The people of the Hepburn Shire, and in particular Daylesford-Hepburn, are anxious to get an explanation about what went wrong with The Rex project – who was responsible, the true costs and what measures are required to remedy the situation.
Council is preparing updated documentation for a Request for Tender to complete the project. Costs are expected to escalate beyond the current $13.5M price tag for acquisition and renovation. Tenders will close on September 20. The current timetable is for tender evaluation and selection and a new contract by mid-November.
It seems prudent to understand the past mistakes and responsibilities before re-embarking on the next multi-million dollar phase of the project.
The project has been the focus of a forensic audit by Crowe Horwath commissioned in August 2018 and an investigation by the Local Government Inspectorate commenced in early 2019. The Crowe Horwath report has been completed but has not been released to the public. The Local government Inspectorate report has not been completed.
The Wombat Post has contacted the Local Government Inspectorate a number of times in the past six months requesting timelines for the release of the Inspectorate report. The LGI has responded that they “cannot commit to a publication timeline at this stage.”
The Rex was purchased by Council in August of 2016 and shortly thereafter, commenced renovations as an “owner/builder” with costs estimated to be in excess of $900,000. However cost estimates escalated as a result of unanticipated problems.
In June, 2018, the Audit and Risk Committee recommended to Council that an internal audit be commenced on the Rex Construction. Later in the same month, work on the Hepburn Hub at the Rex project was abruptly halted by Interim CEO, Bruce Lucas, due to the requirement for a Planning Permit. Costs had increased pushing the renovation project above the $1,000,000 threshold which required a Permit. The site was secured and no work has been done since.
In August of 2018, Crowe Horwath was commissioned to undertake an independent audit of the project. Martin Thompson, Senior Partner in Crowe Howarth provided an interim verbal report to Council at their meeting in December 2018.
In May 2019, the Audit and Risk Committee received an Interim Report from Crowe Horwath and requested additional work on the land acquisition and disposals that were part of the Rex purchase.
The Crowe Horwath reports raised concerns for CEO, Evan King, and he contacted the Local Government Inspectorate early in 2019. The Inspectorate had meetings with the CEO and the Mayor, Cr Don Henderson, in May. On July 23 and 24, 2019, the Inspectorate visited Council offices as part of their investigation.
Steve Pogonowski, Senior Communications Adviser for the Local Government Inspectorate, advised The Wombat Post that the Inspectorate had completed a draft report, which, as part of the Inspectorate’s process was circulated for comment to key stakeholders, including parties named in the report. Recipients were allowed a few weeks to respond. As of the end of June, the LGI had not received responses from all involved and was awaiting those responses before the report could be finalised. Those who have seen the draft report are bound by a strict confidentiality agreement.
The timeline above indicates that answers have been a long time coming. It has been over 2 years since the LGI initiated their investigation. Six of seven Councillors have changed and we have a new CEO. We suspect that errors of judgement have been made and we do not suggest in any way that the process has been corrupt. Nevertheless, the project is costing ratepayers vastly more than initial projections and the community has a right to know what has gone wrong.
The Wombat Post intends to continue to seek responses from the Local Government Inspectorate and the Minister for Local Government. Furthermore, we will pursue the release of the inspectorate report and keep readers and the community updated about any developments. The Report should provide fundamental information that will allow the community and Council to make informed decisions about the future of the Rex project and local government governance and processes.
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