Minutes of Finance Committee - Wednesday, 10 February 2021

Finance Committee 22 10 February 2021

10.15am: At this time, Cr Henley returned to the meeting.

6.2 FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 31 DECEMBER 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 budgets, strategies, plans and policies (excluding local planning policies); funding, donations and sponsorships; reviewing committee recommendations
VOTING REQUIREMENT	Simple Majority
ATTACHMENTS	Attachment a Investment Report - December 2020 ⇩ Attachment b Financial Activity Statement - December 2020 ⇩

Committee RECOMMENDATION and Officer Recommendation

F2102/008 Moved Councillor J Barrett-Lennard, seconded Councillor S Riccelli

That the Council receives the statutory financial activity statement reports for the period ending 31 December 2020, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations.

CARRIED 5/0

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 December 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 27 July 2020, the Council adopted (C2007/071) the following material variance reporting threshold for the 2020/21 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 2020/21 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 only if not to do so would present an incomplete picture of the financial performance for a particular period; 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 December 2020

The Statement of Financial Activity (FAS) for the year to date (YTD) as at 31 December 2020 shows an overall Net Current Position of $26.4M as opposed to the budget of $22.7M. This represents a positive variance of $3.7M YTD. This variance fell by $8M from $11.7M at the end of November.

The following table summarises the major YTD 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. Each numbered item in this lead table is explained further in the report.

Description	2020/21 Actual YTD $	2020/21 Amended Budget YTD $	2020/21 Amended Budget $	2020/21 YTD Bud Variance %	2020/21 YTD Bud Variance $	Change in Variance Current Month $
Revenue from Ordinary Activities				*1.32%*	*879,400*	*636,389*
1. Operating Grants, Subsidies & Contributions	2,756,809	1,964,051	4,782,445	40.36%	792,758	565,377

Expenses from Ordinary Activities				*8.97%*	*3,713,867*	*295,483*
2. Materials & Contracts	(7,151,732)	(9,226,677)	(18,710,746)	22.49%	2,074,945	224,669
3. Utilities	(1,180,961)	(1,390,836)	(2,770,956)	15.09%	209,875	62,531
4. Other Expenditure	(1,219,913)	(2,294,119)	(5,236,779)	46.82%	1,074,206	147,075

5. Non-Operating Grants, Subsidies and Contributions	3,744,448	7,557,231	34,437,199	(50.45%)	(3,812,783)	(2,991,712)

Capital Revenue & (Expenditure)				*2.78%*	*614,321*	*(5,457,909)*
6. Land & Buildings	(2,502,565)	(3,201,852)	(17,454,059)	21.84%	699,287	199,115
Plant & Equipment	(693,830)	(1,222,172)	(2,510,340)	43.23%	528,342	98,062
Furniture & Equipment	(200,289)	(323,310)	(461,088)	38.05%	123,022	114,180
Infrastructure	(7,880,369)	(17,007,033)	(40,004,996)	53.66%	9,126,664	1,242,448
7. Proceeds from Sale of Assets	121,925	433,500	581,500	(71.87%)	(311,575)	(34,000)
8. Proceeds from New Loans	0	7,500,000	7,700,000	(100.00%)	(7,500,000)	(7,500,000)
9. Repayment of Capital Lease	(319,152)	(260,950)	(521,900)	(22.30%)	(58,202)	(80,829)
10. Transfer to Restricted Assets	(2,638,608)	(27,504)	(62,750)	(9493.54%)	(2,611,104)	(35,241)
11. Transfer from Restricted Assets	664,123	0	2,807,074	100.00%	664,123	532,143

Revenue from Ordinary Activities

In total, revenue from Ordinary Activities is $636K, or 1.32%, ahead of budget YTD. The only material variance item contributing to this is:

1. Operating Grants, Subsidies and Contributions

Ahead of YTD budget by $793K, or 40.36%, mainly due to the items listed in the table below:

Revenue Code	Revenue Code Description	Actual YTD $	Amended Budget YTD $	Variance YTD $	Variance YTD %	Change in Variance Current Month $
Finance and Corporate Services		*952,706*	*930,106*	*22,601*	*2.37%*	*73,207*
10200	Financial Services – Reimbursements	122,543	103,810	18,733	15.29%	58,315
The second instalment of the LGIS Contributions Assistance Package was due to be received in November, but instead a credit note received from LGIS was offset against scheme policies that were due for payment in early December, at their instruction.
Community and Commercial Services		*186,082*	*160,994*	*25,088*	*13.48%*	*(11,324)*
10530	Community Services Administration – State Government Grants	50,000	25,002	24,998	50.00%	(4,167)
The Rio Tinto COVID Relief & Recovery Grant was invoiced in total in August, however the budget was spread evenly over 12 months.
Planning and Development Services		*710,930*	*754,343*	*(43,413)*	*(6.11%)*	*(75,265)*
10820	Strategic Planning – State Government Grants	-	37,500	(37,500)	(100.00%)	(37,500)
The variation from Strategic Planning budget (Grant $37,500) is due to the total grant ($75,000) being acquitted in two instalments: a 50% payment was received some time ago on achievement of certain project milestones to that stage in the preparation of the ‘Coastal Adaptation Strategy’ or CHRMAP, ‘Coastal Hazard Risk Management and Adaptation Plan’. The final 50% is due to be paid to the City upon Government endorsement of the final CHRMAP. Preparation of this complicated and comprehensive document has been set back several times over the past 2 years due to project requirements concerning financial modelling and Government Working Group reviews et al. As such, the City has received approval to extend the anticipated completion date for the project (this has occurred several times) until September 2021 (and it may require even longer). At the moment, it is expected to report on the draft CHRMAP to OCM 24 February, then, if approved, put out for public information/comment for 2-3 months. Then will need to be finalised etc. The $37,500 final grant payment will therefore not be paid until FY 21/22.
10830	Environmental Management Administration – State Government Grants	18,780	-	18,780	100.00%	10,000
Grant received in two lots in September and December, however it was budgeted to be received in June.
10925	Preventative Services – CLAG – State Government Grants	26,418	32,600	(6,182)	(23.40%)	(32,600)
The Department of Health contribution to the mosquito program was less than expected.
10940	Fire Prevention DFES – Contributions	21,203	39,944	(18,741)	(88.39%)	-
The $21K received relates to the last quarter of the 19/20 year. The half yearly reconciliation (for quarters 1 & 2 of the 20/21 year) of the CESM role with DFES remains outstanding and is in progress.

Engineering and Works Services		*907,091*	*118,506*	*788,585*	*86.94%*	*578,862*
W0267	Road Safety Signage Infrastructure – Federal government Grants	50,000	-	50,000	100.00%	-
The $98K budget for year 1 of the $194K grant from the Road Safety Innovation Fund was amended to be received in January. However, $50K relating to milestone 1 was received in November.
11301	Regional Waste Management Administration – Reimbursements	47,958	10,998	36,960	77.07%	(1,833)
The contributions to the 2020/21 Southwest Regional Waste Group Project were received from 10 participating local governments in November, totalling $48K. Only $22K was budgeted for the year, and this was spread over 12 months.
11501	Operations Services Works – Reimbursements	123,206	30,600	92,606	75.16%	20,938
Workers compensation claims totalling $122K have been received YTD. This is by nature very difficult to predict. $61K was budgeted for the year, spread evenly over 12 months.
B1401 & B9610	Old Butter Factory – Insurance Reimbursements	149,415	-	149,415	100.00%	133,278
Conservation and fire damage works now completed. Insurance claim has now been approved and paid. Not budgeted as additional works were required for structural and fire compliance that had not been scoped at commencement of the works. Not unusual for conservation projects of this nature. Net impact after insurance claims is estimated at approximately ($30K).

Expenses from Ordinary Activities

Expenditure from ordinary activities is $3.7M, or 8.97%, less than expected when compared to the budget YTD as at December. The following individual expense line items on the face of the financial statement have YTD variances that meet the material reporting thresholds:

2. Materials and Contracts

Better than budget by $2.07M or 22.49%. The table below lists the main variance items that meet the reporting thresholds:

Cost Code	Cost Code Description	Actual YTD $	Amended Budget YTD $	Variance YTD $	Variance YTD %	Change in Variance Current Month $
Finance and Corporate Services		*1,075,484*	*1,203,488*	*128,004*	*10.6%*	*16,139*
10000	Members of Council	63,326	96,868	33,542	34.6%	63,971
The variance is primarily related to the audit fee for the 19/20 financial year, which as at YTD December had not been received.
10151	Rates Administration	129,178	150,703	21,525	14.3%	18,797
The variance is predominantly due to the underspend in consultancy. This budget was for the Rating Strategy Project, funded by reserves. The project has been delayed due to resourcing issues in the Rates Team, plus pending communications with the Minister regarding Rates reviews that could have significant impact on the scope of the project.

10250	Information & Communication Technology Services	680,099	666,212	(13,887)	(2.1%)	(77,415)
· Software licences – Our licences are on track to go over budget this year with the addition of some unplanned software; this should be balanced elsewhere. The payment curve for this is not smooth and we have recently paid some large invoices including T1. · Photocopying – As mentioned in Customer Service below, the printer costs are routing through this account hence the budget overspend. · GIS costs – We had planned to use a new image provider at a reduced cost, unfortunately they could not provide what was agreed upon and we had to stick with using Landgate, this will be adjusted for next budget.
10360	Customer Services	12,233	24,016	11,783	49.1%	2,465
· Photocopying – The Finance team going paperless has had a significant impact on our paper spend, especially for coloured paper. In addition, an arrangement has been made with the Executive Assistants for auditing of the stationery supplies in their departments, so ordering has more closely aligned to needs rather than maintaining large stores. · Computer Consumables – Historically printer cartridges etc came from this bucket. With the adoption of more printers using a full supply contract this account is not being utilised. We still do order some cartridges manually but the number is heavily reduced. This will be reviewed during the upcoming budget considerations for 21/22 to get a better idea of actual spend.
10500	Legal & Compliance Services	49,617	30,690	(18,927)	(61.7%)	(21,459)
Greater than expected spend of external legal representation (largely due to increase in prosecutions/compliance action plus a Supreme Court matter). It was acknowledged when the legal budget was set last year that a transfer from the legal reserve may be required.
10521	Human Resources & Payroll	19,524	37,678	18,154	48.2%	3,113
The variance is timing related, with consultancy funds related to the organisational staff survey yet to be expended. Procurement is currently in progress with expenses expected to be incurred by April 2021.
10616	Winderlup Villas Aged Housing	16,578	37,926	21,348	56.3%	3,872
Lower than expected maintenance costs to the end of December. Less reactive maintenance for FY to date.
Community and Commercial Services		*624,330*	*1,065,400*	*441,070*	*41.4%*	*55,122*
10380	Busselton Library	24,226	62,309	38,083	61.1%	8,792
· Furniture & Office Equipment - The purchase of new furniture and office equipment (under the capitalisation threshold) has been held up due to the new renovations and subsequent requirement for furniture and fit-out of the new children’s area. Increased expenditure will occur over the next few months in line with budget. · Library Resources - Spending on Library Resources was delayed whilst tenders were sought for a new “buy local” initiative. A significant number of purchase orders have been raised since November, with items due to be received over the next few months. · Entity Specific Consumables – Coffee machine has been disposed of which means that there will be no expenditure, and no offset income. · Photocopying – Currently investigating zero expenditure. It appears Photocopy Paper isn’t being correctly costed to the library budget before being issued from central stores – will be rectified in consultation with Customer Service Team.
10381	Dunsborough Library	10,147	20,719	10,572	51.0%	(967)
· Contractors – Carpet cleaning has been rescheduled to occur in March/April 2021. · Other Computer costs - $1800 Networking costs no longer required. · Photocopying – see Busselton explanation. · Library Resources – see Busselton explanation.

10540	Recreation Administration	8,973	27,458	18,485	67.3%	2,907
The City is still awaiting the outcome of the 2021/22 Every Club grant application. It is envisaged that this will be successful, and as such this budget will be spent by years end.
10541	Recreation Planning	1,030	61,832	60,802	98.3%	16,667
Timing of expenditure is largely due in Q2 & Q3 awaiting the outcomes of external grant applications. As of 31 Dec, grant deeds have now been finalised. The expected expenditure is now Q3 and Q4.
10590	Naturaliste Community Centre	24,791	60,087	35,296	58.7%	627
The Naturaliste Community Centre was closed due to COVID and upon reopening, was subject to phased restrictions which limited the attendance numbers and therefore expenditure associated with our programs and services throughout the first two quarters. To date, we are still limited by Phase 4 restrictions and have limited numbers in some activities affecting a slow return to business as usual and therefore planned expenditure. Business is now picking up and we are likely to see increased expenditure over the next few months in line with budget.
10591	Geographe Leisure Centre	143,453	192,829	49,376	25.6%	3,347
This is the same as the factors listed above for the NCC.
10600	Busselton Jetty Tourist Park	213,945	290,508	76,563	26.4%	6,139
The majority of this variance cost is the monthly management contract fee ($41,125) for the caravan park which has resulted due to a timing issue with presentation and payment of the invoice. Other expenses falling within Materials & Contracts are related to maintenance, which will occur throughout the year.
10630	Property and Business Development	11,841	42,787	30,946	72.3%	5,836
The budget is made up of numerous line items that have been spread throughout the year. The actual timing for these things are inherently difficult to predict, as more often than not they depend on interactions with outside third parties for development opportunities and collaborations. For example, we budget for advertising and marketing, but need to wait for relevant opportunities to arise throughout the year that may not necessarily align with budget timing.
10900	Cultural Planning	46,487	34,448	(12,039)	(34.9%)	5,020
The overspend in YTD budget for Cultural Planning is due to the earlier than planned completion of the Slippery Rocks Sculpture.
11151	Airport Operations	79,512	197,715	118,203	59.8%	3,671
The budget variance YTD includes the key allocations of: · security screening of $45K not spent; · contractors - $42K for tree clearing not completed/expended; and · smaller variances in other areas not yet expended.
B1361	YCAB (Youth Precinct Foreshore)	13,401	28,434	15,033	52.9%	2,180
Operating grants forecast were not available as planned and therefore associated expenses did not occur. Alternative funding was sourced to run a program in Dunsborough which commences February when expenses to deliver will start to be seen.
Planning and Development Services		*538,785*	*1,044,461*	*505,676*	*48.4%*	*118,454*
10810	Statutory Planning	5,374	17,022	11,648	68.4%	2,436
Invoices for design peer review work expected to be paid in January. This budget is expended in an ad hoc, as required basis.
10830	Environmental Management Administration	167,471	300,310	132,839	44.2%	95,360
Expenditure variance due to timing of Barnard Park East upgrade works contract due April 2021.
10920	Environmental Health Services Administration	523	15,383	14,860	96.6%	382
YTD budget includes error of $5,000 extra within 3280 (Contractors), Contractor allocation of $5,000 to implement audit outcomes now completed in house. Traditional pre-summer assessment of sound level meters revealed little to no faults requiring repair due to 2020 COVID event cancellations.

10931	Protective Burning & Firebreaks –Reserves	20,954	271,944	250,990	92.3%	36,049
Mitigation work is heavily weather reliant. Grant funding is provided by State government in a lump sum payment and is not reflective of timing on mitigation expenditure. Tender currently in development for the implementation of mechanical and chemical program across the approved grant application treatments. Outstanding payments of $16,000 for traffic management not reflected in current YTD. Additionally, payments to Brigades for burning completed in spring has not been made to reflect in YTD; payments will be processed as soon as practicable during summer operations.
11170	Meelup Regional Park	33,948	91,345	57,397	62.8%	22,502
Expenditure variance due to timing of awarding cultural heritage assessment contract as part of the Meelup Regional Park Management Plan review. This was budgeted to occur in November, but is now planned for mid-February 2021.
B1010-B1028	Bushfire Brigades – Various	52,968	76,284	23,316	30.6%	(330)
Emergency operations dependant. YTD will vary according to operational requirements.
Engineering and Works Services		*4,911,708*	*5,908,898*	*997,190*	*16.9%*	*34,549*
11160-11162	Busselton Jetty	31,519	16,248	(15,271)	(94.0%)	1,040
An incorrect posting of $17K of capital expenditure will be corrected in January.
12600	Street & Drain Cleaning	138,762	218,868	80,106	36.6%	(6,786)
Expenditure timing - The rate of expenditure for street sweeping has increased as we move through into the summer months with servicing of the town centres and surrounds increasing with the extra visitors to town. There has been delays in receiving invoicing from contractors. The majority of drain abduction works will commence prior to the rainy season in the last quarter of the financial year to ensure drains are free of debris to mitigate against flooding. This budget will be fully expended come June 30.
12620 & 12621	Rural & Urban Tree Pruning	78,341	189,000	110,659	58.5%	5,110
Expenditure timing and reduced expenditure to potentially offset May 2020 storm damage subject to DRFAWA claims.
Various	Bridges	9,265	90,606	81,341	89.8%	14,399
Expenditure timing and reduced expenditure to potentially offset May 2020 storm damage subject to DRFAWA claims.
Various	Buildings	667,130	710,538	43,408	6.1%	(49,602)
The majority of scheduled maintenance activities to Buildings occur primarily in the second half of the financial year and costs associated with the busy tourist season also increase costs from December through to Easter; hence the year to date variance to budget (which is spread evenly).
Various	Other Infrastructure Maintenance	504,098	917,683	413,585	45.1%	30,012
This broad category encompasses the consolidation of 84 separate and unique services delivered across the City, this includes things like Event support; Boat Ramp maintenance; Cemetery maintenance; maintenance at the Libraries and GLC; Caravan Park maintenance; Street Lighting installation; the Foreshores; the CBD’s; Cycleway, Footpaths Maintenance etc. Expenditure variance for November is attributable to timing with the budget having been evenly spread across the financial year. Material & Contractor costs associated with the majority of these areas will gradually increase as we move into the busy summer months of the year.

Various	Waste services	998,985	1,334,104	335,120	25.1%	108,262
The pandemic resulted with more people remaining at home for extended periods, generating more household waste. This, coupled with the two major storm events, requiring more time to process the increased volumes and therefore delays in payment of invoices, has contributed to the larger variances. Other significant contributing factors include: · The City has suspended the FOGO service (i.e. no collection and no processing costs) for the remainder of the financial year. Furthermore, there were also delays in receiving invoices from various aspects of the recycling contractor as well. · The planned restoration works associated with the decontamination of the Busselton Transfer Station and its surrounds have not as yet commenced. · When works at either waste facility have occurred, they were done internally using casual labour and the City’s Plant and Equipment, instead of external contractors.
Various	Roads Maintenance	936,967	433,404	(503,563)	(116.2%)	(50,026)
Higher than normal costs are largely associated with DRFCA WA storm damage claims from the May 2020 storm events. Four claims have been submitted to DFES totalling $789K, with $150K of these associated with costs incurred in the previous financial year. The State Government has received advice from the Federal Government in relation to debris removal from road verges and the evidence requirements in support of these types of claims. The State Government is scheduled to commence their detailed review in early February.
Various	Reserve Maintenance	744,597	987,486	242,889	24.6%	(52,354)
Costs associated with Public Open Spaces are historically lower in the first half of the financial year with an increase in costs beginning as we move into the busier summer period. Monthly costs in December continued to rise accordingly.
5280	Transport - Fleet Management	802,044	1,010,961	208,917	20.7%	34,494
Fuel was underspent by $112,999 YTD due to lower fuel cost and lower plant and vehicle utilisation. Tyre purchase was underspent by $15,634 YTD, replacement parts/tooling/contractor costs were underspent by $80,284 YTD. Budget is spread evenly across the year, however spending is generally more cyclical in nature and peaks in the busier spring/summer/autumn months.

3. Utilities

Costs are $210K, or 15.1%, under budget as at December YTD. Contributing factors include:

· At year ended 30 June 2020, the June street lighting account was booked in June, rather than in the following month when received per normal practice. Accruals are not done on a monthly basis, so this has the effect of causing actuals to appear to be on average $75K behind budget in relation to street lighting (until the following June, when actuals will catch up to budget);

· There have been delays in receiving the accounts for parks and reserves from Synergy, due to system issues at their end (along with a number of other electricity accounts). With no accruals on a monthly basis, this also causes what appears to be an under-spend against the budget. As at December, system issues at Synergy are still ongoing. Pending resolution of this and a catch up in billing, this should largely rectify itself in coming months as the billing cycles re-align.

· Apart from the Synergy system issues, the invoices that were in fact emailed from Synergy were quarantined at the City end due to the new cyber security practices. The quarantined messages are not visible to Accounts staff, however processes are being developed to ensure they are made aware in a timely fashion to avoid supplier payment delays.

4. Other Expenditure

$1.07M, or 46.8%, under the budget YTD. The main contributing items are listed below:

Cost Code	Cost Code Description	Actual YTD $	Amended Budget YTD $	Variance YTD $	Variance YTD %	Change in Variance Current Month $
*Executive Services*		*48,189*	*61,482*	*13,293*	*21.6%*	*4,943*
10001	Office of the CEO	48,189	61,482	13,293	21.6%	4,943
Just under $10,000 is related to there being no expenditure of the CEO’s discretionary account. The balance are timing differences.
*Finance and Corporate Services*		*408,376*	*497,628*	*89,252*	*17.9%*	*10,252*
10000	Members of Council	224,113	275,420	51,307	18.6%	10,324
Timing variances exist in relation to the payment of elected member allowances and reimbursements. As per previous commentary, some of this is related to sitting fees being paid in arrears with a double payment in June. $7,500 is related to there being no expenditure against the Council holding account, and the balance relates to timing variances for expense reimbursements which are difficult to predict when budgeting.
10700	Public Relations	37,455	58,112	20,657	35.5%	989
The underspend variance is related to a reduced payment to BASSCA this year given COVID-19 and no school exchanges, the cancelling of the Mayoral Breakfast and a reduced spend associated with functions such as the launch of Jetstar flights.
*Community and Commercial Services*		*601,743*	*1,456,616*	*854,873*	*58.7%*	*117,322*
10530	Community Services Administration	265,809	405,538	139,729	34.5%	117,889
Invoices from Royal Lifesaving have not yet been received for services rendered YTD.
10532	BPACC Operations	11,668	25,000	13,332	53.3%	5,000
Low cost marketing materials have been developed to date and until construction is secured under the tender no large investments in event attraction are likely to be made.
10536	School Chaplaincy Programs	41,400	-	(41,400)	(100.0%)	-
Historically, Youthcare invoices the City in the 2^nd half of the year, but this year invoiced earlier than budgeted.
10546	Jetty Swim	-	20,600	20,600	100.0%	20,600
Per the Jetty Swim agreement, they have been paid their first milestone of $17,500 of the total $35,000 that they are contracted to receive for the 2021 event. The PO for this was incorrectly raised against 333.10530.3645.0000 Events Sponsorship (Diff rates). A journal transfer will be processed in February to correct this.
10547	Iron Man	-	200,000	200,000	100.0%	-
Ironman has been cancelled for this year and hence the funds will not be expended. Council have resolved (C2012/159 – 9 December 2020) to utilise the remaining budget towards an electronic billboard, however this will not likely be completed until closer to the end of the financial year.
10567	CinefestOZ	80,000	120,000	40,000	33.3%	(80,000)
YTD variance is due to the sponsorship contract being varied due to a change in format as a result of COVID (C2009/110) - $80k paid in 2020/21 with the balance ($38k) carried over to be paid in addition to 2021/22 Market Yield Adjustment.
10625	Art Geo Administration	1,628	15,132	13,504	89.2%	1,546
Underspend is offset by additional wages due to in house production of marketing, promotional and interpretation work.

10630	Economic and Business Development Administration	2,010	17,127	15,117	88.3%	1,899
The budget is made up of numerous line items that have been spread throughout the year. The actual timing for these things are inherently difficult to predict, including valuations as more often than not they depend on interactions with outside third parties for development opportunities and collaborations. For example, we budget for marketing and promotions, but need to wait for relevant opportunities to arise throughout the year that may not necessarily align with budget timing. It should be noted that a large portion of the total annual budget ($55K) relates to cruise ship visitor servicing ($38K), which due to the effects of COVID is unlikely to be spent by the end of the financial year.
11151	Airport Operations	76	413,981	413,905	100.0%	52
Relates to marketing activities for RPT services which have not commenced due to COVID.
*Planning and Development Services*		*63,517*	*110,635*	*47,118*	*42.6%*	*11,628*
10805	Planning Administration	8,523	30,000	21,477	71.6%	5,000
The subsidy for the façade refurbishment at the old Hobson’s site was delayed. This will be paid in January.
10830	Environmental Management Administration	119	18,301	18,182	99.3%	773
YTD variance due to timing of Biodiversity Incentive Rebate Scheme payment due May 2021.
*Engineering and Works Services*		*98,088*	*167,758*	*69,670*	*41.5%*	*2,931*
B1223	Micro Brewery - Public Ablution	60,000	120,000	60,000	50.0%	-
The City’s fund contribution to the construction of these ablutions is due to be paid upon receipt of invoice from the company.

5. Non-Operating Grants, Subsidies & Contributions

The negative variance of $3.8M is mainly due to the items in the table below. It should be noted that apart from the first two items in the table (Locke Estate contributions due to COVID hardship relief), any negative variance in this area will approximately correlate to an offsetting variance in a capital project tied to these funding sources. This can be seen in the section below that outlines the capital expenditure variances. The positive variances generally relate to budget timing, i.e. the funds are usually brought to account during the end of financial year reconciliation process, so hence are budgeted in June.

Revenue Code	Revenue Code Description	Actual YTD $	Amended Budget YTD $	Variance YTD $	Variance YTD %	Change in Variance Current Month $
*Finance and Corporate Services*		-	*52,000*	*(52,000)*	*(100.0%)*	*(48,000)*
R0288	Locke Estate – Leaseholder Contributions	-	52,000	(52,000)	(100.0%)	(48,000)
*Planning and Development Services*		*10,592*	-	*10,592*	*100.0%*	-
B1025	Yallingup Coastal Bushfire Brigade – Donated Assets	10,592	-	10,592	100.0%	-
*Engineering and Works Services*		*3,733,856*	*7,505,231*	*(3,771,375)*	*(50.2%)*	*(2,943,712)*
A0025	Tuart Drive Bridge 0238 – Federal Capital Grant	-	170,330	(170,330)	(100.0%)	(170,330)
B9407	Busselton Senior Citizens – Developer Cont. Utilised	595,306	162,479	432,827	266.4%	-
B9591	Performing Arts Convention Centre – Developer Cont. Utilised	-	3,000,000	(3,000,000)	(100.0%)	(2,000,000)
C0059	Dunsborough Yacht Club Carpark – Developer Cont.	60,000	-	60,000	100.0%	-
C3116	Dawson Park (McIntyre St POS) – Developer Cont.	-	77,467	(77,467)	(100.0%)	-
F1002	Dual Use Path - Dunsborough to Busselton – State Capital Grant	64,000	-	64,000	100.0%	-
F1022	Buayanyup Drain Shared Path – State Capital Grant	-	160,002	(160,002)	(100.0%)	(26,667)
S0005	Ludlow Hithergreen Road - Second Coat Seal – Main Roads Capital Grant	180,000	225,000	(45,000)	(20.0%)	(37,500)
S0048	Bussell Highway – Developer Cont. Utilised	200,000	250,002	(50,002)	(20.0%)	(41,667)
S0070	Peel & Queen Street Roundabout Service Relocation – Developer Cont. Utilised	120,000	240,000	(120,000)	(50.0%)	-
S0073	Gale Road Rural Reconstruction – Federal Capital Grant	515,811	686,244	(170,433)	(24.8%)	(114,374)
S0074	Causeway Road Duplication – Developer Cont. Utilised	500,000	300,000	200,000	66.7%	-
S0075	Local Road and Community Infrastructure Program – Federal Capital Grant	480,935	525,483	(44,548)	(8.5%)	(285,015)
T0020	Capel Tutunup Road – RTR Capital Grant	-	713,364	(713,364)	(100.0%)	(118,894)
W0067	Ford Road Reconstruct and Asphalt Overlay – Main Roads Direct Grant	10,875	-	10,875	100.0%	-
W0121	Geographe Bay Road Quindalup – Developer Cont. Utilised	12,000	-	12,000	100.0%	-

6. Capital Expenditure

As at 31 December 2020, there is an underspend variance of 48.2%, or $10.5M, in total capital expenditure, with YTD actual at $11.3M against the YTD amended budget of $21.8M. A portion of this positive underspend variance is offset by the negative variance in Non-Operating Grants, Contributions & Subsidies discussed above, with the remainder offset by the negative variances in Transfers From Reserves related to funds held aside for these projects. The attachments to this report include detailed listings of all capital expenditure (project) items, however the main areas of YTD variance are summarised as follows:

Cost Code	Cost Code Description	Actual YTD $	Amended Budget YTD $	Variance YTD $	Variance YTD %	Change in Variance Current Month $
*Land*		-	*50,000*	*50,000*	*100.0%*	*37,100*
10610	Property Services Administration	-	50,000	50,000	100.0%	37,100
The budget represents funds allocated for costs associated with potential strategic land purchases in the City of Busselton. To date, there have been no expenses incurred, as potential transactions have not progressed beyond informal discussions.
*Buildings*		*2,502,565*	*3,151,852*	*649,287*	*20.6%*	*162,015*
B9516	Busselton Library Upgrade	582,177	603,000	20,823	3.5%	(17,214)
Library works completed. Balance of funds to be directed to fit-out items.
B9300	Aged Housing Capital Improvements – Winderlup	-	39,600	39,600	100.0%	6,600
Works proposed are to separate power and drainage servicing Winderlup Court and Winderlup Villas. The power requirements will not be triggered until the new conditional land title lot is created. Upgrade and separation of drainage is planned to occur this financial year as the infrastructure is damaged.
B9302	Aged Housing Capital Improvements - Winderlup Court (City)	-	52,000	52,000	100.0%	-
As per above.
B9407	Busselton Senior Citizens	620,333	738,128	117,795	16.0%	-
Works were completed in September. The savings against budget are being reviewed for potential use on roof replacement and carpark works. Contractor delays in providing estimates have delayed commencement of these works.
B9558	Churchill Park - Change Room Refurbishment	-	21,000	21,000	100.0%	-
Works are scheduled to be completed before the end of the financial year. Procurement for roof sheeting is currently underway.
B9591	Performing Arts Convention Centre	923,912	1,143,756	219,844	19.2%	71,961
Regional Growth Fund milestones are under review pending funding extension confirmation. Design contract program extension pending. Budgeted cash flow is under review on this basis.
B9596	GLC Building Improvements	57,164	245,826	188,662	76.7%	(13,629)
Carried over works from the prior year. Works have been rescheduled and have been forecast to be completed in February/March 2021 to minimise impact to GLC operations.
B9606	King Street Toilets	49,061	23,016	(26,045)	(113.2%)	3,421
Stage 1 works completed. Minor additional works undertaken in this period to improve accessibility to new viewing platform.

B9608	Demolition Allocation (Various Buildings)	2,011	12,500	10,489	83.9%	12,500
Funds have been allocated to partial demolition of the Weld Theatre by the end of the financial year, in preparation for its integration with the BPACC.
B9610	Old Butter Factory	130,269	-	(130,269)	(100.0%)	(1,716)
Conservation and fire damage works now completed. Insurance claim has now been approved, with the final position estimated to be in the order of ($30K), with savings being identified in other areas to account for this variance.
B9612	Churchill Park Renew Sports Lights	-	70,000	70,000	100.0%	70,000
A review of consultants work to date is being undertaken, with a decision to be made Feb/March with Council if this site is the subject of a grant application to the State Government. If yes, application to be submitted and funds to be carried forward; if not, funds to be spent this financial year.
B9711	Busselton Airport – Building	-	15,000	15,000	100.0%	-
Small capital works projects to be completed either prior to Jetstar flights commencing or by the end of the financial year.
B9717	Airport Construction, Existing Terminal Upgrade	-	21,402	21,402	100.0%	3,567
As per above.
B9809	Busselton Jetty Tourist Park Compliance Works	3,600	40,000	36,400	91.0%	40,000
Compliance electrical works to be completed by the end of the financial year.
*Plant & Equipment*		*693,830*	*1,222,172*	*528,342*	*43.2%*	*98,062*
10372	Dunsborough Cemetery	-	20,000	20,000	100.0%	-
The budget is for maintenance trailers for the cemetery, both for grave shoring equipment and watering equipment, as well as fencing and turf upgrades. The delay in procurement of these items is due to current workloads of relevant staff and other projects taking a higher priority to date.
10810	Statutory Planning	-	35,000	35,000	100.0%	-
Vehicle ordered in December, delivery expected in January. A delay in the order was due to a delay in confirmation of government pricing and availability of different vehicle makes by the manufacturer.
10920	Environmental Health Services Administration	-	35,000	35,000	100.0%	-
Vehicle ordered in September, delivery expected in January. Delays in delivery are due to the high demand currently being experienced by dealers due to the government’s stimulus package in concurrence with supply chain restrictions due to COVID.
11106	Street Lighting Installations	17,300	-	(17,300)	(100.0%)	(17,300)
The expenditure represents a storage container for the lighting equipment. The budget for the whole activity has been entered against one operational line incorrectly, rather than being split according to operational maintenance, capital upgrade, and one of asset purchases such as this.
11156	Airport Development Operations	172,865	141,552	(31,313)	(22.1%)	23,592
Baggage handling system supply/install is now completed, however monthly budget allocation has been spread over a longer time period.
11160	Busselton Jetty	-	15,000	15,000	100.0%	-
Jetty mule ordered in October, delivered in January.
11401	Transport – Workshop	10,410	30,000	19,590	65.3%	-
Delivery of upgrades to repeater at communications tower still in progress.
11402	Plant Purchases (P10)	321,201	400,000	78,799	19.7%	40,000
Generators at DWF pond and cell – not yet replaced. Site and operations under review. Manager’s vehicle also yet to be ordered/delivered.

11403	Plant Purchases (P11)	-	190,000	190,000	100.0%	22,500
1 x vehicle ordered, delivery expected in January – reasoning similar to above, another ordered with delivery expected in March. 1 x light truck ordered in December, delivery expected in May.
11404	Plant Purchases (P12)	-	114,000	114,000	100.0%	19,000
1 x light truck and concrete scarifier to be ordered early February, delivery expected in May.
11407	P&E - P&G Smart Technologies	-	49,998	49,998	100.0%	8,333
The annual scope of the project is currently being finalised and delivery will follow in the last quarter of 20/21.
11500	Operations Services Administration	-	40,000	40,000	100.0%	-
Vehicle ordered in October, delivery expected in March. Delays in delivery are due to the high demand currently being experienced by dealers due to the government’s stimulus package in concurrence with supply chain restrictions due to COVID.
B1025	Yallingup Coastal Bushfire Brigade	10,592	-	(10,592)	(100.0%)	-
Unbudgeted donated asset (offsetting revenue shown above).
*Furniture & Office Equipment*		*200,289*	*323,310*	*123,022*	*38.1%*	*114,180*
10250	Information & Communication Technology Services	190,289	287,310	97,022	33.8%	111,180
Project delivery has been affected by COVID including the single label domain of which the majority should have been spent by now. We are soon to be procuring a round of Computer Hardware which will reduce the variance.
10591	Geographe Leisure Centre	-	20,000	20,000	100.0%	-
Funds have been committed in January for the purchase and installation of a new disability access hoist for the pool.
*Infrastructure By Class*		*7,880,369*	*17,007,033*	*9,126,664*	*53.7%*	*1,242,448*
Various	Roads	4,245,345	8,443,107	4,197,762	49.7%	(183,073)
Capital projects with civil works are commonly scheduled to be carried out later in the financial year, in the drier summer/autumn construction season. The capital works budgets have been entered based on an even spread method and approach, not on a scheduled timing of works basis. Project delivery increased during December.
Various	Bridges	-	721,998	721,998	100.0%	5,333
Bridge projects are largely completed towards the end of the summer months, will billing expected to come through towards the end of the third quarter.
Various	Car Parks	873,044	1,026,238	153,194	14.9%	(93,408)
Generally similar to the above Roads comment, however good progress has been made with several projects now that inclement weather has abated.
Various	Footpaths & Cycleways	164,908	740,910	576,002	77.7%	107,162
Generally similar to the above Roads comment, however there are delays in invoice receipting.
Various	Parks, Gardens & Reserves	2,463,130	5,391,066	2,927,936	54.3%	1,004,328
Capital projects within this grouping are planned to be carried out largely later in the financial year. The capital works budgets have been entered based on various spread method, not on a scheduled timing of works basis. WAPC POS upgrade projects are currently at the consultation stage and will move through to construction in the last quarter. The Craig Street Groyne and Sea Wall project is scheduled for construction during the last quarter.
Various	Drainage	-	55,394	55,394	100.0%	6,725
Projects of this nature are scheduled for the summer months.
Various	Regional Airport & Industrial Park Infrastructure	133,942	628,320	494,378	78.7%	395,381
Airport projects planned over the year; bird netting due to start in January; car park works completed but not invoiced; other line items not started as yet.

7. Proceeds From Sale of Assets

YTD proceeds from sale of assets is $312K behind budget due to delays in delivery of acquisitions, and the associated transfer to auction of the vehicles being replaced.

Also, aside from a significantly reduced capital replacement program in both light vehicles and heavy plant items, many existing items of plant that were due to be replaced have been retained in service to maintain operational requirements.

8. Proceeds From New Loans

The budgeted proceeds of $7.5M are related to the 50% drawdown on the construction loan for the BPAC. This project has been deferred in consultation with the Federal Government. Construction is now planned to commence in July 2021. Grant funding will start to be acquitted in the second half of 2021, as will the drawdown on the borrowing facility.

9. Repayment of Capital Lease

The budget was being finalised during the first COVID lockdown. As such, the timing was not set as accurately as it could have. The timing difference at the end of December YTD will rectify by the end of January.

10. Transfer to Restricted Assets

There is a YTD variance in transfers to restricted assets of $2.6M more than amended budget. Grant funding received from Federal Government for “Drought Communities Program” of $500k (attributable to CC C3223 Dunsborough Non-Potable Water Network). The funding was received in September whereas budget projected allocation was in June. It was anticipated that the expenditure would be incurred in June, hence the funding timing projections followed.

Developer contributions, deposits and bonds are inherently hard to predict and budget for. An annual amount of $50K spread evenly over 12 months was budgeted, however, over $2.1M has been received in the YTD as at December, the bulk of which are for road works bonds ($1.7M).

11. Transfer from Restricted Assets

YTD there has been $664K transferred from restricted assets into the Municipal Account. This was mainly attributable to refunds of road work bonds of $492K, refund of hall deposits of $14K, Busselton Jetty Tourist Park deposit refunds of $136K, and other sundry refunds of $22K.

Investment Report

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

As at 31 December 2020, the value of the City’s invested funds totalled $87.29M, steady from $89.29M as at 30 November 2020.

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 unchanged at $6.0M.

During the month of December, two term deposits totalling the amount of $8.0M matured. Existing deposits were renewed for a further 182 days at 0.36% on average.

The official cash rate remains steady for the month of December at 0.10%. This will have a strong impact on the City’s interest earnings for the foreseeable future.

Chief Executive Officer – Corporate Credit Card

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

Date		Payee	Description	$ Amount
14/12/2020	ADINA APARTMENT HOTEL		ACCOMMODATION - RCAWA MEETING		201.39
14/12/2020	PRINT HALL PERTH		MEALS - RCAWA MEETING		74.17
14/12/2020	PRINT HALL PERTH		MEALS - RCAWA MEETING		78.23
15/12/2020	ADINA APARTMENT HOTEL		ACCOMMODATION - RCAWA MEETING		10.12
18/12/2020	RAMADA RESORT DUNSBOROUGH		END OF YEAR COUNCILLOR FUNCTION		1,442.00
21/12/2020	PHIL HOLLETT GALLERY		GIFTS FOR 2021 COMMUNITY CITIZEN OF THE YEAR NOMINEES		220.00
					*2,025.91*

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 by Council. Council may wish to make additional resolutions as a result of having received these reports.

CONCLUSION

Budget timings remain affected by COVID impacts and are gradually being re-aligned. As at 31 December 2020, the City’s net current position stands at $26.4M. The City’s financial performance is considered satisfactory, and cash reserves remain strong.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.