With voters preparing to make their choice in the politically-divided outback community, the council’s CEO has written to Minister Stephan Knoll to suggest the elected body be replaced with an administrator, using the powers available to him under the Local Government Act.
As revealed by InDaily in September, Knoll has written to the council asking it to give him reasons why he shouldn’t replace the elected body with an administrator in response to a scathing Ombudsman’s report which found the council committed serious maladministration in 2016.
In response, the council has denied the claims of maladministration, which relate to a contentious $200 million energy supply deal for the town.
Rather, it says that an administrator is required because it is suffering from serious financial hardship and internal political strife over “competing development interests”.
In a letter to Knoll, the council rejects the findings of the Ombudsman’s report, which detailed how the council signed on to the 20-year energy deal with company EDL without subjecting the agreement to its procurement processes.
As InDaily has reported extensively, the federal and state-backed agreement has been controversial in Coober Pedy for many years, with the council claiming it was under pressure to sign the agreement despite its concerns.
The Ombudsman rejected that version of events.
In a letter to Knoll, Coober Pedy council’s acting CEO Colin Pitman said the “current council is clearly not the same council that resolved to sign the Power Purchase Agreement with EDL”.
He said there had been a “serious lack of natural justice” afforded to the council members in place in 2016 and his letter outlines the reasons why he believes this to be the case, including reiterating previous claims of pressure being applied by the State Government.
However, the request for an administrator is based on other concerns, particularly the current council’s “inability to operate in a manner compliant with all of the provisions of the Local Government Act”.
In particular, the council is concerned about its capacity to finance its debts, citing a high number of outstanding debtors, “poor” management by the State Government of the Remote Areas Energy Supplies (RAES) scheme (which subsidises local power prices), and the costs of litigation.
The council says it is owed $1.8 million by debtors, which was increasingly due to its responsibility as the effective water and electricity provider in the off-grid town.
“A large number of ratepayers are using liberally the hardship provisions of the [ESCOSA water and electricity] licence and hardship policy to demand concessional repayment plans,” the letter says.
“At least 140 hardship cases after financial counselling many of whom are not meeting the cost of the current years (sic) outstanding rates let alone the historic outstanding debts.”
The letter says the council has also been hit hard by adjustments to RAES subsidies in the wake of the EDL agreement. A lack of due diligence by the scheme and the council, in the past, meant Coober Pedy had a shortfall in subsidies of about $2.2 million.
In addition, poor financial management by the council from 2012 to 2016 meant it continued to carry a debt of about $6.5 million, despite that figure reducing over the past two years.
The letter argues that a small council like Coober Pedy is required to “meet the demands of providing the largest number of services for any council in the state”, including airport management, potable water production and retailing, power distribution, street lighting, waste water treatment, and more.
It also raises problems caused by local divisions, saying there is a “generally hostile environment in the community due to competing development interests”.
“For the reasons mentioned above the road to economic sustainability cannot occur without government intervention.”
The letter says the government should provide a “well-supported administrator to work with the current administration”.
Knoll would not comment on the council’s request today.
Nominations for local government elections are closed, with the voting period to open in late October. In the interim, councils are governed by caretaker provisions.
If an administrator is appointed, he or she would have the same powers, functions and duties of an elected council and would not be under the specific direction of the Minister.
According to the Local Government Act, the Governor can make a proclamation declaring the council to be defaulting, effectively suspending all members and appointing an administrator, on the advice of the Minister.
Not earlier than three months after suspending all members, the Governor can declare the offices of all members to be vacant and fresh elections can be held, or an administrator can remain in place for up to 12 months, after which elections can be held.
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