1. Preparing your council’s Fit for the Future proposal
Templates and
Self-Assessment Tool
November 2014

2. Agenda Fit for the Future overview Understanding the Criteria
Choosing your Template
Completing the Templates
Key issues and questions

3. Where have we come from? The journey so far… Destination 2036
2011
2012
2013
2014
Today
Destination 2036
Councils came together to plan how local government could meet the challenges of the future.
TCorp Sustainability Review
Conducted a comprehensive, independent analysis into the financial sustainability of every council in NSW.
Fit for the Future – Local Government
Will lay the foundations for a stronger system of local government
and stronger local communities.
Local Government Infrastructure Audit
Provided information in relation to the infrastructure backlog in NSW and identified infrastructure needs by area and asset type.
Independent Local Government Review
Conducted wide consultation to develop key recommendations regarding local government structures, governance models and boundary changes.
Local Government Acts Taskforce
Looked at ways to modernise legislation, to ensure that it would meet the future needs of councils and communities.

4. Fit for the Future councils
Where are we going?
Fit for the Future councils
Scale and capacity
Financially sustainable
Efficient
Effective services and infrastructure

5. Total reform package Legislative reform Fit for the Future Proposals
Cutting red tape, streamlining procurement. A new Local Government Act from 2016
Fit for the Future Proposals
Councils review structural options and develop improvement plans by June 2015
Financial reforms
A new State borrowing facility, rating review and FAGs redistribution
Joint Organisations
New council organisations for Regional NSW. Pilots begin February Roll-out to all regions by September 2016
State Government support
Help with preparing proposals, support for merging councils, seed funding for Joint Organisations, Small Councils Innovation Fund

6. What’s on offer for councils?
$10.5m - $22.5m for Sydney council mergers
$5m - $13.5m for regional & rural council mergers
$13m state wide for Transition Committees
$4 million Small Councils Innovation fund

7. Progress to date . . . September – October 2014
November – December 2014
Program launch
Facilitators available
Regional workshops
Joint Organisations EOI
Templates released
Rural Council workshops
JO Pilots announced, design begins
Regional visits
Far West forum
Technical Panel available

8. Assess scale and capacity Make the transition, access the benefits
What are we asking councils to do?
Assess scale and capacity
Prepare a Proposal
Make the transition, access the benefits

9. Fit for the Future criteria
Sustainability
Operating Performance Ratio
Own Source Revenue
Building & Infrastructure Asset Renewal Ratio
Scale and Capacity
Use the Independent Panel recommendations as a starting point
Efficiency
Real Operating Expenditure per capita
Service &
Infrastructure
Management
Infrastructure Backlog Ratio
Asset Maintenance Ratio
Debt Service Ratio .

10. How were the criteria and measures developed?
TCorp analysis & recommendations
Accounting Code
Infrastructure audit
FFTF Criteria
Independent Panel research and recommendations
Some TCorp calculations refined following input from LG sector
Some criteria refined following review and recommendations from IPART
Input from OLG and specialist consultants

11. Why were these measures chosen?
Sustainability
Operating Performance
Ratio
Core measure of financial sustainability – indicates council’s capacity to meet ongoing operating expenditure requirements
Benchmark: TCorp recommended at least break-even over the longer term – ongoing deficits are unsustainable
Own Source Revenue
Councils with higher own source revenue have greater ability to control their own operating performance and financial sustainability.
Benchmark: TCorp recommended 60% as the minimum level to ensure councils have sufficient flexibility to manage external shocks & challenges
Building & Infrastructure Asset Renewal Ratio
Measures whether council’s assets are deteriorating faster than they are being renewed – indicator of whether council’s infrastructure backlog is likely to increase.
Benchmark: Ratio of greater than 100% ensures community assets are managed in a sustainable way.

12. Why were these measures chosen?
Infrastructure and service management
Infrastructure Backlog
Ratio
Measures how effectively councils are managing their infrastructure. Increasing backlogs may affect council’s ability to provide services and remain sustainable.
Benchmark: The benchmark of less than 2% ensures infrastructure backlogs are at manageable levels
Asset Maintenance Ratio
Measures whether council is spending enough on maintaining its assets to avoid increasing its infrastructure backlog.
Benchmark: A ratio of greater than 100% ensures council’s infrastructure position is not deteriorating
Debt Service Ratio
Indicates whether council is using debt wisely to share the life-long cost of assets and avoid excessive rate increases.
Benchmark: It is appropriate that councils should carry some level of debt to ensure inter-generational equity in funding major infrastructure.
Efficiency
Real Operating Expenditure per capita
Indicates how well councils are utilising economies of scale and managing service levels to achieve efficiencies.
Benchmark: Focuses on each council’s individual performance over time, rather than comparing with others. Decline in real expenditure per capita indicates improved efficiency (all things being equal).

13. Becoming Fit for the Future . . .
Becoming Fit for the Future is a process
Involves asking where are we now, how can we improve, what will success look like?
Some councils will take longer than others to improve their situation
Your Fit for the Future Proposal shows how you will move towards this goal
Once your Proposal is assessed as Fit for the Future, you will have access to a range of benefits

14. The Fit for the Future toolkit
Self-Assessment Tool
Template 1
Council Merger Proposal
Council Improvement Proposal
(Existing structure)
Template 2
Rural Council Proposal
(to be released following further development)
Template 3
Toolkit available at:

15. Deciding which template to use . . .

16. Deciding on Scale and Capacity . . .
The Panel’s final report is the starting point for all Fit for the Future proposals
The Independent Panel carried out extensive research and consultation on the subject of scale and capacity – no “one size fits all” approach.
It is up to each council to decide whether it has sufficient scale and capacity, based on the Panel’s recommendations and your own assessment
If the Panel recommended a merger for your council, this should be the first option that you consider
You do not have to adopt the Panel’s exact recommendations, but your proposal should demonstrate that your council has sufficient scale and capacity

17. How can we improve our situation? How do we measure success?
Completing the template
The Templates all follow the same basic process . . .
Where are we now?
How can we improve our situation?
How do we measure success?
Does our council have the appropriate scale and capacity?
(Use the Panel’s report as a starting point)
How are we performing against the other FFTF Criteria?
(Use the Self-Assessment Tool to review your performance)
What other challenges do we face?
(Use your IP&R documents)
Choose the appropriate pathway
(Merger? Rural Council? Performance Improvement Plan?)
Prepare a plan
Your plan will vary, depending on the Template chosen
Model the outcomes
Different levels of modelling required, depending on the Template chosen.
How long will it take you to achieve the benchmarks?

18. Template 1 Section 1 – The proposed merger Section 2 – The outcome
Identify the agreed merger and any boundary changes
Explain how it will provide scale and capacity (if different from Panel recommendation)
Section 2 – The outcome
How will the merger help meet priorities and challenges?
Identify the costs and benefits
Section 3 – Community involvement
How has the community been informed?
What has the response been?
Section 4 – Achieving the benchmarks
Estimate the expected improvement in performance
Only complete if the merger is agreed

19. Template 2
Section 1 – About your proposal
Summarise your proposal
Explain how you meet the scale and capacity criteria
Section 2 – Current position
Provide an overview of your council and community – key features, challenges, opportunities
Identify your current and forecast performance against the benchmarks and explain why
Section 3 – Becoming Fit for the Future
Identify strategies and outcomes (including ones not implemented), and explain assumptions
Prepare an action plan
Section 4 – Expected outcomes
Identify if the strategies and actions will help you meet the benchmarks by 2019/20
Section 5 – Implementation
Explain how you will put your plan into action
Only complete if your council has sufficient scale and capacity and you do not intend to merge or become a Rural Council

20. Meeting the benchmarks
There may be reasons why your council finds it difficult to meet the benchmarks – the Template provides room to explain your situation
You do not have to meet all the benchmarks by 2020 to become Fit for the Future – but you need to have a plan in place to continue working towards these goals.
Some councils may not be able to achieve the own source revenue targets – but you must show that you are trying to improve your situation

21. Expert assistance with mergers
Help with your proposal
Relationship Manager
Expert assistance with mergers
ONE STOP SHOP
Technical support
Facilitators
A single point of contact and assistance

22. Next steps. . . January – July 2015 November 2015 – September 2016
Template 3 available
Template 3 workshops
JO Pilots begin
Expert Panel appointed
FFTF proposals due 30 June
January – July 2015
Expert Panel’s recommendations
Councils begin implementation
JO Pilots review
Merger transitions in progress
JOs rolled out across regional NSW
November 2015 – September 2016

23. Questions…
Feedback form