Council Finances – Still a Mess!

Last month we wondered if MidCoast Council had made “ . . . The Dumbest Deal EVER?”

We revealed some of the key financial provisions relating to the project entitled ‘The Forster Civic Precinct’, which is not really a ‘Civic Precinct’  but a library within a high rise commercial property development, which will accommodate a small service centre (as token compensation for the people of Forster / Tuncurry for the centralisation to the Masters Warehouse) and a tourist information counter.

Each year our Councillors are required by law (a very significant and serious responsibility) to approve the Mayor and one other Councillor to sign off on Council’s Financial Statements before they are submitted for Audit by the Auditor General.

The official ‘sign off’ document / statement includes the wording:

“To the best of our knowledge and belief, these statements:

· present fairly the Council’s operating result and financial position for the year

· accord with Council’s accounting and other records

We are not aware of any matter that would render these statements false or misleading in any way.”

So at the MidCoast Council Meeting of 25 September, there was a Report submitted by the Finance Manager, Mr Phil Brennan (authorised by the Director of Corporate Services, Steve Embry) entitled  ‘Agenda Item 22 2018 -2019 Financial Statements for MidCoast Council’ followed with the recommendation:

“That Council resolve to issue the statutory statements in relation to the 2018-2019 Annual Financial Reports for MidCoast Council.”

The Council report also stated:

“At the time of preparing this report, the Annual Financial Reports were still being completed. They will be circulated to the Auditors, Councillors and the Audit, Risk & Improvement Committee (ARIC) as soon as they are available.”

We are told  statements were not circulated to Councillors prior to the Meeting of 25 September, they were not included in the Meeting Agenda and to this day do not appear on Council’s website for that meeting.

The 25 September meeting was also where Council ‘re-voted’ (transferred to the next financial year, 2019/20) $46.376 million dollar’s worth of projects which had not been completed (or perhaps not even started) by the end of the financial year ending 30 June 2019.

At the October 23 Council Meeting, conveniently held in Gloucester, the 2018 -2019 Financial Statements, which weren’t even recorded as ‘Drafts’ were actually presented to Councillors for sign-off.

Councillors had very little time to properly digest the 100 odd pages of figures and they were told that the Auditors had arrived and had commenced the Audit (before Council had signed-off?)

These Financial Statements were incomplete, with a number of sections missing columns of figures, and in some cases the figures appeared to be a carbon copy of last year’s results.

As an example on Page 26 of the Financial Statements (Note 6c) which is titled ‘Restricted cash, cash equivalents and investments’ there were no figures listed under Internal Restrictions for the 2019 year. Yet in the 2018 year, there over a dozen figures listed, totalling $75,845 million?

As a further example, on Page 19 (Note 3) under the heading of ‘Income from continuing operations ‘e’ Grants Specific Purpose’  there is no grant income listed for the ‘Civic Precinct’   for 2018 and 2019. So why has our Federal Member, Dr David Gillespie been invited to pose for photo ops on the building site?

Does this mean Council has not received any Commonwealth funding for the Civic Precinct for those two years and all the work has been paid for by we the ratepayers?

Critically, we are told that the Council staff did not provide an updated ‘Long Term Financial Plan (LTFP)’  which is a key component that all Councils are required by law, to maintain as part of their ‘Resourcing Strategy’ under what is called the ‘Integrated Planning and Reporting Framework’ .

This LTFP is the measure by which we can judge Council’s performance, and assess Council’s financial future, particularly in the context  of highly speculative projects, like the  move to Masters. (Which Council refers to as the Office Centralisation to the Masters Warehouse in Biripi Way, Taree.)

According to our financial guru, the Office of Local Government says:

‘The Long-Term Financial Plan must project financial forecasts for the council for at least ten years, and be updated annually as part of the development of the Operational Plan. The Long-Term Financial Plan must be used by the council to inform its decision-making during the finalisation of the Community Strategic Plan and the development of the Delivery Program.’

We have not seen an updated Long Term Financial Plan from MidCoast Council for over 12 months.

The Council’s Financial Results (before Audit):

Council operates its finances through three funds: “The General Fund, The Water Fund and the Sewer Fund”.

The General Fund which is essentially all of Council’s activities (except for Water and Sewer) had a Loss of $6.642 million.

The Water Fund had a surplus of $1.142 Million and the Sewer Fund had a surplus of 6.031 million.

(This newspaper has received many complaints re sewer and water charges by Council. This editor pays for a septic company to do a regular three monthly clean and check of her septic system. On every rates bill for the past twelve years there is an $80 charge for sewerage. For what? We have never seen anyone from Council. 

So now we know why we are paying such exorbitant Water and Sewer Fees.)

Of particular note was on Page 22 of the Financial Statements (Note 4) ‘Expenses from continuing operations’ Section (c) ‘Materials and contracts’  where Consultancy costs have increased from $1.85 Million to $4.22 Million (a 130% increase?) and  Council’s Staff numbers have also significantly increased by 50 persons. So who’s doing what?

So much for all those promised savings from amalgamation.

Don’t forget these issues come on the back of last year’s financial reporting woes where the Budget had a $13 million dollar blunder and later in the year, rather embarrassingly the Financial Statements had to be re-signed a second time due to errors.

Council was amalgamated in May 2015, four and half years is more than a reasonable time to get the accounts in order and stop trotting out same old lame excuses. 

One has to wonder what Council’s so called ‘watchdog’ the Audit, Risk and Improvement Committee are doing?

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