Chapter 5 - Tumbi Creek
Introduction
5.1
On 24 June
2004 and 11 July 2004
then Parliamentary Secretary
De-Anne Kelly
approved two Regional Partnerships Program (RPP) grants to Wyong Shire Council
for dredging work at the mouth of Tumbi Creek. Together these grants totalled
$1.496 million.[258]
5.2
The grants received much media attention in late 2004
and early 2005. Questions were asked in both houses of the federal parliament
regarding the probity of the grants and approval process. The Committee inspected
Tumbi Creek mouth and the proposed dredge channel on 24 February 2005 and heard evidence from relevant
parties at a public hearing at The Entrance on the same date.
5.3
This chapter examines the Tumbi Creek dredging project
grants. It briefly describes the background and reasons for the proposed
dredging and sets out the evolution of the project proposal. The chapter then
examines the grant applications, assessment and approval process, including the
roles of relevant key stakeholders.
5.4
The examination gives rise to a number of concerns
about the administration of the RPP program, which are discussed throughout the
chapter. Such concerns include: the appropriateness of the Tumbi Creek dredging
grants according to the published program guidelines; the inadequacy of the
grant applications; circumvention of the ACC review process; availability of alternative
sources of funding; and probable political influence to expedite the assessment
of the grants.
Background
5.5
Tumbi Creek is located within the jurisdiction of the
Wyong Shire Council (the Council), on the New South
Wales Central Coast.
The creek is one of four freshwater courses entering into the Tuggerah
Lakes.[259] Management of the lakes system has
long been a priority for the region, with $13 million allocated to lake
restoration work by the New South Wales
government in 1988.[260] Tumbi Creek
mouth itself has been dredged on three previous occasions, in 1974, 1986 and
1995.[261]
5.6
Siltation around creeks and inlets is the result of natural
processes of erosion and deposition that occur in all estuarine environments.[262] Mr
John Asquith,
Chair of the Central Coast Community Environmental Network, told the Committee
that 'closure of these types of channels and their reopening in storm
conditions is a natural cycle'.[263] In
the case of Tumbi Creek, Mr Asquith
explained that sediment build up had been made worse by human activity. For
example, increased population around the lake has increased the nutrient levels
in the lake environment, contributing to build up of weeds and therefore the
blocking of the creek mouth.[264] Documents
provided to the Committee by Wyong Shire Council also state that, 'the level of
development in the catchment had increased both the volume and velocity of
stormwater flows in the creek, leading to erosion and instability of sections
of the creek banks and particularly the creek bed'.[265]
5.7
As a result of sediment build up, in late 2000 the
entrance to Tumbi Creek became blocked, resulting in NSW Waterways removing
navigation markers to the channel and closing it to boating access. At the same
time, the Council closed the boat ramp at Tumbi Creek, with plans to improve an
alternative boat ramp at Saltwater Creek.
Evolution of the project proposal
5.8
The proposed dredging project, put forward for grants
under the RPP, is the culmination of a long history of proposals and research
into options for handling siltation at Tumbi Creek mouth. A brief overview of this
history is canvassed here.[266]
5.9
In response to community concerns, the Council
considered the state of the creek in January 2001 and resolved to seek approval
for minor excavation of the creek mouth channel. The New South Wales Department
of Land and Water Conservation (DLWC) gave approval for this dredging work in
August 2001. However, by that time the Council no longer considered minor dredging
a viable option, due to the increased siltation which had occurred in the
intervening period and further concerns about water quality and potential
flooding.
5.10
In September 2001 the Council resolved to pursue a more
extensive dredging option. This option involved dredging a new channel and
spreading the dredge spoil across the lake bed. The estimated cost of this proposal
was $300,000. Various studies, information gathering exercises and negotiations
were subsequently conducted in order to meet concerns raised by the Review of Environmental Factors associated
with the proposal and to meet dredge licence requirements.[267]
5.11
Eventually, more than two years later, all matters had
been resolved and in March 2004 the DLWC issued the Council with a dredging
licence and concurred that dredging could commence.
5.12
In the intervening period, community concerns had been
levelled at the proposal to dispose of the dredge spoil across the lake bed. Mr
Ken Ticehurst,
Federal Member for Dobell, addressed the Council on 10 December 2003 offering $340,000 of federal
funding towards the dredging, conditional on the dredge spoil being taken off
site rather than spread across the lake. The offer was also conditional on the
state government and the Council providing matching funding.[268]
5.13
On 10 March
2004, one week after receipt of the dredging licence, the Council considered
a rescission motion relating to the dredging and resolved not to proceed with
the option to spread the dredge spoil across the lake bed. The Council called
for a report on alternative options for opening the mouth of Tumbi Creek and
the associated costs.[269]
5.14
Throughout this period, Mr
Ticehurst continued to take an active
interest in the dredging of Tumbi Creek and lobbied Council members to adopt a
dredging option which involved disposing of the spoil off site. In a letter of 10 March 2004 to Cr Greg Best, then
Mayor of Wyong Shire, Mr Ticehurst
said:
In conclusion I would hope that Councillors support the
rescission motion as our environment and our lakes are too precious to be dealt
a blow by dumping 15,000 cubic meters of sludge and silt onto the lake floor.[270]
The RPP proposal
5.15
Ten alternatives for clearing the blocked creek mouth
were put forward to the Council in a preliminary report. Five of these options
involved again dredging the channel created by previous dredging works; the
other five involved dredging a new channel on an alignment closer to the
creek's natural watercourse.[271]
5.16
Committee members explored with Mr
David Cathers,
Council's Director of Engineering Services, the 'preliminary' nature of the
report:
Senator O’BRIEN—Mr
Cathers, can you explain what the report
means when it says that the options are ‘based on preliminary data and would
require further investigation’?
Mr Cathers—Yes.
...The reason why I included the comments that were based on preliminary
information was that it was developed to, I guess, a concept level. We had some
preliminary survey levels taken and the information was not good enough at that
point in time to include in contractual documents.[272]
5.17
The Council considered the report at a meeting on 9 June 2004 and resolved to adopt
Option 1, which involved dredging the creek on the new alignment and disposing
of the spoil off site at a landfill tip. In the report, this option was ranked
third of the ten proposals. Mr Cathers
explained that the ranking was based on 'ecological impacts, social impacts
etc'.[273] He said that the ten new
proposals were not ranked against the rescinded proposal, which had already
been ruled out by the Council. Mr Cathers
told the Committee that while the selected option was not, due to cost
considerations, ranked the highest it was expected to have a longer impact than
the cheaper options.[274]
The RPP applications
5.18
The first RPP application put forward by the Council in
relation to Tumbi Creek was submitted the next day, 10 June 2004, without further development of the newly
adopted dredge proposal.[275] The
application was predicated on a tri-funding arrangement, with the Council,
state and federal governments each contributing $680,000.
5.19
Mr Ticehurst
had encouraged the Council to apply for RPP funding, inferring that the
application should be lodged quickly. In a media release of 8 June 2004, Mr
Tichehurst said:
The funds for Tumbi Creek are available in the Regional Partnerships programme of the
Federal Department of Transport and Regional Services.
The appropriate application from Wyong Shire Council is awaited
by the Department of Transport and Regional Services. Subject to Wyong Council
resolving on Wednesday to formally apply, an application will be lodged with
the Department of Transport and Regional Services.[276]
5.20
Unlike other RPP applications prepared by the Council,
the Tumbi Creek dredging application was not prepared in consultation with the
relevant ACC.[277] Instead the
application was submitted directly to DOTARS' regional office. Mr
Cathers told the Committee that he had been
advised to send the application directly to DOTARS by Mr
Graeme Hallett,
an adviser to the Hon Jim
Lloyd, Minister for Local Government,
Territories and Roads.[278]
5.21
Subsequently, on 11 June 2005, DOTARS sent the application to the ACC for
comment.[279] However, the ACC's
comments were not provided to the minister for consideration before the grant
was approved. Dr Gary
Dolman, Assistant Secretary, said:
There was an issue with this particular project, unfortunately,
where the ACC advice was late in coming. So in this case the ACC recommendation
was not provided.[280]
5.22
The application was provided to the ACC on 11 June 2004. The Committee was
informed that the ACC's comments were entered into TRAX on the 22 June 2004, that is, seven working
days later, but were not stored successfully.[281]
The ACC's comments were then emailed to DOTARS two days later on 24 June 2005.[282] The covering email sent to the ACC
with the application clearly indicates that these were adequate response times:
For those projects that were developed in consultation with the ACC,
comments should be sent to the Department within 10 working days. However, ACCs
are not required to meet this timeframe for projects they have not been
consulted on.[283]
5.23
Dr Dolman
told the Committee that Parliamentary
Secretary Kelly's
office had twice requested that the department 'look at whether the project
could be given some priority'.[284]
5.24
DOTARS provided conflicting evidence as to when the
grant was approved. Following the detection of errors in information already
revised by the department, discussed in Chapter 1, DOTARS
Secretary Mr Michael Taylor
informed the Committee that the first application in relation to Tumbi Creek
was approved on 24 June 2004.[285] This date was consistent with the
information provided in revised tables. However, in answers to questions on
notice later supplied to the Committee, Dr
Dolman provided contradictory evidence,
stating that 'Mrs Kelly
approved the first grant for $680,000 (GST incl) on 23 June 2004'.[286]
5.25
Whether the grant of $680,000 was approved on the 23 or
24 June 2004, this was a
remarkably short response time when compared with other RPP projects.[287] A letter advising the Council of approval
of the grant was sent from the parliamentary secretary on 2 July 2004.[288]
The funding was formally announced in a press release from Mr
Ticehurst on 5 July 2004.
5.26
On the 25 June 2004, the Council submitted a
second RPP application, this one directly to DOTARS' national office, seeking $1.3 million.
The covering letter accompanying the application stated:
Council is now seeking financial support from the Federal
Government for two-thirds of the estimated cost of the project ($1.36M), on the
basis that the NSW Government has made no provision for funding of this work.[289]
5.27
Wyong Shire Mayor Brenton Pavier told the Committee
that he had discussions with Mr Hallett
prior to the Council seeking the additional funding. He described the nature of
the discussion as follows:
Mayor Pavier—It was to properly reflect, which was probably well
known in the community, that the state government was not going to come to the
party on its particular one-third and that we would try and seek an additional
third.
Senator CARR—And
what did Mr Hallett
tell you?
Mayor Pavier—I think he said that he would go off to his various
colleagues or take those representations back to whomever.[290]
5.28
As discussed later in this chapter, state government
funding was available for the dredging of Tumbi Creek, but not for the option
which by this stage was preferred by the Council.
5.29
The second RPP application, for $1.3 million, was not
sent to the ACC for consideration.[291]
This application was almost identical to the first, apart from the amount of federal
money sought, and absence of state partnership funding. Presumably, the ACC's original
comments therefore remained relevant. DOTARS witnesses refused to inform the
Committee whether or not the ACC's advice on the first application was given to
the minister to consider before approving the second grant:
Senator CARR—Was
it applied to the second application on the 25th?
Dr Dolman—I
think we are getting into the area of advice to ministers.[292]
5.30
The additional grant of $680,000 was approved on 11 July 2004 and announced by the Prime
Minister, the Hon John
Howard, during a visit to Tumbi Creek on 26 August 2004 (three days before the
federal election was called).[293] In a
letter of 26 August, Parliamentary
Secretary Kelly
informed the Council that the additional funding had been approved.[294]
5.31
The Committee was first led to believe by Mayor Pavier that
neither he nor other members of the Council were aware of the Parliamentary
Secretary's decision to approve the additional funding prior to receipt of her
written advice.[295] However, documents
later provided to the Committee show that on the 9 August 2004, Mr Hallett
sent an email to a number of individuals including Mayor Pavier and Mr
Ken Ticehurst,
stating the following:
Dear people
At 9am on 26 August the
full measure of Tumbi Creek funding will be announced at the site.
I recommend that we must make this announcement a little more
professional than just standing on the jetty, speaking and moving off asap.
With a minister and parliamentary secretary present we must
offer some sustenance and time to meet with the media and local residents.
I agree with Brenton that we should not seek WSC expenditure on
this.
Therefore a Dobell campaign should fund a simple barbeque
breakfast with juice, tea and coffee. We can either hire equipment or use a supporters.
We will punt on the fact that it won't rain.
Finally I recommend that an addressed letter of invitation go to
residents who live near by the creek to come and hear an "important
announcement" and share breakfast with Ken,
the Mayor and Ministers.
Please advise your views so we can bed this down.
thanks
Graeme[296]
5.32
As Mayor, Councillor Pavier was fully aware of the
second grant application made by Wyong Shire Council, including the quantum of
additional funding sought. Given that approval of the first grant had already
been announced, and that Mr Hallett's
email specifically referred to the 'full measure' of funding for Tumbi Creek,
the Committee considers that Mayor Pavier was aware of the decision to approve
additional funding prior to the parliamentary secretary's written advice.
5.33
The above email communication, in advance of formal
advice regarding the additional grant approval, indicates the high degree of
collaboration between the offices of the Mayor, the local federal member and
the Minister for Local Government, Territories and Roads in relation to the
Tumbi Creek RPP applications. As mentioned in the introduction to this report,
a key term of reference for this inquiry concerns the nature and extent of the
roles of various stakeholders, including politicians and their advisers, in the
process of selecting successful applications. The Committee was therefore
concerned to explore with witnesses the nature of the collaboration between
various political stakeholders in relation to the Tumbi Creek project.
5.34
Mayor Pavier's statement, in sworn evidence, that he
was unaware of the decision to approve the additional funding prior to receipt
of written advice from the parliamentary secretary forestalled further
questioning by Committee members. This effectively obstructed the Committee's
examination of this issue at that time.
State funding
5.35
Concurrent with the above exchanges regarding federal funding
for the dredging work, the Council was in communication with relevant state
departments regarding state funding.
5.36
Evidence to the inquiry shows the New South Wales Government
was committed to contributing funding towards the dredging of Tumbi Creek in
line with the Council's original proposal. Mr
Kerry Yates, Council's
General Manager, said:
As recently as this month or last month, we received a letter
from Grant McBride, the member for The Entrance, confirming that the money was
still available for the original scheme – not for the scheme that is now
favoured.[297]
5.37
A copy of this letter provided to the Committee sets
out the state government's position:
I am pleased to advise that following further representations to
the Minister for Infrastructure and Planning, the Hon
C Knowles,
the State Government has re-committed to fund in equal partnership with Council
the dredging of Tumbi Creek in accordance with council's original proposal, for
which a licence had previously been issued by the Department of Lands.
As I have previously stated, the Federal funds committed to this
project would be better expended on catchment management issues upstream rather
than just treating the symptoms of poor catchment management over and over
again.[298]
5.38
The state government did not support the revised proposal
involving removal of the dredge spoil off site and was not prepared to co-fund this
option. The state government's position on this matter was described in a
letter from the Hon Craig
Knowles to the Hon
Grant McBride:
Committing to equally share funding for investigations and works
estimated at $2 Million without fully examining the alternatives, without
having regard to other state-wide priorities and without having any input into
the recommended option is not exercising due diligence with regard to the
expenditure of public monies. I am also concerned that the council would
consider the expenditure of over $2 million on a remedial action that may need
to be repeated in a few years and at more than one location.[299]
Possible reallocation of grant monies
5.39
Heavy rain on 1
October 2004 flushed some sediment from the mouth of Tumbi Creek,
making the passage navigable for small boats. A number of questions in the
House of Representatives in February 2005 focussed on whether or not the
Council subsequently sought to reallocate some of the RPP grant to other works
upstream, and the advice given to the Council in that regard. In essence, these
questions asked whether Minister Lloyd's
office had advised the Council not to disclose the true state of the creek
mouth so as to continue to receive the allocated federal funding, and by so
doing, to defraud the Commonwealth.[300]
5.40
The Committee explored with Council witnesses the
matter of the possible reallocation of the RPP grant money. Councillor
Robert Graham,
Deputy Mayor, told the Committee:
I am not an engineer. I did not know how much spoil had been
washed out, so the question I was asking the council was, 'How much has been
taken out? A certain amount of money has been promised. Do we need all that
money now and, if there is any left over – any residue – can we use it up the
creek?' ...I asked whether there was going to be any residue from the money from
the federal government and, if so, whether there was any chance that we could
use some of that upstream to back up the river banks to stop the silt coming
down...We got the answer back that there was only 1,000 cubic metres, so it is
probably pretty much irrelevant.[301]
5.41
Advice on the impact of the storms on the creek mouth
was given to the Council in a presentation by Mr
Cathers on 24 November 2004. Mr Cathers concluded that the heavy
rainfall of 1 October 2004 moved about 1,000 cubic metres of silt, however the
RPP funded project involved dredging 15,000 cubic metres and therefore further
work was required. The presentation also noted that DOTARS had requested an
update of the Council's intent following the opening of the creek mouth.[302]
5.42
DOTARS' request appears to have been initiated by an
email from Mr Hallett
who, following conversations with Mayor Pavier, requested a statement from
DOTARS about the conditions applying to the announced RPP grant. Mr
Hallett's email said:
...I require a clear statement on behalf of the Commonwealth by
DOTARS of the conditions that apply to the announced funding for the agreed
works at Tumbi Creek for the dredging and removal to land fill of the spoil in
Tumbi Creek.
The commitment by the Howard Government to the electors of
Dobell in partnership with Wyong Council is non negotiable. It is the position
of Mr Ticehurst
that the money be delivered as agreed for the works in the schedule of the
agreement under Regional Partnerships.
The confirmation of the strict conditions of our partnership
with Wyong Shire Council under this programme should therefore be stated for
the information of Wyong elected councillors and senior officers, so there can
be no doubt about the way forward to deliver the commitment on Tumbi Creek.[303]
5.43
In correspondence to Council officers following the October
storm, DOTARS' regional office staff had advised that 'if there is a cost
saving, we may be able to re-direct funding to works consistent with the broader
objectives of the project'.[304] In DOTARS'
formal response, Dr Dolman
stated that the funding allocated was for specific outcomes and that any
changes to the project objectives would require a 'formal request by the
Council for the consideration of the Parliamentary Secretary, Mr
John Cobb'.[305] DOTARS' response also stated:
The Department is currently waiting for advice from Wyong
Council regarding the implications of the recent removal of the blockage at the
mouth of Tumbi Creek on the dredging project. A revised project schedule and
costing will be negotiated with the Council.[306]
5.44
DOTARS sought to ensure any savings created by the
partial clearing of the creek were appropriately returned to the Commonwealth. Dr
Dolman told the Committee:
The first thing we did is that we replied to that email which
was passed on to council to make it clear that the objectives, or the outcomes,
of the project were what we were funding and that we would not consider funding
outside the project which had been agreed without a new application. We also
made it clear that our expectation was that advice on any reduction in costs
would be provided by the council back to DOTARS. We also indicated in that email
that, given that we were paying two-thirds of the project because the state
government had not contributed, our expectation was that any reduction in costs
would initially come from our component of the project until a fifty-fifty
situation had been reached.[307]
5.45
While DOTARS' formal response regarding the conditions
on the grant appears appropriate, the covering email sent by Mr
Hallett when providing the advice to Wyong
Shire Councillors raises serious concerns. Mr
Hallett stated:
Any changes means [sic] less federal money, so the Wyong
officials should keep their counsel on this if we want the total allocated by
the PM for Tumbi Creek.[308]
5.46
Committee members questioned Mayor Pavier about this
advice:
Senator O’BRIEN—Mr Mayor, when Mr Hallett told you in an email
on 22 November that any changes meant less federal money so the Wyong shire
officials should keep their counsel about the state of the creek mouth, what
did you understand that to mean?
Mayor Pavier—I think that follows on with regard to some advice
by DOTARS as well. I think that it is part and parcel of the email, and my
understanding of that was that there is a due process that needs to be
undertaken and you need to follow that process. Akin to drawing this conclusion,
we have a development application process, and if there are negotiations
between staff and an applicant for a development application that keeps
changing, we would have a section 96, which deals with modifications. If you
keep changing an initial application, staff would consider it to be a fresh
application. Certainly in my mind, it was ‘stick to your guns’ and I was
certainly of that view as well.[309]
5.47
That Mayor Pavier chose to approach a ministerial
adviser, rather than the funding department, for advice on the impact of the
creek's partial clearance on the RPP grant further demonstrates the high degree
of political collaboration evident in relation to this particular grant. That
the mayor also thought it more appropriate not to alter ('stick to your guns')
the terms of the Council's application despite changed circumstances than to follow
the department's advice raises concerns about his approach to using public
funding.
5.48
Mr Hallett's
advice that Wyong officials should 'keep their counsel' despite the changed
circumstances of the project was also highly inappropriate and possibly amounts
to misconduct. Apparently with no authority from the relevant minister, Mr
Hallett countermanded the department's
advice, which stated that the department required advice from the Council as to
the impact of the storm on the project, with a revised project schedule and
costing then to be negotiated.
5.49
In a statement tabled in the House of Representatives
on this matter Mr Hallett
attempted to justify his advice in the following manner:
My clear intention, as indicated in the totality of the e/mail
correspondence was to provide proper advice, having been asked by the Mayor, to
WSC [Wyong Shire Council] about the future of the project if WSC decided to
change the use of the designated RP funds.
I further was aware from the Mayor that during November 2004
that WSC officers were undertaking engineering surveys of the Tumbi Creek mouth
to determine if the creek was now clear and flushed after the rains.
My intent was for WSC to provide to the Australian Government a
professional engineering survey report as to the true state of the amount of
spoil still to be removed after the rain.[310]
5.50
It is difficult to reconcile Mr
Hallett's email advising Council officials
to 'keep their counsel on this' with the post hoc justification contained in
his statement. Mr Hallett
was in effect encouraging the Council to cover up a development that would have
had an important bearing on a funding decision by the Commonwealth. Rather than
acting appropriately to protect public money, Mr
Hallett was clearly more intent on
protecting the maximum amount of money that the Council could obtain.
5.51
Nonetheless, in response to questions in the House of
Representatives regarding Mr Hallett's
emails, Minister Lloyd said:
Firstly, I did not see the emails in question until yesterday
afternoon when they were brought to this House. Secondly, neither my chief of
staff nor I were consulted about the text of the emails before or after they
were sent. Thirdly, I do not think that the Leader of the opposition checks a
draft of every single email that is sent by his staff—and I am sure that no
other member of parliament is in a position to check every email that is sent
from their office.
Fourthly, while I have spoken to the staff member concerned and
have indicated to him that the wording of the emails was inappropriate, the
House should bear in mind that he sent with that two-line covering email the
department's advice which made clear the purpose for the grants, that if the
purposes of the grant were not to be met then that would affect the level of
funding and that the project would not be revised to include outcomes beyond
those agreed by Mrs Kelly without a formal request by council and
reconsideration by the parliamentary secretary, the Hon. John Cobb. Mr
Hallett has provided me with a statement on
this matter which puts his handling of the issue into its proper context.[311]
5.52
By limiting his censure of Mr
Hallett's conduct to inappropriate 'wording'
in the email, the minister's statement attempts to deflect attention from the
intention of Mr Hallett's
action which was to override the attached departmental advice. Mr Hallett's
conduct in this instance also goes to wider concerns about the unchecked growth
in the power of ministerial staffers, particularly the trend of staffers usurping
the role of departments by issuing directions personally on government programs
and acting inappropriately as 'de facto assistant ministers'.[312]
5.53
While Mr Hallett
sought and passed on official departmental advice, the Committee considers that
his actions in countermanding that advice constitute interference, if not
outright subversion, of due process.
Issues relating to the administration of RPP
5.54
The application, assessment and approval process for
the Tumbi Creek dredging grants demonstrates that proper administration of the
RP program has been perverted for this project. Issues raised by this process include
the appropriateness of the project for RPP funding given the published program
guidelines, inadequacies in the funding applications, sidelining of the ACC
assessment process and political influence to expedite the grant.
Appropriateness of the project for
RPP funding
5.55
The aims of the dredging work raised several concerns
about the eligibility of the project for RPP funding, which were the subject of
lengthy discussion at the Committee's hearing. These concerns included whether
the project provided value for money given the size of the grant sought, the
limited number of direct beneficiaries and lack of project sustainability. Also
of concern, given the published program guidelines, were the lack of necessary
licence approvals required for the project and the possibility of alternative sources
of funding. These concerns are discussed below.
Aims of the project
5.56
The RPP funding applications submitted by the Council
describe the rationale for the project as follows:
- To return a valuable recreation asset to former
functionality by re-opening the creek channel for boats
- To provide improved creek flushing and water
quality, allowing swimming in the creek
- To reduce potential for flooding of nearby
houses[313]
5.57
Witnesses for the Council emphasised that flood mitigation
was of primary concern:
Councillor Graham—One
of the problems with it being blocked up is that the fish cannot get upstream
to breed. Another, very important, thing is that there are about 10 or 20 homes
that could be flooded if there were a big downpour...I have asked on several
occasions in council whether if that did flood we would have a duty of care to
open it up without getting all the permissions to alleviate the flooding.
Mayor Pavier—Certainly in my mind, if you want my tuppence worth,
is that the flood situation for those 16 or 18 homes is paramount and
recreational boaters would probably carry less weight. People swimming, quality
of water—those are lesser weight factors. But certainly in my mind the flooding
issue is paramount.[314]
5.58
Mr Cathers
clarified the extent of the flood risk created by the blocked creek, informing
the Committee that 16 properties were potentially threatened in a
one-in-100-year flood event. Of these, five houses were at risk of flood impact
in habitable areas and a further three risked impact in non-habitable areas
(such as laundries or garages).[315]
5.59
The Committee received mixed evidence regarding the
recreational use of the creek. As noted above, improved water quality to allow
swimming in the creek was stated in the Council's application as one of the
reasons for the dredging. However, Mr John
Asquith, Chairman of the Central Coast
Community Environment Network (CCCEN), presented the view that the dredging
would not bring the creek water quality up to the recreational standard
required for swimming. Mr Asquith
said:
...From what the council have told me, the removal of the spoil
will not bring the water quality up to the recreational water guidelines, the
ANZECC guidelines.[316] So it will
improve water quality, there is no doubt about that, because there will be some
dilution, but they have never claimed, in my discussions with them, that it
will get it up to recreational standards.[317]
5.60
The Committee also heard that Tumbi Creek was not a
high use area of the Tuggerah Lakes:
CHAIR—...What would you say the level of usage of the creek is, particularly
when it is dredged?
Mr Asquith—It
is not particularly high. I have canoed along the creek a few times to have a
look at it, and there have been some improvement works done to stabilise part
of the banks. But there is not a lot of water usage, you might say—recreational
craft or swimming. The more common activities are probably people looking at
the creek from their houses or from parks, bike riding through there and
feeding the ducks which, in itself, creates a lot of the water quality problems
that occurred in the creek just there. It is not a high usage area of Tuggerah
Lakes from what I have seen.[318]
5.61
The Committee also received mixed evidence regarding environmental
reasons for the dredging. Mr Cathers
told the Committee that improving water exchange, by allowing the creek to
flow, was important for a number of ecological considerations including fish
breeding.[319] However, Mr
Asquith told the Committee that the dredging
was not necessary for environmental reasons. He said:
In terms of the impact on wildlife, fish and what have you, from
my understanding of it and the explanations that I have had given to me, the
closure of these types of channels and their reopening in storm conditions is a
natural cycle. With regard to whether that is good or bad for wildlife, it will
just swing the balance one way. One lot will gain like it is and another lot
will gain when it is opened up. So that is just an ecological process.[320]
5.62
Mr Asquith
also stated that there was mixed scientific evidence about the environmental
impact of spreading the dredge spoil across the lake bed.[321] He explained that CCCEN was against
disposing of the spoil in the lake, not because of compelling scientific evidence
about the environmental impact but because of the poor precedent and example it
would set.[322]
Value for money and sustainability
5.63
The Council's applications for RPP funding acknowledged
that the project would not be self-sustaining:
The re-opening of this channel to improve recreational
opportunities, reduce flooding potential and improve water quality is required
about once or twice a decade from historical records.[323]
5.64
During the hearing, Mr
Cathers informed the Committee that
following the proposed dredging, Tumbi Creek mouth would need to be dredged
again within seven to ten years.[324]
5.65
The Committee was concerned about the allocation of
such a large grant to a short-term fix with limited beneficiaries, rather than
a long-term solution, particularly given that sustainability is an important
feature of the RPP project viability assessment criteria. Committee members pursued
these issues with Council witnesses:
Senator CARR—...It may well be, as people have put to us, that
this is a very important project for the 16 properties on the creek and the
eight houses that may be subject to flooding in a 100-year event. It is
obviously very important to them but, given the amount of money involved, isn’t
there a question of priority for the lake management? Isn’t that an issue that
ought to be considered in the granting of moneys of this dimension?
Mayor Pavier—I can only reaffirm the council’s commitment here.
We are spending $3 million annually on the lakes and we have resolved as a
council, unanimously, to expend $680,000 of our own general revenue fund
towards this and we rate it highly. I am on record now saying that it is a high
priority.[325]
5.66
Mr Cathers
advised the Committee that works were required upstream to provide longer-term
solutions, but these had been given a lower priority in terms of applications
for funding:
The problem we have got there requires a fix now, whereas the
work we would be doing upstream would be providing a solution to a longer term
problem. So it is a question of which do you deal with first. We would be seeking
funding for the works upstream, in addition to the council expending its own
money.[326]
5.67
Mr Asquith
expressed the view that the funding could achieve better value for money spent
on other lake priorities. The following exchange is relevant:
Mr Asquith—From the position of the environment network, if
there is $2 million going to be spent on the lake—and we would be delighted to
have $2 million spent on improving various things around the lake—we would like
to see it spent on the priorities, and they have been identified to a large
extent. To me, the priorities are those things where you get the best value for
the dollars you have got, where you get the best water quality and the best
improvements.
Senator O’BRIEN—Does
that mean dealing with issues upstream rather than at the mouth?
Mr Asquith—Primarily
dealing with issues upstream but also a lot of foreshore issues. On the western
side of the lake there are a number of groups working there where there are a
lot of stormwater outlets, a lot of erosion of the lake foreshore and so on.
They could use $2 million for a better long-term effect.[327]
5.68
In light of the evidence to the inquiry, Committee members
questioned DOTARS witnesses as to whether the dredging project met the RPP
guidelines:
Senator O’BRIEN—Did
the original application meet all the program guidelines?
Dr Dolman—Yes,
they were assessed and it was found that they did meet all those guidelines.
Senator O’BRIEN—So
it was value for money? Or don’t you assess that?
Dr Dolman—As
I said the other day in Canberra, the
way that we assess that is to look at three specific things: outcomes for the
community, partnerships and ongoing viability. It met all of those things and,
yes, it was assessed as being value for money.[328]
5.69
It is difficult to reconcile DOTARS' assessment with
the evidence provided to this Committee, which shows that the dredging project
has a limited number of beneficiaries and lacks a sustainable outcome. While
undoubtedly of short-term benefit to those living in the direct vicinity of
Tumbi Creek, the Committee considers this to be a limited outcome for a substantial
grant of almost $1.5 million.
Licence approvals
5.70
The published RPP guidelines state:
Project proposals that can not obtain or have not yet obtained the
relevant approvals or licences to progress will not generally be considered.[329]
5.71
As noted in an earlier chapter, during the inquiry it
became apparent that both this guideline and an earlier form of the guideline
were published on DOTARS' website. The earlier version stated that 'projects
that can not obtain or that are in the process of obtaining the relevant approvals
or licences to progress' were not eligible for RPP funding.[330]
5.72
While the Council was in receipt of a dredging licence
for the works proposed initially, a licence had not been obtained for the dredging
option proposed in the RPP applications, which involved removal of the spoil
off site.[331] Council witnesses
confirmed at the Committee's hearing that licences had not yet been obtained
and the Council did not know if they would be granted.[332] According to the earlier version of
the RPP guidelines, this circumstance would have made the Tumbi Creek dredging
project ineligible for RPP funding. The Committee was therefore concerned to
know when the change to the guideline was approved by the minister. DOTARS
undertook to provide the Committee with this information but to date, the information has not been
provided. This is unsatisfactory and given the lengthy delay in responding, the
Committee can only conclude that there is no adequate explanation.
5.73
The Committee heard that a number of issues would need
to be addressed by the Council before state approvals were granted. These
included methods for handling and treating the spoil to address potential acid-sulphate
soils and ensuring adequate protection for foreshore saltmarsh habitats during
the dredge and spoil removal works. Saltmarsh habitats are listed as threatened
ecocological communities under the NSW Threatened Species Act.[333]
5.74
The Committee was advised that under the funding
agreement between DOTARS and the Council, money would not be provided for the
project until the Council obtained all necessary licence approvals.[334] Dr
Dolman described the funding approval as 'a
decision in principle to approve the project' conditional on the relevant state
approvals being obtained.[335]
5.75
At a public hearing in August 2005, nearly a year after
the announcement of the additional grant, the Committee was told that state
licences had not yet been obtained and therefore a funding contract had not yet
been signed. Committee members explored this situation with DOTARS witnesses:
Senator O’BRIEN—So
Tumbi Creek is coming to the point where we will either have to get the
approval or the funding will have to be withdrawn.
Dr Dolman—That
is essentially the case.
Ms Riggs—We
will consider what advice we might give the minister about what his options might
be.[336]
5.76
Dr Dolman
also noted that 'There is no set timetable written down in any program or
documentation that talks about the time we would allow a project to try to meet
the conditions'.[337] The Committee is
concerned that latitude regarding project approval requirements has been
deliberately incorporated into the RPP guidelines, with no consequent
procedures for projects where licence approvals are not readily obtained.
5.77
Also of concern, the Committee was informed that the
full costs of the dredging project could not be determined until the state
government's licence approval requirements were specified. Mayor Pavier said:
It was always my desire that the funding arrangements would be
equally split across the three spheres of government. When that did not occur,
the federal government picked up the two-thirds component. My understanding,
and it would always be my desire, is that if the costs were to blow out we
would certainly want to go back before the federal government to keep that
one-third to two-third ratio in place. Our revenue base probably does not allow
us to continue exponentially with some blow-out figures. I am sure inflation
and those sorts of things are factored in but, by the time we get state
government approval for this process, I just cannot predicate the costs.[338]
5.78
The Committee considers it would be totally
inappropriate for federal funding to be viewed as an available revenue source
to fill cost overruns for this or any other RPP project. The Committee also cannot
accept that any valid assessment of the value for money of this project can
have been conducted when the total cost of the project remained unknown.
5.79
The Committee notes the Council's hesitancy to invest
money developing the dredging option and obtaining state licences prior to
obtaining a funding commitment. Mr Yates
told the Committee:
It is certainly not unusual for us to be
making grant applications based on preliminary information without detailed
design, because it is pointless spending a lot of money on doing detailed
design when a grant might not be obtained or council might or might not decide
to go ahead.[339]
5.80
The Committee is aware that the current RPP guideline
provides some latitude regarding licence approval requirements. However, given
the size of the grant involved and the potential impact on the project budget
of obtaining and complying with license approvals, the Committee considers that
further assessment and development of the dredging option should have been undertaken
prior to the announcement of federal funding for this project.
5.81
Subsequent to the Committee's final hearing with
DOTARS, on 2 September 2005
the Council received a licence from the NSW Department of Lands for dredging
and offsite disposal. The licence specified that the Council must provide
further information and justification as to why the larger channel, involving
dredging of 15,000 m3
of spoil was required. Alternatively, the
licence permitted the Council to proceed with the Department of Lands'
preferred and less costly channel alignment, requiring dredge and removal of
5,000 m3.[340]
Other funding sources
5.82
The published RPP guidelines state that the following
projects are not eligible for funding:
Applications seeking funds that are, or could be perceived as
cost shifting, that is substituting or duplicating funding from other sources
including government and the private sector.[341]
5.83
As discussed above, state government funding was committed
for dredging at Tumbi Creek, but not for the option preferred by the Council. Evidence
to the inquiry suggests that by allocating funding to an option not supported
by the state government, this RP grant is inconsistent with state planning
priorities. In a letter to Senator Ian
Campbell regarding the original offer of
$340,000 of federal funding, contingent on off-site disposal, the Hon
Craig Knowles,
NSW Minister for Infrastructure and Planning and Natural Resources, said:
I do not support the redirection of RFMP [Regional Flood
Mitigation Program] funds to this project ahead of effectively four prioritised
floodplain management projects elsewhere in the State...
To redirect these funds would devalue the well managed and
transparent process under which floodplain management projects are prioritised
in conjunction with the Floodplain Management Authorities of NSW.
The current proposal, the result of three years of co-ordination
between Council and the State Government, involves the development of stringent
guidelines for procedures and monitoring of the works. The methodology has a
State wide significance and the results of the dredging will be properly
evaluated and the efficiency of the work assessed for future projects.[342]
No
partner funding
5.84
Partnership funding is one of the key principles of the
Regional Partnerships Program. The published program guidelines state:
Partnerships are a strong demonstration of support. Partnerships
are established where individuals, private sector businesses,
community/not-for-profit organisations, other organisations and any local,
state and/or Australian Government agencies make a financial and/or in-kind
contribution to your project.[343]
5.85
The RPP Internal Procedures Manual states as 'a rule of
thumb' that, 'a contribution of 50% will generally be expected from applicants
and their partners'.[344] The
procedures manual gives the following examples of special circumstances where a
contribution of less than 50 per cent may be acceptable:
- Projects servicing very small communities which
have a low average income base and/or are remote
- Projects in areas suffering from economic
decline and/or natural disaster or drought
- The applicant is a local council in a remote
area with a low rate base, the majority of people have low incomes, and it can
be demonstrated that the council has contributed as much as it is capable of,
given the funding it receives from all sources.[345]
5.86
The Committee notes that none of these provisos apply
to the Tumbi Creek project and questions why the Government accepted a 30 per
cent contribution from the Council in the second application. It is both
unusual and inappropriate for federal funds to be used to 'top up' funding to RPP
projects that have inadequate levels of partnership support.
Inadequacy of the RPP applications
5.87
The paucity of information included in the Council's RPP
applications, particularly in terms of budget and project milestones,
demonstrates serious deficiencies in the administration of this particular RPP
grant. Comments made by members of the Central Coast Area Consultative Committee
(CCACC) demonstrate the inadequacy of the Council's first grant application. In
a note to Mr Peter
Hale, Chairman of the ACC, the Executive
Officer Mr John Mundy
stated 'it is probably the worst application that I have seen'.[346] Mr
Hale told the Committee it was the worst
application he had seen, other than from small, voluntary community groups.[347]
5.88
The following paragraphs review several areas in which
the applications were demonstrably deficient: the project budget, timetable and
performance measures.
Project budget
5.89
The project budget provided in the first application
separated costs into only three identified items: consultant/contractors ($1.47
million), landfill fees ($250,000) and roads ($320,000).[348] The second application repeated
these details, and provided a reference to a council report of 9 June 2004.[349] However, that report compared the estimated
overall cost of different dredging options rather than giving a detailed
breakdown and evidence for the estimated cost of the proposed option.
5.90
While it is understood that the Council intended to
contract out the dredging works, the RPP application should have provided
sufficient information for an evaluation of the cost-effectiveness of the proposed
project. The application form specifically requests that evidence of budgeted
costs be provided (for example quotes, market comparisons, valuations).[350] No such evidence was included in the
Council's applications.
5.91
DOTARS witnesses advised the Committee that in
assessing the application further budget information was sought from the Council.
DOTARS did not disclose the response received.
5.92
This Committee requested that Council representatives
supply the precise costings for the project and received a two page estimate of
costs. These estimates provided a further breakdown of cost items, including
the assumed per unit costs of each item (for example, dredging costs at $50 per
cubic metre) and the basis for each estimate.[351]
5.93
However, the total project cost estimate reflected the
imprecise nature of the budget. After allowing a 20 per cent contingency in its
cost estimate, the Council added an additional $25,000 to its request, for the
purposes of rounding out the total figure:
Sub-total |
$1,646,000 |
20% contingency |
$329,000 |
Total |
$1,975,000 |
Say |
$2,000,000[352] |
The Committee is concerned that this sort of arbitrary
approach to requests for public funds is apparently permitted under the
Regional Partnerships Program.
5.94
From the limited budget information provided in the
project applications, questions arose about a $250,000 item listed as 'landfill
fees'.[353] The Committee was advised
that disposal of the dredge spoil would be exempt from the relevant state landfill
levy. Therefore the Committee wished to be assured that the Council's budget
did not include non-existent costs. The matter of disposal fees had also been
raised with the Council by DOTARS when negotiating the funding contract.[354]
5.95
Council witnesses explained that this cost item was
actually for the costs associated with handling the material at the landfill
site.[355] In the further budget
information provided to this Committee the item was listed as 'Disposal costs
at Buttonderry Waste Management Facility site', with the cost estimate relating
to earthworks and materials handling at the landfill.[356] While the Committee is satisfied that
this item therefore related to real costs, the listing of the item in the grant
application as 'landfill fees' was misleading.
Timetable and outcomes
5.96
Question 14 of the RPP application form asks proponents
how they will measure their project's outcomes. The question asks proponents to
'include information about timeframes, how outcomes will be measured and by
who, and how they will be reported on'.[357]
The Council's responses to this question failed to provide such details. In
each of the applications, the performance measures were listed as:
Outcome |
Performance measure |
Improved access by boats |
No.
of boats using channel will be monitored |
Improved water
quality |
Water quality testing
will be done and fish stocks checked.[358] |
5.97
This information provides no indication of the scale of
improvements that the project aimed to achieve. How many more boats were
expected to use the channel? Did the Council expect that water quality would
improve to agreed recreational standards? How often would testing be done?
Where would the results be reported? It is also notable that although flood
mitigation was raised at the Committee's hearing as a principal reason for the
dredging work, monitoring of flood risk was not included in the project outcome
measures. It is difficult to see that any valid measures of the outcomes of
this project were required in order for it to obtain funding approval.
5.98
Given the deficiencies in the grant application
reviewed by the ACC, the ACC advised DOTARS that the proponent should be asked
to supply further information in support of the application. The suggested
information included: evidence that the project would allow the water in the
creek to be used for recreational purposes; a feasibility study into use of the
boat ramp and whether an alternative site would provide a more economical
solution; and reports on how often the dredging would be required once carried
out initially.[359] The Committee did
not receive evidence whether or not this information was sought or obtained by
DOTARS.
5.99
It is inappropriate that applications with the paucity
of budget detail and inadequate project implementation plans and performance
measures described above were accepted by the Government. In the Committee's
view, the dredging option required further research and development prior to
funding approval. The Committee is further concerned that the inadequacy of the
applications reflects undue haste in their preparation and submission, as a
result of political influence to expedite the grants.
Bypassing the ACC's assessment
5.100
As noted above, the relevant ACC was not involved in
the development of either of the Council's applications relating to Tumbi
Creek, which were submitted directly to DOTARS' regional and national offices,
respectively. DOTARS sent the first application to the ACC for comment, but did
not supply the ACC's assessment to the minister when considering the first
grant. The second application was not provided to the ACC and the department
did not disclose whether the ACC's earlier advice was supplied to the minister
when considering the second grant.
5.101
Evidence to the inquiry shows that the ACC had several
concerns with the project. Overall, the ACC rated the project as 'Recommended
and low priority'.[360] Two ACC members
registered their support for the project and two stated that they did not
support the project.[361] Mr
Peter Hale,
Chairman of the CCACC, expanded on the ACC's overall assessment:
Simply put, there had been so much publicity about it and it was
obviously so important, particularly to the people in that area, that it
deserved to get some rating to say that people wanted to do it. From the
political perspective of council and government, it was an important project
and that was fine, but it was very low priority.[362]
5.102
Mr Hale
also expanded on why the project was considered a low priority:
I think it was mentioned that there are five tributaries into
the lake and a lot more drainage that runs into it. To me, Tuggerah
Lake has a very serious problem.
From Wyong council’s point of view, I would agree that the lake itself has a
very serious problem, but it is a lot greater than $1.6 million worth. To me,
it is a low priority because I do not see the effect of what the $1.6 million
will do.[363]
5.103
Although the second
application was not provided to the ACC, Mr
Hale heard of the proposed increase in federal
funding for the project and felt compelled to register his concerns with
DOTARS. In a letter of 6 August 2004 Mr Hale wrote, 'I feel obliged to lodge my
serious concerns as to the value of this project and possible political fallout
both standing alone and in relation to other needed projects on the central
coast.' He also said, 'This allocation will cause serious concern in our
committee as to the validity of the Partnership program and could very well
lead to a 'white board' type scandal'.[364]
5.104
During the Committee's hearing, Mr
Hale explained these comments as follows:
I think those words refer to a minister of a similar name,
Kelly, but the issue was that we have had great difficulty in having projects
funded and the system is always so stringent that on this occasion the $680,000
was hard enough to credit, but when it was going to be announced that it was
$1.2 million it was disappointing to a committee that saw a lot of other things
that could be funded that would benefit the whole of the community.[365]
5.105
Dr Dolman
advised the Committee that following Mr Hale's
letter to the department he raised the concerns with Parliamentary
Secretary Kelly.[366] However, by the date of Mr
Hale's letter the decision to approve the
additional grant had already been made.
5.106
The Committee has on several occasions been informed
that ACC assessments form an important element of advice to the minister
regarding funding decisions. Given the size of the grant sought, the content of
the ACC advice and the public and political interest in the Tumbi Creek
dredging project, the Committee finds it unusual and unsatisfactory that the
ACC's assessment was not provided in relation to the first application and possibly
the second application. The Committee notes that by the department's own guidelines,
to argue that the ACC comments were 'late in coming' and thus not provided is
untenable and is undermined by the fact that DOTARS had another opportunity to
provide the ACC's comments before the second grant was approved. This leads the
Committee to the view that the funding decision was taken with undue haste,
without proper assessment and endorsement and for political reasons.
Conclusions
5.107
The Committee considers that, while undoubtedly a
galvanising issue for the local residents of the area, the Tumbi Creek dredging
project would provide a very low return on an investment of almost $1.5 million
of tax payers' money when compared with the returns from numerous other
projects funded through RPP.
5.108
The evidence available to this Committee does not explain
why Minister Lloyd's office
advised the Council officers to send the initial RPP application directly to
DOTARS. Similarly, the reasons why the parliamentary secretary sought to have
the project given priority are not available for scrutiny. Nevertheless, the
poor quality of the RPP applications, lack of regard for the ACC's comments and
remarkably short approval time indicate that the application, assessment and
approval process was conducted with undue haste. The Committee considers that priority
treatment for this project application resulted in the announcement of federal
funding for a dredging project popular with the local community in the lead up
to the 2004 federal election campaign, at the expense of transparent and
accountable consideration of the project's merits and suitability for RPP
funding.
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