Kiama Municipal Council is unable to accurately determine how much it cost to construct Blue Haven Bonaira, and may have used restricted funds to complete it.

The revelations are contained in an executive summary of a report from auditors Forsyths, which offers a glimpse into the “significant deficiencies in council’s management” of Blue Haven Bonaira, which is the primary reason for council’s current financial predicament.

The full report was given to KMC in April, but has only now been released in its executive summary form to the public, with aspects like employee contracts remaining confidential. Some of the other details that remain confidential are the payouts to executives in 2018 and 2021 which contributed to Council’s current financial position.

The report reveals that KMC underestimated the cost of the project in 2016  by approximately $30 million, expecting the total cost would be around $74 million. The actual cost is estimated at $105.4 million, however, this isn’t a definitive number either, as Forsyths states that it did not have enough information to determine the final price tag.

“Council did not have data to support total project cost within one source of truth as data was split over multiple work orders. As a result, we were required to utilise underlying accounting data to estimate total final project cost,” the Forsyths report states.

KMC took responsibility for managing the Blue Haven Bonaira project in February 2020 after it was opened to the public. The quality of project management was “significantly reduced” once KMC took over, as there were still defects yet to be rectified and project variations to be finalised. At this stage, total project spend was approximately $98 million.

The Forsyths report also reveals that $3.4 million of developer contribution funds that were allocated for upgrades to Council Chambers was spent on Blue Haven Bonaira’s construction. 

“From our understanding of EPA [Environmental Planning and Assessment] regulation, the use of these funds for Blue Haven is not allowed and therefore these funds need to be returned to the developer contribution external restriction,” the report states.

Where does the buck stop?

Speaking to The Bugle, Kiama Mayor Neil Reilly made it clear that he didn’t want to pass judgement on anyone involved. “I’ve got no idea what the motivations were of the staff, but I believe that they thought they were acting in the best interest of the community at the time...I’m not going to make any judgments. The whole reason we are here is to look at the council’s financial improvement, and that’s that.”

Mayor Reilly also pointed out that only the NSW State Government and its agencies can investigate the council. KMC has already sought out options for self-investigation, however these may have been superseded in part when the State Government imposed a Performance Improvement Order in November 2022 to improve Council’s financial position.

“It is possible to conduct a separate independent investigation but this may divert focus and resources from attending to immediacy of PIO obligations,” the Forsyth report states.

KMC CEO Jane Stroud has also referred the matter to ICAC (Independent Commissions Against Corruption) twice in 2022, and she continues to work closely with the Office of Local Government, TCorp and the Audit Office of NSW to address ongoing issues.

The Forsyths report also notes the recommendations KMC has already taken since it received the initial report. Of the 38 recommendations made by Forsyths, 21 have already been actioned, while 11 of the remaining 17 recommendations are in progress.