Our financial position remains sound. We’ve included detailed information about our financial performance in the Financial Statements and Performance Statement sections of the Financial Report.
The value of rateable property at 1 January 2019 was $74 billion. We’re focused on generating funds to update community infrastructure and facilities. We also want to maintain essential services and, where possible, improve them, especially in terms of access, equity and environmental sustainability. Our long-term financial strategy confirms this approach.
See a summary of our performance below.
The Financial Report can be downloaded here.
Our 2018–19 operating position was a $25.42 million surplus, which is $6.76 million higher than our 2018–19 budget. Factors that contributed to this include:
- higher-than-anticipated revenue from parking infringement income of $4.44 million (offset by higher provision for parking infringement debtors of $3.26 million);
- early receipt of the 2018–19 payment from the Victorian Grants Commission. We received $1.95 million (50 per cent of the 2019–20 grants) for financial assistance and local roads funding during 2018–19; and
- unbudgeted capital grants of $2.16 million for current and future projects.
For more information see note 1.1 starting on page 10 of the Financial Report.
Our total revenue for 2018–19 was $189.93 million, $7.61 million favourable to budget (4.2 per cent). The main factors that contributed to the favourable variance included:
- statutory fees and fines of $3.78 million;
- operating grants of $2.12 million; and
- capital grants of $2.16 million.
Rates and charges revenue was in-line with the 2018–19 Annual Budget. Our rates and charges are still much lower than the average of all inner metropolitan councils (we are the second lowest for rates and charges revenue).
Statutory fees and fines were favourable to budget by $3.78 million. This was mostly due to higher than anticipated revenue from parking infringements income of $4.44 million. There was also lower than expected planning permit income ($661,000).
Grants — operating were favourable to budget by $2.12 million. This was because the Commonwealth Government announced it would prepay 50 per cent of our Victorian Grants Commission funding for 2019–20. We received $1.95 million in advance for financial assistance and local roads funding during 2018–19.
Grants — capital were favourable to budget by $2.16 million due to early receipt of income for future projects ($920,000) and unbudgeted income for current projects ($984,000).
Monetary contributions were lower than anticipated and unfavourable to the budget by $1.15 million. Open space income is dependent on developer decisions and is outside of Council’s control.
Refer to Figure 1.
Our total 2018–19 expenditure was $164.51 million (0.52 per cent unfavourable to budget).
Factors that contributed to the unfavourable variance include:
- materials and services of $1.24 million;
- other expenses of $3.31 million; and
- offset by savings in employee costs of $2.96 million.
Refer to Figure 2.
FIGURE 1. 2018–19 SOURCES OF INCOME (%)
Figure 2. 2018–19 Categories of Expenditure (%)
During 2018–19, we expended $43.2 million on capital. Variance to budget for total capital works was $806,000 across the following activities:
Buildings — we underspent by $2.12 million in 2018–19 due to works that were not complete at year end at Town Hall, Caulfield; and continued pavilion upgrade projects across various locations. These will be carried forward into 2019–20.
Plant, machinery and equipment — was under budget due to a delay in receipt of ordered vehicles and plant. These are due to be received in early 2019–20 and $950,000 will be carried forward.
Streetscape works — relates to development and beautification of Council’s streets and shopping precincts. These projects are under budget by $1.13 million due to works in progress for activity centre minor upgrades $675,000 and the Carnegie Structure Plan implementation $337,000. Funding for these projects will be carried forward to the 2019–20 year.
The above underspends were offset by:
Footpaths — additional spend to budget by $982,000 due to future renewal works being undertaken during 2018–19; and
Carried forward expenditure from 2017–18 — over budget by $2.42 million and relates to projects that were either incomplete or not commenced due to planning issues, weather delays, extended consultation etc. Council approved carried forward projects of $8.66 million in July 2018 of which $7.42 million was spent as at 30 June 2019.
Refer to Figure 3.
ASSET EXPENDITURE CATEGORIES
The major asset expenditure categories of capital works were:
- buildings $5.05 million;
- plant and equipment $4.12 million;
- roads $8.64 million;
- footpaths $3.25 million;
- drainage $4.33 million;
- open space and recreation $9.06 million;
- car parks $77,000;
- streetscape works $1.24 million; and
- projects carried forward from 2017–18 $7.42 million.
For more information, see note 1.2 starting on page 12 of the Financial Report.
The $43.2 million comprised:
- renewal 37.99 per cent ($16.41 million);
- upgrade 28.17 per cent ($12.17 million);
- expansion 27 per cent ($979,000); and
- new expenditure 31.57 per cent ($13.64 million).
Refer to Figure 4.
FIGURE 3. CAPITAL WORKS EXPENDITURE 2008–09 TO 2018–19 ($M)
Figure 4. 2018–19 Capital Works expenditure — by type (%)
To bridge the infrastructure gap, we invested $29.56 million in renewing, upgrading and expanding assets in 2018–19. This was funded from operations.
Our asset renewal ratio, measured by comparing asset renewal and upgrade expenditure to depreciation, was 130 per cent. Renewal expenditure was $16.41 million and upgrade expenditure was $12.17 million.
Refer to Figure 5.
Our net asset base decreased from $2,551 million to $2,220 million. This was mostly due to a decrease in the value of our fixed assets from $2,542 million to $2,203 million.
The movement in our property, infrastructure, plant and equipment value is due to:
- the impact of our assets revaluation;
- the net result of the capital works program;
- asset depreciation; and
- the sale of property, plant and equipment.
Refer to Figure 6.
Working capital is the excess of current assets above current liabilities. This calculation recognises that although we have current assets, some are already committed to settling liabilities in the following 12 months. Therefore, they’re not available for discretionary spending.
Cash and cash equivalents (including financial assets) was $86.48 million as at 30 June 2019. This is enough to cover our short-term restricted liabilities, which include $36.93 million in trust funds and aged care deposits; and $18.58 million in Public Open Space Reserve funds.
We must ensure we maintain working capital and that we have enough cash reserves to meet normal cash flow requirements. We’ll continue to have a large investment in capital works projects. The liquidity ratio expresses our level of current assets for meeting current liabilities.
We should hold enough cash to cover ‘restricted assets’, such as Residential Aged Care deposits; Public Open Space Reserve; contract deposits; and the Fire Services Property Levy.
Refer to Figure 7.
FIGURE 5. ASSET RENEWAL RATIO (INCLUDING UPGRADE) (%)
FIGURE 6. PROPERTY, INFRASTRUCTURE, PLANT AND EQUIPMENT AND INTANGIBLES ($M)
FIGURE 7. LIQUIDITY RATIO (WORKING CAPITAL) (%)
PUBLIC OPEN SPACE STRATEGY
Contributions to the Public Open Space Reserve during the financial year relate to public open space levies were received under Section 18 of the Subdivision Act 1988.
We received contribution income of $7.85 million during the 2018–19 year. This can be used to fund projects that meet the conditions of the Open Space Strategy, which is mainly focused on increasing open space in identified gap areas. We spent $3.06 million on projects that met the conditions and the remainder will be held in the reserve for future years.
Council has a requirement to report on major initiatives pursuant to section 127 of the Local Government Act 1989. The progress of the major initiatives for 2017–18 as at 30 June 2018 were:
Theme 1: Liveable and well designed — A well planned City that is a great place to live.
We will deliver detailed Structure Plans for Bentleigh, Carnegie and Elsternwick, which address development, open space, business and transport, and an Activity Centre Strategy for all our centres.
Outcome: Structure Plans which address development, open space, business and transport for Bentleigh, Carnegie and Elsternwick were adopted by Council 27 February 2018.
Outcome: The revised Activity Centre, Housing and Local Economy Strategy was adopted by Council on 25 July 2017.
We will invest a minimum of $30 million annually through Council’s capital works program.
Outcome: Actual spend as at 30 June 2018 is $35.23 million.
We will develop a new Integrated Transport Strategy, which identifies and sets the City’s goals for various transport modes, with a focus on creating safer and walkable neighbourhoods.
Outcome: The Integrated Transport Strategy 2018–2023 was adopted by Council on 12 June 2018.
We will complete a municipal-wide Car Parking Strategy.
Outcome: The Car Parking Strategy could not be completed until the Integrated Transport Strategy was adopted. This is now expected to be finalised in November 2018.
We’ve prepared a 2019–20 Annual Budget, which is aligned to the vision in the Council and Community Plan 2017–2021. It seeks to balance demand for services and infrastructure within revenue constraints. We aim to do this within the State Government-mandated rate increase. The strategy in the 2019–20 Budget is to:
- manage finances appropriately within the constraints set by the State Government’s Rate Capping regime;
- renew and upgrade our ageing assets and community facilities;
- maintain essential services at not-less-than current levels;
- set fee increases that are manageable and sustainable;
- invest in continuous improvement, technology and other enablers to efficiency and embrace customer outcomes; and
- keep day-to-day costs manageable and rates below our peers.
The 2019–20 Budget is based on a rate increase of 2.5 per cent. This is in line with the Fair Go Rates System (FGRS), which caps Victorian council rate increases to forecast movements in the Consumer Price Index (CPI).
Our focus for 2019–20 is to continue delivering projects and services that make Glen Eira a great place to live and to respond to the challenges we currently face. These challenges include:
- top-up funding for local services we provide on behalf of the State and Federal Governments (such as school crossing supervision and Home and Community Care services). These funds have not increased in-line with real cost increases, leaving a gap;
- increasing investment in maintaining our ageing community and infrastructure assets;
- responding to growth and increasing diversity in our population; and
- responding to the general slow-down in economic activity that will impact income streams.
To support our $2,220 million of community assets, we projected an investment of $40.06 million in new capital expenditure for asset renewals, upgrades and expansions.
Highlights of the capital works program included:
- Strategic projects — Activity centre streetscape works, Integrated Transport Strategy implementation and Structure Plan designs (Elsternwick, Bentleigh, Carnegie) and Carnegie Sports Precinct ($4.34 million).
- Great@GlenEira — includes technological solutions to enable customers to better transact with Council. Customer focused projects include: a parking permit digital solution, single customer view and digital kiosks at key locations to make it easier for you to do business with us without needing to come to the Town Hall ($1.11 million).
- Recreation and Open Space — this includes open space initiatives; parks; playing surfaces; and playground equipment ($9.33 million).
- Community facilities — comprise buildings and building improvements, upgrades and renewal of community facilities; Municipal offices; sports facilities; and pavilions ($3.5 million).
- Sustainability — installation of photovoltaic systems on Council assets to generate renewable energy; new waste and recycling bin enclosures at parks and reserves; and other building sustainability improvements ($570,000).
- Community safety — this includes safety projects: intersection crossings, pedestrian and safer speed limits; school safety; shopping centres; sustainable transport; disabled parking upgrades and new footpaths ($1.26 million).
- Renewal projects — this includes the renewal and upgrade of Council’s major infrastructure assets such as: road reconstruction; drainage improvement; footpaths; local road resurfacing; and car parks. Other renewals include: building improvements and upgrade of community facilities; replacement of plant and machinery; furniture and equipment; information technology and telecommunications; and library collections ($19.95 million).