Exiting CEO claims city was “heading for insolvency”

OUTGOING City of Greater Geelong chief executive officer Kaarina Phyland has revealed her parting thoughts on the city’s financial position, comparing it to “an organisation heading into insolvency”.

In a post on her LinkedIn page yesterday (Saturday, August 26) in her last week in the job, Ms Phyland noted she was appointed as the city’s acting CEO almost exactly a year earlier.

“[The city’s] balance sheet might look healthy [at the time] but its operations had become increasingly unsustainable – structurally in terms of its P&L [profit and loss],” she wrote.

“In simple terms, its revenue generated through rates, grants and fees etc. goes nowhere near covering the expenses of its 130 loss-making services.

“When facing tough times, like an organisation heading into insolvency, hard decisions and trade-offs are unavoidable.

“With a focus on the future, and not just the now, disciplined leaders call upon courage to consistently make ethical choices for the greatest long-term good, doing the right thing even when it is unpopular. This is often called visionary leadership.

Ms Phyland said this could mean “struggling against powerful interests and going against the status quo”.

“In times of ‘alternate facts’, influencers and spin-doctoring, disciplined and ethical leaders don’t take the easy road when the going gets tough and when the value of integrity is at stake. Corrosion of character lays in wait.”

A local government becoming insolvent – defined as when it can no longer pay its debts when they are due –  is rare in Australia, and almost always coincides with the state government sacking the council and appointing administrators.

Ms Phyland said during her time as CEO, the city had been able to turn around a predicted operating budget deficit of $8 million.

“A challenging thing to do in times of massive upward pressure on costs, when you’re also balancing protecting employment and core services the community expects.”

She predicted the city would need a $20 million to $30 million restructuring of the city’s P&L for it to break even in the 2023-24 financial year.

“The Geelong council has a financial sustainability mountain to climb ahead, like many councils.”

The city’s endorsed 2023-24 budget forecast an operating surplus of $362,000 in this financial year and $180.9 million in loan borrowings, with $70 million in new borrowings.

The city is in the process of selling about $50 million of commercial property that it owns to improve its financial position.

New Geelong CEO Ali Wastie will begin her tenure tomorrow (Monday, August 28), and one of her first jobs will be to find $7.1 million of spending cuts across the organisation.