Almost all of Central Coast Council’s debt appears to be confined to the Central Coast Water Supply Authority, rather than within the Council, it was revealed in 2019/20 audited financial reports.
In comparison to other councils, Central Coast debt appears high, but the debt is mostly within the water division and is quite low compared with other water authorities.
Inherited debt from when the two former councils, Wyong and Gosford, merged to form the Central Coast in 2016, was all in the water and sewer business.
Central Coast is one of the few NSW councils which runs its own water supply business.
Total borrowings for water, drainage and sewerage at the end of the financial year 2019/2020 was $266M.
This would include internal loans from Council’s general funds explained later.
Total revenue for the water, drainage and sewerage business for the same financial year was $161M.
So, the debt was about two times the revenue.
By contrast, Hunter Water’s total revenue for the same financial period was $368M but it had borrowings of $1.455B which is more than five times the revenue.
Central Coast Council’s consolidated statement of financial position as at June 30, 2020, showed Council’s combined current and non-current borrowings totalled $237M.
It showed user charges dropped dramatically from the previous financial year from $159M to $119M during the year, when COVID-19 meant that much of the normal activities of the residents, such as the use of pools, childcare and holiday parks dropped dramatically with the pandemic restrictions.
At the same time, capital works grew from $169.6M to $227.5M.
Council sold investment securities worth $336.7M and bought $170.2M investment securities meaning it sold off $167M of its investments to fund its cash shortfall.
The financial statements were corrected, so explanatory note 7C in the statements now shows that in the previous financial year of 2018/19, Council had $94M more in externally restricted funds than it reported in the 2018/19 financial statements. (See separate story.)
Up until this year, the water supply authority had reported this as unrestricted cash.
The restricted funds at year end for 2019/2020 for the Water Supply Authority were $83.2M.
This means that Council had a negative unrestricted cash balance of $170M at the end of financial year 2019/20.
Note 27 shows that the Council loaned itself internal funds, moving money from the general fund to the water fund and to the drainage fund.
These internal loans totalled $55.2M.
They included two 20-year loans, with an interest rate of 5.72, raised in 2013 and one in 2015, and another on the last day of the 2020 financial year for a one,year term with a nil rate of interest.
Council adopted the 2019/20 audited financial reports for Central Coast Council and the Central Coast Council Water Supply Authority at its Council meeting on May 11.
Council’s net operating result for the financial year ending June 30, 2020, is a deficit of $88.7M, excluding Grants and Contributions for capital purposes.
After adjusting for Capital Grants and Contributions, the net operating deficit is $21.8M.
The only non-cash component of the income statement showed depreciation and amortisation expenses of $157.1M
Central Coast Council Water Supply Authority’s net operating result for the financial year ending June 30, 2020, is a deficit of $48.3M, excluding Grants and Contributions for capital purposes.
After adjusting for Capital Grants and Contributions, the net operating deficit is $31.5M.
Administrator, Dick Persson, said a range of measures are in place to ensure the financial sustainability of the Council.
“The financial challenges of Central Coast Council have been well publicised and the audited financial reports for 2019/20 reiterate the importance of the decisive action that has been taken,” Persson said.
“Council has undergone major change in recent months, much of which has been very difficult, but the community can be assured that a strong pathway to financial sustainability has been established.
“There is a considerable value of rates that have been outstanding for over five years and I have called for an urgent report which outlines rates in arrears, history and options to recoup with consideration to our hardship policy.”
Merilyn Vale
Is MERILYN VALE a councilor or former councilos? Certainly sounds like it. It still remains, the council is in debt to the tune of over five hundred milliom dollars, and shows that the genral manager and all councilors should never be allowed to stand for council or any other position of trust again.