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Finance and Audit Committee Agenda 0508 25 November 2008

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Finance and Audit Committee Agenda 0508 25 November 2008 Powered By Docstoc
					Finance and Audit Committee

                                                                             AGENDA NO. 05/08


Meeting Date: Tuesday, 25 November 2008
Location:     Committee Room No. 2, Fifth Floor,
              Civic Centre, 1 Devlin Street, Ryde
Time:         5.00pm


                                   NOTICE OF BUSINESS
                                                                                             Page
1   CONFIRMATION OF MINUTES ...................................................................... 1
2   INVESTMENT REPORT – OCTOBER 2008.................................................... 2
3   ANNUAL TENDERS – Tender for Hire of Plant........................................... 25
4   TENDER FOR THE SUPPLY AND DELIVERY OF MULTIFUNCTION
    POLES (MFP) FOR MACQUARIE PARK RAILWAY STATION - (Corner
    Lane Cove Road and Waterloo Road, Macquarie Park) ............................ 30
5   GOVERNANCE FRAMEWORK – Procurement Activities.......................... 34
                                                     Finance and Audit Committee Page 1

1     CONFIRMATION OF MINUTES

RECOMMENDATION:

That the minutes of the meeting of the Finance and Audit Committee No. 04/08 held
on 21 October 2008, be confirmed.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 1
                                                     Finance and Audit Committee Page 2

2       INVESTMENT REPORT – OCTOBER 2008
Report prepared by: Chief Financial Officer
Report dated: 21 November 2008                                         File No. COR2008/164

Report Summary
This report provides details of Council’s performance against the benchmark for
returns of its investment portfolio for the month of October 2008, the financial year to
date and the rolling 12 month period.

Council’s return for October 2008 is as follows:

                                          Oct 2008           12 Mths     YTD
                Council Return             3.78%              5.81%        6.22%
                Benchmark                  8.74%               7.80%       7.90%
                Variance                  -4.96%              -1.99%      -1.68%

The above results reflect the volatility that has been present in the global investment
markets for the last 12 months.

While Council’s return to date is below benchmark, Council’s income from interest on
investments exceeds the budget year to date by $66,000 however, given the
significant cuts to interest rates by the Reserve Bank, it is projected that Council’s
forecasted income from interest on investments may need to be adjusted down as
part of the December 2008 review of the implementation of the 2008-2012
Management Plan.

This report includes the current estimated market valuation of Council’s investment
portfolio with a commentary on significant events in the global financial markets. A
summary on movements in ratings on investments within Council’s investment
portfolio and actions taken by Council Officers in managing Council’s investment
portfolio is also provided.

All Council’s investments comply with the Minister for Local Government’s investment
Order dated 15 August 2008 and Council’s investment Policy except for the following
investments whose credit ratings are now below the Minister’s Order:

    Investment                                       Rating           Maturity
    • Grange IMP - Quartz CDO                     A- neg watch       20/12/2010
                    - Merimbula CDO                  C/DR2           20/06/2013
                    - Glenelg CDO                     BBB            22/12/2014
                    - Scarborough CDO                  BB-           23/06/2014
                    - Torquay CDO                      BB            20/06/2013
    • Alpha CDO                                       BBB            20/03/2012
    • Oasis CDO                                       BBB-           04/09/2014
    • Covent Garden CDO                               CCC            20/09/2012
    • Constellation CDO                               CCC            20/03/2012
    • Rembrandt CPDO                                  CCC            02/11/2016
    •   Palladin CDO                                     D           20/06/2010


Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 2
                                                     Finance and Audit Committee Page 3

ITEM 2 (continued)

All the above investments have been previously reported to Council through the
Investment Report and the weekly Councillor Information Bulletin and Councillor
Workshops / Briefings with the exception of Covent Garden. Council officers were
advised on 11 November 2008 that Covent Garden has been downgraded to CCC.

Under the Minister’s Order, Council is required to divest itself of these investments as
soon as practicable. With the exception of the investments in the Grange IMP, these
investments were purchased with the intention of holding them to maturity.

Council officers continue to work closely with Oakvale Capital Limited to manage
Council’s Investment Portfolio and seek viable options to exit the above investments.

Report
The Chief Financial Officer as Council’s Responsible Accounting Officer is required to
report to Council on a monthly basis on Council’s Investment Portfolio and to certify
that the Investments are held in accordance with Council’s Investment Policy and
Section 625 of the Local Government Act.

Investment Performance Commentary
Council’s investment portfolio as at 31 October 2008 was as follows:

                                          October 2008
       Cash/Term Deposits               $55.2M     58.8%
       Floating Rate Notes              $ 6.0M      6.4%
       CDO                              $ 7.0M      7.4%
       CPDO                             $ 1.0M
       Managed Funds                    $ 3.0M      3.2%
       Other Financial Products         $ 6.5M      6.9%
       Total Cash Investments           $78.7M
       Property                         $15.1M     16.1%
       Total Investment Portfolio       $93.8M

The volatility and turmoil in financial markets has continued to impact on Council’s
investment portfolio, both in respect of returns and market valuations of Council’s
structured products (CDOs, CPDO and capital Protected Notes).

Whilst returns are below benchmark for October by 1.99% on a rolling 12 months
basis, the returns are generally in line with budget projections. With the Reserve
Bank cutting interest rates by 100 basis points in November 2008 and the expectation
of further cuts in interest rates, this budget is being closely monitored and any budget
adjustments will be reported as part of the Quarterly Review of the implementation of
the 2008-2012 Management Plan.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 3
                                                      Finance and Audit Committee Page 4

ITEM 2 (continued)

Advice has been received of the following rating migrations since the last monthly
investment report was submitted to Council:

                                                                    Current
                                             Face       Rating at   Rating
                                             Value       Issue       as at
          Name of Product                      $          Date      30/9/08

                                                                      BBB
                                                                      NRI
                                                                     31/10/0
          Alpha                           1,000,000     AAp NRi         8
                                                                      CCC
                                                                     11/11/0
          Covent Garden                   2,000,000        AA           8

The key investments to note in this report are as follows:

       Palladin CDO                   $2 million              AA now CCC
       Commonwealth Bank

       As reported to the Committee of the Whole meeting of 4 November 2008,
       Council has now received formal advice from the Commonwealth Bank that
       this investment has defaulted.

       Council is still awaiting a formal response from the Commonwealth Bank from
       the most recent meeting held with the bank on this investment.

       As a result, this investment is recorded at zero value in the investment report.

       Constellation CDO          $1 million           Floated AAA now CCC
       National Australia Bank
       As reported to the Finance and Audit Committee meeting of 21 October 2008,
       this investment has incurred 6 credit events and whilst no formal notification
       has been received from the NAB, it is understood that the CDO will unwind as
       at 22 December 2008.

       Council is still awaiting a formal response from the National Australia Bank
       from the most recent meeting held with the bank on this investment.

       As a result, this investment is recorded at zero value in the investment report.

       Rembrandt CPDO        $1 million                       AAA now CCC
       Local Government Financial Services

       As reported to the Committee of the Whole meeting of 4 November 2008,
       Council had received formal advice from LGFS dated 28 October 2008 that
       the investment had reached its cash out point and was being unwound with an
       anticipated return of 8 cents in the $1. Subsequently LGFS advised by letter
       dated 30 October 2008 that following City of Ryde’s representations, given the
       advanced negotiations to protect this investment, they had instructed ABN
Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 4
                                                     Finance and Audit Committee Page 5

       AMBRO to suspend the unwinding process whilst all options are explored.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 5
                                                     Finance and Audit Committee Page 6

ITEM 2 (continued)

       It is understood the LGFS Board has considered this matter however at the
       time of writing this report no further information has been forthcoming. A
       further update will be provided at the Finance & Audit Committee should
       additional information be received.

        This investment has been valued at $80,000 in the investment report.

       Oasis CDO                      $1 million              AA now BBB-
       Commonwealth Bank

       This CDO pays 140 bps above the 90 day BBSW. The investment was rated
       AA when purchased on 4 September 2006 with a maturity of 4 September
       2014.

       This CDO suffered 4 credit events in September /October 2008 in respect of
       Fannie Mae, Lehman Brothers, Washington Mutual and Kaupthing Bank.

       Standard & Poors downgraded the investment to BBB- on 29 September
       2008. The investment can withstand approximately 1 further credit event
       before principal is impacted based on an average weighting of 1%.

       Meetings and discussions have been held with the Commonwealth Bank on
       this investment.

       The current illiquid market conditions and pricing of the investment are
       severely restricting the ability of the manager, Societe Generale Asset
       Management, to make substitutions to protect the investment.

        This investment has been valued at $184,000 in the investment report.

       Covent Garden CDO              $2 million              AA now CCC
       Societe Generale

       This CDO pays 120 bps above the 90 day BBSW. The investment was rated
       AA when purchased on 6 July 2007 with a maturity of 20 December 2012.

       This CDO suffered 6 credit events in September /October 2008 in respect of
       Fannie Mae, Freddie Mac, Lehman Brothers, Washington Mutual, Glitnir Bank
       and Kaupthing Bank.

       Council is still awaiting formal notification of the credit events for Glitnir Bank
       and Kaupthing Bank which is expected in the near future.

       Societe Generale were in the process of changing the rating of the investment
       from Fitch to Standards & Poors however they have put this action on hold
       following the recent market turmoil until the market settles.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 6
                                                     Finance and Audit Committee Page 7

ITEM 2 (continued)

       Council officers arranged to meet with Societe Generale on 10 November
       2008 to discuss the status of this investment and following on from this
       meeting, Council was advised on 11 November 2008 that the Fitch Rating
       Agency had downgraded the rating on this investment from AA to CCC.

       The investment can withstand approximately 1 further credit event depending
       upon market recovery before principal is impacted.

       The current illiquid market conditions and pricing of the investment severely
       restrict the ability to make substitutions to protect the investment.

       This investment has been valued at $136,000 in the investment report.

       Alpha CDO               $1 million                     AA now BBB
       ABN AMRO

       This CDO pays 250 bps above the 180 day BBSW. The investment was rated
       AA when purchased on 11 April 2006 with a maturity of 20 March 2012. This
       CDO suffered 4 credit events in September /October 2008 in respect of Fannie
       Mae, Freddie Mac, Washington Mutual and Lehman Brothers which impacted
       the principle portfolio.

       Standard & Poors downgraded the investment to A- on 15 October 2008 and
       then to BBB watch negative on 31 October 2008. The income pool has not
       experienced any credit events and continues to pay coupon.

       The investment can withstand approximately 9 further credit events before
       principal is impacted.

       This investment has been valued at $390,000 in the investment report.

       Focus Note              $500K                          AA
       Westpac Bank

       Council has also been advised that its $500K investment in the Westpac
       Principal Protected Focus Note has moved into a zero coupon bond as part of
       its capital protection mechanism. This investment was purchased on 20
       December 2006 and will mature in December 2012

       The Westpac Focus Note invested in the BT Wholesale Focus Australian
       Share Fund has been significantly impacted by the volatility in the financial
       markets.

        Whilst Council will not receive any more coupons from this investment, it will
       receive the full face value of its investment on maturity.

       Council received a total of $33K in interest on this investment.

       This investment has been valued at $408,000 in the investment report.

Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 7
                                                     Finance and Audit Committee Page 8

ITEM 2 (continued)

       Grange IMP

       Since Lehman Brothers filed for bankruptcy, Council has been unable to
       obtain valuations for the CDO in the IMP. As an interim measure Council has
       written down the value of the CDOs within the IMP by 15% ($285K) to reflect
       the estimated decline in theses products since mid September 2008 following
       the global turmoil in the financial markets.

       As part of the Grange IMP, Council held a $50K ANZ Principal Yield Cure
       note which had a call date of 17 October 2008. The Note was called on this
       date and Council received full repayment of the $50K principal.

Financial Security Reserve

Council at its meeting of 7 October resolved to create an $8 million Financial Security
Reserve to protect Council against any future fallout from the global financial crisis.
This reserve has been created from the $25 million interest on investments that has
been earnt over the past six (6) years that has assisted Council in the creation and
building of its Reserve Funds.

The creation of the $8 million Financial Security Reserve is seen as a prudent
measure that will protect Council from any impact from the global financial crisis.

The maturity date of the investments below the Ministers Order are as follows:

                                                      Maturity
                           Investment                  Date


                           Quartz *                    2010/11
                           Alpha                       2011/12
                           Covent Garden               2011/12
                           Merimbula *                 2012/13
                           Torquay *                   2012/13
                           Scarborough *               2013/14
                           Glenelg *                   2014/15
                           Oasis                       2014/15
                           Rembrandt                   2016/17

                           Defaulted/Unwinding
                           Palladin                    2009/10
                           Constellation               2011/12

                           *Grange / Lehman IMP



The net exposure of these investments which are below the Minister’s Order is
approximately $7.2 million.


Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 8
                                                     Finance and Audit Committee Page 9

ITEM 2 (continued)

These investments have been downgraded due to a combination of the current
paralysis in the financial credit markets and the various rating agencies (Standards &
Poors, Fitch, Moodys) changing their rating methodology.

Due to the lack of liquidity and confidence in the global financial markets, it is
extremely difficult for Fund Managers to implement any viable exit strategies from
reference entities they deem to be at risk.

Having regard to the Department of Local Government’s Circulars on Council’s
Investments and the Ministers Investment Order, Council’s officers have reviewed
these investments within the guidelines of the Circular and sought advice from its
independent advisor.

Oakvale Capital Limited have confirmed their previous recommendation, that given
market conditions and the limited options available, Council should continue to hold
these investments.

Oakvale Capital Limited will, through their continued review of both Council’s portfolio
and the market, provide Council with options and on-going advice on Council’s
portfolio.

Economic Commentary

The Reserve Bank of Australia cut the official interest rate by 100 basis points in
October, the biggest cut in the official interest rate since 1992, and followed that with
a 75 point cut in November.

Globally, the Federal Reserve, European Central Bank and four other central banks
lowered rates by 50 points in October, in a coordinated and unprecedented effort to
ease the effects of the current economic crisis.

Whilst moves around the globe in October to shore up financial systems provided a
measure of calm to the markets, there are still a number of issues that are likely to
arise going forward.

   1.   Corporates that will struggle to get access to capital at a reasonable price.
   2.   Rising default rates.
   3.   Slow economic growth.
   4.   Hedge Funds deleveraging and selling assets.
   5.   Retail selling of assets as they move back to cash.
   6.   Inflation as a result of governments pumping money into their respective
        economies.

Manufacturing in the US contracted in October at the fastest pace in 26 years as the
credit crisis deepened and companies reduced orders. The US Institute for Supply
Management's factory index dropped to 38.9, worse than anticipated by economists
surveyed by Bloomberg News and the lowest level since September 1982. At a
corporate level, Standard & Poors worst case view for the next 12 months is a 9%
default rate.

Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 9
                                                   Finance and Audit Committee Page 10

ITEM 2 (continued)

S&P predict that losses on Alt-A loans of five-years or more with fixed interest rates
will rise from 35% to 40%. Alt-A loans are loans made to supposedly more credit
worthy borrowers, and are a far larger market than the sub-prime market. The core
of the capital in the banking system is directly tied to securities whose value is tied to
the price of U.S. houses. With U.S. house prices falling, more mortgage owners are
underwater, more are in default, and more will be foreclosed on.

Legal Issues
As previously reported to Council, Piper Alderman have been engaged to provide
advice on legal options available to Council in relation to its investments.

Council’s Property Investment Portfolio
At 31 October 2008, the following properties were held as part of Council’s Property
Investment portfolio:

   •   2 Dickson Avenue, West Ryde
   •   1a Station St, West Ryde
   •   8 Chatham Road, West Ryde
   •   202 Rowe St, Eastwood (commercial)
   •   226 Victoria Rd, Gladesville (commercial)
   •   West Ryde Car Park Site
   •   Herring Road Air Space Rights

Types of Investments:

At Call refers to funds held at a financial institution, and can be recalled by Council
either same day or on an overnight basis.

A Floating Rate Note (FRN) is a longer term investment issued by a financial
institution with a variable interest rate. The adjustments to the interest rate are
usually made quarterly, and are tied to a certain money market index such as the
Bank Bill Swap Rate.

A Floating Rate CDO or Collateralised Debt Obligation (CDO) is an investment
backed by a diversified pool of one or more classes of debt. These investments are
for longer terms and offer a higher rate of interest. Credit ratings are assigned to
these investments as detailed in the portfolio.

A Constant Proportion Debt Obligation or CPDO is an investment in an index of
debt securities, similar in theory to a CDO. The investment index is periodically
rolled, whereby the Special Purpose Vehicle buys protection on the old index, and
sells protection on the new index.

Credit Rating Information
Credit ratings are generally a statement as to an institution’s credit quality. Ratings
ranging from AAA to BBB- (long term) are considered investment grade.

A general guide as to the meaning of each credit rating is as follows:

Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 10
                                                   Finance and Audit Committee Page 11

ITEM 2 (continued)

AAA:   the best quality companies, reliable and stable
AA:    quality companies, a bit higher risk than AAA
A:     economic situation can affect finance
BBB:   medium class companies, which are satisfactory at the moment
BB:    more prone to changes in the economy
B:     financial situation varies noticeably
CCC:   currently vulnerable and dependent on favourable economic conditions to
       meet its commitments
CC:    highly vulnerable, very speculative bonds
C:     highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay
       out on obligations
D:     has defaulted on obligations and it is believed that it will generally default on
       most or all obligations




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 11
                                                                                            Finance and Audit Committee Page 12

          ITEM 2 (continued)
INVESTMENT SUMMARY AS AT 31 OCTOBER 2008

                                                                                                            12 Month                                  Indicative
                                                                          Invested at     Annualised    Average Return       Return                     Market
                                                               Investment 31-Oct-08         Period         on Current       since 01     % of Total    Value **    % Market
                 Issuer                   Investment Name        Rating      $000's       Return (%)    Investments (%)    July 2008     Invested       $000's       Value
Westpac                                1. Westpac 12_2013          AA-       1,000            8.49             8.27           8.49         1.27         1,000      100.00%
CBA                                    2. CBA 02_2014              AA-       1,000            8.45             8.18           8.45         1.27          984        98.44%
Thunderbird Investments plc            3. Balmoral AA               AA       1,000            8.76             9.11           9.07         1.27          985        98.48%
CBA                                    4. Shield Series 21          AA        500             0.00            -3.72           0.00         0.64          586       117.25%
ANZ                                    5. ANZ Subordinated         AA-       2,000            7.88             8.06           8.05         2.54         1,937       96.86%
Merrill Lynch                          6. Merrill Lynch & Co        A        1,000            7.88             8.26           8.29         1.27          920        91.98%
Select Access Investments (no 2) Ltd   7. Titanium AAA             AAA       2,000            8.34             8.65           8.66         2.54         1,440       71.98%
Alpha Financial Products               8. Alpha                    BBB       1,000           10.11            10.24           10.67        1.27          390        39.00%
Helix Capital                          9. OASIS                   BBB-       1,000            8.88             9.22           9.19         1.27          184        18.40%
Westpac                                10. FOCUS Note               AA        500             4.12            -5.24           5.37         0.64          408        81.66%
CBA                                    11. ELD Series 2             AA        500             3.00             3.82           3.00         0.64          498        99.52%
Westpac                                12. Camelotfund              AA        500             0.00            -3.72           0.00         0.64          427        85.38%
Grange                                 13. Grange IMP               A        3,029          -63.41           -11.81          -16.35        3.85         3,029      100.00%
AB Svensk Exportkredit                 14. Global Protected
                                       Property Note VII           AA+         1,000          0.00            0.00            0.00         1.27          830       83.00%
Script Securitisation Ltd              15. Constellation          CCC+           0            7.76            9.00            8.98         0.00           0         0.00%
Longreach                              16. Longreach CPWF          AAA         2,000          2.01            2.01            2.01         2.54         1,874      93.70%
C.L.E.A.R. plc                         17. Palladin                 D            0            0.00            7.83            6.13         0.00           0         0.00%
Rembrandt Australia Trust              18. Rembrandt              CCC          1,000          0.00            8.69            6.78         1.27           80        8.00%
CBA                                    19. ELD Series 4             AA          500           3.00            3.01            3.00         0.64          486       97.29%
Obelisk Trust 2007-3                   20. Covent Garden          CCC          2,000          8.19            9.02            9.02         2.54          136        6.78%
ANZ                                    21. ANZ 3 YEAR
                                       SENIOR                      AA          1,000          7.91            8.18            8.18         1.27         1,000      100.00%
Credit Suisse First                    22. Trident                 AA-         1,000          0.00            0.01            0.01         1.27          852       85.17%
Bankwest                               23. Bankwest Term
                                       Deposit                     AA-         8,477          7.75            8.01            7.95         10.77        8,477      100.00%
ANZ                                    24. ANZ Term Deposit        AA         10,000          7.61            7.77            7.72         12.71       10,000      100.00%
NAB                                    25. NAB Term Deposit
                                                                   AA          8,000          7.43            7.77            7.68         10.17        8,000      100.00%
Westpac                                26. Westpac Term
                                       Deposit                     AA          8,102          7.77            7.82            7.81         10.30        8,102      100.00%
Westpac                                27. Westpac At Call         AA         20,587          6.31            6.38            6.38         26.16       20,587      100.00%

TOTALS/WEIGHTED AVERAGES                                                      78,695          3.78            6.07            5.84          100        73,312
*Monthly returns when annualised can appear to exaggerate performance
**Market valuations are indicative prices only, and do not necessarily reflect the price at which a transaction could be entered into.
# Valuations unavailable as at report date and are the most recently published price

Return including Matured/Traded Investments
Weighted Average Return                                                                      3.78             5.81           6.22
Benchmark Return: UBSA 1 Year Bank Bill Index (%)                                            8.74            7.80             7.90
Variance From Benchmark (%)                                                                  -4.96           -1.99           -1.68

Investment Income                                                           Sources and Purposes for Investments
                                              $000's                        as at 31 Oct 2008                                             $000's
This Period                                     161                         Externally Restricted - Section 94                            14,131
                                                                            Externally Restricted - Other                                 11,474
Financial Year To Date                         1,539                        Unexpended Grants and Contributions                            2,192
Budget Profile                                 1,473                        Internally Restricted - Liability Reserves                    16,026
Variance from Budget - $                         66                         Internally Restricted - Revenue Reserves                      42,661
                                                                            General Fund                                                  -7,789




          Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.                                                             Page 12
                                                              Finance and Audit Committee Page 13

ITEM 2 (continued)

Certificate of the Chief Finance Officer

I certify that as at the date of this report, the investments listed have been made and are held in
compliance with Council's Investment Policy and applicable legislation, with the exception of the following
investments:

Grange IMP - Quartz CDO               A- neg watch
             - Merimbula CDO             C/DR2
             - Glenelg CDO                BBB
             - Scarborough CDO             BB-
             - Torquay CDO                 BB
Oasis CDO                                 BBB-
ALPHA CDO                                 BBB
Covent Garden                             CCC
Rembrandt                                 CCC
Constellation                             CCC
Palladin                                    D


                                                      21 November 2008

Richard Nankivell                                      Date




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.                          Page 13
                                                   Finance and Audit Committee Page 14

ITEM 2 (continued)

Council’s Investment Powers
Council’s investment powers are regulated by Section 625 of the Local Government
Act, which states:

        (1) A council may invest money that is not, for the time being, required by the
        council for any other purpose.

        (2) Money may be invested only in a form of investment notified by order of the
        Minister published in the Gazette.

        (3) An order of the Minister notifying a form of investment for the purposes of
        this section must not be made without the approval of the Treasurer.

        (4) The acquisition, in accordance with section 358, of a controlling interest in
        a corporation or an entity within the meaning of that section is not an
        investment for the purposes of this section.

Council’s investment policy requires that all investments are to be made in
accordance with:

   •    Local Government Act 1993 - Section 625
   •    Local Government Act 1993 - Order (of the Minister) dated 31 July 2008
   •    The Trustee Amendment (Discretionary Investments) Act 1997 – Sections
        14A(2), 14C(1) & (2)
   •    Local Government (Financial Management) Regulation 1993
   •    The Code of Accounting Practice and Financial Reporting
   •    Investment Guidelines issued by the Department of Local Government

Following the release of the Cole Report on the Review of NSW Local Government
Investments, the NSW Government adopted all the recommendations of the report
which include:

    •   Amendments to the Ministerial Order.
    •   Grandfathering existing investments that are excluded by the proposed
        changes to the Ministerial Investment Order.
    •   Excluding the manufacturers and distributors of investment products from
        acting as investment advisors to councils.
    •   Suspending investments with specific credit ratings until December 2009.
    •   Ensuring councils are more fully aware of their obligations under the Local
        Government Act 1993 and the NSW Trustee Act 1925 and
    •   Issuing investment policy guidelines for councils.

The Minister for Local Government has issued a revised Order which was gazetted
on 15 August 2008 in line with the recommendations of the Cole Report.

The Department of Local Government is currently preparing guidelines aimed at
assisting Council’s in developing a comprehensive investment policy.


Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 14
                                                   Finance and Audit Committee Page 15

ITEM 2 (continued)

Council Officers will work with its investment advisor, Oakvale Capital Limited to
develop a revised draft Investment Policy which will be submitted to the Finance &
Audit Committee for consideration following release of the DLG guidelines.

Council’s Investment Committee which is made up of senior staff meets on a regular
basis to review investment performance and to consider recommended investment
opportunities.

Overview of Investments
A brief overview of all investments held by the City of Ryde is provided;

   1. Westpac FRN (AA-)
      Floating Rate Note issued by Westpac. Pays 47 bps over 90 day BBSW. This
      investment was purchased on 18 December 2003. First call date for this note
      is on 18 December 2008, with legal maturity on 18 December 2013. No fees
      are payable by Council on this investment.

   2. CBA FRN (AA-)
      Floating Rate Note issued by the CBA. Pays 43 bps over 90 day BBSW. This
      investment was purchased on 10 February 2004. First call date for this note is
      on 10 February 2009, with legal maturity on 10 February 2014. No fees are
      payable by Council on this investment.

   3. Balmoral (AA)
      CDO with a portfolio of 3 AA rated OECD government bonds and 36 AAA
      rated asset backed securities paying 130 bps over 90 day BBSW. This
      investment was purchased on 12 March 2004. The investment is for 5 years
      and matures on 4 March 2009. No fees are payable by Council on this
      investment.

   4. CBA - Shield Capital Protected Series 21 (AAp)
      Council invested in the Shield Capital Protected Hedge Fund Note on 24
      March 2004. This is a medium to long term investment (3-7 years) and
      matures on 28 February 2011. The investment is capital guaranteed by CBA
      on maturity. The note is linked to the performance of a diversified fund of
      hedge funds, being Colonial First State Wholesale Global Diversified
      Strategies Fund. The target return at maturity is anticipated to be over 10% pa
      annualised. This is a volatile investment that has active market exposure. No
      fees are payable by Council on this investment.

   5. ANZ Subordinated (AA-)
      Floating Rate Note issued by the ANZ bank, paying 41 bps over 90 day
      BBSW. This investment was purchased on 29 June 2004. First call date for
      this note is 21 May 2009, with legal maturity on 21 December 2014. No fees
      are payable by Council on this investment.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 15
                                                   Finance and Audit Committee Page 16

ITEM 2 (continued)

   6. Merrill Lynch (A+)
      Floating Rate Note issued by Merrill Lynch, paying 40bps over 90 day BBSW.
      This investment was purchased on 9 November 2004. This FRN matures 9
      March 2010. No fees are payable by Council on this investment.

   7. Titanium (AAA)
      CDO with a portfolio of a minimum of 100 investment grade names, paying 80
      bps over 90 days BBSW. This investment was purchased on 14 June 2005.
      The investment is for is 5.5 years and matures on 14 December 2010. No
      fees are payable by Council on this investment.

   8. FRN Alpha (Originally AA now BBB)
      This is a CDO that pays 250 bps above 180 day BBSW. This investment was
      purchased on 11April 2006. The investment is for 6 years and matures on 20
      March 2012. The CDO containing 2 separate portfolios, a capital portfolio and
      an income portfolio. The 2 portfolios are managed to maintain ratings stability.
      The CDO was previously downgraded to A- on 25 September 2008 and has
      now been downgraded to BBB watch negative on 31 October 2008. No fees
      are payable by Council on this investment.

   9. OASIS (Originally AA now BBB-)
      This is a CDO that pays 140 bps above 90 day BBSW This investment was
      purchased on 4 September 2006. The investment is for 8 years and matures
      on 4 September 2014 .This is a CDO that is actively managed by Société
      Générale. The CDO was downgraded to BBB- on 29 September 2008. No
      fees are payable by Council on this investment.

   10. FOCUS Note (AAp)
       This investment was purchased on 20 December 2006. This is a medium to
       long term investment (3-7 years) and matures on 20 December 2012. The
       capital of the investment is guaranteed by Westpac on maturity. This
       investment consists of a dynamically managed portfolio comprising
       investments in the BT Focus Australian Share Fund, and aims to outperform
       the S&P/ASX 300 Accumulation Index by 5% over a 3 to 5 year horizon. This
       note has had an annualised return of 3.62% since inception, with short term
       returns anticipated to be volatile. This note also pays a biannual contingent
       coupon of 180 day Bank Bill swap rate (currently approximately 8.00%).
       Westpac receive a principal protection fee of 0.90 p.a., an upfront structuring
       and distribution fee of 2.50%. BT Financial Group receives a management fee
       of 0.60% p.a., and a performance fee of 15%. The performance fee is only
       paid if the performance of the fund before fees exceeds the S&P/ASX
       Accumulation index plus the management fee. Monthly returns, when
       annualised can appear to exaggerate performance. On 28 October 2008
       advice was received that the recent volatility in the global financial markets
       had triggered the capital protection mechanism in this investment with 100%
       of the portfolio now invested in a zero coupon bond . Council will not receive
       any further coupon payments between now and the December 2012 maturity
       date but will receive the full face value of the investment at maturity.


Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 16
                                                   Finance and Audit Committee Page 17

ITEM 2 (continued)

   11. ELD 2 (AAp)
       This investment was purchased on 22 December 2006. The investment is for 3
       years maturing 22 December 2009. This note provides Council with a variable
       return based on the performance of a reference basket of stocks selected from
       the ASX 100. Minimum return is 3.00% p.a., and returns are capped at
       13.50%. The actual return for each year to be calculated in December. The
       return for the first year was 7.91%. No fees are payable by Council on this
       investment.

   12. Camelotfund (AAp)
       This investment was purchased on 1 March 2007. The investment is for 5
       years and matures 25 January 2012. This investment is in a fund that provides
       opportunity to diversify into a foreign exchange strategy with low correlation to
       other products and asset classes. Short term (i.e. monthly) returns on this
       note will be volatile. The SPV set up by Westpac receives a distribution fee of
       2% of the note value, and the manager receives a management fee of 1%
       p.a., and a performance fee of 15% above 6M BBSW. Westpac receives a
       capital protection fee of 1% p.a. times NAV. This investment is capital
       protected by Westpac.

   13. Grange (Lehman Brothers) IMP (Min A Rating)
       This is a portfolio of FRNs, CDOs and Bank issued securities managed by
       Grange Securities on Council’s behalf. Lehman Brothers have cancelled the
       management agreement, and this portfolio is currently static. The IMP
       comprises the following investments:

       Investment                                     Maturing               Call Date
       Quartz CDO                                     20/10/2010             20/12/2008
       Flinders CDO                                   20/03/2012             20/03/2009
       Torquay CDO *                                  20/06/2013             20/06/2009
       Merimbula CDO                                  20/06/2013
       Scarborough CDO *                              23/06/2014             23/06/2009
       Glenelg CDO *                                  22/12/2014             22/06/2009
       Adelaide Bank FRN *                            02/04/2014             02/04/2009
       AAA (Berryl) Global Bank Note                  20/09/2014
       HSBC FRN *                                     22/09/2016             22/09/2011

       * If not called an additional margin paid

   14. Global Protected Property Note VII (AAp+)
       This investment was purchased on 13 March 2007. The investment is for 4.5
       years and matures on 20 September 2011. It is a capital guaranteed
       investment which provides Council with a return on maturity based on the
       performance of three international property funds. It is anticipated that
       performance at the commencement of this investment will be low, with returns
       geared heavily towards the end life of the investment. This note was invested
       in as a result of a swap out of the earlier series VI note, in which Council
       realised a profit of $237K capital profit after 9 months. Capital protection fee
       of 1.1% to Svensk Export Kredit.

Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 17
                                                   Finance and Audit Committee Page 18

ITEM 2 (continued)

   15. Constellation (Floated AAA now CCC+)
       This is a CDO that is paying 130 bps above 90 day bps. This investment was
       purchased on 11 April 2007. The investment is for 5 years and matures 20
       March 2012, but may be called by the issuer as at March 2011. This
       investment was previously downgraded from AA to A, and in late October
       2007 was downgraded further to ‘A-’. Further advice was received in mid
       November 2007 that this investment had been put on negative watch, implying
       further downgrades of this note may occur, and this occurred in early March
       2008, when the note was downgraded to BBB+ and then BBB on 1 April 2008.
       The note was then downgraded to BBB- effective 26 May 2008. The note was
       downgraded to CCC+ on 26 September 2008. The note experienced six (6)
       credit events in September and has now defaulted and is in the process of
       being unwound. It is understood that the effective unwind date will be 22
       December 2008. No fees are payable by Council on this investment.

   16. Longreach Capital Protected Wholesale Fund (AAAp)
       This investment is in property, infrastructure and utilities. This investment was
       purchased on 16 May 2007. The investment is for 5 years and matures on 16
       May 2012. The Fund Manager’s expectation is a target range of 8% to 10% pa
       over the life of the investment. Council receives a minimum coupon of 2% pa.
       There is a fee of 0.95% pa payable of the capital protection amount, plus a
       performance fee of 25% if the fund performs at or above UBS Bank Bill Index
       + 4%.

   17. Equity Linked Deposit Series 4 (AAp)
       This note is almost identical to the structure of the ELD 2 (No 12) above,
       except that returns are based on the performance of a reference basket of
       resource stocks. This investment was purchased on 5 June 2007. The
       investment is for 3 years and matures on 5 June 2010.Minimum return is
       3.00% pa, and returns are capped at 11.50% with the actual return for each
       year to be calculated in June. No fees are payable by Council on this
       investment.

   18. Palladin (Originally AA now D)
       This is an actively managed CDO paying 100 bps over 90 day BBSW. This
       investment was purchased on 7 June 2007 The investment is for 3 years and
       matures 20 June 2010. The note was downgraded from AA to BBB- at the
       end of April 2008. The note was downgraded to CCC- on 30 September 2008.
       Council has been advised that Sigma Finance, the provider of the collateral
       has ceased trading and is in the process of filing for bankruptcy. On 3
       November 2008 the Commonwealth Bank advised that the Palladin
       Investment had formally defaulted and as a result the investment is valued at
       zero in the Investment Portfolio. No fees are payable by Council on this
       investment.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 18
                                                   Finance and Audit Committee Page 19

ITEM 2 (continued)

   19. Rembrandt (Originally AAA now CCC)
       This is a Constant Proportion Debt Obligation (CPDO) paying 190 bps over 90
       day BBSW with exposure to credit spreads in the iTraxx and DJ Investment
       Grade Indices. This investment was purchased on 20 June 2007. The
       investment is for 9.5 years and matures on 2 November 2016 The portfolio is
       rebalanced and repriced every 6 months. There is an arrangement fee of 1%
       on this investment, plus 29 bps p.a. of the NAV. The note was downgraded
       from AAA to BBB+ on 21 February 2008 and then to BB+ effective 12 March
       2008. This investment was considered by Council at its meeting of 1 April
       2008 to invest further funds to protect this investment. Council resolved not to
       proceed with the new investment. The note was downgraded to CCC on 22
       September 2008. On 28 October 2008 advice was received that the note had
       breached the 10% cash out point and the unwinding of the investment had
       commenced. Subsequently LGFS advised on 30 October 2008 that the unwind
       has been suspended while options were being explored.

   20. Covent Garden (Originally AA now CCC)
       This is a managed CDO paying 120 bps over 90 day BBSW. This investment
       was purchased on 6 July 2007. The investment is for 5 years and matures on
       20 September 2012. Advice was received on 11 November 2008 that this
       investment has been downgraded to CCC. No fees are payable by Council on
       this investment.

   21. ANZ 3 Year Senior Debt (AA)
       Floating Rate Note issued by the ANZ bank, paying 32 bps over 90 day
       BBSW. This investment was purchased on 18 September 2007. The
       investment is for 3 years and matures on 18 September 2010. No fees are
       payable by Council on this investment.

   22. Trident (AAp-)
       This investment was purchased on 30 May 2007. The investment is for 4
       years and matures on 30 May 2011 The investment which is capital protected
       has exposure to a basket of bond funds, with a coupon paid 6 monthly of 50%
       of the positive performance of the funds, with the other 50% being reinvested.
       There is a distribution fee charged upfront of 2%, plus a principal protection
       fee of 0.95% p.a. of the portfolio value, plus a leverage charge of USD 30 day
       LIBOR +0.50% p.a. on any leverage amount.

   23. Bankwest Term Deposit (AA-)
       This investment is a 90 day term deposit with Bankwest, paying 7.53% (7.75%
       annualised) and matures11 December 2008. No fees are payable by Council
       on this investment.

   24. ANZ Term Deposit (AA)
       This investment is a 90 day term deposit with ANZ, paying 7.40% (7.61%
       annualised) and matures on 15 December 2008. No fees are payable by
       Council on this investment.



Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 19
                                                                                         Finance and Audit Committee Page 20

ITEM 2 (continued)

   25. NAB Term Deposit (AA)
       This investment is a 90 day term deposit with NAB, paying 7.23% (7.43%
       annualised) and matures on 13 December 2008. No fees are payable by
       Council on this investment.

   26. Westpac Term Deposit (AA)
       This investment is a 90 day term deposit with Westpac, paying 7.55% (7.77%
       annualised) and matures on 14 November 2008. No fees are payable by
       Council on this investment.

   27. Westpac At Call Account (AA)
      This investment is an at call account, paying the short term money market
      rate. These funds are used for operational purposes.




                                          11.0
        YTD Weighted Average Return (%)




                                          10.0
                                           9.0
                                           8.0
                                           7.0
                                           6.0
                                           5.0
                                           4.0
                                           3.0
                                           2.0
                                           1.0
                                           0.0
                                            Nov-07 Dec-07   Jan-08   Feb-08   Mar-08   Apr-08 May-08 Jun-08   Jul-08   Aug-08 Sep-08    Oct-08
                                                  12 Mth Return
                                                  Benchmark                               Month
                                                  Monthly Annualised




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.                                                   Page 20
                                                                                           Finance and Audit Committee Page 21

ITEM 2 (continued)




                                  NAB

                              Bankwest                                                                                     Managed
                                                                                                                          Cash Fund
                 Credit Suisse First

                Obelisk Trust 2007-3

          Rembrandt Australia Trust                                                                                                           Term
                                                                                                                                             Deposit
                       C.L.E.A.R. plc

                          Longreach
                                                                                                    Managed
            Script Securitisation Ltd
                                                                                                    Cash Plus
            AB Svensk Exportkredit                                                                    Fund
                               Grange

                        Helix Capital                                                                                        Direct
           Alpha Financial Products                                                                                       Investment

Select Access Investments (no 2) Ltd
                                                                                             0%       10%       20%        30%         40%         50%
                       Merrill Lynch

                                      ANZ

       Thunderbird Investments plc

                                  CBA

                               Westpac
                                                                                                          More Than
                                         0%         5%     10% 15% 20% 25%                                365 Days
                                        Portfolio % With Institution


                                                                                                  180 Days
                                                                                                   to 365
                                                                                                    days



Low/Unrated                                                                                                                        Less Than
                                                                                                                                    180 Days


    A- to BBB
                                                                                              0        20,000    40,000       60,000     80,000


       A+ to A
                                                                                                                >365 days <365 days
                                                                                                      FRN's        $4.0M       $2.0M
  AAA to AA-
                                                                                                     CDO's         $6.0M       $1.0M
                                                                                                    CPDO's         $1.0M       $0.0M
                                                                                                      Other        $6.5M       $0.0M
                  0%

                        10%

                                20%

                                        30%

                                              40%

                                                     50%

                                                            60%

                                                                  70%

                                                                        80%

                                                                              90%

                                                                                    100%




                                                                                                  Mgd Funds        $0.0M       $3.0M
                                                                                                       Cash        $0.0M     $55.2M
      Permitted                Actual




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.                                                     Page 21
                                                             Finance and Audit Committee Page 22

ITEM 2 (continued)




       90,000


       80,000


       70,000


       60,000


       50,000
                Oct-07 Nov-   Dec-   Jan-   Feb-   Mar-   Apr-   May-   Jun- Jul-08 Aug-   Sep-
                        07     07     08     08     08     08     08     08          08     08




Consultation
Council business units consulted included:-
•   Finance Unit

Internal Workshops held:-
•     Councillor Workshop 2 October 2008
•     Councillor Briefing 14 October 2008

External public consultation included:-
•    Ryde City View – 12 November 2008
     Article on Global Financial Crisis – City of Ryde’s response

Council officers have regular discussions & meetings with Investment Issuers and
Council’s Investment Advisor Oakvale Capital Limited to monitor the impact of market
conditions on the performance of Council’s investments and the economic outlook
going forward.

Critical Dates
The Chief Financial Officer as Council’s Responsible Accounting Officer is required
to report to Council on a monthly basis on Council’s Investment Portfolio and to
certify that the Investments are held in accordance with Council’s Investment Policy
and Section 625 of the Local Government Act.

Management Plan Budget / Linkages
This project forms part of the 2008/2009 Operational Budget for the Finance Unit.

Relationship to Key Outcome Areas
          People
          This matter has no direct relationship to this key outcome area. However
          interest on investments represents a significant source of Council’s
          income and contributes to the funding of a range of services and
          initiatives in the key outcomes for People.

Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.              Page 22
                                                   Finance and Audit Committee Page 23

ITEM 2 (continued)

             Assets
             This matter has no direct relationship to this key outcome area. However
             interest on investments represents a significant source of Council’s
             income and contributes to the funding of a range of services and
             initiatives in the key outcomes for Assets.

             Environment
             This matter has no direct relationship to this key outcome area. However
             interest on investments represents a significant source of Council’s
             income and contributes to the funding of a range of services and
             initiatives in the key outcomes for Environment.

             Governance
             This project meets the following key outcomes for Governance (set out on
             page 75 of the Management Plan 2008-2012):


G3    Review of best practices approaches on Governance to enhance the delivery of
      services to the community.

G5    Compliance with all legislative requirements and statutory obligations.

The Chief Financial Officer as Council’s Responsible Accounting Officer is required to
report to Council on a monthly basis on Council’s Investment Portfolio and to certify
that the Investments are held in accordance with Council’s Investment Policy and
Section 625 of the Local Government Act.

Council’s investment portfolio provides a significant source of Council’s income
through interest on investments and contributes to the funding of a range of services
and initiatives across all Council’s in key outcomes areas.

Council has budgeted to earn $3.71 million in interest from investments during the
2008/09 financial year.

Financial Impact
Whilst Council’s returns are under the rolling 12 months benchmark, the actual
returns are generally in line with budget projections.

Council is concerned over a number of investments as detailed in the report and at its
meeting of 7 October resolved to create an $8 million Financial Security Reserve in
October 2008 to protect Council against any future fallout from the global financial
crisis.

This reserve has been created from the $25 million interest on investments that have
been earnt over the past six (6) years that has assisted Council in the creation and
building of its Reserve Funds.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 23
                                                   Finance and Audit Committee Page 24

ITEM 2 (continued)

Council has budgeted to earn $3.71 million in interest from investments during the
2008/09 financial year and as at 31 October 2008 has earned $1.539 million,
exceeding the year to date budget by $66K. However due to the global turmoil in the
financial markets, interest rates are forecast to decline and this will be monitored and
reported in future reports.

Policy Implications
There are no policy implications through the adoption of the recommendation.

The recommendation is consistent with Section 625 of the Local Government Act,
which deals with the investment of surplus funds by Council’s.

Other Options
Not Applicable

Conclusion
This report provides details of Council’s performance against the benchmark for
returns of its Investment portfolio for the month of October 2008 and actions taken by
Council Officers as a result of the deepening crisis in global financial markets.

Whilst returns are in line with budget predictions, the escalation of the volatility in the
global financial markets has placed further risk on the principal of some of Council’s
investments.

The creation of the $8 million Financial Security Reserve is seen as a prudent
measure that will protect Council from any impact from the global financial crisis.

Council Officers in conjunction with Oakvale Capital Limited are closely monitoring
developments in the financial markets and keeping Council fully informed of
significant developments as they occur through the monthly Investment report and
Councillor briefing sessions.

RECOMMENDATION:

That the report of the Chief Financial Officer, dated 21 November 2008, on
Investment Report – October 2008, be received and endorsed by Council.

Report prepared by


Richard Nankivell
Chief Financial Officer

Report approved by


Roy Newsome
Group Manager – Corporate Services


Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 24
                                                   Finance and Audit Committee Page 25

3     ANNUAL TENDERS – Tender for Hire of Plant
Report prepared by: Plant & Fleet Coordinator and Manager – Waste & Fleet
Report dated: 24 October 2008                             File No. COR2008/678

Report Summary
This report is to advise the Council on the Tenders received for hiring of plant and to
recommend acceptance of Tenders to be placed on preferred contractors list up to 31
October 2009.

Background
The plant owned by Council is not sufficient to carry out Councils work program. A
plant hire tender is invited annually for various categories of plant and are placed on
a preferred contractors list. Plant are hired on “as required” basis, from the preferred
contractor list in the absence of Council plant.

The Plant hire rates have been forwarded to Councillors CIRCULATED UNDER
SEPARATE COVER – CONFIDENTIAL. Pursuant to Section 10A (2)(d)(i) of the
Local Government Act 1993, these documents are listed as confidential as they
concern the receipt and discussion of commercial information of a confidential nature
that would, if disclosed, prejudice the commercial position of the persons who
supplied it.

Report
Council has recently called tenders (COR-RFT-12/08) for the provision of hire plant
included in Council’s Construction and Maintenance Programs. Tenders were
advertised in the Sydney Morning Herald on 16, 17 & 20 September 2008. Twenty
nine (29) tenders were received for fourteen (14) different categories of plant.

The tenders were assessed by a panel, consisting of three (3) Council Officers.
Tenderers were selected and evaluated on the following selection criteria:

•     Legal Status Of Entity
•     Conformity to the Documentation
•     Insurance
•     Referees
•     Tender Price
•     Proposed personnel including Sub - contractors
•     OHS&R
•     Previous Experience
•     Organisational Structure - technical/ financial capability
•     Demonstrated understanding of Council requirements
•     Conformity to EPA requirements and past records

It should be noted that several tenderers were unable to submit all financial and
insurance details required. This situation, however, will be rectified prior to the
execution of contracts.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 25
                                                   Finance and Audit Committee Page 26

ITEM 3 (continued)

Tender prices were called for a total of fourteen (14) categories of plant as follows.
  Category of Plant      Description
           1             Graders
           2             Front end Loaders
           3            Backhoes
           4            Excavators
           5            Water Carts
           6            Skid Steer Loaders
           7            Skid Steer Loader and Truck combination
           8            Bogey Tip Truck
           9            Bogey Truck and Dog
          10            Eight wheeler Truck
          11            5 -8 tonne Tipper with Canopy suitable to cart woodchip
          12            Rollers
          13            Cranes
          14            Elevated Platforms

The assessment panel has placed the Tenders into the following categories:

Category A: Preferred Contractors

         Tenderer                                     Category of Plant
A & A Hire Services                                   3, 4, 6,7, 8
Acclaimed Excavations Pty. Ltd.                       1, 2, 3, 4, 5, 6, 7, 8, 9, 10,12,13
Active Excavation Works                               4, 6, 8
Active Hire Group Pty. Ltd.                           12, 14
Active Tipper Hire Pty. Ltd.                          4, 6, 7, 8, 9
Advance Plant Hire Pty. Ltd.                          3, 4, 5, 6, 8
Allard’s Plant Hire Pty. Ltd.                         1, 2, 3, 4, 5, 6, 8, 9, 12, 14
Anova Constructions Pty. Ltd.                         3, 4
Barron Transport Pty. Ltd.                            6, 7
Bennett Excavations Pty. Ltd.                         4, 6, 7
Boom Sherrin                                          14
Complete Hire                                         12, 14
Conplant Pty. Ltd.                                    12
Dinamo Pty. Ltd.                                      3, 4, 6, 8, 9
G V R D Chong Pty. Ltd.                               11
Hickey’s Earthmoving Pty. Ltd.                        4,10
Ken Coles Excavations Pty. Ltd.                       3, 6, 8
L G S Plant Hire                                      4
Lion Earthworks Pty. Ltd.                             4, 8, 9
M P Schultz Excavations                               4, 8, 9
Mike’s mini Machines                                  4, 6, 8, 9
Online Plant Hire Services Pty. Ltd.                  1, 3, 4, 6,7, 12
Raygal Pty. Ltd.                                      4, 5, 6, 7, 8, 9
Scape Constructions Pty. Ltd.                         4, 6, 8, 9
Stephensons Cranes                                    13



Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.    Page 26
                                                   Finance and Audit Committee Page 27

ITEM 3 (continued)

T F Group Pty. Ltd                                     4, 5, 6, 8
V M C Truck & Plant Hire                               6, 7
Vanra Pty. Ltd.                                        6
W D Elliotts Earthmoving Pty. Ltd.                     4

Category B: Late Tenderer

Universal Mobile Tower

Works awarded to Contractors under this contract are carried out on an “as required”
basis, following consideration at the time of the following factors:

•   Type of Work
•   Price
•   Availability
•   Previous Workmanship
•   Relevant Expertise
•   Previous Service provided to residents
•   Previous compliance to safety requirements


Consultation
Internal Council business units consulted included:-
•     Operations unit, Public Works.
•     Waste & Fleet, Public Works

Critical Dates
There are no critical dates or deadlines to be met.

Management Plan Budget / Linkages
Contractors will be used on a number of Capital works project and Maintenance
programs as identified in the Management Plan 2008-2012.

This project forms part of the 2008/2009 Operational Budget for the Public Works
Group

Relationship to Key Outcome Areas
          People
          This matter has no direct relationship to this key outcome area.


            Assets
            This project meets the following key outcomes for Assets (set out on
            page 56 of the Management Plan 2008-2012):
           o Delivery of Capital Works Program on time and budgetary requirements
           o Delivery of Maintenance programs in accordance with agreed service
             levels


Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 27
                                                   Finance and Audit Committee Page 28

ITEM 3 (continued)

            Environment
            This project meets the following key outcomes for Environment (set out
            on page 67 of the Management Plan 2008-2012):
           o All contractors are required to abide by Council’s environmental policies
             and procedures

            Governance
            This project meets the following key outcomes for Governance (set out on
            page 75 of the Management Plan 2008-2012):
           o Open tender process with best financial outcome to the Council.

Financial Impact
Each engagement of a contractor from the Contractor list will be funded from
approved Capital works projects or Maintenance programs. Total Council
expenditure on external plant hire over 12 months is estimated at $12M.

Policy Implications
There are no policy implications through adoption of the recommendation.

Other Options
The current system of inviting annual tenders provides an open and transparent
process of engaging contractors on an “as required “ basis. This ensures competitive
rates and better financial outcome.

Conclusion
The tendered rates for hiring of plant are considered competitive and that the
preferred list of contractors satisfy Council’s selection criteria.

RECOMMENDATION:

(a)   That the report of the Co-Ordinator – Plant & Fleet Management, dated 24
      October 2008 on Tender for Hire of Plant, be received and noted.

(b)   That the tenders for hiring of plant until 31 October 2009 from the following
      tenderers be accepted on an “as required “ basis for the indicated category of
      plant:
Tenderer                                            Category of Plant
A & A Hire Services                                 3, 4, 6,7, 8
Acclaimed Excavations Pty. Ltd.                     1, 2, 3, 4, 5, 6, 7, 8, 9, 10,12,13
Active Excavation Works                             4, 6, 8
Active Hire Group Pty. Ltd.                         12, 14
Active Tipper Hire Pty. Ltd.                        4, 6, 7, 8, 9
Advance Plant Hire Pty. Ltd.                        3, 4, 5, 6, 8
Allard’s Plant Hire Pty. Ltd.                       1, 2, 3, 4, 5, 6, 8, 9, 12, 14
Anova Constructions Pty. Ltd.                       3, 4
Barron Transport Pty. Ltd.                          6, 7
Bennett Excavations Pty. Ltd.                       4, 6, 7
Boom Sherrin                                        14
Complete Hire                                       12, 14
Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 28
                                                   Finance and Audit Committee Page 29

ITEM 3 (continued)

Conplant Pty. Ltd.                                     12
Dinamo Pty. Ltd.                                       3, 4, 6, 8, 9
G V R D Chong Pty. Ltd.                                11
Hickey’s Earthmoving Pty. Ltd.                         4,10
Ken Coles Excavations Pty. Ltd.                        3, 6, 8
L G S Plant Hire                                       4
Lion Earthworks Pty. Ltd.                              4, 8, 9
M P Schultz Excavations                                4, 8, 9
Mike’s mini Machines                                   4, 6, 8, 9
Online Plant Hire Services Pty. Ltd.                   1, 3, 4, 6,7, 12
Raygal Pty. Ltd.                                       4, 5, 6, 7, 8, 9
Scape Constructions Pty. Ltd.                          4, 6, 8, 9
Stephensons Cranes                                     13
T F Group Pty. Ltd                                     4, 5, 6, 8
V M C Truck & Plant Hire                               6, 7
Vanra Pty. Ltd.                                        6
W D Elliotts Earthmoving Pty. Ltd.                     4

(c)   That the preferred contractors be advised that the work will be allocated to them
      on an “as required” basis, following consideration at the time of the following
      factors: type of work, price, availability, previous workmanship, relevant
      expertise, previous service provided to the residents and previous compliance
      to safety requirements.

(d)   That the late tenderer be advised of the Council’s decision.


Report prepared by:

Paul Chandrakumar
Co-Ordinator Plant & Fleet Management

George Dedes
Manager – Waste & Fleet


Report approved by:

Kim Woodbury
Group Manager
Public Works




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 29
                                                   Finance and Audit Committee Page 30

4     TENDER FOR THE SUPPLY AND DELIVERY OF
      MULTIFUNCTION POLES (MFP) FOR MACQUARIE PARK
      RAILWAY STATION - (Corner Lane Cove Road and Waterloo Road,
    Macquarie Park)
Report prepared by: Project Manager (Civil)
Report dated: 21 November 2008                                      File No. COR-RFT- 13/08

Report Summary
This report is to advise Council on the Tenders received for the Supply and Delivery
of Multifunction Poles for the Macquarie Park Railway Station. The poles are a part of
the major works to underground all electrical and services including landscaping and
granite paving around the new railway station located at the corner of Lane Cove
Road and Waterloo Road, Macquarie Park.

Background
As part of the Capital Works Program, Council is carrying out public domain
improvements along the frontages of the new Macquarie Park Railway Station on the
corner of Lane Cove Rd and Waterloo Rd.

The Tender is for the procurement of multifunction street lights (MFP) and
accessories in accordance with the power and lighting design drawings and
specification prepared by GHD on Council’s behalf. The MFP must be delivered in
time for the poles to be erected before paving and other landscaping works are
undertaken.

Report
Council has recently called tenders (COR-RFT- 13/08) for the Supply and Delivery of
fourteen (14) Multifunction Poles and their accessories for Macquarie Park Railway
Station.

Tenders were advertised in the Sydney Morning Herald on 14, 18 and 21 October
2008. Tenders closed on 4 November 2008. Three (3) tenders were received for the
nine (9) items listed in the returnable schedules. Tenders were received from:

•     Fyntrim Pty Ltd
•     Hub Street Equipment Pty Ltd
•     Streetscape Pty Ltd

The Tender Evaluation Report is CIRCULATED UNDER SEPARATE COVER-
Confidential and ON FILE. Pursuant to Section 10A (2) (d) of the Local Government
Act 1993, these documents are listed as confidential as they contain commercial
information of a confidential nature that would, if disclosed, prejudice the commercial
position of the persons who supplied it. Furthermore, it is considered that discussion
in an open meeting would, on balance, be contrary to the public interest as it could
affect Council’s ability to secure the preferred tenderers.

The tenders were assessed by a panel, consisting of four (4) Council Officers.
Tenderers were selected and evaluated on the following selection criteria:



Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 30
                                                   Finance and Audit Committee Page 31

ITEM 4 (continued)

Tender Submission:
•   Price
•   Conformity to the Documentation
•   Demonstrated understanding of Council’s requirements.

Product Suitability:
•   Product Quality
•   Aesthetics
•   Referees
•   Delivery of Multifunction Poles.

Organisational Capacity
•   Company Structure – Technical and Financial capability
•   OHS&R
•   Insurance
•   Legal Status of the Entity
•   After Sales Service.

The panel has assessed that the Tender from Streetscape Projects Pty Ltd with their
“Smartpole” products to be the most meritorious Tender submission for Macquarie
Park Railway Station project with the overall highest score when evaluated against
the Tender Evaluation Criteria.

Consultation
Internal Council business units consulted included:-
•     Access Unit
•     Catchments Unit
•     Parks Unit

Internal Workshops held:-
•     Not Applicable

City of Ryde Advisory Committees consulted included:-
•     Not Applicable

External public consultation included:-
•    Not Applicable

Critical Dates
Council is working with Transport Infrastructure Development Corporation (TIDC) to
complete all the public domain works prior to the opening of the railway line, later this
year. Delivery of the poles will be required by January 2009.

Relationship to Key Outcome Areas

             People
             This project meets the following key outcomes for People (set out on
             pages 32-33 of the Management Plan 2008-2012):
Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 31
                                                   Finance and Audit Committee Page 32

ITEM 4 (continued)

P1    A vibrant city that is healthy, physically attractive, economically strong and
      engages its community through cultural and social activities.
P2    A city that plans for people by identifying their diverse needs and involving them
      in decision making to improve their quality of life.

The new multifunction poles and granite paving at the station will create a more
visually attractive public domain, whilst meeting the needs of rail commuters and
pedestrians.

             Assets
             This project meets the following key outcomes for Assets (set out on
             page 60 of the Management Plan 2008-2012):


A1    Well designed streets and paths where motorists, cyclists and pedestrians feel
      safe.
A3    A high standard of visual appearance as there is no litter or graffiti, and we care
      for our infrastructure and public areas.

A high quality and durable public domain will be provided outside the Macquarie Park
Station. The design of the public domain has been developed to complement the
design of the station and consideration given to the usability of the site.

             Environment
             This project meets the following key outcomes for Environment (set out
             on page 71 of the Management Plan 2008-2012):


E2    Attractive streets, public places and buildings through better planning and
      design which is responsive to community expectations and our local
      environment.

             Governance
             This matter has no direct relationship to this key outcome area.


G3    Incorporation of best practice approaches in the delivery of services to the
      community.
G5    Compliance with all legislative requirements and statutory obligations.

This project has been designed by accredited designers and approved by Energy
Australia.

Financial Impact
This project is funded under the Town Centre Upgrades (Renewal) Program
2008/2009. The tendered amount of $178,754 is under Council’s estimate for these
specific works of $180,000.



Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 32
                                                   Finance and Audit Committee Page 33

ITEM 4 (continued)

This project is a complex project involving the coordination of many organisations (i.e.
Council, TIDC, RTA, and the various utilities). The site is difficult due to the large
amount of underground services and heavy vehicular and pedestrian traffic volumes.
Accordingly, it is anticipated that under the contract arrangement, variations of up to
10% of the contract value could be incurred, if delivery problems are experienced.

The on-going cost of maintaining this project can be included in future operational
budgets.

Management Plan Budget / Linkages
This project is from the Management Plan (Assets/Capital Works/Town centre
Upgrades) listed on page No. A-8 of the Management Plan 2008-2012.

Conclusion
Three (3) Tenders received for this project. The tender that scored the best against
the evaluation criteria was submitted by Streetscape Projects Pty Ltd. It is
recommended that their tender be accepted.

RECOMMENDATION:

(a)   That the report of the Manager – Public Works, dated 21 November 2008 on
      Supply and delivery of Multifunction Poles (MFP) for the Macquarie Park
      Railway Station, be received and noted.

(b)   That the tender submitted by Streetscape Projects Pty Ltd for Contract COR-
      RFT-13/08 – Supply and delivery of Multifunction Poles (MFP) for the
      Macquarie Park Railway Station, in the amount of $178,754 (excl GST) be
      accepted.

(c)   That the unsuccessful tenderers be advised of Council’s decision.



Report prepared by:

Peter Nguyen
Project Manager- (Civil)

Andrew Cooper
Manager – Access


Report approved by:

Mr Kim Woodbury
Group Manager
Public Works



Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 33
                                                   Finance and Audit Committee Page 34

5     GOVERNANCE FRAMEWORK – Procurement Activities
Report prepared by: Manager Risk and Audit
Report dated: 20 November 2008                                        File No. COR 2008/578

Report Summary
This report is to advise Council of the governance framework in place that guides and
supports Council’s procurement activities. This report is provided to Council following
the late report to Council’s Committee of the Whole on 18 November 2008 in respect
of the NSROC Tender 7/08 – Supply, Supply and delivery and Supply Delivery and
Laying of Asphaltic Concrete and Associated Works. The first part of the report
provides Council with an outline of the general governance framework relating to
Council’s procurement activities with the second part specifically addressing the
procedures for the opening of tenders/quotations in relation to Council procurement.

Background
The City Of Ryde’s procurement philosophy is to acquire goods, services and
equipment on a best value for money basis through the application of consistent
and ethical policies and procedures that comply with all legislative requirements.
The City Of Ryde engages in a large number of procurement activities on an annual
basis. The complexity of the procurement ranges from daily purchasing of goods
and services through Council’s preferred supplier network to the administration and
placement of large scale tenders.

Report
1. General Governance Framework – Procurement Activities
Council’s procurement activities are controlled through a Procurement Governance
Framework. This framework consists of a number of policies and guidelines which
have been designed to encompass legislative requirements. The framework is
constantly evolving to cater for upgrades in available technology as well as changes
in underlying legislative and policy requirements.

Council has introduced a number of key initiatives in recent times and is planning to
develop these and other projects that will result in a greater level of governance in
the procurement framework. These key projects include:

-     Recent Introduction of on-line requisitioning
-     Ongoing revisions to the procurement policy
-     Introduction of an electronic tender box in the short term
-     Introduction of Tendering guidelines
-     Continual enhancement of the staff intranet procurement site to include
      standard pro-forma procurement documents

An outline of the key governance components in relation to the procurement
framework is summarised below:




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 34
                                                   Finance and Audit Committee Page 35

ITEM 5 (continued)

Council’s Policy framework
The City Of Ryde has developed two policies covering procurement. These are:

-     City Of Ryde Procurement Policy (all levels of procurement)
-     City Of Ryde Sustainable Procurement Policy

These policies are meant to be complementary of each other with the Procurement
Policy having been adopted in 2005 and the Sustainable Procurement Policy in 2007.
The procurement policy has been since supplemented by a number of ongoing
enhancements and revisions and is also supported through various procedures.

These policies encompass all legislative requirements under the Local Government
Act 1993 (i.e. section 55 pertaining to tendering) as well as the Local Government
(General) Regulations pertaining to tendering.

Continuing Procurement Education
Council has instituted a number of initiatives related to procurement education. These
include:

-     Establishment of a specific procurement section on Council’s staff intranet
-     Promotion of procurement initiatives through Council’s intranet site and via
      Council’s staff newsletter
-     General procurement and one on one education sessions
-     Update sessions and advice to all staff utilising Council’s intranet site
-     Specific education to Service Unit Managers on procurement issues
-     Education sessions on the Sustainable Procurement Policy
-     Demonstrations of range of sustainable products
-     With the introduction of on-line requisitioning (purchasing), training sessions
      have been conducted covering all users of the system

Promotion of Procurement initiatives and education on the Staff Intranet
 The staff intranet has a dedicated “Procurement Spot” which is designed to assist
staff at all levels in the procurement process. This includes contact details for key
staff as well as a range of procurement templates designed to assist council in
complying with best practice. The main aspects of the procurement spot include:

-     Key Contacts including areas of expertise and responsibility
-     Policy documents
-     Listing of key providers
-     Alternate Procurement Options – including Department of commerce contracts,
      Local government Procurement (LGP) sourced contracts and NSROC preferred
      suppliers
-     An extensive range of Procurement Templates designed to assist Council
      officers engaged in procurement activities in meeting best practice and
      as recommended the Independent Commission Against Corruption and the
      Department of Local Government




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 35
                                                   Finance and Audit Committee Page 36

ITEM 5 (continued)

Centralised handling/registration for Major Procurement
The City Of Ryde currently maintains a centralised register for all major procurement.
This is for procurement where the total expenditure will be greater than $50k. This
register is maintained by the Manager Risk and Audit who allocates the procurement
activity a central number i.e. COR-RFT-10/08. This number then appears as a central
reference in all documentation.

Any procurement that exceeds the $50k estimate is directed to Council’s tender box.
This is opened at set times in the presence of at least 3 independent officers

Other Initiatives
•     On line requisitioning
At the commencement of the 2008/09 financial year, Council moved to utilising the
Technology One solution as its core financial system. As a result of this, Council is
now utilising on-line requisitioning. This has resulted in improvements in internal
control (i.e. through improved reporting and monitoring tools) and efficiency of
processing.

•    Probity Advisor
For any contract involving expenditure in excess of $1,000,000 or where the issue is
contentious, consideration will be given to the appointment of a probity advisor to
oversee the administration of the Tender/Expression of Interest process. A probity
advisor has been appointed to a small number of such projects in recent times.

2. Specific procedures for the opening of submissions in relation to Council
    procurement.
This part of the report deals with specific procedures for the opening of procurement
submissions received into Council’s tender box. It was apparent that an
administrative error occurred in the application of these procedures which resulted in
the late report to Council’s Committee of the Whole on 18 November 2008 relating to
NSROC Tender 7/08 – Supply, Supply and delivery and Supply Delivery and Laying
of Asphaltic Concrete and Associated Works.

Council has one central tender box located in the Civic Centre. The responsibility for
the administration of the tender box is allocated to the Manager Risk and Audit. All
Council generated formal procurement (i.e. where the estimated total expenditure is
greater than $50,000) is directed to Council’s tender box. Council’s policies direct all
persons procuring items in excess of this value to obtain a central tender, quotation
or Expression of Interest number from the Manager Risk and Audit at the initial
planning stage of the procurement. They are then allocated a number from a register
maintained by the Manager Risk and Audit i.e. COR-RFT-XX/08. The closing date is
also noted in the register and an appropriate venue is booked for the opening of the
tender box.

All procurement activity through Council’s Tender Box is generally allocated a
standard closing time of 2pm on a Tuesday.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 36
                                                   Finance and Audit Committee Page 37

ITEM 5 (continued)

At this time the tender opening panel (consisting of the Manager Risk and Audit and 2
other officers independent of the procurement process) invite any persons present for
the opening to attend the venue for the opening. The tender box is taken to the room
and opened in view of any persons wishing to be present for the opening.

The procurement documents are opened and a listing is compiled of all opened
procurement documents. Council’s procurement documents include a requirement for
the respondents to lodge an original and at least one other copy. Both of these are
stamped on the opening page with a “City Of Ryde – Tender Box Opening Panel“ by
the panel with all members of the panel initialling the stamp. The original is also
reviewed and any schedules showing apparent pricing or other conditions affecting
pricing are also stamped and initialled by the panel. In the case of tenders or
Expressions of Interest (where the expenditure is greater than $150,000) a listing of
tenders received is displayed on Council’s website and on the notice board in the
public foyer of Council’s Civic centre.

The originals of the submissions received are then sent to Council’s records section
for registration and filing. The copies are then distributed to the initiating officer for the
evaluation and determination of a preferred provider.

Given the recent circumstances relating to the tender as reported to the Committee of
the Whole on 18 November 2008, all staff involved in the tender opening process
have been reminded of the need to take care with every aspect of the tender opening
process.

Consultation
Not applicable

Management Plan Budget / Linkages
Council’s Procurement activities impact on a large number of areas of the
management plan 2008-2012.

Relationship to Key Outcome Areas
          People
          This matter has no direct relationship to this key outcome area.


             Assets
             This matter has no direct relationship to this key outcome area.


             Environment
             This matter has no direct relationship to this key outcome area.




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 37
                                                   Finance and Audit Committee Page 38

ITEM 5 (continued)

             Governance
             This project meets the following key outcomes for Governance (set out on
             page 75 of the Management Plan 2008-2012):

G5    Compliance with all legislative requirements and statutory obligations.

Council’s governance framework over its procurement activities complies with the
requirements of the Local Government Act 1993 and regulations.

Financial Impact
There is no financial impact through adoption of the recommendation

Policy Implications
There are no policy implications through adoption of the recommendation

Other Options
Not Applicable

RECOMMENDATION:

That the report of the Manager Risk and Audit, dated 20 November 2008 on the
Governance Framework – Procurement Activities, be received and noted.


Report prepared by:

John Schanz
Manager Risk and Audit



Report approved by:

Roy Newsome
Group Manager
Corporate Services




Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008.   Page 38

				
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