POLL: GM quits as cash woes bite

Documents foretell financial doomsday

ANALYSIS: Resilient leader resigns 

The military man turned executive

EDITORIAL: Council manager departs

PHIL Pearce quit Newcastle City Council yesterday amid growing unrest about the council’s financial position and tension with lord mayor Jeff McCloy and some senior staff members.

Mr Pearce, who was just 18 months into a five-year contract, shocked staff and councillors when he announced he would leave the city for ‘‘personal’’ reasons.

The decision is understood to have been made after a tense meeting with senior management yesterday afternoon.

It also came amid questioning from the Newcastle Herald about internal documents that revealed the extent of the council’s financial difficulties.

At 12.22pm yesterday, Mr Pearce released a bullish statement in response to questions from the Herald.

The statement, which outlined how the council would proceed with plans to cut costs and increase revenue, was similar to a memo he sent to councillors the previous night.

‘‘I have been clear that council faces a significant sustainability issue and possible insolvency if it doesn’t act on the current situation,’’ Mr Pearce said.

He did not respond to several follow-up questions.

Instead, at 3.54pm, the council released a statement confirming Mr Pearce would stand down from March 2.

‘‘My reasons for resigning are personal and I will not be making any further statements on the reasons for my decision,’’ Mr Pearce said in the statement.

Behind the scenes, Cr McCloy and Mr Pearce had clashed on a number of issues since the September election, particularly regarding the financial management of the council.

At the final council meeting of last year, evidence of those simmering tensions dripped into the chamber.

Cr McCloy moved to establish a financial advisory panel of prominent local businessmen that would effectively provide a second opinion on information and advice presented by council staff.

Mr Pearce, when questioned, told the meeting that he was opposed to the formation of the panel and had ‘‘talked this through’’ with the lord mayor. 

Cr McCloy said publicly yesterday that he voiced concerns about the direction of the council internally.

‘‘From my point of view I wish Phil well for the future, but the city must move forward,’’ Cr McCloy said.

Pressure on the general manager was coming from several sources.

His performance agreement was linked to the city’s art gallery redevelopment project, which suffered a cost blowout late last year, with Cr McCloy labelling it ‘‘a total disaster’’.

In October, Mr Pearce announced a staffing freeze and cuts to casual positions after budget over-runs in the first quarter of the financial year.

The following month council modelling revealed the council was heading down a path to financial ruin, and Mr Pearce announced a financial plan that included about $190million in cuts, increases to rates and entry fees at cultural facilities.

In a memo sent to councillors on Tuesday, Mr Pearce said the plan would not bring the budget back into surplus until 2017. Those plans may now be placed on hold, at least temporarily, as a new general manager will likely want to put their own stamp on the city.

Cr McCloy said he would probably call the council together before its scheduled resumption in February to begin the search for a fifth general manager in six years.

The position has been a revolving door since the resignation of Janet Dore in 2007. Ms Dore’s successor, Lindy Hyam, left in late 2010 after a much-publicised breakdown in her relationship with then lord mayor John Tate.

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