Central Coast Council financial crisis: Administrator releases 90 day report, wants referendum

A 90-day report into Central Coast Council’s financial crisis has been released, which includes a referendum with a view to decrease councillor numbers.

Protest against a rate rise outside Central Coast Council in Gosford

A referendum will be held on reducing Central Coast councillor numbers from 15 to nine.

Interim administrator Dick Persson made the announcement as he handed down his three month progress report into the council’s financial crisis at Wednesday night’s meeting.

Mr Persson said a drop in the number of councillors would increase the chances of success and the current 15 councillor model had resulted in a “parliament" with little collaboration and political point scoring.

“There is little doubt that this dynamic contributed significantly to the financial disaster that now confronts the residents of the Central Coast,” he stated in the report.

In terms of the ward structure, Mr Persson told the Express he supported the option of no wards.

The five wards of Central Coast Council could be reduced to none.

“With no wards, councillors become councillors for the whole region and don’t just represent interests of their ward,” he said. “I’m going to consult the community and get a feel of what people think, whether they want three, five or no wards. Then I will be able to form the referendum question.”

Mr Persson acknowledged a reduction to nine councillors may not change party politics and fighting, however said a smaller group was more likely to work together.

He said councillor workloads would be bigger, however they would be paid the same rate.

“I think people who come into councils don’t do it for money,” he said.

The referendum, which would cost around $180,000, will be held at the next local government election in September, however the outcome would not come into effect until 2024. He said councillors would be voted in through the proportional representation system which is how senators are voted in.

The 90-day report reveals the council has secured new commercial loans of $150m and staff numbers will return to a level similar to the time of merger back in 2016.

Dick Persson AM

“These changes, along with the measures outlined in this report, and in the 30-Day Interim Report, will see the Central Coast Council return to a strong financial position over the next five or so years,” Mr Persson said.

“The current cost savings achieved through applying these measures include $31m in employee costs and $23m in materials and contracts.”

Mr Persson said the bottom line was that the council had a recurrent shortfall of around $70m this year and confirmed a 15 per cent rate rise (if approved by IPART) would result in an extra $26 million for the council.

He said if the council had not been successful in the $100m loan it received before Christmas, staff and creditors would not have been paid in January. He also stated that he and acting CEO Rik Hart had to persuade another major bank calling in a $104m loan in December.

“We can’t underestimate how dire this situation is,” he said.

The Central Coast Council building at Gosford is on the list of assets to be sold.

“We are well advanced to turn the situation around.

“We strongly support an approach which focuses mainly on reducing costs (70 per cent) but also includes a proportion of the necessary funds coming from increased revenue (30 per cent).

“We will have a small surplus next year and over the next 10 years.”

He said the council’s voluntary redundancy program had received strong interest and middle management had been reduced from 39 to 26.

The report also addressed the executive team, with many people in the community asking why they still had jobs.

Mr Persson stated that the directors were performing well and it would be the job of the new CEO to evaluate their individual performances.

He said that directors were not able to challenge the way a CEO runs an organisation.

“I am satisfied that the former CEO did not create a culture or structure whereby the executive team were able to discuss the overall council finances,” he said.

Protesters asked the question, “What if we all refuse to pay our rates?”

Prior to the meeting, Mr Persson addressed around 50 residents protesting against the proposed rate rise to deal with council’s financial crisis.

Angry protesters demanded answers as to why they should pay for the financial mismanagement and why legal action couldn’t be taken against those responsible.

Mr Persson was calm, yet firm, stating there was no one else to pay.

“I support a rate increase because I don't believe there is any other alternative,” he said. “We have cut costs as much as we can.

“Your anger needs to go to the ballot box, they’re the people that have let you down.”

To the question, “What if we all refuse to pay?” Mr Persson replied that each individual would be dealt with in terms of accruing interest and late fees.

Protest against a rate rise outside Central Coast Council in Gosford

He said there were no legal grounds for some of the actions people were requesting.

He said he had found no evidence of corruption and the council was instead dealing with “incompetence”.

The revelation of council’s dire financial situation – initially reported as $89m – shocked the community on October 6 and has been a rollercoaster ever since with the suspension of the mayor and councillors and appointment of Mr Persson and Mr Hart.

Mr Persson and Mr Hart started with council on November 2 and have since had their roles extended for three months, which means the councillors’ suspension has also been extended.

The extension is to set the next budget and appoint a chief executive officer.

Central Coast interim administrator Dick Persson AM and Acting CEO Rik Hart.

In November 2020, Mr Persson released a 30-day report into the crisis, revealing a $115m loss this financial year.

“Central Coast residents have been badly let down by their council and widespread anger over the council’s performance is totally acceptable,” he said at the time.

At the end of this financial year, accumulated losses for the past four years will be over $200m, while the accumulated debt including $200m to be repaid to restricted reserves will be $565m.

Mr Persson outlined a range of issues that contributed to the major losses including use of restricted funds, employment of 250 additional staff after the merger of Gosford and Wyong councils and the Independent Pricing and Regulatory Tribunal (IPART) pricing decision. He said council also proceeded with expanded service and capital works programs which it could not afford.