From Hilltops Council – Councillor Greg Armstrong

Greg Armstrong

Financial Fine Points

Each Year Council is required to produce a set of Audited Financial Statements, such Statements report the financial performance of the Council and are used to assess the financial health and strength of the organisation. The figures are audited by the Auditor General of NSW and their agents.

Sadly, the Statements are a bit like these Councillor columns, and suffer from a lack of community consumption.

At times this may be due to the complex nature of both, so I will attempt to do better over the next 3 years and hopefully shed some new light on the financial reports.

For Hilltops Council, the Financial Statements are produced for the General Fund, Water Fund, Sewer Fund and Other Undertakings including the South West Regional Waste Management Group and South West Rural Fire Zone.

Note No.24 of the 2019-2020 Financial Statements and Section D1-1 of the 2020-2021 Financial Statements provides a snapshot of the annual Operating Performance on a Fund-by-fund basis.

The 2019-2020 and 2020-2021 results highlights the need for drastic improvement in the General Fund.

The net operating results before grants and contributions for capital purposes were 2019-2020 General Fund - Deficit $13.061 million, 2019-2020 Water Fund - Surplus $997 thousand, 2019-2020 Sewer Fund - Surplus $1.03 million and 2019-2020 Other Funds - Surplus $447 thousand.

With 2020-2021 General Fund - Deficit $8.538 million, 2020-2021 Water Fund - Surplus $1.241 million, 2020-2021 Sewer Fund - Surplus $1.12 million and 2020-2021 Other Funds - Surplus $578 thousand.

Adding these results together produces the 2019-2020 Operating Deficit of $10.587 million and 2020-2021 Operating Deficit of $5.599 million that is reported as the consolidated net operating result before grants and contributions provided for capital purposes.

Monies from the Water Fund, Sewer Fund and Other Funds are restricted for use in the operation of the respective fund. e.g., Water Fund monies can only be spent on Water Fund activities and assets, Sewer Fund monies can only be spent on Sewer Fund activities and assets and Other Fund monies are for the use of the respective organisations (Rural Fire Service and Regional Waste Management Group).

The rate peg set each year by the State Government only applies to the General Fund - Councils that operate Water and Sewer Funds must set Water and Sewer charges to ensure that the undertakings are sustainable, yet affordable.

This may see Water and Sewer charges increasing by more than the General Fund rate-peg or, in some cases by less than the General Fund rate-peg. Each Fund has its own needs and service demands, accordingly there is no universal solution to funding requirements between them.

Ultimately, there will be need for increased revenue and cost containment if the Council is to successfully rein in the General Fund operating deficit.

I hope everyone had a safe and COVID free Anzac Day - Lest we forget.

Councillor Greg Armstrong