Freo's View

CITY SAYS FREMANTLE FINANCIALLY SOUND

Posted in city of fremantle, economy, finances, local government, Uncategorized by freoview on January 11, 2020

 

The City of Fremantle commented on yesterday’s blog post about the City’s financial situation, so here it is:

Clarification of City of Fremantle audit report

The City of Fremantle has received an unqualified audit report from the Office of the Auditor General for the 2018-19 financial year, which means the Auditor General identified no concern in relation to the way the City presented its financial statements.

The Auditor General did identify an adverse trend in the City’s Operating Surplus Ratio. This was specifically as a result of the sales of 12 Josephson Street and Tappers St Mews, which did not realise their ‘book’ value.

12 Josephson Street was sold on the open market as part of a program to sell under-utilised assets and make them available for redevelopment. The sale of that property has paved the way for the development of Perth’s first timber-framed office building which will result in more people working, and hopefully living, in Fremantle, which in turn will mean more customers for local businesses and more rates revenue for the City.  

The Tappers St Mews property was sold to not-for-profit social housing provider Foundation Housing last year. A restriction on the title of the property prevented it from being sold for private purposes, and therefore at the private market rate.

The sale of the property for less than the private market rate will allow Foundation Housing to continue to operate the property as viable social housing, which delivers a significant social benefit to the Fremantle community.

As a consequence of these sales not achieving their book value the City recorded a non-cash loss result. The Operating Surplus Ratio was negatively impacted by these book losses.

In relation to the Operating Surplus Ratio, Department of Local Government guidelines recommend local governments maintain a surplus between 1 and 15 per cent, which would provide a buffer against unforeseen financial shocks. The City’s result was less than 1 per cent off this guideline.

The City of Fremantle has always maintained the view that it is not prepared to increase the impost on ratepayers to build a surplus that most likely won’t be called upon. The City prefers to manage any unforeseen financial events within its current budget parameters.

Unlike many other local governments, the City generates about 90 per cent of its revenue. We don’t rely on state government grants or other external sources of funding for operational activities so therefore we have greater control over our budget.

The City remains confident that it is in a sound financial cash position and will continue to manage provision of services to the community and its renewal agenda within current budget levels. To illustrate this, the cash position for year ending 30 June 2019 as per the rate setting statement was a surplus of just under $5 million.

 

Roel Loopers

SIGNIFICANT ADVERSE TREND IN FREMANTLE’S FINANCES

Posted in city of fremantle, economy, finances, local government, Uncategorized by freoview on January 10, 2020

 

I copy the below the City of Fremantle’s annual report audit from the agenda of the Fremantle Council committee meeting to be held on Monday the 13th of January.

SUMMARY

The audit of the City of Fremantle annual financial report for the year ending 30 June 2019 has been completed by the Office of the Auditor General (OAG) and Council has been provided with an independent auditor’s report.The City has received an unqualified audit report. In the opinion of the Auditor General the financial report of the City of Fremantle fairly represents the results of the operation of the City and its financial position for the year ending 30 June 2019. This report recommends that the independent auditor’s report be received and the audited financial report with full set of financial statements for the financial year ending 30 June 2019 be adopted

The concluding (exit) audit meeting took place on Thursday 5 December 2019 and was attended by Vince Turco and Efthalia Samaras from the Office of the Auditor General along with the Auditors from Moore Stephens, City of Fremantle Mayor, Acting Chief Executive Officer, Director City Business and Manager Finance.

At this meeting the Audit Concluding Memorandum was discussed. This report is attached for the Committee’s review as a confidential attachment, the key outcomes are: Recommended to the OAG to issue and unmodified opinion on the audit of the City’s financial report. Noted a significant adverse trend in the financial position of the City. The Operating Surplus Ratio has been below the Department Local Government, Sport and Cultural Industries (DLGSCI) threshold for the past 2 years, with the current year ratio also being below the previous year. Did not identify any non-trivial uncorrected audit differences or any significant deficiencies in internal controls.

CONSULTATION OFFICER COMMENT

Council has completed its annual financial statements for the year ended 30 June 2019 and received an unqualified audit report. The Auditor General has issued an independent auditors report.The City received an unqualified audit report.

In the opinion of the Auditor General the annual financial report of the City:(i)Is based on proper accounts and records; and(ii)Fairly represents, in all material respects, the results of the operations of the City for the year ended 30 June 2019 and its financial position at the end of that period in accordance with the Local Government Act 1995 (the Act)and, to the extent that they are not inconsistent with the Act, Australian Accounting Standards.

The independent auditor reported in their opinion the following material matter indicates a significant adverse trend in the financial position of the City: The Operating Surplus Ratio has been below the Department of Local Government, Sport and Cultural Industries standard for a second year, with the current year ratio also being below the previous year.The financial ratios are reported at Note 36 to the annual financial report on page 71.The DLGSCI operational guideline 18 on financial ratios defines the operating surplus ratio as a measure of a local government’s ability to cover its operational costs and have revenues available for capital funding or other purposes.

The guideline sets the basic standard as met with a ratio result between 0.01 and 0.15. An advanced standard is met with a ratio result above 0.15. The ratio results for the last 3 years have been: The adverse trend result for 30 June 19 was due to an additional $4m in one-off operating expenditure which reduced the overall net result (and therefore increased the operating deficit) made up of:1.Sale of Tapper St Mews –Loss on asset disposal of $2.43m2.

Fair value adjustment to assets held for resale 12 Holdsworth St and 12 Josephson St –Loss on fair value adjustment of $1.57m

By removing the above one-off items the adjusted operating surplus ratio for 30 June 19 would be (0.02), the same as the previous year.

The agenda is available on the City of Fremantle website

Roel Loopers

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FREMANTLE ARTS GRANTS UP FOR GRABS

Posted in art, city of fremantle, finances, local government, Uncategorized by freoview on August 21, 2018

 

ARTS & COMMUNITY GRANTS ALERT/GRANT WRITING WORKSHOPS!

These grants aim to provide financial assistance in support of activities contributing to the wellbeing, vibrancy, and cultural diversity of Fremantle.

The next round of arts and community grant funding will open from 9:00am 4 September 2018. Applications close 5:00pm 27 September 2018.

If you would like help writing your grant application the City is running community workshops.

Tuesday 4 September, 10:00am to 11:00am at North Fremantle Community Centre
Tuesday 4 September, 6:00pm to 7:00pm at Fremantle Library
Wednesday 5 September, 10:00am to 11:00am at Sullivan Hall, White Gum Valley
Thursday 6 September, 6:00pm to 7:00pm at North Fremantle Community Centre
Friday 7 September, 10:00am to 11:00am at The Meeting Place, South Fremantle
Wednesday 12 September, 9:30am to 10:30am at Fremantle PCYC, Hilton.

Book your place by emailing grantfunding@fremantle.wa.gov.au

For more information on the grant process
https://www.fremantle.wa.gov.au/commu…/arts-community-grants

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FREMANTLE LOSES OUT ON $ 2 MILLION IN RATES ANNUALLY

 

When the Western Australian state government complains about the unfairness of the GST distribution, they might want to also have a think about the unfairness to some local governments, like Fremantle, regarding the local council rates exemptions for all kinds of institutions.

It costs the City of Fremantle estimated over $ 2 million annually, which is a big amount for a city with a small ratepayers’ base. We don’t know the exact figures because the Valuer General’s office does not provide councils with property values where there is no need.

But according to City of Fremantle figures we lose out on $ 707,000 from Notre Dame University, $ 210.544 from crown properties, $ 98,992 from places of worship, $ 24,085 from schools/educational, $ 630,819 from charities and $ 54,846 from others/written law/acts.

The above figures are not complete as they do not include the large TAFE site in Beaconsfield and others which are exempt from paying local government rates. The City also does not get rates from Fremantle Ports.

So maybe it is time the State Government compensated affected local councils for state laws that financially disadvantage them considerably.

Roel Loopers

FREMANTLE GOVERNANCE COST TRANSPARENCY

Posted in budget, city of fremantle, finances, local government, Uncategorized by freoview on July 31, 2018

 

Governance

 

I always try to keep the words balance and respect in mind when I publish a blog post, so I am happy to now post the reply by the City of Fremantle here in regard to the question I asked on the weekend about what the GOVERNANCE expenditure in the budget was for. Here it is:

Regarding what is included in the $47 million figure under ‘governance’ in the capital expenditure chart in the rates booklet – the vast majority of that ($46.3 million) is the allocation towards the new Kings Square administration and library building.

It also includes $504,500 towards the purchase of our current admin building from the Dockers and $105,000 for the new parking app.

The rest is for things like office furniture, telecommunications equipment, IT equipment (like PC’s, tablets, printers and accessories) fixed and wireless internet etc.

 

Roel Loopers

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FREO’S $ 47 MILLION GOVERNANCE COST

Posted in budget, city of fremantle, finances, local government, Uncategorized by freoview on July 28, 2018

Governance

 

Two very large sums of expenditure  in the budget for the City of Fremantle, but what really is governance?

Employee costs are a whopping $ 37,809.270 but then there is also $ 47,083.216 costs for governance.  Surely our 13 Elected Members don’t get that much, so what is the money for, or is it just a way of hiding more staff costs?

Please explain CEO Phil StJohn. Thank you!

 

Roel Loopers

 

Henty's

 

FREMANTLE’S HEALTHY FINANCIAL RATING

Posted in budget, city of fremantle, economy, finances, local government, Uncategorized by freoview on June 22, 2018

 

The financial management of the City of Fremantle was strongly criticised by some in our community when it was rated only 42 by the My Council state government website for 2015/16, so for what it is worth, Fremantle has climbed substantially and was rated 87 for the 2016/17 financial year. It was at 79 in 2014/15.

Roel Loopers

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FIVE MILLION DOLLAR PRESENT FOR FREMANTLE?

Posted in budget, city of fremantle, finances, local government, Uncategorized by freoview on May 26, 2018

 

It’s always good to start the weekend, especially a wet and stormy one, with good news about Fremantle, even if that news is so far only a rumour on the grapevine, but I expect Freo City to officially confirm it next week.

So what’s the good news? The City has received an unexpected and very welcome $ 5 million present, I hear from my always reliable sources, so where did the money come from and what will it be spent on?

I don’t believe they won Lotto or went to the casino, and I strongly reject the nasty thoughts that the present comes from Sunset Events. ; >)

The Fremantle Roundhouse volunteers are in need of only $ 200,000 for new interpretive historic displays, so make that a priority please Fremantle Council! Thank you in advance.

Roel Loopers

FREMANTLE FINANCIALLY SOUND SAYS MINISTER

Posted in city of fremantle, development, economy, finances, Uncategorized by freoview on September 20, 2017

 

I am not a big fan of publishing media releases by Freo City, or anyone else for that matter, but this one about the City of Fremantle’s financial situation is very important, especially during the local government election campaign, where some people claim Freo is going broke because of its investment in the Kings Square Project and selling city assets.

The City of Fremantle has received clarification from the Minister for Local Government over the City’s risk profile.

The City wrote to the Minister, David Templeman, in August after it was identified as being “high risk” in a response to a question in State Parliament.

The City’s risk profile was based on reporting from the 2015/16 financial year, where it recorded an unusually low Financial Health Indicator (FHI) score due a number of factors including a change in accounting methodology.

In his reply the Minister said he accepted information from the City’s auditors that, subject to final audit, the City of Fremantle’s 2016/17 FHI score will restore to approximately 85.

For the MyCouncil website and the Department of Local Government’s risk profile an FHI score of 70 and above indicates sound financial health.

The Minister also said he had asked his Department to review the way it communicates its risk profile process to avoid potential misunderstandings in the future.

CITY OF FREMANTLE FINANCES SOUND

Posted in city of fremantle, economy, finances, Uncategorized by freoview on August 11, 2017

 

A small article in today’s West Australian reported that David Templeman, the Minister for Local Government, had announced that 15 per cent of, or 22 local councils in W.A. were considered to be high risk by the department.

They include the City of Perth, Fremantle, Kalgoorlie, Exmouth, Derby, Carnarvon, etc. but the article did not go into detail as to why these councils are judged to be high risk.

The claim about Fremantle’s finances has been made before, and rejected by the City, but I thought it would be prudent to ask them for a comment. Here it is:

Today’s page 14 newpaper article in The West Australian: ‘More councils high-risk’ has named the City of Fremantle as being identified by the Department of Local Government as ‘high risk’.

The City assumes it was included in this list due to a one-off low Financial Health Indicator (FHI) score for the 2015/16 financial year. The lower than usual score was caused by a combination of factors including a change in accounting methodology used by the City to simplify the way overhead costs are recorded. This change artificially inflated the year-on-year operating expenditure in 2015/16.

With this anomaly addressed in subsequent budgets, the City’s FHI score will normalise back to its long-term healthy trend when the 2016/17 audit is completed.

In previous reports issued by the Department of Local Government the City of Fremantle has not ever been classified as being in any risk category, let alone a high risk.

The City is independently audited each year and no audit has ever indicated any fundamental issues or problems with the City’s medium or long-term financial viability.

I wonder if it should not be a matter of course for the Department of Local Government to notify local councils of their findings and concerns and offer support to them, and clarify how they reached the findings.

 

Roel Loopers

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