Both suspended Armidale Regional Council members and the former mayor Simon Murray say they were surprised that administrator Viv May gave the impression in his September community update that he had uncovered an $8M discrepancy in council funds.
Speaking to media inside the council chambers on Thursday September 24 Viv May said he had seen no evidence of corruption at Armidale Regional Council but millions of dollars had been wasted.
He advised an audit was looking at the council finances since the merger of Armidale of Guyra councils in 2016, as in that time Mr May said $8 million has been blown.
"When he came out and said that I thought - that's old hat - that came out months ago," said former mayor Simon Murray.
A detailed financial report was requested by Council at its October 2019 ordinary meeting and was reviewed at the December meeting in Guyra.
In her report, head of financial services Kelly Stidworthy, outlined the cash position since merger of the Armidale Dumaresq.Council and Guyra Shire Council to June 30, 2019.
"The cash position in the 2016/17 revised budget appears to have been overstated to the extent of $24M," she said.
"This was used as the starting point for the 2017/18 budget and it appears to have been accepted that there was more unrestricted cash available than was actually the case.
"The analysis in this report shows that it is primarily the adoption of deficit budgets during the period since merger that has reduced internal reserves and unrestricted cash levels."
Suspended councillor Dorothy Robinson said contrary to Mr May's claim of simply "receiving" a report at the December meeting claiming an apparent $24 million mistake that had occurred before they were elected, councillors voted at the same meeting for training in financial decision-making, to be held as early in the new year as practicable
"We wanted expert advice on how to deal with a difficult situation, including rate-pegging, cost-shifting and major reductions in government grants," said Dr Robinson.
"Most of the now-suspended councillors attended the entire training session, conducted by Dennis Banicevic, Director of Pricewaterhouse-Coopers, who has over 30 years experience in local government finance and audit.
"However, three of the four councillors who have now resigned either didn't turn up or attended for less than an hour."
Mr Murray said he and former CEO Susan Law were surprised there was not more interest shown in the report by councillors at the December meeting, but it was reviewed under unusual circumstances.
"We had a blackout in Guyra and we were trying to conduct the meeting by torchlight," Mr Murray said.
"We went through each item, and unless there was an issue people wanted to discuss, it was basically passed. It was a blackout, and it was December, so what do you expect?
"We were amazed that nothing really came of that report, and we were amazed when the administrator came out making all these claims because it is old hat. We knew about it well before December but the report was just dotting the i's and crossing the t's."
We knew about it well before DecemberSimon Murray
"What does Viv May hope to achieve from a public inquiry? I said that to him months ago.
"You won't get a clean slate in Armidale - there are so many people who were previous councillors who are waiting in the wings to run again."
Mr Murray also said that he felt some councillors refused to see the restricted financial position the council was in.
"There were quite a number of times the councillors had trouble understanding the dire financial condition we were in," he said.
Dr Robinson said the financial training reassured the councillors that with nearly $70 million in reserves (and the ability to arrange borrowings from restricted reserves in the case of unexpected drains on cash flows), ARC was in a better position than some other councils.
"Amalgamations are expensive," she said.
"Despite the claimed millions of dollars mistake, ARC's $3.8 million problem was slightly better than the average for councils that were subject to forced amalgamations according to the report "Council Amalgamations, a sea of red ink", by accountant and finance professional Brian Halstead.
"ARC's finances obviously suffered from mistakes made in procedures to account for the fact that the merger didn't happen at the end of the financial year.
"The period between 12 May and the end of the financial year is a time when councils spend more money than they receive, so some adjustments are necessary.
"Armidale Dumaresq and Guyra Shire Councils had $4.85 million more in reserves on 12 May 2016 than the start of the financial year.
"Brian Halstead's report avoids that particular problem by comparing the last FY before the merger with projections for 2018/19."
Amalgamations are expensiveDorothy Robinson
After ARC councillors attended the financial training, the majority were trying to fix an even more pressing problem according to Dr Robinson.
"We were addressing the loss of capable, experienced staff with expertise in water, engineering, library and governance, and the talk from exiting staff of internal bullying and fear in the council offices," she said.
"There were also problems caused by the transformation project's multiple restructures that appeared to be making council less efficient at a great cost.
"We have no idea why Mr May is apparently trying to blame us for all these problems, when we were doing our very best to fix them under very difficult circumstances."
In his September community update Mr May said the financial position of the council needed closer examination and stabilisation.
"A forensic review, particularly in respect of cash reserves and expenditure since the 2016 merger is being conducted and should be available for report to council at its October or November meeting," he said.
"The report will also clearly reconcile funds given to council by the state at merger. I am advised that the estimated unrestricted cash as at 30 June 2020 is $2.14 million compared with $9.853 million at the time of merger (12 May 2016)."
"An example of council's poor financial position is the lack of funds for the maintenance of its basic infrastructure in the 2020/21 Budget," he said.