What Is The True State Of The Books At PSC? Part One

Financial-Statements Part One of a series of articles:

Tim Hazel, Financial Section Manager, recommended to a Council meeting on 08 April 2014 that: “Council resolve to no longer include business units as part of Councils Annual Financial Statements.” This resolution was moved and seconded by East Ward Councillors John Nell and John Morello. The motion was then adopted,  moved and seconded by The Mayor Bruce Mackenzie and seconded by John Morello. This action is of great concern to TRRA Inc. This just means less transparency and accountability by this Council to its ratepayers

TRRA Inc. – What we do and Why

Financial%20Management%20and%20PlanningTRRA Inc. membership consists of ratepayers on the Tomaree Peninsula who really care about protecting their lifestyle and environment. That is why they join and come to meetings. They in turn have elected a Committee of activists who were experts in their field, to ensure that their voices are heard by the elected Council Representatives and Council Staff who control that environment.  Everyone gets a chance to elect the Councillors and the Mayor once every four years, but some obviously do not care enough to inform themselves sufficiently before election day, and don’t worry about it afterwards until the next one. Probably none of them would bother to join TRRA.

Politics and vested interests, as we have clearly seen in the last Council election, often distort the process and we have to wear the result for another four years.  Many of our Councillors do not think that they need to be accountable to the electorate until the next election.  Some I have to spoken to say “I have been elected by the people, so I will do whatever I think is right for the rest of my term, that is what I was elected to do.”  They even go out of their way to make sure we don’t even find out what they did, by invoking “commercial in confidence etc.”  Others actually consult with groups like ours and talk directly to their constituents to find out what they want of if they have changed their views!

On our Committee we have had many people from diverse backgrounds,  Some have retired, some are still working.  It is a moving feast because people travel or move and are not always available, some people are more passionate about certain things than others. In the last few years we have had input from Business Consultants, Managers, Lawyers, Accountants, Union Officials and people with PHDs in Environmental Planning, Privacy Commissioners, retired Teachers and Public Servants with expertise in preparing and making complex submissions to Council and various Government Departments.

We have had a small team of qualified people analyse the PSC Financial Statements for 2013-14 as we do each year, and we have some serious concerns, but we are not prepared to release the result at this time. When you read the rest of this story you will understand why.

This Council has form……

Businessman and ComputerIn 2010 we had a major disagreement with Council Management about a proposed rate rise, and the way that they were administering their Council owned Holiday Parks. They were also operating some Parks on Crown Land and questionable Council run businesses associated with this activity.  Enquiries from TRRA and articles in the Newcastle Herald lead to the Crown commissioning Delloittes to audit their books .  There was an adverse finding, and although the Crown had no objection, TRRA Inc. then had a two and a half year battle with Council management through the GIPPA freedom of information process, involving the Office of The Information Commissioner and the Minister for Local Government to get access to the audit. By the time we did it was ancient history and Council had complied with the schedule forced on them by the Crown to disentangle the Council Funds from the Crown funds (everything was in one bucket and even the auditors had to guess who was entitled to what). Council were told in no uncertain terms that there must be transparency and accountability in future in the way that these business units were operated. The Deloitte Report cost $75,000.00 (it has 75 pages = $1,000.00 a page!) and our copy is a scanned one, so it is too big to post here. Suffice to say: the Trust Fund was frozen, and Council was given 2 years to sort it all out.

120312 Crown Respose To Deloitte Report

120517 Letter to OIC re Review

121127 IPC Report On GIPPA Request

Council lost every argument on this including the rate rise (disallowed by the Minister because they had lost more in one year  on one failed business venture than the rate rise would have raised, and done nothing to address that problem) They constantly obfuscated and appealed every decision until there was no where left to hide.  This is when the dreadful loss of 17 Million Dollars (and counting) at Samurai Holiday Resort became apparent, and they were exposed for very dodgy accounting in their business units. We think each Business Unit should be accountable separately, we have a right to know to know what is performing and what is not performing, and the reasons why, after all it is our money! It appears that the Holiday Parks lost about $856K in 2013. We don’t know what happened in 2014. We have serious misgivings about what is going on at Soldiers Point and what we still call Samurai.

Here We Go Again…………….!

iStock_000003584033Large_7Imagine our surprise when we discovered (belatedly, we can’t stay on top of everything that they do!) that Tim Hazel, Financial Section Manager, recommended to a meeting on 08 April 2014 that: “Council resolve to no longer include business units as part of Councils annual financial statements.” This resolution was moved and seconded by East Ward Councillors John Nell and John Morello. The motion was then moved and seconded by The Mayor Bruce Mackenzie and seconded by John Morello. The convoluted argument put in the report in support this resolution is contained in the Council Papers HEREIt tries to avoid any future accountability by saying that a requirement for  a “competitive Neutrality policy” in 1993 no longer applies and a gives a totally confusing definition of when a business is not a business, neither of which address transparent business practice and accountability to stakeholders (Us!) which is actually the point of producing a financial statement.

This is the bit that really blew us away given Councils recent history:

“The current process of reporting on the existing four (4) business units being Property Development, Holiday Parks, Civil Works and the Newcastle Airport is manual by nature, time consuming to prepare, confusing to the users of the financial statements, and when assessed on the whole adds no benefit to the users of Council’s financial statements.”

“By eliminating the Special Purpose Financial Statements for business units this will have a reduction in the time taken to complete the financial statements, a reduction in the time taken to audit the financial statements, and remove an area of great complexity from the interpretation of the result of the business units.”

“They are pretty dumb, what they don’t know, won’t hurt ’em!!!”

It is not just us you know, most of the Councillors don’t know what is going on either! The information is just not there in the books, but they signed off on it anyway………..

The key to all in this document is the Risk Assessment:

“There is a risk that the new auditors may disagree with the proposed treatment” – not likely, that was probably why they got rid of the last lot!

“There is a risk that members of the public may comment unfavourably regarding the removal of the business units” Well they sure as hell got that right!

These are our “unfavourable Comments”

141124 Comments to Councillors Nov 25 Meeting Agenda item 5

 141202 Submission to PSC Financial Statements 2013-2014

 141121 Letter to Minister re PSC Financial Statements 2013-2014

 141121 Letter to Shadow Minister LG PSC Financial Statements 2013-2014

141211 Letter To Ombudsman PSC Financial statements 2013-2014

141121 letter to Examiner – PSC Not Reporting Business Units

Council Adopted the 2013 -2014 Audit Committee Report on 09 December 2014, with this:

141208 Mayoral Minute – Annual Financial Reports

‘”The TRRA contends that information contained within these reports was useful and served a specific purpose, particularly in relation to the Holiday Parks. It is suggested that contact will be made with the TRRA to provide a high level of financial analysis to assist them in their enquiries. The submission has been forwarded to Council’s external auditor as required by legislation.”

We are waiting, pencils sharpened, calculators and spread sheets at the ready…………..Stay tuned!

financialStatement1

 

Financial-StatementsIn Part Two of this series:

We report on the reaction of the Government and the Council to our submissions:

This entry was posted in 2014, Council Compliance, Council Decisions, Council Financial, Council Responses, Council Submissions, PORT STEPHENS COUNCIL, State Gov Submissions, State Gov. Responses, What The Papers Said! and tagged , , , , , . Bookmark the permalink.

One Response to What Is The True State Of The Books At PSC? Part One

  1. Beejeepers says:

    What a classic case!
    Transparency is ONLY A PROBLEM when there are THINGS TO HIDE!

    Simple

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