Local, Politics

Rubbery figures and strange reasoning? Council’s meeting last night.

Last night Coffs Harbour City Council’s video meeting considered a motion to consider a report on whether a by-election for a ninth Councillor can be held. In addition what appear, historically, to be irregular projected financials were presented to Councillors.

By Rob Steurmann

Item BS 20/32 was tabled at last night’s meeting. It relates to projected financials.

Has Council developed a new form of Rubbery Figures to challenge the originals?

Under Clause 203 of the Local Government (General) Regulations 2005 Council has to present quarterly accounts.  This is a variation from the practice followed in the past, or so it would seem.  An examination of past agendas shows that there were infrequent monthly updates of the financial position.

They appear to be lengthy documents that quite frankly look more like a tourist brochure than a reasoned base from which to develop a financial strategy. 

Of interest in last night’s financial documents are the final figures for revenue received from rates end–of-financial year 2018 $94.780m and end–of-financial year 2019 $98.458m.  It is hard to see any attempt to give current year to date figures in the lead up the final figures but in some reports the use of “normalised” figures occurs.

Sometime after 30 June 2019 a new report was created.  It shows the projected budget, the revised budget and in the last column the actual year to date figures.   On 24 October 2019 a figure of $100.728m appears. For the first time the quarterly report (in the new format) is used to give the position at the end of the second quarter.  Tabled in February 2020 this report shows a year to date figure (end of second quarter) of $110.736m for rates. 

This is clearly wrong. 

At the last meeting the senior Finance Business Partner prepared the report but it was authorised by the Section Head (presumably the Responsible Accounting Officer).  The accounts tabled are for the period ended 31st March 2020 and in the executive summary there is recognition of Covid 19.

It states;  “Covid 19 has introduced an element of uncertainty into the budget review process”. They follow a standard format and this is now part of the problem.  The process is a regular feature with the Councillors and the employees – it now lends itself to rote performance.

New factors, such as the impacts of Covid 19, struggle to get analysed and genuine predictive outcomes then presented for consideration.

For BS 20/32 the Responsible Accounting Officer advised the financial position is ‘satisfactory’.  This means the adjustments made can be accommodated from council reserves.  On the surface no critical analysis was made.

This is rote performance. 

Earlier in the summary the author claimed “there were no perceived short or long term social impacts.” This is the usual statement resulting from the standardisation of reports to council.   

Excuse me but this statement is made some six weeks after the Covid 19 outbreak hit Australia! 

Although the report refers to the period ended 30th March 2020 it was six more weeks in its preparation.  Surely this is sufficient time to see the enormous changes and challenges hitting Australia?    

The country went into full planning mode to assess the impacts on health and the economy, massive stimuli packages began to appear on an almost daily basis.  People lost their jobs and this area had the unenviable distinction of having the highest per capita percentage of people to lose their jobs.

Council even went to the trouble to apply for some relief under the Job Keeper scheme.  

Is this not a social impact?

The proposed controversial CCC construction project in Gordon Street was touted by Council’s cheer squad as “a way to stimulate the economy”.  And the Mayor claimed the accounts were sound in a radio interview with Moffee on TripleM Coffs Coast. 

But is this the truth?

The deficit of $995,000 rose by $5,374,000 to now stand at $6,369,000.  Of this $5,093,000 relates to Covid 19 issues.

The increase in the deficit are split into Covid and non Covid ($281,000) components.

For the Covid items the losses are:

            Airport             $2.235m

            Holiday Parks    $2.076m

            City Smart        $0.354m and

            “Others”              $0.328m

Apparently this is satisfactory and can be met from existing reserves.

Well so be it. Except the first line in the financial report is wrong in my humble opinion.

No mention is made of any loss in revenue from rates or charges. By not using the proper Year to-Date figures it conceals any potential loss.

In the previous period the opening line showed a budgeted income (from rates and annual charges) of $98,664,000. Rote performance kicks in yet again and the year to date figures are unchallenged. 

Lo and behold three months later very similar figures are produced!  The very first line in the March accounts, should anyone be bothered to look, must cast serious doubt over the whole of the accounts. 

In the previous accounts presented for the period ended 31 December 2019 the year to date figure for rates income is stated to be $100,736,000.  In the accounts, three months on, the year to date amount is now $100,731,000. Exactly $5,000 less. How round! How exact!

This is crap.  It is nigh on the definition of impossibility!

It says over three months the council lost exactly $5,000 in rate and charges income.  What are the odds of that?!

Apparently the third rate installment of over $25m is of no apparent concern.  So how does council know its real financial position?

This is problematic because Council is not using a reliable base in my opinion.

Unless, by magic, the loss is included as part of “Others”, whatever they are, ($328,000) the impact is understated. 

Consider this scenario. If 11% of local residents lost their jobs, using very conservative figures of 4,000 people not on job keeper at $400 per week, then the negative financial impact on the local economy is in the order of $26M to the local economy at the end of the 2020-21 financial year. With the average quarterly rate installment in Coffs Harbour being a little under $700 then the CHCC revenue at risk is ($700 x 4000) at about a $2.8m rate loss over a year.   Those scenario figures are conservative.

So what percentage of ratepayers will have difficulty in making their rate payments?  Council does not seem to have deemed this an import question to consider, analyse and then predict.

Yet earlier in the financial summary the author claimed “there were no perceived short or long term social impacts.”

Perhaps more thought needs to be directed to establish a more realistic figure.   Whichever way one looks at it it is going to increase the CHCC deficit.

Also, of concern is the budget figure for Coastal Works.  In the original budget this amounts to $6,901, 971. There is an adjustment in March of $2,413,000 (EIS for bypass is incomplete) and this takes the revised budget to $4,489,971.  But the year to date figure is $1,750,997. 

It raises the question, given the current Covid crisis, will Coastal Works spend $2.7M, or 60% of its allocated budget in the last quarter)?

Council ticks all the boxes for the OLG.  Council presents the required accounts but what happens next? 

The OLG advised me it was not their role to be proactive – in other words they do not do any critical analysis of the content in the reports sent to them. 

A robot could do the work OLG does.  Have all the boxes been ticked? – Yes well there is nothing left to do.  No, not all boxes were ticked but there is no need to worry – OLG is not proactive. 

This is a monumental failure by the OLG.

But have no fear there are no perceived short or long term social impacts. Well according to Council in their rote report that took no analysis of Covid 19 impacts that is.

Even “Blind Freddie”, hard at work in the OLG, must be able to see this? 

So what else is wrong? Council plan, in the future, to borrow the funds required to construct the new building. Land prices have fallen dramatically in recent times and Council was unable to sell community assets to raise needed funds for the proposed CCC in Gordon Street.   

They have taken a stand and cannot see any reason to pause the work.  The debt on the community grows by the minute and yet the apparently OLG remains unmoved. 

Is the OLG in fact itself a monumental failure?   

Last night’s on-line/video Council meeting. Picture from The ABC Coffs Coast Facebook page.

Motion to look into Councillor By-Election

The following is a report from the ABC Coffs Coast Facebook page – Thursday 28 May 2020;

“COFFS HARBOUR CITY COUNCIL TO URGENTLY EXPLORE OPTIONS TO HOLD BY-ELECTION –

The council has asked for an urgent report detailing options to hold a by-election for a ninth councillor. Councillor Rhoades put forward the motion at tonight’s meeting to investigate postal, online and other methods to hold the vote during COVID-19 restrictions.

He said a by-election was crucial to return the council to its full complement of councillors following the postponement of this year’s local government elections and the resignation of former Councillor Jan Strom 14 months ago.

Cr Rhoades’ motion was amended to add a condition that no further action be taken until the date of the election has been gazetted by the NSW Minister for Local Government. Councillors voted 5-3 in support of the amended motion.”

———

CCO Editors note; CCO understands the intention is for the NSW local government elections to be held on the second Saturday of September as has traditionally been the case – 11 September 2021. Why any need for the gazetting of this before proceeding to look into whether a by-election can be held using alternative voting methods is strange to say the least and last night’s discussion about it was monotonously circuitous.

It sounded remarkably like a time wasting ploy in our opinion. We hope that is not the case.

———–

Rob Steurmann is a retired Government forensic auditor and regular CCO commentator.

  

12 Comments

  1. 40cmPedestalFan

    How would those at Council, both non-elected and t’other, view Mr Steurmann’s diligent, forensic contribution, should we think? Welcome? A nuisance, an imposition? Helpful?

    We shouldn’t have to pose the question!

    Credit where it’s due – Councillor Swan presented last night with a thoughtful maturity.

    What a shame any further comment on the meeting can’t be positive and inspiring. Jeepers. A village fete committee comes to mind. We really do have a second-rate and untalented grouping. It’s like the B Team was sent in to have a run, have a go. You come away feeling that this assemblage just isn’t up to it, for a major regional centre.

    How Cr Rhoades got sideswiped is beyond comprehension. Such a sensible, simple motion to set in place.

    A few points.

    Cr Townley’s contribution can only be described as obstructionist. For all the wordage about supporting the idea of a by-election in essence, her reasoning, and the very amendment itself, proves otherwise. What did Rhoades require, as Cr Amos asked? A few phone calls and some emails. No action, simply that. But that, to her, was a bridge too far. We would have gained nothing, and have gained nothing, from her amendment. Logic and fair reason can only result in her amendment being seen to sink the proposition. It was completely unnecessary and was clearly well-considered: one wonders for her motivation. One wonders also if there’s a power trip going on.

    Cr Arkan raised the issue of “democracy” which clearly was in the context of the community getting a say through the electoral process, but Cr Townley saw that as an affront to Councillor activity leaving no doubt as to her dug-in defiance in relation to major Council decisions on issues – or issue, singular, as it came across. Guess which one. Cr Adendorff knee-jerked a giveaway without prompting, on that.

    How Cr Adendorff could expect to get re-elected next time around beggars imagination. His contribution would have it that the few phone calls and email-sending would bear a burden on Council finances such that either we couldn’t afford it, or it was so significant as to steer well away from the tabled motion. Seriously.

    But nothing in that discussion by the proponents of the motion showed political nous. If Cr Rhoades confirmed in a phone call that, as our Editor states, elections are held on the second September Saturday why, why, weren’t other Councillors made aware of this? He was obviously waiting to present the information prior to the vote but was sideswiped.

    It’s this political sideswiping that needs attention and action by the four Councillors we are relying on.

    Consider this. If a proposition is likely to be sideswiped, would you bow to fate and let it happen? This occurs again and again with the four. One of them needs to step up. Regarding last night, it goes like this: issue a media release at least two days prior to the meeting stating clearly that the next general election has a specific date, then state your case. Get the public onside. Weighty support for the motion is guaranteed. The debate has to include the public, and is not. Their efforts are failing because of it.

    So what does that take? It takes a Councillor standing up to the Mayor through the public forum. Could that person or persons expect a Mayoral hissy-fit? Seems probable to me. What then? You take that to the media (if they don’t follow and pick up on it) highlighting what would, in that case, be a Mayor not wanting a by-election for the people of our region, then ask why. And if a mere Councillor running a campaign through the media is considered by the Mayor as out of order, not in keeping with good teamsmanship, bad form, then that provides the perfect opportunity to ram home the point publicly that a certain middle finger has already been given to custom, more than once.

    The point here is that the four Councillors we are relying on to bring true vision and proper sense to Council are continually getting sideswiped (very amateurishly, it must be said) and they have to change tactics. My suggestion is to grow a set, take a deep breath, and run their stance, prepared, through the local media.

    If our democracy is being denied through the normal pillars of society, then use the fourth. If nothing else, public reaction will then clearly dictate the direction Council should take on these big decisions, now, and no Councillor can successfully argue with that. But you have to kick it off.

    Cr Amos?

  2. It sounds so ‘FISHY’ Don’t claim to be an accountant ,but blind Freddie could see there’s a very serious problem with the accounting done by CHCC. Also what the hell do we have a office of local government when they do absolutely bloody nothing to help residents when they believe our council should be sacked.!

  3. Latex Johnny

    A clear and concise analysis by someone with greater understanding of finances compared to the Council book keepers.
    But the question is; out of the remaining eight councillors elected to protect our interests, how many can be relied upon to question the veracity of management’s accounting ? Are they even interested ?
    If there has been misapplication or deceptive behaviour, the buck stops with the GM who’s answerable not just to ratepayers but one assumes also to the Auditor General.

  4. 40cmPedestalFan

    The niggling of conscience has caused me to reflect upon Cr Adendorff’s remarks last night regarding Council costs associated with Cr Rhoades’ motion. My better recollection is that Cr Adendorff was concerned for the cost of a by-election, not the cost of phone calls and emails as my earlier comment erroneously stated. None of us will get anywhere in our discussions if we misrepresent others and I’ve made that mistake, and to CCO’s readers, the Editor, and especially to Cr Adendorff I sincerely apologise.

  5. Bruce Weir

    So Rob do I have this correct
    For the Covid items the losses are
    City Smart $354M and.
    Others $328 M
    So City Smart lost $354 million
    and Others lost $328 million.

    Any suggestions as to how we do we get out of this black hole

    Editor’s reply: Hi Bruce – thanks for drawing this to our attention. The gremlins got in there and some crucial decimal points were left out. The figures should read “City Smart $3.54m and Others $3.28m”. Still a deficit in each case bit nowhere near as bad as they were originally, accidentally presented. The figures have now been fixed in Rob’s report.

  6. Gabrielle Brabander

    Where are the rate income figures for the first quarter of this year? hint; rate income figures presented in the papers show a change downwards on the previous quarter’s figures of just $5k – which makes no sense.
    Is this a similar accounting scenario to the problems encountered when Councillors tried to analyse the figures last year?
    Part of the report states under ‘social impacts’; “There are no perceived short or long term social impacts”.
    OK the figures are to 31 March last – but by mid-February everyone could see Covid19 was going to be a problem. And yet Council gives rote figures that make no attempt whatsoever to take into account those impacts!! Really? l hope Councillors are satisfied they have the answers to these questions? As a ratepayer, l am not.

  7. Thank a god, any god, for Rob Steurmann! Understanding accounting practices is beyond me, and this probably explains the pauper status which I experience. I could never make sense of the paperwork which seems to have been Rob’s bread and butter, but I trust his judgement, and his assessment, implicitly.

    I support Rob’s view of the abject failure of the OLG to do a job, any job, in support of the people of Coffs Harbour. The Minister has chosen to act in other instances, but seems afraid of getting serious where our council is concerned. Her recent words of bravado have so far come to nothing.

    I refuse to attend council meetings, in either form, because I suffer from the curse of an overactive, inbuilt, bullshit meter. I would undoubtedly be ejected from the “in person” form, and I cannot afford to replace the computers which would, with certainty, be thrown at a wall during the digital form, so I rely upon the analyses of respected commentators. They seem to be united in the view that several of our councillors are incapable of handling their chosen roles, that vested interests regularly influence decision-making, and that the GM seems to act in his own interests first, rather than doing the job for which he is extremely well remunerated.

    Regrettably, at present there seems to be bugger-all we can do about it.

    I would draw the readers’ attention to the nomenclature of items listed for discussion at council meetings. Is it merely coincidental that the item analysed so effectively by Rob, is listed as Item BS 20/32, or are most matters put before council, worthy of the tag “BS”?

    • 40cmPedestalFan

      It’s made worse, Julian, because at every meeting and within each meeting you get your hopes up. There’s ample opportunity for good decisions and good reasoning but it’s then quickly lost, which is just one person on mic. Far from it then a healthy, robust discussion.

      If you ever feel the need to check in to a Council meeting, why not instead hunt down a clip from the British documentary series ‘Yes Minister’ and enjoy how the experts do it to an entire country.

  8. Bruce Weir

    I still don’t understand how these figures add up. From the amended report

    The deficit of $995,000 rose by $5,374,000 to now stand at $6,369,000. Of this $5,093,000 relates to Covid 19 issues.

    The increase in the deficit are split into Covid and non Covid ($281,000) components.

    For the Covid items the losses are:

    Airport $2.235m

    Holiday Parks $2.076m

    City Smart $3.54M and

    “Others” $3.28 M

    Those four amounts dont add up to
    $5 093 000.
    Can the Forensic Auditor explain please.

    • Bruce – when Rob sent this to me the word doc had dropped the decimal point so I copied it as was.

      I have now fixed them after a second discussion with Rob. But be warned they still don’t add up – but Rob tells me that is fairly common with these reports! Read into that what you will. The figures should be;

      “City Smart $0.354,($354,000) and

      “Others” $0.328m ($328,000).

  9. Bruce Weir

    The first comment on this article asks how would those at Council, both non-elected and t’other, view Mr Steurmann’s diligent, forensic contribution, should we think?

    I am not at council but I have to laugh at the dilligent forensic contribution comment. Despite 2 reviews the FORENSIC AUDITOR still cant get it right.
    The relevant figures from the council are
    2.335 (not 2.235 by the FA)
    2.076
    .354
    .328
    Total $5.093

    Which is correct.

    Fairly big call from Rob saying things not adding up are fairly common in these reports.

    All up it seems pretty sloppy work from a self styled FORENSIC AUDITOR.

    Editors note: You have got it wrong Bruce – those mistakes were mine as Editor because I transposed them wrongly from the Windows doc sent to me when doing a copy and paste then re-editing. My fault as I have stated. Not Robs. Big difference.

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