Warrnambool City Council audit committee chief resigns, saying saleyards will never make a profit

Warrnambool City Council audit committee chairman Leon Fitzgerald has resigned in protest over what he describes as misinformation about the future of the South West Livestock Exchange.

"To make one mistake is unfortunate," he said.

"To make several looks like carelessness.

"However, the errors and omissions in the investment case put forward to council were so numerous and so serious I was put in a position where I had to act.

"I quit over the information being provided to ratepayers and councillors about the Warrnambool saleyards.

"I could no longer be complicit in what is being done."

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Mr Fitzgerald has extensive experience in project control, financial management and capital project evaluation with major corporations, including Boeing Defence & Aerospace and the ASX-listed global engineering company Worley Limited.

He said the application of simple accounting practises on the public documents indicated ratepayers faced an ongoing blackhole of losses he estimated at between $600,000 and $700,000 annually immediately after the proposed capital upgrade, which would grow to $800,000 in future years.

Mr Fitzgerald said that could only be mitigated by a massive increase in cattle volume, far in excess of the "best case" scenario of 87,000 put to the council.

"Councillors may take other factors into account in making their decision," he said.

"However, they should not take this decision labouring under the misapprehension that SWVLX is profitable."

Mr Fitzgerald said a failure to calculate a combination of depreciation, interest costs and a fanciful predicted turn around in cattle sale numbers were at the core of future financial woes.

"I'm expressing my concern about the financial analysis presented to council on August 1 as part of the SWVLX saleyards' (Warrnambool saleyards) capital expenditure proposal, and the subsequent issuing of material on August 10 as part of community/stakeholder consultation," he said.

"I believe both are, at best, opaque and confusing and, at worst, contradictory and misleading."

Mr Fitzgerald said another key concern was using Warrnambool cattle throughput figures before the Mortlake saleyards opened as the basis of future predictions.

Warrnambool numbers have dropped from just under 110,000 in 2012-14 to less than 60,000 in the past two years.

Mr Fitzgerald described a forecast turnaround back to more than 80,000 as bewildering.

The forecast was based upon what he believed was a flawed statistical analysis based more on hope than expectation.

There is no objective market analysis or strategic pathway outlined to describe how this volume increase might be be achieved, Mr Fitzgerald said.

"Without that volume uplift, SWVLX will not generate enough cash to meet its operating costs, including interest, and also fund council's own forecast of renewal capital of a further $4 million over coming years," he said.

"The end result, when SWVLX inevitably closes sometime in the future, is the ratepayers incurring a loss of internal WCC reserves invested and having to repay loan principle, which in aggregate will be $8 million to $9 million."

A Warrnambool City Council spokesman on Friday said the council welcomed Mr Fitzgerald's interest and would be happy to look at his analysis.

He said previous information released by the council related to the initial roof tender.

"Council is now looking further at the future of the yards and more detailed information is needed to assist the outcomes of that process."

Councillors last month voted 4-3 to not accept a tender for multi-million dollar works at the saleyards.

There is now a public consultation process being undertaken before the councillors are expected to decide on the future of the saleyards in November.