The Western Bay of Plenty District Council has a draft $3.3 million surplus for the 2021 financial year. Photo / Andrew Warner
The Western Bay of Plenty District Council has finished the 2021 financial year with a draft $3.3 million surplus.
The unaudited annual financial result was presented to the Performance and Monitoring Committee last Thursday.
Chief financial officer David Jensen said the surplus was primarily driven through underspends and personnel costs.
"We're all aware of the environment we're operating in," Jensen said.
One of the areas of underspend was the council's operating projects, he said.
"There's been well-publicised difficulties getting money out the door and executing some of those contracts, and that's showing in our surplus."
According to Jensen's report to the committee, total operating expenditure was $104.21 million, $3.02m lower than the full-year budget.
The major variances were the additional level of service projects of $5.66m, which were $4.069m lower than the full-year budget of $9.73m.
Also, personnel costs of $26.78m were $581,000 lower than the full-year budget of $27.37m. The report said this was largely due to the timing of when open vacancies were filled throughout the year.
During the meeting, Mayor Garry Webber said: "As always, the improvement in your balance sheet makes everybody happy".
He warned of the need to include the impact of depreciation in the revaluation of assets that was currently under way.
"When you tell everybody what the valuation brings through you need to advise them of the impact of depreciation.
"That's what you have to swallow at the same time, and it takes a bit of a gloss off it because that will have to be budgeted going forward."
Council staff are working with external valuers to revalue the council's assets to reflect the likely replacement cost as of June 30.
Jensen said, "Ordinarily Council revalues its assets every three years, but with the movements over the last 12 months in construction costs and inflation, we have been requested to go out and revalue all of our assets this year as well."
He agreed with Webber about depreciation.
Councillor James Denyer wanted to know how capital expenditure was proceeding now that lockdowns had ended.
Jensen said the financial achievement of the capital programme was a little over 70 per cent.
"With councils around the country, the average achievement across New Zealand for the last financial year is between 50 and 80 per cent," he said.
"I think Council's [Western Bay] done very well in terms of the experiences of other councils.
"Obviously what happens moving forward will depend on the contractor market.
"There's a lot of things that may be outside Council's control, but we are working very closely with our suppliers to try and do the best we can."
The total capital expenditure of $40.38 million was $22.34 million lower than the full-year budget.
Jensen said financial contributions were "largely on budget" as well, with a "very, very small" underachievement.
He said after speaking to developers and the planning team, it was unlikely the council would achieve the full budget for financial contributions for the 2022 financial year.
Developers had expressed "some concern" around the ability of banks to lend money to people buying new properties, Jensen said.
"Some of the developers are feeling a little gun-shy around releasing new sections onto the market if the banks aren't going to be lending on to consumers.
"So, just some constraint there in the pipeline that we have seen coming for this financial year in terms of new development."
Jensen closed his report to the committee saying the council had met all of its key performance indicators for the year.
"We've done as much as we can, but there are a lot of instances where we haven't been able to spend all of the budgets."
The financial result will now face auditors, as per standard procedure, and then be signed off by the council.
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