(11/8/2017) City of Fremantle on sound financial footing
The Friday 11 August 2017 page 14 newspaper article in The West Australian: ‘More councils high-risk’, named the City of Fremantle as being identified by the Department of Local Government as ‘high risk’.
The City assumes it was included in this list due to a one-off low Financial Health Indicator (FHI) score for the 2015-16 financial year.
The lower than usual score was caused by a combination of factors including a change in accounting methodology used by the City to simplify the way overhead costs are recorded. This change artificially inflated the year-on-year operating expenditure in 2015-16.
With this anomaly addressed in subsequent budgets, the City’s FHI score will normalise back to its long-term healthy trend when the 2016-17 audit is complete.
Indicative (unaudited) calculations have shown an FHI score of 76 for the 2016/17 financial year, well above the benchmark of 70 set by the state government.
In previous reports issued by the Department of Local Government the City of Fremantle has never been classified as being in any risk category, let alone a high risk.
The City is independently audited each year and there have never been fundamental issues or problems with the City’s medium or long-term financial viability.
The chart below shows the City of Fremantle’s FHI trend over time. The Department of Local Government views trends as more important than one off results stating on their MyCouncil website (https://mycouncil.wa.gov.au):
“The FHI is best viewed as a trend over time.”
The MyCouncil website also states:
“The FHI is one factor to consider in assessing overall performance. Other factors include: the range of services offered; efficiency of services delivered; and community satisfaction.”