Please note:  These minutes are yet to be confirmed as a true record of proceedings

CITY OF BUSSELTON

MINUTES FOR THE Finance Committee MEETING HELD ON 10 March 2021

TABLE OF CONTENTS

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

1....... Declaration of Opening, ACKNOWLEDGEMENT OF COUNTRY and Announcement of Visitors. 2

2....... Attendance. 2

3....... Public Question Time. 2

4....... Disclosure Of Interests. 2

5....... Confirmation Of Minutes. 3

5.1          Minutes of the Finance Committee Meeting held 10 February 2021. 3

6....... Reports. 4

6.1          LIST OF PAYMENTS MADE - JANUARY 2021. 4

6.2          FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 31 JANUARY 2021. 14

6.3          2020/21 BUDGET REVIEW... 48

7....... General Discussion Items. 64

8....... Next Meeting Date. 64

9....... Closure. 64

 


Finance Committee                                                             5                                                                     10 March 2021

 

MINUTES

 

MINUTES OF Finance Committee HELD IN the Committee Room, Administration Building, Southern Drive, Busselton, ON 10 March 2021 AT 10.00am.

 

1.               Declaration of Opening, ACKNOWLEDGEMENT OF COUNTRY and Announcement of Visitors

The Presiding Member opened the meeting at 10.04am.

 

The Presiding Member noted this meeting is held on the lands of the Wadandi people and acknowledged them as Traditional Owners, paying respect to their Elders, past and present, and Aboriginal Elders of other communities who may be present.

 

2.               Attendance 

Presiding Member:

 

Members:

 

Cr Paul Carter

 

 

Cr Grant Henley    

Cr Sue Riccelli

Cr Phill Cronin

Cr Jo Barrett-Lennard

 

Officers:

 

Mr Mike Archer, Chief Executive Officer

Mr Tony Nottle, Director, Finance and Corporate Services

Mr Jeffrey Corker, Finance Coordinator

Ms Melissa Egan, Governance Officer

 

Apologies:

 

Nil

 

3.               Public Question Time

Nil

 

4.               Disclosure Of Interests

Nil


 

5.               Confirmation Of Minutes

5.1             Minutes of the Finance Committee Meeting held 10 February 2021

Committee Decision

F2103/009               Moved Councillor J Barrett-Lennard, seconded Councillor S Riccelli

That the Minutes of the Finance Committee Meeting held 10 February 2021 be confirmed as a true and correct record.

CARRIED 5/0

 


 

10.12am:              At this time, Mr Archer entered the meeting.

6.               Reports

6.1             LIST OF PAYMENTS MADE - JANUARY 2021

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

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

SUBJECT INDEX

Financial Operations

BUSINESS UNIT

Financial Services

REPORTING OFFICER

Manager Financial Services - Paul Sheridan

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Noting: The item is simply for information purposes and noting

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   List of Payments - January 2021  

 

Committee RECOMMENDATION and Officer Recommendation

F2103/010               Moved Councillor J Barrett-Lennard, seconded Councillor P Cronin

That the Council notes payment of voucher numbers M118513 – M118591, EF076679 – EF077259, T7541 – T7543, DD004368 – DD004389 together totalling $7,800,415.60.

CARRIED 5/0

 

DISCLOSURE OF INTEREST

Date

10 March 2021

Meeting

Finance Committee

Name/Position

Cr Paul Carter

Item No./Subject

6.1 List of Payments Made - January 2021

Type of Interest

Impartiality Interest

Nature of Interest

I declare an Impartiality Interest in relation to Agenda Item 6.1, specifically cheque #77056, as I am an employee of Afrgi.

 

EXECUTIVE SUMMARY

This report provides details of payments made from the City’s bank accounts for the month of January 2021, for noting by the Council and recording in the Council Minutes.

 

BACKGROUND

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

OFFICER COMMENT

In accordance with regular custom, the list of payments made for the month of January 2021 is presented for information. 

Statutory Environment

Section 6.10 of the Local Government Act 1995 and more specifically Regulation 13 of the Regulations refer to the requirement for a listing of payments made each month to be presented to the Council.

Relevant Plans and Policies

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

Financial Implications

There are no financial implications associated with the officer recommendation.

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

Not applicable.

CONCLUSION

The list of payments made for the month of January 2021 is presented for information.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.


Finance Committee

8

10 March 2021

6.1

Attachment a

List of Payments - January 2021

 









Finance Committee                                                             21                                                                               10 March 2021

 

6.2             FINANCIAL ACTIVITY STATEMENTS - YEAR TO DATE AS AT 31 JANUARY 2021

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   Financial Activity Statement - January 2021

Attachment b    Investment Report - January 2021  

 

Committee RECOMMENDATION and Officer Recommendation

F2103/011               Moved Councillor J Barrett-Lennard, seconded Councillor S Riccelli

That the Council receives the statutory financial activity statement reports for the period ending 31 January 2021, 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 January 2021.

 

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 January 2021

The Statement of Financial Activity (FAS) for the year to date (YTD) as at 31 January 2021 shows an overall Net Current Position of $22.3M as opposed to the budget of $16.8M. This represents a positive variance of $5.4M YTD.  This variance increased by $1.7M from $3.7M at the end of December.  

 

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

 

0.93%

633,876

(245,524)

1.    Other Revenue

352,322

222,384

424,730

58.43%

129,938

121,018

 

 

 

 

 

 

 

Expenses from Ordinary Activities

 

7.35%

3,459,501

(254,367)

2.    Materials & Contracts

(7,752,032)

(10,061,844)

(18,067,582)

22.96%

2,309,811

234,866

3.    Utilities

(1,346,363)

(1,620,817)

(2,770,956)

16.93%

274,454

64,578

4.    Other Expenditure

(1,436,163)

(2,499,130)

(5,236,779)

42.53%

1,062,967

(11,238)

 

 

 

 

 

 

 

5.    Non-Operating Grants, Subsidies and Contributions

4,197,248

7,900,333

34,437,199

(46.87%)

(3,703,085)

109,698

 

 

 

 

 

 

 

Capital Revenue & (Expenditure)

 

10.83%

2,871,972

2,257,651

6.    Land & Buildings

(2,632,607)

(3,541,859)

(17,454,059)

25.67%

909,252

209,964

Plant & Equipment

(871,455)

(2,028,534)

(2,510,340)

57.04%

1,157,079

628,738

Furniture & Equipment

(201,660)

(443,088)

(461,088)

54.49%

241,428

118,406

Infrastructure

(9,987,769)

(19,482,767)

(40,004,996)

48.74%

9,494,998

368,334

7.    Proceeds from Sale of Assets

141,641

546,500

581,500

(74.08%)

(404,859)

(93,285)

8.    Proceeds from New Loans

0

7,700,000

7,700,000

(100.00%)

(7,700,000)

(200,000)

9.    Repayment of Capital Lease

(319,152)

(391,424)

(521,900)

18.46%

72,272

130,474

10.  Advances to Community Groups

0

(200,000)

(200,000)

100.00%

200,000

200,000

11.  Transfer to Restricted Assets

(2,661,247)

(32,088)

(62,750)

(8193.59%)

(2,629,159)

(18,055)

12.  Transfer from Restricted Assets

1,524,426

0

2,807,074

100.00%

1,524,426

860,303

 

 


Revenue from Ordinary Activities

In total, revenue from Ordinary Activities is $634K, or 0.93%, ahead of budget YTD.  The only material variance item contributing to this is:

 

1.      Other Revenue

Ahead of YTD budget by $130K, or 58.43%, 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

$

Community and Commercial Services

35,117

3,745

31,372

837.69%

7,484

10591

Geographe Leisure Centre – LSL Contributions from other LG’s

18,132

 -

18,132

100.00%

 -

Long Service Leave entitlements accrued can be transferred between local governments.  This receipt was budgeted for in June, however it was received earlier than expected.

10625

Art Geo Administration – Sale of Artworks

14,772

 -

14,772

100.00%

7,553

The distribution of the proceeds of artwork sales on behalf of the artists, is done in the month following the sales, after the monthly reconciliation process.

Planning and Development Services

155,789

82,103

73,686

89.75%

76,524

10925

Preventative Services – CLAG – Sundry Income

77,284

2,380

74,904

3147.22%

76,691

Due to the much earlier and more significant onset of the Ross River Virus threat, extra chemical applications were required.  Permission was received from the Department of Health to draw extra trust funds for these purposes.

10970

Parking Control – Parking Fines & Costs

22,658

35,000

(12,342)

(35.26%)

807

Budgeting for this is always done on a simple historical trend basis, and is never a targeted revenue source.  It is down on budget due to the enforcement team being temporarily understaffed.

Engineering and Works Services

137,203

113,667

23,536

20.71%

38,763

11107

Engineering Services Design – LSL Contributions from other LG’s

14,475

 -

14,475

100.00%

 -

Long Service Leave entitlements accrued can be transferred between local governments.  At the time of budgeting it was not known that the City would be employing a person for whom a LSL entitlement would be transferred.

12642

NCC Standpipe – Sale of Water

2,470

14,581

(12,112)

(83.06%)

(2,083)

The consumption and associated sale of water from this facility has not been as high as originally forecast.

G0030

Busselton Transfer Station – Sale of Scrap Materials

79,571

58,563

21,008

35.87%

7,674

There was an initial spike in sales compared to the timing of the budget, and better than predicted prices received for scrap metal.  However, it is predicted that this will slow somewhat as the financial year progresses.

 

 

 

 

 

Expenses from Ordinary Activities

Expenditure from ordinary activities is $3.5M, or 7.35%, less than expected when compared to the budget YTD as at January. 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 $2.3M, or 22.96%. The table below lists the main items contributing to this variance:

Cost Code

Cost Code Description

Actual YTD

$

Amended Budget YTD

$

Variance
YTD
$

Variance
YTD
%

Change in Variance Current Month

$

Finance and Corporate Services

1,377,123

1,399,385

22,262

1.6%

(105,742)

10151

Rates Administration

140,945

183,987

43,042

23.4%

21,517

The variance is predominantly due to the underspend in consultancy. This budget was for the Rating Review 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.  Unspent funds will remain carried forward in the reserve to fund the revised project.

10200

Financial Services

33,846

47,717

13,871

29.1%

4,936

Due mainly to a reduction in bank fees that were budgeted at a higher amount, plus none of the consultancy budget has been used YTD.  This will potentially be used later in the Financial year in relation to adoption of new accounting standards, plus updates to the Long Term Financial Plan model.

10250

Information & Communication Technology Services

885,683

776,867

(108,816)

(14.0%)

(94,928)

·        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

14,362

27,852

13,490

48.4%

1,707

·        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

63,882

35,805

(28,077)

(78.4%)

(9,149)

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

20,424

40,791

20,367

49.9%

2,213

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, 10617 & 10618

Aged Housing

41,019

82,607

41,588

50.3%

7,412

Lower than expected maintenance costs to the end of the reporting period.  Less reactive maintenance for FY to date.

Community and Commercial Services

724,651

1,240,901

516,251

41.6%

75,180

10380

Busselton Library

31,028

73,034

42,006

57.5%

3,923

·        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

12,505

22,687

10,182

44.9%

(389)

·        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

8,994

30,836

21,842

70.8%

3,357

The City application to State Government 2021/22 Every Club grant was successful. As of 31 Jan, awaiting for grant deed which will stipulate conditions/ details of grant. It is envisaged that this budget will be spent by years end.

10541

Recreation Planning

1,030

80,999

79,969

98.7%

19,167

Timing of expenditure was awaiting the outcomes of external grant applications.  As of 31 Jan, grant deeds have now been finalised, scope and quote with preferred consultant is being finalised. The expected expenditure is now Q3 and Q4.

10590

Naturaliste Community Centre

30,114

63,896

33,782

52.9%

(1,514)

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

170,287

233,353

63,066

27.0%

13,689

This is the same as the factors listed above for the NCC.

10600

Busselton Jetty Tourist Park

257,872

338,926

81,054

23.9%

4,491

The majority of this variance cost is the monthly management contract fee ($41,125 – runs one month in arrears), 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

59,689

47,848

80.2%

16,902

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.

11151

Airport Operations

89,258

214,914

125,656

58.5%

7,453

The budget variance YTD includes the key allocations of:

·        security screening of $45K not spent;

·        contractors - $44K for tree clearing not completed/expended; and

·        smaller variances in other areas not yet expended.

B1361

YCAB (Youth Precinct Foreshore)

17,487

33,173

15,686

47.3%

654

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

684,288

1,189,359

505,071

42.5%

(605)

10820

Strategic Planning

129,693

141,414

11,721

8.3%

19,202

Estimated revenues (re-zonings, structure plans) and anticipated consultant contracts (for specialised works seen as likely to be needed for scheduled City projects) etc. are often quite difficult to predict as they are subject to third-party intentions and initiatives, or competing demands and task allocation/prioritisation here at the City.

10830

Environmental Management Administration

195,524

318,870

123,346

38.7%

(9,492)

Expenditure variance due to:

·        Timing of Barnard Park East management plans contract, due April 2021, pending completion of upgrade works;

·        Lower Vasse River sediment removal and groundwater investigations were delayed, now due May 2021;

·        Carbunup reserve contaminated site investigations due May 2021.

10920

Environmental Health Services Administration

523

25,689

25,166

98.0%

10,306

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.

10925

Preventative Services – CLAG

119,098

57,581

(61,517)

(106.8%)

(54,442)

Due to the much earlier and more significant onset of the Ross River Virus threat, extra chemical applications, transport, etc were required.  Permission was received from the Department of Health to draw extra trust funds for these purposes (see positive variance in Other Income section above).  Full reconciliation of the CLAG budget will occur by the end of the financial year.

10931

Protective Burning & Firebreaks –Reserves

35,626

317,268

281,642

88.8%

30,652

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

45,095

104,371

59,276

56.8%

1,879

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-March 2021, due to initial request for services not attracting a suitable service provider.

B1010-B1028

Bushfire Brigades – Various

66,179

88,998

22,819

25.6%

(497)

Emergency operations dependent. YTD will vary according to operational requirements.

Engineering and Works Services

4,964,353

6,227,363

1,263,010

20.3%

265,820

11160-11162

Busselton Jetty

32,695

18,956

(13,739)

(72.5%)

1,533

An incorrect posting of $17K of capital expenditure will be corrected in February.

12600

Street & Drain Cleaning

160,366

255,346

94,980

37.2%

14,874

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.  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.  There is $247k in committed costs linked to future planned scheduled maintenance within the system. This budget will be fully expended come June 30.

12620 & 12621

Rural & Urban Tree Pruning

85,632

220,500

134,868

61.2%

24,209

Expenditure against these activities has been withheld to the value of $247K to help offset May 2020 storm damage related costs which are subject to DRFAWA claims. YTD withheld expenditure should total $144k which is close to the actual under expended amount of $135k. A total of $403k in Contractor clean-up costs were incurred post June 30 with these costs coded against the individual roads impacted. The majority of these costs are subject to four (4) submissions for reimbursement currently being assessed via disaster recovery relief claims lodged. It is unknown at this time how long these assessments will take especially given the recent flooding in the North and Perth fires likely further delaying the assessment process.

Various

Bridges

15,566

105,707

90,141

85.3%

8,800

Expenditure against these activities has been withheld to the value of $105K to help offset May 2020 storm damage related costs which are subject to DRFAWA claims. YTD withheld expenditure should total $102k apportioned which is close to the actual under expended amount of $90k.

Various

Buildings

743,785

828,961

85,176

10.3%

41,768

The majority of scheduled maintenance activities to Buildings occur primarily in the second half of the financial year outside of peak periods (January to April) to avoid impacts to visitor usage of facilities. Hence the year to date variance to budget (which is spread evenly).

Various

Other Infrastructure Maintenance

609,427

1,018,366

408,938

40.2%

(4,647)

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 variances for January is mostly attributable to timing with the budget having been evenly spread across the financial year. There is also within here a further $50k in budgeted services that have been withheld to help offset storm damage related costs.  Material & Contractor costs associated with the majority of these areas has been on the rise now that the City is into the busy summer months of the year.

 


 

Various

Waste services

1,133,665

1,552,288

418,623

27.0%

83,503

The pandemic has resulted with more people remaining at home, and more West Australian visitors around for extended periods, generating more household and green waste. By building up the green waste piles, contractors are only brought periodically, in order to maximise efficiency. This lag time in invoicing, after the material have been processed, coupled with a significant staffing shortage has meant that waste transfer operations to the Dardanup landfill have been scaled right back, further compound the underspend. 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.

·        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

645,990

148,078

(497,912)

(336.2%)

5,651

Higher than normal costs are largely associated with DRFCA WA storm damage claims stemming from the May 2020 storm events with $403k in extraordinary Material & Contractor costs being incurred Road Maintenance.  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 received advice in January pursuant to the “evidence requirements” from the Federal Government specifically in relation to debris removal from road verges. Post November 2018 disaster recovery relief rules were tightened in light of a Productivity Commission review that found unsatisfactory levels of claims for costs that were unrelated to disaster events. This included claiming for the general clean-up of debris from rural verges both related and unrelated to specific storm events. The State Government officers were scheduled to commence their detailed review in early February however this may now be impacted by the flooding in the North and Perth fires. Offset savings against these unforeseen costs are spread throughout Engineering Operation budgets with moratoriums being put on services including, Rural and Urban tree pruning, Bridge maintenance etc.

Various

Reserve Maintenance

752,876

1,046,048

293,172

28.0%

50,283

Material & Contractor costs associated with Public Open Spaces are historically lower in the cooler first months of the  financial year; July through to September, with expenditure patters starting  to increasing through October to December then spiking through January to April before beginning to moderate lower again after the Easter public holidays.  Going against the trend actual costs incurred in January totalled $115k against a monthly budget of $149k further adding to the favourable position. On top of this there was a stock adjustment made against Materials & Contractors reducing expenditure against budget by a further $106k. Off note there is $317k of Commitment costs representing planned expenditure to occur in future periods; this will significantly reduce the variance.    

5280

Transport - Fleet Management

784,350

1,033,113

248,763

24.1%

39,846

Fuel was underspent by $148,810 YTD due to delays in processing invoices due to fleet staff absences, lower fuel cost and lower vehicle utilisation.  Tyre purchase was underspent by $9,126 YTD, replacement parts/tooling/contractor costs were underspent by $90,827 YTD due to supplier delays in processing invoices.  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 $274K, or 16.93%, under budget as at January YTD.  Due to the delayed or altered billing cycles of some of the suppliers, it is best to view the variances for each area after factoring this in.  The schedule below provides a better understanding of the costs YTD that are included in the category of Utilities:

Account

Total Annual Budget

YTD Budget as at 31/1

YTD Actual as at 31/1

Reported YTD Var. to 31/1

YTD Actual (including late billing)

YTD Var. (including late billing)

3500 - Electricity

1,763,264

1,028,604

896,656

131,948

1,037,172

(8,568)

3505 - Gas - Reticulated

7,324

4,270

1,557

2,713

1,836

2,434

3506 - Gas - LPG Bottled

14,809

8,624

11,536

(2,912)

12,176

(3,552)

3507 - Gas - Alinta Boiler Gas (BJTP)

5,595

3,255

679

2,576

679

2,576

3510 - Water Consumption

460,095

268,415

101,469

166,946

101,469

166,946

Billing cycles range from bi-monthly to every 4 months.  The budget is spread evenly over 12 months.

3511 - Water Meter Rental & Supply Charge

79,139

46,067

29,830

16,237

29,830

16,237

Per above.

3513 - Sewerage Volume Charges

20,924

14,614

31,822

(17,208)

31,822

(17,208)

Annual bill is retrospective, charge in July.  Budget set in February - difficult to forecast so far in advance.

3514 - Sewerage Charge (Rates)

89,081

53,971

87,543

(33,572)

87,543

(33,572)

Billing cycle is annual, but the budget has been spread.  Total annual budget variance is only $2K.

3520 - Office Telephones, Faxes & Internet

128,938

75,257

49,510

25,747

55,935

19,322

9 weeks of WFH resulting in reduced VOIP charges for desk phones.

3521 - Public WIFI

36,455

21,252

23,436

(2,184)

26,464

(5,212)

3522 - Mobile Device Costs

104,774

61,145

62,795

(1,650)

63,141

(1,996)

3524 - Other Telecommunication & Network Costs

60,558

35,343

49,636

(14,293)

51,909

(16,566)

After hours call services and NBN for libraries and airport.

TOTAL UTILITIES: 

2,770,956

1,620,817

1,346,469

274,348

1,499,977

120,840

 


 

4.    Other Expenditure

$1.06M, or 42.5%, 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

49,180

69,229

20,049

29.0%

6,756

10001

Office of the CEO

49,122

69,229

20,107

29.0%

6,814

Underspends exist in the donations contributions and subsidies budget ($5,700), CAPEROC budget ($3,000) and the CEO Discretionary Budget ($11,500).   

Finance and Corporate Services

461,515

556,110

94,595

17.0%

5,343

10000

Members of Council

266,218

317,948

51,730

16.3%

422

Timing variances exist in relation to the payment of elected member allowances and reimbursements.  As per previous commentary, the bulk of this ($30,000) is related to timing variances in payment of sitting fees. $5,000 is related to underspends in the elected members training budget and $7,500 to there being no expenditure against the Council holding account.  The balance relates to timing variances for expense reimbursements which are difficult to predict when budgeting.

10700

Public Relations

43,990

66,964

22,974

34.3%

2,316

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

697,794

1,580,045

882,251

55.8%

27,378

10530

Community Services Administration

314,793

440,896

126,104

28.6%

(13,626)

Invoices from Royal Lifesaving have not yet been received for services rendered YTD.

10532

BPACC Operations

11,668

30,000

18,332

61.1%

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.

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%

 -

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

1,649

16,904

15,255

90.2%

1,751

Underspend is offset by additional wages due to in house production of marketing, promotional and interpretation work.

10630

Economic and Business Development Administration

2,418

19,081

16,663

87.3%

1,546

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.

 


 

10634

Business Support Program

48,522

62,356

13,834

22.2%

6,208

There are a number of grants that are being finalised by applicants and once these have been completed then we will pay out the grant funds. There is also an amount of $19K that has not been allocated from the total annual budget that will be reflected in the YTD variance.

11151

Airport Operations

76

414,033

413,957

100.0%

52

Relates to marketing activities for RPT services which have not commenced due to COVID.

Planning and Development Services

129,458

121,321

(8,137)

(6.7%)

(55,255)

10830

Environmental Management Administration

119

18,301

18,182

99.3%

 -

YTD variance due to timing of Biodiversity Incentive Rebate Scheme payment due May 2021.

10925

Preventative Services – CLAG

27,945

13,823

(14,122)

(102.2%)

(14,664)

Due to the much earlier and more significant onset of the Ross River Virus threat, extra chemical applications, transport, etc were required.  Permission was received from the Department of Health to draw extra trust funds for these purposes (see positive variance in Other Income section above).  Full reconciliation of the CLAG budget will occur by the end of the financial year.

10942

Bushfire Risk Management Planning – DFES

23,466

 -

(23,466)

(100.0%)

(23,466)

This represents repayment of unspent 19/20 BRMP grant funds.

Engineering and Works Services

98,215

172,425

74,210

43.0%

4,540

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.

G0042

BTS External Restoration Works

17,562

29,169

11,607

39.8%

4,167

Latest round of home grown produce testing has not been invoiced.

 

5.    Non-Operating Grants, Subsidies & Contributions

The negative variance of $3.7M is mainly due to the items in the table below. It should be noted that apart from the first two items in the table (the Locke Estate Contributions variance is due to COVID hardship deferral 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

36,000

56,000

(20,000)

(35.7%)

32,000

R0288

Locke Estate –

Leaseholder Contributions

36,000

56,000

(20,000)

(35.7%)

32,000

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

4,150,656

7,844,333

(3,693,677)

(47.1%)

77,698

A0025

Tuart Drive Bridge 0238 – Federal Capital Grant

 -

170,330

(170,330)

(100.0%)

 -

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%)

 -

C0059

Dunsborough Yacht Club Carpark – Developer Cont.

60,000

 -

60,000

100.0%

 -

C1026

Townscape Works Dunsborough – State Capital Grant

10,000

 -

10,000

100.0%

10,000

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

 -

186,669

(186,669)

(100.0%)

(26,667)

S0005

Ludlow Hithergreen Road - Second Coat Seal –

Main Roads Capital Grant

180,000

262,500

(82,500)

(31.4%)

(37,500)

S0048

Bussell Highway – Developer Cont. Utilised

200,000

291,669

(91,669)

(31.4%)

(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

800,618

(284,807)

(35.6%)

(114,374)

S0074

Causeway Road Duplication – Developer Cont. Utilised

800,000

300,000

500,000

166.7%

300,000

S0075

Local Road and Community Infrastructure Program –

Federal Capital Grant

480,935

525,483

(44,548)

(8.5%)

 -

S0076

Kaloorup Road (Stage 1) – Main Roads Direct Grant

106,800

 -

106,800

100.0%

106,800

T0020

Capel Tutunup Road –

RTR Capital Grant

 -

832,258

(832,258)

(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 January 2021, there is an underspend variance of 46.3%, or $11.8M, in total capital expenditure, with YTD actual at $13.7M against the YTD amended budget of $25.5M. 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%

 -

10610

Property Services Administration

 -

50,000

50,000

100.0%

 -

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

2,632,607

3,491,859

859,252

24.6%

209,964

B9516

Busselton Library Upgrade

584,477

603,000

18,523

3.1%

(2,300)

Library works completed. Balance of funds to be directed to fit-out items.

B9300/1/2

Aged Housing Capital Improvements

49,874

133,200

83,326

62.6%

1,020

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, but plans are in place to obtain quotes now and carry out the works in anticipation of the lot creation.

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. Works have been re-scoped based on preliminary estimates to reduce costs of roof replacement.

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

1,038,279

1,340,685

302,406

22.6%

82,563

Regional Growth Fund milestones are under review pending funding extension confirmation.  Design contract program extension pending.  Budgeted cash flow has been reviewed, with works now scheduled for commencement in June 2021.

B9596

GLC Building Improvements

57,351

286,797

229,447

80.0%

40,784

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

26,852

(22,209)

(82.7%)

3,836

Stage 1 works completed. Minor additional works undertaken in this period to improve accessibility to new viewing platform.  The proportion of the project carried over from prior years is now completed and is overspent compared to the total budget by $3,035, representing 6%. The YTD budget represents an even spread over the financial year and thus the $22.2k YTD variance is attributable to timing and will clear as we near June 30.

 


 

B9607

General Buildings Asset Renewal Allocation (Various Buildings)

66,234

87,500

21,266

24.3%

12,500

This is a general budget allocation for building renewal works. At the end of January, 75% of the YTD budget had been outlaid with a further $37k in commitments representing works either being competed or completed works awaiting invoicing. To this end and with commitments included, costs are tracking according to the YTD budget.

B9608

Demolition Allocation

(Various Buildings)

2,011

12,500

10,489

83.9%

 -

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%)

 -

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

 -

140,000

140,000

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

 -

24,969

24,969

100.0%

3,567

As per above.

B9809

Busselton Jetty Tourist Park Compliance Works

3,600

40,000

36,400

91.0%

 -

Compliance electrical works to be completed by the end of the financial year.

Plant & Equipment

871,455

2,028,534

1,157,079

57.0%

628,738

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.

11106

Street Lighting Installations

17,300

 -

(17,300)

(100.0%)

 -

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-off asset purchases such as this.

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

1,120,000

798,799

71.3%

720,000

Generators at DWF pond and cell – not yet replaced.  Site and operations under review.  Manager’s vehicle also yet to be ordered/delivered.  The large increase in the variance is due to the budgeted purchase of a waste side loader truck, which will now be delivered in October, plus a waste wheel loader which is now planned to be delivered in February.

11403

Plant Purchases (P11)

46,995

192,500

145,505

75.6%

(44,495)

One vehicle ordered with delivery expected in March and one light truck ordered in December, delivery expected in May.

11404

Plant Purchases (P12)

 -

114,000

114,000

100.0%

 -

1 x light truck and concrete scarifier to be ordered early February, delivery expected in May.

 


 

11407

P&E - P&G Smart Technologies

 -

58,331

58,331

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

201,660

443,088

241,428

54.5%

118,406

10250

Information & Communication Technology Services

191,660

407,088

215,428

52.9%

118,406

Whilst variance is currently high the budgeted amount is planned for expenditure. Some of the delayed projects (COVID impacts include consultancy availability, hardware supply chain and additional unplanned IT work) have been accelerated in the new year including the hardware refresh, phone line migration, single label domain, website builds and online payments. We expect the projects to make up time and currently do not plan for any carry overs.

10591

Geographe Leisure Centre

 -

20,000

20,000

100.0%

 -

Funds have been committed for the purchase and installation of a new disability access hoist for the pool, to be completed early February.

Infrastructure By Class

9,987,769

19,482,767

9,494,998

48.7%

368,334

Various

Roads

5,942,083

9,431,727

3,489,644

37.0%

(708,118)

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 continued to increase over January.  There will be a material underspent against the Peel & Queen Street Roundabout project (S0070) that is valued at $1.2m. Works are scheduled to comment after Easter on the Peel Terrace roundabout section with the second stage Albert Street intersection to be completed after June.

Various

Bridges

 -

842,331

842,331

100.0%

120,333

Bridge projects are largely completed towards the end of the summer months, with billing expected to come through towards the end of the third quarter.

Various

Car Parks

928,964

1,117,801

188,837

16.9%

35,643

This variance is represented by projects completed ahead of YTD budget such as Carpark - Hotel Site 1, the King Street Carpark and the Eagle Bay carpark while at the same time there are a number of projects yet to commence that are well behind YTD budget such as the Vasse Oval Gravel Car Park project, Administration Building Carpark & the Fourth Street carpark that is unlikely to be constructed this financial year due to a need for adequate protective costal defences prior to construction. The Dunsborough Yacht Club Carpark has been completed coming in under budget by $88k. Significant Savings were achieved by utilising old recycled road base materials from the nearby Geographe Bay Road renewal project. The intention is to use some of these savings to offset additional costs associated with the Geographe Bay Road project.

Various

Footpaths & Cycleways

181,561

869,395

687,834

79.1%

111,832

Of the 16 Cycleway and Footpath projects only three have been completed to the end of January with planning well under way for the other 13 of them. The largest project being the Buayanyup Drain Shared Path is $373K under budget YTD and is planned to commence in the last quarter of the financial year, thus 43% of the YTD variance is attributable to this project alone.

 


 

Various

Parks, Gardens & Reserves

2,800,888

6,498,559

3,697,671

56.9%

769,735

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 an even 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. 

65% of the YTD variance within this category of Infrastructure is attributable to three projects being the Dunsborough Lakes Sporting Precinct (Stage 1) at $658k, the Craig Street Groyne and Sea Wall at $600,000 and Site Rehabilitation Old Busselton Landfill Site at $583k. Thus this category also encompasses Coastal and Waste infrastructure projects as well. There are 67 individual projects within this category. It is envisages that not all works will be completed by June 30. For example the $1m set aside for site rehabilitation at Busselton is not likely to physically commence this financial year due to site related issues and complex planning associated with capping the site.

Various

Drainage

 -

62,119

62,119

100.0%

6,725

There are only three small drainage related projects on budget this financial year.  Both the Glenmeer Ramble and Chugg Road Drainage Upgrade projects are scheduled to commence in the last quarter of the financial year.

Various

Regional Airport & Industrial Park Infrastructure

134,273

660,835

526,562

79.7%

32,183

Bird netting was due to start in January and the car park works have been completed but not invoiced as yet. 

The most significant part of the underspend relates to noise amelioration works which is funded from grant funds held in reserve.  This will be partially invoiced by the end of the financial year, but depending on construction timelines, the rest will need to remain on the Airport development budget for future noise amelioration.  Unspent funds will therefore remain in the reserve.

 

7.    Proceeds From Sale of Assets

YTD proceeds from sale of assets is $405K 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

$7.5M of the budgeted proceeds of $7.7M 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. 

 

The remaining $200K of the variance is offset by to advances to community groups which have not occurred.

 

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.  Advances to Community Groups

No applications have been made to date. The $200K positive variance is offset by the non-receipt of the associated loans funds that the City would receive for these on-lending purposes.

11.  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), 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 January, the bulk of which are for road works bonds ($1.7M).

 

12.  Transfer from Restricted Assets

YTD there has been $1.5M transferred from restricted assets into the Municipal Account. This was mainly attributable to refunds of road work bonds of $1.2M, refund of hall deposits of $14K, Busselton Jetty Tourist Park deposit refunds of $306K, and other sundry refunds of $39K.

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 January 2021, the value of the City’s invested funds totalled $81.29M, down from $87.29M as at 31 December 2020.  The decrease is due to the closure of two term deposits totalling $6.0M

 

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 January five term deposits totalling the amount of $11.5M matured. Existing deposits were renewed for a further 120 days at 0.34% on average.

 

The official cash rate remains steady for the month of January 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 January 2021 are provided below to ensure there is appropriate oversight and awareness.

 

Date

Payee

Description

$ Amount

31/12/2020

EHB HOLDINGS PTY LTD

(ESPLANADE HOTEL)

CEO HOSPITALITY

161.50

31/12/2020

EHB HOLDINGS PTY LTD

(ESPLANADE HOTEL)

DUPLICATE PAYMENT IN ERROR- REIMBURSED BY SUPPLIER

91.60

8/01/2021

HARVEY NORMAN AV/IT BUSSELTON

SCREEN COVER FOR NEW PHONE 12 PRO

79.00

12/01/2021

JB HI FI BUNBURY

COVER FOR NEW PHONE 12 PRO

69.95

21/01/2021

WA LOCAL GOVERNMENT WEST LEEDERVILLE

WALGA 150 YEARS OF LOCAL GOV DINNER - MIKE ARCHER,

GRANT HENLEY, KELLY HICK

900.00

 

 

 

1,302.05

 

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 the impacts of COVID-19 and are gradually being re-aligned. As at 31 January 2021, the City’s net current position stands at $22.3M. The City’s financial performance is considered satisfactory, and cash reserves remain strong.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.  


Finance Committee

45

10 March 2021

6.2

Attachment a

Financial Activity Statement - January 2021

 















Finance Committee

47

10 March 2021

6.2

Attachment b

Investment Report - January 2021

 


Finance Committee                                                             48                                                                  10 March 2021

 

10.38am:                              At this time, Mr Archer left the meeting.

 

10.40am:                              At this time, Mr Archer re-entered the meeting.

 

6.3             2020/21 BUDGET REVIEW

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

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

Absolute Majority

ATTACHMENTS

Attachment a   Detailed Budget Review Schedule 2020-21

Attachment b    Financial Activity Statement YTD December 2020

Attachment c    Capital Projects & Acquisitions YTD January 2021

Attachment d   Amended Budget Review Table  

 

OFFICER RECOMMENDATION

That the Council, pursuant to Regulation 33A of the Local Government (Financial Management) Regulations, adopts the 2020/21 Annual Budget Review as presented within this report.

 

Committee RECOMMENDATION

F2103/012               Moved Councillor G Henley, seconded Councillor P Cronin

That the Council, pursuant to Regulation 33A of the Local Government (Financial Management) Regulations, adopts the 2020/21 Annual Budget Review as presented within this report, inclusive of administrative corrections to the table on page 50 of the Agenda as per Attachment D.

CARRIED 5/0

BY ABSOLUTE MAJORITY

 

Reasons:              The table on page 50 of the Agenda contained administrative errors and the correct table was presented to the Committee during the meeting.

 

EXECUTIVE SUMMARY

Between January and March in each financial year, a local government is to carry out a review of its annual budget for that year. The Council is required to consider the review submitted to it after consideration by the Finance Committee, and determine (by absolute majority) whether or not to adopt the review, any parts of the review or any recommendations made in the review within 30 days of the review being undertaken.

 


 

BACKGROUND

Local governments are required to carry out an annual budget review and in accordance with Regulation 33A of the Local Government (Financial Management) Regulations.

 

The purpose of an annual budget review is to ensure that a local government conducts a review of its financial performance at an appropriate time in the financial year. This is to identify significant budget variances and recommend remedial action as necessary, prior to the end of the financial year.

This report, based on the City’s financial performance for the financial year to date as at 31 December 2020, has been compiled to fulfil the statutory reporting requirements of the Local Government Act 1995 and associated Regulations in respect of the annual budget review process.

OFFICER COMMENT

The budget review process was conducted between 7 January and 10 February 2021, via a series of workshop meetings with each of the manager/coordinator groups across the entire organisation (14 in total).

 

This review takes into account a number of factors including what has occurred during the first six months of the fiscal year, the likely operating environment over the remaining six months under the current economic climate, and the most likely impact on the City’s net current position. 

 

The attached Detailed Budget Review Schedule (Attachment A), outlines the estimated variations from the existing amended budget position on a line by line basis, showing an estimated total positive net variance to the budgeted net current position of approximately $1.9M.

 

A copy of the Financial Activity Statement YTD December 2020 (“FAS”) has also been attached (Attachment B), including columns that show the net surplus / (deficit) variance totals for each Nature & Type category.

 

For ease of reference, the net surplus / (deficit) variance totals for each of the affected Nature & Type categories from the FAS are summarised in the table below.

 

Affected FAS Categories by Nature &Type

Forecast Surplus / (Deficit) Variance to Amended Budget at Year End

 

$

Revenue from Ordinary Activities

 

Rates

56,832

Operating Grants, Subsidies and Contributions

652,934

Fees & Charges

49,574

Other Revenue

(43,625)

Interest Earnings

(14,935)

 

700,779

Expenses from Ordinary Activities

 

Employee Costs

815,051

Materials & Contracts

1,368,994

Utilities (Gas, Electricity, Water etc)

50,190

Other Expenditure

2,125,549

 

4,359,784

 

 

Operating Surplus / (Loss)

5,060,564

 

 


 

Capital Revenue & Expenditure

 

Non-Operating Grants, Subsidies and Contributions

(8,000)

Capital Expenditure

23,300,000

Proceeds from Sale of Assets

(2,000)

Proceeds from New Loans

(7,500,000)

Combined net Impact from reserves & restricted

(18,940,307)

 

 

Net Current Position - Surplus / (Deficit)

1,910,256

 

Commentary around the most significant factors contributing to the more material variances in the table above is provided below.

 

Rates

After the government stimulus measures were introduced there was flood of development applications and a frenzy of planning approval.  The actual lag between that and the eventual rating of the vacant land and/or completed buildings has meant that estimated surpluses in relation to our budgeted interim rating forecasts have been trimmed back to a more conservative level.

 

The impact of this rating growth is projected to fall mainly over the 2022 calendar year, and even into 2023.

 

Operating Grants, Subsidies and Contributions

This category contains the reimbursements for insurance claims.  In April and May of 2020, the district (and the state) was hit by two major storm events. The finalisation and payment of the claims lodged by the City was only recently completed.  This makes up the majority of this variance, as it was largely unknown if this was going to be realised at the time of finalisation of the 20/21 budget.

 

Fees & Charges

The lingering economic downturn effects of the COVID crisis has meant that the fees and charges generated from certain activities has been severely, if not completely curtailed.

 

The main areas predicted to have a net negative effect against budget include:

·        recreation centres - $90K;

·        venue, facility and property hire and rental - $60K;

·        cruise ship berthing - $95K;

·        various airport revenue streams - $285K, although this is absorbed by the Airport Reserves, so will not affect the municipal account (“muni”).

 

This will however be more than made up for by the unpredicted spike in the various property development and building fees and charges, which are estimated to produce a net positive variance in excess of $380K.

 

Other Revenue

The projected negative variance of $44K is mainly due to much lower sales of scrap materials from the waste facilities.  Almost all of this is offset against the transfers from the waste reserve, so the impact on the muni net current position is negligible.

 


 

Interest Earnings

The reduction in return on City deposits has had an immediate effect on this year’s financial position in that interest earnings will not achieve budget levels. Current projections are as follows:

 

Budgeted

Projected

Surplus /

 

June '21

June '21

Deficit

Municipal Funds

$90,250

$75,315

-$14,935

Reserve Funds

$562,684

$403,453

-$159,231

 

While original 2020/21 budget projections were conservative, end of year results will fall well short. As the RBA is driving down rates over a number of years, it is probable that returns will be low for the foreseeable future and accordingly the effect on the future budgets and long-term plans will need to be considered in due course.

 

The deficit in the reserve funds interest is offset against a corresponding reduced transfer to reserves, thus reducing the muni impact to only $15K.

 

Employee Costs

There is an estimated savings against budget to 30 June of approximately $815K, with $128K of that funded from reserves, therefore estimated net muni savings of $687K is predicted.

 

Main contributors include:

·        Approximately $210K in recreation services (GLC, NCC, Admin), as a result of significantly reduced or cancelled programs due to extended COVID restrictions, plus the coordinator’s position has not yet been filled.

·        Reduced spending in employee related activities such as training, employee assistance program, staff assessments and drug & alcohol testing amounting to approximately $67K.

·        Estimated savings in Governance of approximately $80K against budget, mainly due to the fact that at the time of budgeting it is never 100% known where a disability trainee will be placed, only that the organisation will be doing so, and hence it is budgeted here.  This person was placed at the GLC, and an internal management adjustment to move the budget over to that area is currently underway.  Other contributing factors include some temporary reduction in hours, unplanned at the time of preparing the budget, and some initially planned minor increases were have not been passed on.

·        Timing and/or re-scoping of many scheduled programs of works in Park & Gardens amounting to approximately $100K.

·        Postponement of the commencement of a budgeted position for the BPACC amounting to $44K.

·        The rest being made up of savings in numerous areas, deriving from:

o   budgeted increases not being passed on;

o   timing delays in the replacement of staff who have resigned;

o   non-replacement of some positions to assist with the revised management structure as informed to Council late last year.

 

Materials & Contracts

This category indicates a potential savings to budget of $1.4M.  This is reduced by the fact that $1.2M of these savings would have been funded from reserves, so therefore the transfer from reserves back into muni is also reduced by this amount.  This leaves a forecast net savings of $201K.

 

 

It should be noted that subsequent to the end of financial year audit for the 2019/20 year, an internal investigation was undertaken to quantify the value of consumables stock being held at various City locations (mainly the depot).  The result of this was that $643K of stock items that need to be recognised in the accounts which had previously been expensed as part of the Materials & Contracts category, on various activities and projects.

 

If this non-cash credit adjustment is taken off, the actual forecast net impact on the muni net current position is a $442K deficit.

 

The biggest contributor to this deficit is the overspend of approximately $550K in road maintenance, which was planned and scheduled in lieu of the insurance reimbursement for the storm damage claims made for the events in April and May 2020 (see commentary above).  The estimate for these claims amounted to approximately $700K.

 

Utilities

Savings of approximately $50K are forecast due to savings on the landline charges in the main administration building, plus savings on the electricity accounts across most of the City facilities and buildings. The reduced occupancy and hiring of the various facilities played a large part creating the lower usage.

 

Other Expenses

Of the $2.1M forecast savings, $2M will remain in reserves, so will not have an impact on the net current position. The remaining $119K savings relates to certain travel and event activities that have been cancelled or reduced because of COVID restrictions.

 

Non-Operating Grants, Subsidies and Contributions

$8K of previously paid developer funds for the Vasse Village that will not be utilised for cultural planning as budgeted, and will remain in the reserve.

 

The net effect on the municipal net current position will be nil.

 

Capital Expenditure

The schedule of Capital Projects & Acquisitions YTD as at January 2021 (Attachment C) has been reviewed in conjunction with officers. 

 

Of the total annual amended budget of $60M, it is estimated that approximately $26.7M will still be in progress come 30 June 2021, and will need to be carried forward to be re-listed (and/or re-scoped), in the 2021/22 budget.

 


 

A summary of the detailed listing in Attachment C is shown below:

 

Description

2020/21 Actual Spend to 19/2      (B)

2020/21
Amended Budget      (A)

Remaining Budget        (A - B)

Forecast Under / (overspend) to 30/6

Land

                      -  

150,000

150,000

150,000

Buildings*

2,878,026

17,304,059

14,426,033

10,000,000

Plant & Equipment

888,978

2,510,340

1,621,362

500,000

Furniture & Office Equipment

201,660

461,088

259,428

50,000

Roads

6,232,304

15,170,848

8,938,544

3,000,000

Bridges**

-  

6,399,989

6,399,989

6,399,989

Car Parks

943,699

1,855,535

911,836

100,000

Footpath and Cycleways

203,463

1,739,745

1,536,282

1,000,000

Parks, Gardens & Reserves***

2,851,827

13,486,482

10,634,655

5,000,000

Airport Industrial Parks

146,973

1,256,653

1,109,680

500,000

 

 

 

 

26,699,989

 

*Predominantly relates to the BPACC project.

**Timing is heavily influenced by MRWA who have confirmed that no bridgeworks will be completed and invoiced by 30 June 2021.

***Mainly due to the Dunsborough Non-Potable Water Network, and the Dunsborough Lakes Sporting Precinct Stage 1.

 

These carry-forwards are entirely funded from reserves (and/or grants that are put aside in reserves), and the non-drawdown of the construction loan for the BPACC.  As such, there will be a nil impact on the net muni position at year end.

 

General Commentary

Major factors influencing estimated budget positions described above:

·        The lingering effects of the initial onset of the pandemic in the later part of the 19/20 financial year has meant that many of the early 20/21 budget projections set prior to the onset, early in the 2020 calendar year, are now out of date and, in some cases, inaccurate.  Compounding this is the fact that the budget process was not finished until well after the onset, so many later projections were set at intentionally conservative levels.

·        In the latter parts of the budget review process, but before finalisation of this report, parts of Western Australia, including the South West region, were forced into a week of hard lockdown due to a COVID-19 infection in Perth.  This may have rendered certain projections to June 30 somewhat obsolete.

·        Uncertainty surrounding how economic stimulus was going play out in the community and how certain aspects of the community were going to be affected by lingering effects of the pandemic (business closures etc.) has meant that much of the City’s activity was a lot more “reactionary”, rather than following strict budgeted pathways.

 

The result of this is that many planned operational activities and large parts of the capital works program will not be completed in line with the budgeted schedule, giving the effect of a significant cost saving against budget. It is important to note that many of the projects are seasonally impacted and may correct themselves in the ensuing 6 month period.

Components of the unspent capital and operating expenditure budgets are currently being assessed for re-listing in the Council’s 2021/22 draft budget, if required.

Statutory Environment

Regulation 33A of the Local Government (Financial Management) Regulations is set out below:

 

Regulation 33A.                Review of budget

(1)         Between 1 January and 31 March in each financial year a local government is to carry out a review of its annual budget for that year.

             (2A)     the review of an annual budget for a financial year must —

(a)      Consider the local government’s financial performance in the period beginning on 1 July and ending no earlier than 31 December in that financial year; and

(b)      Consider the local government’s financial position as at the date of the review; and

(c)       Review the outcomes for the end of that financial year that are forecast in the budget.

(2)       Within 30 days after a review of the annual budget of a local government is carried out it is to be submitted to the council.

(3)       A council is to consider a review submitted to it and is to determine* whether or not to adopt the review, any parts of the review or any recommendations made in the review.

(4)       Within 30 days after a council has made a determination, a copy of the review and determination is to be provided to the Department.

             *Absolute majority required.

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

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

Options

As an alternative to the proposed recommendation, the Council could not adopt the budget review report. If Council is intends to consider this option, officers can assist on the drafting of a suitable alternative motion for adoption before the statutory due date of 30 April 2021.


 

CONCLUSION

Despite uncertainty and multiple directional changes compared to planned and budgeted works and activities, as at YTD December 2020, the City’s overall financial performance is considered satisfactory.  Projections resulting from the budget review process during January and February in consultation with all manager/co-ordinator groups across all parts of the City, indicated a potential positive impact on closing net current position as at 30 June 2021, in the order of approximately $1.9M.   

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

By 30 April 2021.

 

 


Finance Committee

57

10 March 2021

6.3

Attachment a

Detailed Budget Review Schedule 2020-21

 




Finance Committee

59

10 March 2021

6.3

Attachment b

Financial Activity Statement YTD December 2020

 


Finance Committee

62

10 March 2021

6.3

Attachment c

Capital Projects & Acquisitions YTD January 2021

 




Finance Committee

63

10 March 2021

6.3

Attachment d

Amended Budget Review Table

 


Finance Committee                                                             64                                                                  10 March 2021

11.48am:              At this time, Mr Nottle left the meeting.

 

11.52am:              At this time, Mr Nottle re-entered the meeting.

 

7.               General Discussion Items

Mr Archer and Mr Nottle provided an overview of the ‘WA Regional Capitals Alliance Corporate Benchmarking Report’.

 

8.               Next Meeting Date

Wednesday, 14 April 2021.

 

9.               Closure

The meeting closed at 12.06pm.

 

 

THESE MINUTES CONSISTING OF PAGES 1 TO 64 WERE CONFIRMED AS A TRUE AND CORRECT RECORD ON Wednesday, 14 April 2021.

 

DATE:______________________  PRESIDING MEMBER:_____________________________