COB-RGB

 

 

 

COUNCIL AGENDA

 

Supplementary Item

 

 

 

13 May 2020

 

 

 

 

 


ALL INFORMATION AVAILABLE IN VARIOUS FORMATS ON REQUEST

city@busselton.wa.gov.au

 

 


CITY OF BUSSELTON

SUPPLEMENTARY Item FOR THE Council MEETING TO BE HELD ON 13 May 2020

TABLE OF CONTENTS

 

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

16..... Finance and Corporate Services Report. 3

16.2        FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 31 MARCH 2020. 3

 


Council                                                                                      4                                                                         13 May 2020

16.             Finance and Corporate Services Report

16.2           FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 31 MARCH 2020

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

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

SUBJECT INDEX

Financial Services

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 March 2020

Attachment b    Financial Activity Statement March 2020  

 

OFFICER RECOMMENDATION

That the Council receives the statutory financial activity statement reports for the period ending 31 March 2020, 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 31 March 2020.

 

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 31 March 2020

The Statement of Financial Activity (FAS), for the year to date as at 31 March 2020 shows an overall Net Current Position of $12.1M as opposed to the amended budget of ($10.3M), a positive difference of $22.5M. 

 

The following summarises the major cash variances that appear on the face of the FAS, which in accordance with Council’s adopted material variance reporting threshold, 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

1.79%

1,253,407

1.    Operating Grants, Subsidies and Contributions

4,009,442

3,006,912

4,977,647

33.34%

1,002,530

2.    Other Revenue

326,623

395,243

551,510

(17.36%)

(68,620)

 

 

 

 

 

Expenses from Ordinary Activities

 

 

6.36%

3,863,794

3.    Materials & Contracts

(11,899,640)

(14,215,503)

(19,058,249)

16.29%

2,315,863

4.    Other Expenditure

(2,189,825)

(2,727,195)

(4,995,811)

19.70%

537,370

5.    Allocations

1,435,580

1,628,517

2,161,452

11.85%

(192,937)

 

 

 

 

 

 

6.    Non-Operating Grants, Subsidies and Contributions

7,919,030

6,143,442

24,388,690

28.90%

1,775,588

 

 

 

 

 

 

Capital Revenue & (Expenditure)

 

 

35.67%

15,400,077

7.    Land & Buildings

(3,718,731)

(6,719,951)

(8,861,113)

44.66%

3,001,220

Plant & Equipment

(2,711,982)

(4,160,850)

(4,885,350)

34.82%

1,448,868

Furniture & Equipment

(355,381)

(854,042)

(1,113,069)

58.39%

498,661

Infrastructure

(11,803,767)

(25,220,387)

(38,328,246)

53.20%

13,416,620

8.    Proceeds from Sale of Assets

3,063,385

651,550

3,409,080

370.17%

2,411,835

9.    Transfer to Restricted Assets

(617,907)

(45,081)

(60,100)

(1270.7%)

(572,826)

10.  Transfer from Restricted Assets

886,539

0

6,319,121

100.00%

886,539

11.  Transfer from Reserves

2,549,212

9,019,946

34,669,883

(71.74%)

(6,470,734)

 


 

Revenue from Ordinary Activities

Year to date (YTD) actual income from ordinary activities is $1.25M more than expected when compared to the YTD amended budget, with the following items meeting the material variance reporting thresholds:

 

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

·    Grants Commission - Special Grants Bridges (10152), ($158K) - $124K is still to come in relation to Bussell Hwy Bridge 0241.  The remaining variance relates to budgeting misallocations where the grants were actually supposed to be main roads direct funding;

·    Insurance Reimbursements (10200), $125K – mainly due to the LGIS scheme member credit refund of $101K;

·    Legal Fees Reimbursements (10500), ($58K) – 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 no amendment to remove this budgeted revenue item in 19/20 will be done;

·    Human Resources Reimbursements (10521), $51K - $33K due to conference and training reimbursements not budgeted for sufficiently and $19K received in workers comp reimbursements with all receipts budgeted in June;

·    Contributions to Airport Operations (11151), $51K – received December but budgeted in June;

·    Strategic Planning Operating Grants & Subsidies (10820), ($28K) – This is remaining grant funding for the CAS project which will not be finalized until later in the year.  The remaining activities for the project will be carried over into the next budget;

·    Environmental Management Administration (10830), $232K – $170K grant received for the Revitalizing Geographe Waterways Phase 2 project earlier than budgeted, plus unbudgeted amounts of $40K for Lower Vasse River Collaborative Project from Regional Estuaries Initiatives, and $20K for Strategic Weed Action for Biodiversity Protection from Department of Primary Industries;

·    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), which was not budgeted.  Details of the cost codes for a budget amendment have not been finalised;

·    Bushfire Risk Management Planning Grants DFES (10942), $43K – 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;

·    Preventative Services CLAG Contribution (10925), ($29K) – Offset by budgeted expenditure that has not occurred, to the same amount;

·    Fire Prevention DFES Contribution & Prior Period Adjustments (10940), $28K – timing difference due to prior period adjustments for late receipted contributions;

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

·    Busselton Jetty Contributions (11160), $35K – bi-annual contribution more than budgeted;

·    Regional Waste Management Administration (11301), ($26K) – Contributing councils have not been invoiced as much as budgeted;

·    Reimbursements Old Butter Factory (B1401 & B9610), $371K – Timing difference due to difficulties in predicting when LGIS would process the claims;  Advice received in January that claims have been processed;

·    Storm Damage Insurance Renewal (C2527), $37K – insurance claim for damage to King Street steps and ramp received.

2.    Other Revenue is ($68K) worse than budget.  The main contributing variances are outlined in the table below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

10100

Finance & Corporate Services Support - LSL contribution not received from other LG (Offset by officer not taking LSL this FY)

(26,000)

10510

Governance Support Services (LSL contribution received from other LG.  Not related to above)

14,745

10591

Geographe Leisure Centre (LSL contribution not received from other LG)

(13,599)

10970

Parking Control

(38,909)

G0030

Busselton Transfer Station

30,701

G0031

Dunsborough Waste Facility

(36,245)

 

Expenses from Ordinary Activities

Expenditure from ordinary activities is $3.2M or 5.9% less than expected when compared to the amended YTD budget.  The following items meet the material variance reporting thresholds:

 

3.    Materials and Contracts better than amended budget YTD by $2.3M

 

The main contributing items are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

41,401

10000

Members of Council

(29,479)

10250

Information & Communication Technology Services

(81,595)

10500

Legal and Compliance Services

54,592

Community and Commercial Services

347,155

10380

Busselton Library

64,440

10600

Busselton Jetty Tourist Park

73,749

10625

Art Geo Administration

25,452

10630

Property and Business Development

30,198

10900

Cultural Planning

53,513

Planning and Development Services

652,788

10820

Strategic Planning

188,103

10830

Environmental Management Administration

167,785

10850

Implement Management Plans Other

77,274

10931

Protective Burning & Firebreaks-Reserves

40,433

11170

Meelup Regional Park

92,510

Engineering and Works Services

1,237,186

Various

Busselton Jetty Maintenance

542,569

12620

Rural-Tree Pruning

(39,556)

12621

Urban-Tree Pruning

(62,804)

Various

Bridge Maintenance

120,315

Various

Building Maintenance

(32,979)

Various

Other Infrastructure Maintenance

67,640

Various

Waste services

248,334

Various

Road Maintenance

(236,244)

Various

Reserve Maintenance

99,012

 

4.    Other Expenditure $537K under the amended YTD budget:

 

The main contributing items are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

201,408

10000

Members of Council

128,551

10151

Rates Administration

43,690

10700

Public Relations

31,565

Community and Commercial Services

204,157

10530

Community Services Administration

133,538

Engineering and Works Services

123,000

11160

Busselton Jetty

68,747

B1223

Micro Brewery - Public Ablution

60,000

G0042

BTS External Restoration Works

123,000

 

5.    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

6.    Non-Operating Grants, Subsidies and Contributions exceed budget by $1.8M with the main items impacting on this being the timing of the receipt of funding.  This is largely offset with more than anticipated capital expenditure at the same time, where works are completed in connection with the funding.  The extent to which the works remain incomplete will represent a positive impact on net position, and the remaining funding will be carried forward in reserves to be spent in future periods in order to complete the projects.

 

Cost Code

Cost Code Description

Variance
YTD

Finance and Corporate Services

(333,129)

10239

Contributions (Program 11) - Community Facilities

(593,580)

10239

Contributions (Program 12) – Works

113,278

10250

Information & Communication Technology Services – Capital Grants (Federal)

144,956

Community and Commercial Services

1,805,858

C6025

Installation of Bird Netting – Capital Grant (Federal)

(92,620)

C6099

Airport Development – Capital Grant (Federal)

1,891,478

Planning and Development Services

(792,369)

B1015

Hithergreen District Bushfire Brigade – Donated Assets

(465,200)

B1024

Wilyabrup Bushfire Brigade – Donated Assets

(178,300)

B1029

Busselton Branch SES – Donated Assets

(97,200)

B9109

Hithergreen Building Renovations – Capital Grant (State)

(51,669)

Engineering and Works Services

1,095,229

B9407

Busselton Senior Citizens – Contributions

111,300

C1512

Port Geographe Boat Ramp Renewal Works – Capital Grant (State)

(123,750)

C3020

Donated Assets Parks, Gardens & Reserves

329,133

C3113

Busselton Tennis Club – Infrastructure – Contribution

80,000

C3122

Rails to Trails - Continuation of Implementation Plan – Capital Grant (Lotteries Commission)

(300,000)

C3168

Busselton Foreshore Jetty Precinct – Capital Grant

70,239

C3186

Lou Weston Oval – Courts – Contributions

(235,000)

C3210

McBride Park - POS Upgrade – Contributions

(32,538)

C3211

Tulloh St (Geographe Bay Road) - POS Upgrade – Contributions

(90,332)

F0019

College Avenue – Capital Grant (State)

144,000

S0035

Strelly Street / Barlee Street Roundabout – MR Capital Grant

32,383

S0064

Peel Terrace (Stanley Pl/Cammilleri St Intersection Upgrade) – MR Capital Grant

(150,003)

S0069

Peel Terrace (Brown Street Intersection Upgrades) – MR Capital Grant

(74,997)

S0070

Peel & Queen Street Roundabout Service Relocation – MR Capital Grant

(175,003)

S0071

Ludlow-Hithergreen Road Safety Improvements – Fed Capital grant

461,200

S0072

Kaloorup Road - Reconstruct and Seal Shoulders – MR Capital Grant

100,000

S0324

Georgette Street - Reconstruction & Kerbs – MR Capital Grant

67,000

T0019

Wonnerup South Road - Reconstruct and Widening (narrow seal) – RTR Capital Grant

156,130

T0086

Yoongarillup Road - Reconstruct & Widen (Western Section) – RTR Capital Grant

369,525

V0002

Eastern Link - Busselton Traffic Study – Capital Grant (Federal)

400,000

 

Capital Expenditure

7.    As at 31 March 2020, there is an underspend variance of 49.7% or $18.4M in total capital expenditure with YTD actual at $18.6M against the YTD amended budget of $37M.

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

Land

(71,308)

10370

Busselton Cemetery

(71,308)

Buildings

3,072,528

B9516

Busselton Library Upgrade

244,860

B9109

Hithergreen Building Renovations

51,669

B9300/1/2

Aged Housing Capital Improvements (Winderlup, Harris Rd)

116,541

B9407

Busselton Senior Citizens

785,744

B9556

NCC Upgrade

41,665

B9591

Performing Arts Convention Centre

239,947

B9596

GLC Building Improvements

264,277

B9605

Energy Efficiency Initiatives (Various Buildings)

(51,997)

B9606

King Street Toilets

116,314

B9610

Old Butter Factory

(117,023)

B9716 & B9717

Airport Terminals

1,330,827

B9808

Busselton Jetty Tourist Park Upgrade

92,199

Plant & Equipment

1,448,868

10000

Members of Council

40,000

10510

Governance Support Services

(38,683)

10591

Geographe Leisure Centre

(33,033)

11156

Airport Development Operations

835,690

11402

Plant Purchases (P10)

304,970

11403

Plant Purchases (P11)

151,782

11407

P&E - P&G Smart Technologies

150,000

Furniture & Office Equipment

498,661

10250

Information & Communication Technology Services

325,385

10625

Art Geo Administration

(35,000)

11156

Airport Development Operations

158,974

Infrastructure By Class

13,152,666

 

Roads

1,915,666

 

Bridges

310,000

 

Car Parks

1,321,728

 

Footpaths & Cycleways

623,736

 

Parks, Gardens & Reserves

7,223,426

 

Drainage

113,445

 

Regional Airport & Industrial Park Infrastructure

1,644,665

 

In the main, many of these projects have yet to be completed and represent a timing difference.  Due to the COVID-19 crisis, many projects have also been deferred and will be relisted for completion in next year’s budget.

 

Proceeds from Sale of Assets

8.    There is a variance for the proceeds from sale of assets of $2.4M, due to difficulty in predicting timing for the settlement of the sale of the old library building land, creating a timing difference against budget.

 

Transfer to Restricted Assets

9.    There is a variance in transfers to restricted assets of $572K more than amended budget. The reasons for this are as follows:

·    Transfer to deposits and bonds of $75K 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 $37K 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;

·    Additional bonds of $350K were received in relation to the next stage of the Dunsborough Lakes development;

·    Transfer of $156K representing contribution by developers, including $125K from the sale of the old library land as agreed with the developers.

               

 

Transfer from Restricted Assets

10.  There is a variance in transfers from restricted assets of $886K more than amended budget.   The main reason for this is as follows:

·    Transfer from Roadwork Bonds of $814K as opposed to a budget of $0;

·    Refunds of $27K in deposits for venue hire;

·    Refunds of $12K of Jetty berthing deposits;

·    $34K of other miscellaneous refunds of bonds & deposits.

These funds do not have a budget allocation as they dependant of external third parties and are not able to be reliably measured.

 

Transfer from Reserves

11.  There is a variance for transfer from reserves of $6.5M less than amended budget. The reasons for this are as follows:

·    100 – Airport Infrastructure Renewal Reserve ($39K) – Partial work for installation of bird netting;

·    136 – Airport Marketing & Incentive Reserve ($1.4M) – Being deferred until next financial year;

·    106 – Building Asset Renewal Reserve $35K – early recoup related to completed works;

·    409 – Geographe Leisure Centre Building Reserve ($270K) – Project B9596 for general building improvements;

·    110 – Jetty Maintenance Reserve ($850K) – has not occurred 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;

·    115 – Plant Replacement Reserve ($191K) – timing difference associated with recoupment for purchase of new plant;

·    137 – Major Traffic Improvements Reserve $500K – Project V0002 for the Eastern Link Project is on-going.  Approximately $1.7M has been spent, of which $400K grant funding has been received and $1M transferred to Muni;

·    127 – New Infrastructure Development Reserve ($613K) – This reserve is funding 10 projects at the moment, none of which are at a state of completion to activate a transfer;

·    133 – Valuation & Corporate Expenses Reserve ($12K) – the transfer to cover the $97K bill from the Electoral Commission happened in March;

·    123 - Port Geographe Waterways Management Reserve (SAR) ($327K) – Annual deed agreement not yet requested to be paid;

·    121 – Waste Management Facility and Plant Reserve ($3.34M) – The works for the Transfer station plus the site rehabilitation jobs that have not progressed, are the biggest cause of this variance.  It is forecast that these jobs will be deferred until next financial year.

 

 

 

 

 

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 31st March 2020 the value of the City’s invested funds totalled $78.99M, up marginally from $78.98M as at 29th February. The increase is due to interest earnings.

 

During the month of March four term deposits totalling the amount of $13.0M matured. Two deposits were closed totalling $8.0M as the Commonwealth Bank that owns Bankwest will now not allow Bankwest to hold corporate deposits such as the City’s. Two corresponding deposits were opened with the ANZ for 107 days at 1.15% on average. Two further deposits were renewed for a further 121 days at 1.25% on average.

 

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.

 

An amount of $1.525M was transferred from the Airport Development WATC account to the corresponding ANZ account.

 

The RBA announced two reductions in the official cash rate in March to only 0.25%. This will have a strong impact on the City’s interest earnings for the foreseeable future. Further drops are unlikely at this stage.

 

Chief Executive Officer – Corporate Credit Card

Details of transactions made on the Chief Executive Officer’s corporate credit card during March 2020 are provided below to ensure there is appropriate oversight and awareness.

 

Date

$ Amount

Payee

Description

16-Mar-20

60.00

Equinox Café

Media Call - Removal BTC Courts

 

60.00

 

 

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 such risks 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 31 March 2020, the City’s financial performance, although displaying a positive net current position, is considered at risk of not meeting operational budget expectations by the end of the financial year due to the economic downturn brought on by the COVID-19 global pandemic.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.


Council

14

13 May 2020

16.2

Attachment a

Investment Report March 2020

 


Council

21

13 May 2020

16.2

Attachment b

Financial Activity Statement March 2020