Annual Review 2015–16 Excellence in property and places for NSW
Annual Reports
Government Property NSW Dear Minister
Letter of submission
I am pleased to submit to you, for presentation to Parliament, an Annual Review of the activities of Property NSW for the period 1 July 2015 to 30 June 2016.
Additionally, in accordance with the Annual Report (Statutory Bodies) Act 1984, I submit the Annual Reports and financial affairs of Government Property NSW, Sydney Harbour Foreshore Authority and NSW Teacher Housing Authority for the same period.
Brett Newman Martin Hoffman Deputy Secretary Secretary Property NSW Department of Finance, Services and Innovation
Property NSW Annual Review 2015–16 Front cover: Colonial Secretary’s building, Macquarie Street, Sydney. This page: The Goods Line, Darling Harbour © Florian Groehn. Contents
Property NSW Annual Review Appendices
02 Foreword from our 14 Our services and 37 Appendix A Deputy Secretary divisions Government Property NSW • F inancial statements 04 Our role 20 Our people • S tatutory information 05 Our organisation 23 Our performance 91 Appendix B Sydney Harbour 06 Our work 24 Performance overview Foreshore Authority • The Sandstones • Commercial • Financial statements • Gosford revitalisation • Retail and statutory information: • Millers Point • Waste Sydney Harbour • Integrated outsourced • Housing Foreshore Authority asset management • Financial • Financial statements: • Relocations to Luna Park Reserve Trust Western Sydney 30 Environment and • Flexible teacher sustainability 183 Appendix C accommodation Teacher Housing • The Goods Line Authority of NSW • Financial statements • Statutory information
246 Index
Under clause 6 of Schedule 5 of the Waste Recycling and Processing Corporation (Authorised Transaction) Act 2010, the Treasurer has designated that Waste Assets Management Corporation’s Annual Report be included with the Department of Finance, Service and Innovation’s Annual Report. www.property.nsw.gov.auProperty NSW Annual Review 2015–16 Foreword from our Deputy Secretary On behalf of Property NSW, I’m delighted to report on our progress over the past 12 months, a period of significant progress for our agency.
• Pipeline of projects – we have a pipeline of $2.3 billion worth of possible transactions over the financial years 2017–21. This is an estimate of the assets that we are currently reviewing and assessing Property NSW is the new brand name encompassing the in consultation with government 02 entities of Government Property NSW (GPNSW), Sydney agencies, including State Owned Harbour Foreshore Authority (SHFA), Teacher Housing Corporations and Public Trading Authority of NSW (THA) and Waste Assets Management Enterprises, which may be Corporation (WAMC). This rebranding is symbolic of the considered for sale, redevelopment evolution of GPNSW, which now encompasses a wider range improvement or continued of functions, including place making expertise as a result of occupation by government. the consolidation of SHFA functions, and the subsequent integration of NSW Public Works Facilities Management • Millers Point – our sales program and Valuation Services, formerly part of Land and Property has delivered $210 million to fund Information (LPI). new social housing dwellings across New South Wales. With a total of This evolution has enabled the coming together of tremendous 72 Millers Point properties sold skills and expertise, which build Property NSW’s capability this year, close to 600 new fit-for- as a property and place making specialist. This past year has purpose social housing dwellings seen us deliver an array of major projects and transactions have been funded to date. as well as drive tourism and economic development. This has been possible with our extensive experience across the • Gosford revitalisation – delivering property sector and heritage, enabling us to provide end-to- a plan to develop a vacant site end solutions for property portfolios and places. at 32 Mann Street, Gosford, to support the government’s Decade It has been a source of great pride that our group has of Decentralisation (DoD) policy managed to further its role as NSW Government’s trusted and to enable the relocation of advisor when it comes to driving reform and delivering over 300 Department of Finance, commercial and community best practice outcomes. Services and Innovation (DFSI) roles – contributing to the revitalisation of Property NSW owns and manages $3 billion worth of assets Gosford’s economy. across 1,800 sites, as well as managing over 1,300 leases for NSW Government agencies. • Decade of Decentralisation – we have continued to play a substantial Property NSW has delivered significant results in 2015/16. role in relocating public service Highlights include: jobs from the Sydney CBD to metropolitan and regional centres, in • Asset recycling – our Commercial Transactions and Major particular Western Sydney. We have Projects teams delivered 130 transactions worth $431.5 already delivered a reduction of over million, funding that will support the delivery of better 35,100m 2 of government Sydney infrastructure and services. These included the sale of CBD office space, against a target land at Stanhope Gardens for $31 million and a further 13 of 100,000m2 by 2021, and have surplus properties for $32.8 million for the Department of relocated more than 2,300 jobs out Education. of the CBD, with around 1,300 of
Property NSW Annual Review 2015–16 Internal presentation from Deputy Secretary, Brett Newman
those relocated to Western Sydney. • Property Portfolio Reporting We are currently undertaking a (PPR) – we developed an innovative leasing market search for up to online portfolio management portal, 55,000m2 of office accommodation improving the way our government in Western Sydney to accommodate clients manage their assets. PPR a number of government agencies enables agencies to access real- from 2019. time key metrics for their Property NSW managed property portfolio, 03 • The Sandstones – we continue resulting in improved decision- to support the adaptive reuse of making. heritage assets. Achievements this year include the sale, via long-term We have made significant progress over lease, of the Lands and Education the past 12 months, and our enhanced buildings on Bridge Street, Sydney, range of services are well placed to drive to Pontiac Land Group, for development and reform. redevelopment as a luxury boutique hotel, including their commitment to We recently developed a simplified undertake an estimated $300 million vision for our organisation: excellence of works. in property and places for NSW.
• Property and facilities Our success is directly linked to the management – we awarded an support we receive from our key integrated outsourced property stakeholders, and I’d like to thank them asset management contract to for their contribution during a year of Jones Lang LaSalle. This new transition for our agency. contract will enable government to save close to $12 million over Finally, I’d like to acknowledge the the contract’s five year term by commitment of our people. I’d like to leveraging global best practice commend them for their resilience property service experience. over the past 12 months, and for their commitment in helping our agency • Place management – we achieve our vision. established a dedicated Place Management division, which It is with pleasure that I present our will become the model for other 2015/16 Annual Review and Annual jurisdictions across the state. Reports, and I look forward to Visitation to Darling Harbour remains delivering our strategic objectives steady, despite major redevelopment and capitalising on new opportunities within the precinct, on the back of over the coming year. a strong program of events and activations which have contributed to tourism and spend in the precinct. Brett Newman In The Rocks, major events like Deputy Secretary the Aroma Festival attracted more Property NSW than 100,000 people to the iconic precinct.
Property NSW Annual Review 2015–16 Our role Property NSW manages the NSW Government’s Property NSW operates under the significant property portfolio and its places. Our focus following principal legislation: is on the strategic review, acquisition, divestment and • Government Property NSW Act 2006 greater utilisation of the government’s real property assets • Sydney Harbour Foreshore Authority and precincts, which results in better visitor experiences Act 1998 and services for the people of NSW. • Teacher Housing Authority Act 1975 • Waste Recycling and Processing Our assets comprise office buildings, significant heritage Corporation (Authorised Transaction) properties, non-commercial assets and land holdings, and Act 2010. many have been vested in Property NSW by other government agencies.
Our organisation works closely with a range of government agencies, providing specialist industry knowledge, expertise and understanding of the unique requirements of government property management. 04 Our approach to management of government property generates whole-of-government savings, economic benefits, and sustainability.
Property NSW Annual Review 2015–16 Our organisation This year has been one of significant change, with a complex Under the Government Property restructure that saw the consolidation of SHFA under Property NSW Act 2006, GPNSW is also NSW, along with GPNSW, THA and WAMC. required to report to the Treasurer on matters relating to the properties of After balance date government agencies, including advice From 1 July 2016, Valuation Services, Public Works Facilities on their efficient utilisation and relevant Management and Public Works Advisory joined Property NSW budgetary measures. to form the Property and Advisory Group, which reports to DFSI. The organisation chart below is as at submission date. Operationally, the Property and Advisory Group is managed by a Deputy Secretary who reports to the Minister, both directly and via the Secretary of DFSI.
As statutory bodies representing the Crown, the entities that are under Property NSW have the status, privileges and immunities of the Crown and are under the control and 05 direction of the Minister for Finance, Services and Property.
Minister for Finance, Services and Property (Portfolio Minister)
Department of Finance, Services and Innovation
Property and Advisory Group
Public Works Property NSW Advisory Rural Place Water Water Group Leasing Strategy Portfolio Services Services Services Property Property Advisory Financial Valuation Valuation Solutions Operational Commercial Commercial and Housing Transactions Management Management Regional and Major Projects Heritage Asset
Structure as at submission date
Property NSW Annual Review 2015–16 Our work Property NSW’s work encompasses a range of property and place making skills and expertise, enabling the success of projects that meet government objectives. Case 06 studies of our work highlight our dedication to excellence in property and places.
Department of Lands building, BridgeProperty Street, NSW Sydney Annual Review 2015–16 Department of Education building, Bridge Street, Sydney
The Sandstones 7
In 2015/16, the NSW Government announced the sale, via a long-term lease, of The Lands and Education buildings, collectively known as ‘The Sandstones’.
Located at 22–39 Bridge Street, Sydney, Property NSW, using its heritage, planning, procurement, and these elegant, grandiose heritage buildings stakeholder management expertise, managed the due diligence tell a unique and interesting story about and divestment process. The due diligence process involved the history of the early NSW colony. In applying for and obtaining Stage 1 development consent and their current state, the Sandstones are endorsement of the Conservation Management Plans by the NSW underutilised by the government and Heritage Council. not readily accessible to the public. The buildings are State Heritage listed and The divestment process concluded in September 2015 with benefit from the highest level of statutory Pontiac Land Group, a reputable Singaporean developer and hotel heritage protection possible in NSW. operator with extensive experience in sympathetic heritage asset adaptive reuse projects, announced as the successful proponent. To contribute to the NSW Government’s The $35 million purchase price included a commitment to 2020 tourism policy targets and to open undertake an estimated $300 million of works. The redevelopment the assets to the public, future use of is forecast to generate economic benefits for the state of the buildings was restricted to adaptive $185 million over 20 years. reuse as luxury boutique hotels. To ensure an optimal outcome, the government Property NSW’s role on this exciting project will continue as it approved divestment via a long-term monitors delivery of the project through to the opening of the lease. This allows Property NSW to retain hotel in 2021. custodianship and ensure heritage controls are adhered to, while permitting the adaptive reuse as hotels.
Property NSW Annual Review 2015–16 Gosford Artist impression of proposed revitalisation Mann Street development
08 In 2015/16, the NSW Government endorsed the relocation of over 300 DFSI jobs to Gosford. Property NSW has delivered a plan to develop 32 Mann Street, which will contribute to the revitalisation of Gosford’s economy and reinforce the city’s importance as the regional capital of the Central Coast.
In April 2016, Property NSW lodged a The project aligns with the NSW Government’s Draft Central development application for a six storey, Coast Regional Plan, plans for revitalising the Gosford 7,000 square metre mixed use commercial waterfront precinct, and the Decade of Decentralisation building. A key aim of the development policy, ensuring regions across NSW play a greater role in the application is to accommodate the economic future of our State. relocation of more than 300 government jobs to Gosford. The long-term vision for the remainder of the Mann Street site is outlined in an indicative site concept study and includes a The development of 32 Mann Street has mix of development opportunities including restaurants, car the potential to act as a catalyst to create parking and boutique residential short-term accommodation, ongoing economic and employment together with generous public open space. opportunities for the Central Coast. The development will create 90 direct Property NSW will seek Expressions of Interest to secure an construction jobs, 30 new jobs in the experienced and capable development partner to develop planning and design stages, and in excess the A-grade, six storey mixed use commercial building and of 330 ongoing indirect jobs. The project purchase the vacant land for development so it delivers is also forecast to deliver $1.4 million per a vibrant and active area connecting Gosford CBD to the annum in additional retail expenditure to waterfront. the Gosford CBD and $4.2 million per annum in additional retail expenditure to Subject to approval of the development application the Central Coast. and securing a development partner, it is expected that construction of the commercial building will commence in early 2017 and take around 18 months to complete.
Property NSW Annual Review 2015–16 Property NSW is managing the sale of over 290 government owned properties in Millers Point, with proceeds reinvested into social housing. The sales program is part of the NSW Government’s initiative to sell government-owned heritage housing that is no longer fit-for- purpose, and reinvest the proceeds into the supply of over 1,500 new social housing dwellings across Millers Point Sydney and regional NSW.
In 2015/16, a total of 72 properties were Consistent branding and messaging has increased market sold, generating gross sales proceeds of exposure and awareness of the Millers Point precinct. Exclusive more than $210 million. For every property agents were appointed to manage large tranches of property sold, up to five modern social housing sales, delivering economies of scale for the Government and dwellings can be built, contributing to the ensuring better oversight of buyer preferences and interest. These reduction of the social housing waiting list. measures have assisted to reduce selling costs, maximising the Close to 600 new fit-for-purpose dwellings return for social housing reinvestment. have been funded to date. The Millers Point sales program will At the commencement of the divestment continue throughout the next financial year, program, the Department of Family and with plans to sell the remaining apartments, Community Services (FaCS) owned group properties and terraces, using a 293 former social housing properties combination of expression of interest and in Millers Point and The Rocks. Most auction programs. of the properties had been owned by the Government for over 100 years, with 214 heritage listed. Importantly, all heritage listed properties are sold with a Conservation Management Plan endorsed by the NSW Heritage Council.
Property NSW developed the ‘Rediscover Millers Point’ brand and marketed sales through the website www.rediscovermillerspoint.com.au.
Property NSW Annual Review 2015–16 Penrith Government Office Building
The new contract enables the government to save $11.9 million over its term, and delivers a robust performance management framework with a strong focus on service excellence. JLL’s global property expertise will also enable Property NSW’s government clients to leverage best practice processes and systems, further improving office 10 accommodation efficiency and delivering additional savings.
Property NSW will continue to provide Integrated strategic asset management and advisory services and, with the backing outsourced asset of JLL’s 24-hour help desk facility, deliver improved customer relationship management management. Improved technology platforms, such Property NSW’s new integrated outsourced asset as an online information portal and management contract with Jones Lang LaSalle (JLL) will reporting system, will provide our enable government savings of close to $12 million over its clients with up-to-date information five year term. on occupancy and utilisation costs, enabling improved budgeting and After a rigorous tender process, JLL was awarded a new forward planning. Property NSW integrated outsourced property asset management contract will have greater control over the in April 2016. management of the government’s capital maintenance program by improving the Leveraging off their global best practice specialist experience tracking, performance and delivery of in property services, JLL’s five year contract includes a more efficient operations. 24/7 help desk facility, property management, facilities management, minor works, project management, and The new contract arrangement research/benchmarking services. commences in the first quarter of 2016/17. A program of continuous This approach aligns with the Property Asset Utilisation improvement and innovation will drive Taskforce (PAUT) principle of reducing duplication, by further efficiencies and savings over outsourcing services by delivering an integrated property the next five years, with exceptional asset management framework. customer service being a primary target.
Property NSW Annual Review 2015–16 Artist impression of 105 Phillip Street, Parramatta
Relocations to Western Sydney
Working in consultation with the The NSW Government’s Decade of Decentralisation policy 11 Department of Education, Property aims to relocate public sector jobs from the Sydney CBD and NSW delivered a complex pre- Greater Sydney area to metropolitan and regional locations, commitment transaction to develop with a particular focus on Western Sydney. The government’s improved office accommodation in objective is to stimulate economic growth and long term job Western Sydney. generation.
In November 2015, the government approved the relocation of the Department of Education (DoE) from its existing CBD office tenancies (c. 35,000m2) to a new consolidated site in Parramatta (25,000m2). This will be implemented in two stages, with an estimated 650 jobs moving to Parramatta in 2018 and a further estimated 1,170 jobs moving in 2020.
Property NSW has secured a commitment for the DoE to be accommodated in new premises to be constructed by Dexus at 105 Phillip Street, Parramatta.
Property NSW provided its expertise and advice on the commercial aspects of the proposal, managing an open market Expression of Interest process and negotiating and securing the financial and commercial terms for the agreement for lease and lease documentation. This highly complex pre-commitment transaction will deliver a high- standard of accommodation with particular emphasis on environmental credentials and staff amenity. It will also deliver improved utilisation due to the reduction of the DoE’s current accommodation footprint by 10,000 square metres.
Property NSW Annual Review 2015–16 Flexible teacher Coonamble teacher accommodation accommodation
Teacher Housing Authority of NSW (THA) has designed flexible accommodation to support the needs of teachers and their families in remote and rural communities.
In June 2016, THA officially opened a $1.25 million accommodation complex, providing more housing for teachers at Coonamble’s schools. The new eight unit accommodation 12 complex on Gordon Street has the flexibility to be converted into four two-bedroom units, or two three-bedroom units and one single-bedroom unit.
Coonamble, nearly 600 kilometres north-west of Sydney, has a population of close to 3,000. Its two schools cater for nearly 500 students, and THA provides 33 residences for teachers across both schools.
The new housing is part of an ongoing commitment by the NSW Government to attract and retain teachers in rural and regional areas across the state.
Similar projects were completed during the year, with a $1.06 million development in Wilcannia (four units) and a $2.25 million development in Brewarrina (eight units).
Flexible accommodation meets the needs of families, couples and singles, as well as providing improved asset utilisation. THA will deliver similar projects to rural and remote communities in the future.
Property NSW Annual Review 2015–16 The Goods Line © Florian Groehn
Property NSW developed and manages The Goods Line (TGL), a green public space that provides a traffic-free, accessible thoroughfare from Central Station The Goods Line to Darling Harbour.
TGL connects Ultimo and Darling Harbour TGL has been compared to New York’s famous High Line, with Central Station and the CBD. reclaiming a disused rail corridor – including a heritage rail bridge 13 over Ultimo Road – and returning it to public use as a vibrant, Opened in August 2015, TGL is surrounded elevated pedestrian walkway and cycle path. by some of Sydney’s most important cultural, educational and media institutions, Property NSW worked closely with the University of Technology, including the ABC, UTS, TAFE and the Sydney, Sydney Trains and neighbouring stakeholders to deliver Museum of Applied Arts and Sciences the project. (Powerhouse). TGL has received many accolades for urban and green design, TGL creates a new open space for including the 2016 AILA NSW Awards Civic Landscape Award recreation and study, connecting more of Excellence and the 202020 Vision Green Design Award 2016. than 80,000 tertiary students, locals and It is currently nominated in the Landscape category of the World visitors to the many major attractions in Architecture Festival and the Rosa Barba International Darling Harbour. Landscape Prize.
TGL is also a new public space for pop- up events, bringing new activity into the precinct. Property NSW attracts more than 26 million people to Darling Harbour each year, and TGL adds to the social fabric by making it easier for nearby students, workers and residents to enjoy the entertainment and retail facilities on offer in the precinct.
Property NSW Annual Review 2015–16 Our services and divisions Property NSW’s services and divisions complement the organisation’s objectives.
14 Property NSW delivers property Major Projects solutions and great places for the Our Major Projects team is responsible people of NSW. for the strategic evaluation, management and delivery of large scale or complex Property NSW is focused on excellence real estate projects, including in property and places. We deliver acquisitions and divestments, on behalf continuous improvement and innovation. of the NSW Government. 14 Our approach is to collaborate with stakeholders to deliver government In executing its role, the team focuses objectives for the community. We on whole-of-government engagement manage the state’s significant property and outcomes. Its services include portfolio and its places, which results in adaptive re-use and best-use site better visitor experiences and services analysis, real estate advisory, acquisition for the people of NSW. and divestment management, and development management – such as Our services include: project design, feasibility assessment, • leading property reform rezoning, pre-leasing and project • active portfolio and asset management. management • delivering transactions and major Examples of Major Projects’ work projects include: • place making and heritage conservation, and • Heritage precinct management – • valuation services. strategic review of NSW Government’s Macquarie Street Our service delivery is underpinned by colonial heritage precinct, with a strong Key Performance Indicators, view to improving public access and described in Our KPIs, and supported connectivity, and the adaptive reuse by divisions that work closely with our of heritage buildings. government clients to drive commercial best practice outcomes for the benefit of • Site value enhancement – execution the NSW community. of master planning, rezoning and development delivery strategies for significant infill sites in Rydalmere and Hurlstone to return optimum divestment value to government.
Property NSW Annual Review 2015–16 Pictured (left to right): Emanuel Varapatis, Fire and Rescue NSW (FRNSW); Colin Stewart and Mark Jones, CBRE; Cameron Elsegood, Major Projects; Jonathan Betts, Leasing; Rosemary Milkins, FRNSW; Leon Walker, Major Projects; Alex Nedeljkovic, representing FRNSW; Peter Hurley, Major Projects; and Peter Bolton- Hall, Major Projects.
• Real estate advisory – providing In addition, this division manages and advice on best-use options for provides expert and strategic advice to government owned sites, including agencies on prospective acquisition and the Powerhouse Museum, Ultimo, disposal programs and transactions. and the Chief Secretary’s Building. This year, the team streamlined • Site adaptive reuse – facilitating the processes and demonstrated significant 15 reuse of a portion of Fire and Rescue progress in working through Property NSW’s Alexandria Training College NSW’s property pipeline. This resulted in for use as the future headquarters of the execution of 130 transactions worth Sydney Train’s Rail Operation Centre. $431.5 million, exceeding client and market expectations. • Development management – management of high value, complex Examples of transactions and projects 15 development projects to achieve undertaken by the team include: government policy objectives such as The Sandstones and Gosford • Department of Education – the development (see earlier case sale of 5.7 hectares of land at studies). Stanhope Gardens for $31 million and a further 13 surplus properties for $32.8 million. Commercial Transactions Our Commercial Transactions division is • 22 Main Street, Blacktown – this responsible for the evaluation, planning office building, partly leased to the and delivery of property acquisitions NSW Government, was sold for $17.2 and disposals on behalf of government million. agencies across a wide spectrum of projects and portfolios. This team • 2 Burley Street, Lane Cove – the undertakes transactions that benefit sale of vacant land adjoining the from economies of scale (volume or Pacific Highway for Roads and similarity), or exhibit shorter “go to Maritime Services for $22.1 million. market” timelines, lower individual values or complexity than those undertaken by • 108 Millers Street, Pyrmont – sale of the Major Projects team. 1,846m2 of vacant land for Transport for NSW for $22.4 million. This team applies strong project management practices to move • Millers Point – sale of 72 dwellings transactions through various phases, for $210 million for NSW Land and including pre-sale due diligence Housing Corporation. investigations, feasibility analysis, execution of value add strategies and implementation of marketing and sale strategies.
Property NSW Annual Review 2015–16 • delivered 62 capital projects, including major heritage works on Portfolio Management Group State-significant assets like the Chief The Portfolio Management Group (PMG) is responsible for Secretary’s Building in Sydney the management and maintenance of government owned properties, and for delivering strategic asset management • completed more than 18,000 planned services to government agencies. A number of groups within facilities maintenance services PMG provide these services. and provided strategic solutions to reactive operational issues across a 16 Asset Management – provides strategic planning, portfolio of 830 owned and leased maintenance, revenue forecasting, expense management, properties and capital expenditure management on more than 200 government owned properties and a further 630 leased • responded to more than 54,000 properties across the state. The team drives effective requests via the Customer Service lease/lessor management and tenant services for over Centre and developed a “Priority 1 million square metres of Net Lettable Area (NLA) across Critical” process, delivering service the portfolio, with non-commercial assets, such as State- efficiencies and minimising the impact significant, special use assets making up a further 715,000 on client continuity square metres. • identified environmental and Vesting – provides a range of statutory acquisitions services sustainability initiatives, sites where under the GPNSW Act and the Land Acquisition (Just Terms installation of Power Factor Correction Compensation) Act 1991 for Property NSW and our clients. (PFC) units would achieve electricity This year, eight orders, including a total of 111 land parcels, demand savings, opportunities to were transferred from government agencies to Property implement a cloud-based utility bill NSW. The team also manages the acquisition and holding analysis and payment system that of Certificates of Title under Memorandum of Understanding delivers a streamlined process and (MoU) for agencies that do not have the legislative power to cost savings for government, and deal in real property transactions. In 2015/16, Vesting assisted planning for the rollout of Power of NSW Police in the acquisition of five properties across the Choice (PoC) smart metering on state and worked with DFSI on a project to rectify Certificates small market sites in the next financial of Title owned by the former Public Work’s Minister. year to increase transparency and accuracy of electricity billing data Building and Environmental Services (BES) – delivers facilities management, capital works, environmental and • led the tender process to select sustainability services and the Customer Service Centre. In an outsourced asset management 2015/16, BES: service provider, JLL; the contract model allows tenants to work from a common technology platform, with access to detailed reporting of metrics relating to their portfolios.
Property NSW Annual Review 2015–16 Leasing Our Leasing division is responsible for devising, negotiating and implementing Strategy leasing strategies for over one million Our Strategy division is responsible for the development of square metres of commercial office whole-of-government strategy for the effective management space across the state. of the State’s real property portfolio. It also provides market leading, specialist, multi-disciplinary advice on long term The team works collaboratively with portfolio planning, accommodation strategy, policy and government agencies to ensure that the collaborative initiatives. leased space occupied by the State’s 17 public sector meets its operational The team is responsible for driving the development, requirements, broader strategic initiatives integration and implementation of policies and initiatives and delivers best value to government. to improve management of the asset portfolio across As specialist leasing advisors, the team government agencies, and to improve utilisation. Strategy also has successfully negotiated over 400 advises on the operating model and long term capital plan for lease transactions in the past 12 months. Property NSW.
Key highlights for 2015/16 include: Key achievements for the Strategy division in 2015/16 include the development of new policies for the ownership and • securing 25,000m2 of commercial management of government’s real property portfolio, and the space for the Department of successful transition of SHFA’s functions into Property NSW. Education in Parramatta, to be delivered by 2020 • securing 5,800m2 of commercial space in Wollongong for NSW State Emergency Service State Headquarters, to be delivered in early 2017 • executing transactions involving 272 separate head leases and licences over 170,500m2 of Net Lettable Area across the State • securing 6,000m2 in the CBD to house iCare, at the commencement of the State Insurance and Care Governance Act. A further 3,100m2 of space within the same building was also acquired for iCare to operate from while the main tenancy was fitted out.
Property NSW Annual Review 2015–16 The Rocks and Darling Harbour precincts
Place Management a tenancy in The Rocks or Circular Quay, Property NSW is responsible for the and to keep the leasing process moving ownership and management of NSW’s as efficiently as possible. State-significant precincts, The Rocks and Darling Harbour. The suite also includes The Rocks’ Strategic Directions and Retail Leasing Place Management aims to uphold Directions, allowing existing and potential community, social, heritage and tenants to explore Property NSW’s vision commercial interests by providing and responsibilities for its precincts. world-class places and experiences that attract more than 40 million visitors per Place Management also delivered The 18 year1 to our precincts. Goods Line, the award-winning urban green space linking Central Station to The division’s multi-disciplinary Darling Harbour. experience extends to asset management, retail and commercial Additionally, the NSW Government has leasing, strategic planning and heritage, committed to a number of key heritage as well as events and marketing. capital works, including: • $23 million restructure of Pyrmont Place Management is responsible for Bridge 19 head leases, 32 licences and 63 • $15 million construction of Cockle Bay tenancies throughout Darling Harbour marine structures (including berthing licences) and 207 • $15 million refurbishment of retail leases, 67 licences and 200 market stall tenancies in The Rocks. holders in The Rocks. Place Management will deliver on these The division works to ensure the initiatives, supported by its heritage and activation and profitability of our place making expertise. precincts for the mutual benefit of tenants, visitors and the taxpayers of NSW. Retail vacancy rates, which Valuation Services are reported by industry on a square Our Valuation Services division harnesses metre basis, show that The Rocks is its government property expertise significantly outperforming its neighbour to provide impartial and transparent the Sydney CBD. valuations of each local government area every three to four years, alongside annual During 2015/16, Place Management valuations of all NSW properties. developed a suite of documents, designed to help potential tenants to This important information assists local plan ahead and gather together the and State governments to determine rates information needed to help them secure and land taxes.
Property NSW Annual Review 2015–16 Image captured from Property NSW’s online Property Portfolio Reporting portal
Valuation Services also provides other the group’s financial transactions and providing financial and services to government agencies, giving administrative support to the group. them easy and fast access to the latest valuation data. The integrity of valuation This includes the management of all financial data relating data is paramount, and controls apply to to owned real estate, managed leases and all projects ensure the fairness and thoroughness of undertaken by Property NSW. The team is instrumental in the valuation process. developing and delivering financial forecasts, business and project budgets as well as group-wide asset plans and analysis. Operational and Housing Services Our Operational and Housing Services Our Finance team members provide practical advice division is responsible for providing high across financial planning, property accounting, transaction 19 quality business support and corporate management, project accounting and business analytics. services to Property NSW business units. Public Works Advisory The division provides specialist services Public Works Advisory (PWA) supports our government clients in information technology, business to deliver infrastructure projects more effectively by providing transformation, communications advice on how to utilise the specialist services of ‘best fit’ and marketing, human resource providers. management, legal, risk and compliance management and other general The division provides a bridge between the government and business services. Additionally, with the the private sector to ensure the best infrastructure outcomes consolidation of THA into Property NSW, for the NSW Government. the division provides housing services and solutions for rural and regional The team are asset advisory specialists, with a proud history teachers across the State. dating back to the first Public Works project in Sydney Cove in 1788. The division’s services include: This year, the division’s Business • procurement and financial infrastructure advisory Transformation team led the cross- • analysis of design solutions business working group to develop and • domain market advice deliver the Property Portfolio Reporting • engineering emergency management portal for our agency clients, enhancing • support to regional government agencies with limited Property NSW’s digital services offering. infrastructure delivery capability • water and environment infrastructure advice • heritage asset management advice and archaeological Property Financial Services services. Our Finance team is responsible for measuring and analysing the financial PWA joined Property NSW on 1 July 2016 to form the Property performance of the Property and and Advisory Group. Advisory Group, as well as administering
Property NSW Annual Review 2015–16 Our people Leadership – our Executive team
The Property and Advisory Group BRETT NEWMAN Executive team Deputy Secretary, Property NSW In the past year Property NSW has Chief Executive Officer, GPNSW focused on building teams that live our values – accountability, creativity Brett joined Property NSW as GPNSW’s and teamwork. Although our focus is Chief Executive Officer in April 2013, on property and place making, our and is the Deputy Secretary of Property teams are made up of diverse skill sets, NSW. He leads the NSW Government’s 20 facilitating a multi-disciplinary approach owned and leased property portfolio, to problem solving. which generates revenues in excess of $500m per annum. As at 30 June 2016, Property NSW employed 368 people, including 177 Brett is Chair of the Teacher Housing women and 191 men, with 27 of our Authority and the Strategic Property people employed on a contract basis, Transactions Committee. He is on the 260 permanent, and the remaining Board of Sydney Harbour Foreshore 81 employees either seconded, Authority and participates in a number providing services as consultants or of government wide strategic steering employed on Executive contracts. committees.
Providing equal opportunities for women Prior to leading Property NSW, Brett and men to develop their skills continues held a number of senior executive to be a focus for Property NSW. Of the positions with organisations such 37 leadership roles, 13 are occupied as Blackstone, Westpac, Stockland, by women and 24 by men. Challenger and Macquarie Bank.
Property NSW aims to operate at least as efficiently as private enterprise, in line with our values to deliver services that are of the highest quality. Workplace culture is an important part of how Property NSW carries out its business, maintains consistency of performance and ultimately delivers the best results for Government.
On 1 July 2016, Public Works Advisory joined Property NSW to form the Property and Advisory Group.
Property NSW Annual Review 2015–16 LEON WALKER DENNIS SZABO ADAM OLGA MASELLA JENNY Executive Executive HOWARTH Executive BLATCHFORD Director, Director, Executive Director, Leasing Acting Executive Major Projects Commercial Director, Portfolio Director, Strategy Transactions Management Olga has over 16 Leon has a strong Group years’ experience Jenny joined background as an Dennis has over leading and Property NSW experienced chief 20 years Adam’s property managing in 2014. She operating officer, experience in career includes teams of diverse has a breadth 21 fund manager and professional the management property experts, of experience project financier, services funds of portfolios maximising across project having held management for global commercial, management, executive positions and corporate organisations financial and strategy and with Mirvac and real estate. such as Westpac, community stakeholder Macquarie Group, Dennis has led Telstra and ANZ, outcomes in the engagement, most domestically and our Commercial with responsibility public and private recently leading abroad, across Transactions team for providing sectors. Olga was the development industry sectors through a period of integrated appointed to this of whole-of- including property, significant change transaction, role in July 2016 government banking and and success. asset and facility after previously strategies for infrastructure. Dennis joined management occupying the Property NSW Leon is Property NSW services. His roles of Acting and managing the experienced in January 2014 experience Executive Director implementation in the effective with a background extends from and Director, of policies management in senior property Commercial and initiatives of business management roles acquisitions and Transactions within to improve operations with Westpac and divestment to the Property NSW. management of and corporate Pricewaterhouse- development and the portfolio. Jenny governance Coopers. implementation of commenced processes, the strategic property her career as development of accommodation a banking and high performing solutions and finance lawyer, teams, the integrated followed by 10 management of management of years as an large business property services. investment banker. transformation projects, and Bill Frith was complex matters. appointed to this role in October 2016.
Property NSW Annual Review 2015–16 SAM ROMANIUK ANNA WELANYK JENNIFER STUART STUART Executive Executive Director, PALMER CRAWFORD PICKERING Director, Place Valuation Services Executive Executive Executive Management Director, Director, Director, Public Anna has extensive Operational and Property Works Advisory Sam has more global experience Housing Services Financial than 20 years’ leading teams Services Stuart has over 30 experience in in the planning Jennifer has years’ experience strategy, portfolio and delivery of a wealth of Stuart has over in capital management, integrated real experience 20 years’ development, corporate estate services in managing experience in strategic asset development and including various and leading financial and management direct property executive level through change, operational and facilities investment. He positions with having been management and operational leads the Place CBRE, London. involved in the has worked at the management 22 Management Since joining decommissioning senior executive across the public division, Property NSW of Service level in the and private responsible in February 2014 First and the property, private sectors. He has for managing as Executive transformation equity, investment held executive State significant Director, Portfolio initiatives for State banking and and director precincts including Management Fleet and State finance industries. level positions The Rocks and Group, Anna Records. She has Since joining for organisations Darling Harbour, delivered a raft diverse public Property NSW in including the Coles while balancing of improvement sector experience, July 2014, Stuart Group, and the visitor, community initiatives including including roles at has managed Queensland and and commercial the development the NSW Health the financial Victorian State expectations. of a new service Department and managerial governments Prior to this role, delivery solution for and the NSW reporting for across the Arts, Sam occupied the management of Attorney General’s Property NSW’s State Development the position of the Government’s Department. property portfolio and Health Executive Director, assets, saving Jennifer and has provided portfolios. Stuart Strategy, and taxpayers in excess commenced at practical advice was appointed before joining of $11 million over Property NSW as to the agency and to head of Public Property NSW in five years. Anna Executive Director, other stakeholders Works Advisory August 2013, Sam was appointed Operational and regarding the in July 2016 to held several senior Executive Director, Housing Services financial and assist government executive roles at Valuation Services, in July 2016. accounting agencies to Stockland. commencing July implications optimise their 2016. of property asset solutions. strategies.
Property NSW Annual Review 2015–16 Our performance Key highlights for Property NSW in the 2015/16 financial year
The successful identification, review, and sale of $432m of Received and processed over 597,200 underutilised assets in Sydney and regional NSW.1 tonnes of solid waste materials across seven sites. $432m 597, 200 Continued implementation of the Government’s Decade of Decentralisation policy on office accommodation. To date there has been a reduction of 35,100m2 of office space from the Total returns on the GPNSW Commercial CBD, which has resulted in the relocation of 2,300 government Portfolio increased to 12.2%. employees to suburban and metropolitan areas.
Capex continues to reduce ($67/m2), 2 7% down on the previous year and 23 35,100m below industry benchmarks.
Improvement in utilisation of office space from 15.8m2/FTE to 15.3m 2/FTE for the total portfolio under Property NSW 7% management.
Maintained very low vacancy rates for our 2 retail and commercial portfolios (1.3%) 15.3m across CBD and regional areas.
Increased visitation 0.5% to 40.4 million2 across The Rocks and Darling Harbour precints, with a colourful mix of some of the city’s 1.3% biggest and most popular events.
THA recorded a Net Promoter Customer Service Index of +42, a reflection of its delivery of education accommodation 40.4m services in remote communities. Average rental increase of 0.7% for maintained leases in line with CPI inflation, representing continued control over the rental costs of the portfolio. +42
1. Sales that Property NSW assisted agencies in divesting. Whole of Government property sales for 2015/16 totalled $2.01bn, including PTEs and SOCs. 2. Electronic people counters are installed in key locations in The Rocks and Darling Harbour. The counters emit an infrared beam and, each time a pedestrian breaks the beam, a people movement is registered. Calibration and expansion calcluations are applied to raw counts to ensure that final figures estimate total pedestrian flow. These figures may include repeat visits made by visitors, workers and residents.
Property NSW Annual Review 2015–16 Performance overview
Commercial Portfolio Utilisation trend reflects the improved collaborative relationship Our primary goal is to ensure that the property between Property NSW and agencies to both we manage best supports core service delivery of recognise and deliver on opportunities for improved agencies, by: utilisation. • ensuring that space is well utilised • minimising rental cost by leveraging the This improving utilisation has significant ongoing bargaining power of Government impacts on total rental cost as leases are renewed. • maximising precinct value Given the significant staffing base working in • maximising efficiency of landfill operations; and properties managed by Property NSW, the 0.3m2/ • providing quality housing services for teachers. FTE utilisation reduction achieved could represent over 15,000m2 (approx. 2% of the leased portfolio) Utilisation1: In 2015/16, the total portfolio under in reduced space. Note that some of these Property NSW2 management saw an improvement reductions have come through accommodating in utilisation3 of office space from 15.8m2/FTE to staff increases into the same space, but regardless, 15.3m2/FTE. This covers both owned and leased there is a significant future rental cost saving properties, and is a result of improved Property directly resulting from these improved utilisation NSW policies and processes. Through a better rates. 24 understanding of agency requirements, we have been able to implement a more robust assessment For the Property NSW managed portfolio, including and approval process of space requirements for operational space, total utilised space per FTE renewals and new leases. in both the CBD (15.7m2/FTE) and Metro (15.9m2/FTE) portfolios is significantly below During 2015/16, the largest improvements have benchmark levels (19.2m2/FTE and 18.1m2/FTE been in CBD assets, which have seen a decrease respectively4). of utilised space of 0.5m2/FTE on average. A 13m 2/FTE is the NSW Government’s long-term Leased Portfolio Rental Costs: As the size of the utilisation target, and the continued downward leased portfolio grows (through both asset sales and changing Government priorities), managing the Utilisation excluding operational space (m2/FTE) average rental costs of commercial leases becomes increasingly important. Property NSW seeks to down 1.8% pa CBD add value through employing a greater collective bargaining power than individual agencies would have in order to deliver both lower and more stable 16.6 16.6 16.1 16.5 16.1 14.8 15.8 rental costs for Government. 15.3
Metro In 2015/16, Property NSW facilitated accommodation changes in the CBD prime 15.5
15.1 market, resulting in an increased average rental 15.0 14.8 cost from $600/m2 5 to $623/m2 for that class of Regional occupation, an increase of 3.8%. Across the owned and managed portfolio there has been a marginal increase in the cost per square metre of 0.8%, well 17.9 17.0 16.8
16.2 below the increase in the CPI for the year.
12/13 13/14 14/15 15/16 12/13 13/14 14/15 15/16
1. Property NSW uses accepted industry standards in calculating utilisation results. It should be noted that temporary vacancies due to lease expiries, building refurbishments, agency downsizing, etc., can affect year-on-year figures; and that Property NSW numbers are reliant on the accuracy of agency staff numbers, which are collected annually through an employment survey. 2. Commercial property statistics reflect the GPNSW portfolio, comprising 99% of the commercial office NLA managed by Property NSW. 3. U tilisation target of 13m2/FTE implemented under ERC minute, are exclusive of operational space, and these figures reflect that. 4. BIS Shrapnel Sydney Commercial Property Prospects – Supply & Demand for Sydney CBD and Metropolitan office space – 2016. 5. Adjustment to prior year comparatives to include previously excluded rent.
Property NSW Annual Review 2015–16 Commercial Portfolio Performance1 The five year rollingCapital expenditure on the The core aim of Property NSW in property commercial portfolio has fallen as Property NSW management is to ensure property accommodation continues to focus on the capital maintenance on supports the core service delivery of agencies. those assets identified as strategic assets required Across Government, this requires a certain level to be held for the long term or requiring immediate of property ownership, where service delivery expenditure. In 2015/16, the five year rolling average is dependent on continuity of asset ownership for capex ($67/m2) was below the benchmark. and the ability to structure fit-outs and other accommodation arrangements to enhance the Capital Expenditure ($/m2) ability of the agency to deliver on its service Total Commercial Properties7 requirements.
Accordingly, Property NSW seeks to manage 115 returns and expenditures of capital assets as secondary and supporting goals, rather than 82 72 optimising portfolio returns at the expense of 67 wider objectives. Note that the asset performance included in this section contains only commercial 25 properties to provide accurate comparisons to benchmarks. 12/13 13/14 14/15 15/16 Total returns from the commercial portfolio are difficult to compare consistently from year to year Property NSW continues to focus on Operating due to the changing nature of the portfolio within expenditure for commercial assets and in 2014/15, Property NSW. Despite this, total returns reflect the average opex per square metre has increased upturn in the Sydney office market, even though broadly in line with the market across the entire these remain below the Investment Property portfolio, due mainly to increased obligations on Databank (IPD) benchmark of 14.6%. newly vested properties.
Total Returns (% pa) Operating Expenditure ($/m2) Total Commercial Properties6 Total Commercial Properties CBD 74 74 96 14.6 83 81 69 76 68 12.2
8.6 Metro 6.3 89 5.8 54 45 37
12/13 13/14 14/15 15/16 Benchmark Regional 81 79 73 66
6. R eturns have been calculated having regard to 12/13 13/14 14/15 15/16 12/13 13/14 14/15 15/16 passing rents, capital expenditure and changes in market value. Total Commercial Properties Benchmark Source – IPD Australian Quarterly Digest for secondary office. 7. Capital expenditure includes expenditure related to items that are significant replacements or additions to existing properties.
Property NSW Annual Review 2015–16 Property NSW has continued to maintain very low Retail Vacancy (%) vacancy rates for the owned commercial properties with CBD vacancy at 0.5%8 vs. benchmark9 of 5.6%, 4.6 and the Metro areas (0.1%5 vs. 5.5%10). 4.4
Commercial Vacancy (%) 2.9 1.9
CBD 1.7 5.0 0.5
0 0 0 12/13 13/14 14/15 15/16 Benchmark
Metro Waste Portfolio Performance 3.2 3.5 WAMC operates one open landfill site at Eastern 2.1 0.1
1.4 Creek 2, and is managing its rehabilitation and 2.5 maintenance, post-closure. WAMC continues to Regional manage the rehabilitation and maintenance of eight other closed landfill sites at Thornleigh, Merrylands, 1.3 5.8 5.1
4.7 Grange Avenue, Eastern Creek 1, Castlereagh,
3.4 Harrington Quarry, Lucas Heights 1 and Belrose. 12/13 13/14 14/15 15/16 12/13 13/14 14/15 15/16 In addition, WAMC monitors and manages leachate treatment facilities at both the open and closed Retail Portfolio Performance landfill sites, and manage joint venture landfill gas Property NSW manages significant retail leases in and energy systems to supply electricity into the The Rocks and Darling Harbour precincts, including grid as a sustainable and renewable energy source, over 200 stallholders at The Rocks Markets. WAMC received 597,200 tonnes of solid waste 26 materials at its operating landfills during the The Rocks, Circular Quay, and Darling Harbour are reporting period, which was 3% above the significant cultural and heritage precincts to Sydney, budgeted volume of 580,000 tonnes (WAMC’s New South Wales, and Australia. They are popular customers delivered additional tonnes to meet its destinations for local and international visitors and commercial and operational objectives). contribute significantly to the State’s economy. Housing Portfolio Performance In The Rocks, over 14.5 million people movements At 30 June 2016, THA’s portfolio consisted of were recorded in 2015/16, with people enjoying the 1,311 properties, including 83 residences under entertainment, shopping and dining experiences on management (owned by the Department of offer. This was an increase in people movements of Education). 2.5% on the previous year. During the year the average occupancy rate was In Darling Harbour, 25.9 million people movements 87.8% (85.0% in 2014/15). The teacher utilisation were recorded in 2015/16, with people enjoying rate, a more accurate efficiency indicator increased attractions and events in the precinct. This was from 73.9% to 76.8%. a decrease in people movements of 0.6% on the previous year. Where a property is vacant due to lack of teacher demand, THA (through its managing agents) lease Tenant sales turnover growth in SHFA’s retail that property to a private tenant. portfolio has increased 8% over the past year, representing significant growth in food and THA completed the construction of 16 new beverage tenants. residences for a total capital cost of $4.6m. Four new blocks of land were acquired in Broken Hill, Vacancies for retail spaces continue to remain low Coonamble and Brewarrina. comparative to the Sydney CBD benchmark of 4.4%11. Nine properties, deemed surplus to needs, were sold during the year, contributing $1.7m towards new teacher housing.
8. Source data: GPNSW from MRI database as at 30 June 2016. 9. Sydney CBD Benchmark source – PCA CBD Vacancy Rate, July 2016. 10. Metro (suburban) Benchmark Source – BIS Shrapnel Non CBD Vacancy Rate, December 2014. 11. Retail Benchmark source – JLL Sydney CBD Prime Specialty Shops Vacancy Rate, June 2016.
Property NSW Annual Review 2015–16 Financial Performance Net Result ($m) Financial Distributions ($m)
Property NSW is in its first year of reporting combined results, $33.5m $266.8m which includes Government Excludes contribution to RestartNSW Property NSW, Sydney fund Harbour Foreshore Authority, Waste Assets Management FY16 $33.5 FY16 $266.8 Corporation, and Teacher Housing Authority. FY15 $34.1 FY15 $79.8
FY14 $23.8 FY14 $59.0
In 2015/16, Property NSW Financial distributions to recorded an operating surplus Government comprised of $33.5m against a budgeted $4.1m from surplus income deficit of $2.5m (excluding on operations, $62.5m from $200.2m of RestartNSW Grant net asset sale proceeds, and payments). The decrease $200.2m contribution to the from the prior year is due to a RestartNSW Fund from proceeds reduction in realised gains on of owned asset sales. the sale of properties offset by increased fee-for-service revenue growth. 27
Capital Program ($m) Total Assets ($bn) Revaluations $38.3m $3.0bn $169.6m
FY16 $38.3 FY16 $3.0 Other <1% FY15 $41.5 FY15 $2.9
FY14 $35.1 FY14 $2.6 Retail Capital program projects in Property NSW retained a healthy 50% 2015/16 comprised of works balance sheet position at 30 on the renewal and upgrading June 2016, with the ratio of total of owned buildings, works assets to total liabilities standing Commercial of a regulatory compliance at 6.3:1 (5.8:1 at 30 June 2015) 49% nature, minor works on and net assets totalling $2.5b corporate systems, and ($2.5b at 30 June 2015). equipment purchases. Total capital expenditure of $38.3m Asset revaluation increases have Major contributors to the $169.6m for the 2015/16 financial year been correspondingly offset by net revaluation movement in the was $12.9m below the budget. asset sales and depreciation of Property NSW portfolio were The underspend resulted mainly plant, property and equipment. 52 Martin Place ($43m), IMAX from the reassessment of capital Theatre ($29m) and Argyle Stores expenditure requirements in ($10m). In a buoyant leasing 2015/16 on owned property market with record low interest assets earmarked for potential rates, the portfolio has benefited divestment in the near future. from positive revaluations.
Property NSW Annual Review 2015–16 Financial Performance Summary
2014/15 2015/16 2015/16 2015/16 2016/17 actual actual budget variance budget $’000 $’000 $’000 $’000 $’000
Operating result Expenses 786,398 979,069 812,146 (166,923) 869,636 Revenues 784,077 792,324 771,316 21,008 961,655 Other Gains/(Losses) 36,393 20,009 38,361 (18,352) 37,132 Net operating result – 34,072 (166,736) (2,469) (164,267) 129,151 surplus/(deficit) Revaluations 133,043 169,597 - 169,597 - Total comprehensive income 167,115 2,861 (2,469) 5,330 129,151
Financial distributions Normal Distribution 27,3 9 8 4,089 11,461 ( 7,372) 4,046 Capital Repatriation 52,393 62,500 169,546 (107,0 46) 271,500 RestartNSW Grant Payments - 200,202 - 200,202 - Total financial distributions 79,791 266,791 181,007 85,784 275,546
Financial position Total Assets 2,954,354 2,999,652 2,719,381 280,271 4,113,097 Total Liabilities 507,792 476,476 4 37,10 9 (39,367) 1,926,833 28 Net Assets/equity 2,446,562 2,523,176 2,282,272 240,904 2,186,265
Capital program Property Refurbishment & Other 41,530 38,317 51,228 12,911 251,227 Total capital program 41,530 38,317 51,228 12,911 251,227
*Net Operating result for 2015/16 is $33,466 excluding RestartNSW grant payments from expenses.
Performance against Budget Budget Overview The net operating result for Property NSW Property NSW’s 2016/17 budget projects an was impacted by the unbudgeted contribution operating surplus of $129.2m. The major contributor of $200.2m grant payments to Restart NSW. to the increase in revenues is the inclusion of Excluding the RestartNSW grant payments, all $155m of grant income for the acquisition of assets agencies within Property NSW delivered favourable from NSW Health for vesting. operating results against budget. The majority of the other gains for 2015/16 is due to the sale Excluding the impact of the 2015/16 RestartNSW of Rozelle marshalling yards. grant payments, there is an increase in expenditure predominantly due to the completion of the International Convention Centre at Darling Harbour in 2016/17 and Property NSW assuming management of the new facilities.
The sale of a number of assets and ground leases have been budgeted to impact both the net operating result and capital repatriations.
Property NSW Annual Review 2015–16 Financial Performance – Statutory Bodies
2014/15 2015/16 2015/16 2015/16 2016/17 actual actual budget variance budget $’000 $’000 $’000 $’000 $’000
Government Property NSW1 Expenses 501,659 717,017 531,120 (185,897) 529,407 Revenues 509,168 530,327 545,899 (15,572) 684,143 Other Gains/(Losses) 36,426 1,025 2,343 1,318 - Net operating result – 43,935 (185,665) 17,122 (202,787) 154,736 surplus/(deficit)
Sydney Harbour Foreshore Authority2 Expenses 150,541 137,368 158,007 20,639 222,595 Revenues 150,117 126,366 108,146 18,220 159,054 Other Gains/(Losses) (157) 18,720 36,150 (17,4 3 0) 37,569 Net operating result – (581) 7,718 (13,711) 21,429 (25,972) surplus/(deficit)
Luna Park Reserve Trust Expenses 1,467 1,682 1,929 247 1,577 Revenues 1,742 1,917 2,207 (290) 1,855 Other Gains/(Losses) - - - - - Net operating result – 275 235 278 (43) 278 29 surplus/(deficit)
Waste Assets Management Corporation3 Expenses 112,547 103,176 101,400 (1,776) 95,547 Revenues 106,136 116,381 97,70 0 18,681 99,197 Other Gains/(Losses) 46 225 - 225 - Net operating result – (6,365) 13,430 (3,700) 17,130 3,650 surplus/(deficit)
Teacher Housing Authority Expenses 20,184 19,826 19,690 (136) 20,510 Revenues 16,914 17,333 17,324 (31) 17,406 Other Gains/(Losses) 78 39 (132) 171 (437) Net operating result – (3,192) (2,454) (2,458) 4 (3,541) surplus/(deficit)
Property NSW Expenses 786,398 979,069 812,146 (166,923) 869,636 Revenues 784,077 792,324 771,316 21,008 961,655 Other Gains/(Losses) 36,393 20,009 38,361 (18,352) 37,132 Net operating result – 34,072 (166,736) (2,469) (164,267) 129,151 surplus/(deficit)
1. Net Operating result for Government Property for 2015/16 includes RestartNSW grant payments of $200.2m. 2. Other Gains/(Losses) for 2015/16 excludes Fair Value Increment on Investment Properties of $58.0m that has been allocated to Other Comprehensive Income for consistency. 3. Expenses for 2015/16 excludes the revaluation decrement of land and buildings of $709,000 to Other Comprehensive Income for consistency.
Property NSW Annual Review 2015–16 Environment and sustainability Property NSW delivers sustainability outcomes for its asset portfolio
Property NSW recognises the 2015/16 Overview need to use natural resources Energy reduction measures in Property NSW owned buildings responsibly, while meeting have aimed to mitigate the impact of future energy cost increases. its operational objectives, in A number of energy efficiency projects have been scoped and a manner that is sustainable prioritised based on the shortest ‘in use’ payback period. These and in accordance with the investments optimise the resource efficiency gain, in particular NSW Government Resource when reviewing energy consumption from lighting and Building Efficiency Policy (GREP) Management Systems. July 2014 and NSW Energy Efficiency Action Plan August Total Billed Utility Usage and Cost Summary 2015/161 2013. Electricity Consumption Natural Gas Consumption Imperative to this is the delivery of sustainability outcomes for 8 400 our portfolio of assets. Our key 320 30 objectives in this space are to 6 improve resource and operational 240 efficiencies while reducing costs 4 160 for properties owned and leased 2 for government agencies. 80 34 18 31 17 32 18
We have delivered savings at 13/14 14/15 15/16 13/14 14/15 15/16 owned and leased assets by KWh millions MJ millions building and occupying assets $ millions $ thousands that achieve NSW GREP policy requirements, driving performance on leased sites Water Consumption with green leases, integrating 100 sustainability requirements in all relevant capital works, 80 and ensuring continuous improvement in operational 60 efficiency at owned and leased 40 sites to reduce energy, water and waste costs. 20 76 35 38
13/14 14/15 15/16 kL thousands $ thousands
1. These numbers: • are aggregate totals based on total costs paid in a financial year • do not reflect vacancy within buildings • are impacted by variations due to sale, lease backs and vesting of sites during the financial year • only show usage and costs for utility accounts maintained by Government Property NSW. Further, costs are impacted by changes to utility tariff escalations.
Property NSW Annual Review 2015–16 NABERS Ratings – Owned Assets Lighting Upgrades All government owned buildings are subject to Property NSW progressively reviews all sites to GREP, which requires office buildings over 2,000m2 identify properties with nominal lighting power to achieve and maintain a NABERS rating above 4.5 density of 12W/m2 or higher for implementation stars by June 2017. of LED lighting upgrades, improving energy efficiency, reducing total demand at the property, Since 2013, Property NSW has undertaken incorporating long term warranties and realising extensive work to develop its energy efficiency electricity bill savings for all stakeholders. improvement plan. Electrical and Water Equipment and Appliance This work underpins Property NSW’s approach to Standards achieving the outcomes sought from the GREP. Property NSW has incorporated GREP standard requirement for appliance, fixtures and fitting in its Weighted average NABERS ratings for large fitout guidelines and new building design guide as a owned offices (stars)2 minimum requirement. 31 Waste Leased site waste is managed by landlords (some Energy 4.4 landlords provide waste information through the Green Lease forum). In some cases, agency tenants manage their waste and have direct waste Water 4.3 contracts.
Green Lease Sites Managed by Property NSW – Property NSW-owned site waste contracts currently Leased Assets do not include reporting, source segregation and Property NSW is working with its client agencies training in the scope. When contracts are renewed to implement Green Leases, designed to achieve in 2018, these requirements will be incorporated. water and energy efficiencies as well as other sustainability goals. The policy is to negotiate Green Property NSW is currently working on a Waste Leases for all new and renewed leases of at least Management Strategy to incorporate source two years, where NSW Government agencies segregation and recycling targets for its business, occupy at least 2,000m2 Net Lettable Area (NLA). including: • using recycling bins—including organic, co- Green Lease coverage mingled, and paper and cardboard—in all office kitchens 2 • installing additional recycling bins during events 249,024m to encourage visitors to recycle • providing water refill stations at major events • encouraging tenants to use the organic food Solar Photovoltaic (PV) Opportunities processor in The Rocks Centre shared waste Six solar Power Purchase Agreement (PPA) facility to process food waste, diverting it from sites were identified by Property NSW under landfill the Office of Environment and Heritage (OEH) • implementing successful digital and social media program (777 Large Market Contract). marketing to promote events, reducing printed marketing material.
2. The above figures do not represent the weighted average NABERS ratings for the entire owned office portfolio. They represent the weighted average for a large proportion of the owned office portfolio and are based on NABERS ratings attained during 2015/16.
Property NSW Annual Review 2015–16 Eastern Creek 1 landfill gas power 2 plant (1) and landfill gas collection infrastructure (2).
Property NSW collaborated closely with Cromwell • NABERS water ratings: designed to 4 Star Property Group to implement Green Leases across water rating (whole building, need to sign a 5 large leased offices in 2015/16. A total of 300 commitment agreement with NABERS national tonnes of general waste, paper, cardboard and administrator), where cost effective. commingled wastes were generated across these properties, with a 56% recycling rate was achieved • Non-office buildings: Non-office buildings at these sites. This rate would be higher if secure types are to be designed and built with predicted paper document recycling was included. energy consumption at least 10% less than National Construction Code ‘Deemed to Satisfy’ 32 Purchase of 6% Green Power minimum compliance. Property NSW purchases electricity through the NSW Procurement 777 and 776 whole of • General office lighting (troffers) lighting: government contract which have a default 6% power density should be below 7 W/m2 while Green Power component. meeting the Australian standard illuminance requirements for nominated use (typically this Low VOC Surface Coatings means LED lighting, depends on the spacing Property NSW has incorporated GREP standard and grid). requirements for Low VOC coatings in its fitout guidelines and new building design guide, as a • Energy Star, MEPS, GEMS, WELS minimum requirement. requirements: include specifications for energy and water appliances and equipment as well as Renewable Energy Low VOC surface coatings in fit-out, major refurb Generator stations at WAMC’s landfill sites generate and new building scope. 100,000 MWh (megawatt hours) of renewable energy annually by processing gas generated • THA: in conjunction with the Government and captured within the landfills. Green credits Architects Office, THA is industry partnering with and renewable energy are produced and 460,000 the Faculty of Architecture, Design and Planning tonnes of climate-impacting carbon dioxide (CO2-e) at the University of Sydney for an Australian atmospheric emissions are avoided in the process. Research Council (ARC) linkage grant. This research compares the biophysical performance NSW Government: New Government Building and achieved satisfaction outcomes of the Eco Design Requirements Village against some of THA’s more conventional Minimum requirement NSW GREP policy 2014: residences in Broken Hill. Addressing the social • NABERS energy ratings: designed to 4.5 Star and environmental aspects of sustainable energy rating (whole building, base building and housing, the research focuses on the role of the tenancy ratings; landlords/tenants are required to occupant’s attitudes and satisfaction in social sign a commitment agreement with a NABERS sustainability, using a quality of life metric – national administrator) without Green Power. developed by the University.
Property NSW Annual Review 2015–16 2015/16 Key Outcomes
• NABERS Energy Ratings – 66% of rated NLA • Total reduction in billed electricity valid during FY15/16 was at or above 4.5 Star rating 18.7%
66% • Total reduction in billed water
• NABERS Water Ratings – 88% of rated NLA 33 valid during FY15/16 was at or above 4 Star 2.1% rating • Electricity tariff savings – $51,000 annual electricity bill savings through identification and 86% implementation of tariff changes.
• Green Lease coverage – About 249,024m2 of leased NLA was covered by a Green Lease $51,000
• ERM portal and electricity reporting – • AGL portal – Delivered natural gas data Delivered electricity data and reporting access and reporting access to AGL Insight portal, to ERM portal for all relevant stakeholders on the enabling timely, robust natural gas reporting and new whole of government contracts 777 and 776 monitoring. starting 1 Jul 2015, enabling electricity reporting and monitoring.
Property NSW Annual Review 2015–16 Property NSW Bligh House, Level 3, 4–6 Bligh Street, Sydney NSW 2000 GPO Box 4081, Sydney NSW 2001 T: 02 9273 3800
Level 6, 66 Harrington Street, The Rocks NSW 2000 PO Box N408, Grosvenor Place NSW 1220 T: 02 9240 8500 www.property.nsw.gov.au
Teacher Housing Authority NSW McKell Building, Level 18, 2–24 Rawson Place, Sydney NSW 2000 Locked Bag 7, Haymarket NSW 1240 T: 02 9260 2000 www.tha.nsw.gov.au
Waste Assets Management Corporation Level 2, 10 Valentine Avenue, Parramatta NSW 2150 PO Box 3366, Parramatta NSW 2124 T: 02 9685 4960 www.finance.nsw.gov.au/waste-assets-management-corporation
Valuation Services 1 Prince Albert Road, Queens Square, Sydney NSW 2001 PO Box 745, Bathurst NSW 2795 T: 1800 110 038 www.valuergeneral.nsw.gov.au
Public Works Advisory McKell Building, 2–24 Rawson Place, Sydney NSW 2000 T: 02 9372 8877 www.publicworksadvisory.nsw.gov.au Financials and statutory information For the year ending 30 June 2016
Appendix A Government Property NSW
Appendix B Sydney Harbour Foreshore Authority
Appendix C Teacher Housing Authority of NSW
Note Under clause 6 of Schedule 5 of the Waste Recycling and Processing Corporation (Authorised Transaction) Act 2010, the Treasurer has designated that Waste Assets Management Corporation’s Annual Report be included with the Department of Finance, Service and Innovation’s Annual Report.
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Property NSW Annual Review 2015–16 Appendix A Government Property NSW 37
• Financial statements for the year ended 30 June 2016 • Statutory information
Government Property NSW 2015–16 38 Government Property NSW
• Financial statements for the year ended 30 June 2016
Government Property NSW 2015–16 39
Government Property NSW 2015–16 40
Government Property NSW 2015–16 41
Government Property NSW 2015–16 Government Property NSW Start of Audited Financial Statements Statement of Comprehensive Income For the Year Ended 30 June 2016
Note Actual Budget Actual 2016 2016 2015 $'000 $'000 $'000 Expenses Excluding Losses Operating Expenses Personnel Services Expense 2(a) 25,672 26,968 18,893 Other Operating Expenses 2(b) 471,419 483,452 455,135 Depreciation and Amortisation 2(c) 12,888 14,875 16,741 Grants and Subsidies 2(d) 200,697 - 4,530 Finance Costs 2(e) 6,341 5,825 6,360
TOTAL EXPENSES EXCLUDING LOSSES 717,017 531,120 501,659 Revenue Sale of Goods and Services 3(a) 497,194 512,848 485,068 Investment Revenue 3(b) 6,342 6,260 6,130 Grants and Contributions 3(c) 26,241 26,241 17,470 Other Revenue 3(d) 550 550 500
Total Revenue 530,327 545,899 509,168 Gain/(Loss) on Disposal 4 1,468 2,643 28,264 Other Gains/(Losses) 5 (443) (300) 8,162
Net Result (185,665) 17,122 43,935 Other Comprehensive Income Items that will not be Reclassified to Net Result: Net Increase/(Decrease) in Property, Plant and 42 Equipment Revaluation Surplus 17(b)(i) 82,041 - 46,984 Total Other Comprehensive Income 82,041 - 46,984 TOTAL COMPREHENSIVE INCOME (103,624) 17,122 90,919
[The accompanying notes form part of these financial statements]
Government Property NSW 2015–16 - 1 - Government Property NSW Government Property NSW Start of Audited Financial Statements Statement of Comprehensive Income Statement of Financial Position As At 30 June 2016 For the Year Ended 30 June 2016
Note Actual Budget Actual Note Actual Budget Actual 2016 2016 2015 2016 2016 2015 $'000 $'000 $'000 $'000 $'000 $'000 ASSETS Expenses Excluding Losses Operating Expenses Current Assets Cash and Cash Equivalents 6(a) 108,891 60,610 265,675 Personnel Services Expense 2(a) 25,672 26,968 18,893 Receivables 7 76,114 55,366 70,076 Other Operating Expenses 2(b) 471,419 483,452 455,135 Non-Current Assets Held For Sale 9 52,086 - 80,279 Depreciation and Amortisation 2(c) 12,888 14,875 16,741 Grants and Subsidies 2(d) 200,697 - 4,530 Total Current Assets 237,091 115,976 416,030 Finance Costs 2(e) 6,341 5,825 6,360 Non-Current Assets TOTAL EXPENSES EXCLUDING LOSSES 717,017 531,120 501,659 Receivables 7 226,949 246,112 218,540 Property, Plant and Equipment 8 729,526 619,789 593,175 Revenue Sale of Goods and Services 3(a) 497,194 512,848 485,068 Intangible Assets 10 1,893 4,533 865 Other 11 6,450 6,400 5,850 Investment Revenue 3(b) 6,342 6,260 6,130 Grants and Contributions 3(c) 26,241 26,241 17,470 Total Non-Current Assets 964,818 876,834 818,430 Other Revenue 3(d) 550 550 500 TOTAL ASSETS 1,201,909 992,810 1,234,460 Total Revenue 530,327 545,899 509,168 LIABILITIES Gain/(Loss) on Disposal 4 1,468 2,643 28,264 Current Liabilities Other Gains/(Losses) 5 (443) (300) 8,162 Payables 13 23,669 7,836 19,425 Borrowings 14 866 866 1,074 Net Result (185,665) 17,122 43,935 Provisions 15 103,549 53,207 69,941 Other Comprehensive Income Other Liabilities 16 8,025 9,593 8,476
Items that will not be Reclassified to Net Result: Total Current Liabilities 136,109 71,502 98,916 Net Increase/(Decrease) in Property, Plant and Non-Current Liabilities Equipment Revaluation Surplus 17(b)(i) 82,041 - 46,984 Payables 13 7,687 - 5,338 43 Total Other Comprehensive Income 82,041 - 46,984 Borrowings 14 34,398 34,398 35,265 TOTAL COMPREHENSIVE INCOME (103,624) 17,122 90,919 Provisions 15 116,380 131,704 155,510 Other Liabilities 16 57,865 51,420 51,099
Total Non-Current Liabilities 216,330 217,522 247,212 [The accompanying notes form part of these financial statements] TOTAL LIABILITIES 352,439 289,024 346,128
NET ASSETS 849,470 703,786 888,332 EQUITY Accumulated Funds 667,259 628,833 788,162 Asset Revaluation Reserve 17(b) 182,211 74,953 100,170 TOTAL EQUITY 849,470 703,786 888,332
[The accompanying notes form part of these financial statements]
- 1 - - 2 - Government Property NSW 2015–16 Government Property NSW
Statement of Changes in Equity For the Year Ended 30 June 2016
Asset Asset Accumulated Revaluation Total Accumulated Revaluation Total Note Funds Reserve Equity Funds Reserve Equity 2016 2016 2016 2015 2015 2015 $'000 $'000 $'000 $'000 $'000 $'000
Opening Balance 788,162 100,170 888,332 708,139 53,186 761,325
Net Result for the Year (185,665) - (185,665) 43,935 - 43,935 Other Comprehensive Income: Net Increase/(Decrease) in Property, Plant and Equipment Revaluation Surplus 17(b)(i) - 82,041 82,041 - 46,984 46,984
Total Other Comprehensive Income - 82,041 82,041 - 46,984 46,984
Total Comprehensive Income for the Year (185,665) 82,041 (103,624) 43,935 46,984 90,919 Transactions with Owners as Owners Financial Distributions 17(a) (66,589) - (66,589) (65,329) - (65,329) Net Increase/(Decrease) in Net Assets from Equity Transfers 17(c) 131,351 - 131,351 101,417 - 101,417
Total Transactions with Owners as Owners 64,762 - 64,762 36,088 - 36,088
Closing Balance 667,259 182,211 849,470 788,162 100,170 888,332
[The accompanying notes form part of these financial statements]
44
Government Property NSW 2015–16 - 3 - Government Property NSW Government Property NSW
Statement of Changes in Equity Statement of Cash Flows For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
Asset Asset Accumulated Revaluation Total Accumulated Revaluation Total Note Actual Budget Actual Note Funds Reserve Equity Funds Reserve Equity 2016 2016 2015 2016 2016 2016 2015 2015 2015 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 CASH FLOWS FROM OPERATING ACTIVITIES Opening Balance 788,162 100,170 888,332 708,139 53,186 761,325 Payments Net Result for the Year (185,665) - (185,665) 43,935 - 43,935 Personnel Services (26,081) (26,968) (19,009) Other Comprehensive Income: Finance Costs (4,929) (4,929) (5,015) Net Increase/(Decrease) in Property, Plant Grants and Subsidies (200,202) - (4,530) and Equipment Revaluation Surplus 17(b)(i) - 82,041 82,041 - 46,984 46,984 Other (466,753) (511,156) (458,472) Total Other Comprehensive Income - 82,041 82,041 - 46,984 46,984 Total Payments (697,965) (543,053) (487,026) Total Comprehensive Income for the Year (185,665) 82,041 (103,624) 43,935 46,984 90,919 Receipts 495,673 507,319 477,621 Transactions with Owners as Owners Sale of Goods and Services Financial Distributions 17(a) (66,589) - (66,589) (65,329) - (65,329) Interest Received 6,388 6,418 6,164 Net Increase/(Decrease) in Net Assets from Grants and Contributions 26,241 26,241 12,325 Equity Transfers 17(c) 131,351 - 131,351 101,417 - 101,417 Total Receipts 528,302 539,978 496,110
Total Transactions with Owners as Owners 64,762 - 64,762 36,088 - 36,088 NET CASH FLOWS FROM OPERATING ACTIVITIES 6(b) (169,663) (3,075) 9,084 Closing Balance 667,259 182,211 849,470 788,162 100,170 888,332 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Property, Plant and Equipment (9,165) (21,329) (6,596) [The accompanying notes form part of these financial statements] Proceeds from Sale of Property, Plant and Equipment 89,707 172,189 218,837
NET CASH FLOWS FROM INVESTING ACTIVITIES 80,542 150,860 212,241 CASH FLOWS FROM FINANCING ACTIVITIES Repayment of borrowings and advances (1,074) (1,074) (989) Financial Distributions to the State Government 1(l) (66,589) (181,007) (65,329) NET CASH FLOWS FROM FINANCING ACTIVITIES (67,663) (182,081) (66,318) 45 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (156,784) (34,296) 155,007 Opening Cash and Cash Equivalents 265,675 94,906 110,668 CLOSING CASH AND CASH EQUIVALENTS 6(a) 108,891 60,610 265,675
[The accompanying notes form part of these financial statements]
- 3 - - 4 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Reporting Entity
Government Property NSW (GPNSW) was established under the Government Property NSW Act 2006 (the Act) to improve the management of the NSW Government's owned and leased real property portfolio and to become a central agency with a whole-of-government focus on the acquisition, disposition and better utilisation of real property assets. GPNSW commenced operations on 1 September 2006 and is domiciled in Australia. Its principal business address is Bligh House, 4-6 Bligh Street, Sydney NSW 2000. GPNSW is a not-for-profit entity as profit is not its principal objective. GPNSW is consolidated as part of the NSW Total State Sector Accounts.
Under the Act, GPNSW is unable to employ staff. However, to enable it to exercise its functions, GPNSW can obtain personnel services from Government agencies who are able to engage staff under Part 4 of the Government Sector Employment Act 2013 . During 2015-16, personnel services were provided by the Department of Finance, Services and Innovation (DFSI) (formerly Office of Finance and Services). The DFSI, a principal department, is a separate reporting entity and does not control GPNSW for financial reporting purposes.
These financial statements have been authorised for issue by GPNSW's Chief Executive Officer on 15 September 2016.
(b) Basis of Preparation
GPNSW's financial statements are general-purpose financial statements which have been prepared on a "going concern" basis and in accordance with:
(i) applicable Australian Accounting Standards (which include Australian Accounting Interpretations); (ii) the requirements of the Public Finance and Audit Act 1983 and Public Finance and Audit Regulation 2015 ; and (iii) the Financial Reporting Directions published in the Financial Reporting Code for NSW General Government Sector Entities or issued by the Treasurer. 46 Property, Plant and Equipment, Non-Current Assets Held for Sale and Other Non-Current Asset are measured at fair value. Other financial statement items are prepared in accordance with the historical cost convention except where specified otherwise.
The accrual basis of accounting has been adopted in the preparation of the financial statements, except for cash flow information.
Judgements, key assumptions and estimations made by management are disclosed in the relevant notes to the financial statements.
All amounts are rounded to the nearest one thousand dollars ($'000) and are expressed in Australian currency.
(c) Statement of Compliance
The financial statements and accompanying notes comply with Australian Accounting Standards, which include Australian Accounting Interpretations.
(d) Borrowing Costs
Borrowing costs are recognised as expenses in the period in which they are incurred, in accordance with Treasury’s Mandate to not-for-profit general government sector entities.
(e) Insurance
GPNSW's insurance activities are conducted through the NSW Treasury Managed Fund Scheme of self-insurance for Government entities. The expense (premium) is determined by the Fund Manager based on past claim experience. Properties owned by GPNSW are insured for their replacement value. Management reviews the insurance coverage each year.
Government Property NSW 2015–16 - 5 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Reporting Entity (f) Accounting for the Goods and Services Tax (GST)
Government Property NSW (GPNSW) was established under the Government Property NSW Act 2006 (the Act) to improve Income, expenses and assets are recognised net of the amount of GST, except that: the management of the NSW Government's owned and leased real property portfolio and to become a central agency with a whole-of-government focus on the acquisition, disposition and better utilisation of real property assets. GPNSW (i) the amount of GST incurred by GPNSW as a purchaser that is not recoverable from the Australian Taxation Office commenced operations on 1 September 2006 and is domiciled in Australia. Its principal business address is Bligh House, is recognised as part of the cost of acquisition of an asset or as part of an item of expense; 4-6 Bligh Street, Sydney NSW 2000. GPNSW is a not-for-profit entity as profit is not its principal objective. GPNSW is consolidated as part of the NSW Total State Sector Accounts. (ii) receivables and payables are stated with the amount of GST included; and
Under the Act, GPNSW is unable to employ staff. However, to enable it to exercise its functions, GPNSW can obtain (iii) commitment amounts disclosed in the financial statements include the amount of GST recoverable from, or payable to, personnel services from Government agencies who are able to engage staff under Part 4 of the Government Sector the Australian Taxation Office. Employment Act 2013 . During 2015-16, personnel services were provided by the Department of Finance, Services and Innovation (DFSI) (formerly Office of Finance and Services). The DFSI, a principal department, is a separate reporting entity Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flows and does not control GPNSW for financial reporting purposes. arising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified as operating cash flows. These financial statements have been authorised for issue by GPNSW's Chief Executive Officer on 15 September 2016. (g) Income Recognition (b) Basis of Preparation Income is measured at the fair value of the consideration or contribution received or receivable. Additional comments GPNSW's financial statements are general-purpose financial statements which have been prepared on a "going concern" regarding the accounting policies for the recognition of income are discussed below. basis and in accordance with: (i) Operating Lease Income (i) applicable Australian Accounting Standards (which include Australian Accounting Interpretations); (ii) the requirements of the Public Finance and Audit Act 1983 and Public Finance and Audit Regulation 2015 ; and Operating lease income is recognised in accordance with AASB 117 "Leases". Lease income from operating leases (iii) the Financial Reporting Directions published in the Financial Reporting Code for NSW General Government Sector where GPNSW is the lessor is recognised as income in the Statement of Comprehensive Income on a straight-line Entities or issued by the Treasurer. basis over the lease term. Contingent rental income is recognised as income in the period in which it is earned. 47 Property, Plant and Equipment, Non-Current Assets Held for Sale and Other Non-Current Asset are measured at fair value. (ii) Finance Lease Income Other financial statement items are prepared in accordance with the historical cost convention except where specified otherwise. Finance lease income is recognised in accordance with AASB 117 "Leases". Lease income from finance leases where GPNSW is the lessor is recognised as income in the Statement of Comprehensive Income over the lease period so The accrual basis of accounting has been adopted in the preparation of the financial statements, except for cash flow as to allocate finance income over the lease term on a systematic and rational basis. This income allocation is based information. on a pattern reflecting a constant period return on GPNSW’s net investment in the lease.
Judgements, key assumptions and estimations made by management are disclosed in the relevant notes to the financial The estimated unguaranteed residual value used in computing GPNSW's gross investment in each lease is statements. reviewed regularly. If there has been a reduction in the estimated unguaranteed residual value, the income allocation over the lease term is revised and any reduction in respect of amounts accrued is recognised immediately. Contingent All amounts are rounded to the nearest one thousand dollars ($'000) and are expressed in Australian currency. rent from finance leases as lessor is recognised as income in the period in which it is earned.
(c) Statement of Compliance (iii) Fees for Services Rendered
The financial statements and accompanying notes comply with Australian Accounting Standards, which include Australian Revenue from the rendering of services is recognised when the service is provided or by reference to the stage of Accounting Interpretations. completion (based on labour hours incurred to date).
(d) Borrowing Costs (iv) Interest Income
Borrowing costs are recognised as expenses in the period in which they are incurred, in accordance with Treasury’s Revenue is recognised using the effective interest method as set out in AASB 139 "Financial Instruments: Recognition Mandate to not-for-profit general government sector entities. and Measurement".
(e) Insurance (v) Grants and Contributions
GPNSW's insurance activities are conducted through the NSW Treasury Managed Fund Scheme of self-insurance for Grants and contributions are recognised as income when GPNSW obtains control over the assets comprising the Government entities. The expense (premium) is determined by the Fund Manager based on past claim experience. Properties grant or contribution, it is probable that the economic benefits will flow to GPNSW, and the amount of the grant or owned by GPNSW are insured for their replacement value. Management reviews the insurance coverage each year. contribution can be measured reliably. Control is normally obtained upon the receipt of cash.
- 5 - - 6 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Income Recognition (Continued)
(vi) Emerging Asset Revenue
In accordance with TPP 06-08 "Accounting for Privately Financed Projects", the Opera House Car Park is an emerging asset which GPNSW has a right to receive in 2043 under a privately financed infrastructure arrangement. The right is being recognised as revenue and added to the asset value over the term of the car park concession. Any periodic revaluations are accounted for in accordance with AASB 116 "Property, Plant and Equipment".
(h) Assets
(i) Acquisitions of Assets
Acquisition of assets is recognised when the risks and rewards of the asset have passed to the buyer. On property asset, this usually coincides with when the legal title passes to the buyer, which is upon settlement of a contract.
The cost method of accounting is used for the initial recording of all acquisitions of assets controlled by GPNSW. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the requirements of other Australian Accounting Standards.
Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition (see also assets transferred as a result of an equity transfer (Note 1(m)).
Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. 48 Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent; i.e. deferred payment amount is effectively discounted at an asset-specific rate.
(ii) Capitalisation Thresholds
Plant and equipment, and intangible assets costing $5,000 and above individually (or forming part of a network costing more than $5,000) are capitalised.
Property expenditure that gives rise to an effective and material increase in the future economic benefits of the property to GPNSW is capitalised. The general threshold for property expenditure capitalisation is $30,000.
(iii) Revaluation of Property, Plant and Equipment
Physical non-current assets are valued in accordance with the 'Valuation of Physical Non-Current Assets at Fair Value' Policy and Guidelines Paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 "Fair Value Measurement", AASB 116 "Property, Plant and Equipment" and AASB 140 "Investment Property".
Investment property is separately discussed at Note 1(h)(xvi).
Property, plant and equipment is measured at the highest and best use by market participants that is physically possible, legally permissible and financially feasible. The highest and best use must be available at a period that is not remote and take into account the characteristics of the asset being measured, including any socio-political restrictions imposed by government. In most cases, after taking into account these considerations, the highest and best use is the existing use. In limited circumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use or where there is a feasible higher restricted alternative use.
Fair value of property, plant and equipment is based on a market participants’ perspective, using valuation techniques (market approach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs. GPNSW revalues each class of property, plant and equipment on annual basis to ensure that the carrying amount of each asset in the class does not differ materially from its fair value at reporting date (Note 8(b)(i) and 8(b)(ii)).
Government Property NSW 2015–16 - 7 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Income Recognition (Continued) (h) Assets (Continued)
(vi) Emerging Asset Revenue (iii) Revaluation of Property, Plant and Equipment (Continued)
In accordance with TPP 06-08 "Accounting for Privately Financed Projects", the Opera House Car Park is an emerging Non-specialised assets with short useful lives are measured at depreciated historical cost, as an approximation of fair asset which GPNSW has a right to receive in 2043 under a privately financed infrastructure arrangement. The right value. is being recognised as revenue and added to the asset value over the term of the car park concession. Any periodic revaluations are accounted for in accordance with AASB 116 "Property, Plant and Equipment". When revaluing assets, any balances of accumulated depreciation at the revaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are then increased or decreased by the (h) Assets revaluation increments or decrements.
(i) Acquisitions of Assets Revaluation increments are credited directly to revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in the net result, the Acquisition of assets is recognised when the risks and rewards of the asset have passed to the buyer. On property increment is recognised immediately as revenue in the net result. asset, this usually coincides with when the legal title passes to the buyer, which is upon settlement of a contract. Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a The cost method of accounting is used for the initial recording of all acquisitions of assets controlled by GPNSW. credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited directly to the Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset revaluation reserve. at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the requirements of other Australian Accounting Standards. As a not-for-profit entity, revaluation increments and decrements are offset against one another within a class of non-current assets, but not otherwise. Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition (see also assets transferred as a result of an equity transfer (Note 1(m)). Where an asset that has previously been revalued is disposed of, any balance remaining in the revaluation reserve in respect of that asset is transferred to accumulated funds. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. (iv) Impairment of Property, Plant and Equipment 49 Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent; i.e. deferred As a not-for-profit entity with no cash generating units, impairment under AASB 136 "Impairment of Assets" is unlikely payment amount is effectively discounted at an asset-specific rate. to arise. As property, plant and equipment is carried at fair value, impairment can only arise in the rare circumstances where the costs of disposal are material. Specifically, impairment is unlikely for not-for-profit entities given that AASB (ii) Capitalisation Thresholds 136 modifies the recoverable amount test for non-cash generating assets of not-for-profit entities to the higher of fair value less costs of disposal and depreciated replacement cost, where depreciated replacement cost is also fair value. Plant and equipment, and intangible assets costing $5,000 and above individually (or forming part of a network costing more than $5,000) are capitalised. (v) Depreciation of Property, Plant and Equipment
Property expenditure that gives rise to an effective and material increase in the future economic benefits of the property Depreciation is provided for on a straight-line basis for all depreciable non-current assets so as to write off the to GPNSW is capitalised. The general threshold for property expenditure capitalisation is $30,000. depreciable amount of each asset as it is consumed over its useful life to GPNSW. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. (iii) Revaluation of Property, Plant and Equipment GPNSW's buildings are separately componentised into the structure, air conditioning units and lifts where it can Physical non-current assets are valued in accordance with the 'Valuation of Physical Non-Current Assets at Fair Value' be determined that these components: Policy and Guidelines Paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 "Fair Value Measurement", AASB 116 "Property, Plant and Equipment" and AASB 140 "Investment Property". (a) physically exist; and (b) are material enough to justify separate tracking; and Investment property is separately discussed at Note 1(h)(xvi). (c) are capable of having a reliable value attributed to them; and (d) have differing estimated useful lives to the extent that failure to depreciate them separately would result in a Property, plant and equipment is measured at the highest and best use by market participants that is physically material difference in the annual depreciation expense for GPNSW. possible, legally permissible and financially feasible. The highest and best use must be available at a period that is not remote and take into account the characteristics of the asset being measured, including any socio-political restrictions imposed by government. In most cases, after taking into account these considerations, the highest and best use is the existing use. In limited circumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use or where there is a feasible higher restricted alternative use.
Fair value of property, plant and equipment is based on a market participants’ perspective, using valuation techniques (market approach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs. GPNSW revalues each class of property, plant and equipment on annual basis to ensure that the carrying amount of each asset in the class does not differ materially from its fair value at reporting date (Note 8(b)(i) and 8(b)(ii)).
- 7 - - 8 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Assets (Continued)
(v) Depreciation of Property, Plant and Equipment (Continued)
The starting useful lives of GPNSW's items of property, plant and equipment are based on the following:
2016 2015 Years Years
Buildings (Not Componentised) 40 40 Buildings (Componentised) Structure 40 40 Air Conditioning Units 20 20 Lifts 30 30 Computer Equipment and Software 3 3 Furniture and Fittings 10 10 Plant and Equipment and Office Equipment 5 5 Leasehold Improvements 6 6
Leasehold Improvements are depreciated over the shorter of the lease term and their useful life. Heritage buildings are depreciated in accordance with the above useful life ranges. Finance Lease Assets are amortised over the period of the lease. Fine Arts and Heritage items located within owned buildings are not depreciated as they do not have a limited useful life. These items are however subject to an annual impairment test to identify any impairment.
In accordance with AASB 5 "Non-current Assets Held for Sale and Discontinued Operations", any assets held for sale are not depreciated. Land is also not depreciated as land is not a depreciable asset. 50 (vi) Restoration Costs
The estimated cost of dismantling and removing an asset and restoring the site is included in the cost of an asset, to the extent it is recognised as a liability.
(vii) Maintenance
Day-to-day servicing costs or maintenance are charged as expenses as incurred, except where they relate to the replacement of a part or component of an asset, in which case the costs are capitalised and depreciated.
(viii) Leased Assets
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of the leased assets, and operating leases under which the lessor effectively retains all such risks and benefits.
(a) Finance Leases
Assets held under finance leases as lessee are recognised on inception at an amount equal to the fair value of the leased property, or if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the Statement of Financial Position as Finance Lease Liabilities under Borrowings (Note 14). Lease payments are allocated between the principal component of the lease liability and the interest expense.
Finance leases as lessor in which substantially all the risks and rewards incidental to legal ownership are transferred by GPNSW to the lessee, are classified in the Statement of Financial Position as Finance Lease Receivables under Receivables (Note 7(b)). Assets held under a finance lease arrangement are presented as a receivable at an amount equal to the net investment in the lease. Lessee finance lease payments are treated by GPNSW as repayment of principal and finance income over the lease term to reimburse and reward GPNSW’s investment and services. Lease payments relating to the period, excluding costs for services, are applied against the gross investment in the lease to reduce both the principal and the unearned finance income.
Government Property NSW 2015–16 - 9 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Assets (Continued) (h) Assets (Continued)
(v) Depreciation of Property, Plant and Equipment (Continued) (viii) Leased Assets (Continued)
The starting useful lives of GPNSW's items of property, plant and equipment are based on the following: (b) Operating Leases
2016 2015 Operating lease payments are recognised in the Net Result and charged on a straight-line basis over the lease term. Years Years Lease incentives received which are less than $0.5 million are recognised directly in the Net Result in the year in which they are received. Lease incentives received which are greater than this amount are recognised in the Statement of Buildings (Not Componentised) 40 40 Financial Position and are allocated to the Net Result over the lease term (Notes 16(a) and 2(b)). Buildings (Componentised) Structure 40 40 In accordance with AASB 137 "Provisions, Contingent Liabilities and Contingent Assets", in the case of an onerous Air Conditioning Units 20 20 contract, the present obligation under the contract is recognised and measured as a provision. Lifts 30 30 Computer Equipment and Software 3 3 The terms of occupancy for government agencies occupying space in GPNSW owned premises is dictated in the Furniture and Fittings 10 10 Memorandum of Understanding (MoU) between GPNSW and the agency. The provisions of the MoU are generally Plant and Equipment and Office Equipment 5 5 based on market place conditions applicable to office buildings in commercial centres. Leasehold Improvements 6 6 The term of the tenancy agreement is indefinite with the agency required to give 18 months notice prior to vacating. Leasehold Improvements are depreciated over the shorter of the lease term and their useful life. Heritage buildings are Termination of part tenancies is permitted subject to a variety of conditions being satisfied. depreciated in accordance with the above useful life ranges. Finance Lease Assets are amortised over the period of the lease. Fine Arts and Heritage items located within owned buildings are not depreciated as they do not have a limited Rent reviews for owned government office buildings are conducted at two yearly intervals to update rentals to current useful life. These items are however subject to an annual impairment test to identify any impairment. market rates. There are no ratchet clauses in place and tenants are charged an effective rental, which takes into consideration incentives available in the market place at a particular point in time. In accordance with AASB 5 "Non-current Assets Held for Sale and Discontinued Operations", any assets held for sale are not depreciated. Land is also not depreciated as land is not a depreciable asset. Tenants will makegood the premises by undertaking a physical makegood or negotiating a financial settlement with GPNSW. 51 (vi) Restoration Costs (ix) Intangible Assets The estimated cost of dismantling and removing an asset and restoring the site is included in the cost of an asset, to the extent it is recognised as a liability. GPNSW recognises intangible assets only if it is probable that future economic benefits will flow to GPNSW and the cost of the asset can be measured reliably. Intangible assets are measured initially at cost. Where an asset is (vii) Maintenance acquired at no or nominal cost, the cost is its fair value as at the date of acquisition.
Day-to-day servicing costs or maintenance are charged as expenses as incurred, except where they relate to the All research costs are expensed. Development costs are only capitalised when certain criteria are met. replacement of a part or component of an asset, in which case the costs are capitalised and depreciated. The useful lives of intangible assets are assessed to be finite. (viii) Leased Assets Intangible assets are subsequently measured at fair value only if there is an active market. As there is no active market A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially for GPNSW’s intangible assets, the assets are carried at cost less any accumulated amortisation. all the risks and benefits incidental to ownership of the leased assets, and operating leases under which the lessor effectively retains all such risks and benefits. GPNSW's intangible assets (computer software) are amortised using the straight-line method over a period of three (3) years. (a) Finance Leases Intangible assets are tested for impairment where an indicator of impairment exists. If the recoverable amount is less Assets held under finance leases as lessee are recognised on inception at an amount equal to the fair value of the than its carrying amount, the carrying amount is reduced to recoverable amount and the reduction is recognised as leased property, or if lower, the present value of the minimum lease payments. The corresponding liability to the lessor an impairment loss. is included in the Statement of Financial Position as Finance Lease Liabilities under Borrowings (Note 14). Lease payments are allocated between the principal component of the lease liability and the interest expense. (x) Cash and Cash Equivalents
Finance leases as lessor in which substantially all the risks and rewards incidental to legal ownership are transferred Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand, restricted by GPNSW to the lessee, are classified in the Statement of Financial Position as Finance Lease Receivables cash and other short-term deposits with an original maturity of three months or less. under Receivables (Note 7(b)). Assets held under a finance lease arrangement are presented as a receivable at an amount equal to the net investment in the lease. Lessee finance lease payments are treated by GPNSW as For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as repayment of principal and finance income over the lease term to reimburse and reward GPNSW’s investment and defined above, net of outstanding bank overdrafts. services. Lease payments relating to the period, excluding costs for services, are applied against the gross investment in the lease to reduce both the principal and the unearned finance income.
- 9 - - 10 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Assets (Continued)
(xi) Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These financial assets are recognised initially at fair value, usually based on the transaction cost or face value. Subsequent measurement is an amortised cost using the effective interest method, less an allowance for any impairment of receivables. Any changes are recognised in the Net Result when impaired, derecognised or through the amortisation process.
Short-term receivables with no stated interest rate are measured at the original invoice amount where the effect of discounting is immaterial. Such receivables, which generally have 30-day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
(xii) Impairment of Financial Assets
All financial assets, except those measured at fair value through profit and loss, are subject to an annual review for impairment. An allowance for impairment is established when there is objective evidence that GPNSW will not be able to collect all amounts due.
For financial assets carried at amortised cost, the amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the impairment loss is recognised in the Net Result for the year.
Any reversals of impairment losses are reversed through the Net Result for the year, where there is objective evidence. Reversals of impairment losses of financial assets carried at amortised cost cannot result in a carrying amount that 52 exceeds what the carrying amount would have been had there not been an impairment loss. (xiii) Derecognition of Financial Assets and Financial Liabilities
A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire or if GPNSW transfers the financial asset: - where substantially all the risks and rewards have been transferred; or - where GPNSW has not transferred substantially all the risks and rewards, if GPNSW has not retained control.
Where GPNSW has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of GPNSW’s continuing involvement in the asset.
A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires.
(xiv) Non-Current Assets Held for Sale
GPNSW has certain non-current assets classified as held for sale, where their carrying amount will be recovered principally through a sale transaction, not through continuing use. Non-Current Assets Held for Sale are recognised at the lower of carrying amount and fair value less costs to sell. These assets are not depreciated while they are classified as held for sale.
(xv) Other Assets
Other assets are recognised on a cost basis.
(xvi) Investment Properties
Investment property is held to earn rentals or for capital appreciation, or both. However, for not-for-profit entities, property held to meet service delivery objectives rather than to earn rental or for capital appreciation does not meet the definition of investment property and is accounted for under AASB 116, Property, Plant and Equipment. GPNSW does not have any property that meets the definition of Investment Property.
Government Property NSW 2015–16 - 11 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Assets (Continued) (i) Liabilities
(xi) Loans and Receivables (i) Payables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an These amounts represent liabilities for goods and services provided to GPNSW and other amounts. Payables are active market. These financial assets are recognised initially at fair value, usually based on the transaction cost or face recognised initially at fair value, usually based on the transaction cost or face value. Subsequent measurement is at value. Subsequent measurement is an amortised cost using the effective interest method, less an allowance for any amortised cost using the effective interest method. Short-term payables with no stated interest rate are measured at impairment of receivables. Any changes are recognised in the Net Result when impaired, derecognised or the original invoice amount where the effect of discounting is immaterial. through the amortisation process. (ii) Borrowings Short-term receivables with no stated interest rate are measured at the original invoice amount where the effect of discounting is immaterial. Such receivables, which generally have 30-day terms, are recognised and carried at original GPNSW's borrowings represent finance lease liabilities. The finance lease liabilities are determined in accordance with invoice amount less an allowance for any uncollectible amounts. AASB 117 "Leases".
(xii) Impairment of Financial Assets (iii) Provisions
All financial assets, except those measured at fair value through profit and loss, are subject to an annual review for (a) Personnel Services Provision impairment. An allowance for impairment is established when there is objective evidence that GPNSW will not be able to collect all amounts due. GPNSW receives personnel services from the Department of Finance, Services and Innovation (DFSI). The DFSI is not a Special Purpose Service Entity and does not control GPNSW under this arrangement (Note 1(a)). As GPNSW is not For financial assets carried at amortised cost, the amount of the allowance is the difference between the asset’s an employer, the disclosure requirements of AASB 119 "Employee Benefits" in respect of employee benefits do not carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. apply. However, for clarity and transparency, a Personnel Services Provision is disclosed in the notes to the financial The amount of the impairment loss is recognised in the Net Result for the year. statements where the substance of the underlying liability effectively represents employee benefits (Note 15(a)).
Any reversals of impairment losses are reversed through the Net Result for the year, where there is objective evidence. (b) Land Remediation Provision Reversals of impairment losses of financial assets carried at amortised cost cannot result in a carrying amount that exceeds what the carrying amount would have been had there not been an impairment loss. Where GPNSW has a legal or constructive obligation to remediate an asset such as land, a provision is recognised to 53 reflect the net present value of the estimated future costs required to settle GPNSW's remediation obligations (Note (xiii) Derecognition of Financial Assets and Financial Liabilities 15(b)). At the same time, where GPNSW owns the underlying asset, the amount of the provision is capitalised and added to the cost of the asset. A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire or if GPNSW transfers the financial asset: Periodic changes in the provision are accounted for in accordance with the requirements of AASB Interpretation 1 - where substantially all the risks and rewards have been transferred; or "Changes in Existing Decommissioning, Restoration and Similar Liabilities" and the revaluation model requirements of - where GPNSW has not transferred substantially all the risks and rewards, if GPNSW has not retained control. AASB 116 "Property, Plant and Equipment" for not-for-profit entities.
Where GPNSW has neither transferred nor retained substantially all the risks and rewards or transferred control, The discount applied to recognise the time value of money is unwound over the life of the provision. Any incremental the asset is recognised to the extent of GPNSW’s continuing involvement in the asset. increase resulting from the unwinding of the discount is recognised under Finance Costs within the Net Result in the reporting period in which it occurs. A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. Other increases or decreases in the provision resulting from periodic changes to the estimated timing or amount of (xiv) Non-Current Assets Held for Sale future remediation costs, or changes to the discount rate used, alter the revaluation increase or decrease previously recognised on the underlying asset. An increase in the provision is recognised in the Net Result except to the GPNSW has certain non-current assets classified as held for sale, where their carrying amount will be recovered extent that it reverses any Asset Revaluation Reserve balance in respect of the underlying class of assets. A decrease principally through a sale transaction, not through continuing use. Non-Current Assets Held for Sale are recognised at in the provision is credited to the Asset Revaluation Reserve except to the extent that it reverses any previous increase the lower of carrying amount and fair value less costs to sell. These assets are not depreciated while they are recognised in the Net Result in respect the underlying class of assets. Any changes to the Asset Revaluation classified as held for sale. Reserve resulting from these provision increases or decreases are separately identified and disclosed within Other Comprehensive Income. (xv) Other Assets (c) Other Provisions Other assets are recognised on a cost basis. Other provisions are recognised when GPNSW has a present legal or constructive obligation as a result of a past event, it (xvi) Investment Properties is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle Investment property is held to earn rentals or for capital appreciation, or both. However, for not-for-profit entities, property the present obligation as at the reporting date, taking into account the risks and uncertainties that surround the events and held to meet service delivery objectives rather than to earn rental or for capital appreciation does not meet the definition of circumstances that affect the provision. Where the effect of the time value of money is material, the provision amount is investment property and is accounted for under AASB 116, Property, Plant and Equipment. GPNSW does not have any calculated as the present value of the expenditure expected to be required to settle the obligation. The discount rate used property that meets the definition of Investment Property. in the calculation is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The rate does not reflect risks for which future cash flow estimates have been adjusted.
- 11 - - 12 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Fair Value Hierarchy
A number of GPNSW’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevant observable inputs and minimises the use of unobservable inputs. Under AASB 13 "Fair Value Measurement", GPNSW categorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows:
- Level 1 – quoted prices in active markets for identical assets / liabilities that the entity can access at the measurement date. - Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. - Level 3 – inputs that are not based on observable market data (unobservable inputs).
GPNSW recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Refer to Note 12 and Note 20 for further disclosures regarding fair value measurements of financial and non-financial assets.
(k) Equity and Reserves
(i) Accumulated Funds
The category "Accumulated Funds" includes all current and prior period retained funds. All financial distributions are made directly from Accumulated Funds.
(ii) Asset Revaluation Reserve 54 The total asset revaluation reserve is used to record increments and decrements on the revaluation of non-current property plant and equipment and finance leases. This accords with GPNSW's policy on the Revaluation of Property, Plant and Equipment (Note 1(h)(iii)). No financial distributions are made from the Asset Revaluation Reserve.
(l) Financial Distributions
As a Government business, GPNSW operates under the State Government's Commercial Policy Framework. A key component of this Framework is the requirement to make financial distributions to owners. In GPNSW's case, its owner is the State Government. All payments of financial distributions are made to the Crown Finance Entity. The nature and calculation of the required annual distributions is determined by NSW Treasury Policy and Guidelines Paper, TPP 14-04 "Financial Distribution Policy for Government Businesses". The distributions made by GPNSW include normal distribution payments from cash operating surpluses and capital repatriations, from the sale of its own properties.
Normal distributions are payments made from current year cash surpluses. Treasury policy states that a government business should not retain any cash in excess of its requirements for working capital, in addition to a contingency allowance for an appropriate level of financial flexibility. Funds in excess of these requirements are returned to the State Government.
Capital repatriations are additional one-off payments which represent capital repayments of the State Government’s equity in GPNSW. In GPNSW’s case, capital repatriation payments represent the full return of the net proceeds (ie. total proceeds less costs) of all GPNSW-owned property sales (Note 17(a)).
(m) Equity Transfers
The establishment of new statutory bodies or transfer of net assets between agencies as a result of an administrative restructure, transfers of programs/functions and parts thereof between NSW public sector agencies are designated as a contribution by owners and recognised as an adjustment to Accumulated Funds. This treatment is in accordance with Treasury Policy and Guidelines Paper TPP 09-3 "Contributions By Owners Made to Wholly-Owned Public Sector Entities" and is consistent with Interpretation 1038 "Contributions by Owners Made to Wholly-Owned Public Sector Entities" and Australian Accounting Standards. Transfers arising from an administrative restructure between government agencies are recognised at the amount at which the asset was recognised by the transferor government agency immediately prior to the restructure. In most cases this will approximate fair value. All other equity transfers are recognised at fair value.
Government Property NSW 2015–16 - 13 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Fair Value Hierarchy (n) Budgeted Amounts
A number of GPNSW’s accounting policies and disclosures require the measurement of fair values, for both financial and The budgeted amounts are drawn from the original budgeted financial statements presented to Parliament in respect of the non-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevant reporting period. Subsequent amendments to the original budget (e.g. adjustment for transfer of functions between entities observable inputs and minimises the use of unobservable inputs. Under AASB 13 "Fair Value Measurement", GPNSW as a result of administrative arrangements orders) are not reflected in the budgeted amounts. Major variances between the categorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as original budgeted amounts and the actual amounts disclosed in the primary financial statements are explained in Note 21. follows: (o) Comparative Information - Level 1 – quoted prices in active markets for identical assets / liabilities that the entity can access at the measurement date. Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in - Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. respect of the previous period for all amounts reported in the financial statements. - Level 3 – inputs that are not based on observable market data (unobservable inputs). (p) Changes in Accounting Policy, including New or Revised Australian Accounting Standards GPNSW recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Refer to Note 12 and Note 20 for further disclosures regarding fair value measurements of financial (i) Effective for the First Time in 2015-16 and non-financial assets. The accounting policies applied in 2015-16 are consistent with those of the previous financial year. The following revised (k) Equity and Reserves Australian Accounting Standards were applied for the first time in 2015-16:
(i) Accumulated Funds - AASB 2013-9 (Part C), AASB 2014-1 (Part E) and AASB 2014-8 regarding amendments to AASB 9 "Financial Instruments" The category "Accumulated Funds" includes all current and prior period retained funds. All financial distributions are - AASB 2015-3 regarding withdrawal of AASB 1031 "Materiality" made directly from Accumulated Funds. - AASB 2015-4 regarding amendments to AASB 128 "Investments in Associates and Joint Ventures"
(ii) Asset Revaluation Reserve There was no material impact on the financial statements of GPNSW from these Standards in the period of initial application. The total asset revaluation reserve is used to record increments and decrements on the revaluation of non-current 55 property plant and equipment and finance leases. This accords with GPNSW's policy on the Revaluation of (ii) Issued but Not Yet Effective Property, Plant and Equipment (Note 1(h)(iii)). No financial distributions are made from the Asset Revaluation Reserve. NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless Treasury (l) Financial Distributions determines otherwise. There are a number of recently issued or amended Australian Accounting Standards which are not yet effective and have not been adopted for the reporting period ending 30 June 2016. Management has reviewed As a Government business, GPNSW operates under the State Government's Commercial Policy Framework. A key each of these Standards and considers that their early adoption will not have any material impact on the financial component of this Framework is the requirement to make financial distributions to owners. In GPNSW's case, its owner is the statements of GPNSW except for: State Government. All payments of financial distributions are made to the Crown Finance Entity. The nature and calculation of the required annual distributions is determined by NSW Treasury Policy and Guidelines Paper, TPP 14-04 "Financial - AASB 124 "Related Party Disclosures", has application from 1 July 2016. The amended standard requires Distribution Policy for Government Businesses". The distributions made by GPNSW include normal distribution payments from GPNSW, a not-for-profit entity, to disclose material transactions and outstanding balances between GPNSW and its cash operating surpluses and capital repatriations, from the sale of its own properties. related parties. The definition of a "related party" in AASB 124 is extensive and it includes close famility members of individuals in related party relationships. Key Management Personnel (KMP) are related parties with separate Normal distributions are payments made from current year cash surpluses. Treasury policy states that a government disclosure requirements. business should not retain any cash in excess of its requirements for working capital, in addition to a contingency allowance for an appropriate level of financial flexibility. Funds in excess of these requirements are returned to the State Government. - AASB 15 and AASB 2014-5 "Revenue from Contracts with Customers", has application from 1 January 2018. GPNSW believes this standard will impact on the timing recognition of certain revenues given the core principle of the Capital repatriations are additional one-off payments which represent capital repayments of the State Government’s equity new standard requires revenue to be recognised when the goods or services are transferred to the customer at the in GPNSW. In GPNSW’s case, capital repatriation payments represent the full return of the net proceeds (ie. total proceeds transaction price (as opposed to stage of completion of the transaction). The model features a contract-based five step less costs) of all GPNSW-owned property sales (Note 17(a)). analysis of transactions to determine whether, how much and when revenue is recognised.
(m) Equity Transfers - AASB 16 "Leases", has application from 1 January 2019. This standard generally requires Lessee to recognise a right-of-use asset and a lease liability at a lease's commencement date. GPNSW believes this standard will The establishment of new statutory bodies or transfer of net assets between agencies as a result of an administrative significantly increase the value of GPNSW's total assets and liabilities and affect the composition of GPNSW's revenue restructure, transfers of programs/functions and parts thereof between NSW public sector agencies are designated as a and expenses. At 30 June 2016, GPNSW was unable to quantify the significant financial impact from the application contribution by owners and recognised as an adjustment to Accumulated Funds. This treatment is in accordance with of this standard. Treasury Policy and Guidelines Paper TPP 09-3 "Contributions By Owners Made to Wholly-Owned Public Sector Entities" and is consistent with Interpretation 1038 "Contributions by Owners Made to Wholly-Owned Public Sector Entities" and Australian Accounting Standards. Transfers arising from an administrative restructure between government agencies are recognised at the amount at which the asset was recognised by the transferor government agency immediately prior to the restructure. In most cases this will approximate fair value. All other equity transfers are recognised at fair value.
- 13 - - 14 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
2. EXPENSES EXCLUDING LOSSES 2016 2015 $'000 $'000 (a) Personnel Services Expense (i) Salaries and Wages (Including Recreation Leave) 14,652 11,601 Contractors 5,803 4,965 Voluntary Redundancies 2,641 351 Superannuation (Defined Benefit Plans) (ii) 61 227 Superannuation (Defined Contribution Plans) 928 792 Long Service Leave 586 204 Worker's Compensation Insurance 55 55 Payroll Tax and Fringe Benefits Tax 946 698 25,672 18,893
(i) The Personnel Services Expense is the expense incurred by GPNSW on personnel services provided to it by the Department of Finance, Services and Innovation (DFSI). Under the Government Property NSW Act 2006, GPNSW is unable to employ staff (Note 1(a)).
(ii) The Superannuation (Defined Benefits Plans) expense in 2014-15 included a net decrease of $0.1 million in the unfunded liability at 30 June 2015 in respect of personnel who are members of these Plans (Note 15(a)(i)). This decrease included net gains of $0.7 million in 2014-15 related to a combination of actuarial losses and actual return on fund assets, less interest income. The decrease is recognised directly in the Net Result under Personnel Services Expense.
(b) Other Operating Expenses 2016 2015 $'000 $'000
Property Head Lease Expense (i) 434,409 416,245 Other Property Related Expenses (ii) 26,200 28,045 56 Other Operating Expenses (iii) 10,810 10,845 471,419 455,135
(i) Property Head Lease Expense 2016 2015 $'000 $'000
Minimum Lease Payments (a) 365,798 341,074 Rental Expenses Arising from Sub-Leases (b) 65,119 65,273 Contingent Rentals (c) 12,719 19,194 443,636 425,541 Less Amortisation of Lessor Lease Incentives (Note 16(a)) (9,227) (9,296) 434,409 416,245
(a) The majority of head leased office accommodation property is sub-leased to government agencies. The terms of the operating head leases generally range from 3 to 15 years with the option of renewal of further terms. The lease agreements allow Lessors the right to review rents on specified dates.
(b) Expenditure for recurrent outgoings on property leased by GPNSW as lessee includes maintenance, electricity, cleaning and expenses for common areas and public risk. This is recovered from sub-lessees.
(c) Contingent rentals are variations due to market rental reviews and changes to the Consumer Price Index between the actual lease and the amounts of minimum lease payments determined at the inception of the lease.
Government Property NSW 2015–16 - 15 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
2. EXPENSES EXCLUDING LOSSES 2016 2015 2. EXPENSES EXCLUDING LOSSES (CONTINUED) $'000 $'000 (a) Personnel Services Expense (i) (b) Other Operating Expenses (Continued) Salaries and Wages (Including Recreation Leave) 14,652 11,601 Contractors 5,803 4,965 (ii) Other Property Related Expenses 2016 2015 Voluntary Redundancies 2,641 351 $'000 $'000 Superannuation (Defined Benefit Plans) (ii) 61 227 Superannuation (Defined Contribution Plans) 928 792 Management Fees 7,124 7,590 Long Service Leave 586 204 Gas and Electricity 2,236 3,250 Worker's Compensation Insurance 55 55 Maintenance (a) 7,737 7,011 Payroll Tax and Fringe Benefits Tax 946 698 Cleaning 2,525 2,626 25,672 18,893 Rates and Levies 193 269 Security 882 899 (i) The Personnel Services Expense is the expense incurred by GPNSW on personnel services provided to it by the Valuations 268 635 Department of Finance, Services and Innovation (DFSI). Under the Government Property NSW Act 2006, GPNSW is Bad Debts 43 213 unable to employ staff (Note 1(a)). Other (b) 5,192 5,552 26,200 28,045 (ii) The Superannuation (Defined Benefits Plans) expense in 2014-15 included a net decrease of $0.1 million in the unfunded liability at 30 June 2015 in respect of personnel who are members of these Plans (Note 15(a)(i)). This (a) Maintenance expenses relate to owned properties and include ad-hoc and scheduled maintenance services on decrease included net gains of $0.7 million in 2014-15 related to a combination of actuarial losses and actual return on lifts, air conditioning units, fire protection systems, plumbing, electrical and other areas. There was no personnel fund assets, less interest income. The decrease is recognised directly in the Net Result under Personnel Services services maintenance expense in 2015-16 (nil in 2014-15). Expense. (b) Items classified as Other include telephone, fire safety, legal, building manager costs, gardening and sundry (b) Other Operating Expenses 2016 2015 charges incurred on properties owned by GPNSW. $'000 $'000 (iii) Other Operating Expenses 2016 2015 Property Head Lease Expense (i) 434,409 416,245 $'000 $'000 Other Property Related Expenses (ii) 26,200 28,045 Other Operating Expenses (iii) 10,810 10,845 Audit Fees (Audit of Financial Statements) 198 194 57 471,419 455,135 Legal Fees 164 60 Consultants 253 1,436 (i) Property Head Lease Expense 2016 2015 Office Accommodation Expenses 2,290 1,818 $'000 $'000 Other Contractors 2,119 1,733 Service Fees (a) 3,883 3,970 Minimum Lease Payments (a) 365,798 341,074 Other (b) 1,903 1,634 Rental Expenses Arising from Sub-Leases (b) 65,119 65,273 10,810 10,845 Contingent Rentals (c) 12,719 19,194 443,636 425,541 (a) Service Fees include fees charged by GovConnectNSW for shared transactional services, by DFSI for corporate Less Amortisation of Lessor Lease Incentives (Note 16(a)) (9,227) (9,296) services provided under the DFSI Corporate Operating Model arrangements and by Land and Property Information for 434,409 416,245 system hosting services provided in relation to the Government Property Register.
(a) The majority of head leased office accommodation property is sub-leased to government agencies. The terms of (b) Items classified as Other include advertising, training, conferences, computer costs, telephone, printing, stationery, the operating head leases generally range from 3 to 15 years with the option of renewal of further terms. The lease travel, removal and other sundry charges. agreements allow Lessors the right to review rents on specified dates. (c) Depreciation and Amortisation 2016 2015 (b) Expenditure for recurrent outgoings on property leased by GPNSW as lessee includes maintenance, electricity, $'000 $'000 cleaning and expenses for common areas and public risk. This is recovered from sub-lessees. Depreciation of Property, Plant and Equipment (Note 8(b)) 8,911 13,705 (c) Contingent rentals are variations due to market rental reviews and changes to the Consumer Price Index between Depreciation of Finance Lease Assets (Note 8(b)) 2,839 2,424 the actual lease and the amounts of minimum lease payments determined at the inception of the lease. Amortisation of Intangible Assets (Note 10(b)) 1,138 612 12,888 16,741
- 15 - - 16 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
2. EXPENSES EXCLUDING LOSSES (CONTINUED)
(d) Grants and Subsidies 2016 2015 $'000 $'000
Grants to Other Government Agencies (i) - 4,530 Contributions to the Restart NSW Fund (ii) 200,202 - Land Grants to Local Government (Note 8(b)) 495 - 200,697 4,530
(i) Grants of $4.5 million in 2014-15 represent payments made to various government agencies for office relocation costs under the Government's CBD Backfill Strategy.
(ii) Contributions of $200.2 million in 2015-16 (nil in 2014-15) represent payments made to the Restart NSW Fund (NSW Government's dedicated infrastructure fund) from the net sale proceeds of property assets sold by GPNSW. The payments are based on a NSW Government decision that the net sale proceeds of property assets sold by DFSI related entities are to be paid directly into the Restart NSW Fund from 1 July 2015 onward except where the NSW Government has made a separate decision to allocate the net sale proceeds to fund other programs. The payments of $200.2 million in 2015-16 include $169.9 million of net sale proceeds from properties settled in late June 2015.
(e) Finance Costs 2016 2015 $'000 $'000
Finance Lease Interest Charges (Note 14(a)) 4,929 5,015 Unwinding of Discount Rate on Make Good Provision (Note 15(c)) 7 12 Unwinding of Discount Rate on Land Remediation Provision (Note 15(b)) 1,405 1,333 6,341 6,360 58 3. REVENUE 2016 2015 $'000 $'000 (a) Sale of Goods and Services
Property Rental Income - Operating Lease Income (i) 486,734 482,179 Fees for Services Rendered 10,460 2,889 497,194 485,068
The significant increase in fees for services revenue over 2014-15 has resulted mainly from increase in external property divestment activities and implementation of new leasing fees arrangement in 2015-16.
2016 2015 (i) Property Rental Income - Operating Lease Income $'000 $'000
Owned Property Income 40,728 55,551 Leased Property Income 455,233 435,649 Less: Amortisation of Lessee Lease Incentives (Note 7(c)) (9,227) (9,021) 486,734 482,179
Future Minimum Lease Receipts under Non-Cancellable Operating Leases as Lessor
Receivable within one year 43,039 41,191 Receivable later than 1 year but not later than 5 years 22,045 21,231 Receivable later than 5 years 778 934 Total Including GST 65,862 63,356
The above represents future minimum lease receipts on GPNSW's owned properties. Future minimum lease receipts as at 30 June 2016 include GST payable of $6.0 million ($5.7m at 30 June 2015).
Government Property NSW 2015–16 - 17 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
2. EXPENSES EXCLUDING LOSSES (CONTINUED) 3. REVENUE (CONTINUED)
(d) Grants and Subsidies 2016 2015 (b) Investment Revenue 2016 2015 $'000 $'000 $'000 $'000
Grants to Other Government Agencies (i) - 4,530 Property Finance Lease Income ((i) and Note 7(b)) 5,547 5,218 Contributions to the Restart NSW Fund (ii) 200,202 - Interest Earned (ii) 795 912 Land Grants to Local Government (Note 8(b)) 495 - 6,342 6,130 200,697 4,530 (i) Income from finance leases as lessor includes contingent rent of $0.8 million in 2015-16 ($0.5m in 2014-15). Contingent (i) Grants of $4.5 million in 2014-15 represent payments made to various government agencies for office relocation costs rent is calculated as the difference between the current lease payments and the minimum lease payments which were under the Government's CBD Backfill Strategy. determined at the initial recognition of the finance lease arrangement.
(ii) Contributions of $200.2 million in 2015-16 (nil in 2014-15) represent payments made to the Restart NSW Fund (NSW (ii) Interest earned is received on cash set aside for remediation on land acquired by the Crown from BHP Billiton in 2002. Government's dedicated infrastructure fund) from the net sale proceeds of property assets sold by GPNSW. The The cash is held in a separate GPNSW bank account within the NSW Treasury Banking System. payments are based on a NSW Government decision that the net sale proceeds of property assets sold by DFSI related entities are to be paid directly into the Restart NSW Fund from 1 July 2015 onward except where the NSW (c) Grants and Contributions 2016 2015 Government has made a separate decision to allocate the net sale proceeds to fund other programs. The payments of $'000 $'000 $200.2 million in 2015-16 include $169.9 million of net sale proceeds from properties settled in late June 2015. State Government - Recurrent Contribution (i) 5,668 10,658 (e) Finance Costs 2016 2015 State Government - Capital Contribution (ii) 20,573 6,812 $'000 $'000 26,241 17,470
Finance Lease Interest Charges (Note 14(a)) 4,929 5,015 (i) GPNSW receives an annual recurrent contribution from the State Government for a range of non-commercial Unwinding of Discount Rate on Make Good Provision (Note 15(c)) 7 12 professional services undertaken which provide a whole-of-government benefit. These services include agency property Unwinding of Discount Rate on Land Remediation Provision (Note 15(b)) 1,405 1,333 portfolio reviews, whole-of-town studies, property policy implementation and Government Property Register 6,341 6,360 administration. (ii) GPNSW's approved Capital Program is fully funded by the State Government by way an annual capital contribution. 59 3. REVENUE 2016 2015 The Program includes major works such as refurbishment, compliance and other asset renewal works included under $'000 $'000 GPNSW's Property Refurbishment Program. (a) Sale of Goods and Services (d) Other Revenue 2016 2015 Property Rental Income - Operating Lease Income (i) 486,734 482,179 $'000 $'000 Fees for Services Rendered 10,460 2,889 497,194 485,068 Emerging Asset Revenue ((i) and Note 11) 550 500 550 500 The significant increase in fees for services revenue over 2014-15 has resulted mainly from increase in external property divestment activities and implementation of new leasing fees arrangement in 2015-16. (i) In accordance with TPP 06-08 "Accounting for Privately Financed Projects", the Opera House Car Park is an emerging asset which GPNSW has a right to receive in 2043 under a privately financed infrastructure arrangement. The right 2016 2015 is being recognised as revenue and added to the asset value over the term of the carpark concession (Note 11). (i) Property Rental Income - Operating Lease Income $'000 $'000
Owned Property Income 40,728 55,551 4. GAIN/(LOSS) ON DISPOSAL 2016 2015 Leased Property Income 455,233 435,649 $'000 $'000 Less: Amortisation of Lessee Lease Incentives (Note 7(c)) (9,227) (9,021) 486,734 482,179 Net Proceeds from Disposal of Property, Plant and Equipment and Non-Current Assets Held for Sale 89,707 218,837 Future Minimum Lease Receipts under Non-Cancellable Operating Leases as Lessor Written Down Value (Note 8(b) and 9(b)) (88,239) (190,573) Net Gain/(Loss) on Disposal 1,468 28,264 Receivable within one year 43,039 41,191 Receivable later than 1 year but not later than 5 years 22,045 21,231 Receivable later than 5 years 778 934 Total Including GST 65,862 63,356
The above represents future minimum lease receipts on GPNSW's owned properties. Future minimum lease receipts as at 30 June 2016 include GST payable of $6.0 million ($5.7m at 30 June 2015).
- 17 - - 18 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
5. OTHER GAINS/(LOSSES) 2016 2015 $'000 $'000
Net Gain on Revaluation of Property, Plant and Equipment ((i) and Note 8(b)) 6,959 23,471 Net Loss due to Increase in Remediation Provision from Revised Estimate of Liability (Note 15(b)) (6,820) (14,530) Impairment Loss on Work in Progress - Project Costs Recoverable (167) (779) Impairment Loss on Intangible Assets Note 10(b) (21) - Impairment Loss on Work in Progress - Property, Plant and Equipment (Note 8(b)) (394) - Other Gains/(Losses) (443) 8,162
(i) A net gain on revaluation of Property, Plant and Equipment of $6.9 million ($23.5m in 2014-15) was recognised in the Net Result as it reversed revaluation decreases of the same class of assets previously recognised in the Net Result.
6. CASH AND CASH EQUIVALENTS 2016 2015 $'000 $'000 (a) Reconciliation of Cash and Cash Equivalents
Cash at Bank and On Hand Operating Funds 64,941 223,993 Restricted Cash: Land Remediation Funds (i) 39,460 40,337 Agency Property Transaction Monies (ii) 4,490 1,345 Total Cash and Cash Equivalents 108,891 265,675
(i) A total of $39.5 million ($40.3m at 30 June 2015) is set aside and can only be used for remediation on Newcastle lands acquired by the Crown from BHP Billiton in 2002. 60 (ii) A total of $4.5 million ($1.3m at 30 June 2015) was held "on trust" on behalf of other government agencies and can only be used for property acquisition and divestment transactions in progress, negotiations for which were being undertaken by GPNSW under formal agreement with those agencies (Note 13).
For the purposes of the Statement of Cash Flows, cash includes cash on hand, cash at bank and "restricted cash". The significant decrease in Operating Funds over 2014-15 was mainly due to the receipt of $169.6 million in net property sale proceeds in late June 2015 - primarily from the settlement of the Parramatta Justice Precinct office buildings. The net proceeds from these sales were paid to the Restart NSW Fund in November 2015.
Refer to Note 20 for details regarding credit risk, liquidity risk and market risk arising from financial instruments.
(b) Reconciliation of Net Cash Flows from Operating 2016 2015 Activities to Net Result $'000 $'000
Net Cash Flow From Operating Activities (169,663) 9,084
Non Cash Revenue/(Expenses): Emerging Asset Increment/(Decrement) (Note 3(d)) 550 500 Depreciation and Amortisation (Note 2(c)) (12,888) (16,741) Gain/(Loss) on Disposal of Non-Current Assets (Note 4) 1,468 28,264 Other Gains/(Losses) (Note 5) (443) 8,162
Changes in Operating Assets and Liabilities: Increase/(Decrease) in Receivables 11,853 2,972 Decrease/(Increase) in Payables (5,206) 11,006 Decrease/(Increase) in Provisions (9,683) 181 Decrease/(Increase) in Other Operating Liabilities (1,653) 507 Net Result for the Year (185,665) 43,935
Government Property NSW 2015–16 - 19 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
5. OTHER GAINS/(LOSSES) 2016 2015 7. RECEIVABLES 2016 2015 $'000 $'000 $'000 $'000 Current Net Gain on Revaluation of Property, Plant and Equipment ((i) and Note 8(b)) 6,959 23,471 Trade Receivables: Net Loss due to Increase in Remediation Provision from Revised Estimate Property Rental 7,971 4,003 of Liability (Note 15(b)) (6,820) (14,530) Fees for Services Rendered 3,933 755 Impairment Loss on Work in Progress - Project Costs Recoverable (167) (779) Less: Impairment Allowance (a) (794) (780) Impairment Loss on Intangible Assets Note 10(b) (21) - Subtotal - Trade Receivables 11,110 3,978 Impairment Loss on Work in Progress - Property, Plant and Equipment (Note 8(b)) (394) - Other Receivables: Other Gains/(Losses) (443) 8,162 Work in Progress - Net Project Costs Recoverable 10,577 5,765 Goods and Services Tax Recoverable 929 677 (i) A net gain on revaluation of Property, Plant and Equipment of $6.9 million ($23.5m in 2014-15) was recognised in the Finance Lease Receivables (b) 4,035 4,035 Net Result as it reversed revaluation decreases of the same class of assets previously recognised in the Net Result. Lessee Lease Incentives (c) 8,025 8,476 Makegood Costs Recoverable (d) 33,311 37,120 Fitout Construction Receivable (Note 13) 112 112 6. CASH AND CASH EQUIVALENTS 2016 2015 Accrued Rental Income 5,213 6,117 $'000 $'000 Prepayments 1,921 1,716 (a) Reconciliation of Cash and Cash Equivalents Other 881 2,080 Subtotal - Other Receivables 65,004 66,098 Cash at Bank and On Hand Total Current Receivables 76,114 70,076 Operating Funds 64,941 223,993 Restricted Cash: Non-Current Land Remediation Funds (i) 39,460 40,337 Other Receivables: Agency Property Transaction Monies (ii) 4,490 1,345 Finance Lease Receivables (b) 62,331 61,575 Total Cash and Cash Equivalents 108,891 265,675 Lessee Lease Incentives (c) 42,865 51,099 Makegood Costs Recoverable (d) 114,066 100,528 (i) A total of $39.5 million ($40.3m at 30 June 2015) is set aside and can only be used for remediation on Newcastle lands Receivable from Lessees (Note 13) 7,687 5,338 acquired by the Crown from BHP Billiton in 2002. Total Non-Current Receivables 226,949 218,540 61 (ii) A total of $4.5 million ($1.3m at 30 June 2015) was held "on trust" on behalf of other government agencies and can only Trade receivables and other receivables including makegood are non-interest bearing and are generally on 30-day terms. be used for property acquisition and divestment transactions in progress, negotiations for which were being undertaken by GPNSW under formal agreement with those agencies (Note 13). (a) Impairment Allowance 2016 2015 $'000 $'000 For the purposes of the Statement of Cash Flows, cash includes cash on hand, cash at bank and "restricted cash". Movement: The significant decrease in Operating Funds over 2014-15 was mainly due to the receipt of $169.6 million in net property Carrying Amount at 1 July 780 540 sale proceeds in late June 2015 - primarily from the settlement of the Parramatta Justice Precinct office buildings. The Amount Written Off (30) (3) net proceeds from these sales were paid to the Restart NSW Fund in November 2015. Increase/(Decrease) in Allowance 44 243 Carrying Amount at 30 June 794 780 Refer to Note 20 for details regarding credit risk, liquidity risk and market risk arising from financial instruments. The impairment allowance at 30 June 2016 includes an accumulated allowance of nil (nil at 30 June 2015) for (b) Reconciliation of Net Cash Flows from Operating 2016 2015 uncollectible minimum finance lease payments receivable. Activities to Net Result $'000 $'000 (b) Finance Lease Receivables 2016 2015 Net Cash Flow From Operating Activities (169,663) 9,084 $'000 $'000 Movement: Non Cash Revenue/(Expenses): Carrying Amount at 1 July 65,610 64,907 Emerging Asset Increment/(Decrement) (Note 3(d)) 550 500 Lease Payments Received (4,791) (4,515) Depreciation and Amortisation (Note 2(c)) (12,888) (16,741) Property Finance Lease Income (Note 3(b)) 5,547 5,218 Gain/(Loss) on Disposal of Non-Current Assets (Note 4) 1,468 28,264 Carrying Amount at 30 June 66,366 65,610 Other Gains/(Losses) (Note 5) (443) 8,162 (i) Reconciliation between Gross Investment in Finance Leases as Lessor Changes in Operating Assets and Liabilities: Increase/(Decrease) in Receivables 11,853 2,972 and the Present Value of the Minimum Lease Payments Receivable Decrease/(Increase) in Payables (5,206) 11,006 Decrease/(Increase) in Provisions (9,683) 181 Gross Investment in Finance Leases as Lessor 305,624 309,659 Decrease/(Increase) in Other Operating Liabilities (1,653) 507 Less: Unearned Finance Income (239,258) (244,049) Net Result for the Year (185,665) 43,935 Present Value of the Minimum Lease Payments Receivable 66,366 65,610
- 19 - - 20 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
7. RECEIVABLES (CONTINUED)
(b) Finance Lease Receivables (Continued) 2016 2015 $'000 $'000 (ii) Aged Reconciliation of the Gross Investment in Finance Leases as Lessor
Not later than one year 4,035 4,035 Later than one year and not later than five years 16,141 16,141 Later than five years. 285,448 289,483 Gross Investment in Finance Leases as Lessor 305,624 309,659
(iii) Aged Reconciliation of the Present Value of the Minimum Lease 2016 2015 Payments Receivable $'000 $'000
Not later than one year 4,035 4,035 Later than one year and not later than five years 13,313 13,313 Later than five years. 49,018 48,262 Present Value of the Minimum Lease Payments Receivable 66,366 65,610
(iv) The unguaranteed residual value of all finance leases as lessor accruing to the benefit of GPNSW as at 30 June 2016 is $17.7 million ($16.5m at 30 June 2015).
(v) GPNSW's material leasing arrangements which give rise to finance lease receivables involve owned properties which are leased to tenants under lease terms of 50 years or more.
(c) Lessee Lease Incentives 2016 2015 $'000 $'000 Movement: 62 Carrying Amount at 1 July (i) 59,575 28,357 Add Lease Incentives Provided 542 40,239 Less Current Year Amortisation (Note 3(a)(i)) (9,227) (9,021) Carrying Amount at 30 June 50,890 59,575
Current Asset 8,025 8,476 Non-Current Asset 42,865 51,099 Total Asset at 30 June 50,890 59,575
(i) Lessee lease incentives provided relate to incentives given to GPNSW under head lease agreements which GPNSW has passed on to government agency tenants under sub-lease arrangements. Lessee lease incentives are amortised over the term of each lease and are recognised as a reduction to Property Rental Income under Sale of Goods and Services in the Statement of Comprehensive Income (Note 3(a)(i)).
(d) Makegood Costs Recoverable 2016 2015 $'000 $'000 Movement: Carrying Amount at 1 July 137,648 155,122 Increase in Recoverable from Unwinding of Discount Rate (Note 15(c)) 2,825 4,058 Increase/(Decrease) in Recoverable from Revised Estimate of Liability 12,426 (14,595) Decrease in Recoverable from Payments (Note 15(c)) (5,522) (6,007) Decrease in Recoverable from Payments Received in Advance - (930) Carrying Amount at 30 June 147,377 137,648
Government Property NSW 2015–16 - 21 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
7. RECEIVABLES (CONTINUED) 7. RECEIVABLES (CONTINUED)
(b) Finance Lease Receivables (Continued) 2016 2015 (d) Makegood Costs Recoverable (Continued) 2016 2015 $'000 $'000 $'000 $'000 (ii) Aged Reconciliation of the Gross Investment in Finance Leases as Lessor Current Asset Makegood Costs Recoverable (Note 15) 33,583 37,392 Not later than one year 4,035 4,035 Less Payments Received in Advance (272) (272) Later than one year and not later than five years 16,141 16,141 Total Current Asset at 30 June 33,311 37,120 Later than five years. 285,448 289,483 Gross Investment in Finance Leases as Lessor 305,624 309,659 Non-Current Asset Makegood Costs Recoverable (Note 15) 114,724 101,186 (iii) Aged Reconciliation of the Present Value of the Minimum Lease 2016 2015 Less Payments Received in Advance (658) (658) Payments Receivable $'000 $'000 Total Non-Current Asset at 30 June 114,066 100,528 Total Asset at 30 June 147,377 137,648 Not later than one year 4,035 4,035 Later than one year and not later than five years 13,313 13,313 Later than five years. 49,018 48,262 8. PROPERTY, PLANT AND EQUIPMENT 2016 2015 Present Value of the Minimum Lease Payments Receivable 66,366 65,610 $'000 $'000 (a) Carrying Amount at 30 June (iv) The unguaranteed residual value of all finance leases as lessor accruing to the benefit of GPNSW as at 30 June 2016 is $17.7 million ($16.5m at 30 June 2015). Non-Current Land and Buildings (v) GPNSW's material leasing arrangements which give rise to finance lease receivables involve owned properties At Fair Value 421,178 323,577 which are leased to tenants under lease terms of 50 years or more. Carrying Amount at 30 June 421,178 323,577
(c) Lessee Lease Incentives 2016 2015 Land $'000 $'000 At Fair Value 128,097 132,200 Movement: Carrying Amount at 30 June 128,097 132,200 Carrying Amount at 1 July (i) 59,575 28,357 63 Add Lease Incentives Provided 542 40,239 Plant and Equipment Less Current Year Amortisation (Note 3(a)(i)) (9,227) (9,021) At Fair Value 8,328 7,405 Carrying Amount at 30 June 50,890 59,575 Less Accumulated Depreciation (3,531) (2,816) Carrying Amount at 30 June 4,797 4,589 Current Asset 8,025 8,476 Non-Current Asset 42,865 51,099 Finance Lease Assets Total Asset at 30 June 50,890 59,575 At Fair Value 170,094 130,760 Carrying Amount at 30 June 170,094 130,760 (i) Lessee lease incentives provided relate to incentives given to GPNSW under head lease agreements which GPNSW has passed on to government agency tenants under sub-lease arrangements. Lessee lease incentives are amortised Works in Progress 5,360 2,049 over the term of each lease and are recognised as a reduction to Property Rental Income under Sale of Goods and Services in the Statement of Comprehensive Income (Note 3(a)(i)). Total Non-Current Property, Plant and Equipment at 30 June 729,526 593,175
(d) Makegood Costs Recoverable 2016 2015 Total at Cost or Fair Value 733,057 595,991 $'000 $'000 Total Accumulated Depreciation and Amortisation (3,531) (2,816) Movement: Total Non-Current Property, Plant and Equipment at 30 June 729,526 593,175 Carrying Amount at 1 July 137,648 155,122 Increase in Recoverable from Unwinding of Discount Rate (Note 15(c)) 2,825 4,058 Increase/(Decrease) in Recoverable from Revised Estimate of Liability 12,426 (14,595) Decrease in Recoverable from Payments (Note 15(c)) (5,522) (6,007) Decrease in Recoverable from Payments Received in Advance - (930) Carrying Amount at 30 June 147,377 137,648
- 21 - - 22 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(b) Reconciliation of Opening and Closing Carrying Amounts 2016 2015 $'000 $'000 Land and Buildings (i) Carrying Amount at 1 July 323,577 457,391 Disposals (Note 4) - (20,727) Transfer from Works in Progress 2,108 3,198 Transfers from other Government Agencies (Note 17(c)) 102,669 84,425 Reclassification to Non-Current Asset Held for Sale (Note 9(b)) (38,308) (243,057) Transfer to Local Government (Note 2(d) and Note 8(b)(iv)) (495) - Net Revaluation Reserve Increment/(Decrement) (Note 17(b)(i)) 39,820 25,244 Net Revaluation Increment/(Decrement) Recognised in the Net Result (Note 5) - 30,122 Depreciation Expense (Note 2(c)) (8,193) (13,019) Carrying Amount at 30 June 421,178 323,577
2016 2015 $'000 $'000 Land (i) Carrying Amount at 1 July 132,200 127,990 Transfer from Works in Progress 176 133 Transfers from other Government Agencies (Note 17(c)) 10,500 16,992 Reclassification to Non-Current Asset Held for Sale (Note 9(b)) (23,331) (6,264) Reclassification from Non-Current Asset Held for Sale (Note 9(b)) 1,593 - Net Revaluation Increment/(Decrement) Recognised in the Net Result (Note 5) 6,959 (6,651) Carrying Amount at 30 June 128,097 132,200 64 2016 2015 $'000 $'000 Plant and Equipment Carrying Amount at 1 July 4,589 5,116 Additions 926 170 Disposals (Note 4) - (11) Depreciation Expense (Note 2(c)) (718) (686) Carrying Amount at 30 June 4,797 4,589
2016 2015 $'000 $'000 Finance Lease Assets (ii) Carrying Amount at 1 July 130,760 110,990 Transfer from Works in Progress 2 504 Net Revaluation Reserve Increment (Note 17(b)(i)) 42,171 21,690 Depreciation Expense (Note 2(c)) (2,839) (2,424) Carrying Amount at 30 June 170,094 130,760
2016 2015 $'000 $'000 Works in Progress (iii) Carrying Amount at 1 July 2,049 454 Additions 7,095 5,430 Transfer to Land and Buildings (2,108) (3,198) Transfer to Land (176) (133) Transfer to Finance Lease Assets (2) (504) Impairment Loss (Note 5) (394) - Transfer to Intangible Assets (Note 10(b)) (1,104) - Carrying Amount at 30 June 5,360 2,049
Government Property NSW 2015–16 - 23 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(b) Reconciliation of Opening and Closing Carrying Amounts 2016 2015 (b) Reconciliation of Opening and Closing Carrying Amounts (Continued) $'000 $'000 Land and Buildings (i) (i) Valuation of Land and Buildings and Land Carrying Amount at 1 July 323,577 457,391 Disposals (Note 4) - (20,727) All properties within the asset classes of Land and Buildings and Land (classified under Property Plant and Equipment) Transfer from Works in Progress 2,108 3,198 were independently valued as at 30 June 2016. Qualified valuers, AssetVal Pty Ltd, Savills Valuation, Knight Frank, and Transfers from other Government Agencies (Note 17(c)) 102,669 84,425 CBRE were engaged to provide GPNSW with independent property valuation reports. Each firm provided individual Reclassification to Non-Current Asset Held for Sale (Note 9(b)) (38,308) (243,057) valuations on a sub-set of properties assigned to them. The valuations took into consideration changes to market and Transfer to Local Government (Note 2(d) and Note 8(b)(iv)) (495) - economic conditions that have occurred since 30 June 2015 as well as the previous valuation reports. Net Revaluation Reserve Increment/(Decrement) (Note 17(b)(i)) 39,820 25,244 Net Revaluation Increment/(Decrement) Recognised (ii) Finance Lease Assets in the Net Result (Note 5) - 30,122 Depreciation Expense (Note 2(c)) (8,193) (13,019) Finance lease assets as at 30 June 2016 relate to Noel Park House, Marius Street, Tamworth and a part of the 52 Carrying Amount at 30 June 421,178 323,577 Martin Place building, Sydney. Noel Park House and 52 Martin Place building are being amortised over the life of the lease. Noel Park House and 52 Martin Place building were independently revalued on 30 June 2016 by qualified valuer, 2016 2015 Knight Frank who has recent experience in comparable markets and the category of the finance lease asset being $'000 $'000 valued. Land (i) Carrying Amount at 1 July 132,200 127,990 (iii) Works in Progress Transfer from Works in Progress 176 133 Transfers from other Government Agencies (Note 17(c)) 10,500 16,992 Expenditure capitalised during the year and recorded under works in progress as at 30 June 2016 relates to Reclassification to Non-Current Asset Held for Sale (Note 9(b)) (23,331) (6,264) refurbishment works in various office buildings and GPNSW corporate capital projects totalling $5.4 million ($2.0m at Reclassification from Non-Current Asset Held for Sale (Note 9(b)) 1,593 - 30 June 2015 of which $1.1m was transferred to Intangible Assets). Net Revaluation Increment/(Decrement) Recognised in the Net Result (Note 5) 6,959 (6,651) (iv) Transfer to Local Government Carrying Amount at 30 June 128,097 132,200 The following property was transferred to Local Government for nominal consideration during 2015-16: 65 2016 2015 • Mittagong, Lot 5 Bessemer Street (to Wingecarribee Shire Council) $'000 $'000 Plant and Equipment Carrying Amount at 1 July 4,589 5,116 9. NON-CURRENT ASSETS HELD FOR SALE 2016 2015 Additions 926 170 $'000 $'000 Disposals (Note 4) - (11) (a) Carrying Amount at 30 June Depreciation Expense (Note 2(c)) (718) (686) Carrying Amount at 30 June 4,797 4,589 Land and Buildings 45,746 73,515 Land 6,340 6,764 2016 2015 Carrying Amount at 30 June 52,086 80,279 $'000 $'000 Finance Lease Assets (ii) (b) Reconciliation of Opening and Closing Carrying Amounts 2016 2015 Carrying Amount at 1 July 130,760 110,990 $'000 $'000 Transfer from Works in Progress 2 504 Non-Current Assets Held for Sale Net Revaluation Reserve Increment (Note 17(b)(i)) 42,171 21,690 Carrying Amount at 1 July 80,279 793 Depreciation Expense (Note 2(c)) (2,839) (2,424) Reclassification from Property, Plant and Equipment - Land and Buildings (Note 8(b)) 38,308 243,057 Carrying Amount at 30 June 170,094 130,760 Reclassification from Property, Plant and Equipment - Land (Note 8(b)) 23,331 6,264 Reclassification to Property, Plant and Equipment - Land (Note 8(b)) (1,593) - 2016 2015 Disposals (Note 4) (88,239) (169,835) $'000 $'000 Carrying Amount at 30 June 52,086 80,279 Works in Progress (iii) Carrying Amount at 1 July 2,049 454 Additions 7,095 5,430 Transfer to Land and Buildings (2,108) (3,198) Transfer to Land (176) (133) Transfer to Finance Lease Assets (2) (504) Impairment Loss (Note 5) (394) - Transfer to Intangible Assets (Note 10(b)) (1,104) - Carrying Amount at 30 June 5,360 2,049
- 23 - - 24 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
10. INTANGIBLE ASSETS 2016 2015 $'000 $'000 (a) Carrying Amount at 30 June Computer Software Gross Carrying Amount 6,008 3,844 Less Accumulated Amortisation (4,115) (2,979) Carrying Amount at 30 June 1,893 865
(b) Reconciliation of Opening and Closing Carrying Amounts 2016 2015 $'000 $'000 Intangible Assets Carrying Amount at 1 July 865 932 Additions/Acquisitions 1,083 545 Transfer from Works in Progress (Note 8(b)) 1,104 - Impairment Loss (Note 5) (21) - Amortisation Expense (Note 2(c)) (1,138) (612) Carrying Amount at 30 June 1,893 865
11. OTHER 2016 2015 $'000 $'000 Emerging Asset (i) Carrying Amount at 1 July 5,850 5,300 Net Revaluation Reserve Increment (Note 17(b)(i)) 50 50 Emerging Asset Increment (Note 3(d)) 550 500 Carrying Amount at 30 June 6,450 5,850
(i) An emerging asset in relation to the Sydney Opera House Car Park is recognised under Non-Current Assets - Other. 66 The car park land, which is recognised as a Finance Lease Receivable, was leased to a private consortium on a 50 year ground lease which commenced on 13 March 1993. The lessee has constructed, at its own expense, a subterranean car park which has an assessed economic life of greater than 50 years. At the expiration of the lease term GPNSW has the right to receive the car park.
The emerging value of the car park is $6.5 million at 30 June 2016 ($5.9m at 30 June 2015). The emerging value is being allocated to revenue and Non-Current Assets - Other during the term of the lease as if it were the compound value of an annuity discounted at the NSW Government bond rate applicable at 13 March 1993, being 8.25%.
Qualified valuer, Knight Frank was engaged to provide an independent fair value valuation of the lessor's interest in the freehold property subject to the existing lease as prescribed under Treasury Accounting Policy TPP 06-8 "Accounting for Privately Financed Projects" as at 30 June 2016.
Government Property NSW 2015–16 - 25 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
10. INTANGIBLE ASSETS 2016 2015 12. FAIR VALUE MEASUREMENT OF NON-FINANCIAL ASSETS $'000 $'000 (a) Carrying Amount at 30 June (a) Fair Value Hierarchy Computer Software Gross Carrying Amount 6,008 3,844 2016 Level 1 Level 2 Level 3 Total Fair Less Accumulated Amortisation (4,115) (2,979) Value Carrying Amount at 30 June 1,893 865 $'000 $'000 $'000 $'000 Property, Plant and Equipment (Note 8) (b) Reconciliation of Opening and Closing Carrying Amounts 2016 2015 Land and Buildings - 421,178 - 421,178 $'000 $'000 Land - 128,097 - 128,097 Intangible Assets Finance Lease Assets - 170,094 - 170,094 Carrying Amount at 1 July 865 932 Other Asset (Note 11) Additions/Acquisitions 1,083 545 Emerging Asset - 6,450 - 6,450 Transfer from Works in Progress (Note 8(b)) 1,104 - - 725,819 - 725,819 Impairment Loss (Note 5) (21) - Amortisation Expense (Note 2(c)) (1,138) (612) 2015 Level 1 Level 2 Level 3 Total Fair Carrying Amount at 30 June 1,893 865 Value $'000 $'000 $'000 $'000 Property, Plant and Equipment (Note 8) 11. OTHER 2016 2015 Land and Buildings - 323,577 - 323,577 $'000 $'000 Land - 132,200 - 132,200 Emerging Asset (i) Finance Lease Assets - 130,760 - 130,760 Carrying Amount at 1 July 5,850 5,300 Other Asset (Note 11) Net Revaluation Reserve Increment (Note 17(b)(i)) 50 50 Emerging Asset - 5,850 - 5,850 Emerging Asset Increment (Note 3(d)) 550 500 - 592,387 - 592,387 Carrying Amount at 30 June 6,450 5,850 There were no transfers between Level 1 or 2 during 2015-16. The 'Total Fair Value' above includes assets measured at (i) An emerging asset in relation to the Sydney Opera House Car Park is recognised under Non-Current Assets - Other. fair value and will not reconcile to the total Property, Plant and Equipment recognised in the Statement of Financial The car park land, which is recognised as a Finance Lease Receivable, was leased to a private consortium on a 50 Position as this includes assets which are measured at depreciated historical cost, as an approximation of fair value. 67 year ground lease which commenced on 13 March 1993. The lessee has constructed, at its own expense, a These non-specialised assets do not require fair value hierarchy disclosures under AASB 13 "Fair Value Measurement". subterranean car park which has an assessed economic life of greater than 50 years. At the expiration of the lease term GPNSW has the right to receive the car park. (b) Valuation Techniques, Input and Processes
The emerging value of the car park is $6.5 million at 30 June 2016 ($5.9m at 30 June 2015). The emerging value is GPNSW's Property, Plant and Equipment and Other Asset assets are traded in active markets. The fair values of these being allocated to revenue and Non-Current Assets - Other during the term of the lease as if it were the compound value assets are estimated using valuation techniques that maximise the use of observable market inputs, for example market of an annuity discounted at the NSW Government bond rate applicable at 13 March 1993, being 8.25%. sale, market rent and interest rates. If all significant inputs required to fair value an asset are observable, the asset is included in Level 2. If one or more of the significant inputs is not based on observable market data, the asset is included Qualified valuer, Knight Frank was engaged to provide an independent fair value valuation of the lessor's interest in the in Level 3. The valuation process is managed by GPNSW's Property Management Group (PMG) who engages external freehold property subject to the existing lease as prescribed under Treasury Accounting Policy TPP 06-8 "Accounting independent valuers to perform the valuations of property assets required for financial reporting purposes. The valuation for Privately Financed Projects" as at 30 June 2016. reports are subsequently reviewed by relevant PMG Asset Managers prior to being endorsed by senior management.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.
13. PAYABLES 2016 2015 $'000 $'000 Current Sundry Creditors and Accruals 18,418 16,096 Fitout Construction Payable (Note 7) 112 112 Agency Property Transaction Monies (Note 6(a)(ii)) 4,490 1,345 Payable to Personnel Services Provider (Note 1(a)) 649 1,872 Total Current Payables 23,669 19,425
Non-Current Payable to Lessor (Note 7) 7,687 5,338 Total Non-Current Payables 7,687 5,338
- 25 - - 26 - Government Property NSW 2015–16 Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
14. BORROWINGS 2016 2015 15. PROVISIONS (CONTINUED) $'000 $'000 Current (a) Personnel Services (Continued) Finance Lease Liabilities (a) 866 1,074 Total Current Borrowings 866 1,074 (i) Unfunded Superannuation (Defined Benefits Schemes)
Non-Current The superannuation schemes for the personnel provided to GPNSW by DFSI include the State Superannuation Finance Lease Liabilities (a) 34,398 35,265 Scheme, the State Authorities Superannuation Scheme and the State Authorities Non-contributory Superannuation Total Non-Current Borrowings 34,398 35,265 Scheme. These schemes are all defined benefit schemes - at least a component of the final benefit is derived from a multiple of member salary and years of membership. All the schemes are closed to new members. The Finance Lease Liabilities are secured by the assets leased. On 1 July 2015, all DFSI defined benefit superannuation liabilities, including GPNSW's unfunded superannuation liability (a) Finance Lease Liabilities 2016 2015 of $18.2 million, were transferred to the Crown through an equity transfer in accordance with the Treasurer's approval. $'000 $'000 Accordingly, GPNSW has derecognised the unfunded defined benefit superannuation provision of $18.2 million in July Movement: 2015 through an equity transfer with DFSI. Carrying Amount at 1 July 36,339 37,327 Minimum Lease Payments (6,004) (6,003) (b) Land Remediation 2016 2015 Finance Lease Interest Charges (Note 2(e)) 4,929 5,015 $'000 $'000 Carrying Amount at 30 June (Note 18(c)) 35,264 36,339 Movement: Carrying Amount at 1 July 68,458 52,672 Decrease in Provision from Payments (2,216) (77) 15. PROVISIONS 2016 2015 Decrease in Provision from Reclassification to Payables (3,146) - $'000 $'000 Increase in Provision from Unwinding of Discount Rate (Note 2(e)) 1,405 1,333 Current Increase in Provision from Revised Estimate of Liability Recognised Land Remediation (b) 69,966 32,549 in Net Result (Note 5) 6,820 14,530 Makegood Restoration ((c) and Note 7(d)) 33,583 37,392 Carrying Amount at 30 June 71,321 68,458 Total Current Provisions 103,549 69,941 Current Liability 69,966 32,549 68 Non-Current Non-Current Liability 1,355 35,909 Personnel Services (a) - 18,182 Total Liability at 30 June 71,321 68,458 Land Remediation (b) 1,355 35,909 Makegood Restoration ((c) and Note 7(d)) 114,724 101,186 Land remediation provisions as at 30 June 2016 relate to Newcastle landholdings (i) and Hunter's Hill landholdings (ii). Makegood Restoration - GPNSW Self Occupied Premises (c) 301 233 Total Non-Current Provisions 116,380 155,510 (i) Newcastle Landholdings
(a) Personnel Services 2016 2015 In June 2002, the Crown acquired the former BHP main steel works site at Mayfield and the Kooragang Islands waste $'000 $'000 emplacement sites in the Newcastle ports area. These sites required remediation to remove various contaminants Movement: associated with steel making. As part of the acquisition, the Crown negotiated for BHP Billiton to pay an amount to Carrying Amount at 1 July 18,182 18,207 compensate for the total estimated cost of the land remediation and other works. In February 2007, the landholdings, Net Increase/(Decrease) in Liability to Personnel Services Provider - (25) remaining remediation liability and cash balance were transferred to GPNSW. Transfer of Defined Benefit Superannuation Liabilities to the Crown through DFSI ((i) and Note 17(c)) (18,182) - In July 2009, management control for two parcels of the unremediated land at Mayfield and the Kooragang Island site Carrying Amount at 30 June - 18,182 were transferred to the Newcastle Port Corporation (NPC). At 30 June 2016, GPNSW retained ownership of the remaining parcel of the former steel works site at Mayfield (known as Mayfield Lot 1). Non-Current Liability - 18,182 Total Liability at 30 June - 18,182 The Hunter Development Corporation (HDC) is the agency assigned by Government to undertake the remediation works. Under arrangement, GPNSW periodically reimburses the HDC for works undertaken and each year, the HDC provides Aggregate Personnel Services Liability - Dissection 2016 2015 GPNSW with a revised estimate of costs remaining to complete the works. Calculation of this estimate is based on $'000 $'000 current technical studies and analysis taking into account current and future contract costs, referable to awarded contracts where available. Where necessary, costs are indexed and discounted using general construction industry Unfunded Superannuation (Defined Benefits Schemes) (i) - 18,182 data available. Total Liability at 30 June - 18,182 (ii) Hunter's Hill Landholdings GPNSW receives personnel services from the Department of Finance, Services and Innovation (DFSI). The DFSI is not a Special Purpose Service Entity and does not control GPNSW under this arrangement (Note 1(a)). As GPNSW is not In June 2009, GPNSW acquired land at lots 7, 9 and 11 Nelson Parade Hunter's Hill. Each of these lots are situated on a an employer, the disclosure requirements of AASB 119 "Employee Benefits" in respect of employee benefits do not former uranium smelter site and, as part of the land transfers, the NSW Government has given GPNSW the responsibility apply. However, for clarity and transparency, a Personnel Services Provision is disclosed where the substance of the to remediate the contaminated land. GPNSW has estimated and recognised a remediation liability at the reporting date for underlying liability recognised effectively represents employee benefits. all three lots. This estimate has been determined using quotes, contract and tender details available as at 30 June 2016. Minor works were undertaken in 2015-16, however the remaining remediation will be undertaken mainly in 2016-17 and completed in 2018-19.
Government Property NSW 2015–16 - 27 - - 28 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
14. BORROWINGS 2016 2015 15. PROVISIONS (CONTINUED) $'000 $'000 Current (a) Personnel Services (Continued) Finance Lease Liabilities (a) 866 1,074 Total Current Borrowings 866 1,074 (i) Unfunded Superannuation (Defined Benefits Schemes)
Non-Current The superannuation schemes for the personnel provided to GPNSW by DFSI include the State Superannuation Finance Lease Liabilities (a) 34,398 35,265 Scheme, the State Authorities Superannuation Scheme and the State Authorities Non-contributory Superannuation Total Non-Current Borrowings 34,398 35,265 Scheme. These schemes are all defined benefit schemes - at least a component of the final benefit is derived from a multiple of member salary and years of membership. All the schemes are closed to new members. The Finance Lease Liabilities are secured by the assets leased. On 1 July 2015, all DFSI defined benefit superannuation liabilities, including GPNSW's unfunded superannuation liability (a) Finance Lease Liabilities 2016 2015 of $18.2 million, were transferred to the Crown through an equity transfer in accordance with the Treasurer's approval. $'000 $'000 Accordingly, GPNSW has derecognised the unfunded defined benefit superannuation provision of $18.2 million in July Movement: 2015 through an equity transfer with DFSI. Carrying Amount at 1 July 36,339 37,327 Minimum Lease Payments (6,004) (6,003) (b) Land Remediation 2016 2015 Finance Lease Interest Charges (Note 2(e)) 4,929 5,015 $'000 $'000 Carrying Amount at 30 June (Note 18(c)) 35,264 36,339 Movement: Carrying Amount at 1 July 68,458 52,672 Decrease in Provision from Payments (2,216) (77) 15. PROVISIONS 2016 2015 Decrease in Provision from Reclassification to Payables (3,146) - $'000 $'000 Increase in Provision from Unwinding of Discount Rate (Note 2(e)) 1,405 1,333 Current Increase in Provision from Revised Estimate of Liability Recognised Land Remediation (b) 69,966 32,549 in Net Result (Note 5) 6,820 14,530 Makegood Restoration ((c) and Note 7(d)) 33,583 37,392 Carrying Amount at 30 June 71,321 68,458 Total Current Provisions 103,549 69,941 Current Liability 69,966 32,549 Non-Current Non-Current Liability 1,355 35,909 69 Personnel Services (a) - 18,182 Total Liability at 30 June 71,321 68,458 Land Remediation (b) 1,355 35,909 Makegood Restoration ((c) and Note 7(d)) 114,724 101,186 Land remediation provisions as at 30 June 2016 relate to Newcastle landholdings (i) and Hunter's Hill landholdings (ii). Makegood Restoration - GPNSW Self Occupied Premises (c) 301 233 Total Non-Current Provisions 116,380 155,510 (i) Newcastle Landholdings
(a) Personnel Services 2016 2015 In June 2002, the Crown acquired the former BHP main steel works site at Mayfield and the Kooragang Islands waste $'000 $'000 emplacement sites in the Newcastle ports area. These sites required remediation to remove various contaminants Movement: associated with steel making. As part of the acquisition, the Crown negotiated for BHP Billiton to pay an amount to Carrying Amount at 1 July 18,182 18,207 compensate for the total estimated cost of the land remediation and other works. In February 2007, the landholdings, Net Increase/(Decrease) in Liability to Personnel Services Provider - (25) remaining remediation liability and cash balance were transferred to GPNSW. Transfer of Defined Benefit Superannuation Liabilities to the Crown through DFSI ((i) and Note 17(c)) (18,182) - In July 2009, management control for two parcels of the unremediated land at Mayfield and the Kooragang Island site Carrying Amount at 30 June - 18,182 were transferred to the Newcastle Port Corporation (NPC). At 30 June 2016, GPNSW retained ownership of the remaining parcel of the former steel works site at Mayfield (known as Mayfield Lot 1). Non-Current Liability - 18,182 Total Liability at 30 June - 18,182 The Hunter Development Corporation (HDC) is the agency assigned by Government to undertake the remediation works. Under arrangement, GPNSW periodically reimburses the HDC for works undertaken and each year, the HDC provides Aggregate Personnel Services Liability - Dissection 2016 2015 GPNSW with a revised estimate of costs remaining to complete the works. Calculation of this estimate is based on $'000 $'000 current technical studies and analysis taking into account current and future contract costs, referable to awarded contracts where available. Where necessary, costs are indexed and discounted using general construction industry Unfunded Superannuation (Defined Benefits Schemes) (i) - 18,182 data available. Total Liability at 30 June - 18,182 (ii) Hunter's Hill Landholdings GPNSW receives personnel services from the Department of Finance, Services and Innovation (DFSI). The DFSI is not a Special Purpose Service Entity and does not control GPNSW under this arrangement (Note 1(a)). As GPNSW is not In June 2009, GPNSW acquired land at lots 7, 9 and 11 Nelson Parade Hunter's Hill. Each of these lots are situated on a an employer, the disclosure requirements of AASB 119 "Employee Benefits" in respect of employee benefits do not former uranium smelter site and, as part of the land transfers, the NSW Government has given GPNSW the responsibility apply. However, for clarity and transparency, a Personnel Services Provision is disclosed where the substance of the to remediate the contaminated land. GPNSW has estimated and recognised a remediation liability at the reporting date for underlying liability recognised effectively represents employee benefits. all three lots. This estimate has been determined using quotes, contract and tender details available as at 30 June 2016. Minor works were undertaken in 2015-16, however the remaining remediation will be undertaken mainly in 2016-17 and completed in 2018-19.
- 27 - - 28 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
15. PROVISIONS (CONTINUED)
(c) Makegood Restoration 2016 2015 $'000 $'000 Movement: Carrying Amount at 1 July 138,811 155,343 Increase in Provision from Unwinding of Discount Rate (Note 7(d)) 2,825 4,058 Increase in Provision from Unwinding of Discount Rate - GPNSW Occupied Premises (Note 2(e)) 7 12 Increase/(Decrease) in Provision from Revised Estimate of Liability 12,487 (14,595) Decrease in Provision from Payments (Note 7(d)) (5,522) (6,007) Carrying Amount at 30 June 148,608 138,811
Current Liability 33,583 37,392 Non-Current Liability 115,025 101,419 Total Liability at 30 June 148,608 138,811
The makegood restoration liability is calculated on all leased properties, where GPNSW is the lessee and reflects an estimate of the cost to makegood the premises to their original condition at the end of the lease term. The makegood costs are recoverable in full from the sub-lessees except for GPNSW self occupied premises which totalled $0.3 million at 30 June 2016 ($0.2m at 30 June 2015). An average discount rate of 1.63% was used at 30 June 2016 (2.04% as at 30 June 2015) and the level of the provision is reviewed at the end of each year. Any movement in the Makegood Restoration Provision is also reflected in Makegood Costs Recoverable within Receivables (Note 7(d)) except for GPNSW self occupied premises.
16. OTHER LIABILITIES 2016 2015 $'000 $'000 70 Current Lessor Lease Incentives (a) 8,025 8,476 Total Current Liability at 30 June 8,025 8,476
Non-Current Lessor Lease Incentives (a) 42,865 51,099 Deposit Monies from Assets Sale (b) 15,000 - Total Non-Current Liability at 30 June 57,865 51,099
(a) Lessor Lease Incentives 2016 2015 $'000 $'000 Movement: Carrying Amount at 1 July (i) 59,575 28,632 Additional Lease Incentives 542 40,239 Less Current Year Amortisation (Note 2(b)(i)) (9,227) (9,296) Carrying Amount at 30 June 50,890 59,575
Current Liability 8,025 8,476 Non-Current Liability 42,865 51,099 Total Liability at 30 June 50,890 59,575
(i) Lessor lease incentives received relate to incentives given to GPNSW under head lease agreements. Lessor lease incentives are amortised over the term of each lease and are recognised as a reduction to Property Head Lease Expense under Other Operating Expenses in the Statement of Comprehensive Income (Note 2(b)(i)).
(b) Deposit Monies from Assets Sale
In September 2015, GPNSW received $15 million deposit monies for the purchase of a long-term lease over properties located at 23-33 and 35-39 Bridge Street, Sydney. As the commencement of the lease is not until 2018 and is subject to the purchaser obtaining all design and planning approvals for conversion of the properties into a hotel, the deposit is recognised in the Statement of Financial Position as Other Liabilities.
Government Property NSW 2015–16 - 29 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
15. PROVISIONS (CONTINUED) 17. NOTE TO STATEMENT OF CHANGES IN EQUITY 2016 2015 $'000 $'000 (c) Makegood Restoration 2016 2015 (a) Financial Distributions $'000 $'000 Movement: Normal Distributions from Surplus on Rental Carrying Amount at 1 July 138,811 155,343 Operations (Paid to the State Government) (Note 1(l)) 4,089 12,936 Increase in Provision from Unwinding of Discount Rate (Note 7(d)) 2,825 4,058 Capital Repatriations from the Net Proceeds of Asset Increase in Provision from Unwinding of Discount Rate - GPNSW Occupied Sales (Paid to the State Government) (Note 1(l)) 62,500 52,393 Premises (Note 2(e)) 7 12 66,589 65,329 Increase/(Decrease) in Provision from Revised Estimate of Liability 12,487 (14,595) Decrease in Provision from Payments (Note 7(d)) (5,522) (6,007) (b) Asset Revaluation Reserve Dissection 2016 2015 Carrying Amount at 30 June 148,608 138,811 $'000 $'000 Asset Class: Current Liability 33,583 37,392 Land and Buildings 65,164 25,294 Non-Current Liability 115,025 101,419 Finance Lease Assets 114,288 72,117 Total Liability at 30 June 148,608 138,811 Fine Arts & Heritage Assets 2,759 2,759 Total Asset Revaluation Reserve at 30 June 182,211 100,170 The makegood restoration liability is calculated on all leased properties, where GPNSW is the lessee and reflects an estimate of the cost to makegood the premises to their original condition at the end of the lease term. The makegood Movement: costs are recoverable in full from the sub-lessees except for GPNSW self occupied premises which totalled $0.3 million Carrying Amount at 1 July 100,170 53,186 at 30 June 2016 ($0.2m at 30 June 2015). An average discount rate of 1.63% was used at 30 June 2016 (2.04% as at Net Increase in Property, Plant and Equipment Revaluation Surplus (i) 82,041 46,984 30 June 2015) and the level of the provision is reviewed at the end of each year. Any movement in the Makegood Carrying Amount at 30 June 182,211 100,170 Restoration Provision is also reflected in Makegood Costs Recoverable within Receivables (Note 7(d)) except for GPNSW self occupied premises. (i) Net Increase in Property, Plant and Equipment Revaluation Surplus - Dissection 2016 2015 $'000 $'000
16. OTHER LIABILITIES 2016 2015 Land and Buildings (Note 8(b)) 39,820 25,244 $'000 $'000 Finance Lease Assets (Note 8(b)) 42,171 21,690 Current Emerging Asset (Note 11) 50 50 71 Lessor Lease Incentives (a) 8,025 8,476 Net Increase in Property, Plant and Equipment Revaluation Surplus 82,041 46,984 Total Current Liability at 30 June 8,025 8,476 (c) Net Increase/(Decrease) in Net Assets from Equity Transfers 2016 2015 Non-Current $'000 $'000 Lessor Lease Incentives (a) 42,865 51,099 Deposit Monies from Assets Sale (b) 15,000 - Transfer of Defined Benefit Superannuation Liabilities to the Crown Total Non-Current Liability at 30 June 57,865 51,099 through DFSI (Note 15(a)) 18,182 - Transfer of Properties from other Government Agencies: (a) Lessor Lease Incentives 2016 2015 Land and Buildings (Note 8(b)) 102,669 84,425 $'000 $'000 Land (Note 8(b)) 10,500 16,992 Movement: Total Net Increase/(Decrease) in Net Assets from Equity Transfers 131,351 101,417 Carrying Amount at 1 July (i) 59,575 28,632 Additional Lease Incentives 542 40,239 Less Current Year Amortisation (Note 2(b)(i)) (9,227) (9,296) 18. COMMITMENTS FOR EXPENDITURE 2016 2015 Carrying Amount at 30 June 50,890 59,575 $'000 $'000 (a) Capital Expenditure Commitments Current Liability 8,025 8,476 Non-Current Liability 42,865 51,099 Capital expenditure contracted at balance date but not Total Liability at 30 June 50,890 59,575 provided for: Payable within one year 483 - (i) Lessor lease incentives received relate to incentives given to GPNSW under head lease agreements. Lessor lease Payable later than one year but not later than five years - - incentives are amortised over the term of each lease and are recognised as a reduction to Property Head Lease Payable later than five years - - Expense under Other Operating Expenses in the Statement of Comprehensive Income (Note 2(b)(i)). Total Capital Expenditure Commitments (Incl GST) 483 -
(b) Deposit Monies from Assets Sale Total capital expenditure commitments relate to contracted refurbishment works on various owned buildings. Capital expenditure commitments at 30 June 2016 include GST recoverable input tax credits of $0.1 million (nil at 30 June In September 2015, GPNSW received $15 million deposit monies for the purchase of a long-term lease over properties 2015) that are expected to be recoverable from the Australian Taxation Office. located at 23-33 and 35-39 Bridge Street, Sydney. As the commencement of the lease is not until 2018 and is subject to the purchaser obtaining all design and planning approvals for conversion of the properties into a hotel, the deposit is recognised in the Statement of Financial Position as Other Liabilities.
- 29 - - 30 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
18. COMMITMENTS FOR EXPENDITURE (CONTINUED) 2016 2015 $'000 $'000 (b) Operating Lease Commitments
Head lease future minimum lease payments contracted at balance date but not provided for: Payable within one year 369,852 347,131 Payable later than one year but not later than five years 758,423 621,838 Payable later than five years 403,555 381,279 Total Operating Lease Commitments (Incl GST) 1,531,830 1,350,248
The majority of future minimum lease payments will be recouped by GPNSW under sub-leases. Future minimum lease payments and receipts as at 30 June 2016 include GST recoverable input tax credits of $139.3 million ($122.7m at 30 June 2015) and GST payable of $139.3 million ($122.7m at 30 June 2015).
(c) Finance Lease Commitments 2016 2015 $'000 $'000 Minimum Lease Payments: Payable within one year 5,705 6,003 Payable later than one year but not later than five years 19,234 20,130 Payable later than five years 426,350 431,160 Total Minimum Lease Payment Commitment 451,289 457,293
Finance Costs: Payable within one year (4,839) (4,929) Payable later than one year but not later than five years (19,234) (19,264) Payable later than five years (391,952) (396,761) Total Finance Costs Commitment (416,025) (420,954) 72 Present Value of Finance Lease Commitments: Payable within one year 866 1,074 Payable later than one year but not later than five years - 866 Payable later than five years 34,398 34,399 Total Present Value of Finance Lease Commitments (Note 14(a)) 35,264 36,339
GPNSW's Finance Lease Commitments comprise leases on Noel Park House, Tamworth and on part of the 52 Martin Place building, Sydney. The Noel Park House lease has a lease term of 25 years with no option to purchase the asset at the completion of the lease term in 2017. The discount rate implicit in the lease is 8.64% pa. The 52 Martin Place lease liability is being amortised over the lease term, which is 124.25 years and ends in 2110. The discount rate implicit in the lease is 14.91% pa.
19. CONTINGENT ASSETS AND CONTINGENT LIABILITIES
As at the reporting date, GPNSW was not aware of any contingent assets or contingent liabilities.
20. FINANCIAL INSTRUMENTS
GPNSW’s principal financial instruments are outlined below. These financial instruments arise directly from GPNSW’s operations or are required to finance GPNSW’s operations. GPNSW does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
GPNSW’s main risks arising from financial instruments are outlined below, together with GPNSW’s objectives, policies and processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout these financial statements.
The Chief Executive Officer has overall responsibility for the establishment and oversight of risk management and reviews and agrees policies for managing risks. Risk management policies are established to identify and analyse the risks faced by GPNSW, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed by GPNSW on a regular basis.
Government Property NSW 2015–16 - 31 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
18. COMMITMENTS FOR EXPENDITURE (CONTINUED) 2016 2015 20. FINANCIAL INSTRUMENTS (CONTINUED) 2016 2015 $'000 $'000 $'000 $'000 (b) Operating Lease Commitments (a) Financial Instrument Categories
Head lease future minimum lease payments contracted Financial Assets - Carrying Amounts at balance date but not provided for: Class Category Notes Payable within one year 369,852 347,131 Cash and Cash Equivalents n/a 1(h)(x), 6 108,891 265,675 Payable later than one year but not later than five years 758,423 621,838 Receivables (i) Loans and Receivables Payable later than five years 403,555 381,279 (at Amortised Cost) 1(h)(xi), 7 300,213 286,223 Total Operating Lease Commitments (Incl GST) 1,531,830 1,350,248 Financial Liabilities - Carrying Amounts The majority of future minimum lease payments will be recouped by GPNSW under sub-leases. Future minimum lease Class Category Notes payments and receipts as at 30 June 2016 include GST recoverable input tax credits of $139.3 million ($122.7m at 30 Payables (ii) Financial Liabilities June 2015) and GST payable of $139.3 million ($122.7m at 30 June 2015). (at Amortised Cost) 1(i)(i), 13 29,229 22,323 Borrowings Financial Liabilities (c) Finance Lease Commitments 2016 2015 (at Amortised Cost) 1(i)(ii), 14 35,264 36,339 $'000 $'000 Minimum Lease Payments: (i) Receivables exclude statutory receivables and prepayments as they are not within the scope of AASB 7. Payable within one year 5,705 6,003 (ii) Payables exclude statutory payables and unearned revenue as they are not within scope of AASB 7. Payable later than one year but not later than five years 19,234 20,130 Payable later than five years 426,350 431,160 (b) Credit Risk Total Minimum Lease Payment Commitment 451,289 457,293 Credit risk arises when there is the possibility of GPNSW’s debtors defaulting on their contractual obligations, resulting Finance Costs: in a financial loss to GPNSW. The maximum exposure to credit risk is generally represented by the carrying amount of Payable within one year (4,839) (4,929) the financial assets (net of any allowance for impairment). Payable later than one year but not later than five years (19,234) (19,264) Payable later than five years (391,952) (396,761) Credit risk arises from the financial assets of GPNSW, including cash and receivables. No collateral is held by GPNSW. Total Finance Costs Commitment (416,025) (420,954) GPNSW has not granted any material financial guarantees, individually or in aggregate. 73 Present Value of Finance Lease Commitments: All of GPNSW's cash deposits are held within NSW Treasury Banking System bank accounts. All deposits held within the Payable within one year 866 1,074 NSW Treasury Banking System are guaranteed by the State. Payable later than one year but not later than five years - 866 Payable later than five years 34,398 34,399 (i) Cash Total Present Value of Finance Lease Commitments (Note 14(a)) 35,264 36,339 Cash comprises cash on hand and bank balances within the NSW Treasury Banking System. Interest is earned on GPNSW's Finance Lease Commitments comprise leases on Noel Park House, Tamworth and on part of the 52 Martin GPNSW's Land Remediation Account daily bank balance at the monthly average NSW Treasury Corporation 11am Place building, Sydney. The Noel Park House lease has a lease term of 25 years with no option to purchase the asset unofficial cash rate, adjusted for a management fee to NSW Treasury. All other bank accounts are non-interest bearing at the completion of the lease term in 2017. The discount rate implicit in the lease is 8.64% pa. The 52 Martin Place within the NSW Treasury Banking System. lease liability is being amortised over the lease term, which is 124.25 years and ends in 2110. The discount rate implicit in the lease is 14.91% pa. (ii) Receivables - Trade Debtors
19. CONTINGENT ASSETS AND CONTINGENT LIABILITIES All trade debtors are recognised as amounts receivable at balance date. Collectability of trade debtors is reviewed on an ongoing basis. Procedures as established in the Treasurer’s Directions are followed to recover outstanding amounts, As at the reporting date, GPNSW was not aware of any contingent assets or contingent liabilities. including letters of demand. Debts which are known to be uncollectable are written off. An allowance for impairment is raised when there is objective evidence that GPNSW will not be able to collect all amounts due. This evidence includes past experience, current and expected changes in economic conditions and debtor credit ratings. No interest is earned 20. FINANCIAL INSTRUMENTS on trade debtors. Sales are made on 30-day terms.
GPNSW’s principal financial instruments are outlined below. These financial instruments arise directly from GPNSW’s GPNSW is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors. Based operations or are required to finance GPNSW’s operations. GPNSW does not enter into or trade financial instruments, on past experience, debtors which are not past due totalling $7.0 million ($2.4m at 30 June 2015) are not considered including derivative financial instruments, for speculative purposes. impaired and these represent 59.0% (51.6% at 30 June 2015) of the total trade debtors. Most of GPNSW’s debtors are NSW Government Agencies and therefore have an AAA credit rating. There are no debtors which are currently not past GPNSW’s main risks arising from financial instruments are outlined below, together with GPNSW’s objectives, policies and due or impaired whose terms have been renegotiated. processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout these financial statements. The only financial assets that are past due or impaired are trade debtors relating to property rental and fees-for-services income. These are included within Receivables in the Statement of Financial Position. The Chief Executive Officer has overall responsibility for the establishment and oversight of risk management and reviews and agrees policies for managing risks. Risk management policies are established to identify and analyse the risks faced by GPNSW, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed by GPNSW on a regular basis.
- 31 - - 32 - Government Property NSW 2015–16 Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
20. FINANCIAL INSTRUMENTS (CONTINUED) 20. FINANCIAL INSTRUMENTS (CONTINUED)
(b) Credit Risk (Continued) (d) Market Risk
(ii) Receivables - Trade Debtors (Continued) Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. GPNSW’s exposure to market risk is primarily through interest rate risk on GPNSW’s BHP Credit Risk - 2016 Overdue Total Remediation interest earning bank balance held within the NSW Treasury Banking System. GPNSW has no exposure <1 Mth >1 <2 Mths >2 <3 Mths >3 Mths 2016 to foreign currency risk and does not enter into commodity contracts. Financial Assets $'000 $'000 $'000 $'000 $'000 The effect on profit and equity due to a reasonably possible change in risk variable is outlined below under interest rate Receivables: risk. A reasonably possible change in risk variable has been determined after taking into account the economic Past Due But Not Impaired 324 1,311 206 2,240 4,081 environment in which GPNSW operates and the time frame for the assessment (i.e. until the end of the next annual Considered Impaired 11 - 33 750 794 reporting period). The sensitivity analysis is based on risk exposures in existence at the reporting date. The analysis is Total Credit Risk 335 1,311 239 2,990 4,875 performed on the same basis for 2016. The analysis assumes that all other variables remain constant.
Credit Risk - 2015 Overdue Total (i) Interest Rate Risk <1 Mth >1 <2 Mths >2 <3 Mths >3 Mths 2015 Financial Assets $'000 $'000 $'000 $'000 $'000 A reasonably possible change of ± 1% has been used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility. GPNSW’s Receivables: exposure to interest rate risk is set out below. Past Due But Not Impaired 185 357 326 687 1,555 Considered Impaired - 5 36 709 750 Interest Rate Risk - 2016 Carrying -1% +1% Total Credit Risk 185 362 362 1,396 2,305 Amount Profit Equity Profit Equity Financial Assets $'000 $'000 $'000 $'000 $'000 (i) Each row in the above table reports "gross receivables". Cash and Cash Equivalents 39,460 (395) (395) 395 395 (ii) The ageing analysis excludes statutory receivables, as these are not within the scope of AASB 7 and excludes receivables that are not past due and not impaired. Therefore, the Total Credit Risk line will not reconcile to the 74 receivables total recognised in the Statement of Financial Position. Interest Rate Risk - 2015 Carrying -1% +1% Amount Profit Equity Profit Equity (c) Liquidity Risk Financial Assets $'000 $'000 $'000 $'000 $'000
Liquidity risk is the risk that GPNSW will be unable to meet its payment obligations when they fall due. GPNSW Cash and Cash Equivalents 40,337 (403) (403) 403 403 continuously manages risk through monitoring future cash flows planning to ensure adequate holding of available cash. GPNSW’s exposure to liquidity risk is deemed insignificant based on prior period data and current assessment of risk. The above interest rate sensitivity analysis has been performed on the assumption that all other variables remain unchanged. No sensitivity analysis has been performed on foreign exchange risk as GPNSW is not exposed to such Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not foreign exchange fluctuations. invoiced. Amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set out in NSW Treasury Circular 11/12. For small business suppliers, where terms are not specified, payment is made not later than (e) Fair Value 30 days from date of receipt of a correctly rendered invoice. For other suppliers, if trade terms are not specified, payment is made no later than the end of the month following the month in which an invoice or a statement is received. Financial instruments as shown in Note 20(a) are recognised in the Statement of Financial Position at amortised cost, For small business suppliers, where payment is not made within the specified time period, simple interest must be paid which approximates the fair value. automatically unless an existing contract specifies otherwise. For payments to other suppliers, GPNSW may automatically pay the supplier simple interest. The rate of interest applied by GPNSW accords with the current rate applicable under section 22 of the Taxation Administration Act 1996 . 21. BUDGET REVIEW
GPNSW's financial liabilities, as listed at (a) above, are all non-interest bearing. Payables are all payable within 12 (a) Net Result months (Note 13). Payable items which are out of the scope of AASB 7 "Financial Instruments: Disclosures" have been excluded from the carrying amount shown in the Statement of Financial Position. These items are GST payable and The Net Result was $202.8 million lower than budget, primarily due to: unearned revenue. • a $200.7 million increase in Grants and Subsidies expense due mainly to payments to the Restart NSW Fund from A maturity profile analysis of GPNSW's Finance Lease liabilities is presented at Note 18(c). the net proceeds of property sales (Note 2(d)).
Government Property NSW 2015–16 - 33 - - 34 - Government Property NSW Government Property NSW
Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
20. FINANCIAL INSTRUMENTS (CONTINUED) 20. FINANCIAL INSTRUMENTS (CONTINUED)
(b) Credit Risk (Continued) (d) Market Risk
(ii) Receivables - Trade Debtors (Continued) Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. GPNSW’s exposure to market risk is primarily through interest rate risk on GPNSW’s BHP Credit Risk - 2016 Overdue Total Remediation interest earning bank balance held within the NSW Treasury Banking System. GPNSW has no exposure <1 Mth >1 <2 Mths >2 <3 Mths >3 Mths 2016 to foreign currency risk and does not enter into commodity contracts. Financial Assets $'000 $'000 $'000 $'000 $'000 The effect on profit and equity due to a reasonably possible change in risk variable is outlined below under interest rate Receivables: risk. A reasonably possible change in risk variable has been determined after taking into account the economic Past Due But Not Impaired 324 1,311 206 2,240 4,081 environment in which GPNSW operates and the time frame for the assessment (i.e. until the end of the next annual Considered Impaired 11 - 33 750 794 reporting period). The sensitivity analysis is based on risk exposures in existence at the reporting date. The analysis is Total Credit Risk 335 1,311 239 2,990 4,875 performed on the same basis for 2016. The analysis assumes that all other variables remain constant.
Credit Risk - 2015 Overdue Total (i) Interest Rate Risk <1 Mth >1 <2 Mths >2 <3 Mths >3 Mths 2015 Financial Assets $'000 $'000 $'000 $'000 $'000 A reasonably possible change of ± 1% has been used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility. GPNSW’s Receivables: exposure to interest rate risk is set out below. Past Due But Not Impaired 185 357 326 687 1,555 Considered Impaired - 5 36 709 750 Interest Rate Risk - 2016 Carrying -1% +1% Total Credit Risk 185 362 362 1,396 2,305 Amount Profit Equity Profit Equity Financial Assets $'000 $'000 $'000 $'000 $'000 (i) Each row in the above table reports "gross receivables". Cash and Cash Equivalents 39,460 (395) (395) 395 395 (ii) The ageing analysis excludes statutory receivables, as these are not within the scope of AASB 7 and excludes receivables that are not past due and not impaired. Therefore, the Total Credit Risk line will not reconcile to the receivables total recognised in the Statement of Financial Position. Interest Rate Risk - 2015 Carrying -1% +1% 75 Amount Profit Equity Profit Equity (c) Liquidity Risk Financial Assets $'000 $'000 $'000 $'000 $'000
Liquidity risk is the risk that GPNSW will be unable to meet its payment obligations when they fall due. GPNSW Cash and Cash Equivalents 40,337 (403) (403) 403 403 continuously manages risk through monitoring future cash flows planning to ensure adequate holding of available cash. GPNSW’s exposure to liquidity risk is deemed insignificant based on prior period data and current assessment of risk. The above interest rate sensitivity analysis has been performed on the assumption that all other variables remain unchanged. No sensitivity analysis has been performed on foreign exchange risk as GPNSW is not exposed to such Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not foreign exchange fluctuations. invoiced. Amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set out in NSW Treasury Circular 11/12. For small business suppliers, where terms are not specified, payment is made not later than (e) Fair Value 30 days from date of receipt of a correctly rendered invoice. For other suppliers, if trade terms are not specified, payment is made no later than the end of the month following the month in which an invoice or a statement is received. Financial instruments as shown in Note 20(a) are recognised in the Statement of Financial Position at amortised cost, For small business suppliers, where payment is not made within the specified time period, simple interest must be paid which approximates the fair value. automatically unless an existing contract specifies otherwise. For payments to other suppliers, GPNSW may automatically pay the supplier simple interest. The rate of interest applied by GPNSW accords with the current rate applicable under section 22 of the Taxation Administration Act 1996 . 21. BUDGET REVIEW
GPNSW's financial liabilities, as listed at (a) above, are all non-interest bearing. Payables are all payable within 12 (a) Net Result months (Note 13). Payable items which are out of the scope of AASB 7 "Financial Instruments: Disclosures" have been excluded from the carrying amount shown in the Statement of Financial Position. These items are GST payable and The Net Result was $202.8 million lower than budget, primarily due to: unearned revenue. • a $200.7 million increase in Grants and Subsidies expense due mainly to payments to the Restart NSW Fund from A maturity profile analysis of GPNSW's Finance Lease liabilities is presented at Note 18(c). the net proceeds of property sales (Note 2(d)).
- 33 - - 34 - Government Property NSW 2015–16 Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
21. BUDGET REVIEW (CONTINUED)
(b) Assets and Liabilities
Total Assets of $1.2 billion were $210.9 million greater than budget, primarily due to:
• a $48.3 million increase in Cash and Cash Equivalents due mainly to the deferral into 2016-17 of budgeted land remediation works (Note 21(c)); • a $52.1 million increase in Non-Current Assets Held for Sale due to confirmed sale commitments and contract exchanges for various properties as at 30 June 2016; and • a $109.7 million increase in Property, Plant and Equipment due mainly to the vesting of various properties in 2015-16.
Total Liabilities of $352.4 million were $63.4 million greater than budget, primarily due to:
• $49.6m increase in the budgeted land remediation provision due to the deferral into 2016-17 of budgeted remediation works at Mayfield and Hunter’s Hill in addition to revised cost estimates (Note 15(b)); and • a $15.0m increase in Other Liabilities relating to deposit monies received on the sale of properties located at 23-33 and 35-39 Bridge Street, Sydney which will not settle until July 2018 (Note 16(b)).
(c) Cash Flows
Closing Cash and Cash Equivalents was $48.3 million greater than budget, primarily due to:
• a $31.5 million increase due to budgeted land remediation works at Mayfield and Hunters Hill being deferred to 2016-17; • a $11.5 million increase due to Unspent Capital Contribution revenue from the State Government as at 30 June 2016; • a $4.5 million increase due to the receipt of Agency Property Transaction Monies; and • a $5.9 million increase from net property sale proceeds received in late 2015-16. 76 22. EVENTS AFTER THE REPORTING PERIOD
(a) Adjusting Events
There are no known events after the reporting period which would give rise to a material impact on the reported results or financial position of GPNSW as at 30 June 2016.
(b) Non-Adjusting Events
(i) Transfer of Functions from Other Agencies - On 1 July 2016, certain functions of the Sydney Harbour Foreshore Authority in relation to Corporate and Place Management services were transferred to GPNSW. In addition, the Facilities Management function of NSW Public Works was also transferred to GPNSW from that date. The transfer of these functions is expected to increase the revenues and expenses of GPNSW in 2016-17 however, the quantification of the financial impact was still in progress at the reporting date.
(ii) Owned and Leased Office Accommodation Property Vesting and Property Divestments – Pursuant to the recommendations of the Government's Property Asset Utilisation Taskforce and subsequent Premier’s Memorandum M2012-20, further divestment of various GPNSW owned properties, in addition to the ongoing vesting of Government agency owned and leased properties is likely to occur in separate tranches during 2016-17. As the identification and validation of these properties was still in progress at the reporting date, estimates of the financial impact on GPNSW's accounts in 2016-17 are not available.
There are no known other non-adjusting events after the reporting period.
End of Audited Financial Statements
Government Property NSW 2015–16 - 35 - Government Property NSW
Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016
21. BUDGET REVIEW (CONTINUED)
(b) Assets and Liabilities
Total Assets of $1.2 billion were $210.9 million greater than budget, primarily due to:
• a $48.3 million increase in Cash and Cash Equivalents due mainly to the deferral into 2016-17 of budgeted land remediation works (Note 21(c)); • a $52.1 million increase in Non-Current Assets Held for Sale due to confirmed sale commitments and contract exchanges for various properties as at 30 June 2016; and • a $109.7 million increase in Property, Plant and Equipment due mainly to the vesting of various properties in 2015-16.
Total Liabilities of $352.4 million were $63.4 million greater than budget, primarily due to:
• $49.6m increase in the budgeted land remediation provision due to the deferral into 2016-17 of budgeted remediation works at Mayfield and Hunter’s Hill in addition to revised cost estimates (Note 15(b)); and • a $15.0m increase in Other Liabilities relating to deposit monies received on the sale of properties located at 23-33 and 35-39 Bridge Street, Sydney which will not settle until July 2018 (Note 16(b)).
(c) Cash Flows
Closing Cash and Cash Equivalents was $48.3 million greater than budget, primarily due to:
• a $31.5 million increase due to budgeted land remediation works at Mayfield and Hunters Hill being deferred to 2016-17; • a $11.5 million increase due to Unspent Capital Contribution revenue from the State Government as at 30 June 2016; • a $4.5 million increase due to the receipt of Agency Property Transaction Monies; and • a $5.9 million increase from net property sale proceeds received in late 2015-16. 77 22. EVENTS AFTER THE REPORTING PERIOD Government Property NSW (a) Adjusting Events
There are no known events after the reporting period which would give rise to a material impact on the reported results or financial position of GPNSW as at 30 June 2016. • Statutory information
(b) Non-Adjusting Events
(i) Transfer of Functions from Other Agencies - On 1 July 2016, certain functions of the Sydney Harbour Foreshore Authority in relation to Corporate and Place Management services were transferred to GPNSW. In addition, the Facilities Management function of NSW Public Works was also transferred to GPNSW from that date. The transfer of these functions is expected to increase the revenues and expenses of GPNSW in 2016-17 however, the quantification of the financial impact was still in progress at the reporting date.
(ii) Owned and Leased Office Accommodation Property Vesting and Property Divestments – Pursuant to the recommendations of the Government's Property Asset Utilisation Taskforce and subsequent Premier’s Memorandum M2012-20, further divestment of various GPNSW owned properties, in addition to the ongoing vesting of Government agency owned and leased properties is likely to occur in separate tranches during 2016-17. As the identification and validation of these properties was still in progress at the reporting date, estimates of the financial impact on GPNSW's accounts in 2016-17 are not available.
There are no known other non-adjusting events after the reporting period.
End of Audited Financial Statements
- 35 - Government Property NSW 2015–16 Our charter
The NSW Government introduced Government Property NSW (GPNSW) as the new name of the State Property Authority (SPA), effective 12 December 2012, as a result of adopting new property principles and changes to the activities of SPA. Refer to Premier’s Memorandum M2012-20 for more information.
GPNSW has been assigned the NSW Government mandate to continually improve the management of the NSW Government’s owned and leased real property portfolio.
GPNSW operates under the following principal legislation: • Government Property NSW Act 2006.
Aims and objectives Under its Act, the principal objectives of GPNSW in exercising its functions are: • to improve operational efficiencies in the use government agency properties, particularly generic properties such as offices, warehouses, depots and car parks • to manage properties of government agencies in a way that supports the service delivery functions of those agencies • to provide advice and support within government on property matters, and • to operate at least as efficiently as any comparable business, consistently with the principles of ecologically sustainable development and social responsibility for the community.
78 GPNSW delivers on its Act by: • holding, managing, maintaining, acquiring or disposing of property for the government and government agencies • undertaking, managing, coordinating or participating in the development of government agency property • arranging, where appropriate, for the sharing of facilities and premises by government agencies to reduce operational expenses • providing property services for its own or government agency properties, including property management, maintenance and improvements • providing advice to the Minister in relation to government agency property, in particular: o whether the properties are being efficiently utilised o regarding the transfer of properties to GPNSW and related budgets o other matters relating to government agency properties, as the Minister directs.
Management and structure In 2015/16, GPNSW, Teachers Housing Authority of NSW and Waste Assets Management Corporation consolidated with Sydney Harbour Foreshore Authority to form Property NSW.
Additionally, from 1 July 2016, Public Works Facilities Management and Valuation Services consolidated into Property NSW, and Public Works Advisory joined Property NSW to form the Property and Advisory Group.
As at 30 June 2016, Property NSW’s Executive team consisted of: • Brett Newman, Property NSW Deputy Secretary and GPNSW CEO • Adam Howarth, Executive Director, Portfolio Management Group • Dennis Szabo, Executive Director, Commercial Transactions • Leon Walker, Executive Director, Major Projects • Olga Masella, Acting Executive Director, Leasing
Government Property NSW 2015–16 • David Leahy, Executive Director, Operations • Stuart Crawford, Executive Director, Property Financial Services • Jenny Blatchford, Acting Executive Director, Strategy • Anna Welanyk, Executive Director, Valuation Services
Refer to Property NSW’s Annual Review 2015/16 for an organisational chart, as well as names and biographies of the Executive team as at submission date.
Legal change GPNSW provides a range of Statutory Acquisitions Services, which include vesting under the GPNSW Act and acquisitions under the Land Acquisition (Just Terms Compensation) Act 1991 for GPNSW or client purposes.
Eight Orders under the GPNSW Act were notified in 2015/16 to transfer a total of 111 land parcels and 1 lease/license from government agencies to GPNSW, in accordance with Premier’s Memoranda 2012-20. The property transfers were effected from the following agencies for the purposes of ongoing management or to facilitate disposal: • Department of Justice • Department of Planning and Environment • NSW Department of Transport • Department of Education • Department of Premier and Cabinet • Department of Industry, Skills and Regional development • Department of Finance, Services and Innovation. 79
Human resources As at 30 June 2016, GPNSW had a total of 100 ongoing employees and 3 temporary employees, with the remaining 21 employees either seconded, providing services as consultants or employed on Executive contracts.
There were no exceptional movements in wages, salaries or allowances, except for increases awarded across the public sector by the Industrial Relations Commission.
There were no industrial disputes lodged by the NSW Public Service Association with the Industrial Relations Commission of NSW. There was no working time lost due to industrial disputes during the year.
Requirements arising from employment arrangements There were no additional requirements for GPNSW.
Government Property NSW 2015–16 Workforce profile A summary of GPNSW workforce profile* and other information is set out below:
Category 2012/13 2013/14 2014/15 2015/16
Senior Executive Service 4.0 7.0 23.0 21.0 Corporate Management 8.0 4.0 13.8 23.0 Property Management 100.6 104.1 64.6 80.0 TOTAL 112.6 115.2 101.5 124.0
*Excludes permanent employees of other agencies seconded to GPNSW.
Numbers and remuneration of senior executives
2012/13 2013/14 2014/15 2015/16
SES profile Male Female Male Female Male Female Male Female SES 7 1 - 1 - 1 - 1 - SES 5 1 ------80 SES 3 3 - 6 2 5 1 5 1 SEB 1 - - - - 8 8 7 7 TOTAL 5 - 7 2 14 9 13 8
The average total remuneration package of senior executives at the end of the 2015/16 reporting period was $237,56 8.
The percentage of total employee-related expenditure in the reporting year that relates to senior executives is 44.1%.
Workforce diversity In 2015/16, GPNSW continued to promote Workforce Diversity and equal employment opportunity (EEO) through ongoing merit selection training, which was undertaken to ensure equity principles continue to be incorporated in recruitment and selection.
Equity principles also continue to be promoted through GPNSW’s Code of Conduct, including through induction sessions for new employees and ethics training for existing employees.
Trends in the representation of EEO groups among GPNSW employees are shown in the tables following.
During the year, GPNSW moved steadily closer to its primary diversity goal, nearing its benchmark 50 per cent for females at 46.8 per cent.
Government Property NSW 2015–16 Trends in the representation of EEO groups
% of total staff (excl. casuals)
EEO group Benchmark 2013/14 2014/15 2015/16 Women 50 39.3 33.8 46.8 Aboriginal people and Torres Strait 2.6 0.8 0 0 Islanders People whose first language spoken 19.0 15.6 13.6 13.7 as a child was not English People with a disability N/A 2.5 1.9 2.4 People with a disability requiring work- 1.5 0.8 1.0 1.6 related adjustment
Trends in the distribution of EEO groups
EEO group Benchmark 2013/14 2014/15 2015/16
Women 100 89 94 95 Aboriginal people and Torres Strait 100 N/A N/A N/A Islanders People whose first language spoken 100 N/A N/A N/A as a child was not English 81
Contractors and consultants The Crown Employees (Public Service Condition of Employment – 2009) Award was varied in 2015 to provide for salary increases of 2.5%, effective from the first full pay period commencing on or after 1 July 2015.
The Statutory and Other Office Remuneration Tribunal (SOORT) awarded a 2.5% increase to the remuneration packages of Chief Executive (CES) and Senior Executive Service (SES) effective 1 July 2015.
Industrial relations policies and practices • Consultative forums Local Joint Consultative Committees (JCC) are embedded across the organisation. The local JCCs feed into a peak JCC, which is chaired by the Secretary of DFSI. With so much significant change underway across the department, these consultative forums have greatly assisted managing any industrial unrest as a result of the change. • Flexible Working Hours Agreement DFSI, which provides industrial relations support for GPNSW, successfully negotiated a new Flexible Work Hours Agreement (FWHA) in 2015/16, replacing 11 different FWHAs that had existed across the department. The new agreement was signed on 30 June 2016 and is currently being implemented across DFSI, including GPNSW. • Salaries, wages and allowances The agency applied the NSW Wages Policy for wage negotiations, which resulted in wage increases of 2.5 per cent.
Government Property NSW 2015–16 Personnel policies and practices During the reporting period, GPNSW was governed by the policies and procedures of the Department of Finance, Services and Innovation (DFSI).
In 2015/16, the Human Resources functions of Recruitment, Induction, Training and Development, and Payroll were managed by DFSI, to reflect the centralised corporate services model under the agency cluster.
Multicultural Policies and Services Program GPNSW is covered by the DFSI Multicultural Policies and Services Program Plan 2010–14, which ensures that the department delivers services to clients and staff from culturally and linguistically diverse (CALD) backgrounds and is compliant with the NSW Government’s Multicultural Planning Framework.
GPNSW also ensures that international symbols and signs are applied whenever government buildings are occupied or upgraded.
Disability inclusion action plans GPNSW is a part of the DFSI Disability Action Plan.
82 Work Health and Safety (WHS) GPNSW is committed to providing a healthy and safe workplace for all workers including contractors, agency staff and visitors.
During the period, there was one notification of injury resulting in a claim reported under the GPNSW workers compensation policy. There were no serious/notifiable incidents affecting staff.
A number of activities were undertaken in 2015/16 with the aim of a safer workplace, preventing injuries and illnesses and promoting timely, sustainable and early return to work for injured workers. These include:
• conducting workstation assessments for employees • promoting DFSI initiatives, such as Fitness Passport and the corporate influenza vaccination program, for GPNSW staff and contractors • promoting the Employee Assistance Program to staff, particularly through the transition period • reviewing and promoting the WHS Hazard incident and injury reporting procedure as part of WHS induction.
WHS Management activities included: • participation in the DFSI WHS Injury Management (WHISM) community of practice • contributing to a whole-of-department refresh of the WHS Safety Management System framework and associated policies and procedures • development and delivery of WHS induction at Bligh House for staff and contractors • continued provision and training of Floor Wardens and accredited First Aid Officers • WHS inspection of Bligh House • identification and training of GPNSW Committee Representatives for the new Property NSW WHS Committee.
Government Property NSW 2015–16 Promotion In May 2016, SHFA’s CEO, Sam Romaniuk, undertook Minister-approved travel to attend a United States– Australia City Exchange on innovation precincts. The exchange examined the various elements that contribute to the success of an innovation precinct, from the physical infrastructure to the social, economic and cultural shifts that need to occur to generate a thriving innovation ecosystem that generates jobs and economic benefits.
The learning supported development of the objectives and funding model for the newly-formed Place Management division under Property NSW.
The exchange, at a total cost of $27,471.32 (including airfares, meals and incidentals, and the exchange tour), was paid from the Government Property NSW Travel and Training budgets.
Consumer response GPNSW does not deliver front line services to the community. However, mechanisms are in place for its government agency clients to provide feedback relating to base building issues via the GPNSW Service Centre facility at www.gpnsw.net.au/Core/Content/Public-Home-Page/Content1557.aspx.
In 2015/16, the Service Centre continued as the central service point for agency property management issues.
Additionally, Property NSW responds daily to enquiries, complaints and compliments relating to all entities 83 via [email protected]. Refer to www.property.nsw.gov.au/contact-us for more ways to contact Property NSW.
Property NSW has ensured that issues through both channels are dealt with appropriately and with a high degree of client satisfaction.
Property NSW also gauges client response to its service delivery through its annual client survey, aimed at achieving superior customer service and enhancing its service delivery.
Waste reduction initiatives GPNSW continued to implement a number of waste reduction and recycling initiatives during the year, including utilising co-mingled recycling bins in all office kitchens
More information on Property NSW’s waste reduction initiatives under the NSW Government Resource Efficiency Policy (GREP) can be found in Property NSW’s Annual Review 2015/16.
Government Property NSW 2015–16 Consultants GPNSW engages consultants to augment existing expertise and resources. During 2015/16, GPNSW obtained the following consultancy services:
Consultancies Consultants Total cost $ Projects / categories
Greater than $50,000 Project title Consultant name Management Consultancy Services Tracey Shatek & Associates Pty Ltd 121,131
Less than $50,000 Category Number of consultants Property 18 122,201 Corporate 3 20,005
Total 263,337
Credit card certification 84 In 2015/16, credit card usage within GPNSW was mainly limited to claimable work-related travel expenses and expenditure for minor purchases where the use of credit cards is a more efficient means of payment.
In accordance with Treasurer’s Direction 205.01, credit card usage by officers of GPNSW during the reporting period was in accordance with relevant Government policy, Premier’s Memoranda and Treasurer’s Directions.
GPNSW has in place a corporate credit card policy that meets NSW Treasury guidelines.
Government Property NSW 2015–16 PaymentPayment of Accounts of accounts The table below highlights GPNSW’s account payment performance for 2015/16. The table below highlights GPNSW’s account payment performance for 2015-16.
A CCOUNT PA Y MENT 1ST 2 ND 3RD 4TH TOTA L PERFORMANCE 2015-16 QTR QTR QTR QTR
ALL SUPPLIERS
Value of Invoices Paid ($'000) Paid Before Due Date 139,210 135,253 141,993 159,100 575,556 <30 Days Past Due Date 2,544 2,944 2,952 4,065 12,505 >30<60 Days Past Due Date 638 435 1,011 951 3,035 >60<90 Days Past Due Date 276 88 548 335 1,247 >90 Days Past Due Date 164 644 195 202 1,205 Total Value of Invoices Paid ($'000) 142,832 139,364 146,699 164,653 593,548
% Paid on Time - By Value 97% 97% 97% 97% 97%
Number of Invoices Paid Paid Before Due Date 9,294 9,043 8,709 9,967 37,013 Paid Past Due Date 419 345 527 592 1,883 Total Number of Invoices Paid 9,713 9,388 9,236 10,559 38,896
% Paid on Time - By Number 96% 96% 94% 94% 95% Interest Paid (i) 85 Number of Payments for Interest on Overdue Invoices 25 20 40 37 122 Interest Paid on Overdue Invoices 2 - 2 2 6
SMALL BUSINESS SUPPLIERS
Value of Invoices Paid ($'000) Paid Before Due Date 249 214 270 306 1,039 <30 Days Past Due Date - 10 28 19 57 >30<60 Days Past Due Date - - - 8 8 >60<90 Days Past Due Date - - - - - >90 Days Past Due Date - - - - - Total Value of Invoices Paid ($'000) 249 224 298 333 1,104
% Paid on Time - By Value 100% 96% 91% 92% 94%
Number of Invoices Paid Paid Before Due Date 122 92 120 124 458 Paid Past Due Date - 2 8 8 18 Total Number of Invoices Paid 122 94 128 132 476
% Paid on Time - By Number 100% 98% 94% 94% 96%
Interest Paid (i) Number of Payments for Interest on Overdue Invoices - - 1 2 3 Interest Paid on Overdue Invoices - - - - -
In accordance with the Government 's revised payment of Accounts Policy (NSW TC 11/12 Payments of Accounts), interest totalling $163.68 was paid in respect of 3 small business supplier invoices and $6,079.35 was paid in respect of 119 General supplier invoices which were paid past their due date.
For all suppliers, the percentage of invoices paid on time for 2015-16 averaged 97% by value and 95% by number (98% and 96% respectively in 2014-15).
Government Property NSW 2015–16 For all suppliers, the percentage of invoices paid on time for 2015-16 averaged 97% by value and 95% by number (98% and 96% respectively in 2014/15).
During 2015/16, GPNSW continued to monitor previously implemented system and procedural improvements, both internally and with its services providers (Cushman & Wakefield and FiveD Holdings), in an effort to ensure that all invoice payments were made within the prescribed payment requirements. The majority of payment delays experienced by GPNSW are process related and are mainly due to the logistical difficulties in securing certifications on services provided to properties which are spread across NSW. For 2016-17, GPNSW will again target payment performance in excess of 95%.
Out of the total number of invoices paid during 2015/16, 1.2% (or 0.19% by value) was paid to small business suppliers. Of this, 94% by number and 96% by value was paid on time. The invoice certification delays described above resulted in GPNSW being required to pay $163.68 in penalty interest in respect of three small business suppliers during 2015/16.
Risk management and insurance activities
Risk Management Framework GPNSW refreshed its Enterprise Risk Management (ERM) system and framework during 2015/16 and continuously improved it, ensuring that risk identification, analysis and monitoring occurred across all lines of business and in relation to key projects throughout the financial year.
The agency introduced a new ERM system to support operational monitoring of risks in July 2016. GPNSW 86 recalibrated its risk identification, assessment and escalation policies and conducted a refresh of its Divisional risk registers between October 2015 and February 2016.
GNSW’s ERM framework considers risks at the strategic and operational level, as well as within programs and projects. Strategic risks deemed to possess a high rating were required to be reported to the GPNSW Executive Operating Committee and/or escalated to DFSI and the Audit and Risk Committee, in accordance with risk incident and escalation processes.
The ERM system and framework is aligned to the DFSI Risk and Resilience Framework, to NSW Treasury Internal Audit and Risk Management Policy for the Public Sector (TPP 15-03) and AS/NZS ISO 31000: Risk management – Principles and Guidelines.
Insurance In the reporting period, GPNSW was insured with the Treasury Managed Fund, which is managed by the NSW Self Insurance Corporation.
Audit and Risk Committee (ARC) During 2015/16 GPNSW had in place an Audit and Risk Committee (ARC), compliant with NSW Treasury’s Internal Audit and Risk Management Policy for the NSW Public Sector (TPP 15-03).
This committee met five (5) times over the course of 2015/16 to oversee financial reporting, internal control systems, risk management, annual reporting, Audit Office reports and early close, and the internal and external audit functions. Administrative support for the ARC was provided by the DFSI. The ARC considered issues and topics including: • reports of GPNSW progress against Strategic Priorities and progress of PAUT II recommendations • corporate plan, objectives and performance management framework and updates on restructure including the transition of Sydney Harbour Foreshore Authority and repositioning activities in advance of consolidating into a new entity (Property NSW) post 1 July 2016
Government Property NSW 2015–16 • financial performance reports, including the property revaluations and other projects and matters relevant to GPNSW financial performance • GPNSW Internal Audit Plan, reports and implementation of recommendations • NSW Audit Office reports and GPNSW implementation of recommendations • financial statements – the ARC had separate meetings to review soft close and hard close of financial statements, and a meeting to approve financial accounts for 2015/16.
Internal Audit and Risk Management Statement 2015/16 I, Brett Newman, am of the opinion that the Audit and Risk Committee for Government Property NSW is constituted and operates in accordance with the independence and governance requirements of Treasury Policy NSW TPP 15-03. The Chair and Members of the Audit and Risk Committee were:
For the period 1 July 2015 to 20 Nov 2015 • Jon Isaacs, Independent Chair (period of appointment 31 October 2011 to 31 October 2015) • Ken Barker, Independent Member (period of appointment from 31 October 2014 to 20 November 2015) • Evelyn Bosak, Independent Member (period of appointment from 27 October 2013 to 27 October 2016)
For the period 20 November 2015 to 30 June 2016 • Carol Holly, Independent Chair (period of appointment 2 December 2015 to 2 December 2020) • Dianne Hill, Independent Member (period of appointment 1 February 2016 to 1 February 2019) • Mark O’Sullivan, Independent Member (period of appointment 25 January 2015 to 25 January 2017)
This Audit and Risk Committee has been established under a Minister approved shared arrangement for 2015/16 with the following statutory bodies: • Teacher Housing Authority 87 • Waste Assets Management Corporation • Sydney Harbour Foreshore Authority (post 8 January 2016) • Luna Park Reserve Trust (post 8 January 2016)
These processes, including the practicable alternative measures implemented, provide a level of assurance that enables the senior management of GPNSW to understand, manage and satisfactorily control risk exposures.
As required by the policy, I have submitted an Attestation Statement outlining compliance with exceptions with the policy to the Treasury on behalf of the Treasurer.
Brett Newman Chief Executive Officer Government Property NSW
Government Property NSW 2015–16 Public information
Public Interest Disclosure As staff are employees of DFSI, GPNSW has adopted and adhered to the DFSI Fraud and Corruption Internal Reporting Policy. All staff are advised of this policy by means of the Code of Conduct and intranet access.
Public interest disclosures made by GPNSW officials for the period 1 July 2015 to 30 June 2016
(1) Public interest (2) Public interest (3) All other public disclosures made disclosures not interest disclosures by public officials in covered by (1) that performing their day are made under a to day functions statutory or other legal obligation Number of public officials who 0 0 0 made PIDs Number of PIDs received 0 0 0 Of PIDs received, number primarily about: Corrupt conduct 0 0 0
Maladministration 0 0 0 88 Serious and substantial waste 0 0 0 Government information 0 0 0 contravention Local government pecuniary 0 0 0 interest contravention Number of PIDs finalised 0 0 0
Privacy and Personal Information Protection Act 1998 (PPIP Act) The Privacy and Personal Information Protection (PPIP) Act 1998 contains twelve information protection principles regulating the collection, use and disclosure of personal information by NSW public sector agencies. These principles ensure that agencies collect personal information for lawful purposes, and that such information is protected from misuse and unauthorised release.
NSW Government agencies are required to prepare and implement a privacy management plan in accordance with section 33(1) of the Privacy and Personal Information Protection Act 1998.
Additional information about how GPNSW manages its obligations under the PPIP Act is available at http://www.property.nsw.gov.au/government-property-nsw-privacy-statement.
Statistical information about access applications received in relation to GPNSW is reported in the DFSI Annual Report.
Government Property NSW 2015–16 Government information
Government Information (Public Access) Act 2009 The Government Information (Public Access) Act 2009 (GIPA Act) requires NSW Government agencies to make mandatory disclosures of information, encourages proactive releases of information and provides mechanisms for individuals to apply to access government information.
More information on how to access department information is available at https://www.finance.nsw.gov.au/accessing-ofs-information/how-can-i-access-ofs-information.
Statistical information relating to formal applications under the GIPA Act is provided in the DFSI Annual Report Government Information (Public Access) statistics.
Review of proactive release program Under section 7(3) of the GIPA Act, agencies must review their proactive release of government information program at least once every twelve months.
GPNSW complies with this Act by proactively releasing information on its website www.property.nsw.gov.au.
Digital Information Security Annual Attestation Statement 2015/16 I, Brett Newman, am of the opinion that Government Property NSW had an Information Security Management System (ISMS) in place during the 2015/16 financial year that is consistent with the Core Requirements set out in the NSW Government Digital Information Security Policy. 89
The controls in place to mitigate identified risks to the digital information and digital information systems of Government Property NSW are adequate.
There is no agency under the control of Government Property NSW which is required to develop an independent ISMS in accordance with the NSW Government Digital Information Security Policy.
Brett Newman Chief Executive Officer Government Property NSW
Government Property NSW 2015–16 Exemptions and nil reports
GPNSW is exempt from reporting on the following matters for the reasons outlined below:
Reporting requirement Reason for exemption
Funds granted to non-government GPNSW did not make any grants to any non-government community organisations organisations during the reporting period. No research and development activities were undertaken during Research and development 2015/16. GPNSW does not control any entities of the kind referred to in Disclosure of controlled entities section 39 (1A) of the Public Finance and Audit Act 1983. GPNSW does not control or hold shares in any subsidiaries within Disclosure of subsidiaries the meaning of the Corporations Act 2001 (Cth.). GPNSW does not have any agreements with Multicultural NSW Agreements with Multicultural NSW under the Multicultural Act 2000. All GPNSW investment powers are in accordance with Part 1 of Schedule 4 of the Public Authorities (Financial Arrangements) Act Investment performance 1987. However, all cash reserves are held in Treasury Banking System (TBS) bank accounts. Not applicable, as GPNSW does not have a level of debt greater Liability management performance than $20m. GPNSW is not subject to determinations or recommendations of the Implementation of price determination Independent Pricing and Regulatory Tribunal of NSW. 90 GPNSW did not dispose any land with value more than $5 million, Land disposal except by way of public offering, such as auction, Expression of Interest or tender during 2015/16.
End of Government Property NSW’s statutory information 2015/16.
Government Property NSW 2015–16 Appendix B Sydney Harbour 91 Foreshore Authority
• Sydney Harbour Foreshore Authority financial statements for the year ended 30 June 2016 • Sydney Harbour Foreshore Authority statutory information • Luna Park Reserve Trust financial statements for the year ended 30 June 2016
Sydney Harbour Foreshore Authority 2015–16 Dear Minister
Letter of submission
I am pleased to submit to you, for presentation to Parliament, the Sydney Harbour Foreshore Authority Annual Report for the year ended 30 June 2016.
The report has been prepared in accordance with the Annual Report (Statutory Bodies) Act 1984, the Public Finance and Audit Act 1983 and the regulations under those Acts.
92
Sam Romaniuk The Hon. Helen Coonan Chief Executive Officer Chair Sydney Harbour Foreshore Authority Sydney Harbour Foreshore Authority Board
Sydney Harbour Foreshore Authority 2015–16 Sydney Harbour 93 Foreshore Authority
• Financial statements for the year ended 30 June 2016
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• Statutory information
Sydney Harbour Foreshore Authority 2015–16 Transition to Property NSW On 1 July 2015, Sydney Harbour Foreshore Authority (SHFA) employees were transferred from the Department of Planning and Environment to the Department of Finance, Services and Innovation.
On 28 September 2015, the NSW Government announced that SHFA’s functions would be consolidated into existing expert whole-of-government agencies, including Property NSW and Destination NSW.
It was also announced that $200 million of funding will be reserved in the Restart NSW Fund for the upgrade of the Circular Quay wharves, with funds generated from the sale of SHFA’s assets that have been identified for divestment, including certain hotels and commercial office property.
From the date of the announcement, SHFA – as the Place Management division – became part of Property NSW within the Department of Finance, Services and Innovation and a transition period for the consolidation commenced.
SHFA remains an entity under its Act, serviced by Place Management and Property NSW.
More information on the Place Management division can be found in the Property NSW Annual Review 2015/16.
Our Charter 132 Sydney Harbour Foreshore Authority (SHFA) was formed in 1999 under the Sydney Harbour Foreshore Authority Act 1998 to consolidate the work and functions of City West Development Corporation, Darling Harbour Authority and Sydney Cove Authority.
Aims and objectives
Under its Act, SHFA is responsible for Sydney’s most historically and culturally significant waterfront locations. These responsibilities include the care, protection, management and promotion of this land and its important buildings.
Property NSW’s Place Management division supports SHFA’s responsibilities as the State’s premier place making agency. It owns, manages and transforms Sydney’s key State-significant heritage and cultural precincts—The Rocks and Darling Harbour—into vibrant, welcoming places that support, sustain and inspire locals and visitors.
Every year the Place Management division brings Sydney’s foreshore to life in The Rocks and Darling Harbour with a colourful mix of some of the city’s biggest and most popular events. The division also cares for the natural and built environments that make the precincts the popular destinations they are today— together they attract more than 40 million* people annually.
On behalf of SHFA, Place Management manages significant commercial and retail leases, provides security, cleaning, building maintenance and other asset management services, and cares for the public domain and over 100 heritage items.
Sydney Harbour Foreshore Authority 2015–16 SHFA also holds ownership of State-significant sites including Ballast Point, and manages other major waterfront assets around Sydney Harbour on behalf of other agencies, such as King Street Wharf. It owns land, parks, wharves and boardwalks at Pyrmont and is responsible for 19 head leases, 32 licences and 63 tenancies throughout Darling Harbour (including berthing licences), and 207 leases, 67 licences and 200 market stall holders in The Rocks.
SHFA also manages the Luna Park Reserve Trust.
*See People movements and how visitors are counted, following.
People movements and how visitors are counted Electronic people counters are installed in key locations in The Rocks and Darling Harbour.
The counters emit an infrared beam and each time a pedestrian breaks the beam a people movement is registered. Calibration and expansion calculations are applied to raw counts to ensure that final figures estimate total pedestrian flow. These figures include repeat visits made by visitors, workers and residents.
Monthly people movements in The Rocks and Darling Harbour Monthly people movements in The Rocks and Darling Harbour 3.0 133
2.5
2.0
1.5
1.0 People movements (millions) movements People 0.5
0.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2015-16
The Rocks Darling Harbour
In The Rocks, approximately 14.5 million people movements were recorded in 2015/16, with people enjoying the entertainment, shopping and dining experiences on offer. This was an increase in people movements of 2.5 per cent on the previous year.
In Darling Harbour, approximately 25.9 million people movements were recorded in 2015/16, with people enjoying cultural festivals, attractions and events in the precinct. This was a decrease in people movements of only 0.6 per cent on the previous year – an important achievement, given the significant transformation underway in the precinct.
Sydney Harbour Foreshore Authority 2015–16 Management and structure
Role of the Board SHFA’s Board is appointed in accordance with the Sydney Harbour Foreshore Authority Act 1998. The Board oversees SHFA’s policies, management and performance, sets strategic direction for the entity and monitors compliance with statutory requirements. The Board monitors organisational performance against strategic objectives. This is achieved both through written reports from management and direct interaction with senior management at quarterly Board meetings.
The Code of Conduct for Board Members prescribes procedures for disclosing and dealing with conflicts of interest.
As per recommendation 2.1 of TPP 09-2, a Board Charter is currently being developed.
The NSW Minister for Finance, Services and Property is responsible for the control and direction of SHFA.
SHFA’s CEO is responsible for the day-to-day management of SHFA in accordance with specific policies and general direction of the Board, and is subject to the control and direction of the Minister.
Board From 1 July 2015, SHFA’s Board consisted of Chair, The Hon Helen Coonan, and Board members Brett Newman, Deputy Secretary, Property NSW, Martin Hoffman, Secretary, Department of Finance, Services and Innovation, along with SHFA’s Chief Executive Officer, Sam Romaniuk, as an ex-officio Board member. 134 Board meetings and attendance Seven Board meetings were held in 2015/16. Dates and attendees are outlined in the table below.
Attendees 14 Jul 29 Jul 15 Sep 23 Sep 18 Dec 24 Mar 30 Jun TOTAL 2015 2015 2015 2015 2015 2016 2016 The Hon. Helen Coonan Yes Yes Yes Yes Yes Yes Yes 7/7 Catherine Gallagher Yes Yes Yes Yes Yes -- 5/5 Sam Romaniuk ----- Yes Yes 2/2 Brett Newman Yes Yes Yes Yes Yes Yes Yes 7/7 Anthony Lean (A/Secretary DFSI, prior to Martin Hoffman Yes Yes ----- 2/2 commencing) Martin Hoffman -- Yes Yes Yes Yes Yes 4/5
Sydney Harbour Foreshore Authority 2015–16 The Hon. Helen Coonan BA, LLB
Board member Chair, Sydney Harbour Foreshore Authority Co-chair, GRACosway Sydney Opera House Trust Chair, Crown Resorts Foundation Obesity Australia
Non-Executive Director Crown Resorts Limited Snowy Hydro Limited
Advisory Board Aon Risk Services Pty Limited J.P. Morgan
Appointed as the Sydney Harbour Foreshore Authority Chair from 1 July 2015 for a period of one year. Reappointed from 4 August 2016 for a period of one year.
Brett Newman MBA, LLM, LLB, BEc Deputy Secretary, Property and Advisory Group Chief Executive Officer, Government Property NSW 135 Board member Sydney Harbour Foreshore Authority
Appointed as a Sydney Harbour Foreshore Authority Board member on 22 June 2015 for a period of two years.
Martin Hoffman MBA (Hons), MAppFin, BEcon Secretary, Department of Finance, Services and Innovation
Board member Sydney Harbour Foreshore Authority
Pursuant to the Sydney Harbour Foreshore Authority Act 1998, the Secretary of the Department is an ex- officio Board member.
Sam Romaniuk B.Com, LLB, ACA Chief Executive Officer, Sydney Harbour Foreshore Authority Executive Director, Place Management, Property NSW
Board member Sydney Harbour Foreshore Authority
Appointed as Chief Executive Officer 22 December 2015. Pursuant to the Sydney Harbour Foreshore Authority Act 1998, the Chief Executive Officer is an ex-officio Board member.
Sydney Harbour Foreshore Authority 2015–16 Changes to the Executive in 2015/16 Catherine Gallagher, Chief Executive Officer, Sydney Harbour Foreshore Authority, left the service in December 2015 and Sam Romaniuk was appointed Chief Executive Officer on 22 December 2015.
For more information about Property NSW’s Executive team, refer to Property NSW’s Annual Review 2015/16.
Executive team – up to and including SHFA’s integration period into Property NSW
Catherine Gallagher Chief Executive Officer The Chief Executive Officer is responsible for the day-to-day management of SHFA in accordance with specific policies and general direction of the Board.
Catherine Gallagher was appointed CEO of SHFA in December 2012. She joined the Authority in March 2005. Catherine brought more than twenty years’ experience across retail, marketing and communication, cultural policy and international relations, in both the public and private sectors, to the role of CEO.
Catherine had oversight of some of Sydney’s most loved and visited events and played a strong supportive role in bringing business events to NSW, in particular through her role on the Board of Business Events Sydney. Supporting this was her expertise in retail with a renewed focus on strategic leasing for the precincts.
Deborah Dearing Executive Director, Place Renewal 136 The Place Renewal division was responsible for the strategic planning, heritage management, and delivery of capital projects and infrastructure maintenance to support the ongoing revitalisation of SHFA’s precincts to provide economic and social returns to the State.
Deborah holds a PhD in Architecture and other post-graduate qualifications. In October 2014, the Minister for Environment and Heritage appointed Deborah to the Heritage Council of NSW.
Deborah has extensive senior executive experience in both government and large private sector organisations, with expertise in planning, urban design, architecture, environmental law and property development.
Deborah was appointed Executive Director, Place Renewal in July 2013.
Michelle Weiss A/Executive Director, Place Management The Place Management division includes event programming and delivery, operational management of the precincts including security and high quality amenity services, strategic communications and stakeholder engagement, ministerial services, marketing and commercial enterprise and partnerships.
Michelle has worked in the private and public sectors, is experienced in internal and external communications and also has extensive public policy development and operations experience. She has expertise in media and issues management, change management, corporate planning, crisis communications, stakeholder relations, promotions, events, customer service and ministerial services.
Michelle Weiss joined SHFA in August 2013 and acted as Executive Director, Place Management until May 2016, when Sam Romaniuk was appointed to the role in the new Property NSW structure.
Sydney Harbour Foreshore Authority 2015–16 Arthur Tzortzis A/Executive Director, Place Services Chief Financial Officer Director of Major Assets The Place Services division provided core business services to SHFA. This included information technology, finance, procurement, legal, risk management, property accounting, major assets management and human resources.
Arthur Tzortzis commenced at the Authority in 2003 and was Acting Chief Financial Officer from April 2010. Arthur is a graduate of the MBA program at the Australian Graduate School of Management (Graduate Diploma in Management and Graduate Certificate in Management), has a Bachelor of Economics and is a current member of the Australian Society of Certified Practising Accountants.
Arthur was appointed Chief Financial Officer in August 2013 and acted as Executive Director, Place Services since September 2014.
Funds granted to non-government community organisations Each year, SHFA supports a diverse number of events which provide cultural experiences and community- based activities that enrich the lives of visitors to the precincts. These events help create the unique character of Darling Harbour and The Rocks. 137 SHFA continued its commitment to cultural organisations, community groups and commercial enterprises, developing, curating and coordinating numerous events in The Rocks and Darling Harbour during the year, including: • Chinese New Year celebrations • Chinese New Year Lantern Carnival • Sydney International Boat Show • Dragon Boat Spectacular • SmoothFM Festival of Chocolate • 33 school and community public performances • a substantial cultural program including 18 festivals from around the world. These festivals are among Australia’s leading multicultural celebrations, where visitors explore various cultures through arts, history, entertainment and great food.
These events bring a rich mix of activities for visitors to enjoy and provide opportunities for tenants to participate.
SHFA was also a significant partner for a number of organisations and provided significant on-the-ground operational support, in addition to the following funding: • Vivid Sydney ($660,000) • Sydney Festival ($150,000) • City of Sydney New Year’s Eve ($100,000) • NSW Wheelchair Sports ($15,000) • NSW Tourism Awards ($10,000) • Community and Cultural Festivals ($220,000 value-in-kind).
Sydney Harbour Foreshore Authority 2015–16 Legal change There were no changes to SHFA’s legislation during 2015/16.
Human resources As at 30 June 2016, the Authority had a total of 115 ongoing employees and 17 temporary employees.
There were no exceptional movements in wages, salaries or allowances, except for increases awarded across the public sector by the Industrial Relations Commission.
There were no industrial disputes lodged by the NSW Public Service Association with the Industrial Relations Commission of NSW. There was no working time lost due to industrial disputes during the year.
Requirements arising from employment arrangements There were no additional requirements for SHFA.
Workforce profile
30 June 2013 30 June 2014 30 June 2015 30 June 2016
Salary scale Total Non English Total Non English Total Non English Total Non English number of Women speaking number of Women speaking number of Women speaking number of Women speaking 138 employees background employees background employees background employees background
Salaries below clerical officer 0 0 0 0 0 0 0 0 0 0 0 0 grade 1; 21 year old or equivalent Salaries from clerical officer grade 1; 21 year old rate to below 1 0 0 0 0 0 0 0 0 0 0 0 minimum clerk grade 1 rate or equivalent Grade 1–2 or 18 5 5 12 3 2 12 5 2 9 3 2 equivalent Grade 3–5 or 15 10 2 10 9 3 16 14 5 16 14 5.3 equivalent Grade 6–9 or 53 30 3 54 29 2 42 23 1 46 27 3.1 equivalent Grade 10–12 or 43 14 4 45 18 6 40 15 3 36 16 4 equivalent Above grade 12 34 11 4 42 18 1 38 16 2 29 11 2.1 or equivalent Total number of employees in 164 70 18 163 77 14 148 73 13 136 71 16.5 established* positions
* Figures do not include casual employees. Part-time employees are counted as one.
The average total remuneration package of senior executives at the end of the 2015/16 reporting period was $172,632 (note, the average includes Senior Officer levels and Professional Officer Level 4 only; as at 30 June 2016, SHFA did not have any employees appointed to Executive roles, therefore they are not included in this figure).
The percentage of total employee-related expenditure in the reporting year that relates to senior executives is 25.4%.
Sydney Harbour Foreshore Authority 2015–16 Senior Executive Service profile 2012/13 2013/14 2014/15 2015/16 Number of SES positions 5 4 4 5 Number filled by females 1 3 3 0 Positions at SES Level 6 1 1 1 1* Positions at SES Level 5 0 0 0 0 Positions at SES Level 4 2 2 2 0 Positions at SES Level 3 1 1 1 0 Positions at SES Level 2 1 0 0 0
* This position was held by Sam Romaniuk, Chief Executive Officer of Sydney Harbour Foreshore Authority, appointed 22 December 2015 – there is no remuneration payable for this appointment.
Note: during the Restructure Management Plan, two Executive Director roles (SES 3 and SES 4) were occupied by use of contingency measures; Executive roles have been recruited and all are GSE compliant.
Note: substantive contracted Executive positions are reported, so that numbers are not inflated.
Senior Executive Service remuneration 139 2015 2016 Senior Executive Band Average Average Range $ Range $ remuneration $ remuneration $ Band 4 (Secretary) 430,451 - 497,300 441,201 - 509,750 Band 3 (Deputy Secretary) 305,401 - 430,450 313,051 - 441,200 Band 2 (Executive Director) 242,801 - 305,400 248,851 - 313,050 Band 1 (Director) 170,250 - 242,800 174,500 - 248,850 172,632
Workforce diversity In 2015/16, SHFA continued to promote Workforce Diversity and equal employment opportunity (EEO) through ongoing merit selection training, which was undertaken to ensure equity principles continue to be incorporated in recruitment and selection.
Equity principles also continue to be promoted through SHFA’s Code of Conduct, including through induction sessions for new employees and ethics training for existing employees.
Trends in the representation of EEO groups among SHFA employees are shown in the tables following.
SHFA has a large pool of staff who support operations across events and activations, and act as tour guides and interpretation officers at The Rocks Discovery Museum and the Chinese Garden of Friendship in Darling Harbour. As these roles are classified ‘casual’, they are not reflected in the statistics below.
During the year, SHFA exceeded its primary diversity goal, surpassing its benchmark 50 per cent for females at 55.2 per cent and closer, also, to its benchmark for ‘people whose first language spoken as a child was not English.’
Sydney Harbour Foreshore Authority 2015–16 Trends in representation of EEO groups % of total staff (excl. casuals)
EEO group Benchmark 2013/14 2014/15 2015/16 Women 50 47. 2 49.3 55.2 Aboriginal people and Torres Strait 2.6 1.2 0 0 Islanders People whose first language spoken 19.0 8.7 8.9 12.1 as a child was not English People with a disability N/A 0.6 0.7 0.7 People with a disability requiring work- 1.5 0 0 0 related adjustment
Trends in the distribution of EEO groups
EEO group Benchmark 2013/14 2014/15 2015/16
Women 100 97 93 93 Aboriginal people and Torres Strait 100 N/A N/A N/A Islanders People whose first language spoken 100 N/A N/A N/A as a child was not English 140 Personnel policies and practices During the reporting period, SHFA was governed by the policies and procedures of the Department of Finance, Services and Innovation (DFSI).
In 2015/16, the Human Resources functions of Recruitment, Induction, Training and Development, and Payroll were managed by DFSI, to reflect the centralised corporate services model under the agency cluster.
Multicultural initiatives The organisation’s workforce reflects the social diversity of the general workforce and significantly, this diversity is represented at all levels.
SHFA recognises that embracing multiculturalism and community relations builds leadership, supports organisation growth, facilitates collaboration and partnerships and creates social inclusion. In 2015/16, SHFA:
• had its draft Reconciliation Action Plan (RAP) endorsed by Reconciliation Australia, which aims to ensure that Aboriginal and Torres Strait Islander heritage and cultures and the principles of reconciliation are incorporated into the work that SHFA does • for the third year in a row, continued the Language on Land program for NAIDOC Week in July 2015; by encouraging tenant participation and displaying the Gadigal people’s traditional name for The Rocks, Tallawoladah, throughout the precinct, the project aims to put Aboriginal language back on land and celebrates the ongoing existence of Aboriginal people in Sydney. In 2016, the names Meeliyahwool (Campbells Cove) and Tar-ra (Dawes Point) were also introduced • finalised the process to rename the lawn area on the eastern side of the Museum of Contemporary Art, Circular Quay, Tallawoladah Place, endorsed by The Geographical Names Board of NSW
Sydney Harbour Foreshore Authority 2015–16 • continued to nurture its relationship with the Chinese community by hosting Chinese New Year celebrations at the Chinese Garden of Friendship and Darling Harbour • connected with young people by hosting Santa Fest—an family-friendly Christmas celebration in Darling Harbour in November and December, which also supports the Starlight Children’s Foundation—and the Sydney Children’s Festival in The Rocks in March 2016 • developed and publicly released an Aboriginal walking tour of The Rocks app, with leading Aboriginal filmmakers, writers and musicians, which aims to tell Aboriginal stories, past and present • completed the first of a potential three-year Darling Harbour Community Cultural Festivals emerging artist development program in partnership with Arts NSW.
SHFA’s annual calendar of events is filled with festivals that celebrate Australia’s rich heritage and cultural diversity, promoting social cohesion and community harmony. These events, like the Thailand Grand Festival in March, also provide economic benefit to Sydney and deliver platforms to showcase multicultural Sydney to the world. Despite the redevelopment of Tumbalong Park and subsequent loss of this significant event space for much of the year, SHFA continued to support the delivery of 18 community and cultural festivals in Darling Harbour.
Additionally, the Authority’s websites promoting The Rocks and Darling Harbour are integrated with Google Translate, making content available in more than 60 supported languages to ensure that information can be accessed around the world.
Disability inclusion action plans SHFA’s Disability Inclusion Action Plan focuses on improving readily identifiable physical access issues, 141 improving staff training, ensuring compliance with the Disability Discrimination Act 1992 (DDA) and formalising complaints procedures.
Initiatives undertaken during the year included: • completion of a new compliant ramp from Hickson Road into Bays 4 and 5 of the ASN building in The Rocks • completion of a concept design for incorporating public access into the commercial lease space in the The Rocks’ Cleland Bond building in preparation for a new tenant; the design will provide public access between Cambridge Walk and Playfair Street via the existing lift • completion of access improvements to 80 George Street as part of the adaptation of a former restaurant lease space • continued ongoing consultation with NSW Roads and Maritime Services for the proposed fully compliant access lift from The Rocks to the Sydney Harbour Bridge pedestrian walkway • actively reviewing, improving and managing access and inclusion viewing opportunities for New Year’s Eve through the provision of suitable locations, accessible temporary toilets, dedicated drop off zones and managed access for those persons or groups with a disability • continuing to use House with No Steps for the grounds maintenance contract for all Pyrmont parks and Ballast Point Park • sponsoring the Oz Day 10k wheelchair race, demonstrating SHFA’s engagement with activities that improve and promote the health and welfare of disability groups.
Sydney Harbour Foreshore Authority 2015–16 Work health and safety (WHS) In 2015/16, SHFA continued to take a proactive approach in managing the work health and safety (WHS) of all employees, other workers and visitors to its properties, sites and activations.
Specific activities undertaken by SHFA during the year include: • implementing the recommendations of the shoreline risk assessment • participating in Safe Work Australia Safety Week • a review of trading table arrangements at Argyle Stores • a review of hazardous chemicals storage, including LPG tenant storage requirements • conducting training for all contract managers in SHFA’s online contractor induction system, Visitor Rego, and undertaking induction for site visitors • reviewing and improving emergency evacuation procedures at Scarborough House, The Rocks.
With the amalgamation of SHFA into Property NSW and the Department of Finance, Services and Innovation (DFSI), work has also been undertaken to assist a review of the DFSI Safety Management System, which will replace the SHFA Safety Management System. A gap analysis of Government Property NSW WHS requirements has also been undertaken, to ensure a consistent approach in the delivery of WHS activities and information across the cluster.
During the period 2015/2016, there were 11 incidents reported, resulting in four claims reported under the SHFA workers compensation policy. There were no serious / notifiable incidents affecting staff.
WHS induction and training All relevant SHFA staff completed the mandatory e-learning modules, WHS awareness for staff and WHS for 142 managers. In January 2016, the Visitor Rego online Contractor Induction Program was launched. Since its inception, it has proved to be an effective resource for ensuring contractors are appropriately inducted onto SHFA sites.
As of 1 July 2016, the DFSI myCareer portal will replace SHFA’s WHS e-learning courses for employees and managers.
WHS consultation The WHS Consultative Committee has been active in the management of WHS issues. In 2015/16, the committee completed eight workplace inspections and implemented safety management initiatives for emergency evacuations, roof access and personal protective equipment.
Consumer response SHFA, as part of Property NSW, responded efficiently and effectively to feedback from customers, tenants and visitors to its precincts. During the year a total of 19,222 reports, requests, compliments and complaints were captured through the Customer Request Management System (CRMS).
This system was linked to a dedicated Customer Service Request Line which operated 24 hours, seven days a week and allowed Property NSW to identify key trends and issues within its precincts and respond accordingly.
Complaints received through the system related to various matters, including busking, noise and the removal of rubbish. Property NSW responded quickly and equitably to CRMS complaints, completing 91 per cent of all requests on time.
Sydney Harbour Foreshore Authority 2015–16 Additionally, Property NSW encouraged feedback from the general public via an online platform on its corporate website and responded to 772 emailed compliments, complaints and enquiries captured through this system. In 2015/16, Property NSW captured 13,608 posts on Darling Harbour Facebook and 4,025 posts on The Rocks Facebook. It also actioned 311 enquiries via the Darling Harbour website and 265 enquiries via The Rocks website.
Property NSW used feedback received during the year to improve customer service levels, including service delivery in its precincts.
Waste reduction initiatives SHFA continued to implement a number of waste reduction and recycling initiatives during the year, including: • utilising recycling bins—including organic, co-mingled, and paper and cardboard—in all office kitchens • installing additional recycling bins during events to encourage visitors to recycle • using recyclable, bioplastic, carbon-neutral coffee cups for The Rocks Aroma Festival, which contained messages encouraging users to recycle • providing water refill stations at major events • encouraging tenants to use the organic food processor in The Rocks Centre shared waste facility to process food waste, diverting it from landfill • implementing successful digital and social media marketing to promote events, reducing printed marketing material.
More information on Property NSW’s waste reduction initiatives under the NSW Government Resource Efficiency Policy (GREP) can be found in Property NSW’s Annual Review 2015/16. 143
Procurement accreditation Changes to NSW Government procurement practices launched in 2012 included a requirement that all government agencies be accredited by the NSW Procurement Board for goods and services procurement to various levels based on assessed procurement capability.
SHFA underwent an extensive external assessment process and has accordingly received Level 2B accreditation.
This enables SHFA to conduct its own procurement activities for contracts up to a value of $20 million, independent of the NSW Procurement branch of the Office of Finance and Services.
Sydney Harbour Foreshore Authority 2015–16 Consultants SHFA engages consultants for specialised work on an as needed basis, including for economic appraisals, financial services and planning advice. In 2015/16, SHFA engaged one consultant whose fees were $50,000 or more, as shown in the table below. These fees totalled $50,000 excluding GST.
Forty four (44) consultants whose fees were less than $50,000 were also engaged, with fees totalling $501,361.12 excluding GST.
Services provided by these consultants included advice on: • feasibility studies and the Expression of Interest process for 86–88 George Street, The Rocks (Phase 1) • a business case, and related peer review, to consider future usage options for 86–88 George Street and 1–5 and 7 Atherden Street, The Rocks • a review of SHFA’s business resilience framework • a financial offer analysis for the IMAX in Darling Harbour • BCA compliance for 1–5 Hickson Road, and BCA planning approval advice on the upgrade of the Cleland Bond Store, The Rocks • the provision of SICEEP accounting requirements • a view study analysis for the response to the NSW Heritage Council regarding the proposed Sydney Harbour Bridge Lift.
Contractor Contract title Category Value Economic appraisal of 86–88 Deloitte Access Economics George Street and 1–5 & 7 Finance / Property $50,000 144 Atherden Street, The Rocks Total $50,000
Credit card certification SHFA has a Corporate Credit Card Policy that complies with NSW Treasury’s Treasurer’s Directions. Cardholders are required to observe the policy and complete a reconciliation form each month, which is authorised by SHFA’s Chief Financial Officer or CEO.
SHFA currently has one credit card on issue with a limit of $5,000.
Sydney Harbour Foreshore Authority 2015–16 Payment of accounts for goods and services
AgedAged analysis analysis at theat theend endof each of eachquarter quarter
Between 30 Between 61 More than Current (i.e. Less than 30 and 60 days and 90 days 90 days within due date) days overdue overdue overdue overdue $'000 $'000 $'000 $'000 $'000 All Suppliers
September 2015 2,045 46 42 - -
December 2015 1,588 52 44 12 -
March 2016 1,894 43 - - -
June 2016 4,780 39 1 175 - Small Business Suppliers
September 2015 413 8 - - -
December 2015 229 6 - - -
March 2016 166 - - - - 145 June 2016 843 16 - - -
Sydney Harbour Foreshore Authority 2015–16 AccountsAccou nduets d orue paidor pa withinid with ineach eac hquarter quarter
September December March June Measure 2015 2015 2016 2016
All Suppliers Number of accounts due for payment 2,919 3,514 3,499 3,087
Number of accounts paid on time 2,614 3,192 3,160 2,869 Actual percentage of accounts paid on time (based on number of 89.6% 90.8% 90.3% 92.9% accounts) Dollar amount of accounts due for 39,732,505 47,096,916 41,220,747 35,137,762 payment Dollar amount of accounts paid on 38,087,288 45,075,014 39,252,458 34,148,078 time Actual percentage of accounts paid 95.9% 95.7% 95.2% 97.2% on time (based on $) Number of payments for interest on - - - - overdue accounts Interest paid on late accounts - - - -
Small Business Suppliers Number of accounts due for payment 440 520 497 375 to small businesses 146 Number of accounts due to small 440 520 496 375 businesses paid on time Actual percentage of small business accounts paid on time (based on 100.0% 100.0% 99.8% 100.0% number of accounts) Dollar amount of accounts due for 2,296,979 3,479,791 3,047,040 2,602,078 payment to small businesses Dollar amount of accounts due to 2,602,078 small businesses paid on time 2,296,979 3,479,791 3,044,073 Actual percentage of small business 100.0% 100.0% 99.9% 100.0% accounts paid on time (based on $) Number of payments to small - - - - business for interest on overdue accounts Interest paid to small businesses on - - - - late accounts
Commentary On time payment was impacted by the implementation of a new financial system, SAP by Design, from 1 July 2015.
Automated monitoring and reporting of accounts ensures that all accounts are tracked from the time the invoice is officially received by SHFA. Accounts over 15 days appear on a weekly report and are followed up by Accounts.
There were no instances in 2015/16 where penalty interest was incurred.
Sydney Harbour Foreshore Authority 2015–16 Public Interest Disclosures SHFA had no public official make a public interest disclosure in 2015/16. SHFA has a Public Interest Disclosure Reporting Policy, which is available on the intranet and was communicated to staff.
Privacy and Personal Information Act SHFA has developed a Privacy Management Plan in response to the Privacy and Personal Information Protection Act 1998. The Act aims to protect the privacy of individuals from inappropriate collection, storage, use and disclosure of personal information by NSW public sector agencies. The Privacy Management Plan is available on the Property NSW website.
The plan is based on 12 information principles that establish standards for using personal information in an open and accountable manner. The information protection principles apply to all employees, consultants and contractors engaged by SHFA.
There were no privacy complaints received during 2015/16.
Government Information (Public Access) 147 SHFA’s program for the proactive release of information involves ensuring compliance with the objectives of the Government Information (Public Access) Act 2009 and assessing disclosure of information against the requirements of the Act.
During the year, SHFA reviewed this program by revising its publication register, reviewing data in relation to decisions to assess whether information was being proactively and informally disclosed, and regularly reviewing the publications and resource centre on its corporate website.
As a result of this review, SHFA released the following information proactively: • updated policy documents • organisational information • SHFA-produced publications • contracts SHFA has entered into with the private sector.
SHFA received a total of 21 formal access applications (including withdrawn applications but not invalid applications). SHFA did not refuse any formal access applications.
Sydney Harbour Foreshore Authority 2015–16 The following tables show details of formal GIPA requests received by SHFA during 2015/16.
Table A: Number of applications by type of applicant and outcome Table A: Number of applications by type of applicant and outcome
Refuse to Information Refuse to deal confirm / deny Access Access Access Information Application already with whether granted in full granted in part refused in full not held withdrawn available application information is held Media 0 0 0 0 0 0 0 0
Members of 0 0 0 0 0 0 0 0 Parliament Private sector 6 1 0 0 0 0 0 3 business Not-for-profit 0 organisations 0 0 0 0 0 0 0 or community groups Members of the public 2 2 0 0 0 0 0 1 (application by legal representative) Members of the public 4 0 0 1 0 0 0 1 (other)
TableTa ble B B:: Nu Numbermber of app licofa tapplicationsions by type of app bylica ntypet and o ofutc oapplicantme and outcome
Refuse to Information Refuse to deal confirm / deny Access Access Access Information Application already with whether granted in full granted in part refused in full not held withdrawn 148 available application information is
held
Personal information 0 0 0 0 0 0 0 0 applications Access applications 12 3 0 1 0 0 0 5 (other than personal information applications) Access applications 0 0 0 0 0 0 0 0 that are partly personal information applicants and partly other
Sydney Harbour Foreshore Authority 2015–16 TableTable CC:: In Invalidvalid ap papplicationslications
Reason for invalidity Number of applications
Application does not comply with formal requirements (section 41 of the Act) 1
Application is for excluded information of the agency (section 43 of the Act) 0
Application contravenes restraint order (section 110 of the Act) 0
Total number of invalid applications received 1
Invalid applications that subsequently became valid applications 0
Table D: Conclusive presumption of overriding public interest against disclosure; matters listed in Schedule 1 of Act Table D: Conclusive presumption of overriding public interest against disclosure: matters listed in Schedule 1 Act
Number of times consideration used
Overriding secrecy laws 0
Cabinet information 0
Executive Council information 0
Contempt 0 149
Legal professional privilege 0
Excluded information 0
Documents affecting law enforcement and public safety 0 Transport safety 0 Adoption 0 Care and protection of children 0 Ministerial code of conduct 0 Aboriginal and environmental heritage 0
Sydney Harbour Foreshore Authority 2015–16 Table E: Other public intrest considerations against disclosure; matters listed in table to Section 14 Table E: Other public interest considerations against disclosure: matters listed in table to Section 14 of Act ofTa Actble E: Other public interest considerations against disclosure: matters listed in table to Section 14 of Act
NuNumber of occasiioons wwhhen appliclicatiioon not successful
Responsible and effective government 0
Law enforcement and security 0
IndividualIndividual rights,rights, judicialjudicial processesprocesses andand natural justice 0
Business interests of agencies and other persons 3
Environment, culture, economy and general matters 0
Secrecy provisions 0
Exempt documents under interstate Freedom of Information legislation 0
Table F: Timeliness Tablele F:F: TimTimelinliness
NNuumber of appliclicatioions
Decided within the statutory timeframe (20 days plus any extensions) 21 150 Decided after 35 days (by agreement with applicant) 0
Not decided within time (deemed refusal) 0
TToottall 21
Sydney Harbour Foreshore Authority 2015–16 Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome)
Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome) Table G: Number of applications reviewed under PartDecis 5io nof va theried Act (by type ofD ereviewcision u pandheld outcome) Total
Internal review Decision varied 0 Decision upheld 0 Total 0
Internal review 0 0 0 Review by Information Commissioner 0 0 0 Review by Information Commissioner 0 0 0 Internal review following recommendation under 0 0 0 Internal review following recommendation under Section 93 of Act 0 0 0 Section 93 of Act Review by Administration Decisions Tribunal Review by Administration Decisions Tribunal 0 0 0 (ADT) 0 0 0 (ADT)
ToTotall 0 0 0 0 0 0
Table H: Applications for review under Part 5 of the Act (by type of applicant) TableTa ble H:H: ApplicationsApplications fo rfor revie revieww und eunderr Part 5Part of t h5e ofAc thet (by Act type (by of atypepplic aofnt )applicant)
Number of applications for review Number of applications for review Applications by access applications 0
ApplicationsApplications by by persons access to whomapplications information the subject of access 0 0 application relates (see Section 54 of the Act) Applications by persons to whom information the subject of access 0 application relates (see Section 54 of the Act)
151
Sydney Harbour Foreshore Authority 2015–16 Luna Park Reserve Trust
Luna Park Reserve Trust is responsible for the care, control and management of the 3.13 hectares of Milsons Point that make up Luna Park Reserve.
Managed by SHFA, the Trust oversees a 40-year operating lease for the Luna Park site and manages the Heritage and Infrastructure Fund to conserve and improve the park’s heritage and infrastructure features. The Trust was established in 1990 when the Luna Park Site Act 1990 commenced under the Crown Lands Act 1989. Luna Park Reserve is dedicated under the Crown Lands Act for the purpose of public recreation, amusement and entertainment.
The Minister for Finance, Services and Property has administrative responsibility for these Acts as they relate to the Luna Park Reserve and oversees the Trust, any land dealings at Luna Park and its general administration.
The Minister for Planning is the consent authority for any development at Luna Park, which is listed as a Schedule 3 site (State significant) under State Environmental Planning Policy – Major Projects 2005. Luna Park Sydney Pty Ltd has complete operational responsibility for the day-to-day running of the park. The Trust works closely with Luna Park Sydney to ensure that the site remains a viable amusement park and entertainment precinct.
Luna Park Reserve Trust financial statements can be found on page 159.
152 Risk management and insurance activities SHFA saw a number of governance challenges in 2015/16, mainly relating to Government’s final conclusions regarding the future of SHFA. At the start of the financial year, SHFA was placed under the direct control of the Department of Financial Services and Innovation (DFSI). From 30 September 2015, a plan was instituted to progressively merge the substantive functions of SHFA with Government Property NSW (GPNSW) from 2016.
During the remainder of 2015, governance arrangements at SHFA were undertaken in-house. This included the management of SHFA-specific risks concerning its management of The Rocks and Darling Harbour precincts that were reported quarterly to the SHFA Audit and Risk Committee (ARC), the legislative compliance attestation and the NSW Treasury CFO Certification process. SHFA’s internal auditors, O’Connor Marsden, continued to examine the assurance controls according to the previously agreed 2015/16 audit plan. For 2016/17 and beyond, the internal audit function will become the responsibility of DFSI’s internal audit unit.
From January 2016, the transition of SHFA’s functions to GPNSW began with the merger of the Governance and ICT teams. From a risk management and insurance perspective, the focus became on the joint governance of both entities. In addition, from 30 November 2015, the NSW Treasury agreed to abolish the independent SHFA ARC and for DFSI to convene a committee that encompassed the entities that merged to form Property NSW. In February 2016, the new ARC met to consider the governance of the entities that form Property NSW. It subsequently met in April and May 2016.
Throughout 2015/16, SHFA faced risks relating to key project objectives, budgets and deadlines, government standards, laws and regulations, income or expenditure targets, delivery of services to internal and external customers, and the organisation’s reputation and brand in accordance with better practice guidelines laid out by the NSW Treasury and NSW Audit Office. In addition to this, the Governance team began to consolidate the risks of the combined agency from January 2016.
Sydney Harbour Foreshore Authority 2015–16 SHFA carries a comprehensive range of insurance cover through the Treasury Managed Fund (TMF). This insurance covers property, public liability, Directors’ insurance, and other contingencies. Unlike private-sector insurance policies, the TMF has limited exclusions. In particular, all properties owned or managed by SHFA are covered for their replacement value.
SHFA carries no officers’ professional liability insurance, however all public service officers are covered by a State indemnity against claims that do not involve negligence.
SHFA’s and Luna Park Reserve Trust’s Internal Audit and Risk Management Attestations can be found on the following pages.
See GPNSW’s 2015/16 Annual Report for more information about the GPNSW Audit and Risk Committee, and the GPNSW Internal Audit and Risk Management Attestation.
153
Sydney Harbour Foreshore Authority 2015–16 154
Sydney Harbour Foreshore Authority 2015–16 155
Sydney Harbour Foreshore Authority 2015–16 156
Sydney Harbour Foreshore Authority 2015–16 157
Sydney Harbour Foreshore Authority 2015–16 Digital Information Security Annual Attestation Statement 2015/16 I, Sam Romaniuk, am of the opinion that Sydney Harbour Foreshore Authority had an Information Security Management System (ISMS) in place during the 2015/16 financial year that is consistent with the Core Requirements set out in the NSW Government Digital Information Security Policy.
The controls in place to mitigate identified risks to the digital information and digital information systems of Sydney Harbour Foreshore Authority are adequate.
There is no agency under the control of Sydney Harbour Foreshore Authority that is required to develop an independent ISMS in accordance with the NSW Government Digital Information Security Policy.
Sam Romaniuk Chief Executive Officer Sydney Harbour Foreshore Authority
Exemptions and nil reports SHFA is exempt from reporting on the following matters for the reasons outlined below. 158 Reporting requirement Reason for exemption
Research and development No research and development activities were undertaken during 2015/16 SHFA did not dispose of any land with a value more than $5 million except Land disposal by way of public offering, such as auction, Expression of Interest or tender during 2015/16 Agreements with Multicultural SHFA does not have any agreements with Multicultural NSW NSW Implementation of price SHFA is not subject to determinations or recommendations of the determination Independent Pricing and Regulatory Tribunal of NSW SHFA does not control or hold shares in any subsidiaries within the meaning Disclosure of Subsidiaries of the Corporations Act 2001 (Cth.). SHFA CEO, Sam Romaniuk, undertook Minister-approved travel to the United States in May 2016. This was paid from the GPNSW Travel and Promotion Training budgets. Refer GPNSW report 2015/16 for more information. No other SHFA employees undertook overseas travel to promote or develop the business during the reporting period. All SHFA investment powers are in accordance with Part 1 of Schedule 4 of Investment performance the Public Authorities (Financial Arrangements) Act 1987. However, all cash reserves are held in Treasury Banking System (TBS) bank accounts. Liability management Not applicable, as SHFA does not have a level of debt greater than $20m. performance
End of Sydney Harbour Foreshore Authority’s statutory information 2015/16.
Sydney Harbour Foreshore Authority 2015–16 Sydney Harbour 159 Foreshore Authority
• Financial statements for the year ended 30 June 2016 – Luna Park Reserve Trust
Luna Park Reserve Trust 2015–16 160
Luna Park Reserve Trust 2015–16 161
Luna Park Reserve Trust 2015–16 162
Luna Park Reserve Trust 2015–16 163
Luna Park Reserve Trust 2015–16 164
Luna Park Reserve Trust 2015–16 165
Luna Park Reserve Trust 2015–16 166
Luna Park Reserve Trust 2015–16 167
Luna Park Reserve Trust 2015–16 168
Luna Park Reserve Trust 2015–16 169
Luna Park Reserve Trust 2015–16 170
Luna Park Reserve Trust 2015–16 171
Luna Park Reserve Trust 2015–16 172
Luna Park Reserve Trust 2015–16 173
Luna Park Reserve Trust 2015–16 174
Luna Park Reserve Trust 2015–16 175
Luna Park Reserve Trust 2015–16 176
Luna Park Reserve Trust 2015–16 177
Luna Park Reserve Trust 2015–16 178
Luna Park Reserve Trust 2015–16 179
Luna Park Reserve Trust 2015–16 180
Luna Park Reserve Trust 2015–16 181
Luna Park Reserve Trust 2015–16 182
Luna Park Reserve Trust 2015–16 Appendix C Teacher Housing Authority 183 of NSW Annual Report 2015–16
• Financial statements for the year ended 30 June 2016 • Statutory information
Teacher Housing Authority of NSW Annual Report 2015–16 184 This page intentionally left blank
Teacher Housing Authority of NSW Annual Report 2015–16 2015–16 ANNUAL REPORT
TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES
Contents
The Hon. Dominic Perrottet MP Contents 1 Minister for Finance, Services and Property Purpose 2 52 Martin Place Aims and objectives 2 SYDNEY NSW 2000 Charter 2 Achievements in 2015–16 3 Dear Minister Focus for 2016–17 3 On behalf of the Teacher Housing Authority of New Chairpersons Report 4 South Wales (THA), we take pleasure in presenting the Authority Membership 5 following report on THA activities for the year ending Members of the Authority 5 30 June 2016 for tabling in Parliament. Chairperson 5 The report has been prepared in accordance with the Annual Reports (Statutory Bodies) Act 1984 and the Deputy Chairperson 5 regulations pursuant to this Act. Members 5 It also includes financial statements as required under Authority Meetings 6 the Public Finance and Audit Act 1983 as amended. Related Entity 6 Tenancy Services Management 7 Financial Management 11 Financial Performance 11 Capital Program 11 Land Owned or Occupied 11 Brett Newman Chairperson Account Payment Performance 12 Credit Card Certification 12 Loan Facility 12 Benchmarking 12 Key Performance Indicators 12 Operating Results 12 Philip Shelley Key Financial Statistics Four Year Trend 12 General Manager Performance against Budget 13 31 October 2016 Account Payment Performance 14 Key Performance Indicators 15 Weekly Rental Amounts 15 Capital Delivery 16 Stakeholders 16 Human Resources 16 Other Activities 17 Appendices 20 Financial Statements 30 Notes 38 Index 56 Access to Services 57
1 Purpose Support the Department of Education (DE) to deliver education in New South Wales by providing teachers with a quality housing service, in rural and remote communities, where the private rental market is considered to be inadequate for their needs.
THA’s key result areas are: • Tenancy Services, • Asset Management; • Financial and Strategic Management.
Aims and objectives The aims and objectives of the THA are to provide:
• a responsive, dependable, empathetic and competent service; • a high standard of housing stock; • a relevant and efficient organisation covering all aspects of tenancy service and asset management; and • an organisation that engages its workforce, creates a culture of continuous improvement, with appropriate resourcing and informed decision making.
Charter The Teacher Housing Authority of New South Wales is a statutory corporation constituted under the Teacher Housing Authority Act 1975 (THA Act) as amended. Under the Act, the principal object of THA is to provide and maintain suitable and adequate housing accommodation for teachers. THA also: • initiates, promotes, commissions and undertakes surveys and investigations into the housing needs of teachers; • undertakes, promotes and encourages research into the design, construction and maintenance of housing suitable for teachers; • plans the provision of a comprehensive and coordinated housing service for teachers throughout rural and remote New South Wales; • provides, conducts, operates and maintains a housing service for teachers; and • advises and makes reports and recommendations to the Minister in respect of matters relating to the housing of teachers.
2 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Purpose Support the Department of Education (DE) to deliver education Achievements in 2015–16 in New South Wales by providing teachers with a quality housing Achievements Pages service, in rural and remote communities, where the private rental market is considered to be inadequate for their needs. • Completed the construction of 20 new residences, including ten ‘flexible accommodation’ units, a design that won the Secretary’s 2016 award for innovation. 10, 20 THA’s key result areas are: • Introduced Net Promoter Score as the method for measuring customer satisfaction. Achieving a score of +42 for the year to 30 June 2016. 9 • Tenancy Services, • Sold 10 residences (9 properties) contributing $1.7 million towards future capital projects. 10 • Asset Management; • Progressed with an innovative flexible design that provides accommodation • Financial and Strategic Management. to suit singles, couples or families. 20 • Implemented a new operating platform, SAPbyDesign, commissioned in time for the beginning of the Aims and objectives 2016 –17 financial year, a platform that will improve financial reporting. 18 The aims and objectives of the THA are to provide: • Performed major works on 50 residences, at a cost of $2.2 million, improving the quality and remaining useful life of these assets. 11 • a responsive, dependable, empathetic and competent service; • Instigated a revised valuation exercise that reduced the cost of valuations and rental assessments • a high standard of housing stock; allowing more to be invested in the portfolio. 39 • a relevant and efficient organisation covering all aspects of tenancy service and asset management; and • Continued to partner with the University of Sydney comparing the biophysical performance and achieved satisfaction outcomes of the Broken Hill Eco Village against conventional residences in that town. 10 • an organisation that engages its workforce, creates a culture of continuous improvement, with appropriate • Implemented a Strategic Asset Plan, one that offers teachers greater choice of where they can live, enhancing resourcing and informed decision making. their experience while improving overall teacher utilisation and an improved ability to manage cost. 10 • Determined exposure to long-term maintenance expenditure based upon typical component Charter lifecycle and asset quality, supporting previous benchmarking analysis. 18 The Teacher Housing Authority of New South Wales is a statutory corporation constituted under the Teacher Housing Authority Act 1975 (THA Act) as amended. Focus for 2016–17 Under the Act, the principal object of THA is to provide and maintain suitable and adequate housing • Continue implementing the Strategic Asset Plan, including the planning and construction of new residences accommodation for teachers. THA also: including flexible designs. • initiates, promotes, commissions and undertakes surveys and investigations into the housing needs of teachers; • Liaise with customers and stakeholder groups to ensure their expectations are met or exceeded, including • undertakes, promotes and encourages research into the design, construction and maintenance of housing hosting a conference for local housing representatives. suitable for teachers; • Further integrate with Property NSW to benefit from cost efficiencies and to offer development opportunities • plans the provision of a comprehensive and coordinated housing service for teachers throughout rural to employees. and remote New South Wales; • provides, conducts, operates and maintains a housing service for teachers; and • advises and makes reports and recommendations to the Minister in respect of matters relating to the housing of teachers.
2 3 Chairperson’s Report
Teacher Housing Authority (THA) has had a successful Significantly, we began implementing the Strategic year, providing housing to more than 1,400 teachers in Asset Plan we developed last year. Our plan offers rural and remote NSW, where their needs cannot be teachers a greater choice of where they can live, met by the private market. This housing is vital to the enhancing their experience while improving overall provision of quality education services in these areas. asset and cost management. Throughout the year, we have focused on improving This has been underpinned by cross-business our customer service, delivering innovative new projects to successfully implement SAPbyDesign housing and practicing thorough asset and financial and Objective, providing improved financial and management. We have achieved significant outcomes records management and integration with Property in these areas. NSW systems. The net promoter score, which measures customer In 2016–17, we look forward to continually improving satisfaction, is at a healthy positive 42. This result is our customer service by hosting conferences for local particularly pleasing as, among other key performance housing representatives, and to further integrate with indicators, the survey measures the service we provide Property NSW to benefit from asset management and to teachers who are new to our accommodation. The cost efficiencies. services THA provides play a key role in enabling I would like to acknowledge the valuable contribution teachers to have a positive experience in a new of departing members Mark Anderson, Trish Webb community. and Deb Marten, and I extend a warm welcome Overall we invested almost $5 million building to Kelly Edmunds, Richard Wiseman and Dennis new residences in Wilcannia, Coonamble and Armstrong who will join Teacher Housing late in 2016. Brewarrina, including eight flexible-design residences. I also acknowledge the work and contributions of This innovative design allows a duplex to be Mark Byrne and Katrina Jay who combined have reconfigured as either two, two-bedroom units, or one served Teacher Housing for more than 20 years. three-bedroom house and one single-bedroom unit. Finally, I would like to extend my appreciation to the The design is cost efficient and meets varying demand staff at Teacher Housing who continue to be hard from singles, couples and families – providing working and enthusiastic in their endeavours to provide opportunity to improve utilisation. The project team, led a quality service that underpins the educational needs by Asset Manager, John Marsi, won a Secretary’s of children in rural and remote areas. Award for innovation this year. Additionally, THA performed major works on 50 residences, improving the quality and remaining life of these assets. Proceeds from the sale of 10 residences contributed $1.7 million towards future capital projects.
Brett Newman Chairperson Teacher Housing Authority
4 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Chairperson’s Report Authority Membership Members of the Authority Seven members constitute the THA; four are Teacher Housing Authority (THA) has had a successful Significantly, we began implementing the Strategic appointed by the Governor, and three are Chairperson year, providing housing to more than 1,400 teachers in Asset Plan we developed last year. Our plan offers ex officio. rural and remote NSW, where their needs cannot be teachers a greater choice of where they can live, Brett Newman met by the private market. This housing is vital to the enhancing their experience while improving overall Of the four members appointed by the Governor: MBA, LLM, LLB, BEs provision of quality education services in these areas. asset and cost management. • one is nominated by the Minister for Family Chairperson since August 2013. Throughout the year, we have focused on improving This has been underpinned by cross-business and Community Services (and is Appointed by the Secretary DFSI, Brett is the our customer service, delivering innovative new projects to successfully implement SAPbyDesign Deputy Chairperson); Deputy Secretary of the Property and Advisory Group, housing and practicing thorough asset and financial and Objective, providing improved financial and • one is nominated by the Secretary, DE, being a group of DFSI related entities that includes: THA, management. We have achieved significant outcomes records management and integration with Property an officer of that department serving in the Sydney Harbour Foreshore Authority, Waste Assets in these areas. NSW systems. western or north-western region of the state; Management Corporation, Government Property The net promoter score, which measures customer In 2016–17, we look forward to continually improving • one is nominated by the Managing Director of NSW, NSW Public Works Facilities Management, satisfaction, is at a healthy positive 42. This result is our customer service by hosting conferences for local the NSW TAFE Commission, being a senior Valuation Services (formerly part of Land and particularly pleasing as, among other key performance housing representatives, and to further integrate with financial manager of that Commission; and Property Information (LPI)) and Public Works Advisory. indicators, the survey measures the service we provide Property NSW to benefit from asset management and • one is nominated by the Minister for to teachers who are new to our accommodation. The cost efficiencies. Education on the recommendation of the Deputy Chairperson services THA provides play a key role in enabling NSW Teachers Federation. I would like to acknowledge the valuable contribution teachers to have a positive experience in a new Mark Byrne of departing members Mark Anderson, Trish Webb Of the three ex-officio members: community. MM, MBA and Deb Marten, and I extend a warm welcome • one is the nominee of the Secretary of the Overall we invested almost $5 million building to Kelly Edmunds, Richard Wiseman and Dennis Department of Finance, Services and Deputy Chairperson since January 2007. new residences in Wilcannia, Coonamble and Armstrong who will join Teacher Housing late in 2016. Innovation (DFSI), being an officer of that Nominated by the Minister for Family and Community Brewarrina, including eight flexible-design residences. I also acknowledge the work and contributions of department (and is Chairperson); Services and appointed by the Governor, Mark is the This innovative design allows a duplex to be Mark Byrne and Katrina Jay who combined have • one is appointed by the Secretary, DE; and Regional Asset Director, South Eastern Region, for the reconfigured as either two, two-bedroom units, or one served Teacher Housing for more than 20 years. • one is the THA General Manager. NSW Land and Housing Corporation. three-bedroom house and one single-bedroom unit. Finally, I would like to extend my appreciation to the The design is cost efficient and meets varying demand Under the Teacher Housing Authority Act 1975, staff at Teacher Housing who continue to be hard Members from singles, couples and families – providing members are responsible for determining THA working and enthusiastic in their endeavours to provide opportunity to improve utilisation. The project team, led policies and ensuring the activities of the THA are a quality service that underpins the educational needs Katrina Jay by Asset Manager, John Marsi, won a Secretary’s carried out properly and efficiently. The General of children in rural and remote areas. B Bus (Acc) Dip. Ed, CA Award for innovation this year. Manager controls and manages THA activities. Member since January 2002. Additionally, THA performed major works on 50 residences, improving the quality and remaining life Nominated by the Managing Director of TAFE NSW of these assets. Proceeds from the sale of and appointed by the Governor, Katrina is the 10 residences contributed $1.7 million towards future Manager, Strategic Planning at the Western Institute capital projects. of TAFE. Deborah (Deb) Marten Brett Newman BA, Dip Ed. Chairperson Teacher Housing Authority Member since January 2012. Nominated by the Minister for Education and appointed by the Governor, Deb is an elected organiser, for the Riverina District and for the NSW Teachers Federation.
4 5 Mark Anderson Authority Meetings BA. Dip Ed. M Ed. The Authority met on four occasions during 2015–16 Member from April 2015 to February 2016. with attendances as follows: Appointed by the Secretary of the Department of Eligible Education Mark was the Director People and Careers Name to Attend Attended at that Department until February 2016. Brett Newman 4 4 Kate Sheehan Mark Byrne 4 4 BA. Dip Ed. M Ed. Mark Anderson/ 4 3 Member since February 2016. Kate Sheehan1 Appointed by the Secretary of the Department of Trish Webb2 2 2 Education Kate is the acting Director People and Katrina Jay3 4 0 Careers at that Department. Deb Marten 4 4 Trish Webb Philip Shelley 4 4 Dip Ed. 1. On 4 May 2016 Claudia Ranieri attended as proxy for Member from August 2015 to February 2016. Kate Sheehan (this position is able to nominate a proxy). 2. Pending an appointment this position was vacant from Nominated by the Minister for Education and Feb – June) (this position is unable to nominate a proxy). appointed by the Governor Trish was the Director 3. Due to prolonged illness Katrina Jay was unable to Public Schools, Far West for the Department attend meetings during the year (this position is unable to of Education. nominate a proxy). Philip Shelley Related Entity B. Bus, Grad Dip Mgt, MBA THA is a non-controlled related entity of the Member since June 2008. Department of Finance, Services and Innovation (DFSI) and is grouped within Property NSW. Philip is the General Manager of the Teacher Housing Authority of NSW and Executive Member. Property NSW is the new brand name encompassing the entities of Government Property NSW (GPNSW), Sydney Harbour Foreshore Authority (SHFA), Teacher Housing Authority of NSW (THA) and Waste Assets Management Corporation (WAMC). This provides THA with corporate support including: business and administration systems; HR policies, including employee development programs; matters concerning audit, risk and governance; ministerial and executive services and legal counsel. THA submits reports to Property NSW for inclusion in DFSI agency cluster reporting to support DFSI, the Secretary and the Minister with reporting to the Expenditure Review Committee (ERC) and Cabinet on behalf of all agencies for which the Minister is responsible for.
6 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Mark Anderson Authority Meetings Tenancy Services Management BA. Dip Ed. M Ed. The Authority met on four occasions during 2015–16 DE does not provide a rental subsidy to NSW TAFE Member from April 2015 to February 2016. with attendances as follows: Housing allocated teachers or to casual teachers. During the year 454 teachers and 90 non-teachers Appointed by the Secretary of the Department of Eligible (private tenants) were allocated housing Education Mark was the Director People and Careers Name to Attend Attended (newly signed leases). Local Housing Representatives at that Department until February 2016. When new to a rural or remote community, it can be a Brett Newman 4 4 This represents an annual tenant-turnover rate of 41% daunting time for a teacher, particularly early in their Kate Sheehan which is significantly higher than the industry norm. Mark Byrne 4 4 career. Support from a teacher, experienced in the As such, it is difficult to compare and benchmark BA. Dip Ed. M Ed. local area and with knowledge of housing procedures, Mark Anderson/ 4 3 THA costs, including maintenance, against the broader 1 can be invaluable. Member since February 2016. Kate Sheehan industry and other government agencies that provide Appointed by the Secretary of the Department of Trish Webb2 2 2 residential accommodation (refer Benchmarking To provide this support THA oversees a network of page 12). Local Housing Representatives. These representatives Education Kate is the acting Director People and 3 Katrina Jay 4 0 are teachers who are elected by the local Teacher Careers at that Department. Of the residences allocated to teachers, 273 (60%) Deb Marten 4 4 Association as the THA representative. They provide were allocated to teachers appointed to temporary Trish Webb their time voluntarily and play an important role in Philip Shelley 4 4 teaching positions. Dip Ed. communicating with THA, school principals and 1. On 4 May 2016 Claudia Ranieri attended as proxy for teachers who live in THA accommodation. Member from August 2015 to February 2016. Kate Sheehan (this position is able to nominate a proxy). Rents As well as being a point-of-contact for newly 2. Pending an appointment this position was vacant from Properties managed by THA are tenanted and Nominated by the Minister for Education and Feb – June) (this position is unable to nominate a proxy). appointed teachers they advise THA on allocations administered under the Residential Tenancies Act appointed by the Governor Trish was the Director 3. Due to prolonged illness Katrina Jay was unable to (particularly in relation to proposed sharing 2010. Under the THA Act, the Treasurer determines Public Schools, Far West for the Department attend meetings during the year (this position is unable to arrangements) and keep abreast of particular teacher nominate a proxy). the setting of rents for THA property and approves the of Education. needs and demands. Local Housing Representatives THA charging a market rent for each leased property. liase with THA staff on policy matters and proposed Philip Shelley Related Entity THA engaged Land and Property Information (LPI) capital programs. B. Bus, Grad Dip Mgt, MBA to determine a market rent for each residence. THA is a non-controlled related entity of the Every three years THA hosts a conference for these Member since June 2008. Department of Finance, Services and Innovation Revised market rents were effective 1 May 2016 representatives. The conference provides opportunity (DFSI) and is grouped within Property NSW. and were applied in accordance with the Residential Philip is the General Manager of the Teacher Housing for: THA to say thank you to this group, to share ideas, Tenancies Act 2010. Once applied the average Authority of NSW and Executive Member. Property NSW is the new brand name encompassing for representatives to meet THA staff and generally the entities of Government Property NSW (GPNSW), increase was 2.13%, with 22.7% of residences review and discuss the service THA provides. Sydney Harbour Foreshore Authority (SHFA), Teacher experiencing an increase, 8.2% a decrease and Housing Authority of NSW (THA) and Waste Assets 69.1% experienced no change. Managing Agents Management Corporation (WAMC). Teachers who believe that an increase in rent is THA use local managing agents to provide an This provides THA with corporate support including: excessive or the rent does not reflect the rental market accessible and responsive local tenancy management business and administration systems; HR policies, can appeal to the THA for review, or seek a hearing service to tenants on behalf of THA. with the NSW Civil and Administrative Tribunal. including employee development programs; matters Managing Agents receive a monthly management concerning audit, risk and governance; ministerial and fee for each property they manage. Their role executive services and legal counsel. Rental Subsidies includes: holding keys, arranging maintenance, Rental subsidies are offered to teachers who teach THA submits reports to Property NSW for inclusion conducting property inspections and administration of in four (incentive) transfer-point, six transfer-point in DFSI agency cluster reporting to support DFSI, lease agreements. and eight transfer-point schools. These are schools the Secretary and the Minister with reporting to the As at June 2016, THA had 70 individual managing the DE considers advantageous for the purpose of Expenditure Review Committee (ERC) and Cabinet agents. Five THA properties are administered without recruitment and retention to offer various benefits on behalf of all agencies for which the Minister is a managing agent; these are Bigga (1), Lord Howe in addition to a teacher’s salary, so as to encourage responsible for. Island (3) and Wambangalang (1). teachers to teach in those schools. THA administers the rental subsidy on behalf of DE and DE pays the rental subsidy to THA on behalf of those teachers.
6 7 Vacancy/Occupancy Rate d) 90 longer-term applications, these teachers are in private rental accommodation and have requested Where a property is vacant due to a lack of teacher that their application remain active as they would demand, THA (through its managing agents) lease that like to be considered for THA accommodation property to a private tenant. should it become available. Of these: The average occupancy rate for the year was 87.8% i. 18 applications are from teachers appointed to up from 85.0% in 2014–15. The teacher utilisation rate, schools which attract one or two transfer-points a more accurate efficiency indicator, increased from (these communities generally have an adequate 73.9% to 76.8%. Factors influencing the vacancy private rental market ), as such THA does not rate include: intend to provide additional accommodation in • the difficulty in attracting teachers to school these communities; and residences, that are situated in isolated ii. six applications are from teachers appointed to communities – are not required by teaching staff schools that attract four-transfer points; these – but may be in the future; communities generally have a partly-adequate • declining student enrolments, in some communities private rental market; (in line with a decline in population); iii. sixty-six applications are from teachers • a high tenant turnover rate (41%); appointed to schools that attract four • a high vacancy rate during the summer (incentive) transfer points, six and eight holiday period; transfer-points, these communities generally • the number of residences that are held vacant for have a partly-adequate private rental market teachers (sometimes for lengthy periods), following and the teacher would like to relocate to THA advice from a school that an appointment to a accommodation if it were to become available school in the locality is imminent; and (40% of these are for housing in Broken Hill). • the need to leave residences vacant pending Throughout categories C and D are teachers disposal action. who currently reside in THA accommodation in another community to the school where they are Housing Demand appointed. This group includes those who are in THA THA assesses and reviews outstanding demand at the accommodation which may be inadequate for their end of April and November each year. This coincides family’s needs. with the beginning and end of the school year. As at Due to the individual needs of each teacher, unsatisfied 30 April 2016, there were 269 unsatisfied applications applications for accommodation are difficult to classify for accommodation: and contain a degree of subjectivity. Notwithstanding a) 10 were recent applications that were being this, unsatisfied demand is one of a number of factors processed at the time; THA uses when determining new supply. b) 17 applications were from teachers who were housed in THA accommodation and applied so as Field Trips to relocate to another THA residence in that town; Tenancy Services Officers undertake up to two field c) 152 applications were from teachers who resided trips each year to increase their knowledge of their in private accommodation. These teachers applied property portfolio. Field trips play an integral role for accommodation as it is the means of obtaining in developing and maintaining relationships with a rental subsidy from the DE. Of these applications tenants, principals, managing agents, local housing 41% are for housing in Broken Hill. In such areas representatives and other key stakeholders in the private rental is considered partly-adequate communities where THA provides accommodation. and THA supplements the market; and Welcome Kit – Tenant Handbook A welcome kit, designed to allow a tenant to keep all material relating to their accommodation in one place, is provided to all new teacher-tenants. The kit includes a Tenant Handbook that provides teachers with all the important and practical information about their tenancy. The handbook can also be viewed and downloaded from the THA website.
8 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Vacancy/Occupancy Rate d) 90 longer-term applications, these teachers are in Customer Satisfaction The results from teachers new to THA accommodation private rental accommodation and have requested since 1 January 2015 – 30 June 2016 are as follows. Where a property is vacant due to a lack of teacher During the year the Net Promoter Score (NPS) that their application remain active as they would demand, THA (through its managing agents) lease that was adopted as a new method of measuring like to be considered for THA accommodation Item Number Percentage property to a private tenant. customer satisfaction. This method, replaced the should it become available. Of these: SERVQUAL method (used since 2009) for measuring Surveys Sent 762 The average occupancy rate for the year was 87.8% i. 18 applications are from teachers appointed to customer satisfaction. Responses received 358 47% up from 85.0% in 2014–15. The teacher utilisation rate, schools which attract one or two transfer-points a more accurate efficiency indicator, increased from (these communities generally have an adequate The NPS provides an index, ranging from −100 to Margin of error (at 95% 73.9% to 76.8%. Factors influencing the vacancy private rental market ), as such THA does not +100 that measures the willingness of customers to confidence interval) 3.9 rate include: recommend a product or service to others. It is used intend to provide additional accommodation in Detractors (1–6) 60 17% • the difficulty in attracting teachers to school these communities; and as a proxy for gauging overall customer satisfaction. residences, that are situated in isolated Passives (7–8) 99 28% ii. six applications are from teachers appointed to Conducted quarterly, a survey is emailed to those communities – are not required by teaching staff schools that attract four-transfer points; these teachers who have moved into a THA residence in Promoters (9–10) 210 59% – but may be in the future; preceding quarter. communities generally have a partly-adequate Comments received 80 • declining student enrolments, in some communities private rental market; The survey takes five minutes to complete and the (in line with a decline in population); Overall Score iii. sixty-six applications are from teachers format is compatible with smart phones, tablets and (Promoters minus Detractors) 59-17= +42 • a high tenant turnover rate (41%); appointed to schools that attract four PCs. One question drives the score: “Based on your • a high vacancy rate during the summer (incentive) transfer points, six and eight experience with Teacher Housing how likely are you to Given the importance housing is to a teacher’s overall holiday period; transfer-points, these communities generally recommend us to a colleague?” Teachers answer with experience the results are generally pleasing. a score between 1 and 10 (with 1, being extremely • the number of residences that are held vacant for have a partly-adequate private rental market The method also provides opportunity for teachers unlikely to recommend, and 10 being extremely teachers (sometimes for lengthy periods), following and the teacher would like to relocate to THA to comment on the service received. Actions from likely to recommend. advice from a school that an appointment to a accommodation if it were to become available comments received include: improving response rates school in the locality is imminent; and (40% of these are for housing in Broken Hill). Responses are segmented into: Detractors (1–6); to emails/messages; and addressing outstanding • the need to leave residences vacant pending Throughout categories C and D are teachers Neutrals (7–8); and Promoters (9–10). Neutrals maintenance requests with managing agents. disposal action. who currently reside in THA accommodation in are excluded, and the overall score is determined another community to the school where they are by the percent of Promoters minus the percent of Housing Demand appointed. This group includes those who are in THA Detractors. As such the score will always be between THA assesses and reviews outstanding demand at the accommodation which may be inadequate for their –100 and +100. end of April and November each year. This coincides family’s needs. with the beginning and end of the school year. As at Due to the individual needs of each teacher, unsatisfied 30 April 2016, there were 269 unsatisfied applications Asset Management applications for accommodation are difficult to classify for accommodation: At 30 June 2016 THA’s portfolio had a written down book value of $ 163.9 million. The portfolio consisted and contain a degree of subjectivity. Notwithstanding of 1352 properties, including 107 managed residences that are owned by the Department of Education. a) 10 were recent applications that were being this, unsatisfied demand is one of a number of factors A breakdown of the portfolio is included in the Key performance indicators on page 15. processed at the time; THA uses when determining new supply. b) 17 applications were from teachers who were THA provides accommodation in 207 communities, the average number of residences in each community is housed in THA accommodation and applied so as Field Trips 6.5 with a more detailed breakdown in the table below: to relocate to another THA residence in that town; Tenancy Services Officers undertake up to two field Number of Number of Percent of c) 152 applications were from teachers who resided trips each year to increase their knowledge of their Community Presence Communities Properties Portfolio in private accommodation. These teachers applied property portfolio. Field trips play an integral role for accommodation as it is the means of obtaining in developing and maintaining relationships with More than 50 properties 4 227 17% a rental subsidy from the DE. Of these applications tenants, principals, managing agents, local housing Between 30–49 properties 5 185 14% 41% are for housing in Broken Hill. In such areas representatives and other key stakeholders in the private rental is considered partly-adequate communities where THA provides accommodation. Between 20–29 properties 5 116 9% and THA supplements the market; and Between 10–19 properties 24 334 24% Welcome Kit – Tenant Handbook Between 5–9 properties 42 271 20% A welcome kit, designed to allow a tenant to keep all material relating to their accommodation in one Between 2–4 properties 47 139 10% place, is provided to all new teacher-tenants. The kit With a single property 80 80 6% includes a Tenant Handbook that provides teachers Grand Total 207 1352 100% with all the important and practical information about their tenancy. The handbook can also be viewed and downloaded from the THA website.
8 9 Strategic Asset Management Plan Capital Program THA has a Strategic Asset Management Plan which The Capital Program is focused on providing identifies residences that are surplus to need, replaces accommodation in the more isolated regions of NSW, those that are in poor locations or at the end of their where the private rental market does not adequately economic lives and provides for new supply to meet meet the needs of teachers. The program is funded a portion of any unmet demand. from a combination of operating income, proceeds from the sale of surplus assets, and the annual State The plan considers the adequacy of the private rental Government contribution. markets where THA provides accommodation and the level of incentive the Department of Education provides During the year THA completed the construction of to schools so as to assist attracting and retaining twenty new residences (refer Appendix 1 on page 20). teachers at those schools. The plan has two aspects: Projects are not considered work-in-progress • Rural Strategy: provides for teachers to choose to until expenditure, beyond the acquisition of land, commute from a larger community to where they has been incurred. teach. In many instances teachers prefer a reasonable daily commute to living in an isolated Land Purchases community. This choice supports the Department During the year THA purchased one block of land in of Education’s recruitment and retention strategies. Finley at a cost of $63,087. • Remote Strategy: provides accommodation where teachers have no choice but to live in the Asset Disposal community in which they teach. During the year THA sold ten properties, deemed to be The strategic asset management plan underpins surplus to need, refer Appendix 3 on page 20. portfolio management and supports recommendations THA retains the proceeds from the sale of surplus made to the Board. assets which support funding new supply. Eco Village No properties with a value greater than $5 million were disposed of during 2015–16. During the year THA continued to partner with the University of Sydney in research comparing the No properties were disposed of where there was a biophysical performance and achieved satisfaction business or family connection between the purchaser outcomes of the Eco Village in Broken Hill against and the approving person. the THA’s conventional residences in that town. An application for access to documents concerning Further information including the research findings is details of properties disposed of during the reporting available on the THA website. year may be made in accordance with the Government Information (Public Access) Act 2009. Flexible Accommodation Maximising asset utilisation and providing the right Hazardous Materials mix of houses/units is difficult given varying demand When THA properties are leased in accordance with i.e. singles, couples and families. the NSW Residential Tenancies Act 2010 they are not To meet this challenge THA developed flexible defined as a teacher’s workplace under the under the accommodation, an innovative concept developed NSW Work Health and Safety Act 2011. at the Eco Village. A single level duplex can be When maintenance or refurbishment work is carried configured into either: two two-bedroom units or; out on a THA property it becomes the temporary one single-bedroom unit and one three-bedroom unit. workplace of the contractor. THA has a Hazardous The first of these was completed in Lake Cargelligo Materials Management Plan for undertaking in 2015 and then in Coonamble and Brewarrina in maintenance or other works at THA properties. early 2016. This plan meets THA’s obligations under the NSW John Marsi, THA Asset Manager, won the 2016 Work Health and Safety Act 2011. The plan can be Secretary’s individual award for innovation for progress downloaded from the THA website. made in these designs. Capable of meeting the needs of families, couples and singles it provides opportunity to improve asset utilisation over the life of the asset.
10 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Strategic Asset Management Plan Capital Program Heritage Assets Financial Management THA has a Strategic Asset Management Plan which The Capital Program is focused on providing As at 30 June 2016 there were eight residences identifies residences that are surplus to need, replaces accommodation in the more isolated regions of NSW, owned and managed by THA considered to be of Financial Performance those that are in poor locations or at the end of their where the private rental market does not adequately local and state heritage significance and listed on a Funding for operational and capital activities is economic lives and provides for new supply to meet meet the needs of teachers. The program is funded local council’s Local Environment Plan (S170 Register). provided from rental and investment income, proceeds a portion of any unmet demand. from a combination of operating income, proceeds Four are DE owned school residences, managed by from sale of assets and an annual contribution from from the sale of surplus assets, and the annual State THA (Crookwell, Quambone, Narrandera and Burren The plan considers the adequacy of the private rental the State Government. Government contribution. Junction) and four are THA owned residences (Leeton, markets where THA provides accommodation and the Dalgety, Merriwa and Gulgong). The 2015–16 result was a deficit of $2.5 million, level of incentive the Department of Education provides During the year THA completed the construction of which was in line with budget. Operating revenue to schools so as to assist attracting and retaining twenty new residences (refer Appendix 1 on page 20). Maintenance totalled $17.3 million. This included rental income of teachers at those schools. The plan has two aspects: Projects are not considered work-in-progress $10.6 million, against a budgeted $10.9 million, and THA classifies maintenance as either refurbishment • Rural Strategy: provides for teachers to choose to until expenditure, beyond the acquisition of land, a contribution received from the State Government maintenance or responsive (contingency) maintenance commute from a larger community to where they has been incurred. of $5.9 million. teach. In many instances teachers prefer a which includes periodic and emergency maintenance. Salaries and wages totalled $1.8 million against reasonable daily commute to living in an isolated Land Purchases • Refurbishment maintenance is conducted in line with budgeted $2 million and against $1.5 million in community. This choice supports the Department During the year THA purchased one block of land in a maintenance plan that has been approved by the 2014–15. The salaries and wages expense in 2014–15 of Education’s recruitment and retention strategies. Finley at a cost of $63,087. Board and developed using condition based property assessments. Expenditure on refurbishment programs was lower due to a transfer of the superannuation • Remote Strategy: provides accommodation liability from THA to the state. where teachers have no choice but to live in the Asset Disposal and major works in 2015–16 was $2.2 million and included the refurbishment of 50 residences. Operating expenses totalled $19.8 million against community in which they teach. During the year THA sold ten properties, deemed to be • Responsive maintenance is, in most instances a budgeted $19.8 million. The strategic asset management plan underpins surplus to need, refer Appendix 3 on page 20. arranged by Managing Agents with expenditure portfolio management and supports recommendations The state government contribution is in line with THA retains the proceeds from the sale of surplus approved by THA. Expenditure on responsive made to the Board. NSW Treasury’s Commercial Policy Framework, in assets which support funding new supply. maintenance was $4.4 million. particular, the Social Program Policy which forms part Eco Village No properties with a value greater than $5 million During the year THA conducted financial analysis to of that framework. were disposed of during 2015–16. determine future maintenance expenditure based During the year THA continued to partner with the upon: the portfolio projections of the strategic asset Capital Program University of Sydney in research comparing the No properties were disposed of where there was a plan; historic expenditure on responsive maintenance; biophysical performance and achieved satisfaction business or family connection between the purchaser During the year capital expenditure totalled typical component lifecycle and current asset quality. outcomes of the Eco Village in Broken Hill against and the approving person. $4.7 million (budgeted $6.8 million) and proceeds from the sale of surplus assets totalled $1.7 million the THA’s conventional residences in that town. An application for access to documents concerning That analysis estimated that future expenditure would (budgeted $2.9 million). Further information including the research findings is details of properties disposed of during the reporting be within 5% of the amounts currently projected in the available on the THA website. year may be made in accordance with the Government forward estimates and 10 year financial projections. Opportunities to capitalise major items of maintenance Information (Public Access) Act 2009. As such, the current projections were deemed to be are limited as such expenditure is rarely reflected in Flexible Accommodation sufficient to maintain the portfolio in its current condition. the residence’s market value. Analysis indicates that Maximising asset utilisation and providing the right Hazardous Materials had this capitalisation occurred operating result would Project Management mix of houses/units is difficult given varying demand When THA properties are leased in accordance with reflect a break-even position. i.e. singles, couples and families. the NSW Residential Tenancies Act 2010 they are not THA outsources project management to suitably qualified project and construction managers that Land Owned or Occupied To meet this challenge THA developed flexible defined as a teacher’s workplace under the under the provide design, documentation and supervision accommodation, an innovative concept developed NSW Work Health and Safety Act 2011. The value of the land owned or occupied as at 30 June services for capital and refurbishment projects. 2016 was: at the Eco Village. A single level duplex can be When maintenance or refurbishment work is carried configured into either: two two-bedroom units or; out on a THA property it becomes the temporary School Residences 2015–16 2014–15 2013–14 one single-bedroom unit and one three-bedroom unit. workplace of the contractor. THA has a Hazardous THA manages residences owned by the Department $’000 $’000 $’000 The first of these was completed in Lake Cargelligo Materials Management Plan for undertaking of Education. These properties are located on school in 2015 and then in Coonamble and Brewarrina in maintenance or other works at THA properties. Vacant Land 1,064 964 477 early 2016. grounds and due to various title arrangements cannot This plan meets THA’s obligations under the NSW Residences 26,448 30,436 25,164 be vested or otherwise transferred to THA. John Marsi, THA Asset Manager, won the 2016 Work Health and Safety Act 2011. The plan can be Total land owned Secretary’s individual award for innovation for progress downloaded from the THA website. During the year, the THA returned the management of or occupied 27,512 31,400 25,641 made in these designs. Capable of meeting the needs the following five school residences to the Department of families, couples and singles it provides opportunity of Education: Duri, Cowra South, Spring Terrace, Asset value is recoded as at 30 June 2016. to improve asset utilisation over the life of the asset. Girilambone, Cumnock and the THA accepted the return of the Tambar Springs school residence.
10 11 Account Payment Performance Loan Facility Throughout the year, THA paid on average 98.1% In June 2016 THA fully repaid a loan from T-Corp. percent of its creditors (90% percent of small The loan was able to be paid off ahead of time businesses) within 30 days of receipt of invoice. because the THA has adequate forecast cash reserves Timeframes may vary depending on contractual and saving interest payments in the long term. other agreements. Account payment performance is detailed on page 12. Benchmarking Benchmarking against comparable organisations, Credit Card Certification conducted in 2014–15 was expanded to include exposure to future maintenance expenditure. As required by Treasury Policy paper TPP 05-1 Credit Projections were made in light of asset age, current Card Use Best Practice Guide, I certify that corporate condition and typical component lifecycle. credit card use at the THA during 2015–16 has been in accordance with Premier’s Memoranda and Maintenance expenditure during the year, Treasurer’s Directions. and for future projections, remains below this established benchmark. Philip Shelley, General Manager, Teacher Housing Authority of NSW, 30 September 2016
Key Performance Indicators THA reviews KPI’s and benchmarks annually, so as to ensure they are aligned with THA’s strategic objectives. KPI’s are tabled on page 15.
Operating Results Key Financial Statistics Four Year Trend
2015–16 2014–15 2013–14 2012–13 Key Financial Results $’000 $’000 $’000 $’000 Financial Performance Revenue 17,333 16,914 17, 213 17,3 4 5 Expenses 19,787 20,106 22,166 19,290 Total Operating Revenue (2,454) ( 3,192) (4,953) (1,945) Included in Operating Results: State Government Contribution 5,868 5,725 5,710 5,705 Grant from DEC 600 600 600 600 Borrowing Costs 302 135 108 236 Financial Position Assets 170,147 171,207 152,079 159,313 Liabilities 1,478 2,608 4,291 7,0 52 Net Assets 168,669 168,599 147,78 8 152,261 Financial Analysis Current Ratio 5.03:1 6.84:1 3.03:1 1.76:1 Total Debt to Total Assets 0.9% 1.5% 2.8% 4.4% Total Assets to Equity 100.9% 101.5% 102.9% 104.6% Return on Assets (1.44)% (2.09)% (2.50)% (2.30)%
12 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Account Payment Performance Loan Facility Performance against Budget Throughout the year, THA paid on average 98.1% In June 2016 THA fully repaid a loan from T-Corp. 2015–16 percent of its creditors (90% percent of small The loan was able to be paid off ahead of time 2015–16 2015–16 Variance 2016–17 businesses) within 30 days of receipt of invoice. because the THA has adequate forecast cash reserves Management Operations Actual $’000 Budget $’000 $’000 Budget $’000 Timeframes may vary depending on contractual and saving interest payments in the long term. other agreements. Revenue Account payment performance is detailed on page 12. Benchmarking Rental Income 10,551 10,908 (357) 10,746 Benchmarking against comparable organisations, Grant from DEC 600 600 0 600 conducted in 2014–15 was expanded to include Credit Card Certification Government Contribution 5,868 5,711 157 6,015 exposure to future maintenance expenditure. As required by Treasury Policy paper TPP 05-1 Credit Projections were made in light of asset age, current Investment and Other Income 314 145 169 200 Card Use Best Practice Guide, I certify that corporate condition and typical component lifecycle. credit card use at the THA during 2015–16 has Total Operating Revenue 17,333 17,364 (31) 17,561 been in accordance with Premier’s Memoranda and Maintenance expenditure during the year, Expenses Treasurer’s Directions. and for future projections, remains below this Property Maintenance 6,641 7,0 4 5 404 7,449 established benchmark. Philip Shelley, General Manager, Teacher Housing Property Rates 2,342 2,286 (56) 2,428 Authority of NSW, 30 September 2016 Borrowing Costs 302 113 (189) 120 Personnel Services Expenses 2,129 2,125 (4) 2,209 Key Performance Indicators Other Administration Expenses 3,160 3,252 92 2,960 THA reviews KPI’s and benchmarks annually, so as to ensure they are aligned with THA’s strategic objectives. Loss/(Gain) on Asset Disposals (39) 132 171 437 KPI’s are tabled on page 15. Depreciation 5,252 4,869 (383) 5,499 Total Operating Expenses 19,787 19,822 35 21,102 Operating Results Operating Surplus/(Deficit) (2,454) (2,458) 4 (3,541) Key Financial Statistics Four Year Trend 2015–16 2015–16 2014–15 2013–14 2012–13 2015–16 2015–16 Variance 2016–17 Key Financial Results $’000 $’000 $’000 $’000 Capital Program Actual $’000 Budget $’000 $’000 Budget $’000 Financial Performance Receipts Revenue 17,333 16,914 17, 213 17,3 4 5 Asset Disposal Proceeds 1,657 2,865 (1,208) 3,933 Expenses 19,787 20,106 22,166 19,290 Total Capital Receipts 1,657 2,865 (1,208) 3,933 Total Operating Revenue (2,454) ( 3,192) (4,953) (1,945) Payments Included in Operating Results: New Works 4,726 6,605 1,879 4,938 State Government Contribution 5,868 5,725 5,710 5,705 Other 5 250 245 0 Grant from DEC 600 600 600 600 Total Capital Payments 4,731 6,855 2,124 4,938 Borrowing Costs 302 135 108 236 Net Cash Inflow/(Outflow) (3,074) (3,990) 916 (1,005) Financial Position Assets 170,147 171,207 152,079 159,313 Liabilities 1,478 2,608 4,291 7,0 52 Net Assets 168,669 168,599 147,78 8 152,261 Financial Analysis Current Ratio 5.03:1 6.84:1 3.03:1 1.76:1 Total Debt to Total Assets 0.9% 1.5% 2.8% 4.4% Total Assets to Equity 100.9% 101.5% 102.9% 104.6% Return on Assets (1.44)% (2.09)% (2.50)% (2.30)%
12 13 Account Payment Performance
Less Between Between More than 30 30 and 60 and than 90 days 60 days 90 days days Current overdue overdue overdue overdue Quarter $’000 $’000 $’000 $’000 $’000 All Suppliers Sep–15 3,831 64 4 39 – Dec–15 4,166 416 2 – – Mar–16 3,641 31 – – – Jun–16 3,303 381 2 – – Small Business Suppliers Sep–15 13 1 – – – Dec–15 11 – – – – Mar–16 7 – – – – Jun–16 7 – – – –
Measure Sep–15 Dec–15 Mar–16 Jun–16 Number of accounts due for payment 3,566 3,114 3,510 3,807 Number of accounts paid on time 3,475 2,994 3,468 3,807 Actual percentage of accounts paid on 97% 96% 99% 100% time (based on number of accounts) Dollar amount of accounts due $3,731 $4,389 $3,591 $2,771 for payment Dollar amount of accounts paid on time $3,620 $3,971 $3,561 $2,771 Actual percentage of accounts paid on 97% 90% 99% 100% time (based on $) Number of payments for interest on 0 0 0 0 overdue accounts Interest paid on overdue accounts 0 0 0 0 Small Business Suppliers Number of accounts due for payment 24 20 20 23 Number of accounts paid on time 14 20 20 23 Actual percentage of accounts paid on 58% 100% 100% 100% time (based on number of accounts) Dollar amount of accounts due $14 $11 $7 $7 for payment Dollar amount of accounts paid on time $13 $11 $7 $7 Actual percentage of accounts paid on 93% 100% 100% 100% time (based on $) Number of payments for interest on 0 0 0 0 overdue accounts Interest paid on overdue accounts 0 0 0 0
14 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Account Payment Performance Key Performance Indicators
Less Between Between More Property and Occupancy Data than 30 30 and 60 and than 90 days 60 days 90 days days 2016 Target 2016 2015 2014 2013 Current overdue overdue overdue overdue Quarter $’000 $’000 $’000 $’000 $’000 Houses by Owner THA N/A 464 476 495 518 All Suppliers Sep–15 3,831 64 4 39 – DEC N/A 107 111 132 165 Dec–15 4,166 416 2 – – Head Leased N/A 0 0 1 3 Mar–16 3,641 31 – – – Furnished Units (incl Studio Units) N/A 754 726 729 729 Jun–16 3,303 381 2 – – Small Business Suppliers Sep–15 13 1 – – – Total Residences Under Management 1,283 1,325 1,313 1,357 1,415 Dec–15 11 – – – – Vacant Land THA owned 25 37 26 28 Mar–16 7 – – – – Crown Land 2 2 2 2 Jun–16 7 – – – – Total N/A 27 39 28 30 Work In Progress N/A 0 3 7 13 Measure Sep–15 Dec–15 Mar–16 Jun–16
Number of accounts due for payment 3,566 3,114 3,510 3,807 Total Properties 1,352 1,355 1,392 1,458 Number of accounts paid on time 3,475 2,994 3,468 3,807 Actual percentage of accounts paid on 97% 96% 99% 100% Average Occupancy throughout the year 89.4% 87.8 % 85.0% 85.3% 85.7% time (based on number of accounts) Dollar amount of accounts due $3,731 $4,389 $3,591 $2,771 Average Occupancy throughout the Teachers 79.1% 76.8% 73.9% 72.8% 72.6% for payment year by tenant type Dollar amount of accounts paid on time $3,620 $3,971 $3,561 $2,771 Non Teachers 10.3% 11.0 % 11.1% 12.5% 13.1% Actual percentage of accounts paid on 97% 90% 99% 100% Vacant 10.6% 12.2% 15.0% 14.7% 14.3% time (based on $) Number of payments for interest on 0 0 0 0 Allocations (New Tenants signed) Teachers N/A 454 411 437 462 overdue accounts Non N/A 90 82 101 125 Interest paid on overdue accounts 0 0 0 0 Teachers Small Business Suppliers Total 544 493 538 587 Number of accounts due for payment 24 20 20 23 Number of accounts paid on time 14 20 20 23 Weekly Rental Amounts (applied from 1 May*) Actual percentage of accounts paid on 58% 100% 100% 100% time (based on number of accounts) 2016 2015 2014 2013 Dollar amount of accounts due $14 $11 $7 $7 Average $186.93 $183.04 $176.57 $172.78 for payment Highest $415.00 $415.00 $415.00 $410.00 Dollar amount of accounts paid on time $13 $11 $7 $7 Lowest $65.00 $55.00 $55.00 $50.00 Actual percentage of accounts paid on 93% 100% 100% 100% Median $180.00 $180.00 $170.00 $165.00 time (based on $) Number of payments for interest on 0 0 0 0 Change of average rent 2.13% 3.66% 2.74% 2.41% overdue accounts Interest paid on overdue accounts 0 0 0 0
14 15 Capital Delivery Average capital project delivery period (for projects completed in the period)
Target 2016 2016* 2015 2014 2013 2012 2011 Weeks to appoint a project manager 8 13 4 5 7 6 8 Weeks to appoint a contractor once a 12 27 11 12 26 20 29 project manager has been appointed Construction period 32 26 34 27 56 38 30 Period of delivery since approval (weeks) 52 66 49 44 89 64 67 Residences constructed in period 16 16 6 18 15 18 13
*Note that contracts are now tendered and awarded following Board approval.
Stakeholders Industrial Relations There were no industrial issues which affected the Responsibilities to stakeholder groups and how those operations of THA during the year. responsibilities are addressed are shown in Appendix 11 on page 28. Equal Employment Opportunity The THA’s EEO Management Plan for 2015–16 Human Resources focused on improving internal communications through whole of staff meetings and circulated Staffing Arrangement material to all staff. The THA Act prohibits THA from engaging employees. Statistical information relating to the EEO is shown at The staff who perform functions for the THA are Appendix 5 on page 21. The relative stability of the DFSI employees, employed under agreement THA’s workforce has provided little opportunity to between THA and DFSI, and engaged in accord improve representation and distribution of some EEO with the Government Sector Employment Act 2013. groups at the THA. Accordingly, DFSI personnel policies and practices apply to the THA staff. Multicultural Policies and Staffing Numbers Services Program THA is committed to the principles of multiculturalism A table showing the category of staff at THA, for the outlined in the Community Relations Commission and reporting year and the preceding three years, is shown Principles of Multiculturalism Act 2000. at Appendix 4 on page 21. These principles are implemented through: Organisational Structure • merit-based recruitment practices; and The organisational chart, as at 30 June 2016, outlining • work arrangements in the office which respect and THA’s organisational structure, reporting lines and accommodate cultural and religious differences functional responsibilities is shown in Appendix 7 wherever possible. on page 22. THA acknowledges that members of the NSW Principal Roles Government teaching service are representative of many different cultures throughout the state. On behalf of the THA, and in accordance with the PSC The provision of housing to those teachers is made on Circulars: 2014–09; 2015–07; and 2016–05 executive the basis that differences can be accommodated in reporting is included in the DFSI annual report. each property without the need to take special action to meet particular religious or cultural requirements.
16 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Capital Delivery As a related entity of DFSI, THA staff members have access to the DFSI Multicultural Policies and Services Other Activities Average capital project delivery period (for projects completed in the period) Program 2015–2016 including the DFS statement on Public Access to multicultural planning and progress. Target Government Information THA will continue to implement the principles by the 2016 2016* 2015 2014 2013 2012 2011 During the year THA did not receive any requests for means outlined above. Weeks to appoint a project manager 8 13 4 5 7 6 8 information under the Government Information Public Access Act (GIPAA) 2009. Weeks to appoint a contractor once a 12 27 11 12 26 20 29 The Community Relations Commission has advised project manager has been appointed the THA of its compliance with the Principles of Multiculturalism Act 2000. Privacy and Personal Information Construction period 32 26 34 27 56 38 30 Protection Act 1998 (PPIP Act) Period of delivery since approval (weeks) 52 66 49 44 89 64 67 Workplace Health and Safety (WHS) In accordance with section 33(1) of the Privacy and Residences constructed in period 16 16 6 18 15 18 13 As DFSI employees, THA has adopted the DFSI Personal Information Protection (PPIP) Act 1998 WHS policies and procedures for THA staff. A DFSI THA has adopted DFSI’s privacy management plan. *Note that contracts are now tendered and awarded following Board approval. WHS committee includes both a THA employer and Information about how the THA manages its employee representatives. obligations under the PPIP Act is available at https:// Industrial Relations During 2015–16 there were no reportable incidents, www.finance.nsw.gov.au/privacy-statement. Stakeholders near-misses, or lost time due to injury concerning There were no industrial issues which affected the In 2015–16, THA did not receive: any applications by Responsibilities to stakeholder groups and how those THA employees, including contractors, agency staff operations of THA during the year. any individuals requesting their personal information responsibilities are addressed are shown in Appendix or volunteers. under the PPIP Act; any informal requests for personal 11 on page 28. Equal Employment Opportunity DFSI reports on, in its annual report, WHS initiatives, information; or any requests for reviews under the a WHS Community of Practice and a summary of PPIP Act. The THA’s EEO Management Plan for 2015–16 compensation claims. These include WHS matters Human Resources focused on improving internal communications relating to THA. through whole of staff meetings and circulated Insurance Staffing Arrangement NSW Treasury Managed Fund provides: workers material to all staff. Employee Assistance Program The THA Act prohibits THA from engaging employees. compensation, property, public liability and Statistical information relating to the EEO is shown at The staff who perform functions for the THA are As DFSI employees THA staff have access to the DFSI miscellaneous cover for THA. Appendix 5 on page 21. The relative stability of the DFSI employees, employed under agreement provided Employee Assistance Program. THA’s workforce has provided little opportunity to For the 2015–16 financial year, THA incurred insurance between THA and DFSI, and engaged in accord improve representation and distribution of some EEO premiums totalling $376,497 (property cover with the Government Sector Employment Act 2013. NSW Public Sector Workforce Profile groups at the THA. was $350,086). Accordingly, DFSI personnel policies and practices As part of a Service Level Agreement for corporate Property insurance related claims totalling $25,792 apply to the THA staff. Multicultural Policies and services, DFSI completes and lodges the annual workforce profile in respect of THA staff. were paid by the fund during the year. Refer Appendix Staffing Numbers Services Program 6 on page 21. THA is committed to the principles of multiculturalism A table showing the category of staff at THA, for the Disability Inclusion Plan outlined in the Community Relations Commission and Government Property Register reporting year and the preceding three years, is shown The THA has developed a Disability Inclusion Action Principles of Multiculturalism Act 2000. at Appendix 4 on page 21. Plan in accordance with the Guidelines for Disability Land titles held by THA are aligned to the Government These principles are implemented through: Action Planning by NSW Government Agencies Property Register (GPR) in accordance with Premiers Memorandum M2012-20. Organisational Structure • merit-based recruitment practices; and (Premier’s Memorandum M2009-01). The organisational chart, as at 30 June 2016, outlining • work arrangements in the office which respect and THA’s organisational structure, reporting lines and accommodate cultural and religious differences functional responsibilities is shown in Appendix 7 wherever possible. on page 22. THA acknowledges that members of the NSW Principal Roles Government teaching service are representative of many different cultures throughout the state. On behalf of the THA, and in accordance with the PSC The provision of housing to those teachers is made on Circulars: 2014–09; 2015–07; and 2016–05 executive the basis that differences can be accommodated in reporting is included in the DFSI annual report. each property without the need to take special action to meet particular religious or cultural requirements.
16 17 Internal Audit and Risk Management Consultants THA has in place internal audit and risk management Nine consultants were engaged during the year at a processes that are compliant with the eight core total cost of $64,300. Consultancies supported and/or requirements set out in NSW Treasury Policy TTP provided advice in regard to the following: 15-03 Internal Audit and Risk Management Policy for • review and consider the maintenance service the NSW Public Sector. These processes include: delivery model; • THA Members approving the appointment of • conduct long-term maintenance expenditure DFSI’s Chief Auditor Executive as THA’s Chief scenario analysis; Auditor Executive; • taxation advice (GST); • Treasury approving in accordance with Guidance • evaluate position descriptions; on shared arrangements and sub committees for Audit and Risk Committees (TPP 12-04); shared • assess (audit) website security; arrangements for the entities that form • assess the adequacy of 13 private rental markets; Property NSW. • examine the payment process (justification) of Refer internal Audit and Risk Management Attestation a specific capital project; Statement (Appendix 8, page 23). • research the history of a heritage residence, and • provide illustrative plans for a design concept. Internal Audit Plan THA has an ongoing Internal Audit Program approved Information and by the ARC. That program includes THA activities in Communications Technology DFSI wide audits as well as audits specific to THA. In Under a Service Level Agreement DFSI supports 2015–16 the following audit, specific to THA, the THA’s ICT systems. This includes web hosting, was conducted: configuration, administration, management and • Tenancy Allocation. maintenance related support functions for servers within the production and DR data centres and remote Public Interest Disclosures (PID’s) office data centres. THA adopts the DFSI Fraud and Corruption Internal THA’s website, at www.tha.nsw.gov.au provides Reporting Policy. That policy outlines the support and teachers with access to a range of information and protections available for staff under the Public Interest online services including application and vacancy Disclosures Act 1994 for a person wishing to make a forms, tenant handbooks, policies and reports, public interest disclosure. newsletters and contact information. Teachers can The policy is available on the intranet, it includes details view properties in each location. of nominated officers who are authorised to receive a During the year THA replaced the financial aspects disclosure (including the THA General Manager). of ProMan (IT operating platform) with SAPbyDesign. PID resources are available to staff on the intranet, This project, which leveraged off a similar successfully highlighted during induction training and presented implemented project at Sydney Harbour Foreshore on at staff meetings with the presentations Authority was managed and delivered by Government emailed to staff. Property NSW. During the year there were no PIDs made: by public The financial aspects of SAPbyDesign went live officials performing their day to day functions; under a on 1 July 2016. THA remains reliant upon ProMan statutory or other legal obligation; or of any other form. for non-financial tenancy and asset management functions until customised modifications to SAPbyDesign have been fully implemented.
18 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Internal Audit and Risk Management Consultants NSW Digital Information Security Overseas Travel THA has in place internal audit and risk management Nine consultants were engaged during the year at a Policy Compliance Attestation No Board or staff member travelled overseas on official processes that are compliant with the eight core total cost of $64,300. Consultancies supported and/or Statement 2015–16 Financial business during 2015–16. requirements set out in NSW Treasury Policy TTP provided advice in regard to the following: Year Teacher Housing 15-03 Internal Audit and Risk Management Policy for • review and consider the maintenance service Digital Information Security Annual Attestation Review of Government the NSW Public Sector. These processes include: delivery model; Statement (Appendix 9). Employee Accommodation • THA Members approving the appointment of • conduct long-term maintenance expenditure With a core competency of providing employee DFSI’s Chief Auditor Executive as THA’s Chief scenario analysis; Business Continuity Plan (BCP) accommodation in rural and remote NSW, Auditor Executive; • taxation advice (GST); THA’s ICT platforms are integrated within the DFSI IT THA continues to provide logistical and commercial • Treasury approving in accordance with Guidance advice on aspects of government employee • evaluate position descriptions; infrastructure. THA therefore subscribes to and is part on shared arrangements and sub committees for of the broader DFSI plan on disaster recovery and accommodation to other Government agencies Audit and Risk Committees (TPP 12-04); shared • assess (audit) website security; crisis management. as requested. arrangements for the entities that form • assess the adequacy of 13 private rental markets; Property NSW. • examine the payment process (justification) of THA has prepared a Business Impact Assessment Public Sector Reforms and in conjunction with the DFSI business continuity Refer internal Audit and Risk Management Attestation a specific capital project; Legislative Changes management team which addresses specific THA Statement (Appendix 8, page 23). • research the history of a heritage residence, and requirements in the event of a crisis. During the year, there were no administrative or • provide illustrative plans for a design concept. legislative changes which impacted THA’s governance, Internal Audit Plan Business Plan/Statement strategic direction or financial position. THA has an ongoing Internal Audit Program approved Information and of Business Intent by the ARC. That program includes THA activities in Communications Technology THA prepares an annual Statement of Business Intent DFSI wide audits as well as audits specific to THA. In Under a Service Level Agreement DFSI supports (SBI) and a Business Plan in accordance with NSW 2015–16 the following audit, specific to THA, the THA’s ICT systems. This includes web hosting, Treasury Guideline Reporting and Monitoring Policy was conducted: configuration, administration, management and for Government Businesses (TPP05-02). • Tenancy Allocation. maintenance related support functions for servers within the production and DR data centres and remote The SBI is a performance agreement between THA, Public Interest Disclosures (PID’s) office data centres. the Minister and the Treasurer and outlines THA’s strategic and performance commitments for the THA adopts the DFSI Fraud and Corruption Internal THA’s website, at www.tha.nsw.gov.au provides 2016–17 financial year. The Business Plan supports Reporting Policy. That policy outlines the support and teachers with access to a range of information and the SBI and details the objectives, strategies and protections available for staff under the Public Interest online services including application and vacancy performance targets of the organisation within a five to Disclosures Act 1994 for a person wishing to make a forms, tenant handbooks, policies and reports, 10 year planning horizon. public interest disclosure. newsletters and contact information. Teachers can The SBI and the Business Plan were endorsed by The policy is available on the intranet, it includes details view properties in each location. the Board in September 2016 and forwarded to the of nominated officers who are authorised to receive a During the year THA replaced the financial aspects Secretary of the Treasury (on behalf of the Treasurer) disclosure (including the THA General Manager). of ProMan (IT operating platform) with SAPbyDesign. for endorsement. Once endorsed, the SBI will be PID resources are available to staff on the intranet, This project, which leveraged off a similar successfully available on THA’s website. highlighted during induction training and presented implemented project at Sydney Harbour Foreshore Property NSW submits the 2016–17 SBI and on at staff meetings with the presentations Authority was managed and delivered by Government Business Plan on behalf of THA. emailed to staff. Property NSW. During the year there were no PIDs made: by public The financial aspects of SAPbyDesign went live officials performing their day to day functions; under a on 1 July 2016. THA remains reliant upon ProMan statutory or other legal obligation; or of any other form. for non-financial tenancy and asset management functions until customised modifications to SAPbyDesign have been fully implemented.
18 19 Appendices Appendix 1 Residences Constructed or Acquired During 2015–16
Total project Town Project Description Street Cost ($’000) Lake Cargelligo Construction of two unit duplex (flexible design) Grace Street 542.3 Naranderra Construction of two single-bedroom units Jellinbah Street 621.7 Condobolin Driveway modifications to units purchased in 2013-14 McGreggor 69.2 Street Coonamble Construction of two two-unit duplex (flexible design) Bimble Street 1,168.5 Wilcannia Construction of four single-bedroom units Woore Street 1,054.9 Brewarrina Construction of four single-bedroom units Wilson Street 1,149.8 Brewarrina Construction of two two-unit duplex (flexible design) Bathurst Street 1,188.9 Total 5,795.3
Appendix 2 Works-In-Progress as at 30 June 2016
Town Project Description Street Cost ($’000) Leeton Legal fee for land acquisition Church Street 1.5 Condobolin Survey plans and preliminary drawings Officers Parade 25.3 Total 26.8
Appendix 3 Asset Disposal (Property Sold in 2015–2016)
Town Address Type Contract Price Cowra 4 Karinya Street House 180,000 Hanwood 20 Wilga Street House 190,000 Dundurrabin 37 Mount Street House 132,500 Griffith 26 Wyangan Avenue House 185,000 Griffith 5 Bennett Court House 195,000 Corindi Beach 121A Pacific Street House 315,000 Ungarie 28 Ungarie Street House 110,000 Gunnedah 121 Barber Street House 79,950 Walcha 4 Semphill Crescent 2 Units 342,000 Total 1,729,450
20 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Appendices Appendix 4 THA Employees by Category as at 30 June 2016
Appendix 1 Category 2015–16 2014–15 2013–14 2012–13 Residences Constructed or Acquired During 2015–16 Administrative and clerical and part time employees (includes contractors) Total project Full-time positions 19 20 21 21 Town Project Description Street Cost ($’000) Part-time positions 3 3 3 2 Lake Cargelligo Construction of two unit duplex (flexible design) Grace Street 542.3 Total Positions 22 23 24 23 Naranderra Construction of two single-bedroom units Jellinbah Street 621.7 Condobolin Driveway modifications to units purchased in 2013-14 McGreggor 69.2 Street Appendix 5 Coonamble Construction of two two-unit duplex (flexible design) Bimble Street 1,168.5 Wilcannia Construction of four single-bedroom units Woore Street 1,054.9 Workforce Diversity Brewarrina Construction of four single-bedroom units Wilson Street 1,149.8 Workplace Diversity Group Govt Target 2015–16 2014–15 2013–14 2012-13 Brewarrina Construction of two two-unit duplex (flexible design) Bathurst Street 1,188.9 Women 50% 73% 73% 59% 59% Total 5,795.3 Aboriginal & Torres Strait Islanders 2% – – – – People whose language first spoken as 20% 50% 48% 30% 30% a child was not English Appendix 2 People with Disability 12% – – – – Works-In-Progress as at 30 June 2016
Town Project Description Street Cost ($’000) Appendix 6 Leeton Legal fee for land acquisition Church Street 1.5 Treasury Managed Fund – Insurance Recovery Condobolin Survey plans and preliminary drawings Officers Parade 25.3 Locality Claim Cost ($) Total 26.8 Wambangalang Pipes burst in ceiling 6,094 Bourke Storm damage 2,768 Appendix 3 Mendooran Storm damage 2,628 Lightning Ridge Replace garage door – vehicle damage 2,228 Asset Disposal (Property Sold in 2015–2016) Bourke Replace vanity – water damage 1,245 Town Address Type Contract Price Bourke Ceiling damage water leak 1,232 Cowra 4 Karinya Street House 180,000 North Star Storm damage 1,199 Hanwood 20 Wilga Street House 190,000 Condobolin Repairs to storeroom – break in 1,133 Dundurrabin 37 Mount Street House 132,500 Wanaaring Storm damage 1,078 Griffith 26 Wyangan Avenue House 185,000 Various 11 Claims under $1000 6,188 Griffith 5 Bennett Court House 195,000 Total 25,792 Corindi Beach 121A Pacific Street House 315,000 Ungarie 28 Ungarie Street House 110,000 Gunnedah 121 Barber Street House 79,950 Walcha 4 Semphill Crescent 2 Units 342,000 Total 1,729,450
20 21 Appendix 7 Operational Management Chart 2015–16
Property NSW Department of THA Board (DFSI Group of Finance, Services Agencies) and Innovation
General Manager
Project Officer Tenancy Services Finance Executive Executive Asset Manager Communications Manager Manager Assistant Officer (Part-time)
Tenancy Business Technical Admin Financial Services Analyst Officer Assistant Accountant Officer (Part-time)
Tenancy Tenancy Finance Officer Technical Services Support Accounts Officer Officer Officer Receivable (Part-time)
Contracts Tenancy Finance Officer Admin Services Accounts Officer Officer Payable
Tenancy Maintenance Finance Officer Services Officer Debt Recovery Officer
22 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Appendix 7 Appendix 8 Operational Management Chart 2015–16 Internal Audit and Risk Management Attestation Statement for the 2015–2016 Financial Year for the Teacher Housing Authority I, Brett Newman, Chair of the Teacher Housing Authority, am of the opinion that the Teacher Housing Authority has Property NSW Department of internal audit and risk management processes in operation that are compliant with the eight (8) core requirements THA Board (DFSI Group of Finance, Services set out in the Internal Audit and Risk Management Policy for the NSW Public Sector, specifically: Agencies) and Innovation
For each requirement, please specify whether compliant, Core Requirements non-compliant, or in transition General Manager Risk Management Framework
1.1 The agency head is ultimately responsible and accountable for Compliant risk management in the agency
1.2 A risk management framework that is appropriate to the agency Compliant Project Officer has been established and maintained and the framework is Tenancy Services Finance Executive Executive Asset Manager Communications Manager Manager Assistant Officer consistent with AS/NZS ISO 31000:2009 (Part-time) Internal Audit Function
Tenancy Business 2.1 An internal audit function has been established and maintained Compliant Technical Admin Financial Services Analyst Officer Assistant Accountant 2.2 The operation of the internal audit function is consistent with the Compliant Officer (Part-time) International Standards for the Professional Practice of Internal Auditing Tenancy Tenancy Finance Officer Technical Services Support Accounts 2.3 The agency has an Internal Audit Charter that is consistent with Compliant Officer Officer Officer Receivable the content of the ‘model charter’ (Part-time)
Contracts Tenancy Finance Officer Audit and Risk Committee Admin Services Accounts Officer Officer Payable 3.1 An independent Audit and Risk Committee with appropriate Compliant expertise has been established Tenancy Maintenance Finance Officer 3.2 The Audit and Risk Committee is an advisory committee providing Compliant Services Officer Debt Recovery Officer assistance to the agency head on the agency’s governance processes, risk management and control frameworks, and its external accountability obligations
3.3 The Audit and Risk Committee has a Charter that is consistent Compliant with the content of the ‘model charter’
22 23 Membership The chair and members of the Audit and Risk Committee are: • Carol Holley, Independent Chair, from 2 December 2016 to 1 December 2020; • Dianne Hill, Independent Member, from 1 February 2016 to 31 January 2019; • Mark O’Sullivan, Independent Member, from 25 January 2016 to 24 January 2018. The previous Audit and Risk Committee was disbanded with effect from 20 November 2015. This Audit and Risk Committee has been established under a Treasury approved shared arrangement with the following departments/statutory bodies: • Government Property NSW • Sydney Harbour Foreshore Authority • Luna Park Reserve Trust • Waste Assets Management Corporation
Brett Newman Chair Teacher Housing Authority Date: 22 September 2016
Agency Contact Officer Andrew Pilbeam Chief Audit Executive, 9372 8047 [email protected]
24 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Membership Appendix 9 The chair and members of the Audit and Risk Committee are: • Carol Holley, Independent Chair, Digital Information Security Annual Attestation Statement for 2015–2016 from 2 December 2016 to 1 December 2020; I, Philip Shelley, General Manager of the Teacher Housing Authority of NSW, am of the opinion that the Teacher • Dianne Hill, Independent Member, Housing Authority has implemented an Information Security Management System during the financial year being from 1 February 2016 to 31 January 2019; reported on which is compliant with the Core Requirements set out in the Digital Information Security Policy for the • Mark O’Sullivan, Independent Member, NSW Public Sector. from 25 January 2016 to 24 January 2018. I, Philip Shelley, General Manager of the Teacher Housing Authority of NSW, am of the opinion that the security The previous Audit and Risk Committee was disbanded with effect from 20 November 2015. controls in place, to mitigate identified risks to the digital information and digital information systems of the Teacher Housing Authority are adequate for the foreseeable future. This Audit and Risk Committee has been established under a Treasury approved shared arrangement with the following departments/statutory bodies: I, Philip Shelley, General Manager of the Teacher Housing Authority of NSW, am of the opinion that, where necessary in accordance with the Digital Information Security Policy for the NSW Public Sector, the Teacher • Government Property NSW Housing Authority of NSW is transitioning towards adopting relevant practices aligned with AS/NZS ISO/IEC 27001 • Sydney Harbour Foreshore Authority Information technology – Security techniques – Information security management systems. • Luna Park Reserve Trust • Waste Assets Management Corporation
Philip Shelley General Manager Date: 22 September 2016 Brett Newman Chair Teacher Housing Authority Date: 22 September 2016
Agency Contact Officer Andrew Pilbeam Chief Audit Executive, 9372 8047 [email protected]
24 25 Appendix 10 Comments from customer survey
All in all it has been an extremely easy and Kerrie from THA is fantastic and Kelly’s Property positive experience. Next to previous housing in Walgett are very responsive to requests procedure I cannot fault the ease and understanding shown in the move. Absolutely I appreciated being able to defer full payment nothing negative to report! Thank you of the bond to reduce moving costs. I arrived in Broken Hill and the apartment was ready. I was I liked dealing with Nick. I thought he was so grateful, thank you very much accurate when giving information and friendly with his customer service. Unfortunately, I moved As a Teacher that has moved from a country all the way from Newcastle to Broken Hill on a town to another country town it has been great single term contract. There’s so much rhetoric for me knowing that there is a property available on attracting and keeping good teachers in the at times through Teacher Housing. It takes bush, but nothing was done to help me maintain much of the stress away of trying to look for my accommodation here or move to a new place. and viewing dozens of units, homes etc. As the elected Teacher Housing Representative for our Only that at the beginning when I was looking to Association I will endeavour to speak with all move in, it took longer than originally planned but teachers in the town that are being housed by I was only notified when I contacted you. I would TH so that they can contact me with concerns have appreciated being kept in the loop. about their rental properties. It will also give me the opportunity to speak with THA on a regular basis so that we are able to make the transition I was in a time of uncertainty while moving of these teachers who have taken the step and from Sydney where I lived with my husband to moved to a country town a lot more stress free Moree where I would be living alone. Teacher when it comes to dealing with such issues as Housing were wonderful to work with and all out-dated furniture, stoves, repairs etc. It is great I had to organise was my electricity and phone that units and homes can be partly furnished, but connection. Thank you once again! when these materials are old and parts are not available to be repaired then up-grades should Thankyou. Trish Clark from Trangie and Elodie be made accordingly. It is here that TH and the from Cobar have been excellent. agent, tenant will be working as one to attract more and more teachers to the country area Staff at THA and staff at local agency have with a great service from TH. Thanking you for been terrific! the opportunity to participate in the survey and looking forward to dealing with you in the future.
The whole experience was very smooth, aided enormously by friendly, helpful, efficient people. Thank you!
26 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Appendix 10 Comments from customer survey
All in all it has been an extremely easy and Kerrie from THA is fantastic and Kelly’s Property Biki’s help and advice was very calming, as Talking to nice personable people... I didn’t feel positive experience. Next to previous housing in Walgett are very responsive to requests I was panicking about when housing would I was just a number procedure I cannot fault the ease and be available. understanding shown in the move. Absolutely I appreciated being able to defer full payment Any issues have been more with the managing nothing negative to report! Thank you of the bond to reduce moving costs. I arrived in Disappointed with agent’s inspection of property agent than with THA. Broken Hill and the apartment was ready. I was – many faults not recognised at all, including the I liked dealing with Nick. I thought he was so grateful, thank you very much cleaning (or lack there of), old appliances, bent All seemed to go ok, just little hickup with rent accurate when giving information and friendly legs on chairs and stain in bath. All interactions deductions when payroll mucked up pay so I got with his customer service. Unfortunately, I moved with Teacher Housing have been positive As a Teacher that has moved from a country 3 pays and therefore 3 lots of rent deducted in all the way from Newcastle to Broken Hill on a and prompt with every effort to fit in with my town to another country town it has been great 2 weeks. Just waiting on bond to be refunded. single term contract. There’s so much rhetoric movements. thank you and well done for me knowing that there is a property available on attracting and keeping good teachers in the at times through Teacher Housing. It takes bush, but nothing was done to help me maintain An excellent experience thanks to Karen as much of the stress away of trying to look for Great place to call home. my accommodation here or move to a new place. well as the agents up here. The house we were and viewing dozens of units, homes etc. As the privately renting up here was going to be sold so elected Teacher Housing Representative for our It is so wonderful to be able to make a big life we wanted to get the family settled in somewhere Only that at the beginning when I was looking to Association I will endeavour to speak with all change with the support of housing behind new before Christmas, at fairly short notice. move in, it took longer than originally planned but teachers in the town that are being housed by myself and my family. It has been one of the best This was achieved and made easy after my I was only notified when I contacted you. I would TH so that they can contact me with concerns things my family has ever done and Nic Ul and initial contact with teacher housing. This is my have appreciated being kept in the loop. about their rental properties. It will also give me the team around him have been instrumental in first experience in dealing with the organisation the opportunity to speak with THA on a regular making this happen. Thank you. and I thoroughly recommend the service. basis so that we are able to make the transition I was in a time of uncertainty while moving Thanks again of these teachers who have taken the step and from Sydney where I lived with my husband to moved to a country town a lot more stress free Teacher housing is very practical and the Moree where I would be living alone. Teacher when it comes to dealing with such issues as standard has always been good. Very happy with my house. From point of contact Housing were wonderful to work with and all out-dated furniture, stoves, repairs etc. It is great to moving in was a few days. My alternative was I had to organise was my electricity and phone that units and homes can be partly furnished, but a motel so i really appreciate my situation being connection. Thank you once again! I have been moved in for a term and I am still treated with the efficiency that it was, by teacher when these materials are old and parts are not waiting on a new couch and a dead tree to be housing and the real estate agent. available to be repaired then up-grades should taken out of the backyard Thankyou. Trish Clark from Trangie and Elodie be made accordingly. It is here that TH and the from Cobar have been excellent. agent, tenant will be working as one to attract more and more teachers to the country area We have only been in teacher housing for one term. To date we have no complaints. Staff at THA and staff at local agency have with a great service from TH. Thanking you for been terrific! the opportunity to participate in the survey and looking forward to dealing with you in the future.
The whole experience was very smooth, aided enormously by friendly, helpful, efficient people. Thank you!
26 27 Appendix 11 Responsibilities to stakeholders
Responsibility Stakeholder Application 1. The provision of an economic, Members of • Review business performance, where effective and efficient housing service the Education necessary measuring it against relevant where the private rental market Teaching indicators. Prepare adequate business plans; is inadequate. Service budgets, audits and customer surveys. (Teachers) • Determine alternative rental accommodation in the relevant communities. • Ensure managing agents are accessible, responsive, and suitably empowered to act on behalf of THA. • Support locally appointed housing representatives to represent and liaise with tenants, agents and THA. • Prepare and review a strategic asset plan for the portfolio to ensure service levels and business objectives are met and assets are acquired, maintained and sold as required. 2. Significant matters relating to the Minister for • Submission of the Business Plan and housing of teacher and non-teacher Finance, Statement of Business Intent. tenants are referred for consideration. Services and Property 3. Contentiousness or politically Minister for • Ensure THA has a robust policy framework in sensitive issues that may impact Finance, place so as issues are suitably addresses as upon the government are advised in Services and they arise. a timely manner. Property • Be aware of Property NSW / DFSI policies and 3.i. Deadlines set for the provision objectives so as such issues are appropriately of briefing notes, draft responses to advised and/or responded to. ministerial correspondences are met. 4. Support the Department of Department of • Ensure THA liaises with the Department of Education in the delivery of education Education Education staffing services on accommodation by providing quality housing as needs, local issues, emerging demographics an incentive to attract and retain and other relevant topics. teachers to localities in rural NSW. • Conduct customer surveys on the adequacy of the THA’s service. 5. Liaise with the Department of Department of • The preparation and review of business plans, Education on THA policy matters Education budgets, forward estimates underpinned by that may impact on the ability of the adequate strategic asset plans. department to adequately staff schools and TAFE colleges in rural NSW. 6. The development and implication of a NSW Treasury • Review the Business Plan and Statement of financially sound Business Plan and Business Intent in light of THA’s objectives, Statement of Business Intent. scope of operations, strategic direction, financial & non-financial targets and impacts of risk assessments.
28 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Appendix 11 Responsibility Stakeholder Application 7. Adherence to all financial policies and NSW Treasury • Preparation and presentation of annual audited Responsibilities to stakeholders procedures required of government. financial statements. Department Responsibility Stakeholder Application of Finance, • Preparation and presentation of a Business Plan and Statement of Business Intent. 1. The provision of an economic, Members of • Review business performance, where Services and effective and efficient housing service the Education necessary measuring it against relevant Innovation • Liaison on various preliminary and where the private rental market Teaching indicators. Prepare adequate business plans; mini budgets. is inadequate. Service budgets, audits and customer surveys. • Respond to requests for information in (Teachers) • Determine alternative rental accommodation in a timely manner. the relevant communities. • Adherence to Acts, Regulations, circulars, • Ensure managing agents are accessible, policies and guidelines. responsive, and suitably empowered to act on • Preparation and presentation of the behalf of THA. annual report. • Support locally appointed housing 8. Contentiousness or politically Department • Adhere to all policies and procedures required representatives to represent and liaise with sensitive issues that may impact of Finance, of governmental agencies. tenants, agents and THA. upon the government are advised Services and • Respond to requests for information in a • Prepare and review a strategic asset plan for in a timely manner. Innovation timely manner. the portfolio to ensure service levels and 8.i. Deadlines set for the provision Department of • Review the impact of governmental policy on business objectives are met and assets are of briefing notes, draft responses Premier and THA’s business. acquired, maintained and sold as required. to ministerial correspondences etc. Cabinet • Preparation and submission of THA’s 2. Significant matters relating to the Minister for • Submission of the Business Plan and are met. Department of annual report. housing of teacher and non-teacher Finance, Statement of Business Intent. 8.ii. Operate within the broad Education tenants are referred for consideration. Services and governmental framework of NSW. Property Public Service Commission 3. Contentiousness or politically Minister for • Ensure THA has a robust policy framework in sensitive issues that may impact Finance, place so as issues are suitably addresses as 9. Provide an organisation that THA Staff • Review operational and strategic HR issues in upon the government are advised in Services and they arise. engenders a learning and continuous light of legislative issues and the boarder a timely manner. Property • Be aware of Property NSW / DFSI policies and improvement culture. governmental framework. 3.i. Deadlines set for the provision objectives so as such issues are appropriately • Review the business plan in consideration of of briefing notes, draft responses to advised and/or responded to. internal capabilities in an effort to align an ministerial correspondences are met. employee’s needs with those of THA. 4. Support the Department of Department of • Ensure THA liaises with the Department of 10. THA be appropriately resourced THA Staff • Ensure THA’s objectives are met by preparing Education in the delivery of education Education Education staffing services on accommodation to deliver an effective and efficient an appropriate budget, training employees and by providing quality housing as needs, local issues, emerging demographics housing service to teachers. recruiting staff adequately qualified for each an incentive to attract and retain and other relevant topics. position. teachers to localities in rural NSW. • Conduct customer surveys on the adequacy of 11. Access to quality education for Students and • The provision of quality housing service to the THA’s service. all NSW children. parents teachers in rural and remote NSW where the private rental market does not meet 5. Liaise with the Department of Department of • The preparation and review of business plans, their needs. Education on THA policy matters Education budgets, forward estimates underpinned by that may impact on the ability of the adequate strategic asset plans. 12. The rights of the members of The wider • Compliance with various legislations in department to adequately staff schools the community who rent THA community particular the NSW residential and TAFE colleges in rural NSW. accommodation (in the absence tenancy legislation. of teacher demand). 6. The development and implication of a NSW Treasury • Review the Business Plan and Statement of financially sound Business Plan and Business Intent in light of THA’s objectives, Statement of Business Intent. scope of operations, strategic direction, financial & non-financial targets and impacts of risk assessments.
28 29 Financial Statements For the Year Ended 30 June 2016 Statement by Members 31 Independent Auditor’s Report 32 Statement of Comprehensive Income 34 Statement of Financial Position 35 Statement of Changes in Equity 36 Statement of Cash Flows 37 Notes Accompanying and Forming Part of the Financial Statements 38
30 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Financial Statements For the Year Ended 30 June 2016 Statement by Members Statement by Members 31 Financial Statements for the Period Ended 30 June 2016 Independent Auditor’s Report 32 Statement of Comprehensive Income 34 Pursuant to Section 41C (1B) and 1(C) of the Public Finance and Audit Act 1983, I declare on behalf of the Teacher Housing Authority of New South Wales that in my opinion: Statement of Financial Position 35 (a) The accompanying financial statements have been prepared in accordance with the provisions of the Public Statement of Changes in Equity 36 Finance and Audit Act 1983, the Public Finance and Audit Regulation 2015 and the Treasurer’s Directions; Statement of Cash Flows 37 (b) The financial statements exhibit a true and fair view of the financial position and transactions of the Agency for the period ended 30 June 2016; Notes Accompanying and Forming Part of the Financial Statements 38 (c) At the date of this statement there are no circumstances, which would render any particulars included in the financial statements to be misleading or inaccurate.
Brett Newman Philip Shelley Chairman General Manager 30 September 2016 30 September 2016
30 31 32 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
32 33 [Start of Audited Financial Statements] Statement of Comprehensive Income For the Year Ended 30 June 2016
2016 2015 Note $’000 $’000
REVENUES Rental Income 2 10,551 10,335 Investment Income 243 216 Other Income 71 38 Grant from Department of Education and Communities 600 600 State Government Contribution 3 5,868 5,725 TOTAL REVENUES 17,333 16,914
EXPENSES Property Maintenance 4 6,641 7,55 4 Property Rates 5 2,342 2,145 Personnel Services Expense 6 2,129 1,753 Borrowing Costs 302 95 Other Administration Expenses 7 3,160 3,271 Depreciation 10(a) 5,252 5,366
TOTAL EXPENSES 19,826 20,184 Profit (Loss) on Disposal of Non-Current Assets 10(b) 39 78 Net result for the Year (2,454) (3,192)
OTHER COMPREHENSIVE INCOME Items that will not be reclassified to net result Net increase/(decrease) in property, plant and equipment 10(a) 2,524 24,003 revaluation surplus TOTAL OTHER COMPREHENSIVE INCOME 2,524 24,003
TOTAL COMPREHENSIVE INCOME 70 20,811
The accompanying notes form part of these statements
34 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
[Start of Audited Financial Statements] Statement of Financial Position Statement of Comprehensive Income As at 30 June 2016
For the Year Ended 30 June 2016 2016 2015 Note $’000 $’000
2016 2015 Note $’000 $’000 ASSETS Current Assets REVENUES Cash and Cash Equivalents 8 5,942 7, 221 Rental Income 2 10,551 10,335 Receivables 9 304 336 Investment Income 243 216 Non-Current Assets Held For Sale 10(a) 1,194 2,260 Other Income 71 38 Total Current Assets 7,440 9,817 Grant from Department of Education and Communities 600 600 State Government Contribution 3 5,868 5,725 Non-Current Assets TOTAL REVENUES 17,333 16,914 Property, Plant and Equipment 10(a) 162,707 161,255 Amortised Borrowing Cost – 135 EXPENSES Total Non-Current Assets 162,707 161,390 Property Maintenance 4 6,641 7,55 4 Property Rates 5 2,342 2,145 TOTAL ASSETS 170,147 171,207 Personnel Services Expense 6 2,129 1,753
Borrowing Costs 302 95 LIABILITIES Other Administration Expenses 7 3,160 3,271 Current Liabilities Depreciation 10(a) 5,252 5,366 Payables 12 1,478 1,271 Borrowings 13 – 164 TOTAL EXPENSES 19,826 20,184 Total Current Liabilities 1,478 1,435 Profit (Loss) on Disposal of Non-Current Assets 10(b) 39 78
Net result for the Year (2,454) (3,192) Non-Current Liabilities Borrowings 13 – 1,173 OTHER COMPREHENSIVE INCOME Total Non-Current Liabilities – 1,173 Items that will not be reclassified to net result Net increase/(decrease) in property, plant and equipment 10(a) 2,524 24,003 revaluation surplus TOTAL LIABILITIES 1,478 2,608 TOTAL OTHER COMPREHENSIVE INCOME 2,524 24,003 NET ASSETS 168,669 168,599 TOTAL COMPREHENSIVE INCOME 70 20,811 Equity The accompanying notes form part of these statements Reserves 95,626 94,563 Accumulated Funds 73,043 74,036 TOTAL EQUITY 168,669 168,599
The accompanying notes form part of these statements
34 35 Statement of Changes in Equity For the Year Ended 30 June 2016
Asset Accumulated Revaluation
Funds Reserve Total Note $’000 $’000 $’000
Balance as at 1 July 2015 74,036 94,563 168,599
Net result for the year (2,454) – (2,454)
Other comprehensive income: Net increase / (decrease) in property, plant and 10(a) – 2,524 2,524 equipment Transfer from Asset Revaluation Reserve on disposal 1,461 (1,461) – of property, plant and equipment Total other comprehensive income 1,461 1,063 2,524 Total comprehensive income for the year (993) 1,063 70 Balance as at 30 June 2016 73,043 95,626 168,669
Balance as at 1 July 2014 73,662 74,126 147,78 8
Net result for the year (3,192) – (3,192)
Other comprehensive income: Net increase/(decrease) in property, plant and 10(a) – 24,003 24,003 equipment Transfer from Asset Revaluation Reserve on disposal 3,566 (3,566) – of Property, plant and equipment Total other comprehensive income 3,566 20,437 24,003 Total comprehensive income for the year 374 20,437 20,811 Balance as at 30 June 2015 74,036 94,563 168,599
The accompanying notes form part of these statements
36 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Statement of Changes in Equity Statement of Cash Flows For the Year Ended 30 June 2016 For the Year Ended 30 June 2016
2016 2015 Asset Note $’000 $’000 Accumulated Revaluation
Funds Reserve Total Cash Flows from Operating Activities Note $’000 $’000 $’000 Payments Property and Administration (11,490 ) (14,091) Balance as at 1 July 2015 74,036 94,563 168,599 Personnel Services Expense (2,662) (2,085) Net result for the year (2,454) – (2,454) Finance Expenses (167) – Total Payments (14,319) (16,176) Other comprehensive income:
Net increase / (decrease) in property, plant and 10(a) – 2,524 2,524 Receipts equipment Rental Income 10,669 10,473 Transfer from Asset Revaluation Reserve on disposal 1,461 (1,461) – Investment Income 243 216 of property, plant and equipment Other Income 71 38 Total other comprehensive income 1,461 1,063 2,524 Total Receipts 10,983 10,727 Total comprehensive income for the year (993) 1,063 70 Balance as at 30 June 2016 73,043 95,626 168,669 Cash Flows from Government State Government Contribution 3 5,868 5,725 Balance as at 1 July 2014 73,662 74,126 147,78 8 Department of Education and Communities Contribution 600 600 Net result for the year (3,192) – (3,192) Net Cash Flows from Government 6,468 6,325 Net Cash Flows From Operating Activities 16 3,132 876 Other comprehensive income: Net increase/(decrease) in property, plant and 10(a) – 24,003 24,003 Cash Flows from Investing Activities equipment Proceeds from Disposal of Non-Current Assets 10(b) 1,657 3,856 Transfer from Asset Revaluation Reserve on disposal 3,566 (3,566) – Purchases of Non-Current Assets 10(a) (4,731) (3,288) of Property, plant and equipment Sale of Investment – 4,108 Total other comprehensive income 3,566 20,437 24,003 Net Cash Flows From Investing Activities (3,074) 4,676 Total comprehensive income for the year 374 20,437 20,811 Balance as at 30 June 2015 74,036 94,563 168,599 Cash Flows from Financing Activities Repayment of borrowings 13(a) (1,337) (229) The accompanying notes form part of these statements Net Cash Flows from Financing Activities (1,337) (229) Net Increase/(Decrease) in Cash (1,279) 5,323 OPENING CASH AND CASH EQUIVALENTS 7, 221 1,898 CLOSING CASH AND CASH EQUIVALENTS 8 5,942 7,221
The accompanying notes form part of these statements
36 37 Notes accompanying and forming part of the Financial Statements for the period ended 30 June 2016 1. Summary of Significant Management and Board assert the going concern Accounting Policies assumption is appropriate as its revenue streams are fixed and variable costs, such as future property (a) Reporting Entity maintenance and the capital expenditure program, The Teacher Housing Authority of NSW, is a NSW can be reduced or deferred, if required. government entity. The Teacher Housing Authority of NSW is a not-for-profit entity (as profit is not its (c) Statement of Compliance principal objective) and it has no cash generating units. The Authority’s financial statements and notes comply The Authority is consolidated as part of the NSW Total with Australian Accounting Standards, which include State Sector Accounts. Australian Accounting Interpretations.
The Authority provides a portfolio of houses and (d) Income Recognition furnished units in areas of the state which do not have a viable private rental market. The provision of Income is measured at the fair value of the accommodation is one of several incentives which consideration or contribution received or receivable. assist the Department of Education and Communities Rental income is recognised in accordance with AASB in attracting and retaining teachers in parts of the state 118 Revenue on accrual basis in accordance with the which are considered to be “hard to staff”. substance of the relevant agreement. The financial statements for the year ended 30 June The Authority receives an annual state government 2016 have been authorised for issue by the Board contribution from Department of Finance, Services on 30 September 2016. & Innovation (DFSI) and a capital grant from the Department of Education and Communities. (b) Basis of Preparation These are recognised as income upon receipt. The Authority’s financial statements are general Investment income, including interest revenue is purpose financial statements which have been recognised using the effective interest method as set prepared on an accruals basis in accordance with: out in AASB 139 Financial Instruments: Recognition • applicable Australian Accounting Standards (which and Measurement. include Australian Accounting Interpretations); (e) Personnel Services and other provisions • the requirements of the Public Finance and Audit Act 1983 and Public Finance and Audit The Authority receives personnel services from the Regulation 2015. Department of Finance, Services & Innovation (DFSI). The Department is not a Special Purpose Service Property, plant and equipment, assets held for sale Entity and does not control the Authority under and financial assets at ‘fair value through profit or loss’ this arrangement. are measured at fair value. Other financial statement items are prepared in accordance with historical cost (f) Borrowing Costs convention except where specified otherwise. Borrowing costs are recognised as expenses in the Judgements, key assumptions and estimations made period in which they are incurred, in accordance by the Authority’s management are disclosed in the with Treasury’s Mandate to not-for-profit general relevant notes to the financial statements. government sector agencies.
All amounts are rounded to the nearest one thousand (g) Insurance dollars and are expressed in Australian currency. The Authority’s insurance activities are conducted At 30 June 2016, the Authority’s current through the NSW Treasury Managed Fund Scheme of assets exceeded its current liabilities by $6.0m self- insurance for Government agencies. The expense ($8.4m in 2015). (premium) is determined by the Fund Manager based on past claims experience.
38 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 accompanying and forming part of the Financial Statements (h) Accounting for the Goods the characteristics of the asset being measured, including any socio-political restrictions imposed by for the period ended 30 June 2016 and Services Tax (GST) government. In most cases, after taking into account The Authority is classified as a full input-taxed entity these considerations, the highest and best use is the 1. Summary of Significant Management and Board assert the going concern as all core-business revenues are generated from existing use. In limited circumstances, the highest and assumption is appropriate as its revenue streams input-taxed supplies. Accordingly, all expenses, assets Accounting Policies best use may be a feasible alternative use, where there are fixed and variable costs, such as future property and payables relating to these supplies are recognised are no restrictions on use or where there is a feasible (a) Reporting Entity maintenance and the capital expenditure program, inclusive of GST. Cash flows are included in the higher restricted alternative use. The Teacher Housing Authority of NSW, is a NSW can be reduced or deferred, if required. statement of cash flows on a gross basis. government entity. The Teacher Housing Authority Fair value of property, plant and equipment is based of NSW is a not-for-profit entity (as profit is not its (c) Statement of Compliance (i) Assets on a market participants’ perspective, using valuation principal objective) and it has no cash generating units. The Authority’s financial statements and notes comply i. Acquisitions of Assets techniques (market approach, cost approach, income The Authority is consolidated as part of the NSW Total with Australian Accounting Standards, which include approach) that maximise relevant observable inputs The cost method of accounting is used for the State Sector Accounts. Australian Accounting Interpretations. and minimise unobservable inputs. Also refer Note 10 initial recording of all acquisitions of assets and Note 11 for further information regarding fair value. The Authority provides a portfolio of houses and (d) Income Recognition controlled by the Authority. Cost is the amount of furnished units in areas of the state which do not cash or cash equivalents paid or the fair value of Revaluations shall be made with sufficient regularity have a viable private rental market. The provision of Income is measured at the fair value of the the other consideration given to acquire the asset to ensure the carrying amount of each asset in the accommodation is one of several incentives which consideration or contribution received or receivable. at the time of its acquisition or construction or, class does not differ materially from its fair value at assist the Department of Education and Communities Rental income is recognised in accordance with AASB where applicable, the amount attributed to that reporting date. 118 Revenue on accrual basis in accordance with the asset when initially recognised in accordance in attracting and retaining teachers in parts of the state The Authority adopted the “Use of sampling in asset substance of the relevant agreement. with the specific requirements of other Australian which are considered to be “hard to staff”. valuation” method to determine the fair value of its land Accounting Standards. The financial statements for the year ended 30 June The Authority receives an annual state government and buildings. This method is outlined in Appendix B 2016 have been authorised for issue by the Board contribution from Department of Finance, Services Assets acquired at no cost, or for nominal of TPP14-01 “Accounting Policy: Valuation of Physical on 30 September 2016. & Innovation (DFSI) and a capital grant from the consideration, are initially recognised at their fair value Non-Current Assets at Fair Value” that was issued Department of Education and Communities. at the date of acquisition. by Treasury in February 2014. A methodology was These are recognised as income upon receipt. implemented where assets are grouped based on (b) Basis of Preparation Fair value is the price that would be received to sell Local Government Areas, the type of residence and The Authority’s financial statements are general Investment income, including interest revenue is an asset in an orderly transaction between market the construction material, and a residence or a subset purpose financial statements which have been recognised using the effective interest method as set participants at measurement date. prepared on an accruals basis in accordance with: out in AASB 139 Financial Instruments: Recognition of residences is then selected from each Group. Where payment for an asset is deferred beyond normal • applicable Australian Accounting Standards (which and Measurement. The Authority conducts a comprehensive rolling credit terms, its cost is the cash price equivalent, i.e. include Australian Accounting Interpretations); revaluation over every three years for its land and deferred payment amount is effectively discounted (e) Personnel Services and other provisions buildings by revaluing a sample of properties each year • the requirements of the Public Finance and Audit over the period of credit. Act 1983 and Public Finance and Audit The Authority receives personnel services from the and projecting the movement in the sample to the Regulation 2015. Department of Finance, Services & Innovation (DFSI). ii. Capitalisation Thresholds entire portfolio every year. Samples are reviewed each The Department is not a Special Purpose Service Plant and equipment and intangible assets costing year to ensure they adequately represent the remaining Property, plant and equipment, assets held for sale Entity and does not control the Authority under $5,000 and above individually, are capitalised. assets in the respective group. The sampling exercise and financial assets at ‘fair value through profit or loss’ this arrangement. is summarized in the table below. are measured at fair value. Other financial statement iii. Revaluation of Property, Plant and Equipment items are prepared in accordance with historical cost (f) Borrowing Costs Physical non-current assets are valued in accordance Sample No. Year 1 Year 2 Year 3 convention except where specified otherwise. Borrowing costs are recognised as expenses in the with the ‘Valuation of Physical Non-Current Assets at Sample 1 (Base) >12% >12% >12% Fair Value’ Policy and Guidelines Paper (TPP 14-01). Judgements, key assumptions and estimations made period in which they are incurred, in accordance Sample 2 >7% by the Authority’s management are disclosed in the with Treasury’s Mandate to not-for-profit general This policy adopts fair value in accordance with AASB relevant notes to the financial statements. government sector agencies. 13 Fair Value Measurement, AASB 116 Property, Plant Sample 3 >7% and Equipment and AASB 140 Investment Property. All amounts are rounded to the nearest one thousand Sample 4 >7% (g) Insurance Property, plant and equipment is measured at the dollars and are expressed in Australian currency. New Supply (est.) 1%–3% 1%–3% 1%–3% The Authority’s insurance activities are conducted highest and best use by market participants that is At 30 June 2016, the Authority’s current through the NSW Treasury Managed Fund Scheme of physically possible, legally permissible and financially Estimated percent pa >20% >20% >20% assets exceeded its current liabilities by $6.0m self- insurance for Government agencies. The expense feasible. The highest and best use must be available ($8.4m in 2015). (premium) is determined by the Fund Manager based at a period that is not remote and take into account on past claims experience.
38 39 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
The last comprehensive revaluation was completed the recoverable amount test for non-cash generating on 28th February 2016 with an effective date assets of not-for-profit entities to the higher of fair value as at 31st March 2016 and was based on an less costs of disposal and depreciated replacement independent assessment. cost, where depreciated replacement cost is also fair value. Non-specialised assets with short useful lives are measured at depreciated historical cost, as an v. Depreciation of Property, Plant and Equipment approximation of value. The entity has assessed that Depreciation is provided for on a straight-line basis for any difference between fair value and depreciated all depreciable assets so as to write off the depreciable historical cost is unlikely to be material. amount of each asset as it is consumed over its When revaluing non-current assets using the useful life to the Authority. All material identifiable cost approach, the gross amount and the related components of assets are depreciated separately over accumulated depreciation are separately restated. their useful lives. Land is not a depreciable asset. For other assets valued using other valuation The rates determined for the 2016 financial year are: techniques, any balances of accumulated depreciation i) Buildings 2.0% or over remaining useful lives at the revaluation date in respect of those assets are credited to the asset accounts to which they ii) Office Furniture and Equipment 33.33% relate. The net asset accounts are then increased or decreased by the revaluation increments (j) Maintenance or decrements. Day-to-day servicing costs or maintenance are Revaluation increments are credited directly to charged as expenses as incurred, except where they revaluation surplus, except that, to the extent that relate to the replacement of a part or component an increment reverses a revaluation decrement in of an asset, in which case the costs are capitalised respect of that class of asset previously recognised and depreciated. as an expense in the net result, the increment is recognised immediately as revenue in the net result. (k) Loans and receivables Revaluation decrements are recognised immediately Loans and receivables are non-derivative financial as expenses in the net result, except that, to the extent assets with fixed or determinable payments that that a credit balance exists in the revaluation surplus in are not quoted in an active market. These financial respect of the same class of assets, they are debited assets are recognised initially at fair value, usually directly to the revaluation surplus. based on the transaction cost, or face value. Subsequent measurement is at amortised cost using As a not-for-profit entity, revaluation increments and the effective interest method, less an allowance for decrements are offset against one another within a any impairment of receivables. Any changes are class of non-current assets, but not otherwise. recognised in the net result for the year when impaired, Where an asset that has previously been revalued is derecognised or through the amortisation process. disposed of, any balance remaining in the revaluation Short-term receivables with no stated interest rate are surplus in respect of that asset is transferred to measured at the original invoice amount where the accumulated funds. effect of discounting is immaterial. iv. Impairment of Property, Plant and Equipment As a not-for-profit entity with no cash generating units, (l) Investments impairment under AASB 136 Impairment of Assets is Investments are initially recognised at fair value plus, in unlikely to arise. As property, plant and equipment is the case of investments not at fair value through profit carried at fair value or an amount that approximates or loss, transaction costs. fair value, impairment can only arise in the rare The Authority determines the classification of its circumstances such as where the costs of disposal financial assets after initial recognition and, when are material. Specifically, impairment is unlikely for allowed and appropriate, re-evaluates this at each not-for-profit entities given that AASB 136 modifies financial year end.
40 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
The last comprehensive revaluation was completed the recoverable amount test for non-cash generating (m) Impairment of Financial Assets • Level 1 – quoted prices in active markets for on 28th February 2016 with an effective date assets of not-for-profit entities to the higher of fair value All financial assets, except those measured at fair identical assets / liabilities that the entity can as at 31st March 2016 and was based on an less costs of disposal and depreciated replacement value through profit and loss, are subject to an annual access at the measurement date. independent assessment. cost, where depreciated replacement cost is also review for impairment. An allowance for impairment is • Level 2 – inputs other than quoted prices included fair value. Non-specialised assets with short useful lives are established when there is objective evidence that the within Level 1 that are observable, either directly measured at depreciated historical cost, as an v. Depreciation of Property, Plant and Equipment entity will not be able to collect all amounts due. or indirectly. approximation of value. The entity has assessed that Depreciation is provided for on a straight-line basis for For financial assets carried at amortised cost, the • Level 3 – inputs that are not based on observable any difference between fair value and depreciated all depreciable assets so as to write off the depreciable amount of the allowance is the difference between market data (unobservable inputs). historical cost is unlikely to be material. amount of each asset as it is consumed over its the asset’s carrying amount and the present value of The entity recognises transfers between levels of the When revaluing non-current assets using the useful life to the Authority. All material identifiable estimated future cash flows, discounted at the effective fair value hierarchy at the end of the reporting period cost approach, the gross amount and the related components of assets are depreciated separately over interest rate. The amount of the impairment loss is during which the change has occurred. Refer Note 11 accumulated depreciation are separately restated. their useful lives. Land is not a depreciable asset. recognised in the net result for the year. and Note 17 for further disclosure regarding fair value measurements of financial and non-financial assets. For other assets valued using other valuation The rates determined for the 2016 financial year are: Any reversals of impairment losses are reversed techniques, any balances of accumulated depreciation through the net result for the year, where there is i) Buildings 2.0% or over remaining useful lives (q) Equity and reserves at the revaluation date in respect of those assets objective evidence. are credited to the asset accounts to which they ii) Office Furniture and Equipment 33.33% (i) Revaluation reserve relate. The net asset accounts are then increased (n) Non-current assets The revaluation surplus is used to record increments or decreased by the revaluation increments (j) Maintenance (or disposal groups) held for sale and decrements on the revaluation of non-current or decrements. assets. This accords with the entity’s policy on the Day-to-day servicing costs or maintenance are The entity has certain non-current assets (or disposal revaluation of property, plant and equipment as Revaluation increments are credited directly to charged as expenses as incurred, except where they groups) classified as held for sale, where their discussed in note 1(i). revaluation surplus, except that, to the extent that relate to the replacement of a part or component carrying amount will be recovered principally through an increment reverses a revaluation decrement in of an asset, in which case the costs are capitalised a sale transaction, not through continuing use. (ii) Accumulated Funds Non-current assets (or disposal groups) held for sale respect of that class of asset previously recognised and depreciated. The category ‘Accumulated Funds’ includes all current are recognised at the lower of carrying amount and as an expense in the net result, the increment is and prior period retained funds. recognised immediately as revenue in the net result. (k) Loans and receivables fair value less costs of disposal. These assets are not depreciated while they are classified as held for sale. (iii) Separate reserve accounts Revaluation decrements are recognised immediately Loans and receivables are non-derivative financial Separate reserve accounts are recognised in the as expenses in the net result, except that, to the extent assets with fixed or determinable payments that (o) Payables financial statements only if such accounts are required that a credit balance exists in the revaluation surplus in are not quoted in an active market. These financial These amounts represent liabilities for goods and by specific legislation or Australian Accounting respect of the same class of assets, they are debited assets are recognised initially at fair value, usually services provided to the Authority and other amounts, Standards (e.g. revaluation reserve and foreign directly to the revaluation surplus. based on the transaction cost, or face value. Subsequent measurement is at amortised cost using including interest. Payables are recognised initially at currency translation reserve). As a not-for-profit entity, revaluation increments and the effective interest method, less an allowance for fair value, usually based on the transaction cost or decrements are offset against one another within a any impairment of receivables. Any changes are face value. Subsequent measurement is at amortised (r) Comparative information class of non-current assets, but not otherwise. recognised in the net result for the year when impaired, cost using the effective interest method. Short-term Except when an Australian Accounting Standard Where an asset that has previously been revalued is derecognised or through the amortisation process. payables with no stated interest rate are measured permits or requires otherwise, comparative information at the original invoice amount where the effect of is presented in respect of the previous period for all disposed of, any balance remaining in the revaluation Short-term receivables with no stated interest rate are discounting is immaterial. amounts reported in the financial statements. surplus in respect of that asset is transferred to measured at the original invoice amount where the accumulated funds. effect of discounting is immaterial. (p) Fair value hierarchy (s) Changes in accounting policy, iv. Impairment of Property, Plant and Equipment (l) Investments A number of the entity’s accounting policies and including new or revised Australian As a not-for-profit entity with no cash generating units, disclosures require the measurement of fair values, for Accounting Standards impairment under AASB 136 Impairment of Assets is Investments are initially recognised at fair value plus, in both financial and non-financial assets and liabilities. (i) Effective for the first time in 2015–16 unlikely to arise. As property, plant and equipment is the case of investments not at fair value through profit When measuring fair value, the valuation technique carried at fair value or an amount that approximates or loss, transaction costs. used maximises the use of relevant observable inputs The accounting policies applied in 2015–2016 are consistent with those of the previous financial year fair value, impairment can only arise in the rare The Authority determines the classification of its and minimises the use of unobservable inputs. Under except as a result of the following new or revised circumstances such as where the costs of disposal financial assets after initial recognition and, when AASB 13, the entity categorises, for disclosure Australian Accounting Standards that have been are material. Specifically, impairment is unlikely for allowed and appropriate, re-evaluates this at each purposes, the valuation techniques based on the applied for the first time in 2015–2016: not-for-profit entities given that AASB 136 modifies financial year end. inputs used in the valuation techniques as follows:
40 41 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
• AASB 2013–9 (Part C), AASB 2014–1 (Part E) and AASB 2014–8 regarding amendments to AASB 9 Financial Instruments • AASB 2015–3 regarding withdrawal of AASB 1031 Materiality The above standards have all been fully compiled into their respective standards, with the exception of AASB 2014–1 (Part E). The application of these Standards did not have any material impact on the Authority’s financial statements. (ii) Issued but not yet effective NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless Treasury determines otherwise. There are a number of recently issued or amended Australian Accounting Standards which are not yet effective and have not been adopted for the reporting period ending 30 June 2016. The following Standards are relevant to the Authority: • AASB 9 and AASB 2014–7 regarding financial instruments • AASB 14 and AASB 2014–1(Part D) regarding Regulatory Deferral Accounts • AASB 15, AASB 2014–5 and AASB 2015–8 regarding Revenue from Contracts with Customers • AASB 1056 Superannuation Entities • AASB 1057 and AASB 2015–9 Application of Australian Accounting Standards • AASB 2014–4 regarding acceptable methods of depreciation and amortisation • AASB 2014–6 regarding bearer plants • AASB 2014–9 regarding equity method in separate financial statements • AASB 2015–1 regarding annual improvements to Australian Accounting Standards 2012–2014 cycle • AASB 2015–2 regarding amendments to AASB 101 (disclosure initiative) • AASB 2015–6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities • AASB 2015–7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-for-Profit Public Sector Entities The Authority does not expect any material impact on the financial statements in the period of initial application of these Standards.
42 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 2. Rental Revenue
• AASB 2013–9 (Part C), AASB 2014–1 (Part E) and AASB 2014–8 regarding amendments to 2016 2015 AASB 9 Financial Instruments Rental Income comprise: $’000 $’000 • AASB 2015–3 regarding withdrawal of AASB 1031 Materiality Gross Rental Income 10,551 10,335 The above standards have all been fully compiled into their respective standards, with the exception of Total Rental Income 10,551 10,335 AASB 2014–1 (Part E). The application of these Standards did not have any material impact on the Authority’s financial statements. 3. State Government Contribution (ii) Issued but not yet effective Rental and investment income is sufficient to fund a portion of the Authority’s operating and capital costs. NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless Treasury However, the Authority is dependent on continued subsidisation from the State Government to fund the balance determines otherwise. There are a number of recently issued or amended Australian Accounting Standards which of these costs. are not yet effective and have not been adopted for the reporting period ending 30 June 2016. The following Standards are relevant to the Authority: 2016 2015 • AASB 9 and AASB 2014–7 regarding financial instruments State Government Contribution comprise: $’000 $’000 • AASB 14 and AASB 2014–1(Part D) regarding Regulatory Deferral Accounts Grant from Department of Finance, Services & Innovation 5,868 5,725 • AASB 15, AASB 2014–5 and AASB 2015–8 regarding Revenue from Contracts with Customers Total State Government Contribution 5,868 5,725 • AASB 1056 Superannuation Entities • AASB 1057 and AASB 2015–9 Application of Australian Accounting Standards 4. Property Maintenance • AASB 2014–4 regarding acceptable methods of depreciation and amortisation • AASB 2014–6 regarding bearer plants 2016 2015 • AASB 2014–9 regarding equity method in separate financial statements Property Maintenance Expenses comprise: $’000 $’000 • AASB 2015–1 regarding annual improvements to Australian Accounting Standards 2012–2014 cycle Plumbing 473 514 • AASB 2015–2 regarding amendments to AASB 101 (disclosure initiative) Electrical 295 308 • AASB 2015–6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to General Maintenance 1,405 559 Not-for-Profit Public Sector Entities Ground/ Yard Maintenance 1,020 1,006 • AASB 2015–7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-for-Profit Public Air Cooling Installation and Maintenance 453 608 Sector Entities Air Conditioners & Fans 98 10 The Authority does not expect any material impact on the financial statements in the period of initial application Furnishings, Fixtures and Fittings 664 724 of these Standards. Property Refurbishment 2,233 3,531 Other Maintenance – 294 Total Property Maintenance Expenses 6,641 7,554
42 43 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
5. Property Rates
2016 2015 Property Rates comprise: $’000 $’000 Annual Rates 1,548 1,527 Water Rates 728 547 Other 66 71 Total Property Rates 2,342 2,145
6. Personnel Services Personnel services are acquired from the Department of Finance,Services & Innovation comprise of:
2016 2015 Personnel Services comprise: $’000 $’000 Salaries and Wages 1,527 1,429 Recreation Leave 112 104 Long Service Leave 61 25 Superannuation 97 (83) Total 1,797 1,475 Other Personnel Services Expense 332 278 Total Personnel Services Expense 2,129 1,753
7. Other Administration Expenses
2016 2015 Other Administration Expenses comprise: $’000 $’000 Consultants 64 129 Office Lease Expense 186 197 Insurance 376 423 Property Valuations 165 449 Property Management Fees 849 885 IT Costs 597 167 Travel Expenses 70 77 Admin Cost – Outsourcing 636 621 Other General Administration 217 323 Total Other Administration Expenses 3,160 3,271
44 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
5. Property Rates 8. Cash and Cash Equivalents
2016 2015 2016 2015 Property Rates comprise: $’000 $’000 Cash and Cash Equivalents comprise: $’000 $’000 Annual Rates 1,548 1,527 Cash on Hand 1 1 Water Rates 728 547 Cash at Bank 5,941 7, 220 Other 66 71 Total Cash and Cash Equivalents at 30 June 5,942 7,221 Total Property Rates 2,342 2,145 For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and cash on hand. 6. Personnel Services Cash and cash equivalent assets recognised in the statement of financial position are reconciled at the end of the Personnel services are acquired from the Department of Finance,Services & Innovation comprise of: financial year to the statement of cash flows as follows:
2016 2015 2016 2015 Personnel Services comprise: $’000 $’000 $’000 $’000 Salaries and Wages 1,527 1,429 Cash and cash equivalents per statement of financial position 5,942 7, 221 Recreation Leave 112 104 Cash and cash equivalents per statement of cash flows 5,942 7,221 Long Service Leave 61 25 Refer to Note 17 for details regarding credit risk, liquidity risk and market risk arising from financial instruments. Superannuation 97 (83) Total 1,797 1,475 9. Receivables Other Personnel Services Expense 332 278 2016 2015 Total Personnel Services Expense 2,129 1,753 Receivables comprise: $’000 $’000 Current: 7. Other Administration Expenses Rental Debtors 77 111
[Note 9(a)] 2016 2015 Allowance for Impairment (12) (25) Other Administration Expenses comprise: $’000 $’000 Tenancy Liaison Service Agent Advances 236 243 Consultants 64 129 Prepayment 2 5 Office Lease Expense 186 197 Other Debtors 1 2 Insurance 376 423 Total Receivables 304 336 Property Valuations 165 449 Property Management Fees 849 885 (a) Allowance for Impairment IT Costs 597 167 2016 2015 Travel Expenses 70 77 Allowance for Impairment – movement $’000 $’000 Admin Cost – Outsourcing 636 621 Opening Allowance at 1 July 25 20 Other General Administration 217 323 Debts Written Off [Note 15] (16) 3 Total Other Administration Expenses 3,160 3,271 New Allowance Transferred In/(Out) 3 2 Closing Allowance at 30 June 12 25
Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired, are disclosed in Note 17.
44 45 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
10. Land and Buildings, Office Furniture and Equipment and Office Refurbishment (a) Movement – ‘000
Land and Office Land and Buildings held Furniture and 2016 Total Buildings for sale (1) Equipment $’000 At Fair Value Net Carrying Amount at 1 July 2015 161,255 2,260 – 163,515 Assets Under Construction (1,534) – – (1,534) Additions 6,260 – 6 6,266 Disposals (271) (1,347) – (1,618) Transfers – Assets For Sale (281) 281 – – Net Revaluation Increments/ 2,524 – – 2,524 (Decrements) Depreciation Expenses (5,251) – (1) (5,252) Fair Value at 30 June 2016 162,702 1,194 5 163,901
(a) Movement – ‘000
Land and Office Land and Buildings held Furniture and 2015 Total Buildings for sale (1) Equipment $’000 At Fair Value Net Carrying Amount at 1 July 2014 144,083 1,285 – 145,368 Assets Under Construction 1,397 – – 1,397 Additions 1,893 – – 1,893 Disposals (3,780) – – (3,780) Transfers – Assets For Sale (975) 975 – Net Revaluation Increments/ 24,003 – – 24,003 (Decrements) Depreciation Expenses (5,366) – – (5,366) Fair Value at 30 June 2015 161,255 2,260 – 163,515
46 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
10. Land and Buildings, Office Furniture and (a) Movement – ‘000 Equipment and Office Refurbishment Land and Office (a) Movement – ‘000 Land and Buildings held Furniture and 2016 Total Buildings for sale (1) Equipment $’000 Land and Office Gross Carrying Amount 30 June 2016 164,531 1,194 6 165,731 Land and Buildings held Furniture and 2016 Total Buildings for sale (1) Equipment $’000 Accumulated Depreciation (1,829) – (1) (1,830) At Fair Value Fair Value 162,702 1,194 5 163,901 Net Carrying Amount at 1 July 2015 161,255 2,260 – 163,515 2015 Assets Under Construction (1,534) – – (1,534) Gross Carrying Amount 30 June 2015 162,547 2,260 – 164,807 Additions 6,260 – 6 6,266 Accumulated Depreciation (1,292) – – (1,292) Disposals (271) (1,347) – (1,618) Fair Value 161,255 2,260 – 163,515 Transfers – Assets For Sale (281) 281 – – (1) Land & Buildings held for sale are disclosed separately for reporting period June 2016 in accordance with ‘AASB 5 – Non–current assets held Net Revaluation Increments/ 2,524 – – 2,524 for sale and Discontinued operations’. (Decrements) Depreciation Expenses (5,251) – (1) (5,252) These assets will be disposed of because they are: A physical valuation was completed by an independent Fair Value at 30 June 2016 162,702 1,194 5 163,901 • at the end of their economic lives and it is valuer on 28th February 2016 with values effective unfeasible to upgrade them from 31st March 2016. For further details regarding the fair value measurement of property, plant and (a) Movement – ‘000 • in locations where the private rental market equipment refer to Note 1(i)(iii) Revaluation of Property, adequately provides rental properties Plant and Equipment on page 39. Land and Office • in locations where there is insufficient teacher Land and Buildings held Furniture and 2015 Total demand and assets in that location are (1) (b) Disposals $’000 Buildings for sale Equipment $’000 underutilised, or At Fair Value • a combination of the above 2016 2015 $’000 $’000 Net Carrying Amount at 1 July 2014 144,083 1,285 – 145,368 In 2015 the Authority conducted a review of its Assets Under Construction 1,397 – – 1,397 asset portfolio. These disposals are in line with the Gross Proceeds 1,729 4,069 Additions 1,893 – – 1,893 recommendations in that review. Written Down Value (1,618) (3,780) Disposals (3,780) – – (3,780) The following methods are used for disposing Disposal Costs (72) ( 211) Transfers – Assets For Sale (975) 975 – Authority assets. Loss on Disposal 39 78 Net Revaluation Increments/ 24,003 – – 24,003 a) to an NGO or government agency (Decrements) b) by public auction or public listing Depreciation Expenses (5,366) – – (5,366) c) to a sitting tenant Fair Value at 30 June 2015 161,255 2,260 – 163,515 d) by private treaty These assets are expected to be realised by 30 June 2017.
46 47 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
11. Fair Value Measurement of Non-Financial Assets Fair value hierarchy
Level 1 Level 2 Level 3 Total fair 2016 $’000 $’000 $’000 value $’000 Property, plant and equipment Land and buildings 162,702 – 162,702 Non-current assets (or disposal groups) held for sale Land and buildings – 1,194 – 1,194 TOTAL – 163,896 – 163,896
Level 1 Level 2 Level 3 Total fair 2015 $’000 $’000 $’000 value $’000 Property, plant and equipment Land and buildings – 161,255 – 161,255 Non-current assets (or disposal groups) held for sale Land and buildings – 2,260 – 2,260 TOTAL – 163,515 – 163,515
There were no transfers between Level 1 or 2 during the periods.
12. Payables
2016 2015 Payables comprise: $’000 $’000 Payable to DFSI – 531 Prepayments by Tenants 30 33 Other Creditors and Accruals 1,448 707 Total Payables 1,478 1,271
Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables, are disclosed in Note 17.
13. Borrowings
2016 2015 Borrowings comprise: $’000 $’000 TCorp Loan (Current Liability) – 164 TCorp Loan (Non-Current Liability) – 1,173 Total Borrowings – 1,337
Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables, are disclosed in Note 17.
48 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
11. Fair Value Measurement of Non-Financial Assets (a) TCorp Loan The Authority received Treasurer’s approval to obtain financial accommodation for up to $5.0 million, under Fair value hierarchy section 8(2) of the Public Authorities (Financial Arrangements) Act 1987. A Credit Foncier loan with a face value of Level 1 Level 2 Level 3 Total fair $5.0 million was obtained from NSW Treasury Corporation in February 2012 at a fixed interest rate of 4.98 % for 2016 $’000 $’000 $’000 value $’000 a term up to 10 years. Property, plant and equipment During 2015–16 the Authority paid TCorp loan principal $1.337m and interest $0.191m. Land and buildings 162,702 – 162,702 14. Commitments Non-current assets (or disposal The Authority is classified as a fully input-taxed entity. As such, the Authority is not eligible to claim input tax credits groups) held for sale from the Australian Taxation Office for any Goods and Services Tax (GST) paid on taxable acquisitions. Any GST Land and buildings – 1,194 – 1,194 paid on such acquisitions is accounted for as part of the cost of that acquisition and expensed or capitalised TOTAL – 163,896 – 163,896 accordingly. Where applicable, the following commitments for expenditure on goods or services include the GST payable.
Level 1 Level 2 Level 3 Total fair (a) Operating Lease Commitments 2015 $’000 $’000 $’000 value $’000 The Authority entered into an Occupation Agreement with DFSI over a period of 5 years commencing 1 April 2011. The lease has expired on 1 April 2016 and no new agreement has been entered as at 30 June 2016. Property, plant and equipment
Land and buildings – 161,255 – 161,255 2016 2015 Non-current assets (or disposal Office Lease Commitments $’000 $’000 groups) held for sale Payable within one year – 186 Land and buildings – 2,260 – 2,260 Total Office Lease Commitments – 186 TOTAL – 163,515 – 163,515
There were no transfers between Level 1 or 2 during the periods. (b) Other Operating Commitments – Property Maintenance and School Residence Refurbishment 12. Payables Expenditure commitments for property maintenance and school residence refurbishments arise from contracts entered into for the provision of contingent maintenance and programmed maintenance for dwellings included 2016 2015 within the Authority’s annual Property Refurbishment Program. The amount contracted for at balance date but not Payables comprise: $’000 $’000 recognised in the accounts as a liability is: Payable to DFSI – 531 Prepayments by Tenants 30 33 2016 2015 Property Maintenance Commitments $’000 $’000 Other Creditors and Accruals 1,448 707 Payable within one year 666 – Total Payables 1,478 1,271 Total Property Maintenance Commitments 666 – Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables, are disclosed in Note 17. (c) Capital Commitments 13. Borrowings Capital expenditure commitments arise from contracts entered into for the construction, acquisition and upgrading of dwellings included within the Authority’s Capital Program. The amount contracted for at balance date but not 2016 2015 recognised in the accounts as a liability is: Borrowings comprise: $’000 $’000 TCorp Loan (Current Liability) – 164 2016 2015 Capital Commitments $’000 $’000 TCorp Loan (Non-Current Liability) – 1,173 Payable within one year 10 – Total Borrowings – 1,337 Payable between two years 7 Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables, Total Capital Commitments 17 – are disclosed in Note 17.
48 49 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
15. Debts Written Off
2016 2015 Debts Written Off Comprise: $’000 $’000 Uncollectable rental account debts [Note 9(a)] 16 11 Total Debts Written Off 16 11
All possible action was taken to recover these debts before authority was obtained for write–off action.
16. Reconciliation of Net Cash Flow from Operating Activities to Operating Deficit For the purposes of the Statement of Cash Flows, cash includes cash on hand, cash at bank and investments readily convertible to cash. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled at Note 8.
Reconciliation of Cash Flow from Operating Activities to Net 2016 2015 result as reported in the Statement of Comprehensive Income $’000 $’000 Net result (2,454) (3,192)
Non Cash Expenses/(Revenues): Depreciation 5,252 5,366 Loss/(Gain) on Disposal of Non–Current Assets (39) (78) Borrowing Costs – TCorp Loan 134 95
Changes in Operating Assets and Liabilities: Increase/(Decrease) in Payables and other liabilities 207 (590) Decrease/(Increase) in Receivables 32 208 Increase/(Decrease) in Provisions – (933) Net Cash inflow/(outflow) from Operating Activities 3,132 876
50 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
15. Debts Written Off 17. Financial Instruments The Authority’s principal financial instruments are outlined below. These financial instruments arise directly from 2016 2015 the Authority’s operations or are required to finance the Authority’s operations. The Authority does not enter into or Debts Written Off Comprise: $’000 $’000 trade financial instruments, including derivative financial instruments, for speculative purposes. Uncollectable rental account debts [Note 9(a)] 16 11 The Authority’s main risks arising from financial instruments are outlined below, together with the Authority’s Total Debts Written Off 16 11 objectives, policies and processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout these financial statements. All possible action was taken to recover these debts before authority was obtained for write–off action. The Board has overall responsibility for the establishment and oversight of risk management and reviews and 16. Reconciliation of Net Cash Flow from Operating agrees policies for managing each of these risks. Risk management policies are established to identify and analyse Activities to Operating Deficit the risks faced by the Authority, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed by the Authority on a regular basis. For the purposes of the Statement of Cash Flows, cash includes cash on hand, cash at bank and investments readily convertible to cash. Cash at the end of the financial year as shown in the Statement of Cash Flows is (a) Financial Instrument Categories reconciled at Note 8. Financial Assets Carrying Amount Reconciliation of Cash Flow from Operating Activities to Net 2016 2015 2016 2015 result as reported in the Statement of Comprehensive Income $’000 $’000 Class: Note Category $’000 $’000 Net result (2,454) (3,192) Cash and cash equivalents 8 Not Applicable 5,942 7, 221 Non Cash Expenses/(Revenues): Receivables(1) 9 Loans and Receivables 304 336 Depreciation 5,252 5,366 (at amortised cost) Loss/(Gain) on Disposal of Non–Current Assets (39) (78) Payables(2) 12 Financial liabilities measured at 1,478 740 amortised cost Borrowing Costs – TCorp Loan 134 95 Borrowings 13 Financial liabilities measured at – 1,337 Changes in Operating Assets and Liabilities: amortised cost Increase/(Decrease) in Payables and other liabilities 207 (590) Notes Decrease/(Increase) in Receivables 32 208 (1) Excludes statutory receivables and prepayments (i.e. not within scope of AASB 7) Increase/(Decrease) in Provisions – (933) (2) Excludes statutory payables and unearned revenue (i.e. not within scope of AASB 7) Net Cash inflow/(outflow) from Operating Activities 3,132 876 (b) Credit Risk Credit risk arises when there is the possibility of the Authority’s debtors defaulting on their contractual obligations, resulting in a financial loss to the Authority. The maximum exposure to credit risk is generally represented by the carrying amount of the financial assets (net of any allowance for impairment). Credit risk arises from the financial assets of the Authority, including cash, receivables, and authority deposits. No collateral is held by the Authority. The Authority has not granted any financial guarantees. Credit risk associated with the Authority’s financial assets, other than receivables, is managed through the selection of counterparties and establishment of minimum credit rating standards. Authority deposits held with NSW TCorp are guaranteed by the State.
50 51 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
Cash The Authority is not materially exposed to Cash comprises cash on hand and bank balances concentrations of credit risk to a single trade debtor within the NSW Treasury Banking system. or group of debtors. Based on past experience, Interest is earned on daily bank balances at the debtors that are not past due (2016:Nil; 2015: Nil) monthly average NSW Treasury Corporation (TCorp) are not considered impaired. Debtors that are more 11 am unofficial cash rate, adjusted for a management than 2 months past due (2016:$15k; 2015:$3k) are fee to NSW Treasury. considered impaired and together these represent 19% of the total trade debtors. The Authority debtors Receivables – trade debtors represent a large number of individual teachers whose particular credit rating will vary and are unknown All trade debtors are recognised as amounts receivable to the Authority. There are no debtors which are at balance date. Collectability of trade debtors currently not past due or impaired whose terms have is reviewed on an ongoing basis. Procedures as been renegotiated. established in the Treasurer’s Directions are followed to recover outstanding amounts, including letters of The only financial assets that are past due or impaired demand. Debts which are known to be uncollectible are ‘sales of goods and services’ in the ‘receivables’ are written off. An allowance for impairment is raised category of the statement of financial position. when there is objective evidence that the entity will not be able to collect all amounts due. This evidence includes past experience, and current and expected changes in economic conditions and debtor credit ratings. No interest is earned on trade debtors.
Past due but Considered June 2016 ($’000) Total (1)(2) not impaired(1)(2) impaired(1)(2) 1 month – 3 months overdue 72 65 7 3 months – 6 months overdue – – – > 6 months overdue 5 – 5 2015 ($’000) 1 month – 3 months overdue 6 6 – 3 months – 6 months overdue 21 – 21 > 6 months overdue – – –
(1) Each column in the table reports “gross receivables”. (2) The ageing analysis excludes statutory receivables, as these are not within the scope of AASB 7 and excludes receivables that are not past due and not impaired. Therefore, the total will not reconcile to the receivables total recognised in the statement of financial position.
52 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
Cash The Authority is not materially exposed to (c) Liquidity Risk the policy set out in NSW TC 11/12. For small business Cash comprises cash on hand and bank balances concentrations of credit risk to a single trade debtor Liquidity risk is the risk that the Authority will be unable suppliers, where terms are not specified, payment within the NSW Treasury Banking system. or group of debtors. Based on past experience, to meet its payment obligations when they fall due. is made not later than 30 days from date of receipt Interest is earned on daily bank balances at the debtors that are not past due (2016:Nil; 2015: Nil) The Authority continuously manages risk through of a correctly rendered invoice. For other suppliers, monthly average NSW Treasury Corporation (TCorp) are not considered impaired. Debtors that are more monitoring future cash flows and maturities planning if trade terms are not specified, payment is made no 11 am unofficial cash rate, adjusted for a management than 2 months past due (2016:$15k; 2015:$3k) are to ensure adequate holding of high quality liquid later than the end of the month following the month in fee to NSW Treasury. considered impaired and together these represent assets. The objective is to maintain a balance between which an invoice or a statement is received. For small 19% of the total trade debtors. The Authority debtors continuity of funding and flexibility through the use of business suppliers, where payment is not made within Receivables – trade debtors represent a large number of individual teachers whose overdrafts, loans and other advances. the specified time period, simple interest must be paid particular credit rating will vary and are unknown automatically unless an existing contract specifies All trade debtors are recognised as amounts receivable to the Authority. There are no debtors which are During the current and prior year, there were no otherwise. For payments to other suppliers, the Head at balance date. Collectability of trade debtors currently not past due or impaired whose terms have defaults or breaches on any loans payable. No assets of an authority (or a person appointed by the Head is reviewed on an ongoing basis. Procedures as been renegotiated. have been pledged as collateral. The Authority’s of an authority) may automatically pay the supplier established in the Treasurer’s Directions are followed exposure to liquidity risk is deemed insignificant based simple interest. The Authority did not have to make to recover outstanding amounts, including letters of The only financial assets that are past due or impaired on prior periods’ data and current assessment of risk. any interest payment in this respect during the current demand. Debts which are known to be uncollectible are ‘sales of goods and services’ in the ‘receivables’ or prior years. are written off. An allowance for impairment is raised category of the statement of financial position. The liabilities are recognised for amounts due to be when there is objective evidence that the entity will paid in the future for goods or services received, The table below summarises the maturity profile of the not be able to collect all amounts due. This evidence whether or not invoiced. Amounts owing to suppliers Authority’s financial liabilities together with the interest includes past experience, and current and expected (which are unsecured) are settled in accordance with rate exposure. changes in economic conditions and debtor credit ratings. No interest is earned on trade debtors. Interest Rate Exposure ($’000) Maturity Dates Weighted Average Nominal Fixed Variable Non– Effective Amount(1) Interest Interest interest Past due but Considered 2016 Interest Rate ($’000) Rate Rate Bearing < 1 yr 1–5 yrs > 5 yrs June 2016 ($’000) Total (1)(2) not impaired(1)(2) impaired(1)(2) Payables: – 1,478 –– 1,478 ––– 1 month – 3 months overdue 72 65 7 Borrowings: – ––– –––– 3 months – 6 months overdue – – – 2015 > 6 months overdue 5 – 5 Payables: – 740 –– 740 ––– 2015 ($’000) Borrowings: 4.98% 1,337 262 – – 164 743 430 1 month – 3 months overdue 6 6 – Notes 3 months – 6 months overdue 21 – 21 (1) The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities based on the earliest date on > 6 months overdue – – – which the entity can be required to pay. The tables include both interest and principal cash flows and will not reconcile to the Statement of Financial Position. (1) Each column in the table reports “gross receivables”. (2) The ageing analysis excludes statutory receivables, as these are not within the scope of AASB 7 and excludes receivables that are not past due and not impaired. Therefore, the total will not reconcile to the receivables total recognised in the statement of financial position.
52 53 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
(d) Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Authority has no exposure to market risk. The Authority has no exposure to foreign currency risk and does not enter into commodity contracts. The effect on profit and equity due to a reasonably possible change in risk variable is outlined in the information below, for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after taking into account the economic environment in which the entity operates and the time frame for the assessment (i.e. until the end of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at the statement of financial position date. The analysis is performed on the same basis as for 2015. The analysis assumes that all other variables remain constant.
(e) Interest rate risk Exposure to interest rate risk arises primarily through the entity’s interest bearing liabilities. This risk is minimised by undertaking mainly fixed rate borrowings, from NSW TCorp. The Authority does not account for any fixed rate financial instruments at fair value through profit or loss or as available–for–sale. Therefore, for these financial instruments, a change in interest rates would not affect profit or loss or equity. A reasonably possible change of +/– 1% is used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility. The Authority’s exposure to interest rate risk is set out below.
($’000)
–1% +1%
Carrying Amount Result Equity Result Equity 2016 Financial assets Cash and cash equivalents 5,942 (59) (59) 59 59 Receivables 304 – – – – Financial liabilities Payables 1,478 – – – – Borrowings – – – – –
2015 Financial assets Cash and cash equivalents 7, 221 (72) (72) 72 72 Receivables 336 – – – – Financial liabilities Payables 740 – – – – Borrowings 1,337 – – – –
54 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016 Notes accompanying and forming part of the Financial Statements for the year ended 30 June 2016
(d) Market Risk (f) Fair Value compared to carrying amount Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of Financial instruments are generally recognised at cost. changes in market prices. The Authority has no exposure to market risk. The Authority has no exposure to foreign Except where specified below, the amortised cost of financial instruments recognised in the statement of financial currency risk and does not enter into commodity contracts. position approximates the fair value, because of the short–term nature of many of the financial instruments. The effect on profit and equity due to a reasonably possible change in risk variable is outlined in the information The following table details the financial instruments where the fair value differs from the carrying amount: below, for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after taking into account the economic environment in which the entity operates and the time frame for the 2016 2016 2016 2015 2015 2015 assessment (i.e. until the end of the next annual reporting period). The sensitivity analysis is based on risk $’000 $’000 Fair $’000 $’000 Fair exposures in existence at the statement of financial position date. The analysis is performed on the same basis as Carrying Value Value Carrying Value Value for 2015. The analysis assumes that all other variables remain constant. Amount Level Level Amount Level Level Financial assets (e) Interest rate risk Cash and Cash Equivalents 5,942 5,942 Level 2 7, 221 7, 221 Level 2 Exposure to interest rate risk arises primarily through the entity’s interest bearing liabilities. This risk is minimised by undertaking mainly fixed rate borrowings, from NSW TCorp. The Authority does not account for any fixed Receivables 304 304 Level 2 336 336 Level 2 rate financial instruments at fair value through profit or loss or as available–for–sale. Therefore, for these financial Financial liabilities instruments, a change in interest rates would not affect profit or loss or equity. A reasonably possible change of Payables 1,478 1,478 Level 2 740 740 Level 2 +/– 1% is used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility. The Authority’s exposure to interest rate risk is Borrowings – – Level 2 1,337 1,337 Level 2 set out below. The fair value of borrowings are based on all future discounted cash flows at current market yield of 3.87%. ($’000)
–1% +1% 18. Contingent Liabilities and Contingent Assets The Authority is unaware of any significant contingent liabilities or contingent assets as at 30 June 2016 Carrying (nil in June 2015). Amount Result Equity Result Equity 2016 19. After Balance Date Events Financial assets There were no events subsequent to balance date which affect the financial statements. Cash and cash equivalents 5,942 (59) (59) 59 59 Receivables 304 – – – – Financial liabilities End of Audited Financial Statements Payables 1,478 – – – – Borrowings – – – – –
2015 Financial assets Cash and cash equivalents 7, 221 (72) (72) 72 72 Receivables 336 – – – – Financial liabilities Payables 740 – – – – Borrowings 1,337 – – – –
54 55 Index Pages Pages Access to services 57 Key Performance Indicators 12, 15 Account Payment Performance 12, 14 Land Owned or Occupied 11 Achievements in 2015–16 3 Land Purchases 10 Aims and Objectives 2 Loan Facility 12 Appendices 20 Local Housing Representatives 7 Asset Disposal 10, 20 Maintenance 11 Asset Management 9 Managing Agents 7 Authority Meetings 6 Members of the Authority 5 Authority Membership 5 Multicultural Policies and Services Program 16 Benchmarking 12 Notes 38 Business Continuity Plan (BCP) 19 NSW Digital Information Security Policy, Business Plan/Statement of Business Intent 19 Compliance Attestation Statement 2015–16 19 Capital Delivery 16 NSW Public Sector Workforce Profile 17 Capital Program 10, 11, 20 Operating Results 12 Chairperson Report 4 Organisational Structure 16, 22 Charter 2 Other Activities 17 Consultants 18 Overseas Travel 19 Contents 1 Performance against Budget 13 Credit Card Certification 12 Principal Roles 16 Customer Satisfaction 9 Privacy and Personal Information Protection Disability Inclusion Plan 17 Act 1998 (PPIP Act) 17 Eco Village 10 Project Management 11 Employee Assistance Program 17 Property and Occupancy Data 15 Equal Employment Opportunity 16 Public Access to Government Information 17 Field Trips 8 Public Interest Disclosures (PID’s) 18 Financial Management 11 Public Sector Reforms and Legislative Changes 19 Financial Performance 11 Related Entity 6 Financial Statements 30 Rents 7 Flexible Accommodation 10 Rental subsidy 7 Focus for 2015–16 3 Review of Government Employee Accommodation 19 Government Property Register 17 School Residences 11 Hazardous Materials 10 Staffing Arrangement 16 Heritage Assets 11 Staffing Numbers 16, 21, 22 Housing Allocated 7 Stakeholders 16, 28 Housing Demand 8 Statement by Members 31 Human Resources 16 Strategic Asset Management Plan 10 Independent Auditors Report 32, 33 Tenancy Services Management 7 Industrial Relations 16 Vacancy/Occupancy Rate 8 Information and Communications Technology 18 Weekly Rental Amounts (applied from 1 May*) 15 Insurance 17, 21 Welcome Kit – Tenant Handbook 8 Internal Audit and Risk Management 18, 23 Workplace Health and Safety (WHS) 17 Internal Audit Plan 18 Key Financial Statistics Four Year Trend 12
56 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES – ANNUAL REPORT 2015–2016
Index Access to Services Pages Pages Access to services 57 Key Performance Indicators 12, 15 Street Address Tenancy Service Areas Account Payment Performance 12, 14 Land Owned or Occupied 11 McKell Building Northern NSW & Illawarra (02) 8276 8014 Level 18, 2–24 Rawson Place Achievements in 2015–16 3 Land Purchases 10 Riverina (02) 8276 8013 Sydney NSW 2000 Aims and Objectives 2 Loan Facility 12 Central Western (02) 8276 8015 Appendices 20 Local Housing Representatives 7 Postal Address Asset Disposal 10, 20 Maintenance 11 North Western (Bourke/Orange) (02) 8276 8012 Locked Bag 7 Asset Management 9 Managing Agents 7 Haymarket NSW 1240 Building Services (Assets) Authority Meetings 6 Members of the Authority 5 Technical Officer (North) (02) 8276 8031 Authority Membership 5 Multicultural Policies and Services Program 16 Key Telephone Numbers Benchmarking 12 Notes 38 Switchboard (02) 8276 8000 Technical Officer (South) (02) 8276 8032 Business Continuity Plan (BCP) 19 NSW Digital Information Security Policy, Toll Free 1300 137 343 Contracts Administration Officer (02) 8276 8033 Business Plan/Statement of Business Intent 19 Compliance Attestation Statement 2015–16 19 General Manager (02) 8276 8001 Maintenance Officer (responsive) (02) 8276 8034 Capital Delivery 16 NSW Public Sector Workforce Profile 17 Capital Program 10, 11, 20 Operating Results 12 Finance Manager (02) 8276 8020 General Inquiries Organisational Structure 16, 22 Chairperson Report 4 Financial Accountant (02) 8276 8022 Email: [email protected] Charter 2 Other Activities 17 Executive Officer (02) 8276 8004 Website: www.tha.nsw.gov.au Consultants 18 Overseas Travel 19 Contents 1 Performance against Budget 13 Manager Tenancy Services (02) 8276 8011 Business Hours Credit Card Certification 12 Principal Roles 16 Asset Manager (02) 8276 8030 Monday to Friday 8.30 am – 4.30 pm Customer Satisfaction 9 Privacy and Personal Information Protection Communications Project Officer (02) 8276 8003 This report is also available on the internet at Disability Inclusion Plan 17 Act 1998 (PPIP Act) 17 www.tha.nsw.gov.au/about/annualreport.cfm Eco Village 10 Project Management 11 Employee Assistance Program 17 Property and Occupancy Data 15 Equal Employment Opportunity 16 Public Access to Government Information 17 Field Trips 8 Public Interest Disclosures (PID’s) 18 Financial Management 11 Public Sector Reforms and Legislative Changes 19 Financial Performance 11 Related Entity 6 Financial Statements 30 Rents 7 Flexible Accommodation 10 Rental subsidy 7 Focus for 2015–16 3 Review of Government Employee Accommodation 19 Government Property Register 17 School Residences 11 Hazardous Materials 10 Staffing Arrangement 16 Heritage Assets 11 Staffing Numbers 16, 21, 22 Housing Allocated 7 Stakeholders 16, 28 Housing Demand 8 Statement by Members 31 Human Resources 16 Strategic Asset Management Plan 10 Independent Auditors Report 32, 33 Tenancy Services Management 7 Industrial Relations 16 Vacancy/Occupancy Rate 8 Information and Communications Technology 18 Weekly Rental Amounts (applied from 1 May*) 15 Insurance 17, 21 Welcome Kit – Tenant Handbook 8 Internal Audit and Risk Management 18, 23 Workplace Health and Safety (WHS) 17 Internal Audit Plan 18 Key Financial Statistics Four Year Trend 12
56 57 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES
Level 18, 2–24 Rawson Place, Sydney, NSW 2000 Haymarket Post Shop, Locked Bag 7, Haymarket, NSW 1240 www.tha.nsw.gov.au This page intentionally left blank 245 TEACHER HOUSING AUTHORITY OF NEW SOUTH WALES
Level 18, 2–24 Rawson Place, Sydney, NSW 2000 Haymarket Post Shop, Locked Bag 7, Haymarket, NSW 1240 www.tha.nsw.gov.au
Property NSW Annual Review 2015–16 Index
Note: This index covers information for Property NSW’s Annual Review, as well as GPNSW and SHFA’s statutory information. Refer to Appendix C for THA’s index (page 56 of their Annual Report).
A Access back cover After balance date 5 Agreements with Multicultural NSW 90, 158 Aims and objectives 78, 132
B Budgets 29
C Consultants 84, 144 Consumer response 83, 142 Credit card certification 84, 144
D Digital information security policy attestation 89, 158 Disability Inclusion Action Plans 82, 141 Disclosure of controlled entities 90, 152 Disclosure of subsidiaries 90, 158
246 E Exemptions 90, 158 External costs back cover
F Financial statements 38, 93, 159 Funds granted to non-government community organisations 90, 137
G Government Information (Public Access) Act 89, 147
H Human resources 79, 138
I Implementation of price determination 90, 158 Internal audit and risk management policy attestation 87, 154, 156 Investment performance 90, 158
L Land disposal 90, 158 Legal change 79, 138 Letter of submission Inside cover, 92 Liability management performance 90, 158
Property NSW Annual Review 2015–16 M Management and activities 2–23 Management and structure 5, 20, 78, 134 Multicultural Policies and Services Program 82, 140
N Numbers and remuneration of senior executives 80, 139
P Payment of accounts (including time for payment) 85, 145 Privacy and Personal Information Protection Act 88, 147 Promotion 83, 158 Public Interest Disclosures 88, 147
R Requirements arising from employment arrangements 79, 138 Research and development 90, 158 Risk management and insurance activities 86, 152
S Summary review of operations 2–33 247
T Teacher Housing Authority Annual Report 2015/16 183
W Websites 34, back cover Work Health and Safety 82, 142 Workforce diversity 80, 139
Property NSW Annual Review 2015–16 Property NSW Bligh House, Level 3, 4–6 Bligh Street, Sydney NSW 2000 GPO Box 4081, Sydney NSW 2001 T: 02 9273 3800
Level 6, 66 Harrington Street, The Rocks NSW 2000 PO Box N408, Grosvenor Place NSW 1220 T: 02 9240 8500 www.property.nsw.gov.au
Teacher Housing Authority NSW McKell Building, Level 18, 2–24 Rawson Place, Sydney NSW 2000 Locked Bag 7, Haymarket NSW 1240 T: 02 9260 2000 www.tha.nsw.gov.au
Waste Assets Management Corporation Level 2, 10 Valentine Avenue, Parramatta NSW 2150 PO Box 3366, Parramatta NSW 2124 T: 02 9685 4960 www.finance.nsw.gov.au/waste-assets-management-corporation
Valuation Services 1 Prince Albert Road, Queens Square, Sydney NSW 2001 PO Box 745, Bathurst NSW 2795 T: 1800 110 038 www.valuergeneral.nsw.gov.au
Public Works Advisory McKell Building, 2–24 Rawson Place, Sydney NSW 2000 T: 02 9372 8877 www.publicworksadvisory.nsw.gov.au
Annual Review and Annual Reports costs The 2015/16 Property NSW Annual Review and associated Annual Reports are produced in electronic format and are available to download from www.property.nsw.gov.au.
The reports were written, designed and produced in-house at no cost to Property NSW.