Call for Public Enquiry into Lane Cove Council $83M budget deficit

The mayor of the Lane Cove council (LCC) has just stated that the council is considering a applying for a Special Rate Variation to increase rates above the Independent Pricing and Regulatory Tribunal (IPART) rate currently set at 3.9%.

The operational plan adopted in June 2025 shows that the council is no longer operating as a going concern, and has not ability or plan to recover. It is unable to deliver its commitments to the public.

The Long Term Financial Plan (LTFP) for the council, on page 20 states,

”As a result of the many pressures on Council’s ...

The mayor of the Lane Cove council (LCC) has just stated that the council is considering a applying for a Special Rate Variation to increase rates above the Independent Pricing and Regulatory Tribunal (IPART) rate currently set at 3.9%.

The operational plan adopted in June 2025 shows that the council is no longer operating as a going concern, and has not ability or plan to recover. It is unable to deliver its commitments to the public.

The Long Term Financial Plan (LTFP) for the council, on page 20 states,

”As a result of the many pressures on Council’s budget, including rate pegging, cost shifting, inflation, increased service expectations and increased depreciation, Council is unable to continue to maintain its operating performance ratio above benchmark. For the first time in many years, Council has budgeted for an operating deficit in 2025/26 which will continue over the life of the LTFP” (The lifetime of the plan is 10 years)

The Income Statement on page 21 shows that there is an accumilated deficit of $13.2M over the term of the plan.

Furthermore, the under the plan roads will deteriorate to a health level of 50%, 16% below the national average; exposing the residents to unacceptable risks.

The Asset Management Plan (AMP), in the context of recovering health rating of assets such as roads and parks, back to the National Average, on page 23 states,

"“Under the improvement scenario, current modelling indicates that additional average annual renewal investment in the order of $7M per annum would be required.”
This translates to an additional $70M over the 10 year duration of the plan

This totals to a shortfall of $83.2M ($13.2M + 70M) for the term of the plan, bringing into question if the council is operating as a going concern.

Meanwhile, council is building a $75M Sports centre (now overrun tp $82M), and the General Manager has resigned leaving the council in this financial state.

There is significant prima facie evidence to suggest the council misled the public in order to gain approval for a proposal to build a $82M Sports and Recreation Centre (SRC), particularly in relation to operational planning used to assess Capital Expense proposals. A community discussion paper which describes issues and breaches in more detail, can be accessed here.

The council did not issue its Asset Management Plan for 3 yrs leading up to the approval of the SRC, and manipulated the Long Term Financial Plan with an intent to conceal that an asset renewal deficit of around $40M would accrue over the next 10 years if the proposal proceeded. Also, that the health of council roads and parks would rapidly deteriorate to a rating of around 50%, due to cost savings to fund the proposal.

There was strong public objections to this proposal, as it was a high cost facility of $75M, which was for the whole of the Lower North Shore, where local residents usage was estimated to be less than 20%; but Lane Cove Council was taking on the full burden of funding it, and all risks related to the construction.

Furthermore, the council was already unable to maintain its assets such as roads and parks, but was taking on significant capital expense constructions which it would not be able to maintain.

Around June 2023, members of the public first identified serious anomalies with the council planning documents and raised these matters with the council and other government oversite organisation, such as the Auditor General, Ombudsman, Minister of Local Government and ICAC, prior to the final appointment of the head contractor in August 2023.

There have been over a 1000 submissions made to these organisations, through petitions and emails, making Lane Cove Council have the highest rate of complaints to the Ombudsman for the last 2 consecutive years, and yet, no action was taken by a single organisation, now resulting in the public having to pay even more for this facility.

Furthermore, there have been 3 audits since the matter was repitatively raised with the Auditor General, including one after the June 2025 operational plan, but these issues and risks were not identified or mentioned the their report.

Commitment to a Capped Budget of $75M breached

Due to the public concern on cost, the council mislead the public by commiting it would operate with a capped budget of $75M. Within 6 months of the project commencing the budget cap was breached by $6M (ref: Council meeting papers for May 2024). The necessary steps to implement the cap, such as fixing the price of all mandatory work, had not been taken. It is plausible that this was done to reduce the starting contract price by sharing risk, thereby meeting the $75M cap, to gain approval.

Questionable exercise to bring tender under the capped budget

All head contractor tenders came above the capped budget. The council then deligated the General Manager authority to deal with one of the tenderers to bring the price under the budget. In August 2023, the GM reported he had achieved that. However within the1st month of work commencing, $6M worth of contract variations were raised (ref: PCG meeting papers of 10th Oct 2023). The integrity of this exercise should be examined.

The Lane Cove public has lost confidence in the integrity of the council due to its reckles management of public funds and assets, and in the effectiveness of government oversight agencies.

This campaign calls for a public hearing into the events that have led to the current liquidity crisis and hold those liable to account, and investigate how all government oversight agencies, particular the auditors; failed to act or identify the issue.

It also calls for actions to find alternative sources of funding to pay-off the $10M loan for this facility, and engage a consult to review council processes and to instill integrity, so that the public can build trust in the councils ability to responsibly manage public funds and assets.

A community discussion paper which describes issues and breaches in more detail, can be accessed here.

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Inaction by Government oversight organisations

35 emails sent

This action is to call for an administrator to be appointed to restructure the council finances to return its operations to profit making with the capacity to maintain its assets and with the public interests in mind.

It also calls for a public enquiry into,

Council activities leading to the approval of the $75M Sports and recreation centre
How the Office of Local Government Capital Expense Review approval was given for a $75M capital expense without an Asset Management Plan and significant breaches to guidelines.
Why the Audit Office did not pickup the impending liquidity crisis, despite having performed two audits after being alerted by public of the issues.
why the council and various government oversight organisations ignored over a 1000 calls from the residents of Lane cove to investigate the operations and financial status of the Lane Cove Council over the last 3 years, which has now led the council to a liquidity crisis requiring a Special Rate Variation.

Furthermore it calls for the council to seek other sources of government funding prior to a Special Variation on rates for Lane Cove council Residents, and an external review of council opertations so the public can gain confidence in the council being fit to manage public funds and assets.

The call is addressed to,

Bola Oyetunji, Auditor General NSW

Daniel Mookhey, Treasurer NSW

Courtney Houssos, Minister for Finance

Ron Hoenig, Minister of Local Government

Paul Miller, Ombudsman NSW

John Hatzistergos, Commissioner ICAC

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Dear Daniel Mookhey- Treasurer NSW, Bola Oyetunji- Auditor General NSW, Courtney Houssos- Minister for Finance, Ron Hoenig-  Minister of Local Government, Paul Miller-  Ombudsman NSW, John Hatzistergos-  Commissioner ICAC

On the 7th May 2025 at a residents association meeting, councillors from Lane Cove Council stated that council is considering a Special Variation in rates in year 2026/27, above the maximum permitted of 3.9% specified by the Independent Pricing and Regulatory Tribunal (IPART).

The Long Term Financial Plan (LTFP) for the council, on page 20 states,
” As a result of the many pressures on Council’s budget, including rate pegging, cost shifting, inflation, increased service expectations and increased depreciation, Council is unable to continue to maintain its operating performance ratio above benchmark. For the first time in many years,  Council has budgeted for an operating deficit in 2025/26 which will continue over the life of the LTFP” (The lifetime of the plan is 10 years)

The Income statement on page 21 of the LTFP shows that there will be a $13.2M deficit accrued over the term of the plan.

Furthermore, the Asset Management Plan (AMP), page 23 shows that the council plans to let the health of roads, the largest and most critical / community risk asset class, deteriorate to a rating of 50%, 16% below the national average!

In the context of recovering health rating of assets such as roads and parks, back to the National Average, on page 23 states,
“Under the improvement scenario, current modelling indicates that additional average annual renewal investment in the order of $7M per annum would be required.”
This translates to an additional $70M over the 10 year duration of the plan.

In total, there is a deficit of $83.2M ($13.2 + 70) to operate without a deficit and recover the health of assets over the term of the plan.

This is the definition of an organisation that is not a going concern. The council has no plan or ability to operate at a profit, and is failing to meet its commitments (maintain its assets) in the foreseeable future.

Yet, council is FULLY funding an $82M Sports centre for the ENTIRE Lower North shore, with an expected usage by Lane Cove residents of just 20%.

Clearly the situation is beyond the capacity of council management. We need urgent action to assist council restructure its finances, to make it run at a profit, and save our approximately $600M worth of assets from any further deterioration. Roads at a health rating of 50% will expose the community to unacceptable risk, and may cost lives!

The council now requires a major financial and asset restructure which the council has neither the integrity nor skills to perform. Therefore we need an administrator appointed to work in the public interest.

The public took several steps to try protect public funds and assets, such as, reminding councillors of their duties when assessing capital expenses; alerting councillors and oversight agencies such as the Audit Office, the Office of Local Government (OLG), the Ombudsman NSW and ICAC of fraudulent and misleading documents used to gain approval; and calling for an external review prior to proceeding; but to no avail.

Despite objections by some councillors, the proposal was approved by a series of resolutions passed by use of the mayors casting vote.

It is now evident that council was fully aware of the need for a Special Rate Variation well before the approval of the $75M (now blown out to $82M, just below the review threshold!) Sport and Recreation Centre (SRC) but took several intentional steps, that breached OLG Capital Expense and Integrated Planning and Reporting guidelines, to conceal it from the public.

It also concealed the intentional deterioration of public assets through lack of maintenance, so it could funnel funds towards saving for the facility. It concealed this by failing to issue an Asset Management Plan (AMP), a mandatory component of the integrated planning framework; for 4 consecutive years (2019-2022 inc) leading up to the approval of the sports centre; and concealing 8 performance factors, 3 of which are mandatory planning measures defined in the Integrated Planning and Reporting guidelines, from the Long Term Financial Plan (LTFP). They included critical areas such as "Debt Service Coverage, Asset maintenance and asset renewal deficits.

The LTFP and AMP are 2 of 3 critical components of the integrated planning and reporting framework mandated by the Local Government Act 1993 (section 8A,(1).(d)). These are forward financial planning tools that enable analysis for investment decisions, and would clearly show that the SRC was not a viable investment. Instead of using the tool to engage public and increase public knowledge, council plausibly manipulated the information and used it to mislead the public and decision makers.

In effect, over this period (from 2019 - Aug 2023), council made $160M in capital expenses (Canopy $81M and SRC with one builder), while planning to accrue an asset renewal deficit of $40M, taking on debt of $10M and running down the health of roads and parks to a health rating of around 50%.  It is plausible that the council repetitively breached the Capital Expense Guidelines, the IP&R guidelines and both the Local Government Act and ICAC during this period. Furthermore, it is unclear who and which government agencies were complicit in this deception.

The Audit office has done 3 audits since August 2022, and despite all warnings from public, not raised a single red flag. Furthermore, the current opinion, just 3 months after council adopting an operational plan clearly stating it is running at a loss for the foreseeable future, has no plan or ability to recover; and has a $70M funding deficit so cannot maintain its roads and parks (no longer a going concern); once again has NOT raised a single red flag!

The end result is that through no fault of their own, the only person held to account is the Lane Cove resident, who will be penalised by a Special Rate Variation.

I believe the council has acted recklessly and criminally as it has made several procedural breaches defined in the capital expense guidelines, councillor Handbook, and Integrated Planning and Reporting guidelines;  and is therefore no longer fit to manage public funds and assets valued approximately $800M. The public has the right to know the full extent of the misconduct, why all financial controls and oversight authorities failed despite being alerted, and that corrective actions are taken to protect public funds and assets. This can only be achieved through commissioning an independent public enquiry, an external review of council processes and holding those involved to account.

I ask that,
1.	An Administrator is appointed to restructure the council to return it to a going concern able to honour its commitments and to protect the community from unacceptable risks both physical and financial.

2.	The Ombudsman, OLG and ICAC call for a public enquiry into the Lane Cove councils handling of this matter, the failures within the government financial Risk Management framework; the failure of oversight agencies to act, to seek answers to the questions above, and to hold those involved in misconduct, accountable.

3.	The OLG organise an external review on council procedures and financial planning controls, so as to rebuild public trust. Also, to assist with other possible sources of funding, such as the Ministry of Sport NSW, as this is a sporting facility, and Northern Sydney Regional Organisation of Councils (NSROC), as 80% of the usage is expected to be from Lower North Shore, external to Lane Cove.

4.	The Treasurer to take due responsibility for the failure of financial risk management frameworks for public funds, and take real measures to assist the council recover, such as a $10M grant to repay the T-Corp loan; instead of further penalising the residents of Lane Cove, who have been exposed to council deceit, inaction by oversight agencies and safety hazards due to unmaintained rundown parks and roads.

The community took every measure to try and prevent the crisis, therefore should not be penalised with a Special Rate Variation.

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