Central Coast Council budget crisis: Mayor, councillors suspended, administrator appointed
The Central Coast mayor and councillors will be suspended and an administrator appointed over the council’s current financial crisis.
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Local Government Minister Shelley Hancock has announced she will suspend Central Coast Mayor Lisa Matthews and all councillors in relation to the council’s financial crisis.
Ms Hancock also said the State Government will advance $6.2m to the council to make sure staff are paid today, as well as suppliers.
“The local community is sick of excuses from council.
“There is no question that council needs to be held responsible for these failures.”
Ms Hancock said she would begin the process of suspending the mayor and councillors
She will issue council with a notice of intention to suspend it and appoint an interim administrator.
The Local Government Minister said although she could have taken action two months ago to suspend the council after the Auditor-General claimed in a report the council had illegally used developer contributions in the past to pay staff, she “didn’t think we had enough information”.
”We have been moving for days, and weeks, and months to try to help Central Coast Council out of their own problem,” Ms Hancock told the Express Advocate on Wednesday.
”But they haven’t given us information, we have asked for information.”
No action has been taken by the NSW Government against any individual at the council and no charges have been laid.
A spokesman for Ms Hancock alleged council continued to use developer contributions illegally after the Auditor-General’s August report revealed claims of wrongdoing.
The council will have an opportunity to fight against the decision and make a submission within seven days. The suspension will not affect council staff.
The move comes after council announced on Tuesday that its 2157 staff might not be paid this week.
The council has been pleading with Ms Hancock for permission to use its restricted funds in order to pay staff for the week ending October 18. The salaries are due in staff bank accounts tonight.
A last-minute extraordinary meeting was held last night where councillors voted to urgently call on Ms Hancock to give them the go ahead to use restricted funds — made up of developer contributions and other service fees.
Mayor Lisa Matthews said the current funds in the bank were quarantined as restricted funds under the Local Government Act.
“Council will make urgent representations again to Minister for Local Government, Shelley Hancock seeking permission for the partial utilisation of restricted funds to make staff payroll for the week ending 18 October 2020,” Mayor Matthews said at the meeting
“Should the Minister’s approval not be forthcoming, then some 2,157 full time equivalent council employees may not be paid this week.”
‘This community will not be better off if we go to administration’
During yet another extraordinary meeting on Wednesday afternoon, councillors voted to fight the looming suspension and seek legal advice on their position. The councillors have seven days to prepare a submission for Ms Hancock before she makes a final decision.
Cr Chris Holstein said he was disappointed with the announcement, but in the same breath acknowledged the constant political snipes and fighting among councillors.
“The comments and snipes are a clear indication that we don’t have the ability to work together,” he said.
However, he said “this community will not be better off if we go to administration”.
Cr Greg Best, who believes the council is looking at a potential loss of $300m, agreed and said the infighting was why the council was getting sacked. However he said he believed the financial problems were coming from the “bowels of our building”.
“The problem exists from within the operational controls of this business,” he said.
Cr Kyle MacGregor described the potential suspension as “nothing more than scapegoating 15 councillors and a coup against a democratically elected government”.
Mayor Lisa Matthews released a media statement saying is “unforgivable for council staff to be left in a position where they might not be paid”.
“It is unacceptable that the elected councillors and I were not given information about the precariousness of council’s finances until yesterday,” she said.
Many councillors thanked the community for its support over the past few years, while some blamed political infighting or the amalgamation for the downfall.
Cr Jillian Hogan appeared emotional as she said she had worked hard for the community.
“I am so gutted, I know I have represented my community really well,” she said. “We as councillors are only as good as the information we have been given. Sadly we have been given the wrong information that has compromised our positions.”
Tony Denny offers a lifeline
Local millionaire developer Tony Denny also came to the party on Wednesday, offering the council a loan of $5m to pay staff.
He emailed Cr Bruce McLachlan indicating his company Central Real provided commercial loans and would offer immediate funds of $5m to council over a 14 day facility with an interest rate of 3.5 per cent.
“I have been dealing with many council staff members over the years and have received excellent service,” Mr Denny said.
“I would not like to stand by and see these good staff members not paid, due to circumstances beyond their control.
“I know what my Colorbond fence court costs were to the community so it comes as no shock to me that this current council finds itself in financial difficulty.”
Council refused Mr Denny’s Colorbond fence DA for his home in Killcare Heights in 2019, forcing Mr Denny to take council to the Land and Environment Court at a massive cost.
United Services Union weighs in
The United Services Union (USU) has intervened, lodging urgent proceedings in the NSW Industrial Relations Commission to ensure workers are paid.
The USU said the State Government must immediately intervene to help council.
“Workers are rightly shocked and concerned by revelations that Central Coast Council’s financial crisis has escalated to the point that there isn’t enough money available to pay wages this week,” USU general secretary Graeme Kelly OAM said.
“This is a truly extraordinary situation. It is something you might see in an impoverished developing nation, but it should never be the case at one of the largest councils in NSW.
Mr Kelly said since the State Government implemented the council amalgamation, it had a “moral obligation” to intervene.
“Rather than being forced to negotiate an urgent commercial loan or to dip into restricted funds — in breach of the Local Government Act — Central Coast Council should be provided urgent financial assistance from the NSW Government to ensure wage and service costs can be met,” he said.
“It is simply unacceptable that the more than 2000 council employees who tirelessly serve their local community should face going unpaid this week because of the actions of management or the failure to by the NSW Government to act.”
Council initially asked Ms Hancock to use the restricted funds when the $89m budget deficit crisis was announced, however had not received an official response.
Central Coast Parliamentary Secretary Adam Crouch released a statement last week saying the State Government would not bail out the council or let them break the rules and use restricted funds.
At Tuesday night’s meeting the council also voted to seek a commercial loan or overdraft and persist with calling for State Government support with emergency funding.
When the Express spoke to Cr Matthews on Tuesday she called the situation dire and said when it came to potential staff cuts or selling council owned property, “nothing was off the table”.
“People are certainly worried,” she said. “If I was one of the staff members on the ground I would be incredibly worried about my future. Council is the biggest employer here.
“We need a restructure and hopefully we will maintain positions on the ground.”
Another extraordinary meeting will be held at 1.30pm on Wednesday as the situation continues to unfold.