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Interim Administrator Minute and Performance Improvement Order

Last Friday the Council was given notice by the Minister for Local Government the Hon Shelley Hancock MP of her intention to issue a Performance Improvement Order on Armidale Regional Council under the Local Government Act 1993. Council has seven days to make any submissions.

I am attaching the letter from the Minister together with the draft Order.

My term as Interim Administrator concludes on 11 December 2020 and I am required to submit a further report including recommendations to the Minister by 27 November.

While it is pleasing to report that there are some “green shoots” there is still a long way to go to put in place a Council that undertakes its statutory obligations and has the respect of the community it seeks to serve.

I was extremely fortunate to secure the services of Mr John Rayner PSM as the Acting General Manager and together we have used our experience to start to rebuild systems and procedures within the Administration and to stabilise the Council’s failing finances. In my view the former and suspended Councillors together with CEO’s and some staff failed and there remains a denial on the part of some to acknowledge their contribution in that regard.

A new General Manager (James Roncon former General Manager Broken Hill City Council) has been appointed and will commence duties on 11 January 2021. I am very confident that Mr Roncon is the right fit to address the many challenges of the organisation but he will need “air”. 

The organisational structure of the Council is complex and confusing. Since the 2016 merger there have been four formal reorganisations and eight General Managers including acting and interim. The cost not only in dollars but mental health considerations of staff and service delivery is considerable. While Mr Rayner and myself have our views on the structure that would best serve ARC we have taken the decision that it is best left to the incoming General Manager and there remains a number of vacancies at all levels across the organisation.

In my earlier report to the Minister I recommended that consideration be given to the conduct of a Public Inquiry and outlined a number of examples where in my view the Council had failed the community it was meant to serve in the exercise of its functions, provision of core services and decision making, community participation, financial management and Integrated Planning and Reporting.

I can now report that many of the matters raised are being addressed and have or will be reported to Council and many plans and policies are rightfully being put to public consultation. The workload of the Administration has been enormous and staff have responded with professionalism and confidence.

Yesterday Council received the independent review of its finances from Finch Consulting. I requested this forensic assessment in view of the deterioration of the Council’s unrestricted cash position since the merger in 2016. The review focuses on General Fund over expenditures, unplanned expenditures and the status and utilisation of reserves, both pre and post merger.

Having regard to the Minister’s notice to issue the Order and appoint a Financial Controller to the Council the receipt of the Finance Review is timely.

The Review confirms my worst fears and provides a clear picture of the financial ineptitude that has occurred particularly in the first three years of the new Council. It identifies considerable cost overruns on poorly scoped projects, a significant lapse in oversight and reporting from a financial perspective on project management and control was inadequate. It notes that some projects were initiated in the assumption that Reserves existed but in fact they had been extinguished.

The Acting General Manager has independently reported to the meeting on the Review and Financial Sustainability, both of which are self explanatory.

The Review makes eleven recommendations and the community can be assured that they must be implemented under the Minister’s Draft Performance Order if there is agreement for same from the Financial Controller.

Very importantly ARC is now enthusiastically responding to both Federal and State Government grant opportunities and there appears to be a renewed trust with not only local Members but government departments and agencies. The capacity of the Council to manage these opportunities should not be underestimated and is stretching some areas of the Council to the limit. The Acting General Manager is recruiting Project Managers with a ‘can do’ approach

As outlined in the Acting General Manager’s Financial Sustainability Report some legacy issues are now the subject of independent financial scoping and will be the subject of report to Council as soon as possible.

In addition to all of the above the Acting General Manager is introducing a ‘Back to basics’ culture in the organisation and emphasising the importance of the Council Community Strategic Plan (CSP) process and delivery of same.

Clearly there is a strong commitment of the staff under both Messers Kerr and Rayner’s leadership to ensure that ARC is a good example of sound local government.

Given the governance and financial matters raised in the Minister’s Draft Performance Improvement Order and the appointment of both an Independent Financial Controller and Temporary Advisor with clear briefs I am confident the incoming General Manager will have the “air” to address the myriad of challenges that confront ARC.

The Council is in a rebuilding phase; governance and Council’s financial management weaknesses are being rectified and improved. That process has commenced and has been recognised by the Minister in announcing a very strong independent oversight on Councillors - limiting opportunities for further mismanagement.

My only remaining concern is a more political matter and that relates to full representative democracy in the ARC Local Government Area with the resignation of four Councillors and the fact that there still remains no acknowledgement by some of the Suspended Councillors that their behaviour was not acceptable. I have no control over these matters but electors will have the chance to pass judgement in September 2021.

The letter from the Minister makes it very clear that if the proposed Performance Improvement Order is not complied with she may consider again temporarily suspending the Council. 

In my first minute to Council in June 2020 I stated that the ARC community deserved better from its Council and committed to work to restore a democratically elected body as soon as possible.

I welcome the Draft Performance Improvement Order of the Minister for Local Government. It is a comprehensive approach to the management of what was a toxic environment and will allow the return of the Council and democratic leadership to the people of ARC.  An honest, open and transparent approach to decision making has been introduced to ARC over the past six months and I expect this will continue with the return of elected members.

I will remain as Interim Administrator until 11 December 2020 and will continue to drive a reform agenda and of course am available to meet with and assist residents.  

I move:

That the Minute be noted and the Minister for Local Government be advised that Council welcomes the proposed Performance Improvement Order and the appointment of a Financial Controller and Temporary Advisor.

(Viv May PSM)

Interim Administrator

Notice of Intention to Issue a Performance Improvement Order dated 19 November 2020, Proposed Performance Improvement Order and Performance Improvement Order Information Sheet is available on Council's Councillors page

 

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