Agenda of Finance Committee - Wednesday, 21 July 2021

Finance Committee 21 21 July 2021

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

STRATEGIC THEME	LEADERSHIP - A Council that connects with the community and is accountable in its decision making.
STRATEGIC PRIORITY	4.2 Deliver governance systems that facilitate open, ethical and transparent decision making.
SUBJECT INDEX	Financial Services
BUSINESS UNIT	Financial Services
REPORTING OFFICER	Manager Financial Services - Paul Sheridan
AUTHORISING OFFICER	Manager Governance and Corporate Services - Sarah Pierson
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 - May 2021 ⇩ Attachment b Investment Report - May 2021 ⇩

OFFICER RECOMMENDATION

That the Council receives the statutory financial activity statement reports for the period ending 31 May 2021, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations.

EXECUTIVE SUMMARY

Pursuant to Section 6.4 of the Local Government Act 1995 (the Act) and Regulation 34(4) of the Local Government (Financial Management) Regulations 1996 (the Regulations), a local government is to prepare, on a monthly basis, a statement of financial activity that reports on the City’s financial performance in relation to its adopted / amended budget.

This report has been compiled to fulfil the statutory reporting requirements of the Act and associated Regulations, whilst also providing the Council with an overview of the City’s financial performance on a year to date basis, for the period ending 31 May 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 can be provided as required to further supplement the information comprised within the statutory financial reports.

Comments on Financial Activity to 31 May 2021

The Statement of Financial Activity (FAS) for the year to date (YTD) shows an overall Net Current Position of $4.96M as opposed to the amended budget of ($12.1M). This represents a positive variance of $17.1M YTD. This variance increased by $3.7M from $13.5M at the end of April.

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				*3.96%*	*2,899,486*	*261,616*
1. Operating Grants, Subsidies and Contributions	5,584,461	4,010,229	4,782,445	39.26%	1,574,232	142,611
2. Other Revenue	554,249	338,275	424,730	63.85%	215,974	42,175
3. Interest Earnings	839,459	994,802	1,046,684	(15.62%)	(155,343)	(43,192)
Expenses from Ordinary Activities
4. Materials & Contracts	(12,630,973)	(16,140,363)	(18,147,582)	21.74%	3,509,390	204,534
5. Other Expenditure	(2,311,884)	(3,365,672)	(5,236,779)	31.31%	1,053,788	(239,507)
6. Non-Operating Grants, Subsidies and Contributions	5,589,060	14,220,060	34,437,199	(60.70%)	(8,631,000)	(2,019,063)
Capital Revenue & (Expenditure)				*28.16%*	*13,824,293*	*5,335,883*
7. Land & Buildings	(3,155,107)	(8,881,049)	(17,454,059)	64.47%	5,725,942	1,718,030
Plant & Equipment	(1,234,932)	(2,473,982)	(2,510,340)	50.08%	1,239,050	(9,570)
Infrastructure	(17,425,882)	(32,649,857)	(40,057,700)	46.63%	15,223,975	1,889,089
8. Proceeds from Sale of Assets	339,756	581,500	581,500	(41.57%)	(241,744)	0
9. Proceeds from New Loans	0	7,700,000	7,700,000	(100.00%)	(7,700,000)	0
10. Repayment of Capital Lease	(456,815)	(521,901)	(521,900)	12.47%	65,086	2,825
11. Advances to Community Groups	0	(200,000)	(200,000)	100.00%	200,000	0
12. Transfer to Restricted Assets	(5,453,037)	(50,424)	(62,750)	(10714.37%)	(5,402,613)	(156,433)
13. Transfer from Restricted Assets	2,596,074	1,556,917	2,807,074	66.74%	1,039,157	(482,408)
14. Transfer from Reserves	9,706,572	6,139,756	34,901,501	58.09%	3,566,816	2,534,180

Revenue from Ordinary Activities

In total, revenue from Ordinary Activities is $2.9M, or 3.7%, ahead of budget YTD. The material variance items contributing to this include:

1. Operating Grants, Subsidies and Contributions

Ahead of YTD budget by $1.6M, or 39.3%, 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		*1,757,409*	*1,709,861*	*47,548*	*2.71%*	*662*
10510	Governance Support Services – State Government Operating Grants	-	18,700	(18,700)	(100.00%)	(1,700)
Each year the City takes on a disability trainee. At the time of setting the budget, it is not known where this person may be placed, so the reimbursement from the State Government is budgeted in this area. The trainee was actually placed at the GLC, with all associated actual wage costs and reimbursements allocated to this area.
10152	Other General Purpose Funding – Financial Assistance Grants	1,424,119	1,394,881	29,238	2.05%	7,310
Actual grants received are slightly higher than originally budgeted. The Grants Commission always advises the exact amounts to be received well after budget adoption.
10151	Rates Administration – Reimbursements – Legal Fees	41,855	28,996	12,859	30.72%	6,086
There has been a much higher than expected requirement for debt recovery services in relation to overdue rates. Legal costs for this process are reimbursed by the ratepayers involved.
10200	Financial Services – Reimbursements – Insurance	126,578	104,735	21,843	17.26%	(6,654)
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.
10522	Occupational Health & Safety – Reimbursement – Wellness Program	7,160	22,913	(15,753)	(220.01%)	(203)
Due to COVID restrictions in the first half of the financial year a number of programs were either not able to proceed or were undersubscribed. With the relaxing of restrictions and returning confidence, staff participation in the various Wellness activities has increased, however it is unlikely that the full budget will be achieved by year end.
Community and Commercial Services		*346,588*	*242,319*	*104,269*	*30.08%*	*24,031*
10540	Recreation Administration – State Government Operating Grants	31,736	18,337	13,399	42.22%	(1,667)
The grant applications that have been approved by the State Government have derived approximately $30K in excess of the total amount budgeted for the year of $20K.

10541	Recreation Planning – State Government Operating Grants	14,348	-	14,348	100.00%	14,348
The Department of Local Government, Sport & Cultural Industries awarded $14K to the City from the Community Sporting and Recreation Facilities fund (CSRFF), to develop the Master Plan for Sir Stewart Bovell Sports Park.
B1361	YCAB (Youth Precinct Foreshore) – State Government Operating Grants	30,138	13,750	16,388	54.38%	-
Additional unbudgeted Crime Prevention Grant received from WA Police to run the Choices Program.
11151	Airport Operations – Contributions	101,000	50,000	51,000	50.50%	16,000
More contributions toward airport marketing have been received from neighbouring local governments than was originally anticipated.
10530	Events & Cultural Services Administration – Parenting Leave Reimbursements	14,655	-	14,655	100.00%	-
Parenting leave reimbursement was not planned at the time of the development of the 20/21 budget.
10630	Economic and Business Development Administration – Parenting Leave Reimbursements	9,059	-	9,059	100.00%	-
Parenting leave reimbursement was not planned at the time of the development of the 20/21 budget.
Planning and Development Services		*1,029,890*	*1,043,297*	*(13,407)*	*(1.30%)*	*85,317*
10820	Strategic Planning – State Government Grants	22,500	37,500	(15,000)	(66.67%)	22,500
The variation from Strategic Planning budget (Grant $37,500) is due to the total grant ($75,000) being acquitted in three instalments: the first 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 second payment (30%) was received in May 2021 following adoption of the draft CHRMAP for advertising by the Council (OCM 24 February 2021). The final payment of 20% is due once Council adopts 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 31 March 2022. The $15,000 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%	-
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	32,038	44,370	(12,332)	(38.49%)	-
The Department of Health contribution to the mosquito program was less than expected.
Engineering and Works Services		*2,450,574*	*1,014,752*	*1,435,822*	*58.59%*	*32,601*
S0076	Kaloorup Road (Stage 1) – Main Roads Operating Grant	-	267,000	(267,000)	(100.00%)	-
Works originally budgeted to be completed by April are forecast to be complete in June, however grant acquittal and invoicing cannot be finalised until all billing has been processed and a final reconciliation of works has been completed and signed off.
11160	Busselton Jetty – Contributions	842,772	429,700	413,072	(100.00%)	-
The second half yearly contribution was budgeted to be received in June, however it was received in April.
11162	Busselton Jetty - Underwater Observatory – Reimbursement of Utilities Charges	24,243	-	24,243	100.00%	13,770
The City recoups both electricity and sewer service charges from Busselton Jetty Inc. Due to an administrative oversight, this item has not been budgeted, however there is a nil impact on the municipal net current position due to this income being put into the Jetty reserve. This offsets the costs which are also put into the reserve. YTD also contains an insurance re-imbursement of $14K for damage to the UPS during storm events in May 2020.
11300	Sanitation Waste Services Administration – Parenting Leave Reimbursements	13,570	-	13,570	100.00%	-
Parenting leave reimbursement was not planned at the time of the development of the 20/21 budget.
11301	Regional Waste Management Administration – Reimbursements	95,919	20,163	75,756	78.98%	(1,833)
The contributions to the 2020/21 Southwest Regional Waste Group Project were received from 10 participating local governments in November and April, totalling $48K each time. Only $22K was budgeted for the year, and this was spread over 12 months.
11501	Operations Services Works – Insurance Reimbursements	253,706	56,100	197,606	77.89%	23,598
Workers compensation claims totalling $254K 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%	-
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).
M9999	Road Maintenance Bal Of Budget – Insurance Reimbursements	778,013	-	778,013	100.00%	-
Storm damage claims from the storm events in May 2020.

2. Other Revenue

Ahead of YTD budget by $216K, or 63.8%, 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		*57,422*	*31,337*	*26,085*	*83.24%*	*12,489*
10200	Financial Services – Sundry Income	21,971	198	21,773	10,996%	12,385
Due to workload issues and a change in staff in Planning, there was a delay in on-payment of development application fees to the Department of Planning for fees received from an applicants in April and May. This will be rectified in June.
Community and Commercial Services		*48,813*	*5,885*	*42,928*	*729.44%*	*8,135*
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	6,588	-	6,588	100.00%	(740)
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.
10630	Economic and Business Development Administration – LSL Contributions from other LG’s	9,738	-	9,738	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.
Planning and Development Services		*201,101*	*129,019*	*72,082*	*55.87%*	*4,614*
10925	Preventative Services – CLAG – Sundry Income	83,195	3,740	79,455	2124.45%	5,519
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	31,535	55,000	(23,465)	(42.66%)	(3,492)
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		*246,912*	*172,034*	*74,878*	*43.53%*	*16,938*
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.
G0030	Busselton Transfer Station – Sale of Scrap Materials	143,138	88,099	55,039	62.47%	18,745
The pricing received for scrap metal has been significantly higher than originally forecast. As such, higher than predicted volumes have also been delivered to the recyclers to take advantage of this pricing.

3. Interest Earnings

Interest earnings is $155K, or 15.6%, behind budget YTD May due to the significantly lower than forecast interest rates, as a result of the COVID pandemic induced economic downturn. The current low interest rate environment will reduce the City’s income in both the current budget period and future years.

Expenses from Ordinary Activities

Expenditure from ordinary activities is $4.5M, or 6.3%, less than expected when compared to the budget YTD as at May. The following individual expense line items on the face of the financial statement have YTD variances that meet the material reporting thresholds:

4. Materials and Contracts

Better than budget by $3.5M, or 21.7%. 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		*1,773,420*	*2,209,869*	*436,449*	*19.7%*	*184,328*
10151	Rates Administration	204,617	283,787	79,170	27.9%	1,907
The variance is predominantly due to the under spend 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 communications with the Minister regarding rates reviews that have changed the scope of the project. Unspent funds will remain carried forward in the reserve to fund the revised project.
10200	Financial Services	40,285	74,972	34,687	46.3%	5,498
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, as well as in the Rates area to help fine tune some system functionality in the lead up to the annual rates run.
10250	Information & Communication Technology Services	1,051,695	1,239,487	187,792	15.2%	100,545
Outstanding invoices for commitments we have raised are responsible for the increase in variance, a description of the primary variances are below: · Software licenses –The City’s licenses still are on track to go over budget this year with the addition of some unplanned software, we are waiting on invoices for the $159,000 in commitments we have outstanding which will reduce the variance accordingly. · Photocopying – As mentioned in Customer Service below, the printer costs are routing through this account hence the budget overspend. · GIS costs – It was planned to use a new image provider at a reduced cost, unfortunately they could not provide what was agreed upon and the City continued to use Landgate at a higher cost. · Consultancy – We are underspent in consultancy this FY, unplanned projects have affected our ability to resource the projects we had initially targeted for this year. We are waiting on invoices for $37,000 of committed spend which will reduce the variance accordingly. · Contractors (including Contract Staff) – By end of year there will be a $100,000 underspend due to the budgeted contractor being engaged as an employee. This was originally funded from reserve.

Various	Waste Services	1,837,933	2,437,524	599,591	24.6%	135,195
The YTD under expenditure to budget for Waste Services Consolidated is attributable to many factors including the following: · $145K under expended variance to budget associated with Contamination Site Contractor costs. Environmental based costs such as testing and monitoring were not known at the time of budget preparation; investigations are ongoing. · $123K under expended variance to budget associated with External Waste Disposal being gate house disposal costs at the Cleanaway Dardanup landfill. Some of this is timing pending the receipt of both the April and May monthly invoice. · $95k under expended variance to budget associated with Cleanaway Recycling Collection costs, will all this attributable to timing pending the receipt of the May monthly invoice. · $95K under expended variance to budget associated with the Dunsborough Waste Site. The green waste stock pile will now be processed in the 2022 financial year contributing to this variance. · $67K favourable variance associated with the postponement of the FOGO trail. These funds will net-off against the Waste Reserve with the year-end transfer of funds calculation.
Various	Roads Maintenance	945,063	437,014	(508,049)	(116.3%)	17,024
The higher than normal costs are largely associated with storm damage clean-up costs stemming from the May 2020 storm events, where there has been $403K in extraordinary Material & Contractor costs incurred against Road Maintenance. In February, the City was notified that it will be in receipt of reimbursements that effectively cover and offset against this overspend. The Road Maintenance budget is being carefully managed exclusive of storm-related costs that have been reimbursed.
Various	Reserve Maintenance	1,370,498	1,706,772	336,274	19.7%	16,587
Significant volumes of works began on the City’s POS Reserves after the Easter public holidays with greater volumes of contractor invoices starting to flow through to the City. Included in the YTD variance is a one-off non-cash stock adjustment that when excluded reduces the YTD variance by $106K leaving $230k under expended to budget YTD. This grouping is comprised of 184 separate POS areas where some are over budget while others are under budget. The following areas are under expended to Contractor budgets YTD and thus explain the YTD variance: · Cultural Precinct $23k · Eastern Link Landscaped Area $20k for maintenance post construction. (will not be outlaid as project currently in progress) · Busselton Foreshore Area $73k · Provence Estate $34k · Vasse Newtown $31k · Vasse Kealy $25
5280	Transport - Fleet Management	1,438,627	1,672,689	234,062	14.0%	(32,959)
Fuel and Oil was underspent by $169,782 YTD accounting for 72% of the Fleet YTD variance. An end of year surplus is anticipated but will be less than was anticipated in the mid-year budget review as the fuel price has been on the rise. Fuel consumption across the City is now at its highest level as many large Civil works projects are now underway. Tyre purchases are underspent by $1,885 YTD and replacement parts/tooling/contractor costs are underspent $62,395 YTD.

5. Other Expenditure

$1.05M, or 31.3%, 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*		*68,368*	*100,217*	*31,849*	*31.8%*	*4,374*
10001	Office of the CEO	67,298	100,217	32,919	32.8%	4,631
The underspend relates to donations contributions and subsidies budget ($10K), CapeROC budget ($16K) and the CEO Discretionary Budget ($7K).
*Finance and Corporate Services*		*745,670*	*886,981*	*141,311*	*15.9%*	*(44,074)*
10000	Members of Council	433,702	499,478	65,776	13.2%	821
Timing variances exist in relation to the payment of elected member allowances and reimbursements. The main contributors being $23K related to timing variances in payment of sitting fees, the elected members training budget underspent by $16K, and no expenditure against the Council holding account with a YTD budget of $11K. The timing variances for expense reimbursements are difficult to predict when budgeting.
10151	Rates Administration	87,458	105,963	18,505	17.5%	(53,280)
Budget variances are due to interim valuation invoices still to be received.
10700	Public Relations	77,412	117,972	40,560	34.4%	8,424
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*		*1,021,633*	*2,028,854*	*1,007,221*	*49.6%*	*(19,806)*
10530	Events & Cultural Services Administration (formerly Community Services Administration)	484,819	649,773	164,954	25.4%	(12,480)
Funds currently committed from the 2020/21 events budget through multi-year agreements and Rounds 1 and 2 of the Event Sponsorship Program totals $380,562. In addition, $200,000 is allocated towards the development of an electronic events billboard. This leaves a balance of $205,852 in the 2020/21 events budget for any further event attraction or initiatives. This balance includes funds from cancelled events. Of the $250,000 allocated to the 2020/21 marketing budget, $120,000 has been allocated to the Airport Marketing Reserve, $50,000 to the Busselton Performing Arts and Convention Centre (BPACC), up to $12,000 had been allocated to update the City’s Events Strategy and up to $5,000 for the update of tourism signage, leaving a balance of $63,000 for any further initiatives. It is recommended that the remaining balance after any further allocations be transferred to the Airport Marketing Reserve. Of the $40,000 allocated to City run events, a total of $11,684 was spent on seven Sun-Sets on the Bay events in Busselton and Dunsborough. This leaves a balance of $28,316. Pending any further initiatives, the remaining balance at the end of financial year will remain in the Marketing and Area Promotion Reserve.
10532	BPACC Operations	11,668	50,000	38,332	76.7%	5,000
Low cost marketing materials have been developed to date and until final decisions are made regarding the project tenders, no large investments in event attraction will 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.
10550	Forrest Rally	-	12,500	12,500	100.0%	-
Forrest Rally organisers have advised that the event will not be proceeding from 2020/2021 onwards, therefore these funds will not be expended.
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	11,743	23,992	12,249	51.1%	(711)
Underspend is offset by additional wages due to in house production of marketing, promotional and interpretation work.
10630	Economic and Business Development Administration	3,440	39,346	35,906	91.3%	15,654
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, the City budgets 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-19 will not be spent by the end of the financial year.
10634	Business Support Program	72,522	97,988	25,466	26.0%	(1,092)
There are a number of grants that are being finalised by applicants. Once these have been completed, then the City 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 variance at year end.
11151	Airport Operations	5,276	420,741	415,465	98.7%	(5,148)
Relates to marketing activities for RPT services which have not commenced due to COVID.
*Planning and Development Services*		*152,894*	*158,152*	*5,258*	*3.3%*	*1,215*
10805	Planning Administration	29,148	55,000	25,852	47.0%	5,000
This variance relates to the façade refurbishment program which is not likely to have any additional projects / work costed to it this financial year as the City has not run the program as per normal because of unusually high workloads caused by the building stimulus.
10931	Protective Burning & Firebreaks-Reserves	3,804	16,115	12,311	76.4%	(790)
Due to the limited seasonal burning opportunities, the budget for catering for the crews has not been spent as expected YTD.
10942	Bushfire Risk Management Planning – DFES	23,466	-	(23,466)	(100.0%)	-
This represents repayment of unspent 19/20 BRMP grant funds.
*Engineering and Works Services*		*323,319*	*191,468*	*(131,851)*	*(68.9%)*	*(181,217)*
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. Final inspection of the toilet facilities was expected late March, after which the invoice should have been forthcoming.
G0042	BTS External Restoration Works	237,879	45,837	(192,042)	(419.0%)	(180,960)
There was an unforeseen cost increase in groundwater monitoring due to a laboratory error by our third party contractor. The round of testing conducted in November included the sampling of over 50 groundwater bores, many of which reported “anomalous results”. The contractor concluded that the lab had made errors in mis-labelling samples, which required re-sampling. Although the lab did not charge us for additional testing due to their error, the City incurred extra costs when it had to re-engage the contractor to re-test several dozen bores in January. The City’s Legal department is investigating whether compensation from the contractor can be pursued. In May, a legal settlement payout that was made in November 2020 was re-allocated from capital per advice from the Office of Auditor General, as these costs are not capital in nature.

6. Non-Operating Grants, Subsidies & Contributions

The negative variance of $8.6M 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*		*46,678*	*60,000*	*(13,322)*	*(22.2%)*	*(4,000)*
R0288	Locke Estate – Leaseholder Contributions	46,678	60,000	(13,322)	(22.2%)	(4,000)
*Community and Commercial Services*		*156,039*	*38,851*	*117,188*	*301.6%*	*133,039*
10590	Naturaliste Community Centre – Developer Contributions Utilised	23,000	-	23,000	100.0%	-
10900	Cultural Planning – Donated Assets	51,000	-	51,000	100.0%	51,000
C6025	Installation of Bird Netting – State Capital Grant	82,039	38,851	43,188	111.2%	82,039
*Planning and Development Services*		*502,478*	-	*502,478*	*100.0%*	-
10980	Other Law, Order & Public Safety – Donated Assets	8,231	-	8,231	100.0%	-
B1025	Yallingup Coastal Bushfire Brigade – Donated Assets	10,592	-	10,592	100.0%	-
C3223	Dunsborough Non-Potable Water Network – Federal Capital Grant	483,655	-	483,655	100.0%	-
*Engineering and Works Services*		*4,883,864*	*14,121,209*	*(9,237,345)*	*(65.4%)*	*(2,148,102)*
A0023	Kaloorup Road Bridge – 3381 – Donated Asset	-	936,000	(936,000)	(100.0%)	(936,000)
A0024	Boallia Road Bridge – 4854 – Donated Asset	-	1,009,000	(1,009,000)	(100.0%)	(1,009,000)
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 – Federal Capital Grant	-	5,175,000	(5,175,000)	(100.0%)	-
B9999	Donated Buildings (Micro-Brewery Public Toilets)	110,000	-	110,000	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%	-
C3116	Dawson Park (McIntyre St POS) – Developer Cont.	-	77,467	(77,467)	(100.0%)	-
F1022	Buayanyup Drain Shared Path – State Capital Grant	-	293,337	(293,337)	(100.0%)	(26,667)
S0005	Ludlow Hithergreen Road - Second Coat Seal – Main Roads Capital Grant	360,000	412,500	(52,500)	(12.7%)	(37,500)
S0048	Bussell Highway – Developer Cont. Utilised	200,000	458,337	(258,337)	(56.4%)	(41,667)
S0070	Peel & Queen Street Roundabout Service Relocation – Developer Cont. Utilised	320,000	800,000	(480,000)	(60.0%)	200,000
S0072	Kaloorup Road - Reconstruct and Seal Shoulders – Developer Cont. Utilised	100,000	-	100,000	100.0%	-
S0073	Gale Road Rural Reconstruction – Federal Capital Grant	515,811	1,258,114	(742,303)	(59.0%)	(114,374)
S0074	Causeway Road Duplication – Developer Cont. Utilised	800,000	300,000	500,000	166.7%	-
S0075	Local Road and Community Infrastructure Program – Federal Capital Grant	688,143	765,951	(77,808)	(10.2%)	-
S0076	Kaloorup Road (Stage 1) – Main Roads Direct Grant	106,800	-	106,800	100.0%	-
T0020	Capel Tutunup Road – RTR Capital Grant	-	1,307,834	(1,307,834)	(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%	-

7. Capital Expenditure

As at 31 May 2021, there is an underspend variance of 49.9%, or $22.2M, in total capital expenditure, with YTD actual at $22.3M against the YTD amended budget of $44.5M. 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*			*950*	*75,000*		*74,050*	*98.7%*	*(950)*
10610		Property Services Administration	950	75,000		74,050	98.7%	(950)
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*			*3,154,157*	*8,806,049*		*5,651,892*	*64.2%*	*1,718,980*
B9516		Busselton Library Upgrade	555,092	603,000		47,908	7.9%	36,350
Library works completed. Balance of funds to be directed to fit-out items.
B9300/1/2		Aged Housing Capital Improvements	64,128	179,600		115,472	64.3%	2,386
Budgeted works were proposed to separate power and drainage servicing Winderlup Court and Winderlup Villas. Whilst the power requirements are not triggered until the new conditional land title lots are created, the intention was to progress with this anyway. The procurement process has elicited one quotation only which, even if acceptable is unlikely to generate an invoice payable in the current financial year. As such the budgeted funds will be carried over in reserve to be utilised once appropriate contractual arrangements can be made.
B9402		Busselton Waste Transfer Station - Buildings	18,206	-		(18,206)	(100.0%)	(18,206)
A requirement arose for a 2.4 x 2.4 Transportable Ablution Block, and savings were identified in the budget for infrastructure that could be utilised for these purposes. This overspend variance will be offset by the identified underspends in infrastructure.
B9407		Busselton Senior Citizens	626,400	738,128		111,728	15.1%	(917)
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. The tender to perform these works has now been awarded, and is expected to be completed by the end of the financial year.
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	1,344,449	6,362,563		5,018,114	78.9%	1,637,768
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 pending final Council decision on the tenders.
B9596		GLC Building Improvements	62,543	450,681		388,138	86.1%	192,260
Carried over works from the prior year. Works have now been completed with reconciliation of the final progress claims expected to be completed in May. Payment should follow shortly thereafter and is expected to fully utilise this budget.
B9607	General Buildings Asset Renewal Allocation (Various Buildings)		112,921	137,500	24,579		17.9%	11,636
This budget was assigned for various Capital works as identified as per the City’s Building Asset Management Plan. Some items of expenditure have been for undertaking maintenance as opposed to Capital renewal works. To this end, $44k in costs incurred have been moved back and recorded against Operations in the June period. These major maintenance works will still be funded from the Building Reserve, however an under-expended position to budget will result against this item.
B9608	Demolition Allocation (Various Buildings)		-	12,500	12,500		100.0%	2,011
Funds were initially allocated to partial demolition of the Weld Theatre by the end of the financial year, in preparation for its integration with the BPACC. Final Council decision on this project is now pending due to further review of tenders.
B9610	Old Butter Factory		277,434	-	(277,434)		(100.0%)	(145,885)
Conservation and fire damage works were completed early in the financial year. A journal for $145k representing costs associated with the Wood Turners relocation to the Old Butter Factory site was processed in May and hence the end of month $277k unfavourable variance; this JNL has since been reversed back out in June bringing the variance back to its original $131k. An Insurance claim reimbursement totalling $99.4k offsets the true costs of $131k leaving a net over spent to budget of $32k come June 30.
B9612	Churchill Park Renew Sports Lights		181	140,000	139,819		99.9%	-
A review of consultants work to date has been undertaken and Council has endorsed a grant application to the State Government for this site. If the application is accepted (response expected in June), budgeted expenditure will be carried forward into the 21/22 budget year. If not, much of this budget will be spent by the end of this 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		3,416	39,237	35,821		91.3%	151
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*			*1,234,932*	*2,473,982*	*1,239,050*		*50.1%*	*(9,570)*
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. Suitable specifications have now been developed and quotes are being sought, however the new equipment is not expected to be delivered until August 2021. As such, these budgeted funds will remain in reserve and be relisted to be drawn in the 21/22 budget.

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.
11156	Airport Development Operations	199,403	259,512	60,109	23.2%		23,592
All baggage handling system invoices have been invoiced and paid. The remaining funds will be included in the outstanding Airport Development funding balance.
11162	Busselton Jetty - Underwater Observatory	17,523	-	(17,523)	(100.0%)		-
In February there was $17.5K in unplanned expenditure for an Uninterrupted Power Supply (UPS) for the Underwater Observatory (UWO) lift. This will be funded from the Jetty Reserve.
11401	Transport – Workshop	19,227	30,000	10,774	35.9%		-
The hardware for upgrades to the repeater at the communications tower has been delivered. Installation of these will be dependent upon receiving Telstra approvals, which is being worked through by Property and Leasing, but will take place in 21/22 FY.
11402	Plant Purchases (P10)	596,461	1,420,000	823,539	58.0%		-
Underspend variances to budget YTD are due to: · The new generators at DWF pond and cell that were ordered in April, with delivery of one unit in June and the second in July. (carryover listed in the 21/22 budget); · The waste manager’s new replacement vehicle to be ordered and delivered in May; · A waste truck side loader that has been ordered, but delivery/payment is not expected until August (this underspend saving will be a carry-forward purchase from the Plant Reserve in the 21/22 budget); · The waste compactor semi-trailer purchase has been deferred indefinitely pending development of the new waste plan.
11403	Plant Purchases (P11)	46,995	202,500	155,505	76.8%		2,500
One ute ordered with delivery delayed until July and one light truck ordered in December, delivery now delayed until July. Both listed as carryovers in the 21/22 budget.
11404	Plant Purchases (P12)	8,923	114,000	105,077	92.2%		(8,923)
One light truck ordered with delivery expected in July. Listed as carryover in the 21/22 budget.
11407	P&E - P&G Smart Technologies	-	91,663	91,663		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.
*Furniture & Office Equipment*		*449,887*	*458,088*	*8,201*		*1.8%*	*(176,068)*
10250	Information & Communication Technology Services	262,104	407,088	144,984		35.6%	(47,182)
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, and online payments. It is however expected that some projects, including portions of the website build and laptop replacements will be carried over to the subsequent financial year. The funding for these elements will also remain in reserve and be carried over to fund the expenditure when it occurs.

Various	Parks, Gardens & Reserves	4,688,523	10,195,699	5,507,176	54.0%	81,733
79% representing $4.373M of the YTD variance in this category is attributable to only the four projects listed below: 1. Dunsborough Lakes Sporting Precinct (Stage 1); Civil works to begin soon but the majority of the budget to be carried over and added to Stage 2. 2. Craig Street Groyne and Sea Wall; works progressing with progress claims anticipated in both May and June. 3. Site Rehabilitation – Busselton; works postponed in lieu of site settling, survey and levelling. 4. Mitchell Park Upgrade; works commenced but the contractor went into Administration with the majority of this Budget to be carried over into the 2022 Financial year. Further to the above, in excess of $1M of the YTD variance is attributable to the numerous Public Open Space upgrade projects using Cash in Lieu of Public Open Space contributions; these works will commence in the 2022 Financial Year.
Various	Drainage	33,552	89,019	55,467	62.3%	3,396
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	269,234	790,895	521,661	66.0%	(15,115)
The car park works have been completed but not paid at the time of this report. 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 remain on the Airport development budget for future noise amelioration. Unspent funds will therefore remain in the reserve.

8. Proceeds From Sale of Assets

YTD proceeds from sale of assets is $242K 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.

9. Proceeds From New Loans

$7.5M of the budgeted proceeds of $7.7M are related to the planned drawdown on the construction loan for the BPACC. This project has been deferred in consultation with the Federal Government. The tender process has been completed and Council is now reviewing its options regarding this project. No drawdown is expected this financial year.

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

10. 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 YTD will rectify by the end of June.

11. Advances to Community Groups

No applications have been approved 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.

12. Transfer to Restricted Assets

There is a YTD variance in transfers to restricted assets of $5.4M more than amended budget.

At the time of budgeting it is not possible to predict what grants will be received in what timeframe, nor when they will be spent and hence potentially transferred to restricted assets beforehand. The following grants, totaling $2.5M, have been received and transferred to restricted assets for which there is no budgeted transfer and full acquittal completed:

· 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 and another $200K received in March. Budget projected allocation was in June as was the anticipated expenditure, hence no necessity to budget for a transfer to restricted assets;

· $841K of the $1.6M grant for the Dunsborough Lakes Sporting Fields Development was received in March;

· $855K 3^rd instalment of the annual Roads to Recovery Grant allocation that has not been fully acquitted by YTD March;

· $128K from the Department of Transport for the Buayanyup Drain Shared Path project.

Developer contributions, deposits and bonds are inherently hard to predict and budget for. An annual amount of $63K spread evenly over 12 months was budgeted, however over $2.9M has been received YTD, the bulk of which are for road works bonds ($2.4M).

13. Transfer from Restricted Assets

YTD there has been $2.6M transferred from restricted assets into the Municipal Account. This was mainly attributable to refunds of road work bonds of $1.5M, refund of hall deposits of $28K, Busselton Jetty Tourist Park deposit refunds of $394K, $507K spent from the Dunsborough Non-Potable Water Network grant, $130K of town planning bonds, and other sundry refunds of $53K.

The variance to YTD budget for these items is due to majority of the transfers being forecast to occur in June.

14. Transfer from Reserves

YTD there has been $9.7M transferred from reserves into the Municipal Account, compared to a budget of $6.1M. The discrepancy is caused by the earlier than expected completion of many reserve funded capital projects, most notably $2.8M of road works, with the transfers budgeted to occur in June.

Investment Report

As at 31 May 2021, the value of the City’s invested funds totalled $80.3M, no change from $82.2M as at 30 April 2021.

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 constant at $7.0M.

During the month of May five term deposits totalling the amount of $10.5M matured. One deposit was closed totalling $2.0M to provide funds for standard operations. Remaining deposits were renewed for a further 153 days at 0.32% on average.

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

Date		Payee	Description	$ Amount
5/05/21	OCEAN CENTRE HOTEL GERALDTON		ACCOMMODATION - TOURISM COUNCIL WA REGIONAL CONFERENCE - MAYOR G. HENLEY		$340.00
5/05/21	OCEAN CENTRE HOTEL GERALDTON		ACCOMMODATION - TOURISM COUNCIL WA REGIONAL CONFERENCE- CR K. COX		$376.50
6/05/21	THAI LEMONGRASS		COUNCILLOR DINNER 5.05.2021		$400.00
14/05/21	ZONTA CLUB DUNSBOROUGH		PEARL ANNIVERSARY LUNCH 12.06.21		$70.00
18/05/21	LG PROFESSIONALS WA		NETWORK FORUM 2021 REGISTRATION - STAFF		$400.00
			TOTAL		$1,586.50

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

As at 31 May 2021, the City’s net current position stands at $4.96M. The City’s financial performance is considered satisfactory, and cash reserves remain strong.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.

Finance Committee 61 21 July 2021

6.3 APPLICATION FOR RATE EXEMPTION - GROUP TRAINING SOUTH WEST INC.

STRATEGIC THEME	LEADERSHIP - A Council that connects with the community and is accountable in its decision making.
STRATEGIC PRIORITY	4.2 Deliver governance systems that facilitate open, ethical and transparent decision making.
SUBJECT INDEX	Rates & Exemptions
BUSINESS UNIT	Finance and Corporate Services
REPORTING OFFICER	Rates Coordinator - David Nicholson
AUTHORISING OFFICER	Manager Governance and Corporate Services - Sarah Pierson
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	Absolute Majority
ATTACHMENTS	Attachment a Rate Exemption Application⇩ Attachment b Property Use Statement⇩ Attachment c Financial Statements ⇩

OFFICER RECOMMENDATION

That the Council:

1. Grant rate exemption to Group Training South West Inc. for 1/18 Trumper Drive Busselton, effective 16 December 2020, under section 6.26(2)(g) of the Local Government Act 1995; and

2. Agree that this rate exemption is to continue where Group Training South West Inc. confirm in writing by 30 April annually that they continue use the property for the purposes stated in the application.

EXECUTIVE SUMMARY

An application seeking rate exemption on 1/18 Trumper Drive, Busselton (the Property) was received from Group Training South West Inc. (GTSW) on 16 December 2020 (Attachment A). The Property is owned by GTSW and is used predominately to deliver training and education for apprentices and students. In accordance with the GTSW “Property Use” statement (Attachment B), the Property is also used to provide other services. Based on GTSW’s financial report, the majority of its income is from client receipts for the services it provides. As education is defined as a charitable purpose, this report recommends that rate exemption be granted under section 6.26(2)(g) of the Local Government Act 1995 (the Act) effective from 16 December 2020, when the application was received.

BACKGROUND

On 16 December 2020, the City received an application from GTSW seeking rate exemption on 1/18 Trumper Drive, Busselton. Despite having owned the Property since June 2000, this is the first time GTSW has lodged a rate exemption application with the City.

GTSW is a “not-for-profit” organisation and has been deemed income tax exempt by the Australian Taxation Office.

The training, education and other services provided by GTSW are almost wholly funded from customer receipts, therefore careful consideration of GTSW’s eligibility for rate exemption has been undertaken by City officers. Having completed this assessment, officers consider GTSW to be eligible for rate exemption.

Engagement with Western Australian Local Government Association (WALGA)

With respect more broadly to rate exemptions for charitable organisations, following a Council resolution in May 2019, the Mayor raised this issue with the South West Zone of WALGA (SWZ) at its meeting, also in May 2019. The SWZ supported the City of Busselton’s view unanimously and resolved as follows:

That the SWZ:

1. Request that WALGA continue to lobby the State Government to consider the removal of rate exemptions for charitable organisations under the Local Government Act 1995 and that an alternative position may be implementing a rebate similar to the Pensioners and Seniors Rebate Scheme.

In response to the SWZ’s resolution, WALGA advised that the SWZ’s position is consistent with the following long-held sector position that:

1. There is a need to amend the Local Government Act to clarify that Independent Living Units should only be exempt from rates where they qualify under the Commonwealth Aged Care Act 1997; and

2. Either:

a. amend the charitable organisations section of the Local Government Act 1995 to eliminate exemptions for commercial (non-charitable) business activities of charitable organisations; or

b. establish a compensatory fund for Local Governments, similar to the pensioner discount provisions, if the State Government believes charitable organisations remain exempt from payment of Local Government rates.

WALGA also added to its submission to the State Government following the consultation on phase 2 of the review of the Act:

Request that a broad review be conducted into the justification and fairness of all rating exemption categories currently prescribed under Section 6.26 of the Local Government Act.

WALGA’s advocacy position has not changed in relation to this issue and it continues to push for meaningful legislative change in this area. Until then, however, the current approach to rate exemptions due to charitable purpose remains in place.

OFFICER COMMENT

In accordance with Section 6.26(2)(g) of the Act, land is not rateable if it is used exclusively for charitable purposes.

Rate exemption applications need only to be considered in two parts. The first part is to assess whether the use itself is “charitable” and the second part is to determine whether the property is being used “exclusively” for such a charitable use.

In considering the first part, that is, ‘are the operations of GTSW considered to be a charitable use’, legal opinions have been consistent in defining a charitable purpose as land used for:

1. The relief of poverty;

2. The advancement of education;

3. The advancement of religion; and

4. Other purposes beneficial to the community.

The Property has been owned by GTSW since at least June 2000 and is used to provide training, educational and apprenticeship services. These services are provided on a “fee for service” basis with only 11% of GTSW income in 2020 being derived from Government Grants. Despite the majority of income being derived from fees, the educational services provided by GTSW is considered to be charitable in nature, being the advancement of education.

In considering the second part, that is, ‘is the property being exclusively used for a charitable purpose’; this criteria is being met by GTSW as they are the sole owner of the property and due to the services that they provide from the property.

It is noted that, in addition to owning the Property in Busselton, GTSW owns and/or occupies five other properties in the City of Bunbury and that the City of Bunbury have granted rate exemptions on each property.

No physical inspection of the Property has been carried out, as its rating classification and the statutory declaration of the Property’s use (contained in the application at Attachment A) is considered to be sufficient.

Statutory Environment

Section 6.26(2)(g) of the Act specifically states that land used exclusively for charitable purposes is not rateable.

Relevant Plans and Policies

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

Financial Implications

If rate exemption is denied, then there may be costs incurred by the City if GTSW was to apply to the State Administrative Tribunal for a review of Council’s decision.

If the rate exemption is granted from 16 December 2020, then Council’s rating income would reduce by $924 for the 2020/21 financial year and approximately $1,993 plus any rate increases for each financial year thereafter.

Stakeholder Consultation

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

Risk Assessment

That being said, if Council choses to not grant rate exemption, then staffing and/or legal costs may be incurred if the applicant refers the matter to the State Administrative Tribunal (SAT) for a review of the decision.

Options

As an alternative to the proposed recommendation, the Council could decline the rate exemption application on the basis that it considers the property to be rateable under the Act. This is not recommended based on the definition of a charitable purpose and risks associated with declining the application as stated above.

CONCLUSION

It is considered that the services provided by GTSW would be defined as an advancement of education and therefore charitable in nature. In these circumstances, 1/18 Trumper Drive, Busselton, is eligible for rate exemption under section 6.26(2)(g) of the Act.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

If rate exemption is granted on 1/18 Trumper Drive, Busselton, then it would be applied effective from 16 December 2020, being the date the application was lodged, and implemented within 1 to 2 weeks of Council’s decision.

10360	Customer Services	21,278	43,196	21,918	50.7%	2,093
· Photocopying – The Finance team going paperless has had a significant impact on the City’s 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 been 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. The City still orders 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	113,056	136,265	23,209	17.0%	81,515
Expenditure on various reactive legal matters have not required as much expenditure as originally anticipated.
10616, 10617 & 10618	Aged Housing	84,514	129,811	45,297	34.9%	1,458
Lower than expected maintenance costs to the end of the reporting period. Less reactive maintenance for FY to date.
Community and Commercial Services		*1,357,176*	*2,000,538*	*643,362*	*32.2%*	*(84,115)*
10380	Busselton Library	55,269	106,102	50,833	47.9%	1,618
· Non-capital Furniture & Office Equipment – Offsets an overspend in 7743 due to capitalisation of shelving/furniture purchases. (Purchase Order 49449 raised, $6,063 deposit has been paid, with the remaining funds in process of being rolled over into the 2021/22 budget). · Contractors (Inc Contract staff) - $8,000 underspend to offset $8,000 grant income not received (Be Connected Grant). · Entity Specific Consumables – The coffee machine has been disposed of, which means that there will be no expenditure, and no offset income.
10381	Dunsborough Library	21,591	33,808	12,217	36.1%	72
· Contractors – Currently chasing up annual carpet cleaning with Facilities who have now assumed responsibility for scheduling annual carpet cleaning. · Other Computer costs - $1,800 networking costs no longer required. · Photocopying – centralised purchases have not been allocated correctly. · Library Resources – expenditure has increased and monies will be spent (annual expenditure patterns were delayed due to RFQ process earlier in the year).
10540	Recreation Administration	15,534	44,348	28,814	65.0%	(1,686)
The City’s application to the State Government for the 2021 & 2022 Every Club grants was successful. Grant deeds have been received and executed. It is envisaged that $15K of the $30K that has been invoiced will need to be rolled into next FY to fund the new Community and Recreation service trainee and the remaining $15K will be expended on delivering the program through workshops.
10541	Recreation Planning	2,930	139,750	136,820	97.9%	3,087
Timing of expenditure was awaiting the outcomes of external grant applications. During February grant deeds were finalised, however the scope of work will not be finalised with the preferred consultant until June. It is estimated that this will absorb approximately $70K of the underspend variance by EOFY.

10590	Naturaliste Community Centre	48,927	85,491	36,564	42.8%	777
Variance primarily due to line items below: · Photocopying – $2.25K this budget allowance has been offset by IT as an expense within their budget. · Licence Fees - $4.3K underspend, likely to remain at approximately $3.5K by EOFY. · Contractors – $9.3K underspend, pending storage works commencing/completion at NCC in June to expend this area. · Holiday Program – $7.3K underspend, likely to result in $5K underspend due to reduced program this year. · Leisure Program Activities – $1.4K underspend, this will be expended by EOFY. It is anticipated that there will be an overall underspend in these areas by the EOFY.
10591	Geographe Leisure Centre	270,288	329,130	58,842	17.9%	(568)
Variance primarily due to line items below: · Building Maintenance Services & Contractors – $21K underspend, delay in securing contractors to do works required – will know more once May EOM financials are finalised. · Garden Maintenance – $1.1K underspend, invoice timing. · Swimming Pool Maintenance/Repairs – $5K underspend likely to remain if no breakdown of equipment in June. · Photocopying – $8.5K this budget allowance has been offset by IT as an expense within their budget so will not be expensed. · Printing – $2.8K – this will be expended. · License Fees – $8.6K underspend, likely to be $4K underspend by EOFY due to cancelled Crossfit licence. · Non-Capital Furniture & Office Equipment – $9.6K underspend, pending works likely to expend this by EOFY. · Holiday Program – $2.3K underspend, will be expensed for items for July program. · Leisure Program Activities – $5.6K underspend, this will be expended by EOFY. It is anticipated that there will be an overall underspend in these areas by the EOFY.
10600	Busselton Jetty Tourist Park	399,056	532,598	133,542	25.1%	47,056
The variance can be attributed to two outstanding monthly management fee invoices ($41,125 – runs one month in arrears), due to presentation and payment of the invoice. Other expenditure that has not occurred falling within Materials & Contracts are related to non-scheduled maintenance, garden maintenance, purchase of materials, and savings in cleaning materials and disposal of waste fees.
10625	Art Geo Administration	49,781	61,461	11,680	19.0%	3,270
Over half of the underspend in ArtGeo is due to unallocated centralised costs for printing and photocopy. The remainder is due to using in house design resources instead of outsourcing to produce signage and interpretation and therefore these underspends are offset in additional wages.

10630	Economic and Business Development Administration	49,177	103,922	54,745	52.7%	16,197
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, the City budgets for advertising and marketing, but needs to wait for relevant opportunities to arise throughout the year that may not necessarily align with budget timing. A further $20,114.00 is to be invoiced (Pracsys Economics for Industry Sector Analysis) in June and a couple of smaller amounts leaving a total variance of approx. $19k by year end.
11151	Airport Operations	198,949	283,110	84,161	29.7%	(8,710)
The budget variance YTD includes the key allocations of: · Security screening of $45K not spent. · Car park design, signage, line marking, repairs and maintenance of approximately $28K. The remainder of the variance relates to commitments for: · COVID screens $6,500. · Apron lighting repairs of approximately $3K. · General grounds maintenance and improvements of approximately $4K. · Technical inspections $5,500.
B1361	YCAB (Youth Precinct Foreshore)	37,822	52,129	14,307	27.4%	19
Operating grants forecast were not available as planned and therefore associated expenditure has not occurred. Alternative funding was sourced to run a program in Dunsborough which commenced in February and March. Full invoicing for these activities has not as yet been received, and is also not expected to come in as high as what was originally forecast based on the grant funding.
Planning and Development Services		*1,026,607*	*1,840,512*	*813,905*	*44.2%*	*58,919*
10810	Statutory Planning	15,669	31,207	15,538	49.8%	2,744
Not possible to predict when consultancy services will be required in advance. In this case, funds have been committed (heritage and traffic advice) but invoices not received.
10820	Strategic Planning	174,859	222,222	47,363	21.3%	2,273
Estimated revenues (re-zonings, structure plans) and anticipated consultant contracts (for specialised works seen as likely to be needed for scheduled City projects) are often quite difficult to predict as they are subject to third-party intentions and initiatives, or competing demands and task allocation/prioritisation at the City.
10830	Environmental Management Administration	320,896	487,535	166,639	34.2%	(15,871)
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; and · Carbunup reserve contaminated site investigations due May 2021. Awaiting a number of significant invoices to complete contracts within early June and all outstanding payments will be reconciled prior to the EOFY.

10920	Environmental Health Services Administration	3,306	38,881	35,575	91.5%	(210)
There is an error in the timing of the YTD budget. The full year for contractors is only $5K, however YTD shows $20K, as a budget credit of $15K was processed in June. The YTD variance for this whole area is actually $14,376. The reasons for this $14K underspend include the contractor allocation of $5K to implement audit outcomes being done in house, plus very minimal pre-summer assessments of sound level meters, revealing little to no faults requiring repair, due to 2020 COVID event cancellations.
10922	Preventative Services – Mosquitoes	18,774	35,532	16,758	47.2%	221
Variance is attributed to: · Contractors – $1853 underspend due to reduced mosquito trapping being undertaken by contractor. · Consultants – No spend i.e. saving - this allocation was to create a mosquito management plan by consultants, internal staff developed the plan instead. · Chemicals – $8,048 funds available this has been spent as additional chemical were purchased in June and has been paid, In 2020/21, the allocation should be fully expended YTD. · Equipment Repairs & Maintenance – $932 saving due to mosquito trap servicing was not required, only batteries were purchased. · Photocopying – $300 saving as photocopying expenses have not been/needed to be allocated to this cost code.
10925	Preventative Services – CLAG	119,098	57,913	(61,185)	(105.6%)	83
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	86,150	498,564	412,414	82.7%	42,912
Spring and Autumn burning mitigation programs now complete with all expenses currently being reconciled. Mechanical mitigation program of approximately $80,000 commence on Monday 3^rd May with invoicing for works completed expected to be received in the month of May. All funds expected to be spent by end of FY. Awaiting a number of significant invoices to complete contracts for mitigation works in June. Brigade payments are also being completed for works within 20/21. All outstanding payments will be reconciled prior to the EOFY.
10942	Bushfire Risk Management Planning – DFES	155	12,738	12,583	98.8%	1,158
Awaiting final plant costings and reconciliation will be completed and submitted.
11170	Meelup Regional Park	76,255	174,575	98,320	56.3%	7,267
Expenditure variance due to timing of awarding Cultural Heritage Assessment (CHA) contract as part of the Meelup Regional Park Management Plan review. Initial request for services did not attract a suitable service provider, delaying the project. Contract for CHA awarded 20 April 2021. $60,000 for Meelup Healthy Country Plan has been approved for relisting in 2021/22, due to timing of completion being extended. No expenses for this will appear within the 20/21 financial year.
B1010-B1028	Bushfire Brigades – Various	113,247	139,854	26,607	19.0%	9,517
Emergency operations dependent. YTD actuals vs budget will vary according to emergency operational requirements, and are inherently difficult to predict. All brigade payments will be completed prior to the EOFY and are currently being reconciled.

Engineering and Works Services		*8,471,040*	*10,082,989*	*1,611,950*	*16.0%*	*45,375*
11160/1/2	Busselton Jetty	16,834	29,788	12,954	43.5%	2,259
$32.5k was included on the Jetty budget for Contractor costs for miscellaneous repairs and maintenance and for the replacement of small items under $5,000 as and when required. This budget is used for the replacement of bins, vandalism repairs, minor painting, jetty signage etc. YTD there has been less expenditure of this type than in prior years.
12600	Street & Drain Cleaning	292,881	401,258	108,377	27.0%	(73,888)
Year to date expenditure for these services began tracking back to budget in May and will continue to do so in June, pursuant to pre-rainy-season drain abduction works that commenced in mid to late April. These works ensure drains are free of debris to mitigate against flooding. This leaves $107K in ongoing works to be invoiced in the final month of June with these works ongoing. This budget is anticipated to be fully expended as at 30 June.
12620 & 12621	Rural & Urban Tree Pruning	147,521	346,500	198,979	57.4%	25,907
$247K of expenditure for rural tree pruning and for the removal of urban dead trees and debris was withheld to help offset storm damage clean-up costs incurred in relation to the May 2020 storms. In February 2021 it was confirmed that the City had secured storm claim reimbursement revenue and thus this budget was reinstated. Contractor availability meant that the Rural Tree Pruning budget will be under expended by approx. $150k come June 30. The CEO has notionally agreed that this budget can be carried over into the 2022 financial year. In the wake of the Yallingup fires a further $150k was approved to be spent on cleaning up the verges of rural single access roads. These costs were coded against the individual roads and these works will be completed by June 30.
Various	Bridge Maintenance	29,399	166,111	136,712	82.3%	7,521
Expenditure on Bridge Maintenance activities was also withheld to the value of $105K to help offset May 2020 storm damage related costs. With the storm costs now having been reimbursed, the budget has been reinstated. It’s difficult to secure Contractor availability for these types of specialised works at short notice; to this end some of the budget will remain unused. $90k of this unspent budget will be carried over into 2022.
Various	Building Maintenance	1,205,451	1,302,653	97,202	7.5%	(39,654)
The year to date underspend variance associated with Building Maintenance decreased by a further $40K in May to $97K. Scheduled maintenance activities on various buildings have been in progress post the busy Easter holiday period. Expenditure has exceeded budget on some buildings while being under budget on others. Come June 30 the majority of this budget will have been outlaid.
Various	Other Infrastructure Maintenance	1,186,834	1,582,680	395,846	25.0%	(12,616)
This category encompasses the consolidation of almost 100 individual Cost Codes representing a unique array of services delivered right across the City. It 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; cycleways and footpaths etc. The $396K YTD expenditure variance to budget at the end of May is mostly attributable to timing with the budget having been evenly spread across the financial year. Urban Street lighting installations and the Rural Intersection lighting budgets are under expended to budget $118k; most of this budget will be outlaid come June 30. The Boat Ramp Contractor maintenance budget is under spent to budget by $36k with much of this not anticipated to be outlaid come June 30. The remaining budget for both Strategic Fire Breaks – Maintenance $18k and Cycleway Maintenance Busselton $22k will have been utilised come June 30.

Finance Committee		8		21 July 2021
6.1	Attachment a		List of Payments May 2021

10591	Geographe Leisure Centre	71,380	20,000	(51,380)	(256.9%)	(51,620)
Pool covers worth $51K were purchased. The overspend in this budget area is offset by forecast underspends in the GLC building upgrade area.
10900	Cultural Planning	56,000	12,000	(44,000)	(366.7%)	(44,000)
Completion of the Slippery Rocks bronze sculpture for $51K, plus $5K for the winning sculpture competition.
*Infrastructure By Class*
Various	Roads	10,876,579	14,245,367	3,368,788	23.6%	(332,156)
Major civil road construction works are now underway in many locations across the City by both the City’s two road construction teams and Contractors. The large Gale Rural Road project originally estimated at $1.437M has commenced and is nearing completion; it is estimated to come in under budget by approx. $400K; due to competitive contractor pricing. There will also an underspend associated with the Peel & Queen Street Roundabout project (S0070) valued at $1.2M as the majority of these works will be carried over into 2022. Stage 1 Blackspot works on Kaloorup Road vales at $410k although recently started will also not be completed by June 30. These projects are contributing to the current $3.368M YTD variance. The projects below comprise 83% of the variance. · S0076 Kaloorup Road (Stage 1) $366,987 · S0073 Gale Road Rural Reconstruction $485,860 · S0048 Bussell Highway $554,347 · T0020 Capel Tutunup Road $622,596 · S0070 Peel & Queen Street Roundabout $771,099 TOTAL YTD underspent to budget $2,800,887
Various	Bridges	4,872	4,303,489	4,298,617	99.9%	2,091,624
Although Bridge renewal works will be done on both the Bussell Highway and Yallingup Beach Road bridges this financial year it is unlikely any expenditure will be recorded due to the requirement for formal notification of completion from Main Roads and of invoices from them. Main Roads carry out these works on behalf of the City. Works on the Kaloorup, Boallia Road and Tuart Drive Bridges are now scheduled to commence in the 2022 Financial year. To this end an under expended variance to budget totalling $6.4M is anticipated come 30 June. All 5 bridge projects will represent carry overs.
Various	Car Parks	1,222,880	1,709,053	486,173	28.4%	34,754
Car Park projects are generally progressing well although there is a $486K under expended variance to budget YTD. 54% of the YTD variance is attributable solely to the Car Parking associated with the Barnard East Development with the majority of construction to occur in 2022. Both the Baudin Memorial & Administration Building Carpark projects will start in earnest and are scheduled to be completed by June 30; they have a combined YTD variance to budget of $152k.
Various	Footpaths & Cycleways	330,241	1,316,335	986,094	74.9%	24,852
The YTD variance associated with Footpath & Cycleway projects grew by a further $24.8K to the end of May. This is primarily attributable to the Buayanyup Drain Shared Path project that is soon to commence which represents 58%, or $576K of the YTD variance. There has been a number of unforeseen complexities associated with this project. An extension to the 50% Regional Bike Network grant associated with this project has been secured and the project is scheduled to be completed by the end of July 2021. Contributing a further $232K in combined under expenditure to budget are the Bussell Highway Footpath Sections Project and the Dunsborough Centennial Park Footpath Project where the budget for these have been earmarked and re-assigned to cover additional Queen Street Paving costs.

Finance Committee		57		21 July 2021
6.2	Attachment b		Investment Report - May 2021

Finance Committee		101		21 July 2021
6.3	Attachment c		Financial Statements