Financial overview

Our financial position remains sound. We have included detailed information about our financial performance in the Financial Statements and Performance Statement sections of the Financial Report.

The value of rateable property as at 1 January 2022 was $84 billion. We are focused on generating funds to update community infrastructure and facilities. We also want to maintain essential services and, where possible, improve them, especially in terms of access, equity and environmental sustainability. Our long-term financial strategy confirms this approach.

During 2021–22, the COVID-19 pandemic continued to impact on Council’s operations. Council has noted the following significant impacts on its financial operations:

Council was successful in receiving the following additional revenue:

  • Outdoor Eating and Entertainment Package to support hospitality businesses prepare for a COVID normal re-opening across Victoria – $250,000 (round two) and COVID Safe Outdoor Activation Fund 2021, $575,000.
  • Local Roads and Community Infrastructure Program (Phase Two $2.2 million).
  • Local Government Business Concierge and Hospitality Support Program, $120,000.

Revenue reductions including:

  • Fees from Glen Eira Leisure services were reduced by $3.95 million due to forced closures.

Revenue forgone including:

  • Deferring payment of rate debt accumulated from 16 March 2020 and 30 June 2021 and offering a Hardship Rates Relief Package during 2021–22 for any ratepayer experiencing financial hardship and no interest charged; rate debtors increased by $1.94 million over the course of the year.

New costs and services

  • Pandemic prevention expenses associated with COVID-19 including: personal protective equipment and clothing, cleaning materials such as: sanitisers, gloves, cleaning products and other prevention materials – $678,000 incurred for 2021–22.

Additional COVID-19 impacts are included in the relevant notes throughout the Financial Report.

The Financial Report can be downloaded here.

See a summary of our performance below.

OPERATING POSITION

Our 2021–22 operating position was a $14.23 million surplus, which is $3.18 million higher than our Budget 2021–2022. Factors that contributed to this include:

INCOME

Our total revenue for the 2021–22 financial year was $188.46 million, $6.66 million unfavourable to budget (three per cent).

Rates and charges revenue was in line with the Budget 2021–2022. Our rates and charges are still much lower than the average of all inner metropolitan councils (we are the second lowest).

Statutory fees and fines were unfavourable to budget by $1.23 million, mainly due to lower than anticipated revenue from parking infringements of $1.66 million.

User fees were lower than anticipated, mainly related to further pandemic related closures of Glen Eira Leisure facilities ($3.95 million), the decision to close of our Residential Aged Care services at Rosstown Community in November 2021 ($2.02 million) and reduced fees received for Family and Children’s services ($896,000).

Grants — operating were favourable to budget by $2.39 million due to:

  • Early receipt of the 2022–23 payment from the Victorian Grants Commission. The amount of $3.27 million (75 per cent of the 2022–23 grants) was received for financial assistance and local roads funding during the 2021–22 financial year; increased government subsidy funding of family day care and early learning centres ($302,000); and the above favourable variances were offset by reduced residential aged care income due to the closure of two facilities ($2 million).

Grants — capital was unfavourable to budget by $1.7 million due to the timing of grants now expected to be received during 2022–23.

Contributions — monetary — Open space fees are favourable to budget by $937,000. These contributions are levied on multi-unit property developments in order to fund open space and depend on decisions made by developers, not Council.

Refer to Figure 1.

EXPENSES

Our total expenditure for 2021–22 was $174.22 million (five per cent favourable to budget). Significant variances to budget include:

Employee costs — favourable variance of $9.05 million mainly due to: closure of Rosstown Community in November 2021 ($2 million) and the remainder due to pandemic related closures and reductions in service as well as general staff vacancies.

Materials and services — favourable variance of $2.6 million due to savings across utilities, materials, contractors, training and building maintenance, mainly due to closures of services and buildings as a result of the pandemic.

For more information see note 2 starting on page 11 of the Financial Report.

Refer to Figure 2.

FIGURE 1. 2021–22 SOURCES OF INCOME (%)

Figure 2. 2021–22 Categories of Expenditure (%)

CAPITAL INVESTMENT

During 2021–22, we expended $54.54 million on capital works. Variance to budget for total capital works was $28.1 million across the following activities:

Land — we purchased six parcels of land for future open space ($3.78 million over budget).

Buildings — we underspent by $21.3 million due to delays in starting work on Carnegie Memorial Swimming Pool ($17.6 million) and works that are ongoing at Murrumbeena Community Hub, Bentleigh Library and Youth Hub redevelopment and Lord Reserve. These will all be carried forward into 2022–23.

Plant, machinery and equipment — was under budget due to delays in delivery of ordered fleet and plant and equipment as a result of manufacturing and delivery delays ($1.06 million).

Communications and telecommunications — was under budget due to hardware unable to be delivered by year end ($994,000).

Roads — was underspent by $1.54 million due to works across the municipality unable to be completed. Delays have occurred with delivery of materials and where works need to be aligned with other utility and service providers. The underspend will be carried forward to the 2022–23 financial year.

Open space — underspent by $1.8 million due to various projects that will be completed early in 2022–23. This includes Princes Park play space, Caulfield Park Masterplan implementation and Lord Reserve and Koornang Park Masterplans.

Streetscape works — relates to development and beautification of Council’s streets and shopping precincts. These projects are under budget by $2.93 million mainly due to the Bentleigh Eat Street Plaza project which was delayed due to COVID-19 ($2.21 million). Funding will be carried forward to the 2021–22 year.

Refer to Figure 3.

ASSET EXPENDITURE CATEGORIES

The major asset expenditure categories of capital works were:

  • land $10.78 million;
  • buildings $12.71 million;
  • plant and equipment $3.33 million;
  • roads $5.63 million;
  • footpaths $2.92 million;
  • drainage $2.98 million;
  • open space and recreation $6.6 million;
  • car parks $451,000;
  • streetscape works $87,000; and
  • projects carried forward from 2020–21 $9.09 million.

For more information see note 2.1.2 starting on page 14 of the Financial Report.

The $54.54 million comprised:

  • renewal 22.08 per cent ($12.04 million);
  • upgrade 28.24 per cent ($15.41 million);
  • expansion 5.9 per cent ($3.22 million); and
  • new expenditure 43.78 per cent ($23.88 million).

Refer to Figure 4.

FIGURE 3. CAPITAL WORKS EXPENDITURE 2011–12 TO 2021–22 ($M)

Figure 4. 2021–22 Capital Works expenditure — by type (%)

ASSET RENEWAL

To bridge the infrastructure gap, we invested $27.45 million in renewing and upgrading assets in 2021–22.

Our asset renewal ratio, measured by comparing asset renewal and upgrade expenditure to depreciation, was 112 per cent.

Refer to Figure 5.

ASSETS

Our net asset base increased from $2,509 million to $2,763 million. This was mostly due to an increase in the value of our fixed assets from $2,503 million to $2,768 million.

The movement in our property, infrastructure, plant and equipment value is due to:

  • the impact of our assets revaluation;
  • the net result of the Capital Works Program;
  • asset depreciation; and
  • the sale of property, plant and equipment.

Refer to Figure 6.

LIQUIDITY

Working capital is the excess of current assets above current liabilities. This calculation recognises that although we have current assets, some are already committed to settling liabilities in the following 12 months. Therefore, they are not available for discretionary spending.

Cash and cash equivalents (including financial assets) were $45.58 million as at 30 June 2022. This is enough to cover our short-term restricted liabilities, which include $25.69 million in trust funds and aged care deposits.
We must ensure we maintain working capital and have enough cash reserves to meet normal cash flow requirements. We will continue to have a large investment in capital works projects. The liquidity ratio expresses our level of current assets for meeting current liabilities.

We should hold enough cash to cover restricted assets, such as residential aged care deposits, Public Open Space Reserve, contract deposits and the Fire Services Property Levy.

Refer to Figure 7.

FIGURE 5. ASSET RENEWAL RATIO (INCLUDING UPGRADE) 2017–18 TO 2021–22 (%)

FIGURE 6. PROPERTY, INFRASTRUCTURE, PLANT AND EQUIPMENT AND INTANGIBLES 2017–18 TO 2021–22 ($M)

FIGURE 7. LIQUIDITY RATIO (WORKING CAPITAL) 2017–18 TO 2021–22 (%)

PUBLIC OPEN SPACE STRATEGY

Contributions to the Public Open Space Reserve during the financial year relate to public open space levies that were received under Section 18 of the Subdivision Act 1988.

Contribution income of $4.39 million was received during 2021–22. This can be used to fund projects that meet the conditions of the Open Space Strategy, which is mainly focused on increasing open space in identified gap areas. We spent $11.04 million on projects that met these conditions. The balance of the Public Open Space Reserve is now $19.61 million.

Reading our Financial Report

Financial Report and Performance Statement