Presentation - GMR23/031 REVIEW OF BAY PAVILIONS – Lei Parker
August 15th 2023 – Public Forum.
Councillors,
I would like to address you today on the issue of the Batemans Bay Aquatic and Performance Centre.
From Council’s own reports I would like to present some background first:
A site, identified as a regionally significant provided a strategic opportunity to create recreational and cultural facilities hub to benefit the Shire. A Sunset Committee was established with Council taking note of their valuable input into the process.
There was significant consultation with the community to define a development direction.
The consultant provided professional, independent, statistically reliable recommendation on the best way forward for the community and Council referring to statistically and demographically reliable survey data to establish market demand, user trends and inform development options
Following the creation of development concept plans for the site, the plans were publicly exhibited. The Council endorsed it's preferred option.
The consultant also provided a business plan. It was evident that given the significant estimated capital cost Council would need to secure funding from a range of sources.
With development likely to be staged over a number of years in line with capital availability, priority needs and optimum operating financial performance, there was time and opportunity to also plan and attract investment to the project.
As a next step in the project, Council needed to develop a more detailed, design, funding and investment strategy.
Council policy requires that the whole of life cost be considered before accepting any new asset. This includes ongoing maintenance costs and replacement costs.
The key findings of the report and business planning results indicated a significant community benefit of developing the facilities however, this would come at a cost to the community now and into the future.
To understand the extent of the cost, significant, further detail, design work needs to be done to enable a more robust funding and financing strategy to be developed by Council.
Councillors, the above is NOT about Mackay Park
It is in fact paraphrasing a REPORT TO ORDINARY MEETING OF EUROBODALLA SHIRE COUNCIL HELD ON TUESDAY 27 AUGUST 2013 which moved, and adopted, that Council:
“Receive and note the Hanging Rock Master Plan and Business Plan that included an arts space and aquatic centre”.
What happened to this project? Council sat on its hands. Why? There were political aspirations, there was an upcoming hush-hush opportunity to buy the old Bowling Club site, the Batemans Bay pool had end of life issues, and staff had their own vision of what might be, A Gateway Vision, if only money could be found.
Sometime later, after the 27th August 2013 approved motion, it is understood that the next batch of Councillors were advised, during briefings, around the Mackay Park business plan, that Hanging Rock would have less exposure as a venue and, as such, the projected revenues would be well below financial viability.
Moving on to Mackay Park, its double speak, its lack of transparency, a poor paper trail, a business plan with questionable income and expenditure projections.
The initial business plan for a $46m facility, warned:
It should be noted that the financial model does not incorporate sensitivity analysis or depreciation at this stage. This will be done after the base case assumptions and preferred design option have been approved by Council. Further, once the preferred design option and financial modelling has been approved and finalised, an assessment of the economic impact of the facility should be undertaken by Council to support any applications for external funding.
But what did council do?
It used the business case, against advice, to apply for funding from NSW Sport. That application was turned down because the facility had no sporting component and was joined to a theatre.
It also applied for funding from the Federal government Regional Growth Fund. This funding stream was found by the Auditor General to be compromised in its processes.
In the media release from Ann Sudmalis she was very clear… “Eurobodalla Shire Council have been invited to submit their full Business Case for assessment under the Australian Government’s highly anticipated $272.2 million Regional Growth Fund.”
The Mayor, in her own media release said at the time “I’m certain Council’s strong and affordable business case that focuses on meeting the broadest community needs and our commitment to the project have impressed the Federal government.”
Council did not provide a FULL Business case or even the flawed one as was required, but were, never the less, awarded the $25m grant two days before a Federal election was called.
As it was, the promise was only that, an unfunded promise, but it was honoured when Labor won the seat of Gilmore, though they did not call for a FULL business case.
An FOI request to determine what business case had been provided to NSW Sport saw Council blocking attempts and then refusing to reveal, while being told to provide. After several attempts and an NSW Civil and Administrative Tribunal (NCAT) directive to Council to desist the heavily redacted application was released that revealed Council had used the Otium Business Case contrary to advice from Otium, given that the preferred option and, therefore, financial modelling had not been approved by Council and finalised, nor had there been a transparent assessment of the economic impact of the facility on the community as per:
Further, once the preferred design option and financial modelling has been approved and finalised, an assessment of the economic impact of the facility should be undertaken by Council to support any applications for external funding.
The Councillors of the day were clearly advised of the above by way of a Public Access Presentation by myself on Tuesday Oct 23rd 2018. They ignored it.
Next came the gifting of $26.5m from the State Government that included $8m that was pork barrelled for the Theatre. That funding required no business case and therefore required no scrutiny.
The Councillors had been clearly advised that $33m of their $51.5m in grants had come from political pork barrelling. They didn’t care. It was money for nothing. But it turns out that, like a gifted Rolls Royce, such an “gift” comes with a substantial future costs.
The report before you today clearly reveals there was little if any evidence of consideration of this ongoing burden. Right from the start, decades before, political aspirants made promises that glittered and seduced and never bothered to reveal the cost it would bring to future generations. “Vote for me and I will deliver glittering prizes”.
In looking at the archive of The Beagle there are 150 specific articles on Mackay Park going back to 2016. Most of them place a spotlight on the failures of consultation, the unwillingness to release information, the audacious ignorance of public analysis made of the business case, the pork barrelling, the manipulations, and the warnings around the failures to prove the viability of the project, especially after it went from a $46m build to $70m.
A copy of most of those articles were emailed to councillors to ensure they were being given additional information outside of the information that were receiving at briefings.
Some Councillors chose to block these emails while others chose to denigrate the messenger, being The Beagle, referring to it as a rag of a blog, in an attempt to discredit it, and the warnings it offered.
I welcome the KPMG report that reveals much of what the councillors were being repeatedly informed by their own community outside of the briefings they received behind firmly closed doors.
Council had publicly stated: “Council's independent Audit, Risk and Improvement Committee has been briefed on the financial details of the project throughout the process.”
Reading the first line of the Findings it appears that this was not the case.
Council were later advised, in this chamber, that the Audit, Risk and Improvement Committee was not fully briefed on the finances of the project as they could not be provided with all financials due to “commercial in confidence”.
In fact, in this chamber, on July the 28th 2020, Council Phil Constable, a member of that committee, asked for a deferral of the vote to proceed with the project and commit Council to pay $19 million to address for the financial shortfall.
He moved a motion for deferral so that the Audit, Risk and Improvement Committee could be briefed, and their informed advice received.
That motion was voted down.
It was on July the 28th 2020 that the councillors voted 6-3 to endorse the preferred tenderer for the $70 million Mackay Park project and, in doing so, endorse committing $19 million of ratepayers money to prop up the $51 million they had in State and Federal Grants.
The motion came via a 160 word Mayoral Report that was given to Councillors at the last minute. This saw a fifteen minute break for them to digest the report and then come back to the chamber to vote on it.
The motion, in part, was very clear:
Do you endorse the preferred tenderer and do you commit $70 million (including $19 million of ratepayers money)?
YES or NO
Innes, Brown, Thomson, Nathan, Tait and Pollock all said YES.
McGinlay, Mayne and Constable said NO.
In order to vote it was essential that Councillors were fully informed. One area where they needed to be certain was that the Office of Local Government was satisfied with the proposed project.
General Manager Dale admitted in writing that material correspondence, received on July 13th, 2020, was NOT given to councillors in the leadup to their crucial vote on committing $19 million to the Mackay Park project.
The OLG correspondence stated, in part:
It is also of concern that, while the top line of the above OLG correspondence was reported to the Councillors via the Council meeting agenda of July 28th, 2020, the second (and quite concerning) paragraph above was not conveyed.
Had the councillors been given a copy of the letter, held by the General Manager for two weeks prior to July 28th they would have also read the following:
But all they saw of the letter was a single sentence extract.
The opinion offered by the OLG in their full letter of Review WAS indeed material to the information required by the councillors in order to assist them to make their decision to commit $19 million of ratepayers money to the Mackay Park project.
The OLG, in their letter, clearly indicated they perceived a risk, yet that opinion was not given to the councillors, or to Council’s Audit and Risk Committee by General Manager Dale, as confirmed in the letter to The Beagle editor dated 11 November 2020.
Had the OLG letter not been accessed via a GIPA request the councillors would still be none the wiser of its contents.
During debate of July 28th 2020, the Councillors initially considered that they had been fully advised of everything they needed to know in order to vote.
Clr Nathan said during the debate “We as the elected body have been thoroughly briefed.”
Note that whist she said this the OLG letter was only known to one or two executive, and NOT councillors.
Clr Pollock added during debate “There is nothing more to be placed to the Audit and Risk Committee for them to make a more informed decision than they have already provided”.
Yet the Audit and Risk Committee had not been provided the OLG letter either.
Councillor Pollock offered during Council debate of 28th July 2020 (1.54.39 timestamp https://webcast.esc.nsw.gov.au/archive/video20-0728.php#placeholder ) that the project had gained the greatest level of government support of any programme put forward by Eurobodalla Council.
He then asserts “None of that happens without significant scrutiny from all of those sources”.
But now we know that the FULL business case was never provided to the Federal Government and it was not scrutinised by the State Government following the announcement of Andrew Constance and Gladys Berejiklian
We also know that the Council’s Audit and Risk committee were in the dark on financial detail and were not as informed, as suggested during debate, as the KPMG reports.
During debate, and prior to the final vote, then Mayor Innes said: “Ultimately, what the community knows is what the community knows. What concerns me is what you, myself and my fellow councillors know. Because we are the ones who need to have all the information in front of us to make a decision on behalf of those who have democratically elected us to make decisions on their behalf” The KPMG report is scathing. It reveals an litany of process failures and each of these failures are there in detail. Innes said that “councillors need to have all the information in front of us” ….. But what if the information wasn’t all there, as appears to be the case. What if the financials were never independently scrutinised? What if the financial information and assumptions failed the Pub Test.
Most Councillors chose to be cloth-eared to the concerns being raised, instead choosing to remain within their own echo chamber?
The KPMG report gives the Council of the day, in my opinion, of an F- scorecard in regards to the project.
I endorse the recommendations of the General Manager to establish a Projects Management Office. There is little doubt that the plethora of failures we now have on record would not have happened if the administration that bought us to this point had been held to account by those we elected.
Some tried, but the majority won the day and delivered the legacy to the term of councillors we now have.
In turn the burden of The Pav will be passed as a baton to the next term of Councillors, and the next, and the next.
Hopefully, with the right leadership in place, the community will embrace the facility, and with sensible management overheads can be reduced without reducing delivery.
