Late Items Agenda of Council

Council 3 27 June 2018

12. REPORTS OF COMMITTEE MEETINGS

12.1 Finance Committee - 21/06/2018 - FINANCIAL ACTIVITY STATEMENTS - PERIOD ENDING 31 MAY 2018

SUBJECT INDEX:	Budget Planning and Reporting
STRATEGIC OBJECTIVE:	Governance systems, process and practices are responsible, ethical and transparent.
BUSINESS UNIT:	Finance and Corporate Services
ACTIVITY UNIT:	Financial Services
REPORTING OFFICER:	Manager Financial Services - Kim Dolzadelli
AUTHORISING OFFICER:	Director, Community and Commercial Services - Cliff Frewing
VOTING REQUIREMENT:	Simple Majority
ATTACHMENTS:	Attachment a Statement of Financial Activity - Period Ending 31 May 2018 ⇩ Attachment b Investment Report - Period Ending 31 May 2018 ⇩

This item was considered by the Finance Committee at its meeting on 21 June 2018, the recommendations from which have been included in this report.

PRÉCIS

Pursuant to Section 6.4 of the Local Government Act (‘the Act’) and Regulation 34(4) of the Local Government (Financial Management) Regulations (‘the Regulations’), a local government is to prepare, on a monthly basis, a statement of financial activity that reports on the City’s financial performance in relation to its adopted/ amended budget.

This report has been compiled to fulfil the statutory reporting requirements of the Act and associated Regulations, whilst also providing the Council with an overview of the City’s financial performance on a year to date basis for the period ending 31 May 2018.

BACKGROUND

The Regulations detail the form and manner in which financial activity statements are to be presented to the Council on a monthly basis; and are to include the following:

§ Annual budget estimates

§ Budget estimates to the end of the month in which the statement relates

§ Actual amounts of revenue and expenditure to the end of the month in which the statement relates

§ Material variances between budget estimates and actual revenue/ expenditure/ (including an explanation of any material variances)

§ The net current assets at the end of the month to which the statement relates (including an explanation of the composition of the net current position)

Additionally, and pursuant to Regulation 34(5) of the Regulations, a local government is required to adopt a material variance reporting threshold in each financial year. At its meeting of 26 July 2017, the Council adopted (C1707/163) the following material variance reporting threshold for the 2017/18 financial year:

“That pursuant to Regulation 34(5) of the Local Government (Financial Management) Regulations, the Council adopts a material variance reporting threshold with respect to financial activity statement reporting for the 2017/18 financial year as follows:

· Variances equal to or greater than 10% of the year to date budget amount as detailed in the Income Statement by Nature and Type/ Statement of Financial Activity report, however variances due to timing differences and/or seasonal adjustments are to be reported on a quarterly basis; and

· Reporting of variances only applies for amounts greater than $25,000.”

STATUTORY ENVIRONMENT

Section 6.4 of the Local Government Act and Regulation 34 of the Local Government (Financial Management) Regulations detail the form and manner in which a local government is to prepare financial activity statements.

RELEVANT PLANS AND POLICIES

Not applicable.

FINANCIAL IMPLICATIONS

Any financial implications are detailed within the context of this report.

Long-term Financial Plan Implications

Any financial implications are detailed within the context of this report.

STRATEGIC COMMUNITY OBJECTIVES

This matter principally aligns with Key Goal Area 6 – ‘Leadership’ and more specifically Community Objective 6.1 - ‘Governance systems, process and practices are responsible, ethical and transparent’.

RISK ASSESSMENT

Risk assessments have been previously completed in relation to a number of ‘higher level’ financial matters, including timely and accurate financial reporting to enable the Council to make fully informed financial decisions. The completion of the monthly Financial Activity Statement report is a control that assists in addressing this risk.

CONSULTATION

Not applicable.

OFFICER COMMENT

In order to fulfil statutory reporting requirements, and to provide the Council with a synopsis of the City’s overall financial performance on a full year basis, the following financial reports are attached here to:

§ Statement of Financial Activity

This report provides details of the City’s operating revenues and expenditures on a year to date basis, by nature and type (i.e. description). The report has been further extrapolated to include details of non-cash adjustments and capital revenues and expenditures, to identify the City’s net current position; which reconciles with that reflected in the associated Net Current Position report.

§ Net Current Position

This report provides details of the composition of the net current asset position on a full year basis, and reconciles with the net current position as per the Statement of Financial Activity.

§ Capital Acquisition Report

This report provides full year budget performance (by line item) in respect of the following capital expenditure activities:

· Land and Buildings

· Plant and Equipment

· Furniture and Equipment

· Infrastructure

§ Reserve Movements Report

This report provides summary details of transfers to and from reserve funds, and also associated interest earnings on reserve funds, on a full year basis.

Additional reports and/or charts are also provided as required to further supplement the information comprised within the statutory financial reports.

COMMENTS ON FINANCIAL ACTIVITY TO 31 May 2018

The Statement of Financial Activity for the period ending 31 May 2018 shows a better than expected Net Current Position “Surplus” of $10M being $29.97M more than Year to Date (YTD) Budget. At this time subject to there being no adverse activity in the following month it is expected that a modest surplus in the vicinity of $500K to $1M will be achieved at year end.

The following summarises the major variances in accordance with Council’s adopted material variance reporting threshold that collectively make up the above difference:

Description	2017/2018 Actual	2017/2018 Amended Budget YTD	2017/2018 Amended Budget	2017/18 YTD Bud Variance	2017/18 YTD Bud Variance
Revenue from Ordinary Activities	64,659,810	64,468,604	66,421,049	0.30%	191,206
Expenses from Ordinary Activities	(60,295,551)	(62,422,003)	(68,674,825)	3.41%	2,126,452

Non-Operating Grants, Subsidies and Contributions	13,094,426	23,437,861	43,655,339	-44.13%	(10,343,435)
Loss on Asset Disposals	(641,061)	(6,252)	(6,252)	-10513.69%	(634,809)

Capital Revenue & (Expenditure)
Land & Buildings	(4,557,187)	(15,538,361)	(16,636,693)	70.67%	10,981,174
Plant & Equipment	(1,868,589)	(4,278,112)	(4,279,400)	56.32%	2,409,523
Furniture & Equipment	(484,529)	(800,193)	(830,212)	39.45%	315,664
Infrastructure	(38,213,066)	(53,908,332)	(60,684,321)	29.11%	15,695,266
Proceeds from Sale of Assets	318,150	635,150	635,150	-49.91%	(317,000)
Proceeds from New Loans	6,960,000	10,110,000	10,110,000	-31.16%	(3,150,000)
Advances to Community Groups	(110,000)	(260,000)	(260,000)	57.69%	150,000
Transfer to Restricted Assets	(2,458,356)	(564,501)	(625,751)	-335.49%	(1,893,855)
Transfer from Restricted Assets	21,688,927	15,354,556	27,808,739	41.25%	6,334,371
Transfer to Reserves	(10,825,164)	(14,279,526)	(16,285,572)	24.19%	3,454,362
Transfer from Reserves	5,035,307	1,146,659	19,921,964	339.13%	3,888,648

Operating Revenue:

Revenue from ordinary activities is $191,206 more than expected when compared to YTD Budget with the following items meeting the material variance reporting threshold set by Council for the 2017/2018 Financial Year.

Description	2017/2018 Actual	2017/2018 Amended Budget YTD	2017/2018 Amended Budget	2017/18 YTD Bud Variance	2017/18 YTD Bud Variance
	$	$	$	%	$
Revenue from Ordinary Activities
Operating Grants, Subsidies and Contributions	1,956,132	2,769,653	3,637,258	-29.37%	(813,521)
Other Revenue	476,594	355,846	426,167	33.93%	120,748

Operating Grants, Subsidies and Contributions

Cost Code	Cost Code Description	Comment	Variance YTD
Finance and Corporate Services
Reimbursements
10200	Financial Services	Insurance Recovered - Claims	47,893
10521	Human Resources & Payroll	Reimbursements - Workers Compensation offset with level of expenditure	(75,485)

Community and Commercial Services
State Government Grants & Subsidies - Operating Activities
10540	Recreation Administration	Operating Grants & Subsidies Dept. Sport & Rec - balance of Grant to claim	(32,314)
11151	Airport Operations	Operating Grants & Subsidies - AIRLINE ENGAGEMENT PROJECT - BUSSELTON MARGARET RIVER AIRPORT PROJECT	56,800
C6101	Airport Development - Project Expenses	Operating Grant-Following the State Government’s Value Optimisation Review of the Busselton-Margaret River Airport Development Project the City negotiated with the State the return of $1.4M in funding. A variation to the Financial Assistance Agreement for the Royalties for Regions funding followed and the $1.4M was returned in May 2018.	(1,400,000)

Planning and Development Services
State Government Grants & Subsidies - Operating Activities
10830	Environmental Management Administration	Operating Grants & Subsidies-Other - recoup earlier than expected	44,256

Reimbursements
10940	Fire Prevention DFES	Reimbursement - ESL Levy - recoup earlier than expected	40,522

Engineering and Works Services
State Government Grants & Subsidies - Operating Activities
11300	Sanitation Waste Services Administration	Operating Grants & Subsidies-Offset with level of expenditure	(90,000)

Contributions - Operating Activities
11160	Busselton Jetty	Contributions - Operating Activities - recoup earlier than expected	383,017

Reimbursements
11501	Operations Services Works	Reimbursements - Workers Compensation - offset with expenditure	38,980

Other Revenue

The items predominately impacting the above “Other Revenue” performance is Sale of Scrap Materials $104K.

The Officer notes that the above performance of “Operating Grants and Subsidies“ and “Other Revenue” is added to by a positive collective performance of $884K for Rates, Interest and Fees and Charges; these items fall below the Material Variance reporting thresholds. These variations are considered to be that of a timing difference with the exception of Rate Revenue ($186K) which is expected to be a permanent variation.

Interim Rates:

Officers continue to monitor Interim Rating Income levels and present the following information noting that the YTD Budget has already been achieved;

Operating Expenditure:

Expenditure from ordinary activities, excluding depreciation, is $2.54M less than expected when compared to YTD Budget with the following items meeting the material variance reporting threshold set by Council for the 2017/2018 Financial Year.

Description	2017/2018 Actual	2017/2018 Amended Budget YTD	2017/2018 Amended Budget	2017/18 YTD Bud Variance	2017/18 YTD Bud Variance
	$	$	$	%	$
Expenses from Ordinary Activities
Materials & Contracts	(13,525,861)	(15,135,292)	(16,914,999)	10.63%	1,609,431
Allocations	1,605,424	1,796,173	1,996,270	10.62%	(190,749)

Materials and Contracts:

The main items affected are listed below, at this stage these variances are considered to be of a timing nature:

Cost Code	Cost Code Description / GL Activity	Variance YTD
Finance and Corporate Services
10100	Finance & Corporate Services Support	29,272
10250	Information & Communication Technology Services	38,175
10500	Legal and Compliance Services	35,175
Community and Commercial Services
10591	Geographe Leisure Centre	67,480
10635	Regional Centres Program	100,000
10900	Cultural Planning	53,791
11151	Airport Operations	(48,718)
Planning and Development Services
10830	Environmental Management Administration	58,315
10850	Implement Management Plans Other	57,492
10925	Preventative Services - CLAG	39,337
11170	Meelup Regional Park	67,099
Engineering and Works Services
11104	Port Geographe	(300,000)
11106	Street Lighting Installations	33,086
11108	Rural Intersection (Lighting) Compliance	40,830
11160	Busselton Jetty	498,157
12600	Street & Drain Cleaning	(38,419)
Various	Bridge Maintenance	78,396
Various	Building Maintenance	136,496
C8500	Cycleways Maintenance Busselton	(26,727)
Various	Waste	398,480
Various	Road Maintenance	(218,543)
Various	Reserve Maintenance	(373,765)
5280	Transport - Fleet Management	95,701

Allocations:

Allocations are running $190k under YTD Budget; these items are an internal allocation of administrative costs from the Finance and Corporate Services division.

The Officer further notes that the above combined performance of “Materials and Contracts” and “Allocations” is added to by a positive collective performance of $1.12M for Employee Costs, Utilities, Insurances and Other Expenditure.

Non-Operating Grants, Subsidies and Contributions:

Non-Operating Grants, Subsidies and Contributions are less than YTD Budget by $10.34M with the main item impacting on the above result is the timing of the receipt of “Airport Development - Project Grant” with a current negative result of $10.14M; this is a timing difference in nature and effectively Municipal Funds are currently being utilised to offset the level of current expenditure for this project. Other items impacting Non-Operating Grants, Subsidies and Contributions are as follows:

Capital Expenditure

As at 31 May 2018, there is a variance of -39.45% or -$29.4M in total capital expenditure with YTD Actual at -$45.12M against a YTD Budget of -$74.52M; with the table below showing those categories exceeding the 10% material variance threshold. The Airport Development makes up for $11.96M, Plant and Equipment Purchases, $2.4M, Furniture and Equipment Purchases $315K, Major Project - Busselton Foreshore $3.12M, Main Roads projects $1.5M, Busselton/Dunsborough Traffic Implementation Works $990K and Council Roads Initiatives $754K of the overall variance which also assists in explaining the above current YTD shortfall in Non-Operating Grants.

The attachments to this report include detailed listings of the following capital expenditure (project) items, to assist in reviewing specific variances.

Investment Report

Pursuant to the Council’s Investment Policy, a report is to be provided to the Council on a monthly basis, detailing the investment portfolio in terms of performance and counterparty percentage exposure of total portfolio. The report is also to provide details of investment income earned against budget, whilst confirming compliance of the portfolio with legislative and policy limits.

As at 31^stMay 2018, the value of the City’s invested funds totalled $78.19M, up from $77.64M as at 30^th April. The slight increase is due to a net positive inflow of Loan Income compared to on-going expenditure.

During the month of May six term deposits held with five different institutions totalling $14.0M matured. Five totalling $12.5M were renewed for a further 10 days at 2.54% (on average). One deposit in the amount of $1.5M had to be closed so as to maintain compliance with the Investment Policy 218, with specific regard to maximum exposure to a single institution. Investments balances are now falling to levels of a number of years ago and current holdings could no longer be maintained with the bank. The funds were utilised to meet ongoing expenses.

No fixed term deposits relating to the Airport Redevelopment Project matured during the month.

The balance of the 11am account (an intermediary account which offers immediate access to the funds compared to the term deposits and a higher rate of return compared to the cheque account) increased by $6.0M due to the inflow of new Loan income. The balance of the Airport Development ANZ cash account decreased by $2.55M as funds were needed to pay ongoing expenses. The balance of funds held at the WA Treasury decreased by $1.4M when the funds were required to be returned to the WA Government.

The RBA left official rates on hold during May and June. Future movements remain uncertain at this point, although the next movement is likely to be up but not in the immediate future.

Chief Executive Officer – Corporate Credit Card

Details of monthly (April to May) transactions made on the Chief Executive Officer’s corporate credit card are provided below to ensure there is appropriate oversight and awareness of credit card transactions made.

Date	Amount	Payee	Description
10-May-18	$75.00	Sticky Tickets	BCCI Budget Breakfast Tickets (2 x Cr’s)

*Funds debited against CEO Annual Professional Development Allowance as per employment Contract Agreement

+ Allocated against CEO Hospitality Expenses Allowance

CONCLUSION

As at 31 May 2018, the City’s financial performance is considered satisfactory. At this time, subject to there being no adverse activity in the following month, it is expected that a modest surplus in the vicinity of $500K to $1M will be achieved at year end.

COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

That the Council receives the statutory financial activity statement reports for the period ending 31 May 2018, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations.

Council 27 27 June 2018

12.2 Finance Committee - 21/06/2018 - BUDGET AMENDMENT REQUEST

SUBJECT INDEX:	Budget Planning and Reporting
STRATEGIC OBJECTIVE:	Governance systems, process and practices are responsible, ethical and transparent.
BUSINESS UNIT:	Finance and Corporate Services
ACTIVITY UNIT:	Finance and Corporate Services
REPORTING OFFICER:	Manager Financial Services - Kim Dolzadelli
AUTHORISING OFFICER:	Director, Community and Commercial Services - Cliff Frewing
VOTING REQUIREMENT:	Absolute Majority
ATTACHMENTS:	Nil

This item was considered by the Finance Committee at its meeting on 21 June 2018, the recommendations from which have been included in this report.

PRÉCIS

This report seeks recommendation of the Finance Committee to Council for the approval of budget amendments as detailed in this report. Adoption of the Officers recommendation will result in no change to the City’s current Amended Budgeted Surplus Position of $0.

BACKGROUND

Council adopted its 2017/2018 Municipal Budget on Wednesday, 26 July 2017 with a balanced Budget position.

Since this time Council has been advised of certain funding changes that have impacted the original Budget and Council is now being asked to consider Budget Amendments for the following Key Areas/Projects:

1. “Regional Road Group Projects”

BACKGROUND

A budget amendment is being requested to transfer left over funds between Regional Road Group Projects Queen Street and Peel Terrace. The current scope of the Queen St project has been bought in under Budget and approval from RRG has been received to transfer $100,000 in Regional Road Group (RRG) funding from this project to the Peel Terrace project.

As this funding requires a 1/3 contribution from the City a total transfer of funds of $150,000 is being sought between the two projects; $100,000 RRG and $50,000 municipal funds.

The $50,000 contribution has already been budgeted and will simply be transferred between projects meaning this amendment has a nil impact on the City’s bottom line.

PLANNED EXPENDITURE ITEMS

Increased expenditure on Peel Terrace project.

The following amendments shown below in Table 1 are being sought for approval.

Table 1:

*Cost Code*	*Description*	Current Budget	Change	Proposed Amended Budget
Expenditure
S0066	RRG Project Queen Street	254,412	-150,000	104,412
S0064	RRG Project Peel Terrace	1,102,549	150,000	1,252,549
Income
S0066	RRG Project Queen Street – Grant Income	-160,000	100,000	-60,000
S0064	RRG Project Peel Terrace – Grant Income	-644,000	-100,000	-744,000
Net Total		552,961	0	552,961

PROPOSED OUTCOME

Increased expenditure on Peel Terrace project and retention of grant funding.

STATUTORY ENVIRONMENT

Section 6.8 of the Local Government Act refers to expenditure from the municipal fund that is not included in the annual budget. In the context of this report, where no budget allocation exists, expenditure is not to be incurred until such time as it is authorised in advance, by an absolute majority decision of the Council.

RELEVANT PLANS AND POLICIES

There are multiple Plans and Policies that support the proposed Budget Amendments.

FINANCIAL IMPLICATIONS

Budget amendments being sought will result in no change to Council’s Budget Surplus position of $0.

Long Term Financial Plan Implications

There are no LTFP implications in relation to this item.

STRATEGIC COMMUNITY OBJECTIVES

RISK ASSESSMENT

There is a risk to the City, as there is with all projects undertaken, that the final cost could exceed budget. If this looks to be the case Council will be notified so a suitable offset / project scope back can be identified.

CONSULTATION

Consultation has occurred with Main Roads WA.

OFFICER COMMENT

The Officer commends the requested Budget Amendment to the Finance Committee for consideration and recommendation to Council.

CONCLUSION

Council’s approval is sought to amend the budget as per the details contained in this report. Upon approval the proposed works will be planned, organised and completed.

OPTIONS

The Council could decide not to go ahead with any or all of the proposed budget amendment requests.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Should the Officer Recommendation be endorsed, the associated budget amendment will be processed within a month of being approved.

COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

ABSOLUTE MAJORITY DECISION OF COUNCIL REQUIRED

That Council endorse the Requested Budget Amendments outlined in table 1 below, resulting in no change to an Amended Budgeted Surplus Position of $0.

Table 1:

*Cost Code*	*Description*	Current Budget	Change	Proposed Amended Budget
Expenditure
S0066	RRG Project Queen Street	254,412	-150,000	104,412
S0064	RRG Project Peel Terrace	1,102,549	150,000	1,252,549
Income
S0066	RRG Project Queen Street – Grant Income	-160,000	100,000	-60,000
S0064	RRG Project Peel Terrace – Grant Income	-644,000	-100,000	-744,000
Net Total		552,961	0	552,961

Council 30 27 June 2018

12.3 Finance Committee - 21/06/2018 - CREATION OF NEW RESERVE ACCOUNTS AND BUDGET AMENDMENT REQUEST

SUBJECT INDEX:	Budget Planning and Reporting
STRATEGIC OBJECTIVE:	Governance systems, process and practices are responsible, ethical and transparent.
BUSINESS UNIT:	Finance and Corporate Services
ACTIVITY UNIT:	Finance and Corporate Services
REPORTING OFFICER:	Manager Financial Services - Kim Dolzadelli
AUTHORISING OFFICER:	Director, Community and Commercial Services - Cliff Frewing
VOTING REQUIREMENT:	Absolute Majority
ATTACHMENTS:	Nil

This item was considered by the Finance Committee at its meeting on 21 June 2018, the recommendations from which have been included in this report.

PRÉCIS

This report seeks recommendation of the Finance Committee to Council for the approval to create three (3) new Reserve accounts.

BACKGROUND

During the Long Term Financial Plan (LTFP) and Draft Budget workshops with Council, a number of changes to reserve accounts were identified. This item requests creation of new reserves in accordance with those discussions including the transfer of Surplus Funds from the 2017/2018 Financial Year in order to establish opening balances for these new Reserves.

Specifically the Reserve accounts to be established, as above, are as follows:

· Emergency Disaster Recovery Reserve

Purpose: To provide funds for Disaster Recovery activities within the district.

Proposed Transfer: $50,000

· Energy Sustainability Reserve

Purpose: To provide funds for the investigation, implementation and optimisation of Energy Sustainability initiatives on City owned assets.

Proposed Transfer: $100,000

· Cemetery Reserve

Purpose: To provide funding for the renewal, expansion/establishment and major maintenance and initiatives of Cemeteries within the district.

Proposed Transfer: $100,000

STATUTORY ENVIRONMENT

Section 6.11 of the Local Government Act 1995 the manner in which a local government may establish and maintain a reserve account.

“6.11. Reserve accounts

(1) Subject to subsection (5), where a local government wishes to set aside money for use for a purpose in a future financial year, it is to establish and maintain a reserve account for each such purpose.

(2) Subject to subsection (3), before a local government —

(a) changes* the purpose of a reserve account; or

(b) uses* the money in a reserve account for another purpose,

it must give one month’s local public notice of the proposed change of purpose or proposed use.

* Absolute majority required.

(3) A local government is not required to give local public notice under subsection (2) —

(a) where the change of purpose or of proposed use of money has been disclosed in the annual budget of the local government for that financial year; or

(b) in such other circumstances as are prescribed.

(4) A change of purpose of, or use of money in, a reserve account is to be disclosed in the annual financial report for the year in which the change occurs.

(5) Regulations may prescribe the circumstances and the manner in which a local government may set aside money for use for a purpose in a future financial year without the requirement to establish and maintain a reserve account.”

RELEVANT PLANS AND POLICIES

There are multiple Plans and Policies that support the proposed Budget Amendments.

FINANCIAL IMPLICATIONS

Budget amendments being sought will result in a reduction in the Estimated Surplus position as at 30 June 2018 in the amount of $250,000; which at this time, subject to there being no adverse activity in the following month, is expected to be a modest surplus in the vicinity of $500K to $1M. As has previously been endorsed by Council any remaining Surplus at the end of the financial year would be transferred to the New Infrastructure Development Reserve as part of the 2018/2019 Budget.

Long Term Financial Plan Implications

The proposed creation of the above Reserves is in line with the recently adopted LTFP.

STRATEGIC COMMUNITY OBJECTIVES

RISK ASSESSMENT

This report outlines the potential establishment of reserve accounts. Reserve accounts are used to hold monies for future expenditure relating to a specific purpose. Therefore the proposed reserve accounts seek to ensure the risk associated with the future funding of specific obligations is reduced.

CONSULTATION

Consultation has occurred with the appropriate City of Busselton officers and during the LTFP and Draft Budget workshops with Council.

OFFICER COMMENT

The Officer recommends the requested creation of Reserve accounts and Budget Amendments to the Finance Committee for consideration and recommendation to Council, noting that the requested amendments are in line with the 2018/2019 Draft Budget.

CONCLUSION

Council’s approval is sought to create three (3) new Reserves and amend the 2017/2018 Budget as per the details contained in this report.

OPTIONS

The Council could decide not to go ahead with any or all of the proposed new Reserve accounts or Budget amendment requests.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Should the Officer Recommendation be endorsed, the associated budget amendment will be processed by 30 June 2018.

COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

ABSOLUTE MAJORITY DECISION OF COUNCIL REQUIRED

That the Council endorse:

1. The creation of the following Reserve accounts:

· Emergency Disaster Recovery Reserve

Purpose: To provide funds for Disaster Recovery activities within the district.

· Energy Sustainability Reserve,

Purpose: To provide funds for the investigation, implementation and optimisation of Energy Sustainability initiatives on City owned assets.

· Cemetery Reserve.

Purpose: To provide funding for the renewal, expansion/establishment and major maintenance and initiatives of Cemeteries within the district.

2. The following Transfers to Reserve to occur from the 2017/2018 Surplus position:

· Emergency Disaster Recovery Reserve $50,000

· Energy Sustainability Reserve $100,000

· Cemetery Reserve $100,000

Council 33 27 June 2018

12.4 Finance Committee - 21/06/2018 - ENDORSEMENT OF RESERVES AND RESERVE PURPOSES FOR THE 2018/19 ANNUAL BUDGET

SUBJECT INDEX:	Budget Planning and Reporting
STRATEGIC OBJECTIVE:	Governance systems, process and practices are responsible, ethical and transparent.
BUSINESS UNIT:	Finance and Corporate Services
ACTIVITY UNIT:	Finance and Corporate Services
REPORTING OFFICER:	Manager Financial Services - Kim Dolzadelli
AUTHORISING OFFICER:	Director, Community and Commercial Services - Cliff Frewing
VOTING REQUIREMENT:	Absolute Majority
ATTACHMENTS:	Attachment a Draft Reserve Purposes 2018/19 ⇩

This item was considered by the Finance Committee at its meeting on 21 June 2018, the recommendations from which have been included in this report.

PRÉCIS

This report seeks recommendation of the Finance Committee to Council for the endorsement of Reserve accounts and Reserve purposes for new and existing Reserves for inclusion in the Draft 2018/2019 Budget.

BACKGROUND

During the Long Term Financial Plan (LTFP) and Draft Budget workshops with Council, a number of changes to reserve accounts were identified. This item requests creation of new reserves and endorsement of the Purposes for new and existing Reserves in accordance with those discussions.

As there is a large number of Reserves these have been detail in attachment “A” to this report.

STATUTORY ENVIRONMENT

Section 6.11 of the Local Government Act 1995 the manner in which a local government may establish and maintain a reserve account.

“6.11. Reserve accounts

(2) Subject to subsection (3), before a local government —

(a) changes* the purpose of a reserve account; or

(b) uses* the money in a reserve account for another purpose,

it must give one month’s local public notice of the proposed change of purpose or proposed use.

* Absolute majority required.

(3) A local government is not required to give local public notice under subsection (2) —

(a) where the change of purpose or of proposed use of money has been disclosed in the annual budget of the local government for that financial year; or

(b) in such other circumstances as are prescribed.

(4) A change of purpose of, or use of money in, a reserve account is to be disclosed in the annual financial report for the year in which the change occurs.

RELEVANT PLANS AND POLICIES

The LTFP has identified a number of Reserves that are required to be established to meet our current and ongoing needs.

FINANCIAL IMPLICATIONS

Nil. The proposed creation of Reserves and Purposes is in line with both the recently adopted LTFP and 2018/2019 Draft Budget Workshop outcomes.

Long Term Financial Plan Implications

The proposed creation of Reserves and Purposes is in line with the current LTFP.

STRATEGIC COMMUNITY OBJECTIVES

RISK ASSESSMENT

CONSULTATION

Consultation has occurred with the appropriate City of Busselton officers and during the LTFP and Draft Budget workshops with Council.

OFFICER COMMENT

The reserves and purposes as indicated within attachment A allow the City to plan its expenditure both now and into the future. It allows for the City to meet its asset management commitments and service provision.

CONCLUSION

The Officer recommends the endorsement of the new reserves and reserve purposes noting these are in line with both the recently adopted LTFP and 2018/2019 Draft Budget Workshop outcomes.

OPTIONS

The Council could decide not to go ahead with any or all of the proposed new reserves and endorsement of the Purposes for new and existing Reserves.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Should the Officer Recommendation be endorsed, the associated Reserves and purposes will be incorporated in the Draft 2018/2019 Draft Budget.

OFFICER RECOMMENDATION

ABSOLUTE MAJORITY DECISION OF COUNCIL REQUIRED

That the Council endorse the Reserves and Reserve purposes for new and existing Reserves as contained in attachment “A” to this report for inclusion in the 2018/19 Annual Budget.

COMMITTEE RECOMMENDATION

ABSOLUTE MAJORITY DECISION OF COUNCIL REQUIRED

That the Council endorse the Reserves and Reserve purposes for new and existing Reserves as contained in attachment “A” to this report for inclusion in the 2018/19 Annual Budget including suggested minor wording amendments.

Council		19		27 June 2018
12.1	Attachment a		Statement of Financial Activity - Period Ending 31 May 2018

Council		38		27 June 2018
12.4	Attachment a		Draft Reserve Purposes 2018/19