Maitland City Council has posted a windfall of more than $3.3million in interest for the last financial year, more than $400,000 than it budgeted for.
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A report to this week’s council meeting said that actual income for the year to date was $3,381,525 compared to a budget of $2,978,000 resulting in a favourable variance of $403,525.
Councillor Philip Penfold said the surplus comes from good management of the council’s financial portfolio.
A statement of investments report to council said the council’s investment portfolio posted a return in June of 2.80 per cent per annum versus the bank bill index benchmark return of 2.02 per cent.
“Without marked-to-market influences, council’s investment portfolio yielded 3.10 per cent for the month. This is based on the actual interest rates being received on existing investments and excludes the underlying changes to the market value of the securities/deposits,” the report said.
It also said that council has a well-diversified portfolio with its entire portfolio spread among the top three credit rating categories. It is expected that council can continue to achieve above benchmark returns with prudent investment selection for its short and long term holdings.
Fairfax Media reported in May that council was is expected to be in a satisfactory financial position at the end of this financial year, when measured against the city’s 2015/16 operational budget. A budget review for the March, 2016, quarter shows Maitland Council is on track for a surplus of $7834 at the end of this financial year. This was up from the previous surplus estimate, last June, of $6874.
“Council holds millions of dollars, much of which are contributions from developers that go towards building certain assets like the indoor heated pool currently under construction,” Cr Penfold said. “I acknowledge the officers’ good management resulting in the $400,000 more than we thought we would have in a difficult interest rate environment.”
Council’s Administration Manager Graeme Tolhurst said the total interest earned by council for 2015/16 was an increase of $24,000 on 2014/15.
“Council achieved a budget surplus on interest on investments of $403,000 in 2015/16, an increase of $75,000 on 2014/15,” mr Tolhurst said.
“Half of the 2015/16 surplus of interest income is investing Section 94 Contributions. The interest earned on Section 94 Contributions is added to Maitland Section 94 Contributions Plan (Citywide) 2016 with the remaining money being used to address storm damage which occurred in January 2016.
“In order to successfully earn interest, the money is invested in Term Deposits (80%pa) and Floating Rate Notes (20%pa) as per Council’s Investment Policy,” Mr Tolhurst said.
