Dear Mr Beagle, I have finally received a response from councils General Manager (thanks no doubt to Clr McGinlay’s support)
In answer to my letter asking why council publicly claimed to need three rate rises, by saying they did not have the money to fund a new wish list of projects (totalling around $17 million) When council actually had $29.2 million in spare cash in (unrestricted fund) accounts?
Well firstly the GM’s response confirms this basic fact. Yes council did have $29 227 000 in ‘unrestricted funds’ back then (not apparently the $11 million they told ratepayers at the time?)
Here is the GM’s latest explanation (as published below …) which may be easier to understand if I do a summery showing earlier council claims first.
It started with two public meetings in Narooma and Moruya. Where councils Book-keeper (in Narooma) and GM (in Moruya) both stated that council needed an extra $17 million for a new wish list of public works, which they claimed council did not have.
In answer to public questions of how much they did have all up, and how much of that was in the form of ‘unrestricted funds’ (i.e cash that could be spent) The community were told there was around $70 million in various accounts, of which $11 million was in ’unrestricted funds’.
However a quick check (after the Moruya meeting) of councils previously audited figures online showed there was far more than $11 million claimed, so after checking with Narooma residents that the same figure had been given there, I emailed all councillors and asked why ratepayers were being given an incorrect balance figure?
There was no answer, but councils book-keeper immediately put an article in the newspapers, now stating the figure was $26 million!
Then at the third public meeting in Batemans Bay I again asked why ratepayers were told $11 million at the first two public meetings? The former Mayor Brown (presiding with the GM and Book-keeper next to him) answered by simply saying “It did not happen”! and when I tried to question what he meant by that? he just kept repeating that “It did not happen"
So I put in a code of conduct complaint against the Mayor, GM and Book-keeper (and other Senior management present who did not correct them)
In the code of conduct I not only included witnesses from the community that were present, but also a written summery clarifying what was said by the then Bay Post Editor (who was sitting next to me in the Moruya meeting)
I also requested that a different investigator/ mediator be used, as previous code of conduct complaints appeared to be entirely one sided for staff?
My request for a new mediator was refused. Then all the witnesses were apparently ignored in the finding? However management did now admit that ‘It DID happen’ i.e. They now admitted that the $11 million figure was given by the book-keeper and GM for both public meetings, and the excuse for this was that they had stated that this was not the real ‘unrestricted funds’ balance, but just what they personally thought should be considered unrestricted, and available for discretionary spending, and that this was explained at the two meetings (contrary to what all the witnesses claimed?)
e.g. The book-keeper states in the code of conduct report that in his opinion only “$11M (of the now claimed $26 million should be considered) available for discretionary spend” and that “I used my discretion and used $11M in open forum as it was consistent with my earlier conservative discussions with the General Manager who also used $11M. I did not overly emphasise the detailed calculations I have noted above”
Yet the Newspaper editor correctly recorded that the GM argued that this $11 million should NOT be considered available for ‘discretionary spending’ in the Moruya public meeting? hmmm? All witnesses are also adamant that no qualification of this figure was given, and that it was given in answer to the question of how much does council hold in ‘unrestricted funds’?
The code of conduct investigator states in the finding…
“The allegations by Mr Rogers that he and other members of the community were misled by the 6 Respondents in relation to the amount of working capital required to be held by Council for day-to-day operating expenses in order to support a proposed rate increase is not substantiated by the evidence gathered throughout the preliminary assessment process.
· The available evidence shows that at the November community workshops Mr O’Reilly and Dr Dale provided a detailed explanation of the working capital figure was calculated, together with the reasoning behind why it was considered prudent for Council to keep additional funds in reserve (ie. in addition to those funds shown on the balance sheets). I do not consider that the explanation given was misleading, and rather, it would appear that Mr Rogers has misinterpreted or misunderstood the information provided to him.”
However, according to the witnesses I listed, none had been contacted by the supposed ‘investigator/ mediator’? So all public witnesses and even the newspaper editors written record was apparently rejected out of hand? and apparently not considered to be evidence?
So what was this “available evidence” which this mediator claimed clears the GM, book-keeper and others? She does not say? Nor does she name any witnesses to counter the ones I gave?
The finding also states that I was not allowed to contest the findings, and that the findings were secret and were not allowed to be revealed publicly. However I already knew that this secrecy only applies to councillors and staff, not to me.
Since then (after the code of conduct) we now have the real audited figures for what council actually had at the time of the proposed rate rises. So I asked a different question of the GM (and councillors)
Asking… “ Dear GM, why did you tell the community that council did not have the $17 million they claimed they needed (for these extra works) when council had $29, 227 000 dollars in unrestricted funds in the bank at the time of the proposed rate rise?
More than enough for not only the $17 million you claimed was needed, and the $11 million that you and Book-keeper felt was necessary to keep in reserve?
So how was this not ’fraud’ on the whole community?
... and do councillors not believe that the community deserves even honesty from the General Manager? who they pay over $280 000+ per year?”
In the GM’s answer she now admits that council had a total of $84.239 million invested at the time (not the approximate $70 million ratepayers were told at the public meetings) and that they actually held $29.227 million in ‘unrestricted funds’ Not $26 million, or the earlier $11 million.
The GM does not talk about the $17 million dollar figure, which was also given by council (to the community and I-PART) as the amount they needed (but did not have) for extra infrastructure projects to justify the rate rises. However this figure was given at all three public meetings (in Narooma, and in Moruya and in Batemans Bay)
Council have since tried to increase this figure, but this is the correct figure which appears in the official I-PART approval for the three rate rises. (see I-PART approval extract attached)
The GM’s latest answer now says that ALL of the actual $29.2 million ’unrestricted funds’ should actually be considered as ’restricted’? because of ratio’s of debt to liquidity etc.
Unfortunately this new answer appears to be at odds with what she and councils book keeper claimed to have said in the earlier public meetings? as stated in the code of conduct finding?
i.e. Why did the GM and book-keeper CLAIM to have said that only $11 million of the full amount should be considered available for "discretionary spend" if they now claim that none should be?? The GM again appears to have spun herself off the road with this latest excuse?
The GM’s answer finishes by inviting me to report all this to the ICAC or the Office of Local Government (her Briar patch?) if I am not satisfied with her answer. However, having never seen a government investigate council bureaucrats and actually prosecute (or investigate anything?) I would suggest councillors may be far more successful with a simple independent audit (using an ‘independent auditor’) as suggested by retired Sydney Councillor Mr Peter Bernard. This is how Gosford council was found to have $1.4 Billion dollars in missing assets! (yes that Billion with a ‘B’) Damien Rogers Moruya The letter below has just been been received by Damien Rogers from the General Manager of Eurobodalla Council dated 22 June 2017 . Dear Mr Rogers I refer to your email dated 7 June 2017 addressed to the Mayor regarding the financial management of cash reserves in relation to the Special Rate Variation (SRV) in 2015. I provide the following information to clarify your questions. You have referred to the projects that were funded through the SRV as “a wish list of infrastructure works they had cobbled together”. By way of background the list of community infrastructure projects, undertaken as a result of the SRV, focussed on transport, recreation, marine and building infrastructure. The works included new and renewal capital works designed to deliver broad economic and social benefits to the community by improving social, cultural, health and accessibility outcomes. Council undertook extensive consultation with the community regarding the package of works to be undertaken through the SRV. The list of works was first developed as a result of the community consultation undertaken during the preparation of the Community Strategic Plan 2030. Council considered this issue on 22 July 2014, 23 September 2014, 9 December 2014, 10 February 2015 and 26 May 2015. At its meeting on 10 February 2015, Council approved a rate variation of 6.5% per annum (including rate peg amount) for a period over three years, commencing in 2015-16. This would enable Council to deliver a $20.7 million community infrastructure program. The reduction in the rate variation initially sought (from 8% per annum to 6.5% per annum) was in response to community feedback, independent research undertaken and addition cost efficiencies. You have made a number of statements regarding the management of cash reserves and the SRV. In relation to your comments regarding Council’s financial position, I provide the following information based on the figures as of 30 June 2015 that you have referred to. There are three factors that must be taken into consideration in managing cash. Firstly, we need to establish the cash balance at the point in time. At 30 June 2015, Council had $84.2 million of cash, cash equivalents and investments. Council’s financial statements for year ended 30 June 2015, note 6a,b and c report on Council’s cash assets, cash equivalents, investments and their restrictions. As at 30 June 2015, Council had the following in cash, cash equivalents and investments:
The first issue in managing cash reserves is to determine what is cash restricted and what is unrestricted. Council’s cash, cash equivalents and investments can be subject to rules and restrictions. These restrictions can be classified as x External which means rules on what the cash can be used for. These rules have been imposed on Council by legislation for specific purposes by an outside source such as NSW Government; x Internal which means rules have been imposed on the use, via a council resolution; or x Unrestricted which means no rules apply to what this money can be used on. The breakdown of this as at 30 June 2015 was:
As this table shows $55.013 million was held for restricted purposes so its use and where it can be used is prescribed. Unrestricted cash funds at year end 30 June 2015 was $29.227 million. The second issue in managing cash reserves is being able to pay short term obligations and liabilities. This includes aspects such as loan repayments, creditors and staff wages. In assessing Council’s financial reserves, Council ensures it manages its money effectively, including what it has in the bank as well as the funds collected in the short term to meet anticipated obligations. This is referred to as Council’s liquidity. Council’s liquidity position is measured by the current unrestricted ratio. Council’s unrestricted current ratio, as at 30 June 2015 was $3.09:1. This means that Council has $3.09 of current assets for every $1.00 of current liabilities. The benchmark as determined by the Office of Local Government, is at least $1.50 of current assets for every $1.00 of current liabilities. Council aims to keep between $2.00 to $3.00 for every $1.00 of current liabilities. This result indicates that Council has sufficient ability to satisfy its short term financial obligations. Taking this into consideration, it is estimated that as of 30 June 2015, there was approximately $11 million truly available to respond to any unexpected expenditure. Council has a carrying value of infrastructure, property, plant and equipment of over $1.3 billion (written down value). Council must ensure that it has sufficient funds to maintain our infrastructure and to meet any emergencies that may occur during the year including damage to facilities due to flood, bushfire or a sudden failure of a significant item of infrastructure such as a bridge. In the local government sector, given councils are responsible for ratepayers money, Council has taken a responsible approach to managing its financial reserves. Council has a strong liquidity position and this has enabled Council to look at using its available cash reserves instead of borrowings. Council’s Treasury Management Strategy aims to maintain satisfactory liquidity levels whilst minimising its reliance on external borrowings to finance its future capital works. This is reflected in the reduction in Council’s unrestricted current ratio as at 30 June 2016, which was $2.68:1. By minimising its reliance on borrowings, Council reduce borrowing costs which improves its operating performance. Council must also balance the above considerations whilst ensuring there is sufficient funds to pay for infrastructure renewals, when they fall due, to ensure Council meet the service levels expected by the community and to meet any emergencies that may occur during the year. In 2015-16 Council spent $28 million on renewing its infrastructure. Finally, if you consider that there has been ‘fraud’ as you state in your email, please refer your concerns to ICAC or to the Office of Local Government. I trust this response answers your questions. Yours sincerely Dr Catherine Dale General Manager
