AN OPEN LETTER TO THE HON. TONY SIMPSON, MLA, MINISTER FOR LOCAL GOVERNMENT AND COMMUNITIES

By email to Minister.Simpson@dpc.wa.gov.au

Copies to: Hon. Colin Barnett, Premier of Western Australia

wa-government@dpc.wa.gov.au

Hon. Mia Davies, MLA Minister.Davies@dpc.wa.gov.au

Hon. Paul Brown, MLC paul.brown@mp.wa.gov.au 

Ms Jennifer Mathews, Director-General, Department of Local Government and Communities info@dlgc.wa.gov.au

                        Hon. David Templeman MLA david.templeman@mp.wa.gov.au

Dear Minister Simpson,

Shire of York—Proposed Purchase of Old Convent School—Apparent Breach of Section 83 of the WA Criminal Code

On Thursday 2 July 2015, at 5 pm, the Shire of York convened a Special Council Meeting.  

The York community was told of the meeting only 25 hours before, by a notice posted on the Shire of York website at 4 pm on 1 July.

As you know, our elected councillors will resume office later this week. At this as at all meetings since early January, your appointee as commissioner, James Best, replaced the elected council.

The main purpose of this meeting, and the main reason for hundreds of community members attending it at such short notice, was to enable the commissioner to authorise the purchase of two blocks of land, Lots 800 and 801 South Street, belonging to two prominent local business people.  The land is the site of a heritage building, the Old Convent School, formerly owned by the Shire but sold in 2001 to private buyers.

At an earlier Special Council Meeting convened a week before, on Thursday, 25 June, to pass the Annual Budget for 2015/16, this proposed purchase had encountered extreme opposition from ratepayers who had been alerted to it as a new item in the draft budget.  Notice of this meeting was unconscionably short, given the importance of the business under consideration.

The new item bore the description ‘Town Square—purchase and development’.  This was misleading, because the amount allocated to the proposed purchase, $625,000, would cover only the purchase price of the property, leaving nothing over for development. The property to be acquired was not identified. 

As well as being misleading, the item seems to have been artfully concealed in a very lengthy budget document. Only the sharp eyes of a few astute members of the community brought it to light. 

Calling council meetings at such short notice makes it difficult for many people to attend.  However, immediately following the 25 June meeting, the community mobilised to petition for a special Electors’ Meeting.  The petition, containing many more than the requisite 100 signatures, was handed to the Acting CEO, Graeme Simpson, on Monday morning 29 June 2015. 

It appears to have been the handing over of this petition that precipitated the convening of the second Special Council Meeting on 2 July, when Commissioner Best, in his capacity as Council, gave the green light for this apparently corrupt transaction to go ahead.

We say ‘apparently corrupt’, because it seems that the purchase of the property in question will confer a benefit upon the vendors, who are friendly with the commissioner, while inflicting a financial detriment on all other York ratepayers.  We do not assert that it was in fact corrupt.  That is a matter on which we presume you will seek legal advice.

It would surely have been more fitting for the matter to be deferred for consideration by our elected councillors on their return to office.  If they agreed with the proposal, they could apply to you for special permission to raise the money required.

The draft budget revealed that the purchase money is to be obtained in the form of a loan from State Treasury.  The Shire has been in considerable financial difficulties for some time. It can ill afford more debt, and the commissioner himself has admitted it is close to insolvent.

Borrowing such a large sum for a proposed development that hardly anyone wants and regarding which the community was not consulted—which, indeed, seems to have been hatched in secrecy—will obviously make the Shire’s financial situation worse.

Sadly, the Old Convent School is not in a satisfactory state of repair.  It will require a good deal of work and money to bring it up to the standard required for its proposed use as a visitors’ centre. Yet Commissioner Best and Acting CEO Simpson made no allocation in the budget to cover the cost of repair and maintenance of the building or further development of the site as a whole.

Perhaps the most disturbing aspect of the proposed transaction is the lack of prudence displayed in the Shire’s failure to obtain, before signing the contract of sale, a sworn valuation from a licensed land valuer.  It is generally believed that the property is worth much less than the Shire has contracted to pay for it. Without a sworn valuation, we have no way of knowing if that is true.

When questioned about this at the 2 July meeting, Acting CEO Simpson declared that obtaining such a valuation was only legally necessary when a local government was proposing to sell a property, not when purchasing one.  If that is truly the case, it ought not to be, since both kinds of transaction should be directed towards getting ratepayers the best possible value for money.

Minister Simpson, you must bear a considerable measure of responsibility for this fiasco.  You appointed James Best as commissioner in York, presumably on the advice of your department.  The popular opinion is that you briefed him to hose down community disquiet about the actions of previous councils and a former CEO, with the intention of disguising your department’s laisser-faire attitude towards, or even complicity in, what your senior bureaucrats have designated as ‘historical issues’ in York.

All Mr. Best needed to do was to keep the engine oiled and ticking over.  Instead, seemingly carried away by the scope of his mission, he has spent ratepayers’ money on unnecessary consultants and lawyers as well as public relations experts, or spin doctors as they are more accurately known. From a financial point of view, and not only that, his tenure of office in York has been a disaster.

We believe we speak for the great majority of York residents in asking you to use your authority and influence to put a stop to the proposed purchase of the Old Convent School, for example by persuading WA Treasury to reject the Shire’s application for a loan.

To assist you in your deliberations, we attach a schedule of extracts from the Shire of York’s website that relate to the long-term financial viability of the shire. We refer you in particular to the extract from page 19.  It is abundantly clear that the Shire cannot afford Commissioner Best’s latest and most questionable extravagance.

Yours sincerely,

Jane E Ferro

James Plumridge

5 July 2015

SCHEDULE

EXTRACTS FROM THE SHIRE OF YORK’S LONG TERM FINANCIAL PLAN 2013-14 TO 2022-23 (LTFP)

1.5 STRATEGIC PLANNING FRAMEWORK
The framework guides the Council in identifying community needs and aspirations over the long term (Strategic Community Plan), medium term (Corporate Business Plan) and short term (Annual Budget), and then holds itself accountable (Audited Financial Statements). The Council, in preparing a long term financial plan, will seek to answer the following-
 The affordability of the community’s needs and wants;ð
 How can we plan to achieve the desired outcomes;ð
 Meeting future challenges and pressures; andð
 Achieving financial sustainability.ð

The LTFP establishes the financial direction of the Council in order to meet the funding requirements over the next 10 years. The Plan is prepared in conjunction with the Councils Corporate Business Plan to ensure the affordability of services and facilities incorporated into the Corporate Business Plan.

Pg 19
3.1.1 Findings
An analysis of the above financial information reveals that for the 2012-13 financial year the Shire has an operational deficit of $1.219M inclusive of depreciation, or a surplus of $0.40M excluding depreciation (non cash).
This continuing trend will place the Shire as unsustainable (deficit of $1,218,962 divided by Rates revenue of $3,764,540 = -32.38%) if the current service delivery levels are maintained and if no alternative revenue sources are identified.

Pg 24
5.0 FINANCIAL SUSTAINABILITY
5.1 WHAT IS LONG TERM FINANCIAL SUSTAINABILITY
In order for the Shire to be financially sustainable it needs to fund ongoing service delivery and the replacement of assets without imposing excessive debt or rate increases on future generations; in other words it needs to maintain intergenerational equity.
The key financial sustainability principles are-
1. The Shire must achieve a fully funded operational position; that is it must collect sufficient revenue to fund operational expenditure, depreciation and interest on borrowings.

Pg 38
6.2.5 Borrowings
The Shire will be prudent and fiscally responsible when considering any proposals for new debt to deliver Council’s objectives.
The Shire does not propose to borrow funds over the life of the Plan.
For further information on Borrowings, please see Section 9.3.7 of this Plan.
9.3.7.2 New Borrowings
No new loans are proposed to be raised over the life of the Plan.

Pg 57
11.0 RISK ASSESSMENT
Risk can be simply defined as the effect of uncertainty on the objectives of the Shire. When evaluating risks the following issues must be understood –
5. Uncertainty is the state, even partial, of deficiency of information related to, understanding or knowledge of, an event, its consequences, or likelihood.