COB-RGB

 

 

 

 

 

Finance Committee Agenda

 

 

 

18 October 2018

 

 

 

 

 


ALL INFORMATION AVAILABLE IN VARIOUS FORMATS ON REQUEST

city@busselton.wa.gov.au

 

 


CITY OF BUSSELTON

MEETING NOTICE AND AGENDA – 18 October 2018

 

 

 

TO:                  THE MAYOR AND COUNCILLORS

 

 

NOTICE is given that a meeting of the Finance Committee will be held in the Committee Room, Administration Building, Southern Drive, Busselton on Thursday, 18 October 2018, commencing at 9.30am.

 

The attendance of Committee Members is respectfully requested.

 

 

DISCLAIMER

Statements or decisions made at Council meetings or briefings should not be relied on (or acted upon) by an applicant or any other person or entity until subsequent written notification has been given by or received from the City of Busselton. Without derogating from the generality of the above, approval of planning applications and building permits and acceptance of tenders and quotations will only become effective once written notice to that effect has been given to relevant parties. The City of Busselton expressly disclaims any liability for any loss arising from any person or body relying on any statement or decision made during a Council meeting or briefing.

 

 

 

Mike Archer

 

CHIEF EXECUTIVE OFFICER

 

12 October 2018


CITY OF BUSSELTON

Agenda FOR THE Finance Committee MEETING TO BE HELD ON 18 October 2018

TABLE OF CONTENTS

 

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

1....... Declaration of Opening and Announcement of Visitors. 4

2....... Attendance. 4

3....... Public Question Time. 4

4....... Disclosure Of Interests. 4

5....... Confirmation Of Minutes. 4

5.1          Minutes of the Finance Committee Meeting held 20 September 2018. 4

6....... Reports. 5

6.1          ASSET MANAGEMENT REPORT. 5

6.2          FINANCIAL ACTIVITY STATEMENTS - PERIOD ENDING 30 SEPTEMBER 2018. 21

6.3          LIST OF PAYMENTS MADE SEPTEMBER 2018. 52

6.4          BUDGET AMENDMENT REQUEST / REVIEW... 73

7....... General Discussion Items. 79

8....... Next Meeting Date. 79

9....... Closure. 79

 


Finance Committee                                                             4                                                                 18 October 2018

 

1.               Declaration of Opening and Announcement of Visitors

                         Councillor Paul Carter has submitted notice that he will be stepping down as Presiding Member of the Finance Committee.

                   Re-election of a Presiding Member

                   Re-election of a Deputy Presiding Member

2.               Attendance 

Apologies

3.               Public Question Time  

4.               Disclosure Of Interests

5.               Confirmation Of Minutes

5.1             Minutes of the Finance Committee Meeting held 20 September 2018

Recommendation

That the Minutes of the Finance Committee Meeting held 20 September 2018 be confirmed as a true and correct record.

 


Finance Committee                                                             6                                                                  18 October 2018

6.               Reports

6.1             ASSET MANAGEMENT REPORT

SUBJECT INDEX:

Assets

STRATEGIC OBJECTIVE:

Assets are well maintained and responsibly managed.

BUSINESS UNIT:

Engineering and Facilities Services

ACTIVITY UNIT:

Asset Management

REPORTING OFFICER:

Asset Coordinator - Daniel Hall

AUTHORISING OFFICER:

Director, Engineering and Works Services - Oliver Darby

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Attachment a   Reserve Funding Overview

Attachment b    Example increase in Annual Building Replacement Value

Attachment c    Annual Percentage of Attachment C Replacement Value Allocated to Reserves by Hierarchy

Attachment d   Allocation of Annual Renewal Funding

Attachment e    Overall Ten Year Building Allocation funds to Specific Reserves

Attachment f    Overall Ten Year Building Allocation funds to Specific Reserves  

  

PRÉCIS

 

The purpose of this report is to provide the Finance Committee with asset management information relevant to the financial management of the City of Busselton.  It outlines various activities and how they may or may not impact the financial management of the City. It is not intended as an exhaustive list of all of the asset management undertakings for the period, but is rather a targeted report detailing issues relevant to the Finance Committee.

 

Asset Management Report

 

Building Funding Plan - Overview

 

The recent and planned growth of the buildings portfolio has created the need for a more flexible approach to allocation of annual renewal funding for buildings. This funding has historically been allocated through the Capital budget as a standard amount each year with incremental increases for inflation.  This annual amount must be spent within the allocated year and underspent funds are not able to be added to the following year’s budget. This provides certainty for the annual amount available, however has limitations in situations where the value of the critical projects may be less than the budget allocation for that year, creating the need to ‘fill the budget’ with projects that may not be absolutely necessary.

 

In this current structure, the predetermined annual budget drives the allocation of renewal projects.

 

The Progression of the City’s Buildings Asset Management Plan has highlighted the need for the annual budget process to be more flexible in terms of the amount to be allocated each financial year. The allocated amount needs to be driven by the current prioritised projects for buildings rather the pre-determined budget allocation driving the amount of projects to be delivered.

 

In order for the required projects to drive the annual budget, a structure has been put in place to allow for variations within the annual budget allocation from year to year. Reserve accounts have been established in which to allocate funds and draw upon when they are required.


 

Funds in a Reserve Account are not tied to being spent in any particular financial year which provides the required flexibility to the Building Renewal funding.

 

The funds can remain in the account until such time as works are scheduled through the various avenues as outlined in section two of the methodology.

 

This represents a major change in how the City approaches building renewal funding and for this reason, detailed modelling has been undertaken to determine how funds will be apportioned and how the change will be managed in the long term.

 

An overview of the funding plan outcomes is provided in Attachment A. It shows the funds to be allocated to Reserves for the purpose of funding renewal of buildings. How this has been determined is detailed within the methodology section.

 

Building Funding Plan – Methodology for How the Funds Are Allocated

 

The methodology for determining the annual amount to be allocated to the reserves is based on the following criteria;

 

1.            Building replacement cost;

2.            Annual Inflation of building replacement cost;

3.            Apportion of funds based on building SLH; and

4.            Building Asset Management Reserves.

 

Building Replacement Costs

 

The replacement costs are based on the Rawlinson’s Australian Construction Handbook, 2016. The handbook provides the average cost range for a wide selection of typical buildings. CPI has also been added to the values to ensure they are relevant for 2018. Table 1 provides an example of the current replacement value for Alan Street Ablutions in preparation for annual inflation.

 

Table 1 Example Building Replacement Cost

 

Description

Current Replacement Value

Alan St Ablutions

$74,880

               

Annual Inflation of Building Replacement Cost

 

The inflation applied to the annual replacement cost of buildings is determined by the Non-Residential Building Construction Index, provided by the Australian Bureau of Statistics [ABS]. Advice received from the Western Australian Local Government Association [WALGA] suggests that the index will increase by two percent in both 2018-19 and 2019-20. This has then been applied across the ten years for the purpose of this exercise. It will however, be subject to ongoing review and update. Attachment B provides an example of how the current replacement cost is increased per annum in accordance with the index.

 

Once the building values have been established, the next step in the process is to apply the amount to be allocated for renewal per annum. This is done by applying an annual percentage to the building value for that year i.e. the building values shown in attachment B. The annual percentages to be applied are based on the criticality and importance of the building (Service Level Hierarchy) and are shown in Attachment C. 

 

 

The intention of the funding plan is to maintain these buildings at the required standard until such time as they require replacement, refurbishment or significant upgrade. It is anticipated that the reserve will have a balance of funds at this point to contribute towards these works, however is not intended to fund the major upgrade, expansion or new works.

 

As outlined in Table X below, buildings receiving four percent in 2028/29 are SLH 1, indicating that they are high use buildings that are critical the ongoing operations and service provision of the City. They would therefore be required to be maintained at higher standard and be required to be replaced sooner to cater for the evolving requirements of the community.

 

Buildings receiving two and a half percent in 2028/29 are less critical, lower use or leased buildings with reduced City management obligation and would generally not require replacement, refurbishment or significant upgrade until after a forty year period.

 

Buildings with no annual allocation are buildings with little or no use or are leased and the City has no obligation to maintain them.  At the end of their useful lives, these buildings will generally be decommissioned, demolished, subject to third party renewal responsibility or grant funding application. An annual allocation has been apportioned ($100,000 plus CPI) within the funding plan to allow for City contributions to grant funding as required.

 

Once the annual replacement value and apportioning percentage have been determined, the next step in the process is to allocate an annual renewal funding amount. This is achieved by multiplying the annual replacement value and the annual apportioning percentage to determine the amount to be allocated. In the example shown in Attachment D, the replacement value for each given year is multiplied by the percentage for that year. In 2018-19 the replacement value of $74,880 is multiplied by the corresponding percentage of 1.5 to provide an annual allocation of $1,123.

 

Building Asset Management Reserves

 

There are a total of fifteen current reserves established for the purpose of funding building renewal and another four are planned to be established as new buildings are constructed.  Table X provides a breakdown of the current and planned reserves and gives a description of the buildings that are funded by the reserve.

 

Table 2 Current and Planned Building Renewal Reserves

 

Reserve Name – Current

Description of Buildings Funded

Aged Housing Residents Funded Reserve

Council owned community housing

Airport Infrastructure Renewal Reserve

All current and future buildings associated with the operation of the Busselton Margaret River Regional Airport. This reserve also funds all other infrastructure, plant furniture and equipment

Barnard Park Building Reserve

Barnard Park Sports Pavilion

Building Asset Renewal Reserve

All other buildings not funded by another reserve. This includes community use elements of fire sheds constructed by the City.

Busselton Jetty Tourist Park Reserve

All current and future buildings associated with the operation of the Busselton Jetty Tourist Park. This reserve also funds all other asset renewal requirements for the park.

Busselton Library Building Reserve

Busselton Library


 

Civic and Administration Building Reserve

Civic and Administration Building

Community Resource Centre Reserve

Community Resource Centre. Council is responsible for 50% of the renewal requirements for this building and other users are responsible for 50% also.

Geographe Leisure Centre Building Reserve

Geographe Leisure Centre

Jetty Maintenance Reserve

Underwater Observatory and Jetty Interpretive Centre. This reserve also funds renewal and maintenance requirements of all other elements of the Jetty Structure.

Joint Venture Housing Reserve

Community Aged Housing at Winderlup Villas and Harris Road pursuant joint venture agreements with the Department of Housing. This reserve also funds operational and administrative costs.

Naturaliste Community Centre Building Reserve

Naturaliste Community Centre

Railway House Building Reserve

Railway House. The allocations to this reserve are split between the City and other users of the building. The City contributed 50% of the requirements.

Waste and Facilities Plant Reserve

All current and future buildings associated with the operation of waste sites both within the district and regionally. This reserve also funds waste site development and rehabilitation and acquisition of waste plant and equipment and any other waste management activities that may include contaminated sites with the district.

Youth and Community Activity Building Reserve

Youth and Community Activities Building. The Surf Life Saving Club are also required to allocate funds towards future maintenance also.

 

 

Reserve Name – Future

 

Yalyallup Sports Pavilion Renewal Reserve

Future Yalyallup Sport Pavilion - 2024

Dunsborough Lakes Community Pavilion Renewal Reserve

Future Dunsborough Lakes Community Pavilion - 2029

Performing Arts and Convention Centre Renewal Reserve

Future Performing Arts and Convention Centre - 2026

Vasse Sports Pavilion Renewal Reserve

Future Vasse Sports Pavilion -2026

 

Based on the allocated Reserve for each building, the calculated funds are to be placed in the reserve in preparation for annual renewal works as required. Attachment E provides an overview of the funds to be apportioned to the Reserves over ten years. This table provides the overall amount required, however there is further refinement required to determine the exact annual impact on the City’s municipal funds. Some of these reserves have income streams other that the City’s main source of funds known as ‘municipal funds’. These other income streams include income from tenants and leases or income from commercial activities undertaken at the site.

 

The planned future reserves indicate when the City is required to allocate renewal funding, following building construction and building defects liability period of twelve months.

 


 

Building Funding Plan – Methodology for How the Funds Are Spent

 

The allocation of funds into the reserves is based around an anticipated distribution within pre-determined parameters; however, how the funds are actually spent requires further assessment to understand the buildings current condition, cost of components to be renewed and other factors affecting whether renewal works are required at the time. Funds from reserves are allocated through the annual budget as works are required. Renewal works are generated through the following avenues.

 

1.            Asset Management condition assessments,

2.            Facilities management identification of major maintenance items requiring a capital         allocation,

3.            Community and user group requests,

4.            Complimentary renewal works undertaken as part of a major upgrade or expansion project;

5.            Council requests and budget bids; and

6.            Separate Master Planning Activities linking with the Asset Management Plan.

 

Asset Management Condition Assessments

 

Asset management condition assessments are undertaken on a regular basis, however each year in the lead up to the annual budget preparation certain buildings will receive a detailed condition inspection. These buildings are those noted as being poorer condition, high use, or reaching the end of their useful lives. These inspections are undertaken in conjunction with the facilities management team also.

 

In conjunction asset condition assessments, Asset Management officers also undertake assessments of performance of existing buildings. This assessment of performance considers elements such as physical condition, required and expected performance standards, current and expected future utilisation and capacity of the asset to meet requirements.

 

The asset management condition and performance assessments also generate a guiding plan for required building renewal works over ten and twenty years. This is required as a means of linking the anticipated works with Long Term Financial Planning.

 

Facilities management identification of major maintenance items requiring a capital allocation

 

The facilities management team carry-out maintenance works as required to City managed buildings. Through this work they gain a good understanding of renewal requirements for buildings and this information is assessed when determining the budget projects.

 

Community and user group requests

 

As regular users of the buildings, community and user groups often provide feedback on the current functionality and condition of buildings. This information is taken into account when deciding upon upcoming budget priorities.

 

Complimentary renewal works undertaken as part of a major upgrade or expansion project

 

Renewal works are sometimes undertaken in conjunction with a larger project for the same building. This provides savings in terms of contractor mobilisation and economies of scale for the amount of work being performed. This can trigger renewal works ahead of time, however provides the best benefit to the overall operations of the building or facility and the best value for money.

 


 

Council requests and budget bids

 

As the elected representatives of the community, the Council is able to request and debate potential renewal projects for buildings. This is provided through the annual budget process. This ensures that the community is able to have input into potential projects.

 

Separate Master Planning Activities linking with the Asset Management Plan

 

Buildings associated with larger facilities such as sports grounds, foreshores and Leisure Centres are often included within a master plan outlining the future renewal and upgrade requirements for the whole facility. These master plans are undertaken to ensure that all works undertaken with a view to the short, medium and long term requirements. Again, this can trigger renewal works ahead of schedule; however can be justified as part of the longer term planning for the facility.

 

The methodology for how the funds are spent highlights the sometimes complex nature of determining renewals and renewal priorities. It is an iterative process that is not governed by any single element, but rather a combination of information sources that each provide input in the determination of where the money needs to be spent. This process informs both the Annual Budget and Long Term Financial Plan for the City.

 

OFFICER RECOMMENDATION

 

That the Council note the Asset Management Report for September 2018.

 

 


Finance Committee

11

18 October 2018

6.1

Attachment a

Reserve Funding Overview

 


Finance Committee

12

18 October 2018

6.1

Attachment b

Example increase in Annual Building Replacement Value

 


Finance Committee

13

18 October 2018

6.1

Attachment c

Annual Percentage of Attachment C Replacement Value Allocated to Reserves by Hierarchy

 


 


Finance Committee

16

18 October 2018

6.1

Attachment d

Allocation of Annual Renewal Funding

 


Finance Committee

18

18 October 2018

6.1

Attachment e

Overall Ten Year Building Allocation funds to Specific Reserves

 


 


 


Finance Committee

21

18 October 2018

6.1

Attachment f

Overall Ten Year Building Allocation funds to Specific Reserves

 


 


Finance Committee                                                             24                                                               18 October 2018

6.2             FINANCIAL ACTIVITY STATEMENTS - PERIOD ENDING 30 SEPTEMBER 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 Finance and Corporate Services  - Tony Nottle

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Attachment a   Statement of Financial Activity - Period Ending 30 September 2018

Attachment b    Investment Report - Period Ending 30 September 2018  

  

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 30 September 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 25 July 2018, the Council adopted (C1807/138) the following material variance reporting threshold for the 2018/19 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 2018/19 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 30 SEPTEMBER 2019

 

The Statement of Financial Activity for the period ending 30 September 2018 shows a better than expected Net Current Position “Surplus” of $40.67M being $6.09M higher than year to date budget (YTD budget).

 

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

 

Description

2018/2019
Actual

2018/2019
Amended
Budget YTD

2018/2019
Amended
Budget

2018/19
YTD Bud Variance

2018/19
YTD Bud Variance

 

$

$

$

%

$

Expenses from Ordinary Activities

(17,719,783)

(19,457,637)

(75,222,770)

8.93%

1,737,854

 

 

 

 

 

 

Borrowings Cost Expense - Interest Expenses

(232,039)

(287,008)

(1,374,387)

19.15%

54,969

Non-Operating Grants, Subsidies and Contributions

(552,228)

4,380,103

30,347,185

-112.61%

(4,932,331)

 

 

 

 

 

 

Adjustments for Non-cash Revenue & Expenditure

 

 

 

 

 

Depreciation

5,555,662

4,853,652

19,070,922

 

702,010

Deposit & Bonds Movements (cash backed NC)

74,433

0

0

 

 

 

 

 

 

 

 

Capital Revenue & (Expenditure)

 

 

 

 

 

Land & Buildings

(216,636)

(3,899,049)

(17,618,620)

94.44%

3,682,413

Plant & Equipment

(661,422)

(1,620,500)

(5,363,500)

59.18%

959,078

Furniture & Equipment

(91,360)

(217,873)

(883,640)

58.07%

126,513

Infrastructure

(3,780,762)

(8,772,781)

(36,804,070)

56.90%

4,992,019

Proceeds from Sale of Assets

87,490

401,850

1,045,950

-78.23%

(314,360)

Transfer to Restricted Assets

(402,581)

(136,998)

(551,000)

-193.86%

(265,583)

Transfer from Restricted Assets

3,399,616

2,392,590

14,423,922

42.09%

1,007,026

Transfer to Reserves

(6,024,886)

(3,987,556)

(19,269,123)

-51.09%

(2,037,330)

 

 

 

 

 

Operating Expenditure:

 

Expenditure from ordinary activities, excluding depreciation, is $2.44M less than expected when compared to YTD budget with the following items meeting the material variance reporting threshold set by Council for the 2018/2019 Financial Year.

 

Description

2018/2019
Actual

2018/2019
Amended
Budget YTD

2018/2019
Amended
Budget

2018/19
YTD Bud
Variance

2018/19
YTD Bud
Variance

 

$

$

$

%

$

Materials & Contracts

(3,030,050)

(4,636,098)

(18,621,467)

34.64%

1,606,048

Utilities (Gas, Electricity, Water etc.)

(512,617)

(642,148)

(2,569,240)

20.17%

129,531

Depreciation on non-current assets

(5,555,662)

(4,853,652)

(19,070,922)

-14.46%

(702,010)

Insurance Expenses

(423,061)

(312,088)

(698,808)

-35.56%

(110,973)

Other Expenditure

(579,570)

(1,128,996)

(4,770,041)

48.67%

549,426

Allocations

267,645

419,311

1,723,162

36.17%

(151,666)

 

Materials and Contracts:

The main items affected are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD

Finance and Corporate Services 

 

10250

Information & Communication Technology Services

184,242

10251

Business Systems

49,612

10500

Legal and Compliance Services

25,637

 

 

 

Community and Commercial Services 

 

10591

Geographe Leisure Centre

38,739

10600

Busselton Jetty Tourist Park

50,162

10980

Other Law, Order & Public Safety

36,243

11151

Airport Operations

30,004

 

 

 

Planning and Development Services 

 

10830

Environmental Management Administration

26,725

10925

Preventative Services - CLAG

32,754

11170

Meelup Regional Park

38,389

 

 

 

Engineering and Works Services 

 

11101

Engineering Services Administration

64,405

11160

Busselton Jetty

195,907

11300

Sanitation Waste Services  Administration

25,099

11301

Regional Waste Management Administration

30,000

12620

Rural-Tree Pruning

(62,775)

B1000

Administration Building- 2-16 Southern Drive

26,401

G0010

Domestic Recycling Collections

46,348

G0034

External Waste Disposal

53,459

G0042

BTS External Restoration Works

(65,964)

R0004

Bsn Foreshore Precinct (not including Skate Park)

55,843

5280

Transport - Fleet Management

111,374

Utilities:

There is an overall variance in utility charges of $129,531 this variance is spread over 364 individual line items with an average variance of only $364 per item.

 

Depreciation:

There is an overall variance in depreciation of $702K, it should be noted that this is a non-cash item and does not impact on the City’s surplus position.  The variance can be attributed to the fact that Fair Valuation of infrastructure assets was completed post budget adoption and the increase in valuation was unable to be included in the 2018/2018 budget.

 

Insurance:

There is a YTD variance in insurance costs of $111K, this is of a timing issue only.

 

Other Expenditure:

There is a YTD variance in other costs of $549K, this is considered a timing issue only, and the main items affected are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD

Finance and Corporate Services 

 

10000

Members of Council

56,768

10700

Public Relations

29,148

 

 

 

Community and Commercial Services 

 

10530

Community Services Administration

35,785

10567

Cinefest Oz

(71,249)

11156

Airport Development Operations - Marketing and Incentives

375,000

 

 

 

Planning and Development Services 

 

10942

Bushfire Risk Management Planning - DFES

(39,283)

 

 

 

Engineering and Works Services 

 

B1223

Micro Brewery - Public Ablution

30,000

G0042

BTS External Restoration Works

(38,169)

 

Allocations:

Allocations are running $151k under YTD budget; these items are an internal allocation of administrative costs from the Finance and Corporate Services division.

 

Borrowing Costs – Interest Expenses:

Interest expenses are $55k less than YTD budget, no new loans have been taken at this point in time.

 

Non-Operating Grants, Subsidies and Contributions:

Non-Operating Grants, Subsidies and Contributions are less than YTD budget by $4.93M with the main item impacting on the above result being the timing of the receipt of “Airport Development - Project Grant” with a current negative result of -$4.7M.

 

Capital Expenditure

As at 30 June 2018, there is a variance of -67.26% or -$9.76M in total capital expenditure with YTD actual at -$4.75M against a YTD budget of -$14.51M. The airport development makes up for $4.43M, Plant and Equipment Purchases, $959K, Busselton Tennis Club – Infrastructure $922K, Eastern Link - Busselton Traffic Study $698K, Council Roads Initiative projects $649K, Main Roads projects $498K , Sanitation Infrastructure $461K, Parks Gardens and Reserves $347K.  These items of under expenditure 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 30th September 2018 the value of the City’s invested funds totalled $80.8M, up from $67.4M as at 31st August. The increase is due to the inflow of funding associated with the annual rates first instalment period.

 

During the month of September four term deposits held with two different institutions totalling $12.0M matured. All were renewed for a further 166 days at 2.67 per cent (on average).

 

The inflow of rate funding culminated in the annual opening of new term deposits. A call for rates was put out to eight banks and as a result six new deposits were opened totalling $16m. The term of these deposits are between seven and nine months, and rates are between 2.70 per cent and 2.76 per cent.

 

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) decreased by $2.5M with the funds being converted to fixed term deposits returning a higher interest rate.

 

The balance of the Airport Development ANZ cash account remained steady this month.

 

The RBA left official rates on hold during September and October. 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 (August to September) 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

25-Aug-18

$29.00

Equinox Café

Coffee With Minister Templeman

30-Aug-18

$230.51

Westin Perth FDS Perth

Accommodation - Mike Archer (Cancelled)

03-Sep-18

$74.95

Map World Australia

Laminated World Map For Citizenship Ceremonies

03-Sep-18

$531.00

LG Professionals

2018-2019 Membership Subscription

04-Sep-18

$25.86

Hiroshima Peace Culture Foundation

Membership Fees - Two (2) Years 2017 & 2018

04-Sep-18

$25.86

Hiroshima Peace Culture Foundation

Membership Fees - Two (2) Years 2017 & 2018

05-Sep-18

$68.68

City Of Perth - Airport Parking

Airport Security Parking Perth

07-Sep-18

$27.27

City Of Perth - Airport Parking

Airport Security Parking Perth

07-Sep-18

$9.09

City Of Perth - Airport Parking

Airport Security Parking Perth

10-Sep-18

$29.00

Empire Karratha

Meals

13-Sep-18

$1,218.00

ICTC Society Inc. - Tweed Heads

Conference Payment For Cr Ross Payne

 

 

 

 

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

+ Allocated against CEO Hospitality Expenses Allowance

 

CONCLUSION

 

As at 30 September 2018, the City’s financial performance is considered satisfactory. 

 

OFFICER RECOMMENDATION

 

That the Council receives the statutory financial activity statement reports for the period ending 30 September 2018, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations.

 

 


Finance Committee

48

18 October 2018

6.2

Attachment a

Statement of Financial Activity - Period Ending 30 September 2018

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



Finance Committee

51

18 October 2018

6.2

Attachment b

Investment Report - Period Ending 30 September 2018

 


Finance Committee                                                             53                                                               18 October 2018

6.3             LIST OF PAYMENTS MADE SEPTEMBER 2018

SUBJECT INDEX:

Financial Operations

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 Finance and Corporate Services  - Tony Nottle

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Attachment a   List of Payments - Period Ended 30 September 2018  

  

PRÉCIS

 

This report provides details of payments made from the City’s bank accounts for the month of September 2018, for noting by the Council and recording in the Council Minutes.

 

BACKGROUND

 

The Local Government (Financial Management) Regulations 1996 (Regulations) require that when the Council has delegated authority to the Chief Executive Officer to make payments from the City’s bank accounts, that a list of payments made is prepared each month for presentation to, and noting by, Council.

 

STATUTORY ENVIRONMENT

 

Section 6.10 of the Local Government Act and more specifically, Regulation 13 of the Regulations refer to the requirement for a listing of payments made each month to be presented to the Council.

 

RELEVANT PLANS AND POLICIES

 

Not Applicable.

 

FINANCIAL IMPLICATIONS

 

Not Applicable.

 

Long-term Financial Plan Implications

 

Not Applicable

 

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

 

Not Applicable.

 

CONSULTATION

 

Not Applicable.

 

OFFICER COMMENT

 

In accordance with regular custom, the list of payments made for the month of September 2018 is presented for information.

 

CONCLUSION

 

The list of payments made for the month of September 2018 is presented for information.

 

OPTIONS

 

Not Applicable.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

Not Applicable.

 

OFFICER RECOMMENDATION

 

That the Council notes payment of voucher numbers M116107 – M116205, EF060662 – EF061168, T007409 – T007411, and DD003558 – DD003582; together totalling $23,589,364.32.

 

 


Finance Committee

72

18 October 2018

6.3

Attachment a

List of Payments - Period Ended 30 September 2018

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Finance Committee                                                             78                                                               18 October 2018

6.4             BUDGET AMENDMENT REQUEST / REVIEW

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 Finance and Corporate Services  - Tony Nottle

VOTING REQUIREMENT:

Absolute Majority

ATTACHMENTS:

 

  

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 2018/2019 municipal budget on Wednesday, 25 July 2018 with a balanced budget position.

 

Since this time Council has been advised of certain funding changes that have positively impacted the original budget and Council is now being asked to consider budget amendments for the following key areas/projects:

 

1.    Beach Emergency Numbers (BEN) Sign Program

2.    Legal Costs - Reimbursement,

3.    Toddler’s Playground, and

4.    Lighting at Bovell Park.

 

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 Long Term Financial Plan implications in relation to this item.

 

 


 

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

 

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 the appropriate Council officers.

 

OFFICER COMMENT

 

The Officer recommends the following requested budget amendments to the Finance Committee for consideration and recommendation to Council.

 

1.    “Beach Emergency Numbers (BEN) Sign Program

 

The Beach Emergency Numbers (BEN) Sign Program is a coding system designed to improve emergency response times by installing signs with unique numbers at beach access points. These signs provide specific location information which is vital when emergency services are deployed in the event of a shark attack or other beach emergencies.

 

In December 2017, the State Government launched a grants program to provide financial assistance to local government authorities to introduce BEN signs along beach access points in their district.

 

Planned Expenditure Items

Supply only of 89 BEN signs including posts, post caps and brackets.

 

Officers propose that the 2018/2019 adopted budget be amended to reflect the following funding charges, shown in Table 1.

 

Table 1:

 

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Revenue

 

 

 

 

BEN Program Grant Funding

Grant funding for the supply only of 89 BEN signs

0

(24,250.50)

(24,250.50)

 

 

 

 

 

Expenditure

 

 

 

 

441-10980-3213-0000

BEN Program Signage

0

24,250.50

24,250.50

Net Total

0

0

0

 

Proposed Outcome

The proposed amendment will enable signs to provide specific location information which is vital when emergency services are deployed in the event of a shark attack or other beach emergencies.

 

 

2.    “Legal Costs - Reimbursement”

 

As Council will be aware, the owners of Busselton Central Shopping Centre (Australia Unity Property Ltd) applied for judicial review by the Supreme Court of the decisions by Council to approve a Kmart discount department store development and an Aldi supermarket development at Lot 17, West Street. On 18 August 2017 the primary judge dismissed that application for judicial review. AUP unsuccessfully appealed that decision in the Supreme Court of Appeal, and on 23 March 2018 the appeal was dismissed. As a result AUP was ordered to pay legal costs incurred by the City’s.  Those costs have now been determined and paid by AUP to the City.

 

Planned Expenditure Items

The amendments shown below in Table 2 will reflect the receipt of payment of money for legal costs as income and a corresponding transfer to the Legal Expenses Reserve.

 

Table 2:

 

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Income

 

 

 

 

300-10500-1529-0000

Reimbursement - Legal Fees (GST)

(13,400)

(61,364)

(74,764)

 Equity Transfer

 

 

 

 

Reserve

Transfer to Legal Expenses Reserve

       10,464

       61,364

         71,828

Net Total

(2,936)

                 -  

(2,936)

 

Proposed Outcome

The proposed budget amendment will ensure recognition of additional income that was unbudgeted at the commencement of the 2018/2019 financial year.

 

3.    “Toddler’s Playground”

 

Due to reallocation of interest accrued on Royalties for Regions grant funds in accordance with State Government requirements, the budget for the Toddler’s Playground project has decreased. The resulting budget will be overspent if Major Projects constructs the project to the approved design and expected standard of works.

 

It has been identified that there is $101,801 of funds held in POS 52 that are approved to spend exclusively on the Toddler’s Playground project; only $61,010 of these funds have been allocated to the project in the current budget. Officers are seeking to amend the budget for the project to incorporate all the remaining funds held of $40,791 to the project.

 

Planned Expenditure Items

Completion of the Toddler’s Playground project to the approved design and expected standard of works.

 

The amendments shown in Table 3 are sought for approval.

 


 

Table 3:

 

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Expenditure

 

 

 

 

120-C3150-3280-0000

Toddler Playground

133,510

40,791

174,301

Equity Transfer

Public Open Space Reserve # 52

(61,010)

(40,791)

(101,801)

Net Total

72,500

0

72,500

 

Proposed Outcome

The proposed amendment will bring efficiency to filed work undertaken by the Engineering Works and Services team.

 

4.    “Lighting at Bovell Park”

 

As a result of the strong winds and bad weather during the night of the 4th June 2018, one of the light poles at Bovell Park servicing the training ground used by the Geographe Bay Football Club and situated between the turf hockey pitch and Vasse Highway came down.

 

On inspection, it was discovered that the base of the pole was severely affected by rust and the second pole also showed clear signs of major deterioration at the base. The poles are believed to be approximately 40 years old and the contractor was instructed to remove the second pole as a safety precaution.

 

The cost of purchase and installation of two new lights is estimated at $79,000 for which there is no budget provision. Whilst there is an expected insurance payout for one of the lights, this is not expected to exceed $19,000 – and could be less. The new football season commences in April 2019 and it is suggested that funds be provided by way of a budget adjustment so that the lights can be installed before the 2019 season commences. A budget adjustment of $60,000 is therefore sought.

 

Planned Expenditure Items

The amendments shown in Table 4 are sought for approval.

 

Table 4:

 

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Revenue

 

 

 

 

Equity Transfer

Community Facilities – Busselton Reserve

(20,000)

(60,000)

(80,000)

211-10200-1509-0000

Reimbursements - Insurance

(68,000)

(19,000)

(87,000)

 

 

 

 

 

Expenditure

 

 

 

 

New

Bovell Park Lighting

0

79,000

79,000

Net Total

(88,000)

0

(88,000)

 

 

Proposed Outcome

Installation of two new lights at Bovell Park.

 


 

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.

 

OFFICER RECOMMENDATION

ABSOLUTE MAJORITY DECISION OF COUNCIL REQUIRED

 

That Council endorse the requested budget amendments outlined in tables 1 to 4 below, resulting in no change to an amended budgeted surplus position of $0.

 

Table 1:

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Revenue

 

 

 

 

BEN Program Grant Funding

Grant funding for the supply only of 89 BEN signs

0

(24,250.50)

(24,250.50)

 

 

 

 

 

Expenditure

 

 

 

 

441-10980-3213-0000

BEN Program Signage

0

24,250.50

24,250.50

Net Total

0

0

0

 

Table 2:

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Income

 

 

 

 

300-10500-1529-0000

Reimbursement - Legal Fees (GST)

(13,400)

(61,364)

(74,764)

 Equity Transfer

 

 

 

 

Reserve

Transfer to Legal Expenses Reserve

    10,464

       61,364

         71,828

Net Total

(2,936)

                 -  

(2,936)

 

Table 3:

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Expenditure

 

 

 

 

120-C3150-3280-0000

Toddler Playground

133,510

40,791

174,301

Equity Transfer

Public Open Space Reserve # 52

(61,010)

(40,791)

(101,801)

Net Total

72,500

0

72,500

 

Table 4:

Cost Code

Description

Current Budget

Change

Proposed Amended Budget

Revenue

 

 

 

 

Equity Transfer

Community Facilities – Busselton Reserve

(20,000)

(60,000)

(80,000)

211-10200-1509-0000

Reimbursements - Insurance

(68,000)

(19,000)

(87,000)

 

 

 

 

 

Expenditure

 

 

 

 

New

Bovell Park Lighting

0

79,000

79,000

Net Total

(88,000)

0

(88,000)

 

 

 

  


Finance Committee                                                             79                                                               18 October 2018

7.               General Discussion Items  

8.               Next Meeting Date

Thursday, 15 November 2018

9.               Closure