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Minutes – Finance & Administration Committee – 17/6/02 #451243 – 1/59/1-01

CAIRNS CITY COUNCIL

MINUTES

MEETING: FINANCE & ADMINISTRATION COMMITTEE

MONDAY, 17th June 2002

COMMENCING AT 4 PM PRESENT Councillor A Blake (Chairperson) Councillor M Gill Councillor J O’Brien Councillor M Cochrane Councillor P Gregory

APOLOGY: His Worship the Mayor Cr K Byrne Councillor A Sheppard OFFICERS:

D Farmer Chief Executive Officer J Scarini General Manager Corporate Services P Tabulo General Manager City Development J Howard General Manager Corporate Strategy

C Teitzel Manager Financial Services C Crane Manager Information Services L Kirchner Manager Legal & Administration G Schofield Manager Media & Public Relations G Connelly Minute Secretary

OBSERVERS:

Councillor D Ford Councillor F Lindsay

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The Chairperson, Cr Blake opened the meeting.

1. PROJECT STATUS REPORT – SYSTEMS IMPROVEMENT PROJECT IMPLEMENTATION (SIP II) ............................................................ 1

Ian Cowan : 1/51/39-01: Doc #370592 v8

RECOMMENDATION: GREGORY / GILL That the status report for May 2002 on the Systems Improvement Project Implementation (SIP II) be noted. carried

INTRODUCTION: This is the ninth status report on the implementation of the recommendations from the Systems Improvement Project and covers work undertaken in the month of May 2002.

BACKGROUND: Recommendations were made to Council in August 2001 on work to be undertaken to improve Council’s current suite of systems and work commenced on the improvements in September 2001.

COMMENT: Activities completed as at end of May:

• Study Tour for Project Team members.

• Review Structure of Chart of Accounts and Method of Reporting and Recording Costs.

• Scoping Study for Oracle Financials products.

• Design and Implement Works Costing

• Implement accruals and committals across the Mat-man and Oracle Financial products

• Partial shutdown of ICP (Interim Costing Process) - (Full shutdown will occur in conjunction with the second phase of the COIL interface)

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Activities with work in progress during the month of May:

• Design and Implement works Costing – During May there was on-going monitoring and support of changes made to systems and processes which occurred in April.

• Implementation of Mat-Man cardSmart – All testing of software and downloads was completed. The policy relating to use of purchase cards was reviewed and recommendation of changes to reflect the use of the new system will be placed before Council.

• Intercompany Accounting – Work has continued on the preparation of a separate set of books for accounting for Cairns Water, utilising Council’s Oracle Financials application. A commencement date of 1 July 2002 is expected to be achievable.

• Timesheet capture and interface – The first phase (labour component) of the COIL interface (COIL = CHRIS to Oracle Interface Link) continued to operate as expected. Development of the second phase (fleet component) was completed and rigorous testing has been carried out. The second phase will be implemented from 1 July 2002.

• Implementation of CHRIS Kiosk – Some testing has occurred during May but further testing is required, together with some data-cleansing of the CHRIS database.

Activities deferred until next financial year: • Migrate CHRIS to an Oracle Platform.

• Oracle Projects – improve setup and operation. As reported last month, these activities will be deferred until after the Oracle 11i upgrade has been undertaken.

CONSIDERATIONS: Financial: The financial position at the end of May was Recurrent Capital

Budget (9 month review) $505,258 $144,000

Funds expended $344,467 $89,132

Funds committed $10,426 $21,026

Total $354,893 $110,158

All other considerations were reviewed and deemed not applicable.

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CONCLUSION: Work continues to progress all activities. The team is being managed to deliver the project milestones.

2. SERVICE ARRANGEMENTS OVER THE CHRISTMAS PERIOD ....... 4 Jo-Anne Scarini : File No. 1/58/15-01: Doc # 450379

RECOMMENDATION: GILL / GREGORY That Council staff be encouraged to take leave from their accrued leave entitlements on the following days during the Christmas / New Year period: Friday 27 December, Monday 30 December, Tuesday 31 December. A small number of Customer Service staff be rostered to work during this period on all normal working days. Appropriate arrangements ensuring continued access to library and other community facilities be put in place and any changes to normal operation be advised to the public. Other essential staff be rostered on an ‘on-call’ basis during this time. carried

INTRODUCTION: Council operated a skeleton staff over the Christmas New Year period last year and this report recommends the timing and arrangements to apply to a similar shutdown this coming year.

BACKGROUND: The public holidays over the Christmas / New Year period fall as follows: Monday December 23, normal working day Tuesday December 24, normal working day Wednesday December 25, Christmas Day, gazetted Public Holiday Thursday December 26 Boxing Day, gazetted Public Holiday Friday December 27, normal working day

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Monday December 30, normal working day Tuesday December 31, normal working day Wednesday January 1, New Years Day, gazetted Public Holiday

COMMENT: Following the Christmas closedown that occurred last year with minimal disruption to services, the following recommendations are made for service arrangements over the coming Christmas period. The official close date for Council will be Tuesday the 24th December. It is intended that staff will be encouraged to take Annual Leave or Rostered Days Off for the days Friday December 27th, Monday December 30th, and Tuesday December 31st. All services will resume normal activity on Thursday the 2nd January 2003. A small number of Customer Service operators will be required to staff the Customer Service Centre of Council on these days, allowing Council to provide continuity of service to the general public during this period. Other officers that may be required during this time, will operate on an ‘on-call’ basis. Appropriate arrangements will be put in place to ensure that adequate access to library and other community facilities exists over the Christmas/New Year period and the public are notified of any changes to normal operating hours. The following table provides a summary of these activities.

Mon 23rd

Tue 24th

Wed 25th

Thur 26th

Fri 27th

Sat 28th

Sun 29th

Mon 30th

Tue 31st

Wed 1st

Customer Services

√ √ Χ Χ √ Χ Χ √ √ Χ

City Library √ √ Χ Χ √ √ Χ √ √ Χ Other Libraries √ √ Χ Χ √ Χ Χ √ √ Χ CairnsWater √ √ Χ Χ √ √ √ √ √ √ After Hours Service

√ √ √ √ √ √ √ √ √ √

CONSIDERATIONS: Policy: Consistent with leave policies, staff will be encouraged to take leave entitlements due. Financial: There are no financial implications of this recommendation. Social: Support should be provided to employees to spend as much time as possible with friends and family over this period, while still ensuring adequate resources are in place to address matters of an urgent nature.

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Appropriate access to library and other community facilities must be maintained over this period.

OPTIONS: An alternative to the above would be to encourage staff to attend work over this period. This would be expected to be counter productive as this time of year is traditionally very slow.

CONCLUSION: That Council staff be encouraged to take leave from their accrued leave entitlements over the Christmas / New Year period for the days of Friday 27th December, Monday 30th December and Tuesday 31st December. A number of Customer Service staff be rostered to work during this period on all normal working days. Other essential staff be rostered on an ‘on-call’ basis during this time.

3. MEDIA AND PUBLIC RELATIONS BRANCH MONTHLY REPORT.... 7 Gary Schofield : 1/60/1-03 #449987

RECOMMENDATION: O’BRIEN / COCHRANE That the report of the Media and Public Relations Branch for the month of May be received and noted. carried

4. CORPORATE SERVICES MONTHLY REPORT FOR MAY, 2002..... 13 Jo-Anne Scarini:TL : 1/58/15-01: #446954

RECOMMENDATION: GREGORY / GILL That the report of the Corporate Services Division for the month of May be received and noted. carried

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5. FINANCIAL STATEMENTS PERIOD ENDED 31 MAY 2002 ........... 30 Christopher Teitzel:FZ 17/49/9-02: #449773

RECOMMENDATION: O’BRIEN / COCHRANE That this report be adopted by Council. carried

INTRODUCTION: Attached in Agenda are the financial statements for the month ended 31 May 2002. Actual amounts are compared against the 9 month budget results adopted by the Finance and Administration Committee. These financial statements include:

- Statement of Financial Performance - Statement of Appropriation - Statement of Financial Position - Cash Flow Statement - Capital Funding Statement

Divisional statements are included in this report to provide information on the performance of each division for the month of May 2002. The statements are for Cairns City Council only and do not include the Cairns Regional Gallery Ltd.

COMMENT: STATEMENT OF FINANCIAL PERFORMANCE A net result from ordinary activities of $14.58m is experienced due to: Revenue from ordinary activities is $120.1m, which is 0.4% greater than the budget of $119.6m. This is caused, in the main, by the following:

• An issue of supplementary rates in May greater than forecast and less

discounts taken than budgeted ($166k).

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• An increase ($420k) in fees and charges. Due mostly to increases in fees and charges received in the divisions of City Development and Cairns Water. These include subdivision fees, building regulation fees, plumbing approvals, water meter reading fees and water laboratory sampling. The Divisional reports for these areas detail the exact nature of this revenue.

• A decrease in government grants, subsidies and contributions ($112k) is the net

effect of the following: The recurrent grants for the community jobs program ($146k) is

not expected to be received due to the decline in utilisation of trainees.

A delay in the receipt of the recurrent grant for the application of National Competition Policy ($300k) for 2001/2002.

An increase in recurrent developer contributions for water and wastewater for the period to date.

• A decrease of ($154k) in other income received is the net result of the following:

A delay in the lodging of claims for RMPC works completed. A delay in the rectification works on Lake Morris Road has resulted

in no claims being made to date.

Expenses from ordinary activities and borrowing costs are $105.5m which is 2.9% lower than the budget of $108.6m which is due primarily to the employee costs and materials and services category. • This is mainly due to timing variances of actual expenditure as compared to budget

by the various Divisions. The Divisional reports address these variances in detail. Most Divisions expect to utilise this by the end of the financial year. However the division of City Works and Services needs to monitor their budgets closely to ensure there are no overruns by the end of June due to Lake Morris Road repairs.

• A liability of $808,000 has been taken up in the Corporate Services Division in the

month of May for the repayment of the CSR Ltd developer contributions credit. This was not budgeted for as part of the 9 month budget review.

CAPITAL FUNDING STATEMENTS Capital works expenditure to date totals $25.9m, plus committed funds of $15.6m which brings a total of $41.5m expenditure to date. This represents 96% of the total approved capital works of $43.0m. Of the total expenditure, only 11% of projects are funded via reserves, 31% is funded via grants, 2% is funded via loans and 56% is funded via revenue. CASH INVESTMENTS Cash invested as at the end of May 2002 is $49.8m (May 2001 $41.9m). QTC currently holds 67% of the total invested funds and 6% with AMP and 27% with BT. QTC still yields the highest interest rate amongst these funds, being 4.65%.

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LOAN BORROWINGS QTC Loan balance at the end of the period is $102.1m (May 2001 $112.5m), of which $861,766 was paid during the month. Based on the recent assessments issued, the borrowing per assessment is $1,922 per assessment, compared to $2,111 per assessment in May 2001, a reduction by 9% from the same period last year. Of the total debt pool that these various loans are held, $2.6m are expected to be repaid in 3 years and $99.5m are expected to be repaid in 6 years. As at the end of May, the capacity of Council to service its outstanding debt based on the operating revenue earned is 15% representing debt servicing and redemption cost to total revenue as a proportion, Council’s exposure to debt is 11% representing total liabilities to total assets as a proportion.

CONCLUSION:

• Council will need to continue to monitor its performance to ensure that the budget is delivered as originally intended.

• Council will need to continue its stringent debt recovery and monitoring of cash balances.

• Council is in the process of finalising the 2002/2003 budget. Budget will be adopted by Council 21 June 2002.

All other considerations were reviewed and deemed not applicable.

6. CAIRNS REGIONAL GALLERY BUSINESS PLAN.......................... 58 Linda Kirchner: 10/13/4-05: #446796

RECOMMENDATION: COCHRANE / O’BRIEN That the Cairns Regional Gallery Business Plan be noted. carried

INTRODUCTION: As indicated in previous reports to Council, a Business Plan for the Cairns Regional Gallery 2002/2003 is required to be tabled at a Council meeting. That Plan has now been completed and a copy is attached for Council consideration.

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BACKGROUND: The Plan details the Role of the Gallery, it’s Vision, Mission and Values, Critical Success Factors, how the gallery operates within the region, and some detail on the arts and cultural development in the region. The plan highlights the challenges ahead for the next twelve months but also acknowledges the positive influences of the Board of the Directors and the Friend of the Gallery.

COMMENT: The Gallery Director has confirmed that work on the revised Articles of Association and the Memorandum of Association is progressing and that the final draft will be considered at the June Gallery Board meeting. It is therefore anticipated that these documents will be tabled at the June Ordinary meeting of Council.

CONSIDERATIONS: Statutory: The new Articles are being prepared to meet the requirements of the Corporations Law and the Queensland Audit Office. Policy: Preparation of the Business Plan is in accordance with 2002 – 2005 Funding and Performance Agreement between Council and Cairns Regional Gallery Limited. Financial: This Council has agreed to an annual budget allocation of $620,000. Social: The ongoing support by Council of the Regional Gallery will ensure the continued operation of this facility for the enjoyment of the local community and visitors.

CONSULTATION: The Mayor and four Councillors are currently members of the Board.

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OPTIONS: Council simply needs to note this Business Plan.

CONCLUSION: It is recommended that Council note the Gallery Business Plan 2002/2003.

7. CORPORATE STRATEGY DIVISION MONTHLY REPORT ............147 John Howard : 1/3/83-01: #450604 v1

RECOMMENDATION: GREGORY / COCHRANE That the report of the Corporate Strategy Division for the month of May be received and noted. carried THIS MATTER WAS DEALT WITH IN THE CLOSED SESSION OF THE FINANCE AND ADMINISTRATION COMMITTEE MEETING BUT BROUGHT TO THE OPEN SESSION FOR THE ORDINARY MEETING

4. PREJUDICAL MATTER - THE MAYORESS OF CAIRNS COMMUNITY CHEST FUND (THE TRUST)........................................................... 21

Linda Kirchner: 1/3/26-01-01#429493

RECOMMENDATION: GILL / COCHRANE 1. That Council resolve to adopt the position of ‘Trustee’ for the purpose of

administrating the Trust. 2. The Council resolve to adopt the Deed of Variation for the Administration of

the Trust.

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3. That Council resolve to delegate the powers of administration of the Trust to

the Chief Executive Officer and Mayor. 4. That Council resolve to submit an application to the Australian Taxation

Office for “benevolent” status. carried

INTRODUCTION: The Mayoress of Cairns Community Chest Fund was established in October 1993 to provide financial scholarships through its fundraising activities. The scholarships were distributed to Cairns youth for higher education pursuits. A review of Trust Act, Local Government 1993 Financial Guidelines and the Charitable Funds Act 1958-90 has been undertaken to ensure that the Trust operations are efficient and effective.

BACKGROUND: Under the current arrangements, Council officers provide administrative / financial services for the Trust and the monies raised are held by Council in a general trust. This has GST implications for Council. The current trustees are Amanda Byrne, Mayoress of Cairns, exofficio; Councillor Annette Sheppard; Mr Robert Furlong; and Mr Kevin Maher. The review has indicated that, under the Trust Act, there are two options for the operation of the Trust: 1. The Trust continue in its current form but the administrative / financial services are

sourced externally and the funds no longer managed through Council’s Trust account.

2. Council to assume the role of Trustee with an Executive Committee being

appointed to undertake the works of the Trust. This option enables Council to continue to assist with Trust Operations, thus maximising the available funds for distribution to worthy students.

Council has obtained legal advice on current operational arrangements and a draft Deed of Variation has been prepared (see attachment). The purpose of the Deed of Variation is to legally transfer the role of Trustee to Council, and to define the functions of the Executive Committee. Managing the Trust operations through the Executive Committee will achieve the requirements of the Trust Act and ensure accountability to the Cairns community.

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COMMENT: It is proposed that the Mayor and the Chief Executive Officer be authorised to administer the Trust and therefore Executive Committee activities. The Deed of Variation prescribes: • that the Executive Committee will consist of representatives from benevolent

organisations; • that records of the quarterly meetings of the Executive Committee will be made

available to the Chief Executive Officer for review; and • a documented procedure for expenditure / distribution of the funds raised by the

Committee. Execution of the Deed of Variation will require the signature of the current Trustees, which will effect their resignation. However, should they wish, they could nominate for membership on the Executive Committee.

CONSIDERATIONS: Statutory: The proposed changes are in accordance with the Trust Act 1973, Local Government 1993- Financial Guidelines and the Charitable Funds Act 1958-90. Policy: The proposed changes reflect Council’s Corporate Plan objective of “giving the community access to open, accountable decision making in a consistent and congruent manner”. Financial: Under the proposed changes a separate bank account will be established for the Trust in accordance with the Trust Act’s requirement for an independent bank account. The Trust has previously applied to the Australian Taxation Office for exception on the basis of benevolent status. This was not successful because the ATO ruled that gifting of moneys to students for educational purposes was invalid for taxation exemption. It is proposed that Council as the new trustee resolve to reapply for taxation exemption. Should this be unsuccessful, Council may wish to consider using an existing benevolent organisation, such as the Far North Queensland Youth Assistance Fund for tax deductibility for specific fund raising events. Approximately forty organisations in Cairns currently use the Youth Assistance Fund in this manner for Charity Events.

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The proposed changes will require Council resources (administration and financial expertise) to continue to assist with the day to day operation of the Trust. However, the new arrangements will accord with statutory financial management requirements. Social: The proposed arrangements will enable Council to better assist the youth of Cairns by providing a robust systems for management of Trust activities.

CONSULTATION: The proposed arrangements have been discussed with the Mayoress of Cairns City Council and the Manager Financial Services. It is proposed that if Council resolves to proceed with the Deed of Variation that the Chief Executive Officer or his delegate explain Council’s intentions to the remaining trustees so that the Deed of Variation can be ratified.

OPTIONS: If Council does not proceed, the Mayoress of Cairns Community Chest Fund operations will not meet the requirements of the Trust Act and Council’s involvement in the financial management of the Trust will be in conflict with the Local Government 1993 Financial Guidelines. CONCLUSION: The proposed course of action will consolidate the operations of the Trust and therefore Council’s ability to assist the youth of Cairns.

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CLOSED SESSION O’BRIEN / COCHRANE COUNCIL RESOLVE INTO CLOSED SESSION TO DISCUSS CERTAIN MATTERS FOR THE REASONS LISTED IN THE AGENDA AND NOTED ON THE RESOLUTIONS SUBSEQUENTLY RECORDED carried OUT OF CLOSED SESSION O’BRIEN / COCHRANE COUNCIL RESOLVE TO MOVE OUT OF CLOSED SESSION carried RESOLUTIONS ARISING FROM THE MATTERS DISCUSSED IN CLOSED SESSION

1. BUDGETARY MATTER - RATES AND CHARGES – REQUEST TO ALLOW DISCOUNT .......................................................................... 1

Christopher Teitzel : 17/49/9-03: #450167

RECOMMENDATION: COCHRANE / O’BRIEN That the property owners of Assessment #398438 and Assessment #247460 be advised that their respective requests have been reviewed and discount will not be allowed, but that an amount equivalent to the discount and interest that has since been charged be credited to the rates assessments for Assessment #398438 being $210.64 and Assessment #247460 being $338.35. The amendment became the motion and was carried

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2. BUDGETARY MATTER – OUTSTANDING DEBT REPORT...............................10 Trevor Hazell:FZ: 19/23/1-10: #446892

RECOMMENDATION: COCHRANE / GILL That this report be noted. carried

3. BUDGETARY MATTER – WRITE-OFF UNRECOVERABLE DEBT ...................17 Trevor Hazell:FZ 19/23/1-08 : #444786

RECOMMENDATION: COCHRANE / GREGORY It is recommended that the following debts amounting to $29,398.06 be approved for write-off. Account No. Amount 41031.72 $1,209.62 5551669 $985.15 Assessment No. 397778 $1,897.97 260877 $25,305.32 TOTAL $29,398.06 carried THE MEETING CLOSED AT 4.45 PM

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