Three years ago, Central Coast Council (CCC) was days away from a complete financial collapse that would have left more than 300,000 people without basic services.
But after hundreds of redundancies, millions in sold assets and a massive rise in rates, the organisation will be in the green when the region's first council elections in seven years are held in September.
In October 2020, an administration was brought in to oversee the council after it was revealed it had no money to pay its staff and needed an emergency loan from the NSW government, due to an $89 million deficit, and a total debt nearing half a billion dollars.
A broom was swept through the organisation, with the chief executive and all the councillors sacked.
David Farmer was hired as the CEO due to his history of fixing wayward councils, including steering Wollongong and Ipswich councils after major corruption scandals.
Mr Farmer said it was CCC's "lack of control and caution" rather than corruption that led to its dire financial situation. Despite its growing deficit, the council expanded its capital spending program.
"What was happening is like in your home budget; if you earn $1000 a week and you're spending $1200 bucks a week, then you don't go out and buy a new car," Mr Farmer told the Newcastle Herald.
"We're somewhere between the top three and five councils in Australia in terms of turnover and assets. So you know no one would have thought a council like this could fail."
The council provides water and sewerage for residents, and has the most cheapest water in the country due to "double regulation" by the Independent Pricing and Regulatory Tribunal, which contributed significantly to its financial spiral.
The council had illegally dipped into restricted funds, such as developer contributions and government grants, so the council's first action was to get a $50 million loan to repay the funds that had been unlawfully spent.
While there was no issue with securing the initial loan, when CCC sought another $100 million to fund day-to-day operations, "the media got wind" and the banks refused to lend any more money.
"Rik Hart, the administrator at the time, said 'we were very close to just leaving the keys on the front desk and going home', because we couldn't get the money to pay staff or creditors," Mr Farmer said.
"It would have been a complete disaster, but a bit of intervention by the government and council managed to get that second $100-million loan."
Turning it around
With enough money to continue operating, set about making difficult decisions, including cutting about 600 staff positions - or one in four jobs - with almost 300 redundancies.
The council was also forced to significantly reduce salaries, wages and services.
The capital works program was restricted to $175 million, $60 million worth of assets was sold, and water and sewerage charges were increased.
Even after these drastic changes, the council still needed a 13 per cent rate increase.
Mr Farmer said the council's "reputation took a beating".
"The solution wasn't in any way palatable because we actually had to ask people to pay more money to get slightly lower services," he said.
"I didn't run the ship onto the rock, but unfortunately during the rescue term, you get tilted with the rotten fruit because you've got to deliver the hard decisions."
There were "enormous ramifications" for the community as a result of the council's financial failure - maintenance for parks, gardens, public spaces and roads was reduced, while cuts had to be made to the development application assessment team, leading to frustratingly slow building approval rates.
"We're still trying to get out of the hole that we dug," he said.
Right path but hangover remains
After three-and-half years of hard decisions, Central Coast Council is back in the green - if only slightly.
The $100 million emergency loan was repaid at the end of 2023 and the $50 million will be repaid by Christmas this year.
The capital works program has been expanded to $300 million and the council has returned a surplus the past two years, with the most recent worth $10 million.
Mr Farmer said the surpluses were "comparatively small" for a council that turned over about $700 million annually.
"Three surpluses in a row won't add up to those two huge loss-making years," Mr Farmer said.
"It will take a number of years for the surplus to catch up to the years you went broke. There are still some real challenges, we've still got some hangovers from what happened."
The council is stable enough to welcome back councillors in this year's upcoming local government election. Mr Farmer said the incoming group would have a big job on their hands.
"We're on the right track, the trajectory is definitely positive, but there's still a lot of work to go and it's a fragile organisation," he said.
*This article originally stated an administrator was brought into oversee CCC due to an $89m debt, when it should have stated an $89m deficit. The total debt was close to $500m. The article also incorrectly stated the council had the most expensive water in NSW due to over regulation. It should have stated it had the cheapest water. The article has been altered to reflect these changes.
