THE COVID-19 EFFECT ON THE 2020/2021 FINANCIAL STATEMENTS

The recent tabling of Dubbo Regional Council’s (DRC) 2020/2021 Financial Statements provides a deeper insight to the overall effect of COVID-19 on the organisation’s overall future budgets and financial position.  The pandemic has affected Council’s established revenue streams, creating a real ‘pinch’ to the bottom line of Council’s overall budget, something that is expected to worsen in the short to mid-term unless the organisation puts some effective strategies in place that are currently being considered.  COVID-19’s grip on the budget could worsen if Council and the community miss the opportunity to act upon and change key aspects of the budgets, now. Council recognises the challenge ahead for its budget and is confident it has the answers and ability to improve the situation.

The Statement of Financial Position indicates that Council is in a sound financial position with Net Assets of $2,628 million. Cash and Investments total $222.623 million. While significant, it should be noted that there are restrictions on the future use of these funds which are otherwise already committed under legislation or other externally imposed requirements.

The Income Statement shows the change with a net operating result for the year -- before grants and contributions provided for capital purposes -- of an $11.1 million deficit.  This is more than the $7.5 million deficit forecast due to COVID-19 in August 2020, further highlighting the pandemic’s growing effect on the region.

“With some areas of Council’s revenue streams affected -- some more significantly -- by the far-reaching effect of the pandemic over nearly two consecutive years, a hit was expected,” said CEO Murray Wood. “Throw in the direct effect of closures and lockdowns across the LGA from August of this year - that hit on Council has been challenging.”

 “In just about every way, the region’s success, growth and strategic position has provided Council with additional costs.  With an unexpected decrease in revenue over consecutive years, those demands -- if left unchecked or not addressed now -- could out-strip Council’s annual revenue and cash reserves, ie. ‘rainy day savings’.  Because of the rolling effect of COVID-19… put in simple terms: Council is currently ‘asset rich’ and ‘cash poor’.”

“The first thing to recognise in the Financial Statements is, while not a ‘critical emergency’, it does show Council’s overall budgets and financial position in the coming years will be under significant duress,” said Mr Wood. “There are steps we can take now to greatly assist in reducing the pressure to Council’s bottom-line,” said Mr Wood. “A greater focus on directing grants to improve what we have versus ‘nice to have’ new assets.  Tightening Council’s overall spending through a significantly more strategic capital expenditure review is another effective way of doing this; and making difficult cost-saving decision early – ahead of time.”

While Council is not proposing wholesale cuts to services or community assets, it will look closely at ways to ensure the community has a greater awareness and understanding of Council services and assets, and ensures greater community involvement in determining where the funds Council administers are spent on ‘must haves’ versus ‘nice to haves’ for the community.

“As a Council, we really need the community to help us identify and drive savings,” said Mr Wood.  “If the community wants to consolidate and focus on what we have now, we can work with what we’ve got to maintain a standard the community expects. If the community wants more new assets or more services, then Council will need to actively look at what it can reduce or remove to balance expenditure, insofar as existing services and assets, to make it happen while remaining financially viable.”

Last Edited: 17 Jul 2023

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