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council agenda

 

SUPPLEMENTARY ITEMS

 

 

 

29 January 2020

 

 

 

 

 


ALL INFORMATION AVAILABLE IN VARIOUS FORMATS ON REQUEST

city@busselton.wa.gov.au

 

 


CITY OF BUSSELTON

Late Items FOR THE Council MEETING TO BE HELD ON 29 January 2020

TABLE OF CONTENTS

 

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

8....... CONFIRMATION OF MINUTES. 3

8.4          Minutes of the Finance Committee held 22 January 2020. 3

12..... Finance and Corporate Services Report. 4

12.2        Finance Committee - 22/01/2020 - FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 30 NOVEMBER 2019. 4

 


Council                                                                                      4                                                                  29 January 2020

8.               CONFIRMATION OF MINUTES

8.4             Minutes of the Finance Committee held 22 January 2020


RECOMMENDATION

That the Minutes of the Finance Committee Meeting held 22 January 2020 be noted.


12.             Finance and Corporate Services Report

12.2           Finance Committee - 22/01/2020 - FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 30 NOVEMBER 2019

STRATEGIC GOAL

STRATEGIC OBJECTIVE

6. LEADERSHIP Visionary, collaborative, accountable

6.1 Governance systems, process and practices are responsible, ethical and transparent.

SUBJECT INDEX

Budget Planning and Reporting

BUSINESS UNIT

Financial Services

REPORTING OFFICER

Manager Financial Services - Paul Sheridan

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Executive: substantial direction setting, including adopting strategies, plans and policies (excluding local planning policies), tenders, setting and amending budgets, funding, donations and sponsorships, reviewing committee recommendations

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   Investment Report November 2019

Attachment b    Financial Activity Statement YTD November 2019  

 

This item was considered by the Finance Committee at its meeting on 22 January 2020, the recommendations from which have been included in this report.

COMMITTEE AND OFFICER RECOMMENDATION

That the Council receives the statutory financial activity statement reports for the period ending 30 November 2019, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations.

EXECUTIVE SUMMARY

Pursuant to Section 6.4 of the Local Government Act 1995 (the Act) and Regulation 34(4) of the Local Government (Financial Management) Regulations 1996 (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 November 2019.

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 on 31 July 2019, the Council adopted (C1907/131) the following material variance reporting threshold for the 2019/20 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 2019/20 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.”

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 year to date basis, the following financial reports are attached hereto:

 

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 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 November 2019

The Statement of Financial Activity for the year to date as at 30 November 2019 shows an overall Net Current Position of $34.1M as opposed to the amended budget of $21.1M. The following summarises the major variances in accordance with Council’s adopted material variance reporting threshold that collectively make up the above difference:

 

Description

2019/20
Actual YTD

2019/20
Amended
Budget YTD

2019/20
Amended
Budget

2019/20
YTD Bud Variance

2019/20
YTD Bud Variance

 

$

$

$

%

$

Revenue from Ordinary Activities

 

1.     Operating Grants, Subsidies and Contributions

2,261,197

1,462,264

4,926,958

54.64%

798,933

2.     Interest Earnings

985,097

867,290

1,955,000

13.58%

117,807

 

 

 

 

 

 

Expenses from Ordinary Activities

 

 

 

 

3.     Materials & Contracts

(6,574,202)

(7,455,664)

(19,058,249)

11.82%

881,462

4.     Utilities (Gas, Electricity, Water etc)

(972,991)

(1,115,946)

(2,774,257)

12.81%

142,955

5.     Other Expenditure

(1,394,441)

(1,096,309)

(4,920,811)

(27.19%)

(298,132)

6.     Allocations

670,692

908,766

2,161,452

26.20%

(238,074)

 

 

 

 

 

 

7.    Non-Operating Grants, Subsidies and Contributions

1,948,119

2,829,823

23,804,690

(31.16%)

(881,704)

 

 

 

 

 

 

Capital Revenue & (Expenditure)

 

 

 

 

8.     Land & Buildings

(952,526)

(3,348,268)

(9,837,358)

71.55%

2,395,742

Plant & Equipment

(538,441)

(1,775,915)

(4,493,000)

69.68%

1,237,474

Furniture & Equipment

(66,522)

(451,690)

(1,113,069)

85.27%

385,168

Infrastructure

(4,646,410)

(11,761,583)

(36,934,273)

60.50%

7,115,173

9.     Proceeds from Sale of Assets

255,155

483,050

3,476,580

(47.18%)

(227,895)

10.  Self Supporting Loans - Repayment of Principal

(23,826)

26,176

76,055

(191.02%)

(50,002)

11.  Transfer to Restricted Assets

(95,301)

(25,045)

(60,100)

(280.52%)

(70,256)

12.  Transfer from Restricted Assets

538,401

0

6,319,121

100.00%

538,401

13.  Transfer from Reserves

1,232,906

1,657,906

34,970,205

(25.63%)

(425,000)

 

Revenue from Ordinary Activities

Year to date (YTD) actual income from ordinary activities is $1.713M more than expected when compared to the YTD amended budget, with the following items meeting the material variance reporting threshold:

1.    Operating Grants, Subsidies and Contributions are $799K (net) better than amended budget. This variance is mainly due to the following:

·    Grants Commission (10152) ($106K) – local roads grant, special grants for bridges.  This variance arose as we did not receive the quarterly grants for the Kaloorup and Boallia roads bridges.  It should be noted that as this is a pass through to Main Roads, the related capital expenditure items have not occurred either, so it is a neutral position on cash basis.  The Director of EWS advises that should work on these particular bridges actually go ahead, Main Roads may hold the grants directly themselves;

·    Insurance Reimbursements (10200) $76K – Insurance recoveries not yet allocated to correct section and contributions credit (1st and 2nd instalments), received earlier than expected;

·    Legal Fees Reimbursements (10500) ($33K) – budget item included for a fine that was received in the 18/19 financial year.  A budget amendment was processed to move a portion of the fine from retained earnings to a legal reserve, however a further budget amendment to remove this revenue item is being investigated;

·    Human Resources Reimbursements (10521) $37K - $18K due to conference & training reimbursements not budgeted for sufficiently and $19K received in workers comp reimbursements with all receipts budgeted in June;

·    Recreation Grants (10540) $25K – $20K receipt doubled up in error, will be corrected for the December accounts;

·    Environmental Management Administration (10830) $172K – grant received for the Revitalizing Geographe Waterways Phase 2 project earlier than forecast;

·    Preventative Services CLAG (10925) $28K – part of the operating grant received from Department of Health earlier than budgeted;

·    Protective burning and firebreaks reserve (10931) $166K. This variance relates to receiving 50% grant awarded to the City under the mitigation activity fund (Emergency Services Levy) and will be subject to a Council report requesting that the 2019/20 budget be amended to reflect this additional income.  Details of the cost codes for this amendment are being finalised;

·    Bushfire risk management planning (10942) DFES $101K. This variance relates to the payment of grant in full for the bushfire risk planning coordinator position within the City of Busselton. This represents a timing difference between budget allocations (over 12 months), and actual funds received;

·    Fire Prevention DFES (10940) $49K – this is due to a combination of receiving the quarterly ESL grant a month earlier than forecast ($90K over), and not receiving the prior period grant acquittal adjustment that was forecast in October ($41K under);

·    Pre-Primary Building & Surrounds (B1503) $30K – grant was budgeted to be received in June 2020, but was received in November 2019;

·    Regional Waste Management Administration (11301) ($27K) – annual budget of $63K spread over 12 months, but no contributions have actually been invoiced or received YTD;

·    Reimbursements Old Butter Factory (B1401 & B9610) $193K – timing difference due to difficulties in predicting when LGIS would process the claims;

 

2.    Interest earnings is $118K better than amended budget.  This variance is mainly due to the following:

·    Late payment interest (NA1203) $49K

·    Instalment plan interest (NA1204) $53K

·    Interest on municipal funds (NA1760) $46K

·    Interest on reserve funds (NA1761) $58K

·    Interest on restricted funds (NA1762) $28K

 


 

Expenses from Ordinary Activities

Expenditure from ordinary activities is $1.11M less than expected when compared to the amended YTD budget, with the following items meeting the material variance reporting threshold:

 

3.    Materials and Contracts better than amended budget YTD by $881K

The main contributing items are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

 

10000

Members of Council

(28,819)

10200

Financial Services

(40,810)

10250

Information & Communication Technology Services

(379,779)

10500

Legal and Compliance Services

34,150

Community and Commercial Services

 

10380

Busselton Library

41,733

10600

Busselton Jetty Tourist Park

83,752

11151

Airport Operations

28,611

Planning and Development Services

 

10820

Strategic Planning

78,793

10830

Environmental Management Administration

100,898

10850

Implement Management Plans Other

37,499

10922

Preventative Services – Mosquitoes

(26,541)

Engineering and Works Services

 

Various

Busselton Jetty Maintenance

276,694

12620

Rural-Tree Pruning

(98,692)

12621

Urban-Tree Pruning

(66,920)

Various

Bridge Maintenance

84,339

Various

Building Maintenance

85,604

Various

Other Infrastructure Maintenance

59,023

Various

Waste services

167,829

Various

Road Maintenance

(96,747)

Various

Reserve Maintenance

131,750

 

4.    Utilities $143K better than amended YTD budget:

This relates mainly to a total underspend YTD in the 140 electricity accounts of $87K; $48K in water and $6K in telephones.  Anecdotally this relates to timing differences of when the various invoices are received and processed, which, based on previous years, usually resolves itself closer to budget by year end. The accounts are monitored and reviewed with any major anomalies investigated.


 

5.    Other Expenditure $298K over amended YTD budget:

The main contributing items are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

 

10000

Members of Council

87,449

10151

Rates Administration

27,510

10700

Public Relations

26,229

Community and Commercial Services

 

10530

Community Services Administration

(70,339)

10533

Welfare / Senior Citizens

43,397

10536

School Chaplaincy Programs

(40,490)

10547

Iron Man

(195,000)

12631

Peel Tce Building & Surrounds

(39,962)

B1354

John Edwards Pavilion

(95,455)

 

6.    Allocations

In addition to administration based allocations which clear each month, this category also includes plant and overhead related allocations. Due to the nature of these line items, the activity reflects as a net offset against operating expenditure, in recognition of those expenses that are of a capital nature (and need to be recognised accordingly). It should be noted that performance in the category has no direct impact on the closing position.  

 

 

Non-Operating Grants, Subsidies and Contributions

7.    Non-Operating Grants, Subsidies and Contributions are less than budget by $882K with the main items impacting on the above result being the timing of the receipt of funding which is also offset with less than anticipated capital expenditure at this time.

 

Cost Code

Cost Code Description

Variance
YTD

Finance and Corporate Services

 

10239

Contributions - Community Facilities

(307,644)

R0288/R0228

Contributions - Capital Activities - Locke Estate

48,000

Community and Commercial Services

 

C6099

Airport Development - Project Grant

477,978

Planning and Development Services

 

B9109

Hithergreen Building Renovations

(28,705)

Engineering and Works Services

 

C1512

Port Geographe Boat Ramp Renewal Works

(68,750)

C3113

Busselton Tennis Club - Infrastructure

80,000

C3168

Busselton Foreshore Jetty Precinct

(128,425)

C3186

Lou Weston Oval - Courts

(195,000)

F0019

College Avenue

72,000

S0035

Strelly Street / Barlee Street Roundabout

37,803

S0051

Causeway Road / Rosemary Drive Roundabout

(133,335)

S0064

Peel Terrace (Stanley Pl/Cammilleri St Intersection Upgrade)

(83,335)

S0069

Peel Terrace (Brown Street Intersection Upgrades)

(41,665)

S0071

Ludlow-Hithergreen Road Safety Improvements

230,600

S0072

Kaloorup Road - Reconstruct and Seal Shoulders

100,000

T0019

Wonnerup South Road - Reconstruct and Widening (narrow seal)

(260,225)

T0085

Yoongarillup Road - Reconstruct Intersection at Vasse H/Way

(87,500)

T0086

Yoongarillup Road - Reconstruct & Widen (Western Section)

(615,875)

 

Capital Expenditure

8.    As at 30 November 2019, there is a variance of 64.2% or $11.1M in total capital expenditure with YTD actual at $6.2M against the YTD amended budget of $17.3M.

        The attachments to this report include detailed listings of all capital expenditure (project)             items, however the main areas of variance are summarised as follows:

 

Cost Code

Cost Code Description

Variance
YTD

Buildings

 2,400,303

B9600

Old Vasse Lighthouse (budget amendment pending)

43,745

B9516

Busselton Library Upgrade

135,375

B9109

Hithergreen Building Renovations

28,705

B9407

Busselton Senior Citizens

442,395

B9511

ArtGeo Building (budget amendment pending)

(27,703)

B9596

GLC Building Improvements

119,353

B9604

Womens Change Facility Bovell

(55,304)

B9605

Energy Efficiency Initiatives (Various Buildings

43,988

B9610

Old Butter Factory

(100,241)

B9716 & B9717

Airport Terminals

1,678,335

B9808

Busselton Jetty Tourist Park Upgrade

66,128

Plant & Equipment

1,237,474

10115

Major Projects Administration

40,423

10250

Information & Communication Technology Services

35,000

10910

Building Services

35,000

11101

Engineering Services Administration

40,000

11150

Asset Management Administration

35,000

11151

Airport Operations

30,000

11156

Airport Development Operations (budget amendment pending)

(26,950)

11402

Plant Purchases (P10) (budget amendment pending)

645,000

11403

Plant Purchases (P11) (budget amendment pending)

182,369

11404

Plant Purchases (P12) (budget amendment pending)

190,000

Furniture & Office Equipment

385,168

10250

Information & Communication Technology Services

274,401

11156

Airport Development Operations

125,000

Infrastructure By Class

7,115,173

 

Roads

2,328,696

 

Bridges

62,000

 

Car Parks

328,427

 

Footpaths & Cycleways

247,781

 

Parks, Gardens & Reserves

3,383,913

 

Regional Airport & Industrial Park Infrastructure

746,037

Many of these items of under expenditure e.g. Main Roads construction works, also assists in explaining the above current YTD shortfall in Non-Operating Grants. In the main, many of these projects have yet to be commenced at this time of year and represent a timing difference.

 

Proceeds from Sale of Assets

9.    There is a variance for the proceeds from sale of assets of -$228K, due to timing in the changeover of vehicles.

 

Self Supporting Loans – Repayment of Principal

10.  There is a variance of YTD $26K vs a budget of $24K.  The accounting treatment in the system for the Tennis Club loan has not yet been actioned.  This will be rectified in December.

 

Transfer to Restricted Assets

11.  There is a variance for transfer to restricted assets of $70K more than amended budget.   The reason for this is as follows:

·    Transfer to deposits and bonds of $44K as opposed to a budget of $0. These funds do not have a budget allocation as they are not able to be reliably measured;

·    Interest earned on government grants of $25K transferred to restricted cash, for which there was no budget allocated as it was expected that the grant would have been utilized by this stage.

 

Transfer from Restricted Assets

12.  There is a variance for transfer from restricted assets of $538K more than amended budget.   The main reason for this is as follows:

·    Transfer from Roadwork Bonds of $519K as opposed to a budget of $0.  These funds do not have a budget allocation as they are not able to be reliably measured;

 

Transfer from Reserves

13.  There is a variance for transfer from reserves of $425K less than amended budget.   The reason for this is as follows:

·    Transfer from Jetty Maintenance Reserve of $425K did not occur due to works not being undertaken on cost code C3497 (part of the Parks, Gardens & Reserves variance shown above), for the following reasons:

i.                     The previous expenditure figure was based on the 50 year plan.

ii.                   The 5 year structural review undertaken in 2019/2020 discovered that the Jetty was in better condition than forecast in the 50 year plan.  Capital works planned for 2020 have been deferred to 2030.

iii.                 Requests for Tenders issued for maintenance works per the 5 year plan are to be awarded at the Council meeting on 29 January 2020.

iv.                 As a result budget figures have been revised for next the 5 financial years to reflect the 5 year plan.

 

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 November 2019 the value of the City’s invested funds totalled $84.48M, steady from $84.48M as at 31st October 2019.

 

During the month of November only one term deposit in the amount of $2.0M matured. It was renewed for a further 91 days at 1.58%.

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) remained steady.

 

The balance of the Airport Development ANZ and WATC cash accounts remained steady, although an amount of $1.5M was withdrawn from the WATC account and transferred to the ANZ Cash A/c.

 

The RBA announced no rate changes in November or December. Future movements are unknown at this time although further drops are possible in coming months.

 

Chief Executive Officer – Corporate Credit Card

Details of monthly (October to November) 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

28-Oct-19

         205.00

Dataco Pty Ltd

Civic Reception Beverages

08-Nov-19

             7.17

City of Perth

Parliament Parking - Meeting

13-Nov-19

         304.50

Caves House Hotel

Deposit - Councillor & SMG EOY Function

18-Nov-19

         124.23

Airport Security Parking

Parking LGCOG Conference Hervey Bay*

25-Nov-19

         232.88

Mantra Hervey Bay

Accommodation LGCOG Conference*

25-Nov-19

         101.00

The Dock Hervey Bay

Meals LGCOG Conference Hervey Bay*

26-Nov-19

           36.83

EG Fuelco

Fuel Hire Car LGCOG Conference*

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

+ Allocated against CEO Hospitality Expenses Allowance

Statutory Environment

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

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

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

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

Risk Assessment

An assessment of the potential implications of implementing the officer recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No risks of a medium or greater level have been identified.

Options

The Statements of Financial Activity are presented in accordance with Section 6.4 of the Act and Regulation 34 of the Regulations and are to be received. Council may wish to make additional resolutions as a result of having received these reports.

 

CONCLUSION

As at 30 November 2019, the City’s financial performance is considered satisfactory.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.


Council

14

29 January 2020

12.2

Attachment a

Investment Report November 2019

 


Council

24

29 January 2020

12.2

Attachment b

Financial Activity Statement YTD November 2019