Call for Public Enquiry into Lane Cove Council

History of Sports and Recreation Centre proposal in brief.

The Sports and Recreation Centre (SRC) has been strongly opposed by Lane Cove residents for a number of reason, including the council taking on the full burden of $75M and its associated risks, when it will serve the whole of the north shore, and only around 10% of usage would be Lane Cove residents. The proposal should be funded as a joint council project. This led to the council resolving that a $75M budget cap will be imposed.

Due to the lack of consensus; all key council resolutions relating to the SRC were resolved by the majors casting vote, creating outrage within the community.

The project has lead to significant dysfunction withing the council.

  1. The mayor was ousted in September 2023, due to the use of his casting vote, instead of seeking consensus.
  2. The council was reported to have the most Ombudsman complaints per capita; 3 times more than any other council. (SMH Article)
  3. The GM banned councillors from speaking directly to staff (SMH Article).
  4. Council meetings were split into two sessions on seperate days for the public forum and the councillor meeting.   

The proposal has only just completed the detailed design, and the GM has now reported that the project will breach the budget cap of $75M by 7%.

There is evidence to suggest that the council is delaying othe capital works and funneling asset maintenance funds which is leading to asset degradation; and making false statements or concealing information; to fund the deficit of this project as detailed below.  

There have been continuous calls for a Public enquiry into the operations of the council, and yet, the Office of Local Government nor the Ombudsman have acted on it.

Background

While there had been discussions on the SRC for many years, in June 2021 the council presented a Long Term Financial Plan (LTFP) which included a cost of $51M for the SRC. In August 2022 it provided an updated LTFP which showed a cost of $75M and plans for progressing towards a tender process.

In a letter dated 11 Oct 2022, the Office of Local Government states that it determined that Council has satisfactorily addressed the criteria required in the OLG Capital Expenditure Guidelines. It also states that “It is also essential that clear accountability for project reporting to both Council and the community is provided throughout, so the community is kept informed of key elements, costs and decisions made in relation to the project”.

The proposal was then put to tender, but all responses breached the $75M cap. The LCC agenda for meeting on 24 August 2023 states that and LCC resolved to reject all tender submissions, due to being above the $75M cap and delegated authority to the General Manager to enter into negotiations with the preferred tenderer based on a set of cost reduction principles. These principles did not delegate authority to the GM to take on risks to reduce the contract price.

The report then confirms the principles for cost reduction were adhered to and concludes that “Council has achieved this in line with its commitment to a total project budget of $75 million, with construction now anticipated to be included by August 2025.”

In May 2024 Council meeting agenda, 9 months after commencing the work, the council for the first time reports on the status of the project, highlighting a budget blowout of 7%. It does not state the new cost to completion, nor any milestone or budget allocations. There is no mentioning of any part of the contract being fixed price. It seems that neither the contractor no the council have any constraint on the budget. Instead of insisting the cap is met, the GM seeks to fund the deficit from some other source, as though there is no cap. This give rise to question the veracity of the GM statement that the council had achieved the cost reduction in line with its commitment to a total project budget of $75M.

Furthermore, on page 29 Executive Summary, it states “Funding has been identified to address the increased costs, which will not impact Council’s existing capital works projects.” However, on page 73, under conclusion of the 3rd quarter budget review it states “Capital expenditure has been decreased by $(7,954K) mainly due to the re-phasing of a number of projects’ budgets into the 2024/25 financial year budget.”. It is reasonable to question if these capital expenditures are being intentionally delayed, to fund the SRC budget overruns.

key issues raised by councillors and the public during the approval process,

  • Can LCC afford $75M? How can it cap the price?
  • It is not in the Lane Cove residents’ interest for LCC to pay the full cost and take on the full risk, in a highly volatile construction environment (inflation at 6% at the time), considering that based on council engaged research at best only around 10% of the residents and 1.53% of the catchment population are likely to use the facility. This is more appropriate for a Joint council proposal.
  • The project was being rushed through, with insufficient consideration.
  • The LTFP (Aug 2022) used to assess the life cycle impact of the project, had serious issues, such as a CPI of 2% (a 3rd of the RBA forecast), the key asset performance indicators had been removed from the performance dashboard (since first including the SRC in the LTFP), effectively concealing whether Asset management benchmarks are met.
  • The construction site is a creek bed which flows when there is heavy rains and that there was significant contaminated fill. Both these factors now appear to be main causes for the breach of the $75M cap.
  • Due to the lack of consensus, all key resolutions were made on the mayors casting vote.

Council Assets deterioration

The Councils draft Asset Management Plan also corroborates that the Council over the years has been neglecting asset maintenance such that the asset performance indicators are the worst they have been in the 10 years reported (page 18 Historical asset maintenance and renewal). The council financial statements show that the cost to bring assets to agreed service level has increased 300% by $8.7M (from $2.9M to $11.6M) in the last 3 years.

And yet, the Executive Summary (page 6), states; “Our asset performance has been positive,…” and “Our asset value and condition has improved over the years”, in paragraphs 3 and 4 respectively. This is clearly an executive summary which misleads the public, and does not reflect the true position of the assets.

Furthermore, it is reasonable to question if asset maintenace funds are being funneled for other purposes, such as funding the SRC. This may also partially explain why the asset performance indicators were removed from the LTFP.

During the last 9 months.

  • The mayor was ousted from his position, mainly due to the excessive use of his casting vote on this critical matter, instead of seeking consensus.

  • The project has breached the $75M cap by 7% ($5.25 a new total of $80.2M), at a point when the detailed design has only just been completed, and earth works are only partially completed.

    The council has not reported the percentage of completion, but assuming 25% completion, and the project tracks with a similar rate above budget, the total overrun could be as high as $21M (4 x 5.25) at completion. A total cost of $96M.

  • By rushing through the approval process, the council had not obtained required utility /Sydney water approvals prior to commencing construction; so additional costs have arisen.

  • The contamination and water risks that were raised at proposal stage; have now crystalised, and the public are for the first time informed that the council had taken on these risks, and had made no / inadequately contingency.

  • It is still not known what measures the council has taken to implement the $75M budget cap.

  • The Council has only produced 1 report on the project status despite the request by the OLG.

The project is not being run in a manner which is in the interest of the residents of Lane Cove. The clear basis of approval of the project, the cap at $75M, has be mismanaged exposing the council to unacceptable financial risk. Also, due to the repetitive misinformation on critical factors, the public can no longer have confidence in the council management.

 

Besides this submission, you can also sign a petition calling for a Public Enquiry into the operations of Lane Cove Council, by the Gore Creek Valley Action Group by clicking here.

For more details please email [email protected]

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