AG’s assessment highlights that NSWMA is operating at a loss
An assessment by the Auditor General of the fiscal trends at the National Solid Waste Management Authority, (NSWMA) has highlighted what the entity has long bemoaned; that its operating at a loss.
The AG‘s report was tabled in parliament on Tuesday.
It noted, that the assessment was in aid of parliament’s public accounts committee review of the financial performance of public bodies.
The Auditor General said the financial statement analysis, looked at the NSWMA’s performance over a 5 year period, between 2016 and 2021, to observe trends.
The analysis revealed that the NSWMA’s net profit over the period was primarily enabled by government subvention income, which accounted for 89 percent of total revenue.
The AG noted that while the NSWMA’s net profit margin was positive, it showed a declining trend.
It said the NSWMA recorded a net loss of over $860 million for fiscal year 2020 / 2021, relative to net profit of $198 million in the previous fiscal year.
It said the net profit margin fell to negative 1.55 in the 2020 / 2021 fiscal year, from 0.29 the previous year.
The AG said the NSWMA’s profitability was largely underpinned by government subvention, funded by the parochial revenue fund as NSWMA’s other income sources, namely, contracts and fees from the collection of commercial solid waste and from landfill waste disposal, generated minimal revenue.
It said while there were marginal increases in subvention over the 5 year period, the subvention of over $6.2 billion in 2020 / 2021, was less than the $6.9 billion dollars for the previous year.
The net loss in 2020/21 was in a context where government reduced its expenditure budget due to fiscal challenges brought on by the Covid-19 pandemic.
The AG said that in order to ascertain the impact of subventions on NSWMA’s balance sheet, subventions were excluded from calculations.
The AG observed that net profit margin fell to negative 12 point 65 for 2020/21 relative to -9.45 for 2016/17, as revenue from operations was insufficient to offset the impact of increasing expenses, which amounted to $7.9 billion in 2020/21, relative to $5 billion in 2016/17, averaging $6.5 billion dollars, over the five-year review period.
A recommendation has been made for the NSWMA to take steps to improve its income generating capacity.