LCC: Lismore City Council General Manager, Shelley Oldham, with Lismore mayor Isaac Smith after announcing a a multi-million dollar black hole in Lismore City Council's budget.
LCC: Lismore City Council General Manager, Shelley Oldham, with Lismore mayor Isaac Smith after announcing a a multi-million dollar black hole in Lismore City Council's budget. Marc Stapelberg

Why council hasn't been forced into administration

AS SOME of the community call for the Lismore Council to be dissolved after its budget blowout, government authorities confirm administration isn't on the cards, but they are being watched closely.

A Office of Local Government spokeswoman said the organisation has not conducted a formal assessment of Lismore City Council in relation to potential administration.

"While there are various discretionary powers to intervene in a council's operations, these are reserved for circumstances where there is a serious breakdown in council operations or where major flaws in key council processes are evident," she explained.

"The decision to suspend a council and appoint an administrator ultimately rests with the Minister for Local Government.

"The Office of Local Government monitors the financial position of all councils in NSW.

"OLG is aware of the information presented to the council on February 26 in their quarterly budget review and will continue to monitor the situation," she said.

A spokeswoman for the Minister for Local Government, Gabrielle Upton, confirmed the minister has also been updated on the latest developments.

"We are satisfied with the action taken by local government at this stage," she said.

Lismore Mayor Isaac Smith and new General Manager Shelley Oldham made the announcement of a cash deficit of $6.1m earlier in the week. The variance was discovered following a two-month due diligence study by independent consultants Grey Advantage, instigated by Ms Oldham, that uncovered a series of previously unreported costs.

It is the largest budget deficit reported by council.

Ms Oldham said the governance problems were "across the board" in the organisation, calling the deficit a "failure" of management and governance.

She said the Office of Local Government (OLG) has chosen not to move the council into administration due to its "quick" response with the remediation plan.

"We have had to report this to the Office of Local Government, and they have had a good look at our bench mark ratios which we are required to meet.

"They [The OLG] understand where we are up to and they have had a look at our preliminary remediation plan - and they have chosen not to take that course of action at the moment.

"They've also been aware we've had some budget problems ... they are also pleased to have the real facts in front of them now that we can work with."

Council's full transformation plan to try to balance the budget and ensure the future sustainability of the organisation will come up at its meeting on March 12.