Coffs Coast Business

Cr Cecato appointed Deputy Mayor, Cr Knight uses casting vote once again to overturn airport lease rescission motion

Cr Cecato won the position of Deputy Mayor against Cr Sally Townley at the latest CHCC meeting last Thursday 10 September by one vote.

The vote was 4-3.

New eputy Mayor George Cecato

The Mayor Denise Knight left the meeting earlier in evening, citing a “family emergency”.

Nevertheless Mayor Knight did however ensure she had time to defeat a rescission motion aimed at deferring the leasing of the Coffs Coast Regional Airport until economic conditions improved.

She yet again used her casting vote after the vote was tied 4-4 with Councillors Amos, Arkan, Swan and Townley for the rescission motion and Councillors Addendorf, Cecato, Knight and Rhoades voting against it.

Cr Tegan Swan has been the Deputy Mayor for the past two years.

Today, Saturday 12 September, was scheduled to be the Local Government election day. It has been deferred one year due to the Covid19 crisis. If you have not vboted in our virtual poll on who, if any, of the current Councillors you would vote for if they were standing again please go to; https://coffscoastoutlook.com.au/?p=36136 and use the link there.

Or vote directly via; https://doodle.com/poll/5uu8ma5rycvuvzeg

10 Comments

  1. 40cmPedestalFan

    Defamation laws bind me to only mention in regards to Thursday’s ballot is that an Acting Mayor’s role, if more permanent, is one that’s held out through media interviews as personally represenatitive – an embodiment of community vision and sentiment, how we regard our region, if you will – to any visitor.

    A couple of things have concerned me regarding the airport deal on the table and was hoping that Thursday would provide some clarity or indication towards that. Here they are:

    * Isn’t it an absolute pre-requisite in leasing an airport that flight times are made clear? Straight up front. Isn’t that the first thing that would be made clear when starting negotiation? Why – seriously – why was it not?

    * Isn’t it an absolute pre-requisite in any leasing of this nature that clarity is obtained in the first instance about what sub-tenancy the lessee intends to pursue? Isn’t that also one of the first concerns to clarify? Why was it not?

    How can a negotiation have progressed to the point we have, now, with those two elements still outstanding?

    How can Councillors be acting in good faith, without that knowledge, when considering progressing a lease?

    What have I got wrong here? I mean, seriously, have we really arrived at a situation where two absolute and critical fundamentals have not been clarified, maybe even not been asked, and Council is beholden to further negotiations with a company while already considerably down the track?

    I’m truly at a loss. Unless there’s something I’m missing here, what level of incompetence are we to sink to with this administration?

    It was always going to be a bad deal. Nothing is more obvious. But during the meeting I was hoping to get an indication of why the strong desire to get the lease signed off.

    What was clear to me during the meeting is that the General Manager was very direct in answering questions that were positive in relation to the lease, and very, very elusive and vague in answering questions that pointed towards not leasing it.

    He wants the deal. So why?

    Nothing presents as a good reason. The only thing that has come to mind for me is that the tabled offer provides more income in the short term than the airport is currently providing, and projected as providing, in the short term.

    Any other reaons I’d love to see. Because that’s the only reason why a General Manager would want a bad deal inked – to get immediate funds. To get an immediate lifeline of income. The bad negotiation and rush to sign would also point to this.

    If that’s so, the next point is obvious: Council is in financial trouble.

    • Masterfully put 40Cm. The Council must be in financial strife – something that was highlighted as a distinct possibility not long ago right here; https://coffscoastoutlook.com.au/?p=35981

      Also the real picture in relation to Council’s accounts was something I note Cr Townley, to her credit, was asking probing questions about last Thursday evening too.

      And isn’t it interesting to note Cr’s Rhoades and Cecato are Council representatives on the Airport Focus Group – the Chairperson of which is vehemently opposed to this obvious dash for cash and ultimate fire sale? One also suspects the GM is in haste to nail things down, including that monstrosity in Gordon Street, before he bails out ASAP.

      The rumour is that the lease bidder is an entity owned by Australian Superannuation groups. They like a nice monopoly on their books. It can endlessly gouge both passengers and airlines for them, and their members will never probably know.

      • 40cmPedestalFan

        That’s very, very interesting, Rikki.

        Yes, CCO asked the question: is Council going broke. And your link points also to exactly where my thinking now is heading: something is going on in Council that isn’t showing yet publicly. Something is definitely amiss financially.

        Far be it from me to ask this, but I will with enormous respect. Is it at all possible for Mr Steurmann to run an article that shows where Council records could cover up or cloud a financial crisis, or a crisis looming? It’s a big ask, I know.

        Regarding the stinking lease, everything points away from the actual airline operation – no profit there for years, no improvements actuated yet for years, no profit from those possible improvements for many years. That is, other than the usual gouging and added costs imposed on a captive public – bad enough, sure. But that’s the usual stench.

        The really acrid stench for me is coming from what else is available to the lessee. I don’t know enough about the property or what’s possible with it, but that’s exactly where I’d be forensically searching. We no doubt won’t know until it manifests in years to come, not being able to view the lease in discussion. I’ve no doubt the minds in Council, nor its consultants, have picked it up. Can’t see it presenting in the future. But you can guarantee it’s there.

        Something is on inside that lease, something is really on. And it’s not good.

        I get the impression, also – and only an impression – that Councillors have been made aware of a hint of financial difficulties or a concern. But I don’t think they’ve been made aware of the full extent of it, or what could become the full extent of it.

        Unless it’s a general concern – that Council finances are heading in the wrong direction (but why then pursue Gordon St?) and your basic, gutter-incompetence-Management is looking for a regular and guaranteed-price income lifeline, then we can reasonably let our thoughts point towards someone in Council knowing more than they’re saying.

        I do think we are allowed, at this point, to begin considering that Council finances are headed for far more trouble than we are aware of, including Councillors.

  2. The poor girl just doesn’t get it.

    Leasing the airport in a buyers’ market makes no economic sense.

    Using her casting vote as she has done may be legal, but it’s also immoral, unethical and undemocratic.

    When she finally evaporates into political oblivion, she’ll be remembered for all of the wrong reasons, and for a very short time.

    In the meantime, we need to keep the pressure on for her demise.

  3. It’s an insult to democracy and it divides this community. There is no longer any reason to postpone local government elections in NSW. If poor besieged Victoria can hold a postal poll next month because they think it is important, why can’t we? A poll delayed is democracy denied. Let’s clear the air. Support my ePetition (coming soon) to the State Legislative Assembly calling for local government elections across NSW.

  4. In reply to 40cm Pedestal Fan who asked about CHCC’s financial position;

    Covering up or clouding a financial crisis?

    This is an interesting proposition worthy of some comment.

    It is best to start out with the issues common to all councils in NSW. This is an industry reporting in a fixed format to a regulator, in this case, to the Office of Local Government (OLG). Such reporting is at set intervals (say an annual report) but the reports vary from the practices adopted by the commercial world.

    Business reports to shareholders. They issue a trading position (profit or loss) and the entity equity via a balance sheet.

    The OLG reporting on the other hand contains a mix and that makes it harder for the resident to get a grip on the “cash” position of the council. It is the “cash” position to be of more importance to the residents.

    The “employees” report to the “elected” council on a quarterly basis. Yet,it is noted, the final figure is expressed as the estimated, or projected, annual outcome. This is hardly of worth when the figure most want to know is the “cash” position as it stands at the time of the report.

    Thus the “cash” position is distorted to start with but there are further ways to compound the accounts. The question of intent has to be taken into account. Some clouding or distortion occurs from lack of training, poor budgeting practices and the like. Real time audits during the year should pick this up. All councils perform similar tasks and thus it is reasonable to expect a generic accounting system with a standard chart of accounts would be in place.

    If OLG did their job properly, the system could be acquired from a preferred tender list. Our council spent a little under $5M on a new accounting system 2 years ago. So what is the rationale beyond the council tender process and costly evaluation? What was so different in our council from functions done in other councils?

    A standard accounting system allows the regulatory body to develop “test or sample” packs to examine the internal controls and validate manual processes. It ought to pick up “mistakes” due to lack of or poor training. It could identify any incorrect assignment of codes to distinguish capital from day to day costs. These may give an improper result but may be unintentional.

    Worse still is a process undertaken with an intention to deceive. The creation of “ghosts”, revaluations, grants, funding redirection and “slush” funds can all be used in such a way to cloud or cover up the financial position. Some of the terms are technical jargon but I think you will get the point. An operational matter buried deep in the accounts probably within a consolidated amount. There is little chance a cursory glance by elected officials will find this.

    No, with 128 pages of lengthy acounts to read, digest and match to council priorities it is asking a lot from a reader to take it in. (The supplementary accounts are not in the figure quoted).

    To give but a brief example the following went unchallenged at the recent council meeting to consider financing options for the new complex in Gordan St. The General Manager claimed on-going savings to arise from the Transformation to Sustainability (T2S) project were in a reserve. It went through to the keeper as they say. There are many questions about the statement left unsaid.

    Was the elected council aware of this? Did councillors condone the creation of a “slush” fund? Did councillors exercise their right to prioritise spending the funds? Did they agree it was better, for the community, to hold the funds in a reserve and not have the funds available to address the arrears position? Did anyone actually check the savings were actually in the reserve? Or, what they can be applied to in the future? It hardly seems likely they will be spent in the T2S project now as it is long ago done.

    More questions ought to be asked. It is noted approval from OLG might be required to apply the funds to the Gordan St project.

    And with the impact of COVID 19 what steps did council take, if any, to reorder our priorities? The presented report for the March quarter gave a deficit of $6m and this was a long way off the anticipated annual surplus. Did council appreciate the “cash” position?

    At what point does the well run dry? Or did egos get in the way at the council meeting?

    This is by no means an exhaustive list but it is a brief comment on some of the ways available to , “cloud”, or cover up the financial position. I hope it will make others think. With proper “flash” audits during a year there is a high potential to detect irregularities as they occur. It is all a matter of intent.

  5. 40cmPedestalFan

    Dear Rob, this is extremely valuable information and for one, I can’t thank you enough. I’m sure every reader is feeling the same. For the time and expertise, again, thank you.

    I’ve spent some time absorbing this, and reading it over several times. It’s a bit of a shock. I also didn’t want to provide a knee-jerk reaction, nor to respond in a way that draws improper inferences reflecting poorly on what you’ve provided.

    I’ll respond in point form, though this may unfairly give more credence to my layman’s thoughts. They’re not in any order of importance. I’ll draw inferences from these later, so as not to cover up or cloud your points.

    (A) What strikes home immediately is that there is not a definite “No” or anything close to it. By this, I mean that you haven’t said something like: “Council is highly unlikely to be able to cover up or cloud a financial crisis.”

    (B) What also strikes home, stunningly, is that: “The OLG reporting on the other hand contains a mix and that makes it harder for the resident to get a grip on the “cash” position of the council. It is the “cash” position to be of more importance to the residents.”

    (C) Council finance admin reports to Councillors quarterly, yet Councillors are not informed of the current financial position of Council.

    (D) Council has two years ago implemented a new accounting system ($5m.) I watched a little of the OLG video [April 2018] of their roadshow regarding Council’s new reporting implementations they have to abide by, wherein it states that the changes are complicated.

    https://www.youtube.com/watch?v=0vVZuCF7yR0&feature=youtu.be

    (E) Council finances are reviewed by the OLG. The OLG website FAQ states, unsurprisingly:

    What if Council’s financial position is declining?
    The Office of Local Government monitors the financial performance of all NSW councils. A risk analysis is carried out upon receipt of council financial reports and further action taken if considered necessary. A desk review, on site review or a Promoting Better Practice review could be undertaken.

    https://www.olg.nsw.gov.au/councils/council-finances/financial-reporting/frequently-asked-questions/

    (F) There is a massive amount of accounting for someone to read in order to understand Council’s financial position – a position which is obviously always changing.

    (G) A significant financial change (T2S) was recently brought up and went unquestioned by Councillors.

    (H) There are ways to cover up or cloud Council’s financial position, but it requires an intent to do so, as mistakes are likely to be picked up.

    ____________________

    My inferences drawn from this:

    While it is possible for a person or persons within Council to cover up or cloud Council’s financial position, I don’t think it’s likely, as it requires malicious intent – unless Council has found itself in a difficult position and believes it can work through it without drawing attention to itself. That is a possibility, but I don’t expect it to be so. It’s too shady.

    However, it is much more possible that Council is in a difficult financial position and its accounting hasn’t yet attracted OLG attention, or is not assessed by the OLG in the immaculate manner it states, or that attention hasn’t been passed on to either the Councillors or the public.

    I say this because many NSW Councils could well be in a similar position. And given Council’s new accounting system, it may be that insufficient time has passed for it to scream alarm bells, though it could be indicating them. On top of the new accounting system, OLG has introduced significant changes. Further, here is a news item from the ABC in April of this year, worried about the impact of covid:
    abc.net.au/news/2020-04-23/nsw-councils-push-for-funding-to-keep-afloat-during-coronavirus/12176994

    I would also draw some relevence, regarding the specialised impact on finances of Covid, on councils in the UK, as reported in The Guardian in June of this year, where it’s concerned that 8 out of 10 councils could go bankrupt:
    https://www.theguardian.com/society/2020/jun/23/at-least-8-in-10-english-councils-need-help-to-avoid-going-bankrupt

    (Talk about those UK cats doing countdown!)

    But more to the point, what really shows up is that Councillors wouldn’t have a bloody clue about our Council’s financial position, sufficiently accurate to be making decisions. That’s a big statement, but I’d add therewith that, at a guess, at least 95% of other councillors in the country wouldn’t either. Getting a grip on a council’s financial position is near impossible.

    Therefore, councillors really seem to be relying on the tidbits of information they’re given by admin and that’s precisely where I expect councils get into trouble. Decisions are made based on poor knowledge. None of that is acting “in good faith” but the local government system can’t demand of councillors a fiscal test or a standard of understanding (not least because admin itself doesn’t know its critical cash position), because the local government system simply would fall apart. Councillors are not always highly educated or highly experienced in business, nor are they trained or have prepared themselves to serve in government.

    I imagine the tidbits of information they get from admin as much like, say, a cappuccino. You can only see into it from the top, and at the top all you see is the froth. You have no idea what the body of it is like: it could be toxic, could be terrific. As a councillor, you are given by admin the froth: sip it and make your decisions on that.

    Not very comforting, any of this.

    So, in short, there’s every understandable reason our Council could be in the shit, and it’s not yet detected properly, or is being addressed behind the scenes and the public and Councillors don’t know. What worries me also is when an ideological point of view held by a Councillor, or a passionate view, or a “committed” view, informs his or her decisions and this prejudgement greets a decision to be made. A couple of big financial decisions, given the above pre-existing cloudiness, add the very clear covid consequences and Council could be quickly hurtled deep into trouble. Or, it could be a series of smaller decisions, over years, that does the same.

    And all of it seems to only become noticed and passed onto Councillors and the public when that trouble is catastrophic.

    I’d finish with this. Every person considering standing for a Council election should be handed Rob Steurmann’s piece above, and told to read it. I’d hate to be a Councillor in Coffs Harbour right now, always flying blind, and not even aware that they would be doing so once elected.

  6. So”The Office of Local Government monitors the financial performance of all NSW councils”. With 128 local government areas in NSW, that is a massive undertaking.

    If the Port Macquarie Glasshouse saga is anything to go by, it appears the OLG financial watchdogs are always late to the party – after all the damage is done.

    • The odds of the OLG monitoring genuinely the accounts of 128 LGA’s each and every year are astronomical – it as near as damn it the definition of impossibility. In order to do that properly they would need to regularly and deeply audit both the annual accounts of the councils and randomly visit the councils themselves. And they simply don’t have the staff or the resources to do this properly. It is an insult for them to even claim they do this. It is total bollocks.

      Further to what 40cm Pedestal Fan said in reply to me above my two bob’s worth is that here in dear old Coffs Harbour a certain number of CBD landlords and ratepayers bang on the GM’s door and I suspect say words to the effect; “You must protect our property values, we are major ratepayers!” And he pulls his forelock and says “I’m on it Gov!” And that is about as deep as any deep and meaningful ‘strategy’ goes with him. Other than ensuring the Councillor’s vote remains split so the mayor can use her casting vote that is one suspects.

      But then what does one expect from someone with no attachment to the city who was parachuted in some 10 or 11 years ago from an apparently ‘interesting’ stint in the Hunter Valley and one of the first things he apparently let be known he wanted to do was to go back on the City Hill agreement with the Federal Government? Possibly so as to turn it into a housing development or similar?

      In the meantime does anyone else suspect like me that he daily practices his Mayoral marionette skills?

      • 40cmPedestalFan

        That the OLG successfully monitors all 128 council’s finances is clearly now presenting as a major flaw in local government survival through crisis. Thank you for highlighting this.

        Rikki, I don’t recall the GM saying that about City Hill, and it now also is firming my view that Hawkridge Consulting was instructed, overtly or covertly, to return a recommendation for Gordon St.

        The next thought leads towards a referral to ICAC.

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