QPRC takes a hit to the hip pocket from bushfires and COVID-19

The impact of the COVID-19 pandemic and the Black Summer bushfires have burnt the hip pocket of Queanbeyan-Palerang Regional Council (QPRC), with its financial statement for 2019-2020 revealing a $4.8 million deficit.

This follows the previous financial year’s $3.55 million surplus.

Council took an $8.2 million hit due to infrastructure destroyed during the 2020 bushfires and floods, while the loss of revenue from the closure of facilities such as pools, sale yards, sports grounds and other community facilities due to the COVID-19 pandemic was estimated to be $1.2 million.

While QPRC’s net operating result for the financial year returned a $78 million surplus between income and expenses, that surplus is reinvested back into infrastructure. The $4.8 million deficit occurs when grants and contributions for capital works are accounted for.

During the year, QPRC was successful in attracting $67 million in federal and state grants for community services and capital expenditure.

Councils throughout NSW were granted an extension until 30 November to lodge their financial statements, and QPRC tabled its profit and loss at its meeting on 25 November.

Council’s chief finance officer Kate Monaghan said QPRC is satisfied with the result considering the extraordinary circumstances of bushfires and COVID-19.

“When broken down into funds, water and sewer funds are producing year-on-year surplus results, and the general fund is trending an operating deficit result that council will address through current and future budget decisions,” she said.

“Our deficit position in 2019-2020 is due to $8.2 million impairment of roads, bridges and stormwater infrastructure destroyed during 2020’s bushfires and floods. Some of the bridges were actually hit by bushfires and then two floods.

“Our infrastructure repair will be carried out during the next two financial years and funded through the commonwealth and state disaster recovery funding arrangements. So that deficit will be corrected over time.”

Ms Monaghan said her other concern of the financial year was council’s general fund, where rates are deposited, was not covering the cost of many services that run at a loss or are covered through user charges.

Due to restrictions with the COVID-19 pandemic, 40-50 of those services have run at a loss due to a reduction in use.

The main ones are council’s pools, sporting facilities and The Q – Queanbeyan Performing Arts Centre.

“We estimate we’ve lost at least $1.2 million just from having restrictions on access to various facilities – mostly the aquatic facilities – and we also didn’t have use of many sports fields during the lockdown period,” said Ms Monaghan.

“We also lost about $1.5 million from the economic impact on some of our investment portfolios, but these will also be recovered over time.”

However, some savings were made with a reduction in the costs of operating closed facilities and casual wages which amounted to an estimated $479,000.

Another element affecting income has been the delayed payment of rates, again due to the impact of bushfires and COVID-19.

During the year, council has added $112 million in new and renewed community assets and infrastructure to its asset base, including roads at Googong. It is also banking on the continued growth of towns in the shire, along with the sale of assets for the proposed high school at Bungendore.

Council has now received $9.1 million owed under disaster recovery funding for expenditure during the emergency response to the 2019-2020 fires, which has improved the opening position.

However, council continues to hold a high value of debt due to the large value of capital grant-funded projects, whereby grants and contributions are claimed and reimbursed after expenditure is incurred.

Council’s is also reporting an operating budget deficit for the 2020-2021 financial year.

The report tabled on 25 November said that while many of the operating expenses in the current year are project-related and one-off, it is recognised that the current general fund position is unsustainable and has placed a focus on budget review to identify possible future savings.

Queanbeyan-Palerang Regional Council’s 2019-2020 financial statement can be viewed here.

Original Article published by Michael Weaver on The RiotACT.