How the appointment of yet another Chief Executive Officer at Canning plays out is important to its community, but it could be of interest to all councils. One of the last reforms made to the local government act, under former Minister David Templeman, related to CEO recruitment processes. Mr Geoff Blades, of legendary recruitment agency Lester Blades, told me Canning now represents a “test case” in this area.
My personal view is that Canning is on track to screw up for what may be the last time. The Mayor of Canning, Patrick Hall, calls its council “board members”. If that’s the case its a company that seems to be going broke under its non-executive directors (more soon). Now, I’m concerned the “board” is about to make its worst business decision yet.
The timing of its recruitment process could undermine a new CEO before he/she sets foot in the door. Based on what I’ve seen thus far, also, changes to the Act, amounting to putting an “Independent Member” on the selection panel to help improve outcomes, may need fine-tuning. The concept of “independent” seems contestable, which means it could be challenged by unsuccessful applicants for these incredibly well-paid jobs.
Canning needs to get every part of this process right. The City has been under investigation twice in the last 25 years, taken offline for four of those years, and been managed by three sets of Commissioners instead of democratically elected councillors.
My investigations show that fewer people applied to run Canning, WA’s 9th largest council, the last time it recruited for a CEO, than sought to manage the much smaller Town of Victoria Park, next door.
Multiple investigations in to Canning appear not to have gone unnoticed.
Now, following new eyes looking at a budget controlled for the last five years by current CEO, Arthur Kyron, and overseen by just-resigned former Director of Corporate & Commercial, Garry Adams, the City is apparently not currently sustainable.
It would be a stretch to blame COVID.
Here, then, over several parts, is what I think anybody applying for the CEO position at Canning needs to know – and what other councils should be following, if, as Mr Geoff Blades says, Canning, of all councils, now represents the “test case” for reform in CEO recruitment in WA.
The City of Canning is seeking to appoint a sixth Chief Executive Officer in 10.5 years1, within what appears an increasingly chaotic administration2, amongst a council with conduct issues3, and, since March 2021, as the City’s finances were revealed to be in bad shape, despite Canning being considered a wealthy council otherwise, ie, having two industrial areas.
The CEO advertisement, placed at a poor time as it was (during Easter break, due to conclude 19th April), paints a different picture to the state the City appears to be in. The ad’s timing is likely to see Canning cement in place a cycle whereby a CEO is appointed either just before, or just after, the annual budget has been passed by council. This first occurred in 2016. Both staff and council made a decision to pass the budget a mere six days before the new CEO’s arrival. Now, that CEO, Arthur Kyron’s contract is not due to end until the third week of June, which suggests it’s possible that, once again, a new CEO will play no role in the City’s finances for the next financial year.
There has been an increase in how often councillors are warned of possible “breaches”, or “loss of reputation”, even “damage to staff morale” – dot points of doom – in motions submitted for voting on. The CEO selection cycle is no different.
The timing of the arrival of a new CEO is especially concerning given what suddenly emerged during the Agenda Briefing of March 2021. Audio reveals elected members were angry and confused to learn that Canning’s finances seem to have collapsed.
Council has also been told its Long Term Financial Plan has drifted considerably off course, and will need to be redone. There is a very real possibility the new CEO will play no role in oversight of either the formation of Canning’s 2021-2022 budget, or the new Long Term Financial Plan it would support.
By far the most urgent situation, however, is in determining what happened to Canning’s financial viability, and how it could have been undermined again?
Canning was only released from being under state government administration, for similar issues, six and a half years ago.
It appears the City may have been setting off alarms as early as 2019. The Department of Local Government, Sport and Cultural Industries (DLGSCI) sent a letter at that time asking questions about “significant adverse trends in the financial position: Asset Sustainability and Operating Surplus Ratio [being] below the Dept standard for last three years”.
The Dept’s concerns may have borne out – following the departure of the two key employees across the City of Canning’s budget, in December 2020/January 2021, it was revealed in March the City is unable to afford to renew infrastructure because of a failure to set aside for depreciation of assets.
Canning’s CEO Kyron has hired a series of former CEOs of WA councils over the last few months. Mr Stephen Cain, just-passed CEO of Cockburn, is now across the City’s budget and seems to have found serious problems within. My understanding is that as much as $220m in infrastructure needs to be replaced over the next 25 years, but this is not currently possible. Canning’s existing Long Term Financial Plan was already predicated on a 3.5% increase in rates, per year, to 2027, and now needs to be substantially changed.
Mr Cain is the staff proposing the substantive changes – audios reveal CEO Kyron almost never speaks – and seeks to do so quickly. But is the situation so easy to solve – and who pays ultimately? The sense is that Canning’s community will once again be hit with considerably higher rate rises, for years, and in the era of COVID-19, to once again arrest failure cycles at the city.
At a Special Council Meeting held March 25th, the Mayor foreshadowed a motion that an external body review the parameters of any new Long Term Financial Plan. The Officer’s Comment, as part of the motion to council (NOM-002-21 Long Term Financial Plan External Review Process) was disappointing to see. The Director, Mr Cain, acting as the Responsible Officer, only appeared to support the motion if the review was kept to two to three weeks, and at a cost of 20K, which it was stated was all the City could afford.
The council ultimately voted down the motion.
As the situation continued to unfurl there was the suggestion that projects, for which rates have already been collected, may now not be deliverable. There have apparently been years of operating deficiencies, which looks on track to be as much as $10m by the end of this financial year. It seems the City predicated its ability to meet its operating budget on up to seven million dollars’ worth of land sales that did not eventuate.
An attempt, albeit minor at this stage, was made to blame the McGowan Government for asking that councils freeze rates as a response to the advent of the coronavirus. It should be noted that Canning did not put a percentage increase on the rates issued for 2020/2021 financial year, but did lift the rate in the dollar it charged and thus, I understand, kept rates revenue the same as the year before. Financial issues were already in play before COVID, it seems, with Canning being unable to open either of its swimming pools following restrictions being lifted4.
Canning’s current council:
TO BE CONTINUED.
1CEOs in last 10 years at City of Canning: Dominic Carbone, Mark Dacombe, Lyn Russell, Arthur Kyron (appointed), and Andrew Sharpe (long term acting role, former director). If Canning appoints a new CEO to coincide with the end of current CEO’s term, it will represent six CEOs in 10.5 years.
2Canning suffered a sudden loss of four executive staff in December/January (one director, three executive managers across two of four directorates). CEO Kyron hired Stephen Cain, the CEO that City of Cockburn took action to divest itself of, in 2019/2020. Audios show council has made reference several times to Mr Cain’s appointment, and indicated they don’t know how long he is to be acting in the role of director of [finance]. Mr Cain was not the executive directly across budgets at Cockburn. Within weeks of being at Canning, Mr Cain made startling revelations about its finances, to strong reactions from council.
3Media reveals Canning has some of the highest referrals on elected member conduct to Standards Panel. Note: this appears to be continuing. See “Councillors behaving badly” article in The West Australian , Saturday, September 21, 2019, page 39.
Thank you to Dave Friedlos and the Canning Gazette for coverage of this issue. The image used within this article is from the front cover of Canning Gazette, dated 8 April 2021.
Comments attributed to Mayor Patrick Hall taken from audio of Special Council Meeting, 25 March 2021.