Water and Waste Committee - City of Gold Coast€¦ · “That Gold Coast Water establish a standing item on the Water Services Committee Agenda which is a register ... following

779 Adopted Report

of the

Water and Waste Committee Meeting

held on

Tuesday 17 September 2019 at

10 am

City of Gold Coast Council Chambers 135 Bundall Road Surfers Paradise

779th Council Meeting 20 September 2019 2 Water And Waste Committee Meeting 17 September 2019 Adopted Report

Index 779 Adopted Report

Water and Waste Committee Meeting Tuesday 17 September 2019

PRESENTATION: - Green Organics Update

Item Direct. File Page Subject

1 WW CM787/788/06/01(P1) 6 Water and Waste Committee Action List and Forward Planning Schedule

2 WW WSS1125/1227/02(P1) 8 Water and Waste Annual Register of Council Directions

3 WW FN334/252/19(P13) 10

Water and Sewerage Services Performance as at 30 June 2019 Financial Report

4 WW FN334/252/19(P13) 42 Waste Services Financial Performance as at 30 June 2019

General Business

5 WW HL323/455/02(P11) 63 Review of Kerbside Bin Service Area

6 WW HL323/113/01/07(P2) 64 Assisted Household Bin Service

7## WW HL323/113/01/07(P2) 65 Incentives For Existing Green Waste Customers

## Committee Recommendation changed at Council Meeting KEY: OCEO - Office of the Chief Executive Officer OCOO Office of the Chief Operating Officer EPE - Economy, Planning and Environment OS - Organisational Services LC - Lifestyle and Community TI - Transport and Infrastructure WW - Water and Waste

779th Council Meeting 20 September 2019 3 Water And Waste Committee Meeting 17 September 2019 Adopted Report ADOPTION BY COUNCIL 20 September 2019 RESOLUTION G19.0920.020 moved Cr Boulton seconded Cr PC Young

That the Report of the Water & Waste Committee’s Recommendations of Tuesday 17 September 2019, numbered WW19.0917.001 to WW19.0917.007, be adopted with the exception of Recommendation Number WW19.0917.007 which was specifically resolved.

CARRIED UNANIMOUSLY

ATTENDANCE Cr P Taylor (Chairperson) Cr K Boulton Cr R La Castra Cr PJ Young Cr G Tozer Cr PC Young (left meeting at 10:26am) Mr P Heaton Director Water and Waste Mr C Owen Manager Customer Engagement Ms K O’Brien Manager Business Performance Ms M Lenihan Executive Coordinator Waste Strategy APOLOGY / LEAVE OF ABSENCE PRESENTATIONS Green Organics Update Ms M Lenihan – Executive Coordinator Waste Strategy




ITEM 1 WATER AND WASTE WATER AND WASTE COMMITTEE ACTION LIST AND FORWARD PLANNING SCHEDULE CM787/788/06/01(P1)

Proposed Date Subject Action Officers Action

October 2019 Revisit option of Suntown Green Waste pad

Mairead Lenihan / Chris Owen

November 2019 Water Netserv Plan 2019 Kathy Baker / Kim Evans

Council’s approval sought to adopt the Water NetServ Plan (Part A) 2019 and Water Supply and Sewerage Infrastructure Plan 2019.

November 2019 Customer Hardship and Assistance Programs Recommendation: WW18.0823.005

Chris Owen That the Director Water and Waste investigate, along with the rest of Council, the potential framework for improving Customer Hardship and Assistance Programs.

December 2019

Water and Sewerage Leakage Remission Policy Recommendation: WW19.0429.006

Chris Owen That Council notes a revised Water and Sewerage Leakage Remission Policy will be brought to Council for consideration prior to the end of the 2019 calendar year.

December 2019 Damian Leeding Stabilisation Project Paul Heaton Following Video shown in July meeting, Cr Owen-Jones requested Director provide another update in December on how the project has progressed and to provide some photos.

December 2019

Local Government Platform Stage Three Recommendation: WW18.0320.005

Karen O’Brien 2 That Council note that a decision on LGP Stage Three is deferred until February 2019 due to items outlined in this report.

3 That Council note that a Business Case will be bought back to Water and Waste Committee in late 2018 on the preferred approach for LGP Stage Three.

May 2020

Waste and Recycling Centres (operations and access)

Mairead Lenihan / Chris Owen


ITEM 1 (Continued) WATER AND WASTE COMMITTEE ACTION LIST AND FORWARD PLANNING SCHEDULE CM787/788/06/01(P1) RECOMMENDATION It is recommended that Council resolve as follows: That the Action List and Forward Planning Schedule for Water and Waste Committee be noted. Authorised by: Paul Heaton iSPOT#37409759 Director Water and Waste COMMITTEE RECOMMENDATION WW19.0917.001 moved Cr PC Young seconded Cr La Castra That the Action List and Forward Planning Schedule for Water and Waste Committee be noted.

CARRIED


ITEM 2 WATER AND WASTE WATER AND WASTE ANNUAL REGISTER OF COUNCIL DIRECTIONS WSS1125/1227/02(P1)

STANDING AGENDA ITEM: Committee Recommendation: WS14.0430.007 / Council Resolution: G14.0506.025

“That Gold Coast Water establish a standing item on the Water Services Committee Agenda which is a register (and thus an agreed record) of any “directions” that Council gives Gold Coast Water for reporting in the annual operations report.”

That is: - a resolution that goes against or substantially modifies the recommendations of the Officers and; - has a (or potential to have a) material/commercial impact on the business unit.

Council Meeting

Council Resolution

Description 2017-18 2018-19 final

That the adopted infrastructure charges are adjusted so that there is a 100% discount for family accommodation dwellings of 100m2 GFA or less for any approvals issued on or after 1 July 2014 through the remainder of this Council’s term. Permanent changes to Adopted Infrastructure Charges Resolution (AICR):

Nil

1. Existing building: no infrastructure charges levied for any change in non-residentialland use (ongoing).

2. Expansion: for non-residential land uses, up to an additional 50 per cent of GFA ora maximum of 500m², whichever is the lower, will be exempt from infrastructurecharges (ongoing).

3. Family accommodation: no charge for family accommodation dwellings of 100m²GFA or less. Family accommodation dwellings greater than 100m² GFA will becharged at 40 per cent of the relevant AICR charge (ongoing).

771 G19.0326.022 4. Not-for-profit community groups: rebates for the water and wastewater networkswill be restored, following the return of responsibility to the City (ongoing).Recommendation: WW19.0321.002

$76,473.78


ITEM 2 (Continued) WATER AND WASTE ANNUAL REGISTER OF COUNCIL DIRECTIONS WSS1125/1227/02(P1)

RECOMMENDATION

It is recommended that Council resolve as follows:

That the Water and Waste Annual Register of Council Directions be noted.

Authorised by: Paul Heaton

iSPOT#43956542 Director Water and Waste

COMMITTEE RECOMMENDATION WW19.0917.002 moved Cr PC Young seconded Cr La Castra

That the Water and Waste Annual Register of Council Directions be noted.

CARRIED

779th Council Meeting 20 September 2019 Water And Waste Committee Meeting 17 September 2019

ITEM 3 WATER AND WASTE WATER AND SEWERAGE SERVICES PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) Attachment 1: Status Update – Major Capital Projects Attachment 2: Income Statement and Notes Attachment 3: Detailed Income Statement - Cash Attachment 4: Concealed Leakage Remission Payments 2018-19, by Suburb (Top 20) Attachment 5: Concealed Leakage Remissions > $10,000 - CONFIDENTIAL

1 BASIS FOR CONFIDENTIALITY

Not Applicable.

2 EXECUTIVE SUMMARY

Not Applicable.

3 PURPOSE OF REPORT

The purpose of this report is to provide the Water and Waste Committee with results of Water and Sewerage Services financial performance for the 2018-19 financial year. Within the report, the “revised budget” refers to the March 2019 Budget Review.

4 PREVIOUS RESOLUTIONS

Ex Minute No G18.0621.032

The City’s 2018-19 Budget was adopted by Council at the Budget Meeting held on 21 June 2018.

Ex Minute No B17.1207.003

1 That Council approve the net increase of $2.3 million to be transferred to the Waste Management Reserve.

2 That Council note budget variations per Attachments 2 and 3 are included in the September 2017 Budget Review.


1 That Council approve the decrease of $0.2 million to be transferred from the Waste Management Reserve, with total anticipated transfer from Reserve now being $1.4 million for the 2018-19 financial year.

2 That Council note budget variations per Attachments 2 and 3 are included in the December 2018 Budget Review.


1 That Council approve the increase of $0.1 million to be transferred to the Water and Sewerage Infrastructure Reserve, with total anticipated transfer to Reserve now being $8.1 million for the 2018-19 financial year.

2 That Council note budget variations per Attachments 2 and 3 will be included in the March 2019 Budget Review.

10 Adopted Report


ITEM 3 (Continued) WATER AND SEWERAGE SERVICES PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13)

5 DISCUSSION

The Water and Waste (WW) Directorate is responsible for two of the City’s commercial business units as defined in the Local Government Regulation 2012, Gold Coast Water (GCW) and Gold Coast Waste Management (GCWM).

GCW is responsible for water, sewerage and recycled water services across the City.

While GCW is a commercial business unit within Council, it is required to comply with the requirements applicable to Distributor-Retail water businesses under the South East Queensland Water (Distribution and Retail Restructuring) Act 2009 and the Local Government Act (2009).

This report outlines the performance for the GCW commercial business unit which, for the purposes of this report, is known as Water and Sewerage Services.

5.1 Water and Sewerage Services High Level Financial Summary

Table 1 provides a summary of Water and Sewerage Services’ financial performance for 2018-19.

Table 1: Gold Coast Water – Summary Financial Management Statement – For year ended 30 June 2019

Net Profit before Capital Revenue is 0.2% ($0.5 million) below revised projections, with Earnings before Interest and Taxation (EBIT) 3.4% ($6.8 million) higher than revised projections.

This variance in EBIT is due to Capital Revenue being $8.7 million higher than revised projections.

Income Tax Equivalents paid to the City is $2.2 million above projections mainly due to Developer Contributions exceeding revised projections.

Summary Financial Management Statement

2018-19Actuals

Revised Budget

2017-18Actuals

30 June 2019 $M $M $M % $MOperating Revenue 525.96 529.23 (3.27) (0.6%) 511.44Flow -Dependant Expenditure 201.08 203.80 2.72 1.3% 192.51Controllable Expenses 110.65 111.88 1.23 1.1% 109.69Operating Result 214.23 213.55 0.68 0.3% 209.24Loss on Sale of Assets 6.18 5.00 (1.18) (23.6%) 4.38Net Profit before Capital Revenue 208.05 208.55 (0.50) (0.2%) 204.86Capital Revenue 95.17 86.50 8.67 10.0% 108.99Depreciation / Amortisation 96.38 95.00 (1.38) (1.5%) 94.83Earnings Before Interest and Taxation 206.84 200.05 6.79 3.4% 219.02Interest Expense (QTC loan) 2.51 2.51 0.00 0.0% 2.80Interest Margin Expense 0.88 0.88 0.00 0.0% 0.88Shareholder Interest Expense 88.82 88.82 0.00 0.0% 88.82Income Tax Equivalents 40.68 38.52 (2.16) (5.6%) 41.70Net Profit After Taxation 73.95 69.32 4.63 6.7% 84.82Contribution to Whole of City projects 1.00 1.00 0.00 0.0% 3.50Retained Earnings 72.95 68.32 4.63 6.8% 81.32

Variance

11 Adopted Report



5.2 Distribution of Earnings

Water and Sewerage Services Earnings before Interest and Taxation (EBIT) for the period ended 30 June 2019, on a cash basis, is $265.5 million (operating revenue of $526.0 million, cash capital revenues of $51.1 million less operating expenditure of $311.6 million). This result exceeds the target set at the March 2019 Budget Review by 2.1% ($5.4 million) and is 2.3% ($6.3 million) lower than the 2017-18 result.

Table 2 outlines the distribution of 2018-19 earnings. The final position results in Total Transfers to Reserves of $49.6 million. These funds are being accumulated for future years’ water and sewerage capital investment program.

Table 2: Water and Sewerage Services – Distribution of Earnings –Year Ended 30 June 2019

5.3 Economic Regulation

The price monitoring framework that was undertaken by the Queensland Competition Authority (QCA) ended on 30 June 2015. A draft framework was proposed by the QCA however was not adopted by Government.

While a framework is currently not in place, Water and Sewerage Services apply principles of economic regulation by ensuring that we do not recover revenue greater than our maximum allowable revenue and only prudent and efficient expenditure is incurred.

Distribution of Earnings 2018-19Actuals

Revised Budget

2017-18Actuals

30 June 2019 $M $M $M % $MInterest Expense (External) 2.51 2.51 0.00 0.0% 2.80Principal Repayment (External) 4.69 4.69 0.00 0.0% 4.40Debt Service Payment 7.20 7.20 0.00 0.0% 7.20Capital Expenditure 77.28 92.09 14.81 16.1% 60.31Capital Expenditure 77.28 92.09 14.81 16.1% 60.31Interest Returned - Community Investment in GCW 88.82 88.82 0.00 0.0% 88.82Tax Equivalents (30% taxable earnings) 40.68 38.52 (2.16) (5.6%) 41.70Contribution to Whole of City projects 1.00 1.00 0.00 0.0% 3.50Participation Return 0.00 0.00 0.00 0.0% 0.00Interest Expense Margin 0.88 0.88 0.00 0.0% 0.88

Payment to Council(Excluding SLA, Fleet & Plant and Land Tax)

131.38 129.22 (2.16) (1.7%) 134.90

Retained Earnings for future GCW Capital Works Investment 20.55 8.08 (12.47) (154.3%) 19.96Developer Contributions received, but not utilised 29.06 23.47 (5.59) (23.8%) 49.43Total Transfers to Reserve 49.61 31.55 (18.06) (57.2%) 69.39

Total Distribution 265.47 260.06 (5.41) (2.1%) 271.80

Variance

12Adopted Report



5.4 Returns to Community

In accordance with the City’s GCW Capital Structure and Community Returns Policy, Water and Sewerage Services operates as a commercial business unit and provides an appropriate return to the community, based on its investment in the business.

Returns paid to the City for 2018-19 exceeded the target set at the March 2019 Budget Review by $2.6 million and are outlined in the Table 3. Total payments to the City exceeded the March 2018 budget review target by $2.8 million.

The increase in returns was primarily the result of a $2.2 million additional income tax equivalents being provided to the Community. Land Tax equivalents paid to the City was also higher then projections due to Government changes to the rate applicable for land tax.

Table 3: Gold Coast Water – Returns to Community –Year Ended 30 June 2019

Total community returns for 2018-19 are $2.1 million (1.3%) lower than the returns provided in 2017-18. This is mostly due to the lower level of Contribution to Whole of City Projects.

5.5 Water and Sewerage Rates Revenue

Table 4: Rates & Charges Revenue –Year Ended 30 June 2019

Community Returns 2018-19Actuals

Revised Budget

2017-18Actuals

30 June 2019 $M $M $M % $MInterest Margin Expense 0.88 0.88 0.00 0.0% 0.88Shareholder Interest 88.82 88.82 0.00 0.0% 88.82Income Tax Equivalents 40.68 38.52 2.16 5.6% 41.70Land Tax Equivalent 2.24 1.80 0.44 24.4% 1.80Participation Return 0.00 0.00 0.00 0.0% 0.00Contribution to Whole of City projects 1.00 1.00 0.00 0.0% 3.50Return to Community 133.62 131.02 2.60 2.0% 136.70SLA Costs 19.92 19.92 0.00 0.0% 18.97Insurance Premiums 1.82 1.82 0.00 0.0% 1.85Fleet & Plant Charges 4.51 4.30 0.21 4.8% 4.49Total Payments to Council 159.87 157.06 2.81 1.8% 162.00

Variance

Gold Coast Water Rates Revenue 2018-19Actuals

Revised Budget

2017-18Actuals

30 June 2019 $M $M $M % $MAccess Charges

Water 68.25 68.00 0.25 0.4% 67.31Sew erage 179.43 179.98 (0.54) (0.3%) 176.23

Total Access Charges 247.69 247.98 (0.29) (0.1%) 243.54Usage Charges Revenue

Water 223.00 226.53 (3.53) (1.6%) 213.40Sew erage 39.39 39.45 (0.06) (0.2%) 39.83Non Drinking Water 0.95 0.73 0.22 30.0% 0.79Less: Concealed Leakage (2.13) (2.10) 0.03 (1.4%) (2.46)

Total Usage Charges 261.21 264.61 (3.40) (1.3%) 251.56

Total Rates Revenue 508.89 512.59 (3.69) (0.7%) 495.10

Variance

13 Adopted Report



Total rates revenue received in 2018-19 was $3.7 million (0.7%) below projections. This revenue comprised:

Access Charges: $0.3 million below revised budget, made up of $0.5 million below budget sewerage access charges partially offset by above budget $0.2 million in water service charges. Both variances are within 1% of the revised budget.

Usage Charges: $3.4 million below revised budget due primarily to lower than forecast water charges of $3.5 million, partially offset by higher non drinking water charges ($0.2 million). Overall volumetric charges are within 1.3% of the revised budget.

For the fourth consecutive year, the City’s has maintained a price freeze on all Council water and sewerage charges. As a result the increase in revenue is solely due to growth in connections and the pass-through of the State Government’s bulk water price increase. This price freeze has continued in the 2019-20 financial year.

Section 5.6.1 provides further information on bulk water demand.

5.5.1 Non-Revenue Water

Non Revenue Water is water that the City purchases from the State Government which is not recovered from customers. Reducing the City’s non-revenue water (NRW) is a key focus for the business. A cross branch working group is operating to focus on identification, investigation and rectification of potential losses within the City’s network. Focus areas for the group this year have been:

a. Continuation of the trial of TaKaDu, a predictive monitoring tool to assist with water lossmonitoring and management.

b. Commissioning of 40 newly established Demand Management Areas (DMAs) which willincrease the breadth of the network across which we can actively monitor and managewater loss.

c. Establishment of the proactive field leak detection team to investigate and repair leaksonce located.

d. Continued acceleration of the meter replacement program to replace aged or slowingmeters in 2018-19 replaced a total of 13,506 meters.

e. Delivery of analysis and investigations to identify water theft and metering problems.f. Implementation of the improvement opportunities identified during the LEAN review of

leak detection.g. Implementation of rolling billing which enables customers to receive their bill shortly after

their meter is read. This will assist in the early identification and rectification of leaks.h. Installation of smart meters at all schools to assist in real time water monitoring as well as

the identification of leaks.i. Activation of contract arrangements to accelerate replacement and reconfiguration of

large stopped and damaged buried water meters.j. Asset management review and accelerated repair and replacement of metered

standpipes to minimise the number of standpipes that are not recording water usage.

14 Adopted Report



5.5.2 Concealed Leakage Remissions

A total of $2.1 million was paid in concealed leakage remissions for the year, a decrease of 13% compared to the $2.5 million paid during 2017-18. There has been a downward trend in concealed leakage remissions paid from 2013-14 where remissions were in excess of $4 million.

Table 5 shows that, by number of applications approved, only 13.1% (343 applications) relate to non-residential customers however this equates to 50% of the value of remissions paid.

Table 5: Concealed Leakage Remissions –Year Ended 30 June 2019

Analysis of leakage remissions indicate that in 2018-19:

· 2% decrease in applications processed (98 applications) for a total of 3,880.· 67% of total applications received a remission (2,613).· 33% of total applications were declined (1,267) compared to 35% (1,394) in

2017-18. The most prevalent reason for applications being declined is repairs notbeing undertaken within the one-month required timeframe.

· the highest single remission paid to a customer was $102,480 (Water $21,095,Sewer $81,385) (2018: $82,815 entirely sewer).

· 14% decrease in the average value of remissions approved of $815 (2018: $950).Specifically:

o residential customers was $471 (2018: $476)o non-residential customers was $3,094 (2018: $3,507).

The following table provides summary information of high level remissions paid during 2018-19. Attachment 4 provides a listing of 2018-19’s “Top 20 Suburbs” by value of concealed leakage remissions payments. A listing of all remissions over $10,000 is provided at Confidential Attachment 5.

Table 6: High Value Concealed Leakage Remissions – Year Ended 30 June 2019

A revised leakage remission Policy is currently being drafted and will be submitted to Council for consideration. The revised Policy aims to align with other concealed leak remission policies in South East Queensland, including more limited remissions for non-residential customers in conjunction with Smart Meter installations.

NumberApprovals

Total LeakVolume

WaterRemissions

Value ($)

SewerRemissions

Value ($)

TotalRemissions

Value ($)

% of Total Average valueof remissions

Residential 2,270 553,880 1,068,498 1,068,498 50% 471 Non Residential 343 381,496 425,680 635,560 1,061,240 50% 3,094 2018-19 2,613 935,376 1,494,178 635,560 2,129,738 100% 815

NumberApprovals

Total LeakVolume

WaterRemissions

Value ($)

SewerRemissions

Value ($)

TotalRemissions

Value ($)

Average valueof remissions

Remissions greater than $10,000Residential 3 13,726 38,049 - 38,049 12,683 Non Residential 13 49,607 52,154 124,191 176,345 13,565 Remissions greater than $20,000 16 63,333 90,203 124,191 214,394 26,248 Non Residential 5 51,496 21,095 209,701 230,796 46,159

15 Adopted Report



5.6 Flow-Dependant Expenditure

Water and Sewerage Services flow dependant expenditure was below revised budget by a total of $2.7 million or 1.3%.

Table 7: Flow dependent expenditure

5.6.1 Bulk Water Purchases

Total bulk water purchases for 2018-19 was below revised budget by $2.0 million, with demand for the year being 452 ML (0.7%) lower than revised forecast. In total, 63,259 ML of bulk water was purchased in 2018-19. This represents an increase of 1.5% (923 ML) compared to last year’s bulk water purchases of 62,336 ML.

As shown in Graph 1 below, demand is generally higher than forecast during months experiencing low rainfall. Rainfall for the 2018-19 year was approximately 82% of the long term average, with 1,016.2 mm being recorded at the Gold Coast Seaway. This compares to a long term average of 1,240.2mm.

Graph 1: Analysis of Water Supplied versus Demand Forecast * ML supplied as invoiced by the SEQ Water Grid Manager.

Flow-Dependant Expenditure 2018-19Actuals

Revised Budget

2017-18Actuals

30 June 2019 $M $M $M % $MBulk Water Purchase 183.69 185.72 2.03 1.1% 175.66Electricity 9.74 10.49 0.75 7.1% 9.79Biosolids Disposal 4.05 3.98 (0.07) (1.8%) 3.78Chemicals 3.60 3.61 0.01 0.3% 3.29Total Flow-Dependant Expenditure 201.08 203.80 2.72 1.3% 192.52

Variance

16 Adopted Report



Bulk water purchases expense for 2018-19 includes a refund for previous over-charging that has been received from Seqwater. Meter accuracy issues were identified at the Molendinar and Mudgeeraba water treatment plants. This resulted in bulk water purchases for the period December 2017 to November 2018 being reduced by a total of 263 ML or $0.75 million. The portion of this reduction which relates to the 2017-18 financial year is 151 ML or $0.42 million.

5.6.2 Electricity

Electricity charges are $0.8 million or 7.1% below forecast. Forecast electricity charges assumed a 16% price increase for small meters and a 3.85% increase for large meters for the full year. Electricity prices increased by an average 3% from 1 January 2019. In addition, favourable weather conditions have resulted in lower electricity usage within the treatment plants and pump stations than forecast.

5.7 Controllable Expenses

Controllable Expenses were within 1.1% of revised forecast. This is consistent with trends since 2013-14 where controllable expenses have been within 4% of revised budget.

A detailed Income Statement is appended to this report (Attachment 2).

17 Adopted Report



5.8 Capital Revenues and Non-Cash Expenses

5.8.1 Capital Revenues

Contributed assets are 10.3% ($4.1 million) higher than revised projections, with over $44 million in contributed assets being recognised during the year. This is 10.9% lower than the almost $50 million recognised in 2017-18, but substantially higher than the average of the past six years of $34 million.

Developer Contributions are 9.8% ($4.6 million) above revised projections, with over $51 million in developer contributions being recognised during the year.

The graph below illustrates the high level of capital revenues, both Contributed Assets and Developer (Cash) Contributions that have been received in the past four years and is consistent with the high level of development activity occurring across the City. Capital revenue peaked in 2015-16 and has since seen a gradual decline. While significant levels of development is currently being experiencing across the City, these levels of capital revenues it is unlikely that this level of contributions will continue over the long term and management of developer contributions is being closely monitored.

Graph 2: Capital Revenues Received

5.8.2 Asset Values and Non-Cash Expenses

A total of $3.86 billion (written down replacement cost) of water and sewerage infrastructure assets is managed within the Water and Sewerage Services business unit.

Depreciation expense of $96.4m is $1.4 million (1.5%) above revised projections and $1.6 million (1.6%) higher than last financial year.

Loss on Disposal of assets was $6.2 million for 2018-19, which compares with $4.4 million in 2017-18 and is higher than the five year average of $5.3 million.

18 Adopted Report



5.9 Capital Program

5.9.1 Capital Expenditure

The initial 2018-19 Water and Sewerage Services capital program consisted of 65 projects totalling $94.98 million. The revised budget following the budget reviews during the year was $92.09 million spanning 99 projects.

Table 8: Capital Expenditure

The final capital expenditure for 2018-19 was $77.26 million which represents a variance of 16.1% against the revised budget of $92.09 million and 18.7% against initial budget of $94.98 million.

The main contributors to this variance are:

· Potable Water Filling Stations - $3.47 million below revised budgetProject expenditure is behind the revised forecast due to extended tender negotiationswith the preferred contractor. Works will continue into 2019-20, with works expected to becompleted by October 2019.

· Long Term Recycled Water Release Stage 1 - $2.71 million below revised budgetThis multi-year project is slightly behind forecast due to ongoing piling issues at the entryshaft in Quota Park which delayed tunnelling works. Works will continue into 2019-20with completion scheduled for 30 June 2020.

· Elanora STP Digester A Sludge Heater Refurbishment - $1.45 million below revisedbudgetThis multi-year project is behind revised forecast due to delays experienced by thecontractor in acquiring major equipment required to undertake the construction works.Works will continue into 2019-20 with completion scheduled for March 2020.

Refer to Attachment 1 for a status update of major capital investment projects.

Expenditure Revised Budget Initial Budget Variance Variance

($M) ($M) ($M) ($M) %

Sewerage 62.58 72.55 75.09 9.97 13.7%

Water 14.08 18.93 19.81 4.86 25.7%

Non-Core Water 0.53 0.53 0.00 0.01 1.1%

Corporate 0.08 0.08 0.08 (0.00) (2.4%)

Total Capital 77.26 92.09 94.98 14.83 16.1%

Actuals v Revised Budget

Water and Sewerage Services Capital Expenditureas at 30 June 2019

Product

19 Adopted Report



5.9.2 Capital Program Achievements

Fifty-nine capital works projects were completed in the 2018-19 financial year. Some of the significant projects completed are outlined in Table 9.

Table 9: Significant Capital Projects Completed

5.9.3 Assets under Construction (AuC)

At 30 June 2019, total Assets under Construction (AuC) balance is $157.3 million, which includes 108 capital projects. Table 10 shows the movement of AuC balances since the return to Council, in comparison to the capital spend each year.

Table 10: Closing Balances – Assets under Construction (AuC)

PROJECT 2018-19 EXPENDITURE

TOTAL PROJECT

EXPENDITUREWater Meter Replacements 2018-19 3,633,486 3,633,966

Water Main Replacements 2018-19 3,008,511 3,008,793

SPS Switchboard Renewals 2017-19 2,779,054 3,951,112

Hydrant Replacements 2018-19 1,505,244 1,515,677

Fall from heights prevention SPS 1,424,448 6,325,379

SPS Mech Elec Renewals 18-19 1,193,428 1,194,915

Proactive Water Service Replacements 2018-19 1,160,887 1,215,244

Creek St Pimpama SPS & RM (Pimpama Village) 982,006 1,007,462

Sewer Minor Civil Works 2018-19 959,291 959,291

STP Civil Renewals 2018-19 790,421 860,267

Pimpama Regional SPS & RM (Pimpama Jacobs Well Rd) 779,644 860,267

WPS Switchboard Renewals 2018-19 594,497 598,579

Water Loss Management - Establishment of New DMAs 526,970 3,635,459

Coombabah STP Pipework Replacement 500,039 605,879

Sub Total (Significant Projects) 19,837,925 29,372,290

Other Completed Projects 3,154,563 64,156,704

TOTAL 22,992,489 93,528,994

Assets Under Construction

Capital Spend ($M)

AuC Balance ($M)

1 July 2012 0.00 125.86

30 June 2013 59.28 69.70

30 June 2014 46.96 70.20

30 June 2015 34.17 53.15

30 June 2016 51.81 75.45

30 June 2017 66.65 80.42

30 June 2018 60.59 99.25

30 June 2019 77.28 157.32

20 Adopted Report



The construction of infrastructure assets can extend over multiple financial years and WW strives for timely processing of all projects, once assets are “in service” and able to recognised within the City’s financial asset register.

This is not only to ensure that assets are recorded in the system for customer and maintenance purposes but also for compliance with the Australian Accounting Standards and to ensure the Regulatory Asset Base (RAB) is appropriately maintained for regulatory and pricing purposes.

5.10 Other Financial Activities

5.10.1 Community Service Obligations

In accordance with Sections 23 and 24 of the Local Government Regulation 2012:

…The cost of carrying out community service obligations, less any revenue received from performing the obligations, must be treated as revenue for the significant business activity. {Section 23} (and)

…A community service obligation is an obligation the local government imposes on a business entity to do something that is not in the commercial interests of the business entity to do.

Example of a community service obligation – giving a price concession to a particular group of customers, including pensioners, seniors and students {Section 24}

For the 2018-19 year, $0.1 million water or sewerage infrastructure charges have been recorded as foregone under the City’s rebates provided for Non-Profit Community Groups (2017-18: Nil).

To date, no Community Service Obligations have been formally recognised for these Rebates and Credits.

21 Adopted Report



5.10.2 Community Service Obligations – Catchment Management Unit

Catchment Management Unit protects human health in recreational waters by monitoring the state of the City’s water environments and providing rapid reporting of the health status of primary contact recreation areas. It supports the maintenance of legislated environmental values in the City’s water environments through catchment and stormwater planning and the implementation of appropriate environmental restoration actions.

These activities are funded by way of a Community Service Obligation (CSO). At adoption of Council’s initial budget, the total value of this CSO is $4,631,502. Unexpended funds of $182,837 were carried over from the 2017-18 financial year, taking the revised total of this CSO to $4,814,339 for the year. Following the September, December and proposed March budget reviews the CSO remains unchanged at $4,814,339 for the year.

As shown in Table 11, operational business as usual activities for the Catchment Management Unit are ongoing, with expenditure for those activities for the year being 17.0% ($0.8 million) below budget. The Catchment Management Unit has been undertaking a full review of the City's Water Environment and Recreational Waters monitoring program, with sampling frequency having been reduced, pending the development of comprehensive monitoring program. There have also been fewer than expected incidents throughout the year that have required ad-hoc testing. Delays have been experienced in the award of a contract for the City Flows Monitoring Program due to protracted negotiations with the contractor, with other project works also experiencing delivery delays. A trial private landholder partnership has received Council endorsements, however delays have been experienced in finalising governance arrangements for this trial.

Table 11: Summary of Catchment Management Unit – Operational Expenses

There were no capital works project undertaken during 2018-19.

Commencing 1 July 2019, the Water and Sewerage Services commercialised business unit has taken on funding obligations for non-labour costs for the Catchment Management Unit. This will significantly reduce the value of the Community Service Obligation recorded in future years.

Catchment Management Unit - Operational

Initial Budget ($)

Revised Budget ($)

YTD Actuals ($)

Spent (%)

CMU Operations 1,259,500 1,405,000 1,037,363 73.8%

Catchment Activities 1,536,860 1,536,860 1,632,699 106.2%

Healthy Waterways Contribution 321,000 321,000 315,000 98.1%

WaterSafe Monitoring & Investigations 249,300 195,637 50,331 25.7%

Laboratory Testing Services 536,500 587,500 243,051 41.4%

Community Action Support 155,000 195,000 150,036 76.9%

Water Cycle Implementation 110,000 110,000 106,347 96.7%

SLA for Corporate Services 463,342 463,342 463,342 100.0%4,631,502 4,814,339 3,998,169 83.0%

22 Adopted Report



5.11 Reserve Balances

5.11.1 Water and Sewerage Infrastructure Reserve

Cash surpluses from operations are transferred to the Water and Sewerage Infrastructure Reserve. These cash reserves are set aside for future investment in water and sewerage infrastructure. A capital program totalling in excess of $1.5 billion is projected over the next ten years.

With the movements processed as part of the 2018-19 year-end review, the reserve balance, as at 30 June 2019 will be $202.4 million.

5.11.2 Infrastructure Charges Reserve

Infrastructure Charges may only be utilised to fund growth-related infrastructure assets. Receipts of Infrastructure Charges have significantly exceeded expectations over the past three years. As at 30 June 2019, the balance of funds held in the Water and Sewerage Infrastructure Charges Reserves is $233.2 million.

Infrastructure Charges that cannot be utilised in the current year are retained within the City’s Infrastructure Charges Reserves to be utilised for funding of growth-related assets in future years.

Based on current projections, infrastructure charges reserves will be exhausted within the next ten years to assist with funding of growth-related projects scheduled over that timeframe.

6 ALIGNMENT TO THE CORPORATE PLAN, CORPORATE STRATEGIES AND OPERATIONAL PLAN

Not Applicable.

7 FUNDING AND RESOURCING REQUIREMENTS

Not Applicable.

8 RISK MANAGEMENT

The following Corproate risk applies to this report:

Risk Number Description

Risk No. CO000435 Failure to achieve a sustainable long term financial position leading to negative impacts on Council’s ability to deliver on its key focus area commitments.

23 Adopted Report



9 STATUTORY MATTERS

Not Applicable.

10 COUNCIL POLICIES § Gold Coast Water Capital Structure and Community Returns Policy§ Revenue Policy§ Gold Coast City Council Budget Review Policy§ Water and Sewage Leakage Relief Policy

11 DELEGATIONS

Not Applicable.

12 COORDINATION AND CONSULTATION

Name and/or Title of the Stakeholder Consulted

Directorate or Organisation

Is the Stakeholder Satisfied With Content of Report and Recommendations (Yes/No) (comment as appropriate)

Marilyn Hildebrandt Executive Coordinator – Directorate Finances

Office of the COO Yes

13 STAKEHOLDER IMPACTS

Not Applicable.

14 TIMING

Not Applicable.

15 CONCLUSION

Water and Waste comprises two commercial business units within the City of Gold Coast. Water and Sewerage Services operates in accordance with the requirements of the Local Government Act 2009 and the South East Queensland Water (Distribution and Retail Restructuring) Act 2009 and provides an appropriate return to the community on its investment in the business.

As a monopoly service provider, Water and Sewerage Services operates within a regulatory framework that comprises an economic regulator and a number of technical regulators.

For 2018-19, total returns to the community of $133.6 million were achieved. This result is 2.0% ($2.6 million) greater than March 2019 budget review projections. This increase in returns is primarily the result of additional income tax equivalents payable to the City.

24 Adopted Report



The final result of the year’s operations has provided returns to the community as set out in Table 12:

Table 12: WW Returns to Community – For the year ended 30 June 2019

16 RECOMMENDATION

It is recommended that Council resolves as follows:

1 That Attachment 5 be deemed non-confidential except for those parts deemed by the Chief Executive Officer to remain confidential in accordance with sections 171 (3) and 200 (5) of the Local Government Act 2009”.

2 That Council note the Water and Sewerage Services Financial Performance Report for the 2018-19 financial year.

Author: Authorised by: Karen O’Brien Paul Heaton Manager Business Performance Director Water and Waste 4 September 2019 TRACKS REF: 74339357

COMMITTEE RECOMMENDATION WW19.0917.003 moved Cr PC Young seconded Cr La Castra

1 That Attachment 5 be deemed non-confidential except for those parts deemed by the Chief Executive Officer to remain confidential in accordance with sections 171 (3) and 200 (5) of the Local Government Act 2009”

2 That Council note the Water and Sewerage Services Financial Performance Report for the 2018-19 financial year.

CARRIED

Community Returns 2018-19Actuals

Revised Budget

2017-18Actuals

30 June 2019 $M $M $M % $MInterest Margin Expense 0.88 0.88 0.00 0.0% 0.88Shareholder Interest 88.82 88.82 0.00 0.0% 88.82Income Tax Equivalents 40.68 38.52 2.16 5.6% 41.70Land Tax Equivalent 2.24 1.80 0.44 24.4% 1.80Participation Return 0.00 0.00 0.00 0.0% 0.00Contribution to Whole of City projects 1.00 1.00 0.00 0.0% 3.50Return to Community 133.62 131.02 2.60 2.0% 136.70SLA Costs 19.92 19.92 0.00 0.0% 18.97Insurance Premiums 1.82 1.82 0.00 0.0% 1.85Fleet & Plant Charges 4.51 4.30 0.21 4.8% 4.49Total Payments to Council 159.87 157.06 2.81 1.8% 162.00

Variance

25 Adopted Report


Attachment 3.1.1 Attachment 1: Status Update – Major Capital Projects

Long Term Recycled Water Release

Project scope and budget

The City’s existing excess recycled water release system at the Seaway is nearing capacity. The Long Term Recycled Water Release Plan aims to provide a city wide solution to cater for excess recycled water in both average dry weather and peak wet weather flows. Stage 1 consists of infrastructure upgrades at Coombabah Sewage Treatment Plant, Benowa Repump Station and the marine crossings of the Broadwater and Nerang River.

The initial budget for 2018-19 was $31.9 million. A budget increase of $5.5 million for the 2018-19 financial year was approved following works brought forward from future years due to an accelerated delivery schedule. Construction commenced in 2018-19 with an expected completion date of June 2020.

· March Budget Review $5.5 million increase

Achievements for 2018-19

· Site establishments and commencement of construction at six separate sites – QuotaPark, Biggera Waters; South Stradbroke Island; Winchester Street, Southport;Waterways Drive, Main Beach; Coombabah STP; and Benowa Recycled Water PumpStation.

· Completion of all designs and procurement of all equipment including pumps, motor,drives, switchboards, pipes, valves and fittings.

· Effective communication of project to external stakeholders via notifications, newsletters,community open days and via websites.

· Maintaining good working relationships with both internal stakeholders and externalproject partners.

· Project financials are in accordance with forecasts with minimal contract variations todate.

Major issues

· Treatment and disposal of groundwater was suspended for two months due to leaking atthe entry shaft at Quota Park, Biggera Waters.

· Progress of horizontal directional drilling contractor has been less than anticipatedresulting in project delays.

Financial Performance

Forecast ($) 37,400,000 Budget ($) 69,848,145

Expenditure ($) 34,689,241 ITD Expenditure ($) 44,237,385

Variance ($) 2,710,759 Remaining ($) 25,610,759

Variance (%) 7% Remaining (%) 37%

Year to Date Whole Project

26 Adopted Report


Attachment 3.1.2

Pimpama to Coombabah STP Release Main Stage 1


This project includes the design and construction of the first stage of works required to upgrade the transfer of excess recycled water from Pimpama Sewage Treatment Plant to Coombabah Sewage Treatment Plant. The proposed infrastructure includes the upgrade of a section of pipeline approximately 1.8 kilometres in length, discharging to the Coombabah Sewage Treatment Plant Recycled Water Storage Lagoon.

The initial budget for 2018-19 was $6.2 million. Budget decreases totalling $5.2 million for the 2018-19 financial year were approved resulting from an ongoing easement negotiations. Stage 1 works will carry over into 2019-20, with completion expected 30 June 2020.

· September Budget Review $3.0 million decrease· March Budget Review $2.2 million decrease


· Design, Procurement and pre construction activities completed· Construction works will commence in July 2019

Major issues

· Easement negotiations with a private property owner delayed the completion of designand commencement of procurement activities during the year. These have now beenresolved


Forecast ($) 1,000,000 Budget ($) 6,200,000


Variance ($) (343,702) Remaining ($) 4,564,490

Variance (%) (34%) Remaining (%) 74%

Whole ProjectYear to Date

27 Adopted Report


Attachment 3.1.3 Potable Water Filling Station


This project will upgrade eleven existing potable water filling stations to address safety concerns. It will also mitigate existing risks associated with metered standpipe users connecting to hydrant points that are not located in safe areas and reduce the risk of contamination of the potable water supply.

The initial budget for 2017-18 was $3.7 million.

· September Budget Review No change· March Budget Review No change


· Design completed· Construction contract awarded and pre construction activities completed· Construction of the project to commence in July 2019

Major issues

· A prolonged procurement process to award the construction contract for the projectresulted in significant delays to this project within the financial year. These have nowbeen resolved


Forecast ($) 3,662,000 Budget ($) 3,934,356

Expenditure ($) 195,625 ITD Expenditure ($) 449,981



Whole ProjectYear to Date

28 Adopted Report


Attachment 3.1.4

Coombabah STP Stage 6 Upgrade


This project involves the upgrade of Coombabah STP to provide additional treatment capacity to cater for growth and meet licence requirements. Coombabah catchment is expected to experience significant growth over the coming years. The preferred Stage 6 option involves a 120,000 EP augmentation, utilising existing biological nutrient removal technology and includes a new Preliminary Treatment Facility, new bioreactor and two secondary clarifiers, disinfection system, waste sludge thickening and dewatering and associated ancillary and support facilities.

The initial budget for 2018-19 was $2.5 million. A budget decrease of $1.5 million for 2018-19 was approved resulting from deferral of works to future years.

· September Budget Review No change· March Budget Review $1.5 million decrease


· Principal Engineer contract awarded.· Master Planning and concept design complete. The Stage 6 upgrade is being designed

to ensure the new facilities integrates efficiently with future upgrades.

Major issues

· Initial environmental studies indicate approvals may be difficult to obtain. An alternativesite location for the STP upgrade is currently being considered.

· The capacity of the upgrade has increased from the approved business case due torecent population forecasts.


Forecast ($) 1,045,000 Budget ($) 110,163,116





29 Adopted Report


Attachment 3.1.5

New Water Mains in Coomera


This is Trunk Infrastructure being delivered by a Developer and involves the installation of approximately 2km of water mains to accommodate future growth in the Coomera area as identified through the Local Government Infrastructure Planning (LGIP) process.

The Developer is yet to lodge an operational works permit and budget has been deferred to 2019-20.

The initial budget for 2018-19 was $1.9 million. Budget decreases totalling $1.9 million for 2018-19 were approved resulting from works deferring to future years.



Forecast ($) 3,000 Budget ($) 1,900,000

Expenditure ($) - ITD Expenditure ($) -

Variance ($) 3,000 Remaining ($) 1,900,000

Variance (%) - Remaining (%) 100%


30 Adopted Report


Attachment 3.1.6

Elanora STP Digester A and Sludge Heater Refurbishment


This project includes the refurbishment of digester A and replacement of the non-compliant gas pipework, railings, roof seal and digester heaters at Elanora Sewage Treatment Plant (STP) including opportunistic replacement of internal mechanical, electrical and civil components.

The initial budget for 2018-19 was $1.8 million. A budget increase of $1.1 million for 2018-19 was approved resulting from identification of additional scope.

· September Budget Review No change· March Budget Review $1.1 million increase


· Design and construct contract for the project awarded.· Site established and construction activities commenced.

Major issues

· Construction delays associated with delivering a project within an operational SewageTreatment Plant and equipment deliveries not tracking to schedule led to an underspendwith respect to our March budget review. These issues have now largely been resolved.


Forecast ($) 2,975,000 Budget ($) 5,711,295





31 Adopted Report


Attachment 3.1.7

Coombabah Sewage Treatment Plant Digesters – Supply and Install Cogeneration Unit


This project includes the supply and installation of a 500kW Cogeneration Unit at Coombabah STP along with a pre gas treatment system. The combined heat power plant will utilise methane gas generated by anaerobic digestion to provide the required sludge heating and generate renewable electric energy. This energy will be used within the plant thereby reducing purchased energy from predominantly coal power stations.

The initial budget for 2018-19 was $1.8 million. Budget decreases totalling $1.3 million for 2018-19 were approved resulting from the deferral of some works to 2019-20.



· Procurement documentation largely completed to be released for tender early within the2019-20 financial year.

Major issues

· No major issues at this stage.


Forecast ($) 535,000 Budget ($) 2,237,969





32 Adopted Report


Attachment 3.1.8

Stapylton Jacobs Well Road Water Main


This project involves the construction of approximately 2km of DN200 main along Stapylton-Jacobs Well Road reserve from a connection point at intersection of Quinns Hill Road to boundary of the property at No. 400 Stapylton-Jacobs Well Road. Stage 2 is the construction of 1.7km of DN150 main and 100 meters of DN200 main in the Stapylton/Jacobs Well area.

The initial budget for 2018-19 was $1.8 million. Budget decreases totalling $1.8 million for 2018-19 were approved resulting from the deferral of some works to 2019-20.



· Negotiation with Department of Main Roads (DTMR) on preferred alignment completed

Major issues

· DTMR negotiations delayed progression of this project within the financial year. Thesehave now been resolved and the project will be completed within 2019-20.


Forecast ($) 20,000 Budget ($) 1,410,000





33 Adopted Report


Attachment 3.1.9

Recycled Water Network Expansion


This project includes infrastructure works for the expansion of the recycled water network to implement improved utilisation of recycled water across the city. The cost of this infrastructure is intended to be recovered in recycled water customer pricing.

The initial budget for 2018-19 was $1.5 million. A budget decrease of $0.8 million for 2018-19 was approved resulting from the deferral of some works to 2019-20.



· Detailed Planning for entire project largely completed

Major issues

· None to report at this stage.


Forecast ($) 708,500 Budget ($) 91,000,000





34 Adopted Report


Attachment 3.1.10

Sewage Treatment Plant Process Tank Refurbishment 2018-21


The aim of this project is to refurbish the Primary Clarifier Tanks C, D and E at Elanora Sewage Treatment Plant and Clarifiers 4, 5, 6 and 7 at Merrimac Sewage Treatment Plant. This project is part of a three year program to refurbish process tanks and includes mechanical, electrical and civil components, protective coating and other asset renewal activities.

The initial budget for 2018-19 was $1.4 million. Budget decreases totalling $1.2 million for 2018-19 were approved resulting from delays in finalisation of specifications.



· Finalisation of project scope for the program.· Design and construction contract scheduled to be released to the market early in the

2019-20 financial year.

Major issues

· None to report at this stage.


Forecast ($) 250,000 Budget ($) 5,323,000





35 Adopted Report


Attachment 3.2.1 Attachment 2: Detailed Income Statement - Accrual

Water and Sewerage Services Financial Management Statement

2018-19Actuals

Revised Budget

30 June 2019 $M $M $M %RevenueAccess Charges 247.69 247.98 (0.29) (0.1%)Usage Charges Revenue 263.34 266.71 (3.37) (1.3%)Less: Concealed Leakage (2.13) (2.10) 0.03 (1.4%)Interest on Outstanding Rates 2.49 2.25 0.24 10.7%Interest on Investments 10.26 10.26 - 0.0%Fees and Charges 4.31 4.13 0.18 4.4%Total Operating Revenue 525.96 529.23 (3.27) (0.6%)Operating ExpenditureFLOW-DEPENDANT EXPENDITUREBulk Water Purchases 183.69 185.72 2.03 1.1%Electricity 9.74 10.49 0.75 7.1%Biosolids Disposal 4.05 3.98 (0.07) (1.8%)Chemicals 3.60 3.61 0.01 0.3%Total Flow-Dependant Expenditure 201.08 203.80 2.72 1.3%

Operating Revenue net of Flow-Dependant Expenditure 324.88 325.43 0.55 0.2%Gross Margin

CONTROLLABLE EXPENDITUREEmployee Expenses 48.39 50.17 1.78 3.5%Materials and Services 27.36 26.91 (0.45) (1.7%)Council Corporate SLAs 19.92 19.92 - 0.0%Internal Directorate SLA (3.05) (3.33) (0.28) 8.4%Fleet and Plant 8.65 8.62 (0.03) (0.3%)Sew age Treatment Charge 3.69 3.86 0.17 4.4%Insurance Premiums 1.82 1.82 - 0.0%Other Expenditure 2.40 1.80 (0.60) (33.3%)Consultants 1.40 2.02 0.62 30.7%Regulatory Expenses 0.07 0.09 0.02 22.2%Total Controllable Expenditure 110.65 111.88 1.23 1.1%Total Operating Expenditure 311.73 315.68 3.95 1.3%

Loss on Sale of Assets 6.18 5.00 (1.18) (23.6%)

Net Profit before Capital Revenue 208.05 208.55 0.50 0.2%

Capital RevenueDevelopers Contributions 51.07 46.50 4.57 9.8%Contributions and Donations Received 0.00 0.00 - 0.0%Contributed Assets 44.10 40.00 4.10 10.3%Total Capital Revenue 95.17 86.50 8.67 10.0%

EBITDA 303.22 295.05 8.17 2.8%

Depreciation 96.38 95.00 1.38 1.5%

EBIT 206.84 200.05 6.79 3.4%Interest Expense (QTC Loan) 2.51 2.51 - 0.0%Interest Margin Expense 0.88 0.88 - 0.0%Shareholder Interest Expense 88.82 88.82 - 0.0%Income Tax Equivalents 40.68 38.52 2.16 5.6%NPAT 73.95 69.32 4.63 6.7%

Contribution - Whole of City projects 1.00 1.00 - 0.0%

Retained earnings impact after participation return 72.95 68.32 4.63 6.8%

Variance

36 Adopted Report


Attachment 3.3.1 Attachment 3: Detailed Income Statement - Cash

Water and Sewerage Services Financial Management Statement {Cash}

2018-19Actuals

Revised Budget

30 June 2019 $M $M $M %Operating RevenueAccess Charges 247.69 247.98 (0.29) (0.1%)Usage Charges Revenue 263.34 266.71 (3.37) (1.3%)Less: Concealed Leakage (2.13) (2.10) 0.03 (1.4%)Interest on Outstanding Rates 2.49 2.25 0.24 10.7%Interest on Investments 10.26 10.26 - 0.0%Other Operating Income 4.31 4.13 0.18 4.4%Total Operating Revenue 525.96 529.23 (3.27) (0.6%)

Flow-Dependant ExpenditureBulk Water Purchase 183.69 185.72 2.03 1.1%Electricity 9.74 10.49 0.75 7.1%Biosolids Disposal 4.05 3.98 (0.07) (1.8%)Chemicals 3.60 3.61 0.01 0.3%Total Flow-Dependant Expenditure 201.08 203.80 2.72 1.3%

Operating Revenue net of Flow-Dependant Expenditure 324.88 325.43 (0.55) (0.2%)

Controllable ExpensesEmployee Expenses 48.39 50.17 1.78 3.5%Materials and Services 27.36 26.91 (0.45) (1.7%)Council Corporate SLAs 19.92 19.92 - 0.0%Internal Directorate SLA (3.05) (3.33) (0.28) 8.4%Fleet and Plant 8.65 8.62 (0.03) (0.3%)Sew age Treatment Charge 3.68 3.85 0.17 4.4%Insurance Premiums 1.82 1.82 - 0.0%Other Expenditure 2.24 1.80 (0.44) (24.4%)Consultants 1.40 2.02 0.62 30.7%Regulatory Expenses 0.07 0.09 0.02 22.2%Total Controllable Expenses 110.48 111.87 1.39 1.2%Total Operating Expenses 311.56 315.67 4.11 1.3%

Net Profit before Capital Revenue 214.40 213.56 0.84 0.4%

Capital RevenueDeveloper Contributions Funding 51.07 46.50 4.57 9.8%Contribution / Donations Received (Capita 0.00 0.00 - 0.0%Reserve Funding 0.00 0.00 - 0.0%Total Capital Revenue 51.07 46.50 4.57 9.8%

EBIT 265.47 260.06 (5.41) (2.1%)Interest Expense (QTC loan) 2.51 2.51 - 0.0%Interest Margin Expense 0.88 0.88 - 0.0%Shareholder Interest Expense 88.82 88.82 - 0.0%Income Tax Equivalents 40.68 38.52 (2.16) (5.6%)NPAT 132.58 129.33 3.25 2.5%

Contribution - Whole of City projects 1.00 1.00 - 0.0%Participation Return 0.00 0.00 - 0.0%Less Developer Conts Revenue 51.07 46.50 (4.57) (9.8%)Plus Developers Conts Funding (22.01) (23.03) (1.02) 4.4%Debt Redemption 4.69 4.69 - 0.0%Capital Expenditure 77.28 92.09 14.81 16.1%

Transfer to Reserves 20.55 8.08 12.47 154.3%

Variance

37 Adopted Report


Attachment 3.4.1

Attachment 4: Concealed Leakage Remission by Suburb 2018-19

Water Sewer TotalMERMAID BEACH 39,990 85,684 125,674 6%PALM BEACH 71,417 49,779 121,197 6%BURLEIGH HEADS 51,330 66,962 118,292 6%SOUTHPORT 64,871 41,816 106,687 5%SURFERS PARADISE 54,732 50,080 104,812 5%CURRUMBIN WATERS 78,918 14,800 93,719 4%MERMAID WATERS 78,863 6,816 85,679 4%MUDGEERABA 58,461 20,687 79,148 4%NERANG 52,369 11,586 63,955 3%BUNDALL 37,444 21,542 58,987 3%BROADBEACH WATERS 54,530 2,351 56,881 3%ROBINA 52,234 3,580 55,814 3%ARUNDEL 13,996 40,980 54,976 3%RUNAWAY BAY 45,138 9,563 54,701 3%ELANORA 51,628 - 51,628 2%ASHMORE 48,751 503 49,254 2%BURLEIGH WATERS 38,615 7,359 45,974 2%PARADISE POINT 36,878 5,191 42,069 2%TALLAI 39,407 - 39,407 2%LABRADOR 34,017 5,138 39,155 2%REMAINDER 490,589 191,141 681,730 32%TOTAL REMISSIONS PAID 1,494,178 635,560 2,129,738 100%

% of Total

TOTAL REMISSIONSSuburb

38 Adopted Report


Attachment 3.5.1

This page / attachment has been redacted due to confidential content.


Attachment X.2

Attachment 3.5.2 This page / attachment has been redacted due to confidential content.


Attachment 3.5.3 This page / attachment has been redacted due to confidential content.


ITEM 4 WATER AND WASTE WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) Attachment 1: Status Update – Major Investments Attachment 2: Detailed Income Statement – Accrual Attachment 3: Detailed Income Statement – Cash 1 BASIS FOR CONFIDENTIALITY Not Applicable. 2 EXECUTIVE SUMMARY Not Applicable. 3 PURPOSE OF REPORT The purpose of this report is to provide the Water and Waste Committee with the results of Waste Services financial performance for the 2018-19 financial year. Within the report, the “revised budget” refers to the March 2019 Budget Review. 4 PREVIOUS RESOLUTIONS


The City’s 2018-19 Budget was adopted by Council at the Budget Meeting held on 21 June 2018. Ex Minute No B17.1207.003 3 That Council approve the net increase of $2.3 million to be transferred to the

Waste Management Reserve. 4 That Council note budget variations per Attachments 2 and 3 are included in

the September 2017 Budget Review.

Ex Minute No G19.0130.031 3 That Council approve the decrease of $0.2 million to be transferred from the

Waste Management Reserve, with total anticipated transfer from Reserve now being $1.4 million for the 2018-19 financial year.

4 That Council note budget variations per Attachments 2 and 3 are included in the December 2018 Budget Review.


1 That Council approve the net increase of $2.5 million to be transferred to the

Waste Management Reserve. 2 That Council note budget variations per Attachments 2 and 3 are included in the

March 2019 Budget Review.


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) 5 DISCUSSION The Water and Waste (WW) Directorate is responsible for two of the City’s commercial business units as defined in the Local Government Regulation 2012, Gold Coast Water (GCW) and Gold Coast Waste Management (GCWM). GCWM is responsible for solid waste collection and disposal services across the City. While GCWM is a commercial business unit within Council, it is required to comply with the requirements applicable to waste businesses under the Waste Reduction and Recycling Act (2011) as well as the Local Government Act (2009). This report outlines the performance for the GCWM commercial business unit which, for the purposes of this report, is known as Waste Services. 5.2 Waste Services High Level Financial Summary Table 1 provides a summary of Waste Services financial outcomes for 2018-19:

Table 1: Waste Services – Summary Financial Management Statement

Net Profit is 24% ($8.3 million) below revised projections, with Earnings before Interest and Taxation (EBIT) 29.6% ($7.7 million) below revised projections. An $11.5 million Landfill Remediation Liability adjustment is the key driver for this outcome. Exclusive of this adjustment, Net Profit would be $37.84 million which is $3.2 million (9.3%) higher than revised projections. In accordance with taxation law, as the Landfill Remediation Liability adjustment is not a cash outgoing, this adjustment is excluded from taxation calculations. Income Tax Equivalents paid to the City was $0.8 million higher than projections in line with better than projected operating results.

Summary Financial Management Statement

Actual Revised Budget

2017-18 Actuals

30 June 2019 $M $M $M % $MOperating Revenue 111.87 109.68 2.19 2.0% 110.40Operating Expenses 84.89 75.05 (9.84) (13.1%) 70.67Operating Result 26.98 34.63 (7.65) (22.1%) 39.73Loss on Sale of Assets 0.63 0.00 (0.63) 0.0% 0.80Net Profit 26.35 34.63 (8.28) (23.9%) 38.93Depreciation / Amortisation 8.03 8.60 0.57 6.6% 9.34Earnings Before Interest and Taxation 18.32 26.03 (7.71) (29.6%) 29.59Interest Expense (QTC loan) 3.79 3.79 0.00 0.0% 4.16Interest Margin Expense 0.15 0.15 0.00 0.0% 0.21Income Tax Equivalents 8.73 7.91 (0.82) (10.4%) 9.23Net Profit After Taxation 5.65 14.18 (8.53) (60.2%) 16.00Participation Return 7.69 7.69 0.00 0.0% 7.69Contribution to Whole of City projects 0.00 0.00 0.00 0.0% 0.00Retained Earnings (2.04) 6.49 (8.53) (131.4%) 8.31

Variance


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) 5.12 Distribution of Earnings Earnings before Interest and Taxation (EBIT) for the period ended 30 June 2019, on a cash basis, is $38.9 million (operating revenue of $111.9 million less operating expenditure of $73.0 million). This result exceeds the target set at the March 2019 Budget Review by 12.2% ($4.2 million) and is 2.5% ($1.0 million) lower than the 2017-18 result. The table below sets out the distribution of these earnings. The final position results in Total Transfers to Reserves of $9.4 million. These funds are being accumulated for future years’ capital and landfill remediation requirements.

Table 2: Waste Services – Distribution of Earnings

5.13 Returns to Community Waste Services operates as a commercial business unit and provides an appropriate return to the community, based on the City’s investment in the business. Returns paid to the City for 2018-19 exceeded the target set at the March 2019 Budget Review by $1.0 million (5.7%), as outlined in the table below:

Table 3: Waste Services – Returns to Community

The increase in returns is due to a combination of higher income tax equivalents as a result of higher than projected operating profit and increased land tax payable to the City. The increase in land tax payments resulted from Government changes to the rate applicable for land tax.

Distribution of Earnings Actual Revised Budget

2017-18 Actuals

30 June 2019 $M $M $M % $MInterest Expense (External) 3.79 3.79 0.00 0.0% 4.16Principal Repayment (External) 7.65 7.65 0.00 0.0% 8.32Loan Funding (3.34) (3.34) 0.00 0.0% (0.74)Debt Service Movement 8.10 8.10 0.00 0.0% 11.74Capital Expenditure 4.81 8.45 3.64 43.1% 2.91Capital Expenditure 4.81 8.45 3.64 43.1% 2.91Tax Equivalents (30% taxable earnings) 8.73 7.91 (0.82) (10.4%) 9.23Contribution to Whole of City projects 0.00 0.00 0.00 0.0% 0.00Participation Return 7.69 7.69 0.00 0.0% 7.69Interest Expense Margin 0.15 0.15 0.00 0.0% 0.21Payment to Council(Excluding SLA, Fleet & Plant and Land Tax) 16.57 15.75 (0.82) (5.2%) 17.13

Retained Earnings for future Capital Works Investment

9.36 2.32 (7.04) (303.3%) 8.08

Total Transfers to Reserve 9.36 2.32 (7.04) (303.3%) 8.08

Total Distribution 38.85 34.63 (4.22) (12.2%) 39.86

Variance

Community Returns Actual Revised Budget

2017-18 Actuals

30 June 2019 $M $M $M % $MInterest Margin Expense 0.15 0.15 0.00 0.0% 0.21Income Tax Equivalents 8.73 7.91 0.82 10.4% 9.23Land Tax Equivalent 2.72 2.50 0.22 8.8% 2.32Participation Return 7.69 7.69 0.00 0.0% 7.69Contribution to Whole of City projects 0.00 0.00 0.00 0.0% 0.00Return to Community 19.29 18.25 1.04 5.7% 19.45SLA Costs 2.74 2.74 0.00 0.0% 2.47Insurance Premiums 0.08 0.08 0.00 0.0% 0.08Fleet & Plant Charges 8.67 10.21 (1.54) (15.1%) 8.98Total Payments to Council 30.78 31.28 (0.50) (1.6%) 30.98

Variance


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) Total Payments to Council during the year were $30.8 million which was $0.5 million (0.5%) lower than revised projections and $0.2 million (0.7%) lower than 2017-18. The lower payments to Council are due to reduced Fleet & Plant Charges being incurred within the Waste Service business. Efforts have been ongoing to review all hire charges incurred and to reduce this significant operating expense, this work will continue during 2019-20. 5.14 Operating Revenue

Table 4: Waste Services Operating Revenue

The overall operating revenue result for 2018-19 was a positive variance against revised budget of $2.2 million (2.0%) comprising an additional:

· $1.4 million in Recycling Revenue due to a combination of funds received for the “Containers for Change” scheme and higher than projected scrap steel sales;

· $0.69 million from Internal Tipping Charges; and · $0.67 million in waste collection (rates) revenue due to higher than forecast growth in

services.

These items were offset by lower than projected (external) Tipping Charges which have been impacted by the establishment of a privately operated landfill in close proximity to the City’s Stapylton landfill. Table 5 shows the total number of bins in service as at 30 June 2019 and growth experienced this financial year.

Waste Services Operating Revenue Actual Revised Budget

2017-18 Actuals

30 June 2019 $M $M $M % $MWaste Utility Rate Revenue 84.66 83.99 0.67 0.8% 81.13Refuse Tipping Fees 6.68 7.24 (0.56) (7.7%) 8.45Recycling Revenue 2.80 1.41 1.39 98.6% 2.39Fees and Charges 1.33 1.40 (0.07) (5.0%) 1.74Internal Tipping Charges 11.01 10.32 0.69 6.7% 10.80Community Service Obligations 3.25 3.25 - 0.0% 3.20Interest on Outstanding Rates 0.35 0.28 0.07 25.0% 0.30Interest on Investments 0.97 0.97 - 0.0% 0.69Contributions & Donations Revenue 0.38 0.38 - 0.0% 0.87Other Operating Income 0.44 0.44 - 0.0% 0.83Total Operating Revenue 111.87 109.68 2.19 2.0% 110.40

Variance


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13)

Table 5 - Waste Collection Services

5.15 Operating Expenses Operating Expenses were $1.7 million (2.2%) below revised projections, as illustrated in Table 6 below:

Table 6: Waste Services Operating Expenses

Operating Expenses include an expense of $11.5 million, being an adjustment to the Landfill Remediation Liability as at 30 June 2019. The Landfill Remediation Liability will be addressed in Section 5.8 of this report.

Waste collection binsBins in service as at 30 June

2019

Bins in service as at 30 June

2018 Bin increase\

(decrease) % General waste (weekly)Domestic w heelie bins 193,369 190,187 3,182 1.7%Commercial w heelie bins 7,192 7,145 47 0.7%Bulk bins (domestic and commercial) 3,012 2,933 79 2.7%Total weekly general waste services 203,573 200,265 3,308 1.7%Recyclable waste (weekly) Commercial w heelie bins 423 386 37 9.6%Bulk bins (domestic and commercial) 1,608 1,539 69 4.5%Total w eekly recyclable w aste services 2,031 1,925 106 5.5%Recyclable waste (fortnightly)Domestic w heelie bins 185,271 181,918 3,353 1.8%Commercial w heelie bins 2,589 2,515 74 2.9%Total fortnightly recyclable waste services 187,860 184,433 3,427 1.9%Other (fortnightly)Green w aste 30,841 27,415 3,426 12.5%Total fortnightly other services 30,841 27,415 3,426 12.5%Food waste (weekly)Bulk bins (domestic and commercial) 45

Year to Date

Waste Services Operating Expenses

Actual Revised Budget

2017-18 Actuals

30 June 2019 $M $M $M % $MEmployee Expenses 9.16 9.58 0.42 4.4% 9.46Materials and Services 14.22 12.93 (1.29) (10.0%) 13.60Council Corporate SLAs 2.74 2.74 - 0.0% 2.47Internal Directorate SLA 3.05 3.33 0.28 8.4% 2.74Waste Collection Payments 28.23 28.52 0.29 1.0% 26.73Fleet and Plant 11.60 13.36 1.76 13.2% 11.94Consultants 1.37 1.86 0.49 26.3% 1.05Electricity 0.15 0.15 - 0.0% 0.15Insurance Premiums 0.08 0.08 - 0.0% 0.08Other Expenditure 2.80 2.50 (0.30) (12.0%) 2.45Operating Expenses 73.40 75.05 1.65 2.2% 70.67

Landfill Remediation Adjustment 11.49 0.00 (11.49) 0.0% 0.00

Total Operating Expenses 84.89 75.05 (9.84) (13.1%) 70.67

Variance


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) Specific expenditure items to be highlighted include: Material and Services:

· Leachate Management: despite reducing the budget for leachate management at the March 2019 budget review by $2 million due to disposing and treating leachate at the Coombabah Sewage Treatment Plant (instead of a private contractor) and drier weather conditions, further savings of $0.1 million were achieved during the last quarter of the financial year;

· Greenwaste: suspension of contract payments for greenwaste haulage, following the contractor going into liquidation, resulted in lower expenditure for this service. An alternate interim arrangement is in place;

· Protective Services: a service arrangement has been entered into with the City’s

Organisational Services Directorate to provide protective services officers to operate at the City’s Waste and Recycling Centres. Due to safety concerns, these officers commenced at our WRC’s during the latter part of 2018-19, incurring costs that had not been provided for.

· Environmental Monitoring: some increases in expenditure related to environmental

monitoring and laboratory testing has been incurred as we seek to improve and minimise our impacts on the City’s natural environment.

Fleet and Plant: following closer review of fleet and plant charges, savings in plant hire costs have been realised, with short-term plant hire being specifically monitored and reduced during the second half of the financial year.

5.16 Non-Cash Expenses Depreciation Expense for the year totalled $8.0 million which was 6.7% below the projection of $8.6 million. This was offset by the recognition of $0.6 million Loss on Asset Disposal for which no budget allocation had been provided. 5.17 Capital Program

5.7.1 Capital Expenditure The initial 2018-19 Waste Services capital program consisted of 18 projects totalling $12.73 million. The revised budget following budget reviews during the year was $8.45 million across 17 projects.



Table 7: Capital Expenditure

The final capital expenditure for 2018-19 was $4.5 million which represents a variance of 46.7% against the revised budget of $8.45 million and 64.6% against the initial budget of $12.73 million. Refer to Attachment 1 for a status update of major capital investment projects.

5.7.2 Capital Program Achievements Ten capital works projects were completed in the 2018-19 financial year. Significant projects completed are listed in the table below.

Table 8: Significant Capital Projects Completed

Expenditure Revised Budget Initial Budget Variance Variance

($M) ($M) ($M) ($M) %

Landfills 2.69 5.77 9.78 3.08 53.4%

Waste and Recycling Centres 1.81 2.68 2.45 0.87 32.4%

Fleet and Plant 0.00 0.00 0.50 0.00 0.0%

Total Capital 4.50 8.45 12.73 3.95 46.7%

Waste Services Capital Expenditureas at 30 June 2019

Product

Actuals v Revised Budget

PROJECT 2018-19 EXPENDITURE

TOTAL PROJECT

EXPENDITUREWRC Minor Renewals 2018-19 503,090 515,965

Merrimac Green Waste Pad 359,786 360,861

Landfill Minor Renewals 2018-19 125,508 130,584

WRC Minor Renewals 2017-18 103,699 826,177

Sub Total (Significant Projects) 1,092,084 1,833,587

Other Completed Projects 116,263 1,275,816

TOTAL 1,208,347 3,109,403



5.18 Community Service Obligations

In accordance with Sections 23 and 24 of the Local Government Regulation 2012:

…The cost of carrying out community service obligations, less any revenue received from performing the obligations, must be treated as revenue for the significant business activity. {Section 23} (and)

…A community service obligation is an obligation the local government imposes on a business entity to do something that is not in the commercial interests of the business entity to do. Example of a community service obligation – giving a price concession to a particular group of customers, including pensioners, seniors and students {Section 24}

Table 9 provides a summary of Community Service Obligations (CSO) provided to Waste Services for the 2018-19 year.

Table 9 – Community Service Obligations

Commencing 1 July 2019, Refuse Charge Donations have been transferred to the Organisational Services Directorate and will no longer form part of the City’s Waste Services Community Service Obligation. This item will sit within the Revenue Services budget responsibility area and appropriate budgetary transfers are being undertaken as part of the September 2019 budget review. Total CSO costs of $3.2 million were reimbursed by the City during the year, as shown in the Waste Services Financial Management Statement (Attachment 2). As part of the City’s year-end balancing, the final cash position for the Waste Services business was amended to reflect the lower reimbursement required of $3.12 million.

Community Service Obligation2018-19 Actual($M)

2018-19 Revised Budget

($M)

Variance($M)

Variance(%)

2017-18 Actual($M)

Refuse Charge Donations 0.59 0.56 0.03 6% 0.55

Free Tipping Donations 0.45 0.49 (0.03) (6.3%) 0.45

Kerbside Collection 1.13 1.19 (0.06) (4.7%) 1.07

Stradbroke Island Waste Disposal 0.49 0.46 0.03 6% 0.45

Clean-Up Australia Day 0.01 0.02 (0.01) (38.1%) 0.02

Carcass Collection 0.06 0.06 (0.00) (3.9%) 0.04

Street and Park Bin Services 0.38 0.37 0.01 3% 0.33

E-Waste - 0.09 0% -

TOTAL Community Service Obligation 3.12 3.24 (0.03) (0.8%) 2.91


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) 5.19 Landfill Remediation In accordance with Australian Accounting Standards, the City is required to account for future liabilities related to the remediation, restoration and ongoing environmental and other monitoring requirements for our landfill sites (two active and five closed landfill sites). As part of the City’s environmental obligations associated with the operation of these landfill sites, there is a legislative requirement to monitor and remediate the environmental impacts of these sites, both during their active life and following cessation of their utilisation as a landfill. Environmental Approvals (EA) for landfills require post closure monitoring for a period of thirty (30) years. A model has been prepared to estimate the value of this future liability, based on inputs expected to be required at each landfill site, upon cessation. The cost of meeting EA requirements for active landfills are an operational expense and do not form part of liability calculation. The final liability calculated as at 30 June 2019 is $81.2 million, which represents a net increase of $11.2 million over the liability value presented in the City’s 2017-18 Financial Statements. An Operating Expense of $11.5 million has been recorded to recognise movements, exclusive of costs incurred during 2018-19, as detailed in Table 10 below:

Table 10 – Landfill Remediation Liability Movements 2018-19

5.20 Waste Management Reserve Cash surpluses from waste management operations are transferred to the Waste Management Reserve. These cash reserves are being accumulated to provide for:

(1) Future funding requirements for the replacement, renewal and expansion of assets required to deliver waste management services; and

(2) Landfill remediation and post-closure environmental monitoring requirements – considerable post closure and remediation costs will be incurred on landfill sites once they are exhausted.

With the movements processed as part of the 2018-19 year, the reserve balance, as at 30 June 2019 is $38.3 million. Year-end surplus movements will be recognised as part of the July 2019 budget review.

LANDFILL REMEDIATION LIABILITY VALUE($ M)

Opening Balance 70.0Estimation Adjustment 1.8Revised Opening Balance 71.8Annual Discounting Movement 1.8Change in Discount Rate 13.5Revision of Restoration Dates (0.3)Revision of Future Costs (5.3)Liability Balance (excl. costs incurred) 81.5Costs Incurred - current year (0.3)Closing Liabliity Value 81.2


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) 6 ALIGNMENT TO THE CORPORATE PLAN, CORPORATE STRATEGIES AND

OPERATIONAL PLAN Not Applicable. 7 FUNDING AND RESOURCING REQUIREMENTS Not Applicable. 8 RISK MANAGEMENT The following risk assessment applies to this report:

Risk Number Description

Risk No. CO000435 Failure to achieve a sustainable long term financial position leading to negative impacts on Council’s ability to deliver on its key focus area commitments.

9 STATUTORY MATTERS Not Applicable. 10 COUNCIL POLICIES § Revenue Policy § Gold Coast City Council Budget Review Policy 11 DELEGATIONS Not Applicable. 12 COORDINATION AND CONSULTATION Name and/or Title of the Stakeholder Consulted

Directorate or Organisation

Is the Stakeholder Satisfied With Content of Report and Recommendations (Yes/No) (comment as appropriate)

Marilyn Hildebrandt Executive Coordinator – Directorate Finances

Office of the COO Yes

13 STAKEHOLDER IMPACTS Not Applicable. 14 TIMING Not Applicable.


ITEM 4 (Continued) WASTE SERVICES FINANCIAL PERFORMANCE AS AT 30 JUNE 2019 FN334/252/19(P13) 15 CONCLUSION As a commercial business unit within the City of Gold Coast, Waste Services operates in accordance with the requirements of Waste Reduction and Recycling Act (2011) and the Local Government Act 2009, and provide an appropriate return to the community on its investment in the business. For the 2018-19 financial year, total returns to the community of $19.3 million have been achieved. This result is $1.0 million (5.7%) greater than March 2019 budget review projections and $0.2 million (0.8%) lower than last financial year.

Table 11: Waste Services Community Returns

16 RECOMMENDATION It is recommended that Council resolves as follows: That Council note the Waste Services Financial Performance Report for the 2018-19 financial year.

Author: Authorised by: Karen O’Brien Paul Heaton Manager Business Performance Director Water and Waste 4 September 2019 TRACKS REF: 74339857 COMMITTEE RECOMMENDATION WW19.0917.004 moved Cr PC Young seconded Cr La Castra That Council note the Waste Services Financial Performance Report for the 2018-19 financial year.

CARRIED

Community Returns Actual Revised Budget

2017-18 Actuals

30 June 2019 $M $M $M % $MInterest Margin Expense 0.15 0.15 0.00 0.0% 0.21Income Tax Equivalents 8.73 7.91 0.82 10.4% 9.23Land Tax Equivalent 2.72 2.50 0.22 8.8% 2.32Participation Return 7.69 7.69 0.00 0.0% 7.69Contribution to Whole of City projects 0.00 0.00 0.00 0.0% 0.00Return to Community 19.29 18.25 1.04 5.7% 19.45SLA Costs 2.74 2.74 0.00 0.0% 2.47Insurance Premiums 0.08 0.08 0.00 0.0% 0.08Fleet & Plant Charges 8.67 10.21 (1.54) (15.1%) 8.98Total Payments to Council 30.78 31.28 (0.50) (1.6%) 30.98

Variance


Attachment 4.1.1 Attachment 1: Status Update – Major Capital Projects Reedy Creek Landfill Cells 3 and 4 Program scope and budget The Environmental Authority for the Reedy Creek Landfill requires that all landfill cells have an appropriately designed and constructed landfill liner system to provide adequate protection against possible environmental impacts such as contamination of local ground water by landfill leachate. The construction of Cell 3 at Reedy Creek is programmed for completion by the end of 2018-19. This will maintain availability of landfill void space at Reedy Creek as existing landfill cells come to the end of their useful lives. The project initially involved the design and construction of Cell 3 inclusive of bulk earthworks, engineered liner and leachate drainage systems. Recent airspace calculations have indicated that Reedy Creek will reach capacity sooner than originally scheduled. It has been determined that there are considerable benefits in constructing Cell 4 in conjunction with Cell 3 and the project scope has been amended accordingly. Cell 4 is scheduled for completion by the end of 2019-20. Initial budget for 2018-19 was $4.88 million. A budget decrease of $1.93 million was approved for the 2018-19 following deferral of works pending the review of the Landfill Masterplan.

· September Budget Review No change · March Budget Review $1.93 million decrease

Achievements for 2018-19 · Design of the project was completed · Contract for the construction of the project was awarded Major issues · A significant concern was identified post award of the construction contract regarding the

ability of the material excavated in the construction of Cells 3 and 4 to be stored on site which has led to the construction contract being suspended. This issue is expected to be resolved prior to the end of 2019. Construction of this project will be rescheduled following resolution of this issue.

Financial Performance:

Forecast ($) 2,950,000 Budget ($) 9,218,648






Attachment 4.1.2 Stapylton Landfill Main Access Upgrade Program scope and budget A Master Plan for Stapylton Landfill was developed in 2017-18 which included recommendations to reconfigure the access road network and replace the existing wheel wash system. This project is for the design and construction of the main access road, roundabout realignment and a new wheel wash facility. The road and enhanced wheel wash infrastructure will enable improved traffic management, compliance with environmental regulations and the prevention of tracking vehicle mud and dirt off site and onto public roads. Initial budget for 2018-19 was $2.00 million.

· September Budget Review No change · March Budget Review No change

Achievements for 2018-19 · Design of the project completed · Construction on site commenced Major issues · None at this stage Financial Performance

Forecast ($) 2,000,000 Budget ($) 3,178,840






Attachment 4.1.3 Solid Waste Strategy Implementation Program scope and budget The Solid Waste Strategy 2024 was endorsed by Council in September 2015. The Strategy provides a framework for the City to develop a more sustainable and integrated approach to solid waste management. The Strategy spans nine years and is a legislative requirement under the Waste Reduction and Recycling Act 2011 (s121). The annual program of work contributes to achieving the four Strategy outcomes: § The City and community actively practise waste avoidance and other positive waste

behaviours. § Waste re-use, recycling and resource recovery opportunities are maximised prior to

landfill disposal. § Our capacity to manage future waste is secured. § Solid waste management has minimal negative impact on our environment and public

health. The impact of the Waste Levy from 1 July 2019 will increase the importance of this program of work to minimise waste going to landfill and the financial impact on the City and its Customers. Initial budget for 2018-19 was $4.38 million. Achievements for 2018-19 § Commercial Food Waste

o The service diverted approximately 500 tonnes of food waste from landfill for the

2018-19 financial year.

§ Resource Recovery o Total domestic waste resource recovery achieved for 2018-19 is 30.9%, 4.1%

below the annual target of 35%. o Total waste resource recovery achieved for June is 35.1%. The YTD recovery

result is 37.44% which is 7.56% below the annual target of 45%.

Major issues · No major issues. Financial Performance

Forecast ($) 4,330,020 Budget ($) 4,384,020


Variance ($) 574,662 Remaining ($) 628,662




Attachment 4.1.4 Waste and Recycling Centre Bin Bay Upgrades Program scope and budget This project is to upgrade bin bays at Reedy Creek, Helensvale, Merrimac, Jacobs Well and Springbrook Waste and Recycling Centres to address operational and safety concerns. The program of works aims to eliminate manual handling issues associated with the current configuration of bin flaps, minimise risk of damage to bin bay infrastructure and streamline the delivery and removal of bulk bins within the facilities. Initial budget for 2018-19 was $1.00 million. Budget decreases totalling $0.78 million were approved for the 2018-19 financial year due to delays resulting from identification of additional scope and subsequent amended designs.

· September Budget Review $0.70 million decrease · March Budget Review $0.08 million decrease

Achievements for 2018-19 · Design of the project has been largely completed Major issues · None at this stage Financial Performance

Forecast ($) 220,000 Budget ($) 1,504,000






Attachment 4.1.5 Stapylton Landfill Cell 7 Program scope and budget The Environmental Authority for the Stapylton landfill requires that all landfill cells have an appropriately designed and constructed landfill liner system to provide adequate protection against possible environmental impacts such as contamination of local ground water by landfill leachate. The project involves the design and construction of Cell 7 inclusive of bulk earthworks, engineered liner and leachate drainage systems. Construction works are scheduled for completion in 2019-20. This will maintain availability of landfill void space at Stapylton as existing landfill cells come to the end of their useful lives. Initial budget for 2018-19 was $0.52 million. The budget for 2018-19 was reduced to nil at the December 2018 budget review. This project has been deferred to future years in line with the Stapylton Landfill Master Plan. Financial Performance

Forecast ($) - Budget ($) 5,390,000


Variance ($) - Remaining ($) 5,390,000




Attachment 4.1.6 Waste and Recycling Centre Compaction Plant 2018-19 Program scope and budget The Waste and Recycling Centres (WRCs) currently have limited compaction mechanisms in place resulting in Roll-On Roll-Off bins (RORO) being transported from WRCs below their maximum load capacity. This project aims to acquire specialised plant to improve bin compaction rates at WRCs, increasing RORO bin load capacity which will ultimately improve transport efficiencies. The initial budget for 2018-19 was $0.50 million. The budget for 2018-19 was reduced to nil at the December 2018 budget review. This project has been deferred to future years. Financial Performance

Forecast ($) - Budget ($) 500,000


Variance ($) - Remaining ($) 500,000




Attachment 4.1.7 Reedy Creek Landfill Internal Road Upgrade and Stormwater Entrance Program scope and budget The upgrade of the entrance road will improve the line of sight for security and supervision of vehicles entering the site and the inclusion of a roundabout will allow easy direction flow for traffic and slow traffic entering the site improving safety. The upgrade of internal roads and sealing the perimeter will reduce dust, erosion and stormwater impact both on and off site. The sealed roads will also allow for line marking improving safety for staff and visitors. The upgraded storm water diversion and catchment system will enable improved capture of stormwater both on site and from stormwater flowing into the site and enclosing the sedimentation ponds will improve safety and amenities. This project incorporates the design and construction of an upgraded storm water diversion and catchment system to redirect flow into the existing treatment system and to upgrade the front entrance and internal road network at Reedy Creek Landfill. The initial budget for 2018-19 was $0.30 million. The budget for 2018-19 was reduced to nil at the December 2018 budget review. This project has been deferred to future years. Financial Performance







Attachment 4.1.8 Stapylton Landfill Internal Road Upgrade and Sediment and Erosion Control Program scope and budget The upgrade of internal roads and sealing the perimeter will reduce dust, erosion and stormwater impact both on and off site. The sealed roads will also allow for line marking improving safety for staff and visitors. The sediment and erosion control project is for the construction of a stormwater sedimentation basin or other detained surface water runoff treatment system at Stapylton Landfill to better manage the capture, control, treatment and release of storm water. Infrastructure at critical control points will be installed to better control stormwater flows to minimise adverse environmental impacts and earthen bank protection works will be undertaken to reduce erosion and sediment generation. The budget for 2018-19 was reduced to nil at the December 2018 budget review. The Sediment and Erosion Control works have been deferred to future years and the Internal Road Upgrade works have been combined with the Stapylton Landfill Main Access Upgrade project. Financial Performance







Attachment 4.2.1 Attachment 2: Detailed Income Statement - Accrual

Waste Services Financial Management Statement

Actual Initial Budget

Revised Budget

30 June 2019 $M $M $M $M %RevenueWaste Utility Rate Revenue 84.66 83.99 83.99 0.67 0.8%Refuse Tipping Fees 6.68 8.29 7.24 (0.56) (7.7%)Recycling Revenue 2.80 1.08 1.41 1.39 98.6%Fees & Charges 1.33 2.50 1.40 (0.07) (5.0%)Internal Tipping Charges 11.01 7.82 10.32 0.69 6.7%Community Service Obligations 3.25 3.25 3.25 - 0.0%Interest on Outstanding Rates 0.35 0.15 0.28 0.07 25.0%Interest on Investments 0.97 0.63 0.97 - 0.0%Contributions & Donations Revenue 0.38 0.38 0.38 - 0.0%Other Operating Income 0.44 0.04 0.44 - 0.0%Total Operating Revenue 111.87 108.13 109.68 2.19 2.0%

Operating ExpensesEmployee Expenses 9.16 8.86 9.58 0.42 4.4%Materials and Services 14.22 15.85 12.93 (1.29) (10.0%)Council Corporate SLAs 2.74 2.74 2.74 - 0.0%Internal Directorate SLA 3.05 3.33 3.33 0.28 8.4%Waste Collection Payments 28.23 27.56 28.52 0.29 1.0%Fleet and Plant 11.60 10.93 13.36 1.76 13.2%Consultants 1.37 1.20 1.86 0.49 26.3%Electricity 0.15 0.15 0.15 - 0.0%Insurance Premiums 0.08 0.08 0.08 - 0.0%Landfill Remediation Adjustment 11.49 0.00 0.00 (11.49) 0.0%Other Expenditure 2.80 2.50 2.50 (0.30) (12.0%)Total Operating Expenses 84.89 73.20 75.05 (9.84) (13.1%)

Total Operating Profit 26.98 34.93 34.63 (7.65) (22.1%)

Loss on Sale of Assets 0.63 0.00 0.00 (0.63) 0.0%

EBITDA 26.35 34.93 34.63 (8.28) (23.9%)

Depreciation 8.03 8.60 8.60 0.57 6.6%

EBIT 18.32 26.33 26.03 (7.71) (29.6%)Interest Expense (QTC Loan) 3.79 3.94 3.79 - 0.0%Interest Margin Expense 0.15 0.15 0.15 - 0.0%Income Tax Equivalents 8.73 7.94 7.91 (0.82) (10.4%)NPAT 5.65 14.30 14.18 (8.53) (60.2%)

Dividend 7.69 7.69 7.69 - 0.0%

Retained Earnings (2.04) 6.61 6.49 (8.53) (131.4%)

Variance


Attachment 4.3.1 Attachment 3: Detailed Income Statement – Cash

Waste Services Financial Management Statement {Cash}

Actual Initial Budget

Revised Budget

30 June 2019 $M $M $M $M %Operating RevenueWaste Utility Rate Revenue 84.66 83.99 83.99 0.67 0.8%Refuse Tipping Fees 6.68 8.29 7.24 (0.56) (7.7%)Recycling Revenue 2.80 1.08 1.41 1.39 98.6%Fees & Charges 1.33 2.50 1.40 (0.07) (5.0%)Internal Tipping Charges 11.01 7.82 10.32 0.69 6.7%Community Service Obligations 3.25 3.25 3.25 - 0.0%Interest on Outstanding Rates 0.35 0.15 0.28 0.07 25.0%Interest on Investments 0.97 0.63 0.97 - 0.0%Contributions & Donations Revenue 0.38 0.38 0.38 - 0.0%Other Operating Income 0.44 0.04 0.44 - 0.0%Total Operating Revenue 111.87 108.13 109.68 2.19 2.0%

Operating ExpensesEmployee Expenses 9.16 8.86 9.58 0.42 4.4%Materials and Services 14.22 15.85 12.93 (1.29) (10.0%)Council Corporate SLAs 2.74 2.74 2.74 - 0.0%Internal Directorate SLA 3.05 3.33 3.33 0.28 8.4%Waste Collection Payments 28.23 27.56 28.52 0.29 1.0%Fleet and Plant 11.60 10.93 13.36 1.76 13.2%Consultants 1.37 1.20 1.86 0.49 26.3%Electricity 0.15 0.15 0.15 - 0.0%Insurance Premiums 0.08 0.08 0.08 - 0.0%Other Expenditure 2.42 2.50 2.50 0.08 3.2%Total Operating Expenses 73.02 73.20 75.05 2.03 2.7%

Total Operating Profit 38.85 34.93 34.63 4.22 12.2%

Gain/Loss on Sale of Assets 0.00 0.00 0.00 - 0.0%

Depreciation / Amortisation 0.00 0.00 0.00 - 0.0%

EBIT 38.85 34.93 34.63 4.22 12.2%Interest Expense (QTC loan) 3.79 3.94 3.79 - 0.0%Interest Margin Expense 0.15 0.15 0.15 - 0.0%Income Tax Equivalents 8.73 7.94 7.91 (0.82) (10.4%)NPAT 26.18 22.90 22.78 3.40 14.9%

Dividend 7.69 7.69 7.69 - 0.0%Debt Redemption 7.65 7.83 7.65 0.00 0.0%Capital Expenditure 4.81 12.73 8.45 3.64 43.1%Loan Funding (3.34) (5.60) (3.34) - 0.0%

Transfer to Reserves 9.36 0.26 2.32 7.04 (303.3%)

Variance


ITEM 5 GENERAL BUSINESS REVIEW OF KERBSIDE BIN SERVICE AREA HL323/455/02(P11) COMMITTEE RECOMMENDATION WW19.0917.005 moved Cr Tozer seconded Cr Taylor That a review of the kerbside bin service area particularly focusing on unserviced rural residential lots outside of the declared waste collection area be completed and brought back to a future committee meeting.

CARRIED


ITEM 6 GENERAL BUSINESS ASSISTED HOUSEHOLD BIN SERVICE HL323/113/01/07(P2) COMMITTEE RECOMMENDATION WW19.0917.006 moved Cr PC Young seconded Cr PJ Young Review of the assisted lift service be extended to include the green waste bins.

CARRIED


ITEM 7 GENERAL BUSINESS INCENTIVES FOR EXISTING GREEN WASTE CUSTOMERS HL323/113/01/07(P2) COMMITTEE RECOMMENDATION WW19.0917.007 moved Cr PC Young seconded Cr PJ Young That a report be brought back regarding the existing green waste customers who currently do not have the 360 litre recyclable bin and how they could be incentivised by the city to take up a free offering of the larger size bin.

CARRIED Committee Recommendation Changed at Council (20 September 2019) RESOLUTION G19.0920.019 moved Cr Owen-Jones seconded Cr PJ Young

That Committee Recommendation WW19.0917.007 be adopted as printed which reads as follows:- That a report be brought to Council regarding the existing green waste customers who currently do not have the 360 litre recyclable bin and how they could be incentivised by the city to take up a free offering of the larger size bin.

CARRIED There being no further business the meeting closed at 10:33am.


These Pages

Numbered 1 to 66

Constitute The Adopted Report Of The Meeting

Of The Water and Waste Committee

Held Tuesday 17 September 2019

Documents

Water and Waste Committee - City of Gold Coast€¦ · “That Gold Coast Water establish a standing item on the Water Services Committee Agenda which is a register ... following