Lismore City Council will be operating under the watchful eye of the Office of Local Government after a due diligence study commissioned by incoming general manager Shelly Oldham has revealed an unexpected $6.1 million cash deficit.
The deficit was reported in September 2018 to be just $258,400.
A Lismore Council meeting last night heard the shortfall was the result of a range of unreported expenses including: Northern Rivers Waste compliance, transport and safety costs; Beardow Street landslip remediation; Northern Rivers Quarry operating and compliance costs; and revenue from sale of property, plant and equipment being lower than forecast.
In a media conference yesterday, Ms Oldham said the council would have to look at all options to reduce the liability, including: selling plant and equipment, reducing staff levels and increasing rates.
Ms Oldham described Lismore Council’s reporting systems as ‘antiquated’ and its governance as ‘poor’.
‘The due diligence study has revealed a genuine need to look at management practices and address a lack of oversight around our commercial areas of operation,’ Ms Oldham said.
‘We need to modernise our technology and systems, improve our accountability and project management capability, and tighten controls around governance, compliance and risk. Much of what has occurred could have been avoided if we had better project and risk management in place.
‘The Mayor and Councillors will need to put individual agendas aside and work together as a team in the coming months to get Lismore City Council back on track.
‘We are looking across the board at all Council services to see where we can make the best gains with the least disruption to the community.
‘We have a big job to transform this organisation. Our systems are antiquated and our governance and reporting structures are poor. There has been a breakdown in our systems and controls, and that’s what we need to fix,’ Ms Oldham said.’
Rates and staffing levels
The GM declined to lay the blame on any current staff and indeed she praised staff for their hard work during the due diligence study and said they were ‘an asset to the Lismore community’.
She also said the public perception that staff numbers had blown out was incorrect but added that wages were increasing faster than Council’s rate increases could support them.
She said a reconfiguration of Council and a workforce assessment would commence in March.
Ms Oldham added Council would establish a 10-year rates plan.
‘Rate increases are something Council will need to consider – our rates are simply not keeping pace with our expenses. Other Northern Rivers councils have undertaken rate increases of between 20 and 30 per cent in the last decade,’ Ms Oldham said.
‘Council will need to have a realistic and genuine conversation with our community about what services they want from Council and what they are prepared to pay for,’ she said.
Tough decisions ahead
Mayor Isaac Smith (Labor) said while the news was concerning, the GM was doing what she was appointed to do and 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.
‘We chose our new general manager specifically because of her previous business experience and proven track record of financial acuity. She has exposed where there are problems and that is the kind of leadership we need.
‘Now we have all the facts before us we can make a sensible plan about how to fix our financial position. It is going to be a difficult time and there will be some very tough decisions ahead,’ he said.