How one company ripped a $650,000 hole in Tamworth council's budget

In the same meeting as a controversial rate rise was voted through, Tamworth Regional Council (TRC) wrote off $654,307.54 in unsecured debts council staff identified as uncollectable.

Nearly all of the debt was owed by a single company, but the real kicker is we might never know its name.

"It is extremely disappointing, in regards specifically to the amount of $649,415.64 in the second part of the write-off, disappointing we cannot out them publicly," Cr Mark Rodda said during the council meeting on June 25.

"That company continues to trade in a different form in this country and despite their specific company arrangements I think it's appalling that we've got no recourse to the parent company to retrieve those funds."

The company's identity is being held commercial in confidence, but Cr Rodda later confirmed to the Leader the company in question was liquidated and has a parent company that's still trading.

"To be honest I don't know why we're keeping [its identity] quiet either. We should be shouting it to the world," he said.

A council report says TRC has exhausted its "legal grounds to recover" the nearly $650,000 Cr Rodda mentioned.

Mayor Russell Webb told the Leader being unable to recover that amount of debt is a blow to council's finances, but is a level of risk "every business" takes on.

"Getting a bill like that, one that we can't recover that money for a whole lot of reasons, because people have gone into liquidation and you only get a few cents on the dollar back on whatever money might be outstanding. I think that's something every business dreads, and we as a council dread it too," Cr Webb said.

"We have to make sure, or try to make sure, that doesn't happen again, but I can guarantee you that every business in this city, in this region, and in this state dreads the thought of doing work with a company that goes into liquidation and leaves them hanging for that money."

Writing off the debt does not prohibit council from initiating legal proceedings to recover it in future should circumstances change.

"We do what we can do, we have to take precautions in our dealings, and of course we have to tighten up in some cases now in some areas where we might be doubtful about what a business might be like in dealing with us and may end up owing us money," Cr Webb said.

Deputy mayor Judy Coates, who sits on TRC's Audit, Risk and Improvement Committee, said during the meeting that the local government will be taking every precaution it can to prevent this from happening again.

"I have been asking questions around the debts and how they've occurred, and the methods we as a council are putting in place to mitigate these kinds of things going forward," Cr Coates said.

She later elaborated on that point when speaking with the Leader.

"Because of the types of debts that they are, it wouldn't be appropriate to say too much more at the moment," Cr Coates said.

"All I can say is I feel really confident in what's being proposed, both for mitigating those bigger debts and those more related to booking facilities and venues and things like that. That conversation has to be had with the mayor, general manager, and councillors.

"My main message about the sundry debt is that we're certainly aware of it and there are some very positive things in the pipeline that will be discussed to put in place to address it," Cr Coates said.