As Council’s financial performance stabilises and its financial position continues to improve, a key focus is now on its long-term financial plan to ensure service delivery and infrastructure provision to the community is under-pinned by sound, stable and sustainable financial management.

At the end of the third Quarter of the financial year, Council continues to project a net operating surplus for the remainder of this financial year. The proposed Q3 adjustments will result in a budgeted operating surplus (before capital income) of $7.1M. 

The projected surplus continues to be forecast despite the significant impact of an increase in depreciation and other asset adjustments following the 2021/22 audit. These adjustments, whilst not impacting on Council’s cash, impacted the projected operating result by just under $30M.  $10M of this relates a one-off adjustment arising from a significant reconciliation of asset registers, with regular end-of year asset reconciliation adjustments being much smaller.

Council’s CEO David Farmer said the continued strong financial performance means that Council is still on-track to pay down some of its emergency debt earlier than originally forecast and also set aside funds for future needs, while prudently managing other financial challenges such as rising costs. 

“Now that Council is in a sound and stable financial position, like every other Council in NSW, we need to continue managing our budgets closely to make sure we remain financially sustainable in the future.

“All Councils in NSW face the challenge of having their main source of income, rates, limited by rate-pegging. For the next financial year whilst the total income from our rates will increase by 3.8% or $7.8M, this increase will be more than absorbed by the increasing costs of resourcing and contracts, as well as costs which to continue to be shifted to Council by other levels of government, such as the Emergency Services Levy increasing by about $2M.

“Also, aside from the financial side of things, we need to be realistic about how many projects we can deliver over the next financial year given staff recruiting challenges and the on-going issue of supply shortages of materials for infrastructure projects.

“To this end we are closely reviewing forecasted CAPEX projects for the next financial year, being realistic with what can be delivered within our Operational Plan.

“We would rather be upfront with the community about what can be realistically delivered in light of those restrictions, even if we have the money to do the projects.”

Other key financial results reported to Council at the Ordinary May Council meeting are:

• Operating income is projected to improve by $12.9M. Of this $6.7M relates to better than budgeted income from interest on investments because of rising interest rates. Other favourable budget adjustments include revenue from certain activities continuing to recover post-COVID. 
• Operational expenditure is projected to increase by $21.2M. This includes the increase of $30M in Depreciation and asset adjustments, offset by savings across various programs.
• As at the end of the third Quarter and based on rates revenue being attributed evenly over the financial year, the operating result (excluding capital grants and contributions) is a surplus of $27.3M, a favourable variance of $5M when compared to a budgeted surplus of $22.3M. 
• The Q3 YTD capital expenditure is $108.0M compared to a YTD budget of $113.5M.
• Council continues to have sufficient unrestricted cash to meet operational requirements and has maintained adequate loan repayment coverage. As at the end of the third Quarter Council had $706M in cash and investments. Unrestricted funds on a consolidated basis total $208M, with the remaining $498M being restricted for specific purposes. 
• During the month of April, financial performance continued to be strong. As at the end of April 2023, Council’s year to date operating result is a surplus of $33.3M, (before capital income), which was favourable to budget by $6.1M.

Administrator Rik Hart said Council’s review of all projects being planned by all areas of the business, is a responsible step, so the community can be assured that what is in the final Operational Plan, is what will be delivered.

“We expect there will be some projects which will be deferred – but they will still get done.  Our challenge is to ensure we have enough staff, can access contractors and the supply of materials as needed for projects.

“The overall aim is to ensure that when the newly elected Council is in place in late 2024, the Council’s financial and staff situation will be one which can operate successfully.”

To stay up to date with information about Council finances and service delivery, go to:

• ‘Finance Monthly Reports’ at centralcoast.nsw.gov.au
• ‘Financial Strategy’ at centralcoast.nsw.gov.au
• ‘Delivery Program and Operational Plan 2022-23” at centralcoast.nsw.gov.au
• ‘Capital Works Program’ at centralcoast.nsw.gov.au

ENDS