Port Macquarie-Hastings Council dismissal, 2008

The dismissal of the Port Macquarie-Hastings Council on 27 February 2008 marked the end of a series of events involving a project which was initiated in 2001 in the New South Wales coastal town of Port Macquarie to build a cultural and entertainment centre, known to locals as the Glasshouse.cite news|url=http://www.abc.net.au/news/stories/2008/02/27/2174137.htm|title=Council sacked over cost blow-out|date=27 February 2008|work=Australian Broadcasting Corporation|accessdate=2008-02-27] The project, initially a joint venture with the management of the neighbouring shopping centre, Port Central, was initially expected to cost the council AUD$7.3 million, but by late 2007, despite the centre not yet having opened, the costs had blown out to over $41.7 million, with interest repayments likely to extend the council's liability to $66 million. On 27 July 2007, a full public inquiry was announced by the Minister for Local Government, which reported back in February 2008. [cite book|title=Port Macquarie-Hastings Council - Public Inquiry - Inquiry Report Volume 1|last=Willan|first=Frank|publisher=Government of New South Wales|isbn=1920766693|accessdate=2008-04-12] It found that the council had failed to provide appropriate financial and project management and had lost control of the costs, that the project costs had harmed the council's ability to provide services and amenities to the community, and that the council's communications management strategy had resulted in inadequate consultation with the public and inappropriate regard to their concerns. The outgoing Mayor, Rob Drew, was critical of the process throughout, maintaining that errors had been made and misinformation had been accepted as fact; however, the New South Wales Urban Task Force, a property development lobby group, believed the sacking served as a warning to other councils to stick to "core responsibilities". [cite news|url=http://www.abc.net.au/news/stories/2008/03/06/2181446.htm|title=Task force says council sacking a warning to others|work=ABC Online|date=6 March 2008|accessdate=2008-04-12]

Background

On 30 March 1999, Council met to initiate planning for a centre to house the visual and performing arts at the former Civic Centre site in the Port Macquarie central business district. It recommended a project plan be developed by 2001. On 21 August 2000 a Cultural Facilities Taskforce was created. In December 2000, the council approached the management of the neighbouring shopping centre, Port Central, about a possible joint venture on the site, and the council endorsed further negotiations on 28 May 2001. The joint venture was expected to cost around AUD$13.5 million, with the Council contributing $7.3 million.Inquiry report, chapter 3.] The joint venture collapsed in August 2002 because the council were not prepared to accommodate the needs of their commercial partner to make the project viable, and decided to go it alone. The new centre became an icon building under the direction of the council's General Manager, managed by a Project Control group including the Mayor and Deputy Mayor. The costs blew out considerably—by 28 June 2004, when the council unanimously backed the project, outlays had already reached $15-$20 million, and by late 2007 they had reached $41.7 million.Inquiry report, chapter 3.] This was due to a range of factors—the council bought and demolished neighbouring shops to make the facility big enough to include meeting rooms and conference facilities, and a convict-era drain in remarkably good condition was discovered by archaelogists and needed to be preserved.cite news|url=http://www.abc.net.au/stateline/nsw/content/2006/s2002408.htm|title=Stateline - People in glasshouses...|date=10 August 2007|last=Dempster|first=Quentin|accessdate=2008-04-12]

The Payne report

In October 2006, the NSW Department of Local Government announced it would investigate the council's financial management and would try to determine whether it properly considered the impact the added costs could have on its other functions. [cite news|url=http://www.abc.net.au/news/stories/2006/10/27/1774711.htm|title=Govt to investigate Macquarie-Hastings cultural centre costs|work=ABC Online|date=27 October 2006|accessdate=2008-04-12] The investigation, which commenced on 6 November 2006, was conducted under Section 430 of the "Local Government Act 1993" (NSW), which allows the Director-General of the Department to investigate any aspect of a council or of its work or activities. [ [http://www.austlii.edu.au/au/legis/nsw/consol_act/lga1993182/s430.html Section 430] , Local Government Act 1993] The report, delivered in May 2007 to the Minister of Local Government, concluded that council did not exercise due diligence and that there had been a failure to scope the project, and recommended to the Minister that a Section 740 public inquiry, which would be independent and have some of the powers and protections of a Royal Commission, [ [http://www.austlii.edu.au/au/legis/nsw/consol_act/lga1993182/s740.html Section 740] , Local Government Act 1993] be held. A Section 740 inquiry is a necessary step before a council can be dismissed. [cite web|url=http://www.dlg.nsw.gov.au/dlg/dlghome/dlg_publicinquiries.asp?mi=7&ml=1|title=Public inquiries|author=Department of Local Government|date=17 December 2007|accessdate=2008-04-12]

On 21 May 2007, councillors Lisa Intemann and Jamie Harrison, who believed the council had exceeded its mandate and failed to consult with the community, led a public rally in Port Macquarie. The Mayor, Rob Drew, believed the centre development should be an exciting time for Port Macquarie and was critical of opposition to the project, characterising it as "slanderous accusations" and "fomenting discontent". [cite news|url=http://www.abc.net.au/news/stories/2007/05/21/1928274.htm|title=Rally planned against Glasshouse project|work=ABC Online|date=21 May 2007|accessdate=2008-04-12] [cite news|url=http://www.hastings.nsw.gov.au/www/html/2980-21-may-2007-glasshouse-rally.asp|title="Just tell the truth," Mayor tells agitators|date=21 May 2007|author=Port Macquarie-Hastings Council|accessdate=2008-04-12] He acknowledged the report raised concerns about the processes behind the project, but insisted the project itself was sound, saying in a press release, "I for one make no apologies that this is a multi-purpose facility which will provide for performers, community groups, which will provide for conferences, seminars and meetings, which will provide for activities never seen before in Port Macquarie." [cite news|url=http://www.hastings.nsw.gov.au/www/html/3002-31-may-2007-understanding-the-glasshouse.asp|title=Understanding the Glasshouse|author=Port Macquarie-Hastings Council|date=31 May 2007|accessdate=2008-04-12] Harrison meanwhile told the ABC, "The report has said categorically that council has lied to the community about the cost of the arts centre at every opportunity it's had and it's put a gloss or a spin on it".cite news|url=http://www.abc.net.au/news/stories/2007/05/30/1937079.htm|title=Councillor would back public inquiry into Glasshouse|work=ABC Online|date=30 May 2007|accessdate=2008-04-12]

By June, the mayor was looking for political support to avert a full public inquiry. The National Party, whose members were dominant on the council, and MLC Melinda Pavey had been particularly critical of the actions of the Department of Local Government in the General Purpose Standing Committee. Local Independent MP Rob Oakeshott said, however, that the council should instead address the findings of the report, and stop arguing about the facts or using emotional arguments in support of it. He also cautioned against getting politicians involved, stressing that this was a formal legal process. [cite news|url=http://www.abc.net.au/news/stories/2007/06/07/1944615.htm|title=Council may seek Glasshouse political support|date=7 June 2007|work=ABC Online|accessdate=2008-04-12]

The Willan inquiry

On 27 July 2007, the Minister for Local Government announced a Section 740 inquiry into Port Macquarie-Hastings Council and the Glasshouse project, with particular regard to aspects of financial and project management, the project's impact on the council to provide services and amenities to the community, and the openness and transparency of decisions made by the council. He appointed Frank Willan, a former administrator of Glen Innes Severn Council in 2004, as Commissioner. [cite news|url=http://www.dlg.nsw.gov.au/portmacquariehastings/|title=About the Port Macquarie-Hastings Council public inquiry|author=Department of Local Government|date=27 July 2008|accessdate=2008-04-12] The mayor expressed disappointment, asserted the methodology of the earlier Section 430 investigation was faulty, and believed the Council's management and decision-making processes would be vindicated. [cite news|url=http://www.hastings.nsw.gov.au/www/html/3606-27-july-2007-section-740-public-inquiry--statement-from-the-mayor.asp|title=Section 740 Public Inquiry - Statement from the Mayor|author=Port Macquarie-Hastings Council|date=27 July 2007|accessdate=2008-04-12]

After 18 days of public hearings and a total of 765 submissions, [cite news|url=http://www.abc.net.au/news/stories/2007/12/18/2121902.htm|title=More submissions sought for Port Macquarie council probe|work=ABC Online|date=18 December 2007|accessdate=2008-04-12] Mr Willan released the inquiry report in February 2008. [cite book|title=Port Macquarie-Hastings Council - Public Inquiry - Inquiry Report Volume 1|last=Willan|first=Frank|publisher=Government of New South Wales|isbn=1920766693|accessdate=2008-04-12] The report contained a number of critical findings, chief of which was that the council and councillors had not been rigorous in seeking accurate information about the project, had been swayed by developers and supporters, had failed to plan and manage the project and had lost control of the "uncontrollably escalating" cost, and the result was adversely impacting on works and services in other areas of the Council's operation. The Glasshouse once open, in the commissioner's view, would not have been able to generate the projected income. It further found that the community had been "consistently misled", that the council had improperly used its support group to campaign against critics and its "communication strategies have driven its processes". The council had therefore failed to meet its charter. Willan recommended to the Minister that all civic offices be declared vacant, an administrator be appointed, and that changes to the way councils dealt with their own proposals be enacted. [Inquiry Report, pp.322-337.]

acking and aftermath

Upon the report's release, the Local Government Minister Paul Lynch concluded on 27 February 2008 that it gave him no choice but to sack the council. He said of the development, "What seems to have happened is that a reasonable community facility has been treated by the council as an icon which must be built come hell or high water, regardless of the cost to ratepayers." He emphasised that in his view, incompetence rather than corruption was the reason for the cost blowout, which would reach $66 million once interest repayments were accounted for. The outgoing Mayor, Rob Drew, criticised the dismissal, calling it "atrocious".

The New South Wales Urban Task Force, a property development lobby group, believed the sacking served as a warning to other councils to stick to "core responsibilities", [cite news|url=http://www.abc.net.au/news/stories/2008/03/06/2181446.htm|title=Task force says council sacking a warning to others|work=ABC Online|date=6 March 2008|accessdate=2008-04-12] and in late March, the administrator adopted stricter financial measures listed in an independent review of the project. [cite news|url=http://www.abc.net.au/news/stories/2008/03/28/2201312.htm|title=Glasshouse failings prompt stricter financial measures|date=28 March 2008|accessdate=2008-04-12]

References