Actions of first Administrator should be examined - CEN
The Community Environment Network has written to Minister for Local Government Ms Shelley Hancock asking for the terms of reference of the Central Coast Council inquiry to be extended to cover the period of the first Administrator in 2016.
"A change to accounting practices adopted by the first Council Administrator in 2016 was disastrous for the new council and must be examined as part of the Public Inquiry," said Network chair Mr Gary Chestnut.
"The current terms of reference exclude anything that took place before September 2017.
"Prior to the September 2017 council election, Administrator Mr Ian Reynolds and CEO Mr Gary Noble approved the accounting change that meant restricted water funds were reported as unrestricted and available to spend within the Council's consolidated general fund.
"In other words, it looked like the Council had hundreds of millions of dollars more cash to spend on capital works projects than it really did," he said.
"This policy was adopted by the Central Coast Council and its executive leadership team and has never been rescinded.
"It has been undetected and unchanged by a number of chief executive officers, acting chief executive officers and chief financial officers and was never explained to the elected councillors.
"Council's internal auditor, its audit risk and improvement committee, the NSW Audit Office and consultant auditors all subsequently failed to question the practice which significantly eroded Council's restricted funds and contributed to a cash crisis in 2020.
"The NSW Crown Solicitor has recently provided advice to the NSW Auditor General which further complicates this issue by finding that the spending of those funds was legitimate.
"This advice by the NSW Crown Solicitor may change the financial position of Council considerably.
"The Public Inquiry must be able to examine whether the additional $150 million borrowed since the councillors were suspended was necessary and whether it was reasonable or just to blame the councillors for the organisation's financial weaknesses given the Crown Solicitor's advice has legitimised the spending of restricted funds.
"The ongoing mis-reporting of restricted reserves cannot be overlooked as one of the core reasons for the Central Coast Council's financial failure.
"It must be examined by the inquiry."
Media release, 9 Jul 2021
Gary Chestnut, CEN