DEPUTY lord mayor Declan Clausen has raised questions about the origins of some $42,000 in political donations given to four Newcastle Independents candidates ahead of the 2021 local council election.
Cr Clausen questioned Independent Cr John Church at the June 25 council meeting about whether the donations could be "unaccounted for ratepayer funds" from former Business Improvement Association (BIA) Newcastle Now.
"Where did the 12 [14] disclosed political donations received from the Newcastle Now Partnership Incorporated by Cr Church and Newcastle Independents candidates actually come from?" Cr Clausen said.
"This must be one of the largest groups of donations received by any candidate anywhere in NSW leading up to the 2021 council election.
"Given the fact that there is money that has not been returned by the former BIA, is it reasonable to ask whether it is possible that these funds were in fact from the unaccounted for ratepayer funds from the former Business Improvement Association entity?"
Cr Church told the Newcastle Herald he was preparing a response to the questions raised by Cr Clausen but denies any wrongdoing.
Newcastle Now was one of four BIAs established in 2011 as not-for-profit organisations which were almost entirely reliant on five special rates levied on commercial property owners in the Newcastle city centre, Hamilton, Mayfield, Wallsend and New Lambton.
Funds from the special rates were reserved for the promotion, beautification and development of the precincts they were collected from.
The council restructured the BIA scheme and excluded Newcastle Now and Hamilton Chamber of Commerce from applying for funding after a report by consultants AECOM referred to "poor financial disclosure relating to BIAs".
Political donations
NSW Electoral Commission (NSWEC) disclosures show Newcastle Now Partnership Incorporated made 14 separate $3000 political donations to four Newcastle Independents candidates, including Cr Church, between June 30 and July 22, 2021.
Newcastle Now Partnership was incorporated on June 3, 2020. NSW Fair Trading documents show Churchills Carpet Court owner Paul Murphy is the public officer.
Edward Duc, former chairman of Newcastle Now, is the chair of Newcastle Now Partnership Incorporated.
Mr Duc said the Newcastle Alliance, which Mr Murphy previously chaired, had given Newcastle Now Partnership Incorporated the funds that were donated to Newcastle Independents candidates in 2021.
Mr Duc said there are no "unaccounted for" funds after Newcastle Now folded.
He said no funds remained to return to the council once the funding deed with Newcastle Now was terminated and the final projects the council agreed to were complete.
"This is what, six years ago now?" he said.
"If he [Cr Clausen] had these concerns, why didn't he ask the question five or six years ago? Indeed, why didn't [Jeremy] Bath ask these questions five or six years ago? Why is it being delayed until now?
"Is this some political stunt they're into?"
'Apolitical philosophy'
Mr Duc said the group helped support the Newcastle Independents because of its "apolitical philosophy".
"We do not think that councils should be political animals, and I think Newcastle is a pretty good example of why you don't want politics in councils," he said.
Newcastle Now Partnership Incorporated rose from the ashes of the defunct Newcastle Now in April 2020.
Mr Duc confirmed former members of Newcastle Now as well as individuals from Mayfield and Hamilton were now members of Newcastle Now Partnership Incorporated.
The group's constitution says its goal is to be a "peak-body forum" for Newcastle's ratepayers, community and businesses and to foster the economic development and welfare of the local government area.
Cr Church took Cr Clausen's questions on notice at the June 25 council meeting.
The matter has been tabled until the next ordinary council meeting, where Cr Church will have an opportunity to answer the questions.
City of Newcastle said it had been made aware of an allegation in October 2022 that residual special business rate funding held by a former BIA had been provided to four candidates contesting the 2021 local government election in Newcastle.
The council said that in April 2023 it had been contacted by NSWEC requesting information about Newcastle Now and the reasons why it had ceased to be one of the four funded BIAs.
The council had provided "extensive information" to NSWEC.
A NSWEC spokeswoman said it reviewed all allegations it became aware of but that, unless permitted by law, it did not comment on specific compliance matters or whether it was investigating a matter.
Newcastle Now payments
A Newcastle council spokeswoman said it had provided $245,373.30 in funding raised from special business rates to Newcastle Now over two payments in October and November 2018.
The funds were for a range of projects due to be finished in January 2019.
"This included a final payment to Newcastle Now on 26 November 2018 for $80,374," the council spokeswoman said.
"This was provided following a written request from the then executive manager of Newcastle Now that they had $161,935 in outstanding employee entitlements and outstanding contracts."
The council said Newcastle Now had not provided a final account to City of Newcastle, nor any records of how the funds had been expended during the term of the deed.
"City of Newcastle has also not received any portion of the funds back from Newcastle Partnerships Inc," the council spokeswoman said.
The council wrote to Newcastle Partnerships Inc on June 20, 2024, requesting evidence of how the $245,373.70 was spent and any funds that are still being held.
The special business rate program was reviewed in 2019 after an external review a year earlier found Newcastle Now had committed "multiple breaches" of the conditions of its 2011 funding deed.
The council's former corporate and community planning manager, Jill Gaynor, later won an unfair dismissal case after she was "summarily dismissed" by Mr Bath in October 2018 over her handling of the city's business levy scheme.
A district court judge found Mr Bath was "plainly wrong" in his reasons for sacking Ms Gaynor.
The judge found Newcastle Now had submitted business plans from 2012 to 2017 and said it was "wrong of Mr Bath to suggest otherwise".
