Editorial: Selling the childcare centre – at what cost?

Filed in Feature, Just In by July 27, 2023

WHILE the airport cost $1.6million last year, Council’s general manager, Greg McDonald told a recent community meeting it was important to continue with the project since approximately 34 families rely on the airport for employment.

Yet, Council has the Upper Hunter Early Learning Centre on the market, which can accommodate 57 children each day, is the only long-term day care centre in the Shire and is arguably the only Council asset which can deliver a positive cash flow.

There are many more than 57 children who can be enrolled at the Centre, because not every child attends every day. The Centre supports many more than 34 families, either directly as employees at the Centre, or by families relying on the Centre so they can work.

The cost to the community of selling this asset, is not only a hit to the Council bottom line in terms of cashflow, but it may also be a hit to the hip pockets of local families who rely on the Centre.

Once the asset is sold, the new owner is not bound by the Local Government and is a servant to shareholders, not the community.

Short-term gain for long term pain

When reviewing Council’s dire financial position, I asked one of the external financial people, “how could we dig our way out of this position?” They responded, “what do you have to sell that’s $32million?” I responded, “nothing!”

The most obvious approach to claw out of debt is to stop creating debt, that means making some tough decisions on the pet projects hemorrhaging money, but to date Council is not prepared to sell any assets in distress.

The second approach is to sell any assets you can find. By selling the Upper Hunter Early Learning Centre it may give a quick cash injection of a few million, but that won’t even hit the sides of the debts accumulating from other projects.

Just consider, for example:

  • the saleyards is losing in the vicinity of $500,000 per year and has now racked up $1.5million;
  • the airport project just lost $1.6million and has lost at least $2.8million in two years, and
  • on just those two projects we’ve accumulated more than $4.3million and each of those are projected to continue making losses.

So if Council were to sell the UHELC for say, hypothetically, $3million, that will not even cover the losses on just those two projects to date, much less offset any further losses.

Then balance that short-term quick financial gain against:

  • ditching the only Council asset that can create ongoing cashflow,
  • local families paying more for childcare, and
  • some families not being able to work, because their childcare costs outstrip their wages.

Running day-care centres may not be core Council business, but neither are cafes, function centres, liquor licences, airports, sale yards, golf courses, or Campbell’s Corner. Arguably the day-care centre supports more employment than the other projects and is the only one not making a loss. This seems a lot like robbing Peter to pay Paul.

Background to potential sale

In approximately January 2022, Council was approached by an interested buyer for the childcare Centre, so Council staff commissioned an independent valuation by Colliers.

In July last year, Councillors were informed of the above, but were not told who the interested buyer was, and were not provided with a copy of the valuation, which had been completed the month before. But Council voted to commission an independent real estate agent to invite expressions of interest in the business. That independent real estate agent also ended up being Colliers.

At the December 2022 Council meeting, I requested financials for the UHELC, I have still not received the financials I requested. But I did receive a code of conduct complaint because I had told the public I’d requested the financials, in a closed Council session, predictably the Office of Local Government is still considering the matter and is yet to make any determination.

Keeping it off the public record

I am concerned with selling a valuable community asset. I am concerned with the process of doing so. I am concerned with the way it has been rushed and I am completely uncomfortable with the lack of scrutiny and consultation with the very people affected by this, the ratepayers and users of the Centre.

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.

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