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Administration and Finance Committee Meeting

 

  BUSINESS PAPER

 

 

 

Tuesday 1 December 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative Centre 30 Frances Street Randwick 2031

Telephone: 1300 722 542

Fax: 02 9319 1510

 council@randwick.nsw.gov.au

www.randwick.nsw.gov.au


 

 

 

 

 

 

 

 

 

 

 

 


Administration and Finance Committee                                                                      1 December 2015

 

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Administration and Finance Committee Meeting

 

Notice is hereby given that a Administration and Finance Committee Meeting of the Council of the City of Randwick will be held in the Council Chamber, First Floor, 90 Avoca Street, Randwick on Tuesday, 1 December 2015 at 6:00pm

 

 

Committee Members:         The Mayor D’Souza, Andrews, Belleli, Bowen (Deputy Chairperson), Garcia, Matson, Moore, Nash, Neilson (Chairperson), Roberts, Seng, Shurey, Smith, Stavrinos and Stevenson

 

Quorum:                           Eight (8) members

 

NOTE:   At the Extraordinary Meeting held on 28 September 2004, the Council resolved that the Administration and Finance Committee be constituted as a committee with full delegation to determine matters on the agenda.

Apologies/Granting of Leave of Absences 

Confirmation of the Minutes  

Administration and Finance Committee Meeting - 10 November 2015

Declarations of Pecuniary and Non-Pecuniary Interests

Address of Committee by Members of the Public

Privacy warning;

In respect to Privacy & Personal Information Protection Act, members of the public are advised that the proceedings of this meeting will be recorded for the purposes of clause 69 of Council’s Code of Meeting Practice.

Urgent Business

Administration Reports

A12/15     Contingency Fund - status as at 30 November 2015............... 1

Finance Reports

F16/15      Monthly Financial Report as at 31 October 2015..................... 5

F17/15      Investment Policy............................................................... 15    

Notice of Rescission Motions

Nil  

…………………………………………………….

Ray Brownlee

General Manager


Administration and Finance Committee                                                                      1 December 2015

 

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Administration Report No. A12/15

 

Subject:                  Contingency Fund - status as at 30 November 2015

Folder No:               F2004/07396

Author:                    Julie Hartshorn, Senior Administrative Coordinator      

 

Introduction

 

The purpose of this report is to detail the progressive amount of donations, allocations, waiving of fees and other similar contributions for the 2015-16 financial year.

 

Issues

 

In the 2015-16 financial year there have been 26 allocations totalling $151,720.50 as listed in the table below.

 

Meeting

Details

Approved allocation

Annual contributions (ongoing)

Ord Council – 22 Feb 2011

Annual contribution (5 years from 2011-12 to 2015-16) - Randwick Girls High School - 'Mayor's Award'

$1,000.00

Planning Committee – 13 Mar 2012

Annual contribution – Australia Day Botany Bay Regatta

$750.00

Ord Council – 25 June 2013

Annual contribution Sponsorship of the Westpac Rescue Helicopter Lifesaver Service – 3 year agreement 2013-14 to 2015-16

 

$15,000.00

Ord Council

17 Sept 2013

Annual Contribution (5 years from 2015-16 to 2019-20) Waiving of Fees – Rainbow Club Australia Inc – Murray Rose’s Malabar Magic Ocean Swim

 

$14,500.00

Ord Council  23 Sept 2014

Annual contribution (5 years from 2015-16 to 2019-20) - Randwick Boys High School - 'Mayor's Award'

$1,000.00

2015-16 Contingency Fund allocations

Ord Council – 23 Sept 2014

POW Hospital's request for financial support to use Prince Henry Centre – to celebrate 50th year since the first kidney transplant in NSW

$3,600.00

Ord Council – 28 Apr 2015

Waiving of fees - South Maroubra Surf Club use of DRLC for the Annual Nippers Proficiency Test

$1,210.00

Ord Council – 23 June 2015

Waiving of fees - Saint George Coptic Orthodox Church Annual Community Fete

$1,545.00

Ord Council – 23 June 2015

Waiving of fees - Des Renford Leisure Centre for Maroubra Swim Club Carnivals

$4,100.00

Ord Council – 23 June 2015

Sponsorship - Eastern Beaches Masquerade Ball (supporting the Eastern Beaches LAC)

$6,500.00

Ord Council – 23 June 2015

Waiving of Fees - Indonesian Presbyterian Church Community BBQ

$165.00

Ord Council – 28 July 2015

New Mayor's Award for Outstanding Contribution to the Randwick Business Community

$2,000.00

Ord Council – 25 Aug 2015

Waiving of fees and financial contribution - NSW Police Force International Student Beach Soccer Day

$4,533.00

Ord Council – 25 Aug 2015

Waiving of fees - Handball Australia

$3,685.00

Ord Council – 25 Aug 2015

Waiving of Fees - Our Lady of the Rosary School, Kensington Christmas Fair

$7,000.00

Ord Council – 25 Aug 2015

Waiving of fees - Salvation Army Community Christmas Lunch

$2,220.00

Ord Council – 25 Aug 2015

15th Annual Des Renford Chair of Hearts Research Family Gala and Charity Day

$8,500.00

Ord Council – 25 Aug 2015

Waiving of fees - South Coogee Public School Biennial Fiesta

$7,000.00

Ord Council – 25 Aug 2015

Waiving of fees and financial contribution – Surfing NSW

$23,533.00

Ord Council – 22 Sept 2015

Donation - ‘A National Act of Recognition’ Fund

$2,500.00

Ord Council – 27 Oct 2015

Waiving of fees - Greek Epiphany Festival 2016

$10,212.00

Ord Council – 27 Oct 2015

Waiving of fees - St Nicolas' Anglican Church “Carols by the Sea”

$1,732.00

Ord Council – 27 Oct 2015

Waiving of fees - Closure of Edgar St, Maroubra between Henning Ave and Cooper St Maroubra

$3,000.00

A&F Comm -  10 Nov 2015

Waiving of fees – 2015 Taste of Coogee event

$14,795.50

Ord Council – 24 Nov 2015

Waiving of fees - Maroubra Diggers Junior Swimming Club – for carnivals at Des Renford Leisure Centre

$2,040.00*

Ord Council – 24 Nov 2015

Waiving of fees - Rainbow Club Australia - lane hire at Des Renford Leisure Centre

$9,600.00*

Total - 2015-16 Contingency Fund allocations

$151,720.50

 

*assumes Council adopts the recommendations in MM63/15 and MM64/15 at the 24 November 2015 Council meeting.

 

Relationship to City Plan

 

The relationship with the City Plan is as follows:

 

Outcome 2:        A vibrant and diverse community.

Our community will be proud to be part of our City and celebrate its range of cultures and people.

Direction 2b:      Enrich our range of community services that meet our community’s needs.

Key Actions:       Support the provision of services and facilities to meet the needs of our Target Groups and celebrate the range of cultures and people within Randwick City.

 

Financial impact statement

 

Council has allocated $110,341.00 in the 2015-16 Budget for contingencies (including the September quarterly review adjustment). Any expenditure that exceeds the budget allocation will be funded through savings at the December quarterly budget review.

 

 

Recommendation

 

That the status of the contingency fund allocations for 2015-16 be noted.

 

Attachment/s:

 

Nil

 

  


Administration and Finance Committee                                                                      1 December 2015

 

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Finance Report No. F16/15

 

 

Subject:                  Monthly Financial Report as at 31 October 2015

Folder No:               F2015/00181

Author:                    Oliver Guo, Management Accountant      

 

Introduction

 

Section 202 of Local Government (General) Regulation 2005 requires that the responsible accounting officer of a council must:

a)     establish and maintain a system of budgetary control that will enable the council’s actual income and expenditure to be monitored each month and to be compared with the estimate of the council’s income and expenditure, and

b)     if any instance arises where the actual income or expenditure of the council is materially different from its estimated income or expenditure, report the instance to the next meeting of the council.

 

Issues

 

This report provides the financial results of the Council as at 31 October 2015. Attachment 1 summarises the Council’s financial performance and its source and application of funds. It also summarises the operating result for each of the Council’s principal activities. Attachment 2 details the financial position of the Council as at 31 October 2015. Attachment 3 details the cash flow of the Council as at 31 October 2015.

 

This report is as at 31 October 2015 and does not include the September Quarter Budget Variations. Council has subsequently adopted the September Variations and as a result they will be included in the November Report.

 

Relationship to City Plan

 

The relationship with the City Plan is as follows:

 

Outcome 1:     Leadership in Sustainability.

Direction 1b:   Council is a leader in the delivery of social, financial and operational activities.

 

Financial impact statement

 

There is no direct financial impact for this matter.

 

Conclusion

 

The Council’s Manager Corporate and Financial Planning, as the Responsible Accounting Officer, advises that the projected financial position is satisfactory. The Current Ratio as at 31 October 2015 is 2.62 compared to 2.34 as at 30 June 2015. The Current Ratio is a financial indicator specific to local government and represents its ability to meet its debts and obligations as they fall due.

 

Recommendation

 

That the Administration and Finance Committee acknowledges that the Responsible Accounting Officer has advised that the projected financial position of Council is satisfactory.

 

 

Attachment/s:

 

1.View

Monthly Financial Statements - Income Statements October 2015

 

2.View

Monthly Financial Statements - Balance Sheet October 2015

 

3.View

Monthly Financial Statements - Cash Flow Statement October 2015

 

 

 

 


Monthly Financial Statements - Income Statements October 2015

Attachment 1

 

 


 


 


 


 


Monthly Financial Statements - Balance Sheet October 2015

Attachment 2

 

 


Monthly Financial Statements - Cash Flow Statement October 2015

Attachment 3

 

 


Administration and Finance Committee                                                                      1 December 2015

 

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Finance Report No. F17/15

 

Subject:                  Investment Policy

Folder No:               F2015/06527

Author:                    Greg Byrne, Manager Financial Operations      

 

Introduction

 

Council has an Investment Policy that outlines the investment objectives of Council. The Investment Policy provides the framework that safeguards the investment portfolio.

 

The Office for Local Government publish a Code of Accounting Practice and Financial Reporting that requires Council to review the Investment Policy annually or in the event of legislative change or as a result of significantly changed economic conditions.

 

At the Ordinary Council Meeting of 27 October 2015 it was resolved that a report be brought forward to a Council meeting assessing how Council’s Investment Policy might be amended to allow for a comprehensive divestment from institutions supporting fossil fuels.

 

Issues

 

The Fossil Fuel Divestment movement is being campaigned by various organisations and is a worldwide movement that aims to see banks, universities, superannuation funds and other organisations cease any investment exposure in fossil fuel industries.

 

Council’s current Investment Policy does not allow company shares as a permissible investment. Consequently we do not hold any direct investment in fossil fuel industries via company shares, however we do hold investment funds with financial institutions who provide loans to fossil fuel companies.

 

The divestment from institutions supporting fossil fuels would mean that Council would identify any banks that provide loans to companies involved with the fossil fuel industries and any investment monies held would be moved away from those banks.

 

The current Investment Policy has the “Preservation of Capital” as the principal objective. The Investment Policy is very conservative and is highly restrictive in order to maintain this objective. The current Investment Policy has contributed to Randwick City Council’s strong financial position. $100’s of millions were lost by councils during the Global Financial Crisis (GFC) as a result of poor quality investments. Randwick City Council never lost a cent to the speculative CDO investments that many councils were exposed to during the GFC.

 

In 2013, Council enhanced the credit quality of the investment portfolio by restricting allowable investments to only Prime, High Grade and Upper Medium Grade investments. This resulted in all new investments having a minimum Standard & Poors (S&P) long term credit rating of A-. Council has not invested in any new products since 2013 with a credit rating of BBB+ or less.

 

The credit quality of Council’s investment portfolio is strengthened by its exposure to the major domestic banks. The “big four” banks, ANZ, CBA, NAB and Westpac, are all rated “AA-“. As at 30 September 2015, 52% of the investment portfolio equating to $40.13M, was held with the “big four” banks. The major domestic banks also happen to rank amongst the highest commercial banks lending to fossil fuels in Australia.

 

If the Investment Policy was altered to prevent the investment with any institutions lending to fossil fuel companies, Council would be eliminating any investments with the major banks rated “AA-“ as well as some other “A” rated banks including Macquarie Bank. Council would be left with a very small sub-sector of banks to choose to invest with under the credit quality provisions of the current Investment Policy.

 

To expand the available choice of investments, Council could elect to remove the credit quality provisions that were introduced in 2013, however this would reduce the overall rating of the investment portfolio which would in turn weaken the “Preservation of Capital” position.

 

The introduction of divestment in institutions funding fossil fuels, could lead to an adverse impact on the quality of Council’s investment portfolio. Possible implications include:

 

·      High concentration risk – limiting Council to a selected number of banks

·      Increased credit risk

·      Increased counterparty risk

·      Reduction in performance resulting in significant loss of investment income generated

·      Underperformance compared to industry benchmarks and to the majority of other local councils

 

Overall, the divestment from institutions supporting fossil fuels would be contrary to Council’s adopted Investment Policy’s primary objective to preserve capital, as the investment portfolio’s risk would increase.

 

If a fossil fuel free Investment Policy were introduced, there is no guarantee that a particular financial institution will maintain its status as fossil free. For example, Suncorp Bank is currently not lending and is considered fossil free, however in 2008-09 they made loans in the amount of $962M. If a divestment position is adopted, it would become necessary for Financial Operations staff to ask every financial institution, every time a new investment is placed, if they provide funding to fossil fuels.

 

Council’s primary bank for transactional banking is the Commonwealth Bank of Australia (CBA). If a divestment from fossil fuel position is adopted by Council, it would be necessary to source a new bank for transactional banking.

 

It is recommended that the current Investment Policy be maintained and be adopted by Council with the addition of the following clause:

 

Fossil Fuel Investment

Where financial institutions are offering equivalent investment returns with the same credit rating, and the investment fits within the provisions of this Investment Policy, preference will be given to placing funds with institutions identified as not dealing with fossil fuel companies. 

 

Relationship to City Plan

 

The relationship with the City Plan is as follows:

 

Outcome:  1.     Leadership in Sustainability.

Direction:  1c.    Long term financial viability is achieved.

 

Financial impact statement

 

The Investment Policy provides the framework for the prudent investment of Council funds. The policy has the key objectives of; preservation of capital, maximise investment returns, and minimising any associated risks.

 

Conclusion

 

The current Investment Policy with the proposed Fossil Fuel Investment clause, is attached for consideration / adoption.

 

 

Recommendation

 

That the attached Investment Policy be adopted with the addition of the proposed Fossil Fuel Investment clause.

 

 

 

Attachment/s:

 

1.View

Investment Policy - December 2015

 

 

 

 


Investment Policy - December 2015

Attachment 1