Nothing more

than a cultivated mushroom

Since Central Coast Council went into administration in 2020, ratepayers have been kept constantly in the dark, treated like mushrooms and cultivated with nothing but selective manure, while fire sales of community assets fall beneath the auctioneer’s hammer – short term gain while developers make it big.

21 February 2024

ALAN HAYES

 

THE loss of local democracy on the Central Coast in 2020, when the Berejiklian Government sacked the elected Council, is something that has continually weighed heavily on the minds of the majority of citizens. Coasties suffered a dictatorial blow that has lingered, like a spectre of penury, as they have been financially bleed, while those who wield the ‘hammer’ pat themselves on the back and take a pay rise.

 

Council Administrator, Rik Hart, adopted an Administrator’s Minute on 12 December 2023 extending the Council CEO David Farmer’s contract for a further five years until April 2029. But Hart’s minute didn’t stop there – as a reward for being a good soldier, Farmer  was given a four-percent pay increase. More than a hint of nepotism and an extra dip into the public purse, while ratepayer’s will be left wondering why it is that they are expected to ‘carry the can’.

 

A dictatorial regime isn’t really concerned with the mere people, an attitude that was made abundantly clear when Dick Persson, the first Council Administrator was appointed. Persson’s attitude was that all ratepayers were shareholders in the council, and, therefore, by default had to pay to solve council’s financial woes. Yet strangely enough ratepayers have never received a dividend when the ‘books were in the black’ or more important, as any other shareholder in a public corporation, have a say in its administration and where the money was to be spent.

 

While Farmer enjoys the non-democratic salary increase given to him by the ‘one-man-ruler’ of the Central Coast, ratepayers can endure the 15 percent rate rise burden imposed upon them. A burden, which ratepayers consider to lack any impartial process, whatsoever - an impost by the Independent Pricing and Regulatory Tribunal (IPART).

 

For those individuals who have forgotten, Hart went to IPART because he said that Council needed to borrow $150 million to solve its financial dilemma – IPART agreed to increase the rates for three years only. Hart then resubmitted Council’s application and insisted they needed to 'wring' the extra money out of ratepayers for ten years – IPART agreed. But that wasn’t the end of it – once again Hart went to IPART, now insisting that the 15 percent rate increase be permanently embedded into property owner’s rates.

 

Winding back the clock

 

The problem for Central Coast Council began with a serious cash flow issue, caused by two successive substantial deficits; one around $90 million and one around $70 million, which led to a significant shortage of cash.

 

Around the same time, Council began the process to expand its capital programme, which further escalated the financial situation, instead of reducing their capital programme until they got their operating position back into balance.

 

What Council’s executive have difficult in admitting, it was not the elected councillors that were dipping into the restricted funds but certain staff members – yet those individuals were not punished; many of the boys and girls in the band are still employed in the same position as previously and 'carrying on regardless' playing the 'same old, ever familiar tune'.

 

At the time the missing money was discovered, and elected councillors were sacked, Central Coast Council’s financial debacle was touted to be largest financial loss in local government history - over half a billion dollars. A figure that was manipulated to tap ratepayers of their hard-earned income.

 

The deficit over and above the alleged $160 million was generated by the writing down of assets belonging to the Central Coast’s Water Authority. A paper debt that is common in business, when capital assets are written down to gain a tax advantage and minimise tax. And of the alleged debt of $160 million from dipping into restricted funds? The Berijiklian Government allowed Council to reclassify the funds of some of the debt and write it off, because they argued it was spent on programmes – not something either administrator would like ratepayers to know about, while Hart tightened the ‘thumb-screws’ for the massive rate hike.

 

So, why did Hart need to borrow $150 million from a commercial lender on undisclosed terms and conditions? – isn’t that something the shareholders (ratepayers) of council were entitled to know, especially since ratepayers are ultimately responsible for the discharge of the loan.

 

And what about Lake Macquarie-based property developer Winarch Capital, who grossed more than $120 million in profits after on-selling industrial land they purchased from Council?

 

The land was purchased from Council for $27 million in July 2021 – land which council had paid $19 million for. It was sold to Winarch Capital with a nineteen-week settlement period, who sold 25 industrial lots within 21 days, during the Council's land asset "fire sale". No due diligence there by council as to the real value of community property!

 

When ABC Central Coast ABC asked Council if it was a good deal, it responded with this statement, "The independent property valuation for this unserviced, undeveloped land was $19,500,000, and therefore the sale represents $7,531,774.5, or 38.6% above the market valuation. Recent reporting of the sale price of individual lots sold by the developer is for developed and serviced land, noting costs and risks to deliver the subdivision and service connection to those purchasers are for the developer."

 

The later part of that statement is untrue – it was a financial windfall for Winarch because it was sold without having to turn a sod!

 

Council’s claim that it was unable to optimise the value of the site due to its current financial crisis just doesn’t hang together. The Grapevine, when reporting the story in 2021, spoke with a number of commercial property real estate agents who said that council failed in its due diligence when determining the true value of the property.

 

It’s obscene that Administrator Hart allowed the Warnervale land sale to proceed on this basis at ratepayers expense – ratepayers didn’t want excuses on a sale that could have gone a long way to reducing any restrictive funds debt or negating the need for a commercial loan that they are now paying for.

 

At the time, a Central Coast resident said,” so, Rik the dictator has made decisions without the ratepayers consent and sold off prime land for a pittance. No doubt all the other land sold was sold well under real world value and we thought the previous Councillors had a lot to answer for”.

 

Another Coastie also said at the time, “You would think that our Representatives would understand and worked out by now that Australian Government's Debts, currently ALL Levels of Government are in Debt to Record Levels (N$W $70 Billion ), Federal Government ($1.2 Trillion ) and even our Own Council are NOT being helped by the passing of Public assets at ‘generous discounts’ to private hands is helping us.....!!! We need a new style of Government in Australia - a reboot!!! If our Administrator thinks he's helping us, please don't let him "help" us anymore!

 

The future

 

So, why the boys and girls in the Council band still play that same old song, the Administrator hums along, oblivious to the plight of ratepayers and, instead, panders to the machinations of those who really call the tune. And how many more council upper management pay rises can ratepayers expect to fund before we have a democratically elected council?