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.

Beware dodgy Senate preference deals

In pre-poll booths around Australia, voters are already braving the gauntlet of party boothworkers, eager to get their candidates' how-to-vote cards into the hands of as many voters as possible.
As well as encouraging voters to vote No.1 for a particular party or candidate for the House of Representatives, these how-to-vote cards show how they would like voters to indicate preferences to other parties or candidates.
Preferences are likely to play an important role in the result of many House of Representative seats, including the seat of Newcastle.
In the contest for control of the Senate, preferences always play a key role. Typically, Labor and the Coalition win four or five of the six Senate seats up for election in each state, and the last one or two are won by smaller parties.
Because Labor and the Coalition usually win a very similar number of Senate seats, the smaller parties often hold the "balance of power" in the Senate, ensuring that it plays a more effective role as a genuine house of review, rather than acting as a rubber stamp for the government, as it infamously did in 2005, when the Howard government used its Senate majority to ram through its WorkChoices legislation.
Senate preferences are rarely indicated on how-to-vote cards.
When voters fill in their Senate ballot paper, they have the choice of either numbering all candidates (in sequence, starting with 1) "below-the-line", or just numbering 1 in the box of their preferred party or group "above-the-line".
In this election, electoral authorities will be providing magnifying glasses for voters having problems reading the small fonts they had to use to squeeze the 110 candidates in 44 different parties or groups onto the record-breaking metre long NSW Senate ballot paper.
It's easy to see why the vast majority of voters will choose the much easier "above-the-line" option.
Below-the-line Senate voters can allocate their preferences among the 110 candidates any way they want, but preferences for "above-the-line" votes are distributed according to the registered ticket that the relevant party or group has lodged for this purpose with the Australian Electoral Authority.
This is where it can get tricky, because sometimes these registered ticket preferences don't go where voters might expect.
In this election, for example, the registered ticket of the Wikileaks Party in NSW allocates preferences to extreme right-wing parties such as the Shooters and Fishers Party and the Australia First Party before The Greens, who have strongly supported the cause of Wikileaks founder Julian Assange.
The Wikileaks Party claims that this was an administrative error. Whatever the explanation, NSW voters who vote for Wikileaks above-the-line in the Senate may find that their vote inadvertently helps to elect a candidate from a party at the opposite end of the political spectrum.
This isn't the only aberrant preference flow in the registered tickets that have been lodged for the Senate election.
So, if you value your democratic right to vote, and you want to make sure that your Senate vote goes where it accurately reflects your political views, either take the plunge and vote below-the-line, or at least make sure you check the registered ticket of your preferred party.
These are posted in every polling booth on election day, or you can check them out on the Australian Electoral Commission website at: http://www.aec.gov.au/election/nsw/files/nsw-gvt.csv

Does Newcastle Council have the ticker for community engagement?

Newcastle councillors recently voted to place a draft Community Engagement Policy and Community Engagement Framework on public exhibition.

These documents have been developed under a City Engagement Charter adopted by the previous council, and in the long shadow of the Laman St fiasco and the identification of community engagement in council decision making as the number 1 priority identified by residents in the council's own Newcastle Voice survey.

Ironically, they also come at a time when  the current council is closing doors on the community, and many are questioning whether the council has the ticker for genuine for community engagement.
The current council has significantly increased the use of secret sessions between councillors and council officers, which are closed to the public.

At one of these sessions, councillors and council staff were apparently briefed by a representative of Incitec Pivot, who were lobbying for their proposed ammonium nitrate plant on Kooragang Island.

More recently, senior council staff vetoed a request for the elected council to be briefed (in an open session) on the potential explosive danger of massive ammonium nitrate stockpiles in the Newcastle area by Tony Richards, an independent expert on industrial explosives who has featured previously in this column.

Mr Richards was willing to provide his expertise for free, but when the proposal to hear from him was brought to the elected council, the majority conservative bloc voted against even considering such a briefing.

Such an attitude to the community is hardly surprising from a council headed by a Lord Mayor who, on one occasion during last September's election campaign, stated that he would throw up if he heard me say the word "community" once more.

The elected council can play a key role in establishing the organisational culture of a council (for better or worse), and council staff - especially senior staff - understandably take their cues from the elected councillors.

The previous elected council was notoriously anti-community, so when council officers brought the draft City Engagement Charter to them, there was no recommendation to consult the community about it. Following community pressure, however, that document was placed on public exhibition.

However, it was deja vu for the community when the council officers' report on the draft Community Engagement Policy and Framework appeared in the council business papers without any consideration of placing them on public exhibition, and with a recommendation to simply adopt it.

These are key documents, that will play a major role in the way the council relates to the community.

The Policy is intended as "a reference for the delivery of all community engagement" and its stated purpose is "to embed an open, transparent and consistent approach to engaging with the community".
For an organisation with a culture of genuine commitment to community engagement, the idea of simply adopting the core organisational Policy to do with community engagement without even asking the community what they thought about it would be anathema.

The Policy and the Framework documents themselves raise a number of specific concerns, but the biggest worry is that the best Policy and Framework in the world are worthless without a council that is genuinely committed to developing and maintaining an organisational culture that understands, respects and values community engagement.

Without this, it's all just hollow verbiage.

To their credit (and again after public pressure), the elected council ignored the officers' recommendation to simply adopt these documents, and voted unanimously to put them on public exhibition.

Time will tell whether this is just a momentary flicker, or a genuine opening of closed doors.

If you want your say about these documents, you can find them on council's website, at: http://www.newcastle.nsw.gov.au/council/community_consultation/public_exhibitions.

Art Gallery decision raises larger questions on special rate increase

The Newcastle Art Gallery redevelopment was one of nine projects for which Newcastle Council was granted a Special Rate increase last year by the NSW Independent Pricing and Regulatory Tribunal (IPART).

While much recent discussion about funding for the project has centred around the federal government's $7million commitment and the lack of matching state funding, the council's apparent willingness to ditch the project raises questions about both the integrity of their Special Rate bid, and about the general accountability of councils for complying with IPART conditions.

Ordinarily, councils in NSW are allowed to raise their total rate income only by the amount set by IPART.

This practice (called "rate capping" or "rate pegging") is one of the main reasons why councils around NSW (including Newcastle City Council) are in such dire financial circumstances. It's terrible public policy (NSW is the only state that has it), and it should be abolished - but that's a discussion for another day.

Last year, Newcastle Council asked IPART to be allowed to raise an estimated extra $45.6million between 2012 and 2020/21 to help fund nine significant civic projects that were specified in Appendix A of their application.

IPART approved the council's request on the condition that "The council uses the additional income from the special variation for the purpose of providing funding towards the 9 Civic Projects outlined in the council’s application, and listed in Appendix A."

Note: "the 9 Civic Projects outlined in the council's application". Very precise. Not "at least 8 (or 7, or 6) out of the 9 Civic Projects"; and not "most of the 9 Civic Projects".

In fact, even before its controversial decision to place the Art Gallery redevelopment on indefinite hold, the council had quietly dropped two other Appendix A projects: the expansion of parking metres around the CBD, and repairs to council car parks prior to selling them.

The Art Gallery decision reduced the Appendix A list from 9 to 6.

Questioned by local media representatives about what action they might take to ensure the council's compliance with IPART's conditions for the Special Rate, the NSW Division of Local Government responded that they understood that the development of the regional art gallery had been "deferred not axed".

The Division also stated that:

"As the Council will continue to direct all the income from the special rate variation to the projects identified in the civic project program, albeit over a longer period of time, the Division does not consider that the proposal breaches the conditions of approval."

The Division's language drops the specific reference in the IPART decision to "the 9 Civic Projects", strongly implying that it's okay by them if it's a bit short of nine - though it doesn't say how many short would be okay.  

At the moment, it seems that two out of three is fair enough.

It's hardly an approach that will send a message to councils that they should take IPART conditions seriously, or that will assure Newcastle ratepayers that the money will be spent on what the council promised.

And it will send a shudder down the back of advocates for the other projects associated with the Special Rate, who saw the IPART condition as some kind of security for these projects.

P.S. Newcastle council also recently voted (7 Liberal/McCloy Independents v 6 Labor and Greens) against even hearing a proposal for a briefing from independent experts (including Tony Richards, who has featured in some of these columns) on the potential dangers of ammonium nitrate stockpiles in the Newcastle area.

Sandgate development proposal - world's largest ammonium nitrate stockpile?

In this column in December last year I reported the concerns of local explosives expert Tony Richards about the potential catastrophic danger posed by large stockpiles of ammonium nitrate (AN) in the Newcastle area.

"No matter what people say about how safe it is, I can tell you - as someone with my experience - that it frightens the daylights out of me to have that sort of tonnage sitting on the front door of Newcastle," Mr Richards said.

These words resonated, tragically and dramatically, as news came in of the fertilizer factory explosion that recently devastated the small town of West, in Texas.

According to reports, that blast killed at least 14 people and injured 200, and destroyed 50 homes over an area of at least four blocks. Reports say that the explosion registered as a small earthquake and that the impact was felt many miles away.

The precise cause of the disaster is still being investigated, but media reports indicate that it was almost certainly started by a fire and subsequent explosion involving ammonium nitrate.

The West fertilizer plant apparently stored 270 tonnes of AN, and questions have been raised about its compliance with US regulatory requirements.

Newcastle's stockpiles of AN (used as both a fertilizer and explosive) are significantly larger than this. Orica's Kooragang Island plant stockpiles up to 10,000 tonnes. Incitec has applied to store up to 12,500 tonnes at their Kooragang Island facility.

As I reported in my February column, Crawford Freightlines are asking the state government to approve storage of up to 13,500 tonnes at their Sandgate facility.

The public exhibition of the Sandgate proposal attracted 24 submissions, and is currently in the last stage of consideration by the Department of Planning and Industry.

As the company's response to the submissions observes, "most of the concerns raised on public safety and human health risk focused on the risk of explosion / detonation."

In fact, many of these submissions (including mine) referred to the potential catastrophic impact of accidental detonation of such a large quantity of AN, many times greater than that mentioned in association with the recent Texas disaster.

My submission speculated that - if approved - the Sandgate stockpile might well be the largest stockpile of ammonium nitrate in the world. The company's response has not disputed that speculation.

The company's response to community concerns reiterates that detonation risk was considered in the company's hazard analysis, which complies with current state government guidelines.

The hazard analysis is highly technical, but the explosion scenarios it considers are based on potential incidents involving up to 2,500 tonnes of AN (less than 20% of the 13,500 tonnes that the approval seeks), and don't appear to take into account a potential catastrophic blast that could affect residential suburbs kilometers from the facility.

As Tony Richards says, he's far from convinced that regulation of AN in NSW is world's best practice, especially given that a worst case scenario involving that amount of AN could be similar to an atomic blast, causing hundreds of deaths and thousands of injuries. If evacuation were possible in such a case, it would have to be beyond the Charlestown ridge.

The company rejects calls for an alternative location for the facility, primarily on financial and logistical grounds.

However, The Greens NSW parliamentarian Cate Faehrmann has now called for the relocation of all large stockpiles of ammonium nitrate away from residential areas.

Newcastle Greens Councillor Therese Doyle has requested that Newcastle Council be briefed by Mr Richards and other independent experts on the danger of large ammonium nitrate stockpiles in the council area.

The submissions and other documents related to the Sandgate development proposal are on the DPI website at: http://majorprojects.planning.nsw.gov.au/index.pl?action=view_job&job_id=5119