The 2022-23 financial results for Central Coast Council show a second year of budget surpluses following two years of losses during the financial crisis that put the Coast under administration in late 2020 and culminated in the councillors being officially sacked in March 2022.
Administrator Rik Hart adopted the draft financial statements at the September 26 Council meeting after CEO David Farmer outlined the highlights.
Council recorded a net operating surplus, excluding capital grants and contributions, of $28.5M, which was $21.5M more than budgeted in the 2022-23 financial year.
It was $12M less than the result in the prior year, but Council said it still represented a good result.
Farmer said it was bolstered by the early payment of the 2023-24 Financial Assistance Grant from the Federal Government.
“Remove that early payment and the surplus was about $10M and close to budget while the underlying surplus was about $20M which was close to budget,” he said.
Farmer said the surpluses from the two years were, in total, almost as much as the smaller of the deficits, in 2021, so the Council was still behind by about $90M or the equivalent of the 2020 deficit.
Council took out two emergency loans totalling $150M in December 2020 and Farmer said the larger of the loans, $100M, was now down to about $80M and money was put aside to repay it in December when it is due to be refinanced.
The money put aside had reached about $40M by the end of the 2022-23 financial year and had grown to about $55M in the first two months of this financial year.
“We plan to retire most if not all of this loan in December,” he said.
He said that was important for two reasons: it removed the debt off the books and would provide free cash flow for other things but also the interest rate on that debt would “dramatically increase” if Council let that roll over in December.
“In summary, Council is in a sound and stable financial position,” Farmer said.
“It still has to deal with debt incurred during the financial crisis and it also has to deal with a range of other financial challenges, consistent with other local governments, for example, the rate cap for the past two years has been one per cent and 3.8 per cent respectively which is significantly lower than inflation, building construction costs, or the Local Government Award.
“And so therefore we have to manage significant constraints but we’re in a position that is not dissimilar to most other local governments, moving from a position that was possibly the worst, one of the worst, in the country.”
Hart said Council had come an extremely long way in a short period of time.
“It does take time to get this organisation completely back on its feet,” he said.
Earlier, at the public forum held before the meeting, resident activist Kevin Brooks had criticised Council’s financial position, saying the ratepayers were to thank for Council’s financial turnaround.
“The August Consolidated Report forecasts that income from rates this year will be a whopping $421M; just three years ago, it was only $331M,” Brooks said.
“Over three budgets since democracy was suspended, income from rates has risen by an eye-watering $90M per year – close to a 30 per cent increase in just three years with more phased increases in the pipeline.
“To put that in perspective, the Administrator is on public record as saying he needed $11M per year to repay loans from the financial crisis.
“He is now raising eight times that in extra rates.”
Brooks said it showed that the burden of the financial turnaround had been borne almost exclusively by ratepayers.
“Even more so when you add asset sales on top,” he said.
The money “gushing into Council coffers” may have papered over the cracks of the financial crisis but it had not solved Council’s underlying problems in poor management, low productivity, poor culture, inefficiency and insufficient prioritisation, Brooks said.
“As at March this year, this Council had the same number of staff as it did at merger in May 2016 based on the Administrator’s preferred measure of FTE including vacant posts,” he said.
“Given the service cuts and performance decline since then, this means the same number of people are producing less – which means productivity has fallen.
“This Council raises significantly more in rates, spends more, but does less and performs worse.”
The consolidated statements, including for Council’s water and sewer authority, will now be externally audited before being presented to the October Council meeting and are due to be submitted to the Office of Local Government by the October 31 deadline.
“No pressure,” Mr Hart said to the Corporate Services Director, Marissa Racomelara, whose department includes the chief financial office.
Merilyn Vale