GM calls $6.1 deficit a 'failure' of management, governance
UPDATE 12.20pm: LISMORE City Council has revealed a 'shocking' and unforeseeable' black hole in its budget equating to a cash deficit of more than $6m.
It is the largest budget deficit reported by council.
Lismore Mayor Isaac Smith and new General Manager Shelley Oldham made the "surprising" announcement ahead of council quarterly budget review statement being reported at tonight's council meeting which reveals the cash deficit of $6.1m. In September 2018, the cash deficit was reported as $258,400.
Ms Oldham said the variance was discovered following a two-month due diligence study by independent consultants Grey Advantage that uncovered a series of previously unreported costs.
She said several factors have contributed to the deficit, which include issues within the Northern Rivers Waste compliance, transport and safety costs, Beardow Street landslip remediation and Northern Rivers Quarry operating and compliance costs.
Ms Oldham said the governance problems were "across the board" in the organisation, calling the deficit a "failure" of management and governance.
She said council would not be sacking staff or increasing rates in the near future, but would need to consider putting in place a staged, 10-year rating strategy. But before revealing when increases to rates would come into place, council would first have to have a "ten year plan" conversation with the community.
The Office of Local Government have chosen not to move the council into administration due to the their "quick" response of the remediation plan.
While no one in upper management have been sacked over the findings, Mayor Smith confirmed a senior manager, from waste services department who would not be named, had chosen to resign.
Mayor Smith expressed his concern at the revelations but added he was relieved to have a clear picture of Council's financial position. He said the community would rightly expect immediate and direct action.
"We are all deeply concerned at the findings and I know the community will feel the same. We knew we had some financial challenges that we needed to look at, but nothing to this extent," Mayor Smith said.
He empathised with the ratepayers and residents.
"I am angry, shocked, frustrated and disappointed," he said.
Council will develop a transformation plan with a short-term goal to improve cash flow and a long-term goal to reduce the deficit.
The plan is likely to include:
- A review of plant and fleet utilisation and maintenance as well as changes to procurement practices to immediately improve cash reserves.
- Deferral or cancellation of projects that are not in the four-year Imagine Lismore Delivery Program or do not have allocated funding.
- A reconfiguration of the organisation and workforce assessment.
- Internal changes including improved project management capability and new governance, reporting, risk and compliance controls. An evaluation of the leadership group and development of a detailed transformation plan.
- The development of a 10-year rating strategy.
Original story: LISMORE City Council is about to hold a press conference when a multi-million dollar black hole in its budget is expected to be revealed.
Rumours of a cash deficit of up to $6 million have been circulating on social media, although no one from council has confirmed that figure as yet.
A media conference has been called at 10am to talk about the Quarterly Budget Review Statement and "council's current financial position".
Lismore Mayor Isaac Smith and Lismore City Council General Manager Shelley Oldham will front the cameras outside council chambers.
It's an unusual step to call a media conference about the budget in the first place, especially if you don't have something big to talk about, either good or bad.
Ms Oldham was appointed general manager in October last year and has since conducted a roots and branch assessment of council's status.
She has previously worked for almost a decade as the Senior Vice President and Head of Public Sector at Capgemini.
She was also the Director of Strategy at the Department of Treasury and Finance in Victoria and has broad experience working in government transformation, stakeholder management and strategy.