It is understood a meeting of PICAL’s 300 volunteers was held on Friday morning to explain the shock news the organisation would be wound up, declaring insolvency.
The Phillip Island Community and Learning Centre is set to be wound up after being unable to meet debts incurred from an “administrative inaccuracy”, underpaying wages to employees for more than a decade.
The shock news means the doors to the 44-year-old community house will be closed, most likely along with the emergency food relief program – which feeds about 300 people a week.
Also impacted will be the Centrelink and Services Australia agency, employment services, welfare referrals, education courses and several community groups who are hosted by PICAL, such as the community garden.
However, in a public statement issued Friday lunchtime, the PICAL board said they would aim to continue all existing services “for as long as we are permitted”, with a “focus of supporting continuity moving forward”.
The statement said a special general meeting of members had been called for November 14 and if members agree to the recommendation, PICAL will wind up.
Until that time, the Committee of Management will work with Federal, State and local government “to explore every avenue to preserve as many of PICAL’s vital services as possible for our community”.
The debts are believed to be in the hundreds of thousands of dollars and date back more than 10 years, but are not a result of fraud or misappropriation of money.
Instead, debts have been mounting up because of “incorrect classifications” of job roles of past and current employees – believed to number more than 20 - “which led to some individuals being paid on an incorrect pay scale”, according to PICAL Committee of Management President Graeme Turner.
PICAL currently employs centre manager David Rooks – also a Bass Coast Shire councillor who is re-standing in the council elections at the end of October – for what is believed to be 30 hours per week, as well as a finance officer for one day a week, and a cleaner.
PICAL also has a Commonwealth financial relationship with Centrelink, with most of its funding from the state government, while the Bass Coast Shire is the landlord to PICAL’s Warley Avenue headquarters.
Insolvent
In the public statement Mr Turner explained “estimated historic debts far exceed PICAL’s financial reserves or its ability to raise the necessary funds within a reasonable timeframe, rendering PICAL technically insolvent”.
“PICAL would like to emphasise it is both illegal and against the responsibilities of the Committee of Management to continue trading when we cannot meet, or demonstrate the ability to meet, our debts.
“Despite our best efforts to resolve this historic issue, we are compelled by law to make this incredibly difficult decision.
“We are fully aware of the impact this will have on PICAL’s dedicated staff, clients, volunteers, and the many community members who rely on our services.”
Mr Turner explained enterprise agreements PICAL entered into with staff a decade ago “were quite generic and open to interpretation, which contributed to the error that persisted undetected over the years”.
“This has led to a significant debt that PICAL is unable to pay.
“It is important to note that this was an administrative inaccuracy and not the result of management, misappropriation or fraudulent behaviour by anyone involved with PICAL.
“While there are no current demands for payment, these historic debts are so significant that they far exceed PICAL's financial reserves or capacity to repay, thus making PICAL technically insolvent.”
Mr Turner said “after careful consideration and comprehensive legal and financial consultations”, the Committee of Management concluded the “only responsible course of action will be to make the decision to wind up”.
The November 14 meeting will see members voting on the decision to wind up as well as “possible options and any resolutions that need to be tabled”.
“While this is a challenging time for PICAL, all existing services will continue to support our community as they have done in the past for now and for as long as we are permitted, with a focus of supporting continuity moving forward,” said Mr Turner.
“We will provide more information to all concerned as soon as we are able.”
Established in 1980, PICAL is a part of Gippsland’s Neighborhood Houses Victoria organisation.
The vast majority of Neighbourhood Houses are incorporated associations with a committee/board of governance, but about seven per cent are council managed and two per cent are cooperatives.
The State Government provides core funding to most Neighbourhood Houses with other income from the Federal Government, grants, and inhouse funds.
READ MORE:
The full statement from PICAL Committee of Management President
