CITY of Newcastle chief executive Jeremy Bath and former lord mayor Nuatali Nelmes will remain on Newcastle Airport boards until at least February next year in the interest of "stability".
The Newcastle Herald revealed this week that the airport is facing money troubles due to costs blowouts on its terminal expansion, falling passenger numbers and unbudgeted expenditure for the controversial Kongsberg missile factory and Lockheed Martin Air 6500 project.
Councillors voted on Tuesday to keep Cr Nelmes and Mr Bath, whose fees for work as directors on two Newcastle Airport boards has risen to nearly $80,000 each per year, in the roles on an interim basis until a "merit-based" application process can be put together.
Cr Nelmes said a number of councillors had asked her whether she would be happy to continue in the role on an interim basis.
"Just for the sake of openness and transparency, I am happy to do it only on an interim basis," she said.
"I think it's prudent to have a proper process in terms of selecting a councillor, because it is going to be different for the first time to Port Stephens Council."
Cr Nelmes used her casting vote to appoint herself to the board in 2019 for a fee of $50,000.
The former mayor said there is a "huge amount of work" in the role and offered to mentor the person who is selected to take her place.
"I'd be happy to mentor that person because it is quite a complex structure, but an exceptionally important asset for the City of Newcastle, the region, NSW and really for the country given its strategic location next to RAAF Williamtown," Cr Nelmes said.
The City of Newcastle (CN) and Port Stephens Council jointly own Newcastle Airport.
Directors from each council sit on the Newcastle Airport Pty Ltd (NAPL) and the Greater Newcastle Aerotropolis (GNAPL) boards.
Lord mayor Ross Kerridge removed himself from the discussion after Liberal deputy mayor Callum Pull raised concerns about the "independent" legal advice he received which stated it would not be an issue for him to remain in the chamber.
Cr Kerridge declared a conflict of interest that would preclude him from sitting on the boards because of a family member's employment related to the airport, but did not mention the independent legal advice he had sought apparently came from a supporter of his election campaign.
"Out of an abundance of caution, I'll absent myself from the chamber for this discussion," he said.
The council's legal and governance team was also consulted about the potential conflict and were in agreement it would be appropriate for Cr Kerridge to take part in discussions.
Once the permanent board members are chosen in February, it will take five weeks for their appointment to officially take place.
Greens Cr Charlotte McCabe said she became aware that Port Stephens Council has four representatives on the boards and said work has begun to increase Newcastle's representation.
"We now need to have a very transparent and accountable process to nominate who it will be from the elected council that will be on the board," she said.
"The priority for me is that the process is decided as quickly as possible, that the process is transparent and accountable and that the person who is appointed in the councillor position has the right skills to be an effective representative on the board."
A Port Stephens Council spokeswoman declined to comment, however the Herald understands the additional oversight is provided by the deputy mayor and the chief financial officer.
Newcastle council has asked for a report on the proposed merit-based application process, including corporate governance, experience and qualifications to pick its permanent board directors.
It is unclear what exactly that merit-based process will be, but Labor Cr Deahnna Richardson asked that it seek candidates who at a minimum have qualifications through the Australian Institute of Company Directors.
Independent Cr Peter Gittens said he believed the electorate had voted "quite significantly" in favour of change.
"That change, I believe, should trickle down to the nominations on the airport board even in an interim period," he said.
Councillors could vote to appoint the new board members before February 2025, but decided that should be the latest to make a decision.
A CN spokeswoman said historically it has appointed the chief executive and lord mayor as its two representatives on the airport board.
"This was proposed to continue for the current term however Dr Kerridge declared a significant conflict of interest on all matters relating to the airport and so an alternative councillor is now required," she said.
The spokeswoman said that similar to Newcastle, Port Stephens Council is afforded two airport directors, meaning the joint shareholders provide four directors to the 10-person board.
"Sitting above the airport are four companies, named one, two, three and four, which act as trustees of the four trusts set up by the two councils," she said.
"The first two are owned by City of Newcastle and the other two are owned by Port Stephens. The directors on these companies are not remunerated."
The council spokeswoman said from those four companies, each shareholder has two representatives that sit on the Newcastle Airport Partnership and the Greater Newcastle Aerotropolis Partnership.
The Herald understands for extra oversight Port Stephens Council appoints a second councillor and council employee to the overarching boards. These are unpaid positions.
Those boards approve the airport's annual business plan and any large unplanned contracts once recommended by management and the company boards, the spokeswoman said.
"Newcastle has always taken the approach to appoint the same two people to companies one and two as they do the airport boards," she said.
"Port Stephens does the same but also appoints a second councillor and second council employee to companies three and four."
The council spokeswoman confirmed a report will go to councillors next month outlining a proposed merit-based process in light of Cr Kerridge declaring himself ineligible for the role.
"This process will include a recommendation that it increase the number of directors on companies one and two, which would increase the level of skills, experience and expertise around the board table, and also provide a development pathway for future council representatives on airport boards," she said.
Councillors will decide on the eligibility criteria to be appointed to the board.
The council spokeswoman said Newcastle was fortunate that its current representatives both have "substantial" board experience and more than a decade of experience managing large budgets and capital works programs.
"Any merit-based process will only be to make a recommendation to the council," she said.
Ultimately, the councillors will decide who they believe is best equipped to represent Newcastle on the boards.
