Editorial: Red flag on Merriwa-Willow Tree Road

LAST night I voted against the recommendation for the Merriwa-Willow Tree Road, and I’d like to ensure residents know why.

The recommendation had four points, and while I was happy to support some of them, there was one that leapt out as a hard no. I proposed voting separately on the four points, to allow me to vote in support of some, and no to the one that caused me concern. The other Councillors denied the request.

For context, the initial Merriwa-Willow Tree Road project had a budget of $9.6 million, but this next budget is in the significant $10s-of-millions.

This was the point I wouldn’t support: Delegate authority to the General Manager to approve variations to the contract within the project budget.

Variations to the contract can mean anything in the contract, without coming back to Council for approval.

I remembered how the previous Council expressed shock when it became evident how horribly wrong the project had gone.

I remembered how the airport runway was changed from hotmix to asphalt (within budget) and we now have stones on the runway, it falls apart in hot weather and we need to find another $2.49 million to do it in hotmix.

What Council signed-off last night, means we have waived the requirement for the general manager to inform us of such a change on the Willow-Merriwa Road, much less seek approval. 

Giant red flag

In speaking with people in finance and governance, outside Council, they were gob-smacked at the contractual carte blanche Council approved; “it’s just madness,” and governance is “totally lacking” by taking such a step.

Another further explained, “the staff stuffed it up last time, why the #@!* would you give them total power again?” “You don’t niggle around with bloody contracts anyway, much less allow them to do it without telling you!” “Why would the other Councillors vote for this?”

All of them told me, in the private sector, they would appoint an expert advisory panel to oversee the project and report directly to the board. That is something the Council could do, but instead they have chosen to give one person, the general manager, full control of the project.

John Preston, who took the case through NCAT to obtain the geotechnical report, was happy to go on the record and explain further.

“Unfettered discretion has a long and proud history of ending badly, in a system that is designed for collective responsibility,” said Mr Preston.

“In a society that values accountability no one person’s discretion is supposed to be at large. That’s how mistakes get made. That’s why Councillors are elected to know about things, if and when they don’t go to plan, and they can’t do that if they don’t know about them,” he said.

“Otherwise, all an elected representative can do is call an ambulance; this really is the financial equivalent of just calling the ambulance,” he said.

“There should be a special committee overseeing risk and governance, in the private sector they call that “risk management” and you can’t manage risk, if you don’t know about it!”

“What is the point of elected Councillors? You are supposed to be protecting the interests of ratepayers.”

“It would be so convenient to put yourselves in the shoes of the previous Council, as the last road project unravelled, and have the time-honoured excuse of, I didn’t know about it how can I be responsible?”

“But by the way you are deemed to know about it!” he said.

“They are going down the same path they went down last time!” John Preston said.

How does something like this get through?

If the person running a project needs to go back to the board/Council to approve a contractual change, it means the board/Council are made aware of the change and why. This is fundamental governance.  

Instead, this Council has approved the general manager to have full authority to make changes to the contract, without informing Council.

I’ve typically seen two approaches used to get this kind of carte blanche from a board or in this case a Council.

1: There is a time pressure, and I don’t have time to go back to you, just trust me:

Remember how there was an extraordinary meeting of Council in June 2020, to get blanket approval for a $5 million loan to fix the road? The matter was all very urgent and needed to be signed off immediately, with an end of June deadline.

Council had received a draft geotechnical report, but the report was not finalised and Councillors were not given details on the recommended repairs or costs. A couple of Councillors said they were uncomfortable writing a blank cheque until they understood the extent of the “damage” and the actual cost. They were told the cost would definitely be under $5 million and any amount left over could be spent on other things (not sure that’s how loans are supposed to work, but anyway). It was urgent they approve the loan.

They asked why they couldn’t get a natural disaster grant for the “rain damage”? They were told there was not enough time to go through that process. They asked why they couldn’t claim on insurance? They were told there was no insurance. They were told they needed to approve the loan immediately.

Once the geotechnical report was finalised, John Preston and I fought in NCAT to have it released. It revealed the issue was never “rain damage”, it was negligence. Negligence that will cost taxpayers $10s-of-millions to correct.

While I would happily delegate the general manager to sign the contract on Council’s behalf, I absolutely will not delegate full authority for any and all contractual changes throughout this project.

If hypothetically, an urgent “deadline” for contractual changes occurred, then an extraordinary meeting should be held, with full disclosure to allow Councillors to make an informed decision. That didn’t happen last time, why would we place ratepayer and taxpayer funds at that risk again?

2: I don’t want to bother you with the small details:

In this case…oh please! Councillors have to approve $200 donations to community groups each month, so on a project in the $10s-of-millions…I insist…bother me with the details!

A contract should not be changed lightly ever, especially not one of this magnitude. Good governance requires any contractual changes be brought back to the board/Council, as a safety check.

It’s all in the fine print: Any contractual changes, which may be described as “small” or “insignificant” are basically the fine print. If you want to change some fine print on this project…show me the fine print and justify why!

However, all other Councillors voted to allow the general manager to make changes to the contract, at any stage, without informing them, much less seeking approval. And to date, I have not even seen a copy of the proposed contract, although I have asked for it.

Personally, I don’t believe this Council has the acumen to ensure we don’t end up with another botched major project and I believe voting not to be informed of contractual changes is a huge red flag for governance, one that I could never vote for.

Kind Regards,

Cr Elizabeth Flaherty

All of the above are my perspectives, opinions and beliefs as a Councillor on the Upper Hunter Shire Council, are my own, which may not (in fact probably don’t) reflect Council’s position, but which as an elected representative I am supported in law to freely express.