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Tuesday
Oct012019

Last Minute - Bad News! 

Nothing of note happened at the ultimate meeting of the current Council today until the subject of the annual financial ‘wash-up’ (See ‘Insignificant‘ Expenditure from 26 September below) came up , and then all hell broke loose..

Suddenly, Rob Williams was declaring his utter ”shock and surprise” at having discovered the extent of over-expenditure on the various projects – "the quantum of which I now know, but the reason for which I do not know."

You would have imagined that the Group Manager – Operations Bruce Hinson, and Corporate Services Manager Carl Dudley, would have been in the ‘hot seat’ for this interesting discussion, but they both managed to make themselves ‘scarce,’ and leave it to Finance Manager Donna Holland to ‘carry the can.’ - Carl did front later on, but his responses were mumbled, and incomprehensible to me, at least. 

To say that apoplexy was the ‘order of the day’ would be a gross understatement. Both Tweedledum and Tweedledee (Fox and McLean) were venting fury at the sheer and obvious incompetence being demonstrated by our very highly paid senior officers who have assured the Council for months that they ‘had everything under control,’ and that the Whitianga Town Centre would be brought in at, or under budget. It was the revalation that over-expenditure on this project alone was some $2m that ‘brought the house down,’

One remarkable statement to which I earlier drew attention related generally to ‘over-expenditure’!

"In general, over expenditure is usually able to be offset by corresponding increased revenue or over expenditure in one activity can be offset by under expenditure in other activities but within the same group of activities. This is a usual situation and process at year end.

This was not possible in all instances this year. In some instances, capital projects that had planned to be funded from retained earnings were funded by loans so the retained earnings could be used to fund operational over expenditure.”

But buried in the Recommendations was the following:

7. Approves funding the deficit caused by the the subsidy revenue shortfall on the Whitianga Town Centre upgrade Project by Mercury Bay Loan.

What was hidden here was $1.9m in over-expenditure at Whitianga that was clearly set to swell the already grossly over-extended budget on this project – now some $13m. No, I did not make this up – just like the Sports Ground and now the Billy Point Boat Ramp, this Project will no doubt enhance the already over-enhanced self-image that Marina towns here seem to have of themselves. I heard McLean say today that it was a ‘stylish,’ rather than an 'extravagant' project. He was joking, I think!

Be that as it may, Fox is determined that we all dip into our pockets to pay for it, reminding others wanting an ‘upgrade’ (i.e. Thames!) that they will have no call on District funding unless he gets his way.. Since the Thames upgrade is hardly likely to involve any ‘underground-services,’ the situation is hardly comparable, but Fox was ‘lashing out.’

Of course this has to be someone else’s fault, and in this case it is clearly Transport NZ who are copping blame for failing to come through with expected subsidy, but why it took so long to work this out was not explained, let alone to accept the incompetence that simply failed to get the budget figures correct and keep the ledgers in order. Williams was flailing about pleading ignorance, but it was not a convincing performance -after all, 'blind Ned' knows that the TNZ subsidy is only available for national highways, and the Whitianga main street fell out iof that category some years ago. By the end, the inadequacy of the software system again came in for a flailing, regardless of the millions already spent getting it to this stage.

There are 42 projects that involve over-spending, and that is simply a reflection of total disorder, incompetence and inefficiency in running a Council. Perhaps it is time to throw the system out, and revert to high chairs and hard-bound ledgers in the accounts department. It would certainly be better than the constant 'blame the computor' culture that has existed in there since time immemorial.

Of course, as Williams was want to remind us, previous councils had that previously had substantial capital under-spends were able to absorb the over-spends, along with the famous ‘depreciation reserves’ that Leach and Hammond raided with monotonous regularity as a ‘management prerogative’ it seems. But now, reality has set in, and there is no such back-stop - only more borrowing!

As I said in my commentary on the TYP earlier this year, you may expect a substantial rate hike at the next Annual Plan to cover all the shortfalls that have been revealed. And unless the next Council is prepared to ‘bite the bullet,’ and cut back on the grandiose spending plans laid out by this Council, then we are certainly heading for substantial rises over the next ten years.

As for current staff, I don’t think that Rob Williams made his position secure by his performance today – even though he did claim to be the first to bring transparency to the Council table for many years. My comment would be – too little, too late, and how come did he not know about it until so late in the piece?  The borrowing slide has started, and I cannot see it being reversed.

I don't blame current elected members for this debacle - it is clearly a reflection on the quality of staff that we have running the show, and the incoming Council has a job on its hands to deal with that isssue.  Though on reflexion, Fox does have some responsibility - he after all is Chair of the Audit Committee, and should have been more sceptical about the answers he was getting. .

 

 

 

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Reader Comments (8)

What is incomprehensible to me in all this; and I view this from a lay-persons perspective, is how it is that such a significant and substantial matter (cost over-runs) remains partly or largely unknown to the CE? As a rate-payer my expectation is that there are proper and adequate reporting mechanisms in place that allow project progress to be reported along the way to completion so that over-runs (and consequent need for additional funding) or the need for the revision of part or all of the project, can be reported to the CE (and the elected representatives) for discussion and decision. It does strike me as folly, not to mention less than best practise, to allow such a system to exist, let alone continue. It is regrettable that Councillor McLean sees the issue in terms of the town centre being 'stylish'. Joking or not, you might expect an elected representative to strike at the heart of the matter, challenging staff to a better level of performance so that his (McLean's) rate-paters don't have to fund unexpected cost over-runs - unless of course you expect the excess expenditure to be funded by the whole district. Oh, but wait, he does? In any event, those seeking election to TCDC or Board positions this month, would do well to reflect on this issue; and to gird their loins, so-to-speak, In preparation for holding the Mayor, CE and responsible staff accountable around the council debating table - and, I might add, to insist that such accountability be debated in a public representatives meeting, rather than in a closed session workshop. For those candidates who have stated that they want to give the system a bit of a 'shake-up' now is your chance; cost over-runs is the issue and your election is the opportunity. Don't be found wanting.

October 1, 2019 | Unregistered CommenterRussell

This is what happens when all the competent staff are quietly ushered out the back door silenced via unbudgeted payouts and the CE brings in a mate from Taupo to run the think big projects. I spoke with one ex-staff members recently who was forced out of his position (mid manager) and his vacancy was spilt with two new positions and a third role is now being proposed. Its not just the projects that need a close eye cast upon the expenditure as you can bet your bottom dollar they've squeezed the funds from other budgets to lesson the blow. Diane Conners is correct in her statements in the HH and if she wasn't you would expect counter statements to be spun out pretty quickly or a law suit on the cards. Bill you have the knowlege and mouse to dig deep on this one so go hard my friend.

October 2, 2019 | Unregistered CommenterWhanau

After the last election, the astute Council management team disbanded a project management office that was established after the overspend at the Whitianga sports complex. How did the audit and risk committee allow this to occur? This council has learnt nothing from the past and has been reckless in spending public money. These current overspends are outrageous and make the sports complex blow out look minor in comparison. I remember the previous Mayor and CEO of the time apologised at a public meeting for that debacle. Will this bunch do the same? How can the Mayor claim in her electoral advertising that her council’s projects come in under budget? This is a complete fabrication. What a bunch of amateurs.

October 2, 2019 | Unregistered CommenterHistory never repeats?

From the Council committee minutes it appears that the vast majority of Infrastructure Committee meetings have been canceled over the last two years due to "lack of business". When the cats away the mice will play...

October 3, 2019 | Unregistered CommenterWhanau

As a person who owns a property in Whitianga I am becoming increasingly concerned over the various contracts going over the contract price.
From memory some $4 million for the sports field and now another $2 million for the town centre upgrade.
Was Cr. FOX asleep at the wheel when these cost overruns came before the Audit committee that he chairs?
As for McLEAN crying wolf from the gallery about the surprise being sprung on the council at this late date-- if they were any sort of a Councillor they should have being following the upgrade and any overruns would have been obvious one would have thought.
Maybe it is time we put some people onto council who have a modicum of business sense.
Don't expect the rest of the ratepayers to bail out the Mercury Bay ward-
This would never have happened had RURU still been CEO.

October 5, 2019 | Unregistered CommenterDisgruntled Ratepayer

@disgruntled ratepayer - $4m overrun for the sportsfield? If only it was so. The "deal" Hoppers did with TCDC cost us tens of millions of dollars as they don't have to pay reserve contributions for their current and future sections - and the value is worth significantly more than the cost of the sportsfield. And yet residents continue to vote for Teflon McClean and Fox. I can guarantee you Fox and McClean would have known all about the overspends for the main street upgrade too.

October 9, 2019 | Unregistered Commenterhigh and dry

It seems the upgrade isn't complete either as the Taylor Mistake work is clearly unfinished.....so what will the final figure really be and from what I remember Fox told staff that heads will roll if the project goes one dollar over....well lets see how that plays out as the Projects Manager (the CEO import) should be on the first bus back to Taupo.

October 14, 2019 | Unregistered CommenterWhanau

The first head to roll should Cr. Fox- chair of the Audit committee- where the buck actually stops!!

October 18, 2019 | Unregistered CommenterDisgruntled Ratepayer

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