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Kavinda Herath/Stuff
Environment Southland education advisor Bronwyn Graham with Francis Daly and River Bowen at a 10-year celebration of the Waihopai Planting Restoration Project in February.
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Environment Southland to post profit based on marine fees, investment returns and a “prudent budget”
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Environment Southland’s annual returns show money saved is money earned
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Environment Southland reports profit of $4.6 million instead of a budgeted $2.4 million deficit
Environment Southland’s 2022-23 draft annual report financial reports state that while the regional council was expected to be in a deficit of $2.4 million, it will be posting an operational surplus of $4.6m instead.
The annual report will be reviewed in the council meeting on Wednesday, but the final results will be available when the audit is completed and the report adopted in October.
While the council’s Finance and Performance Committee has released the results for review, it does not expect “any material differences to arise”.
The council credits the year’s surplus to “a prudent approach to managing the budget, combined with better than expected Marine Fee income and investment returns”.
Environment Southland chief financial officer Tanea Hawkins said that “the result is in line with the forecasts council received earlier in the year that were used to finalise the 2023/24 Annual Plan budgets and helped with decisions around the rate increase.”
“It’s a good thing because we’re not adding to debt, we’ve saved some money, and we’re able to transfer some of that money to future reserves to go towards asset replacement and disaster repairs.”
The council’s income has risen on the back of the return of cruise ships, which contributed $2.1m in marine fees, a net underspend of $2.1m in expenses and unrealised gains of $1.5m from investments – $750,000 “higher than budgeted due to higher interest rates.”
The council said that its expenditure was $1.9m “under budget, and this related largely to deferred project spending.”
It has increased its investment portfolio by $1.5m based on a “long-term investment strategy, with income set aside for asset replacement and disaster repairs.”
“With the inclusion of Government Funded Projects the total full year surplus position is $8.1m against a budget of $3.4m”, the council’s report stated.
Projects
The council budgeted $10.7m in government funding for Climate Resilience and the Jobs for Nature projects.
It received $2.3m less than budgeted in the year ended June 30, 2023, but it expects to receive the funds in the coming financial year.
“Surplus funds are used to reduce debt and increase reserves and, as such, build-up the financial resilience of the council”, Hawkins said.
Marine Fee Reserve
The Marine Fee Reserve held $3m , but “a significant amount was used” during the Covid-19 response.
Currently, the reserve has been reduced to $357,000, while $1m of this year’s “marine fee income will be transferred to the Marine Fee Reserve to start building this back up” the council said.
The reinvestment goes towards funding coastal marine work for the future.
The potential for rate increase
In May this year, Environment Southland councillors were considering potential rate increases of 6.9% and 8.5%, higher than the 5% forecasted, in the 2021/2031 Long-term Plan.
The council planned to consult with the community about a proposal to increase the council’s fees and charges by 7%, largely across the board.
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