8.3. Annual Report 2019/20
AUTHOR: Sarah Malcolm, Corporate Planning Coordinator
ENDORSED BY: Ken Gouldthorp, General Manager
ATTACHMENTS: 1. 2020 Annual Report 28 June 2021 A [8.3.1 - 186 pages]
PURPOSE:
The purpose of the Annual Report is to outline for key stakeholders the achievements in implementing Council’s Delivery Program 2018/19-2021/22 which contribute to the strategic outcomes in the North Sydney Community Strategic Plan. Council has a statutory obligation to prepare an Annual Report in accordance with section 428 of the Local Government Act 1993, the Local Government (General) Regulation 2005 (Part 9, Division 7).
EXECUTIVE SUMMARY:
Council’s Annual Report for the financial year ended 30 June 2020 has been completed in accordance with section 428 of the Local Government Act 1993, the Local Government (General) Regulation 2005 (Part 9, Division 7), the Office of Local Government’s Integrated Planning and Reporting Guidelines (2013) and Annual Report Checklist, issued 5 November 2019 (Circular 19-28).
The ‘Our Performance’ section details highlights and key achievements against the projects in the Operational Plan 2019/20 (Year 2 of Delivery Program). The Annual Report also contains the Audited Financial Statements, this is the same version as Item 8.2 reported to this meeting. As required in the IPART Instrument, under section 508A of the Act, there is a report on expenditure funded by the additional income drawn from Year 1 of the Special Rate Variation.
In accordance with the Government Information (Public Access) Act 2009 copies of the Annual Report will be made publicly available for viewing at Council’s Customer Service Centre, on the website and Stanton Library. Copies are provided to the North Sydney Heritage Centre and NSW State Library. As required, the Annual Report will be provided to the Minister for Local Government by 31 December 2020.
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FINANCIAL IMPLICATIONS:
The Annual Report contains the Audited Financial Statements, which were initially submitted to Council 25 October 2020. The version contained within Attachment 1 is the same as Item 8.2 reported to this meeting. The Financial Statements have not changed from the version exhibited.
RECOMMENDATION: 1. THAT the Annual Report for 2020/21 be received.
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LINK TO COMMUNITY STRATEGIC PLAN
The relationship with the Community Strategic Plan is as follows:
5. Our Civic Leadership 5.1 Council leads the strategic direction of North Sydney
BACKGROUND
Council has a statutory obligation to prepare an annual report in accordance with section 428 of the Local Government Act 1993 (the Act), the Local Government (General) Regulation 2005 (Part 9, Division 7) and the Integrated Planning and Reporting Guidelines (2013) under section 406 of the Act. Council is required to report its achievements in implementing its Delivery Program and the effectiveness of the principal activities undertaken in achieving the objectives at which those principal activities are directed.
An Annual Report must contain: a) a copy of Council’s audited Financial Statements prepared in accordance with the Local Government Code of Accounting Practice and Financial Reporting; b) such other information as the Regulations or the Guidelines under section 406 may require; and c) summary of performance against the North Sydney Community Strategic Plan 2018/19-2027/28 (by way of performance against the Delivery Program 2018/19- 2021/22); and d) a report on expenditure funded by additional income drawn from a Special Rate Variation, where applicable.
CONSULTATION REQUIREMENTS
Community engagement is not required.
DETAIL
Council’s Annual Report 2019/20 has been completed in accordance with section 428 of the Local Government Act 1993, the Local Government (General) Regulation 2005 (Part 9, Division 7), the Office of Local Government’s Integrated Planning and Reporting Guidelines (2013) and Annual Report Checklist, issued 5 November 2019 (Circular 19-28).
The objectives of the Annual Report are to:
communicate our performance to the community;
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assess Council’s progress against set targets and outcomes; describe Council’s environmental, social, economic and governance performance; and meet legislative requirements.
The Annual Report includes a report of expenditure versus plan for Year 1 of the Special Rate Variation, in accordance with the requirements prescribed within IPART’s approval instrument.
Delivery Program Performance
The ‘Our Performance section of the Annual Report 2019/20 section details highlights and key achievements against the projects in the Operational Plan 2019/20 (Year 2 of Delivery Program). Council undertook 362 projects during Years 1 and 2 of the Delivery Program. As at 30 June 2020, 91% of projects were on track or completed; 9% of projects were delayed or not progressing. 107 projects have been completed, 218 projects were on track, 31 projects were delayed and carried over to 2020/21 and six projects were discontinued. The discontinued projects are not included in the statistics.
Audited Financial Statements
The Annual Report contains the Audited Financial Statements, which were initially submitted to Council 25 October 2020. The Financial Statements have not changed.
Copies of the Annual Report
In accordance with the Government Information (Public Access) Act 2009 copies of the Annual Report will be made publicly available for viewing at Council’s Customer Service Centre, the website and Stanton Library. Copies are provided to the North Sydney Heritage Centre and NSW State Library. As required, the Annual Report will be provided to the Minister for Local Government by 31 December 2020.
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NORTH SYDNEY COUNCIL ANNUAL REPORT 2019/20
progressivevibrant diverse 3738th Council Meeting - 30 November 2020 Minutes Page 5 of 190 Attachment 8.3.1
ACKNOWLEDGEMENT North Sydney Council acknowledges the Guringai Tribe and Cammeraygal Clan as the traditional owners of this land.
For further information regarding the Annual Report, contact Council’s Corporate Planning Coordinator on 9936 8270.
North Sydney Council 200 Miller Street North Sydney NSW 2060 Telephone (02) 9936 8100 Email [email protected] Website www.northsydney.nsw.gov.au
If you require the publication to be translated, phone Translating and Interpreting Service (TIS) on 13 14 50.
2 NovemberNorth Sydney 2020Council Annual Report 2019/20
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CONTENTS
Introduction 4 Year in Review 5
Mayor’s Message 6
General Manager’s Report 7
Financial Summary 8
Report of Activities funded by the Special Rate Variation (SRV) 13 Our Community 16
Our Vision, Mission and Values 17
Key Demographics 18
North Sydney Profile 19
Key Challenges and Opportunities 21
Australia Day Community Awards 23 Our Council 24
Our Councillors 25
Mayor and Councillor Allowances, Fees and Expenses 26 Our Organisation 28
Organisation Structure 29
Our Workforce 30
Corporate Governance 32
Community Engagement 37
Risk Management 38
Sustainability 40 Statutory Information 41 Our Performance 53
Performance against the Delivery Program/Operational Plan 54 Financial Statements 64
North Sydney Council Annual Report 2019/20 3
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INTRODUCTION
This Annual Report documents the performance of North Sydney Council for 2019/20 against the objectives in the North Sydney Community Strategic Plan 2018-2028 and the actions identified in theDelivery Program/Operational Plan 2019/20. It identifies major projects and activities implemented to improve and enhance the quality of life of our residents. The report provides transparent information for all Council stakeholders.
Council’s General Manager and Directors have reviewed the content of this Annual Report. Council adopted the Financial Statements at the Council Meeting on 30 November 2020 following a review by an independent external auditor.
The Annual Report is available on the Council’s website www.northsydney.nsw.gov.au.
A hard copy version of the Annual Report can be viewed at Council’s Customer Service Centre and Stanton Library, and printed copies are available on request.
4 North Sydney Council Annual Report 2019/20
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YEAR IN REVIEW
North Sydney Council Annual Report 2019/20 5
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MAYOR’S MESSAGE
The 2019/20 financial year was one of the most challenging for Council in more than a decade, with pressures coming from many different directions. As Mayor, I am proud of the way Council responded and the achievements outlined in this report. This was the first year of our Special Rate Variation so along with our regular projects, we had committed to an ambitious program to upgrade essential infrastructure. Although these projects are bread and butter work for local government, they make a huge difference to how our area looks and feels and we have received some lovely feedback about our new retaining walls and footpaths. Council also pressed ahead with the upgrade of the North Sydney Olympic Pool, getting it through to a completed DA. I am confident the design achieved a good balance between the heritage features we know and love and the new facilities we want and expect from a community aquatic centre. We weren’t the only ones undertaking infrastructure projects. The NSW Government forged ahead with the Metro stations at North Sydney and Crows Nest, as well as Harbour Bridge maintenance and the B-Line bus works. Several new premium office towers are under construction in the CBD and new tenants including Nine media and Google have moved in, so our vision for a vibrant and strong commercial centre continues to come to life. The other major project that threw us a curved ball was the release of the Environmental Impact Statement for the Western Harbour Tunnel project. Council identified a number of concerns and worked with the community on a campaign to highlight these to Transport for NSW and the MPs. The issues have not yet been resolved, but we are at the table, negotiating for better outcomes where we can. Of course, the largest and most unexpected challenge was the COVID-19 pandemic. Local Government has shown how adaptable and responsive to local issues that it can really be. We adapted our services to public health orders, offered discounts to support local business, adjusted budgets to cope with reduced income and changed work practices while maintaining productivity across a range of services. I’m always pleased to present Council’s achievements. In this unprecedentedly busy and difficult year I do so with an extra measure of pride, not only in my fellow councillors and the Council staff, but in the businesses and residents who make up this wonderful community.
Cr Jilly Gibson Mayor of North Sydney
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GENERAL MANAGER’S REPORT
Council entered the 2019/20 financial year recognising that the NSW Government’s infrastructure projects, high levels of private development and new legislative requirements would place additional pressure on our resources. I am pleased to report that despite the additional workload generated, we met our own ambitious targets for infrastructure renewal and ended the year on track for our services and projects. Of course, we could not anticipate the degree of upheaval created by the COVID-19 pandemic, which added an extra layer of complexity to both operations and finances. Under Public Health Orders, Council was required to close some services, including the Olympic Pool and Stanton Library, and significantly change the way others were delivered. Again, I am pleased to report that we met the challenge, retaining high levels of productivity across all service areas and finding innovative ways to provide services online or in a COVID-safe way. Council was proactive in supporting the business community, introducing a raft of initiatives to assist businesses to keep trading or re-open after closure. These included waiving rent for tenants of Council’s commercial properties, waiving footpath licensing and food inspection fees, reducing parking fees and supporting businesses to implement COVID-safety measures. Not surprisingly, the pandemic had a detrimental impact on Council’s revenue streams, with income $5.3 million below projections for the last four months of the financial year. Council was required to accelerate the annual depreciation on the North Sydney Olympic Pool due to the impending redevelopment ($6.2 million) and adjust for other mandatory international accounting standards in our financial statements. This resulted in a net operating loss of $5.1 million after grants and contributions for capital projects, instead of the $7.8 million surplus forecast in our original budget. This operating loss was reflected in the Operating Performance Ratio, which was below the benchmark for the first time since 2013/14. Council was well above the benchmark for all other operating measures and despite the deficit for the year, Council’s financial position remains sound. I would like to acknowledge the hard work of the Finance Team in meeting the new financial reporting standards and ensuring Council remains transparent in our financial reporting and asset management. This Annual Report highlights some of the outstanding achievements of the year including progressing the pool redevelopment, meeting new legislative requirements for planning, upgrading essential infrastructure and renewing community facilities such as parks, playgrounds and bushland walking tracks. I am pleased to present the 2019/20 annual report to you.
Ken Gouldthorp General Manager
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FINANCIAL SUMMARY
This section provides a more detailed overview of the 2019/20 Financial Statements (see page 64). The Statements have been prepared in accordance with the Australian Accounting Standards and the NSW Local Government Code of Accounting Practice and Financial Reporting. The Statements were independently audited by the Audit Office of NSW and lodged with the Office of Local Government as required by s417(5) of the Local Government Act 1993.
Highlights › Council recorded a deficit net operating result before grants and contributions provided for capital purposes of $11.5 million › overall income decreased by 10% to $121.33 million › total expenditure increased by $11.6 million to $126.46 million › capital expenditure in the year was $32.39 million (including plant replacement) › total assets increased by 7% to $1.29 billion › total liabilities decreased by 21% to $58.94 million › Council’s financial strength, indicated by net assets (what we own less what we owe), has increased by $69 million to $1.23 billion
The $5.13 million deficit for the year ending 30 June 2020 was largely caused by a one-off increase in depreciation of the North Sydney Olympic Pool complex prior to its closure for redevelopment in 2020/21 and the impact of the COVID-19 pandemic and the restrictions imposed by the Commonwealth and State governments to minimise its spread. Therefore, despite incurring a sizeable deficit in 2019/20, Council’s financial position as at 30 June 2020 remained sound. Council is committed to maintaining its long-term financial sustainability to deliver on the outcomes and strategies of the North Sydney Community Strategic Plan.
2019/20 Financial Results Overview ($,000)
The following table presents a summary of financial results for 2019/20. For more detailed information, refer to the full Financial Statements (also available from Council’s website).
Financial Results ($,000) 2019/20 Total Income 121,327 Total Expenses 126,460 Net Operating Result (5,133) Operating Result before Capital Income (11,511) Total Assets 1,292,796 Total Liabilities 58,938 Net Assets 1,233,858 Total Cash and Investments 91,196
Council made a net operating deficit (total operating result) of $5.13 million, compared to a surplus of $7.79 million forecast in the Original Budget and a revised budget surplus of $8.5 million forecast in the March Quarterly Budget Review. Before grants and contributions provided for capital purposes the deficit was $11.51 million, compared to a surplus of $4.71 million forecast in the Original Budget and a revised budget deficit of $3.36 million forecast in the March Quarterly Budget Review.
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Net Operating Result ($m) North Sydney Council has achieved a net operating surplus in four of the last five years.
Net Operating Result ($m) 2015/16 2016/17 2017/18 2018/19 2019/20 Operating Result before Capital Income 14 6.98 7.17 4.74 (11.51) Net Operating Result 62 25 16 20.51 (5.13)
Income Council’s total income for 2019/20 was $121.3 million, a decrease of $14.1 million year on year. The key drivers of the decrease were revenue shortfalls as a result of restrictions put in place by the NSW State Government in response to the spread of COVID-19 and a drop in revenue from capital grants and developer contributions.
Income Source ($m) 2015/16 2016/17 2017/18 2018/19 2019/20 Gains Asset Disposal 0.03 0.00 0.00 0.00 0.00 Interest and Investment 3.97 3.56 2.65 2.41 1.97 Operating Grants & Contributions 6.12 6.69 4.49 5.55 6.00 Capital Grants & Contributions 47.70 18.48 8.63 15.77 6.38 Other Income 28.51 23.50 17.84 19.11 8.83 Rental Income (previously included in other N/A N/A N/A N/A 7.01 income) Fees and Charges 25.47 29.81 33.21 33.69 28.26 Rates and Annual Charges 49.00 51.48 56.32 58.83 62.88 Total 160.80 133.52 123.13 135.37 121.33
Rates and annual charges were the highest income source, followed by fees and charges, other income and grants and contributions. Combining operating and capital grants, the four categories accounted for 98% of total income.
Expenses Council’s total expenditure for 2019/20 was $126.46 million. Total expenditure increased by $11.6 million year on year. Depreciation and a reduction in the fair value of our investment property portfolio were the key drivers of the increase. The top three contributors to expenses in 2019/20 were employee benefits, materials and contracts, and depreciation and amortisation.
Expenses ($m) 2015/16 2016/17 2017/18 2018/19 2019/20 Employee Benefits 40.54 41.37 41.01 44.99 46.19 Borrowing Costs 0.30 0.30 0.30 0.37 0.42 Materials & Contracts 34.42 34.16 36.73 36.80 37.34 Depreciation & Amortisation 15.54 18.69 19.13 22.11 29.35 Other Expenses 8.45 8.34 9.47 9.11 9.41 Loss Asset Disposal 0.00 5.20 0.69 1.48 0.92 Fair Value Decrement on Investment N/A N/A N/A N/A 2.83 Properties Total 99.24 108.06 107.33 114.86 126.46
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Our Financial Position is Sound As at 30 June 2020, net assets totalled $1.23 billion, including cash and investments of $91.2 million, infrastructure, property, plant and equipment of $1.1 billion. The unrestricted current ratio provides a measure of the adequacy of working capital and the degree to which unrestricted current assets can satisfy the organisation’s short-term commitments. As at 30 June 2020, Council’s unrestricted current ratio was 2.82 times, above the industry benchmark of 1.5 times. This means that Council’s unrestricted or internally restricted cash balance as at 30 June 2020 was 2.82 times the cash required to meet current liabilities at that date.
Key Financial Ratios Council met or bettered the industry benchmark for five of the financial performance indicators. Council was below the benchmark for all three of the infrastructure performance ratios. More detail on the asset breakdown is available in the Special Schedules Financial Report - Report on Infrastructure Assets as at 30 June 2020 in the 2019/20 Financial Statements.
Financial performance ratios Benchmark 2017/18 2018/19 2019/20 Operating Performance Ratio >0% 7.08% 3.34% (6.76%) Own Source Operating Revenue Ratio >60% 89.35% 83.98% 89.80% Unrestricted Current Ratio >1.5x 2.20x 3.45x 2.82x Debt Service Cover Ratio >2x 91.17x 27.62 15.11x Rates & Annual Charges, interest & extra charges 5% 1.29% 2.05% 2.90% Outstanding Cash Expenses Cover Ratio >3mths 6.69mths 8.74mths 9.50mths
Infrastructure management performance ratios Benchmark 2017/18 2018/19 2019/20 Building & Infrastructure Renewal Ratio >=100 199.63% 121.48% 79.33% Infrastructure Backlog Ratio <2% 6.77% 6.24% 4.01% Asset Maintenance Ratio >100% 107.92% 95.35% 97.95%
Operating Performance Ratio: This ratio measures revenue raised and its coverage of operational expenses. A positive ratio indicates operating revenue covers operating expenditure and will help to fund proposed capital expenditure. The ratio failed to meet the benchmark for the first time since 2013/14 at (6.79%). This result was due to the revenue shortfalls arising from the restrictions imposed to minimise the spread of COVID-19 and a one-off increase in depreciation of the North Sydney Olympic Pool complex prior to closure for redevelopment. Own Source Operating Revenue Ratio: This ratio measures Council’s reliance on external funding sources such as grants and contributions. At 89.80%, Council’s result was above the industry benchmark of 60%. Unrestricted Current Ratio: This measure of the adequacy of working capital and the degree to which unrestricted current assets can satisfy the organisation’s short-term commitments. As at 30 June 2020, Council’s unrestricted current ratio was 2.82 times above the industry benchmark of 1.5 times. For each $1 owed, Council had $2.82 to cover liabilities. Council has liquid assets that can meet short term liabilities as they fall due. Debt Service Ratio: This ratio measures the availability of operating cash to service Council’s borrowings. Excluding capital grants and contributions and non-cash items from the operating result, the net operating surplus was sufficient to cover annual interest payments 15.11 times. Rates & Annual Charges Outstanding: This ratio assesses the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of recovery efforts. The result at 2.90% is well within the benchmark of 5%. Cash Expenses Cover Ratio: This ratio indicates the number of months Council can cover immediate expenses without additional cash inflow. In 2019/20 it exceeded the benchmark of >3 months.
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Buildings and Infrastructure Renewal Ratio: This ratio shows whether assets are being renewed at the rate at which they are depreciating. This ratio failed to reach the benchmark for the first time since 2013/14 due to a one-off increase in depreciation of the North Sydney Olympic Pool complex prior to its closure for redevelopment. Council has an ongoing commitment to ensuring that sufficient funds are allocated to the renewal of infrastructure assets to offset their rate of depreciation. Infrastructure Backlog Ratio: This ratio shows the asset renewal backlog as a proportion of the total value of Council’s infrastructure. At 4.01% it failed to meet the benchmark of 2%. Note that increased funding allocated to remediating assets assessed to be in poor condition has seen a strong improvement in this ratio in 2019/20. Asset Maintenance Ratio: This ratio compares actual verses required annual asset maintenance. The ratio fell just short of the benchmark for 2019/20. Nevertheless, it has been at or about the benchmark every year since 2013/14, indicating that Council has been allocating significant funds to asset management to ensure that the infrastructure backlog does not increase.
Financial Strength: our net worth Council’s financial strength indicated by net assets (what we own less what we owe) has increased by $69.2 million to $1.23 billion.
Asset Management Assets 99% of Council’s total assets are comprised of: › cash and investments of $91.2 million › infrastructure, property plant and equipment valued at $1.1 billion › investment properties valued at $92.8 million
Net Assets ($’000) 2015/16 2016/17 2017/18 2018/19 2019/20 Cash and Cash Equivalents 5,521 6,172 5,908 14,083 9,235 Investments 95,434 74,606 63,081 73,145 81,961 Receivables 6,840 10,223 8,684 6,417 6,728 Inventories 43 46 58 57 33 Assets Held For Sale N/A N/A N/A 4,500 N/A Prepaid Expenses 226 273 282 244 378 Infrastructure, Property, Plant and Equipment 855,871 892,742 1,013,603 1,019,274 1,099,318 Investment in Shorelink Library Network 34 33 13 10 20 Investment Property 92,390 97,623 97,740 95,512 92,758 Right of Use Assets N/A N/A N/A N/A 2,365 Total Assets 890,673 1,056,359 1,081,718 1,189,369 1,213,242
Liabilities Council’s liabilities include debt, amounts owed to suppliers and amounts owed to employees for leave entitlements. Our total liabilities at 30 June 2020 were $58.9 million, an increase of $10.3 million (21%) due to a change in the treatment of unspent grant funds at balance date in order to comply with new accounting standards.
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Net Assets ($’000) 2014/15 2015/16 2016/17 2017/18 2018/19 Payables 25,290 20,309 20,697 20,767 22,015 Borrowings 9,720 9,500 9,500 8,911 8,100 Provisions 16,139 16,038 14,851 16,299 17,137 Income received in advance - 1,844 1,233 2,613 - Contract Liabilities N/A N/A N/A N/A 9,287 Lease Liabilities N/A N/A N/A N/A 2,399 Total Liabilities 51,149 47,691 46,281 48,590 58,938
Statement of Cash Flows The Statement of Cash Flows shows Council’s cash inflows and outflows. Our year ending cash and investments balance was $91.2 million, $4 million more than that of the previous year. This increase was mainly due to delays in the commencement and/or completion of some capital projects.
Cash Balance ($’000) 2018/19 2019/20 Cash and Cash Equivalents 14,083 9,235 Investments 73,145 81,961 Total Cash, Cash Equivalents and Investments 87,228 91,196
Capital Works Expenditure Council has an extensive capital works program to renew, upgrade and provide new assets. Council spent $30.5 million on capital works in 2019/20 (excluding plant replacement) compared to $27.6 million in 2018/19. Most of the funds were spent as below: › Public domain improvements - $9.4 million › Renewal of roads and footpaths - $4.9 million › Refurbishment of Council properties - $3.9 million › Renewal of stormwater drainage - $2.4 million › Renewal of retaining walls and sea walls - $2.2 million › Traffic and bicycle facilities - $2 million › St Leonards Park Masterplan implementation - $1.1 million. The graph below shows total capital works expenditure over the last five years.
Capital Works Expenditure (excluding plant replacement) $m 60 51.3 50 43.7 40 39.3 30.5 30 27.6
20
10
0 2015/16 2016/17 2017/18 2018/19 2019/20
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REPORT OF ACTIVITIES FUNDED BY THE SPECIAL RATE VARIATION (SRV)
On 14 May 2019, IPART advised that Council’s SRV and minimum rate increase was partially approved, meaning that Council can increase both residential and business rates by 7% per annum, inclusive of the rate peg, for three years (i.e. until 30 June 2022) not five years. Council will raise less additional revenue than requested so cannot deliver the full program of works advertised in the SRV Information Sheet (October 2018). The additional revenue enables Council to maintain existing service levels (including verge mowing, graffiti removal and the Precinct System) plus generate $11.9 million total additional funds available over three years – an additional $7.3 million to address the condition 5 (very poor) assets and the remaining funds will enable the Council to undertake the additional capital works: › St Leonards Park Masterplan implementation › Public Domain upgrades in Neutral Bay, Cremorne, Kirribilli and McMahons Point villages › Playground upgrades in Sirius Street Reserve and Grasmere Children’s Park › Walking trail upgrades in Primrose Park and Gore Cove to Smoothey Park
The table below outlines the forecasted SRV activity timeline:
Program Project Link 2019/20 2020/21 2021/22
Asset Renewals - Additional Drainage 2.1.1.07 ● ● ● Gross Pollutant Traps 2.1.1.13 ● ● Footpaths 2.1.1.05 ● ● Marine Structures 2.1.1.11 ● Retaining Walls 2.1.1.09 ● ● ● Roads 2.1.1.08 ● Seawalls 2.1.1.10 ● ● ●
Projects St Leonards Park Masterplan Implementation 2.2.1.10 ● ● Neutral Bay and Cremorne Village Upgrades 2.2.1.09 ● ● ● Kirribilli and McMahons Point Village Upgrades 2.2.1.12 ● Upgrade at Sirius Street Reserve Playground 1.4.1.39 ● Upgrade Grasmere Children’s Park Playground 1.4.1.49 ● Primrose Park Walking Track Upgrade 1.4.1.41 ● Gore Cove to Smoothey Park Walking Track Upgrade 1.4.1.40 ●
The SRV expenditure budget in 2019/20 was $2,604,277. Actual expenditure was $1,701,205. The proposed program for all SRV funded projects was delivered last year, except for the Sawmillers Reserve and Hayes Street Boardwalk Neutral Bay marine structures projects. There were delays gaining authority approvals for both these projects resulting in a delay in the finalisation of the design stage. Expenditure on the Hayes Street Jetty and the Sawmillers Wharf marine upgrades was less than planned by $902,992.
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The table below outlines the actual expenditure in 2019/20 by category and activity:
Program Project SRV Budget Total Actual Total SRV Project funds used Expenditure
2019/20 2019/20
Asset Renewals - Additional Drainage Gerard Lane Cremorne $230,000 $230,000 Bennett Street, Cremorne $230,000 $230,000 Drainage Total $230,000 $388,588 $230,000 Seawalls Hayes Street, Neutral Bay $300,102 $180,000 Quibaree Park, Lavender Bay (Seawall $230,000 $230,000 and Boat Ramp Project) Blues Point Reserve, McMahons Point $397,084 $230,000 Seawalls Total $500,000 $860,364 $500,000 Retaining Walls Lodge Road, Cremorne $123,487 $123,487 Iredale Avenue, Cremorne Point $52,500 $48,218 Retaining Walls Total $171,705 $175,987 $171,705 Footpaths Cremorne Road, Cremorne $75,000 $75,000 Footpaths Total $75,000 $75,000 $75,000 Hayes Street Jetty, Neutral Bay (2019/20 Marine Structures $62,957 $62,957 costs only) Sawmillers Reserve Wharf, McMahons $71,349 $230,000 Point (2019/20 costs only) Marine Structures Total $230,000 $230,000 $230,000
Projects Neutral Bay & Cremorne Public Domain Military Road, Cremorne $1,315,074 $500,000 Masterplan Public Domain Masterplan Total $500,000 $1,315,074 $500,000 Sirius Street Reserve Playground Playgrounds $200,000 $200,000 Upgrade, Cremorne Point Playgrounds Total $200,000 $200,000 $200,000 GRAND TOTAL $2,604,277 $3,149,319 $1,701,285
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The chart below summarises total SRV funds spent by category in 2019/20.
$120,274 $200,000
Drainage $134,306 Seawalls
Retaining Walls $500,000 Footpaths
Public Domain Masterplan
$500,000 Marine Structures
Playgrounds
$171,705 $75,000
For the year ended 30 June 2020, the net operating result was a deficit of $5.1 million, compared to a surplus of $7.8 million forecast in the Long Term Financial Plan (LTFP). Before capital grants and contributions, the deficit was $11.5 million, compared to a surplus of $4.7 million forecast in the LTFP. Actual income from continuing operations totalled $121.3 million, compared to $121.2 million forecast in the LTFP. Actual expenses from continuing operations totalled $126.5, compared to $113.4 million forecast in the LTFP. The net operating result was $12.9 million worse than forecast due to the drivers below: 1. Depreciation was $7.8 million higher than forecast. 4. Income from user charges and fees and property rental The majority of this variance arose from the revised was significantly impacted by the COVID-19 pandemic assessment of the useful life of the North Sydney and the subsequent restrictions imposed to minimise Olympic Pool complex prior to its redevelopment, which its spread. Actual revenue from these income categories resulted in an additional $6.2 million of depreciation was $3.7 million below that forecast in the LTFP. above the amount allowed for in the LTFP. 5. Employee costs were $1.4 million higher than forecast, 2. The fair value of Council’s investment property portfolio mainly due to an increase in the provision for employee dropped by $2.8 million over the year due to falling leave entitlements. property values in Sydney during the June quarter. As 6. Offsetting the aforementioned negative impacts on the the LTFP factored in a $1 million increase in the fair forecast result, income from grants and contributions value, this represented a $3.8 million negative impact was $4.3 million higher than forecast mainly due to versus the forecast result. the receipt of unbudgeted additional grant funding from 3. Net losses from the disposal of assets totalled $922,000. Transport for NSW for urban landscaping works along During the year, property and infrastructure assets the Military Road corridor in conjunction with the with a carrying value of $1.1 million were replaced. Northern Beaches B-Line Program and from the NSW The resulting write-off turned a forecasted modest gain Department of Planning, Industry and Environment to of $402,000 into a loss. This represented a $1.3 million assist in the acceleration of Council’s Local Environment negative impact on the forecast result. Plan review program. The minimum rates amount that applied for both residential and business properties during the year was $563 per assessment.
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OUR COMMUNITY
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OUR VISION Shaping a progressive, vibrant and diverse North Sydney community.
MISSION AND VALUES Mission To be leading edge in serving the community of North Sydney by caring for its assets, improving its appearance and delivering services to its people in a financially, socially and environmentally responsible manner.
Values › Sustainability - equity, preservation, justice and precaution › Community service - efficiency, effectiveness and responsiveness › Open government - transparency and accountability › Ethical conduct - honesty and integrity › Justice - fairness and equity › Quality - innovation and excellence › Teamwork - cooperation and respect
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KEY DEMOGRAPHICS
Below is a summary of key demographics for the North Sydney Local Government Area (LGA): The Australian Bureau of Statistics estimated resident population at 30 June 2019 was 75,021 people. This is an increase of 934 from the previous year. The population is expected to increase to 84,422 people by 2036, +11.14%. (This forecast is derived using Council records of current and planned residential development.) Key: North Sydney LGA Data Point (increase % v 2011 census) (decrease v 0.2%) Greater Sydney % MEDIAN AGE COUPLES WITH LONE PERSON CHILDREN 6% HOUSEHOLDS 37 Greater Greater Sydney 18% Sydney 8% 35% 32% OLDER COUPLES (-1.7%) (1) WITHOUT Greater Sydney 36% (2.6%) CHILDREN (1.1%) Greater Sydney 20% HOUSEHOLDS MEDIAN WEEKLY (2.7%) RENTING HOUSEHOLD 89% INCOME Greater Greater $150 Sydney Sydney for RENT $582 44% 33% Greater Sydney $447 MEDIUM AND HIGH $2,356 MEDIAN DENSITY HOUSING 47% (1%) Greater Sydney $1,745 WEEKLY RENT LANGUAGE AT HOME UNIVERSITY Greater QUALIFICATION Sydney OTHER THAN (1.4%) JOBS 6.0% ENGLISH 38% Greater Greater Sydney Sydney 54% 3.7% 36% 37% (0%) (4.6%) UNEMPLOYMENT (2.6%) 22% OVERSEAS BORN Greater Sydney 28% RATE
PARTICIPATION (3.3%) SEIFA INDEX OF HOMELESS RATE 40% DISADVANTAGE PERSONS 411 Greater 2016 ESTIMATED 2016* Sydney (Source: ABS, 71% 23% 2049.0, Estimating (0.2%) Homelessness, 2016) PUBLIC TRANSPORT 1108 Greater Sydney 36% (to work) Greater Sydney 1018
(Source ABS 2016 Census of Population & Housing & The population experts, September 2018)
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NORTH SYDNEY PROFILE Location and Boundaries The LGA is in Sydney’s inner northern suburbs, about three kilometres from the Sydney GPO. The LGA includes the suburbs of Cammeray, Cremorne, Cremorne Point, Crows Nest, Kirribilli, Kurraba Point, Lavender Bay, McMahons Point, Milsons Point, Neutral Bay, North Sydney, St Leonards (part), Waverton and Wollstonecraft. It is bounded by Willoughby LGA in the north, Mosman LGA in the east, Port Jackson in the south and the Lane Cove LGA in the west.
LONG BAY
LONG BAY
CAMMERAY WILLOUGHBY BAY CREMORNE
TUNKS WARD
CAMMERAY CROWS NEST CREMORNE
WOLLSTONECRAFT NORTH CROWS SYDNEY NEST NEUTRAL BAY WOLLSTONECRAFT WARD CREMORNE
WAVERTON WOLLSTONECRAFT VICTORIA WARD NORTH SYDNEY
NEUTRAL BAY MOSMAN BAY
G O R E C O V E WAVERTON BALLS HEAD NORTH CREMORNE BAY SYDNEY POINT
SHELL NORTH NEUTRAL COVE LAVENDER SYDNEY BAY BAY
BERRYS BAY CAREENING LAVENDER COVE MCMAHONS BAY POINT
KIRRIBILLI PORT JACKSON
PORT JACKSON
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Key Features and History The North Sydney area is now predominantly residential, The population is well educated compared to greater with substantial commercial areas. Features include Sydney with 54% of people holding university the North Sydney CBD, HMAS Waterhen, Admiralty qualifications. House, Kirribilli House, May Gibbs’ Nutcote Cottage, Most households are family households. There is a Luna Park, North Sydney Olympic Pool, North Sydney high proportion of lone person households and couples Oval, TAFE NSW Northern Sydney Institute (St Leonards without children. 15% of households are made up of Campus), Australian Catholic University (MacKillop couples with children, compared with 35% in Greater Campus), Mater Hospital and the Sydney Harbour Sydney. Bridge. In 2016 the North Sydney population was living in In 2016, 38% of the population was born overseas; 36,785 dwellings. There are 3,764 (10.2%) separate 22% were from a non-English speaking background. houses in North Sydney, 9,196 (25%) medium density The most common countries of birth are England 7.6%, dwellings, and 23,629 (64.2%) high density dwellings. New Zealand 3% and China 2.9%. The North Sydney Dwelling density is higher in North Sydney than in other population is expected to increase by 11.14% by 2036. parts of Sydney with 86.5% residing in medium or high- The median age is currently 37, with the majority of the density dwellings compared to 40% in Greater Sydney. population falling into the young workforce, 25-34 age group. It is expected the number of dwellings in North Sydney will grow from 36,785 in 2016 to 41,642 in 2026. The largest expected increase in persons between 2011 and 2036 is in the 75 - 79 years category, which The largest increase in household type between 2016 is expected to increase by 1,361, accounting for 3.4% and 2026 is forecasted to be in lone person households. of the total population. For more information about North Sydney’s demographic characteristics, refer to the North Sydney community profile at https://profile.id.com.au/north-sydney
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KEY CHALLENGES AND OPPORTUNITIES There are considerable trends, challenges and Moving in and around North Sydney opportunities that have the potential to impact North Sydney’s strategic direction. These challenges are North Sydney is well serviced by public transport. Due accounted for in the process of forward planning. to North Sydney’s position in metropolitan Sydney’s transport network there are many private motor vehicles Challenges and opportunities were identified with travelling within and through the LGA. This leads to residents through the Community Strategic Plan traffic congestion and impacts on pedestrian accessibility community engagement process. The COVID-19 and amenity. There is a high demand for on-street pandemic is a recent challenge that has been added parking around the commercial centres. to this list. Our challenge is to advocate for improved roads and public transport, encourage greater use of public Growing and Changing Population transport and walking or cycling as alternatives to car North Sydney’s population is expected to increase to use. There is a need to balance the demand and supply over 84,000 people by 2036. The number of people of parking and to maximise the benefits of the Sydney aged over 65 will represent 17% of the population by Metro. 2036. It is forecasted that 30-34 year olds will be the largest age category. More households are likely to be Remaining Competitive and Creating a single people or couples without children. Stronger Economy A large number of new dwellings, particularly in St Leonards, continues to drive population growth in the The North Sydney economy is increasingly part of the LGA. Council is focussing on meeting the needs of a global economy. There are over 15,000 businesses growing and changing population, offering appropriately operating and around 60,000 people working in North targeted support services to ensure that we adjust to Sydney. North Sydney is a major employment centre the community’s needs. so has an employment capacity target of between 76,000 and 81,500 jobs by 2036. Greater Pressure on Natural Resources North Sydney offers surrounding high amenity residential and mixed use precincts with specialist services and There are many natural and human challenges that experiences. North Sydney CBD is a thriving office confront North Sydney and the region. These include market. Macquarie Park has replaced the North Sydney pressure from population growth; increased demand CBD as the second largest office market in metropolitan for resources; diminishing capacity to send waste to Sydney. North Sydney CBD will benefit from higher landfill sites; and the potential impact of changes to our proportions of jobs in professional, scientific and climate. technical services, financial and insurance services, Council must collaborate with our partners to address and information media and telecommunications. our use of scarce resources such as water and energy St Leonards is increasing its health and education to manage the long-term impacts of climate change. facilities evolving into a health and education precinct. St Leonards is a key employment centre in Greater Ageing Infrastructure Sydney. The new Metro station proposed at Crows Nest will provide further opportunity for renewal and Most infrastructure in North Sydney was built in the activation. early to mid-twentieth century. Roads, footpaths, drains and public buildings are coming to the end of their Our challenges are to plan infrastructure for business, useful life, requiring renewal or replacement. reinvigorate North Sydney CBD, and utilise all the opportunities that the education, medical, The forecasted population growth will challenge Council telecommunications and multimedia clusters offer to to deliver infrastructure in the LGA that meets current ensure North Sydney remains competitive and nationally and future community expectations whilst managing significant. existing and future resources.
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Healthy, Safe and Connected Communities Growing Community Expectations and Remaining Living within connected and safe communities and Financially Sustainable pursuing a healthier lifestyle are important. Our Traditionally, councils focused their activities on challenge is to deliver services directly and to collaborate collecting rubbish, maintaining roads and collecting with other government and community agencies in rates to pay for these services. While recent Customer service delivery. Satisfaction Surveys have shown that these and other traditional services, such as street cleaning, park Housing that is Affordable and Diverse maintenance and development assessment remain important, the list of services that the community The affordability of local housing places strain on believes are important for Council to provide has grown households within North Sydney. Declining affordability considerably. Council now provides childcare; runs can prevent low and moderate income earners from events; provides a library and aquatic and sporting entering the property market over time. This increases facilities. the risk of our younger population moving to more affordable areas, which will contribute to increasing the North Sydney, like most Australian local government older demographic in North Sydney. authorities, faces a shortage of funds, with the largest single demand on Council’s resources being the renewal Parents with children, couples without children, single and maintenance of infrastructure. This leaves scarce people and others will continue to grow, requiring resources for constructing new assets and expanding diverse housing options. Houses are becoming less non-core services. affordable, so these groups are preferring to reside in smaller residences close to the city, shopping, schools Council’s challenge is to engage continually with the and transport where they are less reliant on private community to understand and manage expectations motor vehicles rather than buying homes that are further and optimise service delivery at an affordable cost to away and more affordable. the community. Our challenge is to offer affordable and diverse choice in housing, through strategic forecasting and planning COVID-19 to meet the requirements of our community. The economic impact of the COVID-19 pandemic on business and the community is clear. Growing Demand for Sport, Recreation and The impact of COVID-19, including emerging Open Space amendments to State legislation impacting local government financial arrangements and general The demand for open space, sporting and recreation economic conditions, raises significant risk to Council’s facilities is increasing as our population grows. Our cash flow and financial position going forward. The challenge is to meet our residential and visitor community emerging and rapidly changing State legislation and demand for active and passive recreation spaces given policy response to COVID-19 raises substantial risk to the limited supply of land. Council’s budget. Council’s ability to maintain infrastructure and its long term financial sustainability Greater Collaboration between all will be impacted. Council will continue to monitor and Stakeholders respond to these emerging financial impacts. Local government operates under a range of legislation In response to the recognised local government revenue that determines the functions Council undertakes on impacts, a variation to the NSW Local Government the community’s behalf. Many of the aspirations within (State) Award was made to help manage associated the Community Strategic Plan are beyond the scope workplace arrangements. The variation, called the of this legislation and are therefore beyond the direct Splinter Award, applies to over 100 councils (out of influence of Council. 124) including North Sydney Council. Our challenge is to partner and collaborate with other The Splinter Award recognises local government organisations, stakeholders and tiers of government to revenue is not isolated from the economic impacts achieve the outcomes we have worked together to occurring due to COVID-19 and that local government identify. has deliberately been excluded from the majority of Federal and State COVID-19 financial relief measures.
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AUSTRALIA DAY COMMUNITY AWARDS
Council calls for nominations for Australia Day Community their tireless work, they help to educate the community Awards for a number of categories, and a ceremony to about the rich history of the Coal Loader, the return of present these awards is held with the community on the site to the community, its modern-day uses and its Australia Day. In 2020, the award winners were: many sustainability initiatives and programs.
Citizen of the Year: Reverend Dr Paul Dale, Senior Pastor of Church by the Bridge. Environmental Citizen of The Year: The Coal Loader Aquaponics Volunteer Group. Reverend Dale has served his church and the North Sydney community for 17 years. He started his journey This innovative group has been developing a new as Assistant Minister at St Thomas Anglican Church method of growing food, aiming to create a community in North Sydney before taking up responsibility for teaching resource. Visitors to the Coal Loader Centre Church by the Bridge on Broughton Street, Kirribilli, in will eventually be able to use this resource to learn how 2005. At the time there were less than 30 congregation to symbiotically raise plants and fish in a small space members. Today the church has more than 700 adult to use as a source of food. members and 200 children. These dedicated volunteers journey to the site every One of Reverend Dale’s passionate projects is the day, in the morning and in the evening, to feed the fish, annual Carols under the Bridge event which is one of monitor the temperature/PH and ammonia levels, the largest Christmas celebrations on the lower north maintain the pumps and to tend to the plants. shore. The event draws thousands of people each year and is organised and financed by the Church and supported by Council.
Under Reverend Dale’s leadership, the Church has grown its social outreach programs in the community, including fortnightly lunch meetings at Greenway and monthly meetings at the James Milson Retirement Village and James Milson Nursing Home. The Church also organises English classes, weekly playgroups for under-fives and other programs for primary and high school aged kids and adolescents.
Young Citizen of The Year: Zoe Moore. Zoe was nominated by Phoenix House Youth Services in Crows Nest for the positive impact she has had on her peers who attend the study support service. She has assisted her peers with their studies and organised school holiday trips and gym sessions with other students. Her kindness, enthusiasm and support has helped bring the students together and encouraged a sense of community. Zoe is passionate about women’s rights and environmental issues. She has also previously undertaken volunteer work at an orphanage in Vietnam during her travels in South East Asia.
Community Group of the Year: The Coal Loader Community Tour Guides. This wonderful group of dedicated volunteers provide free tours of the Coal Loader to community groups, Citizen of the Year, Reverend Dr Paul Dale, Senior Pastor of Church by schools, and interested visitors every week. Through the Bridge and Jilly Gibson, Mayor of North Sydney
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OUR COUNCIL
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OUR COUNCILLORS Mayor and Councillors 2019/20
Mayor of North Sydney Council
Mayor Jilly Gibson
Tunks Ward
Cr Tony Carr Deputy Mayor Cr Dr Alanya Cr Stephen Barbour Drummond
Victoria Ward
Cr Kathy Brodie Cr Jessica Keen Cr MaryAnn Beregi
Wollstonecraft Ward
Cr Zoë Baker Cr Ian Mutton Cr Samuel Gunning
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such as a computer and printer/fax for Council business The Role of Council purposes, stationery and refreshments at Council and Council operates under the Local Government Act 1993 Committee meetings. (LG Act). The Council is responsible for providing Councillors also receive an annual allowance set by the leadership, monitoring the performance of Council, Local Government Remuneration Tribunal. This overseeing the allocation of the Council’s resources allowance is paid in recognition of the demands placed and determining policies of Council. on Councillors in carrying out their civic duties. The categorisation is based on population growth, operating revenue, services to greater Sydney and industrial, Electoral Representation residential and commercial centres. Councillor allowances Local government elections to elect Councillors and are paid in accordance with that categorisation. For the directly elect a mayor are held every four years. From 2019/20 financial year Council was categorised as ‘metropolitan small.’ September 2017 the elected Council has comprised 10 Councillors (including the popularly elected Mayor) The allowances and fees paid in 2019/20 were: across three wards. The next election is set for 4 September 2021. The elections were postponed from Allowances and Fees Amount ($) 2020 to 2021 due to the COVID-19 pandemic. Mayor allowance 44,000 The Mayor presides at meetings of the Council, carries Councillors’ fees and allowances 203,000 out the civic and ceremonial functions of the civic office, Total 247,000 exercises the policy making functions of the governing body of the Council between its meetings and any other functions that the Council determines. Council’s Mayor and Councillor Facilities and Benefits Policy, provides for the following benefits: The Mayor and Councillors employ and delegate the management and delivery of Council services to the Councillor Expenses Amount ($) General Manager. The responsibilities of Councillors, and the additional responsibilities of the Mayor are Conferences and Seminars 7,000 defined under the LG Act. Mobile Phones 4,000 Sundries 2,000 Mayor and Councillor Allowances, Fees and Printing & Stationery 1,000 Expenses Childcare 1,000 Sustenance – Councillors 3,000 Councillors are entitled to reimbursement for reasonable Travelling – Taxis/Couriers/Etags/ business expenses when attending conferences, 2,000 Public transport seminars, meetings or functions. Approval to attend conferences and seminars is granted through resolution Total 20,000 of the Council. Councillors are entitled to receive facilities
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Councillor Training and Attendance - LG Act s232
Participation of Councillors and the Mayor in ongoing professional development is outlined below.
Councillor Name of Training/Development Activities Attended Mayor Gibson Local Government NSW Conference Road Safety Symposium - Run by Institute for Sensible Transport Code of Conduct and Code of Meeting Practice (LGNSW) Cr Baker Code of Conduct and Code of Meeting Practice (LGNSW) Cr Barbour Code of Conduct and Code of Meeting Practice (LGNSW) Cr Beregi Code of Conduct and Code of Meeting Practice (LGNSW) Cr Brodie Code of Conduct and Code of Meeting Practice (LGNSW) Cr Carr Code of Conduct and Code of Meeting Practice (LGNSW) Cr Drummond Code of Conduct and Code of Meeting Practice (LGNSW) Cr Keen Code of Conduct and Code of Meeting Practice (LGNSW) Cr Mutton Code of Conduct and Code of Meeting Practice (LGNSW)
Councillors’ Meeting Attendance
Councillor attendance at Council and Committee meetings, briefings and workshops are outlined in the table below. Ordinary Extraordinary Governance Legal & Other Council Council & Finance Planning Councillor Councillor Meetings Meetings Meetings Committee Committee Briefings Workshops Total Meetings 10 2 5 5 21 1 Mayor Gibson 10 2 5 5 21 1 Cr Baker 8 2 3 1 8 1 Cr Barbour 9 2 4 3 5 1 Cr Beregi 10 2 1 1 3 1 Cr Brodie 10 2 5 4 21 1 Cr Carr 9 2 2 1 4 1 Cr Drummond 10 2 5 4 15 1 Cr Gunning 8 2 0 0 0 0 Cr Keen 9 2 5 5 17 1 Cr Mutton 10 2 5 5 17 1
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OUR ORGANISATION
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ORGANISATION STRUCTURE
GENERAL MANAGER
Executive Support Legal Services
Governance & Committee Services
OPEN SPACE & CORPORATE COMMUNITY & ENGINEERING & ENVIRONMENTAL CITY STRATEGY SERVICES LIBRARY SERVICES PROPERTY SERVICES SERVICES
Communications Community Asset Environmental Administration & Events Development Management Services Services
Contracts Engineering Landscape Planning Development Library Services Management Infrastructure & Design Services
Customer Services & Project Environmental & North Sydney Oval Records Management Management Building Compliance
North Sydney Integrated Planning Financial Services Property Assets Olympic Pool & Special Projects
Traffic & Strategic Planning Human Resources Parks & Reserves Transport Services (Land Use)
Information Works Ranger & Parking Technology Engineering Services
Procurement Services
Risk Management
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OUR WORKFORCE Our Staff Retaining and Attracting Employees Council is committed to recruiting, developing and The number of full time equivalent (FTE) permanent retaining its staff. Planning for the needs of our current staff decreased over the year from 399 to 386 workforce and those of the future is a major focus for employees. Human Resources. Council’s Workforce Management Strategy outlines this commitment. Total Staff FTE The aim of the strategy is to ensure we retain our staff, 398 hold a strong position within the employment market 2015/16 and remain an employer of choice. 2016/17 389 Remuneration - Reg cl 217(1)(b) 2017/18 378 (i),(ii),(iii),(iv),(v) 2018/19 399 The management executive ensures the remuneration 2019/20 386 review process remains transparent and equitable, and that managers are engaged in the process. Note: Data excludes ‘employees’ defined as casuals or agency resources who meet the ad hoc needs of relevant Council business. Council’s performance review program focuses on individual and team performance that can be directly linked to the Community Strategic Plan strategic Staff Turnover priorities, together with department and personal In 2019/20 Council retained 88% of its workforce. Forty- performance objectives. eight employees terminated their employment, a staff The total remuneration including salary, superannuation turnover rate of 12% for the year. and non-cash benefits paid to senior staff in 2019/20 Permanent FTEs leaving the organisation was: 2015/16 2016/17 2017/18 2018/19 2019/20 Total Remuneration including Staff 10% 16% 19% 12% 12% all benefits 2019/20 ($) Note: Data excludes “employees” defined as casuals or agency Senior Staff (Directors) 1,543,000 resources who meet the ad hoc needs of relevant Council business. General Manager 428,000 Includes full time, part time and casuals. Total 1,971,000 Joint Consultative Committee Staffing and Recruitment The Joint Consultative Committee (JCC) consists of Human Resource Management elected staff and senior management representatives. It is coordinated by the Human Resources Department Programs are in place to ensure equitable treatment and meets monthly. The JCC facilitates workplace of staff by recognising and rewarding superior reform to enhance the efficiency and productivity of performance, protecting health, safety and welfare and Council. the provision of opportunities for training and development. Ensuring Equity and Diversity in Employment Council’s Personal Performance Appraisal (PPA) system provides a means to appraise and improve organisation Council is rich in talent and diversity. This reflects our performance by linking and aligning individual, team, approach to recruitment, selection and promotion. Our and organisation objectives and results. The program employment record is evidence of our support for focusses on future development and identifies and cultural diversity. rewards good performance and provides a means for In line with Australian trends, Council has a high managing underperformance. representation of males in senior management roles. The representation of women in middle management is in line with Australian trends, with 2019/20 at 31%.
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The result is below the 2018/19 Office of Local free from discrimination and harassment and provides Government benchmark of 39%. equal employment opportunities for current and prospective employees. Our success depends on Women in Middle/Executive Management attracting and retaining the best people to support our community. 2017/18 2018/19 2019/20 In 2019/20, Council prioritised the following EEO 10 (19.5%) 12 (31%) 9 (31%) policies: Most employees are at the officer level (93%). Senior › Anti-discrimination and EEO Policy management represents 7% of the total workforce. › Workplace Adjustment Policy Employees by Category as at 30 June 2020 (*comprises General Manager and Directors) The EEO Policy ensures all employees work in an environment that fosters mutual employee respect and where each employee can progress to the fullest of his Management Level # of Employees or her capabilities. This enhances Council’s efficiency Executive* 6 and service delivery. As part of our commitment to EEO, employee nominees Managerial 24 are given the role of EEO Contact Officers, trained to Non-managerial 381 deal with EEO issues and to assist people who have been harassed or discriminated against. Council Return to work retention rates after parental leave as conducted face to face EEO awareness sessions for at 30 June 2020 were 100% for males and 100% for managers and recruitment and selection training in the females. first half of the year. Due to the COVID-19 restrictions, the E-Learning systems were used to promote the EEO Council is an Equal Employment Opportunity (EEO) program. employer committed to providing a workplace that is
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CORPORATE GOVERNANCE Our Community Strategic Plan Accountability and Transparency The North Sydney Community Strategic Plan 2018-2028 Council regularly informs the public on our performance, outlines the strategic directions for the North Sydney expenditure of funds, and of any significant issues that community. Council tracks progress toward achieving occur. Council does this through our annual and the overall outcomes on a quarterly basis. quarterly reporting.
Ethical Decision Making Open Access to Information High Standards of Conduct Council is committed to complying with the Government Information (Public Access) Act 2009 (the GIPA Act). North Sydney has a culture that strongly values ethical Under the GIPA Act there are four ways that information behaviour, integrity, honesty and professionalism. can be made available to the public. These are On induction, all employees are given training and are mandatory disclosure of ‘open access information’, required to sign the Code of Conduct. Refresher training proactive release of information, informal release of and awareness sessions are provided for Council’s information, and through a formal access application. longer-serving employees. In accordance with the GIPA Act, the following There were no instances of suspected or actual corrupt documents are available on Council’s website, unless conduct reported during 2019/20. The Code of Conduct stated otherwise and are available for inspection free is available for public inspection at Council’s Customer of charge at Council’s Customer Service Centre, 200 Service Centre, Stanton Library and on the website. Miller Street, North Sydney, during normal office hours: › North Sydney Community Strategic Plan 2018-2028 New Legislation › Annual Financial Statements There have been no new or amended items of legislation › Annual Report introduced by other levels of government that affected › Annual reports of bodies exercising functions the structure and operations of Council over the past delegated by the local authority 12 months. › any codes referred to in the Local Government Act Financial Reporting 1993 › Auditor’s Reports Audit, Risk and Improvement Committee (ARIC): This Committee independently reviews the objectivity › Code of Meeting Practice and reliability of Council’s financial information, and › the Model Code of Conduct for Local Councils ensures Financial Statements are supported by prescribed under s440 (1) of the Local Government appropriate management sign off on the adequacy of Act 1993. internal controls. A special meeting is also held to review › Council, Committee and Reference Group meeting Council’s Annual Financial Statements. agendas, reports (business papers - excluding for Internal Audit: Council participates in the Northern matters considered when part of a meeting closed Sydney Internal Audit Group with neighbouring councils. to the public) and minutes External Audit: An Auditor General appointed by › Council’s Code of Conduct - Councillors and Staff Council annually audits Council’s Financial Statements › Council’s Land Register - available for inspection by to ensure they are true and fair and comply with appointment at Council’s Customer Service Centre applicable Australian Accounting Standards. › Council’s policy concerning the payment of expenses, Governance and Finance Committee: Deals with the and the provisions of facilities to councillors administrative and policy functions of Council, including › departmental representative reports presented at a responsibilities of financial oversight. meeting of the Council in accordance with section 433 of the Local Government Act 1993
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› EEO Management Plan available by lodgement of an informal access › Council’s Delivery Program; Operational Plans and application. Resourcing Strategy (Long Term Financial Plan, Information not available on the Council website can Asset Management Strategy and Workforce be obtained by submitting an informal or formal request Management Strategy) for the release of government information under the › register of current declarations of disclosures of GIPA Act. Such requests are accepted unless there is political donations kept in accordance with s328A of an overriding public interest against disclosure. the LG Act - online link to the Election Funding Public Interest Disclosures (PID) - PID Act Authority website › Register of Delegations 1994, s31; PID Regulation 2011, c14 › register of graffiti removal work - available for Councillors and Council staff are encouraged to report inspection by appointment at Council’s Customer what they believe to be unethical conduct within the Service Centre organisation. › Register of Investments Council is required under the Public Interest Disclosures Act to collect and report on information about public › register of voting on planning matters interest disclosures (PIDs). › returns of the interest of Councillors, designated No PIDs were made for the period 1 July 2019 to 30 persons and delegates - available for inspection by June 2020. appointment at Council’s Customer Service Centre › Schedule of Fees and Charges. Council has the Internal Reporting - Public Interest Disclosures Policy in place. This policy is available for Members of the public may purchase copies of these public inspection at Council’s Customer Service Centre, documents. Stanton Library and on the website. Other information that Council has available for inspection includes: Record Keeping › Environmental Planning Instruments, Development Corporate documents are kept in a best practice Control Plans and Plans made under s7.11 (formerly electronic records management system. s94) of the Environmental Planning and Assessment Act 1979 applying to land within the LGA › Local policies adopted by the Council concerning Functions Delegated by Council to External approvals and orders Bodies - Reg cl 217(1)(a6) Plans of Management for Community Land. › Council did not delegate functions to any external Information about development applications is available bodies during 2019/20. as follows: › Development applications (within the meaning of the Controlling Interest in Companies - Reg cl Environmental Planning and Assessment Act 1979), 217(1)(a7) lodgement documentation and determination is available on the Council’s website online using the Council holds a controlling interest in Nutcote Pty Ltd DA tracking system. Associated documents received which is the trustee company for the Nutcote Trust. in relation to a proposed development may be made
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Partnerships, Cooperatives and Joint Ventures - Reg cl 217(1)(a8) Council was a party to the following partnerships, cooperatives and joint ventures:
Program Description Aboriginal Heritage Management Joint Venture between Lane Cove, North Sydney, Manly, Ku-ring-gai, Pittwater, Program Ryde, Warringah and Willoughby Councils and Department of the Environment and NSW Heritage Office to manage and preserve Aboriginal heritage sites. Joint Special Interest Group (SIG) Joint SIG between Canada Bay, Gosford, Melton (Vic), Mosman, Newcastle, Noosa (Qld), North Sydney, Shellharbour, Tea Tree Gully (SA), Wellington (NSW), Wellington (SA) Councils and Avand and Civica to provide better integration of Civica - Authority and Advanced Data Integration - DataWorks applications in the areas of document storage and management and the control of names within the applications. Metropolitan Public Libraries An organisation representing the concerns of sharing knowledge and bulk Association (NSW) purchasing. Northern Sydney Regional An organisation representing the concerns of local government in the greater Organisation of Councils Northern Sydney region. (NSROC) Road Safety Program North Sydney Council and Roads and Maritime Services jointly fund the position of a Road Safety Officer. The Road Safety Officer’s role includes public education regarding road safety issues. Shorelink A library management network involving Lane Cove, Manly, Mosman, Stanton and Willoughby public libraries. Statewide Mutual Insurance Pool A cooperative designed to provide access to reasonably priced insurance. James Milson Village A community project providing accommodation for approximately 250 aged people on the lower North Shore. The Village is operated by the North Sydney Retirement Trust, (the Trust”).
Purchasing Decisions Purchasing decisions are made in compliance with s55 of the LG Act. Goods and services valued above $150,000 over the life of the contract are subjected to a publicly advertised tender process and require approval by Council resolution. All successful and unsuccessful tenderers are notified in writing of the tender evaluation outcomes. Quotations are to be publicly advertised where expenditure will be greater than $75,000 and less than $150,000. For expenditure between $25,000 and $75,000, a minimum of three quotations is required. Providing the pricing is competitive, a supplier may be selected, and direct procurement may occur, where expenditure on a good, service or material will not exceed $25,000 over the life of the contract. All potential suppliers are treated impartially. All processes, evaluations and decisions are transparent, free from bias and fully documented in accordance with applicable policies and requirements. Any actual or perceived conflicts of interest are identified, disclosed and appropriately managed. Any information provided to Council by a supplier is treated as commercial-in-confidence and is not released unless authorised by the supplier or relevant legislation. The total value of Council’s major contracts (>$150,000 each) awarded was $15.53 million. The following contracts and agreements over $150,000 were awarded:
Contractor Goods and Services Supplied Amount ($) Alexander Street, Crow’s Nest - Footpath Upgrade Ezy Pave Pty Ltd $267,285.85 Works Ezy Pave Pty Ltd Atchison Street, St Leonards - Footpath Upgrade $276,425.74 Raguz Building Services Alexander Street car park - Toilet Upgrade 4-2020 $284,835.00 SLR Consulting Australia Pty Ltd Air Quality Monitoring $157,534.00 Ezy Pave Pty Ltd Grosvenor Lane - Streetscape Works $1,398,721.21 Hideaway Landscapes Pty Ltd Open Space Mowing Services $975,575.00
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Contractor Goods and Services Supplied Amount ($) Wrightway Security Pty Ltd Security Services NYE $180,111.23 Downer Pipetech Stormwater Drainage Relining Works $495,117.00 Evergreen Turf Forsyth Park #1 Oval Reconstruction $241,146.00 Civil Works (NSW) Pty Ltd Seawall Restoration Works $809,270.00 Garwood International Pty Ltd Supply of Two Six-metre Cubic Garbage Compactors $234,500.00 Optimal Stormwater Hayes Street Gross Pollutant Trap Construction $327,935.00 St Leonards Park Upgrade - Stage One - Miller Street Growth Civil Landscapes P/L $1,998,080.52 Forecourt Neutral Bay & Cremorne Public Domain Upgrade CA&I Pty Ltd $755,018.40 Stage 2. Portion A & C Military Road Neutral Bay & Cremorne Public Domain Upgrade EzyPave Pty Ltd $611,533.00 Stage 2. Portion B & D Military Road Sawmillers Reserve & Hayes St Wharf Reconstruction Polaris Marine Constructions Pty Ltd $569,146.00 - Portion A Sawmillers Reserve & Hayes St Wharf Reconstruction Patrick Collins Construction Pty Ltd $197,420.00 - Portion B Sullivans Constructions Blues Point Reserve Amenities Refurbishment $153,340.00 GPT Cleaning, Pipe Cleaning and CCTV Camera Total Drain Cleaning Service $322,640.00 Inspections Military Road, Neutral Bay - Public Domain Upgrade - EzyPave Pty Ltd $627,429.20 Stage 3 Corporate Initiatives North Sydney Oval Electronic Media Screen $548,200.00 Ezy Pave Pty Ltd Young Street Footpath Upgrade Works $466,172.00 Ezy Pave Pty Ltd Ridge Street Cycleway Construction Stage 2 $216,190.00 Bedrule Pty Ltd Rowlison Parade, Cammeray Footpath and Road $236,124.88 Anzellotti Constructions Pty Ltd Kirribilli Milsons Point 40km-h HPAA - Stage 1 $328,116.44 Ezy Pave Pty Ltd Storm Water Drainage Construction Works $648,229.53 Ignite Architects Pty Ltd Hume Street Park - Consultancy Service $348,536.00 Conybeare Morrison International Pty Ltd Northern CBD Planning Study $242,312.50 Total Drain Cleaning Service GPT Cleaning Program $190,163.00 The Trustee for Troy Family Trust St Thomas Park Playground $190,000.00 Solgen Energy Pty Ltd Solar PV Car Shade System $317,487.76 The Trustee for Troy Family Trust Sirius Street Reserve Playground $229,174.00 Computer Systems (Australia) Pty Ltd Data Centre Refresh $684,759.00
Social Procurement Council is committed to socially responsible procurement. All procurement practices are sustainable and strategically aligned with Council’s goals: › achieving greater value for money across the community through the use of procurement; › ensuring all businesses have the same opportunity to tender for Council contracts; › enhancing partnerships with other councils and suppliers.
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Competition Policy The principle of competitive neutrality requires that government businesses operate without net competitive advantages over the private sector as a result of their public ownership. The following functions were categorised as being business activities and ones to which the principles of competitive neutrality would be applied: Category 1: Turnover of more than $2m per annum
Name Description of Activity Waste management services Domestic and trade waste and recyclables collection and disposal Commercial property management Managed rental property portfolios
Category 2: Turnover of less than $2m per annum
Name Description of Activity Development applications Buildings, development and subdivision approval processing Car parking services Permanent and casual off-street parking facilities subject to hire North Sydney Oval Function Centre Bar and catering facilities available for hire to the public and members
The Financial Statements for the year ended 30 June 2020 disclose the operating results for category 1 and category 2 activities. Council did not receive any competitive neutrality complaints this year. All competitive neutrality complaints are dealt with in accordance with Council’s Procurement Policy and Complaints Handling Policy. These policies are available for public inspection at Council’s Customer Service Centre, Stanton Library and on the website.
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COMMUNITY ENGAGEMENT
Council hosted numerous engagements in 2019/20, In addition, Council conducted: giving stakeholders the opportunity to provide input into › 10 consultations for Council policies (draft or a broad range of projects, services and policies. amended) - including the Draft Single Use Plastics Methods of engagement vary per project, depending Policy, Draft Place Making Policy, Amended on the decision type/level of impact in accordance with Encroachment Management Policy, Amended Access Council’s Community Engagement Protocol. Major to Information Policy and Trailer Parking Policy engagements included: › three consultations regarding planning proposals - › proposed Alcohol-Free Areas 2019-2023 including (North Sydney LEP Review 2019 & Draft › draft Arts and Cultural Strategic Plan North Sydney DCP Review 2020; Small Bars in › draft Bushland Rehabilitation Plan (11 Reserve Kirribilli and NSDCP 2013 Amendment - Extended groupings) Trading Hours in Kirribilli Village; 6 & 8 Hayes Street, Neutral Bay) › amended Community Engagement Protocol (incorporating the Community Participation Plan › two consultations regarding playground upgrades requirements) - including Sirius Street and St Thomas Rest Park Playgrounds › Stage 1 and 2 of Civic Precinct Planning Study (formerly named Northern CBD Planning Study) › two consultations regarding public art - The Sun Also Rises gifted from Sculpture by the Sea 2019 › Draft Events Strategy › two consultations regarding active transport/walking › Draft External Communications Strategy and cycling upgrades - including Ridge Street Active › Draft Fees and Charges Schedule 2020/21 Transport Stage 2 › Draft Local Housing Strategy › two consultations regarding implementation of the › Draft Local Strategic Planning Statement Small Watercraft Storage Strategy and the Cremorne › Draft Financial Statements 2018/19 Reserve Masterplan › Floodplain Risk Management Study and Plan › one consultation regarding an ‘exclusive construction lease’ and a ‘non-exclusive licence’ over community › Military Road Corridor Planning Study (discussion land. papers in two parts Neutral Bay Town Centre Objectives & Ideas, Neutral Bay Town Centre Analysis and Future Direction Report) 2020 Customer Satisfaction Survey › New Year’s Eve 2019 feedback Council periodically conducts a representative telephone › Stage 2 North Sydney CBD Public Domain Strategy survey to measure satisfaction with services. The › Draft Operational Plan and Budget 2020/21 feedback informs our work plans, funding prioritisation and indicators in the Community Strategic Plan. The › Precinct System Discussion Review Stage 1 (Precinct findings were reported to the Council in May 2020. System Discussion Paper and Amended Code of Councillors noted that the positive 2020 results could Conduct, Precinct System Officebearers and not have been achieved without the efforts of staff, Members) through the consistently high level of service provided › Proposed Uses of Ex-Waverton Bowling Club site to our community. › Amended Resourcing Strategy 2018-2028 The mean score of residents’ overall satisfaction with › Draft Smart City Strategy Council was 5.4 (83% satisfied) out of a possible 7, a › Draft Taxi and Ride Sourcing Strategy and Action 0.2 increase on 2016 (up from 5.2) and the highest Plan ever result across the seven surveys conducted between › Ward Boundaries Review 2004 and 2020. › Draft Visitor Economy Strategy The mean score of business overall satisfaction with › Draft 40km/h and 10km/h Shared Zone Masterplan Council was 5.0 (65% satisfied) out of a possible 7, a and Action Plan 0.3 mean point score increase on 2016. › Kirribilli and Milsons Point High Pedestrian Activity Area
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RISK MANAGEMENT Recognising and Managing Risk The chart below aggregates index values to give an impression of the distribution of risk across Protective Under the auspices of the Audit, Risk and Improvement Security Framework (PSF) domains. Committee (ARIC) and the senior management team, Council has developed an enterprise risk management Risk across PSF domains (ERM) framework that enables its business and protects its assets. Council’s approach is consistent with standard AS ISO 31000:2018 Risk management - Guidelines, which emphasises: 23% › the principles of risk management as critical success 27% criteria › leadership by the senior team › holistic integration of risk management with organisational governance › risk management as a continuous improvement process 23% › an open systems model that can be readily adapted to business needs and context. 27%
Council’s risk profile Council’s enterprise risk methodology assesses risk and the maturity and effectiveness of controls. Behind each assessment in the enterprise risk register is an People Information index value that is the product of the consequence and likelihood scales in the risk matrix. Physical Governance
Protective Security Framework Domain Summary (PSF) The PSF domain model includes a taxonomy of risk sources, ranked below:
PSF domain model Information management Assets/infrastructure Financial Compliance/regulatory/legal Human services Environment/climate change Sustainability/resilience Workforce/WHS Probity/fraud/corruption
0 20 40 60 80 100
At a practical level, Council organises its risk management activity through its PSF, which received a high commendation at the Statewide Mutual Risk Management Excellence Awards. The PSF aligns risk management with the following domains:
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Governance Information ›C: ARI Risk and Internal Audit functions have › Information Security Management System (ISMS): developed a risk-based protocol, embodied in a The ISMS organises controls to protect Council’s dedicated continuous improvement program aligned information assets and is steered by an InfoSec with the PSF. This model ensures best use of Working Group. It is modelled principally on standard resources and complements the expanding scope AS ISO/IEC 27001 Information technology - Security of External Audit under the NSW Auditor-General. techniques - Information security management systems - requirements (ISO 27001), supplemented › Business continuity: Council’s Crisis Plan reflects with other relevant best practice models such as the best practice with a distributed model supported by Payment Card Industry Data Security Standard (PCI specialised sub-plans and incident handling DSS). Following several years of concerted effort, resources. The model was tested successfully in a Council’s ISMS is recognised as a leader in local facilitated exercise in November 2019 and has proven government and the next lifecycle will focus on effective in responding to the challenges posed by integration with corporate plans and ever closer COVID-19. alignment to best practice such as ISO 27001 and › Insurance: Our long-term risk mutualisation strategy PCI DSS. through Statewide Mutual membership is aimed at › Incident management: Council’s business continuity minimising the impact of adverse global trends such and information security incident management plans as catastrophic claims, low returns on invested funds, have been extensively updated and integrated. The and general market instability. Crisis Team and the newly established information People security Incident Response Team (IRT) conducted a joint exercise in November 2019. The scenario › Pandemic: The emergence of COVID-19 in 2020 was business email compromise (BEC), currently has significantly shaped our priorities during this the costliest cybercrime globally. Council’s insurers period. Council has effectively monitored and facilitated the exercise and it was observed by responded to rapidly changing regulatory Internal Audit for assurance purposes. The outcome requirements that impact the operation of our validated the best practice planning model and guided business, and staff and community safety. Significant improvements in role definition and communication. achievements include the revision and deployment As many of the controls are relevant to pandemic of Council’s Pandemic Plan and subsequent management, Council’s business continuity model COVID-19 Safety Plans; invoking of the Crisis and was well positioned to respond and adapt to the Pandemic Teams; implementation of physical COVID-19 pandemic unfolding in early 2020. distancing, personal protective equipment, and hygiene/cleaning regimes; supporting rapid adoption Physical of working from home arrangements; and a › Asset Management Working Group (AMWG): This comprehensive communication strategy incorporating body steers improvements in the physical domain, regular emails to staff, dedicated COVID-19 intranet especially in the areas of corporate planning and pages, posters and display material, and a variety rationalising asset information. Since inception, the of digital messaging. AMWG has developed its knowledge and › Work Health and Safety Platform: There has been effectiveness in managing risks to physical assets. some slippage in the implementation timeframe for The AMWG is organising asset information into a the WHS platform due to COVID-19 priorities. “single source of truth” to improve planning, reporting Implementation of the identified priority modules - and resourcing. The Risk team is contributing its incident management and contractor management asset risk and insurance data to provide valuable - is imminent with first level User Acceptance Testing insights for continuous improvement and assurance. (UAT) currently in progress. Significant effort has been invested in data cleansing and realigning business hierarchy to facilitate smooth operation of workflows and escalations.
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SUSTAINABILITY
North Sydney’s commitment to ensuring the sustainability of our organisation and community into the future is described in the Community Strategic Plan. The Community Strategic Plan ensures that we are preparing for a sustainable future.
Organisational Sustainability Policy Council’s Organisational Sustainability Policy defines sustainability as: ‘maintaining and enhancing our quality of life, while ensuring the viability of Council, now and in the future, through an integrated consideration of environmental, economic, social and governance factors’. Council applies this quadruple bottom line approach to its planning, reporting and decision making. Planning, reporting and decision making will include consideration of the environmental, economic social and governance implications with the aim to work toward sustainability. Council’s principles of sustainability are:
Environmental quality Council will enhance natural assets, while considering the economic, social and governance implications of decisions Economic prosperity Council will promote a strong local economy, while considering the environmental, social and governance implications of decisions Social equity Council will ensure access to services, facilities and amenities, and encourage community participation while considering the environmental, economic and governance impact of decisions Good governance Council will govern in order to achieve its objectives within an acceptable degree of risk without compromising its environmental, economic and social wellbeing
Resilient Sydney
The Rockefeller Foundation launched 100 Resilient Cities to mark the centenary of the Red Cross in 2013. This initiative promotes the resilience of major cities around the world based on a model of identifying, assessing and preparing for acute shocks and chronic stresses, which can be characterised as follows: › Acute shocks: sudden, sharp events (eg, financial crisis, pandemic, cyber-attack, facility emergency) › Chronic stress: gradually emerging phenomena and trends (eg scarce resources, ageing population, automation, infrastructure maintenance) The City of Sydney hosts Resilient Sydney for metropolitan councils, and North Sydney has contributed its PSF model. There is a roughly equal distribution of acute shocks and chronic stresses across North Sydney Council’s risk profile. The acute shock scenarios inform Council’s crisis and business continuity planning. Chronic stresses influence Council’s long-term planning, particularly in the area of financial sustainability. The distribution within each PSF domain is:
Enterprise risk distribution
Governance
People
Information
Physical
0 20 40 60 80 100 Acute shock Chronic stress
More information can be found at https://www.cityofsydney.nsw.gov.au/vision/sustainable-sydney-2030/resilient- sydney.
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STATUTORY INFORMATION
41 Page 45 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
As a result of this review, we released the following Access Applications - Government Information information proactively: Public Access (GIPA) Act s125(1) › 919 responses to documented Informal Access to The GIPA Act requires Council to report in detail on Information Applications the handling of access applications. This statement is › increased categories of DA associated information in accordance with the GIPA reporting requirements. on the Applications Tracking section of the Council Commentary on applications for information under GIPA website including publication of submissions can be found below. › online publishing of information referenced in Review of proactive release program Council’s Agency Information Guide › continued Live Minutes of Council Meetings Council’s program for the proactive release of information involves: › continued online streaming of Council Meetings › ongoing review of document registration standards › online publishing of disclosure of interests in relation to online publishing of DA associated documentation in the Applications Tracking section Number of access applications received of Council’s website During 2019/20, Council received a total of 107 formal › ongoing review of document registration standards access applications (including withdrawn applications in relation to onsite public access perusal but not invalid applications). appointments › review of Council’s Access to Information Policy Number of refused applications received › review of Council’s Publication Guide During 2019/20, Council refused a total of three access applications either wholly or in part because the review of Council’s Public Registers › information requested was information referred to in › review of Council’s Privacy Management Plan Schedule 1 to the GIPA Act. Of those applications, no applications were refused in full and three were refused › review of internal eLearning GIPA module in part. › review of Staff Reference Guide for Personal & Private information held by Council During 2019/20, we reviewed this program by: › updating Council’s Agency Information Guide › ongoing consultation with key Council stakeholders › updated documentation to reflect staff realignment › updated documentation and templates to reflect changes in business practices › reviewed mandatory inhouse online training module for GIPA awareness › reviewed mandatory inhouse online training module for privacy principles › ongoing consultation and training provided to existing and newly appointed Council staff in public access practices in accordance with reviews of document registration practices › updating publication to online registers › undertaking internal auditor review of privacy management › reviewed departmental processing practices
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Table A: Number of applications by type of applicant and outcome (More than one decision can be made in respect to an access application. If so, a recording must be made in relation to each decision. This also applies to Table B.)
Access Access Access Information Refuse to Refuse to confirm granted granted refused Information already deal with or deny whether Application in full in part in full not held available application information is held withdrawn Media - 1 ------Members of ------Parliament Private sector 28 ------1 business Not for profit organisations ------or community groups Members of the public (application 7 1 - - - - - 1 by legal representative) Members of the 65 1 - - - 1 - 1 public (other)
Table B: Number of applications by type of application and outcome NOTE: The total number of decisions in Table B should be the same as Table A.
Access Access Access Information Refuse to Refuse to confirm granted granted refused Information already deal with or deny whether Application in full in part in full not held available application information is held withdrawn Personal information ------applications* Access applications (other than 98 3 - - - 1 - 2 personal information applications) Access applications that are partly personal 2 ------1 information applications and partly other
*A personal information application is an access application for personal information (as defined in clause 4 of Schedule 4 to the Act) about the applicant (the applicant being an individual). There were no invalid applications. The conclusive presumption of overriding public interest against disclosure: matters listed in Schedule 1 of the GIPA Act, consideration was not used.
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Table C: Other public interest considerations against disclosure: Matters listed in table s14 of the Act
Number of occasions when application not successful Responsible and effective government 2 Law enforcement and security 1 Individual rights, judicial processes and natural justice 1 Business interests of agencies and other persons 2 Environment, culture, economy and general matters - Secrecy provisions - Exempt documents under interstate Freedom of Information legislation -
Table D: Timeliness
Number of applications Decided within the statutory timeframe (20 days plus any extensions) 106 Decided after 35 days (by agreement with applicant) 1 Not decided within time (deemed refusal) -
Table E: Applications reviewed under Part 5 of the Act
Decision varied Decision upheld Total Internal review - 1 1 Review by Information Commissioner - 1 1 Internal review following recommendation under - 1 1 section 93 of Act Review by Administrative Decisions Tribunal - - -
Companion Animal Management - Reg cl 217(1)(f) Council’s rangers work with the community to protect All Council parks and public reserves are off leash residents, their pets and the natural environment by areas except for: enforcing companion animal laws. › all bushland areas During 2019/20, Council received 30 reports of alleged › all playing fields while organised sporting events are dog attack incidents. As required, all dog attacks were in progress reported to the Office of Local Government within 72 hours of being advised of an attack. › St Leonards Oval (No. 1 and 2) Twelve companion animals were impounded. Nine › Cremorne Reserve animals were returned to their owners or re-homed. › Clark Park Council promotes and assists the desexing of dogs › Ancrum Street Park and cats at veterinary clinics in the LGA. › Coal Loader Centre for Sustainability Council has no euthanasia policy with our pound except for diseased and anti-social animals. › The Coal Loader Platform. Council provided Bradfield Bark animal care program Council spent approximately $53,318 on companion online in 2019/20 for all dog owners. animal management activities. Council received $44,772.36 in companion animal funds.
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Legal Proceedings and Costs – LG Act s428(e) During 2019/20, Council incurred legal costs in relation to legal proceedings as follows: Register of Appeals and Court Matters
Legal Proceeding Cost ($) Status Result 80 Arthur Street, North Sydney. Karimbla Properties (No.37) Limited (Meriton). LEC $0 Closed Proceedings discontinued 247263/17 275 Alfred Street, North Sydney. Benmill Pty Ltd. -$52,731.52 Pending Appeal upheld subject to conditions LEC 227590/18 8 Queens Avenue, McMahons Point Section 34 agreement with applicant Mrs Marion Nicklin -$7,253.97 Closed amending plans LEC 26941/19 3 Amherst Street, Cammeray Brenham P/L -$61.00 Closed Appeal upheld LEC 236368/18 29 Myrtle Street, North Sydney Modog Pty limited $0 Closed Proceedings discontinued LEC 320228/18 29 Myrtle Street, North Sydney Modog Pty limited -$3,828.00 Closed Proceedings discontinued LEC 320239/18 30 Glen Street, Milsons Point The Bunker 2017 Pty Ltd -$739.94 Closed Appeal upheld LEC 325991/18 30 Glen Street, Milsons Point The Bunker 2017 Pty Ltd -$739.93 Closed Appeal upheld LEC 326024/18 30 Glen Street, Milsons Point The Bunker 2017 Pty Ltd -$739.93 Closed Appeal upheld LEC 326020/18 25A Reynolds Street, Cremorne Playoust Churcher Architects -$6,915.70 Closed Proceedings discontinued LEC 339285/18 6 Hayes Street, Neutral Bay Platform Project Services -$19,764.28 Closed Proceedings discontinued LEC 346804/18 58 Aubin Street, Neutral Bay Highbury Group Pty Ltd -$10,945.53 Closed Appeal upheld LEC 351210/18 12 Raymond Street, Neutral Bay Appeal dismissed. Costs awarded to William and Olivia Northcott -$78,838.33 Pending Council LEC 358115/18 7 Penshurst Street, Neutral Bay Michael McCarthy -$17,458.65 Closed Appeal upheld LEC 363684/18 5-7 Doohat Avenue, North Sydney Mackenzie Architects International Pty Ltd -$6,662.74 Closed Appeal upheld subject to conditions LEC 377147/18 8 Wonga Road, Cremorne. Michelle Jie Wang -$200.75 Pending N/A LEC 385659/18 287 Military Road, Cremorne Captive Vision Pty Limited -$14,395.70 Closed Appeal upheld LEC 393238/18 24 Milner Crescent, Wollstonecraft Grafton Property Group Pty Ltd -$21,245.40 Closed Appeal upheld LEC 393609/18
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Legal Proceeding Cost ($) Status Result 6 The Boulevarde, Cammeray Drury and Platino Properties Pty Ltd -$46,121.57 Closed Appeal dismissed LEC 39238/19 63 Carter Street, Cammeray Appeal upheld. Costs awarded to 63 Carter Street Cammeray Pty Ltd -$43,542.66 Closed Council, LEC 94274/19 as agreed or assessed 141 Carabella Street, Kirribilli Appeal upheld. Costs of Nicholas Kougellis -$18,921.52 Closed $6,000 awarded to Council LEC 102445/19 55-61 Chandos Street, St Leonards Tasktea Pty Ltd -$33,497.73 Pending N/A LEC 100913/19 67-69 Chandos Street, St Leonards TWT Development Pty Ltd -$35,320.59 Pending N/A LEC 125653/19 12A Milson Road, Cremorne Point Beth Rahman -$31,040.27 Closed Appeal upheld LEC 126904/19 4 Illiliwa Street, Cremorne Donald Proctor $0 Closed Proceedings discontinued LEC 137229/19 43 Pitt Street, Kirribilli Helen Caroline Miyakawa -$9,671.20 Closed Appeal upheld subject to conditions LEC 138941/19 21 Shellcove Road, Kurraba Point Giselle Joan Chadwick -$5,744.50 Closed Proceedings discontinued LEC 153836/19 1 Henry Lawson Avenue, McMahons Point David Fox -$150,605.21 Closed Appeal dismissed LEC 155417/19 5 Montpelier Street, Neutral Bay Jamie Woodhill -$27,043.81 Closed Appeal upheld LEC 176736/19 22 Cairo Street, Cammeray Michael Doyle and Sally Mitchell -$18,141.06 Closed Appeal upheld LEC 198061/19 22-26 Spruson Street, Neutral Bay Made Property Group Pty Limited -$95,448.41 Pending N/A LEC 229229/19 3 Parker Street, McMahons Point Brazete Investments Pty Ltd -$9,089.06 Pending N/A LEC 260634/19 5 Bay View Street, Lavender Bay Yolenda Camuglia -$42,797.64 Pending N/A LEC 268493/19 17 Milson Road, Cremorne Point Peter Ping Xie -$30,050.20 Closed Appeal upheld LEC 274015/19 101 Miller Street, North Sydney Nick James Wills -$125,917.83 Closed Appeal upheld LEC 290454/19 21 Christie Street, Wollstonecraft BCMA Investments $0 Pending N/A LEC 298474/19 LEC 329322/19 66 Shellcove Road, Neutral Bay Anne McCusker -$25,365.46 Pending N/A LEC 305102/19
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Legal Proceeding Cost ($) Status Result 40 Brightmore Street, Cremorne Connoisseur Property Holdings Pty Limited -$72,273.21 Pending N/A LEC 315224/19 1/9 Tobruk Avenue, Cremorne Richard Bryson -$2,391.40 Pending N/A LEC 316133/19 13 Shellcove Road, Kurraba Point Michael Morgan (Nettletontribe)/ Maryann Beregi -$97,407.44 Pending N/A LEC 329464/19 24 Cranbrook Avenue, Cremorne Modog Pty limited -$56,794.70 Pending N/A LEC 340894/19 27 Edward Street, North Sydney Linda Jays $0- Pending N/A LEC 354290/19 116 Blues Point Road, McMahons Point Blues Point Hotel Property Pty Ltd and Blues Point -$66,767.68 Pending N/A Hotel Property No 2 Pty Ltd LEC 373973/19 17 Milson Road, Cremorne Point Peter Ping Xie -$33,700.00 Closed Appeal upheld LEC 403332/19 111 Milson Road, Cremorne Point Rosetta Stevens $0 Pending N/A LEC 73040/20 55 Lavender Street, Milsons Point LDC Opco Holding Company Pty Limited -$28,584.84 Pending N/A LEC 71383/20 6 Johns Street, McMahons Point Noakes Group Pty Limited -$12,426.15 Pending N/A LEC 122833/20 37-39 Murdoch Street, Cremorne Active Kids Group Pty Limited $0 Pending N/A LEC 157515/20 225 Miller Street, North Sydney Application dismissed, with costs in Karimbla Properties (No.7) Limited (Meriton) -$2,424.64 Closed favour of Council High Court Appeal - S 321/18 221 Miller Street, North Sydney Enforceable undertaking agreed and Richard Crookes Constructions -$3,867.25 Closed approval granted Local Court Matter 101-111 Willoughby Road, Crows Nest Enforceable undertaking agreed and Paynter Dixon Constructions Pty Limited -$5,445.85 Closed approval granted Local Court Matter 50 Ridge Street, North Sydney North Sydney Leagues Club Limited -$422.40 Closed Proceedings discontinued Local Court Matter Shop 18,166-174 Military Road, Neutral Bay LN Enterprises (T/as Daily Delicious Bakery) -$5,823.25 Closed Convicted and fined Local Court Matter 563-565 Pacific Highway, St Leonards Pyramid Consulting Pty Ltd -$20,654.84 Closed Convicted and fined Local Court Matter 83 Mount Street, North Sydney Little Vienna Pty Ltd (T/as Vienna Sandwiches) -$8,912.75 Pending N/A Local Court Matter Shop3, 83 Mount Street, North Sydney Thu Ba Pty Ltd (T/as Destination Roll) $0 Closed Convicted and fined Local Court Matter
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Legal Proceeding Cost ($) Status Result Shop 4, 48 Alfred Street, Milsons Point Seon Oh Kim (T/as Sushi Ai) $0 Closed Convicted and fined Local Court Matter 47a King Street, Wollstonecraft SRG Constructions Pty Ltd -$10,366.68 Closed Convicted and fined Local Court Matter 47a King Street, Wollstonecraft Fined $5,000 and ordered to pay SRG Constructions Pty Ltd -$10,366.67 Closed Council's costs Local Court Matter Guilty plea, Court disposed of 2 McHatton Street, Waverton proceeding, finding the offence proven Neil Schiller $0 Closed with no penalty. Council awarded Local Court Matter professional costs of $800 21 Shellcove Road, Kurraba Point Aranac (Contracting) Pty Ltd $0 Pending N/A Local Court Matter 12 Tobruk Avenue, Cremorne Draincorp Pty Ltd $0 Pending N/A Local Court Matter Dog matter Matthew Williams $0 Pending N/A Local Court Matter 8 Levick Street, Cremorne Michael Barnett $0 Pending N/A Local Court Matter 12 Tobruk Avenue, Cremorne Hunter Building Group Pty Ltd $0 Pending N/A Local Court Matter NCAT - Shop 3, 190-192 Military Road, Neutral Bay Appeal dismissed with costs awarded D’Annunzio -$10,702.96 Closed in favour of Council COM: 18/41110 NCAT - Shop 3, 190-192 Military Road, Neutral Bay Appeal dismissed with costs awarded D’Annunzio -$24,856.04 Closed in favour of Council AP: 20/01855 NCAT Matter - Privacy Complaint EIG -$2,851.20 Pending N/A NCAT 136495/20 NCAT Matter - Formal GIPA Review MaryAnn Beregi -$3,658.05 Pending N/A NCAT 142324/20
Stormwater Management Services (Stormwater Management - LG Reg cl 217(1)(e)) Council has levied an annual charge for stormwater management services since July 2013. The following projects were completed using funds from this charge in 2019/20: › Bay Road, Waverton › McKye Street, Waverton › Bells Avenue, Cammeray › Milson Road, Cremorne Point › Belmont Avenue, Wollstonecraft › Nicholson Street, Wollstonecraft › Ben Boyd Road, Neutral Bay › Priory Road, Waverton › Bent Street, Neutral Bay › Short Street, North Sydney › Christie Street, Wollstonecraft › Spofforth Street, Cremorne › Crows Nest Road, Waverton › Warringa Road, Cammeray › Doris Street, North Sydney › Yeo Street, Neutral Bay › Gerard Lane, Cremorne
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Grants and Donations - LG Act s356 Stanton Library Multicultural Resources $976,293.00 was contributed or otherwise granted Stanton Library holds a vast array of resources - English under s356 (financially assist others) by the Council in as a Second Language (ESL), books, CDs, DVDs, 2019/20. The specific categories are broken down in magazines and newspapers and facilitates a multicultural the table below: writers’ group and an array of events that engages with our multicultural community.
Donations, contributions and assistance to $,000 Along with the Lower North Shore Multicultural Network, other organisations (s356) Council made available the Migrant Services Quick Reference Guide in English, Chinese, Japanese, Aboriginal Heritage Office 5 Spanish, Korean and Farsi/Dari. It also distributes The Youth 27 Guide to Renting for new arrivals. Children and Families 160 Women 22 Harmony Week Older People 551 Observed across Australia in March, this is a week of People with Disabilities 11 cultural respect celebrating diversity, belonging and People from Culturally and Linguistically 4 multiculturalism. Council run activities were postponed Diverse Backgrounds this year due to COVID-19 restrictions. This event is Other 196 transitioning to online. Total 976 Refugee Week Multicultural Services and Programs - LG Act Refugee Week raises awareness about issues affecting refugees and celebrates the positive contributions made s428(2)(j) by refugees to Australian society. Council run activities Council’s programs to promote services and access were postponed this year due to COVID-19 restrictions. for people with diverse cultural and linguistic This event is transitioning to online. backgrounds consistent with principles of multiculturalism involved: Gai-mariagal Festival
Employment Expo The Gai-mariagal Festival raises awareness of Aboriginal and Torres Strait Islander people living in Council partnered with TAFE NSW; Multicultural NSW; the Northern Sydney region. This festival was cancelled local businesses and services; and Lower North Shore due to COVID-19 restrictions. Council held an exhibition: councils to launch an online employment guide. The Looking forward, looking back Guringai Festival Posters purpose of the guide is to find meaningful work or 2001 - 2015, from 21 May - 13 July 2020 to mark the provide information on how to set up a business in occasion. Australia. The partners organised an Employment Expo on 23 October 2019 at St Leonards TAFE with local COVID-19 Fact Sheet employers and businesses; local community organisations and service providers; educational Council produced a fact sheet outlining services to the institutions; economic agencies; local councils. Volunteer multicultural community during COVID-19, connecting organisations were also represented. Workshops and multicultural communities to counselling, health, stalls gave participants practical skills and information government and community services in community on the day. languages and with culturally appropriate access to information. Refugee Welcome Zone Initiative The Network members have adapted their service delivery to accommodate COVID-19 restrictions. Council is a member of the Refugee Welcome Zone initiative and is a signatory of the Refugee Welcome Scroll. Council provides office accommodation and Children’s Services and Programs - LG Act resource support to Sydney Multicultural Community Services (SMCS), a community based not for profit s428(2)(r) and Reg cl 217(1)(c) organisation which provides settlement services for In 2019/20, Council continued programs to promote newly arrived refugees and migrants to Australia. services and programs that provide for the needs of children.
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Council worked with vacation care (Gowrie NSW) and family day care providers to increase access and Disability Inclusion Action Plan (DIAP)- Disability opportunities for participation for children with disabilities, Inclusion Act 2014 s13(1) from non English speaking backgrounds and children of Aboriginal and Torres Strait Islander background. Over the past twelve months Council has continued to deliver on actions identified in the DIAP. Some of the Council’s Donation Program provided $18,000 to key achievements include: community based Occasional Care and other children’s services in the LGA. Council’s Olympic Pool Crèche Liveable Communities provided $25,215 in subsidies. Parking and gardening › upgrade to Miller Street bus stop, one of the principal subsidies totalled $47,061 annually, provided for parents access links to Council Chambers and carers using children’s services. Community centres › upgrade to paths of travel surrounding Council building and grounds maintenance at Forsyth Park, Chambers Green Park, North Sydney, Kirribilli and Crows Nest provided essential facilities for children’s services and › upgraded signage in and around Council Chambers programs run by their independent Boards. Council › refurbishment of Primrose Park Arts and Craft Centre provided $53,408 to the Nutcote Trust (cash, offset of rates and maintenance) for children’s museum services. Employment The North Sydney Children’s Festival, held annually, › ongoing access to health and wellbeing programs is a free event costing $23,804 in 2019. for all staff, including access to the Employee An upgrade to the playground and storage at the Forsyth Assistance Program (EAP) Counselling Service Park Childcare facility was adopted by Council and › celebration of significant calendar events, such as landscape architects completed design plans. R U OK? Day and International Day of People with Council through its Grants Program funded the Disability production of a Child and Family Services referral Systems and Processes brochure which has been distributed both electronically › ongoing use of software to identify access barriers and in hard copy. on Council’s website The development of all children’s services is monitored › training to staff who author web content on creating and reviewed by Council through the Children’s Services accessible content, as well as training on producing Strategic Plan to assess development trends and the accessible documents community’s capacity to meet childcare needs. Council has been active in highlighting to the Commonwealth Attitudes and Behaviours Government issues surrounding the affordability of care › training provided to Senior Leadership Team on in the North Sydney area. Disability Awareness and Confidence COVID-19 had a significant effect on the childcare › celebration of significant calendar events in the landscape. Childcare services in Council facilities faced community, including the Lost Bird Found Project closure due to the rapid reduction in attendees, as and International Day of People with Disability parents responded to safety and financial uncertainties. The sudden removal of fees led to lack of financial International Day of People with a Disability viability. The introduction of Job Keeper and Fee Relief Local school children participated in this full day event agreements by the Commonwealth Government held at the Coal Loader Centre for Sustainability to stabilised the environment and allowed centres to celebrate International Day of People with Disability. survive and remain open. In line with the theme Everyone is a Superhero, students and teachers experienced first hand some of the Council supported the financial security of these centres challenges of living with a disability. Students got the by reducing rent costs by 50%. chance to get close and personal with a guide dog and Emergency one off grants were provided to sustain speak with her owner, before navigating an obstacle centres until the Government’s transitional arrangements course blindfolded. Wheelchair basketball was the most commenced. Family day care and vacation care popular event of the day. provided directly by Council, continued operations ongoing, providing essential care.
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New Dwellings Approved Carers Recognition Act 2010 (CR Act), s 8(2) Compliance Dwellings Approved
Carers and people being cared for are supported 2015/16 262 through service provision offered through our community centres. 2016/17 735 The Crows Nest Centre provides in home support to 2017/18 382 people requiring additional assistance to enable them to remain living at home. 2018/19 343 Information and advice is provided to carers and people 2019/20 470 requiring assistance by Council’s Access and Inclusion Coordinator. Stimulating Development Swimming Pools Act 1992 (SP Act), s 22F(2) A number of large-scale development proposals were Swimming Pools Regulation 2018 (SP Reg) approved in 2019/20, with estimated cost of works well over $303 million. This indicates the steady growth cl 23 within the North Sydney LGA. Details of inspections of private swimming pools Fourteen major developments were under construction or completed in 2019/20, These include: Number of inspections of tourist and visitor accommodation: 2 inspections. › Victoria Cross and Crows Nest Metro Stations Number of inspections of premises with more than › 1 Denison Street, North Sydney 43 inspections. two dwellings: › 118 Mount Street, North Sydney Number of inspections that resulted in issuance of › 86-88 Walker Street, North Sydney a certificate of compliance under s22D of the SP Act: 82 inspections. › 168 Walker Street, North Sydney Number of inspections that resulted in issuance of › 229 Miller Street, North Sydney a certificate of noncompliance under cl 21 of the › 61 Lavender Street, Milson Point SP regulation: 14 Inspections. › 30 Alfred Street South, Milsons Point Processing of Development Applications (DAs) › 31 Albany Street, Crows Nest › 41 Atchison Street, Crows Nest Council operates a fully comprehensive building and development approval service that assesses all › 14 Premier Street, Neutral Bay applications to build, demolish or develop properties. › 211 Military Road, Cremorne The service includes the issuing of building certificates and development approvals, building inspections and › 563-565 Pacific Highway, St Leonards advice on building regulations. The service ensures › 222 Pacific Highway, Crows Nest that all development within the local government area is approved according to the Local Environmental Plan Land Use Planning and any relevant legislation such as the Environmental Planning and Assessment Act 1979. With funding support from the State Government, Council has commenced and completed several The total number of residential DAs in North Sydney significant strategic planning studies and policies to has remained relatively static over the past five years. inform its planning controls in line with Regional and Residential DAs represent 73.8% of all DAs processed district level strategies. These are listed below: by Council with commercial DAs making up the next largest group at 20.3% of all DAs processed. (Figures › Local Strategic Planning Statement - completed are inclusive of s4.55 modifications). › Local Housing Strategy - completed A total of 596 new dwelling applications were determined › North Sydney LEP Review 2019 - completed by Council in 2019/20. Of these there was an increase of 127 DAs actually approved, shown in the following › North Sydney DCP Review 2020 - commenced table: › Civic Precinct Planning Study - commenced
North Sydney Council Annual Report 2019/20 51 Page 55 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
› Military Road Corridor Planning Study - commenced Council entered into the Planning Agreement below during the 2019/20 financial year: › Public Domain Strategy - Stage 2 commenced North Sydney Council & Rozene Pty Ltd Contribution Plans Parties & Rosemate Pty Ltd
During 2019/20, Council received local infrastructure Date of 26 July 2019 contributions under s7.11 of the EP&A Act to the value Execution of $1,703,144. Land to which the 575-583 Pacific Highway, St Leonards DA Tracking VPA relates The electronic Application Tracking System (accessible Facilitates a monetary contribution of via Council’s website) is a secure online DA lodgement $4,095,803 for new open space within and tracking service. It allows the tracking of DAs for the Precinct, a setback of 3m from the the entire DA lifecycle - from initial application lodgement Pacific Highway frontage, except where through to assessment. significant features of the Marco building Description already exist, a restriction on building height to RL 102.3 along the southern Planning Agreements under the Environmental boundary, shared with 567-573 Pacific Highway, and a restriction on building Planning & Assessment (EP&A) Act 1979. height to RL 116.5 along the north- s7.5(5) western boundary. Planning Agreements are legal documents created The Planning Agreement below was entered into prior under the EP&A Act between developers and to the 2019/20 financial year and is yet to be delivered: government agencies (including councils) for the provision of funds or works by the developer for North Sydney Council & Anson City infrastructure, services or other public amenities. These Parties are usually negotiated at the time of rezoning or during Developments 1 (Australia) Pty Ltd the assessment of a development application. They Date of 25 June 2018 typically fund or deliver local infrastructure not envisaged Execution under traditional local infrastructure contribution plans (s.7.11 and s.7.12 contributions plans). Land to which the 617-621 Pacific Highway, St Leonards VPA relates Dedicate two entire fitted out floors Description within the site for an arts centre with an approximate value of $16.5 million.
Environmental Upgrade Agreements (EUAs) Act s54P(1) There were no EUAs entered into during 2019/20.
Overseas visits by Councillors, Council staff or other persons representing Council - Reg cl 217(1)(a) There were no overseas visits in 2019/20.
Recovery and Threat Abatement Plans - Fisheries Management Act 1994, s220ZT(2) There were no Recovery and Threat Abatement Plans implemented in the North Sydney LGA during 2019/20.
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OUR PERFORMANCE
53 Page 57 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
PERFORMANCE AGAINST THE DELIVERY PROGRAM
Our performance is measured against the strategic During Years 1 and 2 of the Delivery Program Council directions, outcomes and strategies of the Community undertook 362 projects. As at 30 June 2020 91% of Strategic Plan 2018-2028. We assess how our activities projects were on track or completed; 9% of projects to date, monitored via the annual Operational Plan have were delayed or not progressing. progressed towards our desired outcomes and our 107 projects were completed, 218 projects were on community’s vision to ensure we are on track. track, 31 projects were delayed and carried over to The Community Strategic Plan 2018-2028 and Delivery 2020/21 and six projects were discontinued. The Program 2018/19-2020/22 comprise five key directions: discontinued projects were not included in the % statistics. › Our Living Environment › Our Built Environment Performance Status › Our Economic Vitality The following is a strategic summary of performance › Our Social Vitality against the Delivery Program 2018/19-2021/22. › Our Civic Leadership
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DIRECTION 1: OUR LIVING ENVIRONMENT
28 48 7 11
Completed On Track Delayed Discontinued Not Progressing
Achievements against the Delivery Program 1.1 Protected and • The Green Events program introduced online workshops and events due to COVID-19 enhanced natural restrictions. This more than doubled the average number of participants to 76. Over 50% of environment and participants were participating in the events for the first time or had only participated in one biodiversity or two prior. The online workshops series has been successful in attracting a new audience. • New Bushland Rehabilitation Plans were adopted by Council. The plans are being implemented by Council staff, contractors and Bushcare volunteers. • 45 active HarbourCare volunteers and 21 sites were attended to. Volunteer participation has increased under COVID-19.
1.2 North Sydney is • The Better Business Partnership and Cityswitch programs continued with online education sustainable and forums run throughout the year. resilient • Waste education programs included composting and “Living with Less” workshops. These were held online in the second half due to COVID-19 restrictions. • 517 people attended nine lunch and learn workshops throughout 2019/20 covering water, energy and waste and online movie screenings; transitioning to online events the second half of the year due to COVID-19 restrictions, receiving very positive feedback. • Council continues to work cooperatively with NSROC on regional waste strategies, including implementation of joint programs/activities. • Council adopted a Single Use Plastics Policy in September 2019.
1.3 Quality urban • 1,208 trees were planted, this is a slight decrease compared to last year. greenscapes • A new community garden was established in Brightmore Reserve, opposite Grasmere Reserve • Implementation of Council’s Urban Forest Strategy commenced, including promotion of tree canopy targets.
1.4 Public open • Bon Andrews Oval took out the Sportsground of the Year Award and Tunks Park placed space and second. recreational • Turf renovation works on the area that fronts the water’s edge of Milson Park has been facilities and completed, with 3,500sqm of new turf installed. services meet • Crown Lands granted Council a temporary lease for ex-Waverton Bowling Club site, in community needs response Council consulted on preferred uses of the site. No further action due to a land title claim. • New irrigation, a concrete cricket pitch, turf and drainage were installed at Forsyth Park. • Warringa Park was upgraded in 2019/20. The park caters for all with swings, slides, a climbing net and a fun ‘spinning cup’ ride. Council consulted the community regarding the installation of small watercraft storage at Sawmillers Reserve.
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DIRECTION 2: OUR BUILT INFRASTRUCTURE
17 43 4 2
Completed On Track Delayed Discontinued Not Progressing
Achievements against the Delivery Program 2.1 Infrastructure • All 2019/20 capital projects and programs identified in Council’s Asset Management Plans and assets meet were completed in accordance with available funding per asset class. community needs • Council received over $800,000 in TfNSW grant funding for 40km per hour zones in the Kirribilli & Milsons Point, in accordance with its 40km/h and 10km/h Shared Zones Masterplan. This is a big win for community safety. • Streetscape frontage works (public domain improvements) along the Parraween Street carpark frontage were completed. The footpath next to the carpark has been upgraded with new paving and associated works. • Council utilised the RMS Regional Road REPAIR grant; the Federal Government’s Roads to Recovery grant and the Local Roads and Community Infrastructure grant to fund critical infrastructure in the North Sydney LGA. • North Sydney experienced a significant rainfall event in February 2020. Council staff assisted police with road closures, removal of vegetation, street clearing, retaining wall impacts and drainage systems.
2.2 Vibrant centres, • New toilets and signage were installed at the Alexander Street carpark. Council received public domain, positive feedback about the new public amenities and supermarket facility. villages and • Public domain upgrade works were completed at the Post Office block, Pacific Highway, streetscapes William Street and Mount Street, North Sydney. • Works at Willoughby Road, from Falcon Street to Burlington Street, were completed with very positive community feedback. The Alexander Street, Burlington Street and Falcon Street block in Crows Nest domain was also completed. Upgrades included new streetscape furniture, bins, bike rings, landscaping, street tree planting, public lighting, decorative lighting, fencing, paving and traffic facilities. • The Education Precinct works in Charles and Napier Street were completed. Community feedback was very positive. • Implementation of the St Leonards Masterplan progressed with completion of the Atchison Street upgrade project.
2.3 Sustainable • Implementation of the shared zone at Grosvenor Lane upgrade has helped establish Neutral Bay transport is as a more desirable shopping destination for residents and visitors. Works at the intersection encouraged between Winter Avenue and Alfred Street North, Neutral Bay were also completed. • The intersection of Oxley Street and Albany Street, Crows Nest was upgraded. • Council was awarded a Certificate of Commendation for organisational excellence and leadership in the NSW Travel Choices Awards for our e-bike fleet. The fleet has traveled more than 2,500kms. • Two child restraint checking days were held, with a total of 192 child restraints installed or adjusted. • The Safer Driving for Seniors workshop held in February 2020 had 30 participants. Feedback from participants was excellent.
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Achievements against the Delivery Program • Road safety campaigns in 2019/20 included truck aware pedestrian safety social media campaign and footpath stencils, road safety; “Thanks for taking care on our roads” COVID-19 safety messaging with pens and bags; Plan B drink drive campaign; and promotion of TfNSW messages. • Council consulted on two active transport/walking and cycling upgrades, including Ridge Street Stage 2.
2.4 Improved traffic • Council continued to implement the Local Area Traffic Management Action Plans. and parking • Council received over $1 million in TfNSW grants in 2019/20 for traffic, pedestrian and cycling management facilities. • Funded by the NSW Government, Council upgraded streetscape along Military Road, including replanting street trees and footpath upgrades following competition of the B-line construction works. • In response to stakeholder results, Council consulted on proposed parking restriction changes in Areas 12 and 13 (Crows Nest/Wollstonecraft), Area 19 (Crows Nest) and Area 21 (North Sydney). • There are 157 car share vehicles available within the North Sydney LGA. • Council consulted on a Taxi and Ride Sourcing Strategy and Action Plan and Trailer Parking Policy in the first half of 2019/20.
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DIRECTION 3: OUR FUTURE PLANNING
16 28 6
Completed On Track Delayed Discontinued Not Progressing
Achievements against the Delivery Program 3.1 Prosperous and • Consultation regarding small bars and the extension of business hours in Kirribilli occurred vibrant economy with 900 surveys and submissions received. The result was positive with small bars and extended business hours in Kirribilli given the go ahead to proceed. • Business Network events were held through the year, making the transition online under COVID-19, topics covered included best practice employer responsibilities, website building, video making for business and digital marketing. • The North Sydney Visitor Economy Strategy was adopted by Council in October 2019, outlining the long-term vision and actions required to develop North Sydney’s visitor economy, by attracting the right markets to North Sydney to create vibrant communities and world-class visitor experiences.
3.2 North Sydney • Midway through the year, the North Sydney CBD marketing campaign moved to online due CBD is one to COVID-19 restrictions. The NTH SYD events program adapted to online delivery, including of NSWs live streaming music at lunchtime and hosting Tea Break Trivia receiving positive participant pre-eminent feedback. commercial • Stage two of the North Sydney CBD Public Domain Strategy occurred between April to June centres 2020. Council is working to create a more engaging and pedestrian focused CBD that offers a greater range of activities and unique public spaces for workers, residents, students and visitors, underpinned by a comprehensive Transport Masterplan. • Preparation of the Civic Precinct Planning Study progressed, with two rounds of stakeholder engagement in 2019/20.
3.3 North Sydney • The North Sydney Smart City Strategy and Action Plan was adopted September 2019 following is smart and two rounds of stakeholder engagement. It sets out the vision and priorities for Council’s digital innovative transformation journey. Of the 30 actions in the 2019/20 action plan, two were completed, 15 on track, 12 are delayed, and one was not progressing. • Council provided increased information resources online to local businesses impacted by COVID-19 including Council website, e-newsletters, and responses to ad-hoc enquiries. • Preparation of a Data Sharing Policy is underway. It will improve data collection, sharing, analysis and decision making at Council.
3.4 North Sydney • Council adopted a Place Making Policy in July 2019, outlining Council’s commitment and is distinctive approach to placemaking. with a sense of • Council’s strategic land use planning framework was reviewed to support the employment place and quality targets of the Greater Sydney Commission’s North District Plan. This included preparation, design public exhibition and adoption of the Local Strategic Planning Statement and Housing Strategy, and initiated amendments to Council’s Local Environment Plan and Development Control Plan. • Preparation of the Military Road Corridor Planning Study progressed, with two rounds of stakeholder engagement in 2019/20.
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Achievements against the Delivery Program • Council completed the planning proposal for the North Sydney CBD which will now increase commercial floor space opportunities in association with the new Metro station. Council continues to advocate strongly to ensure the State Government plans for St Leonards and Crows Nest include job opportunities, more open space and a Metro station that complements the Crows Nest village. • Council is on track for the implementation of e-Planning in line with the NSW Planning portal, effective from July 2020 this included a soft release which was well received by the 10 trial applications lodged through the portal.
3.5 North Sydney • Council’s Environmental and Building Compliance Team assisted with implementation of is regulatory Public Health Orders through the COVID-19 pandemic with free food safety inspections at compliant food shops. • A companion animal owners education program was developed and implemented through the year, including a program targeting school children.
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DIRECTION 4: OUR SOCIAL VITALITY
24 54 2 1
Completed On Track Delayed Discontinued Not Progressing
Achievements against the Delivery Program 4.1 North Sydney • Council provided over $ 1 million in community grants and subsidies, which were distributed is connected, between youth and indigenous affairs, cultural and linguistic diversity, disability services, inclusive, healthy family support and children`s services, services for older people, educational projects and and safe counselling services. • International Day of People with Disability 2019 was celebrated at the Coal Loader with students from local schools. • Engagement with young people continued throughout COVID-19. Support was provided to youth experiencing homelessness, drug and alcohol abuse, mental health issues, family conflict, sexual assault/trauma and relationships problems. • The Seniors Festival for North Sydney 2020 was a great success, with a program of 30 events and activities for local seniors and visitors, showcasing local talent, history and culture. • The Lost Bird Found Project created 2,500 handmade birds which were hidden for people to find, as part of Council’s recognition of Mental Health Week. The project broadened its reach into the corporate sector through the Blue Leader and We Work; community groups, and featured in the Macquarie University TEDx event.
4.2 North Sydney • Council’s Events Strategy was adopted in October 2019. CBD is one • Although the COVID-19 pandemic brought North Sydney’s live events program to a temporary of NSWs halt, it opened the door to new ways of connecting with the community. Some examples are pre-eminent listed below: commercial » BradfieldBark was presented online through a mix of video and live streamed music and centres Q&A sessions with guest speakers. The event reached 33,000 people, with strongest interest from women aged 25 to 34 » The Artisans Markets moved to an online marketplace, supporting and promoting local creatives » Stanton Library’s Children’s Storytime and Writers@Stanton programs were held online, both growing their audiences • Council supported markets in Kirribilli and North Sydney with land management and waste disposal. • Council’s Arts and Cultural Strategic Plan was finalised in September 2019, with three key directions: to provide creative spaces and opportunities, enable creative expression and cultural experiences, and support diversity and inclusiveness. • Preparation of a Public Art Masterplan has commenced.
4.3 North Sydney • The Stanton Library Masterplan highlights the requirement for a CBD Branch library that supports lifelong meets the needs of the growing North Sydney work force. The brief for the new Library Hub learning as part of the Ward Street Masterplan was developed in 2019. • Lifelong learning highlights in 2019/20 included: » The University of the Third Age, delivered by McMahons Point Community Centre » Planet X youth programs with Bradfield College » Children’s Library joint programs undertaken with primary schools » Sponsorship was given to symphony orchestras at Shore, Monte Sant’ Angelo Mercy College and North Sydney Girls High.
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Achievements against the Delivery Program 4.4 North Sydney’s • The Gai-marigal Festival was held in July 2019, including a collaborative exhibition between history is Manuku Arts Inc and Monte Sant’ Angelo Mercy College. preserved and • History Week 2019 was celebrated with the recommencement of history walks, following the recognised publication of updated self-guided maps. History walks were put on hold due to COVID-19 in the second half of 2019/20. • The North Sydney Heritage Centre has digitised 200 maps and plans. This has improved public access and ensures there are back-ups of important archival documents. • Historical Services staff handled over 365 enquiries during the year.
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DIRECTION 5: OUR CIVIC LEADERSHIP
22 45 12 1
Completed On Track Delayed Discontinued Not Progressing
Achievements against the Delivery Program 5.1 Council leads • The periodic Customer Satisfaction Survey was conducted in March/April 2020. Overall the the strategic results were positive with a majority increase in satisfaction over 2016. Residents’ overall direction of satisfaction mean was 5.4 out of 7 (83% satisfied), up from 5.2 in 2016. Businesses’ overall North Sydney satisfaction was 5 out of 7 (65% satisfied), the highest since Council began measuring in 2004. • Year 1 of the SRV Program was implemented in accordance with IPART’s approval. • Council’s Long Term Financial Plan was updated in accordance with preparation of the Operational Plan, inclusive of revised sensitivity modelling under COVID-19. • Council actively participates in NSROC including the General Manager fulfilling the Treasurer role and participation in various Professional Officer Groups (POGs). • Council made numerous submissions advocating for the advancement of local government including review of the rating system and regulatory compliance.
5.2 Council is • Customer feedback processes were improved, including a quick survey link on outgoing well governed customer service emails. This feedback is invaluable, enabling Council to identify how we and customer can improve customer service. focused • Council introduced an electronic business paper solution, improving compilation and presentation of Council meeting and Committee agendas.
5.3 Community is • Council’s External Communications Strategy was adopted in November 2019. informed and • There has been steady growth in participation on all social media platforms. Community consulted groups on social media have also grown. • The major media campaigns for 2019/20 are listed below: » The NSOP redevelopment » The Western Harbour Tunnel (WHT) community campaign. » Smoke free CBD » CBD developments » COVID-19 updates • Council increased its use of video to communicate with the community. 18 videos were posted through the year: » The Lost Bird Found video performed the best, reaching 9,753 people, with 5,001 views and 63 reactions » the Twilight Food Fair 30th Anniversary reached 11,129 people, with 6,295 views and 88 reactions » International Day of People with Disability reached 7,688 people, with 5,226 views and 115 reactions » Bradfield Bark reached 14,957 people with 238 reactions » COVID-19 updates with the Mayor, Jilly Gibson, included three videos, reaching 27,557 people, with 15,090 views and 587 reactions » The videos for the WHT community campaign reached a total of 50,277 people with 29,954 views and 510 reactions. • Council’s Community Engagement Protocol was updated in line with the requirements for the community participation plan.
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Achievements against the Delivery Program • New engagement mechanisms were explored throughout the year, including increased use of drop-in information kiosks (pre-COVID-19), narrated presentations and online mapping tools. • Stage 1 of the Precinct System Review commenced, and planning is underway to celebrate the 50th Anniversary of this Council-initiated engagement program.
5.4 Council’s service • Due to the emergence of COVID-19, Council established a pandemic team to manage the delivery is well crisis response with an emphasis on regular and consistent messaging in line with advice supported from government and health authorities. • Council continued participation in the Resilient Sydney Program. The Resilient Sydney risk assessment model was integrated with Council’s enterprise risk assessment process. • An online WHS Management solution was introduced. • Council’s Procurement Policy was updated. • Council’s data-centre was upgraded.
5.5 Council is an • Implementation of the Managers Leadership Program continued. employer of • The employee satisfaction survey continued to drive department initiatives. These included: choice » staff enews » the Internal Communications Strategy » reinstatement of supervisory and management level meetings
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NORTH SYDNEY COUNCIL FINANCIAL STATEMENTS 2019/20
64 North Sydneyprogressive Council Annual Report 2019/20 vibrant diverse Page 68 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
§Cover§
North Sydney Council ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2020
Shaping a progressive, diverse and vibrant North Sydney community.
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§Cover§
North Sydney Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2020
Shaping a progressive, diverse and vibrant North Sydney community.
66 North Sydney Council Annual Report 2019/20 Page 70 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 General Purpose Financial Statements for the year ended 30 June 2020
§MainTOC§
Contents Page
1. Understanding Council's Financial Statements 3
2. Statement by Councillors & Management 4
3. Primary Financial Statements: Income Statement 5 Statement of Comprehensive Income 6 Statement of Financial Position 7 Statement of Changes in Equity 8 Statement of Cash Flows 9
4. Notes to the Financial Statements 10
5. Independent Auditor’s Reports: On the Financial Statements (Sect 417 [2]) 81 On the Financial Statements (Sect 417 [3]) 84
Overview
North Sydney Council is constituted under the Local Government Act 1993 (NSW) and has its principal place of business at:
200 Miller Street North Sydney NSW 2060
Council’s guiding principles are detailed in Chapter 3 of the LGA and includes:
• principles applying to the exercise of functions generally by council, • principles to be applied when making decisions, • principles of community participation, • principles of sound financial management, and • principles for strategic planning relating to the development of an integrated planning and reporting framework.
A description of the nature of Council’s operations and its principal activities are provided in Note 2(b).
Through the use of the internet, we have ensured that our reporting is timely, complete and available at minimum cost. All press releases, financial statements and other information are publicly available on our website: www.northsydney.nsw.gov.au
North Sydney Council Annual Report Page2019/20 2 of 9067 Page 71 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 General Purpose Financial Statements for the year ended 30 June 2020 Understanding Council's Financial Statements
§Note/Subtotal§ §Subnote§
Introduction
Each year, individual Local Governments across NSW are required to present a set of audited financial statements to their council and community.
What you will find in the Statements
The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 2020.
The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government.
About the Councillor/Management Statement
The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements.
About the Primary Financial Statements
The financial statements incorporate five "primary" financial statements:
1. The Income Statement Summarises Council's financial performance for the year, listing all income and expenses. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.
2. The Statement of Comprehensive Income Primarily records changes in the fair value of Council's Infrastructure, property, plant and equipment.
3. The Statement of Financial Position A 30 June snapshot of Council's financial position indicating its assets, liabilities and “net wealth”.
4. The Statement of Changes in Equity The overall change for the year (in dollars) of Council's "net wealth".
5. The Statement of Cash Flows Indicates where Council's cash came from and where it was spent. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.
About the Notes to the Financial Statements
The Notes to the Financial Statements provide greater detail and additional information on the five primary financial statements.
About the Auditor's Reports
Council’s financial statements are required to be audited by the NSW Audit Office.
In NSW the auditor provides 2 audit reports:
1. an opinion on whether the financial statements present fairly the Council’s financial performance and position, and 2. their observations on the conduct of the audit, including commentary on the Council’s financial performance and financial position.
Who uses the Financial Statements?
The financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the audit report.
The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements.
Council is required to forward an audited set of financial statements to the Office of Local Government.
68 North Sydney Council Annual Report 2019/20 Page 3 of 90 Page 72 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
Financial Statements 2020
North Sydney Council General Purpose Financial Statements for the year ended 30 June 2020
Statement by Councillors and Management made pursuant to Section 413(2)(c) of the Local Government Act 1993 (NSW) (as amended)
The attached General Purpose Financial Statements have been prepared in accordance with:
the Local GovernmentAct 1993 (NSW) (as amended) and the regulations made thereunder;
the Australian Accounting Standards and other pronouncements of the Australian Accounting Standards Board; and
• the Local Government Code of Accounting Practice and Financial Reporting.
To the best of our knowledge and belief, these statements:
• present fairly the Council's operating result and financial position for the year; and
• accord with Council's accounting and other records.
We are not aware of any matter that would render these statements false or misleading in any way.
Signed in accordance with a resolution of Council made on 26 October 2020.
Jilly Gibson Stephen Barbour Mayor Councillor 26 October 20 26 October 2020
uldthorp Garry Ross G eral Manager Responsible Accounting Officer 26 October 2020 26 October 2020
North Sydney Council Annual Report Page2019/20 4 of 9069 Page 73 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Income Statement for the year ended 30 June 2020
§Statement§ Original unaudited budget Actual Actual 2020 $ '000 Notes 2020 2019
Income from continuing operations 62,627 Rates and annual charges 3a 62,883 58,831 31,549 User charges and fees 3b 28,255 33,691 8,523 Other revenues 3c 8,821 16,907 4,975 Grants and contributions provided for operating purposes 3d,3e 5,999 5,550 3,082 Grants and contributions provided for capital purposes 3d,3e 6,378 15,773 1,557 Interest and investment income 4 1,970 2,407 402 Net gains from the disposal of assets 6 – – 1,030 Fair value increment on investment properties 12 – 2,205 7,436 Rental income 14e 7,011 – Net share of interests in joint ventures and associates 19 – using the equity method 10 – 121,181 Total income from continuing operations 121,327 135,364
Expenses from continuing operations 44,844 Employee benefits and on-costs 5a 46,194 44,992 342 Borrowing costs 5b 416 367 37,348 Materials and contracts 5c 37,342 36,799 21,504 Depreciation and amortisation 5d 29,351 22,111 9,353 Other expenses 5e 9,408 9,103 – Net losses from the disposal of assets 6 922 1,481 – Fair value decrement on investment properties 12 2,827 – Net share of interests in joint ventures and associates 19 – using the equity method – 3 113,391 Total expenses from continuing operations 126,460 114,856
7,790 Operating result from continuing operations (5,133) 20,508 7,790 Net operating result for the year (5,133) 20,508
7,790 Net operating result attributable to council (5,133) 20,508
Net operating result for the year before grants and contributions 4,708 (11,511) 4,735 provided for capital purposes
The Council has not restated comparatives when initially applying AASB 1058 Income of Not-for-Profit Entities, AASB 15 Revenue from Contracts with Customers and AASB 16 Leases. The comparative information has been prepared under AASB 111 Construction Contracts, AASB 118 Revenue, AASB 1004 Contributions, AASB 117 Leases and related Accounting Interpretations.
The above Income Statement should be read in conjunction with the accompanying notes.
70 North Sydney Council Annual Report 2019/20 Page 5 of 90 Page 74 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Statement of Comprehensive Income for the year ended 30 June 2020
§Note/Subtotal§ §Subnote§ $ '000 Notes 2020 2019
Net operating result for the year (as per Income Statement) (5,133) 20,508 Other comprehensive income: Amounts which will not be reclassified subsequently to the operating result Gain (loss) on revaluation of IPP&E 11 78,573 – Total items which will not be reclassified subsequently to the operating result 78,573 –
Amounts which will be reclassified subsequently to the operating result when specific conditions are met Other movements – 1,056 Total items which will be reclassified subsequently to the operating result when specific conditions are met – 1,056
Total other comprehensive income for the year 78,573 1,056 Total comprehensive income for the year 73,440 21,564
Total comprehensive income attributable to Council 73,440 21,564
The Council has not restated comparatives when initially applying AASB 1058 Income of Not-for-Profit Entities, AASB 15 Revenue from Contracts with Customers and AASB 16 Leases. The comparative information has been prepared under AASB 111 Construction Contracts, AASB 118 Revenue, AASB 1004 Contributions, AASB 117 Leases and related Accounting Interpretations.
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
North Sydney Council Annual Report Page2019/20 6 of 90 71 Page 75 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Statement of Financial Position as at 30 June 2020
§Statement§ $ '000 Notes 2020 2019
ASSETS Current assets Cash and cash equivalents 7(a) 9,235 14,083 Investments 7(b) 81,961 73,145 Receivables 8 6,393 5,967 Inventories 9a 33 57 Other 9b 378 244 Current assets classified as 'held for sale' 10 – 4,500 Total current assets 98,000 97,996
Non-current assets Receivables 8 335 450 Infrastructure, property, plant and equipment 11 1,099,318 1,019,274 Investment property 12 92,758 95,512 Right of use assets 14a 2,365 – Investments accounted for using the equity method 19 20 10 Total non-current assets 1,194,796 1,115,246
Total assets 1,292,796 1,213,242
LIABILITIES Current liabilities Payables 15 22,015 20,767 Income received in advance 15 – 2,613 Contract liabilities 13 9,287 – Lease liabilities 14b 303 – Borrowings 15 846 811 Provisions 16 15,963 16,021 Total current liabilities 48,414 40,212
Non-current liabilities Lease liabilities 14b 2,096 – Borrowings 15 7,254 8,100 Provisions 16 1,174 278 Total non-current liabilities 10,524 8,378
Total liabilities 58,938 48,590 Net assets 1,233,858 1,164,652
EQUITY Accumulated surplus 17 804,113 813,480 Revaluation reserves 17 429,745 351,172 Council equity interest 1,233,858 1,164,652 Total equity 1,233,858 1,164,652
The Council has not restated comparatives when initially applying AASB 1058 Income of Not-for-Profit Entities, AASB 15 Revenue from Contracts with Customers and AASB 16 Leases. The comparative information has been prepared under AASB 111 Construction Contracts, AASB 118 Revenue, AASB 1004 Contributions, AASB 117 Leases and related Accounting Interpretations.
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
72 North Sydney Council Annual Report 2019/20 Page 7 of 90 Page 76 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1 – Total 1,056 1,056 equity 20,508 (4,556) 20,508 21,564 1,147,644 1,143,088 1,164,652 Page 8 of 90 – – – – – – IPP&E (6,706) reserve 357,878 351,172 351,172 Leases . The comparative Financial Statements 2020 revaluation as at 30/06/19 – 2,150 1,056 1,056 20,508 20,508 21,564 surplus 789,766 791,916 813,480 and AASB 16 Accumulated – Total equity 78,573 78,573 (4,234) (5,133) 73,440 (5,133) 1,164,652 1,160,418 1,233,858 and related Accounting Interpretations. – – – – Leases IPP&E 78,573 78,573 78,573 reserve 351,172 351,172 429,745 revaluation as at 30/06/20 Revenue from Contracts with Customers – – – (4,234) (5,133) (5,133) (5,133) surplus 813,480 809,246 804,113 , AASB 15 Accumulated Contributions , AASB 117 17 11 Notes , AASB 1004 Revenue Income of Not-for-Profit Entities , AASB 118 Construction Contracts has been prepared under AASB 111 North Sydney Council Statement of Changes in Equity for the year ended 30 June 2020 §Note/Subtotal§ §Subnote§ $ '000 Opening balance Correction of prior period errors Changes due to AASB 1058 and 15 adoption Restated opening balance Net operating result for the year Restated net operating result for the period Other comprehensive income – Gain (loss) on revaluation of IPP&E Other comprehensive income Total comprehensive income Equity – balance at end of the reporting period The Council has not restated comparatives when initially applying AASB 1058 The above Statement of Changes in Equity should be read conjunction with the accompanying notes. information
North Sydney Council Annual Report 2019/20 73 Page 77 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Statement of Cash Flows for the year ended 30 June 2020
§Statement§ Original unaudited budget Actual Actual 2020 $ '000 Notes 2020 2019
Cash flows from operating activities Receipts: 63,157 Rates and annual charges 63,118 58,153 31,617 User charges and fees 28,459 34,598 756 Investment and interest revenue received 1,766 2,909 7,568 Grants and contributions 15,940 19,194 3,600 Bonds, deposits and retention amounts received 2,874 3,546 15,321 Other 22,209 26,751 Payments: (44,307) Employee benefits and on-costs (45,673) (42,880) (36,566) Materials and contracts (40,412) (41,441) (379) Borrowing costs (422) (321) (3,600) Bonds, deposits and retention amounts refunded (2,048) (4,118) (9,372) Other (13,053) (9,669) Net cash provided (or used in) operating 18b 27,795 activities 32,758 46,722
Cash flows from investing activities Receipts: 50,000 Sale of investment securities 53,540 69,062 4,500 Sale of real estate assets 4,500 – 808 Sale of infrastructure, property, plant and equipment 773 690 Payments: (50,000) Purchase of investment securities (62,361) (79,126) – Purchase of investment property (73) (66) (28,585) Purchase of infrastructure, property, plant and equipment (32,945) (28,518) (23,277) Net cash provided (or used in) investing activities (36,566) (37,958)
Cash flows from financing activities Payments: (811) Repayment of borrowings and advances (811) (589) – Lease liabilities (principal repayments) (229) – (811) Net cash flow provided (used in) financing activities (1,040) (589)
3,707 Net increase/(decrease) in cash and cash equivalents (4,848) 8,175
14,083 Plus: cash and cash equivalents – beginning of year 18a 14,083 5,908 17,790 Cash and cash equivalents – end of the year 18a 9,235 14,083
73,145 plus: Investments on hand – end of year 7(b) 81,961 73,145 90,935 Total cash, cash equivalents and investments 91,196 87,228
The Council has not restated comparatives when initially applying AASB 1058 Income of Not-for-Profit Entities, AASB 15 Revenue from Contracts with Customers and AASB 16 Leases. The comparative information has been prepared under AASB 111 Construction Contracts, AASB 118 Revenue, AASB 1004 Contributions, AASB 117 Leases and related Accounting Interpretations.
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
74 North Sydney Council Annual Report 2019/20 Page 9 of 90 Page 78 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Contents of the Notes accompanying the General Purpose Financial Statements
§NotesTable§
Note Details Page
1 Basis of preparation 11 2(a) Council functions/activities – financial information 14 2(b) Council functions/activities – component descriptions 15 3 Revenue from continuing operations 16 4 Interest and investment income 24 5 Expenses from continuing operations 25 6 Gain or loss from disposal of assets 29 7(a) Cash and cash equivalents 30 7(b) Investments 30 7(c) Restricted cash, cash equivalents and investments 31 8 Receivables 33 9 Inventories and other assets 34 10 Non-current assets classified as held for sale 35 11 Infrastructure, property, plant and equipment 36 12 Investment properties 40 13 Contract assets and liabilities 42 14 Leases 43 15 Payables and borrowings 47 16 Provisions 49 17 Accumulated surplus, revaluation reserves, changes in accounting policies, changes in 51 accounting estimates and errors 18 Statement of cash flow information 55 19 Interests in other entities 56 20 Commitments 58 21 Contingencies 59 22 Financial risk management 61 23 Material budget variations 65 24 Fair Value Measurement 67 25 Related party disclosures 74 26 Events occurring after the reporting date 74 27 Statement of developer contributions 75 28(a) Statement of performance measures – consolidated results 77
Additional Council disclosures (unaudited) 28(b) Statement of performance measures – consolidated results (graphs) 78 29 Council information and contact details 80
North Sydney Council Annual ReportPage 2019/20 10 of 9075 Page 79 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 1. Basis of preparation
§Note/Subtotal§ §Subnote§
These financial statements were authorised for issue by Council on 26/10/2020. Council has the power to amend and reissue these financial statements.
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Australian Accounting Interpretations, the Local Government Act 1993 (NSW) and Regulations, and the Local Government Code of Accounting Practice and Financial Reporting.
Council is a not for-profit entity.
The financial statements are presented in Australian dollars and are rounded to the nearest thousand dollars.
(a) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of infrastructure, property, plant and equipment and investment property.
(b) Significant accounting estimates and judgements The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council's accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Council and that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include:
(i) estimated fair values of investment properties – refer Note 12 (ii) estimated fair values of infrastructure, property, plant and equipment – refer Note 11 (iii) employee benefit provisions – refer Note 16.
Significant judgements in applying the council's accounting policies
(i) Impairment of receivables
Council has made a significant judgement about the impairment of a number of its receivables – refer Note 8.
Monies and other assets received by Council In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund.
Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to the taxation authority is included with other receivables or payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities that are recoverable from, or payable to, the taxation authority are presented as operating cash flows.
76continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 11 of 90 Page 80 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 1. Basis of preparation (continued)
Volunteer services Volunteer services are services received by Council from individuals or other entities without charge or for consideration significantly less than the fair value of those services. While the measurement of the revenue is at fair value, it is reasonable to assume it is calculated using a comparable hourly rate and the annual total of hours of voluntary services provided.
Volunteer services are not recognised as they would not be purchased if not donated. The quantum of the donated services would not be possible given the constraints on budgets and resources.
New accounting standards and interpretations issued not yet effective Certain new accounting standards and interpretations (ie. pronouncements) have been published by the Australian Accounting Standards Board that are not mandatory for the 30 June 2020 reporting period.
Council has elected not to apply any of these pronouncements in these financial statements before their operative dates.
Council's assessment of these new standards and interpretations (where they have been deemed as having a material impact on Council's future financial performance, financial positon and cash flows) are set out below:
AASB 1059 Service Concession Arrangements: Grantors AASB 2018–5 Amendments to Australian Accounting Standards - Deferral of AASB 1059 AASB 2019-2 Amendments to Australian Accounting Standards – Implementation of AASB 1059
This standard provides guidance for public sector entities (grantors) who have entered into service concession arrangements with private sector operators.
AASB 1059 requires grantors to recognise a service concession asset and, in most cases, a corresponding liability on the balance sheet.
A control approach is used to assess the service concession arrangements in place.
On initial recognition the asset is measured at current replacement cost based on AASB 13 Fair Value Measurement and existing assets of the grantors are reclassified at the date of transition.
After initial recognition, the grantor accounts for the assets under either AASB 116 Property, Plant and Equipment or AASB 138 Intangible Assets.
The nature of the consideration given to the operator will affect whether the grantor applies either the ‘financial liability’ or the ‘grant of right’ model for the recognition of the liability.
AASB 2019-2 makes amendments to the recognition and measurement of the asset and liability where the modified retrospective approach to transition is being used and provides a practical expedient due to the different effective dates of AASB 16 and AASB 1059.
Council does not expect any material impact to future financial statements as we do not generally enter into service concession arrangements.
This standard has an effective date for the 30 June 2021 reporting period.
AASB2014-10 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture AASB2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections
The standard amendments address an acknowledged inconsistency between the requirements in AASB10 and those in AASB128 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture.
These amendments will only impact Council where there has been a sale or contribution of assets between Council and any Joint Venture or Associate.
continued on next page ... North Sydney Council Annual ReportPage 2019/20 12 of 90 77 Page 81 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 1. Basis of preparation (continued)
The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary.
Apart from the standards listed above, there are no other released standards and interpretations (with future effective dates) that are expected to have a material impact on Council.
Council has elected not to apply any of these pronouncements in these financial statements before their operative dates.
New accounting standards adopted during the year During the year Council adopted the following accounting standards and interpretations (as issued by the Australian Accounting Standards Board) which were mandatorily effective from 1 July 2019:
AASB 16 Leases ◾ AASB 15 Revenue from contracts with customers and associated amending standards. ◾ AASB 1058 Income of Not-for-profit entities ◾ Further information on the newly adopted standards which had a material impact on Council's reported financial position, financial performance and/or associated financial statement disclosures can be found at Note 17.
Impacts of COVID-19 pandemic
The COVID-19 pandemic and the subsequent restrictions put in place to slow its spread had a detrimental effect on some of Council's revenue streams during the final four months of the year. The unfavourable variations from the budget caused by its impact are disclosed in Note 23.
78 North Sydney Council Annual Report 2019/20 Page 13 of 90 Page 82 of 3738th Council Meeting - 30 November 2020 Minutes 190 Financial Statements 2020 3738th North Sydney Council Notes to the Financial Statements Council for the year ended 30 June 2020 Note 2(a). Council functions/activities – financial information Meeting
§Note/Subtotal§ §Subnote§ Income, expenses and assets have been directly attributed to the following functions or activities. Details of those functions or activities are provided in Note 2(b).
- Grants included 30 Income from Expenses from Operating result from in income from
November continuing operations continuing operations continuing operations continuing operations Carrying amount of assets $ '000 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Functions or activities Our Living Environment 22,775 24,813 39,993 33,003 (17,218) (8,190) 467 197 336,643 329,160 2020 Our Built Infrastructure 35,031 46,820 31,391 29,765 3,640 17,055 5,333 4,148 617,227 545,187 Our Future Planning 11,826 12,946 14,943 13,711 (3,117) (765) 942 750 130,271 130,905 Minutes Our Social Vitality 1,532 2,518 7,846 8,300 (6,314) (5,782) 1,038 1,005 76,123 74,848 Our Civic Leadership 50,163 48,267 32,287 30,077 17,876 18,190 1,616 1,510 132,532 131,292 Other – – – – – – – – – 1,850 Total functions and activities 121,327 135,364 126,460 114,856 (5,133) 20,508 9,396 7,610 1,292,796 1,213,242 North SydneyCouncil AnnualReport2019/20 Attachment 8.3.1 Page 83 190 of 79
Page 14 of 90 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 2(b). Council functions/activities - component descriptions
§Note/Subtotal§ §Subnote§
Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:
Our Living Environment
Encompasses but is not limited to bushland management, environmental sustainability, recreational facilities, tree preservation and community gardens.
Our Built Infrastructure
Encompasses but is not limited to asset management, land use planning, development and design, heritage preservation, streetscapes, compliance and traffic and transport planning.
Our Future Planning
Encompasses but is not limited to economic development, tourism and our commercial centres and shopping villages.
Our Social Vitality
Encompasses but is not limited to community services, arts and culture, access and safety, housing, health and wellbeing, recreational planning and volunteering.
Our Civic Leadership
Encompasses but is not limited to governance (i.e. how Council is managed).
80 North Sydney Council Annual Report 2019/20 Page 15 of 90 Page 84 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 3. Revenue from continuing operations
§Note/Subtotal§ §Subnote§ $ '000 AASB 2020 2019 (a) Rates and annual charges
Ordinary rates Residential 1058 (1) 26,579 24,308 Business 1058 (1) 16,464 16,249 Less: pensioner rebates (mandatory) 1058 (1) (147) (148) Less: pensioner rebates (Council policy) 1058 (1) (120) (121) Rates levied to ratepayers 42,776 40,288
Pensioner rate subsidies received 1058 (1) 147 148 Total ordinary rates 42,923 40,436
Special rates Infrastructure levy 1058 (1) 1,918 1,780 Environmental levy 1058 (1) 2,153 1,997 Main street levies 1058 (1) 482 493 Rates levied to ratepayers 4,553 4,270
Total special rates 4,553 4,270
Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611) Domestic waste management services 1058 (1) 14,802 13,521 Stormwater management services 1058 (1) 572 565 Section 611 charges 1058 (1) 69 74 Less: pensioner rebates (mandatory) 1058 (1) (44) (42) Less: pensioner rebates (Council policy) 1058 (1) (36) (35) Annual charges levied 15,363 14,083
Pensioner subsidies received: – Domestic waste management 1058 (1) 44 42 Total annual charges 15,407 14,125 TOTAL RATES AND ANNUAL CHARGES 62,883 58,831
The AASB notation (above) identifies the revenue recognition pattern for material items of Council revenue:
15 (1) indicates income recognised under AASB 15 “at a point in time”, 15 (2) indicates income recognised under AASB 15 “over time”, 1058 (1) indicates income recognised under AASB 1058 “at a point in time”, while 1058 (2) indicates income recognised under AASB 1058 “over time”.
Council has used 2016 year valuations provided by the NSW Valuer General in calculating its rates.
Accounting policy for rates and charges Rates and annual charges are recognised as revenue when the Council obtains control over the assets comprising these receipts which is the beginning of the rating period to which they relate. Prepaid rates are recognised as a financial liability until the beginning of the rating period.
Pensioner rebates relate to reductions in rates and certain annual charges for eligible pensioners’ place of residence in the local government council area that are not subsidised by the NSW Government. Pensioner rate subsidies are received from the NSW Government to provide a contribution towards the pensioner rebates and are in substance a rates payment.
2019 accounting policy Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates. continued on next page ... North Sydney Council Annual ReportPage 2019/20 16 of 9081 Page 85 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
§Subnote§ $ '000 AASB 2020 2019 (b) User charges and fees
Specific user charges (per s.502 - specific 'actual use' charges) Domestic waste management services 15 (2) 1,235 1,321 Total specific user charges 1,235 1,321
Other user charges and fees (i) Fees and charges – statutory and regulatory functions (per s.608) Planning and building regulation 1058 (2) 3,303 3,546 Planning and building regulation - Issue Of Notices/EPO 1058 (1) 6 – Planning and building regulation - Sect 735A Certificates & DA Advertising 15 (1) 297 – Regulatory / statutory fees 15 (2) 5,235 7,231 Regulatory / statutory fees - Hall Hire - Public Liability Insurance 1058 (1) 14 – Regulatory / statutory fees - Rezoning Fees 1058 (2) 348 – Section 10.7 certificates (EP&A Act) 1058 (1) 277 260 Section 603 certificates 1058 (1) 165 129 Total fees and charges – statutory/regulatory 9,645 11,166
(ii) Fees and charges – other (incl. general user charges (per s.608)) Swimming centres 15 (2) 1,924 2,687 Business trade waste 15 (2) – 438 Community centres / facilities 15 (2) 90 162 Domestic waste management – other 15 (1) 44 33 Family day care 15 (2) 177 253 Library 15 (1) 71 107 On street parking 15 (2) 8,772 10,297 Off street parking 15 (2) 2,899 3,579 Ovals 15 (2) 815 1,300 Planning and building regulation (non-statutory) 15 (1) 634 594 Public events 15 (2) 71 102 Reinstatements 1058 (2) 1,541 1,486 Other - Fees 15 (2) 68 – Other - Occupancy Certificate 1058 (2) 4 – Other 15 (1) 265 166 Total fees and charges – other 17,375 21,204 TOTAL USER CHARGES AND FEES 28,255 33,691
The AASB notation (above) identifies the revenue recognition pattern for material items of Council revenue:
15 (1) indicates income recognised under AASB 15 “at a point in time”, 15 (2) indicates income recognised under AASB 15 “over time”, 1058 (1) indicates income recognised under AASB 1058 “at a point in time”, while 1058 (2) indicates income recognised under AASB 1058 “over time”.
Accounting policy for user charges and fees Revenue arising from user charges and fees is recognised when or as the performance obligation is completed and the customer receives the benefit of the goods / services being provided.
The performance obligation relates to the specific services which are provided to the customers and generally the payment terms are within 30 days of the provision of the service or in some cases such as caravan parks, the customer is required to pay on arrival. There is no material obligation for Council in relation to refunds or returns.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
Where an upfront fee is charged such as membership fees for the leisure centre the fee is recognised on a straight-line basis over the expected life of the membership.
Licences granted by Council are all either short-term or low value and all revenue from licences is recognised at the time that the licence is granted rather than the term of the licence.
2019 accounting policy User charges and fees are recognised as revenue when the service has been provided.
§Subnote§ $ '000 AASB 2020 2019 (c) Other revenues
Advertising banner production and hire 15 (1) 31 46 Advertising on Council infrastructure 15 (2) 1,074 1,335 Ex gratia rates 1058 (1) 45 44 Better waste and recycling fund 15 (1) 105 105 Fines – parking 1058 (1) 5,916 7,138 Community housing accumulated surplus (from Link Housing) – 289 Container Deposit Scheme refunds – 130 Legal fees recovery – rates and charges (extra charges) 1058 (1) – 22 Commissions and agency fees 15 (1) 3 5 Credit card payment surcharge 15 (1) 81 85 Fines – environmental and compliance 1058 (1) 39 55 Legal fees recovered 1058 (1) 499 91 Miscellaneous sales 15 (1) 21 26 New Years Eve event revenue 15 (1) 356 195 Other - Secondment reimbursement 15 (2) 86 – Other 15 (1) 565 386 Rental income – investment properties (2019 only) – 6,071 Rental income – other council properties (2019 only) – 884 TOTAL OTHER REVENUE 8,821 16,907
The AASB notation (above) identifies the revenue recognition pattern for material items of Council revenue:
15 (1) indicates income recognised under AASB 15 “at a point in time”, 15 (2) indicates income recognised under AASB 15 “over time”, 1058 (1) indicates income recognised under AASB 1058 “at a point in time”, while 1058 (2) indicates income recognised under AASB 1058 “over time”.
Accounting policy for other revenue Where the revenue relates to a contract with customer, the revenue is recognised when or as the performance obligation is completed and the customer receives the benefit of the goods / services being provided.
Where the revenue relates to a contract which is not enforceable or does not contain sufficiently specific performance obligations then revenue is recognised when an unconditional right to a receivable arises or the cash is received, which is earlier.
2019 accounting policy: Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Council and specific criteria have been met for each of the Council’s activities as described below. Council bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
Parking fees and fines are recognised as revenue when the service has been provided, or when the penalty has been applied, whichever occurs first.
Rental income is accounted for on a straight-line basis over the lease term.
Miscellaneous sales are recognised when physical possession has transferred to the customer which is deemed to be the point of transfer of risks and rewards.
Other income is recorded when the payment is due, the value of the payment is notified, or the payment is received, whichever occurs first.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
§Note/Subtotal§ Operating Operating Capital Capital $ '000 AASB 2020 2019 2020 2019 (d) Grants
General purpose (untied) Current year allocation Financial assistance – general component 1058 (1) 785 742 – – Financial assistance – local roads component 1058 (1) 245 237 – – Payment in advance - future year allocation Financial assistance – general component 1058 (1) 831 769 – – Financial assistance – local roads component 1058 (1) 260 246 – – Total general purpose 2,121 1,994 – –
Specific purpose Community care - Family day care child care benefit subsidy 15 (1) 672 766 – – - Family day care COVID-19 relief 15 (1) 29 – – – - Vacation care 15 (1) 54 15 – – - Youth care 15 (1) 2 2 – – - Other Community Care 15 (1) 41 40 – – Environment Protection 15 (1) 45 23 – – Recreation and culture - Library Subsidy and Local Priority grant 1058 (1) 182 135 56 – - Other Library grants 15 (1) 3 6 – 40 - Parks and gardens 1058 (2) – 30 467 168 Town Planning 15 (1) 941 750 – – Transport - Bicycle facilities 1058 (2) – – 165 – - Bus weight tax subsidy 1058 (1) 51 25 – – - Northern Beaches B-Line Project - Urban Landscaping Works 1058 (2) – 67 3,669 3,203 - Pedestrian facilities 1058 (2) – – 66 73 - Roads safety 15 (1) 75 77 – – - Roads to Recovery 1058 (1) 305 – – – - Traffic facilities 1058 (2) – – 242 – - Traffic Route Lighting subsidy 1058 (1) 200 196 – – - Other roads funding 15 (1) 10 – – – Total specific purpose 2,610 2,132 4,665 3,484 Total grants 4,731 4,126 4,665 3,484
Grant revenue is attributable to: – Commonwealth funding 976 771 136 123 – State funding 3,752 3,354 4,529 3,361 – Other funding 3 1 – – 4,731 4,126 4,665 3,484
The AASB notation (above) identifies the revenue recognition pattern for material items of Council revenue:
15 (1) indicates income recognised under AASB 15 “at a point in time”, 15 (2) indicates income recognised under AASB 15 “over time”, 1058 (1) indicates income recognised under AASB 1058 “at a point in time”, while 1058 (2) indicates income recognised under AASB 1058 “over time”.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
Operating Operating Capital Capital $ '000 Notes 2020 2019 2020 2019 (e) Contributions
Developer contributions: (s7.4 & s7.11 - EP&A Act, s64 of the LGA): Cash contributions S 7.4 – contributions using planning agreements 1058 (1) – – – 302 S 7.11 – contributions towards amenities/services 1058 (1) – – 1,713 11,862 Total developer contributions – cash – – 1,713 12,164
Non-cash contributions S 7.4 – contributions using planning agreements 1058 (1) – – – 62 Total developer contributions non-cash – – – 62
Total developer contributions 27 – – 1,713 12,226
Other contributions: Cash contributions Environment protection 15 (1) 456 508 – – Recreation and culture 1058 (1) – – – 63 RMS contributions (regional roads, block grant) 1058 (1) 703 891 – – Town planning 15 (1) – 15 – – Traffic facilities 15 (1) 97 – – – Other - Contribution to works 15 (1) 2 – – – Other 1058 (1) 10 10 – – Total other contributions – cash 1,268 1,424 – 63
Total other contributions 1,268 1,424 – 63 Total contributions 1,268 1,424 1,713 12,289 TOTAL GRANTS AND CONTRIBUTIONS 5,999 5,550 6,378 15,773
The AASB notation (above) identifies the revenue recognition pattern for material items of Council revenue:
15 (1) indicates income recognised under AASB 15 “at a point in time”, 15 (2) indicates income recognised under AASB 15 “over time”, 1058 (1) indicates income recognised under AASB 1058 “at a point in time”, while 1058 (2) indicates income recognised under AASB 1058 “over time”.
Accounting policy for grants and contributions
Accounting policy from 1 July 2019
Grant income under AASB 15
Where grant income arises from an agreement which is enforceable and contains sufficiently specific performance obligations then the revenue is recognised when control of each performance obligation is satisfied.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
The performance obligations are varied based on the agreement but include the provision of community care services, such as family day care and vacation care, road safety and the updating of Council's Local Environment Plan. Payment terms vary depending on the terms of the grant, cash is received upfront for some grants and on the achievement of certain payment milestones for others.
Each performance obligation is considered to ensure that the revenue recognition reflects the transfer of control and within grant agreements there may be some performance obligations where control transfers at a point in time and others which have continuous transfer of control over the life of the contract.
Where control is transferred over time, generally the input methods being either costs or time incurred are deemed to be the most appropriate methods to reflect the transfer of benefit.
Grant income
Assets arising from grants in the scope of AASB 1058 are recognised at the assets fair value when the asset is received. Council considers whether there are any related liability or equity items associated with the asset which are recognised in accordance with the relevant accounting standard.
Once the assets and liabilities have been recognised then income is recognised for any remaining asset value at the time that the asset is received
Capital grants
Capital grants received to enable Council to acquire or construct an item of infrastructure, property, plant and equipment to identified specifications which will be under Council’s control and which are enforceable are recognised as revenue as and when the obligation to construct or purchase is completed.
For construction projects, this is generally as the construction progresses in accordance with costs incurred since this is deemed to be the most appropriate measure of the completeness of the construction project as there is no profit margin.
For acquisitions of assets, the revenue is recognised when the asset is acquired and controlled by the Council.
Contributions
Council has obligations to provide facilities from contribution revenues levied on developers under the provisions of sections 7.4, 7.11 and 7.12 of the Environmental Planning and Assessment Act 1979.
While Council generally incorporates these amounts as part of a Development Consents Order, such developer contributions are only recognised as income upon receipt by Council, due to the possibility that individual development consents may not be acted upon by the applicant and, accordingly, would not be payable to Council.
Developer contributions may only be expended for the purposes for which the contributions were required, but the Council may apply contributions according to the priorities established in work schedules
Accounting policy prior to 1 July 2019
Control over grants and contributions is normally obtained upon their receipt (or acquittal) and revenue is recognised at this time and is valued at the fair value of the granted or contributed asset at the date of transfer.
Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner, or used over a particular period, and those conditions were un-discharged at reporting date, the unused grant or contribution is disclosed below.
A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided at reporting date.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
§Note/Subtotal§ $ '000 2020 2019 (f) Unspent grants and contributions – external restrictions
Certain grants and contributions are obtained by Council on condition that they be spent in a specified manner due to externally imposed restrictions.
Operating grants Unexpended at the close of the previous reporting period 487 29 Add: operating grants recognised as income in the current period but not yet spent (2019 only) – 487 Add: operating grants received for the provision of goods and services in a future period 128 – Less: operating grants recognised in a previous reporting period now spent (2019 only) – (29) Less: operating grants received in a previous reporting period now spent and recognised as income (438) – Unexpended and held as externally restricted assets (operating grants) 177 487
The majority of unspent operating grant funding relates to a grant received from the NSW Department of Planning & Environment to fund the accelerated review of our Local Environment Plan. Of the amount received for milestones completed by 30 June 2020, $111,000 was unspent. Capital grants Unexpended at the close of the previous reporting period 3,359 1,247 Add: capital grants recognised as income in the current period but not yet spent (2019 only) – 194 Add: capital grants received for the provision of goods and services in a future period 7,842 3,111 Less: capital grants recognised in a previous reporting period now spent (2019 only) – (1,193) Less: capital grants received in a previous reporting period now spent and recognised as income (3,359) – Unexpended and held as externally restricted assets (capital grants) 7,842 3,359
Unspent capital grant funding relates to a grant from Transport for NSW towards the cost of urban landscaping works along the Military Road corridor in conjunction with the Northern Beaches B-Line Program (of which $4.34 million was unspent at 30 June 2020) and a $3.5 million grant from the NSW Department of Planning & Environment towards the provision of additional open space in Crows Nest.
Contributions Unexpended at the close of the previous reporting period 20,535 13,684 Add: contributions recognised as income in the current period but not yet spent – 206 Add: contributions received for the provision of goods and services in a future period 2,039 12,293 Less: contributions recognised in a previous reporting period now spent (3,404) (5,648) Unexpended and held as externally restricted assets (contributions) 19,170 20,535
As at 30 June 2020, Council held $18.8 million of unspent developer contributions levied under S7.11 or S7.4 of the Environmental Planning & Assessment Act, 1979. These funds, which form the majority of unspent contributions, will be utilised in future years to assist in the cost of providing local public infrastructure and facilities required as a consequence of development.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 3. Revenue from continuing operations (continued)
AASB 15 AASB 1058 $ '000 2020 2020 (g) Disaggregation of material revenue streams
The following shows the revenue recognition pattern for the material revenue streams of Council.
Revenue recognition at a point in time Rates and annual charges – 62,883 Financial assistance grants – 2,121 User charges and fees 1,311 462 Grant revenue and non-developer contributions 2,427 1,507 Developer contributions – 1,713 Fines – 5,955 Sale of goods 21 – Other 1,170 544 4,929 75,185
Revenue recognised over time Grants to acquire or construct Council controlled assets – 4,609 User charges and fees 21,286 5,196 Other 1,131 – 22,417 9,805
§Note§ Note 4. Interest and investment income
§Subnote§ $ '000 2020 2019
Interest on financial assets measured at amortised cost – Overdue rates and annual charges (incl. special purpose rates) 91 80 – Cash and investments 1,791 2,116 – Developer contributions 93 120 Fair value adjustments – Movements in investments at fair value through profit and loss (5) 91 Total Interest and investment income 1,970 2,407
Interest revenue is attributable to: Unrestricted investments/financial assets: Overdue rates and annual charges (general fund) 91 80 General Council cash and investments 1,785 2,207 Restricted investments/funds – external: Development contributions – Section 7.11 84 109 – Section 7.4 10 11 Total interest and investment revenue 1,970 2,407
Accounting policy for interest and investment revenue Interest income is recognised using the effective interest rate at the date that interest is earned.
Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 5. Expenses from continuing operations
§Note/Subtotal§ §Subnote§ $ '000 2020 2019 (a) Employee benefits and on-costs
Salaries and wages 35,445 33,967 Employee leave entitlements (ELE) 6,300 6,897 Superannuation – defined contribution plans 3,331 3,182 Superannuation – defined benefit plan 826 927 Workers’ compensation insurance 623 598 Fringe benefit tax (FBT) 186 151 Gratuities 437 126 Other 160 187 Total employee costs 47,308 46,035
Less: capitalised costs (1,114) (1,043) TOTAL EMPLOYEE COSTS EXPENSED 46,194 44,992
Number of ‘full-time equivalent’ employees (FTE) at year end 392 399
Accounting policy for employee benefits and on-costs Employee benefit expenses are recorded when the service has been provided by the employee.
Retirement benefit obligations
All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees.
Superannuation plans
Contributions to defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Council participates in a defined benefit plan under the Local Government Superannuation Scheme. However, sufficient information to account for the plan as a defined benefit is not available and therefore Council accounts for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans, i.e. as an expense when it becomes payable – refer to Note 18 for more information.
§Subnote§ $ '000 2020 2019 (b) Borrowing costs
(i) Interest bearing liability costs Interest on leases 74 – Interest on loans 342 367 Total interest bearing liability costs 416 367
Total interest bearing liability costs expensed 416 367 TOTAL BORROWING COSTS EXPENSED 416 367
Accounting policy for borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed as incurred.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 5. Expenses from continuing operations (continued)
§Note/Subtotal§ $ '000 2020 2019 (c) Materials and contracts
Raw materials and consumables 4,258 4,087 Contractor costs – Agency staff 1,147 1,181 – Air quality monitoring 132 – – Cash collection 366 387 – CBD marketing 146 265 – Cleaning of Council properties 451 374 – Community transport 182 173 – Computer hardware and software maintenance 1,426 1,380 – Family Day Care child care assistance 672 767 – Drainage maintenance 751 503 – Footpath maintenance 811 786 – Graffiti removal 132 129 – Internal audit program 114 79 – Mowing 989 1,027 – Other infrastructure maintenance 586 625 – Parking meter maintenance 881 989 – Parks, gardens and tree maintenance 1,873 2,018 – Property maintenance 3,976 4,145 – Property management 394 311 – Public events 744 815 – Roads maintenance 1,623 1,344 – Security 5 11 – Waste and recycling disposal 3,880 4,575 – Waste and recycling collection 6,620 5,503 – Other 1,200 1,144 Consultancy 1,635 1,280 Auditors remuneration 111 68 Infringement notice contract costs (SEINS) 792 932 Legal expenses: – Legal expenses: planning and development 1,396 1,672 – Legal expenses: debt recovery – 22 – Legal expenses: other 49 207 Total materials and contracts 37,342 36,799 TOTAL MATERIALS AND CONTRACTS 37,342 36,799
Accounting policy for materials and contracts
Expenses are recorded on an accruals basis as the council receives the goods or services.
Auditor remuneration During the year, the following fees were incurred for services provided by the auditor of Council, related practices and non-related audit firms Auditors of the Council - NSW Auditor-General:
Audit and other assurance services Audit and review of financial statements i 109 66 Remuneration for audit and other assurance services 109 66
Total Auditor-General remuneration 109 66 continued on next page ... North Sydney Council Annual ReportPage 2019/20 26 of 9091 Page 95 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 5. Expenses from continuing operations (continued)
§Note/Subtotal§ §Total§ $ '000 2020 2019
Non NSW Auditor-General audit firms: Audit and other assurance services Audit of regulatory returns 2 2 Remuneration for audit and other assurance services 2 2
Total remuneration of non NSW Auditor-General audit firms 2 2
Total Auditor remuneration 111 68
(i) The 2020 figure includes $23K of costs relating to 2019 which were invoiced after the completion of the 2018/19 Financial Statements
§Subnote§ $ '000 Notes 2020 2019 (d) Depreciation, amortisation and impairment of non-financial assets
Depreciation and amortisation Furniture and fittings 518 522 Office equipment 913 931 Land improvements (depreciable) 389 625 Plant and equipment 1,954 1,937 Infrastructure: 11 – Buildings – specialised 2,756 2,706 – Buildings – non-specialised 30 31 – Footpaths 3,185 2,687 – Other structures 53 46 – Roads 5,673 5,637 – Stormwater drainage 2,013 2,016 – Swimming pools 6,552 381 – Other open space / recreational assets 1,217 788 – Other infrastructure 3,401 3,360 Right of use assets 14 263 – Other assets: – Heritage collections 41 52 – Library books 393 392 TOTAL DEPRECIATION, AMORTISATION AND IMPAIRMENT / REVALUATION DECREMENT FOR IPP&E 29,351 22,111
Accounting policy for depreciation, amortisation and impairment expenses of non-financial assets
Depreciation and amortisation Depreciation and amortisation are calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives. Useful lives are included in Note 11 for IPPE assets.
Depreciation is capitalised where in-house assets have contributed to new assets.
The redevelopment of the North Sydney Olympic Pool commencing in the 2020/21 financial year, will involve the demolition of substantial parts of the existing asset. Accounting standards require Council to revise the remaining life of the asset and recognise the write-down through an accelerated annual depreciation expense of an additional $6.2 million.
Impairment of non-financial assets Council assets held at fair value that are not held primarily for their ability to generate net cash flow, and that are deemed to be specialised, are no longer required to be tested for impairment under AASB 136. This is because these assets are assessed
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 5. Expenses from continuing operations (continued) on an annual basis to ensure that the carrying amount is not materially different from fair value and therefore an impairment loss would be captured during this assessment.
Assets that do not meet the criteria above are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Impairment losses for revalued assets are firstly offset against the amount in the revaluation surplus for the class of asset, with only the excess to be recognised in the Income Statement.
§Subnote§ $ '000 2020 2019 (e) Other expenses
Advertising 185 175 Bad and doubtful debts 196 73 Bank charges 458 500 Community recycling centre rent 226 231 Contributions/levies to other levels of government – Department of planning levy 276 270 – Emergency services levy (includes FRNSW and SES levies) 1,328 1,274 – Land tax 25 26 – State Treasury (share of net parking infringement revenue) 54 – Councillor expenses – mayoral fee 44 43 Councillor expenses – councillors’ fees 203 198 Councillors’ expenses (incl. mayor) – other (excluding fees above) 14 20 Donations, contributions and assistance to other organisations (Section 356) – Aboriginal Heritage Office 45 58 – Crows Nest Centre 455 396 – Crows Nest Mainstreet 16 16 – Neutral Bay Mainstreet 18 16 – North Sydney community centre 60 60 – Nutcote 47 48 – Other organisations 408 349 NSW Local Government Association membership 56 51 Electricity and heating 1,072 1,130 Insurance 1,959 1,883 Postage 376 373 Staff training 324 345 Staff travel expenses 244 254 Strata Levies 88 – Street lighting 799 865 Telephone and communications 314 352 Valuation fees 56 72 Other 62 25 Total other expenses 9,408 9,103 TOTAL OTHER EXPENSES 9,408 9,103
Accounting policy for other expenses Other expenses are recorded on an accruals basis as the Council receives the goods or services.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 6. Gain or loss from disposal of assets
§Note/Subtotal§ §Subnote§ $ '000 Notes 2020 2019
Property (excl. investment property) Proceeds from disposal – property – – Less: carrying amount of property assets sold/written off – (275) Net gain/(loss) on disposal – (275) Plant and equipment 11 Proceeds from disposal – plant and equipment 840 627 Less: carrying amount of plant and equipment assets sold/written off (694) (535) Net gain/(loss) on disposal 146 92 Infrastructure 11 Proceeds from disposal – infrastructure – – Less: carrying amount of infrastructure assets sold/written off (1,068) (1,298) Net gain/(loss) on disposal (1,068) (1,298) Investments 7(b) Proceeds from disposal/redemptions/maturities – investments 53,540 69,062 Less: carrying amount of investments sold/redeemed/matured (53,540) (69,062) Net gain/(loss) on disposal – – Non-current assets classified as ‘held for sale’ 10 Proceeds from disposal – non-current assets ‘held for sale’ 4,500 – Less: carrying amount of ‘held for sale’ assets sold/written off (4,500) – Net gain/(loss) on disposal – – NET GAIN/(LOSS) ON DISPOSAL OF ASSETS (922) (1,481)
Accounting policy for disposal of assets Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Income Statement.
The gain or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer and the asset is derecognised.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 7(a). Cash and cash equivalents
§Note/Subtotal§ §Subnote§ $ '000 2020 2019
Cash and cash equivalents Cash on hand and at bank 9,081 10,984 Cash-equivalent assets – Deposits at call 154 3,099 Total cash and cash equivalents 9,235 14,083
Accounting policy for cash and cash equivalents For Statement of Cash Flow presentation purposes, cash and cash equivalents include: cash on hand; deposits held at call with financial institutions; other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value; and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position.
§Note§ Note 7(b). Investments
§Subnote§ 2020 2019 $ '000 Current Current
Investments a. ‘Financial assets at fair value through profit and loss’ – ‘Held for trading’ 9,961 73,145 b. ‘Financial assets at amortised cost’ 72,000 – Total Investments 81,961 73,145 TOTAL CASH ASSETS, CASH EQUIVALENTS AND INVESTMENTS 91,196 87,228
Financial assets at fair value through the profit and loss NCD’s, FRN’s (with maturities > 3 months) 9,961 15,145 Long term deposits – 58,000 Total 9,961 73,145
Financial assets at amortised cost Long term deposits 72,000 – Total 72,000 –
§Subnote§ Accounting policy for investments
Financial instruments are recognised initially on the date that the Council becomes party to the contractual provisions of the instrument. On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).
Financial assets All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification On initial recognition, Council classifies its financial assets into the following categories – those measured at: • amortised cost • fair value through profit and loss (FVTPL) • fair value through other comprehensive income – equity instrument (FVOCI-equity)
Financial assets are not reclassified subsequent to their initial recognition.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 7(b). Investments (continued)
Amortised cost Assets measured at amortised cost are financial assets where: • the business model is to hold assets to collect contractual cash flows, and • the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Council’s financial assets measured at amortised cost comprise trade and other receivables, term deposits and cash and cash equivalents in the Statement of Financial Position.
Subsequent to initial recognition, these assets are carried at amortised cost using the effective interest rate method less provision for impairment.
Interest income, impairment and gains or loss on de-recognition are recognised in profit or loss.
Financial assets through profit or loss All financial assets not classified as measured at amortised cost or fair value through other comprehensive income as described above are measured at fair value through profit or loss.
Net gains or losses, including any interest or dividend income, are recognised in profit or loss.
Council’s financial assets measured at fair value through profit or loss comprise investments in FRNs and NCDs in the Statement of Financial Position.
§Note§ Note 7(c). Restricted cash, cash equivalents and investments
§Subnote§
§Total§ 2020 2019 $ '000 Current Current
Total cash, cash equivalents and investments 91,196 87,228
attributable to: External restrictions 34,900 31,289 Internal restrictions 48,933 47,674 Unrestricted 7,363 8,265 91,196 87,228
96 North Sydney Council Annual Report 2019/20 Page 31 of 90 Page 100 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 7(c). Restricted cash, cash equivalents and investments
§Note/Subtotal§ §Total§ $ '000 2020 2019 Details of restrictions
External restrictions – included in liabilities Specific purpose unexpended grants – general fund (2020 only) 8,019 – External restrictions – included in liabilities 8,019 –
External restrictions – other Developer contributions – general 18,785 20,147 Specific purpose unexpended grants (recognised as revenue) – general fund – 3,846 Domestic waste management 6,818 5,734 Infrastructure levy – – Environment levy 893 1,027 Mainstreet levies – 133 Other specific purpose contributions 385 388 Waste and sustainability improvement funds – 14 External restrictions – other 26,881 31,289
Total external restrictions 34,900 31,289
Internal restrictions Capital works 11,703 18,150 Community housing – capital purchases 963 963 Community housing – major maintenance 132 1,632 Deposits, retentions and bonds 10,804 9,978 Employees leave entitlement 8,569 8,149 I.T. hardware and software 299 193 Income producing projects 1,410 5,724 Insurance 77 625 Loan principal 24 836 Olympic Pool Redevelopment 13,089 – Plant and vehicle replacement 1,863 1,424 Total internal restrictions 48,933 47,674
TOTAL RESTRICTIONS 83,833 78,963
North Sydney Council Annual ReportPage 2019/20 32 of 9097 Page 101 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 8. Receivables
§Note/Subtotal§ §Subnote§ 2020 2020 2019 2019 $ '000 Current Non-current Current Non-current
Purpose Rates and annual charges 1,495 237 770 336 Interest and extra charges 52 80 23 96 User charges and fees 1,173 – 1,462 – Accrued revenues – Interest on investments 647 – 438 – – Other income accruals 1,267 – 1,679 – Government grants and subsidies 412 – 124 – Net GST receivable 929 – 800 – Outstanding infringements 704 – 850 – Other debtors 8 18 18 18 Total 6,687 335 6,164 450
Less: provision of impairment User charges and fees (294) – (197) – Total provision for impairment – receivables (294) – (197) – TOTAL NET RECEIVABLES 6,393 335 5,967 450
§Subnote§ $ '000 2020 2019
Movement in provision for impairment of receivables Balance at the beginning of the year (calculated in accordance with AASB 9) 197 133 + new provisions recognised during the year 196 – – amounts already provided for and written off this year (99) – Balance at the end of the year 294 133
§Subnote§ Accounting policy for receivables
Recognition and measurement Receivables are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets.
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Receivables are generally due for settlement within 30 days.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Impairment Impairment of financial assets measured at amortised cost is recognised on an expected credit loss (ECL) basis.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when estimating ECL, the Council considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on Council’s historical experience and informed credit assessment, and including forward-looking information.
When considering the ECL for rates debtors, Council takes into account that unpaid rates represent a charge against the rateable property that will be recovered when the property is next sold. For non-rates debtors, Council uses the presumption that an asset which is more than 30 days past due has seen a significant increase in credit risk.
The Council uses the presentation that a financial asset is in default when:
98continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 33 of 90 Page 102 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 8. Receivables (continued)
• the other party is unlikely to pay its credit obligations to the Council in full, without recourse by the Council to actions such as realising security (if any is held); or • the financial assets (for non-rates debtors) are more than 90 days past due.
Credit losses are measured as the present value of the difference between the cash flows due to the entity in accordance with the contract, and the cash flows expected to be received. This is applied using a probability weighted approach.
On initial recognition of the asset, an estimate of the expected credit losses for the next 12 months is recognised. Where the asset has experienced significant increase in credit risk then the lifetime losses are estimated and recognised.
There has been no change in the estimation techniques or significant assumptions made during the current reporting period.
The Council writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
Where the Council renegotiates the terms of receivables due from certain customers, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in profit or loss.
Rates and annual charges outstanding are secured against the property.
§Note§ Note 9. Inventories and other assets
§Subnote§ 2020 2019 $ '000 Current Current (a) Inventories
Inventories at cost Stores and materials 6 2 Trading stock 27 55 Total inventories at cost 33 57 TOTAL INVENTORIES 33 57
§Subnote§ (b) Other assets
Prepayments 378 244 TOTAL OTHER ASSETS §Subnote§ 378 244
§Subnote§ Accounting policy for inventories and other assets
Raw materials and stores, work in progress and finished goods Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
North Sydney Council Annual ReportPage 2019/20 34 of 9099 Page 103 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 10. Non-current assets classified as held for sale
§Note/Subtotal§ §Subnote§
(i) Non-current assets
2020 2019 $ '000 Current Current
Non-current assets ‘held for sale’ Investment Property – 4,500 Total non-current assets ‘held for sale’ – 4,500
§Subnote§ (ii) Reconciliation of non-current assets ‘held for sale’
2020 2019 Assets ‘held Assets ‘held $ '000 for sale’ for sale’
Opening balance 4,500 – Less: carrying value of assets/operations sold 1 (4,500) – Plus new transfers in: – Assets ‘held for sale’ – 4,500 Closing balance of 'held for sale' non-current assets – 4,500
(1) Council approved the sale of 261 Pacific Highway, North Sydney in May 2018. The property was transferred from "Investment Properties" to "Assets held for sale" with a contract settlement period of 18 months. The property sale was settled in November 2019.
§Subnote§ Accounting policy for non-current assets classified as held for sale
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as assets arising from employee benefits; financial assets; and investment properties that are carried at fair value.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value, less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale.
100 North Sydney Council Annual Report 2019/20 Page 35 of 90 Page 104 of 3738th Council Meeting - 30 November 2020 Minutes 190 Financial Statements 2020 3738th North Sydney Council Notes to the Financial Statements Council for the year ended 30 June 2020 Note 11. Infrastructure, property, plant and equipment Meeting
§Note/Subtotal§ §Subnote§ as at 30/06/19 Asset movements during the reporting period as at 30/06/20 Net Revaluation Net Gross carrying Accumulated carrying Additions Additions new Carrying value Depreciation Adjustments increments to Gross carrying Accumulated carrying 1 - $ '000 amount depreciation amount renewals assets of disposals expense WIP transfers and transfers equity (ARR) amount depreciation amount 30
November Capital work in progress 7,324 – 7,324 4,239 1,753 – – (1,090) – – 12,226 – 12,226 Plant and equipment 17,277 (9,911) 7,366 1,760 93 (668) (1,954) – – – 17,599 (11,002) 6,597 Office equipment 19,445 (16,691) 2,754 251 54 (26) (913) 49 – – 19,640 (17,471) 2,169 Furniture and fittings 8,859 (5,836) 3,023 80 – – (518) – – – 8,939 (6,354) 2,585 Land: 2020 – Operational land 153,661 – 153,661 – – – – – – – 153,661 – 153,661 – Community land 104,825 – 104,825 – – – – – – – 104,825 – 104,825
Minutes – Crown land 51,503 – 51,503 – – – – – – – 51,503 – 51,503 Land improvements – depreciable 18,522 (4,601) 13,921 252 778 – (389) 55 (2,766) – 15,191 (3,340) 11,851 Infrastructure: – Buildings – non-specialised 1,415 (427) 988 26 – – (30) – – – 1,441 (457) 984 – Buildings – specialised 206,498 (78,827) 127,671 890 504 – (2,756) 100 768 – 209,414 (82,237) 127,177 – Other structures 2,223 (89) 2,134 – 25 – (53) 120 144 – 2,570 (200) 2,370 – Roads 329,828 (114,982) 214,846 4,824 1,788 (547) (5,673) 246 (912) 37,592 352,219 (100,055) 252,164 – Footpaths 95,945 (34,898) 61,047 7,048 168 (521) (3,185) 211 – 14,319 117,860 (38,773) 79,087 – Stormwater drainage 198,872 (70,460) 128,412 2,292 447 – (2,013) 118 – 15,871 201,754 (56,627) 145,127 – Swimming pools 22,488 (9,989) 12,499 – – – (6,552) – – – 22,488 (16,541) 5,947 – Other open space / recreational assets 11,648 (7,258) 4,390 806 – – (1,217) 6 2,766 10,791 25,799 (8,257) 17,542
North SydneyCouncil AnnualReport2019/20 – Other infrastructure 225,151 (104,756) 120,395 3,274 630 – (3,401) 185 – – 229,239 (108,156) 121,083 Other assets: – Heritage collections 2,393 (946) 1,447 30 15 – (41) – – – 2,438 (987) 1,451 – Library books 2,331 (1,263) 1,068 294 – – (393) – – – 2,326 (1,357) 969 Total Infrastructure, property, plant and equipment 1,480,208 (460,934) 1,019,274 26,066 6,255 (1,762) (29,088) – – 78,573 1,551,132 (451,814) 1,099,318
(1) Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets). Attachment 8.3.1 Page 105 190 of 101
continued on next page ... Page 36 of 90 Attachment 8.3.1 Net 988 7,324 7,366 2,754 3,023 2,134 4,390 1,447 1,068 amount carrying 51,503 13,921 61,047 12,499 153,661 104,825 127,671 214,846 128,412 120,395 1,019,274 Page 37 of 90 – – – – (89) (427) (946) restated (9,911) (5,836) (4,601) (9,989) (7,258) (1,263) (16,691) (78,827) (34,898) (70,460) (114,982) (104,756) (460,934) depreciation Accumulated Financial Statements 2020 as at 30/06/19 7,324 8,859 1,415 2,223 2,393 2,331 17,277 19,445 51,503 18,522 95,945 22,488 11,648 153,661 104,825 206,498 329,828 198,872 225,151 1,480,208 Gross carrying amount restated – – – – – – – – – – – – – – – – – – 1,056 1,056 transfers Adjustments and – – – – 8 – – – 20 27 14 12 185 102 473 491 346 165 253 (2,096) WIP transfers – – – – (31) (46) (52) (931) (522) (625) (381) (788) (392) (1,937) (2,706) (5,637) (2,687) (2,016) (3,360) expense (22,111) Depreciation – – – – – – – – – – – – – – – (535) (275) (676) (622) (2,108) of disposals Carrying value 6 – – – 5 – – 5 – 95 62 700 115 400 134 193 108 528 Asset movements during the reporting period assets 1,137 3,488 Additions new – – – – – 9 – 1 86 134 385 367 (continued) 1,785 1,164 1,091 2,774 7,508 5,981 2,080 1,982 25,346 Additions renewals Net 871 6,935 8,374 2,397 3,433 2,175 3,617 1,494 1,093 amount carrying 51,503 14,119 58,029 12,863 153,661 104,763 127,271 212,023 127,990 120,992 1,013,603 – – – – (43) (395) (894) restated (8,621) (5,314) (3,976) (9,608) (7,528) (1,231) (15,761) (76,303) (33,395) (68,443) (111,221) (101,396) (444,129) depreciation Accumulated as at 30/06/18 6,935 8,747 1,266 2,218 2,388 2,324 16,995 18,158 51,503 18,095 91,424 22,471 11,145 153,661 104,763 203,574 323,244 196,433 222,388 1,457,732 Gross carrying amount restated Infrastructure, property, plant and equipment Renewals are defined as the replacement of existing assets (as opposed to acquisition new assets). North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 11. §Note/Subtotal§ $ '000 Capital work in progress Plant and equipment Office equipment Furniture and fittings Land: – Operational land – Community land – Crown land Land improvements – depreciable Infrastructure: – Buildings non-specialised – Buildings specialised – Other structures – Roads – Footpaths – Stormwater drainage – Swimming pools – Other open space/recreational assets – Other infrastructure Other assets: – Heritage collections – Library books Total Infrastructure, property, plant and equipment (1) continued on next page ...
102 North Sydney Council Annual Report 2019/20 Page 106 of 3738th Council Meeting - 30 November 2020 Minutes 190 North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 11. Infrastructure, property, plant and equipment (continued)
§Note/Subtotal§ as at 30/06/18 Asset movements during the reporting period as at 30/06/19 Accumulated Net Accumulated Net Gross carrying depreciation carrying Additions Additions new Carrying value Depreciation Adjustments and Gross carrying depreciation carrying $ '000 amount restated restated amount renewals 1 assets of disposals expense WIP transfers transfers amount restated restated amount
Capital work in progress 6,935 – 6,935 1,785 700 – – (2,096) – 7,324 – 7,324 Plant and equipment 16,995 (8,621) 8,374 1,164 115 (535) (1,937) 185 – 17,277 (9,911) 7,366 Office equipment 18,158 (15,761) 2,397 1,091 95 – (931) 102 – 19,445 (16,691) 2,754 Furniture and fittings 8,747 (5,314) 3,433 86 6 – (522) 20 – 8,859 (5,836) 3,023 Land: – Operational land 153,661 – 153,661 – – – – – – 153,661 – 153,661 – Community land 104,763 – 104,763 – 62 – – – – 104,825 – 104,825 – Crown land 51,503 – 51,503 – – – – – – 51,503 – 51,503 Land improvements – depreciable 18,095 (3,976) 14,119 – 400 – (625) 27 – 18,522 (4,601) 13,921 Infrastructure: – Buildings – non-specialised 1,266 (395) 871 134 – – (31) 14 – 1,415 (427) 988 – Buildings – specialised 203,574 (76,303) 127,271 2,774 134 (275) (2,706) 473 – 206,498 (78,827) 127,671 – Other structures 2,218 (43) 2,175 – 5 – (46) – – 2,223 (89) 2,134 – Roads 323,244 (111,221) 212,023 7,508 1,137 (676) (5,637) 491 – 329,828 (114,982) 214,846 – Footpaths 91,424 (33,395) 58,029 5,981 – (622) (2,687) 346 – 95,945 (34,898) 61,047 – Stormwater drainage 196,433 (68,443) 127,990 2,080 193 – (2,016) 165 – 198,872 (70,460) 128,412 – Swimming pools 22,471 (9,608) 12,863 9 – – (381) 8 – 22,488 (9,989) 12,499 – Other open space/recreational assets 11,145 (7,528) 3,617 385 108 – (788) 12 1,056 11,648 (7,258) 4,390 – Other infrastructure 222,388 (101,396) 120,992 1,982 528 – (3,360) 253 – 225,151 (104,756) 120,395 Other assets: – Heritage collections 2,388 (894) 1,494 – 5 – (52) – – 2,393 (946) 1,447 – Library books 2,324 (1,231) 1,093 367 – – (392) – – 2,331 (1,263) 1,068 Total Infrastructure, property, plant and equipment 1,457,732 (444,129) 1,013,603 25,346 3,488 (2,108) (22,111) – 1,056 1,480,208 (460,934) 1,019,274
(1) Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).
continued on next page ... Page 37 of 90 3738th their or reverses directly continued onnext page ... Land When incurred. Subsequent Increases at performed are valuations comprehensive Independent value. fair at held are least equipment and plant property, Infrastructure, Accounting policyforinfrastructure,property,plantandequipment §Note/Subtotal§ Note 11. for theyearended30June2020 Notes totheFinancialStatements North SydneyCouncil reliably. Statement. is initially is Retaining Fences Marine Seawalls Lighting Other Gross Culverts Drainage Drainage Stormwater Bus Street Traffic Footpaths Kerb Sealed Sealed Sealed Transportation Other Vehicles Furniture Computer Office Plant rbbeta uueeooi eeisascae ihteie ilfo oCucladtecs fteie a be can item the of cost the and Council to flow will item the with associated benefits economic future that probable o aeilydfeetfo urn arvle oni ple rwfedapoc oifatutr revaluations. infrastructure to approach brownfield a applies Council value. fair current from different materially not os erae htrvrepeiu nrae fast ntesm ls r is hre gis revaluation against charged first are class same the in assets of increases previous reverse that Decreases loss. shelters eiulvle,oe hi siae sfllvsa follows: as lives useful estimated their over values, residual vr ieyas oee h arigaon fast sasse yCucla ahrprigdt ocnimthat confirm to date reporting each at Council by assessed is assets of amount carrying the however years, five every n gutter and sntdpeitd ercaino te sesi acltduigtesrih-iemto oalct hi ot net cost, their allocate to method straight-line the using calculated is assets other on Depreciation depreciated. not is n equipment and ln n equipment and plant nrsrcue rpry ln n qimn r curdb oni tsgiiatyblwfi au,teassets the value, fair below significantly at Council by acquired are equipment and plant property, infrastructure, equipment infrastructure traps pollutant furniture facilities eonsda hi arvlea custo date. acquisition at value fair their at recognised Council structures neut oteetn ftermiigrsreatiual otecas l te erae r hre othe to charged are decreases other all class; the to attributable reserve remaining the of extent the to equity in od:formation roads: structure roads: surface roads: l te ear n aneac r hre oteIcm ttmn uigtefnnilpro nwihthey which in period financial the during Statement Income the to charged are maintenance and repairs other All eraepeiul eonsn rfto osrltn ota se ls,teices sfrtrcgie as recognised first is increase the class, asset that to relating loss or profit recognising previously decrease a pits pipes ntecryn mut rsn nrvlainaeceie otervlainrsre oteetn htthe that extent the To reserve. revaluation the to credited are revaluation on arising amounts carrying the in walls equipment ot r nlddi h se’ arigaon rrcgie sasprt se,a prpit,ol when only appropriate, as asset, separate a as recognised or amount carrying asset’s the in included are costs riaeassets drainage Infrastructure, property,plantandequipment assets Meeting - 30 November 2020 Minutes 0t 100 to 70 0t 100 to 70 0t 0 te services Other 100 to 60 0t 50 to 40 4t 67 to 34 5t 50 to 25 Playgrounds 60 to 10 0t 80 to 20 collection Heritage 35 to 20 8t 0Mcaia services Mechanical 40 to 18 5t 0Pr furniture Park 90 to 15 o1 ofcladding Roof 10 to 5 o1 Substructure 10 to 5 o1 Buildings 10 to 3 er irr collection Library Years Years er Fittings Years Years o8Bidn components Building 8 to 3 200 110 0Sot lighting Sports 70 90 improvements land Depreciable 80 0Sotadfitness and Sport 50 Superstructure 5 Finishes te Structures Other Other ercal adimprovements land Depreciable wmigpools Swimming te pr n erainassets recreation and sport Other Buildings (continued) North SydneyCouncil AnnualReport2019/20 Financial Statements2020 Attachment 8.3.1 Page Page 38of90 measured 0t 200 to 60 0t 200 to 60 5t 150 to 25 5t 100 to 15 0t 200 to 20 0t 100 to 10 reserves increase 5t 30 to 25 60 to 50 o100 to 5 5t 30 to 25 5t 50 to 25 0t 60 to 50 0t 40 to 30 Income o55 to 5 107 Years Years Years Years profit 190 are are 55 15 of of 5 it it 103 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 11. Infrastructure, property, plant and equipment (continued)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Land under roads Land under roads is land under roadways and road reserves including land under footpaths, nature strips and median strips.
Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051 Land Under Roads.
Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 Property, Plant and Equipment.
Crown reserves Crown reserves under Council’s care and control are recognised as assets of the Council. While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated.
Improvements on Crown reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating to the reserves are recognised within Council’s Income Statement.
104 North Sydney Council Annual Report 2019/20 Page 39 of 90 Page 108 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 12. Investment properties
§Note/Subtotal§ §Subnote§ $ '000 2020 2019 (a) Reconciliation – owned investment property
Reconciliation of annual movement: Opening balance 95,512 97,740 – Capitalised expenditure – this year 73 67 – Net gain/(loss) from fair value adjustments (2,827) 2,205 – Classified as held for sale – (4,500) CLOSING BALANCE – OWNED INVESTMENT PROPERTY 92,758 95,512
§Subnote§ (b) Valuation basis (2019 only)
The basis of valuation of investment properties is fair value, being the amounts for which the properties could be exchanged between willing parties in arms length transaction, based on current prices in an active market for similar properties in the same location and condition and subject to similar leases.
The 2019 revaluations were based on independent assessments made by: Adam Wallace AAPI CPV.
continued on next page ... North Sydney Council Annual ReportPage 2019/20 40 of 90105 Page 109 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 12. Investment properties (continued)
§Note/Subtotal§
(c) Contractual obligations at reporting date (2019 only)
Refer to Note 18 for disclosures relating to any capital and service obligations that have been contracted.
§Subnote§ $ '000 2020 2019 (d) Leasing arrangements – Council as lessor (2019 only) 1
The investment properties are leased to tenants under long-term operating leases with rentals payable monthly. Future minimum lease payments receivable under non-cancellable investment property operating leases not recognised in the financial statements are receivable as follows: Within 1 year – 5,925 Later than 1 year but less than 5 years – 12,219 Later than 5 years – 11,890 Total minimum lease payments receivable – 30,034
(1) Disclosures of leasing arrangements for 2020 are at Note 14. Leases
§Subnote§ (e) Investment property income and expenditure – summary (2019 only)
Rental income from investment property: – Minimum lease payments – 6,071 Direct operating expenses on investment property: – that generated rental income – (2,548) Net revenue contribution from investment property – 3,523
plus: Fair value movement for year (2,827) 2,205 Total income attributable to investment property (2,827) 5,728 Accounting policy for investment property Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not occupied by the Council. Changes in fair values are recorded in the Income Statement as a separate line item.
Properties that are under construction for future use as investment properties are regarded as investment property. These are also carried at fair value unless the fair value cannot yet be reliably determined. Where that is the case, the property will be accounted for at cost until either the fair value becomes reliably determinable or construction is complete.
106 North Sydney Council Annual Report 2019/20 Page 41 of 90 Page 110 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 13. Contract assets and liabilities
§Note/Subtotal§ §Subnote§ 2020 2020 $ '000 Notes Current Non-current Contract liabilities
Grants and contributions received in advance: Unexpended capital grants (to construct Council controlled assets) i (i) 7,842 – Unexpended operating grants (received prior to performance obligation being satisfied) ii (ii) 177 –
Unexpended operating contributions (received prior to performance obligation being satisfied) (ii) 385 – Total grants received in advance 8,404 –
User fees and charges received in advance: Swimming Centre fees iii (iii) 128 – Hoarding Permit fees (iii) 123 – Outdoor Dining fees (iii) 110 – Work Zone Permit fees (iii) 254 – Rental income - investment properties (iii) 142 – Rental income - other (iii) 88 – Other (iii) 38 – Total user fees and charges received in advance 883 – Total contract liabilities 9,287 –
(i) Council has received funding from the NSW Government to carry out public domain improvements along Military Road in Cremorne and Neutral Bay in conjunction with the B-Line project and for the Hume Street Park redevelopment in Crows Nest. The funds received are under an enforceable contract which require Council to construct identified assets which will be under Council's control on completion. The revenue is recognised as Council constructs the asset and the contract liability reflects the funding received which cannot yet be recognised as revenue. The revenue is expected to be recognised in the next 12 months.
(ii) The contract liability relates to grants and contributions received prior to the revenue recognition criteria in AASB 15 being satisfied since the performance obligations are ongoing.
(iii) The contract liability relates to user charges and fees received in advance prior to the revenue recogition criteria in AASB 15 being satisfies since the performance obligations are ongoing.
§Subnote§ Significant changes in contract assets and liabilities The contract liabilities have arisen on adoption of AASB 15 and AASB 1058. Previously income received in advance was recognised for reciprocal contracts. The increase in a contract liability is primarily due to grants in the scope of AASB 15 and capital grants received by Council to acquire or construct assets which will be under Council’s control. Previously, revenue was recognised on receipt of the funds.
Accounting policy for contract assets and liabilities Where the amounts billed to customers are based on the achievement of various milestones established in the contract, the amounts recognised as revenue in a given period do not necessarily coincide with the amounts billed to or certified by the customer.
When a performance obligation is satisfied by transferring a promised good or service to the customer before the customer pays consideration or before the payment is due, Council presents the work in progress as a contract asset, unless the rights to that amount of consideration are unconditional, in which case Council recognises a receivable.
When an amount of consideration is received from a customer / fund provider prior to Council transferring a good or service to the customer, Council presents the funds which exceed revenue recognised as a contract liability.
North Sydney Council Annual ReportPage 2019/20 42 of 90107 Page 111 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 14. Leases
§Note/Subtotal§ §Subnote§
The Council has applied AASB 16 using the modified retrospective (cumulative catch-up) method and therefore the comparative information has not been restated and continues to be reported under AASB 117 and related Interpretations.
(i) Council as a lessee
Council does not have any material lease contracts over land and buildings, machinery or IT equipment.
Council entered a new waste disposal contract on 1 July 2019. Under the terms of the contract Council has the right to obtain substantially all the economic benefits from the waste collection vehicles supplied by the contractor for the duration of the contract. This results in a right of use asset for Council. Information relating to the right of use asset and associated balances and transactions is provided below.
Waste Disposal Contract Council has a right of use asset as it has a right to obtain substantially all the economic benefits from the waste collection vehicles provided under the waste disposal contract.
Extension options The waste collection contract contains an extension option to provide flexibility and certainty to Council operations. The extension is at Council's discretion.
At commencement date and each subsequent reporting date, Council assesses if it is reasonably certain that the extension option will be exercised.
§Subnote§ Waste Disposal $ '000 Contract Total (a) Right of use assets
Additions to right-of-use assets 2,628 2,628 Depreciation charge (263) (263) RIGHT OF USE ASSETS 2,365 2,365
§Subnote§ 2020 2020 $ '000 Current Non-current (b) Lease liabilities
Lease liabilities 303 2,096 TOTAL LEASE LIABILITIES 303 2,096
§Subnote§ (i) The maturity analysis
The maturity analysis of lease liabilities based on contractual undiscounted cash flows is shown in the table below:
Total per Statement of Financial $ '000 < 1 year 1 – 5 years > 5 years Total Position
Cash flows 303 1,211 1,211 2,725 2,399
$ '000 2020
108continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 43 of 90 Page 112 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 14. Leases (continued)
$ '000 2020
(c) Income Statement
The amounts recognised in the Income Statement relating to leases where Council is a lessee are shown below:
Interest on lease liabilities 74 Depreciation of right of use assets 263 337
§Subnote§ (d) Statement of Cash Flows
Total cash outflow for leases (principal and interest) 303 303
§Subnote§ Leases at significantly below market value – concessionary / peppercorn leases Council has a number of leases at significantly below market for land which is used for:
• land beautification • dinghy storage • boat ramps and jetties
The leases are generally between 1 and 5 years and require payments of a maximum amount of $5,000 per year. The use of the right-to-use asset is restricted by the lessors to specified community services which Council must provide, these services are detailed in the leases.
Council does not believe that any of the leases in place are individually material from a statement of financial position or performance perspective.
Accounting policy
Accounting policies under AASB 16 – applicable from 1 July 2019 At inception of a contract, Council assesses whether a lease exists – i.e. does the contract convey the right to control the use of an identified asset for a period of time in exchange for consideration?
Council has estimated the standalone price of the right of use asset obtained from the waste collection contract. In making this estimate Council has maximised the use of observable information
At the lease commencement, Council recognises a right-of-use asset and associated lease liability for the lease term. The lease term includes extension periods where Council believes it is reasonably certain that the option will be exercised.
The right-of-use asset is measured using the cost model where cost on initial recognition comprises: the lease liability, initial direct costs, prepaid lease payments, estimated cost of removal and restoration, less any lease incentives. The right-of-use asset is depreciated over the lease term on a straight-line basis and assessed for impairment in accordance with the impairment of asset accounting policy.
The lease liability is initially recognised at the present value of the remaining lease payments at the commencement of the lease. The discount rate is the rate implicit in the lease, however where this cannot be readily determined then the Council’s incremental borrowing rate for a similar term with similar security is used.
Subsequent to initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. The lease liability is re-measured when there is a lease modification, or change in estimate of the lease term or index upon which the lease payments are based (e.g. CPI).
Where the lease liability is re-measured, the right-of-use asset is adjusted to reflect the re-measurement.
Exceptions to lease accounting continued on next page ... North Sydney Council Annual ReportPage 2019/20 44 of 90109 Page 113 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 14. Leases (continued)
Council has applied the exceptions to lease accounting for both short-term leases (i.e. leases with a term of less than or equal to 12 months) and leases of low-value assets. Council recognises the payments associated with these leases as an expense on a straight-line basis over the lease term.
Leases at significantly below market value / concessionary leases Council has elected to measure the right of use asset arising from the concessionary leases at cost which is based on the associated lease liability at initial recognition.
§Subnote§ (ii) Council as a lessor
§Subnote§ (e) Operating leases
Council leases out a number of properties to commercial tenants and community groups as well as vehicles to Council employees; these leases have been classified as operating leases for financial reporting purposes and the assets are included as investment property (refer note 12) and IPP&E (refer in this note part (v) below) in the Statement of Financial Position.
The amounts recognised in the Income Statement relating to operating leases where Council is a lessor are shown below:
$ '000 2020
(i) Operating lease income Investment properties Lease income (excluding variable lease payments not dependent on an index or rate) 5,914 Other lease income Room/Facility Hire 791 Leaseback fees - council vehicles 306 Total income relating to operating leases 7,011
(ii) Operating lease expenses
Investment properties Direct operating expenses that generated rental income 2,338 Total expenses relating to operating leases 2,338
(iii) Maturity analysis of contractual lease income
Maturity analysis of future lease income receivable showing the undiscounted lease payments to be received after reporting date for operating leases:
< 1 year 5,064 1–2 years 3,800 2–3 years 2,974 3–4 years 1,990 4–5 years 1,646 > 5 years 10,328 Total undiscounted contractual lease income receivable 25,802
110continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 45 of 90 Page 114 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 14. Leases (continued)
§Note/Subtotal§ Plant & Equipment $ '000 2020
(v) Reconciliation of IPP&E assets leased out as operating leases
Opening balance as at 1 July 2019 2,121
Additions renewals 927 Carrying value of disposals (533) Depreciation expense (576) Closing balance as at 30 June 2020 1,939
§Subnote§ (f) Finance leases
Council has no finance leases.
§Subnote§ Accounting policy
When Council is a lessor, the lease is classified as either an operating or finance lease at inception date, based on whether substantially all of the risks and rewards incidental to ownership of the asset have been transferred to the lessee. If the risks and rewards have been transferred then the lease is classified as a finance lease, otherwise it is an operating lease.
When Council has a sub-lease over an asset and is the intermediate lessor then the head lease and sub-lease are accounted for separately. The classification of the sub-lease is based on the right-of-use asset which arises from the head lease rather than the useful life of the underlying asset.
If the lease contains lease and non-lease components then the non-lease components are accounted for in accordance with AASB 15 Revenue from Contracts with Customers.
The lease income is recognised on a straight-line basis over the lease term.
During 2020 some of Council's rental property tenants were granted rent concessions related to Covid-19. Council has treated these concessions as a lease modification. Lease income from these leases, including the rent concessions related to Covid-19, will be recognised on a straight-line basis over the remaining term of the lease.
North Sydney Council Annual ReportPage 2019/20 46 of 90111 Page 115 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 15. Payables and borrowings
§Note/Subtotal§ §Subnote§ 2020 2020 2019 2019 $ '000 Current Non-current Current Non-current
Payables Prepaid rates 584 – – – Goods and services – operating expenditure 5,745 – 5,568 – Goods and services – capital expenditure 3,026 – 3,650 – Accrued expenses: – Borrowings 54 – 60 – – Salaries and wages 1,035 – 848 – – Other expenditure accruals 436 – 347 – Security bonds, deposits and retentions 10,804 – 9,978 – Other 331 – 316 – Total payables 22,015 – 20,767 – Income received in advance (2019 only) Payments received in advance – – 2,613 – Total income received in advance – – 2,613 – Borrowings Loans – secured 1 846 7,254 811 8,100 Total borrowings 846 7,254 811 8,100 TOTAL PAYABLES AND BORROWINGS 22,861 7,254 24,191 8,100
(1) Loans are secured over the general rating income of Council. Disclosures on liability interest rate risk exposures, fair value disclosures and security can be found in Note 19.
§Subnote§ $ '000 2020 2019
(a) Current payables and borrowings not anticipated to be settled within the next twelve months
The following liabilities, even though classified as current, are not expected to be settled in the next 12 months. Payables – security bonds, deposits and retentions 5,359 7,136 Total payables and borrowings 5,359 7,136
112continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 47 of 90 Page 116 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 15. Payables and borrowings (continued)
§Note/Subtotal§
(b) Changes in liabilities arising from financing activities
as at 30/06/19 Non-cash changes as at 30/06/20 Acquisition due to change in Opening Fair value accounting Other non-cash $ '000 Balance Cash flows Acquisition changes policy movement Closing balance
Loans – secured 8,911 (811) – – – – 8,100 Lease liabilities – – – – 2,399 – 2,399 TOTAL 8,911 (811) – – 2,399 – 10,499
§Subnote§ as at 30/06/18 Non-cash changes as at 30/06/19 Opening Fair value Other non-cash Closing $ '000 Balance Cash flows Acquisition changes movement balance
Loans – secured 9,500 (589) – – – 8,911 TOTAL 9,500 (589) – – – 8,911
§Subnote§ $ '000 2020 2019
(c) Financing arrangements
(i) Unrestricted access was available at balance date to the following lines of credit: Bank overdraft facilities 1 500 500 Credit cards/purchase cards 350 350 Total financing arrangements 850 850
Undrawn facilities as at balance date: – Bank overdraft facilities 500 500 – Credit cards/purchase cards 350 350 Total undrawn financing arrangements 850 850
(1) The bank overdraft facility may be drawn at any time and may be terminated by the bank subject to the notice period in accordance with the terms and conditions of the facility.
§Subnote§ Accounting policy for payables and borrowings Council measures all financial liabilities initially at fair value less transaction costs. Subsequently, financial liabilities are measured at amortised cost using the effective interest rate method. The financial liabilities of the Council comprise trade payables, bank and other loans.
Payables These amounts represent liabilities for goods and services provided to the council prior to the end of financial year that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or borrowing costs.
Borrowings are classified as current liabilities unless Council has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
North Sydney Council Annual ReportPage 2019/20 48 of 90113 Page 117 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 16. Provisions
§Note/Subtotal§ §Subnote§ 2020 2020 2019 2019 $ '000 Current Non-current Current Non-current Provisions
Employee benefits Annual leave 4,246 – 3,845 – Sick leave 85 – 93 – Long service leave 7,950 1,174 8,749 278 Gratuities 3,631 – 3,285 – Other leave – RDO’s 51 – 49 – Sub-total – aggregate employee benefits 15,963 1,174 16,021 278 TOTAL PROVISIONS 15,963 1,174 16,021 278
§Subnote§ $ '000 2020 2019
Current provisions not anticipated to be settled within the next twelve months
The following provisions, even though classified as current, are not expected to be settled in the next 12 months. Provisions – employees benefits 11,732 12,086 11,732 12,086
§Subnote§ Accounting policy for provisions Provisions are recognised when Council has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Employee benefits
Short-term obligations
Liabilities for wages and salaries (including non-monetary benefits, annual leave and accumulating sick leave expected to be wholly settled within 12 months after the end of the period in which the employees render the related service) are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
Other long-term employee benefit obligations
The liability for long-service leave and annual leave that is not expected to be wholly settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
114continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 49 of 90 Page 118 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 16. Provisions (continued)
On-costs
The employee benefit provisions include the aggregate on-cost liabilities that will arise when payment of current employee benefits is made in future periods.
These amounts include superannuation, payroll tax and workers compensation expenses which will be payable upon the future payment of certain leave liabilities which employees are entitled to at the reporting period.
The obligations are presented as current liabilities in the Statement of Financial Position if the Council does not have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is expected to occur.
North Sydney Council Annual ReportPage 2019/20 50 of 90115 Page 119 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 17. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
§Note/Subtotal§ §Subnote§
(a) Nature and purpose of reserves
Infrastructure, property, plant and equipment revaluation reserve The infrastructure, property, plant and equipment revaluation reserve is used to record increments / decrements of non-current asset values due to their revaluation.
§Subnote§ (b) Changes in accounting policies due to adoption of new accounting standards (not-retrospective)
§Total§ During the year ended 30 June 2020, the Council has adopted AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-profit Entities and AASB 16 Leases using the modified retrospective (cumulative catch-up) method and therefore the comparative information for the year ended 30 June 2019 has not been restated and continues to comply with AASB 111 Construction Contracts, AASB 117 Leases, AASB 118 Revenue, AASB 1004 Contributions and associated Accounting Interpretations.
All adjustments on adoption of AASB 15 and AASB 1058 have been taken to retained earnings at 1 July 2019.
The impacts of adopting these standards and associated transition disclosures are provided below:
§Total§ Adjustments to the current year figures for the year ended 30 June 2020
Statement of Financial Position
§Subnote§ (ii) AASB 15 and AASB 1058
§Total§ The following approach has been applied on transition to AASB 15 and AASB 1058:
• Council has not adopted the completed contract expedient and therefore has not excluded revenue which was fully recognised in previous years in accordance with the former accounting standards and pronouncements • Council has retrospectively restated contracts for modifications that occurred before 1 July 2019 unless such contract modification were minor.
Upfront fees - North Sydney Olympic Pool Prior to adopting AASB 15, the Council recognised prepaid bulk entry passes and membership fees on receipt. Under AASB 15, since the fees do not relate to a performance obligation, they are combined with other goods and services transferred to the customer and therefore they are now spread over the expected life of the contract with the customer (i.e the membership life).
Transfer of control to a customer – over time or at a point in time AASB 15 has specific criteria regarding whether control is transferred over time or at a point in time. The entity has reviewed its contracts and concluded that the criteria for recognition over time is not met in some circumstances. In such cases, revenue and related production costs will be recognised at the delivery of each separate performance obligation instead of over the contract using a single margin.
Licences Council has reviewed the licences it grants and considers that all licences are either short-term or low value and elects to recognise all revenue from licences up-front rather than spreading them over the life of the licence.
Prepaid rates Under AASB 1004, rates were recorded as revenue at the earliest of receipt of the funds from the ratepayer and the beginning of the rating period. Under AASB 1058, prepaid rates are recognised as a financial liability until the beginning of the rating period.
Grants – operating Under AASB 1004, most grant income was recognised as revenue on receipt. Under AASB 15, where an agreement is enforceable and contains sufficiently specific performance obligations, the revenue is either recognised over time as the work is performed, or recognised at the point in time that the control of the services passes to the customer.
116continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 51 of 90 Page 120 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 17. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
Grants – capital Under AASB 1004, most grant monies were recorded as revenue on receipt. Under AASB 1058, where Council has received assets (including cash) to acquire or construct a non-financial asset, the asset is to be controlled by Council and the contract is enforceable, then the asset is recognised as a contract liability on receipt and recorded as revenue as the performance obligation to acquire or construct the asset is completed.
Changes in presentation In addition to the above changes in accounting policies, the Council has also amended the presentation of the following items to align them with the requirements of AASB 15 and AASB 1058:
• operating grants and contributions received during 2018/19 but unexpended as at 30 June 2019 totalling $875,000 which had been recognised as revenue on receipt under AASB 1004 were recognised as contract liabilities as at 1 July 2019 and taken up as income during the year as the funds were spent; • capital grants received during 2018/19 but unexpended as at 30 June 2019 totalling $3.359 million which were recognised as revenue on receipt under under AASB 1004 were recognised as contract liabilities as at 1 July 2019 and taken up as income during the year as the funds were spent; and • total equity was reduced by $4.234 million to offset the aforementioned amendments.
§Total§ Balance at $ '000 1 July 2019
Opening contract balances at 1 July 2019
Contract liabilities – Under AASB 15 875 – Under AASB 1058 3,359 Total Contract liabilities 4,234
§Total§ Comparison of financial statement line items under AASB 15 compared to previous standards for the current year
The following tables show the impact of adopting AASB 15 and AASB 1058 on the Council’s financial statements for the year ended 30 June 2020.
Statement of Financial Position
Carrying amount per Statement of Carrying Financial amount under Position under previous AASB 15 and Reclassific- Remeasur- revenue $ '000 AASB 1058 ation ement standards Notes
Current liabilities Income received in advance – 883 – 883 Contract liabilities 9,287 (883) (8,404) – Total current liabilities 48,414 – (8,404) 40,010 Net assets 1,233,858 – 8,404 1,242,262
Equity Accumulated surplus 804,113 – 8,404 812,517 Total equity 1,233,858 – 8,404 1,242,262
continued on next page ... North Sydney Council Annual ReportPage 2019/20 52 of 90117 Page 121 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 17. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
The adoption of AASB15 and AASB 1058 has resulted in the following changes to the Statement of Financial Position as at 30 June 2020:
• income received in advance from certain user charges and fees totalling $813,000 which would previously have been shown as income received in advance is now included in contract liabilities; • operating grants and contributions received but unexpended as at 30 June 2020 totalling $562,000 are now shown as contract liabilities; and • capital grants received but unexpended as at 30 June 2010 totalling $7.842 million are shown as contract liabilities.
As a result of the aforementioned changes, total equity is $8.404 million less than would have been the case prior to the adoption of AASB 15 and AASB 1058.
§Total§ Income Statement
Income Income Statement and Statement and comprehen- comprehen- sive income sive income under AASB 15 under previous and AASB Reclassific- Remeasur- revenue $ '000 1058 ation ement standards Notes
Income from continuing operations Grants and contributions provided for operating purposes 5,999 – (313) 5,686 Grants and contributions provided for capital purposes 6,378 – 4,483 10,861 Total Income from continuing operations 121,327 – 4,170 125,497
Total Operating result from continuing operations (5,133) – 4,170 (963)
Net operating result for the year (5,133) – 4,170 (963)
The adoption of AASB 15 and AASB 1058 has resulted in the following changes to the Income Statement for the year ended 30 June 2020:
• operating grants and contributions received but unexpended as at 30 June 2019 totalling $673,000 and subsequently spent during 2019/20 have been accounted for as revenue again in 2019/20; • operating grants and contributions received during 2019/20 but unexpended as at 30 June 2020 totalling $360,000 have been included in contract liabilities and not accounted for as revenue in 2019/20; • capital grants and contributions received but unexpended as at 30 June 2019 totalling $3.344 million and subsequently spent during 2019/20 have been accounted for as revenue again in 2019/20; and • capital grants and contributions received during 2019/20 but unexpended as at 30 June 2020 totaling $7.842 million have been included in contract liabilities and not accounted for as revenue in 2019/20.
The net effect of these changes was a $4.170 million reduction in the net operating result for the year than would have been the case prior to the adoption of AASB15 and AASB 1058.
118continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 53 of 90 Page 122 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 17. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
§Note/Subtotal§ §Total§ Adjustments to the current year figures for the year ended 30 June 2020
Statement of Financial Position
Original Impact Restated Balance Increase/ Balance $ '000 1 July, 2019 (decrease) 1 July, 2019
Contract liabilities – 4,234 4,234 Total liabilities 48,590 4,234 52,824
Accumulated surplus 813,480 (4,234) 809,246 Total equity (48,590) (4,234) (52,824)
§Subnote§ (iii) AASB 16 Leases
§Total§ Council as a lessee Under AASB 117, Council assessed whether leases were operating or finance leases, based on its assessment of whether the significant risks and rewards of ownership had been transferred to Council or remained with the lessor. Under AASB 16, there is no differentiation between finance and operating leases for the lessee and therefore all leases which meet the definition of a lease are recognised on the statement of financial position (except for short-term leases and leases of low-value assets).
Council has used the exception to lease accounting for short-term leases and leases of low-value assets, and the lease expense relating to these leases is recognised in the Income Statement on a straight- line basis.
Practical expedients used on transition AASB 16 includes a number of practical expedients which can be used on transition. Council has used the following expedients:
• Contracts which had previously been assessed as not containing leases under AASB 117 were not re-assessed on transition to AASB 16. • Lease liabilities have been discounted using the Council’s incremental borrowing rate at 1 July 2019. • Right-of-use assets at 1 July 2019 have been measured at an amount equal to the lease liability adjustment by the any prepaid or accrued lease payments. • A single discount rate was applied to all leases with similar characteristics. • The right-of-use asset was adjusted by the existing onerous lease provision (where relevant) at 30 June 2019 rather than perform impairment testing of the right-of-use asset. • Excluded leases with an expiry date prior to 30 June 2020 from the Statement of Financial Position, and lease expenses for these leases have been recorded on a straight-line basis over the remaining term. • Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
Financial statement impact of adoption of AASB 16 Prior to 1 July 2019 Council had no leases classified as operating leases, or leases significantly below market value off balance sheet.
Council recognised a right-of-use asset and lease liability of $2.7m at 1 July 2019 as a result of entering a new waste collection contract on 1 July 2019.
The weighted average lessee’s incremental borrowing rate applied to lease liabilities at 1 July 2019 was 3%.
North Sydney Council Annual ReportPage 2019/20 54 of 90119 Page 123 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 18. Statement of cash flow information
§Note/Subtotal§ §Subnote§ $ '000 Notes 2020 2019 (a) Reconciliation of cash and cash equivalents
Total cash and cash equivalents per Statement of Financial Position 7(a) 9,235 14,083 Balance as per the Statement of Cash Flows 9,235 14,083
§Subnote§ (b) Reconciliation of net operating result to cash provided from operating activities
Net operating result from Income Statement (5,133) 20,508 Adjust for non-cash items: Depreciation and amortisation 29,351 22,111 Net losses/(gains) on disposal of assets 922 1,481 Non-cash capital grants and contributions – (62) Adoption of AASB 15/1058 (4,234) – Losses/(gains) recognised on fair value re-measurements through the P&L: – Investments classified as ‘at fair value’ or ‘held for trading’ 5 (91) – Investment property 2,827 (2,205) Share of net (profits)/losses of associates/joint ventures using the equity method (10) 3
+/– Movement in operating assets and liabilities and other cash items: Decrease/(increase) in receivables (341) 2,203 Increase/(decrease) in provision for impairment of receivables 97 64 Decrease/(increase) in inventories 24 1 Decrease/(increase) in other current assets (134) 38 Increase/(decrease) in payables 177 822 Increase/(decrease) in accrued interest payable (6) 46 Increase/(decrease) in other accrued expenses payable 276 (460) Increase/(decrease) in other liabilities (1,188) 815 Increase/(decrease) in contract liabilities 9,287 – Increase/(decrease) in provision for employee benefits 838 1,448 Net cash provided from/(used in) operating activities from the Statement of Cash Flows 32,758 46,722
§Subnote§ (c) Non-cash investing and financing activities
S7.4 contributions ‘in kind’ – 62 Total non-cash investing and financing activities – 62
120 North Sydney Council Annual Report 2019/20 Page 55 of 90 Page 124 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 19. Interests in other entities
§Note/Subtotal§ §Subnote§ Council’s share of net income Council’s share of net assets $ '000 2020 2019 2020 2019
Joint ventures 10 (3) 20 10 Total 10 (3) 20 10
§Subnote§ Joint arrangements
Joint ventures The following information is provided for joint ventures that are individually material to the Council. Included are the total amounts as per the joint venture financial statements, adjusted for fair-value adjustments at acquisition date and differences in accounting policies, rather than the Council’s share.
§Total§ (a) Net carrying amounts – Council’s share
Nature of Measurement $ '000 relationship method 2020 2019
Shorelink Library Network Joint venture Equity 20 10 Total carrying amounts – material joint ventures 20 10
§Total§ (b) Details
Place of Principal activity business
Shorelink Library Network Automation of regional public library services North Sydney
§Total§ (c) Relevant interests and fair values
Interest in Interest in Proportion of outputs ownership voting power $ '000 2020 2019 2020 2019 2020 2019
Shorelink Library Network 38.7% 38.7% 33.3% 33.3% 33.3% 33.3%
§Total§ (d) Summarised financial information for joint ventures
Shorelink Library Network $ '000 2020 2019
Statement of financial position Current assets Cash and cash equivalents 111 79 Other current assets – 2 Non-current assets – 1 Current liabilities Other current liabilities 51 51 Net assets 60 31
Reconciliation of the carrying amount Opening net assets (1 July) 31 42 continued on next page ... North Sydney Council Annual ReportPage 2019/20 56 of 90121 Page 125 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 19. Interests in other entities (continued)
Shorelink Library Network $ '000 2020 2019
Profit/(loss) for the period 29 (11) Closing net assets 60 31
Council’s share of net assets (%) 33.3% 33.3% Council’s share of net assets ($) 20 10 Statement of comprehensive income Income 446 370 Interest income 1 2 Depreciation and amortisation (1) (2) Other expenses (417) (371) Profit/(loss) from continuing operations 29 (1)
Profit/(loss) for the period 29 (1)
Total comprehensive income 29 (1)
Share of income – Council (%) 38.7% 38.7% Profit/(loss) – Council ($) 11 – Total comprehensive income – Council ($) 11 –
122 North Sydney Council Annual Report 2019/20 Page 57 of 90 Page 126 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 20. Commitments
§Note/Subtotal§ §Subnote§ $ '000 2020 2019 Capital commitments (exclusive of GST)
Capital expenditure committed for at the reporting date but not recognised in the financial statements as liabilities:
Property, plant and equipment Buildings 1,600 253 Computer equipment 36 202 Computer software 18 – Infrastructure 5,581 7,386 Library books 67 15 Other structures 78 248 Parking meters 66 – Plant and equipment 585 300 Total commitments 8,031 8,404
These expenditures are payable as follows: Within the next year 8,031 8,404 Total payable 8,031 8,404
Sources for funding of capital commitments: Unrestricted general funds 67 15 Section 7.11 and 64 funds/reserves 1,461 661 Unexpended grants 712 3,263 Externally restricted reserves 200 221 Internally restricted reserves 5,591 4,244 Total sources of funding 8,031 8,404 Details of capital commitments Infrastructure Capital works in North Sydney CBD, Neutral Bay and Crows Nest, various parks and marine structure upgrades.
North Sydney Council Annual ReportPage 2019/20 58 of 90123 Page 127 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 21. Contingencies
§Note/Subtotal§ §Subnote§
The following assets and liabilities do not qualify for recognition in the Statement of Financial Position, but their knowledge and disclosure is considered relevant to the users of Council’s financial report.
LIABILITIES NOT RECOGNISED 1. Guarantees
(i) Defined benefit superannuation contribution plans
Council participates in an employer-sponsored defined benefit superannuation scheme and makes contributions as determined by the superannuation scheme's trustees.
Member councils bear responsibility of ensuring there are sufficient funds available to pay out the required benefits as they fall due.
The schemes most recent full actuarial review indicated that the net assets of the scheme were not sufficient to meet the accrued benefits of the schemes defined member category with member councils required to make significantly higher contributions in future years.
The Local Government Superannuation Scheme is a defined benefit plan that has been deemed to be a "multi-employer fund" for the purposes of AASB 119 Employee Benefits. Accordingly, Council has not recorded any net liability from its defined benefit scheme obligations in accordance with AASB 119.
Future contributions made to the defined benefit scheme to rectify the net deficit position will be recognised as an expense when they become payable - similar to the accounting for defined contributions plan.
(ii) Statewide Limited
Council is a member of Statewide Mutual, a mutual pool scheme providing liability insurance to local government.
Membership includes the potential to share in either the net assets or liabilities of the fund depending on its past performance. Council’s share of the net assets or liabilities reflects Council’s contributions to the pool and the result of insurance claims within each of the fund years.
The future realisation and finalisation of claims incurred but not reported to 30 June this year may result in future liabilities or benefits as a result of past events that Council will be required to fund or share in respectively.
(iii) Other guarantees
Council has provided no other guarantees other than those listed above.
2. Other liabilities
(i) Third party claims
The Council is involved from time to time in various claims incidental to the ordinary course of business including claims for damages relating to its services.
Council believes that it is appropriately covered for all claims through its insurance coverage and does not expect any material liabilities to eventuate.
(ii) Potential land acquisitions due to planning restrictions imposed by Council
Council has classified a number of privately owned land parcels as local open space or bushland.
As a result, where notified in writing by the various owners, Council will be required to purchase these land parcels.
At reporting date, reliable estimates as to the value of any potential liability (and subsequent land asset) from such potential acquisitions has not been possible.
124continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 59 of 90 Page 128 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 21. Contingencies (continued)
(iii) Legal Claims
Council is the planning authority for its area under the Environmental Planning and Assessment Act 1979.
Pursuant to that Act, certain persons dissatisfied by a planning decision of the Council may appeal to the Land and Environment Court. It is the Court's normal practice in Class 1 proceedings that parties bear their own legal costs. In Class 4 proceedings, costs usually follow the event.
As at 30 June 2020, there were twenty three (23) Land and Environment Court matters ongoing and five (5) Local Court matters to be prosecuted. All known costs have been recognised but the amount of further costs cannot be known until the appeals are determined.
North Sydney Council Annual ReportPage 2019/20 60 of 90125 Page 129 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 22. Financial risk management
§Note/Subtotal§ §Subnote§
Risk management
Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity risk and (4) interest rate risk.
The Council’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Council.
Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreign currency risk. Financial risk management is carried out by Council’s finance section under policies approved by the Council.
A comparison by category of the carrying amounts and fair values of Council’s financial assets and financial liabilities recognised in the financial statements is presented below.
Carrying value Carrying value Fair value Fair value $ '000 2020 2019 2020 2019
Financial assets Measured at amortised cost Cash and cash equivalents 9,235 14,083 23,235 14,083 Receivables 6,728 6,417 6,726 6,417 Investments – ‘Financial assets at amortised cost’ 72,000 – – – Fair value through profit and loss Investments – ‘Held for trading’ 9,961 73,145 67,961 73,145 Total financial assets 97,924 93,645 97,922 93,645
Financial liabilities Payables 22,015 20,767 22,000 20,767 Loans/advances 8,100 8,911 8,100 8,911 Lease liabilities 2,399 – 2,399 – Total financial liabilities 32,514 29,678 32,499 29,678
Fair value is determined as follows:
• Cash and cash equivalents, receivables, payables – are estimated to be the carrying value that approximates market value.
• Borrowings and held-to-maturity investments – are based upon estimated future cash flows discounted by the current mkt interest rates applicable to assets and liabilities with similar risk profiles, unless quoted market prices are available.
• Financial assets classified (i) ‘at fair value through profit and loss’ or (ii) ‘available-for-sale’ – are based upon quoted market prices (in active markets for identical investments) at the reporting date or independent valuation.
Council’s objective is to maximise its return on cash and investments whilst maintaining an adequate level of liquidity and preserving capital.
Council's Finance area manages the cash and investments portfolio with the assistance of independent advisors.
Council has an investment policy which complies with the Local Government Act 1993 and Minister’s investment order 625. This policy is regularly reviewed by Council and its staff and an investment report is tabled before Council on a monthly basis setting out the portfolio breakup and its performance as required by Local Government regulations.
The risks associated with the instruments held are:
• Price risk – the risk that the capital value of Investments may fluctuate due to changes in market prices, whether there changes are caused by factors specific to individual financial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.
126continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 61 of 90 Page 130 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 22. Financial risk management (continued)
• Interest rate risk – the risk that movements in interest rates could affect returns and income.
• Liquidity risk – the risk that Council will not be able to pay its debts as and when they fall due.
• Credit risk – the risk that the investment counterparty will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council – be it of a capital or income nature.
Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasing investments with high credit ratings or capital guarantees.
Council also seeks advice from independent advisers before placing any funds in cash equivalents and investments.
§Subnote§ (a) Market risk – price risk and interest rate risk
The impact on result for the year and equity of a reasonably possible movement in the price of investments held and interest rates is shown below. The reasonably possible movements were determined based on historical movements and economic conditions in place at the reporting date.
Increase of values/rates Decrease of values/rates $ '000 Profit Equity Profit Equity
2020 Possible impact of a 10% movement in market values 996 996 (996) (996) Possible impact of a 1% movement in interest rates 913 913 (913) (913)
2019 Possible impact of a 10% movement in market values 1,515 1,515 (1,515) (1,515) Possible impact of a 1% movement in interest rates 874 874 (874) (874)
§Subnote§ (b) Credit risk
Council’s major receivables comprise (i) rates and annual charges and (ii) user charges and fees.
Council manages the credit risk associated with these receivables by monitoring outstanding debt and employing stringent debt recovery procedures. Council also encourages ratepayers to pay their rates by the due date through incentives.
The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored for acceptable collection performance.
Council makes suitable provision for doubtful receivables as required and carries out credit checks on most non-rate debtors. There are no material receivables that have been subjected to a re-negotiation of repayment terms.
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 22. Financial risk management (continued)
§Note/Subtotal§ §Total§ Credit risk profile
Receivables – rates and annual charges Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the land relating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge interest on overdue rates and annual charges at higher than market rates which further encourages the payment of debt.
Not yet < 1 year 1 - 2 years 2 - 5 years > 5 years $ '000 overdue overdue overdue overdue overdue Total
2020 Gross carrying amount 1,495 144 8 27 58 1,732
2019 Gross carrying amount 770 264 8 23 41 1,106
§Total§ Receivables - non-rates and annual charges Council applies the simplified approach for non-rates and annual charges debtors to provide for expected credit losses prescribed by AASB 9, which permits the use of the lifetime expected loss provision. To measure the expected credit losses, non-rates and annual charges debtors have been grouped based on shared credit risk characteristics and the days past due.
The loss allowance provision as at 30 June 2020 is determined as follows. The expected credit losses incorporate forward- looking information.
Not yet 0 - 30 days 31 - 60 days 61 - 90 days > 91 days $ '000 overdue overdue overdue overdue overdue Total
2020 Gross carrying amount 4,550 129 123 108 380 5,290 Expected loss rate (%) 0.00% 0.00% 0.00% 0.00% 77.40% 5.56% ECL provision – – – – 294 294
2019 Gross carrying amount 4,710 134 110 16 538 5,508 Expected loss rate (%) 0.14% 0.14% 0.14% 0.14% 0.14% 0.14% ECL provision 7 – – – 1 8
§Subnote§ (c) Liquidity risk 1
Payables, lease liabilities and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on hand to meet payment obligations as and when they fall due.
Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining an adequate cash buffer.
Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.
Borrowings are also subject to interest rate risk – the risk that movements in interest rates could adversely affect funding costs and debt servicing requirements. Council manages this risk through diversification of borrowing types, maturities and interest rate structures. The Finance team regularly reviews interest rate movements to determine if it would be advantageous to refinance or renegotiate part or all of the loan portfolio.
The timing of cash flows presented in the table below to settle financial liabilities reflects the earliest contractual settlement dates. The timing of expected outflows is not expected to be materially different from contracted cashflows.
The amounts disclosed in the table are the undiscounted contracted cash flows for non-lease liabilities and therefore the balances in the table may not equal the balances in the Statement of Financial Position due to the effect of discounting.
128continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 63 of 90 Page 132 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 22. Financial risk management (continued)
Weighted average Subject payable in: Actual interest to no 1 - 5 Total cash carrying ≤ 1 Year > 5 Years $ '000 rate maturity Years outflows values
Weighted average Subject payable in: Actual interest to no 1 - 5 Total cash carrying ≤ 1 Year > 5 Years $ '000 rate maturity Years outflows values
2020 Trade/other payables 0.00% 10,804 – – – 10,804 21,431 Loans and advances 4.02% – 1,159 5,793 2,607 9,559 8,100 Total financial liabilities 10,804 1,159 5,793 2,607 20,363 29,531
2019 Trade/other payables 0.00% 9,978 10,789 – – 20,767 20,767 Loans and advances 4.02% – 1,159 5,793 3,765 10,717 8,911 Total financial liabilities 9,978 11,948 5,793 3,765 31,484 29,678
(1) A separate maturity analysis of lease liabilities is at Note 14. Leases
North Sydney Council Annual ReportPage 2019/20 64 of 90129 Page 133 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 23. Material budget variations
§Note/Subtotal§ §Subnote§
Council’s original financial budget for 2019/20 was adopted by the Council on 24 June 2019 and is unaudited.
While the Income Statement included in this General Purpose Financial Statements must disclose the original budget adopted by Council, the Local Government Act 1993 requires Council to review its financial budget on a quarterly basis, so that it is able to manage the various variations between actuals versus budget that invariably occur throughout the year.
This note sets out the details of material variations between Council’s original budget and its actual results for the year as per the Income Statement – even though such variations may have been adjusted for during each quarterly budget review.
Material variations represent those variances between the original budget figure and the actual result that amount to 10% or more.
Variation Key: F = Favourable budget variation, U = Unfavourable budget variation.
2020 2020 2020 $ '000 Budget Actual ------Variance ------
REVENUES User charges and fees 31,549 28,255 (3,294) (10)% U The COVID-19 pandemic had a significant impact on revenue from user charges and fees over the final four months of the year. Subsequent revenue shortfalls, particularly from on and off-street parking fees, some regulatory and statutory fees and the closure of North Sydney Olympic Pool, was the reason for the $3.3 million (10%) unfavourable variance from the original budget.
Operating grants and contributions 4,975 5,999 1,024 21% F The actual amount of grants received often depends on decisions made by the State and Commonwealth Governments after the original budget was adopted. Subsequent to the adoption of the budget, Council received additional funding from the NSW Department of Planning and Environment towards the acceleration of Council's Local Environmental Plan Review Program. This, along with the receipt of some other minor grants which were not included in the original budget, was the reason for the $1 million (21%) favourable variance from budget.
Capital grants and contributions 3,082 6,378 3,296 107% F Subsequent to the adoption of the original budget, Council received additional funding from Transport for NSW for urban landscaping works along the Military Road corridor in conjunction with the Northern Beaches B-Line Program. Though partially offset by lower than forecast revenue from developer contributions, this was the main reason for the $3.3 million (107%) favourable variance from budget.
Interest and investment revenue 1,557 1,970 413 27% F Council traditionally adopts a conservative approach when budgeting for returns from its investment portfolio. This, along with a greater than anticipated pool of funds available for investment due to delays in the commencement and/or completion of some capital projects, was the reason for the $413,000 (27%) favourable variance.
Net gains from disposal of assets 402 – (402) 100% U During the year, property and infrastructure assets with a carrying amount of $1.068 million were replaced. The resulting write-off turned the forecast modest gain from the disposal of assets into a loss, thereby creating an unfavourable variance for this revenue category and the net losses from disposal of assets expenses category.
Fair value increment on investment property 1,030 – (1,030) 100% U Falling property values in Sydney during the June quarter had a negative impact on the fair value of Council's investment property portfolio and this turned the forecast $1 million fair value increment into a $2.8 million decrement, thereby creating an unfavourable variance for this revenue category and the fair value decrement on investment property expenses category.
130 North Sydney Council Annual Report 2019/20 Page 65 of 90 Page 134 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 23. Material budget variations
§Note/Subtotal§ §Total§ 2020 2020 2020 $ '000 Budget Actual ------Variance ------
EXPENSES Borrowing costs 342 416 (74) (22)% U As a consequence of applying AASB 16, it has become necessary to recognise the embedded lease in the waste collection contract of vehicles used to collect domestic waste and recycling. The interest expense incurred from the lease of such vehicles used by the contractor engaged to collect domestic waste and recycling is disclosed on Note 15. It was not included in the original budget as an interest expense and was the reason for the $74,000 (22%) unfavourable variance from budget in borrowing costs.
Depreciation and amortisation 21,504 29,351 (7,847) (36)% U Prior to its closure for redevelopment in 2020/21, the useful life of the North Sydney Olympic Pool complex has been revised. This necessitated the charging of an additional $6.2 million of depreciation in 2019/20 above the amount forecast in the original budget. This was the primary reason for the $7.8 million (36%) unfavourable variance from budget for depreciation and amortisation.
STATEMENT OF CASH FLOWS Cash flows from operating activities 27,795 32,758 4,963 18% F The receipt of grant funds in excess of that originally forecast, though partially offset by the impact of the COVID-19 pandemic on user charges and fees, was the reason for the favourable variance in net cash from operating activities.
Cash flows from investing activities (23,277) (36,566) (13,289) 57% U Delays in the commencement and/or completion of some capital projects, some of which are partially funded from the aforementioned unbudgeted grant funds, resulted in a greater pool of funds available for investment in the short-term. The subsequent purchase of investment securities was the reason for the unfavourable variance in net cash used in investing activities.
Cash flows from financing activities (811) (1,040) (229) 28% U As disclosed above, Council now recognises the embedded lease in the waste collection contract of vehicles used by the contractor engaged to collect domestic waste and recycling. The principal repayments outlaid for the lease of such vehicles was not originally budgeted for as a cash flow from financing activities and this was the reason for the unfavourable variance in net cash used in financing activities.
North Sydney Council Annual ReportPage 2019/20 66 of 90131 Page 135 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 24. Fair Value Measurement
§Note/Subtotal§ §Subnote§
The Council measures the following asset and liability classes at fair value on a recurring basis:
– Infrastructure, property, plant and equipment – Investment property – Financial assets and liabilities
The fair value of assets and liabilities must be estimated in accordance with various accounting standards for either recognition and measurement requirements or for disclosure purposes.
AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a ‘level’ in the fair value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
§Subnote§ (1) Assets and liabilities that have been measured and recognised at fair values
Fair value measurement hierarchy Level 1 Level 2 Level 3 Quoted Significant Significant prices in observable unobserv- 2020 active mkts inputs able inputs Total
Recurring fair value measurements Financial assets Investments – ‘Held for trading’ – 9,961 – 9,961 Total financial assets – 9,961 – 9,961
Investment property Investment properties – 92,758 – 92,758 Total investment property – 92,758 – 92,758
Infrastructure, property, plant and equipment Plant and equipment – – 6,597 6,597 Office equipment – – 2,169 2,169 Furniture and fittings – – 2,585 2,585 Operational land – 67,387 86,274 153,661 Community land – – 156,328 156,328 Land improvements – depreciable – – 11,851 11,851 Buildings – non-specialised – 836 148 984 Buildings – specialised – 47 127,130 127,177 Other structures – – 2,370 2,370 Roads – – 252,165 252,165 Footpaths – – 79,087 79,087 Stormwater drainage – – 145,127 145,127 Swimming pools – – 5,947 5,947 Other open space/recreation assets – – 17,542 17,542 Other infrastructure assets – – 121,083 121,083 Heritage collections – – 1,450 1,450 Library books – – 969 969 Total infrastructure, property, plant and equipment – 68,270 1,018,822 1,087,092
132continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 67 of 90 Page 136 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 24. Fair Value Measurement (continued)
§Note/Subtotal§ Fair value measurement hierarchy Level 1 Level 2 Level 3 Quoted Significant Significant prices in observable unobserv- 2019 active mkts inputs able inputs Total
§Total§ Recurring fair value measurements Financial assets Investments – ‘Held for trading’ – 58,141 – 58,141 Total financial assets – 58,141 – 58,141
Investment property Investment properties – 95,512 – 95,512 Total investment property – 95,512 – 95,512
Infrastructure, property, plant and equipment Plant and equipment – – 7,366 7,366 Office equipment – – 2,754 2,754 Furniture and fittings – – 3,023 3,023 Operational land – 67,387 86,274 153,661 Community land – – 156,328 156,328 Land improvements – depreciable – – 13,921 13,921 Buildings – non-specialised – 830 158 988 Buildings – specialised – 26 127,645 127,671 Other structures – – 2,134 2,134 Roads – – 214,846 214,846 Footpaths – – 61,047 61,047 Stormwater drainage – – 128,412 128,412 Swimming pools – – 12,499 12,499 Other open space/recreation assets – – 4,390 4,390 Other infrastructure assets – – 120,395 120,395 Heritage collections – – 1,447 1,447 Library books – – 1,068 1,068 Total infrastructure, property, plant and equipment – 68,243 943,707 1,011,950
Note that capital WIP is not included above since it is carried at cost.
§Subnote§ (2) Transfers between level 1 and level 2 fair value hierarchies
During the year, there were no transfers between level 1 and level 2 fair value hierarchies for recurring fair value measurements.
§Subnote§ (3) Valuation techniques used to derive level 2 and level 3 fair values
Where Council is unable to derive fair valuations using quoted market prices of identical assets (i.e. level 1 inputs) Council instead utilises a spread of both observable inputs (level 2 inputs) and unobservable inputs (level 3 inputs).
The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows:
Investment property
The market approach using level 2 inputs was used to value Council's investment properties. Level 2 inputs: - Quoted prices for similar assets in active markets - Comparison of rate per square metre of floor area
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 24. Fair Value Measurement (continued)
The 2018 revaluations were based on Independent Assessments made by Ms Elise Wallace of Australis Advisory Group Pty Ltd. There has been no change to the valuation process during the reporting period.
Infrastructure, property, plant and equipment (IPP&E)
Plant & Equipment, Office Equipment, Furniture & Fittings The cost approach using level 3 inputs was used to value Council's plant and equipment, office equipment and furniture and fittings. Level 3 inputs: - Depreciated historic cost - Useful life
Operational Land The market approach using level 3 inputs was used to value Council's operational land. Level 3 inputs: - Rate per square metre from the sales evidence available
Community Land The market approach using level 3 inputs was used to value Council's community land. Level 3 inputs: - Inputs to Valuer General valuations, i.e. land area, land values.
Land Improvements - depreciable The cost approach using level 3 inputs was used to value Council's depreciable land improvements. Level 3 inputs: - Depreciated historic cost - Useful life
Non specialised buildings The cost approach using level 3 inputs was used to value Council's non specialised buildings. Level 3 inputs: - Components - Cost - Residual value - Useful life - Asset condition
Specialised buildings The cost approach using level 3 inputs was used to value Council's specialised buildings. Level 3 inputs: - Components - Cost - Residual value - Useful life - Asset condition
Roads The cost approach using level 3 inputs was used to value Council's road assets. Level 3 inputs: - Unit rates - Useful life - Remaining life - Residual value
Footpaths The cost approach using level 3 inputs was used to value Council's footpath assets. Level 3 inputs: - Unit rates - Useful life - Remaining life - Residual value
134continuedNorth on Sydney next pageCouncil ... Annual Report 2019/20 Page 69 of 90 Page 138 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 24. Fair Value Measurement (continued)
Stormwater Drainage The cost approach using level 3 inputs was used to value Council's stormwater drainage assets. Level 3 inputs: - Unit rates - Useful life - Remaining life - Residual value
Swimming Pools The costs approach using level 3 inputs was used to value Council's swimming pools. Level 3 inputs: - Components - Cost - Residual value - Useful life - Asset condition
Open Space/Recreation Assets The cost approach using level 3 inputs was used to value Council's open space/recreation assets. Level 3 inputs: - Unit rates - Useful life - Remaining life - Residual value
Other Infrastructure Assets The cost approach using level 3 inputs was used to value Council's other infrastructure assets. Level 3 inputs: - Unit rates - Useful life - Remaining life - Residual value
Heritage Collections The cost approach using level 3 inputs was used to value Council's heritage collections. Level 3 inputs: - Depreciated historic cost - Useful life
Library Books The cost approach using level 3 inputs was used to value Council's library books. Level 3 inputs: - Depreciated historic cost - Useful life
continued on next page ... North Sydney Council Annual ReportPage 2019/20 70 of 90135 Page 139 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1 5 – – 144 145 (46) (53) Total 2,175 2,134 2,134 2,370 1,056 Other 28,297 (2,108) 938,550 943,707 (22,088) structures Page 71 of 90 – – – 768 367 (275) (392) 3,381 1,469 1,093 1,068 Financial Statements 2020 (2,704) (2,752) 127,243 127,645 127,645 127,130 Building specialised Library books – – – – – 5 – – 168 158 158 148 (10) (10) (52) 1,494 1,447 Heritage collection specialised Buildings non – – – – 427 (625) (389) 1,085 2,763 Other 14,119 13,921 13,921 11,851 assets (2,766) (3,360) -ments 120,992 120,395 depreciable infrastructure Land improve- – – – – – – – 62 505 (788) Land 3,617 1,056 4,390 assets 156,266 156,328 156,328 156,328 recreation Community Open space / – – – – – – – – – 17 (381) Land pools 86,274 86,274 86,274 86,274 12,863 12,499 Swimming Operational – – – – – 80 112 (522) (518) 3,433 3,023 3,023 2,585 2,438 (2,016) fittings 127,990 128,412 drainage Stormwater Furniture and – – – 354 (26) (931) (913) (622) 2,397 1,288 2,754 2,754 2,169 6,327 Office 58,029 61,047 (2,687) Footpaths equipment – – (535) (668) (676) 8,374 1,464 7,366 7,366 1,853 6,597 9,136 (continued) Roads (1,937) (1,954) (5,637) 212,023 214,846 Plant and equipment Fair Value Measurement Fair value measurements using significant unobservable inputs (level 3) North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 24. §Note/Subtotal§ (4) §Total§ a. The following tables present the changes in level 3 fair value asset classes. $ '000 2019 Opening balance Purchases (GBV) Disposals (WDV) Depreciation and impairment Closing balance 2020 Opening balance Transfers from/(to) another asset class Purchases (GBV) Disposals (WDV) Depreciation and impairment Closing balance §Total§ $ '000 2019 Opening balance Purchases (GBV) Disposals (WDV) Depreciation and impairment FV gains – other comprehensive income Closing balance 2020 continued on next page ...
136 North Sydney Council Annual Report 2019/20 Page 140 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1 5 – – – 144 145 (46) (53) Total Total 2,175 2,134 2,134 2,370 1,056 Other 28,297 27,368 78,573 (2,108) (1,762) 938,550 943,707 943,707 (22,088) (29,064) 1,018,822 structures Page 71 of 90 Page 72 of 90 – – – – – – 768 367 294 969 (275) (392) (393) 3,381 1,469 1,093 1,068 1,068 Financial Statements 2020 Financial Statements 2020 (2,704) (2,752) 127,243 127,645 127,645 127,130 Building specialised Library books Library books – – – – – 5 – – – – – 45 168 158 158 148 (10) (10) (52) (41) 1,494 1,447 1,447 1,451 Heritage Heritage collection collection specialised Buildings non – – – – – – – 427 (625) (389) 1,085 2,763 4,089 Other Other 14,119 13,921 13,921 11,851 assets assets (2,766) (3,360) (3,401) -ments 120,992 120,395 120,395 121,083 depreciable infrastructure infrastructure Land improve- – – – – – – – – 62 505 812 (788) Land 3,617 1,056 4,390 4,390 2,766 10,791 17,542 assets assets (1,217) 156,266 156,328 156,328 156,328 recreation recreation Community Open space / Open space / – – – – – – – – – – – – – 17 (381) Land 5,947 pools pools 86,274 86,274 86,274 86,274 12,863 12,499 12,499 (6,552) Swimming Swimming Operational – – – – – – – 80 112 (522) (518) 3,433 3,023 3,023 2,585 2,438 2,857 15,871 (2,016) (2,013) fittings 127,990 128,412 128,412 145,127 drainage drainage Stormwater Stormwater Furniture and – – – – 354 (26) (931) (913) (622) (521) 2,397 1,288 2,754 2,754 2,169 6,327 7,427 Office 58,029 61,047 61,047 14,319 79,087 (2,687) (3,185) Footpaths Footpaths equipment – – (535) (668) (676) (912) (547) 8,374 1,464 7,366 7,366 1,853 6,597 9,136 6,858 (continued) (continued) Roads Roads 37,592 (1,937) (1,954) (5,637) (5,673) 212,023 214,846 214,846 252,164 Plant and equipment Fair Value Measurement Fair Value Measurement Fair value measurements using significant unobservable inputs (level 3) North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 24. §Note/Subtotal§ (4) §Total§ a. The following tables present the changes in level 3 fair value asset classes. $ '000 2019 Opening balance Purchases (GBV) Disposals (WDV) Depreciation and impairment Closing balance 2020 Opening balance Transfers from/(to) another asset class Purchases (GBV) Disposals (WDV) Depreciation and impairment Closing balance §Total§ $ '000 2019 Opening balance Purchases (GBV) Disposals (WDV) Depreciation and impairment FV gains – other comprehensive income Closing balance 2020 continued on next page ... North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 24. $ '000 Opening balance Transfers from/(to) another asset class Purchases (GBV) Disposals (WDV) Depreciation and impairment FV gains – other comprehensive income Closing balance continued on next page ...
North Sydney Council Annual Report 2019/20 137 Page 141 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020
Note 24. Fair Value Measurement (continued)
§Note/Subtotal§
(5) Highest and best use
All of Council’s non-financial assets are considered as being utilised for their highest and best use.
138 North Sydney Council Annual Report 2019/20 Page 73 of 90 Page 142 of 3738th Council Meeting - 30 November 2020 Minutes 190 Financial Statements 2020 3738th North Sydney Council Notes to the Financial Statements Council for the year ended 30 June 2020 Note 25. Related party disclosures Meeting
§Note/Subtotal§ §Subnote§
Key management personnel -
30 Key management personnel (KMP) of the council are those persons having the authority and responsibility for planning, directing and controlling the activities of the council, directly or
November indirectly. The KMP for North Sydney Council are the Mayor, Councillors, General Manager, Director Corporate Services, Director City Strategy, Director Community and Library Services, Director Engineering and Property Services and Director Open Space and Environmental Services.
The aggregate amount of KMP compensation included in the Income Statement is:
2020 $ '000 2020 2019
Minutes Compensation: Short-term benefits (salaries, Mayoral Allowance, Councillors fees) 2,076 1,972 Post-employment benefits (superannuation) 142 148 Other long-term benefits (increase in employee leave entitlements) 36 53 Total 2,254 2,173
§Note§ Note 26. Events occurring after the reporting date North SydneyCouncil AnnualReport2019/20
§Subnote§
Council is aware of the following ‘non-adjusting events’ that merit disclosure:
Commencement of owner occupation at Ward Street Car Park
Ward Street car park comprises a four-level concrete car park facility with space for approximately 550 cars located in the North Sydney CBD. This property was leased to Wilsons Parking under a 50-year lease that ended on 23 August 2020. While leased, the property was classified as Investment Property for financial reporting as it was primarily held to earn rental income.
Upon expiry of the lease Council took possession of the property and commenced operation as a commercial car park. The fair value of Ward Street car park as at August 2020 has been Attachment 8.3.1 assessed at $42.9 million. Therefore, in the 2020/21 reporting period a transfer of $42.9million from Investment Property to Infrastructure, Property Plant and Equipment will take place.
Because of the uncertainty resulting from covid-19 the effect of this change on Council's income statement cannot be accurately estimated. However, the change in use is expected to result Page in a reduction in rental income and an increase in user fees and charges. There will also be an increase in depreciation expense for buildings a result of the property being classified under IPPE and an increase in materials and contracts due to the operating costs associated with operating the property as a commercial car park. 143 190 of 139
Page 74 of 90 Attachment 8.3.1 – – – – – – – – – – – – – (602) (242) (754) 6,989 internal (5,391) borrowings Cumulative due/(payable) Page 75 of 90 – – – – 40 693 852 489 127 656 asset as at 30/06/20 3,499 5,395 1,676 3,431 1,927 Financial Statements 2020 Held as 16,858 16,858 restricted 18,785 – – – – – – – – – – – – – 914 (41) (44) (74) (755) Internal (to)/from borrowing 3 – – – – – – – – – – year (48) (887) (493) during (1,744) (3,169) (3,169) (3,169) Expenditure 3 3 1 – – – 1 – – 6 2 12 44 12 84 84 10 94 in year earned Interest
– – – – – – – – – – – – – – – – – – Non-cash – – – 37 57 41 44 14 13 74 50 19 109 830 425 Cash Contributions 1,713 1,713 1,713 received during the year , Council has significant obligations to provide Section 7.11 (contributions towards provision or improvement of amenities or – – – – 27 846 431 112 635 1,540 3,871 5,681 1,668 3,419 1,917 18,230 18,230 Balance Opening 20,147 as at 30/06/19 Statement of developer contributions Environmental Planning and Assessment Act 1979 infrastructure in new release areas. is possible that the funds contributed may be less than the cost of this infrastructure, requiring Council to borrow or use general revenue to fund the difference. services) North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 27. §Note/Subtotal§ §Subnote§ Under the It §Subnote§ Summary of contributions and levies $ '000 Traffic Improvements St Leonards Public Domain Other Public Domain North Sydney Public Domain Open Space Increased Capacity Open Space Acquisitions Olympic Pool Library Premises & Equipment Library Acquisitions Indoor Sports Centre Community Centres Child Care Affordable Housing Administration S7.11 contributions – under a plan Total S7.11 and S7.12 revenue under plans S7.4 planning agreements Total contributions continued on next page ...
140 North Sydney Council Annual Report 2019/20 Page 144 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1 – – – – – – – – – – – – – – – – – – – – – – – (602) (242) (754) (754) (242) (602) 6,989 6,989 internal internal (5,391) (5,391) borrowings borrowings Cumulative Cumulative due/(payable) due/(payable) Page 75 of 90 Page 76 of 90 – – – – – – – – 40 40 693 852 489 127 656 656 127 489 852 693 asset asset as at 30/06/20 as at 30/06/20 3,499 5,395 1,676 3,431 1,927 3,431 1,676 3,499 5,395 Financial Statements 2020 Financial Statements 2020 Held as Held as 16,858 16,858 restricted restricted 18,785 16,858 – – – – – – – – – – – – – – – – – – – – – – – 914 914 (41) (44) (74) (74) (44) (41) (755) (755) Internal Internal (to)/from (to)/from borrowing borrowing 3 – – – – – – – – – – – – – – – – – – – 3 year year (48) (48) (887) (493) (493) (887) during during (1,744) (3,169) (3,169) (1,744) (3,169) (3,169) Expenditure Expenditure 3 3 1 – – – 1 – – 6 2 2 – – 6 – 1 – – 1 3 3 12 44 12 84 84 10 12 12 44 94 84 in year in year earned earned Interest Interest
– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – Non-cash Non-cash – – – – – 37 57 41 44 14 13 74 50 19 19 13 74 50 44 14 41 57 37 109 830 425 109 830 425 Cash Cash Contributions Contributions 1,713 1,713 1,713 1,713 received during the year received during the year (continued) , Council has significant obligations to provide Section 7.11 (contributions towards provision or improvement of amenities or – – – – – – – – 27 27 846 431 112 635 635 112 431 846 1,540 3,871 5,681 1,668 3,419 1,917 3,419 1,668 3,871 5,681 1,540 18,230 18,230 Balance Balance Opening Opening 20,147 18,230 as at 30/06/19 as at 30/06/19 Statement of developer contributions Statement of developer contributions Environmental Planning and Assessment Act 1979 services) infrastructure in new release areas. North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 27. §Note/Subtotal§ §Subnote§ Under the It is possible that the funds contributed§Subnote§ may be less thanSummary of contributions and levies the cost of this infrastructure, requiring Council to borrow or use general revenue to fund the difference. $ '000 Traffic Improvements St Leonards Public Domain Other Public Domain North Sydney Public Domain Open Space Increased Capacity Open Space Acquisitions Olympic Pool Library Premises & Equipment Library Acquisitions Indoor Sports Centre Community Centres Child Care Affordable Housing Administration S7.11 contributions – under a plan Total S7.11 and S7.12 revenue under plans S7.4 planning agreements Total contributions continued on next page ... North Sydney Council Notes to the Financial Statements for the year ended 30 June 2020 Note 27. $ '000 §Subnote§ S7.11 Contributions – under a plan NORTH SYDNEY PLAN 2004 Administration Affordable Housing Indoor Sports Centre Community Centres Child Care Library Premises & Equipment Library Acquisitions Olympic Pool North Sydney Public Domain Open Space Increased Capacity Open Space Acquisitions Other Public Domain St Leonards Public Domain Traffic Improvements Total
North Sydney Council Annual Report 2019/20 141 Page 145 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 28(a). Statement of performance measures – consolidated results
§Note/Subtotal§ §Subnote§ Amounts Indicator 3 Prior periods Benchmark $ '000 2020 2020 2019 2018 2017
1. Operating performance ratio Total continuing operating revenue excluding capital grants and contributions less operating expenses 1, 2 (7,767) (6.76)% 3.34% 7.08% 5.92% >0.00% Total continuing operating revenue 114,944 excluding capital grants and contributions 1
2. Own source operating revenue ratio Total continuing operating revenue excluding all grants and contributions 1 108,945 89.80% 83.98% 89.35% 80.31% >60.00%
Total1 continuing operating revenue 121,322
3. Unrestricted current ratio Current assets less all external restrictions 62,684 2.82x 3.45x 2.20x 3.51x >1.50x Current liabilities less specific 22,198 purpose liabilities
4. Debt service cover ratio Operating result before capital excluding interest and depreciation/impairment/amortisatio n 1 22,000 15.11x 27.62x 91.17x 84.31x >2.00x Principal repayments (Statement of 1,456 Cash Flows) plus borrowing costs (Income Statement)
5. Rates, annual charges, interest and extra charges outstanding percentage Rates, annual and extra charges outstanding 1,864 2.90% 2.05% 1.29% 1.13% <5.00% Rates, annual and extra charges 64,199 collectible
6. Cash expense cover ratio Current year’s cash and cash equivalents plus all term deposits 81,235 9.50 8.74 6.69 7.80 >3.00 Monthly payments from cash flow 8,554 mths mths mths mths mths of operating and financing activities
(1) Excludes fair value increments on investment properties, reversal of revaluation decrements, reversal of impairment losses on receivables, net gain on sale of assets and net share of interests in joint ventures and associates using the equity method and includes pensioner rate subsidies
(2) Excludes impairment/revaluation decrements of IPPE, fair value decrements on investment properties, net loss on disposal of assets and net loss on share of interests in joint ventures and associates using the equity method
(3) Council includes "Land improvements – depreciable" as an asset class in these ratios
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 28(b). Statement of performance measures – consolidated results (graphs)
§Note/Subtotal§ §Subnote§
1. Operating performance ratio Commentary on 2019/20 result Purpose of operating performance ratio 2019/20 ratio (6.76)%
This ratio failed to achieve the benchmark for the first time since 2013/14. There were two main reasons for this. Firstly, a revised assessment of the useful This ratio measures Council’s life of the North Sydney Olympic Pool complex prior achievement of containing to its redevelopment in 2020/21 resulted in an operating expenditure within additional $6.2 million of depreciation costs in operating revenue. 2019/20. Secondly, the COVID-19 pandemic and subsequent restrictions had a detrimental effect on revenue over the last four months of the year with shortfalls totalling $5.3 million.
Benchmark: ― > 0.00% Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
2. Own source operating revenue ratio Commentary on 2019/20 result Purpose of own source operating revenue ratio 2019/20 ratio 89.80%
This ratio measures fiscal This ratio comfortably achieved the benchmark and flexibility. It is the degree of has done so for many years. In 2019/20, 89.8% of reliance on external funding Council's operating revenue was derived from sources such as operating grants internal funding sources, i.e. other than from grants and contributions. and contributions.
Benchmark: ― > 60.00% Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
3. Unrestricted current ratio Commentary on 2019/20 result Purpose of unrestricted current ratio 2019/20 ratio 2.82x
This ratio comfortably achieved the benchmark and To assess the adequacy of has done so for many years. This is a reflection of working capital and its ability to Council's ongoing capacity to meet obligations for its satisfy obligations in the short unrestricted activities in the short term. At 30 June term for the unrestricted activities 2020, for every $1 of current liabilities to be funded of Council. from unrestricted cash, $2.82 was available.
Benchmark: ― > 1.50x Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 28(b). Statement of performance measures – consolidated results (graphs)
4. Debt service cover ratio Commentary on 2019/20 result Purpose of debt service cover ratio 2019/20 ratio 15.11x
This ratio has achieved the benchmark every year since Council commenced a controlled borrowing This ratio measures the program in 2015/16. Excluding non-cash items such availability of operating cash to as fair value adjustments, depreciation and net service debt including interest, losses from the disposal assets from the operating principal and lease payments result, there was sufficient funds to cover annual interest payments 15.11 times.
Benchmark: ― > 2.00x Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
5. Rates, annual charges, interest and extra charges outstanding percentage Purpose of rates, Commentary on 2019/20 result annual charges, interest and extra 2019/20 ratio 2.90% charges outstanding
Council no longer offsets overpaid rates against outstanding rates when calculating uncollected rates To assess the impact of and annual charges. This has resulted in an uncollected rates and annual increase in this ratio over the past two years. charges on Council’s liquidity and Nevertheless, it still comfortably achieved the the adequacy of recovery efforts. benchmark. This is a reflection of the ongoing effectiveness of Council's recovery efforts.
Benchmark: ― < 5.00% Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
6. Cash expense cover ratio Commentary on 2019/20 result Purpose of cash expense cover ratio 2019/20 ratio 9.50 mths
This ratio comfortably achieved the benchmark and This liquidity ratio indicates the has done so for many years. At 30 June 2020, in the number of months a Council can absence of any additional cash flows, Council had continue paying for its immediate sufficient cash and funds invested in term deposits expenses without additional cash which could be redeemed should the need arise to inflow. continue paying for its immediate expenses for 9.98 months.
Benchmark: ― > 3.00mths Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
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North Sydney Council Financial Statements 2020 Notes to the Financial Statements for the year ended 30 June 2020 Note 29. Council information and contact details
§Note/Subtotal§ §Subnote§
Principal place of business: 200 Miller Street North Sydney NSW 2060
Contact details
Mailing Address: Opening hours: PO Box 12 9:00am - 5:00pm North Sydney 2059 Monday to Friday
Telephone: 02 9936 8100 Internet: www.northsydney.nsw.gov.au Facsimile: 02 9936 8177 Email: [email protected]
Officers Elected members GENERAL MANAGER MAYOR Ken Gouldthorp Jilly Gibson
RESPONSIBLE ACCOUNTING OFFICER Councillors Garry Ross Councillor Stephen Barbour (Deputy Mayor) arry Ross Councillor Zoe Baker Public Officer Councillor MaryAnn Beregi Margaret Palmer Councillor Kathy Brodie Councillor Tony Carr Auditors Councillor Alanya Drummond Auditor General Councillor Samuel Gunning The Audit Office of New South Wales Councillor Jessica Keen Level 15, 1 Margaret Street Councillor Ian Mutton SYDNEY NSW 2000
Other information ABN: 32 353 260 317
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INDEPENDENT AUDITOR’S REPORT Report on the general purpose financial statements North Sydney Council
To the Councillors of North Sydney Council Opinion I have audited the accompanying financial statements of North Sydney Council (the Council), which comprise the Statement by Councillors and Management, the Income Statement and Statement of Comprehensive Income for the year ended 30 June 2020, the Statement of Financial Position as at 30 June 2020, the Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes comprising a summary of significant accounting policies and other explanatory information.
In my opinion:
• the Council’s accounting records have been kept in accordance with the requirements of the Local Government Act 1993, Chapter 13, Part 3, Division 2 (the Division) • the financial statements: - have been prepared, in all material respects, in accordance with the requirements of this Division - are consistent with the Council’s accounting records - present fairly, in all material respects, the financial position of the Council as at 30 June 2020, and of its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards • all information relevant to the conduct of the audit has been obtained • no material deficiencies in the accounting records or financial statements have come to light during the audit.
My opinion should be read in conjunction with the rest of this report.
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Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’ section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for Professional Accountants (including Independence Standards)’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an Auditor-General • mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.
I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Other Information The Council’s annual report for the year ended 30 June 2020 includes other information in addition to the financial statements and my Independent Auditor’s Report thereon. The Councillors are responsible for the other information. At the date of this Independent Auditor’s Report, the other information I have received comprise the special purpose financial statements and Special Schedules (the Schedules).
My opinion on the financial statements does not cover the other information. Accordingly, I do not express any form of assurance conclusion on the other information. However, as required by the Local Government Act 1993, I have separately expressed an opinion on the special purpose financial statements and Special Schedule - Permissible income for general rates.
In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude there is a material misstatement of the other information, I must report that fact.
I have nothing to report in this regard. The Councillors’ Responsibilities for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the Local Government Act 1993, and for such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Councillors are responsible for assessing the Council’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting.
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Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to:
• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error • issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.
A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar4.pdf. The description forms part of my auditor’s report.
The scope of my audit does not include, nor provide assurance:
• that the Council carried out its activities effectively, efficiently and economically • on the Original Budget information included in the Income Statement, Statement of Cash Flows, and Note 23 Material budget variations • on the Special Schedules. A separate opinion has been provided on Special Schedule - Permissible income for general rates • about the security and controls over the electronic publication of the audited financial statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.
Unaib Jeoffrey Delegate of the Auditor-General for New South Wales
27 October 2020
SYDNEY
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Cr Jilly Gibson Mayor Contact: Unaib Jeoffrey North Sydney Council Phone no: 02 9275 7450 PO Box 12 Our ref: D2023760/1771 NORTH SYDNEY NSW 2059
27 October 2020
Dear Mayor
Report on the Conduct of the Audit for the year ended 30 June 2020 North Sydney Council
I have audited the general purpose financial statements (GPFS) of the North Sydney Council (the Council) for the year ended 30 June 2020 as required by section 415 of the Local Government Act 1993 (the Act).
I expressed an unmodified opinion on the Council’s GPFS.
This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2020 is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my audit opinion on the GPFS issued under section 417(2) of the Act.
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INCOME STATEMENT Operating result
2020 2019* Variance $m $m %
Rates and annual charges revenue 62.9 58.8 6.9
Grants and 41.7 contributions revenue 12.4 21.3
Operating result 125 from continuing operations (5.1) 20.5
Net operating result before capital grants and (11.5) 4.7 345 contributions
The Council’s operating result from continuing operations ($5.1 million loss including depreciation and amortisation expense of $29.4 million) was $25.6 million lower than the 2018–19 result. This was primarily attributable to a reduction in grant funding, reduction in certain commercial revenue streams arising from the COVID-19 pandemic and higher depreciation due to the impact of reassessing the useful lives of assets related to the North Sydney Olympic Pool.
The net operating result before capital grants and contributions ($11.5 million loss) was $16.2 million lower than the 2018–19 result. This movement was similarly due to the reduction in certain commercial revenue streams arising from the COVID-19 pandemic and higher depreciation due to the impact of reassessing the useful lives of assets related to the North Sydney Olympic Pool as noted above.
Rates and annual charges revenue ($62.9 million) increased by $4.1 million (6.9 per cent) in 2019–20 due to the Council’s approved Special Rate Variation, which increased general rates revenue by 7.0 per cent in 2019–20.
Grants and contributions revenue ($12.4 million) decreased by $8.9 million (41.7 per cent) in 2019–20 due to a reduction in developer contributions received during the year which decreased contributions revenue by $10.5 million.
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STATEMENT OF CASH FLOWS
• The Council reported a decrease Net cash flows for the year in cash from $14.1 million at 30 60 June 2019 to $9.2 million at 30 50 June 2020. 40 • Cash inflows from operating 30 activities decreased from 2018- 20 19 as a result of lower receipts 10
from user charges and fees, $ million 0 grants and contributions and (10) certain commercial revenue (20) streams arising from the COVID- (30) 19 pandemic. (40) (50) • Cash outflows from investing 2018 2019 2020 activities decreased slightly from Year ended 30 June $37.9 million in 2018-19 to $36.6 Operating activities Investing activities Financing activities million in 2019-20. • The cash flows from financing activities have remained steady over the last three years.
FINANCIAL POSITION Cash and investments
Cash and investments 2020 2019 Commentary
$m $m
External restrictions 34.9 31.3 • External restrictions primarily include developer contributions, domestic waste management Internal restrictions 48.9 47.7 charges and specific purpose unexpended grants. Unrestricted 7.4 8.3 The increase from 2019 was mainly in unexpended grants (increase of $8.0 million). Cash and investments 91.2 87.3 • Internal restrictions are due to Council policy or decisions for forward plans including the works program. The increase from 2019 was attributable to the Olympic Pool redevelopment project. The increase was offset by reduction of $6.4 million capital works amount held. • Unrestricted balances provide liquidity for day-to- day operations and have increased from the prior year due to the higher cash balance held at 30 June 2020.
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PERFORMANCE Performance measures The following section provides an overview of the Council’s performance against the performance measures and performance benchmarks set by the Office of Local Government (OLG) within the Department of Planning, Industry and Environment.
Operating performance ratio
The ‘operating performance ratio’ Operating performance ratio measures how well council contained 8 operating expenditure within 6 operating revenue (excluding capital 4 grants and contributions, fair value adjustments, and reversal of 2 revaluation decrements). The 0 benchmark set by OLG is greater (2) than zero per cent. Ratio (%) (4) The Council did not meet the OLG (6) benchmark for the current reporting (8) period. This was primarily attributable 2018 2019 2020 to a reduction in grant funding, reduction in certain commercial Year ended 30 June revenue streams arising from the Operating performance ratio COVID-19 pandemic and higher OLG benchmark > 0% depreciation due to the impact of reassessing the useful lives of assets related to the North Sydney Olympic Pool.
Own source operating revenue ratio
The ‘own source operating revenue Own source operating revenue ratio ratio’ measures council’s fiscal 100 flexibility and the degree to which it relies on external funding sources 80 such as operating grants and contributions. The benchmark set by 60 OLG is greater than 60 per cent. 40 The Council exceeded the OLG Ratio (%) benchmark for the past three years. 20 This ratio reflects that Council has a greater reliance on its own source 0 revenue i.e. rates and annual charges 2018 2019 2020 and user charges and fees. Year ended 30 June Own source operating revenue ratio OLG benchmark > 60%
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Unrestricted current ratio
The ‘unrestricted current ratio’ is Unrestricted current ratio specific to local government and 4 represents council’s ability to meet its short-term obligations as they fall due. 3.5 The benchmark set by OLG is greater 3 than 1.5 times. 2.5 The Council exceeded the OLG 2 benchmark for the past three years.
Ratio (x) 1.5 This ratio indicates that Council 1 currently has $2.82 of unrestricted 0.5 current assets available to service 0 every $1.00 of its unrestricted current 2018 2019 2020 liabilities. Year ended 30 June Unrestricted current ratio OLG benchmark > 1.5x
Debt service cover ratio
The ‘debt service cover ratio’ Debt service cover ratio measures the operating cash to 100 service debt including interest, 90 principal and lease payments. The 80 benchmark set by OLG is greater 70 than two times. 60 The Council exceeded the OLG 50 benchmark for the past three years. 40 Ratio (x) 30 Council appears to be effectively 20 monitoring its liquidity levels to ensure 10 it can meet its borrowing costs when 0 they fall due. 2018 2019 2020 Year ended 30 June Debt service cover ratio OLG benchmark > 2x
Rates and annual charges outstanding percentage
The ‘rates and annual charges Rates and annual charges outstanding outstanding percentage’ assesses the percentage impact of uncollected rates and 6 annual charges on council’s liquidity 5 and the adequacy of debt recovery efforts. The benchmark set by OLG is 4 less than 5 per cent for metro 3 councils. The Council exceeded the OLG Ratio (%) 2 benchmark for the past three years. 1 This ratio has been impacted primarily 0 by the economic conditions resulting 2018 2019 2020 from the COVID-19 pandemic. Year ended 30 June Rates and annual charges outstanding percentage OLG benchmark < 5%
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Cash expense cover ratio
This liquidity ratio indicates the Cash expense cover ratio number of months the council can 12 continue paying for its immediate 10 expenses without additional cash inflow. The benchmark set by OLG is 8 greater than three months. 6 The Council exceeded the OLG benchmark for the past three years. 4
This indicates that Council had the Ratio (months) 2 capacity to cover 9.50 months of cash expenditure without additional cash 0 inflows at 30 June 2020. 2018 2019 2020 Year ended 30 June Cash expense cover ratio OLG benchmark > 3 months
Infrastructure, property, plant and equipment renewals Council spent $26.1 million on asset renewals in 2019-20 compared to $25.3 million in 2018-19. Asset renewals are defined as the replacement of existing assets as opposed to the acquisition of new assets.
A short-term benchmark of Council’s strategic asset management is to assess the rate at which Council’s assets are being renewed against the rate at which they are depreciating. In 2019-20, asset renewals of $26.1 million represented 90 per cent of Council’s $29.1 million depreciation expense. This result was lower than the 2018–19 result of 114 per cent.
Asset renewals in 2019-20 were carried out in accordance with Council’s capital works program and primarily related to road and footpath assets.
OTHER MATTERS Impact of new accounting standards AASB 15 ‘Revenue from Contracts with Customers’ and AASB 1058 ‘Income for Not-for-Profit Entities’
The Council adopted the new accounting standards AASB 15 ‘Contracts with Customers’ and AASB 1058 ‘Income of Not-for-Profit Entities’ (collectively referred to as the Revenue Standards) for the first time in their 2019–20 financial statements.
AASB 15 introduces a new approach to recognising revenue based on the principle that revenue is recognised when control of a good or service transfers to a customer. AASB 15 impacts the timing and amount of revenue recorded in a councils’ financial statements, particularly for grant revenue. AASB 15 also increases the amount of disclosures required.
AASB 1058 prescribes how not-for-profit entities account for transactions conducted on non-commercial terms and the receipt of volunteer services. AASB 1058 significantly impacts the timing and amount of income recorded in a councils’ financial statements, particularly for grant income and rates which are paid before the commencement of the rating period.
The Council recognised a $4.2 million adjustment to opening accumulated surplus at 1 July 2019 on adoption of the new Revenue Standards.
The Council disclosed the impact of adopting the new Revenue Standards in Note 17.
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AASB 16 ‘Leases’
The Council adopted the new accounting standard AASB 16 ‘Leases’ for the first time in their 2019–20 financial statements.
AASB 16 changes the way lessees treat operating leases for financial reporting. With a few exceptions, operating leases will now be recorded in the Statement of Financial Position as a right-of-use asset, with a corresponding lease liability.
AASB 16 results in lessees recording more assets and liabilities in the Statement of Financial Position and changes the timing and pattern of expenses recorded in the Income Statement.
The Council recognised right-of-use assets and lease liabilities of $2.7 million at 1 July 2019 on adoption of AASB 16.
The Council disclosed the impact of adopting AASB 16 in Note 17. Legislative compliance My audit procedures did not identify any instances of non-compliance with legislative requirements or a material deficiency in the Council’s accounting records or financial statements. The Council’s:
• accounting records were maintained in a manner and form to allow the GPFS to be prepared and effectively audited • staff provided all accounting records and information relevant to the audit.
Unaib Jeoffrey Delegate of the Auditor-General for New South Wales
cc: Mr Ken Gouldthorp, General Manager Mr Brian Hrnjak, Chair of the Audit, Risk and Improvement Committee Jim Betts, Secretary of the Department of Planning, Industry and Environment
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§Cover§
North Sydney Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2020
Shaping a progressive, diverse and vibrant North Sydney community.
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North Sydney Council Special Purpose Financial Statements 2020 Special Purpose Financial Statements for the year ended 30 June 2020
§MainTOC§
Contents Page
Statement by Councillors & Management 3
Special Purpose Financial Statements
Income Statement – Commercial Properties 4 Income Statement – Waste Management 5 Income Statement – Car Parking Services 6 Income Statement – North Sydney Function Centre 7 Income Statement – Development Applications 8
Statement of Financial Position – Commercial Properties 9 Statement of Financial Position – Waste Management 10 Statement of Financial Position – Car Parking Services 11 Statement of Financial Position – North Sydney Function Centre 12 Statement of Financial Position – Development Applications 13
Note 1 – Significant Accounting Policies 14
Auditor's Report on Special Purpose Financial Statements 17
Background
i. These Special Purpose Financial Statements (SPFS) have been prepared for the use by both Council and the Office of Local Government in fulfilling their requirements under National Competition Policy (NCP).
ii. The principle of competitive neutrality is based on the concept of a ‘level playing field’ between persons/entities competing in a market place, particularly between private and public sector competitors.
Essentially, the principle is that government businesses, whether Commonwealth, state or local, should operate without net competitive advantages over other businesses as a result of their public ownership.
iii. For Council, the principle of competitive neutrality and public reporting applies only to declared business activities.
These include (a) those activities classified by the Australian Bureau of Statistics as business activities being water supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnover of more than $2 million that Council has formally declared as a business activity (defined as Category 1 activities).
iv. In preparing these financial statements for Council’s self-classified Category 1 businesses and ABS-defined activities, councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax-equivalent regime payments and debt guarantee fees (where the business benefits from Council's borrowing position by comparison with commercial rates).
North Sydney Council Annual Report Page2019/20 2 of 19157 Page 161 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
Special Purpose Financial Statements 2020
North Sydney Council Special Purpose Financial Statements for the yearended 30 June 2020
Statement by Councillors and Management made pursuant to the Local Government Code of Accounting Practice and Financial Reporting
The attached Special Purpose Financial Statements have been prepared in accordance with:
• the NSW Government Policy Statement 'Application of National Competition Policy to Local Government', • the Division of Local Government Guidelines 'Pricing and Costing for Council Businesses - A Guide to Competitive Neutrality', • the Local Government Code of Accounting Practice and Financial Reporting, • the NSW Office of Water Best-Practice Management of Water and Sewerage Guidelines.
To the best of our knowledge and belief, these statements:
• present fairly the operating result and financial position for each of Council's declared business activities for the year, and • accord with Council's accounting and other records. present overhead reallocation charges to the water and sewerage businesses as fair and reasonable.
We are not aware of any matter that would render these statements false or misleading in any way.
Signed in accordance with a resolution of Council made on 26 October 2020.
Jilly Gibson Stephen Barbour Mayor Councillor 26 October 2020 26 October 2020
Garry Ross Responsible Accounting Officer 26 October 2020
158 North Sydney Council Annual Report 2019/20 Page 3 of 19 Page 162 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Income Statement – Commercial Properties for the year ended 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 1 Category 1
Income from continuing operations Other income 6,620 7,163 Total income from continuing operations 6,620 7,163
Expenses from continuing operations Employee benefits and on-costs 14 8 Materials and contracts 2,251 2,394 Depreciation, amortisation and impairment 234 234 Calculated taxation equivalents 757 603 Loss on revaluation 472 – Other expenses 720 741 Total expenses from continuing operations 4,448 3,980
Surplus (deficit) from continuing operations before capital amounts 2,172 3,183
Surplus (deficit) from continuing operations after capital amounts 2,172 3,183
Surplus (deficit) from all operations before tax 2,172 3,183
Less: corporate taxation equivalent (27.5%) [based on result before capital] (597) (875) SURPLUS (DEFICIT) AFTER TAX 1,575 2,308
Plus accumulated surplus 102,857 105,281 Plus adjustments for amounts unpaid: – Taxation equivalent payments 757 603 – Corporate taxation equivalent 597 875 Add: Less: – Dividend paid (3,107) (6,210) Closing accumulated surplus 102,679 102,857
Return on capital % 30.0% 43.3%
North Sydney Council Annual Report Page2019/20 4 of 19159 Page 163 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Income Statement – Waste Management for the year ended 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 1 Category 1
Income from continuing operations Access charges 14,723 13,444 User charges 1,235 1,321 Fees 44 471 Grants and contributions provided for non-capital purposes 44 42 Total income from continuing operations 16,046 15,278
Expenses from continuing operations Employee benefits and on-costs 1,293 1,551 Borrowing costs 74 – Materials and contracts 10,565 10,117 Depreciation, amortisation and impairment 263 – Calculated taxation equivalents 19 35 Other expenses 32 35 Total expenses from continuing operations 12,246 11,738
Surplus (deficit) from continuing operations before capital amounts 3,800 3,540
Surplus (deficit) from continuing operations after capital amounts 3,800 3,540
Surplus (deficit) from all operations before tax 3,800 3,540
Less: corporate taxation equivalent (27.5%) [based on result before capital] (1,045) (974) SURPLUS (DEFICIT) AFTER TAX 2,755 2,566
Plus accumulated surplus 4,348 2,051 Plus adjustments for amounts unpaid: – Taxation equivalent payments 19 35 – Corporate taxation equivalent 1,045 974 Less: – Dividend paid (1,685) (1,278) Closing accumulated surplus 6,482 4,348
160 North Sydney Council Annual Report 2019/20 Page 5 of 19 Page 164 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Income Statement – Car Parking Services for the year ended 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 1 Category 1
Income from continuing operations Fees 3,085 3,787 Total income from continuing operations 3,085 3,787
Expenses from continuing operations Employee benefits and on-costs 446 328 Materials and contracts 910 926 Depreciation, amortisation and impairment 908 896 Calculated taxation equivalents 513 318 Other expenses 475 445 Total expenses from continuing operations 3,252 2,913
Surplus (deficit) from continuing operations before capital amounts (167) 874
Surplus (deficit) from continuing operations after capital amounts (167) 874
Surplus (deficit) from all operations before tax (167) 874
Less: corporate taxation equivalent (27.5%) [based on result before capital] – (240) SURPLUS (DEFICIT) AFTER TAX (167) 634
Plus accumulated surplus 58,085 58,832 Plus adjustments for amounts unpaid: – Taxation equivalent payments 513 318 – Corporate taxation equivalent – 240 Less: – Dividend paid (937) (1,939) Closing accumulated surplus 57,494 58,085
Return on capital % (0.1)% 0.7% Subsidy from Council 1,216 708
North Sydney Council Annual Report Page2019/20 6 of 19161 Page 165 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Income Statement – North Sydney Function Centre for the year ended 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 2 Category 2
Income from continuing operations Fees 539 861 Total income from continuing operations 539 861
Expenses from continuing operations Employee benefits and on-costs 225 422 Materials and contracts 461 608 Depreciation, amortisation and impairment 48 49 Other expenses 216 330 Total expenses from continuing operations 950 1,409
Surplus (deficit) from continuing operations before capital amounts (411) (548)
Surplus (deficit) from continuing operations after capital amounts (411) (548)
Surplus (deficit) from all operations before tax (411) (548) SURPLUS (DEFICIT) AFTER TAX (411) (548)
Plus accumulated surplus 1,220 1,322 Plus adjustments for amounts unpaid: Add: – Subsidy paid/contribution to operations 433 446 Closing accumulated surplus 1,242 1,220
Return on capital % (17.7)% (23.0)% Subsidy from Council 431 580
162 North Sydney Council Annual Report 2019/20 Page 7 of 19 Page 166 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Income Statement – Development Applications for the year ended 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 2 Category 2
Income from continuing operations Fees 1,449 1,340 Total income from continuing operations 1,449 1,340
Expenses from continuing operations Employee benefits and on-costs 4,785 4,682 Materials and contracts 261 225 Calculated taxation equivalents 213 206 Other expenses 603 605 Total expenses from continuing operations 5,862 5,718
Surplus (deficit) from continuing operations before capital amounts (4,413) (4,378)
Surplus (deficit) from continuing operations after capital amounts (4,413) (4,378)
Surplus (deficit) from all operations before tax (4,413) (4,378) SURPLUS (DEFICIT) AFTER TAX (4,413) (4,378)
Plus accumulated surplus (1,381) (1,199) Plus adjustments for amounts unpaid: – Taxation equivalent payments 213 206 Add: – Subsidy paid/contribution to operations 4,083 3,990 Closing accumulated surplus (1,498) (1,381)
Subsidy from Council 4,413 4,378
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North Sydney Council Special Purpose Financial Statements 2020 Statement of Financial Position – Commercial Properties as at 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 1 Category 1
ASSETS Current assets Receivables 438 156 Total current assets 438 156
Non-current assets Infrastructure, property, plant and equipment 7,248 7,352 Investment property 95,113 95,512 Total non-current assets 102,361 102,864
TOTAL ASSETS 102,799 103,020
LIABILITIES Current liabilities Payables 120 163 Total current liabilities 120 163
TOTAL LIABILITIES 120 163 NET ASSETS 102,679 102,857
EQUITY Accumulated surplus 102,679 102,857 TOTAL EQUITY 102,679 102,857
164 North Sydney Council Annual Report 2019/20 Page 9 of 19 Page 168 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Statement of Financial Position – Waste Management as at 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 1 Category 1
ASSETS Current assets Cash and cash equivalents 6,810 5,734 Receivables 289 206 Total current assets 7,099 5,940
Non-current assets Right of use assets 2,365 – Total non-current assets 2,365 –
TOTAL ASSETS 9,464 5,940
LIABILITIES Current liabilities Payables 284 1,330 Lease Liability 303 – Provisions 280 258 Total current liabilities 867 1,588
Non-current liabilities Lease Liability 2,096 – Provisions 19 4 Total non-current liabilities 2,115 4
TOTAL LIABILITIES 2,982 1,592 NET ASSETS 6,482 4,348
EQUITY Accumulated surplus 6,482 4,348 TOTAL EQUITY 6,482 4,348
North Sydney Council Annual ReportPage 2019/20 10 of 19165 Page 169 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Statement of Financial Position – Car Parking Services as at 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 1 Category 1
ASSETS Current assets Cash and cash equivalents 3 8 Receivables – 5 Total current assets 3 13
Non-current assets Infrastructure, property, plant and equipment 119,243 119,826 Total non-current assets 119,243 119,826
TOTAL ASSETS 119,246 119,839
LIABILITIES Current liabilities Payables 118 142 Provisions 118 103 Total current liabilities 236 245
Non-current liabilities Provisions 9 2 Total non-current liabilities 9 2
TOTAL LIABILITIES 245 247 NET ASSETS 119,001 119,592
EQUITY Accumulated surplus 57,494 58,085 Revaluation reserves 61,507 61,507 TOTAL EQUITY 119,001 119,592
166 North Sydney Council Annual Report 2019/20 Page 11 of 19 Page 170 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Statement of Financial Position – North Sydney Function Centre as at 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 2 Category 2
ASSETS Current assets Cash and cash equivalents 10 11 Receivables 14 29 Inventories 11 32 Total current assets 35 72
Non-current assets Infrastructure, property, plant and equipment 2,322 2,387 Total non-current assets 2,322 2,387
TOTAL ASSETS 2,357 2,459
LIABILITIES Current liabilities Provisions 5 126 Total current liabilities 5 126
Non-current liabilities Provisions – 2 Total non-current liabilities – 2
TOTAL LIABILITIES 5 128 NET ASSETS 2,352 2,331
EQUITY Accumulated surplus 1,242 1,220 Revaluation reserves 1,110 1,111 TOTAL EQUITY 2,352 2,331
North Sydney Council Annual ReportPage 2019/20 12 of 19167 Page 171 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Statement of Financial Position – Development Applications as at 30 June 2020
§Note/Subtotal§ §Subnote§ 2020 2019 $ '000 Category 2 Category 2
LIABILITIES Current liabilities Payables 9 – Provisions 1,373 1,354 Total current liabilities 1,382 1,354
Non-current liabilities Provisions 116 27 Total non-current liabilities 116 27
TOTAL LIABILITIES 1,498 1,381 NET ASSETS (1,498) (1,381)
EQUITY Accumulated surplus (1,498) (1,381) TOTAL EQUITY (1,498) (1,381)
168 North Sydney Council Annual Report 2019/20 Page 13 of 19 Page 172 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Notes to the Special Purpose Financial Statements for the year ended 30 June 2020 Note 1. Significant Accounting Policies
§Note/Subtotal§ §Subnote§
A statement summarising the supplemental accounting policies adopted in the preparation of the SPFS for NCP reporting purposes follows.
These financial statements are SPFS prepared for use by Council and the Office of Local Government. For the purposes of these statements, the Council is a non-reporting not-for-profit entity.
The figures presented in these SPFS have been prepared in accordance with the recognition and measurement criteria of relevant Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Australian Accounting Interpretations.
The disclosures in these SPFS have been prepared in accordance with the Local Government Act 1993 (NSW), the Local Government (General) Regulation 2005, and the Local Government Code of Accounting Practice and Financial Reporting.
The statements are prepared on an accruals basis. They are based on historic costs and do not take into account changing money values or, except where specifically stated, current values of non-current assets. Certain taxes and other costs, appropriately described, have been imputed for the purposes of the NCP.
The Statement of Financial Position includes notional assets/liabilities receivable from/payable to Council's general fund. These balances reflect a notional intra-entity funding arrangement with the declared business activities.
National Competition Policy
Council has adopted the principle of ‘competitive neutrality’ in its business activities as part of the NCP which is being applied throughout Australia at all levels of government.
The framework for its application is set out in the June 1996 NSW government policy statement titled 'Application of National Competition Policy to Local Government'.
The Pricing and Costing for Council Businesses, A Guide to Competitive Neutrality issued by the Office of Local Government in July 1997 has also been adopted.
The pricing and costing guidelines outline the process for identifying and allocating costs to activities and provide a standard for disclosure requirements.
These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents, Council subsidies, return on investments (rate of return), and dividends paid.
Declared business activities
In accordance with Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities:
Category 1 (where gross operating turnover is over $2 million) a. Commercial Properties Managed rental Property portfolio. b. Waste Management Waste collection and disposal (Domestic, Trade and recyclables). c. Car Parking Services Permanent and casual off street parking facilities subject to charges
Category 2 (where gross operating turnover is less than $2 million) a. North Sydney Oval Function Centre Bar and catering facilities for hire to the public and members. b. Development Applications continued on next page ... North Sydney Council Annual ReportPage 2019/20 14 of 19169 Page 173 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Purpose Financial Statements 2020 Notes to the Special Purpose Financial Statements for the year ended 30 June 2020
Note 1. Significant Accounting Policies (continued)
Building, Development and Subdivision approval processing.
Monetary amounts
Amounts shown in the financial statements are in Australian dollars and rounded to the nearest one thousand dollars.
(i) Taxation equivalent charges
Council is liable to pay various taxes and financial duties. Where this is the case, they are disclosed as a cost of operations just like all other costs.
However, where Council does not pay some taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all Council-nominated business activities and are reflected in SPFS.
For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities):
Notional rate applied (%)
Corporate income tax rate – 27.5%
Land tax – the first $692,000 of combined land values attracts 0%. For the combined land values in excess of $692,001 up to $4,231,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $4,231,000 a premium marginal rate of 2.0% applies.
Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $850,000.
Income tax
An income tax equivalent has been applied on the profits of the business activities.
Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account in terms of assessing the rate of return required on capital invested.
Accordingly, the return on capital invested is set at a pre-tax level - gain/(loss) from ordinary activities before capital amounts, as would be applied by a private sector competitor. That is, it should include a provision equivalent to the corporate income tax rate, currently 27.5%.
Income tax is only applied where a gain/ (loss) from ordinary activities before capital amounts has been achieved.
Since the taxation equivalent is notional – that is, it is payable to Council as the ‘owner’ of business operations - it represents an internal payment and has no effect on the operations of the Council. Accordingly, there is no need for disclosure of internal charges in the SPFS.
The rate applied of 27.5% is the equivalent company tax rate prevalent at reporting date. No adjustments have been made for variations that have occurred during the year.
Local government rates and charges
A calculation of the equivalent rates and charges payable on all category 1 businesses has been applied to all land assets owned or exclusively used by the business activity.
Loan and debt guarantee fees
The debt guarantee fee is designed to ensure that council business activities face ‘true’ commercial borrowing costs in line with private sector competitors.
In order to calculate a debt guarantee fee, Council has determined what the differential borrowing rate would have been between the commercial rate and Council’s borrowing rate for its business activities.
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North Sydney Council Special Purpose Financial Statements 2020 Notes to the Special Purpose Financial Statements for the year ended 30 June 2020
Note 1. Significant Accounting Policies (continued)
(ii) Subsidies
Government policy requires that subsidies provided to customers, and the funding of those subsidies, must be explicitly disclosed.
Subsidies occur when Council provides services on a less-than-cost-recovery basis. This option is exercised on a range of services in order for Council to meet its community service obligations.
Accordingly, ‘subsidies disclosed’ (in relation to NCP) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by Council in any given financial year.
The overall effect of subsidies is contained within the Income Statement of each reported business activity.
(iii) Return on investments (rate of return)
The NCP policy statement requires that councils with Category 1 businesses ‘would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field’.
Such funds are subsequently available for meeting commitments or financing future investment strategies.
The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement.
The rate of return is calculated as follows:
Operating result before capital income + interest expense
Written down value of I,PP&E as at 30 June
As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 0.88% at 30 June 2020.
(iv) Dividends
Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities.
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INDEPENDENT AUDITOR’S REPORT Report on the special purpose financial statements North Sydney Council
To the Councillors of North Sydney Council Opinion I have audited the accompanying special purpose financial statements (the financial statements) of North Sydney Council’s (the Council) Declared Business Activities, which comprise the Statement year ended 30 June 2020, the Statement of Financial Position of each Declared Business Activity as at 30 June 2020 and Note 1 Significant accounting policies for the Business Activities declared by Council.
The Declared Business Activities of the Council are:
• Commercial Properties • Waste Management • Car Parking Services • North Sydney Function Centre • Development Applications.
In my opinion, the financial statements present fairly, in all material respects, the financial position of the Council’s declared Business Activities as at 30 June 2020, and their financial performance for the year then ended, in accordance with the Australian Accounting Standards described in Note 1 and the Local Government Code of Accounting Practice and Financial Reporting – update number 28 (LG Code).
My opinion should be read in conjunction with the rest of this report. Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Schedule’ section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for Professional Accountants (including Independence Standards)’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
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Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an Auditor-General • mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to Note 1 to the financial statements which describes the basis of accounting. The financial statements have been prepared for the purpose of fulfilling the Council’s financial reporting responsibilities under the LG Code. As a result, the financial statements may not be suitable for another purpose. Other Information The Council’s annual report for the year ended 30 June 2020 includes other information in addition to the financial statements and my Independent Auditor’s Report thereon. The Councillors are responsible for the other information. At the date of this Independent Auditor’s Report, the other information I have received comprise the general purpose financial statements and Special Schedules (the Schedules).
My opinion on the financial statements does not cover the other information. Accordingly, I do not express any form of assurance conclusion on the other information. However, as required by the Local Government Act 1993, I have separately expressed an opinion on the general purpose financial statements and Special Schedule ‘Permissible income for general rates’. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude there is a material misstatement of the other information, I must report that fact.
I have nothing to report in this regard. The Councillors’ Responsibilities for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements and for determining that the accounting policies, described in Note 1 to the financial statements, are appropriate to meet the requirements in the LG Code. The Councillors’ responsibility also includes such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Councillors are responsible for assessing the Council’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting. Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to:
• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error • issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or
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in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.
A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar4.pdf. The description forms part of my auditor’s report.
The scope of my audit does not include, nor provide assurance:
• that the Council carried out its activities effectively, efficiently and economically • about the security and controls over the electronic publication of the audited financial statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.
Unaib Jeoffrey Delegate of the Auditor-General for New South Wales
27 October 2020 SYDNEY
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§Cover§
North Sydney Council SPECIAL SCHEDULES for the year ended 30 June 2020
Shaping a progressive, diverse and vibrant North Sydney community.
North Sydney Council Annual Report 2019/20 175 Page 179 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
North Sydney Council Special Schedules 2020 Special Schedules for the year ended 30 June 2020
§MainTOC§
Contents Page
Special Schedules
Permissible income for general rates 3
Report on Infrastructure Assets - Values 7
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North Sydney Council Special Schedules 2020 Permissible income for general rates
§Note/Subtotal§ §Subnote§ Calculation Calculation $ '000 Notes 2020/21 2019/20
Notional general income calculation 1 Last year notional general income yield a 48,530 45,266 Plus or minus adjustments 2 b (131) 360 Notional general income c = a + b 48,399 45,626
Permissible income calculation Or rate peg percentage e 7.00% 7.00%
Or plus rate peg amount i = e x (c + g) 3,388 3,194 Sub-total k = (c + g + h + i + j) 51,787 48,820
Plus (or minus) last year’s carry forward total l 36 (248) Less valuation objections claimed in the previous year m (1) (8) Sub-total n = (l + m) 35 (256)
Total permissible income o = k + n 51,822 48,564
Less notional general income yield p 51,765 48,529 Catch-up or (excess) result q = o – p 58 35
Plus income lost due to valuation objections claimed 4 r 153 1 Carry forward to next year 6 t = q + r + s 211 36
Notes
(1) The notional general income will not reconcile with rate income in the financial statements in the corresponding year. The statements are reported on an accrual accounting basis which include amounts that relate to prior years’ rates income.
(2) Adjustments account for changes in the number of assessments and any increase or decrease in land value occurring during the year. The adjustments are called ‘supplementary valuations’ as defined in the Valuation of Land Act 1916.
(4) Valuation objections are unexpected changes in land values as a result of land owners successfully objecting to the land value issued by the Valuer-General. Councils can claim the value of the income lost due to valuation objections in any single year.
(6) Carry forward amounts which are in excess (an amount that exceeds the permissible income) require ministerial approval by order published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993. The OLG will extract these amounts from Council’s Permissible income for general rates Statement in the financial data return (FDR) to administer this process.
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Special Schedules 2020
INDEPENDENT AUDITOR’S REPORT Special Schedule - Permissible income for general rates North Sydney Council
To the Councillors of North Sydney Council Opinion I have audited the accompanying Special Schedule – Permissible income for general rates (the Schedule) of North Sydney Council (the Council) for the year ending 30 June 2021.
In my opinion, the Schedule is prepared, in all material respects in accordance with the requirements of the Local Government Code of Accounting Practice and Financial Reporting – update number 28 (LG Code), and is in accordance with the books and records of the Council.
My opinion should be read in conjunction with the rest of this report. Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Schedule’ section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for Professional Accountants (including Independence Standards)’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an Auditor-General • mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
178 North Sydney Council Annual Report 2019/20 Page 4 of 10 Page 182 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
Special Schedules 2020
Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to the special purpose framework used to prepare the Schedule. The Schedule has been prepared for the purpose of fulfilling the Council’s reporting obligations under the LG Code. As a result, the Schedule may not be suitable for another purpose. Other Information The Council’s annual report for the year ended 30 June 2020 includes other information in addition to the Schedule and my Independent Auditor’s Report thereon. The Councillors are responsible for the other information. At the date of this Independent Auditor’s Report, the other information I have received comprise the general purpose financial statements, special purpose financial statements and Special Schedule ‘Report on infrastructure assets as at 30 June 2020.
My opinion on the Schedule does not cover the other information. Accordingly, I do not express any form of assurance conclusion on the other information. However, as required by the Local Government Act 1993, I have separately expressed an opinion on the general purpose financial statements and the special purpose financial statements.
In connection with my audit of the Schedule, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Schedule or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude there is a material misstatement of the other information, I must report that fact.
I have nothing to report in this regard. The Councillors’ Responsibilities for the Schedule The Councillors are responsible for the preparation of the Schedule in accordance with the LG Code. The Councillors’ responsibility also includes such internal control as the Councillors determine is necessary to enable the preparation of the Schedule that is free from material misstatement, whether due to fraud or error.
In preparing the Schedule, the Councillors are responsible for assessing the Council’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting. Auditor’s Responsibilities for the Audit of the Schedule My objectives are to:
• obtain reasonable assurance whether the Schedule as a whole is free from material misstatement, whether due to fraud or error • issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the Schedule.
A description of my responsibilities for the audit of the Schedule is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar8.pdf. The description forms part of my auditor’s report.
North Sydney Council Annual Report Page2019/20 5 of 10179 Page 183 of 3738th Council Meeting - 30 November 2020 Minutes 190 Attachment 8.3.1
Special Schedules 2020
The scope of my audit does not include, nor provide assurance:
• that the Council carried out its activities effectively, efficiently and economically • about the security and controls over the electronic publication of the audited Schedule on any website where it may be presented • about any other information which may have been hyperlinked to/from the Schedule.
Unaib Jeoffrey Delegate of the Auditor-General for New South Wales
27 October 2020
SYDNEY
180 North Sydney Council Annual Report 2019/20 Page 6 of 10 Page 184 of 3738th Council Meeting - 30 November 2020 Minutes 190 Special Schedules 2020 3738th North Sydney Council Report on Infrastructure Assets Council as at 30 June 2020
§Note/Subtotal§ §Subnote§ Estimated cost Meeting Estimated cost to bring to the Assets in condition as a percentage of to bring assets agreed level of 2019/20 2019/20 Gross gross replacement cost to satisfactory service set by Required Actual Net carrying replacement Asset Class Asset Category standard Council maintenance a maintenance amount cost (GRC) - $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 1 2 3 4 5 30
November (a) Report on Infrastructure Assets - Values
Buildings Buildings 539 539 2,654 2,642 128,161 210,855 69.0% 23.0% 6.0% 1.0% 1.0% Sub-total 539 539 2,654 2,642 128,161 210,855 69.0% 23.0% 6.0% 1.0% 1.0% 2020 Other Other structures – – – – 2,370 2,570 78.0% 21.0% 1.0% 0.0% 0.0% structures Sub-total – – – – 2,370 2,570 78.0% 21.0% 1.0% 0.0% 0.0% Minutes
Roads Sealed roads 1,089 1,089 1,336 1,267 190,404 256,146 34.0% 38.0% 23.0% 5.0% 0.0% Footpaths 489 489 2,116 2,193 79,087 117,860 27.0% 40.0% 26.0% 6.0% 1.0% Other road assets 510 510 94 72 61,761 96,073 17.0% 49.0% 29.0% 4.0% 1.0% Sub-total 2,088 2,088 3,546 3,532 331,251 470,079 28.8% 40.7% 25.0% 5.0% 0.5%
Stormwater Stormwater drainage 20,435 20,435 913 945 145,127 201,754 56.0% 30.0% 2.0% 2.0% 10.0% drainage Sub-total 20,435 20,435 913 945 145,127 201,754 56.0% 30.0% 2.0% 2.0% 10.0%
Open space / Swimming pools – – 787 655 5,947 22,488 50.0% 43.0% 7.0% 0.0% 0.0% recreational Other 69 69 953 881 17,542 25,799 31.0% 34.0% 33.0% 2.0% 0.0%
North SydneyCouncil AnnualReport2019/20 assets Sub-total 69 69 1,740 1,536 23,489 48,287 39.8% 38.2% 20.9% 1.1% 0.0%
Other Other 6,933 6,933 1,401 1,389 121,083 229,239 9.0% 39.0% 38.0% 11.0% 3.0% infrastructure assets Sub-total 6,933 6,933 1,401 1,389 121,083 229,239 9.0% 39.0% 38.0% 11.0% 3.0% Attachment 8.3.1 Page 185 190 of 181
continued on next page ... Page 7 of 10 Attachment 8.3.1 5 4.0% 4.0% 2.7% Page 8 of 10 4 4.0% 4.0% 4.8% 3 4.0% 4.0% Special Schedules 2020 19.7% 2 15.0% 15.0% 34.9% gross replacement cost 1 73.0% 73.0% 37.9% Assets in condition as a percentage of $ '000 Gross 15,191 15,191 1,177,975 cost (GRC) replacement $ '000 11,851 11,851 amount 763,332 Net carrying – – $ '000 Actual 10,044 2019/20 maintenance – – a $ '000 10,254 2019/20 Required maintenance 582 582 $ '000 30,646 Council service set by to bring the agreed level of Estimated cost 582 582 $ '000 30,646 standard to satisfactory Estimated cost to bring assets (continued) No work required (normal maintenance) Only minor maintenance work required Maintenance work required Renewal required Urgent renewal/upgrading required Asset Category Land improvements – depreciable Sub-total TOTAL - ALL ASSETS asset condition assessment ‘key’ Excellent/very good Good Satisfactory Poor Very poor Required maintenance is the amount identified in Council’s asset management plans. North Sydney Council Report on Infrastructure Assets as at 30 June 2020 §Note/Subtotal§ §Total§ Asset Class Land improvements (a) Infrastructure 1 2 3 4 5 continued on next page ...
182 North Sydney Council Annual Report 2019/20 Page 186 of 3738th Council Meeting - 30 November 2020 Minutes 190 North Sydney Council Special Schedules 2020
Report on Infrastructure Assets (continued) as at 30 June 2020
§Note/Subtotal§ §Total§ Estimated cost Estimated cost to bring to the Assets in condition as a percentage of to bring assets agreed level of 2019/20 2019/20 Gross gross replacement cost to satisfactory service set by Required Actual Net carrying replacement Asset Class Asset Category standard Council maintenance a maintenance amount cost (GRC) $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 1 2 3 4 5
Land Land improvements – depreciable 582 582 – – 11,851 15,191 73.0% 15.0% 4.0% 4.0% 4.0% improvements Sub-total 582 582 – – 11,851 15,191 73.0% 15.0% 4.0% 4.0% 4.0%
TOTAL - ALL ASSETS 30,646 30,646 10,254 10,044 763,332 1,177,975 37.9% 34.9% 19.7% 4.8% 2.7%
(a) Required maintenance is the amount identified in Council’s asset management plans.
Infrastructure asset condition assessment ‘key’
1 Excellent/very good No work required (normal maintenance) 2 Good Only minor maintenance work required 3 Satisfactory Maintenance work required 4 Poor Renewal required 5 Very poor Urgent renewal/upgrading required
continued on next page ... Page 8 of 10 3738th continued onnext page ... (4) (3) (2) (1) (*) Gross replacementcost Council an agreedservicelevelsetby Estimated costtobringassets Cost tobringassetsagreedservicelevel Required assetmaintenance Actual assetmaintenance Asset maintenanceratio infrastructure assets Net carryingamountof satisfactory standard Estimated costtobringassetsa Infrastructure backlogratio impairment Depreciation, amortisationand Asset renewals Buildings andinfrastructurerenewalsratio (consolidated) performance indicators Infrastructure asset $ '000 §Note/Subtotal§ as at30June2020 Report onInfrastructureAssets North SydneyCouncil the acquisitionofnewassets(orrefurbishmentoldassets)thatincreasescapacity/performance. Asset renewalsrepresentthereplacementand/orrefurbishmentofexistingassetstoanequivalentcapacity/performanceasopposed Excludes WorkInProgress(WIP) All assetperformanceindicatorsarecalculatedusingclassesidentifiedintheprevioustable. to bringassetsasatisfactorystandard. to usetheestimatedcostoffullyrenewinginfrastructureassetsassessedbeincategory5(verypoorcondition)as As thereisnostandardindustrypracticeforidentifyingtheestimatedcosttobringassetsasatisfactorystandard,Councilhaselected Council includes"Landimprovements–depreciable"asanassetclassintheseratios Council 2 Meeting * 4 1 - 30 November Amounts 1,177,975 1 763,332 2020 30,646 10,254 10,044 30,646 25,269 20,045 2020 (continued) Minutes Indicator 97.95% 79.33% 2.60% 4.01% 2020 3 121.48% 95.35% 6.24% 3.77% 2019 Prior periods North SydneyCouncil AnnualReport2019/20 199.63% 107.92% 6.77% 4.10% 2018 233.52% 99.53% 0.00% 0.00% 2017 Attachment 8.3.1 Special Schedules2020 Benchmark >=100.00% >100.00% <2.00% Page Page 9of10 187 190 of 183 Attachment 8.3.1 Page 10 of over the last two years. Special Schedules 2020 replacement cost of our 19/20 ratio 2.60% Ratio achieves benchmark Ratio is outside benchmark backlog from increasing. 19/20 ratio 97.95% Commentary on result Commentary on result allocating sufficient funds to the indication that Council has been maintenance of its infrastructure While this ratio was again slightly community's agreed service level was estimated to be $30.6 million. assets to prevent the infrastructure below the benchmark in 2019/20, it This represented 2.6% of the gross has been at or about the benchmark Council's infrastructure assets to the every year since 2013/14. This is an As at 30 June 2020, the cost to bring infrastructure, a gradual improvement Asset proportion of snapshot of the service level backlog growing. and stewardship. the infrastructure Cost to bring Council is investing above 1.0 indicates total value of assets outstanding renewal This ratio provides a under Council's care Compares actual vs. maintenance. A ratio enough funds to stop required annual asset assets to agreed works compared to the maintenance ratio > 100.00% ― Asset maintenance ratio Benchmark: Source of benchmark: Code Accounting Practice and Financial Reporting #28 Cost to bring assets agreed service level our infrastructure. 19/20 ratio 4.01% Ratio achieves benchmark Ratio is outside benchmark Ratio achieves benchmark Ratio is outside benchmark 19/20 ratio 79.33% Commentary on result Commentary on result commitment to ensuring that $11.3 million reduction to the benchmark for first time since at which they are depreciating. of depreciation in 2019/20 and revealed the condition of some $30.6 million, which represents replacement and renewal of our the backlog was estimated to be to these assets has resulted in an 2013/14. Council has an ongoing assets to be worse than previously Sydney Olympic Pool complex has sufficient funds are allocated to the number of infrastructure categories 4.01% of the net carrying amount been revised. This necessitated the thought, increased funding allocated a corresponding improvement in this resulted in this ratio falling below the infrastructure backlog in 2019/20 and After condition audits conducted on a infrastructure assets to offset the rate charging of an additional $6.1 million Prior to its closure for redevelopment ratio. Nevertheless, at 30 June 2020, in 2020/21, the useful life of North a Council’s infrastructure. are depreciating. backlog ratio (continued) infrastructure Infrastructure renewals ratio Buildings and To assess the rate at This ratio shows what being renewed relative which these assets are against the total value of to the rate at which they proportion the backlog is >= 100.00% < 2.00% ― ― North Sydney Council Report on Infrastructure Assets as at 30 June 2020 §Note/Subtotal§ Buildings and infrastructure renewals ratio Benchmark: Source of benchmark: Code Accounting Practice and Financial Reporting #28 Infrastructure backlog ratio Benchmark: Source of benchmark: Code Accounting Practice and Financial Reporting #28
184 North Sydney Council Annual Report 2019/20 Page 188 of 3738th Council Meeting - 30 November 2020 Minutes 190 North Sydney Council Special Schedules 2020
Report on Infrastructure Assets (continued) as at 30 June 2020
§Note/Subtotal§
Buildings and infrastructure renewals ratio Asset maintenance ratio
Buildings and Commentary on result Commentary on result Asset infrastructure maintenance ratio renewals ratio 19/20 ratio 79.33% 19/20 ratio 97.95%
Prior to its closure for redevelopment in 2020/21, the useful life of the North Sydney Olympic Pool complex has While this ratio was again slightly been revised. This necessitated the Compares actual vs. below the benchmark in 2019/20, it charging of an additional $6.1 million required annual asset To assess the rate at has been at or about the benchmark of depreciation in 2019/20 and maintenance. A ratio which these assets are every year since 2013/14. This is an resulted in this ratio falling below the above 1.0 indicates being renewed relative indication that Council has been benchmark for first time since Council is investing to the rate at which they allocating sufficient funds to the 2013/14. Council has an ongoing enough funds to stop are depreciating. maintenance of its infrastructure commitment to ensuring that the infrastructure assets to prevent the infrastructure sufficient funds are allocated to the backlog growing. backlog from increasing. replacement and renewal of our infrastructure assets to offset the rate at which they are depreciating.
Benchmark: ― >= 100.00% Ratio achieves benchmark Benchmark: ― > 100.00% Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
Infrastructure backlog ratio Cost to bring assets to agreed service level
Commentary on result Cost to bring Commentary on result Infrastructure assets to agreed backlog ratio 19/20 ratio 4.01% service level 19/20 ratio 2.60%
After condition audits conducted on a number of infrastructure categories revealed the condition of some assets to be worse than previously This ratio provides a As at 30 June 2020, the cost to bring thought, increased funding allocated snapshot of the Council's infrastructure assets to the This ratio shows what to these assets has resulted in an proportion of community's agreed service level proportion the backlog is $11.3 million reduction to the outstanding renewal was estimated to be $30.6 million. against the total value of infrastructure backlog in 2019/20 and works compared to the This represented 2.6% of the gross a Council’s a corresponding improvement in this total value of assets replacement cost of our infrastructure. ratio. Nevertheless, at 30 June 2020, under Council's care infrastructure, a gradual improvement the backlog was estimated to be and stewardship. over the last two years. $30.6 million, which represents 4.01% of the net carrying amount of our infrastructure.
Benchmark: ― < 2.00% Ratio achieves benchmark
Source of benchmark: Code of Accounting Practice and Financial Reporting #28 Ratio is outside benchmark
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North Sydney Council, 200 Miller Street, North Sydney NSW 2060 Telephone (02) 9936 8100 | Email [email protected] www.northsydney.nsw.gov.au
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