Capital Program 2025-2026 Delivery Status Report

Frank Wilkie3:32

Okay, there's just one typo there. We'll fix it up. Okay, thank you. Now we have a mover and a seconder for the committee recommendation. Happy to move. By Councillor Phillips, seconded by Councillor Finzel. Any discussion? No. All in favour? Councillor Wilson? Yes. Thank you, that's carried. Can we have Councillor Lorentson back to the meeting, please. Item 11.4 is Audit and Risk Committee membership. 11.5 is the capital program 2025 delivery status report for noting. I have a conflict of interest to declare on this Councillor Wilkie, inform the meeting that I have a prescribed conflict of interest in this matter as my mother, who donated $5,000 to my election campaign, lives in a street adjoining Lorikeet Drive, which is the subject of the active street project, which is mentioned in this report for noting as a result of my conflict of interest, I now leave the meeting room. All the matter is considered and voted upon.

Amelia Lorentson6:14

So I'd just like to move the current item, which is the capital program 2025-2026 delivery status report. Can I have a mover and a seconder, please?

Happy to take have you seen it Through the Chair I can prior generalise comments as opposed to specific assets that make that up, so the changes to our asset base over the current financial year will be a reflection of assets that have been delivered through our capital works program and have been commissioned today. So if there are any through any financial year you get to the completion of assets which are then capitalised, put onto our fixed asset register to depreciate it over time. This is also in some ways offset by any assets that are decommissioned. Or have raised reached the end of their useful life. From the report we have a significant delivery works, capital delivery works program. It's 15 million in the current year if I've remembered that correctly. So that's what you're saying is a growing asset base as a result of the infrastructure team delivering infrastructure assets throughout the financial year in terms of whole of life costing of assets is one of the aspects that have been brought up routinely through budget for proceedings. Next year's 2027 budget which is the whole of life asset costing which looks at capital replacement of assets ongoing maintenance expenditure renewals etc so it is a work program we're looking at over the next financial year to build the maturity effectively. Of how we look at whole of life assets and costs within our budget and then the reflection of our monthly finance reports.

Yes, Through the Chair. Just to clarify, there between consultants and contractors. So we have contractors for various bodies of our operational work, either through fixed term temporary contractors or through the delivery of our capital works program that complements our own staff. Consultancies obviously can be brought in for various different means for a whole range of activities. We must comply with our procurement policy which is underpinned by the principles of the Local Government Act and the regulation in terms of transparency and value for money and to ensure that we meet all of those we have thresholds that are determined in the policy of which we need to meet in terms of seeking quotes and we have probity plans and there is a significant amount of rigour by our strategic procurement and contract management team overlaying any form of engagement of consultants and contractors

Thank you. Good morning, Councillors. I will take the report as read. The April report provides us 10 months of the 12 months, or 83% percent of our financial year in actual data. There are no material changes to the identified financial risks to our forecasted position at the end of 30 June 2026. There are number of items noted in the report which we are monitoring closely. As noted in the report as at 30 April 2026 Council has reported a favourable operating result of 3.2 million compared to 3.5 million in March 2026. With a further 6.4 million from capital funding sources. This results in a net variance to budget of 9.6 million which compared to 9.7 million in March 2026. My comments will focus on the headline results, the capital works program and cash and risk outlook rather than detailed workings of the attachments. In doing so I would like to draw attention to a number of aspects of the report. On the top of page 2 there is a table that highlights the variance of revenue and expenditure line items to budget.2 million operating variance to budget is comprised of $2.1 million from general operating activities and services and $1.1 million from council's business activities which is waste management and holiday parks. Tables provided are on page three the report which include green shading to illustrate positive variances against budget with explanatory notes provided in the commentary column to variances noted in the report. Later in my verbal update I will provide further comments to both employee benefits and financial costs which were noted in the previous General Committee Meeting. It is the worth noting that materials and services has seen a $900,000 negative change or variance from March 2026 to April 2026. Going from a $600,000 overspend to $1.5 million. This is about 2.9% of the overall budget. We are continuing to monitor this the scenes. This doesn't appear to have come as an unforeseen cost. It's just continuation of cost or pressures that we have experienced today with commentary provided in the table of what areas of Council that relates to. In regards to capital, revenue and expenditure, tables are provided. In the report of major capital grants and subsidies, which also include our disaster recovery funding. As of April 2026, capital revenue is $24.3 million with cash contributions from developers of $2.3 million and capital grants and subsidies of $21.9 million. Actual capital expenditure excluding capital commitments is $31.8 million, or 39.3% of council's $80.8 million capital works program. Capital expenditure is tracking below profile at this point of the year. This reflects normal project timings and re-profiling of a number of projects within the current year. For comparative purposes page 7 of the report, graphs have been included from the Capital Works Executive committee illustrating capital expenditure to date commitments and also indicative values where we will be at the end of the financial year is at 30 June. These have been provided as illustrations to convey the financial data in a graph format. Cash management and investment performance total cash on so hand is that April 2026 was 146.7 million, down from 159.2 million in March with $7 million held in trust. This tracks to council's normal cash profiling that we receive revenue or the bulk of our revenue in July and January as a result of our rates periods. With the expenditure then being expensed over the preceding months. Currently we have higher than anticipated cash balances primarily as a result of re-profiling of the capital works program. Our final cash positions end of the financial year are being managed closely. As noted in the previous General Committee report we are monitoring whether in fact Council approved borrowings of 3.1 million need to be drawn down. Whether cash surpluses can be used to fund those projects. Page 8 of the report provides a detailed update of our rates arrears figures. Rates arrears decreased from 9.7% to 7.8% from March to April 2026 with payments of arrears balances of $2.2 million received during the period. Council levels were provided in an update of where we are in terms of updates of the rates and charges debt management and recovery policy project as an email following the previous committee meeting as a request during the committee on where we are in the updates supporting that project. The rates and the utility charges and arrears balances are following historic norms. They have followed the predicted cash cycle that we've encountered in previous financial years. And we don't as a result, there is no emerging financial risk of the current balances that are held. In previous financial reports, we've noticed, we've noted within the report questions taken on notice. You will receive a verbal update from myself around were included in the reported time where we issued them. In April, a question was taken from Councillor Lorentson. There was a couple of aspects, so hopefully we've captured this correctly, which we've recorded that is, will the lower capital delivery capital write-offs of 4 $11.5 million in arrears and the unpredictability of development contributions put future pressure on future rates, services and financial sustainability ratios? To address each of the individual items of the particular question, although lower delivery in the interim provides cash surpluses, effectively that cash is ring held for future delivery of works. Currently we've discussed re-profiling of capital works, so not discontinuation of cancellation of works. So effectively any cash held in the short-term will eventually be expended. Time to adjust for the re-profiling of works. This in theory doesn't provoke any financial risk as a result of that, but effectively it's just held in reserve or held in our bank balance until in fact we expend the cash that's held. Capital write-offs separately can occur for a number of reasons. So this can be assets that are reaching the end of their useful life. A new asset has been built, so the previous asset is disposed effectively this is a reflection in some ways of good asset management that you would expect over time of capital write-offs to be addressed as you have new assets that are being delivered. Capital write-offs go through the equity side of our account so actually have no impact on our operating position and effectively the simplicity we have a useful life for all assets that we depreciate if they reach the end of their useful life prior to reaching their notional useful life the balance of that depreciation is written off and that is what a capital right offers so it's more an adjusted accounting adjustment or treatment for how we recognise that within our statements but doesn't provide any operational risk to Council. Council writer is one of the consistent ones that always come up so we are looking to manage that. We have noted historically those probably aren't where we would like to see them as a result of the debt management policy that we're looking to interact. There have been some delays to that operationally of actually getting them in practice just to the audit that we've had to do behind the ensure that everything that is transferred over is correct and fair. There will be further updates provided from me specifically from this as to the timeline around our communications program that we will look to implement as well to actually get out and engage with the community so they can understand what it is, what it looks like and what actual avenues there are to work with Council around decreasing arrears balances. The unpredictability of development contributions which is the language in the report is effectively development contributions are tied to when development occurs so Council has no distinct ability to control so when we talk about unpredictability it's when development occurs we will receive development contributions. Effectively this just creates an interim of receiving contributions to the expenditure so there's effectively a timing Council can manage through product cash balances. We received one question by email from Councillor Finzel so if you're happy I can address that in response or would you like to raise that during question time. Sure. Either way, So Councillor Finzel raised the question seeking clarification around page four of the report in regards to higher than anticipated fleet costs which the description was largely attributed to external hire of plant and equipment. What is the actual plant and equipment Council is hiring and for what reason and whereabouts the and reporting on minutes is this increase or expenditure currently being captured. On response to the question, fleet operating costs are indicated as being 158,000 over budget today. The extent of this overspend should be compared to the actual fleet operating budget of 3.5 million, just for context, fleet hire is an established part of, sorry, is established part of the budget to hire specialist equipment, backfill and house plant due to scheduling or servicing breakdowns. Pressure on fleet hire can be experienced, particularly following natural disasters, meeting reactive requests, with additional fleet hire costs arising from emergent drainage and grading works in recent months. The fleet advisory committee of internal staff meets monthly and monitors the fleet program including expenditure and was and this was considered as part of the most recent meeting and will be worked across all teams to rating costs and the available budget that's in place. There were also in the April General Committee Meeting a number of items that I noted as further investigated what their finance was doing that I wanted to report back on. There were comments made regarding the financial performance of waste management revenue and expenditure and what was driving the current underspend for completeness waste revenues are currently forty six thousand dollars above budget year today this is predominantly made up of higher rates grants and gas royalty revenues which have been partially offset by lower disposal fees and the sale of recyclables these are probably slightly immaterial more than the expenditure line so materials and services are currently tracking five hundred and eighty five thousand dollars the low budget year today this is primarily driven by commercial waste levy expenses of four hundred and eleven thousand dollars primarily driven by lower volumes at the gate and a lower cost share of expenditure of eighty thousand dollars as a result of lower level recyclable sales in the current financial year. Employee benefits were a question taken on notice of where this was tracking versus budget as of April 2026 there was a three hundred and nineteen,000. Dollar variance to budget notably this is against a four hundred forty nine point five million dollar budget so it represents less than a point six percent variance of actuals to budget so what would typically be and material below thresholds for warranting further review the hundred and fifty eight thousand dollar variance today for further explanation is primarily driven by lower training expenses of sixty thousand lower PPE expenses of forty two thousand dollars and so savings within the development assessment branch of one hundred and ninety five thousand dollars the last point is the financial costs underspend today and this variance is due to lower interest expenses of five hundred and nineteen thousand which is primarily related to a delayed drawdown or a decreased drawdown for loans related to the landfill expansion and the timings of the Lake Macdonald subdivision so they effectively just reflect delay timings or re-profiling of what debt was needed to be drawn down which means lower interest costs have been incurred in the current financial year to summarise overall Council Councillor remains romain's in strong financial position as we work towards 30 June 2026 with any variances largely of timing rather than structural issues. Thank you and happy to take any questions in regards to the report. Thank you Sam. Questions, Councillors?