HAWKESBURY Council’s net financial position was in the black to the tune of nearly $18 million but Council ran at an operating loss of about $1 million in the 2016-17 financial year.
At the November 14 Council meeting, the official budget results were heard, which showed Council finished the financial year at a profit to the tune of about $17.774 million.
Despite finishing in the black, this was achieved through a number of grants, and if Council was not successful in obtaining all of these, it would have had a loss of $1.05 million.
- See for yourself: Council’s Annual Report 2016/2017 (18.5 megabytes).
Having said that, before grants were considered in the 2015-16 financial year, Council ran at a loss of nearly $12 million, which showed a substantial improved. Overall, Council’s net position improved by about $11.4 million.
Council’s financial future will again be in the spotlight at the next meeting, scheduled for November 28, where the Council will vote on whether to officially approach the Independent Pricing and Regulatory Tribunal for a special rate variation.
Marc Upcroft from PricewaterhouseCoopers, which audits Council’s books along with the state government’s audit office, said overall Council’s finances were a mixed bag.
“Council's result was a surplus of $17.8m, noticeably higher than the previous year,” he said.
“When I look at Council's balance sheet relative to the current financial year, it is not always a good situation when the operating surplus is negative.”
Upcroft said Council’s operating performance ratio was not up to scratch. Council’s ratio was -6.61 per cent, with the benchmark as zero per cent.
However, he said the own source revenue ratio of 68.44 per cent was better than the benchmark of 60 per cent and the unrestricted current ratio, indicating liquidity, was 3.3 times with the benchmark being 1.5 times.
“Council's borrowings have decreased, and comfortably met the debt service ratio,” Upcroft said.
Council general manager Peter Conroy said more must be done to reduce the operating deficit, although said that Council had already saved about $7.4 million through efficiency measures and cost reduction.
“Whilst we have taken steps to implement efficiency measures and cost reduction strategies, this has not been sufficient to fund the full cost of maintaining and renewing community assets and at the same time maintaining existing services,” he said.
“The benchmark for a financially sustainable Council is a break-even position. As the net operating deficit reported for 2016/2017 does not meet this benchmark, Council is not satisfied with this result and would like to see its financial position improve in future years.”
Hawkesbury Mayor Mary Lyons-Buckett said Council’s position could be turned around.
“That will depend on whether we meet all our strategies included in our Fit for the Future program,” she said.
“If we do nothing and continue as we have in past years we will continue to run at an operating deficit and unless we remove or reduce services the situation would worsen.”
Mr Conroy continued in a similar vein, and said community services potentially would have to be reduced.
“Council is committed to remain financially sustainable to provide required services to its community,” he said.
“To this end it will continue to work towards achieving and maintaining a financial position that meets the benchmarks.
“Council’s proposed Special Rate Variation, if implemented, is one of 20 initiatives that Council is pursuing to achieve financial sustainability.”
At the November 28 Council meeting, the staff’s report on the Draft Supplementary Resourcing Strategy 2017-2027 and the Draft Supplementary Delivery Program 2017-2027 will be released.
Council will receive these reports on the night, which will include the preferred special rate variation option the staff conclude is the right one to choose.
Once the reports have been received, Council will then vote on whether it actually asks IPART for a special rate variation.
