Annual Report 08/09
The voice of local government
Purpose
Published by
Municipal Association of Victoria
Level 12, 60 Collins Street
Melbourne VIC 3000
GPO Box 4326, Melbourne 3001
Telephone: 03 9667 5555
Facsimile: 03 9667 5550
Email: inquiries@mav.asn.au
Website: www.mav.asn.au
Editor
Imogen Kelly
Design
Frank Design Pty Ltd
Photography
Portraits: Chris Kapa
MAV Events: Steven Diffey Photography
This report is produced on a combination of
elemental chlorine-free papers, sourced from
sustainably managed forests and 100% recycled
paper, and printed using vegetable based inks
by an environmentally responsible printer. This
reflects the Municipal Association of Victoria’s
commitment to environmental sustainability.
To promote the
efficient carrying
out of municipal
government
throughout the
state of Victoria
and to watch over
and protect
the interests,
rights and privileges
of municipal
corporations.
CONTENTS
Year In Review
President’s Report
2
4
CEO’s Report
6
MAV Mangement Committee
8
MAV Governance
13
Finance & Economics
16
Governance & Councillor Development 18
Environment
20
Planning & Building
22
Human Services & Public Health
24
Transport & Infrastructure
26
Emergency Management
28
Workforce
30
Collaboration
31
Insurance
32
MAV Team
34
MAV Operations
36
MAV Representatives
38
Committees
39
CMP Members
41
Fidelity Members
42
Financial Overview
43
Guide to the Financial Report
44
Glossary
46
MAV Financials
47
MAV Insurance Financials
79
Build it and the
jobs will come
Voluntary basis for
valuations prevails
Years of research, system
improvements and direct
advocacy delivered more
than $230 million for
Victorian councils to upgrade
and build new community
infrastructure and create
local jobs in the process.
A proposal to centralise
responsibility for valuations
was substantially modified to
be on a voluntary basis only.
YEAR IN REVIEW
Clawing back the
council coffers
Research identified potential
savings of $350 million per
annum from improvements in
procurement operations and
a special business unit was set
up to claw back expenditure.
Council costs
compensated
Shift off
An attempt to shift
responsibilities in Home
and Community Care without
due consideration of the
impacts to service and
funding levels was averted.
Extended reimbursement
arrangements were
negotiated for bushfire
affected councils to recoup
an estimated $30 million.
Not as easy
as ABC
On the fast track
to reform
Improved relations with the
Federal Government helped
secure $25 million to
fast-track improvements to
asset and financial
management systems and
support regional collaboration
in the delivery of services.
2> MAV ANNUAL REPORT 2008/09 YEAR IN REVIEW
The opportunity was seized
following the collapse of ABC
Learning to advocate for
important structural reform of
the childcare industry to
achieve a shift in federal
funding from privately-owned
to publicly-owned services.
Online bid
successful
The State Government
responded to a budget bid
with $10.4 million over four
years to develop new online
planning systems.
Citizens take a
stand
A campaign encouraging
people to stand for council
attracted over 1000 people
to public information sessions
and delivered a 40 per cent
reduction in the number of
uncontested elections.
Classroom antics
In a first for local government,
the sector was represented in
negotiations for a new
kindergarten agreement that
will deliver significant
productivity improvements for
councils and considerable
benefits for teachers.
Punch-on ensues
over planning
powers
A stinging attack was launched
on State Government attempts
to strip councils of their
planning powers and
legislation to diminish local
input was defeated.
Supporting
breaches
A formal mechanism was
established under legislation
to support councils in dealing
with breaches of councillor
conduct.
YEAR IN REVIEW >3
PRESIDENT’S REPORT
“...I am confident that
we make a real difference
on the issues that
matter the most to
our communities...”
This past year has marked a considerable
period of change for local government.
The elections in November 2008 brought
about a changing of the guard that
arguably ended the era that followed
amalgamations. More than a quarter of
councillors across the State did not
contest the elections, making way for a
substantial number of new councillors.
The significance of this occasion was
observed by awarding councillors for their
long service to Victorian communities. This
was a poignant celebration on the eve of
the elections that paid due recognition to
those individuals that have made sizeable
personal sacrifices for the betterment of the
communities they served.
The MAV took advantage of the alignment
of elections and made a concerted
state-wide effort to encourage new
candidates to consider standing for
council. Councils embraced the Stand for
Council campaign and over 1000 people
attended public information sessions,
resulting in a significant reduction in the
number of vacancies going uncontested.
Over half of the councillors elected this
year were new. The challenge for the MAV
was to support this unprecedented
number of new councillors to quickly
adjust to the rigours of their new role and
assist newly formed councils to establish
productive relationships with each other
and their management teams.
There has been a record take-up of
professional development opportunities by
councillors, which bodes well for our
4> MAV ANNUAL REPORT 2008/09 PRESIDENT’S REPORT
capacity as a group to provide effective
governance for local communities
moving forward.
The bar has been lifted for local
government and we now have some of
the most stringent standards imposed on
any level of government in Australia.
Never, it seems, has local government
come under such scrutiny. The MAV is
doing what it can to help councils
understand and manage the implications
of the new requirements.
While it has been a challenge for all of us I
firmly believe it is not a bad thing that we
ensure our practices and processes are
strong enough to withstand the increased
scrutiny that comes with rising community
expectations for robust and transparent
decision making. Some minor adjustments
seem justifiable but we should not be
seeking wholesale changes to the
legislative provisions that govern our sector.
Instead we should be proud that we are at
the leading edge of governance reforms
for all levels of government in Australia.
On a personal note I am sorry to lose
the financial membership of the City
of Melbourne from next year and
disappointed that we weren’t able to
engage with them in a meaningful way
in the lead up to their decision. The
influence afforded by having full
membership of all 79 councils in Victoria
cannot be underestimated and I am keen
to reengage our capital city whenever
they are ready.
At the Board level, the elections also
marked the end of an era. I want to pay my
respects and thanks to those long standing
Board representatives that either retired or
lost office at the elections. Collectively they
made a sizeable contribution not only to
the Association but more broadly to the
position that our sector occupies in the
Australian political landscape of today. In
particular, I wish to acknowledge the efforts
of Jenny Dale and Darryl Argall who both
served as Deputy President for a period
and, for Jenny, a time as Acting President
of the MAV.
In closing, I congratulate my colleagues
We’ve got a good group of new councillors
on the Management Committee for their
with a lot of new energy, and I am
election to represent their regions and
confident that we can make a real
look forward to continuing the productive
difference on the issues that matter the
relationship we have quickly established.
most to our communities including
And finally I wish to thank the Chief
improving our current economic situation;
Executive Officer, Rob Spence and the
helping communities to recover and learn
staff of the MAV for supporting me in my
from this year’s bushfires; ensuring robust
first few months as President.
intergovernmental arrangements for the
CR BILL MCARTHUR
most effective and efficient delivery of
PRESIDENT
services; and responding to the longer term
challenges associated with climate change.
MAV ANNUAL REPORT 2008/09 PRESIDENT’S REPORT >5
CEO’S REPORT
“Our level of engagement
with the Victorian
Government is at an
all time high with our
opinion being sought on
major policy initiatives...”
Following a period of rapid growth
we’ve put an organisational structure
in place that is working to streamline
our core activities of policy development
and advice, advocating local government
interests, building the capacity of
councils, supporting councillors,
providing networking and development
opportunities and promoting the role
of local government.
A specialist staff of 46 is organised in
three operational divisions focusing on
achieving gains for Victoria’s councils
through effective governance, policy
development and collaboration.
Our level of engagement with the
Victorian Government is at an all time
high with our opinion being sought on
major policy initiatives in transport,
infrastructure, children’s services and
climate change this year.
We are engaging better at the federal
level also. We’ve finally seen the results
of years of research and advocacy for
federal funding support in the form of
community infrastructure grants, and we
got good traction in the wake of the ABC
Learning collapse and in response to a
proposed shift in responsibilities for aged
care services.
Moving forward we have undertaken to
provide assistance to the Australian Local
Government Association on the Council
of Australian Governments, bringing us
more and more into the federal sphere.
In the past year the organisation has taken
another step and reached a new level of
6> MAV ANNUAL REPORT 2008/09 CEO’S REPORT
maturity. With that has come increasing
expectations from our members to do
more. Perhaps the best demonstration
of this is the 88 motions we received for
consideration by State Council in May
2009. This compares with the three
motions received in my first year as Chief
Executive Officer of the MAV in 1998.
Aligning the strategic plan and resolutions
of State Council is an increasingly difficult
task given the spectrum of matters now
raised at State Council and the available
resources of the Association. Nevertheless
it’s an area we’ve made some progress in
this year.
There has always been an inherent tension
in our corporate planning processes to
ensure that we deliver the expectations
of our members while remaining flexible
enough to respond to emerging issues.
This is demonstrated by our response to
the catastrophic bushfires that are now
recognised as Australia’s worst natural
disaster in recorded history. Supporting
affected councils has consumed a lot of
our resources in supporting councils to
deal with the aftermath of the fires and
coordinating local government’s response
to the Royal Commission that will continue
to run for some time yet.
Our operating model is to get the
job done and, within reason, not be
constrained by finances. We have more
depth now than we’ve had since
amalgamations devastated our staffing
profile but we’re straining to do some
things because we lack resources.
The strain has been so great this year that
it’s pushed us into deficit but we’ve got
good capital backing and I am confident
that we will recover our position, if not
next year, the year after.
The issues this year have tested the limits of
our staff, and again they have proven their
calibre representing local government at
the highest levels of the State and Federal
Governments. I commend their
achievements under the considerable work
load pressures of this year.
I would also like to record my
appreciation for the dedication and
guidance of our former President, Dick
Gross who lost office at the elections and
many of our long standing Board
members who did not contest the
elections, some of whom served the
Association since the amalgamations and
have played no small part in steering the
organisation through this difficult time.
A new Management Committee is now
in place and applying dedication and
commitment to the activities of the
Association. I extend my thanks to the
President, Cr Bill McArthur and the
Management Committee for their
leadership and encouragement for
the organisation in developing our
plans for the year ahead.
ROB SPENCE
CHIEF EXECUTIVE OFFICER
MAV ANNUAL REPORT 2008/09 CEO’S REPORT >7
MAV MANAGMENT COMMITTEE
LEFT TO RIGHT:
CR SAM ALESSI Whittlesea City Council DEPUTY PRESIDENT (METROPOLITAN)
CR BILL MCARTHUR Golden Plains Shire Council PRESIDENT
CR JANE ROWE East Gippsland Shire Council DEPUTY PRESIDENT (RURAL)
8> MAV ANNUAL REPORT 2008/09 MAV MANAGEMENT COMMITTEE
CR
CR
CR
CR
CR
JOHN SIPEK Moonee Valley City Council
LISA MAHOOD Wodonga City Council
JOHN CHANDLER Stonnington City Council
ENVER ERDOGAN Moreland City Council
REID MATHER Buloke Shire Council
CR
CR
CR
CR
CR
JAN FARRELL Greater Geelong City Council
ROD FYFFE Greater Bendigo City Counci
GEOFF LAKE Monash City Council
KEN GALE Moyne Shire Council
GEOFF GOUGH Manningham City Council
MAV ANNUAL REPORT 2008/09 MAV MANAGEMENT COMMITTEE >9
MAV Management Committee
South east
South West
East
CR BILL MCARTHUR
CR JOHN CHANDLER
CR KEN GALE
Golden Plains Shire Council
Stonnington City Council
PRESIDENT
Member, MAV Audit Committee
Member, MAV Insurance Committee
Member, Australian Local Government Association Board
Member, Australian Council of Local Government Steering
Committee
Councillor 1991 – 1994 (Grenville), 1996 – present
(Golden Plains)
Mayor 2004, 2005
Victorian Councillor Service Award – 15 Years
SOUTH EAST REPRESENTATIVE
Deputy Chair, Planning Advisory Group
Councillor 1996 – present, 1982 – 1994 (Prahran)
Mayor 1988 (Prahran) 1996, 2006
Member, Australian Building Codes Board
Victorian Councillor Service Award – Mayor Emeritus
and 20 Years
Moyne Shire Council
RURAL SOUTH WEST REPRESENTATIVE
Central
South east
Interface
East
Southern
Central
Chair, Human Services Advisory Group
Member, Rates Affordability Working Group
Councillor 2004 – present
Mayor 2008, 2009
Member, Rural Councils Victoria
Member, Timber Towns Victoria
South eastWest
Interface East
CR SAM ALESSI
CR ENVER ERDOGAN
CR GEOFF GOUGH
Whittlesea City Council
DEPUTY PRESIDENT (METROPOLITAN)
INTERFACE REPRESENTATIVE
Moreland City Council
Manningham City Council
METROPOLITAN EAST REPRESENTATIVE
METROPOLITAN CENTRAL REPRESENTATIVE
Councillor 2008 – present
Member, Australian Local Government Association Board
SouthCouncillor
1997 – present
Westeast
East
Gipps
Central
Mayor 1998, 2001, 2005
Chair, Yarra Plenty Regional Library Services Board
Member, Interface Councils Group
Member, Metropolitan Waste Management Group Forum
Victorian Councillor Service Award – Mayor Emeritus
Victorian Multicultural Commission Awards For Excellence Award for Meritorious Service to the Community
SouthWest
GippsGipps
East Gippsland Shire Council
DEPUTY PRESIDENT (RURAL)
RURAL GIPPSLAND REPRESENTATIVE
Co-chair, Environment Advisory Group
Member, MAV Audit Committee
Councillor 2003 – present
Mayor 2004, 2005
Deputy Mayor 2003, 2007
Victorian Local Sustainability Advisory Committee
Co-chair, Transport and Infrastructure Advisory Group
Councillor 1997 – present
Mayor 2002, 2007
North
central
Southern
Interface
CR JAN FARRELL
CR GEOFF LAKE
Greater Geelong City Council
RURAL SOUTH CENTRAL REPRESENTATIVE
Monash City Council
METROPOLITAN SOUTH REPRESENTATIVE
Member, MAV Audit Committee
Chair, Planning Advisory Group
Councillor 2004 – present
Member, Responsible Gambling Ministerial Advisory
Committee – Industry Best Practice Working Group
Councillor 2000 – present
Mayor 2002, 2003
President, Australian Local Government Association
Member, Metropolitan Fire and Emergency Services Board
Member, Australian Council of Local Government Steering
Committee
Southcentralcentral
South
Gipps
CR JANE ROWE
South central
South NorthNorth
central
centralcentral
CR ROD FYFFE
North North
east east
North central
CR LISA MAHOOD
Greater Bendigo City Council
RURAL NORTH CENTRAL REPRESENTATIVE
Wodonga City Council
RURAL NORTH EAST REPRESENTATIVE
Member, MAV Insurance Committee
Deputy Chair, Professional Development Reference Group
Councillor 1996 – present
Mayor 2004, 2005
Member, Ministerial Advisory Council on Libraries
Member, State Library Public Libraries Advisory Committee
Member, National Packaging Covenant Council
Victorian Councillor Service Award – 20 Years
Co-chair, Transport and Infrastructure Advisory Group
Councillor 2000 – present
Mayor 2002, 2003, 2004, 2005, 2006
Deputy Mayor 2001
Victorian Councillor Service Award – Mayor Emeritus
10> MAV ANNUAL REPORT 2008/09 MAV MANAGEMENT COMMITTEE
Central
Southern
North east
North west
Metropolitan South East, Cr John Sipek
from Moonee Valley City Council to
Metropolitan West, Cr Rod Fyffe from
Greater Bendigo City Council to Rural
North Central, Cr Jan Farrell from
Greater Geelong City Council to Rural
South Central and Cr Reid Mather from
Buloke Shire Council to Rural North West.
Elections for the MAV President and
Regional Representatives were postponed
from March 2009 to April 2009 to allow
candidates from councils affected by the
February bushfires to participate.
CR REID MATHER
Buloke Shire Council
RURAL NORTH WEST REPRESENTATIVE
Co-chair, Environment Advisory Committee
Councillor 2003 – present
Mayor 2005, 2006, 2007, 2008, 2009
Member, Minister for Agriculture’s Drought Reference
Group
Member, North Western Municipalities Association
Member, Alliance of Councils for Rail Freight Development
Victorian Councillor Service Award – Mayor Emeritus
West
Southern
CR JOHN SIPEK
Moonee Valley City Council
METROPOLITAN WEST REPRESENTATIVE
Chair, Professional Development Reference Group
Councillor 2005 – present
Deputy Mayor 2009
Member, Metropolitan Waste Management Group Board
Eight candidates nominated for the
position of President. Cr Bill McArthur
from Golden Plains Shire Council was
elected President.
Review of MAV Regions
Following representations by the Murray
Group of Councils, comprising
Gannawarra Shire Council, Campaspe
Shire Council, Moira Shire Council, Swan
Hill Rural City Council, Mildura Rural City
Council and Loddon Shire Council, the
MAV Board resolved to consult member
councils on a proposal to amend the
existing board regions to establish the
Murray Group without increasing the
number of rural regions. Consultation did
not identify a clear preference for any
particular option. At the request of the
Murray Group of Councils a vote by State
Council was delayed until the October
2009 meeting to allow for further
consideration and consultation.
Five candidates for Regional Representative
were elected unopposed – Cr Geoff
Gough from Manningham City Council for
Metropolitan East, Cr Geoff Lake from
Monash City Council for Metropolitan
Southern, Cr Sam Alessi from Whittlesea
City Council for Interface, Cr Jane Rowe
from East Gippsland Shire Council for
Gippsland and Cr Ken Gale from Moyne
Shire Council for Rural South West.
A further 19 candidates nominated for
Regional Representative positions. Cr
Enver Erdogan from Moreland City
Council was elected to represent
Metropolitan Central, Cr John Chandler
from Stonnington City Council to
Board meeting attendance
Changes in representation in
2008/09
JUL
Sam Alessi
Cr Mark Conroy resigned his position on
the MAV Board in September 2008, and
Cr Geoff Lake from Monash City Council
was elected unopposed to fill the vacancy
for the Metropolitan Southern Region.
Darryl Argall
Cr Darryl Argall (Deputy President Rural
and Rural North West), Cr Jenny Dale
(Rural North East), Cr Brenda Hampson
(Rural South West), Cr Chris Papas
(Metropolitan West) and Cr Luke Tobin
(Metropolitan South East) did not contest
the local government elections in
November 2008, while Cr Dick Gross
(President) and Cr Joe Caputo
(Metropolitan Central) lost office.
Jenny Dale
An Interim Management Board was
formed comprising Cr Sam Alessi (Deputy
President Metropolitan and Interface) as
Interim President, Cr Rod Fyffe (Rural
North Central), Cr Geoff Gough
(Metropolitan East), Cr Geoff Lake
(Metropolitan Southern), Cr Bill McArthur
(Rural South Central) and Cr Jane Rowe
(Gippsland).
Geoff Lake
Joe Caputo
AUG
SEP
OCT
NOV
Enver Erdogan
Jan Farrell
Rod Fyffe
Ken Gale
Geoff Gough
Dick Gross
Brenda Hampson
Bill McArthur
Lisa Mahood
Reid Mather
Chris Papas
Jane Rowe
John Sipek
Luke Tobin
FEB
MAR
APR


 X
MAY
JUN
X
X
 
John Chandler
Mark Conroy
DEC

 X 
X
X



X


 X

X
 X  X




X
X

X
 X

 X  X 



X 
X 










MAV ANNUAL REPORT 2008/09 MAV MANAGEMENT COMMITTEE >11
Allowances and Expenses
The Board Allowance and Expense Policy
makes provision for Board members to
receive an annual allowance paid
quarterly in advance, and to claim
out-of-pocket expenses for travel, parking,
accommodation and meals when
undertaking duties as a Board member.
Board allowance amounts are adjusted by
the consumer price index each July.
In 2008/09 the annual allowance
amounts were as follows:
> President $54,024.42
> Deputy President $11,135.98
members, to their council for travel where
they have utilised a council fleet vehicle,
or directly to the hotel for some
accommodation expenses. It should be
noted that some Board members may
lodge claims after 30 June 2009 for
expenses incurred in the 2008/09 year,
details of which will be reflected in the
2009/10 Annual Report.
President Cr Dick Gross, Interim President
Cr Sam Alessi and President Cr Bill
McArthur were provided with full private
use of a motor vehicle at a cost of
$2,698.83, $1,332.89 and $2,716.73
respectively.
> Board/Management Committee
member $7,582.44
ANNUAL
ALLOWANCE
Cr Sam Alessi
TRAVEL AND
ACCOMMODATION
TOTAL
25,725.51
1,911.76
27,637.27
Cr Darryl Argall
4,640.00
19,342.91
23,982.91
Cr Joe Caputo
3,159.10
-
3,159.10
Cr John Chandler
1,832.30
115.00
1,947.30
Cr Mark Conroy
1,895.50
-
1,895.50
Cr Jenny Dale
3,159.10
777.75
3,936.85
Cr Enver Erdogan
1,832.30
-
1,832.30
Cr Jan Farrell
1,832.30
634.20
2,466.50
Cr Rod Fyffe
7,589.42
5,842.20
13,431.62
Cr Ken Gale
1,832.30
1,183.84
3,016.14
Cr Geoff Gough
Cr Dick Gross
Cr Brenda Hampson
Cr Geoff Lake
5,757.12
101.20
5,858.32
22,510.00
1,814.08
24,324.08
3,159.10
2,331.00
5,490.10
5,862.40
417.19
6,279.59
Cr Bill McArthur
18,812.92
3,902.16
22,715.08
Cr Lisa Mahood
1,832.30
318.18
2,150.48
Cr Reid Mather
1,832.30
741.38
2,573.68
Cr Chris Papas
3,159.10
-
3,159.10
Cr Jane Rowe
8,398.96
6,080.64
14,479.60
Cr John Sipek
1,832.30
210.71
2,043.01
Cr Luke Tobin
3,159.10
101.80
3,260.90
The above amounts do not correlate to
the allowance and expense payments
figures in the financial statements as they
include some payments made to Board
members for expenses incurred in
2007/08 and claimed in 2008/09. Some
expenses are also charged to other areas
in the MAV accounts. Payments for
expenses were made direct to Board
12> MAV ANNUAL REPORT 2008/09 MAV GOVERNANCE
MAV Governanace
Municipal Association Act 1907
The Municipal Association Act 1907 defines
the purpose of the MAV to promote the
efficient carrying out of municipal
government throughout the state of Victoria
and watch over and protect the interests,
rights and privileges of municipal
corporations. It establishes the MAV as a
corporation with perpetual succession and
requires it to provide a mutual liability
insurance scheme for local government and
empowers it to provide fidelity insurance.
MAV Rules
The Act requires the MAV to set Rules for
> the management of the Association
> the regulation of proceedings
> fixing the annual subscription paid by
each municipality
> fixing of contributions to the Municipal
Officers’ Fidelity Guarantee Fund
> other matters affecting the management
of the Association.
The Rules require MAV Representatives and
Board members to be councillors. The
simultaneous local government elections
resulted in all existing councillors going out of
office at 6 am on 29 November 2008. As a
consequence there were no MAV
Representatives and no Board members from
6 am 29 November 2008 until such time as
the MAV Representatives were appointed by
member councils and the President and
Regional Representatives were elected. The
Rules were changed to provide for an Interim
Board, to be formed after the elections and
to fix the date for the election of the MAV
President and Regional Representatives.
Following a delay in the election for MAV
President and Regional Representatives,
further changes were proposed to the MAV
Rules to move the first fixed date for
elections; provide for the MAV to delay the
elections in the event of exceptional
circumstances; introduce preferential voting
for the election of Regional Representatives
as is already the practice for President;
update the pecuniary interest disclosure
requirements of Board members to reflect
contemporary practices in councils; and
make some minor editorial changes that
do not alter the tenor of the rules. These
changes received the support of the State
Council in May 2009 but at 30 June 2009
were still awaiting the consent of the
Governor-in-Council. Until such time as
the Governor-in-Council consents to
changing the MAV Rules the President and
Regional Representatives elected in April
2009 will be collectively known as the MAV
Management Committee.
State Council
The Act provides that each member council
may appoint a councillor as its
representative, and these representatives
constitute the Association. The representatives
come together twice annually to form State
Council which sets the policy direction of the
Association and monitors its performance.
The State Council Annual General Meeting
was held in October 2008 and received a
report from the President on the activities and
financial affairs of the Association and voted
on 60 motions from member councils. In
May 2009 the State Council met and
approved the Strategic Work Plan for the
MAV for 2009/10 and considered a further
86 motions from member councils. For a list
of council representatives at 30 June 2009
see page 38.
Board of Management
Twelve Board members are elected to the
Board of Management for a two-year term.
Each Board member is elected to represent
a geographic grouping of councils. The
representatives in that grouping elect the
regional Board member. The thirteenth
member of the Board is the President who
is popularly elected by the representatives
of each member council. The Rules
prescribe the functions of the Board which
include ensuring the directions set by State
Council are met, setting the budget and
overseeing the manner by which the MAV
engages with its membership.
2009/10 Strategic Work Plan
A series of consultation sessions were
scheduled in February 2009 across
various metropolitan and regional
locations to commence the MAV’s
strategic planning process. The sessions
were cancelled when widespread and
devastating bushfires occurred on the
weekend before the first session was
planned. A written draft of the strategic
plan was prepared and circulated for the
feedback of councils in the first week of
April. The draft identified five themes and
proposed priority actions in each
functional area for 2009/10. The themes
are climate change; the global financial
crisis; the unprecedented number of new
councillors in Victoria; the shift to a more
direct relationship with the Federal
Government, and; recovery from the
February bushfires. The draft also
proposed criteria for the Management
Committee to prioritise emerging issues
within the work plan. The Board
considered the feedback received and
amended the plan accordingly. The plan
was then approved by the State Council in
May 2009. The Management Committee
is responsible for overseeing delivery of
the actions identified in that plan, and for
determining, when required, how those
actions will be implemented. The MAV
Annual Report for 2009/10 will provide a
summary of achievements against the
objectives and actions in that plan.
Advisory Groups
Following the elections in April 2009 the
advisory structures to the Management
Committee were reviewed. The
Management Committee established the
Human Services Advisory Group, the
Transport and Infrastructure Advisory
Group the Planning Advisory Group and
the Environment Advisory Group and
called for an expression of interest from
councillors and officers. The groups have
been established for a period of 12
months and in that time each group is
charged with establishing an information
forum. The activities of the former Water
Taskforce, Waste Reference Group and
Drought Taskforce have been
incorporated into the responsibilities of
the Environment Advisory Group and
matters formerly considered by the
Economic and Finance Advisory
Committee will be dealt with directly by
the Management Committee. A member
of the Management Committee is
appointed to chair each of these groups
and provide a conduit for feedback
between the group and the Management
Committee. Groups established are:
> Human Services Advisory Group
– Chair, Cr Ken Gale
> Transport and Infrastructure Advisory
Group – Co-chairs, Cr Geoff Gough
and Cr Lisa Mahood
> Planning Advisory Group – Chair, Cr
Jan Farrell
> Environment Advisory Group – Co-chairs,
Cr Reid Mather and Cr Jane Rowe
For further detail on the role of each
advisory group, see page 39.
MAV ANNUAL REPORT 2008/09 MAV GOVERNANCE >13
Deed of Establishment
The Deed of Establishment sets out how
the insurance scheme is to operate as a
mutual liability fund. It includes rules as to
eligibility and obligations of the
participants. It requires the formation of a
JOHN WARBURTON
management committee, and formalises
APPOINTED 1995
authorities, duties and powers of
Chair, MAV Insurance Committee 2005 – present
delegation by the committee and provides
Director, Lend Lease Real Estate Investments Limited
guidance as to the day-to-day operation
Director, Health Super Financial Services
Director, Emergency Services Foundation
of the insurance business.
Insurance Committee
The Board of Management has delegated
authority and responsibility for the
operation of the MAV Insurance business
(Civic Mutual Plus and the Municipal
Officers’ Fidelity Guarantee Fund) to the
MAV Insurance Committee (MAVIC).
MAVIC has oversight of the operation of
the insurance schemes and monitors the
MAV’s compliance with its Australian
Financial Services Licence (AFSL). It
comprises nine members – four
independent insurance experts, one
council CEO, one MAV Board member,
one representative of the Local
Government Association of Tasmania,
and the President and CEO of the MAV.
APPOINTED 2003
Chief Executive Officer, Local Government Association of
Tasmania (LGAT)
LGAT representative
Quadrant Superannuation
Chairman, Vision Super Audit Committee
Chairman, Metlink Audit Committee
Chairman, Australian Wealth Management Limited 2005
– 2009
Trustee, Melbourne Exhibition and Convention Centre
Trust 1999 – 2009
Director, Living and Leisure Australia Limited 2006 – 2009
Chairman, Port of Hastings Corporation 1997 – 2007
Director, Vision Super (formerly Local Authorities Super)
1997 – 2007
Deputy Chair, Victorian Managed Insurance Authority
1996 – 2000
RON FARRELL
DR MICHAEL KENNEDY
APPOINTED 2001
APPOINTED 1995
Chair, Claims and Technical Committee
Non-Executive Director, Victorian Managed Insurance
Authority
General Manager, Australian Eagle Insurance Co Ltd
Chairman and Non Executive Director, Utilities Insurance
Co Pty Ltd
Non Executive Director, connect.com.au Pty Ltd
Non Executive Director, Metropolitan Fire and Emergency
Services Board
Member, Professional Standards Councils (All States and
Territories)
Chief Executive Officer, Mornington Peninsula Shire
Council
Chairman, Inner East Community Health
Director, LifeSaving Victoria
Chairman, Frankston Mornington Peninsula Local Learning
and Employment Network
Chief Executive Officer, Boroondara City Council 1995
– 1999
Chief Executive Officer, Shire of Hastings 1993 – 1994
CR ROD FYFFE
APPOINTED 2004
MAV Regional Representative for Rural North Central
Councillor, Greater Bendigo City Council
Mayor 2003, 2004, 2005
14> MAV ANNUAL REPORT 2008/09 MAV GOVERNANCE
ALLAN GARCIA
CR BILL MCARTHUR
APPOINTED 2009
MAV President
Councillor, Golden Plains Shire Council
Mayor 2004, 2005
Member, Australian Local Government Association Board
Member, MAV Audit Committee
Member, Australian Council of Local Government Steering
Committee
Insurance Committee Attendance
AUG
John Warburton
Ron Farrell
Cr Rod Fyffe
ANNE MURPHY OAM
APPOINTED 1993
Chair, MAV Insurance Committee 1993 – 2005
Past President, MAV
Principal, Anne Murphy Strategy and Facilitation
Board member, KYM Employment Services Inc
Allan Garcia
Cr Dick Gross
Dr Michael Kennedy
Cr Bill McArthur
Anne Murphy
Adrian Nye
Rob Spence
SEP
OCT


X
X

X
X

 X
DEC


 X 
X


Company Director and Management Consultant
Chairman, Victorian Managed Insurance Authority
President, Metropolitan Fire and Emergency Services
Board
Acting Chair, Adult, Community and Further Education
Board
Associate, HLB Mann Judd
Member, Broadmeadows Schools Regeneration Project
Board
Fellow, CPA Australia
Member, Institute of Company Directors
ROB SPENCE
APPOINTED 1997
Chief Executive Officer, MAV
Trustee, Vision Super
Member, Victorian Children’s Council
Member, Victorian Freight and Logistics Council
JUN





In addition, an allowance of $1100 was
paid to the independent committee
members for attendance at other
insurance-related meetings.
of the internal and the external auditors,
in 2008/09 the MAV Audit Committee
received reports on the establishment of
MAV Procurement; tenders for legal
services and actuarial services; internal
audits of payroll processes and grants
allocation processes; conferences and
new event registration software; the
impacts of climate change and the global
financial crisis on MAV Insurance; the
Victorian bushfires; and, the MAV Local
Government Bushfire Recovery Fund.
Audit Committee
Compliance
The Audit Committee is an independent
committee established at the direction of the
MAV Board of Management in 2004. The
Committee comprises three independent
members: Hugh Parkes FCA CISA (Chair),
Dean Newlan CPA and Elizabeth Reeves
CPA; two Management Committee
members, Cr Jan Farrell and Cr Jane Rowe;
and the MAV President, Cr Bill McArthur.
In addition to the requirements of the
Municipal Association Act 1907 and MAV
Rules, the MAV must comply with relevant
regulations and obligations applicable to
statutory and public bodies. The MAV is
also required to comply with the
provisions of its Australian Financial
Services Licence (AFSL). The MAV has
established a significant compliance and
governance structure to ensure it meets its
obligations under the AFSL. This structure
includes a compliance and risk
management strategy; compliance and
risk management plan; compliance and
risk analysis table; and disaster recovery
and business continuity plan. An
electronic risk management and
compliance system operates within MAV
Insurance to ensure compliance with its
AFSL obligations. Compliance with this
system is audited by the MAV’s
independent internal auditor and findings
are reported to both the MAV Insurance
Committee and the MAV Board of
Management.
> Independent Committee members: $570
APPOINTED 2004
APR
X

X

 X 
 X 
Insurance Committee Sitting Fees
The MAV makes provision for independent
committee members to receive a sitting
fee for each meeting attended. In
2008/09 the sitting fee was:
> Chair: $825
ADRIAN NYE
FEB
The primary objective of the Committee is
to assist MAV management in maintaining
good governance, compliant financial
reporting, management of risk,
maintaining a reliable system of internal
controls and monitoring organisational
performance. The Committee meets
quarterly and additional meetings are
convened as required. The Audit
Committee met on five occasions during
2008/09. Minutes of all Audit Committee
meetings are provided to the MAV
Management Board.
In addition to monitoring the financial and
risk management performance of the MAV
and reviewing the annual work program
MAV ANNUAL REPORT 2008/09 MAV GOVERNANCE >15
Finance and Economics
National Taxation Review
The MAV provided a comprehensive
submission to the Henry Tax Review, which
called for additional guaranteed funding
for local government. The Review
represents one of the best opportunities
for local government to achieve a better
distribution of taxation between the three
spheres of government. The MAV’s
submission examined the underlying
financial strength of Victoria’s councils
and assessed possible sources of revenue
to improve their performance, including
rates; fees, fines and charges; and
potentially new local taxes. It concluded
that there were no alternative revenue
sources available to small rural councils
which face the greatest financial stress.
The submission advocated for a greater
level of intergovernmental financial
transfers to councils, targeted at those
with the most acute challenges. The MAV
also supported the Australian Local
Government Association in preparing its
submission and presenting to the Review.
The Review will continue through 2009
before reporting on its findings in 2010.
Constitutional Recognition
The MAV took a ‘train the trainer’
approach to assisting councils to
participate in the Australian Local
Government Association’s (ALGA)
consultation process on constitutional
recognition issues. All councils were
invited to nominate a representative to
facilitate a discussion at the council level
and respond to a survey by the ALGA. A
training session was attended by 12
councils represented by a mix of
16> MAV ANNUAL REPORT 2008/09 FINANCE & ECONOMICS
councillors and officers. Participants
received presentations on the legal
process for achieving constitutional
recognition and the political realities of
achieving financial sustainability through
constitutional recognition before sharing
how they would approach the topic within
council and work-shopping a framework
of questions to be answered as guided by
an online survey tool. Victorian councils
indicated a desire for the process of
achieving constitutional recognition to
deliver financial recognition over and
above institutional recognition or symbolic
recognition. This view was put forward by
MAV representatives attending an experts’
forum to develop the business papers for
a national summit. It was a view that was
eventually supported at the summit where
it was determined that direct funding from
the Federal Government for local
government should be one of three
principles sought in achieving
constitutional recognition.
Valuations Review
The Valuer General Victoria’s review of
valuations proposed to centralise
responsibility for revaluations. The MAV
successfully advocated for changes to the
proposal to reflect the diverse views of
councils. The successful outcome included
an agreement to provide a voluntary
model in which councils could continue to
undertake revaluations or hand over
responsibility to the State Government.
The MAV consulted members at length
about the proposal and took a position
that balanced very strong opposition to
relinquishing responsibility of the valuation
functions with a desire by some councils
to have the State Government undertake
this responsibility. The State Government
in its final proposal accepted the position
of the MAV.
Overheads Model
Indirect costs make up a sizeable
proportion of councils’ total costs. To
assist councils to assess these costs the
MAV commissioned the development of a
simple overheads model for application in
Victoria. The model can be used to justify
costs, calculate reimbursements and make
subsidies transparent and deliberate.
Applications include budget development,
accountability, decision making, targeting
support to disadvantaged groups, cost
control and income development. Using
the model with no direct support, pilot
councils demonstrated that it can be
populated by an accounting professional
in just three days, saving considerable
time and achieving a more accurate
result. Development of the model was
overseen by a reference group of financial
professionals in local government using
comparable data across councils.
EasyBiz
Hands-on support was provided to
councils to roll out the 18 online forms
developed for high volume business
transactions during the first phase of the
EasyBiz project. Accessing local
government services using the internet has
grown by 150 per cent since 2004. This is
the fastest rate of growth for any of the
three levels of government over that time.
EasyBiz offers businesses a consistent
experience across councils by using the
same form for the most common
transactions in planning, building and
environmental health. The forms use
technology that clearly identifies the
requirements for various licences, permits
and registrations and enables users to
complete and submit applications online
or via traditional means, speeding up the
application process.
Small Towns Summit
The 2008 Small Towns Summit was
held in the township of Lockington.
It was attended by 215 delegates
including councillors and chief executive
officers representing 31 of the 38 rural
councils in Victoria. The Summit provided
a forum for local entrepreneurs, business
and industry leaders, economic and
community development practitioners,
academics and education providers,
relevant decision makers and anyone
passionate about small town prosperity
to establish collaborative networks and
partnerships and work together on the
unique and diverse challenges faced by
small towns. The opportunity to host the
Summit helps build local capacity within
the council and the community to deliver
an event of this size. Campaspe Shire
Council estimated the net economic
benefit of visitors to Lockington and
sourcing products and services for
the Summit locally at $92,960.
Rural Economic Development
Opportunities Fund
Twenty-three projects received funding
under the $500,000 Rural Economic
Development Opportunities Fund
component of the Small Towns
Program delivered by the MAV on
behalf of Rural Councils Victoria. The
guidelines for the Fund were developed
in consultation with Victoria’s 38 rural
councils following a research project
into their economic development needs,
existing economic development activity
and unfunded opportunities. Projects
funded include research studies into
algae biofuel creation, a carbon
negative housing estate and industrial
land directions; marketing, branding
and communication programs; website
hubs; sustainability/futures planning;
beautification of business centres;
development of toolkits; forums for
businesses to better manage, tourism
and events; and registers for homebased businesses and skills within
the community.
Get Down To Business
Grassroots Grants
The MAV developed a toolkit for rural
municipalities to build the capacity of
community groups to submit, acquit,
evaluate and leverage funding and
alleviate the workload of council officers
responsible for grant submissions. The
Grass Roots Grants toolkit contains a
range of useful templates and suggested
activities including researching funding
channels, building relationships with fund
providers, preparing a submission,
managing the funded project and what
happens when the project is over. The
toolkit and an associated series of
workshops will assist community groups to
obtain their own grants, leaving council
officers with more capacity to focus on
larger funding submissions for their
municipalities.
Through its role in supporting Rural
Councils Victoria, the MAV worked
with economic development practitioners
and residents of rural municipalities to
develop a methodology for rural councils
to deliver a cost effective, robust
engagement process to re-energise
communities and encourage focused,
well thought out, sustainable actions that
communities are capable of delivering.
Get Down To Business is designed to build
a commitment within communities to work
in partnership and take ownership for the
town’s future. The program considers
multiple factors that influence a town’s
prosperity including social, economic,
physical and natural resources to identify
opportunities that stimulate additional
economic activity.
MAV ANNUAL REPORT 2008/09 FINANCE & ECONOMICS >17
Governance and Councillor Development
Councillor Conduct Panels
An expression of interest process was
conducted to form Councillor Conduct
Panels. A communications plan
supporting this process included
advertising, media coverage, direct mail
and editorial in local government and
legal industry publications. The MAV
received 60 expressions of interest from
which 12 panel members were appointed
for three years. Panels are formed after
application from a council, councillor or
group of councillors to determine if there
has been a Code of Conduct breach.
The MAV advocated for two years for an
independent means to assist councils to
address allegations of misconduct by
councillors, where previously there were
few options available.
Stand for Council
A campaign encouraging Victorians to
stand for council resulted in a 40 per cent
reduction in the number of uncontested
vacancies. The campaign was developed
by the MAV and resources provided to
councils. Council participation in the
campaign was high. Eighty-five per cent of
councils took up the opportunity to host
one or more public information sessions
which were attended by over 1000
people, and 81 per cent of councils
established a link from their website,
driving considerable traffic to the
campaign website. The website achieved
6209 hits during the campaign period.
Over 54 per cent of all visitors to the
website were referred by other websites.
After the MAV website and search engine
Google, the highest number of referrals
was from the Leader Newspapers website,
demonstrating the strategic importance
of having a media sponsor for the
campaign. Thirty-three per cent of traffic
was direct and spikes in visitor numbers
coincided with advertising placements
indicating that advertising was effective.
In addition to paid advertising, editorial
was achieved in 170 articles that
mentioned the website and/or public
information sessions. Council feedback
was largely supportive of all elements
of the campaign.
18> MAV ANNUAL REPORT 2008/09 GOVERNANCE & COUNCILLOR DEVELOPMENT
Councillor Fundamentals
More than a third (233) of councillors
from 66 councils attended the MAV’s
Councillor Fundamentals series between
February and May 2009. The series
involved 24 workshops in six regional
locations to develop the fundamental
skills and knowledge of councillors in
governance, finance, planning and
communication. The MAV renewed its
existing publications including Citizen to
Councillor, the New Councillor Resource
Guide and the Land Use Planning in
Victoria Guide for Councillors, updating
them for legislative changes and adding
new material to provide course materials
for the Councillor Fundamentals series.
The MAV was successful in proposing that
the State Government provide a subsidy
to councils with limited financial resources
for training purposes.
Service Awards
The Victorian Councillor Service Awards
were established this year to recognise the
contribution of long serving councillors.
Long service was recognised at the levels
of 15, 20 and 25 years and for serving
three full terms or more as mayor. The
advent of all 79 councils going to the
polls was considered an opportune
moment to reflect on the commitment
of long serving councillors. The awards
were presented at the MAV Annual Dinner,
and will be conducted annually on this
occasion. In the inaugural year 26
councillors were awarded for 15 years
service; 20 councillors were awarded
for 20 years; four councillors were
awarded for 25 years; and 61 councillors
were awarded for serving three or more
terms as mayor.
Knowledge Centre
The Knowledge Centre was established
by the MAV as a vehicle for councillor
development beyond the Councillor
Fundamentals series. Demand for the
Knowledge Centre’s intensive, face-toface, small group training model has
been strong with the first two programs
oversubscribed within 10 days of bookings
opening. A further 14 programs have
been developed and will be run out in
the second half of 2009.
Conflicts of Interest
New conflict of interest provisions were
introduced after council elections last year
in response to lengthy advocacy for
change to the existing provisions. The
MAV has assisted councils to understand
the changes by providing training for
councillors through the Councillor
Fundamentals series; providing advice as
appropriate on numerous scenarios; and
working with the State Government to
refine materials to assist councils.
The MAV sought and received an
assurance from the Minister for Local
Government that the provisions will be
reviewed after 12 months and has begun
collecting examples where the provisions
have impeded council business to build
an evidence base towards the eventual
review.
MAV ANNUAL REPORT 2008/09 GOVERNANCE & COUNCILLOR DEVELOPMENT >19
Environment
Climate Change
The MAV actively pursued amendments to
the design of the Australian Government’s
proposed Carbon Pollution Reduction
Scheme (CPRS) to ensure a fair outcome
for the local government sector. Briefing
papers were provided to inform
consultation with member councils in
development of the MAV’s submissions
to the CPRS Green Paper and the
National Carbon Offset Standard
Discussion Paper. The MAV, with the
ALGA, jointly commissioned an analysis
of draft legislation to ensure that local
government interests were maintained as
per the commitments sought and made
through the Green and White Paper
processes. A joint submission was made
through the ALGA to the Australian
Government and relevant senate
committees considering the draft
legislative package. These efforts resulted
in the reversal of a decision to include
‘legacy’ waste emissions in the CPRS.
20> MAV ANNUAL REPORT 2008/09 ENVIRONMENT
Water Allocations
The MAV was an important advocate in
the introduction of a water allocations
system to help manage the effects of
prolonged drought on many councilowned sports surfaces. The allocation
framework allows eligible metropolitan
councils to redirect water savings to other
uses, providing a direct incentive to
improve water efficiency. The MAV called
for the Government to examine a
state-wide water allocations model using
a fair and scientific allocations framework
to assist all councils to better manage
sports grounds during the drought. The
MAV also sought the State Government’s
agreement to introduce a water offset
program which would allow water savings
in other industries to be directed to
community purposes.
Sustainability Website
The MAV’s online collaboration tool for
councils to share innovation and practice
in sustainability was launched by the
Minister for Environment and Climate
Change, Gavin Jennings in October
2008. The website has attracted a steady
stream of visitors without any concerted
marketing effort while elements of
functionality have undergone further
improvements. A marketing plan has been
developed to follow up the soft launch
period that will be rolled out next year.
The sustainability website provides councils
and local government stakeholders with
access to a library of information on
council approaches to sustainability in the
natural and built environments and within
council operations.
Waste
The MAV successfully argued that, moving
forward, the National Packaging
Covenant requires an increased emphasis
on the design of packaging to reduce
environmental impacts before packaging
has to be dealt with by local government.
The environment ministers viewed the
progress of the Covenant as satisfactory
but ordered that a new agreement be
drafted to reflect the change in emphasis
sought by the MAV on behalf of local
government nationally. The MAV was also
successful in arguing for a new review of
regional waste management
arrangements that is focussed on regional
markets and capacity for resource
recovery instead of the form and structure
of the groups that was the focus of an
earlier review.
Environment Survey
A response rate of 91 per cent was
achieved for the fourth MAV Local
Government Environment Survey.
Conducted every three years, the survey
collects data on council resourcing and
operations, priority issues, environmental
strategies and management activities,
delivery mechanisms, natural resource
management, statutory planning the
Victorian Local Sustainability Accord and
Future Coasts program. The results
indicate that local government is playing
an increasing role in environmental
management across the state. There has
been a significant increase in the number
of staff employed by local government to
address environmental issues. Priorities
and activities of councils are shifting
beyond traditional roles in waste and
stormwater management to include
greenhouse gas emissions abatement,
climate change adaptation and
sustainable water management, reflecting
the environmental challenges of the day.
The survey results are being used to raise
the profile of local government’s
environmental management and
sustainability activities at the local, state
and national level.
Natural Resource Management
Negotiations have continued with the
State Government over the responsibility
for weeds on roadsides. The need for
clarification of weed responsibilities,
and the MAV’s position that no additional
expectations be shifted on to local
government was strongly argued in a
submission to the development of the
State’s framework for pest management
going forward. In the interim, the MAV
has assisted the development and delivery
of a program to build the capacity of
those councils seeking support to manage
pest species on roads. Funding has been
achieved for 78 projects in rounds one
and two of the program. The MAV has
also actively represented local government
in the development of the State
Government’s Land and Biodiversity
White Paper that will guide its policy
and investment decisions over the
next 20 years.
Native Vegetation
The MAV facilitated a consultation process
for councils ahead of the introduction of
new planning permit exemptions for the
removal of native vegetation on
roadsides. Through this process councils
had active input to the drafting of the
agreement that triggers the exemption,
and 28 councils have since signed the
agreement. The MAV used inquiries by
the Victorian Competition and Efficiency
Commission and the Victorian
Environmental Assessment Council to
raise the capacity issues facing councils
to effectively implement native vegetation
requirements and proposed alternative
options for the administration of the native
vegetation regulations.
MAV ANNUAL REPORT 2008/09 ENVIRONMENT >21
Planning & Building
New Residential Zones
The MAV successfully argued against the
one-size-fits-all approach to building
heights and proposals to reduce notice
requirements put forward as part of the
consultation process on new residential
zones. While continuing to support the
general approach of providing
substantial, incremental and limited
change areas, the MAV’s submission to
the second part of the three-part process
identified that there remains insufficient
differentiation between the zones, and the
burden for implementation still rests
unfairly with councils.
Planning and Environment Act
Review
The review of the Planning and
Environment Act 1987 presented a critical
opportunity for local government to
influence the planning system in Victoria.
The MAV directly influenced the scope
and process of the review, which included
a series of workshops for council and
industry stakeholders to ensure councils
had early input to the review. The MAV
also facilitated involvement of council
representatives on the 10 working groups
established to explore certain aspects of
the review. The MAV’s submission to the
review raised the need to better define the
roles, functions and responsibilities of
local government and VCAT; identified
concerns with the regulations and
administrative processes that support the
operation of the Act; and highlighted the
cost burden on councils of implementing
State Government policy changes.
22> MAV ANNUAL REPORT 2008/09 PLANNING & BUILDING
Illegal Brothels Reform
The MAV was successful in seeking
legislative changes to enable councils to
more effectively undertake enforcement
against brothels operating without permits
and licences. The reforms amended the
definition of brothel and escort agency to
include premises that offer (rather than
provide) sexual services and clarified the
kinds of evidence councils and agencies
can use, such as evidence of people
entering and leaving premises,
appointments made for prostitution
services, advertising, internal layout and
fit-out of premises. The changes also
make it easier for police to apply for a
warrant to search premises, which
improves support for councils’
enforcement action. These developments
represent significant progress towards
more enabling legislation, successful
enforcement outcomes and better
inter-agency coordination, which was
formalised by the signing of a
Memorandum of Understanding with
Consumer Affairs Victoria following the
legislative changes.
E-planning
The MAV secured $10.4 million over four
years from the State Government, and
$6.5 million from the national housing
affordability fund, in support of e-planning
initiatives. Developments this year include
piloting of online planning applications
involving six councils, 12 applicants, more
than 30 referral authorities and the
Victorian Civil and Administrative Tribunal
(VCAT). The system being piloted
manages applications from beginning to
end, including lodgement, requests for
further information, referral, advertising,
making a decision and VCAT appeals. In
addition, most councils have now
integrated their systems with the Planning
Permit Activity Reporting System, enabling
regular electronic returns on information
not previously available including trends
in planning permit types, numbers, how
long they take, how many are advertised,
objections received, referrals or decisions
under delegation.
Bushfire support
Planning and building functions were
severely impacted in those councils
affected by bushfires this year. The MAV
facilitated placement of staff from
non-affected councils to enable the rapid
inspection and reporting of building
conditions. In support of the immediate
rebuilding effort, the MAV worked with the
affected councils to map a streamlined,
case management approach to planning,
building and environmental health
approvals and ensure consistent
communications. Advocacy successfully
resulted in the granting of exemptions
from planning schemes to fast track the
rebuilding process and councils’ interests
were represented in the development of
the new interim building regulations and
their application. The MAV also sought
and achieved agreement from the State
Government to reimburse councils for
planning, building and environmental
health fees.
Retaining local input
At a time of increased frequency of
reforms that diminish councils’ roles in
planning, the MAV has actively engaged
its members and sought to use various
consultation processes to improve
engagement and awareness between
councils and the State Government on
planning matters. The President and Chief
Executive Officer of the MAV continue to
meet regularly with the Minister for
Planning, and have voiced council
concerns regarding timelines for
consultation, and heavy handed call-ins
and legislative reforms. The MAV has also
commenced a project working with
councils to improve practice, quality
assurance and accountability for councils
in response to the Victorian Auditor
General’s Office audit of planning and
planning enforcement performance.
Coastal planning
The MAV took a lead role in helping
coastal councils respond to the
implications of climate change and new
State Government requirements to plan
for rising sea levels of not less than 0.8
metres by 2100. Legal advice was
obtained to identify mechanisms which
protect councils in their role as planning
or responsible authority against coastal
impacts that could result in risk to life and
property and expose councils to liability. A
forum was organised for Victoria’s 22
coastal councils to share their approaches
to land use and development decisions in
areas likely to be most severely affected
by climate change. In addition, the MAV
represented coastal councils on the
implementation coordination committee
for the Victorian Coastal Strategy and the
Future Coasts program, which is collecting
data to enable accurate assessment of the
vulnerability of Victoria’s coast.
Winky Pop
The MAV successfully sought legislative
clarification to assist councils in
understanding the application of natural
justice to planning decisions as
highlighted by the Winky Pop ruling in the
Supreme Court last year. Legal advice was
sought to identify the best possible
solution, and the State Government
accepted the MAV’s proposal to establish
a simple set of rules that guide
councillors. Legislation was amended to
set out disclosure requirements and clarify
that an indirect interest arises when a
councillor is party to a civil action, a VCAT
appeal or has lodged an objection to a
planning permit. The MAV also engaged
Julian Burnside QC to deliver a seminar
for councillors, planners and governance
officers to explain the principle of natural
justice, implications of the bias rule and
steps that can be taken to ensure that a
decision maker is not considered biased.
MAV ANNUAL REPORT 2008/09 PLANNING & BUILDING >23
Human Services & Public Health
Collapse of ABC Childcare
Following the collapse of ABC Learning
this year, the MAV immediately took action
to better understand the situation and assist
councils to manage community concern
about possible service closures. Funding
was obtained from the State Government
to assist the development of a strategic
and coordinated response from local
government in Victoria. A survey was
conducted to identify ABC centre locations,
clarify ownership arrangements and
determine the level of interest of councils in
each service or facility. The opportunity was
seized to advocate for important structural
reform of the childcare industry to achieve
a more balanced childcare services market
and a shift in federal funding from
privately-owned to publicly-owned
children’s services and infrastructure. This
advocacy placed significant pressure on
the Federal Government which eventually
led to a more transparent process, allowing
the community-based sector including
interested councils more time to evaluate
options and submit expressions of interest
for ABC services and/or facilities where
appropriate. A formal but non-binding
expression of interest was submitted for
all 76 ABC services in Victoria to enable
access to more information about the
services and centres. The MAV also
provided a submission to a Senate inquiry
into the provision of child care and
developed an options paper on funding
for childcare infrastructure.
Shift in responsibilities for HACC
The MAV actively lobbied for the unique
role of Victorian councils to be recognised
and valued in response to a proposal
that the Federal Government take over
responsibility for all aged care programs,
including Home and Community Care.
Agreement was achieved for a longer
period of transition in Victoria should the
proposal proceed to provide more
certainty for councils, continuity of care
for service users and increased
opportunity to negotiate new
arrangements between the Federal
Government and local government. The
MAV continued to raise practical concerns
with the proposal, including splitting the
aged and disability components of the
Home and Community Care program.
The proposal was subsequently adjourned
by the Council of Australian Governments
in November 2008.
Early Years Planning
The MAV was actively involved in the
development of quality early years learning
frameworks at state and national levels,
ensuring that the State Government’s
strategy for early childhood includes a
commitment to support the leadership role
of local government in early years planning
and that the national strategy makes
provision for funding councils to plan
towards delivering 15 hours of
kindergarten for four year olds by 2013.
The MAV was also successful in obtaining
a second round of grants supporting
councils to plan infrastructure requirements
for delivering early years services. A forum
was organised by the MAV for councils to
share their approaches to undertaking
infrastructure planning.
Library Campaign
Tobacco
The MAV commissioned research to
establish a foundation for a long-term
campaign addressing the escalating costs to
local government in the provision of public
library services in Victoria. The research
provided an independent contextual
assessment outlining international and
national trends, state comparisons on
investment and identified issues which could
be progressed by State and local
government. A working party has been
reconvened to provide input to the
development and implementation of the
campaign. Meanwhile the MAV has pursued
improved funding arrangements and cost
efficiencies through aggregated purchasing,
a submission to the State Budget and
advocating for a national framework for
public libraries as part of the Federal
Government’s social inclusion agenda.
The MAV disbursed over $800,000 in
funding to councils as part of a joint
program with the Department of Human
Services to assist councils undertake
education and enforcement activities
under the Tobacco Act 1987. In its tenth
year of operation, this program has
delivered benefits in reducing the
incidence of smoking in the community,
and enabled State Government priorities
to be delivered locally. For councils the
funding has assisted the delivery of
services that provide an important public
health benefit. The MAV convened a
working group through the year to provide
advice to the State Government about the
activities that will be funded in
2009/2010.
24> MAV ANNUAL REPORT 2008/09 HUMAN SERVICES & PUBLIC HEALTH
Changes to the Food Act
The MAV achieved significant influence in
the development of new food safety
legislation to reflect councils concerns that
regulation should not unreasonably
burden councils or volunteers preparing
food for fund raising and community
support activities unless measurable risks
to public health can be demonstrated. The
MAV facilitated frequent and regular
meetings of council officers and the State
Government to achieve early input to
legislative proposals to address the
priorities and needs of local government,
including phased implementation.
Disability Access
The MAV pursued improved accessibility
through submissions on building and
public transport standards and
participation in a universal housing
project providing guidelines and templates
for builders, planners and developers.
Submissions were also made to the
national disability strategy and a review of
mental health services. A biennial survey
of councils demonstrated good progress
towards requirements to have a disability
action plan in place with all but four
councils having formally adopted their plan.
Of the four remaining councils a draft plan
is in place and the actions identified are
being implemented. Some progress was
also made in resolving arrangements for a
new Disabled Person’s Parking Scheme in
Victoria including the possibility of a
nationally consistent approach.
Children’s Regulations
New children’s services regulations struck
the balance sought by the MAV on behalf
of councils between quality improvements
for children and costs of providing
services for providers and parents. The
MAV played a critical role in engaging
councils in the State Government’s
consultation process which resulted in
extensive input from the MAV and councils
on the detail and impacts of the proposed
changes. Meetings and presentations
were organised to brief councils on the
reforms, and the MAV took a formative
role in preparing detailed submissions
and participating in focus groups.
Maternal and Child Health MOU
The MAV negotiated a new Memorandum
of Understanding with the State
Government for the delivery of maternal
and child health services that capitalises
on increased funding levels by reinstating
the 50:50 funding agreement between
local government and the State
Government and ensuring an annual
price indexation. The signing of the
agreement is the culmination of a
three-year advocacy program which
included a costing study to determine the
actual cost of delivering the service. The
MAV again conducted its annual survey
this year to keep a watch on service costs
and ensure the level of indexation fairly
reflects cost movements.
Multicultural
The MAV produced local government area
profiles of seniors from culturally and
linguistically diverse backgrounds as a
resource to support the capacity building of
councils’ planning and service responses to
all seniors. A network of officers with
responsibility for cultural and linguistic
diversity planning was established to share
practice and over 60 people attended a
forum addressing a range of interpreting
and translating issues for the sector to
further support the capacity of councils in
this area. In addition the MAV brokered a
number of opportunities for councils to
benefit from initiatives to increase
participation by promoting cultural diversity
and engagement between faith
communities and the broader community.
Partnerships were established with the
Victorian Multicultural Commission and
VicHealth to deliver capacity building
projects in six councils and with the
University of Melbourne to improve policy
design and program delivery in rural and
regional areas.
Positive ageing
The MAV supported planning for positive
ageing in 73 councils. Demonstration
projects involving 38 councils were
completed and documented to share the
approaches taken to planning for positive
ageing and creating age-friendly
environments. An evaluation of the
demonstration projects concluded that
good progress was made towards creating
age-friendly environments and engaging
older people in decision-making strategies
and governance structures.
MAV ANNUAL REPORT 2008/09 HUMAN SERVICES & PUBLIC HEALTH >25
Transport & Infrastructure
Community Infrastructure Funding
Following years of extensive advocacy by the
MAV and the ALGA, Victorian councils
received in excess of $230 million from the
Federal Government to upgrade and build
new community infrastructure. This new
funding pool is the biggest for local
government since Roads to Recovery was
introduced. Research on the financial
constraints on local government, asset
management system improvements and
direct advocacy ensured that local
government was viewed as a key player in
the Federal Government’s attempts to
stimulate local economies. Significant
flexibility was provided for councils to apply
for funding for a full range of vital
community infrastructure projects, from
sporting facilities to community halls and
libraries.
Public Lighting
The MAV represented local government
on the Public Lighting Taskforce which
drafted a Memorandum of Understanding
between local government, electricity
distributors, VicRoads and the Department
of Sustainability and Environment. The
draft Memorandum of Understanding
includes commitments from the
distributors to formalise and participate in
a technology review, disclose additional
information on their public lighting assets
and meet regularly with the sector. Over
the past year the parties have developed a
cooperative spirit to increase the efficiency
of public lighting stock through increased
understanding of each others’ priorities
and businesses.
Infrastructure Australia
The MAV supported the State Government
to secure more than Victoria’s fair share
(35 per cent) of the Federal Government’s
infrastructure fund. The MAV’s submission
highlighted passenger and freight
transport, telecommunications
(broadband), energy and water as key
areas for Victoria that required national
investment. Citing population growth and
growing environmental issues as key
drivers for expanding Victoria’s public
transport system, the MAV’s submission
reinforced the messages outlined in the
Victorian Government’s submission.
Excluding funding for the national
broadband initiative, Victoria is set to
receive $3.2 billion for the Regional Rail
Link and $40 million for initial
construction work on the Melbourne
Metropolitan rail tunnel.
Transport Position Paper
The MAV developed a position paper
outlining the key priorities in transport for
local government to help frame sector-wide
responses to several pivotal state and
federal government strategies in 2008/09.
A draft was developed with the input of the
MAV Transport and Infrastructure Advisory
Group and circulated to all councils for
comment. The key propositions and
objectives were overwhelmingly endorsed
by all councils. Following the consultation
period the MAV Transport Position Paper
received the endorsement of the MAV
Board and State Council.
26> MAV ANNUAL REPORT 2008/09 TRANSPORT & INFRASTRUCTURE
Priority Routes
The MAV successfully fought against
proposed changes to the Road
Management Act 2004 that would provide
for the specification of priority tram, bus,
bicycle, pedestrian or freight routes on
Victorian roads without any requirement
to consult councils on the inclusion of
local roads. The MAV sought to have
freight removed entirely from the
legislation so the status quo approach to
addressing freight issues, involving an
open exchange of information and
subsequent negotiation between relevant
parties, could be maintained. In a welcome
back-down, the State Government agreed
to legislative amendments to provide
councils with the right to control access of
non-approved freight vehicles to local
roads, and ensure consultation occurs
with councils prior to specifying transport
priorities on local roads.
Rail level crossings
The MAV achieved a commitment from
the State Government to fund the closure
of level crossings on local roads following
legislative changes that placed new
obligations on councils for rail safety. The
commitment includes funding for
infrastructure upgrades for nearby access
routes. In addition to holding briefing
sessions for councils in regional locations,
the MAV visited numerous councils to
provide assistance in considering options
for improving safety at railway level
crossings and mitigating risk.
Clearways
The MAV and affected councils succeeded
in modifying plans to extend clearway
times in the afternoon peak period.
Aimed at tackling peak hour congestion
on Melbourne’s key arterial roads and
improving the speed of road-based
public transport, the MAV initially
supported the extension of clearway
times. Metropolitan councils had mixed
views with some supporting the benefits
to the network and others opposed on
the basis of impacts on traders. In its
role representing councils in the
implementation of new clearway times,
the MAV sought economic analysis from
the State Government to substantiate
claims that the changes would have
negligible impact on traders. In the
absence of any analysis supporting these
claims, the State Government announced it
would alter plans to extend clearway times
during the afternoon peak citing council
proposals to increase the availability of
parking and reduce congestion.
Linking the east and west
The MAV gave its support for a
metropolitan rail tunnel but suggested
deferring a cross city road tunnel in its
response to the recommendations from a
study led by Sir Rod Eddington into
improving transport links between
Melbourne’s east and west. In forming its
response, the MAV hosted a briefing
session for councils with Sir Rod
Eddington. Councils took the opportunity
to question Sir Rod about key aspects of
the report. The rail tunnel was
subsequently included in the State
Government’s transport strategy and has
received federal funding of $40 million.
Disaster Recovery
The MAV made significant progress on a
disaster recovery blueprint for local
government. More than 70 councils
responded to a survey to identify current
practices, budgets and resources for
disaster recovery. The survey also assessed
the appetite within local government for
partnering arrangements and third party
providers to develop options for a
state-wide solution and assist in a bid
for funding. Opportunities were identified
to share infrastructure and resources,
reducing investment needs for councils,
addressing the skill stretch at a local level
and positioning the sector to take
advantage of emerging technologies.
An advanced training program was
subsequently developed and piloted
by eight councils.
Broadband Initiatives
The MAV worked with councils to identify
and develop two broadband enabled
demonstration projects that will deliver
significant benefits for local government and
users of the services they provide. With the
support of the MAV and funding from the
Victorian and Federal Governments, Colac
Otway Shire Council has developed an
internet web-based application for sharing
data between councils, water catchment
authorities and government departments in
the south west of Victoria; and Towong Shire
Council has successfully conducted a pilot
in the township of Tallangatta that will form
the basis of a business case for deploying a
wireless broadband network throughout the
municipality at speeds and prices equivalent
to metropolitan areas. The MAV also
provided support to the ALGA in developing
a national local government position on the
National Broadband Network.
ICT Audit
The MAV undertook an audit of 24
councils to determine a detailed picture
of the local government information
and communication technology
landscape. The audit revealed a lack
of uniformity in core software applications
being used by councils. An expression
of interest was subsequently conducted
on behalf of 31 councils for providers
to establish a single platform to support
a stable environment for the delivery
of shared services between councils.
MAV ANNUAL REPORT 2008/09 TRANSPORT & INFRASTRUCTURE >27
Emergency Management
Coordinating the bushfire
response
The MAV played a frontline role in
Victoria’s response to the bushfires of
January and February 2009, representing
local government on the Victoria
Emergency Management Council and
to the authority set up by the State
Government to oversee the reconstruction
and recovery of bushfire affected areas.
These tragic events are acknowledged
as Australia’s worst natural disaster in
recorded history, killing 173 people and
destroying more than 2000 properties.
Twenty-seven councils were affected by
the bushfires to varying degrees. While
the fires remained a threat the MAV
attended daily meetings of emergency
authorities and kept councils updated
on forecast conditions and the resolution
of policy matters.
28> MAV ANNUAL REPORT 2008/09 EMERGENCY MANAGEMENT
Sharing resources
In the days following the worst of the
bushfires on 7 February 2009, the MAV
registered more than 1000 offers of
assistance from councils and deployed
200 council officers on request to fire
affected areas. The MAV initially put out
a call for emergency management staff
to relieve staff working in Municipal
Emergency Coordination Centres and
relief centres. As the scale of the disaster
became clearer, councils’ needs grew for
staff from other areas of council business.
Local laws officers, building surveyors,
emergency management officers,
environmental health officers, tree and
road crews were in high demand.
The register built on the protocol first
established last year for sharing resources
for response and recovery activities
among councils during an emergency.
Over half of all councils are now
signatories to the voluntary protocol.
Funding for bushfire councils
The MAV negotiated a significant
extension of the usual reimbursement
arrangements for bushfire affected
councils. The costs associated with
response, relief and recovery operations
are likely to exceed $30 million. The State
Government extended the formal policy to
cover operating costs for Municipal
Emergency Coordination Centres and
relief centres and waivers on rates,
building and planning fees among other
costs. The MAV also worked with the State
Government to ensure $10 million set
aside for community recovery delivered
the most value to councils. In addition,
the MAV established a Municipal Bushfire
Recovery Fund in response to offers from
councils around the country wanting to
provide financial assistance for affected
councils. The fund had collected
$550,000 in donations by 30 June 2009.
Drought funding
Fire planning
The MAV succeeded in advocating for the
A new multi-agency approach to fire
reinstatement of the municipal rate subsidy
planning commenced in 15 municipalities.
for eligible farmers. Despite the extension
The MAV represented councils on the
of exceptional circumstances declared for
project committee designing the new
five areas in Victoria there had been no
framework that is expected to result in
commitment given by the State
more comprehensive and consistent
Government to provide the subsidy in
management of fire risk and provide
2008/09. Following representations by the
improved assistance for councils in
MAV, the State Government announced a
developing municipal level plans. Support
drought relief package providing $15
was provided to councils to implement key
million for 50 per cent subsidies on
strategies and processes.
municipal rates and charges and $4.4
million to relieve the impacts of drought on
community sport and recreation facilities
among other initiatives.
MAV ANNUAL REPORT 2008/09 EMERGENCY MANAGEMENT >29
Workforce
Employment rebranding
Building on research and marketing
analysis, the MAV developed a
promotional and advertising campaign to
reposition local government as a
significant employment industry. The
campaign seeks to build an understanding
of the size and scope of work that local
government offers employees, and to
communicate the career enhancing
benefits of working in council. It was
presented to councils along with a request
for practical and financial support for
media costs. By 30 June 2009, 32
councils had pledged over $500,000 to
the campaign.
Award Modernisation
The MAV represented Victorian councils in
the development of a new national local
government industry award to meet
Australian Government requirements to
modernise agreements by 1 January
2010. Working with other state and
territory associations, the MAV
endeavoured to achieve close alignment
of the national and Victorian positions.
This was particularly important given the
withdrawal of the Victorian Employers’
Chamber of Commerce and Industry from
direct involvement in the development of
a national local government submission.
Kindergarten Agreement
The MAV partnered councils to identify
issues of pay equity and highlight practical
steps and measures that can be taken by
councils to enhance their knowledge and
performance in this area. Improving
council practices is important in the
current employment environment when
skills shortages and the significant impact
of the ageing workforce and population
make the need for talent an ongoing
challenge for all employers. The report
was developed with active participation
from Greater Bendigo City Council and
Moreland City Council with further
support provided by Nillumbik Shire
Council, and in partnership with
Workforce Victoria, the Australian Services
Union and the Victorian Employers’
Chamber of Commerce and Industry.
The MAV negotiated a new kindergarten
award on behalf of 30 councils that has
the potential to deliver significant
productivity improvements for councils. It
is the first time local government has
achieved an agreement that represents
the interests of councils, their employees
and the community. Previously local
government has been excluded in
negotiations with unions. Crucial to the
new agreement was the involvement of
the State Government, ensuring
appropriate levels of funding to support
the financial viability of programs within
the context of the new industrial
agreement that will see employees gain
significant benefits.
30> MAV ANNUAL REPORT 2008/09 WORKFORCE
Pay equity
Employee Health Insurance
Forty-three councils have signed up to
the Local Government Employees Health
Plan developed by the MAV as an
employment benefit in support of the
sector’s efforts to be recognised as an
employer of choice. The Plan achieves
up to 45 per cent savings on premiums
by providing a facility, funded by four
per cent of premiums, that reimburses
any excess payable in the event that a
member is hospitalised. Savings are
achieved by opting for a product that
charges a higher excess and lower
premium, safe in the knowledge that if
the member is hospitalised they will be
refunded the excess.
Collaboration
Local Government Procurement
Strategy
The MAV and the State Government
commissioned research to examine the
potential benefits from reformed
procurement practices in councils. The
research conducted by Ernst and Young
identified that up to $350 million per
annum could be saved by improving
procurement practices. The Local
Government Act 1989 was subsequently
amended to require councils to establish a
procurement policy. To assist councils the
MAV commissioned the development of a
model procurement policy addressing the
new legislative requirements and
incorporating best practice guidelines and
input from procurement officers in councils.
Electronic tendering
The MAV brokered an arrangement with a
leading supplier of electronic tendering
systems, enabling councils to establish an
e-portal for conducting tenders. The
system enables councils to manage the
procurement process, including
advertising, supplier notification, tender
forums lodgement and evaluation, to
reduce the operational time and cost
involved. Under the arrangement,
councils are eligible for a 10 per cent
discount on the purchase of the portal
and normal training costs are waived.
Access was made available to councils
that do not generate the volume of
tenders for their own customised portal
through the MAV portal at a reduced rate.
MAV Procurement
Shared Services
The MAV established a new business unit
to pursue improvements and savings in
local government procurement practices.
Following the acquisition of Co-operative
Purchasing Services and its assets, MAV
Procurement was launched in April 2009
to pursue group purchasing opportunities
that prioritise community outcomes and
not just the lowest unit price. Two tender
processes were conducted for
telecommunications on behalf of 40
councils and library materials for more
than half of Victoria’s library services.
The MAV has progressed six projects to
improve collaboration between councils
that will potentially transform the way local
government does business. The information
and communications technology project
was pursued as a priority due to its
potential to provide a common and stable
platform for other shared service initiatives.
Progress was also made on shared services
for records management, maternal and
child health systems, property data, a
census of land use and employment and
front-of-house services.
Councils Reforming Business
The MAV partnered the State Government
to progress the Councils Reforming
Business initiative including improved
procurement practices, shared services
proposals, local laws, affordable housing
and the roll out of the EasyBiz project to
all councils. In addition, the MAV has
provided support for 13 projects involving
53 councils to identify opportunities for
improving procurement practice that can
be rolled out to all councils.
MAV ANNUAL REPORT 2008/09 COLLABORATION >31
MAV Insurance
Royal Commission
The MAV coordinated the representation
of 77 councils to the Bushfires Royal
Commission. Several working groups
were established to work with the legal
team to guide a submission to the Royal
Commission. The submission highlighted
the complexity of Victoria’s fire
management regime and covered policy
issues including fire prevention planning,
building regulations and planning
schemes, native vegetation, road
management, fire refuges and evacuation,
fire response and recovery, and the
Integrated Fire Management Planning
project. A second submission, responding
to the draft recommendations from
Counsel Assisting the Royal Commission,
focussed on issues relating to the
reinstatement of designated community
fire refuges before the next fire season.
Councils were provided with regular
updates on the Commission proceedings.
32> MAV ANNUAL REPORT 2008/09 MAV INSURANCE
Legal Panel
MAV Insurance conducted an open tender
for the provision of legal services for
handling both public liability and
professional indemnity claims. The new
claims panel took effect from 1 July 2009.
Each firm signed an agreement for two
years with potential for a further two years
at the MAV’s discretion. The new
agreement includes formally documented
terms and agreement between firms and
the MAV including a dispute resolution
process; service standards addressing
professional skill and care as well as
timeliness and cost; a quality assurance
process to review the level of service
provided by the firms and Jardine Lloyd
Thompson; reporting standards; value
added services including seminars and
workshops, publications and newsletters;
strict billing conditions; and mandatory
compliance with the Victorian
Government’s Model Litigant Guidelines
and Human Rights Charter. A second
legal panel has also been appointed to
provide legal advice for the general
management of the Civic Mutual Plus
scheme. The tender process was managed
in accordance with a strict probity plan
with an evaluation committee comprising
MAV Insurance Chief Executive Officer,
Rob Spence as Chair; Alison Lyon and
John Smith from MAV Insurance; Ivan
Ciardullo from Jardine Lloyd Thompson;
and Terry Makings, an independent
consultant with considerable local
government experience.
Service Improvements
Seeking to increase transparency, improve
communication and provide a higher level
of service to MAV Insurance members,
two new appointments were made to MAV
Insurance. John Smith was appointed as
MAV Insurance Claims Adviser. With a
long history in insurance, John is
responsible for overseeing claims
management, advising on best practice
and developing key performance
indicators to analyse performance of both
MAV Insurance and that of appointed
service providers, with the ultimate
objective to assure integrated, timely and
high quality outcomes for MAV Insurance
and its members. Daniel Hogan was
appointed to the part-time role of MAV
Insurance Relationship Manager, updating
the membership on significant issues as
required. Recognising that in certain
instances members may wish to directly
contact MAV Insurance in addition to
existing client interface options, the
appointment also provides a direct link
between the business and members.
Reinsurance
The number of reinsurers covering Civic
Mutual Plus was increased by two in
2008/09 bringing the total number of
reinsurers in the program to 16, further
spreading the risk to ensure the long-term
viability of the scheme. The two new
reinsurers conformed to MAV Insurance’s
strict requirements, including a minimum
rating equivalent to a Standard and Poor’s
rating of A and an equivalent of at least
US$25 million in unencumbered
policyholders’ funds. Close monitoring
was maintained on the ongoing financial
viability of all reinsurers to provide
maximum protection for members against
claims that potentially go back to the
commencement of the scheme in 1993.
Pollution Liability Insurance
MAV Insurance requested its broker to
identify appropriate alternatives to cover
gaps in protection against pollution
relating to exclusion 13 in the Civic
Mutual Plus (CMP) policy. A register of
landfills owned and operated by local
government was also compiled to identify
the extent of the need for additional
coverage. MAV Insurance determined not
to proceed with the only option identified
for a special purpose pollution liability
policy on the basis of legal advice that the
policy wording was convoluted and the
scope of the coverage unclear. In addition
the policy was not definitive in its
distinction from the CMP policy, leaving
the scheme vulnerable to arguments
between reinsurers as to which policy
should apply from case to case. MAV
Insurance is committed to pursuing
satisfactory coverage for members
against pollution liability. A detailed
study is planned to identify possibilities
for coverage.
Civic Mutual Plus Results
The operating deficit for the year was
$2,613,270 (2008 $8,175,121). This
result increased the net asset (equity)
position of the Scheme from $15.4 million
in 2008 to $12.8 million at the end of the
2009 financial year. This strong
performance has resulted from the
continuing concentration on cost control,
increased emphasis on operational
efficiency and ensuring the business
structures reflect industry best practice.
The strong capital position provides
increased flexibility and ensures members
are protected as much as possible from
the vagaries of the current international
business and insurance environment.
Municipal Officers’ Fidelity
Guarantee Fund Results
The deficit for 2009 of $51,074 (2008
$53,274 deficit) is ahead of budget for
the year and in line with expectations.
There has been improved claims
performance this year. However, claims
relating to lack of segregation of duties
and management controls are still
frequent. The provision for future claims
remains at $108,000 and appears
adequate. The capital of the Fund at
the end of the 2009 financial year is
$364,001 (2008 $415,075) and is
excess of the minimum capital
requirement.
Civic Mutual Plus Claims Trends
Two claims were paid during the year
totalling $234,000. The smaller of the
claims related to petty cash handling and
the larger claim was the result of the
procurement process being compromised.
The petty cash claim resulted in the
member improving management control
of petty cash procedures and practices.
Following the second claim the member
set about raising employee awareness of
fraud and ensuring employees understand
the importance of internal control
procedures not being compromised. Both
incidents were prosecuted to the full extent
of the law in line with MAV Insurance’s
policy in matters of fraud.
Tort reforms have lead to lower claim
numbers for personal injury matters.
However, those claims that satisfy the new
statutory threshold are inevitably much
more costly on average. Professional
indemnity and property damage not
impacted by tort reforms now accordingly
represent a higher percentage of claims.
Planning disputes and tree root claims
have been prevalent. On previous
experience claims are predicted to increase
in the current economic conditions. The
MAV has now developed the capability for
monthly reporting and trend analysis on
key indicators of scheme viability including
claims lodged, unit cost, legal spend and
performance and timelines.
Fidelity Claims Trends
MAV ANNUAL REPORT 2008/09 MAV INSURANCE >33
11
2
3
MAV TEAM
MAV BOARD
Rob Spence
Chief
Executive
Officer
Christine Jones
Executive
Assistant
1
23
John Hennessy
Sector
Development
Consultant
A
l
i
s
o
&
Secretary
Governance
Trevor Koops
Senior
Economist
Gavin Mahoney
Senior Project
Officer
5
General
Counsel
22
Stillwell
n
L
y
o
n
K
i
m
1
2
S
u
p
p
o
r
t
b
e
r
l
e
y
&
O
f
f
i
c
e
r
4
C
o
r
p
o
r
a
t
e
L
e
g
a
l
13
Kaye Owen
Research &
Policy Director
Paula Giles
Strategic
Programs &
Commercial
Director
19
Allan Holmes
Finance &
Insurance
Consultant
Alison Standish
Corporate
Services
Manager
Rosemary
Hancock
Policy Adviser
John Smith
Claims
Adviser
Imogen Kelly
Senior Adviser
Corporate
Communications
13
6
Jennifer
Thompson
Public Health &
Wellbeing Project
Debbie Smith
Senior
Communications
Adviser
35
Liz Johnstone
Planning Policy &
Projects Manager
16
38
Jan Bruce
Positive Ageing
Project
40
41
Andrew Rowe
Councillor
Development
Officer
Clare
Hargreaves
Social Policy
Manager
Naree Atkinson
Policy Adviser
24
27
MAV TEAM
Emma
Fitzclarence
Policy Adviser
33
18
Helen Rowe
Maternal & Child
Health Project
Jodie Delaney
Events
Coordinator
9
Simone Stuckey
Assoc. of Bayside
Municipalities &
Timber Towns
Victoria
37
Tony Gibbs
Broadband Project
2
Luke Murphy Skye Holcolmbe
Natural Resource Policy Adviser
Management
Project
10
Con Pagonis
Multicultural
Project
Janine Kleynhans
Website
Development
Project
34
Sally Everitt
Michelle
Early Years Project Croughan
Planning Project
Officer
26
Michael Green
Electronic
Records
Officer
Ben Morris
Energy & Waste
Project
17
30
Maxine Morrison
Small Towns
Project
Ann Tok
Events
Coordinator
7
11
21
Lance King
Emergency
Management
Project
Max Fonovic
Marketing
Manager
MAV Procurement
Steve Pascoe
Fire Management
Project
Brendan
O'Loughlin
LGICT Committee
31
Simon Morgan
Finance &
Insurance
Officer
Geoff Pawsey
Workforce & Risk
Manager
Derryn Wilson
HACC Project
20
14
8
Elizabeth Jackson
VicLink
Nicola Wood
Disability Access
& Inclusion Project
Rod Mummery
IT Coordinator
28
15
May Yin
Posarnig
Accounts
Officer
36
John Ryan
Corporate
Administrative
Officer
29
Rebecca Watkins
Administration
Officer
3
Part time staff
Contractor
Grant funded
34> MAV ANNUAL REPORT 2008/09 MAV TEAM
34
35
36
4
5
7
6
8
14
9
15
20
24
37
38
22
26
30
23
27
31
39
12
18
21
25
29
11
17
16
19
24
10
28
32
40
33
41
MAV ANNUAL REPORT 2008/09 MAV TEAM >35
MAV Operations
Human Resources
The MAV retains a mix of staff and
consultants to advocate the interests of its
member councils, raise the sector’s profile,
provide advice and capacity building
programs to support council activities and
supply insurance and procurement services
to councils. In 2008/09 the staffing profile
of the MAV included:
> 34 staff (27 full-time and seven part-time)
funded from membership subscriptions.
These staff focus on delivering the MAV
Strategic Work Plan ratified by State
Council and provide policy support,
advice to councils, capacity-building
programs, and support the representation
of Victorian local government views to the
State and Federal governments and other
key groups
> 12 staff (nine full-time and three part-time)
funded from State and Federal government
grants or external organisations to deliver
specific projects and programs and
support to Victorian councils
> Nine specialist consultants who
supplement the skills of staff and
provide support in areas such as
insurance, financial management,
business development, information
technology and policy advice.
Seven staff left the organisation during the
year; one after the grant funded project
finished and the others moved on to new
career opportunities. These positions were
filled though recruitment or reorganisation.
To improve the flow of information to staff
and efficiency of the MAV payroll systems,
the MAV implemented an online service
providing staff immediate access to their
pay-slips, a leave calculator and the ability
to submit leave forms electronically, saving
time and resources.
36> MAV ANNUAL REPORT 2008/09 MAV OPERATIONS
Events
A new online system was developed
and implemented this year to replace
cumbersome paper based systems for
managing registration and payments for
MAV events. The new system allows for
registration to free events, a range of
payment options including councillor
development credit points, deferring
payment and multiple discount options
and has low ongoing costs. Since the
implementation of the system, cash
flow and arrears management have
greatly improved.
Several major conferences took place in
2008/09 including the Councillor
Development Weekend, MAV Annual
Conference, two meetings of State
Council and the Future of Local
Government Summit, as well as more
topic specific conferences covering
information and communication
technology, asset management, human
resources and risk management. A small
team delivers these major events and
provides support to many smaller forums
and training opportunities. MAV events
are designed to foster collaboration,
disseminate information and engender
innovation in the delivery of council
services. Often organised in conjunction
with special interest group committees,
MAV events seek to reflect the needs of
councils and to focus on topics of
strategic relevance. Sponsorship is sought
to offset the costs of councils attending
events. In 2008/09 $500,000 was raised
to subsidise events.
Video Conferencing
Following a resolution of State Council
the MAV set out to examine the
effectiveness and viability of installing
video-conferencing facilities for
communication between councils and
the MAV for meetings and training.
A survey and workshop were conducted
and discussions held with councils to
determine requirements and evaluate
technical solutions that best suit the MAV
and councils’ needs. The requirements
identified informed the specifications
for a tender for telecommunications
services on behalf of 26 councils.
Website redevelopment
The MAV commenced a redevelopment
of its website to improve delivery of the
information and communication needs
of councils and support collaboration
between councils. Special attention was
given to user needs during the research
phase of the project. Banyule City Council
and Mornington Peninsula Shire Council
participated in the research through a
series of one-on-one interviews and testing
with a cross section of staff. Councillors
and council officers were invited to provide
feedback via an online survey and website
analytics were assessed to determine the
priority information needs of various
member profiles.
Municipality
The MAV launched a new magazine this
year focused on sharing councils’ success
stories so that other councils can learn
from the experiences of those councils
who encounter the same challenges,
problems and issues and direct their
energies to adapting already tested ideas
to local needs. Municipality is produced
under contract by a publishing house that
is responsible for writing, editing,
designing, producing and distributing
the magazine. Advertising is sold to
cover the production and distribution
costs associated with the magazine
under strict guidelines agreed and
sealed under contract between the MAV
and the publisher.
Media coverage
Understanding the financial constraints
and cost pressures facing local
government is an ongoing focus of media
activities for the MAV. In 2008/09
widespread print, radio and TV media
coverage was achieved to inform
communities about council rates, how
property revaluations impact on
ratepayers, growth in council service
delivery costs, failure of government
funding to keep pace with costs and the
need to repair ageing infrastructure. The
MAV’s transparent approach has resulted
in more balanced media reporting,
including a story on A Current Affair that
provided a factual explanation about
revaluations not increasing the amount
councils collect in rates.
In the wake of the global financial crisis,
councils’ investment practices came under
intense media scrutiny, particularly those
who suffered losses in the US subprime
mortgage market through collateralised
debt obligations (CDO). The MAV
mounted a strong defensive campaign to
rebut incorrect reports about Victorian
councils, given CDO investments are not
allowed under Victoria’s strict investment
policy. Following a particularly damning
media report falsely naming individual
municipalities, the MAV’s advocacy
resulted in corrections and apologies
being printed in two key daily newspapers.
A media advocacy campaign initiated
by the MAV in the days leading up to
a meeting of the Council of Australian
Governments (COAG) achieved extensive
media coverage including a front page
exclusive in The Age highlighting that
proposed funding reforms to home
and community care could adversely
affect Victorian recipients. Combined
with direct representations to both Federal
and State ministers, the MAV was
successful in COAG deferring its decision,
agreeing to consult with local government
and establish a working group to review
councils’ concerns.
Emissions reductions
The MAV participated in a three month
trial to reduce its electricity consumption
resulting in greenhouse gas and financial
savings. Timers were installed on printers,
shredders and the hot water service
eliminating unnecessary overnight energy
use. Fluorescent lamps along corridors
and near areas of natural light were
removed. Staff were encouraged to
turn their computers off at the wall
overnight and signage was put in place
to remind staff to turn off lights in meeting
rooms when not in use. These actions
resulted in a reduction of electricity
consumption of 15 per cent, equating to
315,000 black balloons or 15 tonnes of
CO2e greenhouse gas emissions per year.
Plans are also under development to
provide shower and storage facilities at
the MAV offices to encourage more staff
to cycle to work.
The collapse of ABC Learning Centres
provided widespread opportunity for the
MAV to comment in the media about the
importance of local government and other
not-for-profit childcare services, and the
need for national policy reforms.
Other media coverage achieved included
positive stories highlighting councils’
bushfire response and recovery efforts,
and a vigorous defence of the role of
councils in planning permit decisionmaking processes following numerous
State Government interventions that
stripped councils of some of their powers
and reduced rights for community input.
MAV ANNUAL REPORT 2008/09 MAV OPERATIONS >37
MAV Representatives
Council
Alpine Shire Council
Representative
Cr Nino Mautone
Council
Maribyrnong City Council
Representative
Cr Michael Clarke
Ararat Rural City Council
Cr Gwenda Allgood
Maroondah City Council
Cr Peter Gurr
Ballarat City Council
Cr Noel Perry
Melbourne City Council
Cr Peter Clarke
Banyule City Council
Cr Jenny Mulholland
Melton Shire Council
Cr Kathy Majdlik
Bass Coast Shire Council
Cr John Duscher
Mildura Rural City Council
Cr Glenn Milne
Baw Baw Shire Council
Cr Ruth McGowan
Mitchell Shire Council
Cr Bill Melbourne
Bayside City Council
Cr James Long
Moira Shire Council
Cr David McKenzie
Benalla Rural City Council
Cr Bill Hill
Monash City Council
Cr Geoff Lake
Boroondara City Council
Cr Coral Ross
Moonee Valley City Council
Cr John Sipek
Brimbank City Council
Cr Tran Siu
Moorabool Shire Council
Cr Thomas Sullivan
Buloke Shire Council
Cr Reid Mather
Moreland City Council
Cr Enver Erdogan
Campaspe Shire Council
Cr Neil Repacholi
Mornington Peninsula Shire Council Cr Bill Goodrem
Cardinia Shire Council
Cr Bill Pearson
Mount Alexander Shire Council
Cr Philip Schier
Casey City Council
Cr Kevin Bradford
Moyne Shire Council
Cr Ken Gale
Central Goldfields Shire Council
Cr John Smith
Murrindindi Shire Council
Cr Lyn Gunter
Colac Otway Shire Council
Cr Stephen Hart
Nillumbik Shire Council
Cr Helen Coleman
Corangamite Shire Council
Cr Ruth Gstrein
Northern Grampians Shire Council
Cr Kevin Erwin
Darebin City Council
Cr Diana Asmar
Port Phillip City Council
Cr Frank O’Connor
East Gippsland Shire Council
Cr Jane Rowe
Pyrenees Shire Council
Cr Robert Vance
Frankston City Council
Cr Brad Hill
Queenscliffe Borough Council
Cr Bob Merriman
Gannawarra Shire Council
Cr Keith den Houting
South Gippsland Shire Council
Cr James Fawcett
Glen Eira City Council
Cr Margaret Esakoff
Southern Grampians Shire Council
Cr Marcus Rentsch
Glenelg Shire Council
Cr Geoff White
Stonnington City Council
Cr John Chandler
Golden Plains Shire Council
Cr David Cotsell
Strathbogie Shire Council
Cr Howard Myers
Greater Bendigo City Council
Cr Rod Fyffe
Surf Coast Shire Council
Cr Joe Remenyi
Greater Dandenong City Council
Cr Peter Brown
Swan Hill Rural City Council
Cr Gary Norton
Greater Geelong City Council
Cr Jan Farrell
Towong Shire Council
Cr Peter Joyce
Greater Shepparton City Council
Cr Jenny Houlihan
Wangaratta Rural City Council
Cr Ron Webb
Hepburn Shire Council
Cr Bill McClenaghan
Warrnambool City Council
Cr Michael Neoh
Hindmarsh Shire Council
Cr Michael Gawith
Wellington Shire Council
Cr Jeff Amos
Hobsons Bay City Council
Cr Angela Altair
West Wimmera Shire Council
Cr Bruce Meyer
Horsham Rural City Council
Cr Bernard Gross
Whitehorse City Council
Cr Mark Lane
Hume City Council
Cr Ros Spence
Whittlesea City Council
Cr Sam Alessi
Indigo Shire Council
Cr Larry Goldsworthy
Wodonga City Council
Cr Lisa Mahood
Kingston City Council
Cr Arthur Athanasopoulos
Wyndham City Council
Cr Cynthia Manson
Knox City Council
Cr Joe Cossari
Yarra City Council
Cr Jane Garrett
Latrobe City Council
Cr Bruce Lougheed
Yarra Ranges Shire Council
Cr Len Cox
Loddon Shire Council
Cr Allen Brownbill
Yarriambiack Shire Council
Cr Andrew McLean
Macedon Ranges Shire Council
Cr John Letchford
Manningham City Council
Cr Geoffrey Gough
Mansfield Shire Council
Cr Tom Ingpen
38> MAV ANNUAL REPORT 2008/09 MAV REPRESENTATIVES
Committees
MAV Advisory Groups
The MAV Management Committee has
established a number of advisory groups
to provide advice in the following areas:
Other MAV Committees
The MAV has also established and
supported several other committees across
major policy areas and projects, including:
MAV HUMAN SERVICES ADVISORY GROUP
MAV PROFESSIONAL DEVELOPMENT
REFERENCE GROUP
Provides advice on social policy and
human services issues. The committee
also facilitates consultation with regional
groupings of councils on current statewide issues.
MAV PLANNING ADVISORY GROUP
Provides advice on strategic and statutory
planning issues affecting local government
and guides MAV policy and position
development on planning related issues.
MAV ENVIRONMENT ADVISORY GROUP
Provides advice on environment issues of
importance to local government and the
needs and issues of members for delivery
of environment outcomes.
MAV TRANSPORT AND INFRASTRUCTURE
ADVISORY GROUP
Provides advice on infrastructure and
transport issues affecting local
government and assists the MAV to carry
forward key policies and campaigns in
this area.
Provides advice on the MAV’s professional
development program for councillors,
identifies ongoing areas of need within the
sector to be addressed, and encourages
participation of colleagues in the MAV
professional development program.
MAV INFORMATION AND
COMMUNICATION TECHNOLOGY
COMMITTEE
Plans, coordinates and supports
information and communication
technology initiatives that deliver better
council services and reduce costs.
MAV VICTORIAN LOCAL SUSTAINABILITY
NETWORK
Brings together councils and stakeholders
actively pursuing local sustainability
approaches.
MAV ECOLOGICALLY SUSTAINABLE
DEVELOPMENT ADVOCACY GROUP
Advises the MAV and shares information
on reducing the environmental impacts of
the built environment.
MAV HACC AND AGEING ADVISORY
GROUP
Guides the MAV on issues relating to
government ageing policies, Home and
Community Care and related aged
programs, and positive ageing issues.
MAV SWIFT CONSORTIUM MANAGEMENT
GROUP
Manages the ongoing implementation of
shared library services contracts and
policies.
MAV/DHS TOBACCO ADVISORY
COMMITTEE
Advises the MAV and the Department of
Human Services on funding arrangements
between State and local government for
tobacco enforcement and education
measures.
MAV LOCAL GOVERNMENT INDIGENOUS
NETWORK
Brings councils together to share ideas
and information for improving relations
with Victoria’s Indigenous communities.
MAV LOCAL GOVERNMENT DRUG ISSUES
FORUM
Brings councils together to share ideas
and information for improving responses
to drug use in our communities.
MAV WORKFORCE PLANNING
AND SERVICES ADVISORY GROUPS
(METROPOLITAN AND RURAL)
Advises on initiatives to address key
strategic and operational issues affecting
the sector in workforce planning.
MAV DISABILITY INCLUSION STRATEGY
GROUP
Guides the MAV on issues relating to
disability access and inclusion policies
and programs.
MAV EARLY YEARS ADVISORY GROUP
Guides the MAV on issues relating to early
years policy and service provision and
planning.
MAV ANNUAL REPORT 2008/09 COMMITTEES >39
External Committees
As the peak body for local government,
the MAV is regularly invited by the
Victorian and Federal governments and
various agencies to represent the sector
on a range of committees.
In 2008/09, these committees included:
MAV/Department of Education and Early
Childhood Development Maternal and
Child Health Services Improvement
Implementation Advisory Group
MAV/Department of Human Services
Food Safety Coordination Project Steering
Committee
Animal Welfare Advisory Committee
Metropolitan Fire and Emergency Services
Board
Association of Bayside Municipalities
Metropolitan Local Government Waste Forum
Association of Regional Waste
Management Groups
Metropolitan Transport Forum
Better Bays and Waterways Steering
Committee
Ministerial Planning and Environment Act
Review Expert Advisory Group
Broiler Code Committee
Ministerial Utilities Infrastructure Reference
Panel
Building Regulation Advisory Committee
Bus Service Review Reference Group
Business Skills Victoria Board
Catchment Management Authority Local
Government Coordinators Network
Central Region Sustainable Water Strategy
Consultative Committee
Clearwater Steering Committee
Community Services and Health Industry
Training Board
Country Fire Authority Board
Customer Consultative Committee,
Essential Service Commission
Development Assessment Forum
Department of Human Services
Partnership Implementation Committee
Department of Primary Industries Drought
Reference Group
Ministerial Advisory Council on Public Libraries
Municipal Emergency Management
Enhancement Group
Municipal Emergency Management Plan
Audit Committee
National Packaging Covenant Council
North East Environment Network
Northern Biodiversity Network
Office for Children Early Childhood
Development Advisory Group
Public Transport Access Committee
Railway Crossing Project Delivery Committee
Railway Crossing Technical Group Committee
Regional Greenhouse Alliance and
Stakeholders Network
Ride to School Steering Committee
Road Safety Reference Group
Road Safety Conference Committee
Department of Transport Maintaining
Mobility Steering Group
Road Transport Advisory Committee
Domestic Animal Management
Implementation Committee
Saferoads Partnership
Rural Workforce Agency Victoria
State Fire Management Planning Executive
Committee
State Flood Policy Committee
State Flood Strategy Committee
State Library Advisory Committee on
Public Libraries
State Natural and Built Environment
Recovery Planning Committee
State Social, Health and Community
Recovery Committee
Timber Towns Victoria
VicRoads Board (Roads Corporation
Advisory Board)
Victorian Bushfire Reconstruction and
Recovery Authority Interagency Taskforce
Victorian Childcare Industry Liaison Group
Victorian Children’s Council
Victorian Emergency Management
Council
Victorian Food Safety Council
Victorian Freight Logistics Council
Victorian Jurisdictional Projects Group for
the National Packaging Covenant
Victorian Litter Action Alliance Advisory
Group
Victorian Local Government Disability
Planners’ Network
Victorian Local Government Multicultural
Issues Network
Victorian Local Sustainability Accord
Committee
Victoria Rail Crossing Safety Steering
Committee
Victorian Rail Industry Environmental
Forum
Victorian Road Based Public Transport
Advisory Committee
South West (Corangamite) Environment
Network
Victorian Road Freight Advisory Council
E-planning Council
Flood Warning Consultative Committee
Victoria
Standing Committee on Local
Government and Cultural Diversity
Victorian Spatial Council
Future Coasts: Preparing Victoria’s Coasts
for Climate Change Steering Committee
State Emergency Mitigation Committee
Infringements Standing Advisory Committee
State Emergency Recovery Planning
Committee
Victorian Settlement Planning Committee
Victorian Speed Limit Advisory Group
Victorian Sustainable Public Lighting
Action Group
Vision Super Board
Local Government Natural Resource
Management Facilitator Network
State Emergency Relief Sub-committee
State Emergency Strategy Team
White Paper for Land and Biodiversity
Stakeholders Reference Group
Local Government Working Group on
Gambling
State Fire Management Planning
Committee
Women’s Participation in Local
Government Coalition
40> MAV ANNUAL REPORT 2008/09 COMMITTEES
Civic Mutual Plus Members
Alpine Shire Council
Goulburn Valley Region Water Corporation
Moyne Shire Council
Ararat Rural City Council
Goulburn Valley Regional Library Corporation
Municipal Association of Victoria
Ballarat City Council
Goulburn-Murray Rural Water Corporation
Murrindindi Shire Council
Banyule City Council
Grampians Wimmera Mallee Water Corporation
Nillumbik Shire Council
Bass Coast Shire Council
Greater Bendigo City Council
North Central Goldfields Library Service
Baw Baw Shire Council
Greater Geelong City Council
North East Region Water Corporation
Bayside City Council
Greater Shepparton City Council
Northern Grampians Shire Council
Benalla Rural City Council
Hepburn Shire Council
Northern Midlands Council
Boroondara City Council
Hindmarsh Shire Council
Port Phillip City Council
Break O’Day Council
Hobart City Council
Pyrenees Shire Council
Brighton Council
Hobart Regional Water Authority
Queenscliffe Borough Council
Brimbank City Council
Hobsons Bay City Council
Rivers and Water Supply Commission
Buloke Shire Council
Horsham Rural City Council
Sorell Council
Burnie City Council
Hume City Council
South Gippsland Region Water Corporation
Campaspe Shire Council
Huon Valley Council
South Gippsland Shire Council
Cardinia Shire Council
Indigo Shire Council
Southern Grampians Shire Council
Casey City Council
Kentish Council
Southern Midlands Council
Central Coast Council
King Island Council
Southern Rural Water Corporation
Central Gippsland Region Water Corporation
Kingborough Council
Strathbogie Shire Council
Central Goldfields Shire Council
Kingston City Council
Surf Coast Shire Council
Central Highlands Council
Knox City Council
Swan Hill Rural City Council
Central Highlands Region Water Corporation
Latrobe City Council
Tasman Council
Circular Head Council
Latrobe Council
Towong Shire Council
Clarence City Council
Launceston City Council
Victorian Water Industry Association Inc.
Colac Otway Shire Council
Local Government Association of Tasmania
Wangaratta Rural City Council
Coliban Region Water Corporation
Loddon Shire Council
Wannon Region Water Corporation
Corangamite Shire Council
Lower Murray Urban and Rural Water
Corporation
Waratah-Wynyard Council
Cradle Coast Water Authority
Darebin City Council
Macedon Ranges Shire Council
Derwent Valley Council
Manningham City Council
Devonport City Council
Mansfield Shire Council
Dorset Council
Maribyrnong City Council
East Gippsland Region Water Corporation
Maroondah City Council
East Gippsland Shire Council
Meander Valley Council
Eastern Regional Libraries Corporation
Melbourne City Council
Esk Water Authority
Melton Shire Council
Flinders Council
Mildura Rural City Council
Frankston City Council
Mitchell Shire Council
Whitehorse Manningham Regional Library
Corporation
Gannawarra Shire Council
Moira Shire Council
Whittlesea City Council
George Town Council
Monash City Council
Wodonga City Council
Glamorgan/Spring Bay Council
Moonee Valley City Council
Wyndham City Council
Glen Eira City Council
Moorabool Shire Council
Yarra City Council
Glenelg Shire Council
Moreland City Council
Yarra Plenty Regional Library Service
Glenorchy City Council
Mornington Peninsula Shire Council
Yarra Ranges Shire Council
Golden Plains Shire Council
Mount Alexander Shire Council
Yarriambiack Shire Council
Warrnambool City Council
Wellington Shire Council
West Coast Council
West Gippsland Regional Library Service
West Tamar Council
West Wimmera Shire Council
Western Region Water Corporation
Westernport Region Water Corporation
Whitehorse City Council
MAV ANNUAL REPORT 2008/09 CIVIC MUTUAL PLUS MEMBERS >41
Fidelity Members
Alpine Shire Council
Hobsons Bay City Council
Ararat Rural City Council
Horsham Rural City Council
Ballarat City Council
Hume City Council
Banyule City Council
Indigo Shire Council
Bass Coast Shire Council
Kingston City Council
Baw Baw Shire Council
Knox City Council
Bayside City Council
Latrobe City Council
Benalla Rural City Council
Loddon Shire Council
Boroondara City Council
Lower Murray Urban and Rural Water
Corporation
Brimbank City Council
Buloke Shire Council
Cardinia Shire Council
Casey City Council
Central Goldfields Shire Council
Central Highlands Water Corporation
Citywide Service Solutions Pty Ltd
Colac Otway Shire Council
Coliban Region Water Corporation
Corangamite Regional Library
Corporation
Macedon Ranges Shire Council
Manningham City Council
Mansfield Shire Council
Maribyrnong City Council
Melbourne City Council
Melbourne Wholesale Fish Market
Melton Shire Council
Mildura Rural City Council
Mitchell Shire Council
Moira Shire Council
Corangamite Shire Council
Monash City Council
Crowlands Water Supply Co-operative
Moonee Valley City Council
Darebin City Council
Moorabool Shire Council
East Gippsland Region Water Corporation
Moreland City Council
East Gippsland Shire Council
Mornington Peninsula Shire Council
Eastern Regional Libraries
Mount Alexander Shire Council
Frankston City Council
Moyne Shire Council
Gannawarra Shire Council
Municipal Association of Victoria
Geelong Cemeteries Trust
Murrindindi Shire Council
Geelong Regional Library Corporation
Nillumbik Shire Council
Glen Eira City Council
Glenelg Shire Council
Golden Plains Shire Council
Goulburn Valley Region Water
Corporation
North East Region Water Corporation
Northern Grampians Shire Council
Port Phillip City Council
Pyrenees Shire Council
Queen Victoria Market
Goulburn-Murray Rural Water Corporation
Queenscliffe Borough Council
Grampians Wimmera Mallee Water
Corporation
South Gippsland Region Water
Corporation
Greater Bendigo City Council
South Gippsland Shire Council
Greater Dandenong City Council
Southern Grampians Shire Council
Greater Geelong City Council
Southern Rural Water Corporation
Greater Shepparton City Council
Strathbogie Shire Council
Hepburn Shire Council
Surf Coast Shire Council
Hindmarsh Shire Council
Swan Hill Rural City Council
42> MAV ANNUAL REPORT 2008/09 FIDELITY MEMBERS
Tanjil Bren Water Co-op Ltd and
Committee of Management Recreation
Reserve
Towong Shire Council
Wangaratta Rural City Council
Wannon Region Water Corporation
Warrnambool City Council
Wellington Shire Council
West Gippsland Regional Library
Corporation
West Wimmera Shire Council
Western Region Water Corporation
Westernport Region Water Corporation
Whitehorse City Council
Whittlesea City Council
Wodonga City Council
Wyndham City Council
Yarra City Council
Yarra Ranges Shire Council
Yarriambiack Shire Council
Financial Overview
Report on financial results for the
year ended 30 June 2009
In accordance with the requirements of
the Municipal Association Act 1907 , and
applicable accounting standards, the
economic activity of the Municipal
Association of Victoria, the Municipal
Officers’ Fidelity Guarantee Fund and
Local Government Mutual Liability
Insurance Scheme (Civic Mutual Plus) is
reported to the members as an economic
entity within the annual accounts. The
combined activities are shown as the
combined accounts and the Municipal
Association of Victoria, being the parent
entity, is shown separately as the MAV
General Fund.
The Association represents local
government in Victoria. One of the
activities of the MAV is that it seeks out,
applies for, and administers grant funds
for, and on behalf of its members, for the
benefit of both local government and the
Victorian community. This activity of the
Association has been accounted for as a
segment and included at note 24 in the
financial statements.
The MAV financial statements also include
the activities of MAV Procurement, which
provides a range of procurement services
and training in purchasing and
procurement for MAV members; and
MAV Insurance, which operates the
Municipal Officers’ Fidelity Guarantee
Fund and the Local Government Mutual
Liability Insurance Scheme (Civic Mutual
Plus) for the benefit of councils and other
local authorities.
Both insurance activities are nondiscretionary mutual funds and are subject
to the oversight of the Association’s Board
of Management, which acts through a
committee of management constituted by
the Board, the MAV Insurance Committee
(MAVIC). MAVIC carries out oversight and
management of the operational activities
of both the Municipal Officers’ Fidelity
Guarantee Fund and Civic Mutual Plus.
Jardine Lloyd Thompson Pty. Ltd provides
claims and risk management services to
the MAV.
Municipal Association of Victoria
The financial result for the MAV in 2009
was significantly impacted by several
major events during the year that
increased the costs of operation
significantly. These events include the
Victorian bushfires; Ombudsman
investigation of a member council;
additional costs relating to the MAV’s
membership of the Australian Local
Government Association; and increased
councillor training activities following
council elections.
The MAV incurred an operating deficit
for the year of $130,367 (2008 deficit
$63,023). The result inclusive of grants
received and expended for the 2009
year was a deficit of $360,245 (2008
$2,234,176), with net assets reducing
to $6,432,199 (2008 $6,792,448).
In 2009 the MAV received a further
$6.224 million (2008 $7.645 million)
in grants from both Federal and
Victorian governments.
The MAV delivered on several significant
projects during the year that have been
funded by grants from both Federal and
Victorian governments and funds
contributed from its members. These
grants and contributions are managed by
the MAV for the betterment of the local
government sector and Victorian
communities. The deficit relating to grant
activities was $105,808 million for the
year ended 30 June 2009 as compared
to a surplus in 2008 of $2.297 million.
Consequently, as at 30 June 2009, the
MAV had a commitment to expend $5.31
million (2008 $5.58 million) of grant
funds on projects for the betterment of
local government and Victorian
communities. 2008/09 was again a year
of project delivery and firm cost control.
The operating deficit of the combined
entity was $3.024 million (2008 $10.36
million). This had the affect of increasing
the net assets of the combined entity from
$22.591 million in 2008 to $19.567
million this year.
MAV INSURANCE
The MAV Insurance business consists
of Civic Mutual Plus and the Municipal
Officers’ Fidelity Guarantee Fund.
The Association is required under the
Municipal Association Act 1907 to provide
both public liability and fidelity insurance
to local government and other statutory
authorities. MAV Insurance is not subject
to Australian Prudential Regulatory
Authority (APRA) regulations. However,
the MAVIC views compliance with these
regulations as being good business
governance and practice and has a
policy of complying with several, but
not all, of the APRA regulations.
The MAV holds an Australian Financial
Services Licence (AFSL No 27143).
The MAV and MAV Insurance have
AFSL-compliant processes and activities
in place to maintain the highest standards
of governance, provide operational
efficiency and enhance the future viability
of the MAV Insurance business. The
combined deficit for 2009 was $2.664
million (2008 $8.122 million). The net
asset position at the end of 2009 was
$13.135 million (2008 $15.799 million).
The 2009 year produced another strong
result enabling MAV Insurance to hold
contributions for the 2010 financial year
at the same levels as 2009.
MAV PROCUREMENT
The MAV restructured its procurement
activities, and MAV Procurement
commenced in March 2009. The MAV
believes that it can assist members in
accessing significant benefits from
improvements in purchasing and
procurement processes and activities.
The deficit for the first 4 months of
operation to 30 June 2009 was
$124,070. This result included the
writing off of costs of establishment
and development.
MAV ANNUAL REPORT 2008/09 FINANCIAL OVERVIEW >43
Guide to the Financial Report
Introduction
The financial report is a key part of the MAV’s
Annual Report. It shows how the MAV
performed financially during the 2008/09
financial year and the position at the end of
the financial year (30 June 2009).
Components of the Financial
Report
The financial report contains three main
sections: the financial statements, the
notes to the financial statements and the
statements by the directors and auditor.
The financial report is presented in
accordance with the Australian Accounting
Standards and the recommendations of the
Urgent Issues Group.
The financial statements consist of three
main statements: income statement,
balance sheet and statement of cash flows.
The MAV is a not-for-profit association
that represents its members who are the
79 local government authorities around
Victoria.
It runs MAV Insurance which consists of
Civic Mutual Plus (public liability and
professional indemnity insurer) and the
Municipal Officers’ Fidelity Guarantee
Fund.
This year the MAV also established MAV
Procurement, a business unit providing
procurement services and training for its
members.
The MAV also manages grants received
from Federal and State governments for
and on behalf of the local government
sector.
All these different interests are accounted
for separately and then consolidated into
the MAV Financial Report.
The notes to the financial statements
detail the Association’s accounting policies
and set out the detailed values that are
carried into the financial statements.
The statements by directors and auditor
provide the views of the directors of the
MAV and the independent auditor on the
financial report. The statement by directors
confirms the view of the directors that the
financial report provides a true and fair
view of the financial performance, financial
position and solvency of the Association.
The audit report by the independent
auditor expresses the auditor’s opinion on
whether the financial statements present
fairly the financial position of the
Association as at 30 June 2009, and the
results of the various business operations
and cash flows for the year ended 30
June 2009, in accordance with
accounting standards and other
mandatory professional reporting
requirements.
The MAV is committed to accountability in
all of its operations. It is with this in mind
that this plain English guide has been
developed to assist readers understand
and analyse the financial report.
Financial Statements
1. INCOME STATEMENT
The income statement shows:
> the MAV’s revenue from its various
activities
> the expenses incurred in running the
MAV and its business activities.
These expenses relate only to the business
operations and do not include costs
associated with the purchase of assets.
The expense item ‘depreciation’ spreads
the cost of the assets over the estimated
life of the assets.
The most important figure is the surplus for
the year. Where it is positive, this means
that revenues were greater than expenses.
2. BALANCE SHEET
The balance sheet shows the assets the
Association owns and the liabilities it owes
at 30 June. The balance sheet separates
the assets and liabilities into current and
non-current. Current means those assets
or liabilities that will be either collected or
that fall due within the next 12 months.
The components of the balance sheet are:
2.1 CURRENT AND NON-CURRENT ASSETS
Cash assets include cash held in the
bank, petty cash, cash deposits and cash
investments. Receivables are monies owed
to the Association.
Prepayments are payments made in the
current financial year which relate to the
next financial year. For example, annual
subscriptions etc.
Property, plant and equipment represents
the value of the equipment, furniture and
fittings, computers, web site and intranet and
motor vehicles owned by the Association.
Intangible assets are trademarks,
educational programs and other intellectual
property owned by the Association.
2.2 CURRENT AND NON-CURRENT
LIABILITIES
Bank overdraft indicates the amount the
Association owes its bankers on its daily
operating account.
Payables are monies owed by the
Association to its suppliers as at 30 June.
Premiums in advance are insurance
premiums relating to the next financial
year billed to members of the insurance
fund before 30 June.
44> MAV ANNUAL REPORT 2008/09 GUIDE TO THE FINANCIAL REPORT
Provision for employee entitlements is
the accounting term for annual leave,
long service leave and retirement
gratuities owed to staff.
Provision for claims outstanding
represents insurance claims reported by
members together with an estimate of
claims incurred but not yet reported
including an estimate of the costs of
settlement for these claims.
2.3 NET ASSETS
This term describes the difference between
total assets and total liabilities. It
represents the net worth of the Association
as at 30 June.
3. STATEMENT OF CASH FLOWS
The statement of cash flows summarises
cash payments and cash receipts for the
year. The values may differ from those
shown in the income statement because
the income statement is prepared on an
accrual basis.
Notes To The Financial Statements
To enable the reader to understand the
basis on which the values shown in the
statements are established it is necessary
to provide details of the Association’s
accounting policies. These are described
in note 2. Apart from the accounting
policies, the notes also give details behind
many of the summary figures contained in
the statements. The note numbers are
shown beside the relevant items in the
income statement, balance sheet and the
statement of cash flows.
Where the Association wishes to disclose
information which cannot be incorporated
into the statements, this is shown in the
notes. The notes should be read at the
same time as the financial statements in
order to get a full and clear picture of the
financial statements.
Statements by Directors
The statement by directors is made by two
directors on behalf of the Management
Committee of the Municipal Association
of Victoria. The statement states that in the
opinion of the Management Committee
the financial statements present a true and
fair view of the operations of the
Association and that the Association can
pay its debts as and when they fall due.
Independent Audit Report
This report is the independent auditor’s
opinion on the financial statements. It
provides the reader of the financial
statements a completely independent
opinion of the financial statements of the
Association. The opinion covers all
statutory and accounting standards
compliance requirements as well as
providing a view on the truth and fairness
of the financial statements.
Cash is derived from, and is used in, two
main areas:
3.1 CASH FLOWS FROM OPERATING
ACTIVITIES :
Receipts relate to all cash received into
the Association’s bank account from
members and others who owed money to
the Association in the form of fees or
premiums. Receipts also include interest
earned from the Association’s cash
investments. It does not include receipts
from the sale of assets.
Payments relate to all cash paid out of
the Association’s bank account to staff,
creditors and others. It does not include
cash paid for the purchase of assets.
3.2 CASH FLOWS FROM INVESTING
ACTIVITIES
This relates to cash receipts and cash
payments resulting from either the sale or
purchase of property, plant and
equipment. The statement of cash flows
concludes with cash at end of year which
indicates the cash the Association has at
30 June to meets its debts and liabilities.
MAV ANNUAL REPORT 2008/09 GUIDE TO THE FINANCIAL REPORT >45
Glossary
AFSL
Australian Financial Services Licence
ALGA
Australian Local Government Association
CDO
Collateralised Debt Obligations
CMP
Civic Mutual Plus
COAG
Council of Australian Governments
CPRS
Carbon Pollution Reduction Scheme
LGAT
Local Government Association of
Tasmania
MAVIC
Municipal Association of Victoria
Insurance Committee
VCAT
Victorian Civil and Administrative Tribunal
46> MAV ANNUAL REPORT 2008/09 GLOSSARY
Financial Report 08/09
MAV FINANCIAL REPORT 2008/09 >47
Income statement
for the year ended 30 June, 2009
COMBINED
NOTE
REVENUE
EXPENSES
2009
MAV - GENERAL FUND
2008
$
$
2009
$
2008
$
4
59,365,282
61,242,167
12,938,192
13,522,011
5(b)
62,389,871
50,886,143
13,298,437
11,287,835
3
(3,024,589)
10,356,024
NET SURPLUS/(DEFICIT)
(360,245)
2,234,176
Balance sheet
as at 30 June, 2009
COMBINED
NOTE
2009
$
MAV - GENERAL FUND
2008
$
2009
$
2008
$
CURRENT ASSETS
Cash and cash equivalents
Receivables
9(a)
32,443,932
26,922,735
7,153,248
7,321,524
10, 2(g)
35,870,892
35,223,935
1,443,294
871,945
101,366
120,106
101,366
120,106
68,416,190
62,266,776
8,697,908
8,313,575
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
10, 2(g)
49,467,806
39,249,555
Property, plant and equipment
12, 2(i)
593,485
509,994
593,485
Intangibles
13, 2(i)
221,786
252,209
221,786
Other financial assets
-
TOTAL NON-CURRENT ASSETS
50,283,077
TOTAL ASSETS
-
10
40,011,768
118,699,267 102,278,544
509,994
252,209
-
10
815,271
762,212
9,513,180
9,075,787
CURRENT LIABILITIES
Payables
20
2,583,406
2,926,195
Premiums in advance
11
19,168,622
18,880,563
Provision for employee entitlements
Provision for claims outstanding
17
14(a), 2(t)
Other current liabilities
TOTAL CURRENT LIABILITIES
808,686
1,103,428
-
673,121
-
673,121
527,649
20,352,000
17,529,018
527,649
1,315,845
377,605
1,315,845
377,605
44,092,994
40,241,030
2,797,652
2,008,682
156,903
18,962
-
-
NON-CURRENT LIABILITIES
Provision for employee entitlements
Provision for claims outstanding
17
14(a), 2(t)
Other non-current liabilities
18,962
54,756,229
39,147,056
156,903
-
-
264,367
142,251
264,367
117,754
TOTAL NON-CURRENT LIABILITIES
55,039,558
39,446,210
283,329
274,657
TOTAL LIABILITIES
99,132,552
79,687,240
3,080,981
2,283,339
NET ASSETS
19,566,715
22,591,304
6,432,199
6,792,448
EQUITY
19,566,715
22,591,304
6,432,199
6,792,448
The accompanying notes form an integral part of these statements.
48> MAV FINANCIAL REPORT 2008/09
Statement of changes in equity
for the year ended 30 June, 2009
COMBINED
NOTE
2009
MAV - GENERAL FUND
2008
$
$
2009
2008
$
$
RETAINED EARNINGS
Balance at beginning of year
22,591,304
12,235,280
6,792,444
4,558,272
Surplus from ordinary activities
(3,024,589)
BALANCE AT END OF YEAR
19,566,715
10,356,024
(360,245)
2,234,176
22,591,304
6,432,199
6,792,448
Combined statement of cash flows
for the year ended 30 June, 2009
COMBINED
NOTE
2009
$
MAV - GENERAL FUND
2008
$
2009
2008
$
$
CASH FLOW FROM OPERATING ACTIVITIES
RECEIPTS
Subscriptions, grants and fees
Investment income
Reinsurance and other recoveries
38,827,233
41,908,220
16,246,033
15,734,169
1,569,209
864,406
381,873
287,954
13,808,690
16,103,200
-
-
PAYMENTS
Suppliers
(34,451,201) (42,110,794) (16,566,605) (13,073,156)
Claim payments
(14,003,157) (16,098,333)
NET CASH (USED IN)/PROVIDED BY
OPERATING ACTIVITIES
9(b)
5,750,774
666,699
61,301
2,948,967
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of fixed assets
241,399
62,640
241,399
Payments for fixed assets and intangibles
(292,217)
62,640
(358,317)
(292,217)
(358,317)
NET CASH USED IN INVESTING ACTIVITIES
(229,577)
(116,918)
(229,577)
(116, 918)
NET (DECREASE)/INCREASE IN CASH HELD
Cash at beginning of year
CASH AT END OF YEAR
9(a)
5,521,197
549,781
(168,276)
2,832,049
26,922,735
26,372,954
7,321,524
4,489,475
32,443,932
26,922,735
7,153,248
7,321,524
The accompanying notes form an integral part of these statements.
MAV FINANCIAL REPORT 2008/09 >49
Notes to and forming part of the financial statements
for the year ended 30 June 2009
1. CORPORATE INFORMATION
The combined financial report of Municipal Association of Victoria for the year ended 30 June 2009 was authorised for issue in accordance
with a resolution of the directors on the date shown on the attached Statement by Directors.
The Municipal Association of Victoria is an association incorporated by an Act of the Parliament of Victoria, Australia, known as the Municipal
Association Act 1907.
The nature of the operations and principal activities of Municipal Association of Victoria are:
-
to provide a public liability insurance scheme for local government
-
to provide fidelity insurance for local government
-
to promote the efficient carrying out of municipal government throughout the State of Victoria and watch over and protect the interests,
rights and privileges of municipal corporations
-
to serve the interests of the Victorian community.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial report is a general purpose financial report which has been drawn up in accordance with Australian Accounting Standards,
Mandatory Professional Reporting Requirements (Urgent Issues Group Interpretations) and other relevant requirements.
The principal accounting policies adopted in preparing the financial report are stated to assist in a general understanding of the financial
report. Accounting policies have been consistently applied unless otherwise indicated.
The financial report is presented in Australian dollars.
The accounts have been prepared on the accruals basis using historical costs and, except where stated, do not take into account current
valuations of assets.
(b) Statement of compliance
The financial report complies with Australian accounting standards, which include Australian equivalents to International Financial Reporting
Standard (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (IFRS).
(c) Adoption of new accounting standard
The Association has adopted AASB 7 Financial Instruments; Disclosures and all consequential amendments which became applicable on 1
January 2007. The adoption of this standard has only affected the disclosure in these financial statements. There has been no effect on profit
and loss or the financial position of the Association or any of its divisions.
(d) Principles of the combined entity
The economic entity comprises the financial report of Municipal Association of Victoria and its controlled entities the Local Government Mutual
Liability Insurance Scheme (trading as Civic Mutual Plus, - CMP), The Municipal Officers’ Fidelity Guarantee Fund and MAV Procurement.
A controlled entity is any entity controlled by Municipal Association of Victoria (Incorporated under the Municipal Association Act 1907).
Control exists where Municipal Association of Victoria has the capacity to dominate the decision-making in relation to the financial and
operating policies of another entity so that the other entity operates with Municipal Association of Victoria to achieve the objectives of
Municipal Association of Victoria.
The effects of all transactions between entities in the combined entity have been eliminated.
The financial statements of the divisions are prepared for the same reporting period as the Municipal Association of Victoria, using consistent
accounting policies.
All interdivisional balances and transactions, including unrealised profits arising from intra-divisional transactions, have been eliminated in full.
Unrealised losses are eliminated unless costs cannot be recovered.
The equity in the insurance businesses of Civic Mutual Plus and The Municipal Officers Fidelity Guarantee Fund represent the assets of the
members of each of the insurance mutuals and are not available to the members of the Association.
(e) Income tax
The Association is exempt from income tax, in accordance with sections 50-10 and 50-25 of the Income Tax Assessment Act 1997.
(f) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three
months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the
purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the balance sheet.
50> MAV FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
(g) Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less an allowance for impairment.
Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be
uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not
be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered
objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of
estimated future cash flows, discounted at the original effective interest rate.
(h) Trade and other payables
Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days
of recognition.
(i) Property, plant, equipment, trademarks and intellectual property
Plant and equipment, trademarks and intellectual property are carried at cost, less where applicable, any accumulated depreciation or
amortisation and any impairment value.
On disposal of an item of property, plant, equipment, trademarks and intellectual property the difference between the sales proceeds and the
carrying amount of the asset is recognised as a gain or loss.
The depreciable amount of all fixed assets including buildings and capitalised leased assets are depreciated/amortised on a straight line
basis over their estimated useful lives to the entity commencing from the time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
THE FOLLOWING DEPRECIATION RATES ARE IN USE:
ANNUAL RATE
Leasehold improvements at cost
20%
Furniture and equipment at cost
20 - 33%
Motor vehicles at cost
20%
Interactive communications system at cost
33%
INTANGIBLE ASSETS
Intangible assets (computer software, trademarks and intellectual property) acquired separately or in a business combination are initially
measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the
year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful
life and tested for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the
amortisation method for an intangible asset with a finite life are reviewed at least at each financial year-end. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the
amortisation period or method, as appropriate, which is a change in the accounting estimate. The amortisation expense on intangible assets
with finite lives is recognised in profit or loss in the expense category ‘Amortisation.’
The Association does not have any intangible assets with indefinite useful lives.
IMPAIRMENT
The carrying amount of property, plant, equipment, trademarks and intellectual property is reviewed annually by directors to ensure it is not in
excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows that will
be received from the assets’ employment and subsequent disposal. The expected net cash flows have not been discounted to present values in
determining the recoverable amounts.
MAV FINANCIAL REPORT 2008/09 >51
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
(j) Leases
A distinction is made between finance leases which, effectively transfer from the lessor to the lessee substantially all the risks and benefits
incidental to ownership of the leased property, without transferring the legal ownership, and operating leases under which the lessor effectively
retains substantially all the risks and benefits.
Where assets are acquired by means of finance leases, the present value of minimum lease payments is established as an asset at the
beginning of the lease term and amortised on a straight line basis over the expected economic life. A corresponding liability is also established
and each lease payment is allocated between such liability and interest expense.
Operating lease payments are charged to expense on a basis which is representative of the pattern of benefits derived from the leased property.
Lease incentives received under operating leases are recognised as a liability.
(k) Employee entitlements
The following liabilities arising in respect of employee entitlements (note 17) are measured at their nominal amounts: wages and salaries,
annual leave and sick leave regardless of whether they are expected to be settled within twelve months of balance date.
Other employee entitlements are expected to be settled within twelve months of balance date.
All other employee entitlements, including long service leave, are measured at the present value of the estimated future cash outflows in respect
of services provided up to balance date. Liabilities are determined after taking into consideration estimated future increase in wages and
salaries and past experience regarding staff departures. Related on-costs are included.
Contributions made to an employee superannuation fund are charged as expenses when incurred.
(l) Revenue recognition
Interest revenue - Interest revenue is recognised on a time-proportionate basis that takes into account the effective yield on the financial asset.
Grant revenue - Grants are recognised as revenue when the Association obtains control over the assets comprising the contribution. Control
over the grants is normally obtained upon their receipt or upon prior notification that a grant has been secured.
Subscriptions and sponsorships - Subscriptions and sponsorships are recognised on an accrual basis.
(m) Investment income
Investment income consists of interest which is recognised on a time-proportionate basis that takes into account the effective yield on the
financial asset and movement in unit values in cash and fixed interest funds which are carried at fair value through the income statement.
(n) Other financial assets
Investments are valued at net market value at balance sheet date.
(o) Comparative figures
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
(p) Cash flows
For the purposes of the statement of cash flows, cash includes cash on hand and deposits held at call with banks and investments in cash
backed unit trusts net of outstanding bank overdrafts.
52> MAV FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
(q) Change in accounting policy
During the 2009 financial year the MAV’s policy for accounting for councillor training points changed. Prior to 1 July 2008 councillor training
points had to be used by the 30 June each or they were forfeited. In 2009 this policy changed to enable members to accumulate councillor
training points including councillor training points that remained unused up to 30 June 2008.
(i) Impact on current year amounts
The impact of the change in accounting policy on the net surplus for the year ended 30 June 2009 is as follows:
Reconciliation of net surplus
COMBINED
2009
$
Net surplus before change in accounting policy (2,934,943)
Change in accounting policy – councillor
training points
(89,646)
Net deficit after change in accounting policy (3,024,589)
MAV - GENERAL FUND
2009
$
(270,599)
(89,646)
(360,245)
Reconciliation of combined income statement before the change in accounting policy and that after the changes
2009 (BEFORE)
$
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
2009 (AFTER)
$
Revenue
59,454,928
(89,646)
59,365,282
Net Surplus
(2,934,943)
(89,646)
(3,024,589)
Reconciliation of combined balance sheet before the change in accounting policy and that after the change
2009 (BEFORE)
$
TOTAL ASSETS
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
118,699,267
0
2009 (AFTER)
$
118,699,267
LIABILITIES
Current Liabilities
Other current liabilities
TOTAL LIABILITIES
1,102,563
98,919,270
213,282
213,282
1,315,845
99,132,552
NET ASSETS
19,779,997
(213,282)
19,566,715
EQUITY
19,779,997
(213,282)
19,566,715
Reconciliation of MAV General Fund income statement before the change in accounting policy and that after the changes
2009 (BEFORE)
$
Revenue
Net Surplus
13,027,838
(270,599)
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
(89,646)
(89,646)
2009 (AFTER)
$
12,938,192
(360,245)
Reconciliation of MAV General Fund balance sheet before the change in accounting policy and that after the change
2009 (BEFORE)
$
TOTAL ASSETS
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
9,513,180
0
2009 (AFTER)
$
9,513,180
LIABILITIES
Current Liabilities
Other current liabilities
1,102,563
213,282
1,315,845
TOTAL LIABILITIES
NET ASSETS
2,867,699
213,282
3,080,981
6,645,481
(213,282)
EQUITY
6,432,199
6,645,481
(213,282)
6,432,199
MAV FINANCIAL REPORT 2008/09 >53
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
ii) Impact on prior year amounts
The impact of the change in accounting policy on the net surplus for the year ended 30 June 2008 is as follows:
Reconciliation of net surplus
COMBINED
2008
$
Net surplus before change in accounting policy 10,479,660
Change in accounting policy –
councillor training
(123,636)
Net surplus after change in accounting policy 10,356,024
MAV - GENERAL FUND
2008
$
2,357,812
(123,636)
2,234,176
Reconciliation of combined income statement before the change in accounting policy and that after the changes
2008 (BEFORE)
$
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
2008 (AFTER)
$
Revenue
61,365,803
(123,636)
61,242,167
Net Surplus
10,479,660
(123,636)
10,356,024
Reconciliation of combined balance sheet before the change in accounting policy and that after the change
2008 (BEFORE)
$
TOTAL ASSETS
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
102,278,544
0
2008 (AFTER)
$
102,278,544
LIABILITIES
Current Liabilities
Other current liabilities
TOTAL LIABILITIES
253,969
79,563,604
123,636
123,636
377,605
79,687,240
NET ASSETS
22,714,940
(123,636)
22,591,304
EQUITY
22,714,940
(123,636)
22,591,304
Reconciliation of MAV General Fund income statement before the change in accounting policy and that after the changes
2008 (BEFORE)
$
Revenue
Net Surplus
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
2008 (AFTER)
$
13,645,647
(123,636)
13,522,011
2,357,812
(123,636)
2,234,176
Reconciliation of MAV General Fund balance sheet before the change in accounting policy and that after the change
2008 (BEFORE)
$
TOTAL ASSETS
EFFECT OF CHANGE
IN ACCOUNTING POLICY
$
9,075,787
0
2008 (AFTER)
$
9,075,787
LIABILITIES
Current Liabilities
Other current liabilities
TOTAL LIABILITIES
253,969
2,159,703
123,636
123,636
377,605
2,283,339
NET ASSETS
6,916,084
(123,636)
6,792,448
EQUITY
6,916,084
(123,636)
6,792,448
54> MAV FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
SUMMARY OF ACCOUNTING POLICIES RELATING TO INSURANCE ACTIVITIES
(r) Premiums
Premiums comprise amounts charged to members of the Schemes for policy cover, net of amounts returned to members as bonuses.
The earned portion of premiums received is recognised as revenue. Premiums are treated as earned from date of attachment of risk.
The pattern of recognition over the policy is based on time, which is considered to closely approximate the pattern of risks undertaken.
(s) Premiums receivable
During the month of June each year, the Schemes issue premium notices to Scheme Members. The risk attaches to the premiums in the next
accounting period and accordingly the revenue is recognised each following year commencing 1 July. Prior to each balance date members
have committed to participate in both the scheme and the fund for the ensuing year and accordingly the premiums are disclosed in the
balance sheet as ‘contributions receivable’ with an offsetting liability described as ‘contributions billed in advance.’
(t) Claims
Claims-incurred expense and liability for outstanding claims are recognised in respect of direct business. The liability covers claims incurred but
not yet paid, incurred but not yet reported claims, and the anticipated direct and indirect costs of settling those claims. Claims outstanding are
assessed by reviewing individual claim files and estimating claims not notified and settlement costs using statistical and actuarial techniques.
The liability for outstanding claims is measured as the present value of the expected future payments, reflecting the fact that all the claims
do not have to be paid out in the immediate future. The expected future payments are estimated on the basis of the ultimate cost of settling
claims, which is affected by factors arising during the period to settlement such as normal inflation and ‘superimposed inflation’. Advice from
the MAV’s actuary has estimated normal and superimposed inflation to be 1% (2008 2%) and the discount rate at 4.75% (2008 6.7%)
Superimposed inflation refers to factors such as trends in court awards, for example increases in the level and period of compensation for
injury. The expected future payments are then discounted to a present value at the reporting date using discount rates based on the investment
opportunities available to the organisation on the amounts of funds sufficient to meet claims as they became payable.
Details of rates applied are disclosed in note 22.
Claims-incurred expense has reduced from the prior year due to the impact of:
(i) improved risk management practices by members, and
(ii) reform to the law of tort.
(u) Reinsurance and other recoveries receivable
Reinsurance and other recoveries receivable on paid claims, reported claims not paid, claims incurred but not reported and unexpired
risk liabilities are recognised as revenue. Recoveries receivable are assessed in a manner similar to the assessment of outstanding claims.
Recoveries are measured as the present value of the expected future receipts, calculated on the same basis as the liability for outstanding
claims.
Reinsurance recoveries are reduced from the prior year due to a reduction in claims caused by:
(i) improved risk management practices by members, and
(ii) reform to the law of tort
(v) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the entity and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised.
(i) Premiums – recognised in the period the fund is at risk.
(ii) Future reinsurance and other recoveries – on an accruals basis.
(iii) Investment Income – on an accruals basis including adjustments to bring values of cash backed unit trusts to account as investment
income.
(w) Catastrophe insurance
Catastrophe insurance relates to insurance premiums paid to reinsurers in accordance with the established reinsurance strategy of the entity
and in order to protect the insurance businesses from catastrophic and unforseen claims.
MAV FINANCIAL REPORT 2008/09 >55
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
NOTE
2009
2008
$
$
3. CONTRIBUTION TO OPERATING SURPLUS
CONTRIBUTION FROM INSURANCE ACTIVITIES
Premium income
Re-insurance expense
19,520,661
29,561,562
28 & 2(w) (10,479,554) (19,765,079)
NET PREMIUM INCOME
9,041,107
9,796,483
Claims expense
5(a) (33,055,202) (13,517,161)
Reinsurance and other recoveries
2(u)
Performance bonus
26
NET CLAIMS EXPENSE
NET UNDERWRITING RESULT
Investment income
22,029,456
14,323,078
4,541,737
3,911,250
(6,484,009)
4,717,167
2,557,098
14,513,650
1,182,050
583,816
Administration and general expenses
(6,403,492)
(6,975,618)
INSURANCE ACTIVITY OPERATING SURPLUS
(2,664,344)
8,121,848
(360,245)
2,234,176
(3,024,589)
10,356,024
MAV SURPLUS
OPERATING SURPLUS
COMBINED
2009
MAV - GENERAL FUND
2008
$
$
2009
$
2008
$
4. REVENUE
REVENUES FROM OPERATING ACTIVITIES
Subscriptions/premiums
Reinsurance and other recoveries
2(u)
Brokerage and management fees income
Performance bonus
26
Seminars and sale of publications
Project, sponsorship, management and rental income
Grant income
TOTAL REVENUE FROM OPERATING ACTIVITIES
21,715,526
31,691,543
22,029,456
14,323,078
2,214,679
2,150,174
1,366,739
1,450,585
4,541,737
3,911,250
982,327
717,094
982,327
717,094
1,366,739
1,450,585
-
-
868,741
618,010
1,695,741
1,257,366
6,224,498
7,644,899
6,224,498
7,644,899
57,729,024
60,356,459
12,483,984
13,220,118
REVENUES FROM NON-OPERATING ACTIVITIES
Investment income
Gain on disposal of non-current assets
TOTAL REVENUE FROM OUTSIDE THE
OPERATING ACTIVITIES
REVENUE
1,617,296
880,854
435,246
297,039
18,962
4,854
18,962
4,854
1,636,258
885,708
454,208
301,893
59,365,282
61,242,167
12,938,192
13,522,011
COMBINED
NOTE
2009
$
2008
$
5(a) CLAIMS EXPENSES
Paid
Outstanding claims at end of financial year
14(a)
Outstanding claims at beginning of financial year
TOTAL CLAIMS EXPENSES
56> MAV FINANCIAL REPORT 2008/09
14,623,047
17,118,906
75,108,229
56,676,074
(56,676,074) (60,277,819)
2(t)
33,055,202
13,517,161
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
2009
$
MAV - GENERAL FUND
2008
$
2009
$
2008
$
5(b)OPERATING EXPENSES
The following items have been recognised
in the operating surplus:
Claims expense
33,055,202
13,517,161
Catastrophe insurance expense
10,479,554
1,320,223
Stamp duty
General scheme expenses
-
-
19,765,079
-
-
1,826,241
-
-
270,518
274,126
Salary and payroll costs
3,700,457
3,005,888
3,700,457
3,005,888
Grants, projects and legal
5,215,172
4,600,562
5,215,172
4,600,562
Administration
1,960,974
1,828,347
1,219,087
1,399,248
639,489
317,144
639,489
317,144
313,959
Operating lease rental expense
Superannuation contributions
313,959
248,138
Scheme management fee
3,223,446
3,450,454
Meetings and seminars
-
-
248,138
-
-
1,396,093
1,213,725
1,395,489
877,577
Depreciation leasehold improvements
46,219
45,020
46,219
45,020
Depreciation furniture and equipment
66,626
85,653
66,626
85,653
Depreciation motor vehicles
80,379
67,179
80,379
67,179
Amortisation of website, educational programs and trademarks
Board of management expenses
ALGA membership
TOTAL EXPENDITURE
83,272
72,727
83,272
72,727
181,477
224,755
181,477
224,755
356,811
343,944
356,811
343,944
62,389,871
50,886,143
13,298,437
11,287,835
6. LEASING COMMITMENTS
Operating lease commitments, being for lease
of new OCE and OCE colour copiers
Not later than one year
29,216
29,216
29,216
Later than one year but not later than five years
TOTAL LEASE COMMITMENT
29,216
43,824
73,040
43,824
73,040
73,040
102,256
73,040
102,256
Operating lease commitments, being for lease
of leasehold premises:
623,762
418,244
623,762
287,544
Later than one year but not later than five years
Not later than one year
3,030,121
3,258,815
3,030,121
1,500,048
Later than five years
1,244,185
1,639,251
1,244,185
TOTAL LEASE COMMITMENT
4,898,068
5,316,310
4,898,068
134,235
117,239
1,787,592
7. AUDITOR’S REMUNERATION
Amounts received or due and receivable for audit services:
Audit services
Tax Compliance
29,400
134,235
117,239
24,226
-
29,400
24,226
MAV FINANCIAL REPORT 2008/09 >57
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
NOTE
2009
2008
$
$
8. SCHEME MANAGEMENT FEES
Scheme management fees are paid to the Scheme
Manager for:
Re-insurance placement
1,826,074
1,771,292
1,407,372
1,679,162
3,233,446
3,450,454
Claims management (included in claims expenses)
1,131,280
1,373,860
TOTAL SCHEME MANAGEMENT FEES
4,364,726
4,824,314
Risk management and administrative services
Total administration
5(b)
9. NOTES TO STATEMENT OF CASH FLOWS
(a) Cash and cash equivalents at balance date as
shown in the Statement of Cash Flows are held
in Standard and Poor’s rated AA and AAf cash
deposits and reconciled to the related items
in the Balance Sheet as follows:
COMBINED
2009
$
MAV - GENERAL FUND
2008
$
2009
$
7,153,248
2008
$
Cash
14,346,901
13,503,883
7,321,524
Other financial assets
18,097,031
13,418,852
TOTAL CASH AND CASH EQUIVALENTS
32,443,932
26,922,735
7,153,248
7,321,524
-
-
(b) Reconciliation of net cash used in operating
activities to operating surplus
Surplus for year
(3,024,574)
10,479,660
(360,245)
2,357,812
Depreciation and amortisation
276,497
270,578
276,497
270,578
(Surplus)/deficit on disposal of assets
(18,962)
(4,854)
(18,962)
(4,854)
Changes in assets and liabilities
(Increase)/decrease in accounts receivable
2(g) (10,045,288)
(Increase)/decrease in prepayments
Increase/(decrease) in accounts payable
Increase /(decrease) in provision for employee entitlements
Increase/(decrease) in outstanding claims
Increase/(decrease) in accrued revenue
2(t)
(571,349)
(173,999)
18,740
(67,826)
18,740
(67,826)
(415,319)
(576,077)
(294,729)
577,710
7,531
55,680
7,531
55,680
17,660,272
6,216,208
(3,315,417)
-
288,059 (12,325,119)
Increase/(decrease) in other liabilities
1,003,818
(66,134)
1,003,818
CASH FLOWS FROM OPERATIONS
5,750,774
666,699
61,301
58> MAV FINANCIAL REPORT 2008/09
-
-
(66,134)
2,948,967
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
NOTE
2009
MAV - GENERAL FUND
2008
$
$
2009
$
2008
$
10. RECEIVABLES
Future reinsurance and other recoveries receivable
2(u)
Discount to present value
72,327,806
64,964,029
(9,215,000)
(9,199,110)
63,112,806
55,764,919
-
Less doubtful debts
Premiums receivable
(1,148,000)
17,863,762
18,946,413
4,362,130
910,158
1,443,294
871,945
85,338,698
74,473,490
1,443,294
871,945
CURRENT
35,870,892
35,223,935
1,443,294
871,945
NON-CURRENT
49,467,806
39,249,555
TOTAL
85,338,698
74,473,490
2(s)
Other receivables
TOTAL RECEIVABLES
Represented by:
1,443,294
871,945
Reinsurance recoveries are due from reinsurers with Standard and Poor’s ratings of AA+, AA-, A+ and A. Other recoveries are due from
unrated local authorities based in Victoria and Tasmania.
The ageing analysis of trade receivables are as follows:
Total
<30
31-60
61-90
>90
days
days
days
days
2009
Combined
22,507,700
22,144,900
292,614
12,430
57,756
MAV General Fund
1,348,142
985,342
292,614
12,430
57,756
2008
Combined
19,454,373
19,429,458
24,141
-
776
777,880
543,480
233,624
-
776
MAV General Fund
COMBINED
NOTE
2009
$
MAV - GENERAL FUND
2008
$
2009
2008
-
-
$
$
11. PREMIUMS IN ADVANCE
Contributions billed in advance
19,168,622
18,880,563
Leasehold improvements - at cost
616,101
616,101
616,101
616,101
Less accumulated depreciation
517,656
471,437
517,656
471,437
98,445
144,664
98,445
144,664
Furniture and equipment - at cost
562,848
546,232
562,848
546,232
Less accumulated depreciation
491,661
465,600
491,661
465,600
71,187
80,632
71,187
80,632
471,242
310,932
471,242
310,932
93,205
74,524
93,205
74,524
12. PROPERTY, PLANT AND EQUIPMENT
Motor vehicles - at cost
Less accumulated depreciation
378,037
236,408
378,037
236,408
Information technology equipment- at cost
508,608
470,515
508,608
470,515
Less accumulated depreciation
462,792
422,225
462,792
422,225
45,816
48,290
45,816
48,290
593,485
509,994
593,485
509,994
TOTAL PROPERTY, PLANT AND EQUIPMENT
MAV FINANCIAL REPORT 2008/09 >59
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
2009
$
MAV - GENERAL FUND
2008
2009
2008
171,706
144,664
171,706
$
$
$
12. PROPERTY, PLANT AND EQUIPMENT (continued)
Reconciliations of the carrying amounts of property,
plant and equipment at the beginning and end of
the financial year.
LEASEHOLD IMPROVEMENTS
Movements during the year
Beginning of year
Additions
144,664
0
17,978
0
17,978
Depreciation
(46,219)
(45,020)
(46,219)
(45,020)
End of year
98,445
144,664
98,445
144,664
Beginning of year
80,632
42,752
80,632
42,752
Additions
16,615
67,062
16,615
67,062
Depreciation
(26,060)
(29,182)
(26,060)
(29,182)
End of year
71,187
80,632
71,187
80,632
Beginning of year
236,408
316,590
236,408
316,590
Additions
298,866
174,494
298,866
174,494
Disposals
(76,858)
(187,497)
(76,858)
(187,497)
Depreciation
(80,379)
(67,179)
(80,379)
(67,179)
End of year
378,037
236,408
378,037
236,408
Beginning of year
48,290
80,373
48,290
80,373
Additions
38,092
24,388
38,092
24,388
Depreciation
(40,566)
(56,471)
(40,566)
(56,471)
End of year
45,816
48,290
45,816
48,290
FURNITURE AND EQUIPMENT
Movements during the year
MOTOR VEHICLES
Movements during the year
INFORMATION TECHNOLOGY EQUIPMENT
Movements during the year
13. INTANGIBLE ASSETS
Trademarks and intellectual property
Less accumulated amortisation
60> MAV FINANCIAL REPORT 2008/09
555,013
502,163
555,013
502,163
(333,227)
(249,954)
(333,227)
(249,954)
221,786
252,209
221,786
252,209
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
2009
MAV - GENERAL FUND
2008
2009
2008
230,502
252,209
230,502
$
$
$
$
13. INTANGIBLE ASSETS (continued)
Reconciliation of the carrying amounts of intangible
assets at the beginning and end of the financial year
INTANGIBLE ASSETS
Movement during the year
Beginning of year
252,209
Additions
52,849
94,434
52,849
94,434
Amortisation
(83,272)
(72,727)
(83,272)
(72,727)
End of year
221,786
252,209
221,786
252,209
DESCRIPTION OF INTANGIBLE ASSETS
Computer software, trademark and intellectual property costs are carried at cost less accumulated amortisation. These intangible assets have
been assessed as having a finite life and are amortised using the straight line method over a period of three to ten years. The amortisation
has been recognised in the income statement in the line item ‘Amortisation.’ If an impairment indication arises, the recoverable amount is
estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.
14(a)OUTSTANDING CLAIMS
COMBINED
2009
$
Central estimate
81,069,229
Discount to present value
2008
$
61,703,251
(10,728,000)
(8,679,823)
70,341,229
53,023,428
2,807,000
2,464,530
1,960,000
1,188,116
75,108,229
56,676,074
Current
20,352,000
17,529,018
Non-current
54,756,229
39,147,056
75,108,229
56,676,074
Claims handling costs
Risk margin
14(b)
TOTAL OUTSTANDING CLAIMS
Comprising:
TOTAL CLAIMS PROVISION
2(t)
14(b)RISK MARGIN - PROCESS FOR DETERMINING RISK MARGIN
Figures for private insurers published by APRA in October 2006 showed an average risk margin of 15.7% for public and product liability
outstanding claims, and 11.3% for professional indemnity. Based on these averages, and on three actuarial publications, Cumpston Sarjeant
Pty Ltd recommended that risk margins be adopted intended to give an overall risk margin of 15% for outstanding claims, in the absence of
reinsurance.
After allowing for the extent of reinsurance for each year, Cumpston Sarjeant calculated risk margins for each year, in total being 1.8% of
gross outstanding claims. They recommended a risk margin of 20% for the net unexpired risk liability.
These risk margins are likely to give a probability of about 75% that the provisions including the risk margins will prove adequate to meet the
relevant liabilities.
MAV FINANCIAL REPORT 2008/09 >61
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
2009
GROSS
$
2008
REINSURANCE
$
NET
$
GROSS
$
REINSURANCE
$
NET
$
14(c)RECONCILIATION OF MOVEMENT
IN DISCOUNTED OUTSTANDING
CLAIMS LIABILITY
Outstanding claims brought forward
56,676,074
54,616,919
2,059,155
60,277,819
56,128,981
4,148,838
Changes in assumptions
14,151,030
13,456,008
695,022
15,358,718
15,816,289
(457,571)
Increase in claims incurred/
recoveries anticipated
17,660,272
8,495,887
9,164,385
(3,315,417)
(1,512,062)
(1,803,355)
31,811,302
21,951,895
9,859,407
12,043,301
14,304,227
(2,260,926)
Incurred claims recognised in
income statement
Claim payments/recoveries during the year (13,379,147) (13,456,008)
Outstanding claims carried forward
75,108,229
63,112,806
76,861 (15,645,046) (15,816,289)
11,995,423
56,676,074
2009
CURRENT YEAR
$
54,616,919
171,244
2,059,155
2008
PRIOR YEAR
$
TOTAL
$
CURRENT YEAR
$
PRIOR YEAR
$
TOTAL
$
15. NET CLAIMS INCURRED
INSURANCE
Gross claims and related expenses undiscounted
34,339,364
764,015
35,103,379
12,912,258
Discount
(5,084,000)
3,035,823
(2,048,177)
(1,885,258)
4,544,924
2,659,666
Gross claims and related expenses discounted
29,255,364
3,799,838
33,055,202
11,027,000
2,490,161
13,517,161
Reinsurance and other recoveries undiscounted
(4,557,151)
Discount
21,466,000 (31,798,066) (10,332,066)
Reinsurance and other recoveries discounted
16,908,849 (38,938,305) (22,029,456)
NET CLAIMS INCURRED
46,164,213 (35,138,467)
62> MAV FINANCIAL REPORT 2008/09
(7,140,240) (11,697,390)
11,025,746
(9,120,578)
264,547
(8,856,031)
2,170,969
(2,054,763)
10,857,495
(1,879,609) (11,000,187)
(3,587,438)
(3,322,891)
(5,467,047)
(4,323,078)
(2,976,886)
(805,917)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
16. CLAIMS DEVELOPMENT TABLE
ACCIDENT YEAR
2005
$
2006
$
2007
$
2008
$
2009
$
TOTAL
$
GROSS ESTIMATE OF ULTIMATE CLAIMS COST
- CIVIC MUTUAL PLUS
At end year of accident
18,375,690
19,426,057
12,918,950
11,438,398
One year later
17,546,887
14,414,065
10,750,452
14,574,373
Two years later
17,554,596
13,972,302
12,452,238
Three years later
14,652,975
13,554,890
Four years later
15,482,088
Current estimate of cumulative claims cost
15,482,088
13,554,890
Cumulative payments
(6,868,087)
(3,862,390)
Outstanding claims - undiscounted
8,614,001
9,692,500
33,095,464
12,452,238
14,574,373
33,095,464
89,159,053
(2,536,169)
(1,226,994)
(1,825,735) (16,319,375)
19,916,069
13,347,379
31,269,729
72,839,678
Discount
(12,825,587)
Claims handling expense
2,913,587
2004 and prior
12,072,551
TOTAL GROSS OUTSTANDING CLAIMS CIVIC MUTUAL PLUS
14(a)
75,000,229
TOTAL GROSS OUTSTANDING CLAIMS MUNICIPAL OFFICERS’ FIDELITY
GUARANTEE FUND
14(a)
108,000
COMBINED GROSS
OUTSTANDING CLAIMS
14(c)
ACCIDENT YEAR
75,108,229
2005
2006
2007
2008
2009
At end year of accident
2,125,606
2,182,437
2,103,826
2,336,670
28,615,874
One year later
1,847,897
2,104,523
1,723,493
1,146,195
Two years later
2,191,811
1,832,851
1,789,409
Three years later
1,605,025
1,340,145
$
$
$
$
$
TOTAL
$
NET ESTIMATE OF ULTIMATE CLAIMS COST
- CIVIC MUTUAL PLUS
Four years later
1,698,565
Current estimate of cumulative claims cost
1,698,565
1,340,145
1,789,409
1,146,195
(1,334,562)
(494,146)
(858,840)
(362,815)
364,003
845,999
930,569
Cumulative payments
Outstanding claims - undiscounted
Discount
783,380
28,615,874
34,590,188
(1,788,146)
(4,838,509)
26,827,728
29,751,679
(20,675,067)
Claims handling expense
1,190,067
2004 and prior
1,620,743
TOTAL NET OUTSTANDING CLAIMS CIVIC MUTUAL PLUS
11,887,423
TOTAL NET OUTSTANDING CLAIMS MUNICIPAL OFFICERS’ FIDELITY
GUARANTEE FUND
108,000
COMBINED NET
OUTSTANDING CLAIMS
14(c)
11,995,424
These tables show the trend in the balance of outstanding claims.
MAV FINANCIAL REPORT 2008/09 >63
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
MAV - GENERAL FUND
2009
2008
2009
2008
673,121
527,649
673,121
527,649
NOTE
$
$
$
$
17. PROVISIONS FOR EMPLOYEE ENTITLEMENTS
The aggregate amount of employee entitlement
liability is comprised of:
Provisions (current)
Provisions (non-current)
TOTAL EMPLOYEE ENTITLEMENTS
Meets AIFRS requirements
18,962
156,903
18,962
156,903
692,083
684,552
692,083
684,552
684,552
628,872
684,552
628,872
2(b)
Reconciliation of the carrying amounts of provision
for employee entitlements at the beginning and
end of the financial year
EMPLOYEE ENTITLEMENTS
Movement during the year
Beginning of year
Additions
End of year
7,531
55,680
7,531
55,680
692,083
684,552
692,083
684,552
18. SUPERANNUATION CONTRIBUTION
The Municipal Association of Victoria contributes in respect of its employees to both the Vision Super Superannuation Fund’s Accumulation
Fund and the Defined Benefits Fund.
The amount of superannuation contributions paid by the Municipal Association of Victoria to the Vision Super Accumulation Fund and the
Defined Benefits Fund during the reporting period was $313,959 (2008 $248,138). The Municipal Association of Victoria contributes to the
Accumulation Fund based on a fixed percentage of employee earnings in accordance with the Superannuation Guarantee Legislation 9% in
2009 and 9% in 2008. No further liability accrues to the employer as the superannuation benefits accruing to employees are represented by
their share of the net assets of the Fund
Contributions to the Defined Benefits Fund are determined by the Scheme’s actuary. The Funds liability for accrued benefits for defined benefit
and defined contribution members was determined in the 31 December 2005 actuarial investigation carried out by Local Authorities Super
pursuant to the requirements of Australian Accounting Standard AASB 2005-13. An actuarial review again occurred in December 2008 where
it was calculated that the Defined Benefits Superannuation Fund was in surplus. A further review is scheduled to occur in June 2010.
19. GOVERNMENT GRANTS
The Association receives grant monies from various Federal and State Government departments on behalf of local government. Grant monies
received have been accounted for as income in accordance with Australian Accounting Standard 1004. At the end of the financial year the
Association had commitments to expend grants totalling approximately $5,310,809 (2008 $5,578,025) after deducting an estimate of costs of
administering the grants.
COMBINED
2009
$
MAV - GENERAL FUND
2008
$
2009
$
2008
$
RECOGNISED IN INCOME STATEMENT
Grant income
6,224,498
The Association does not receive any other government assistance.
64> MAV FINANCIAL REPORT 2008/09
7,644,899
6,224,498
7,644,899
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
20. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES
The Group’s exposure to interest rate risk and the effective average interest rate for the classes of financial assets is set out below:
COMBINED
MAV - GENERAL FUND
Non-
Floating
Non-
Floating
interest
earning
interest
rate
interest
earning
interest
rate
2009
$
$
$
$
FINANCIAL ASSETS
Bank
-
14,346,902
-
Cash investments
-
18,097,031
-
Receivables
85,338,698
TOTAL FINANCIAL ASSETS
85,338,698
32,443,933
Weighted average interest rate
7,153,248
-
1,443,294
-
1,443,294
7,153,248
4%
6%
FINANCIAL LIABILITIES
Outstanding claims
75,108,229
-
-
-
Unearned premiums/subscriptions
19,168,622
-
-
-
2,583,406
-
Accounts payable
TOTAL FINANCIAL LIABILITIES
Weighted average interest rate
96,860,257
808,702
-
808,702
-
0%
0%
The carrying amounts of financial assets and financial liabilities represent their approximate net fair value.
COMBINED
NonInterest
Earning
MAV - GENERAL FUND
Floating
Non-
Interest
Rate
Interest
Earning
Floating
Interest
Rate
2008
$
$
$
$
FINANCIAL ASSETS
Bank
-
13,503,883
-
Cash investments
-
13,418,852
-
Receivables
74,473,490
TOTAL FINANCIAL ASSETS
74,473,490
Weighted average interest rate
26,922,735
7,321,524
-
871,945
-
871,945
7,321,524
3.3%
5.1%
FINANCIAL LIABILITIES
Outstanding claims
56,676,074
-
-
-
Unearned premiums/subscriptions
18,880,563
-
-
-
2,926,195
-
1,103,428
-
78,482,832
-
1,103,428
-
Accounts payable
TOTAL FINANCIAL LIABILITIES
Weighted average interest rate
0%
0%
The carrying amounts of financial assets and financial liabilities represent their approximate net fair value.
All maturity dates are within twelve months.
MAV FINANCIAL REPORT 2008/09 >65
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
20. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised
financial assets and liabilities as at 30 June 2009. Cash flows for financial assets and liabilities without fixed amount or timing are based on
conditions existing at 30 June 2009.
The remaining contractual maturities of the financial liabilities are:
CONSOLIDATED
2009
$
MAV - GENERAL FUND
2008
$
2009
2008
$
$
3 months or less
26,941,403
26,357,315
808,702
1,103,424
3-12 months
17,151,591
13,883,723
1,988,966
905,258
1-5 years
42,503,498
35,699,075
283,329
274,657
Over 5 years
12,536,060
3,777,131
99,132,552
79,687,244
3,080,997
2,283,339
LIQUIDITY RISK
Maturity analysis of financial assets and liabilities based on management’s expectation.
The risk implied from the values in the table below, reflects a balanced view of cash inflows and outflows. These liabilities originate from
insurance contracts and other financial assets used in the ongoing operations of the business. These assets are considered in the Association’s
overall liquidity risk. To monitor existing financial assets and liabilities as well as to enable effective controlling of future risks, the Association
has established a comprehensive risk reporting covering its insurance business that reflects the expectations of the management of expected
settlement of financial assets and liabilities.
Year Ended 30 June 2009
<3 months
$
3-12
months
$
1-5 years
>5 years
$
Total
$
$
COMBINED
FINANCIAL ASSETS
Cash and cash equivalents
32,443,932
Receivables
24,683,136
11,187,756
38,753,806
10,714,000
32,443,932
57,127,068
11,187,756
38,753,806
10,714,000 117,782,630
5,189,375
15,162,625
42,220,169
12,536,060
85,338,698
COMBINED
FINANCIAL LIABILITIES
Outstanding claims
Unearned premiums/subscriptions
Accounts payable
75,108,229
19,168,622
19,168,622
2,583,406
Other liabilities
2,583,406
-
1,988,966
283,329
2,272,295
TOTAL FINANCIAL LIABILITIES
26,941,403
17,151,591
42,503,498
12,536,060
99,132,552
NET MATURITY
30,185,665
(5,963,835)
(3,749,692)
(1,822,060)
18,650,077
PARENT
FINANCIAL ASSETS
Cash and cash equivalents
7,153,248
-
-
-
7,158,248
Receivables
1,443,294
-
-
-
1,443,294
8,596,542
-
-
-
8,596,542
-
PARENT
FINANCIAL LIABILITIES
Accounts payable
808,702
Other Liabilities
Total Financial Liabilities
NET MATURITY
66> MAV FINANCIAL REPORT 2008/09
-
1,988,966
-
808,702
283,329
-
2,272,295
3,080,997
808,702
1,988,966
283,329
-
7,787,840
(1,988,966)
(283,329)
-
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
20. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
Risk management objectives and policies for mitigating insurance risk
The Association’s local government mutual liability scheme (trading as Civic Mutual Plus) is established by legislation contained in the
Municipal Association Act 1907. Membership is available to local councils and prescribed bodies. The Scheme operates in Victoria and
Tasmania to provide services to members in respect of their potential and actual liabilities. A member may seek indemnity from the Scheme in
respect of a claim.
Actuarial models, using information from the Scheme’s management information systems are used to confirm contributions and monitor claim
patterns. Past experience and statistical methods are used as part of the process.
The principal risk is that the frequency and severity of claims is greater than expected. Civil liability risk events are, by their nature, random, and
the actual number and size of events during any one-year may vary from those estimated using established statistical techniques.
Objectives in managing risk arising from insurance and policies for mitigating those risks
The Scheme has an objective to control insurance risk thereby reducing the volatility of its operating surplus. In addition to the inherent
uncertainty of civil liability risks, which can lead to variability in the loss experience, operating surpluses can also be affected by external factors,
such as competition and movements in asset values.
The Scheme relies on a strong relationship with its members and actively encourages them to adopt practices of risk management that reduce
the incidence of claims to the Scheme.
Reinsurance strategy
The Scheme adopts a conservative approach towards management of risk and does this by utilising various risk transfer options. The MAV
Insurance Committee determines the level of risk, which is appropriate for the Scheme having regards to ordinary concepts of prudence
and regulatory constraints. The risk transfer arrangements adopted by the Scheme include the utilisation of commercial reinsurance / excess
arrangements. These arrangements include constant review of both reinsurers’ financial strength, and ensuring spread of risk among reinsurers
who meet the requirements of the MAV insurance policies. These risk transfer arrangements assist the Scheme to limit exposures to large single
claims and catastrophic events. These programs are reviewed each year to ensure that they continue to meet the risk needs of the Scheme.
Terms and conditions of membership
Membership to the Scheme is offered to eligible bodies and renewed annually on 30th June. Payment of the annual contribution confirms
continuation of membership. Termination of membership is subject to at least 90 days written notice of intention as laid out by the Scheme
Rules.
Product features
The Scheme operates in Victoria and Tasmania. Should a claim be accepted the Scheme provides indemnity to the member in respect of their
civil liabilities for $500 million public / products liability and $300 million for professional indemnity insurance, subject to any excess, for any
claim incurred anywhere throughout the world.
Operating surpluses arise from the total contributions charged to members less the amounts paid to cover claims and the expenses incurred
by the Scheme.
Management of risks
The key insurance risks that affect the Scheme are contribution risk, and claims experience risk.
Contribution risk is the risk that the Scheme does not charge contributions appropriate for the indemnity cover it provides. The Scheme partially
manages contribution risk through its proactive approach to risk management that addresses all material risks both financial and non-financial.
There are no specific terms and conditions that are expected to have a material impact on the financial statements.
Claims experience risk is managed through the non-financial risk assessment and risk management and reinsurance management process.
Claims experience is monitored on an ongoing basis to ensure that any adverse trending is addressed. The Scheme is able to reduce the
claims experience risk of severe losses through the reinsurance program, and by managing the concentration of insurance risks.
Concentration of insurance risks
Insurance risk is managed by taking a long term approach to setting the annual contribution rates that eliminates price fluct uations, through
appropriate investment strategy, reinsurance and by maintaining an active state-wide risk management profile. It is vital that the Scheme keeps
abreast of changes in the general economic, legal and commercial environment in which it operates. It is vital that the Scheme spreads its risk
of reinsurance failure by ensuring reinsurers are of high financial quality and can meet their commitments to the Association. The Association
maintains policies and strategies and receives advice from an independent actuary on at least an annual basis in order to determine the
concentration and amount of risk exposure. The Association keeps abreast of changes in the general economic, legal and commercial
environment in which it operates.
MAV FINANCIAL REPORT 2008/09 >67
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
20. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
CREDIT RATING
Reinsurance and other
recoveries on outstanding
claims
Reinsurance and other
recoveries on paid claims
Reinsurance and other
recoveries on paid claims
AAA
+/$m
AA
+/$m
2009
-
2.28
2008
-
2009
2008
A
+/$m
BBB
$m
SPECULATIVE
GRADE
$m
25.67
-
-
1.61
29.56
17.79
9.98
-
-
2.13
29.90
-
1.37
3.12
-
-
1.47
5.96
-
3.88
0.43
-
-
1.42
5.73
NEITHER PAST
DUE NOR IMPAIRED
$’000
LESS THAN
3 MONTHS
$’000
PAST DUE BUT NOT IMPAIRED
3 TO 6
6 MONTHS
MONTHS
TO 1 YEAR
$’000
$’000
GREATER
THAN 1 YEAR
$’000
NOT
RATED
$m
IMPAIRED
TOTAL
$m
TOTAL
$’000
$’000
2009
-
3.94
0.12
0.38
0.09
1.43
5.96
2008
-
2.21
0.55
0.99
0.61
1.37
5.73
Interest rate risk
The reinsurance indemnity contracts contain no clauses that expose the Scheme, directly to interest rate risk. The reinsurance contracts are long
term arrangements, reviewed and payable annually.
IMPACT OF CHANGES IN INTEREST RATES
Variable
Current Rate
%
Change
variable
to
%
Operating
surplus at
30 June 2009
$
Operating
surplus at
30 June 2014
$
Total accumulated
funds after the impact
of applying variable
$
MAV
Base value at 30 June 2009
Interest rate pa
4.75%
(3,024,574)
6,632,338
6,432,199
5.75%
(2,933,483)
6,787,260
6,582,447
3.75%
(3,121,503)
6,465,107
6,270,014
CIVIC MUTUAL PLUS
Base value at 30 June 2009
Interest Rate pa
4.75%
(2,613,255)
13,167,889
12,770,531
5.75%
(2,553,626)
14,759,523
13,068,733
3.75%
(2,674,276)
11,582,865
12,452,498
Credit risk
The Scheme is exposed to credit risk on insurance contracts as a result of exposure to reinsurers. The credit risk to reinsurers is managed
through the Scheme’s Reinsurance Management Strategy and policies that includes regularly monitoring both the financial rating of the
reinsurers both prior to and during the reinsurance program and the flow of payments coming from the reinsurers. Investments in cash
and cash equivalents at balance date as shown in the Statement of Cash Flows are held in Standard and Poor’s rated AA and AAf rated
cash deposits.
Price risk
Investments held are not subject to price risk. Investments are cash deposits held in Australian banks.
68> MAV FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
21. ACCOUNTING ESTIMATES AND JUDGEMENTS
The Scheme makes estimates and judgements in respect of certain key assets and liabilities. Estimates and judgements are continually reviewed
and are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The key areas in which critical estimates and judgements are applied are described below.
(a) Estimation of outstanding claims liability
Provision is made at the year-end for the estimated cost of claims incurred but not settled at the balance sheet date, including the cost of
claims incurred but not yet reported (‘IBNR’) to the Scheme.
The Scheme takes all reasonable steps to ensure that it has appropriate information regarding its claims exposure. However, given the
uncertainty in establishing claims provisions, it is likely that the final outcome may be different from the original liability established.
Provisions are calculated gross of all recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers and any
third party.
The determination of an appropriate outstanding claims provision involves:
(i) Establishing a case estimate for each reported claim at year-end taking into account legal advice where appropriate on larger claims;
(ii) Allowance for incurred but not reported claims as confirmed by the actuarial review on 30 June 2009;
(iii) An allowance of 4% for claim settlement expenses, as assumed by the Actuary;
(iv) Allowances for discount at 4.75%, as assumed by the Actuary;
(v) A risk margin of 20% of net outstanding claims after the effect of reinsurance has been applied, as assumed by the Actuary.
Details of specific actuarial assumptions used in deriving the outstanding claims liability at year-end are detailed in note 22.
(b) Assets arising from reinsurance contracts
Assets arising from reinsurance contracts were estimated for each accident year, from the payments to date and estimated outstanding
claims history at 30 June 2009, taking into account the reinsurance terms applying to that accident year. In calculating the present value of
reinsurance recoveries, allowance was made for an average recovery delay of 3.5 months, as assumed by the Actuary.
In accordance with the Actuarial recommendations an allowance was made for non-recoveries from relevant insurers.
22. ACTUARIAL ASSUMPTIONS AND METHODS
Actuarial assumptions
The following assumptions have been made in determining the outstanding claims liabilities:
2009
2008
3.25%
4.5%
Claim administration expense
4%
4%
Superimposed inflation
1%
2%
4.75%
6.7%
20%
20%
KEY ACTUARIAL ASSUMPTIONS
Wage inflation
Discount rate
Risk margin
MAV FINANCIAL REPORT 2008/09 >69
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
22. ACTUARIAL ASSUMPTIONS AND METHODS (continued)
Process used to determine actuarial assumptions
A description of the processes used to determine the above key actuarial assumptions is provided below:
Civic Mutual Plus has provided public and professional indemnity insurance to local government bodies in Victoria and Tasmania and other
bodies constituted under any Act for any public or local governing purpose since 30/9/1993. The Actuary was supplied aggregate data on
claims from each year’s cover at each balance date, together with details for each claim at various dates, including 30/6/2009. The individual
claim payments and case estimates reconciled closely with totals in Civic Mutual Plus’s financial statements for each year of cover. The
actuary made estimates of gross outstanding claims with four differential actuarial methods – payments per person incurred, developed claims
incurred, and developed case estimates plus estimated claim incurred but not reported. The actuary selected the last of these methods, for use
in estimating outstanding claims. Payments were projected with a payment pattern, based on past experience, assuming an average delay of
4.6 years from the middle of the accident year. Estimates of outstanding non reinsurance recoveries were made by a recoveries per person
insured method.
During the 2001 financial year three of the participants in the Scheme’s reinsurance program FAI, HIH and Independent were placed into
the hands of liquidators. These companies were part of the reinsurance programs in fund years from 1994 to 1998. The MAV Insurance
Committee continues to constantly monitor the position with a view to ensuring that the Scheme takes all reasonable steps to protect its position
and to maximise potential recoveries. In accordance with the Committee’s prudent approach to reserving within the actuarial calculation of the
central estimate of reinsurance recoveries, the estimated future recoveries from FAI, HIH and Independent is assumed to be zero. Estimates of
reinsurance recoveries were made from projected gross payments and non reinsurance recoveries, allowing for the different insurance treaties
applying to each year and assuming an average four months delay in the receipt of reinsurance recoveries . Recoveries from FAI, HIH and
Independent have been assumed to be zero. Based on the yields of medium term Commonwealth bonds at 30/6/2009 the discount rate was
assumed to be 6.7% pa. Based on the actual expense rates of Civic Mutual Plus, claim administration expenses were assumed to be 4% of the
net claim payments.
Based on averages for private insurers by APRA, and on three actuarial publications the actuary recommended that risk margins be adopted
intended to give an overall risk margin of 15% for outstanding claims, in the absence of reinsurance. After allowing for the extent of
reinsurance for each year the actuary calculated risk margins for each year, in total being 1.8% of gross outstanding claims liabilities. The
actuary considered that these risk margins are likely to give a probability of about 75% that the provisions including the risk margins will prove
adequate to meet the relevant liabilities. Unexpired risk liabilities were estimated by bringing gross claim incurred estimates for each of the 10
years to 30/6/03 to 2008/09 values using Victorian average weekly earnings adjusting for membership changes and fitting a trend line to the
10 years. The trend value for 02-03 was projected to 2008/09, assuming a 20% drop due to tort reform, superimposed inflation at 1% pa
and population growth at 1.3% pa. After allowing for reinsurance costs and a risk margin of 20%, no premium deficiency was apparent.
VARIABLE
IMPACT OF MOVEMENT IN VARIABLE
Wage inflation
Expected future payments are inflated to take account of inflationary increases. An increase or
decrease in the assumed levels of economic inflation would have a corresponding impact on claims
expense, with particular reference to longer tail claims.
Superimposed inflation
In addition to the general economic inflation rate an amount is superimposed to take account of
non-economic inflationary factors, such as increases in court awards. Such rates of superimposed
inflation are specific to the model adopted. An increase or decrease in the assumed levels of
superimposed inflation would have a corresponding impact on claims expense, with particular
reference to longer tail claims.
Discount rate
The outstanding claims liability is calculated by reference to expected future payments. These
payments are discounted to adjust for the time value of money. An increase or decrease in the
assumed discount rate will have an opposing impact on total claims expense.
Case estimate development
Case estimates are initially established in accordance with established guidelines and by reference
to the known facts. Where new information becomes available the initial case estimate will change.
This development movement is applied to open claims and will have a corresponding impact on
claims expense.
70> MAV FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
IMPACT OF CHANGES IN KEY VARIABLES - CIVIC MUTUAL PLUS
Variable
Current Rate
%
Change
variable
to
%
3.25%
$
Operating
surplus at
30 June 2014
$
Total accumulated
funds after the impact
of applying variable
$
2,613,255
13,167,889
12,770,531
4.25%
2,634,773
12,229,214
12,666,234
2.25%
2,592,529
14,078,653
12,872,625
Base value at 30 June 2009
Inflation Rate pa
Operating
surplus at
30 June 2009
23. RENT-FREE PERIOD
During the 2004 financial year the Association negotiated a new ten-year lease over the property at Level 12, 60 Collins Street Melbourne with
the Reserve Bank of Australia. The lease commenced on 1 March 2004 and included a 15 months rent free period up to 31 May 2005.
During the 2008 financial year the Association negotiated a new ten-year lease over the property at Level 11, 60 Collins Street Melbourne with
the Reserve Bank of Australia for and on behalf of Civic Mutual Plus. The lease commenced on 1 June 2008 and included an 8 months rent
free period up to 31 January 2009.
In accordance with ‘Lessee Accounting for Surplus Leased Space Under Non-Cancellable Operating Lease,’ lease incentives received
have been recognised as a liability. This liability recognised in respect of the lease incentive will be reduced by allocating lease rental payments
between rental expense and reduction of the liability.
MAV FINANCIAL REPORT 2008/09 >71
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
SEGMENT
Insurance including public liability, professional liability, product liability and fidelity
Provides a range of procurement services and training in purchasing and procurement for MAV members
TYPES OF PRODUCTS AND SERVICES
24. SEGMENT INFORMATION – PRIMARY SEGMENT
Procurement
guarantee.
Federal and State government grants and expends these grants on projects for the betterment of both local government and the community in
Obtains
2,083,610
GRANT
S
2,361,945
$
5,153,060
$
ASSOCIATIO
N
2009
2008
2,063,416
2009
LOCAL GOVERNMENT
$
5,744,073
$
INSURANC
E
2009
2008
2,342,131
$
$
2008
59,365,282 61,242,166
59,365,282 61,242,166
2009
COMBINED
Insurance
$
7,729,595
2,083,610
2008
Victoria.
government association that represents and provides support to local government and its communities in
Local
Victoria.
$
PROCUREMEN
T
2009
2008
6,318,698
2,361,945
- (3,024,589) 10,356,024
77,659,961
93,458,822
7,498
34,243
1,448,755
6,799,485
1,899
1,552
1,310,372
6,766,920
266,297
257,974
1,897,104
3,102,628
268,679
376,803
1,710,429
3,046,320
-
-
(885,049)
(885,049)
-
-
276,497
292,217
270,578
378,355
(993,518) 99,132,152 79,687,244
(993,518) 118,699,267 102,278,544
20,194
7,216,476
48,359,511
8,086,204
(63,023)
19,814
7,729,595
(130,367)
- 47,254,090
6,318,698
2,297,199
-
(3,024,589) 10,356,024
-
- 96,428,516
99,132,152 79,687,244
118,699,267 102,278,544
-
-
-
- 109,563,048
-
48,379,705
(105,808)
- 47,273,904
8,121,848
48,421
48,421
- (2,664,344)
2,702
243,226
119,155
(124,070)
-
ELIMINATION
S
2009
2008
Grants
Association
BUSINESS SEGMENTS
OPERATING REVENUE
Sales to customers outside the
group
Inter-segment
sales
TOTAL SEGMENT REVENUE
TOTAL COMBINED REVENUE
SEGMENT RESULT
COMBINED ENTITY SURPLUS
FROM ORDINARY ACTIVITIES
ASSETS
Segment
assets
TOTAL ASSETS
LIABILITIE
S
Segment
liabilities
TOTAL
LIABILITIES
OTHER SEGMENT INFORMATION
Acquisition of property, plant
and
and other non-current
equipment
assets
Depreciation
GEOGRAPHICAL SEGMENTS
All of the Association’s business segments operate only in the geographical area of
Australia.
72> MAV FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
25. CAPITAL MANAGEMENT OBJECTIVES
The Association is specifically excluded from the provisions of the Insurance Act and from APRA regulation. There is no externally imposed
capital requirement on the Association. The Association’s capital management philosophy is focused on capital efficiency and effective risk
management to support a progressive business model for the benefit of members of both CMP and the Municipal Officers’ Fidelity Guarantee
Fund.
The independent actuary provides advice on the target capital holding on at least an annual basis. The target capital holding is to be at a level
that provides operational flexibility, avoids sudden increases in contribution levels in response to fluctuations in surplus and ensures solvency in
the event of the maximum likely adverse event. Both CMP and the Municipal Officers’ Fidelity Guarantee Fund are non discretionary mutual
funds and have as a last resort an ability to claim against its members to protect its capital holdings.
The independent actuary has advised that a sufficient capital holding at 30 June 2009 would amount to $14.73 million. The actual capital
holding as at 30 June 2009 was $12.77 million. The capital holding has been negatively impacted by the net increase in claims costs
related to Victorian bushfires amounting to $8.5 million. A five-year financial strategy is in place to increase the capital holding to at least the
minimum required as per the actuary’s advice.
26. CONTINGENT ASSET – REINSURANCE PERFORMANCE BONUS
CMP, in conjunction with similar local government self insured mutual liability schemes around Australia has entered into a profit sharing
arrangement with its primary reinsurers, based on the national local government claims experience. The arrangement enables any surplus per
each year over the five-year reinsurance period to be shared between the various Schemes and the reinsurers on a proportional basis.
The actuary has calculated the potential value of the CMP Scheme’s performance bonus for the remaining period of the five-year program, at
balance date, to be $9.3 million (2008 $13.4 million). Performance bonus totalling $2.84 million became due and receivable on 30 June
2009 and has been received at the date of this report.
There is significant potential for future events to impact the profit share receivable and a number of variable factors involved in the final
determination of the Scheme’s profit share. Accordingly the directors are not satisfied at 30 June 2009 that the potential benefit is an asset
that is probable of receipt and reliably measurable. The financial statements do not include any value attributable to the share of profit. The
position will be monitored on an annual basis.
27 VICTORIAN BUSHFIRES
CMP provides public liability and professional indemnity insurance to councils affected by the Victorian bushfires. The Municipal Association
of Victoria on behalf of CMP is representing councils at the Victoria Royal Commission into the bushfires. There are 27 councils that could be
impacted of which half may be subject to an insurance claim. Councils are not substantially liable for the causes or the affects of the bushfires
and as such the quantum of any potential liability is uncertain. The extent of any potential liability for councils will be impacted substantially
by the number of events that occurred and the extent of both the insurance excesses of affected councils. In addition, CMP is protected by a
strong reinsurance program involving financially sound Australian and international reinsurers. A best estimate of the potential liability of CMP
relating to the Victorian Bushfires is $28.5 million. This amount has been included in the provision for claims outstanding.
28. CATASTROPHE INSURANCE EXPENSE
On 1 July 2008 CMP increased its reinsurance retention levels. This has led to a significant reduction in the Catastrophe Insurance Expense for
the year. In addition to reduced Catastrophe Insurance Expenses the future impact of the increased retention level will also be a reduction in
the proportion of the reinsurance recovery relating to claims incurred from 1 July 2008.
29. MAV PROCUREMENT
In February 2009 the MAV established MAV Procurement. MAV Procurement was established to facilitate members’ procurement practices in
order to obtain financial and operational benefits beyond what is currently available to them. The initiative is to facilitate competition in the
sector ensuring ongoing benefits in the area of council procurement.
MAV FINANCIAL REPORT 2008/09 >73
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
30. REMUNERATION OF KEY MANAGEMENT PERSONNEL
The MAV employed five key management personnel and provided these personnel with short term employee benefits and post employment
benefits.
COMBINED
2009
2009
2008
891,648
856,138
868,535
833,895
55,811
41,932
55,811
41,932
$
Short-term employment benefits
Post-employment benefits
MAV - GENERAL FUND
2008
$
$
$
Loans to directors
No loans were made to or are payable by directors.
Other transactions
There were no other material transactions with directors.
Insurance
The activities of the MAV board members are covered by the MAV directors’ and officers’ indemnity insurance policy effected by the Municipal
Association of Victoria
31. RELATED PARTIES
The Municipal Association of Victoria is a body corporate established under the Municipal Association Act 1907 to provide services for and
represent local government authorities in Victoria. The Association and its wholly owned controlled entities trade with its members in the normal
course of business and on an arm’s length basis. The Deed of Establishment provides for the MAV to appoint a Committee of Management
(MAVIC) to be responsible for the administration of the Scheme. Mr A. Nye is the Chairman of the Victorian Managed Insurance Authority
(VMIA) and President of the Metropolitan Fire and Emergency Services Board, and Mr R. Farrell was a Board Director of VMIA up to 28
February 2008. The MAV and the VMIA from time to time have conflicting interests in insurance claims matters. Any such claims were settled
on commercial terms without the involvement of these Committee members. The discreet nature of these transactions is not material. There
were no material related party transactions during the year.
74> MAV FINANCIAL REPORT 2008/09
Statement by directors
In the opinion of the Directors of the Municipal Association of Victoria:
(a) the accompanying Income Statement is drawn up so as to give a true and fair view of the surplus of the Association for the year ended
30 June 2009;
(b) the accompanying Balance Sheet is drawn up so as to give a true and fair view of the state of affairs of the Association as at that date;
(c) at the date of this statement there are reasonable grounds to believe that the Association will be able to pay its debts as and when they fall
due; and
(d) the accompanying Combined Financial Statements give a true and fair view of the matters with which they deal.
The financial statements and combined financial statements have been made out in accordance with applicable accounting standards and
other mandatory professional reporting requirements.
Signed in accordance with the resolution of directors.
William McArthur
President
Geoff Gough
Director
Robert Spence
Chief Executive Officer
Melbourne 28 October 2009
Auditor’s independence declaration
to the Directors of Municipal Association of Victoria
MAV FINANCIAL REPORT 2008/09 >75
Combined financial reports
76> MAV FINANCIAL REPORT 2008/09
MAV FINANCIAL REPORT 2008/09 >77
Other information
Legal Form
The Municipal Association of Victoria is an association incorporated by the Municipal Association Act 1907.
Domicile:
Melbourne, Australia
Address of Registered Office and Principal Place of Business:
Level 12, 60 Collins Street, Melbourne, 3000, Victoria, Australia
Nature of the operation and principal activities:
The Municipal Association of Victoria represents, promotes and supports the interest of Victorian local government and their communities.
Employees
Average number of equivalent full-time employees during the year is 39.657 EFT.
78> MAV FINANCIAL REPORT 2008/09
Financial Report 08/09
MAVMAVINSURANCE FINANCIAL REPORT 2008/09 >79>79
Income statement
for the year ended 30 June 2009
COMBINED
NOTE
Premium Revenue
3
Re-insurance Expense
2009
2008
$
2009
$
2008
$
$
2008
$
20 (10,479,554) (19,765,079)(10,034,025) (19,354,127)
(445,529)
(410,952)
194,569
212,917
(202,842)
(188,650)
9,796,483
8,846,538
9,583,566
4(a) (33,055,202) (13,517,161)(32,852,360) (13,328,511)
3
Performance Bonus
3
4,541,737
12
(6,484,009)
NET UNDERWRITING RESULT
3
Administration and General
Expenses
$
623,869
Reinsurance and other
recoveries
Investment Income
2009
640,098
9,041,107
NET CLAIMS EXPENSE
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
19,520,661 29,561,562 18,880,563 28,937,693
NET PREMIUM INCOME
Claims Expense
CIVIC MUTUAL PLUS
4(b)
OPERATING SURPLUS
(DEFICIT)
22,029,456 14,323,078 21,951,895 14,304,228
3,911,250
4,541,737
77,561
3,911,250
4,717,167 (6,358,728)
-
(125,281)
(169,800)
2,557,098 14,513,650
2,487,810
14,470,533
69,288
43,117
1,182,050
1,158,004
546,806
24,046
37,009
(144,408)
(133,400)
8,175,121
(51,074)
(53,274)
19,072,463
471,557
528,748
583,815
4,886,967
18,850
-
(6,403,492) (6,975,618) (6,259,084) (6,842,218)
(2,664,344)
8,121,847 (2,613,270)
Balance sheet
as at 30 June 2009
CURRENT ASSETS
Cash Assets
8(a)
Receivables
9
TOTAL CURRENT ASSETS
25,290,684
19,601,211 24,819,127
34,804,558 34,608,056 34,800,612 34,604,443
3,946
3,613
60,095,242 54,209,267 59,619,739 53,676,906
475,503
532,361
NON-CURRENT ASSETS
Receivables
9
49,467,806 39,249,555 49,467,806 39,249,555
TOTAL NON-CURRENT
ASSETS
49,467,806 39,249,555 49,467,806 39,249,555
TOTAL ASSETS
109,563,048
-
-
-
93,458,822 109,087,545 92,926,461
475,503
532,361
CURRENT LIABILITIES
Payables
2,151,665
Premiums in advance
Provision for claims
Outstanding
10
11(a)
TOTAL CURRENT LIABILITIES
2,078,831
19,168,622
2,148,163
2,069,545
3,502
18,880,563 19,168,622 18,880,563
9,286
-
-
20,352,000 17,529,018 20,244,000 17,421,018
108,000
108,000
41,672,287 38,488,412 41,560,785 38,371,126
111,502
117,286
NON-CURRENT LIABILITIES
Lease Accumulation
Provision for claims
outstanding
11(a)
24,493
-
24,493
54,756,229 39,147,056 54,756,229 39,147,056
-
-
-
-
TOTAL NON-CURRENT
LIABILITIES
54,756,229 39,171,549 54,756,229 39,171,549
TOTAL LIABILITIES
96,428,516 77,659,961 96,317,014 77,542,675
111,502
117,286
NET ASSETS
13,134,532 15,798,861 12,770,531 15,383,786
364,001
415,075
EQUITY
13,134,532 15,798,861 12,770,531 15,383,786
364,001
415,075
The accompanying notes form an integral part of these statements.
80> MAV INSURANCE FINANCIAL REPORT 2008/09
-
-
Statement of changes in equity
For the year ended 30 June 2009
COMBINED
2009
NOTE
Balance at beginning of year
CIVIC MUTUAL PLUS
2008
$
2009
$
15,798,876
7,677,029 15,383,786
Capital return to members
2008
$
2009
$
$
7,208,680
-
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
415,075
-
Surplus/(deficit) from ordinary
activities
(2,664,344)
BALANCE AT END OF YEAR
13,134,532 15,798,876 12,770,531 15,383,786
8,121,847 (2,613,255)
8,175,121
2008
$
468,349
-
-
(51,074)
(53,274)
364,001
415,075
Cash flow statement
for the year ended 30 June 2009
COMBINED
NOTE
2009
CIVIC MUTUAL PLUS
2008
$
$
2009
2008
$
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
2009
$
2008
$
CASH FLOW FROM
OPERATING ACTIVITIES
RECEIPTS
Premiums and fees
20,043,260 23,760,056 19,315,194 22,939,666
Performance bonus
4,541,737
Investment income
1,187,336
3,911,250
3,911,250
1,163,446
542,168
820,390
-
-
23,890
34,284
13,808,690 16,103,200 13,731,129 16,084,350
77,561
18,850
Suppliers
(19,888,393) (30,534,888) (19,114,305) (29,717,069)
(774,088)
(817,819)
Claim payments
(14,003,157) (16,098,333) (13,890,537) (15,998,333)
(112,620)
(100,000)
Reinsurance and other recoveries
576,452
728,066
4,541,737
PAYMENTS
NET CASH PROVIDED BY/
(USED IN) OPERATING
ACTIVITIES
8(b)
NET INCREASE/
(DECREASE) IN CASH HELD
Cash at beginning of year
CASH AT END OF YEAR
8(a)
5,689,473 (2,282,263)
5,746,664 (2,237,968)
(57,191)
(44,295)
5,689,473 (2,282,263)
5,746,664 (2,237,968)
(57,191)
(44,295)
19,601,211 21,883,474 19,072,463 21,310,431
528,748
573,043
25,290,684 19,601,211 24,819,127 19,072,463
471,557
528,748
The accompanying notes form an integral part of these statements.
MAV INSURANCE FINANCIAL REPORT 2008/09 >81
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
1. CORPORATE INFORMATION
The combined financial report of MAV Insurance for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of
the Directors of the Municipal Association of Victoria on the date shown on the attached Statement by Directors.
MAV Insurance is the insurance division of the Municipal Association of Victoria. The Municipal Association of Victoria is an association
incorporated by an Act of the Parliament of Victoria known as the Municipal Association Act 1907.
The nature of the operations and principal activities of MAV Insurance are the provision of public liability, professional indemnity and fidelity
insurance to its members and community groups within its council member boundaries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial report is a general purpose financial report which has been drawn up in accordance with Australian accounting standards,
mandatory professional reporting requirements (Urgent Issues Group Interpretations) and other relevant requirements.
The principal accounting policies adopted in preparing the financial report are stated to assist in a general understanding of the financial
report. Accounting policies have been consistently applied unless otherwise indicated.
The financial report is presented in Australian dollars.
The accounts have been prepared on the accruals basis using historical costs and, except where stated, do not take into account current
valuations of assets.
(b) Statement of compliance
The financial report complies with Australian accounting standards, which include Australian equivalents to International Financial Reporting
Standard (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (IFRS)
(c) Adoption of new accounting standard
The Association has adopted AASB 7 Financial Instruments; Disclosures and all consequential amendments which became applicable on 1
January 2007. The adoption of this standard has only affected the disclosure in these financial statements. There has been no affect on profit
and loss or the financial position of the Association or any of its divisions.
(d) The Basis of the Combined Report
The combined financial report relates to the insurance activities of the Municipal Association of Victoria being its controlled entities the Local
Government Mutual Liability Insurance Scheme (trading as Civic Mutual Plus, - CMP), and the Municipal Officers’ Fidelity Guarantee Fund.
The presentation of the combined balances is for management purposes only. The two entities are separate independent legal entities.
The effects of all transactions between entities in the Combined entity have been eliminated.
The financial statements of the entities are prepared for the same reporting period as the Municipal Association of Victoria, using consistent
accounting policies.
(e) Income tax
The entities are exempt from income tax, in accordance with sections 50-10 and 50-25 of the Income Tax Assessment Act 1997.
(f) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three
months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the
purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the balance sheet.
(g) Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less an allowance for impairment.
Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be
uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not
be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered
objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of
estimated future cash flows, discounted at the original effective interest rate.
(h) Trade and other payables
Trade and other payables are carried at amortised cost due to their short term nature they are not discounted. They represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days
of recognition.
82> MAV INSURANCE FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
(i) Investment income
Investment income consists of interest which is recognised on a time-proportionate basis that takes into account the effective yield on the
financial asset and movements in unit values in cash and fixed interest funds which are carried at fair value through the income statement.
(j) Premiums
Premiums comprise amounts charged to members of the Schemes for policy cover, net of amounts returned to members as bonuses.
The earned portion of premiums received is recognised as revenue. Premiums are treated as earned from date of attachment of risk.
The pattern of recognition over the policy is based on time, which is considered to closely approximate the pattern of risks undertaken.
(k) Premiums receivable
During the month of June each year, the CMP Scheme issues premium notices to Scheme Members. The risk attaches to the premiums in
the next accounting period and accordingly the revenue is recognised each following year commencing 1 July. Prior to each balance date
members have committed to participate in the scheme and the fund for the ensuing year and accordingly the premiums are disclosed in the
balance sheet as ‘contributions receivable’ with an offsetting liability described as ‘contributions billed in advance.’
(l) Claims
Claims-incurred expense and liability for outstanding claims are recognised in respect of direct business. The liability covers claims incurred but
not yet paid, incurred but not yet reported claims, and the anticipated direct and indirect costs of settling those claims. Claims outstanding are
assessed by reviewing individual claim files and estimating claims not notified and settlement costs using statistical and actuarial techniques.
The liability for outstanding claims is measured as the present value of the expected future payments, reflecting the fact that all the claims
do not have to be paid out in the immediate future. The expected future payments are estimated on the basis of the ultimate cost of settling
claims, which is affected by factors arising during the period to settlement such as normal inflation and ‘superimposed inflation.’
Superimposed inflation refers to factors such as trends in court awards, for example increases in the level and period of compensation for
injury. The expected future payments are then discounted to a present value at the reporting date using discount rates based on the investment
opportunities available to the organisation on the amounts of funds sufficient to meet claims as they became payable. Details of rates applied
are disclosed in note 16.
Claims-incurred expense has reduced from the prior year due to the impact of:
(i) improved risk management practices by members, and
(ii) reform to the law of tort.
(m) Other financial assets
Investments are valued at net market value at balance date. Investment income includes interest received and receivable on investments and
changes in net market values of investments in cash and bond unit trusts at call.
(n) Cash flows
For the purposes of the statement of cash flows, cash includes cash on hand and deposits held at call with banks and investments in cash
backed unit trusts net of outstanding bank overdrafts.
(o) Reinsurance and other recoveries receivable
Reinsurance and other recoveries receivable on paid claims, reported claims not paid, claims incurred but not reported and unexpired risk
liabilities are recognised as revenue. Recoveries receivable are assessed in a manner similar to the assessment of outstanding claims. Recoveries
are measured as the present value of the expected future receipts, calculated on the same basis as the liability for outstanding claims.
Reinsurance recoveries are reduced from the prior year due to a reduction in claims caused by:
(i) improved risk management practices by members, and
(ii) reform to the law of tort.
(p) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the entity and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised.
(i) Premiums – recognised in the period the fund is at risk.
(ii) Future reinsurance and other recoveries – on an accruals basis.
(iii) Investment Income – on an accruals basis including adjustments to bring values of cash backed unit trusts to account as investment income.
(q) Comparative figures
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
(r) Catastrophe insurance
Catastrophe insurance relates to insurance premiums paid to reinsurers in accordance with the established reinsurance strategy of the entity
and in order to protect the insurance businesses from catastrophic and unforseen claims.
MAV INSURANCE FINANCIAL REPORT 2008/09 >83
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
NOTE
2009
$
CIVIC MUTUAL PLUS
2008
$
2009
2008
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
2009
$
$
2008
$
3. REVENUE FROM
ORDINARY ACTIVITIES
REVENUES FROM
OPERATING ACTIVITIES
Premiums
19,520,661 29,561,562 18,880,563 28,937,693
Performance bonus
Reinsurance and other
recoveries
18
2(o)
TOTAL REVENUE FROM
OPERATING ACTIVITIES
4,541,737
3,911,250
4,541,737
640,098
3,911,250
623,869
-
-
22,029,456 14,323,078 21,951,895 14,304,228
77,561
18,850
46,091,854 47,795,890 45,374,195 47,153,171
717,659
642,719
REVENUES FROM
NON-OPERATING ACTIVITIES
Investment income
1,182,050
583,815
1,158,004
546,806
24,046
37,009
TOTAL REVENUE FROM
OUTSIDE THE OPERATING
ACTIVITIES
1,182,050
583,815
1,158,004
546,806
24,046
37,009
47,273,904 48,379,705 46,532,199 47,699,977
741,705
679,728
Paid
14,623,047 17,118,906 14,420,205 16,930,256
202,842
188,650
Outstanding claims at
end of financial year 11(a) & 2(l)
75,108,229 56,676,074 75,000,229 56,568,074
108,000
108,000
(108,000)
(108,000)
202,842
188,650
TOTAL REVENUE FROM
ORDINARY ACTIVITIES
4(a)CLAIMS EXPENSES
Outstanding claims at
beginning of financial year
TOTAL CLAIMS EXPENSES
(56,676,074) (60,277,819)(56,568,074) (60,169,819)
33,055,202 13,517,161 32,852,360 13,328,511
4(b)ADMINISTRATION AND
GENERAL EXPENSES
The following items have
been recognised in the
operating surplus (deficit):
Stamp duty
Audit fees
Administration
Actuary and legal fees
1,320,223
1,826,241
104,837
93,013
1,474,468
1,331,784
270,518
274,126
1,320,223
1,826,241
99,818
84,465
5,019
-
-
1,462,837
1,326,524
11,631
5,260
253,031
262,884
17,487
11,242
8,548
Scheme management fee
3,233,446
3,450,454
3,123,175
3,342,104
110,271
108,350
TOTAL EXPENDITURE
6,403,492
6,975,618
6,259,084
6,842,218
144,408
133,400
5. AUDITOR’S REMUNERATION
Amounts payable or due
and payable for audit services:
AUDIT OF THE ENTITY
104,837
TAX COMPLIANCE
104,837
84> MAV INSURANCE FINANCIAL REPORT 2008/09
93,013
-
99,818
93,013
84,465
-
99,818
84,465
5,019
5,019
8,548
8,548
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
2009
$
CIVIC MUTUAL PLUS
2008
$
2009
2008
$
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
2009
$
2008
$
6. SCHEME MANAGEMENT FEES
Included within administration
and general expenses are
management fees for:
Re-Insurance placement
1,826,074
1,771,292
1,826,074
1,771,292
1,407,372
1,679,162
1,297,101
1,570,812
110,271
108,350
3,233,446
3,450,454
3,123,175
3,342,104
110,271
108,350
Claims management
1,131,280
1,373,860
1,041,058
1,285,210
90,222
88,650
TOTAL SCHEME
MANAGEMENT FEES
4,364,726
4,824,314
4,164,233
4,627,314
200,493
197,000
Risk management and
administrative services
Total administratiion
4(b)
-
-
7. LEASING COMMITMENTS
Operating lease commitments,
being for lease of leasehold
premises:
Not later than one year
-
130,700
-
130,700
-
-
Later than one year but not
later than five years
-
1,758,769
-
1,758,769
-
-
Later than five years
-
1,639,251
-
1,639,251
-
-
TOTAL LEASE COMMITMENT
-
3,528,720
-
3,528,720
-
-
8. NOTES TO THE CASH FLOW STATEMENT
(a) Cash and cash equivalents at balance date as
shown in the Statement of Cash Flows are held
in Standard and Poor’s rated AA and AAf rated
cash deposits and are reconciled to the related
items in the Balance Sheet as follows:
Cash at bank
7,193,653
6,182,359
6,942,637
5,862,815
251,016
319,544
Other financial assets
18,097,031 13,418,852 17,876,490 13,209,648
220,541
209,204
TOTAL CASH
25,290,684 19,601,211 24,819,127 19,072,463
471,557
528,748
(2,664,329)
(b) Reconciliation of Net Cash
Used In Operating Activities
to Operating Surplus/(Deficit)
Surplus/(deficit) for year
8,121,847 (2,613,255)
8,175,121
(51,074)
(53,274)
2,572,336
2,147,495
(329)
424,841
(5,788)
(31,436)
-
-
-
-
-
(384,426)
CHANGES IN ASSETS
AND LIABILITIES
(Increase)/decrease in
accounts receivable
2(o)
Increase/(decrease) in
accounts payable
(120,593) (1,153,782)
(Increase)/decrease in provision
for reinsurance recoveries
Increase/(decrease) in
outstanding claims
Increase/(decrease) in
unearned revenue
CASH FLOWS (USED IN)/
FROM OPERATIONS
2,485,237
2(o)
(11,959,171)
2,485,566
(114,805) (1,122,346)
3,817,871(11,959,171)
3,817,871
17,660,270 (3,315,415) 17,660,270 (3,315,415)
288,059 (12,325,120)
5,689,473 (2,282,263)
288,059 (11,940,694)
5,746,664 (2,237,968)
(57,191)
(44,295)
MAV INSURANCE FINANCIAL REPORT 2008/09 >85
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
COMBINED
NOTE
2009
$
CIVIC MUTUAL PLUS
2008
$
2009
2008
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
2009
$
$
2008
$
9. RECEIVABLES
Future reinsurance and
other recoveries receivable
2(o)
Discount to present value
72,327,806 64,964,029 72,327,806 64,964,029
-
-
(9,215,000) (9,199,110) (9,215,000) (9,199,110)
-
-
63,112,806 55,764,919 63,112,806 55,764,919
-
-
-
-
-
-
Less: Doubtful Debts
Premiums receivable
- (1,148,000)
2(k)
Other receivables
- (1,148,000)
17,863,762 18,946,413 17,863,762 18,946,413
3,946
3,613
TOTAL RECEIVABLES
84,272,364 73,857,611 84,268,418 73,853,998
3,295,796
294,279
3,291,850
290,666
3,946
3,613
Represented by:
CURRENT
34,804,558 34,608,056 34,800,612 34,604,443
3,946
3,613
NON-CURRENT
49,467,806 39,249,555 49,467,806 39,249,555
TOTAL
84,272,364 73,857,611 84,268,418 73,853,998
3,946
3,613
Reinsurance recoveries are due from reinsurers with Standard and Poor’s ratings of AA+, AA-, A+ and A. Other recoveries are due from
unrated local authorities based in Victoria and Tasmania.
The ageing analysis of premiums receivable and other receivables are as follows:
Total
>30
days
31-60
days
61-90
days
>90
days
2008
Combined
21,159,558 21,159,558
-
-
-
Civic Mutual Plus
21,155,612 21,155,612
-
-
-
-
-
-
Fidelity Fund
3,946
3,946
2007
Combined
19,240,692 19,240,692
-
-
-
Civic Mutual Plus
19,237,079 19,237,079
-
-
-
-
-
-
Fidelity Fund
3,613
3,613
All premiums receivable and other receivables are due from local authorities based in Victoria and Tasmania.
10. PREMIUMS IN ADVANCE
Contributions billed in advance 2(k) 19,168,622 18,880,563 19,168,622 18,880,563
11(a)OUTSTANDING CLAIMS
Central estimate
2(l)
Discount to present value
-
81,069,229 61,703,251 80,979,229 61,613,251
(10,728,000) (8,679,823)(10,728,000) (8,679,823)
70,341,229 53,023,428 70,251,229 52,933,428
Claims handling costs
Risk margin
90,000
11(b)
2,807,000
2,464,530
2,807,000
2,464,530
1,960,000
1,188,116
1,942,000
1,170,116
90,000
-
90,000
90,000
-
-
18,000
18,000
108,000
TOTAL OUTSTANDING CLAIMS
75,108,229 56,676,074 75,000,229 56,568,074
108,000
Comprising:
CURRENT
20,352,000 17,529,018 20,244,000 17,421,018
108,000
NON-CURRENT
54,756,229 39,147,056 54,756,229 39,147,056
TOTAL CLAIMS PROVISION
75,108,229 56,676,074 75,000,229 56,568,074
86> MAV INSURANCE FINANCIAL REPORT 2008/09
-
108,000
-
108,000
108,000
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
11(b)RISK MARGIN - PROCESS FOR DETERMINING RISK MARGIN
Figures for private insurers published by APRA in October 2006 showed an average risk margin of 15.7% for public and product liability
outstanding claims, and 11.3% for professional indemnity. Based on these averages, and on three actuarial publications, Cumpston Sarjeant
Pty Ltd, the appointed actuary, recommended that risk margins be adopted intended to give an overall risk margin of 15% for outstanding
claims, in the absence of reinsurance. After allowing for the extent of reinsurance for each year, Cumpston Sarjeant calculated risk margins for
each year, in total being 1.8% of gross outstanding claims. They recommended a risk margin of 20% for the net unexpired risk liability.
These risk margins give a probability of approximately 75% that the provisions including the risk margins will prove adequate to meet the
relevant liabilities.
11(c) COMBINED RECONCILIATION OF MOVEMENT IN DISCOUNTED OUTSTANDING CLAIMS LIABILITY
NOTE
GROSS
2009
$
REINSURANCE
$
Outstanding claims brought forward 56,676,074 54,616,919
Changes in assumptions
14,151,030 13,456,008
Increase in claims incurred/
recoveries anticipated
17,660,272
Incurred claims recognised in
income statement
31,811,302 21,951,895
Claim payments/recoveries
during the year
8,495,887
(13,379,147)(13,456,008)
NET
$
GROSS
2008
$
NET
REINSURANCE
$
$
2,059,155 60,277,819 56,128,981
4,148,838
695,022 15,358,718 15,816,289
(457,571))
9,164,385 (3,315,417) (1,512,062) (1,803,355)
9,859,407 12,043,301 14,304,228 (2,260,926)
76,861 (15,645,046) (15,816,289)
171,244
Outstanding claims carried forward 75,108,229 63,112,806 11,995,423 56,676,074 54,616,919
2,059,155
12. NET CLAIMS INCURRED
CURRENT YEAR
$
2009
PRIOR YEAR
$
TOTAL CURRENT YEAR
$
$
2008
TOTAL
$
PRIOR YEAR
$
COMBINED
Gross claims and related
expenses - undiscounted
34,339,364
Discount
(5,084,000)
3,035,823 (2,048,177) (1,885,258)
4,544,924
Gross claims and related
expenses - discounted
29,255,364
3,799,838 33,055,202 11,027,000
2,490,161 13,517,161
Reinsurance and other recoveries
- undiscounted
(4,557,151) (7,140,240) (11,697,390)
Discount
21,466,000 (31,798,066) (10,332,066)
Reinsurance and other recoveries
- discounted
16,908,849 (38,938,305) (22,029,456)
NET CLAIMS INCURRED
46,164,213 (35,138,467) 11,025,746
764,015 35,103,379 12,912,258 (2,054,763) 10,857,495
(9,120,578)
2,659,666
(1,879,609) (11,000,187
264,547
(3,587,438)
(3,322,891)
(8,856,031)
(5,467,047)
(4,323,078)
2,170,969
(2,976,886)
(805,917)
CIVIC MUTUAL PLUS
Gross claims and related
expenses - undiscounted
34,136,522
Discount
(5,084,000)
3,035,823 (2,048,177) (1,885,258)
4,544,924
Gross claims and related
expenses - discounted
29,052,522
3,799,838 32,852,360 10,838,350
2,490,161 13,328,511
Reinsurance and other recoveries
- undiscounted
(4,479,590) (7,140,240) (11,619,829) (9,101,728) (1,879,609) (10,981,337)
Discount
21,466,000 (31,798,066) (10,332,066)
Reinsurance and other recoveries
- discounted
16,986,410 (38,938,305) (21,951,895) (8,837,181) (5,467,047) (14,304,228)
NET CLAIMS INCURRED
46,038,932 (35,138,467) 10,900,465
764,015 34,900,537 12,723,608 (2,054,763) 10,668,845
2,659,666
264,547 (3,587,438) (3,322,891)
2,001,169 (2,976,886)
(975,717)
MAV INSURANCE FINANCIAL REPORT 2008/09 >87
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
12. NET CLAIMS INCURRED (continued)
CURRENT YEAR
$
2009
TOTAL CURRENT YEAR
$
$
PRIOR YEAR
$
2008
TOTAL
$
PRIOR YEAR
$
MUNICIPAL OFFICERS’ FIDELITY
GUARANTEE FUND
Gross claims and related
expenses - undiscounted
202,842
-
Discount
-
Gross claims and related expenses
- discounted
202,842
Reinsurance and other recoveries
- undiscounted
(77,561)
Discount
202,842
188,650
-
-
-
-
202,842
-
(77,561)
-
188,650
-
188,650
-
-
-
188,650
(18,850)
-
(18,850)
-
-
-
-
Reinsurance and other recoveries
- discounted
(77,561)
-
(77,561)
(18,850)
-
(18,850)
NET CLAIMS INCURRED
125,281
-
125,281
169,800
-
169,800
2004
2005
2006
2007
2008
TOTAL
$
$
$
$
$
$
13. CLAIMS DEVELOPMENT TABLE
ACCIDENT YEAR
NOTE
GROSS ESTIMATE OF
ULTIMATE CLAIMS COST
- CIVIC MUTUAL PLUS
At end year of accident
18,375,690 19,426,057 12,918,950 11,438,398 33,095,464
One year later
17,546,887 14,414,065 10,750,452 14,574,373
Two years later
17,554,596 13,972,302 12,452,238
Three years later
14,652,975 13,554,890
Four years later
15,482,088
Current estimate of cumulative
claims cost
15,482,088 13,554,890 12,452,238 14,574,373 33,095,464 89,159,053
Cumulative payments
(6,868,087) (3,862,390) (2,536,169) (1,226,994) (1,825,735) (16,319,375)
Outstanding claims - undiscounted
8,614,001
9,692,500 19,916,069 13,347,379 31,269,729 72,839,678
Discount
(12,825,587)
Claims handling expense
2,913,587
2004 and prior
TOTAL GROSS
OUTSTANDING CLAIMS
- CIVIC MUTUAL PLUS
12,072,551
11(a)
75,000,229
TOTAL GROSS OUTSTANDING
CLAIMS - MUNICIPAL
OFFICERS’ FIDELITY
GUARANTEE FUND
11(a)
108,000
COMBINED GROSS
OUTSTANDING CLAIMS 11(c)
75,108,229
NET ESTIMATE OF
ULTIMATE CLAIMS COST
At end year of accident
2,125,606
2,182,437
2,103,826
2,336,670 28,615,874
One year later
1,847,897
2,104,523
1,723,493
1,146,195
Two years later
2,191,811
1,832,851
1,789,409
Three years later
1,605,025
1,340,145
Four years later
1,698,565
88> MAV INSURANCE FINANCIAL REPORT 2008/09
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
13. CLAIMS DEVELOPMENT TABLE (continued)
ACCIDENT YEAR
2004
2005
2006
2007
2008
TOTAL
$
$
$
$
$
$
NOTE
Current estimate of cumulative
claims cost
Cumulative payments
Outstanding claims - undiscounted
1,698,565
(1,334,562)
364,003
1,340,145
1,789,409
(494,146)
(858,840)
845,999
1,146,195 28,615,874 34,590,188
(362,815) (1,788,146) (4,838,509)
930,569
783,380 26,827,728 29,751,679
Discount
(20,675,067)
Claims handling expense
1,190,067
2004 and prior
1,620,744
TOTAL GROSS
OUTSTANDING CLAIMS
- CIVIC MUTUAL PLUS
11,887,423
TOTAL NET
OUTSTANDING CLAIMS
- MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
108,000
COMBINED NET
OUTSTANDING CLAIMS 11(c)
11,995,423
These tables show the trend in the balance of outstanding claims.
14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES
The Group’s exposure to interest rate risk and the effective average interest rate for the classes of financial assets are set out below:
COMBINED
NON-INTEREST
EARNING
$
CIVIC MUTUAL PLUS
FLOATING NON-INTEREST
INTEREST RATE
EARNING
$
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
FLOATING NON-INTEREST
FLOATING
INTEREST RATE
EARNING
INTEREST RATE
$
$
$
2009
FINANCIAL ASSETS
Bank
-
Cash investments
- 18,097,030
7,193,654
-
6,942,637
- 17,876,490
Receivables
84,272,364
TOTAL FINANCIAL ASSETS
84,272,364 25,290,684 84,268,418 24,819,127
Weighted average interest rate
- 84,268,418
5.3%
-
-
251,017
-
220,540
3,946
-
3,946
471,557
5.3%
4.8%
FINANCIAL LIABILITIES
Outstanding claims
75,108,229
- 75,000,229
-
Unearned premiums/subscriptions
19,168,622
- 19,168,622
-
-
-
3,502
-
111,502
Accounts payable
TOTAL FINANCIAL LIABILITIES
Weighted average interest rate
2,151,665
96,428,516
2,148,163
- 96,317,014
0%
0%
108,000
-
0%
MAV INSURANCE FINANCIAL REPORT 2008/09 >89
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
COMBINED
NON-INTEREST
EARNING
$
CIVIC MUTUAL PLUS
FLOATING NON-INTEREST
INTEREST RATE
EARNING
$
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
FLOATING NON-INTEREST
FLOATING
INTEREST RATE
EARNING
INTEREST RATE
$
$
$
2008
FINANCIAL ASSETS
Bank
-
Cash investments
- 13,418,852
6,182,359
-
5,862,815
- 13,209,648
Receivables
73,857,611
TOTAL FINANCIAL ASSETS
73,857,611 19,601,211 73,853,998 19,072,463
- 73,853,998
Weighted average interest rate
-
2.8%
-
319,544
-
209,204
3,613
3,613
2.7%
528,748
6.7%
FINANCIAL LIABILITIES
Outstanding claims
56,676,074
- 56,568,074
-
Unearned premiums/subscriptions
18,880,563
- 18,880,563
-
-
-
-
-
9,286
-
Accounts payable
2,078,831
TOTAL FINANCIAL LIABILITIES
24,493
Weighted average interest rate
77,659,961
2,069,545
108,000
-
24,493
-
- 77,542,675
-
0%
117,286
-
0%
0%
The carrying amounts of financial assets and financial liabilities represent their approximate net fair value.
All maturity dates are within twelve months.
The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised
financial assets and liabilities as at 30 June 2009. Cash flows for financial assets and liabilities without fixed amount or timing are based on
conditions existing at 30 June 2009.
The remaining contractual maturities of the financial liabilities are:
COMBINED
CIVIC MUTUAL PLUS
2008
2009
$
2009
$
2008
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
2009
$
2008
$
26,509,662 25,509,947 26,398,160 25,392,661
3-12 months
15,162,625 12,978,465 15,162,625 12,978,465
-
-
1-5 years
42,220,169 35,394,418 42,220,169 35,394,418
-
-
Over 5 years
12,536,060
3,777,131 12,536,060
111,502
$
3 months or less
3,777,131
96,428,516 77,659,961 96,317,014 77,542,675
117,286
111,502
117,286
Maturity analysis of financial assets and liabilities based on management’s expectation.
The risk implied from the values in the table below, reflects a balanced view of cash inflows and outflows. These liabilities originate from
insurance contracts and other financial assets used in the ongoing operations of the business. These assets are considered in the Association’s
overall liquidity risk. To monitor existing financial assets and liabilities as well as to enable effective controlling of future risks, the Association
has established a comprehensive risk reporting covering its insurance business that reflects the expectations of the management of expected
settlement of financial assets and liabilities.
90> MAV INSURANCE FINANCIAL REPORT 2008/09
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
Year Ended 30 June 2009
<3 months
$
3-12
months
$
1-5 years
>5 years
Total
$
$
$
-
- 25,290,684
COMBINED
FINANCIAL ASSETS
Cash and cash equivalents
25,290,684
-
Receivables
23,674,558 11,130,000 38,753,806 10,714,000 84,272,364
48,965,242 11,130,000 38,753,806 10,714,000109,563,048
COMBINED
FINANCIAL LIABILITIES
Outstanding claims
Unearned premiums/
subscriptions
Accounts payable
TOTAL FINANCIAL LIABILITIES
5,189,375 15,162,625 42,220,169 12,536,060 75,108,229
19,168,622
-
-
- 19,168,622
2,151,665
-
-
-
2,151,665
25,509,662 15,162,625 42,220,169 12,536,060 96,428,516
NET MATURITY
Risk management objectives and policies for mitigating insurance risk
The local government mutual liability scheme (trading as Civic Mutual Plus) is established by legislation contained in the Municipal Association
Act 1907. Membership is available to local government councils and prescribed bodies. The Scheme operates in Victoria and Tasmania to
provide services to members in respect of their potential and actual liabilities. A member may seek indemnity from the Scheme in respect of
a claim.
Actuarial models, using information from the Scheme’s management information systems are used to confirm contributions and monitor claim
patterns. Past experience and statistical methods are used as part of the process.
The principal risk is that the frequency and severity of claims is greater than expected. Civil liability risk events are, by their nature, random, and
the actual number and size of events during any one-year may vary from those estimated using established statistical techniques.
Objectives in managing risk arising from insurance and policies for mitigating those risks
The Scheme has an objective to control insurance risk thereby reducing the volatility of its operating surplus. In addition to the inherent
uncertainty of civil liability risks, which can lead to variability in the loss experience, operating surpluses can also be affected by external factors,
such as competition and movements in asset values. The Scheme relies on a strong relationship with its members and actively encourages
them to adopt practices of risk management that reduce the incidence of claims to the Scheme.
Reinsurance strategy
The Scheme adopts a conservative approach towards management of risk and does this by utilising various risk transfer options. The MAV
Insurance Committee determines the level of risk, which is appropriate for the Scheme having regards to ordinary concepts of prudence
and regulatory constraints. The risk transfer arrangements adopted by the Scheme include the utilisation of commercial reinsurance / excess
arrangements. These arrangements include constant review of both reinsurers’ financial strength, and ensuring spread of risk among reinsurers who
meet the requirements of the MAV insurance policies. These risk transfer arrangements assist the Scheme to limit exposures to large single claims
and catastrophic events. These programs are regularly reviewed each year to ensure that they continue to meet the risk needs of the Scheme.
Terms and conditions of membership
Membership to the Scheme is offered to eligible bodies and renewed annually on 30th June. Payment of the annual contribution confirms
continuation of membership. Termination of membership is subject to at least 90 days written notice of intention as laid out by the Scheme Rules.
Product features
The Scheme operates in Victoria and Tasmania. Should a claim be accepted the Scheme provides indemnity to the member in respect of their
civil liabilities for $500 million public / products liability and $300 million for professional indemnity insurance, subject to any excess, for any
claim incurred anywhere throughout the world.
Operating surpluses arise from the total contributions charged to members less the amounts paid to cover claims and the expenses incurred by
the Scheme.
MAV INSURANCE FINANCIAL REPORT 2008/09 >91
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
Management of risks
The key insurance risks that affect the Scheme are contribution risk, and claims experience risk.
Contribution risk is the risk that the Scheme does not charge contributions appropriate for the indemnity cover it provides. The Scheme partially
manages contribution risk through its proactive approach to risk management that addresses all material risks both financial and non-financial.
There are no specific terms and conditions that are expected to have a material impact on the financial statements.
Claims experience risk is managed through the non-financial risk assessment and risk management and reinsurance management process.
Claims experience is monitored on an ongoing basis to ensure that any adverse trending is addressed. The Scheme is able to reduce the
claims experience risk of severe losses through the reinsurance program, and by managing the concentration of insurance risks.
Concentration of insurance risks
Insurance risk is managed by taking a long term approach to setting the annual contribution rates that eliminates price fluctuations,
appropriate investment strategy, reinsurance and by maintaining an active state-wide risk management profile. It is vital that the Scheme
spreads its risk of reinsurance failure by ensuring reinsurers are of high financial quality and can meet their commitments to the Association.
The Association maintains policies and strategies and receives advice from an independent actuary on at least an annual basis in order to
determine the concentration and amount of risk exposure. The Association keeps abreast of changes in the general economic, legal and
commercial environment in which it operates.
AAA
+/$m
Reinsurance and other
recoveries on outstanding
claims
Reinsurance and other
recoveries on paid claims
Reinsurance and other
recoveries on paid claims
AA
+/$m
CREDIT RATING
A
+/$m
BBB
$m
SPECULATIVE
GRADE
$m
NOT
RATED
$m
TOTAL
$m
2009
-
2.28
25.67
-
-
1.61
29.56
2008
-
17.79
9.98
-
-
2.13
29.90
2009
-
1.37
3.12
-
-
1.47
5.96
2008
-
3.88
0.43
-
-
1.42
5.73
NEITHER PAST
DUE NOR IMPAIRED
$’000
LESS THAN
3 MONTHS
$’000
PAST DUE BUT NOT IMPAIRED
3 TO 6
6 MONTHS
MONTHS
TO 1 YEAR
$’000
$’000
GREATER
THAN 1 YEAR
$’000
IMPAIRED
TOTAL
$’000
$’000
2009
-
3.94
0.12
0.38
0.09
1.43
5.96
2008
-
2.21
0.55
0.99
0.61
1.37
5.73
Interest rate risk
The reinsurance indemnity contracts contain no clauses that expose the Scheme, directly to interest rate risk. The reinsurance contracts are long
term arrangements, reviewed and payable annually.
IMPACT OF CHANGES IN INTEREST RATES - CIVIC MUTUAL PLUS
Variable
Current Rate
%
Change
variable
to
%
92> MAV INSURANCE FINANCIAL REPORT 2008/09
4.75%
$
Operating
surplus at
30 June 2014
$
Total accumulated
funds after the impact
of applying variable
$
(2,613,255)
13,167,889
12,770,531
5.75%
(2,553,626)
14,759,523
13,068,733
3.75%
(2,674,276)
11,582,865
12,452,498
Base value at 30 June 2009
Interest rate pa
Operating
surplus at
30 June 2009
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued)
Credit risk
The Scheme is exposed to credit risk on insurance contracts as a result of exposure to reinsurers. The credit risk to reinsurers is managed
through the Scheme’s Reinsurance Management Strategy and policies that includes regularly monitoring both the financial rating of the
reinsurers both prior to and during the reinsurance program and the flow of payments coming from the reinsurers. Investments in cash
and cash equivalents at balance date as shown in the Statement of Cash Flows are held in Standards and Poor’s rated AA and AAf rated
cash deposits.
Price risk
Investments held are not subject to price risk. Investments are cash deposits held in Australian banks.
15. ACCOUNTING ESTIMATES AND JUDGEMENTS
The Scheme makes estimates and judgements in respect of certain key assets and liabilities. Estimates and judgements are continually reviewed
and are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The key areas in which critical estimates and judgements are applied are described below.
(a) Estimation of outstanding claims liability
Provision is made at the year-end for the estimated cost of claims incurred but not settled at the balance sheet date, including the cost of
claims incurred but not yet reported (‘IBNR’) to the Scheme.
The Scheme takes all reasonable steps to ensure that it has appropriate information regarding its claims exposure. However, given the
uncertainty in establishing claims provisions, it is likely that the final outcome may be different from the original liability established.
Provisions are calculated gross of all recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers and any
third party.
The determination of an appropriate outstanding claims provision involves:
(i) Establishing a case estimate for each reported claim at year-end taking into account legal advice where appropriate on larger claims;
(ii) Allowance for incurred but not reported claims as confirmed by the actuarial review on 30 June 2009;
(iii) An allowance of 4% for claim settlement expenses, as assumed by the Actuary;
(iv) Allowances for discount at 4.75%, as assumed by the Actuary;
(v) A risk margin of 20% of net outstanding claims after the effect of reinsurance has been applied, as assumed by the Actuary.
Details of specific actuarial assumptions used in deriving the outstanding claims liability at year-end are detailed in note 16.
(b) Assets arising from reinsurance contracts
Assets arising from reinsurance contracts were estimated for each accident year, from the payments to date and estimated outstanding
claims history at 30 June 2009, taking into account the reinsurance terms applying to that accident year. In calculating the present value of
reinsurance recoveries, allowance was made for an average recovery delay of three and half months, as assumed by the Actuary.
In accordance with the Actuarial recommendations an allowance was made for non-recoveries from relevant insurers.
16. ACTUARIAL ASSUMPTIONS AND METHODS
Actuarial assumptions
The following assumptions have been made in determining the outstanding claims liabilities:
2009
2008
3.25%
4.5%
Claim administration expense
4%
4%
Superimposed inflation
1%
2%
4.75%
6.7%
20%
20%
KEY ACTUARIAL ASSUMPTIONS
Wage inflation
Discount rate
Risk margin
MAV INSURANCE FINANCIAL REPORT 2008/09 >93
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
16. ACTUARIAL ASSUMPTIONS AND METHODS (continued)
Process used to determine actuarial assumptions
A description of the processes used to determine the above key actuarial assumptions is provided below:
Civic Mutual Plus has provided public and professional indemnity insurance to local government bodies in Victoria and Tasmania and other
bodies constituted under any Act for any public or local governing purpose since 30 September 1993. The Actuary was supplied aggregate
data on claims from each years cover at each balance date, together with details for each claim at various dates, including 30 June 2009. The
individual claim payments and case estimates reconciled closely with totals in Civic Mutual Plus’s financial statements for each year of cover.
The actuary made estimates of gross outstanding claims with 4 differential actuarial methods – payments per person incurred, developed
claims incurred, and developed case estimates plus estimated claim incurred but not reported. The actuary selected the last of these methods,
including a 25% allowance for case estimate development, for use in estimating outstanding claims. Payments were projected with a payment
pattern, based on past experience, assuming an average delay of 4.6 years from the middle of the accident year. Estimates of outstanding non
reinsurance recoveries were made by a recoveries per person insured method.
During the 2001 financial year three of the participants in the Scheme’s reinsurance program FAI, HIH and Independent were placed into the
hands of liquidators. These companies were part of the reinsurance programs in fund years from 1994 to 1998. The Committee continues
to constantly monitor the position with a view to ensuring that the Scheme takes all reasonable steps to protect its position and to maximise
potential recoveries. In accordance with the Committees prudent approach to reserving within the actuarial calculation of the central estimate
of reinsurance recoveries, the estimated future recoveries from FAI, HIH and Independent is assumed to be zero.
Estimates of reinsurance recoveries were made from projected gross payments and non reinsurance recoveries, allowing for the different
insurance treaties applying to each year and assuming an average 4 months delay in the receipt of reinsurance recoveries. Recoveries from
FAI, HIH and Independent have been assumed to be zero. Based on the yields of medium term Commonwealth bonds at 30/6/2009 the
discount rate was assumed to be 4.75% pa. Based on the actual expense rates of Civic Mutual Plus, claim administration expenses were
assumed to be 4% of the net claim payments.
Based on averages for private insurers by APRA, and on three actuarial publications the actuary recommended that risk margins be adopted
intended to give an overall risk margin of 15% for outstanding claims, in the absence of reinsurance. After allowing for the extent of
reinsurance for each year the actuary calculated risk margins for each year, in total being 1.8% of gross outstanding claims liabilities. The
actuary considered that these risk margins are likely to give a probability of about 75% that the provisions including the risk margins will prove
adequate to meet the relevant liabilities. Unexpired risk liabilities were estimated by bringing gross claim incurred estimates for each of the 10
years to 30/6/03 to 2008/09 values using Victorian average weekly earnings adjusting for membership changes and fitting a trend line to the
10 years. The trend value for 02-03 was projected to 2008/09, assuming a 20% drop due to tort reform, superimposed inflation at 1% pa
and population growth at 1.3% pa. After allowing for reinsurance costs and a risk margin of 20%, no premium deficiency was apparent.
VARIABLE
IMPACT OF MOVEMENT IN VARIABLE
Wage inflation
Expected future payments are inflated to take account of inflationary increases. An increase or
decrease in the assumed levels of economic inflation would have a corresponding impact on claims
expense, with particular reference to longer tail claims.
Superimposed inflation
In addition to the general economic inflation rate an amount is superimposed to take account of
non-economic inflationary factors, such as increases in court awards. Such rates of superimposed
inflation are specific to the model adopted. An increase or decrease in the assumed levels of
superimposed inflation would have a corresponding impact on claims expense, with particular
reference to longer tail claims.
Discount rate
The outstanding claims liability is calculated by reference to expected future payments. These
payments are discounted to adjust for the time value of money. An increase or decrease in the
assumed discount rate will have an opposing impact on total claims expense.
Case estimate development
Case estimates are initially established in accordance with established guidelines and by reference
to the known facts. Where new information becomes available the initial case estimate will change.
This development movement is applied to open claims and will have a corresponding impact on
claims expense.
94> MAV INSURANCE FINANCIAL REPORT 2008/09
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
16. ACTUARIAL ASSUMPTIONS AND METHODS (continued)
IMPACT OF CHANGES IN KEY VARIABLES
CIVIC MUTUAL PLUS
Variable
Current Rate
%
Change
variable
to
%
Base value at 30 June 2009
Inflation rate pa
3.25%
4.25%
Operating
surplus at
30 June 2009
$
Operating
surplus at
30 June 2014
$
Total accumulated
funds after the impact
of applying variable
$
(2,613,255)
13,167,889
12,770,531
(2,634,773)
12,229,214
12,666,234
2.25% $(2,592,529) $14,078,653
$12,872,625
17. CAPITAL MANAGEMENT OBJECTIVES
The Association is specifically excluded from the provisions of the Insurance Act and from APRA regulation. There is no externally imposed capital
requirement on the Association. The Association’s capital management philosophy is focused on capital efficiency and effective risk management
to support a progressive business model for the benefit of members of both CMP and the Municipal Officers’ Fidelity Guarantee Fund.
The independent actuary provides advice on the target capital holding on at least an annual basis. The target capital holding is to be at a level
that provides operational flexibility, avoids sudden increases in contribution levels in response to fluctuations in surplus and ensures solvency in
the event of the maximum likely adverse event. Both CMP and the Municipal Officers’ Fidelity Guarantee Fund are non discretionary mutual
funds and have as a last resort an ability to claim against its members to protect its capital holdings.
The independent actuary has advised that a sufficient capital holding at 30 June 2009 is a minimum of $14.73 million. The actual capital
holding as at 30 June 2009 was $12.77 million. The capital holding has been negatively impacted by the net increase in claims costs related
to Victorian bushfires amounting to $8.5 million. A five-year financial strategy is in place to increase the capital holding to at least the minimum
required as per the actuary’s advice.
18. CONTINGENT ASSET - REINSURANCE PERFORMANCE BONUS
CMP, in conjunction with similar local government self insured mutual liability schemes around Australia has entered into a performance bonus
arrangement with its primary reinsurers, based on the national local government claims experience. The arrangement enables any surplus per
each year over the five-year reinsurance period to be shared between the various Schemes and the reinsurers on a proportional basis.
The actuary has calculated the potential value of the CMP Scheme’s performance bonus for the remaining period of the five-year program, at
balance date, to be $9.3 million (2008 $13.4 million). Performance bonus totalling $2.841 million became due and receivable on 30 June
2009 and has been received at the date of this report.
There is significant potential for future events to impact the performance bonus receivable and a number of variable factors involved in the
final determination of the Scheme’s performance bonus. Accordingly the directors are not satisfied at 30 June 2009 that the potential benefit
is an asset that is probable of receipt and reliably measurable. The financial statements do not include any value attributable to the potential
performance bonus not yet received. The position will be monitored on an annual basis.
19. VICTORIAN BUSHFIRES
CMP provides public liability and professional indemnity insurance to councils affected by the Victorian bushfires. The Municipal Association of
Victoria on behalf of CMP is representing councils at the Victorian Royal Commission into the bushfires. There are 27 councils that could be
impacted of which half may be subject to an insurance claim. Councils are not substantially liable for the causes or the affects of the bushfires
and as such the quantum of any potential liability is uncertain. The extent of any potential liability for councils will be impacted substantially
by the number of events that occurred and the extent of the insurance excesses of affected councils. In addition, CMP is protected by a strong
reinsurance program involving financially sound Australian and international reinsurers. A best estimate of the potential liability of CMP relating
to the Victorian cushfires is $28.5 million. This amount has been included in the provision for claims outstanding.
20. CATASTROPHE INSURANCE EXPENSE
On 1 July 2008 CMP increased its reinsurance retention levels. This has led to a significant reduction in the Catastrophe Insurance Expense for
the year. In addition to reduced Catastrophe Insurance Expenses the future impact of the increased retention level will also be a reduction in the
proportion of the reinsurance recovery relating to claims incurred from 1 July 2008.
MAV INSURANCE FINANCIAL REPORT 2008/09 >95
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
21. RELATED PARTIES
The Municipal Association of Victoria is a body corporate established under the Municipal Association Act 1907 to provide services for and the
representation of local government authorities in Victoria. The Association and its wholly-owned controlled entities, including MAV Insurance,
trade with its members in the normal course of business and on an arm’s length basis. The Deed of Establishment provides for the MAV to
appoint a Committee of Management (MAVIC) to be responsible for the administration of the Scheme. Mr A. Nye is the Chairman of the
Victorian Managed Insurance Authority (VMIA) and President of the Metropolitan Fire and Emergency Services Board and Mr R. Farrell was
a Board Director of VMIA up to 28 February 2009. The MAV and the VMIA from time to time have conflicting interests in insurance claims
matters. Any such claims were settled on commercial terms without the involvement of these Committee members. The discreet nature of these
transactions is not material. Total expenses of $700,291 (2008 $512,356 ) were payable to the Municipal Association of Victoria being payment
for administrative support, and overseeing the management of the insurance activities, including the conduct of bi-monthly committee meetings.
Other than this there were no material related party transactions during the year.
Committee members during the year
J. Warburton (Independent Chairperson)
A. Murphy OAM (Independent)
Cr. R. Gross (MAV President to November 2008)
Cr. S. Alessi (MAV President from November 2008 to April 2009)
Cr. W McArthur ( MAV President from April 2009)
A. Garcia (LGAT Representative)
R. Farrell (Independent)
A. Nye (Independent)
Dr. M. Kennedy OAM (CEO, Mornington Peninsula Shire Council)
R. Spence (MAV - Chief Executive Officer)
Cr. R. Fyffe (MAV Representative)
Key management personnel remuneration
COMBINED
2009
CIVIC MUTUAL PLUS
2008
$
2009
$
$
2008
$
MUNICIPAL OFFICERS’
FIDELITY GUARANTEE FUND
2009
$
2008
$
Independent committee members
receive meeting fees. The Chairperson
receives $750 per committee meeting
and other independent committee
members receive $500 per committee
meeting plus $1,030 per annum
for claims and technical committee
and other meetings.
Short-term remuneration of key
management personnel
192,905
174,767
192,905
174,767
-
-
Loans to committee members
No loans were made to or are payable by committee members.
Other transactions
There were no other material transactions with committee members.
Insurance
The activities of the MAV Insurance Committee members are covered by the MAV directors and officers indemnity insurance policy, effected by
the Municipal Association of Victoria.
96> MAV INSURANCE FINANCIAL REPORT 2008/09
Statement by committee of management
In accordance with a resolution of the MAV Insurance Committee, we state that:
In the opinion of the members of the MAV Insurance Committee:
(a) the financial statements and notes of the combined entity are drawn up so as to give a true and fair view of the results of Civic Mutual Plus and
the Municipal Officers’ Fidelity Guarantee Fund for the year ended 30 June 2009;
(b) the accompanying Balance Sheet is drawn up so as to give a true and fair view of the state of affairs of Civic Mutual Plus and the Municipal
Officers’ Fidelity Guarantee Fund as at that date; and
(c) at the date of this statement there are reasonable grounds to believe that Civic Mutual Plus and the Municipal Officers’ Fidelity Guarantee
Fund will be able to pay its debts as and when they fall due.
The financial statements have been made out in accordance with applicable Accounting Standards and other mandatory professional reporting
requirements.
On behalf of the MAV Insurance Committee
John Warburton
MAV Insurance Committee Chairman
Robert Spence
MAV Chief Executive Officer
Melbourne
28 October 2009
Statement by directors
In accordance with a resolution of the Directors of the Municipal Association of Victoria, we state that:
In the opinion of the Directors:
(a) the accompanying Income Statement is drawn up so as to give a true and fair view of the results of Civic Mutual Plus and the Municipal
Officers’ Fidelity Guarantee Fund for the year ended 30 June 2009;
(b) the accompanying Balance Sheet is drawn up so as to give a true and fair view of the state of affairs of Civic Mutual Plus and the Municipal
Officers’ Fidelity Guarantee Fund as at that date; and
(c) at the date of this statement there are reasonable grounds to believe that Civic Mutual Plus and the Municipal Officers’ Fidelity Guarantee
Fund will be able to pay its debts as and when they fall due.
The financial statements have been made out in accordance with applicable accounting standards and other mandatory professional reporting
requirements.
Signed in accordance with the resolution of Directors.
William McArthur
President
Geoff Gough
Director
Melbourne
28 October 2009
MAV INSURANCE FINANCIAL REPORT 2008/09 >97
Combined financial reports - Independent audit report
98> MAV INSURANCE FINANCIAL REPORT 2008/09
MAV INSURANCE FINANCIAL REPORT 2008/09 >99
Auditor’s independence declaration
to the Directors of Civic Mutual Plus and the Municipal Officers’ Fidelity Guarantee Fund
Other information
Legal form
MAV Insurance is the insurance division of the Municipal Association of Victoria. The Municipal Association of Victoria is an association
incorporated by the Municipal Association of Victoria Act 1907.
Domicile:
Melbourne, Australia
Address of registered office:
Level 12, 60 Collins Street, Melbourne, 3000, Victoria, Australia
Principal place of business
Level 1, 468 St. Kilda Road, Melbourne 3004, Victoria, Australia
Nature of the operation and principal activities:
The Municipal Association of Victoria has the power provided to it by the Municipal Association of Victoria Act 1907 to establish Civic Mutual
Plus and the Municipal Officers’ Fidelity Guarantee Fund in order to provide public liability, professional indemnity and fidelity insurance to
local government and water authorities.
Number of employees
Nil
100> MAV INSURANCE FINANCIAL REPORT 2008/09