“Council’s CCS ‘contingency fund’ means basic services will be hit’

Readers will recall Council boasted of doing a project of like magnitude to the current CCS build in the past.   No details were given as to the project claimed to be done.  

By Rob Steurmann

One such large project was done but it is improper for the current Council to take credit for this.  It began well before the life of this Council and before the appointment of the current General Manager.  This was the construction of four retaining dams to reduce the impact of heavy rains and flooding.  Finance was arranged at the time with a special levy added to the water rates.  It is to extend out over 20 years but it is now very close to the end.

Under the ever present cloak of apparent secrecy our Council nevertheless pushes ahead with the current plan to build in Gordon St.  (CCS)

The “secret” costings include an amount best described as the contingency sum.  At times it is said to be $2M and at other times it is 4%.

Despite this our Council ‘has it all under control’.

But so far the blow-out from the original cost of $76.5 M is $6.1m.

This exceeds the $2 M set aside as a reserve for unseen increases by $4.1m.

It also exceeds the amount as calculated using a 4% buffer by $3.16m.

No matter how it is looked at, on the surface and without access to the ‘secret” costings, it fails ‘the pub test’.

So what does this mean?

The building has to be funded and to do so council needs to borrow funds.

There is no evidence, as yet available to those stuck with repaying the loan, to verify any such loan currently exists.

Not a bottomless pit

So as the costs blow out the funds available to do day-to-day important works diminish.

If we borrow more then we pay back more.  We get less of our money set aside for the vital work such as roads, footpaths, rubbish removal etc.

You know the basics that Councils should always do both well and first.

To continually say the additional costs are covered by the amount set aside as a contingency now that this amount has been passed is wrong.

The $2m has run out – it is not a bottomless pit. 

The $2.96m (the 4% figure) is exhausted.   Note these are not two separate amounts.  There is but one contingency fund.  It is one or the other.

The way this matter is being handled cannot engender confidence in residents that this Council is in control of the project.  

Building is yet to commence and the contingency sum is already exhausted?

So what else lies hidden for future discovery? 


Author’s note – 15 May 2021:

On Prime TV News last night the following statement was made by a Council spokesperson ; “the money to transport the soil had no impact on the budget.”

I find this very hard to believe. 

I did not know the amount for trucking the acid sulphate soil was $1.51m when I wrote the above report earlier yesterday.  And, given the secrecy over costs I was unsure of the exact cost of the project to date.  This should not matter because I used a guess figure of $82m – that is $6m in overspends.

The general principle is the same – it is not a bottomless pit.   Extra costs are in excess of the ‘contingency sum’.

Rob is a retired former federal government forensic auditor who writes regularly for CCO.

4 thoughts on ““Council’s CCS ‘contingency fund’ means basic services will be hit’

  1. Now THAT makes sense to me.

    I have stated all along – must be for 2 years or more – this building has
    it is beyond my comprehension if our GM and his team think we can cover this cost of paying back the interest plus principal without seeing the contingency plan for the next 20 + years.
    SHOW us the details of how ,YOU GM, McGrath, will do this?
    OR , will you retire, leave town, be gone, before this comes to fruition.

  2. CCO asked if “the chickens are coming home to roost”. These problems taking hold now: Waste is at crisis; Roads are bad and work on them far behind, one bad accident away from crisis; the so-called CCS ate up its reserves at the very first instance of turning dirt, Councillors have called a crisis meeting. Each of these problems now in the headlines has two things in common: they have accrued over time; and to resolve them they cannot be sent out to consultants.

    If anyone checked in to the last Council meeting they would have heard something very unusual: a chastened Steve McGrath. Not completely, but his demeanour mostly didn’t have the put-on exasperation that he typically prefaces Management’s response to councillors’ questions. He was noticeably off his usual game.

    Things are definitely biting him. And the councillors are markedly growing in strength and confidence in taking on management — unheard of even six months ago, for the entirety of this council: not a whisper. Even talk now of an extraordinary meeting, whether it goes ahead or not, whether it’s uselessly shunted behind closed doors where it will get de-powered with crap, just the mere fact of it being called is a major adjustment. A big development.

    Steve McGrath is now in the can’t-get-out-of-it position when he has to show what’s he’s made of, in facing Biomass personally (what should have happened at the first hint of a problem, ie. when he first took on the job as a good manager would do); in facing the local problems that need attending before there’s an all out public outcry (ditto); and in facing the councillors about his managerial knowledge and ability for a major construction (of this experience he has none). Some councillors — although it’s early and faint and tenuous — are onto him.

    The airport lease, which I think he negotiated weakly, and unnecessarily, won’t show its problems immediately, but they are there, for sure. These wait in the shadows, accruing, to lurch out at any time.

    What now? He’ll bluff his way through, I think. But every word that is spoken or written to question his competency is a stepping stone towards a General Manager (and executive) that we should have. It feels like we have taken the first moves in that direction.

    The winds of change have just arrived.

    Let’s hope the LGA realises the moment, and develops and capitalises on the very positive opportunities presenting themselves now.

  3. We have been promised numerous times that there will be no increase in rates to cover the CCS. Blind Freddie can see then, that the increased rates will come to cover services that can no longer be budgeted for because of the CCS. This, of course, is the economy according to the McGrath/Knight conglomerate.

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