Newcastle City Council has cut off Newcastle Now’s funding until it submits a business plan showing how it intends to spend the money.
In a letter to the business improvement association’s executive manager, Richard Christian, council chief executive Jeremy Bath says Newcastle Now has breached the conditions of its 2011 funding deed. Mr Bath said on Sunday that Newcastle Now had been receiving almost $850,000 a year since at least 2013 without submitting an annual business plan.
“I put Newcastle Now on notice that it should not spend further special rate monies until the requirements of the Deed have been met,” Mr Bath’s letter reads.
The council will launch an external, independent investigation into how funds have been released “in a manner not in keeping with that specified in the Funding and Service Deed of Agreement”.
Mr Bath said it was “likely” the “improper funding process” followed talks between former council and former Newcastle Now employees.
The council levies a special rate on CBD property owners to fund Newcastle Now.
The two organisations have been at odds since a public falling-out between lord mayor Nuatali Nelmes and Newcastle Now chairman Edward Duc at a briefing session in March.
Cr Nelmes said at the briefing that Newcastle Now had “dropped the ball” on business advocacy during light rail works and Mr Duc had been “talking the city down”.
Newcastle Now’s former executive manager, Michael Neilson, said in April that the lord mayor’s offer of a 50 per cent rebate on the special rate levy to help struggling traders was “tokenistic”.
Mr Bath, who became the council’s chief executive last year, writes in his letter that, under the terms of the deed, the special-rate money must be used for beautifying, promoting and developing the city.
Mr Bath writes that the council will not release any special-rate funds to Newcastle Now until it presents:
- a business plan outlining the projects, events and activities it intends to spend the money on;
- a tax invoice for the funds sought in 2018-19 matching the costs of the projects, events and activities detailed in the business plan; and
- an account balance for unspent funds from the previous financial year to be offset against funds requested in 2018-19.
Mr Duc said on Sunday that Newcastle Now had been submitting spending plans which satisfied its agreement with the council.
“We are very cognisant of the fact we are spending ratepayers’ funds and need to account for them,” he said.
Mr Bath has also denied a Newcastle Now request for special-rate funds to provide direct relief to struggling businesses on the grounds that using the money for this purpose would contravene the Local Government Act.
The council’s four Independents lodged a motion last week calling on the council to free up $100,000 of special-rate money and another $100,000 in its own funds to help Newcastle Now’s light rail business assistance program.
Mr Duc told the Herald in May that the differences between the two organisations were unfortunate.
“We’ve always up until recently had a really good relationship, and something has happened to mar that, and, yes, we’re very interested in fixing the problem, getting back together,” he said.
“It’s hard enough with what’s going on in this city at the moment without having Newcastle Now, Newcastle City Council and potentially the state government not co-operating.
“People die in wars, and it’s unnecessary.”
The Herald attempted to contact Newcastle Now for comment.