Financial Summary

This financial summary report provides analysis on Council’s 2017/18 Financial Statements. It compares the actual reported financial results against Council’s own financial objectives.

Council’s Financial Statements are produced in accordance with the Australian Accounting Standards and the NSW Local Government Code of Accounting Practice. These statements are independently audited, reported to Council, placed on public exhibition and lodged with the Office of Local Government (OLG) by the end of October each year. To view Council's audited Financial Statements, click here.

Income and Expenses

Income

Total income 4.70% to $146.823M

Overall income for 2017/18 decreased by $7.236M, which is mainly attributed to:

  • $2.65M increase in Rates and Annual Charges to $62.68M
  • $2.52M increase in User Charges and Fees to $26.32M
  • $0.311M decrease in Interest and Investment Revenue to $3.774M
  • $0.787M decrease in Other Revenues to $2.652M
  • $11.36M decrease in Grants and Contributions to $51.27M

Rates and annual charges 4.4% to $62.68M

The increase in property numbers from 26,809 in 2016/17 to 27,247 in 2017/18 together with the rate peg increase of 1.5% and Council’s special rate variation for the levee system upgrade has added $2.65M to operating revenue.

User charges and fees 10.56% to $26.3M

Revenue from user charges and fees increased by 10.6% or $2.5M for the 2017/18 financial year.  The main contributing factors relate to increased income for specific user charges including Sewerage services of $528K; Waste Management Services of $764K; as well as increased Livestock Marketing Centre income of $521K.

Interest and investment revenues 7.61% to $3.77M

Council’s return on investments decreased by 7.61% or $311K compared to the 2016/17 financial year result due to the current low interest rate environment.

Other revenues 22.88% to $2.65M

Other revenues decreased by 22.88% in 2017/18. This is mainly attributable to decreased income for Traffic Infringement fines, decreasing by $188K for the 2017/18 financial year.

Grants and contributions 18.14% to $51.27M

The reduction experienced in the 2017/18 financial year in comparison to the 2016/17 financial year is due to higher than normal grant income received in the 2016/17 financial year due to a number of large capital projects.  The major project in 2016/17 was the Bomen RIFL Enabling Roads Stage 1 which accounted for $20M in grant funding for the 2016/17 financial year.

Expenses

Employee Benefits and On-costs $39.35M

Borrowing Costs $3.61M

Materials and Contracts $33.42M

Depreciation, Amortisation and Impairment $34.56M

Other Expenses $10.06M

Net losses on disposal of assets $3.66M

Total expenses 2.65% to $124.71M

Overall expenditure for 2017/18 increased by $3.23M, which is mainly attributed to a $4.6M increase in materials and contracts.  Further details are provided below.

Employee benefits and on-costs 2.32% to $39.6M

Total employee costs decreased by $935K for 2017/18. The key factor contributing to the decrease was the reduction in workers’ compensation premium ($1.4M down to $532K).  The premium is based on an average of the past 3 years’ claims, and can differ significantly from year to year.

Borrowing costs 4.34% to $3.61M

Council saw a reduction in its interest payable on external loans of $151K for 2017/18 as well as a reduction in borrowing costs for its other liabilities of $13K as a result of falling interest rates.

Materials and contracts 15.91% to $33.42M

The total costs to Council for materials and contracts increased in 2017/18 by $4.59M. This is mainly attributed to expenditure for the Bomen RiFL Enabling Roads Stage 1 that was not able to be capitalised as the costs were deemed operating in nature.  The expenditure was fully budgeted for under the total project budget.

Depreciation, amortisation and impairment 4.57% to $34.56M

Depreciation is a non-cash expense that reduces the value of an asset over time due to wear and tear, ageing of an asset or obsolescence. The depreciation rates are set out in Note 9 of the Financial Statements. The Office of Local Government requires that a revaluation of an asset class is undertaken every five years. As a result of recently completed capital works and asset revaluations, Council’s depreciation expense decreased for 2017/18 by $1.66M when compared to the 2016/17 financial year.

Other expenses 7.35% to $10.06M

The main reason for the $689K increase in other expenses was a result of increased utility costs for electricity, street lighting, gas and water.

Local Government Industry Indicators

Council, as part of its Annual Financial Statements, reports on a number of local government industry indicators as prescribed by the Office of Local Government (OLG). The below table summarises Council’s results of these performance measures for 2017/18.

RatioPurposeWWCC RatioOLG BenchmarkMeet Benchmark
Operating Performance Ratio Measures Council’s achievement of containing operating expenditure within operating revenue -8.11% Minimum 0.00% No
Own Source Operating Revenue Measures fiscal flexibility. Degree of reliance on external funding such as operating grants and contributions 65.01% Minimum 60.00% Yes
Unrestricted Current Ratio Assesses adequacy of unrestricted working capital and Council’s ability to meet short term obligations as they fall due 2.99 times Minimum 1.50 times Yes
Debt Service Cover Ratio Measures the availability of operating cash to service debt including interest, principal and lease payments 4.79 times Minimum 2.00 times Yes
Rates and Annual Charges Outstanding Ratio Assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of recovery efforts. 4.82% Rural and Regional - < 10% Metro - < 5% Yes
Cash Expense Cover Ratio Liquidity Ratio that indicates the number of months that Council can continue paying its immediate expenses without additional cashlfow. 8.89 months Minimum 3.00 months Yes

Assets and Liabilities

Assets

Total Assets 6.02% to $1.574B

Infrastructure, Property, Plant and Equipment 5.48% to $1.423B

Net Assets ▲6.29% to $1.491B

Cash position

An analysis of Council’s cash holdings at 30 June 2018 highlights that cash and investments increased by $21.07M for the year. Much of this was due to an increase in external restrictions for developer contributions and domestic waste management for 2017/18.

Council’s interest on investments outperformed the original budget for the 2017/18 financial year by $970K. Council’s total portfolio return of 2.94% for the 2017/18 year was considered strong given the Reserve Bank of Australia’s (RBA) cash rate remaining at an all-time low of 1.5% throughout the 2017/18 financial year, and also outperforming the AusBond Bank Bill Index by 1.16% for the year.

Council, as at 30 June 2018, held 13.25% of its entire investment portfolio in cash and cash equivalents to ensure funds are immediately available for working capital and cash flow purposes.  This is a slight decrease from the 30 June 2017 position of 13.51%.

Council engages the services of an independent investment advisor for advice in relation to its portfolio.

Reserves

Council operates a number of internally and externally restricted reserves. External restrictions relate to those funds held for a specific purpose and include developer contributions (Section 94 funds – now called Section 7.11), specific purpose unexpended grants, sewer services, stormwater management, domestic waste services and levee upgrade special rate variation. External restrictions increased by $12.52M, mainly attributable to developer contributions ($3.96M), domestic waste management ($4.44M), sewer services ($2.16M) and special rate variation ($1.68M).

Council continues to maintain a wide variety of internal reserves as detailed in Note 6c of the Annual Financial Statements. These reserves have been established by Council resolution, and include provisions for future major projects and operations. Internal restrictions increased by $1.11M and is mainly attributable to an increase in the Fit for the Future reserve which has increased by $2 3M.

Unrestricted current ratio    

The unrestricted current ratio for 2017/18 is 2.99:1. This ratio decreased marginally from the 2016/17 ratio of 3.08:1, still reflecting Council’s strong level of liquidity.

Receivables    

Receivables for 2017/18 totalled $14.72M, a decrease of 27.60% on the previous year. This is mainly due to a decrease in outstanding debt due to Council for Government grants.

Rates and annual charges outstanding is 4.82% as at 30 June 2018, a decrease of 0.28% on the previous year and significantly lower than the Office of Local Government benchmark for regional Councils of 10%.  This outstanding percentage of 4.82% reflects the effectiveness of the debt recovery team and the strategies implemented to ensure successful debt recovery for Council. At the start of the 2017/18 financial year, Council set itself a target of less than 5% outstanding at the end of June 2018, and this has been achieved.

Infrastructure, property, plant and equipment

Infrastructure, property, plant and equipment (IPPandE) increased for the year by 5.48% to $1.423B. Note 9 of the 2017/18 Financial Statements shows the detail of the asset classes that contribute to the total amount of IPPandE. During the 2017/18 financial year, Council recognised total asset additions of $47.84M, including new assets of $27.96M and renewals of $19.89M.

Liabilities

Total liabilities 1.31% to $82.8M

  • Payables ▼ 11.67% to $12.70M
  • Borrowings ▲ 4.76% to $54.01M
  • Provisions ▲ 7.48% to $14.21M

Payables

Council’s payables at 30 June 2018 totalled $12.70M, a decrease of $1.68M on the previous year. This is mainly due to Council having less outstanding invoices for capital projects than in the previous year.

Borrowings

Total borrowings for Council now stand at $54.01M, an increase of $2.46M from 2016/17. Council has a significant borrowing program projected for future years, which aims to address required upgrades to infrastructure, provide additional community facilities to be used by current and future generations as well as new infrastructure including the Riverina Intermodal Freight and Logistics Hub (RIFL) and Multi-Purpose Stadium, which aims to facilitate the future growth of the city.

Provisions

Council’s total provisions at 30 June 2018 total $14.21M. Council’s provision for Employee Leave Entitlements(i.e. annual leave and long service leave) increased by $383K (3.30%) for 2017/18. Council’s provision for asset remediation increased for 2017/18 by $602K (41.57%) due to a review of future remediation requirements for these assets.

Business Activity Reports

Business activity reporting illustrates the results for Council’s various business activities in accordance with the National Competition Policy for Local Government.

It is designed to reflect the full cost to Council of running these activities, as if Council were competing in a normal commercial environment, where the applicable taxes and competitive pricing principles come into effect.

Council operates three distinct business activities being the Sewerage network, the Livestock Marketing Centre and the Wagga Wagga Airport.

Sewerage network

Council’s sewerage network services more than 27,247 connections. The network consists of 675km of gravity and pressure mains and 42 pump stations. Last year 5,449 ML of sewerage was transported through Wagga’s sewerage system.

Income ▲ 4.3% to $18.278M

Income for sewer for 2017/18 has increased on the 2016/17 financial year. The main contributing factor was the increased revenue from Sewer Rates and Annual charges.

Expenses ▲ 7.4% to $20.049M

Sewer expenditure for 2017/18 increased $1.384M from the 2016/17 financial year. The main factors can be attributed to additional sewer treatment expenses of $479K along with a book loss of $633K on the replacement of sewer infrastructure assets.

Net operating result (after taxation equivalent) - $3.303M surplus

The sewer business achieved a surplus result for the 2017/18 financial year. This is mainly due to increased revenue from rates and annual charges and an increase in capital grants and contributions received.

Assets ▲ 2.6% to $306.15M

Total assets for the year increased by $7.895M as a result of asset additions and renewals completed during the year.

Liabilities ▼ 2.8% to $33.095M

Liabilities for sewer primarily relate to the principle outstanding for loans for the Sewer 2010 project. This reduction in liabilities is a result of principal loan repayments made during the financial year.

Reserve balance▲ 9.1% to $25.75M

The increase in the reserve balance is reflective of the overall surplus operating result.  A surplus reserve balance is required to ensure sufficient funds are available in the future for the renewal of sewer assets.

Livestock Marketing Centre

The Wagga Wagga Livestock Marketing Centre (LMC) is the premier livestock selling centre in Australia for the marketing of cattle, sheep and lambs. The LMC was established in 1979 and continues to lead the way in livestock sales throughout the nation. The facility is located approximately 10km north of the city in the rapidly expanding Bomen Business Park and is neighboured by several key agricultural businesses supporting the region. The LMC remains a major driver of agribusiness, employment and economic growth in the Wagga Wagga regional economy and community.

The LMC is wholly owned by Council and operates on a completely self-funded financial model that delivers a significant dividend to Council annually and is distributed to a number of rural and regional projects. Through a broad cross-sectional series of internal service recharges the LMC itself is continually increasing its support as a major customer to Council. The LMC continues to rank as the largest sheep and lamb selling centre in Australia selling 1,804,464 head in the 2017/18 financial year. The LMC also sold 178,363 head of cattle for the same period maintaining our ranking in the top group of cattle yards throughout Australia. Approximately $427 million worth of livestock was sold through the LMC in the 2017/18 financial year.

Significant works took place throughout the year to deliver projects identified within the Livestock Marketing Centre Strategic Master Plan to provide Council and stakeholders the opportunity to solidify the operations success in the future by enabling greater work space and volume integrated with increased efficiencies within the current site.

Income ▲ 10.52% to $5.58M

Income for the Livestock Marketing Centre has increased when compared to 2016/17 with the Livestock Marketing Centre continually receiving high volumes of sheep and cattle sold through the facility due to an increase in throughput.

Expenses ▲ 3.63% to $4.059M

The increased expenses for the year were attributable to annual award employee increases as well as the requirement for additional labour costs associated with continued high volume of livestock being sold through the facility.

Net operating result (after taxation equivalent) - $1.065m surplus

The net operating surplus result for the 2017/18 year is due to increased revenue.

Assets ▲ 4.70% to $32.132M

Livestock Marketing Centre total assets have increased this year mainly as a result of the extensive capital works program currently being undertaken at the facility.

Liabilities ▼ 51.71% to $578K

Liabilities for the Livestock Marketing Centre have decreased for 2017/18 due to a reduction in contractor payments that were outstanding at the end of the previous financial year.

Reserve balance ▼ 10.23% to $5.73M

The reduction in the reserve balance is reflective of the recent infrastructure improvements undertaken at the Livestock Marketing Centre.

Airport

The Riverina continues to be serviced by the Wagga Wagga Regional Airport with QantasLink and Regional Express (Rex) providing daily return services to Sydney, and Rex providing return flights to Melbourne each day.  There were 225,071 passenger movements over the course of the year, with a total of 30,386 aircraft movements across all categories, including 6,160 regular public transport movements, 15,674 training movements, and 8,552 general aviation and military movements.

Until June 2018, JETGO provided daily return services to Brisbane and the Gold Coast, and disappointingly went into receivership in July 2018.  JETGO services out of Wagga Wagga had good passenger numbers and provided people within the Riverina a direct route to Queensland.

The public car park management system continues to provide a good return on investment with $356,678 in revenue generated. Security screening operations at the airport are contracted to an external provider and have continued to be compliant and meet or exceed the expectations of the Department of Infrastructure and Transport, Aviation and Maritime Security (AMS) Division. Council’s significant investment in the future of regional aviation, through the development of the Commercial Aviation Precinct and Light Aircraft Precinct will continue to grow business, economic development, jobs and flying activity in the region.

During the financial year, the Airport was shortlisted for the Qantas Pilot Academy along with eight (8) other regional cities across Australia.  Whilst Toowoomba were successful in securing the first of two Qantas Pilot Academies, Wagga Wagga is still in the running for the second Pilot Academy.

Wagga Wagga Regional Airport continues to be a leader in regional aviation, contributing significantly to the Gross Regional Product and employment as well as achieving its vision of being a centre of national aviation significance. The Rirport generated a surplus from ordinary activities before depreciation of $413K and has a closing balance of $64K in the Airport Reserve as at 30 June 2018.  Including depreciation, the Airport experienced a net loss of $1.9M.

Income ▲ 11.65% to $4.21M

Income for the airport increased for the 2017/18 financial year due to annual increases in fees and charges including leases.

Expenses ▲ 3.65% to $6.05M

The marginal increase in Operating expenses for 2017/18 is due to increases in utilities and materials and contract prices.

Net operating result (after tax) - $1.91M DEFICIT

The net operating result for the Airport including depreciation for 2017/18 was a deficit of $1.91M. Excluding depreciation, the net operating result was a $413K surplus.

Assets ▲ 5.04% to $37.07M

Airport assets have increased for 2017/18 by $1.78M due to the increased value of the Airport’s asset base.

Liabilities ▼ 1.04% to $13.49M

Liabilities have decreased for the year as loan commitments have been paid, which has resulted in the total principle outstanding being reduced.

Reserve balance ▼ 82.80% to $64K

The reserve balance for the Airport decreased by $308K for 2017/18 to a closing balance of $64K.

Stormwater Levies and Charges

Stormwater charges during 2017/18 applied to all properties, with the following exemptions as specified under the Local Government Act:

  • Crown land
  • Council owned land
  • Land held under lease for private purposes granted under the Housing Act 2001 or the Aboriginal Housing Act 1998
  • Vacant land
  • Rural residential land or rural business land, not located in a village, town or city
  • Land belonging to a charity or public benevolent institution.

Residential standard stormwater

A charge of $25 was applied to all residential properties (including rural residential lands) that are not exempt from the charge.

Residential medium/ high density stormwater

A charge of $12.50 per occupancy was applied to all residential strata, community title, multiple occupancy properties (flats and units), and retirement village style developments that are not exempt from the charge. Subject to a maximum charge of $250.

Business stormwater

A charge of $25 was applied to all business properties (including rural business lands) that are not exempt from the charge.

Properties are charged on a basis of $25 per 350sqm of land. Subject to a maximum charge of $250.

Business strata stormwater

A charge of $5 was applied to all business strata title properties that are not exempt from the charge. Subject to a maximum charge of $250.

Stormwater management

Council’s Stormwater Management Plan 2013/2017 outlined Council’s plans to improve the management of stormwater within the local government area. During 2017/18 Council undertook environmental monitoring for the Wollundry and Flowerdale lagoons and Lake Albert and commenced the following mitigation works of known storm water system risks carried over from the previous year:

  • CCTV condition assessment inspections  
  • Major Overland Flow Flood Study hot spot mitigation
  • Fernleigh Road Culvert widening