Port Stephens Council Financial Matters

As early as 2009 TRRA raised the alarm bells in relation to the state of Council’s finances. The then Chairman predicted that significant rate rises were in the pipeline only to be dubbed “an alarmist” and irresponsible by elected Councillors.

This response prompted TRRA’s Management Committee to undertake an intensive review of all publicly available financial reports.  We discovered disturbing shortcomings in Council’s financial management, a more than doubling of Council debt, substantial increases in staff and salaries, wasteful expenditure and strong warnings from the auditor in relation to the overall financial position. Further we became aware of a number of major legal proceedings that had not been provided for in the Council budgets should Council lose the Cases. At that stage we also became aware of the recurring losses on Samurai and the Caravan Parks. in 2008/09

In March 2010, Council’s senior executive agreed to meet with representatives of TRRA to discuss the situation. Assurances were given that there was no need for the concerns we had raised although limited additional information was laid on the table.

TRRA’s fears were confirmed later in 2010

  • By the inclusion of a strategy in that year’s Integrated Planning Strategy stating: “Implement appropriate rating mechanisms to optimize rate revenue above the rate peg limit.” The Council was laying the foundation for its answer to rapidly deteriorating budget shortfalls – a hefty increase in rates.  Other options raised by TRRA in its discussions such as elimination of failing business ventures, reviews of efficiency and identification of programmes which might be curtailed or abandoned were not included as part of this major strategy document. Council was given a multi page list of financial questions which to date have never been answered.
  • By an announcement that Council would seek an 8.65% increase in rates on top of the pegged increase set by the Government
  • By the 20009/2010 Annual Report Statement  which showed a $5 million operational deficit even after including a profit from Newcastle airport which is non cash and not available to Council for another 37 years

A concerted TRRA campaign through the press and representations to the Minister for Local Government resulted in the State refusing the 8.6% rate increase.

During 2011, Council’s executive ultimately admitted that there were concerns in relation to the state of its finances and that another operational deficit (again believed to be $5 million plus) could be expected.

Council’s Long Term Financial Plan exhibited in May 2011 contained the following public confirmation of our concerns: “Council is recording, and has over the past several years, an underlying operational deficit. (Page 9) The sustainability gap (backlog) in meeting asset renewal requirements is $26.5 million…..and the annual maintenance gap is $7.9 million.”  

In the course of the year some corrective measures have been announced such as a “sustainability review” looking at efficiency and the need for services, a decision to dispose of Samurai Resort recently retracted to a lease out arrangement, an instruction to find $750,000 savings from Council’s head office operations  and a  consideration by the Board of Newcastle Airport Corporation of a revision of its base agreement which could allow for the sale of assets and distribution of funds to shareholders. 

TRRA has also criticized the structure of the Annual Financial Statement from which it is impossible to monitor several vital indicators such as the holding of Non – Discretionary Reserves and the performance of business units such as the caravan parks.  This lack of transparency has been recently raised by a Councillor.

 Meanwhile council has been resorting to increased debt financing and has elected to hand out $1.6 million via Ward Fund Allocations for Councillors pet projects. 

 For the latest up-date on the situation, TRRA anxiously awaits the Annual Report Financial Statement for 2010/2011 and theReport of the Department of Local Government Review of PSC Administration. 

The 2011 ANNUAL Report is now avallable now : HERE

The 2011 DLG REVIEW is now avallable now : HERE

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One Response to Port Stephens Council Financial Matters

  1. Neil Hansford says:

    David Broyd has moved on. Interesting that the person acting in this capacity is the same Rob Noble, ex Newcastle City Council that was employed by the General Manager to conduct his performance review!
    Really!
    As they say only in Port Stephens

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