Our finances

Our financial overview

The EPA’s net operating result for 2020–21 was $3.2 million, $3.1 million lower than the $6.3 million positive net operating result originally estimated as part of the 2020–21 State budget process.

Our expenses and revenue have both increased over the last five years. The forecast budget for 2021–22 is significantly higher than the 2020–21 outcome due to increased project-related activity planned for the 2021–22 year.

The table shows our approved budgets over the last five years.

Approved budgets, 2016–17 to 2020–21

Our approved budget

2016–17

2017–18

2018–19

2019–20

2020–21

Total revenue ($ million)

156.9

162.8

174.3

261.3

219.9

Total expenses ($ million)

158.1

169.8

177.5

255.5

213.6

Net operating result ($ million)

-1.2

-7.0

-3.2

5.8

6.3

 

Managing operational risks: funding

The EPA receives government funding as well as income derived from fees paid by the regulated community. Inadequate funding could reduce our ability to achieve our objectives. We manage this risk through:

  • a robust budget submission and reporting system with frequent monitoring in place
  • budget allocations linked to strategic priorities
  • enhanced tracking of waste flows, to better monitor and collect fees derived from the
    waste levy.

Where our money came from

The EPA receives government funding as a grant from DPIE. Revenue is also derived from other NSW agencies as well as from environmental licensing and administration fees paid by regulated industries.

Our total revenue for 2020–21 was $216 million, a decrease of $3.9 million on our original budget of $219.9 million. The decrease was largely due to:

  • a $7 million reduction in grants received, due to the timing of projects
  • $5.3 million in additional revenue from licensing fees and litigation, offset by a $2.2 million reduction in the Crown reimbursement for long-service leave, payroll tax and super adjustments.

Our total revenue was $33.3 million (18%) higher than the $182.7 million reported for 2019–20.

EPA revenue sources, 2016–17 to 2020–21

Revenue by source – actuals

2016–17

2017–18

2018–19

2019–20

2020–21

NSW Government ($ million)

132.7

137.5

160.6

146.4

174.5

Licensing fees and other charges ($ million)

24.7

31.2

32.0

33.0

37.4

Acceptance by the Crown Entity of employee benefits and other liabilities ($ million)

3.8

2.7

7.3

2.9

4.0

Other income ($ million)

1.0

2.2

2.0

0.4

0.1

Total revenue ($ million)

162.2

173.6

201.9

182.7

216.0

 

The EPA also collects revenue on behalf of the Crown from waste and environment levies and through the licensing of industries we regulate. This annual revenue is paid to the NSW Treasury. Greater detail is provided in the Annual Financial Statement section of this report, under note 22 – Administered assets, liabilities and income.

How we spent our money

In 2020–21 about 44% of total expenditure was for salaries, with the rest used for grant programs and operating expenditure. We paid $34.9 million in grants to various entities for a range of purposes. Greater detail is provided in Appendix 5.

In 2020–21 total expenditure was $212.7 million, a decrease of $0.9 million from our original budget of $213.6 million. The overall decrease was mainly due to:

  • $21.4 million higher than budget ‘other operating expenses’, including expenditure on bushfire and flood recovery programs and additional site clean-up costs
  • $9.6 million lower than budget for grants paid
  • $11.7 million lower than budget employee-related expenses, due to delayed recruitment.

Our expenditure was $32 million (18%) greater this year than in 2019–20 (see table below).

EPA expenditure, 2016–17 to 2020–21

Expenditure by category – actuals

2016–17

2017–18

2018–19

2019–20

2020–21

Salaries ($ million)

73.7

76.3

88.5

84.1

94.2

Personnel services expenses ($ million)

-

-

-

6.7

-

Grants and subsidies ($ million)

38.1

26.4

39.9

41.6

34.9

Other operating costs ($ million)

54.9

61.2

63.0

44.9

80.0

Depreciation and amortisation ($ million)

1.9

2.4

3.1

3.4

3.6

Total

168.6

166.3

194.5

180.7

212.7

Our financial position

The EPA maintained a sound financial position in 2020–21.

Most of our assets and liabilities are of a financial rather than physical nature. Total EPA assets at 30 June 2021 were $73.2 million, an increase of $14.9 million from 30 June 2020. Cash remains one of our largest assets, being $33.3 million at 30 June 2021. We also have $12.8 million in receivables, mostly from waste and environment licences. Our liabilities at 30 June 2021 were $35.7 million, an increase of $11.7 million from last financial year.

Solvency ratio: current position

At 30 June 2021, for every dollar of current liabilities we had $1.48 in current assets. This solvency ratio was lower than the previous year’s, although both current assets and liabilities have increased.

The current assets have increased by $8.3 million from 2019–20, due mainly to additional cash held for projects. Current liabilities have increased by $9.7 million, due mainly to an increase in payables relating to ongoing projects.

EPA current assets, liabilities and ratio, 2016–17 to 2020–21

Current assets, liabilities and ratio

2016–17

2017–18

2018–19

2019–20

2020–21

Current assets ($ million)

19.6

28.9

34.8

37.8

46.1

Current liabilities ($ million)

15.8

19.2

19.1

21.5

31.2

Current ratio

1.2

1.5

1.8

1.8

1.5

Cashflow management

In 2020–21 we generated $13.6 million from our operating activities. This was $8.6 million higher than in the previous year, mainly due to higher grants received during 2020–21.

EPA receivables, sales revenue and collection of debts, 2016–17 to 2020–21

Debtor management

2016–17

2017–18

2018–19

2019–20

2020–21

Trade receivables ($ million)

4.6

6.6

7.2

5.1

6.2

Sales revenue ($ million)

24.7

31.2

32.0

33.0

37.4

Average days to collect debts

68.6

77.4

81.7

56.0

60.5

Credit management

In 2020–21 the average number of days to pay creditors increased to 89.

EPA receivables, sales revenue and collection of debts, 2016–17 to 2020–21

Credit management

2016–17

2017–18

2018–19

2019–20

2020–21

Payable ($ million)

7.1

9.8

9.2

9.9

19.4

Other operating cost ($ million)

54.9

61.2

63.0

44.9

79.9

Average days to pay creditors

47.2

58.4

53.3

80.5

88.6

Expenditure

Exceptional movements in wages, salaries and allowances

There were no exceptional movements in wages, salaries or allowances in 2020–21. All increases to wages, salaries and allowances were consistent with the NSW Government wages policy.

Investment performance

The EPA does not borrow or invest with the NSW Treasury Corporation (TCorp) and has no investment performance to report here.

Liability management performance

The EPA has not accrued any debt greater than $20 million.

Land disposal

As the EPA does not own any land, there was none to dispose of in 2020–21.

Implementation of price determination

The EPA is subject to the recommendations of the Independent Pricing and Regulatory Tribunal of NSW (IPART) under section 18(4) of the Independent Pricing and Regulatory Tribunal Act 1992.

Disclosure of subsidiaries

The EPA had no subsidiaries in 2020–21.

Major assets acquired (other than land-holdings)

There were no major retirements of property, plant and equipment (PPE) assets during the year.

At 30 June 2021 the total value of the EPA’s PPE assets was $6.1 million.

Production costs of the Annual Report

Total external production costs for the 2020–21 Annual Report were approximately $1,800 for editing. Design costs were in-house with some elements shared with other reporting.

Major works in progress

Over the last four years, the EPA has invested heavily in enhancing its software systems and ICT platforms to achieve synergies and efficiencies that align with the agency’s proposed Digital Transformation Strategy. The EPA’s main ICT program of work is the Regulatory Systems Transformation.

Major works in progress

Major works in progress at 30 June 2021

Cost to date
$’000

Cost
overrun

Estimated date
of completion

Regulatory and communication system enhancement

8,678

Nil

2024

Consultants

Consultancies of $50,000 or more

Consultant

Category

Consultancy description

Cost

Marsden Jacob Associates

Management

Preparation of economic and financial analysis for 20-year waste strategy

$321,456

Land Insight &
Resources Pty Ltd

Environment

Consulting in relation to remediation of contaminated sites

$75,000

GWI PTY LTD

Environment

Engagement of services in relation to the Data and Analytics Strategy and data audit

$74,400

Weir Consulting

Organisational review

Business review

$53,430

The Growth Activists Australia

Organisational review

Communications and engagement strategy

$50,278

Subtotal

-

-

$574,564

 

Consultancies of less than $50,000

Category

Number

Cost

Environmental

10

$330,715

Management services

14

$328,972

Organisational review

6

$230,222

Training

2

$35,319

Recruitment services

1

$9,225

Subtotal

33

$934,453

 

Total consultancies

Size

Number

Cost

Consultancies of $50,000 or more

5

$574,564

Consultancies of less than $50,000

33

$934,453

Total consultancies

38

$1,509,017

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