Catastrophic $565m budget blowout under former regime
The losses keep adding up and the financial news worsens as Central Coast Council administrator Dick Persson reveals how $200 million of restricted reserves were used unlawfully.
Last month in his 30-day interim report at an extraordinary meeting of the council, Mr Persson stressed the investigation found no evidence of theft or corruption.
However, Mr Persson said "the previous CFO, Craig Norman and CEO, Gary Murphy were aware of this unlawful use of funds" before councillors received the information.
Mr Murphy was Lismore City Council's general manager for seven years.
"While the exact time they became aware remains hard to ascertain, emails and notes indicate they continued to spend funds unlawfully after they became aware and before they advised the elected body," he said in the report.
Mr Persson said this report provides the community with a picture into the history of how poor financial decisions and catastrophic budget mismanagement has led Australia's sixth largest council to the situation they find themselves in today.
"The financial crisis confronting the Central Coast Council is very serious," Mr Persson said.
"Council's operating loss for the current financial year is on track to be in the order of $115 million.
"This follows last year's loss of $89 million."
Mr Persson said since the council amalgamation, accumulated losses have reached $232 million.
He said debt has risen from $317 million to an estimated $565 million, while staff numbers have increased by 242.
And worryingly, he found restricted reserves of around $200 million have been used unlawfully to fund council opportunities and capital works.
"It will take urgent and strong action to turn things around," Mr Persson said.
"Tough decisions need to be made immediately".
Mr Persson outlined a series of measures to achieve the necessary turnaround:
• Significant asset sales of a least $40 million over each of the next two years;
• Further borrowings;
• A substantial rate increase;
• An increase in some council charges;
• A major reduction in the council's senior and middle management numbers;
• A reduction in staff numbers to return to the level at the time of amalgamation.
"The council's rapid financial decline is due to several matters, with most of them not directly related to the amalgamation." he said.
Mr Persson was damning in his summation of Mr Murphy's performance.
Mr Murphy was stood down last October.
"Managing the council's financial position is the number one job of the CEO and CFO," he said.
"It is clear the CEO was either unaware of the looming crisis, or simply failed to adequately respond. Either way the performance of the CEO was unsatisfactory.
"Council, in their role as the governing body, also shares that financial responsibility.
"They also failed in this regard.
"Central Coast residents have been badly let down by their council and widespread anger over the council's performance is totally understandable.
"On behalf of the council, I acknowledge the hardship these actions will cause and sincerely apologise for the real impact this financial mismanagement will have on all residents and ratepayers."
Central Coast Council and the NSW Minister Local Government Hon. Shelley Hancock MP, have been contacted for comment.