Kiama Council is expected to have its Performance Improvement Orders (PIO) extended after failing to stabilise its financial situation fast enough.

The NSW Minister for Local Government Ron Hoenig informed Kiama Council CEO Jane Stroud on 30 January 2024 of his intent to extend the PIO following the completion of a review from independent expert John Rayner on 20 January 2024.

The PIO was issued by the Local Government Minister at the time, Wendy Tuckerman, which required Council to address 13 specific issues to help improve its financial position, as well as provide four reports detailing its progress. Council has provided those reports, submitting the final report to the Minister in June 2023.

In his letter to Kiama Council, Minister Hoenig said he was satisfied that Council had taken steps and was continuing to address the matters outlined in the initial PIO. However, Minister Hoenig said he was still concerned that Council wasn’t moving quickly enough to stabilise its financial position.

“Given the difficult financial circumstances facing the Council, it is important Council remains on track with the financial strategies that have been put in place to reduce expenditure and increase revenue,” said Minister Hoenig.

“The community needs to have confidence that Council’s financial management and performance has independent oversight and is being closely monitored.”

Minister Hoenig advised that the PIO should remain in place with a number of variations made.

“This will ensure both existing councillors and any new councillors elected in the September 2024 elections are aware of and operate within the financial constraints necessary to return Council to financial sustainability by 2026/27.”

In his reasoning for extending the PIO, Minister Hoenig stated there was evidence to suggest that in the past, Council failed to meet its legislative responsibilities in relation to its financial management. “The current Council has been made aware of and recognises past failures but is moving too slowly to achieve surplus budgets and become financially sustainable,” Minister Hoenig said.

He also provided  list of the ongoing financial and governance issues, which includes:

• The inability to produce 20/21 annual financial statements leading to a disclaimer of audit
• A negative trend of increasing liabilities and trading losses
• Questions raised about Council’s liquidity and viability
• Council’s Aged Care facility/service (Blue Haven) running at a loss
• Poor understanding of the loss, efficiency and compliance of the Blue Haven aged care facilities
• As a result of changed accounting systems, Council was unable to produce reliable financial reports
• Concerns whether Council’s Auditor would certify Council as a going concern
• Significant cost overrun in the establishment of Blue Haven Bonaira
• Restricted funds had been illegally applied to general use

Kiama Council will be required to provide bi-monthly reports to the Office of Local Government on the progress of the actions taken. 

You can read the full list of proposed orders here.

Failing to comply could lead to a further PIO or even the temporary suspension of Council. Kiama Councillor has been invited to provide feedback on the proposed changes to the initial PIO.

Registrations for Council’s Public Access has been extended until 10am Thursday 1 February to give ample time for the public to provide feedback on the report.

Commenting on the report, Kiama Council CEO Jane Stroud said: “I am not surprised that the PIO will continue and will bind this Council, future candidates and ultimately the next incoming Council. Until the structural deficit is corrected and Council lives within its means, it is what is needed, and is a reasonable and well-thought intervention by the State Government. I am grateful that the Minister has not yet imposed further sanctions or moved to appoint a financial controller. Our team have worked hard to comply with the previous Performance Improvement Order and every effort will be made to continue to meet the requirements”.

“I urge members of the public to read the report, understand the issues and to think deeply about the transparency of what has been shared historically and now”.