At the next council meeting tomorrow evening on 22 October the final Coffs Harbour City Council (CHCC) audited accounts for the year ended 30/6/2020 (ref BS20/58) will be presented to Council for consideration.
By Rob Steurmann
At this meeting, a representative from the Audit Office of NSW will attend to address council.
The agenda states; “The Audit Office of NSW, represented by Mr Jan-Michael Perez, will be in attendance to address Council during the meeting in relation to the audit of the 2019/2020 Financial Statements through presenting the Conduct of the Audit Report.”
This is not a normal occurrence.
It needs to be understood the State Government has a policy to, among other things;
- Improve Strategic Planning, and
- Promote Better Decision Making.
By law councils across the state report to the Office of Local Government (OLG) and according to OLG they check out the information provided.
If only this was true.
So, given OLG state it is the residents who must exercise their democratic rights at an election it is really up the residents to decide how council is performing. The accounts, presented at quarterly intervals, provide residents with opportunities during the four years between elections to influence the strategic direction of the council.
It is also a requirement for council to make a plan and this plan includes an annual budget which is an allocation of funding based on priorities.
Council Executive made the 2020 budget and put it to Councillors for adoption. The report BS20/32 presented to council on 28/5/2020 contained a column giving the estimates for the year. A second column shows some changes to the estimate. In short the revised estimated (net operating) surplus/deficit for the year was $0.99M but as of 30/3/2020 this somehow rose to $30.4M. This as you see is $29M better than forecast.
To add to the confusion the last line of BS20/32 refers to the net surplus. Estimated at $21.6M for the year the new figure stood at $44M after the end of the third quarter (30/3/2020).
Residents can now assess how council went against the projected outcome.
As I know many will find over 120 pages of figures very confusing a very simple base report, written in simple English is presented below for readers.
Table 1 – Money we got
Council expected to get in for the year $98,663,000
Amount council got by 30/3/2020 $100,731,000
Difference $2,068,000 more
Note: This incredible given the last quarter rate installment was not yet due
Table 2 – How much did we spend
What was planned for the year $181,568,000
What was spent by 30/3/2020 $125,969,000
Difference on hand (last quarter costs) $ 56,599,000
Note: Were we really going to spent so much with COVID 19 rampant?
Table 3 – How we fared
Surplus we had (actual) $ 30,409,000
Loss as projected $ (-6,369,000)
Difference or turn around $ 36,778,000 (downwards)
Wow. The report states COVID 19 has introduced an element of uncertainty into the budget review process.
But this difference represents a massive shift away from the plan. The predicted surplus had changed to a deficit of $0.995 M.
So, when should those well paid Council employees have alerted our elected representatives that the target outcome was under threat?
Is a shift of $36.78M overall enough to cause a rethink of our priorities?
On 28 May 2020, the third quarter accounts were presented with a current deficit of $0.995 M. Should council have been told then the projected target was out of reach?
Throughout the year council heard we were in profit according to the accounts being presented. To be precise they were presented on 24 October 2019, then on 28 November 2019, on 12 December 2019. In February of this year we were $3.6 M ahead of forecast, and on 11 June 2020 (note the date) we were apparently $6.3M ahead of target.
Hang on a moment.
Council were told to expect a deficit of $6.37M two weeks before this report.
What figure is right? Should Council be told, more directly, of this? Was there a need to reset the priorities for spending?
Yet, as we know, when the funding options for the Cultural and Civic Space (CCS) went to council on 28 September this year the belief by some was reserves were available to fund the new building. It came back to Council in the next month and the General Manager referred to the loss in the fourth quarter as being less.
But this is ambiguous.
The GM did not explain to the virtual online Council meeting the statement he made. And no Councillor sought an explanation – the focus was on the options when in reality there was a deterioration of $36.77M in the projected outcome.
Surely an employee would notice this change as after all it was putting in jeopardy further work on the CCS project so beloved of Council Executive?
As a resident it is up to you to rate the performance of council during the 2019-2020 financial year.
And given the current financial year is already more than a quarter over where is the projected budget for this year?
OLG are not proactive. OLG are letting Coffs Harbour residents down. Their stated commitment to reporting, strategic planning and better decision making is no more than a set of hollow words.
Elected representatives must know how the community feels. The final audited report contains some changes and lo and behold there is a new outcome. Not such a pretty one at that.
Namely, an operating deficit for the year before grant and contributions for capital purposes of $16.213m.
Which rather begs the question “so why did council spend $5M on an accounting system just some two years ago to get the wrong result”?
This is what we strongly suspect the NSW Audit Office found among other matters according to tomorrow night’s agenda;
“An external revaluation of Transport and Stormwater Drainage assets was undertaken in the 2019/20 year, having been carried out previously in 2014/15 by internal resources. This process identified $7.370 million of Infrastructure assets that were decommissioned or disposed due to duplicated records existing, such as a number of large culverts had been recorded in the both stormwater drainage asset category and bridges asset category, requiring a write off of the duplicate assets.”
Right so these things were counted as assets twice?
Thank goodness council explains it; “The operating deficit for the year…………………..cannot be reasonably compared………………….as the original budget surplus does not take into account the unknown result of Council’s asset movements, nor does it consider the budget adjustments”.
So when did council actually reset our priorities then?
See Council’s agenda for this Thursday, and item BS 20/58 in particular, here; https://infocouncil.coffsharbour.nsw.gov.au/Open/2020/10/CO_20201022_AGN_2224_AT_WEB.htm