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.
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:
Holiday Parks $2.076m
City Smart $0.354m and
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?
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.