Late Reports Agenda of Council Briefing

Council Briefing Agenda 27 February 2018

7 Corporate Services

7.8 LATE REPORT: Mid-Year Review of the Annual Budget 2017/18

TRIM Ref: D18/11783

Author: Vanisha Govender, Manager Financial Services

Authoriser: Kerryn Batten, Director Corporate Services

Attachments: 1. Statement of Comprehensive Income by Nature and Type ⇩

2. Rate Setting Statement ⇩

3. Statement of Comprehensive Income by Nature and Type - List of Budget Amendments ⇩

4. Operating Projects and Programs - List of Budget Amendments ⇩

5. List of Capital Expenditure Amendments ⇩

6. Reserve Schedule ⇩

RECommendation:

That Council ADOPTS BY AN ABSOLUTE MAJORITY the Mid-Year Budget Review of the Annual Budget for the 2017/18 financial year as detailed in the report and Attachments 1 – 6, in accordance with Regulation 33A of the Local Government (Financial Management) Regulations 1996.

Purpose of Report:

To consider the Mid-Year Review of the Annual Budget for 2017/18.

Background:

The Local Government Act 1995 and Regulation 33A of the Local Government (Financial Management) Regulations 1996 requires that a Local Government undertakes a review of its annual budget for that year between 1 January and 31 March.

The budget review must then be submitted to the Department of Local Government, Sport and Cultural Industries (the Department) within 30 days after Council has made its determination. The Department does not prescribe a format for the budget review, however the Regulations prescribe that the review 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

Council is to consider the review and is to determine whether or not to adopt the review, any parts of the review or any recommendations made in the review.

Details:

A detailed review has been undertaken based on the actual year to date income and expenditure to 31 December 2017, with projections made to forecast the likely end of financial year result compared to the current budget.

Based on the input from across the organisation, various adjustments have been proposed. The ‘Proposed Revised Budget 2017/18’, which is inclusive of previously endorsed amendments by Council together with recommendations from the Mid-Year Review, is detailed in the following attachments:

· Statement of Comprehensive Income by Nature and Type (Attachment 1); and

· Rate Setting Statement (Attachment 2).

For comparison purposes, the above statements include the following data:

· Previous Year Actuals 2016/17: the actual income and expenditure for the previous financial year;

· Adopted Full Year Budget 2017/18: the original 2017/18 budget adopted by Council in July 2017;

· Current Full Year Budget 2017/18: the original budget, including amendments subsequently approved by Council;

· YTD Actuals at December 2017: actual income and expenditure recorded for the period 1 July 2017 to 31 December 2017; and

· Revised Budget Change 2017/18: the net difference between the Current Full Year Budget 2017/18 and the Proposed Revised Budget 2017/18.

The forecast Net Result from Operations, as detailed in Attachment 1, is a deficit of $3.16 million, prior to adding back non-operating grants and subsidies and profit on disposal of assets of $3.15m. The revised overall forecast Net Result from Operations is a deficit of $16,000, compared to the Current Budget forecast Net Result of a $1.03 million surplus. This variance is primarily comprised of increases in:

· Depreciation arising from asset revaluations, which are a statutory requirement as per AASB13 – Fair Value Measurement, and the Local Government (Financial Management) Regulations 1996 ($582k/6% increase);

· Employee Costs ($170k/0.06% increase);

· Materials and Contracts expenses ($172k/.09% increase); and

· Insurance Costs largely arising from back dated workers compensation premiums ($100k/11% increase).

Details of proposed revisions to the operating budget are listed on Attachment 3 – Supporting Schedule: Nature and Type Amendments.

As a result of the review of the Capital Works Program, the Proposed Revised Capital Budget is projected to be $12.69 million, which represents a reduction of $0.68 million. Full details of capital projects where the budget is being reviewed are listed on Attachment 5 – Supporting Schedule: Capital Expenditure Amendments.

Budgeted Transfers from Reserves is proposed to be reduced by $189,777 linked to the reduction in capital works. Transfers to Asset Sustainability Reserves are forecast to increase by $551,301.

Surplus

As shown in the Rate Setting Statement (Attachment 2), the overall impact of all proposed Budget amendments is a projected balanced budget as at the end of the 2017-18 financial year.

Consultation/Advertising:

The Chief Executive Officer, Directors and Managers, as well as other Officers where required, have been consulted and involved in the detailed review.

Legal/Policy:

The Local Government Act 1995 requires that a budget review be undertaken each financial year, in the period between January and March of a financial year.

Regulation 33A of the Local Government (Financial Management) Regulations 1996 requires:

(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.

*Absolute majority required.

(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.

RISK MANAGEMENT:

High: Failure to undertake a Budget review in the period between January and March in any financial year would be a breach of the Local Government Act (1995).

Strategic Implications:

Plan for the Future Strategic Plan 2013-2023 - Key Result Area 4 – Leadership, Governance and Management:

“4.1 Provide Good Strategic Decision-Making, Governance, Leadership and Professional Management:

4.1.2 Manage the organisation in a responsible, efficient and accountable manner

(a) Continue to adopt best practise to ensure the financial resources and assets of the City are responsibly managed…”

SUSTAINABILITY IMPLICATIONS:

Not applicable.

Financial/Budget Implications:

Other than Depreciation, which is related to asset valuations, there were no significant budget adjustments, and no material financial implications for the City.

Council Briefing Agenda 27 February 2018

9 Chief Executive Officer

9.1 LATE REPORT: Corporate Business Plan Progress Update

TRIM Ref: D18/27498

Author: Len Kosova, Chief Executive Officer

Authoriser: Len Kosova, Chief Executive Officer

Attachments: 1. Corporate Business Plan Progress Update Table ⇩

Recommendation:

That Council RECEIVES the Progress Report for the City of Vincent Corporate Business Plan 2017/18 – 2020/21 included as Attachment 1.

Purpose of Report:

To consider a progress update on the City’s Corporate Business Plan 2017/18 – 2020/21 (see Attachment 1).

BACKGROUND:

Council adopted the City of Vincent Corporate Business Plan 2017/18 – 2020/21 (CBP) at its meeting of 25 July 2017 (Agenda Item 13.1). This report represents the first progress update on the CBP since its adoption.

DETAILS:

Administration has reviewed the status of each individual project in the CBP, as at 23 February 2018, and the results of that review are included in the Progress Update Table included as Attachment 1.

The Table in Attachment 1 includes the same project information as contained in the CBP, except for the following changes:

· The “Comments” column in the CBP has been replaced with a “Progress Update” column, which provides commentary on the progress of each CBP project;

· A colour coded dot has been applied to the right-hand margin corresponding to each project, to enable the reader to identify “at a glance” the project status, as follows – a green dot denotes the project has been completed or is on track; an orange dot denotes the project has been delayed; and a red dot denotes the project is at risk of not being completed in the anticipated timeframe. Where no action was required or planned for a particular project in 2017/18 in the CBP the “Progress Update” column states “No action required in 2017/18” and a dash (-) is shown in the right-hand “at a glance” margin.

CONSULTATION/ADVERTISING:

All relevant staff have contributed to the Progress Update Table shown in Attachment 1.

LEGAL/POLICY:

Requirements relating to the preparation of an annual review of the CBP are set out in Regulation 19DA of the Local Government (Administration) Regulations 1996. The annual review of the CBP will occur separately to this progress report and prior to or concurrent with Council’s adoption of the 2018/19 Budget.

RISK MANAGEMENT IMPLICATIONS:

Low: This Progress Update does not propose any additional initiatives or change to the City’s Corporate Business Plan. The City is required to review its Corporate Business Plan annually which will be presented to Council later this year.

Corporate business planning helps to manage risk to the City of Vincent by ensuring that commitments align with Council’s strategic direction and are sufficiently matched to the City’s resourcing capability to deliver projects and services successfully.

STRATEGIC IMPLICATIONS:

The Corporate Business Plan 2017/18 – 2020/21 reflects the strategic direction set by Council’s priorities and the four Key Result Areas and Objectives of the City’s Strategic Community Plan 2013 – 2023. Notably, the City’s new Strategic Community Plan is expected to be presented to Council for adoption by June 2018, after first being advertised for public comment.

SUSTAINABILITY IMPLICATIONS:

Nil.

FINANCIAL/BUDGET IMPLICATIONS:

The Corporate Business Plan priorities are reflected in the Annual Budget for 2017/18 and Long Term Financial Plan for future financial years.

COMMENTS:

The CBP reflects a significant amount of work to be undertaken by the City in the current financial year. Of the 66 projects listed in the CBP, almost three-quarters (49 in total) are listed for commencement or completion in 2017/18.

As stated on page 6 of the CBP, the CBP is not a representation of all the City’s planned efforts and activities. Rather, it reflects the key strategic initiatives to be undertaken that will contribute to achieving Council’s adopted Strategic Priorities and the objectives of our Strategic Community Plan.

It is therefore pleasing to note that of the 49 CBP projects due to be commenced or completed in 2017/18, all but two are either on track for completion as scheduled, or have now been completed. The only two projects (Projects 3.2 and 7.15) not shown as on track or completed have experienced some delays but are not presently considered to be at risk of not being completed as planned.