Central Coast Council hands out both forced and voluntary redundancies due to financial crisis
Central Coast Council is in the midst of staff cuts with both forced and voluntary redundancies being handed out as its administrator made an emotional admission
Central Coast
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Forced redundancies are being handed out at Central Coast Council.
Administrator Dick Persson has confirmed that while many people have taken advantage of the voluntary redundancy program, people are being told to go.
“There’s quite a lot of people leaving now,” he told the Express.
“It’s quite a sad place here, I have been walking down the halls to find people in tears. It’s hard for staff and their work mates, these people didn’t do anything wrong.”
Mr Persson did not reveal the breakdown of voluntary vs. forced redundancies, however said more information would be released soon.
He said he has found the staff cuts to be the hardest decision, as opposed to any of the other tough decisions at council.
“The process is still happening, some people have been told there are other jobs earmarked for them while others have swapped roles,” he said.
Staff numbers at council increased by 250 since amalgamation of the former Gosford and Wyong councils. One of the strategies to combat the financial crisis is to bring numbers back to where they were in 2016.
It comes as local Labor MPs call on the State Government to guarantee no forced redundancies at council.
The MPs say that council has rejected some voluntary redundancy applicants on the basis that they work in areas of the organisation where roles are not being cut. They say a “mix and match” program proposed by the United Services Union (USU) would ensure no involuntary terminations. The program proposes that staff seeking voluntary redundancies in core service areas could be replaced by staff from other service areas who are not seeking a redundancy.
Wyong state Labor MP David Harris said it was clear that enough council employees volunteered for redundancy so there is “absolutely no need for any employee to be forced out of their job”.
“Employees have families and responsibilities, so to be sacked from their job shouldn’t be an option,” Mr Harris said.
Gosford state Labor MP Liesl Tesch said “the pain being felt by our community is already deep. We cannot make this worse by forcing local people out of their jobs.”
Mr Persson has also said that he was “naive” to think he could come to the council, work out what happened and tell it like it was.
“I now realise both sides are trying to make politics around me,” he said. “However I will continue to say it like it is.”
Central Coast Parliamentary Secretary Adam Crouch has also been exchanging heated words with Mr Persson over the proposed rate rise.
Mr Crouch says he opposes a rate rise, while Mr Persson states that without a 15 per cent rate rise there would still have been a rate increase for former Gosford residents of 27 per cent as a direct causes of the amalgamation.
A council spokeswoman said “Central Coast Council has had to take significant steps towards financial recovery, which has included an organisational structure review that requires savings of $31 million from resourcing costs.
Council has released the next stage of the proposed organisation structure to staff for consultation. Outcomes of the reduction in staff resourcing will not be known until staff consultation is concluded and the new organisation structure is implemented.”
EARLIER
Forensic audit reveals reasons for council’s budget blowout
March 9, 2021
An independent legal analysis of Central Coast Council’s financial crisis has confirmed there is no evidence of corruption.
When news of the financial crisis broke in October 2020, Clayton Utz Legal was brought on to assist in investigations of liquidity issues and the use of restricted funds, and whether a referral to the Independent Commission Against Corruption (ICAC) was warranted.
The report is set to come before the council meeting in Wyong for adoption on Tuesday.
In a letter to the council, Clayton Utz partner Brendan Bateman and senior associate Alison Packham stated that “we found that there were no reasonable grounds at that time to suspect that the council’s liquidity crisis and use of restricted funds, in breach of the Local Government Act 1993 was the result of corrupt conduct”.
They stated that their findings were in line with Administrator Dick Persson’s 30 day report into the financial crisis delivered in December 2020.
His findings revealed the council had an accumulated debt over the past four years of $565m which included paying back $200m in restricted funds.
Clayton Utz outlined seven causes for the financial crisis:
■ legal issues with lack of control, financial systems and transparency from Gosford Council inherited on amalgamation;
■ problems delays and lack of transparency when integrating the financial systems on amalgamation;
■ delays and lack of information in setting up a single financial system;
■ long-time and established practice of reallocating funds within the single bank account between the general fund and restricted funds;
■ mismanagement of the single bank account and lack of financial controls;
■ poor financial management;
■ lack of early warning mechanisms.
The business also engaged accounting audit experts KPMG to carry out a financial forensic analysis of a sample council fund, the domestic waste fund, to determine any cases of potential corruption.
While the investigation revealed that $4m needed to be reallocated from the general fund back to the waste fund, the KPMG report stated that there was no corruption or unlawful transactions identified from their sampling.
Clayton Utz’s report also stated that further investigations into the crisis were “unlikely to any new or additional reasons for its current financial circumstances”.
It comes as a petition for a judicial inquiry into the crisis, which reached more than 20,000 signatures, is set to be debated in NSW Parliament.
EARLIER:
Budget blowout: Office of Local Government warned of finances
By Richard Noone and Fiona Killman, October 8, 2020
The Office of Local Government (OLG) was warned about council’s financial issues a month before it was tasked to appoint independent experts after a number of councillors wrote a letter of complaint, detailing a litany of concerns.
The letter, dated September 14, called on the OLG chief executive to “deal with this complaint by way of a formal and independent investigation into this council”.
The letter chronicled a number of financial concerns including the alleged unlawful expenditure and mismanagement of Section 94 Developer Contributions and wasting millions of dollars in ripping up lease agreements and cancelling projects.
The letter alluded to the termination of the lease with Amphibian Aerospace Industries at Warnervale, losing $5 million in funding by stopping the Winney Bay Track mid-construction and abandoning the $171 million Art Centre and Library.
“Alarmingly four Chief Financial Officers have resigned their positions in this Term of Council alone,” the letter read.
“It is our view and at the very least, unless a Financial Controller is appointed to this council it will continue to suffer huge operating losses and a spiralling deterioration in our budgeted service delivery model.”
A OLG spokesman would not confirm whether it received the letter or acted on it before Central Coast Council’s CEO Gary Murphy informed the OLG on Tuesday of council’s “serious liquidity issue” following a crisis meeting with councillors and senior staff.
“OLG does not publicly comment on complaints it may have received nor does it publicly comment on any matters it may or may not be investigating,” the OLG spokesman said.
Following Tuesday’s revelation of an $89 million budget deficit, Local Government Minister Shelley Hancock immediately instructed the OLG to appoint an independent financial expert and a human resources adviser.
At council’s last meeting, councillor Bruce McLachlan described council’s economic performance as “disgusting” and “embarrassing” during a debate on the draft economic strategy.
“Now after 1000 days in office, it’s financial management is coming home to roost and councillors can’t blame COVID. They were already falling off a cliff, long before the pandemic hit,” he told the Express after the meeting.
“The Administrator left the newly merged Central Coast Council with a $79m budget surplus and we are now approaching estimates of combined total accumulative budget losses of approaching $150m over this council’s first term.”
Mr McLachlan said party politics in the chamber had been a contributing factor to the ongoing debt.
“Project after project, staff have brought forward for approval have been politically delayed, deferred, amended, watered down or like the Winney Bay walk or the airport masterplan, just simply binned,” he said.
“About the only thing councillors didn’t oppose was to giving themselves a pay rise during the pandemic.
“However the community must pay the price. With every project delay, comes a financial cost to the community and a loss in council contributions revenue. These financial costs are mounting, it’s costing hundreds of millions and of dollars in project delays. It’s time for councillors to just get on with the job at hand, and stop the financial bloodbath.”
He said if the financial woes continue, residents would suffer and be slugged with a special levy rate rise.
Council issued a statement on Thursday in which it had established a “100-Day Action Plan to Recovery”.
It said council has established a working group to identify potential savings and while no changes would be made to full-time equivalent staff, a review of contractors and temporary workers would be done.
The statement said council was also investigating whether there were appropriate financial controls in relation to cashflow management.
Council is also looking to blame the 2016 amalgamation for “ongoing impacts which we estimate could be in excess of $100m”.
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