We are pleased to present to you the City of Melbourne’s annual report for 2012–13



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Signed statement



Independent Auditor’s Report

Victorian local government indicators





Indicator

Indicator

2008–09

2009–10

2010–11

2011–12

2012–13

Overall performance
Community satisfaction rating for overall performance generally of Council

#

66

68

70

66



67

Advocacy
Community satisfaction rating for the Council's advocacy and community representation on key local issues

#

61

64

61

55




53

Engagement
Community satisfaction rating for the Council's engagement in decision-making on key local issues

$

59

62

59

56



55

All rates
Average rates and charges per assessment (all rates)

$

 $2,318

 $2,457   

 $2,412

$2,353


$2,310

Residential rates
Average rates and charges per residential assessment

$

$939

 $968

$950 

$939

$950

Operating costs
Average operating expenditure per assessment

$

 $4,333

$4,214


 $4,227 

$4,130 

$4,052

Capital expenditure
Average capital expenditure per assessment

$

 $1,060

$863

$839

$1,206

$1,264

Infrastructure
Renewal gap

%

70%

76%

73% 

97% 

86.7%

Renewal and maintenance gap

%

72%

79%

 77

97% 

88.8%

Debts
Average liabilities per assessment

$

$989

$817


$1,039 

$1,174 

$978

Operating result
Operating results per assessment*

$

$340

$(360)

$474 

$364

$581



In response to feedback from local councils, Local Government Victoria introduced methodological and content changes to the Community Satisfaction Survey in 2011–12. Methodological improvements to the Community Satisfaction Survey in 2011–12 and 2012–13 included increasing the sample size from the previous minimum of 350 respondents per municipality up to 400 respondents so the sample better reflects the demographic composition of a municipality. The survey also allows for respondents to be ‘residents over 18 years of age’ instead of restricting respondents to ‘head of household’. For these reasons, direct comparison with previous Community Satisfaction Survey results is not possible.


In both forms of the survey, the response to each of the standard 'scale' questions above is assigned a value. These values are then averaged across all respondents to create an 'index score'. However, the values assigned changed in 2012:

2010–11 Response scale and values

100 – Excellent: outstanding performance

80 – Good: a high standard
60 – Adequate: an acceptable standard
40 – Needs some improvement
20 – Needs a lot of improvement
Excluded – Don’t know / can’t say

2011–12 and later response scale and values

100 – Very good

75 – Good

50 – Average

25 – Poor

0 – Very poor



Excluded – Can't say
* Note: This represents the operating results per assessment as per the subtotal profit / loss for the period.

Global Reporting Initiative discussion and indicators



The Global Reporting Initiative (GRI) is a network-based organisation that produces a comprehensive sustainability reporting framework that is widely used around the world. The City of Melbourne has included GRI sustainability indicators as part of its performance measures since 2004–05.

The GRI’s principles of inclusiveness, relevance, sustainability context and completeness define the content of this report.

It is important to note that the GRI is a global framework that does not assume that reporting organisations have an established reporting process. The City of Melbourne’s annual report contents are substantially determined by the requirements of the Local Government Act 1989 (Vic). Like most local governments, the City of Melbourne has a long history of reporting both financial and non-financial performance to stakeholders. Many of the disclosures required as part of the GRI are also specified under the Act.

GRI Version G3.1 and G4

The City of Melbourne uses Version G3.1 of the framework, which sets out the principles and indicators that organisations can use to measure and report their economic, environmental, social, human rights, local community impacts and gender performance.

The GRI has recently released a new version of its framework, Version G4, and we are supportive of the new directions taken in this framework with its increased emphasis on only providing information that is critical to the business and stakeholders. The City of Melbourne has elected to continue working with G3.1 for this year’s annual report. We aim to adopt the G4 framework for the 2013–14 annual report. The transition to G4 will coincide with a deeper analysis of our sustainability reporting priorities.


Reading the GRI index
The GRI appears in this annual report as a list of indicators, each with a page reference to demonstrate where in the annual report the relevant data can be located.
GRI application level
‘Application levels’ were introduced with the release of GRI’s G3 guidelines in October 2006. The application level system provides organisations with a pathway towards continuous improvement of their sustainability reporting. The levels are intended to motivate reporters to enhance the quality of their reporting over time.

The application levels indicate the extent to which the G3.1 guidelines were applied in sustainability reporting. They communicate which part of the reporting framework was addressed – which set of disclosures – varying with the different levels. The levels do not give an opinion on the sustainability performance of the reporting organisation, the quality of the report, or on formal compliance with the G3.1 guidelines.

This report was prepared to meet the requirements of application level B under the GRI’s sustainability reporting guidelines, maintaining the standard of reporting and disclosure of previous years. To achieve a ‘plus’ rating (i.e. B+) organisations must seek external assurance by GRI-approved means. Given the level and cost of audit currently in place for the annual report as a whole, the City of Melbourne has chosen not to pursue further external verification of the data at this stage.

The application level table below lists the requirements for each application level. The City of Melbourne has prepared its GRI report to meet ‘B’ level requirements.



More information about the GRI is available at www.globalreporting.org

Global Reporting Initiative content table


GRI standard disclosure

Section / Page

GRI indicator


Strategy and analysis

Message from Lord Mayor and CEO

8, 9

1.1

Goals and key achievements

14–15

1.1

Risks and opportunities

83

1.2

Respect for internationally-agreed standards

3, 64

1.1


Organisational profile

Council profile, products, services and org diagram

10–15, 68

2.1 – 2.10


Report parameters

Report profile

2

3.1-3.4


Report scope and boundaries

3

3.5-3.11

GRI context index

112

3.12

Assurance

3

3.13


Governance, commitment and engagement

Governance and risk management

75–85

4.1 – 4.10

Commitment to external initiatives

10–13

4.13

Stakeholder engagement

73–74

4.14-4.17

Sustainable development policies

41–49, 79–82

4.8


Economic performance indicators

Economic value generated and distributed

Financials

EC1

Risk and opportunities due to climate change


43–45

EC2

Significant financial contribution from government

Financials

EC4

Gross expenditure by type of payment and classification

Financials

EC8-EC9

Procurement policy

79

EC6

Economic, environmental and social criteria

80

EC5

Procurement practice and policy priorities

79

EC7


Environmental performance indicators

Energy

46–49

EN3-EN7

Water

49

EN9-EN10

Biodiversity

46–49

EN14


Emissions, effluents, and waste

46–49

EN16, EN18


Labour practices and decent work performance indicators

Employment, labour / management practices

66–74

LA1, LA2, LA4

OH&S, training and education, diversity and equal opportunity

71–72

LA6-LA14


Human rights performance indicators

Human rights policy and procedures training hours

70, 72

HR3


Society performance indicators

Local community

24, 29, 37, 40, 53, 58, 64

SO1

Corruption

79

SO2-SO4

Public policy

10

SO5

Compliance


75, 79–82

SO8


Product responsibility performance indicators

Marketing communications

73–82

PR6-PR8


Financial statements

Financial report overview

The City of Melbourne prides itself on being a transparent and accountable organisation. Our strong financial management and economic responsibility was once again acknowledged with a AAA/A-1+ credit rating from global ratings agency Standard & Poor’s.


The City of Melbourne was the only Australian council to achieve the top credit rating in 2013. Standard and Poor’s said that the City of Melbourne had shown strong financial leadership.

Operating result

Overall we remain in a strong financial position at the end of the 2012–13 financial year. Total revenue for 2012–13 was $387.56 million. The bulk of this figure came from rates, with the remaining portion attributed to grant and subsidies, parking fees, fines, subsidiary revenue, sales and recoveries, interest and other income streams.


This revenue was offset by the organisation’s total expenses of $357.06 million. The list of expenses includes employee costs, materials and services, insurance, grants and contributions, taxes and levies, depreciation and amortisation, maintenance and other costs.

Overall our underlying surplus was $789,000. This surplus reflects our objective to invest as much as we can in our community, while remaining fiscally responsible.

Detailed information relating to our financial performance can be found in the standard income statement.
Financial overview

The 201­2–13 financial reports for the City of Melbourne provide the final chapter in the four-year story of the Council Plan 2009–13.



Cash balance
Our cash balance has remained fairly steady over the last five years, a testament to our strong financial leadership.
Cash balance ($ million)



Council works
Our total council works program spend includes maintenance, new and upgrade works and renewal and refurbishment works, as well as carry forward (the cost of projects not quite finished in the previous financial year). Over the four years since the introduction of the Council Plan 2009–13 a substantial $454.86 million was spent on council works program.
Council works ($ million)



Net surplus
Our underlying surplus assisted us in funding our capital works projects over the last four years, reflecting our increasing investment in building and maintaining our infrastructure for the community.
Net surplus ($ million)


Net assets

Our Balance Sheet represents the financial position of the City of Melbourne. In 2012–13 our net assets increased by $231.5 million to $3.42 billion. These figures represent the total value of City of Melbourne-owned assets, such as property, plant and infrastructure, investments, cash and receivables, minus any liabilities such as payables, employee entitlements and provisions.

Net assets ($ million)

As part of our commitment to increase the level of transparency in our financial reporting, we have also included a list of the City of Melbourne’s top 20 properties by value, which represent a significant portion of our net assets. All valuations as at 30 June 2013.

Address

Consolidated
value
$million


Royal Park, Flemington Road, Parkville

$307.8

Fawkner Park, 24-88 Commercial Road, South Yarra

$189.6

Fitzroy Gardens, 230-298 Wellington Parade, East Melbourne

$162.9

Kings Domain, Alexandra Avenue, Melbourne

$130.9

Princes Park, 200-590 Royal Parade, Carlton North

$97.1

Melbourne Town Hall and Administration, 90-130 Swanston Street, Melbourne


$81.1

Queen Victoria Market, 65-159 Victoria Street, Melbourne

$80.8

Council House 2, 218-242 Little Collins Street, Melbourne

$51.1

Flagstaff Gardens, 309-311 William Street, West Melbourne

$49.3

Birrarung Marr, Batman Avenue, Melbourne

$41.1

Carlton Gardens South, Victoria Street, Carlton

$36.3

Alexandra Gardens, St Kilda Road, Melbourne

$33.7

Queen Victoria Gardens, St Kilda Road, Melbourne

$32.7

Alexandra Park, Alexandra Avenue, Melbourne

$31.7

Carlton Gardens North, 1-111 Carlton Street, Carlton

$29.6

Treasury Gardens, 2-18 Spring Street, East Melbourne


$29.4

Carlton Baths, 216-248 Rathdowne Street, Carlton

$29.0

Council House, 196-212 Little Collins Street, Melbourne

$25.9

J.J. Holland Park, 67-121 Kensington Road, Kensington

$23.1

1City Square, 99-209 Collins Street, Melbourne

$19.3

The land values included in the City of Melbourne asset register relate to land holdings both owned and controlled by the City of Melbourne. The organisation has significant crown land holdings controlled on behalf of the Crown, via various structures including crown grants, committees of management and other reservations.

The consolidated values contained within this list include both land and building asset values applicable to the specific sites. City of Melbourne is required to value land and building assets pursuant to the provisions of AASB 116. The ‘fair value’ applicable to land value assessments, specifically parks and alike, are significantly adjusted against full market value reflecting legislative provisions, site control, use restrictions and other limitations directly associated with their public use.

Reading our financials

Our financial statements provide an insight into the City of Melbourne’s financial health.
Our financial statements show:


  • how the City of Melbourne and its subsidiaries performed during the year

  • the value of assets held by the City of Melbourne

  • the ability of the City of Melbourne to pay its debts.



What’s in the financial statements?
The financial statements consist of four financial reports, explanatory notes supporting the reports and endorsement from the Melbourne City Council and the Victorian Auditor-General.
The four financial reports are:

  • income statement

  • balance sheet

  • statement of cash flows

  • statement of changes in equity.

The explanatory notes detail the City of Melbourne’s accounting policies and the make-up of values contained in the statements.



How are the financial statements audited?
These financial statements are prepared in accordance with the Local Government Act 1989 (Vic) and the Australian Accounting Standards.
They are audited by the Victorian Auditor-General, approved in principle by the City of Melbourne’s Audit Committee and by Melbourne City Council. These auditing measures ensure the information provided is correct.
The City of Melbourne has received a clear audit of its financial statements for 2012–13.

Standard statements

Annual Report 2012–13

Budget v Actual


Note 1. Significant accounting policies
The significant policies adopted in the preparation of these Standard Statements are:

(a) Basis of preparation

The Standard Statements of the Council are special-purpose financial reports that consist of a Standard Income Statement, Standard Balance Sheet, Standard Cash Flow Statement and Standard Statement of Capital Works. These special purpose financial reports were prepared in accordance with the Local Government Act 1989 (Vic) and the Local Government (Finance and Reporting) Regulations 2004. These special purpose financial reports do not form part of Council's general purpose financial reports.


Standard income statement





Standard statements
for the year ended 30 June 2013

Standard income statement – comparison report



Ref.

Item

Commentary

1

Capital and asset contributions

Mainly due to additional public open space capital contributions ($5.44 million) and external capital contributions for Northbank Promenade development ($8.97 million).


2

Parking fines

The number of parking infringements issued was lower than budgeted due to more compliance by the public. This is partially offset by lower finance cost (see Ref 6 below).


3

Property rental and hire

Mainly due to the revaluation of Council’s investment properties and unbudgeted marina fees.


4

Sales and recoveries

Mainly due to additional recoveries received in relation to Grants in Kind revenue ($0.66 million, fully offset from Grant in Kind payments).

5


Finance income

Mainly due to lower cash balances and lower returns on invested funds. The official RBA cash rate has decreased by 1.50 per cent since the development of the budget.


6

Financial and insurance cost

Mainly due to lower doubtful parking infringement provisions in line with lower parking infringements being issued ($1.91 million) (See Ref 1 above).


7

Net gain on asset disposal


Minor variance due to lower gain on sale of plant and equipment.


8


Contributed assets

Primarily due to contributed infrastructure assets from completed developments in Docklands.


Standard statements
for the year ended 30 June 2013


Standard balance sheet



Standard statements

for the year ended 30 June 2013

Standard balance sheet – comparison report



Ref.

Item

Commentary

1

Cash assets


The higher cash balance is mainly due to higher than anticipated capital works carried forward.


2

Intangibles, property, plant and infrastructure and investment Properties

The higher balances are due to revaluation increments in assets such as land buildings and infrastructure following valuations conducted in 2012 and 2013. Intangible assets increase relates to the capitalisation of IT software.



3

Payables

The lower payables primarily due to lower operating accruals than budgeted.


4

Employee entitlements

Total employee entitlements are higher than budget due to higher provision of annual leave which is partially offset by lower long service leave provisions.


5

Provisions

Slightly higher than budgeted provisions including insurance claims.

Standard statements


for the year ended 30 June 2013


Standard statement of cash flows (reconciliation)


Standard statements
for the year ended 30 June 2013


Standard statement of cash flows (reconciliation) – comparison report

Ref.


Item

Commentary

1

Increase in investment


The revaluation of Council’s investment properties has resulted in a non-cash gain.


2

Loss/(profit) on sale of assets

Minor variance due to disposal of plant and equipment.


3

Contributed assets

Primarily due to contributed infrastructure assets from completed Docklands developments.


4

Net movement in working capital

The net movement in working capital reflects a decrease in creditors due to a lower level of accrued expenditure and higher creditors’ payments.


5

Proceeds from sale of assets


Lower than budgeted proceeds from the sale of Council assets.


6

Sale of investment

Return of share capital from the Melbourne Wholesale Fish Market Pty Ltd.



Standard statements
for the year ended 30 June 2013


Standard statement of cash flow


Standard statements

for the year ended 30 June 2013



Standard statement of capital works


Standard statement of capital works – comparison report


Ref.

Item

Commentary

1

Capital works expenditure

The value of capital and maintenance works completed for 2012–13 is $116.87 million. A carry forward of $24.17 million into 2013–14 is required to complete the program.
The major projects within the carry forward are $3.40 million in respect to World Trade Centre and $3.17 million for Fitzroy Gardens stormwater harvesting and new depot.



Financial report
for
the year ended 30 June 2013
Prepared in accordance with the Local Government Act 1989 (Vic), Local Government (Finance and Reporting) Regulations 2004, and applicable Australian Accounting Standards.
ABN: 55 370 219 287
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