Analysis – Carol Altmann

When is a termination a resignation or vice versa?

The Warrnambool City Council’s forthcoming financial report for 2015-16 contains an intriguing line, saying the substantial sum of between $390,000 and $399,000 was paid out to a senior officer as a result of a “termination” of their employment.

As far as the public record is concerned, nobody has been terminated from the Warrnambool City Council in the past 12 months, but there has been a number of resignations, including director of city growth Bill Millard, who left last November, and that of former head of infrastructure Peter Robertson.

Mr Robertson left the council in January this year after losing the confidence of several councillors.

According to the council documents, the total payout of between $390,000 and $399,000 was a result of a “contractual payment” that was made in addition to the unnamed senior officer’s normal entitlements.

Given the highest salary for a senior officer (not including the CEO) is between $200,000 and $210,000, this is one heck of a payout and begs the question of where that extra $100,000 has come from? Parking fees and fines? And what has been cut in the budget to accommodate it?

We will probably never know due to confidentiality clauses and a general reluctance by the Warrnambool City Council to reveal the salary arrangements of its public officers. After all, we still don’t know, officially, exactly how much CEO Bruce Anson is paid each year.

In the US, for example, it is widely accepted that if you are paid from the public purse – from the US President down – then you can expect full public scrutiny of your entitlements.

Given ratepayers are the ones footing the bill for the Warrnambool City Council, it should be exactly the same here.

There is an old saying in journalism that you should always follow the money and that is exactly what we have done with the ongoing saga of the Warrnambool City Council’s purchase of the old Porter’s shed and it has led to an intriguing twist.

As those who have been following this story already know, the council paid local developer (and former councillor) Graeme Rodger $40,000 for the shed that sits on the edge of his new residential land project on Wangoom Rd, but shortly after tried to get rid of it via auction.

Unfortunately for the council, auctioneer Brian Hancock couldn’t attract a single bid and the shed was passed in at $20,000.

One reason for the shed’s unpopularity among bidders was the cost of dismantling, relocating, repairing and rebuilding the old shed at a new location, as the council is now discovering, and why it tried to “move it along” without success.

More recently, we have since learned, the council was told by Mr Rodger’s lawyers that the shed had to go: it was supposed to have been moved by mid this year, and each month that has passed since has been a blight on Mr Rodger’s land sales, after all, who wants to buy a block with a derelict shed next door?

In our last piece on this saga, we told you that the council had received a quote of $170,000 to move, relocate and reassemble the shed, making the $40,000 shed now costed at $210,000.

We also told you that the council rejected this quote and instead decided to pay Mr Rodger another $63,000 to dismantle and relocate (but not re-assemble) the shed, but that’s not the full story and herein lies the twist.

Mr Rodger is being paid $63,000, but, as the council is fully aware because it organised the arrangement, he is passing that money on to a third party to actually do the dismantling and relocating.

Why would the WCC want to use Mr Rodger as a go-between and not pay the third party itself?

We have pondered this question long and hard and the only possible solution we can come up with is that it is tied up with the council’s procurement policy, in other words, the rules around how it spends money.

These rules are quite complex, but include that any spending on services between $15,000 and $74,999 requires at least three written quotes. Perhaps by paying Mr Rodger for the cost of the shed AND its removal, the council could avoid this step and get the shed off the land by the new, mid-January deadline.

Also, under the rules, a council director can only authorise spending of up to $149,000 and anything above that must go to tender.

Director of Infrastructure Peter Robertson has so far spent $100,000 on the shed, but there are still major costs yet to come and that is the reassembly, re-fit and any repair costs for the corrosion. (See images below)

This is almost certain to exceed $40,000, which begs the question of whether this whole mess should have gone to public tender in the first place?

Unfortunately the council’s media manager Nick Higgins is refusing to answer any of our questions on the shed, but it is indicative of a number of things, not least the secrecy surrounding these dealings and the lack of transparency around the use of ratepayers’ money.

Only three councillors – Brian Kelson, Peter Hulin and Peter Sycopoulis – have raised questions about this shed within council and tried to unravel what went wrong.

And where is this shed headed? Here comes the final twist:

The shed is off to the council depot in Scott St where it will – alongside a brand new shed – partly replace the massive storage shed sold to Midfield Meats as part of the controversial land deal to allow the building of its milk processing plant.

That deal was supposed to give the council a $290,000 profit to invest back into the shrunken depot, but it appears that Porter’s shed alone will now soak up most of that “windfall”.

The Vault – Carol Altmann

The $63,000 relocation of the former Porter’s shed – sold to the Warrnambool City Council by developer and former councillor Graeme Rodger for $40,000 – has begun.

A Bluestone subscriber tipped us off this afternoon that the deconstruction of the Wangoom Rd shed had begun, but we are yet to learn exactly where it is being moved to and for what purpose.

It is also not yet known how much it will cost to reassemble the shed, which the council attempted to auction shortly after the council purchased it early last year, but the auction failed to attract a bid and the shed was passed in for half what the council paid for it – $20,000.

The shed was bought on behalf of the council by its director of City Infrastructure, Peter Robertson, who by way of his position has the authority to make purchases up to $149,999 under the council’s procurement policy.

The ultimate cost of the shed, however, is expected to be far more than that.

In addition to the $103,000 that will be paid to Mr Rodger for the shed and its relocation, there are the reassembly and fit-out costs including insulation, electricity, water etc.

As it happens, we posed a series of questions about these very issues to the council’s media spokesman Nick Higgins on Tuesday (Dec 8).

The questions include:

1. Where is the shed being relocated to and for what purpose?
2. How much will the council spend on reassembling the shed at this new site?
3. Will the council be reassembling the shed on a concrete slab and, if so, how much will this slab cost? If not, what will the shed be reassembled on?
4. What is the estimated cost of the complete refit for the shed upon its relocation, including insulation, power, water, toilets etc as required?
5. Did the council compare the cost of purchasing, disassembling, relocating and reassembling Porter’s shed with the cost of building a new shed and, if so, what was the difference?

We are yet to hear back from Mr Higgins on this ongoing saga, but you will be the first to know when we do.

(And we know the council – while not a subscriber to Bluestone – is reading stories in The Vault via access to someone’s password, so if you are reading this one, Mr Higgins, I am hoping we can have those answers soon to pass on to our subscribers.)

Exclusive – Carol Altmann

There is no doubt the hard-working staff within the Warrnambool City Council do many good things to keep our city ticking along, but occasionally they make financial decisions which are difficult to understand – like this shed.

Take a good close look at this shed because, if you are Warrnambool ratepayer, you now own it … and nobody else wants it.

The former premises of Daryl Porter’s cabinet making works on Wangoom Rd was sold by its new owner, developer Graeme Rodger, to the Warrnambool City Council earlier this year for a price understood to be between $40,000 and $50,000.

The sale was sealed on behalf of the council by its director of City Infrastructure, Peter Robertson, who by way of his position has the authority to make purchases up to $149,999 under the council’s procurement policy.

The idea, Bluestone has been told, was to have the shed relocated to council land in the west Warrnambool industrial estate, most likely at the council depot.

Unfortunately neither Mr Robertson or the council’s media manager will answer Bluestone’s questions about the shed, and perhaps the reason why is because it is shaping up as a major liability.

How? Because it has to be moved, and that is a very expensive exercise.

The 700m2 shed and an attached 300m2 lean-to are made of laminated timber, with a Colourbond steel roof and fully clad walls.

Bluestone has learned that the council received quotes to remove, relocate and re-assemble a shed of this type and found it would cost somewhere between $80,000 to $90,000 and this does not include the cost of a concrete slab.

So a $40,000 to $50,000 shed was now going to cost ratepayers well over $120,000.

No doubt realising that the shed was an unnecessary extravagance at a time when budgets are tight, the council recently tried to get rid of it – but nobody was interested in buying.

The shed was a late inclusion in an on-site auction held on Tuesday March 31, where auctioneer Brian Hancock tried his best to extract even a single bid from the crowd.

Hands stayed firmly down and the shed was passed in at $20,000.

It might not be so bad if the shed could stay where it was, and perhaps the council could rent it out to the many community and sporting groups around Warrnambool who could use the storage space, but there is a final twist.

Graeme Rodger needs the shed gone to make way for his residential subdivision later this year.

Indeed the auction advertisement reflected a sense of urgency, with bold letters stating: “Set time for removal. Payment day of sale.”

Mr Rodger told Bluestone that he was not putting any pressure on the council to move the shed, but that some time “in the next few months” would be reasonable.

The council has found itself in a checkmate and the question now is whether it spends tens of thousands of dollars on moving and re-establishing the shed, or walking away and cutting its losses.