Central Coast probe hears money claims
More details have emerged in the ongoing inquiry into NSW’s Central Coast Council.
The public inquiry is going back through the financial history of the New South Wales council, trying to find out how it accrued high debts and deficits.
At sessions this week, former administrator Ian Reynolds said a 2016 amalgamation process should have been better tailored for larger councils, including for the merger of Gosford and Wyong.
“For the Central Coast, as we were there and in retrospect, the 16 months was not enough to really bed down a lot of the change that needed to be made,” Mr Reynolds said.
“The size of the new council became one of the largest in the state.”
He said the merger added major new complexities to the size of the budget, as well as the running of operations such as water, sewerage and coastal erosion.
A range of factors associated with the amalgamation have been linked to Central Coast’s financial crisis.
These include pay harmonisations, staff redundancies and payouts, as well as systems harmonisation such as IT, the cost of consultants and staff disengagement from the process.
The inquiry also heard from an independent advisory committee with oversight of the Central Coast Council's policies and procedures - the Audit, Risk and Improvement Committee (ARIC).
There has been some criticism of the ARIC’s performance, with some councillors saying it did not focus enough on the council’s finances.
ARIC chairm Carl Millington said the group had wide ranging responsibilities, but typically only met quarterly.
“We had an additional meeting at least once a year to review the annual financial statements,” he said.
“That was pretty much our involvement with the financials of council.
“There was nothing in those first few years that would sort of suggest; ‘We need to look a bit deeper here’.”
Mr Millington said that when he found out the council was using restricted funds for nonrestricted purposes, he felt “blindsided”.
ARIC member John Gordon said the group had a “very broad brief to consider all risks as they impact council”.
“[Financials] is something we thought we could count on,” Mr Gordon said.
“Every council has been budgeting for as long as I have been involved in councils.
“They know how to separate restricted from unrestricted assets.
“But this has been a breakdown.
“The committee cannot cover everything.”
Stephen Naven, chief financial officer of the Wyong council and the newly merged council up until 2017, told the inquiry; “Staff had never really envisaged or contemplated changing the way that we had always accounted for restricted funds”.
“The external auditor took a different interpretation on the way we should account for external funds, specifically unrestricted funds in the water and sewer fund,” he said.
“Being mandated or directed to change an accounting interpretation is not really anything new in local government.
“We didn't really see value in going out and getting legal opinion over and above what we were already paying the existing experts.”