1. LG Sustainability Stage one and two
Towards a sustainable future

2. LG Sustainability - Background
MAV and VAGO assessments
Differing assessments of financial risk
Councils facing risk
One is extremely high risk, four very high risk and fifteen are high risk
MAV - E and H risk Councils require external funding assistance

3. LG Sustainability
Is information to assess Council’s financial sustainability credible?
What strategies does Council have to maintain a financially sustainable position?
What assistance does Council need from government?

4. LG Sustainability - Project outcome
To determine, in partnership with the Council:
whether all management responses to its financial sustainability position have been exhausted and;
ultimately and legitimately requires assistance from State /Federal Government

5. LG Sustainability – Pilot Councils 2008/09
Central Goldfields
Hepburn
Horsham
Ararat
Gannawarra
Corangamite
Yarriambiack
Towong
Loddon
West Wimmera

6. LG Sustainability (2) – 2009/10
Baw Baw
Colac Otway
East Gippsland
Glenelg
Hindmarsh
Hume City
Indigo
Kingston
Macedon Ranges
Maroondah
Moira Shire Council
Moorabool
Moyne
Southern Grampians
Strathbogie
Wellington
Wodonga City

7. LG Sustainability - Self Assessment
Self Assessment - 8 key success factors:
Understanding Financial Sustainability
Corporate Governance
Service and Asset Management Plans
Financial Reporting
Annual Planning ,Budgeting and Rating
Long Term Financial plans
Service provision
Skill Development

8. LG Sustainability – Gap Analysis
WOMBAT SHIRE COUNCIL GAP ANALYSIS CHART

9. Benchmark results KSA’s

10. Financial Ratios

11. Renewal Gap

12. LG Sustainability – Findings
Understanding financial sustainability
SRP’s – Policies and financial strategies
No substantial LTFP’s
Disparate /incomplete Asset Registers
Condition Data/Intervention levels
Depreciation charges not related to condition
Short term Capital Works program

13. LG Sustainability - Findings
Balance Sheet versus Moloney
Whole of life costing –not practiced.
Community consultation/LOS.
Budget in service level terms/SAMP’s
Performance reporting – Audit Committee
Rating strategy – future funding

14. LG Sustainability – Pilot findings
8 of the 10 Councils are rating below average
9 of the 10 Councils have underlying operating deficits
2 of the 10 Councils have lower than average depreciation charges
4 of the 10 Councils have overstated depreciation charges
2 of the 10 Councils are over funding renewal gap.
Inconsistency in renewal valuation rates;
All Brownfield valuations on Balance Sheet

15. LG Sustainability Pilot - CAPITAL
Total Capital expenditure $62 million
Renewal Demand $48 million
Renewal investment $ 34 million
Unexpended CAPEX $7.8 million
71 % of renewal demand funded
55 % of total CAPEX was renewal
45 % of CAPEX was new and upgrade
12.5 % of budgeted CAPEX was not delivered.

16. LG Sustainability (2) - CAPITAL
Total Capital exp $ million
Renewal Demand $ million
Renewal investment $ million
Unexpended CAPEX $56.96 million
68 % of renewal demand funded
49 % of total CAPEX was renewal
29 % of CAPEX was upgrade
22% of CAPEX was new
26 % of Budgeted CAPEX was not delivered.

17. LG Sustainability – Outcomes
Need robust Strategic Resource Plan
Long Term Financial Plan
Financial policies/ target ratios
10 year CAPEX programme – R,U,N
Rating and revenue raising
Council engaged/report performance – Audit Committee
Review of Asset Management Strategy and practices
Asset Registers/Condition Assessments/Intervention levels
Renewal Valuations
Document management strategies – LOS/Rationalisation
Whole of organisation approach
Training

18. LG Sustainability :Strategic Resource Plan
Grants
and
Fees
Notional
Reserve
Funds
Asset
Management
Strategies
Operational
Expenses
(service levels)
Revenue
Raising
(rating) strategy
Capital Works projects and funding
Debt
Strategy
STRATEGIC
RESOURCE
PLAN

19. LG Sustainability - LTFP
SRP – provided policy parameters for LTFP
Councils have increased rates significantly
10 year Capital works program
Escalation factors
Financial Ratios
Charts
Financial Statements
Renewal Demand versus renewal annuity
Rating options

20. LG Sustainability- LTFP

21. LG Sustainability – LTFP

22. LG Sustainability - Conclusion
Focus on determining issues impacting on sustainability
Self Assessment Framework
Data Review
Improvement Plan/cross functional team
Tools and techniques
Strategic Resource Plan
Long Term Financial Plan
Sustainable future