Council secrecy creates "climate conducive to corruption"

An update from my February column, which reported the case of Marrickville councillor Max Phillips who was suspended by the head of the NSW Division of Local Government for refusing to apologise for telling his constituents about discussions between a big developer (Meriton) and his council over development concessions.

This case had major implications for councillors throughout NSW being able to carry out their proper duties as elected representatives accountable to their communities.

The good news is that Councillor Phillips' appeal against the decision was upheld by the NSW Civil and Administrative Tribunal, which overturned his suspension and contested many of the grounds on which both the initial council decision to censure him and the subsequent disciplinary action by the state government bureaucracy were based.

Some of these findings may be used as general precedents in future cases where council administrations or political majorities who want to conceal information from the public attempt to censor or censure community-minded councillors who want to tell their constituents what is really going on.

The bad news is that many of the factors that guided the Tribunal's decision were particular to the circumstances of the Phillips case, and that the NSW local government system contains precious few specific protections for councillors who care more about representing their constituents and the public interest than they do about protecting the interests of council administrations and the commercial interests who do business with them.

The NSW Model Code of Conduct for councils – produced by the same state government department whose CEO made the now discredited decision to suspend Councillor Phillips – contains many provisions specifically limiting councillors from disclosing information to the public, but not a single provision that specifically protects their right to do so.

The Tribunal judgement was critical of the department's decision to simply assume that the council had been correct in its finding against Councillor Phillips, rather than examining whether the council's initial ruling was reasonable in the first place.

Unfortunately, that's the standard situation - state bureaucracies are usually much more inclined to approach things with the same mindset as their counterparts in council bureaucracies, and to see things their way.

Newcastle Council administration – hardly known for its commitment to openness and transparency – has attempted on several occasions to bind Newcastle councillors to stringent restrictions on speaking to the media and the community on any council matters.

The current council has also continued the previous council's practice of cutting the number of formal council meetings, which must be open to the public and the media, and instead conducting much of the discussion on major matters under the veil of secret “workshops”, which are not publicly notified, and are closed to the public and the media.

According to council information, between 16 October 2012 and 18 February this year the current council held 17 ordinary and 11 extraordinary council meetings, compared to 27 closed workshops over the same period.

These closed workshops discussed more than 50 topics, ranging from the Newcastle Art Gallery, city centre revitalisation, community facilities, council pools, media policy and Blackbutt Reserve, to the NSW Government White Paper on Local Government Reform.

Nothing in any of that that the community should know about, of course.

Though decision-making in these workshops is technically prohibited, some councillors privately admit that they are rife with “nod-and-wink” decision-making.

With so many examples of lack of transparency and accountability in public policy decision-making at the forefront of public discussion at the moment, this is yet another example of (in the words of ICAC) a “climate conducive to corruption”.

Council rate increase proposal must leap wide credibility gap

As this column is being written, Newcastle Council is considering major rate increases that would increase the average annual Newcastle residential rate by $400 by 2020.

However, no changes are proposed to the council's rating structure, whereby the council's total rate income is divided 50-50 between an ad valorem (or land value) component, and a flat charge (or base rate) applied uniformly to every residential property.

This means that the burden of paying for the proposed increases will fall more heavily on the usually poorer owners of lower-valued land, compared to what they would pay under a rating structure with a higher relative land value component.

I've written before in this column about the socially inequitable impact of this rating structure. The higher the base rate component, the greater the burden on owners of relatively lower-valued land (note, it's your relative land value compared to other residential properties in the same council area that matters here, rather than its actual value).

Each general rate increase also increases this social inequity. 

Previous councils have produced comparative tables showing the relative rate burden that would apply to a range of residential property values under different rating structure options (e.g., with a 40/60, 30/70 or 20/80 per cent base rate/ad valorem split), but no such information has been provided with the current documentation.

Despite claiming that it is trying to achieve a balance between “the extent to which those who receive the benefits of council’s services also pay for those services”, and “the extent to which those who pay for council’s services have the ability to pay for those services”, the council administration is proposing to keep the highest legally allowable base rate of 50%.

This isn't the only credibility problem the current council faces in advocating a general rate increase. 

Again, I've written before about such credibility problems when the administration was proposing to seek approval from the NSW Independent Pricing and Regulatory Tribunal (IPART) for a Special Rate Variation last year, and later when it reneged on its commitment to the Newcastle Art Gallery. 

The special rate proposal never made it to IPART, because it was rejected 6 votes to 7 by the elected council, in a rare instance of a defection from the usual dominant McCloy/Liberal council bloc.

However, the new proposed rate increase will also require IPART approval, and the council faces similar credibility issues: many of the expenditure commitments it made when the IPART approved its 2012 Special Rate Variation were not fulfilled, and much of the discussion surrounding the proposed rate increases has been (and continues to be) conducted in meetings closed to the public.

Little appears to have changed since last year, with the administration proposing that the elected council agree to the proposed rate increases even before they are exhibited for the mandatory minimum 28 day period.

This is a pity, because, as I've argued before, there is a strong case for increasing council rate revenue, and the council should be working with the community to win its confidence on such proposals.

According to the current documents, the council budget (comprising its Draft 2014/15 Operational Plan and its Draft 2013-2017 Long Term Delivery Plan) will be on public exhibition from 7 May to 4 June 2014.

Restored Regal crowns inspiring community campaign

With rampaging neoliberalism in all spheres of government cutting a swathe through the basic services on which local communities depend, examples of successful grassroots community campaigns are despairingly difficult to find.

For the most part, those of us who are committed to grassroots community values take solace in slowing down the rate of destruction until the political pendulum swings toward a time when people are put before profits, and the public interest before vested interests.

But Newcastle hosts at least one stunningly successful project that will inspire anyone looking for signs of hope in the power of community action.

The beautifully restored and recently re-opened Regal Theatre in Birmingham Gardens stands as a beacon in the general gloom of local politics.

The cinema was formerly (and lovingly) operated for many decades by Bruce Avard, and was locally famous for offerings that were refreshingly different from the homogeneous fare of the big chain multiplex cinemas.

The Regal building itself (converted from a former community hall) became something of a period piece, with a homespun retro atmosphere that complemented Bruce's own warm, personalised style.

And then there were Bruce's almost equally famous home-made choc-tops, maintained at the Regal long after they had been usurped by mass-produced corporate-branded fast food in the big chain cinemas.

Before the Regal was closed in late 2006 as a result of action by Newcastle Council, it had established a large, regular and loyal patronage from across the lower Hunter.

The role of the Regal in Newcastle's cultural life was highly regarded in the local community, and was formally recognised in heritage and cinema history registers.

Soon after it closed, a community group – the Friends of the Regal (co-founded by the late former Newcastle Lord Mayor, Greg Heys) - formed to reopen it.

Local hearts and minds were with them, but it was still a long, hard slog for those involved.

At a council meeting where the proposal to transfer ownership to a community-based trust was debated, I can recall one (now former) Independent Newcastle councillor predicting that it would never succeed.

Securing funding was a key issue, and the campaign received a major boost when prominent figures from Australia's national film industry threw their support behind the project, including the producers of Happy Feet, who provided high quality modern digital projection technology on community-friendly terms.

The “refurbished, rejuvenated and restored” cinema (to quote the Regal website) was re-opened last month with a program that signalled that it is once again poised to play a significant role in our city's cultural life. While some features of the building have been necessarily modernised, it has retained its former community character, with community-friendly prices to match (standard price is $7.00 a ticket). 

 

At the moment, the cinema is being run by a small group of dedicated volunteers. The plan is to transfer the running of the theatre to an appropriate private operator later in the year, with the community retaining ownership through the non-profit, community-based Regal Cinema Building Trust.

The Regal tradition established by Bruce Avard of a short introductory talk just before the curtains open for the movie has been continued - now accompanied by a celebrity dog. 

And to (literally) top it off, they've even brought back the home-made choc tops - based (I'm told) on Bruce's own secret recipe.

Congratulations to all concerned for an inspiring community effort!

The Regal Cinema contact number is 4950 7630; website: http://regalcinema.com.au/

Councillor suspended for telling constituents the truth: could this happen in Newcastle?

Whatever we might think of our local parliamentarians or councillors, most of us believe that we vote them in to do their best to represent us in parliaments or local councils, and to tell us what's going on in important matters via the media and other forms of communication.

So how would you feel if one of your local councillors was suspended by a senior NSW bureaucrat because he refused to say he was sorry for telling you about a multi-million dollar offer made to the council in return for development concessions?

This is precisely what has happened to constituents represented by Greens councillor Max Phillips in inner-Sydney Marrickville – and it could just as easily happen in Newcastle.

Late last year, developer Meriton, approached Marrickville Council about entering into a voluntary planning agreement with the council for its controversial Lewisham Towers apartment development.

The discussion involved representatives of the developer, council staff and councillors. Clr Phillips thought that his constituents should know about these discussions, so he told them.

But Marrickville's Labor and Liberal councillors said that they considered the information confidential, and that Clr Phillips had therefore breached the council's Code of Conduct by disclosing it.

They subsequently joined (in a split council vote) to formally censure Clr Phillips, demanding that he apologise to Meriton and the council for his action.

Clr Phillips refused to do this, saying that he couldn't genuinely apologise because he didn't believe that his action was wrong and that an apology would therefore be dishonest, which would breach the Code of Conduct. 

So the council referred the case to the NSW Division of Local Government.

On 14 January this year, Ross Woodward, the Chief Executive of the NSW Division of Local Government, suspended Clr Phillips for two months.

Mr Woodward's formal order (which is available online) states that Clr Phillips had breached the Code of Conduct by refusing to comply with the council resolution to apologise. 

Mr Woodward said his decision to suspend Clr Phillips for two months was guided by a decision of the NSW Pecuniary Interest and Disciplinary Tribunal in another case (in 2012) concerning another councillor who had also refused to apologise when required to by a council decision.

In that case, the Tribunal determination (also available online) concluded that “Abject refusal to comply with a resolution of council irrespective of whether a Councillor feels she is right or wrong is a serious breach of the code of conduct… The importance of complying with a resolution, no matter how objectionable cannot be overemphasised.”

Clr Phillips is apparently intending to appeal the decision against him. Anyone who is interested in following up any of the details of his case will find plenty of relevant information and other links on the Marrickville and Petersham Greens website.

However, these cases have serious implications for local democracy throughout NSW, because the relevant provisions apply to all NSW councillors.

I've written in the past about the ongoing secrecy and abuse of confidentiality in the current NewcastleCouncil, and the continuing pressure from the council administration to lock elected councillors into putting their loyalty to the council organisation above their duty to the public interest and the community who elected them.

How long will it be until one of our elected councillors, performing the role we expect of them in telling us what's going on, falls foul of similar machinations?

Council has credibility gap on IPART submission

Regular readers of this column will be aware that I often have a very different perspective on matters to do with Newcastle Council from the current General Manager, Ken Gouldthorp, whose stridently neo-liberal managerialist approach grates on my sense of what a community-oriented council should be.

It didn't surprise me, for example, when Mr Gouldthorp recently intervened (unsuccessfully, in this particular case) to advocate against the elected council adopting a Community Engagement Policy.

However, it seems that I'm on a "unity ticket" with Mr Gouldthorp on the issue of rate-capping and the need to increase council's rate income.

Mr Gouldthorp was recently quoted in the local media railing against the decision earlier this month by the NSW Independent Pricing and Regulatory Tribunal (IPART) to restrict NSW councils to a maximum 2.3% increase in their general rate income.

Saying that the rate-cap "beggared belief" he foreshadowed that the council would have to apply for a special rate variation to exceed the cap, and that this would probably need to be more than the 3.4% granted by IPART last year.

I've reflected before (most recently in my June column) on rate-capping as a "terrible policy", and "one of the main reasons why councils around NSW (including Newcastle City Council) are in such dire financial circumstances."

In that column, I also criticised the lack of any real commitment (by Newcastle Council or the state government) to conditions set by IPART on the special rate variation it granted to Newcastle Council last year, ostensibly for nine projects, many of which have been abandoned.

I don't resile from those criticisms - in fact, I think the council has created a rod for its own back in trying to win community support for the future special rate variations that Mr Gouldthorp has recently signalled as almost inevitable.

Applications to IPART for special rate variations have to identify the particular things that the council proposes to spend the money on, and IPART usually decides that any above-cap variation it grants has to be spent accordingly.

This is exactly what happened with Newcastle Council's successful application last year, but the nine projects it sought funding for disappeared as quickly as green bottles hanging on a wall.

As the council builds its case for a further special rate variation in the next financial year, that track record may well come back to haunt them.

That would be a pity, because I have no doubt that there's a genuine case to be made for the extra income.

Since its introduction in 1977, rate-capping has severely compromised the ability of NSW councils to deliver the services that local communities need.

No other sphere of government is subject to these kinds of restrictions, and the practice is limited to NSW, where council rate revenue lags well behind other states.

The cumulative and ongoing financial impact of rate-capping on Newcastle Council amounts to hundreds of millions of dollars of foregone revenue that might have been applied to our deteriorating infrastructure (roads, footpaths, public buildings, parks, etc) and disappearing council services.

I'm sure we'll hear a lot more about this, as the council gears up its pitch to the community - IPART also requires councils to actively engage with their community on any special rate application.

Mr Gouldthorp might need to reach for that Community Engagement Policy after all.

Newcastle Port in policy thought-bubble storm

Note: this article was written the day before the State Government announced that the Morgan Stanley report (to which the article refers) had been completed, and that the port privatisation would proceed. They have refused to release the report.

Most readers will be aware of the NSW government's decision - announced as part of this year's state budget - to privatise the Port of Newcastle, partly to fund light rail for the Newcastle CBD.

The state government's handling of the Newcastle Port privatisation has affirmed the oft-quoted view of two prominent British economists in the 1980s that privatisation was "a policy in search of a rationale". 

After the O'Farrell government auctioned 99 year leases for both Port Botany and Port Kembla last year, Newcastle was left the only remaining major public owned port in NSW.  

The state government has engaged banker Morgan Stanley, who did the job for them with the other two ports, to advise them on the commercial sense of the Newcastle sale, and - if it proceeds - to find a buyer.

It struck some (including me) that a study into whether privatising the port made commercial sense might have been more useful before deciding to sell it. 

This gave the announcement the appearance of yet another O'Farrell government policy "thought bubble", an impression reinforced by the fact that senior NSW Ministers had specifically disavowed any plans to privatise the Port of Newcastle and rejected the viability of light rail for the Newcastle CBD in the months leading up to the sudden budget backflip.

In an article titled "Are we selling off the family silver by privatising Australia’s ports?", published just before the NSW budget announcement, Peter van Duyn, a maritime industry expert based at Melbourne's Institute of Supply Chain and Logistics at Victoria University, said:

The onus on a private port owner is to maximise the profits for shareholders and 'sweat the assets'. In contrast, a publicly owned port on the other hand has the capacity (and some commentators say duty) to stimulate regional development by investing in port infrastructure.

Of the Port Botany and Port Kembla sales, Mr van Duyn said:

while many may welcome the sale of such assets to fund necessary infrastructure projects, others have flagged that the concentration of port ownership may lead to steep price rises, as well as concerns over regulatory oversight.

So how does the proposed privatisation of an income-generating asset such as the Newcastle Port Corporation stack up for the NSW state government?

The corporation's current annual report values its total assets at $502.18million. Its total revenue for 2012/13 was $99.475million, with an after-tax profit of $22.84million. It paid $32.35million to the people of NSW last financial year, in the form of $16.966million in taxes and interest payments, and a dividend of $15.384million.

The state government says it expects to receive around $700million from the sale (which will probably exclude pilotage and navigation services), from which it will spend $350million on a light rail system for the Newcastle CBD to replace the existing inter-city rail infrastructure and service somewhere between Wickham and Broadmeadow.

Like the port sale, the state government hasn't yet presented any detail of their proposed light rail system, or any business case for it.

With so little crucial detail available, it's difficult to conclusively assess the financial case for selling the port to fund light rail, but even the most ardent advocates of the proposal have to accept that it involves swapping an income-generating asset for one that will require significant ongoing government expenditure, and will probably lead to an overall loss in public transport patronage.

Hardly a persuasive case for privatising one of the Hunter's key regional assets.

Dark days for local democracy under current council regime

Last month marked the first year of the McCloy-led Newcastle council.
The early days of this council stimulated local media speculation about a "new era of cooperation" among councillors, after the division that characterised the previous council.
In my December column last year, I questioned this depiction, noting a possible future 7-6 voting pattern evident at the first meeting of the newly elected council (in voting on the Deputy Lord Mayor position), with the four Liberals and two Independents combining with the Lord Mayor against Labor and Greens councillors.
I concluded my December column thus:

"So, as a glimpse into the future voting patterns and dynamics on the new council, the first meeting was really more a mixed bag than the love-in portrayed by the media.
I suspect this is a more accurate indicator of how things will be."

In hindsight, I have to report that I was both wrong and right.
Voting on the new council hasn't really been a mixed bag.
In fact, the 7-6 voting pattern that I noted as one possible trajectory has become so entrenched that regular council watchers now refer to the dominant conservative bloc as the "McLiberals".
Clr Andrea Rufo, who was elected on the ostensibly progressive, pro-community "Community One" platform, and who was touted by some as a possible moderating "balance of power" influence - has since left the Community One group, and now routinely votes with the conservative "McLiberal" bloc, along with the other "Independent", former jockey Allan Robinson, who controversially switched electoral horses in midstream from the Buman to the McCloy stable during last year's council election campaign.
Certainly, the conflict in the current council isn't as overt as it was in its predecessor, mostly because the real level of division is hidden to a large extent by local media coverage that continues to be either generally sympathetic to the dominant bloc, or relatively indifferent to issues of local democracy.
But the attack on local democracy that characterised the previous council has - if anything - intensified under the new regime.
The signal sent by the now dominant "McLiberal" bloc when it first flexed its voting muscle to overturn previous arrangements to share the Deputy Lord Mayor position among all interested councillors and give it exclusively to one of its own has echoed through the year.
Most recently, it was evident in the appointment of a new General Manager, on the vote of the "McLiberal" bloc in a confidential meeting that gave councillors almost no information.
This "it's our show" attitude of the "McLiberal" bloc has also excluded the community.
The first year of the McCloy council has seen a significant reduction in the already diminished number of open council meetings, and a significant increase in regular informal "workshops" between councillors and senior staff that are closed to the public and the media.
These meetings can't make formal decisions, and NSW government rules say they aren't even supposed to make "de facto" decisions.
But, while the official line denies it, I've heard councillors admit that "nod-and-wink" decision-making is common at these gatherings.
Most recently, the council has decided (again confidentially) on an organisational restructure that scraps the "City Engagement" division and creates a "Corporate Services" division.
Will the next step be the incorporation of community engagement into a "customer services" unit, that reduces citizenship participation to a marketised service, and democracy to corporate managerialism?
Watch this space.