Council’s bleeding hart

In November, Council Administrator Rik Hart invited ratepayers and residents to have their say about maintaining current service levels and rates in an online survey. He claimed that Council had done everything behind the scenes to help Council’s financial situation and now it was up to the community.

Council Administrator Rik Hart expects ratepayers to bail out Central Coast Council for the Government's failed experiment.

21 December 2021



ADMINISTRATOR Rik Hart said “Our financial recovery is on track, but we cannot become complacent about maintaining our long term stable financial position”. Yet Rik Hart still cries wolf over Council’s financial position despite the Independent Pricing and Regulatory Tribunal (IPART) determining that ratepayers should not be burdened with a 15 percent rate increase for more than three years. IPART concluded that Council should be able to reverse its financial position within that three years and get its house in order.


So, why is Council’s ‘bleeding Hart’ proposing to make an application to IPART for the 15 percent rate increase for a further seven years?


Rik Hart said “This will allow us to maintain current service levels, continue to find more service efficiencies and pay back loans from surpluses that we must generate according to our agreement with banks.”


Winding back the clock when Dick Persson was Administrator, his interim report explained how dire the Council’s finances were but refused to blame any of it apart from IT expenditure on the amalgamation.


In a nutshell our Council has almost $600 million worth of debt including the money missing from restricted funds. The deficit this year, including $45 million in redundancies and staff entitlements, will be $115 million.


According to the report, Mr Persson requested a three-month extension to oversee the appointment of a new CEO.


“The CEO will have to deliver surplus budgets,” Dick Persson said.


That means Council will have restricted infrastructure budgets for the next decade.


This was a requirement of the commercial loan that Administrator Dick Persson rushed to secure, telling ratepayers that they were shareholders of council. He then further justified his actions that since ratepayers were the shareholders, digging council out of its financial hole was their responsibility.


“As a consequence,” Mr. Persson said, “50:50 funding arrangements with the NSW Government will be of no use to the Central Coast Council. Expect roads, drainage and other public infrastructure to go backwards on the Coast as a result – unless, of course, it’s a vanity project with loads of concrete involved.”


The interim report stated that a catastrophic error of the newly amalgamated Central Coast Council was its failure to understand it had less than $5 million in unrestricted cash excluding the water and sewer fund. How was that overlooked by former Administrator Ian Reynolds and Acting CEO Rob Noble.


The interim report revealed that the Water Fund Externally Restricted Reserves and that Sewer Fund that also Externally Restricted Reserves were understated by around $130 million, so Councillors thought they had $130 million more cash to spend than they did.


Persson’s interim report identified the three big issues as misuse of restricted reserves (clearly a senior staff responsibility), failure to properly manage the budget (clearly a consequence of use of restricted reserves) and a failure to capitalise on the “efficiencies” of amalgamation.


This was the fundamental flaw in Dick Persson’s report. Of course, as an employer of the NSW Government Dick Persson is hardly in a position to be critical of amalgamation.


Likewise, Administrator Rik Hart is also doing the master’s bidding. The ‘Kids in the Candy Store’ are still there advising him as they did Dick Persson, and are still dipping their hands in the lolly jar. Pet projects, like Warnervale Airport, that will cost millions of dollars and are unnecessary, will continue to be funded while ratepayers are expected to adopt austerity measures, taxed like Medieval serfs and be expected to choose what services should be removed or become non-existent.


What we do know is that the Liberal Government’s forced amalgamation was an unmitigated failure and should never have occurred. What we also know is that both administrators and the State Government are determined to blame elected councillors instead of the Government and senior council staff.


It is also  known that the money promised from the Snowy Hydro sale did not eventuate. We also know that while our elected councillors were tied up with endless rescission motions and stunts, the NSW Government became increasingly partisan about issues like the cost of dredging and protecting homes from coastal erosion. Cost shifting has been rampant since 2016. If the Central Coast Council has not been able to realise the promised economies of scale, the NSW Government must take the blame for their incompetence and political machinations and not foist their culpability upon Central Coast ratepayers.


Fast forward again to council’s bleeding Hart!


Rik Hart’s alleged ‘Have Your Say’ forum was no more than a feeble attempt to convince ratepayers that they should dig deeper into their pockets, otherwise choose what council services should be cut. It was tantamount to blackmailing ratepayers into accepting a 15 percent rate increase for an additional seven years or tough tidies to council providing basic services!


One disillusioned ratepayer said: Had my meeting with Rik today on his ‘increasing rates to maintain services’ series.”


“I found it a bit disappointing in that the session itself was one hour but Rik spent about 40 minutes on his presentation - the usual spin we’ve all heard before - that left hardly any time for discussion,” he said.


“The discussion was better - but too little time to cover what we needed,” he continued.


“I guess the purpose was not really to listen to ratepayers but rather to try to win us over to his Special Rate Variation (SRV) proposal.  He even tried to get you to say what services you’d cut if the SRV isn’t approved - needless to say improving productivity or efficiency wasn’t on the list.”


Another ratepayer lamented, “remember council said they were going to pay $200k to get a random group of people to consult.


“So, are we the group they are consulting with? The $200k group?


“Hardly,” they said.


“That’s Rik Hart’s handpicked Community Reference Group, (which we are not part of).”


No doubt Mr. Hart will employ a consultant to soften up his Community Reference Group, subjecting them to spin and then asking if they support the rate rise.  No democracy there, just the agenda of the Government inflicted upon unsuspecting ratepayers by a client dictator.


Rik Hart’s November meetings were not community reference group meetings.  Those meetings will be a separate parallel process that allows ‘council’s bleeding Hart’ to say that he invited comments from the wider community when submitting his SRV to IPART.


Previously elected Councillor Bill Symington said, “It was pretty much the priority of the meeting to get the community “onside” with the administrator’s plan to extend the IPART agreement to the 15% increase in rates, from 3 years to another 7 years, (total 10 years) in an attempt to gather enough funds to pay back the bank loan of the $100 Million.”


“He produced several slides over the two hour meeting and handed out a sheet titled: ‘Snapshot : Services Delivered’ that he asked the community members to fill out in relation to which services they would suggest that the Central Coast Council (CCC) stop providing, if he didn’t get the extension of the 15% rate rise,” Bill Symington said.


“He also stated that if the CCC wanted to make an application to IPART for the extension, the application would have to be ‘signed, sealed and delivered’ in early 2022.


“I noticed other people giving attention to the “list” and handing it to the secretary, but I elected not to fill out the form on the basis that I did not want to see CCC reduce any of the services on the list.


“This progressed to a round table discussion and I suggested that the administrator, that as an employee of the State Government, he  should hold the State accountable for the ‘shoddy mess’ they left the amalgamation of both Gosford and Wyong councils in.


“His answer to my suggestion was that the State Government would not pay.”


At the time of amalgamation, the Baird-Liberal-Government only provided $10 million allocation only to each council. Yet Hornsby Council, which fought amalgamation and won, received a $90 million grant – a grant that was only to be paid if you merged with another council. This begs the question, why did they receive it? Was it because Hornsby Council’s Mayor was Phillip Ruddock, an ex-Liberal minister?


Council’s Acting CEO Rob Noble, during the previous administration, went on record and said that “it would take at least $120 Million Dollars to satisfactorily achieve the amalgamation”.


The extra $100 million that the State Government should have paid but refused to do so would have negated the loan forced upon ratepayers by the government’s first client dictator, Dick Persson.


Central Coast resident and community activist Mike Campbell OAM said that Hart commented on the fact that before amalgamation Wyong Council was “poor” in relation to  its financial structure. Hart also said that Gosford Council was in a “bad state” financially with “Zero” financial reserves.


So, why didn’t the State Government apply due diligence in investigating the financial woes of both Wyong and Gosford Councils before any thought of amalgamation was considered? Why did the State Government claim they were fit for purpose (to amalgamate)? Mr. Campbell sought to get an answer clarifying this from Mr. Hart but to no avail.


“Hart’s emphasis in his meetings with interested parties last month was about how the ratepayers would continue to pay out in rate rises for a number of years,” said Mike Campbell.


“He showed things like the “Community Profile”; how Roads take up 22% of rate Council income; Administration takes up 22% of income as well,” he said.


“He then asked us to rate those services we would like to see cuts in, that could help balance the deficit. He kept emphasizing that there was a large backlog of infrastructure repair to be financed.


“He agreed with my assessment, however, that Gosford had been let to run down, refusing to raise rates in the community because it was a long time “swinging” seat for the Liberals.”


Mr. Campbell’s assessment that the “state Government (via being re-elected) allowed Gosford for all those years prior to amalgamation to be run down with “low rates” to favour their local Member (Terrigal)… then finally to get Gosford out of the mess, amalgamate with Wyong (without due diligence) and get the whole Central Coast to pay for their folly did not receive a rebuttal from Mr. Hart.


The merging of Wyong and Gosford councils has, without doubt, been a catastrophic mistake that was thrusted upon ratepayers to satisfy the political scheming of a Liberal government – colluding that may in time be exposed but not by the recently held manipulated inquiry. If the government had been forthright about the current inquiry into CCC, they would have held a judicial inquiry where they were unable to control the outcome.


And the questions that should have been answered by an inquiry but will still be left unanswered:


  • Was the spending of internally and externally restricted funds a catastrophic error or deliberate?


  • If the senior leadership team had asked Councillors to resolve that they could use internally restricted funds, would such an arrangement have been permitted? And why was this recommendation never put to Councillors?


  • If the senior leadership team had done their job and informed Councillors of the need to use externally restricted funds, permission could have been sought from the Minister and their use would have been legitimised. Such a move would have been cheaper than the commercial loans (and their caveats) that ratepayers are now stuck with for a decade.


  • If councillors had been made aware of the under-estimation, by almost $130 million of sewer and water funds, they would not have accepted the budgets and spending programs proposed by staff. Why was this hidden from them?


  • Was this under-statement of water and sewer deliberate and agreed to by Council’s auditors? Did the Office of Local Government know about this?


Yet while the community is left high and dry for answers, Council Administrator Rik Hart beats even louder on the drum calling on ratepayers to foot the Bill. At last night's Extraordinary Council Meeting (20 December) Rik Hart's one-man band voted unanimously to take the next step forward towards a 'Special Rate Variation'.


Council’s draft Revised Community Strategic Plan, Draft Delivery Program and Operational Plan, Draft Fees and Charges, Draft Long Term Financial Plan, Draft Workforce Management Strategy, and Draft Revised Asset Management Strategy will be on public exhibition and available for community submissions until Friday 21 January 2022, following adoption at today’s Extraordinary Council Meeting.


This is a step required by the Independent Pricing and Regulatory Tribunal (IPART) should Council make a submission to IPART for a Special Variation. The documents reflect Council’s situation, identify the need to apply for a Special Variation and outline scenarios that are available.


Administrator Rik Hart said Council has considered five scenarios and included three scenarios in the Long Term Financial Plan for the community to review and comment on the implications outlined for each scenario.


“I encourage ratepayers and residents to review the materials and consider what is required for their Council’s long-term path to financial sustainability,” Mr Hart said.


Council will consider community submissions from the public exhibition of the plans in a Council Meeting on 3 February next year before adopting these plans and programs. Council will also formally decide at that meeting if it will make a submission to the Independent Pricing and Regulatory Tribunal (IPART) for the current 15% Special Variation (including rate peg) to be maintained in the rate base for an additional seven years, or ten years in total.




So, while Central Coast ratepayers still grapple with enormity of Central Coast Council’s financial crisis, they are treated like Medieval serfs and left to suffer financial hardship and fake consultation at the hands of the Government-appointed client dictator – who expects them to bail out council’s financial mess.

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