OPINION: Gallery isn’t a pretty picture for ratepayers

IN yesterday’s Newcastle Herald, what I regard as the farce that was the project co-ordination of the Newcastle Art Galley revitalisation was revealed for all to see.

 Leaving aside for a moment  that the art gallery revitalisation was never fully funded, despite claims to the contrary, I believe the way this project was handled reveals issues with the understanding of corporate governance.

To give you some context, to date more than $2.6million has been spent over the past few years (this excludes the council’s costs) on design fees alone – an expense incurred to ratepayers.

Here we are with $2.6million spent without one brick being laid. This is the legacy the current council was left with. I am just glad we noticed when we did, otherwise I think this project could have had all the hallmarks of Port Macquarie’s Glass House project, which blew out to $60million and led to Port Macquarie Council being placed into administration.

So how did this project spin so wildly out of control? In part, I believe it was the  management of several individuals to see this project through at any cost.

This was revealed after independent auditors conducted a  review of the art gallery redevelopment design contract.

Some of the significant facts revealed include:

• A design variation of $698,202 over and above the initial contract for a detailed design for the art gallery redevelopment. 

• Of this total, one significant variation approved by Judy Jaeger was for $418,328.48, which was not referred to the general manager or the elected council.

This approval occurred on June 11, 2013 – two months after the council resolved to halt the art gallery redevelopment until such time as the council achieved an operating surplus.

• A variation of $418,328.48 is a significant variation to the contract and exceeds the tender threshold of $150,000, prescribed in the Local Government Act of 1993. There is also concern this action challenged other state guidelines for managing risks in direct negotiations.

• Significantly varying the nature of the original accepted tender by varying the contract to provide for an additional subcontract architect to play a lead design role without the approval of the elected council.

• Failing to comply with the division of Local Government’s capital expenditure guidelines.

• Not applying line item reporting to the elected council on variations to the contract as a key component of the project reporting requirements. 

There was also the claim, in a submission for funding to the NSW state government in August 2012, that the art gallery redevelopment project was ‘‘shovel-ready’’.

For the record, this project is still not shovel-ready. 

The way the art gallery redevelopment was managed from the start,  it was doomed to failure in my opinion. The ratepayers of Newcastle have had to foot the bill as personal passions seem to me to have taken over from proper corporate governance.

Both the  council’s  general manager, Ken Gouldthorp, and I have endured sustained criticism from certain sections of the community for our actions regarding the art gallery. I hope you now see that our concerns were valid and the actions of the current council were in the best interests of our great city.

I support the need for an expanded Newcastle Art Gallery. Art and culture play a critical role in the urban renewal of Newcastle.

Any such project must be carefully conceived, professionally managed and delivered within budget.

Next week a council delegation travels to view the operations and exhibitions of the Adelaide, Bendigo and Ballarat art galleries to seek the best way forward for the Newcastle Art Gallery.

 ■ The Herald attempted to contact Judy Jaeger and Ron Ramsey for comment yesterday.

Jeff McCloy is the lord mayor of Newcastle

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