AGENDA AND BUSINESS PAPER

 

 

Ordinary Meeting of Airport Advisory Committee

 

 

 

To be held on
Tuesday

27 March 2018

AT 5.30pm

 

 

 

Cnr Baylis and Morrow Streets,
Wagga Wagga NSW 2650
PO Box 20, Wagga Wagga

 

Phone: 1300 292 442
Fax: 02 6926 9199
Website: www.wagga.nsw.gov.au


Reports submitted to the Meeting of the Airport Advisory Committee to be held on Tuesday 27 March 2018.

Meeting of Airport Advisory Committee AGENDA AND BUSINESS PAPER

Tuesday 27 March 2018

ORDER OF BUSINESS:

CLAUSE           PRECIS                                                                                                PAGE

ACKNOWLEDGEMENT OF COUNTRY                                                                          4

APOLOGIES                                                                                                                 4

CONFIRMATIONS OF MINUTES                                                                                   4

DECLARATIONS OF INTEREST                                                                                    4

Reports from Staff

RP-1                 Airport - Financial Information                                                 4    

QUESTIONS/BUSINESS WITH NOTICE                                                                         4

 


ACKNOWLEDGEMENT OF COUNTRY

 

 

APOLOGIES

 

 

Confirmation of Minutes

CM-1              Airport Advisory Committee - Meeting held 21 March 2018       

 

Recommendation

That the Minutes of the proceedings of the Airport Advisory Commitee Meeting held on 21 March 2018 be confirmed as a true and accurate record.

 

 

Attachments  

1.

Minutes - Meeting held 21 March 2018

4

 

 

  

 

 

DECLARATIONS OF INTEREST

 

 


Report submitted to the Ordinary Meeting of Airport Advisory Committee on Tuesday 27 March 2018.                       RP-1

 

Reports from Staff

RP-1               Airport - Financial Information

Author:          Carolyn Rodney 

Director:       Natalie Te Pohe

         

 

Analysis:

Follow up financial information requested by the Airport Advisory Committee at the 21 March 2018 meeting.

 

 

Recommendation

That the Committee

a       note the contents of this report

b       endorse in principle the draft 2018/19 Airport Fees & Charges

c        endorse in principle the draft 2018/19 Airport budget, noting that Council staff are in the process of reviewing the asset data relating to the depreciation expense

d       note that all aspects of the 2018/19 budget will be reviewed to inform future budgets

 

Report

At the 21 March 2018 Airport Advisory Committee meeting, discussions were held regarding “RP-2 Airport Financial Overview” report. The Committee requested a subsequent report be presented for their information. The information requested was based on the following topics:

 

·        Depreciation

·        Asset valuations

·        Internal Administration Costs

 

Included below for the Committee’s information is an overview of the Airport Budget which will be presented to the 23 April 2018 Council Meeting. Also included in this report is an adjusted calculation for discussion purposes only (shown in the blue column in Table 1). This has been provided to assist in the discussions between Council and the Committee in regards to the Airport’s current financial position, and the 2018/19 proposed Fees and Charges.

 

AIRPORT FINANCIAL OVERVIEW

 

The Airport function of Wagga Wagga City Council operates as a business, with all income earned and all expenditure incurred remaining separate from Council’s other functions. The annual surplus / (deficit) results for the Airport function are transferred to / (from) the Airport Reserve. 

 

The setting aside of amounts of cash from revenues to fund future capital expenditures by establishing reserves is a key component of Local Government financial management. The cash set aside in each reserve is not available for current operational expenditure, and can only be accessed via Council resolution for an approved budget purpose.

 

Please see below for an overview of the Airports financial position:

 

Table 1 DRAFT 2018/19 AIRPORT BUDGET (including 2016/17 actuals)

As reported to the Committee at the last meeting, the capital program for 2017/18 will not be fully completed (either delayed, removed, or potential reallocation). When budget variations are processed, these will then flow through to the 2018/19 proposed opening reserve balance, and also the draft 2018/19 capital works program budget.

 

Airport Draft 2018/19 Fees & Charges

 

Please see Attachment B for the current draft 2018/19 Airport Fees & Charges for the Committee’s approval in principle. Please note that these draft fees, along with all of Council’s draft 2018/19 fees and charges will be presented to Council at the 23 April 2018 Council Meeting. Following this meeting, the draft Fees & Charges will be placed on public exhibition for 28 days, and formally adopted by Council at the 25 June 2018 Council Meeting.

 

Council Policy – Return on Investment Council Businesses Policy – POL013

 

Council adopted in April 2016 “Return on Investment Council Businesses Policy”, POL013 has the following Policy Statements in regards to Council Businesses with a Commercial Objective:

 

 

Policy 013 also has a Policy Statement specific to the Airport:

 

 

For the 2016/17 financial year, Council had budgeted to receive a $150,000 dividend from the Airport, however due to the Airport’s financial performance for the 2016/17 financial year, Council was not able to yield a dividend.

 

DEPRECIATION

 

The Committee requested a copy of the detailed Asset Book Listing for the Airport prior to the most recent revaluation – Please see Attachment A for this information.

 

Depreciation is a reflection on how much of an asset has been depleted due to wear and tear in any financial year.  The calculation of depreciation is in accordance with Australian Accounting Standards Board, AASB116, in particular sections 50, 51, 60 and 61 shown below for the Committee’s reference:

 


AASB116 – Property Plant and Equipment:

 

As mentioned in section 51 above, Council staff undertake an annual review of the useful lives of assets, and if an adjustment is required, an adjustment is processed during the end of financial year process, which is subsequently audited by Council’s external auditor, NSW Audit Office.

 

ASSET VALUATIONS

 

Council is governed under the Australian Accounting Standards (AASB) in regards to the requirement to revalue assets, under AASB116, sections 31 and 36.

 

AASB116 – Property Plant and Equipment:

 

 

Council undertakes full revaluations on all assets on a five-year cycle, as advised by the Office of Local Government. The majority of Airport Assets are classified as “Other Assets”, and were revalued in 2015/16

 

INTERNAL ADMINISTRATION COSTS

 

Where an organisation undertakes multiple operations, an allocation of internal administration costs is required to obtain a true net cost of each of the businesses. 

 

Different businesses use different methods in calculating the distribution of administration costs across various functions. As discussed at the 21 March 2018 Airport Advisory Committee Meeting, Wagga Wagga City Council’s method is based on the actual cost of the service, and is costed out to the various functions who utilise the service based on the relevant cost drivers, i.e.: the Information Technology charge is driven by the number of IT devices used by the Airport staff.

 

The Committee requested a breakdown of the internal administration services provided to the Airport:

 

Service provided to the Airport

Amount allocated

Accounting and Audit Services

27,963

Information Technology and Records Management

47,057

Customer Service*

9,737

Procurement Services

6,714

Property Management Services

4,561

Payroll Services

3,028

Councillors*

7,607

Airport Management, including additional administration support

124,080

Human Resources Support

5,462

Media & Communications Services*

18,532

Governance Services*

16,798

Airport Promotion & Aviation Industry Development

14,030

Total 2016/17 Internal services provided to the Airport

285,568

Less: Council deemed expenses*

(52,674)

Revised Total 2016/17 Internal services provided to the Airpot

232,894

 

If the Airport was not managed by a Council, it could be deemed appropriate to remove the items marked with an asterisk* (Councillors, Media & Communications, Governance services and Customer service) which total $52,674.  For the purposes of discussion, this amount has been reduced from the Other Expenses category, as shown in Table 1 earlier in this report.

 

Financial Implications

As noted in this report.

Policy and Legislation

POL 021 – Financial Reserves for Future Expenditures

POL 013 – Return on Investment Council Businesses Policy

POL 052 – Budget Policy

Link to Strategic Plan

Community Leadership and Collaboration

Objective: We are informed and involved in decision making

Outcome: Everyone in our community feels they have been heard and understood

 

Risk Management Issues for Council

Without adequate revenue to cover the costs of operating the Airport, there is the risk that the Airport will not be financially sustainable into the future.

Internal / External Consultation

N/A.

 

Attachments  

 

1.

Attachment A - Airport Assets Listing with previous values

 

2.

Attachment B - Airport Draft 2018/19 Fees & Charges

 

 

 

 

 


Report submitted to the Ordinary Meeting of Airport Advisory Committee on Tuesday 27 March 2018.                                                          RP-1

 



Report submitted to the Ordinary Meeting of Airport Advisory Committee on Tuesday 27 March 2018.                                                          RP-1

 




   


QUESTIONS/BUSINESS WITH NOTICE

 

  

 

 

 

 

 


Reports submitted to the Ordinary Meeting of Airport Advisory Committee to be held on Tuesday 27 March 2018.