Geoff Helisma |
Clarence Valley Council’s (CVC) investment portfolio has generated interest of $351,321 above its year to date (YTD) budget forecast.
Staff had budgeted for a $1.314million result over the first seven months of the financial year, however, the report to yesterday’s council meeting revealed that $1,665,151 had been earned.
The council has approximately $108.5 million in its ‘register of investments’ across its working capital, short, medium and long term investments – which are returning an average of 2.73 percent in interest in terms of ‘running yield’, which “is a measure of the return (before costs) that would be earned from current positions if there were no trades and no fluctuation in market yields”, the report to council stated.
This result is above the Reserve Bank of Australia’s cash rate at the end of January, which was 1.5 per cent; it also exceeds the benchmark AusBond Bank Bill Index, which was 1.75 per cent for January.
The council’s general manager, Ashley Lindsay, said the result was “good news”; however, he pointed out that the higher than expected return was inflated by developments after the 2017/18 budget was finalised.
He said the council hadn’t anticipated that the Australian Government would give CVC half of its Financial Assistance Grant (FAG) “up front’ which resulted in a $5.26million boost.
Also, disputed development contributions CVC successfully sought from the state government’s Infrastructure NSW, in relation to construction of the new gaol, have improved the investment portfolio.
“We’re obviously looking to maximise returns as best we can,” Mr Lindsay said, pointing out that there doesn’t “look to be any pickup in the interest market” in the near to medium future.“So the increased portfolio balance is contributing to the increased return,” he said.
“We’ve got more money to invest than we anticipated when we set the budget in the first place.”