The ACT government's Suburban Land Agency has missed Chief Minister Andrew Barr's revenue target for 2017-18 by almost $200 million, putting pressure on the agency to meet an increased $701 million target this fiscal year.
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Mr Barr, Suburban Land Minister Yvette Berry and the agency's board all approve the targets, which have been roundly criticised as contributing to record high ACT land prices and reduced housing affordability in Canberra.
The agency's annual report shows it has failed to meet eight of its nine key financial performance targets for 2017-18, indicating concerns the agency's board voiced in May about its ability to get the intended $576 million to Treasury have now been realised.
An agency spokesman said the target was not met largely due to delays in settling the sale of the former public housing site in Red Hill and Denman Prospect 2, as well as lower than projected sales in Throsby for the financial year.
He said the targets reflected the timing of a range of factors including planning approvals, civil works, land release, market behaviour, and economic and weather conditions, and there was always some risk the targets would differ from the outcome due to changed circumstances.
While the government revised down the 2017-18 target in June to $445 million, the agency only received $388 million in land sales revenue in 2017-18, a $188 million or about 30 per cent shortfall on the original target and $57 million below the June revised target.
When the 2017-18 was revised, the government also increased the 2018-19 revenue from $575 million of $701 million, and the government argues the failure to meet targets will not materially affect the government's budget, as the sales revenue will be achieved at some point in the future.
The shortfall meant the agency paid Treasury a dividend of $196 million in 2017-18, about 23 per cent lower than the $243 million in the original target, while the 2018-19 dividend target has also been revised up from $177 million to $230 million.
The land agency also failed to achieve seven other key financial performance targets, largely due to the lower land sales revenue, including its return to government; operating surplus before and after tax; profit margin, inventory turnover and net cash in-flows from operating activity.
But it exceeded its 72.7 per cent gross profit margins target by 15 per cent, with gross profits for 2017-18 at 83.9 per cent, largely due to the lower cost of land it did sell, due to revisions to project completion costs.
The agency said reviewed all project revenues and costs twice a year and if the estimated costs of developing the land across an estate were reduced, the cost for sites already sold was reduced, in turn increasing profit.
He said project cost projections were revised down for sales in Lawson, Throsby and Moncrieff last fiscal year.
Despite a series of failures on the financial side, the agency seems to be largely on track with its non-financial targets, exceeding a range of targets on social and environmental outcomes, including exceeding its 70 per cent target for new estate residents "satisfied or above" in surveys, at 89.7 per cent at that satisfaction rating.
A spokeswoman for Mr Barr, who with Ms Berry and the agency's board officially approves the targets, said in a statement the agency was governed by the board, and revenue estimates and budgets were set in consultation with government.
While such consultation is largely with the planning directorate and Treasury, which Mr Barr controls, his spokeswoman said "the treasurer has no say in these estimates".
