Financial crisis grips Central Coast Council as budget deficit hits $89 million

Central Coast Council is staring down the barrel of financial ruin, after revelations of serious liquidity issues and allegations of budget mismanagement.

It has been revealed that an expected budget deficit of $41 million has now more than doubled to $89 million.

But Independent Councillor Greg Best claims the actual figure will be far higher, and says councillors have been gagged from talking about it.

The Council said recent reviews commissioned by CEO Gary Murphy, had revealed a "serious financial situation" that it blamed on the effects of COVID-19 and natural disasters.

Authorities are probing whether restricted funds were illegally used.

A recent report by the New South Wales Audit Office found that between 2001 and 2019, more than $13 million in developer contributions collected by the Council were misspent on administration costs, in breach of the law.

The New South Wales Government has now intervened, appointing an independent financial expert and human resources adviser to look into the matter.

'Systemic failures'

Councillor Greg Best will move a motion at next Monday’s council meeting titled "collapse of confidence in Council's internal controls and financial management".

"We have had a systemic failure and putrefaction of our internal controls," he said.

He claims that councillors have been briefed on the actual budget deficit, and it will far exceed $89 million.

"This is going to result in significant further borrowings for the Council, it's going to have to, in my view, result in extraordinary rates rises."

He said large amounts of borrowing, excess staff and mismanagement of Warnervale Airport were among the factors that had sent council finances over the edge.

The ABC contacted every councillor by phone for comment. Of those who could be reached, all except Councillor Best said they were unable to discuss the issue in detail based on legal advice.

Councillor Chris Holstein said he was "extremely angry", while Councillor Chris Burke said "it is confidential".

The office of Mayor Lisa Matthews has also been contacted for comment.

'Forensic audit' underway

Labor member for Wyong David Harris said the Council's revenue would fall short of what had been budgeted for, and the worst was yet to come.

"If you throw in the fact we've had a major flood, we've had bushfires, we've had COVID-19, in just the last 12 months, Council's revenue has gone through the floor," Mr Harris said.

He said the Council's dire financial position could partly be attributed to the amalgamation of Gosford and Wyong councils in 2016.

A Council spokesperson said the ongoing financial cost of the amalgamation was in excess of $100 million.

Central Coast Council received $10 million from the State Government towards the upfront costs of amalgamation and $15 million for infrastructure.

Minister for Local Government Shelley Hancock has appointed an independent financial expert and human resources adviser to oversee the matter.

A Council spokesperson said a working group was preparing a 100-day action plan to recovery, and savings measures would be implemented.