Central Coast Council financial crisis: Submissions open for public inquiry

Coast residents, ex and current council staff and suspended councillors are encourages to have a say into the public inquiry into the embattled Central Coast Council.

Submissions are flooding in for the highly-anticipated public inquiry into the Central Coast Council crisis.

The call for public submissions was made on Friday with the cut off date of June 21.

The inquiry’s commissioner Roslyn McCulloch is keen to hear from council staff, suspended councillors as well as residents of the Central Coast.

Everyone who lodges a submissions is asked to identify themselves, with anonymous submissions carrying “less weight”. People can also register to make submissions at a public hearing.

The inquiry was announced in late April when NSW Local Government Minister Shelley Hancock extended the suspension period for the 13 councillors.

Roslyn McCulloch has been appointed Commissioner of the Central Coast Council public inquiry

It will look into all aspects of the council’s financial crisis – with a $565m debt accrued over the past four years – as well as the councillors actions and decisions made during the downhill journey to near bankruptcy.

The multimillion inquiry could have a range of results from the complete dismissal of councillors, referrals to the Independent Commission Against Corruption and changes in financial procedures for the embattled council.

The move comes a week after the Independent Pricing and Regulatory Tribunal (IPART) approved council’s request for a 15 per cent rate rise.

While council asked for the rate rise to remain permanently in the rate base, IPART only approved the rise for three years.

EARLIER

Why more rates pain could be on the way

On May 20, 2021

Central Coast Council’s problems are far from solved with the approved 15 per cent rate rise, leaving the region open for another rate rise sooner than expected.

Administrator Rik Hart has laid down the facts, telling the Express that the Independent Pricing and Regulatory Tribunal’s (IPART) approval of the 15 per cent rate rise for just three years has a lot of ramifications for the embattled council in terms of commitments made to banks to secure loans as well as securing loans in the future.

Council originally applied for the rate rise to be a permanent fixture in the rate base.

“With IPART only giving us the rate rise for three years, it causes complications,” Mr Hart said.

Central Coast Council Administrator Rik Hart.

When the council received a $100m loan in December 2020, they made various commitments to the bank to secure the money.

The agreement included putting together a 10 year plan that shows council returning to profitability by July 1 2021, selling $60m worth of assets and increasing revenue which brought about the proposed 15 per cent rate rise.

“The $100m was dictated by those conditions,” Mr Hart said.

“We gave an undertaking to the bank that we would get that revenue.”

He said over the next three years, council had $150m of other bank loans falling due.

“It’s now going to be hard to refinance. I will be evaluating this with the chief financial officer and chief executive officer but we may have to think about going for a rate rise as early as next year.

The Central Coast could be looking at another potential rate rise in 2022.

“We won’t be able to talk to banks unless we have a guarantee of the cash flow. Debt is not the problem, we need a revenue stream. This really puts us in a unique situation, we have got to meet our commitments to the bank”.

Mr Hart has urged the community to understand the seriousness of the issue.

He said the current asset sale program, which has received strong community objection, identified $90m of assets that could potentially be sold. He said among all the objections and ongoing consultation, not one person has said “please keep that one, but it’s OK to get rid of this one”.

“We need $60m of that to sell, people aren’t understanding that these are the conditions the bank asked us to meet,” he said. “There is no choice”.

The proposed asset sale sites – council needs to make $60m from the program.

Mr Hart reflected on the dire situation of council late last year when it couldn’t pay its staff or creditors. This was before the accumulated debt of $565m was revealed.

“Going back people didn’t really appreciate or understand, even staff, that this was actually receivership of an organisation,” he said.

“The council had run out of cash and could not pay bills.”

He said without the option of equity, he and former Interim Administrator Dick Persson AM had to look at loans.

“The government made it clear that they were not a bank that leant money and I agree that they shouldn’t have to bail out councils,” he said.

Former Administrator Dick Persson AM and Rik Hart worked tirelessly back in December 2020 to make sure council didn’t close its doors.

He said all councils only dealt with the top four banks and, at the time, Central Coast Council already had loans with three of them.

“None of those three were prepared to talk to us however the last bank were prepared to help based on certain criteria,” he said.

Mr Hart said on the Friday before Christmas last year, the council was staring down the barrel of not paying creditors or staff come January 1.

He said it came down to the last hour before the bank closed for Christmas, when all the paperwork came through. The alternative was the closure of Central Coast Council.

“It’s only just stable now,” he said. “I am confident we will get the ship back up and running but we need the community on board.”