Yarra Ranges Council
Long Term Financial Plan
June 2014
Long Term Financial Plan 2014/15 – 2023/24
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Contents
1. Executive summary
1.1 Financial management obligations .............................................................................................................. 1
1.2 Long Term Financial Plan objectives............................................................................................................. 1
2. Yarra Ranges background
2.1 Background................................................................................................................................................... 2
2.2 Key factors influencing the financial position .............................................................................................. 2
2.3 Rates......................................................................................................................................................
3
3. Financial sustainability
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
Underlying result...........................................................................................................................................6
Liquidity.........................................................................................................................................................7
Indebtedness.................................................................................................................................................7
Self Financing................................................................................................................................................ 8
Capital Replacement..................................................................................................................................... 9
Renewal Gap..................................................................................................................................................9
Average Rate increase...................................................................................................................................11
Overall financial sustainability risk assessment............................................................................................11
4. Relationship to sustainability framework.............................................................................................12
5. Current Financial position
5.1
5.2
5.3
5.4
5.5
Source of funds .............................................................................................................................................. 13
Expenditure.................................................................................................................................................... 13
Debt position................................................................................................................................................. 14
Capital expenditure....................................................................................................................................... 15
Cash position................................................................................................................................................. 15
6. Key Challenges
6.1 Infrastructure................................................................................................................................................ 16
6.2 Environment.................................................................................................................................................. 17
6.3 Risk management requirements................................................................................................................... 17
6.4 Service delivery and growing community expectations.................................................................................17
6.5 Government funding......................................................................................................................................18
6.6 Municipal Emergency Planning and Preparation...........................................................................................18
6.7 Accessibility....................................................................................................................................................18
7. Addressing the challenges – our strategy
7.1
7.2
7.3
7.4
7.6
7.7
7.8
Rates.............................................................................................................................................................. 19
Government funding...................................................................................................................................... 20
Fees and charges........................................................................................................................................... 21
Loan Borrowings............................................................................................................................................ 23
Recurrent operating expenditure.................................................................................................................. 23
New initiatives, one-off expenditure cost pressures...................................................................................... 24
Capital works expenditure............................................................................................................................. 24
Appendices
Forecast Comprehensive Income Statement........................................................................................................ 27
Forecast Balance Sheet........................................................................................................................................ 28
Forecast Cash Flow statement............................................................................................................................. 29
Forecast Capital Works Program.......................................................................................................................... 30
Long Term Financial Plan 2014-15 to 2023-24
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1. EXECUTIVE SUMMARY
The Long Term Financial Plan (LTFP) is the key financial planning document of Council which is
governed by a series of financial strategies and accompanying performance indicators that Council
considers and adopts. It establishes the financial framework upon which sound financial decisions
are made.
1.1 Financial management obligations
Council has a legislative requirement to comply with the principles of sound financial management
as detailed in section 136 of the Local Government Act 1989, these are:

Prudently manage financial risks having regard to economic circumstances. These risks
include:o The level of council debt;
o The management, maintenance and renewal of infrastructure assets;
o The management of current and future liabilities;
o Sustainable revenue streams;
o Changes in the structure of rates and charges base;
o The commercial or entrepreneurial activities of Council.

Rating policies that are consistent and with a reasonable degree of stability in the level of
the rates burden.

Ensure that decisions made and actions taken have regard to their financial effects on
future generations.

Ensure full, accurate and timely disclosure of financial information relating to the council.
A key component of sound financial management is the preparation of longer term financial
strategies, plans and budgets. Council has prepared forward budgets for the ten years 2014/15 to
2023/24 which includes a detailed ten year capital expenditure program.
The Long Term Financial Plan, including the Financial Strategies do not have to be re-created
each year, but rather they should be reviewed annually and modified as Council’s priorities change
1.2 Long term financial plan objectives
The 2014/15-2023/24 LTFP is intended to achieve the following objectives in the ten
year time frame:

Maintain the existing range and level of service provision while developing the capacity to
grow and add new services if required;

Maintain a strong cash position, ensuring Council remains financially sustainable in the long
term;
Achieve operating statement surpluses after adjustments for one-off (non-recurring)
adjustments;
Reduce debt levels;


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Long Term Financial Plan 2014-15 to 2023-24
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






Maintain long term financial sustainability indicators at the low-medium risk levels as
defined by the Victorian Auditor General’s Office (VAGO) sustainability indicators;
Maintenance of existing assets and replacement at a rate consistent with their consumption
& condition;
Addressing the funding gap for asset renewal;
Address unexpected expenditure such as defined benefits superannuation unfunded
liabilities (when surplus funds are available);
No new EFT staff (unless funded from existing budget or additional revenue generation);
Maintain a rate and fees structure which addresses the various objectives with
consideration to the level of rate burden; and
Once off reduction in the rate rise (net of any costs) should the carbon price legislation be
repealed and no substitute legislation is introduced, and this would be applicable in future
budget years.
2. YARRA RANGES - BACKGROUND
2.1 Background
Council is in a very sound financial position and intends to use this strength to continue the delivery
of an exciting range of capital projects and service enhancements without compromising the long
term financial health of the organisation. In recent years Council has made a set of decisions that
significantly impacts the services and infrastructure provided to our community and dealing with the
longer term issues of asset maintenance and financial sustainability. This updated Long Term
Financial Plan consolidates and builds on this strategic direction.
The additional investment made in this strategy will work towards Council's vision of creating a
better future for Yarra Ranges, supported by a high performing organisation providing great service
to its communities.
2.2 Key factors influencing the financial position
There are a number of notable characteristics of Yarra Ranges that heavily influence the current
and future financial position. These factors include:

The sheer size of Yarra Ranges in geographical terms compared with other metropolitan
municipalities, and the consequential increase in unit cost for the delivery of many services
and renewal of assets.

The different demands and expectations of the urban and rural areas of the municipality
place additional pressure on funding to meet issues such as protecting the environment and
the identity of diverse townships.

The relatively static and ageing population of the municipality compared with many other
outer-metro Councils where high growth and development is being experienced.

A growing expectation from the community and other levels of Government that Council will
provide an increasing range of services at an increasing standard or quality.

Ageing infrastructure that requires significant maintenance and re-investment.

An ongoing emphasis by Council on providing environmental leadership to the Yarra Ranges
municipality by reducing or offsetting emissions and promoting environmental education
programs.
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Long Term Financial Plan 2014-15 to 2023-24
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
Increasing legislative obligations imposed by the State Government and the continued
erosion of the real value of specific purpose grants that do not keep pace with providing
services.

Capping of many user fees and charges by the Victorian Government leaves Councils
unable to recover the true cost of delivering services such as libraries, planning, and building.

An ageing population, placing increasing demand on direct care service provision.

Challenge of delivering services in an environment of growing costs of delivery – particularly
costs of fuel and utilities and renewal of assets.
These factors set the scene for Yarra Ranges operating within an inherently restricted financial
context and with increasing demand for services and capital expenditure in a number of areas.
2.3 Rates
Council continues to keep rate increases stable, and is working hard to keep rates down and drive
cost efficiencies and reduction in expenditure.
The above factors however contribute to the following picture of Yarra Ranges’ average rates
compared with the interface councils for the 2013/14 financial year (source MAV July 2013, draft
budget data for 8 interface councils):
Yarra
Ranges ($)
Average total rates
Rates per head
Interface
Councils ($)
Difference
(%)
1,766
1,727
2%
740
707
5%
The data above shows that Yarra Ranges is only 2% higher than the average of interface councils
on rates per assessment. An ongoing problem for Yarra Ranges is that our urban residents have a
direct comparison of rating levels with the adjoining municipalities of Knox and Maroondah where
rates for similar properties are lower. Yarra Ranges’ location on Melbourne’s eastern fringe at the
urban/rural interface presents a distinct contrast to our urban neighbours. This is highlighted by our
unique combination of conspiring factors including fire and emergency management, complex land
use planning, vegetation management, vast open space/bushland reserve management
responsibilities, extensive and dispersed rural infrastructure base and low growth as a source of
funding.
Rates per head of population is an increasingly more useful measure of local government rates as
the services provided by Yarra Ranges expands from property-based to human-based services.
In terms of the MAV data and rates per head of population, Yarra Ranges is ranked 55 th lowest out
of the 73 Councils reported on. The average rates per head of population across the sector was
$791 and this is higher than Yarra Ranges’ result of $740.
The data provided by MAV reported on 73 councils across the state (out of 79 Victorian councils)
and ranked (from highest to lowest) Yarra Ranges rates per assessment at 21st, an improvement
from 15th position. The average total rates across 73 councils was $1,662 and ranged from Loddon
Shire at $1,135 to Melbourne at $2,360 followed by Nillumbik at $2,319. Average rates lifted by
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Long Term Financial Plan 2014-15 to 2023-24
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4.8% across all councils and Yarra Ranges is on par with this increase. However it is anticipated
that as Council holds its average rate increase to 4.8%, it will continue to drop lower in rates per
assessment compared to the rest of the sector.
Rate increases are, however, inevitable. The Local Government Cost Index calculated by the
MAV (using a combination of construction, materials and wages indices to measure the sector’s
expenditure profile) has consistently shown that costs continue to rise faster than CPI. Council
has to meet higher expenses just to maintain its current position. The rising cost of delivering a
large number of council services is not reflected in the Consumer Price Index (which calculates
price movements for a series of common household goods and services such as food, petrol and
utility costs) due to the majority of council spending being driven by labour, material and
construction costs.
Additional rate increases are needed to fund capital works programs and to overcome declining
grants from other levels of government. Adding to Council’s cost pressures, the State and
Commonwealth continue to link indexation of many grants to CPI or less, despite this being a
largely irrelevant benchmarking tool for real cost movements.
This means that pressure always falls on rate revenue to continue to fund service delivery, capital
expenditure and renewal of assets, in addition to defined benefits superannuation funding
shortfalls.
In distributing rates across the municipality, Council distinguishes between the different purposes
for which properties are used – commercial/industrial properties are rated at 150% of the
residential value, whereas farming properties are at 70% of the residential value. Since Yarra
Ranges has a higher than average proportion of farm assessments, and a lower than average
proportion of residential assessments, residential properties have received a relatively higher share
of the rate burden than the outer metro council average. The higher than average cost per unit of
service delivery due to the various physical attributes of the municipality also exacerbates this.
However, to shift the share of rates from residential properties to farming properties would have a
minimal impact on residential but a significant impact on the smaller proportion of farming
properties.
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Long Term Financial Plan 2014-15 to 2023-24
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2. FINANCIAL SUSTAINABILITY
An annual assessment of Council’s financial sustainability is an outcome of the year end audit process and
its scope covers a review of the key financial ratios. This analysis provides a sustainability risk rating for the
past three financial years to 30 June 2013, based on key indicators that VAGO commenced reporting in
2003-04. These ratios provide a set of interrelated indicators for local governments to use as a guide to
assess their financial performance and position. The indicators used reflect short and long term
sustainability, and are measured to determine whether councils:
• generate enough revenue to cover operating costs (including the cost of replacing assets
reflected in the depreciation expense)—underlying result
• have sufficient working capital to meet short-term commitments—liquidity
• are not overly reliant on debt to fund capital programs—indebtedness
• generate sufficient operating cash flows to invest in asset renewal and repay any debt it
may have incurred in the past—self-financing
• have been replacing assets at a rate consistent with their consumption—capital
replacement
• have been maintaining existing assets at a consistent rate—renewal gap.
It is important to consider the trend when assessing these indicators.
VAGO Risk assessment criteria for financial sustainability indicators
Risk
High
Medium
Low
Underlying
result
Negative 10% or
less
Capital
replacement
Equal to or less
than 1.0
Liquidity
Equal to or less
than 1.0
Indebtedness
More than 60%
Self-financing
Less than 10%
Renewal gap
Equal to or
less than 0.5
Insufficient
revenue is being
generated to
fund operations
and asset
renewal.
Insufficient
current assets to
cover liabilities.
Potentially longterm concern
over ability to
repay debt levels
from own-source
revenue.
Insufficient
cash from
operations to
fund new
assets and
asset renewal.
Spending on
capital works has
not kept pace with
consumption of
assets.
Spending on
existing assets
has not kept
pace with
consumption of
these assets.
Negative 10% to
zero
1.0–1.5
40–60%
10–20%
1.0–1.5
0.5–1.0
A risk of
long-term run
down to cash
reserves and
inability to fund
asset renewals.
Need for caution
with cash flow,
as issues could
arise with
meeting
obligations as
they fall due.
Some concern
over the ability to
repay debt from
own-source
revenue.
May not be
generating
sufficient cash
from operations
to fund new
assets.
May indicate
spending on asset
renewal is
insufficient.
May indicate
insufficient
spending on
renewal of
existing assets.
More than zero
Generating
surpluses
consistently.
More than 1.5
No immediate
issues with
repaying shortterm liabilities as
they fall due.
40% or less
No concern over
the ability to
repay debt from
own-source
revenue.
20% or more
Generating
enough cash
from operations
to fund assets.
More than 1.5
Low risk of
insufficient
spending on asset
renewal.
More than 1.0
Low risk of
insufficient
spending on
asset base.
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Long Term Financial Plan 2014-15 to 2023-24
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There are a new suite of indicators released as part of the Local Government (Planning and Reporting) Act
and Regulations legislated in April 2014. Council remains committed to the VAGO Financial Sustainability
indicators as there is currently no expectation that VAGO will discontinue reporting these indicators to
Parliament. The VAGO indicators are also more conservative from a financial sustainability point of view.
Council will explore the potential to incorporate the new financial and sustainability indicators as included in
the Budget, into the Long Term Financial Plan in the future.
3.1 Underlying result (adjusted operating surplus)
Underlying Results (excludes capital grants & non monetary
contributions)
20.00%
15.00%
10.00%
5.00%
0.00%
-5.00%
-10.00%
11/12A 12/13A 13/14F 14/15B 15/16B 16/17B 17/18B 18/19B 19/20B 20/21B 21/22B 22/23B 23/24B
Operating surplus/(deficit) – is total operating income less total operating expenses. It is an
indicator of a Council’s ability to meet its operating expenses from operating revenue. The
operating result has a direct impact on the equity or net worth of Council. A surplus result
contributes to the net worth, whilst a deficit reduces the net worth of Council.
The underlying result (%) is assessed following the removal of one-off (non-recurrent) items of
income and expenditure. These one off items include non-recurrent capital grants, gifted assets,
asset revaluations, write offs and impact of asset sales. Capital income is deducted on the grounds
that it represents “unmatched’ income (expenditure is not included) and it is a non-recurring source
of income.
It should be noted that VAGO’s previously documented results (2009/10 -2011/12) did not exclude
non-recurrent capital grants as this data was not available through the annual accounts (applies to
all councils). Moving forward this data is to be included in annual accounts for all councils and will
be used to calculate the indicator.
Trend in underlying result The long term financial strategy reflects a significant change in Council’s risk relating to the
underlying surplus moving from VAGO’s medium risk category (2011/12 & 2013/14) to low risk
(2014/15-2023/24). The medium risk years were a result of funding a number of major projects
(utilising cash reserves) for which significant non-recurrent capital grant funding was received. The
trend moving forwards reflects less reliance on non-recurrent funding.
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Long Term Financial Plan 2014-15 to 2023-24
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3.2 Liquidity
Liquidity
2.50
2.00
1.50
1.00
0.50
11/12A 12/13A 13/14F 14/15B 15/16B 16/17B 17/18B 18/19B 19/20B 20/21B 21/22B 22/23B 23/24B
Liquidity (current assets divided by current liabilities) is a measure of Council’s ability to pay
existing liabilities in the following 12 months. A ratio of between 1 and 1.5 is seen as the preferred
position with VAGO rating below 1.5 as medium and below 1 as high risk.
Trend in liquidity The strategy in the long term financial plan is to maintain a level of between 1 and 1.5, as Council
utilises its cash reserves when possible. The change from low risk to medium risk is as a result of
having high cash reserves due to capital carry forwards in 2011/12 and 2012/13.
3.3 Indebtedness
Indebtedness
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
11/12A
12/13A
13/14F
14/15B
15/16B
16/17B
17/18B
18/19B
19/20B
20/21B
21/22B
22/23B
23/24B
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Long Term Financial Plan 2014-15 to 2023-24
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Indebtedness (%) is expressed as non-current liabilities (liabilities beyond the next 12 months)
divided by own-sourced revenue. Own sourced revenue (as defined by VAGO) excludes such
items as contributions and all grants. The higher the % the less able to cover non-current liabilities
from the revenues Council generates itself. The target for the long term financial plan is to maintain
an indebtedness % in the low risk range (below 40%).
Trend in indebtedness Indebtedness peaks at 35% in 2015/16, a reduction from 40.6% in last year’s LTFP, and Council
maintains a low risk level of indebtedness per VAGO’s risk assessment model with debt reducing
further over the life of the LTFP. Total borrowings for the 10 year period are $60million with the
outstanding debt at 2023/24 at $12.7million. The peak outstanding debt is $51.3million in 2015/16,
and with no new borrowings from 2020.
There is a strong argument that own-sourced revenue should include recurrent grants such as the
Victorian Grants Commission funding and Department of Human Services funding (Aged Care and
Children’s Services). If these were to be included in these calculations the indicator would reduce
further.
3.4 Self Financing
Self Financing
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
11/12A
12/13A
13/14F
14/15B
15/16B
16/17B
17/18B
18/19B
19/20B
20/21B
21/22B
22/23B
23/24B
Self-financing (%) is expressed as net cash flow from operating activities divided by underlying
revenue (excludes non recurrent grants and contributions).
This ratio measures the ability to replace assets using cash generated by Council. The higher the
% the more effectively this can be done. Council’s long term strategy is to maintain a level of self
financing in the low risk range of VAGO’s assessment (above 20%).
Trend in self financing Council’s 2012/13 actual is in the high risk area due to the payment of the defined benefits super
unfunded liability. For the 2013/14 forecast, Council’s self financing ratio is in VAGO’s high risk
area but it then stays consistently in the low range (above 20%) for the balance of the 10 years.
The 2013/14 year reflects reduced Grants Commission income of $7.3m (recurrent grant) due to
the first instalment being made in 2012/13 and consequently reducing cash flow from operating
activities.
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Long Term Financial Plan 2014-15 to 2023-24
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3.5 Capital Replacement
Capital Replacement
2.50
2.00
1.50
1.00
0.50
11/12A
12/13A
13/14F
14/15B
15/16B
16/17B
17/18B
18/19B
19/20B
20/21B
21/22B
22/23B
23/24B
Capital expenditure is expressed as a ratio of Capital expenditure against depreciation. It is a
comparison of the rate of spending on infrastructure against the depreciation of capital. Ratios
higher than 1:1 indicate that spending is faster than the depreciation rate. This is a long term
indicator as capital expenditure may vary from year to year based on a number of factors and so
should be viewed as an average over a period.
Trend in Capital Replacement In all years in the assessment period Council maintains a ratio in VAGO’s low to medium risk area.
The long term financial strategy for this indicator is to maintain a ratio average over 10 years in the
low risk area (above 1:1.5). The average achieved for the next 10 years for Council has achieved
this with an average of 1:1.8.
3.6 Renewal Gap
Renewal gap
2.25
2.00
1.75
1.50
1.25
1.00
0.75
0.50
0.25
11/12A
12/13A
13/14F
14/15B
15/16B
16/17B
17/18B
18/19B
19/20B
20/21B
21/22B
22/23B
23/24B
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Long Term Financial Plan 2014-15 to 2023-24
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The renewal gap is expressed as a ratio of capital renewal & upgrade expenditure against
depreciation. It is a comparison of the rate of spending on existing assets through renewing,
restoring and replacing existing assets with depreciation. Ratios higher than 1:1 indicate that
spending on existing assets is greater than the depreciation rate. Similar to the capital
replacement, this is a long-term indicator, as capital expenditure can vary from year to year.
This indicator needs to be considered in relation to the assessment of the existing condition of
infrastructure assets to determine whether future funding is capable of maintaining these assets at
an appropriate level. Throughout the local government sector, indications are that assets are not
being adequately maintained highlighting a significant existing renewal gap which is expanding (i.e
the assets have not been maintained at an appropriate level and future funding is insufficient to
ensure their useful life is maximised). To achieve a balanced assessment of renewal gap there is a
need to invest year on year funding at a level between 1 and 1.5 per VAGO’s indicator but also to
assess the existing gap and close that gap to ensure that our asset infrastructure achieves its
maximum useful life.
Yarra Ranges Council has commenced reviewing its current asset data, and is changing
processes in order to capture new data, in order to inform Council’s asset management plans,
which will in turn inform Council’s asset renewal needs.
Modelling based on current data, shows that whilst the cumulative renewal gap peaks in 2016-17,
the gap begins to reduce favourably with Council’s significant renewal funds investment after this
time.
Movement in renewal gap -
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Long Term Financial Plan 2014-15 to 2023-24
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3.7 Average rate increase
The following graph represents the average rate increases projected over the term of the long term
financial plan. For the period of this long term financial plan it is proposed to hold averages rates
increases steady at 4.8%, recognising the significant rate burden and economic conditions that
exist for the community.
While maintaining a low average rate increase Yarra Ranges has still been able to satisfy the
objectives of maintaining and improving service levels in addition to investing heavily in Council’s
infrastructure assets, reduce debt, and fund reserves for potential defined benefits superannuation
shortfalls.
Rates increase
7%
6%
5%
4%
3%
2%
1%
0%
11/12A
12/13A
13/14F
14/15B
15/16B
16/17B
17/18B
18/19B
19/20B
20/21B
21/22B
22/23B
23/24B
3.8 Overall financial sustainability risk assessment
VAGO determines the overall financial sustainability risk assessment using the ratings determined
by the 6 indicators presented 2.1 – 2.6. The following table classifies the overall result.
High risk of short-term and immediate sustainability concerns indicated by either:
• red underlying result indicator or
• red liquidity indicator.
Medium risk of longer-term sustainability concerns indicated by either:
• red self-financing indicator or
• red indebtedness indicator or
• red capital replacement indicator or
• red renewal gap indicator.
Low risk of financial sustainability concerns—there are no high-risk indicators.
Yarra Ranges overall financial sustainability risk assessment The overall financial sustainability risk assessment per VAGO’s ratings indicate that Yarra Ranges
Council is at the low risk level.
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Long Term Financial Plan 2014-15 to 2023-24
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4. RELATIONSHIP TO THE SUSTAINABILITY FRAMEWORK
Supporting the achievement of the Vision 2020 Community Plan (“Vision 2020”) is the explicit
focus of all Council activities. Vision 2020 is the shared vision of the Yarra Ranges community and
is a statement about the kind of community, economy and environment our community wishes to
have in the future.
The Council Plan 2013-2017 was updated in May 2013. Five strategic objectives lead to the
sustainability of our community and our organisation. The achievement of these objectives will be
supported by a combination of organisational values which guide our behaviour and sustainability
principles, which guide our decision-making in achieving these goals. It is through this framework,
that we strive to deliver high quality services to our community. All organisational policies and
strategies, including this Long Term Financial Plan, are developed within this framework and are
guided by the values and sustainability principles.
The updated strategic objectives are presented below:
Quality community infrastructure has been identified by Council as one of its strategic
objectives that contributes to Council being a sustainable community. This is underpinned by long
term financial management which is a key action for the high performing organisation strategic
objective that contributes to Council being a sustainable organisation. Council’s financial strategies
are set out in broad terms in its Strategic Resource Plan, which will form part of the Council Plan
2014 to 2018.
This Long Term Financial Plan sets out in further detail the financial strategies to be employed
which support the achievement of the Council Plan.
The Long Term Financial Plan is reviewed and updated each year to take into account changes in
circumstances and to ensure it continues to address the dynamic environment in which Council
operates. The Plan is then formally adopted by Council.
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Long Term Financial Plan 2014-15 to 2023-24
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5. CURRENT FINANCIAL POSITION
5.1 Source of Funds
The following table sets out the major sources of Council’s 2014/15 budgeted revenue and
provides an indication of how much control we have over each source:
$’000
% of Total
120,416
73.35%
High
28,213
17.18%
Low
Fees and Charges
9,904
6.03%
Low/medium
Contributions
1,667
1.01%
Low
Interest
2,053
1.25%
Low
Other
1,945
1.18%
Low
Total
164,198
Source of Funds
Rates and Garbage
Grants
Control
As demonstrated in the table above, Yarra Ranges has a very high reliance on property rates and
charges and this is the one source of funds that Council has a high degree of control over. Council
is limited in its ability to control income from the majority of other sources.
Loan borrowings is another source of funds available to Council, however debt must be repaid with
interest which reduces the funds available for future years. In this sense borrowings allow Council
to do more now but reduces the capacity for future expenditure until the debt is repaid.
5.2 Expenditure
On the expenditure side, there are three major components of expenditure:
1. Recurrent service delivery and asset maintenance costs
2. Discretionary funds for new services or service enhancements
3. Capital Works and renewal
Recurrent service costs relate to about 150 services provided by Council and the ongoing costs
of maintaining assets such as roads, drainage and buildings. Increases in these costs are largely
driven by labour costs, contract price increases and other inputs such as fuel. Labour costs in
particular generally increase at a level greater than that of standard CPI increases, hence Council
is required to ensure that sources of income are matched to at least increases in the costs of
providing these services.
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Long Term Financial Plan 2014-15 to 2023-24
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Recurrent costs can be contained or reduced by limiting the range or quantity of services provided
or through achieving efficiencies in delivery methods.
A small amount of discretionary funds is built into the financial model to allow for one off and
recurrent service initiatives and cost pressures. This provides Council with some flexibility each
year to deal with the myriad of new and expanding expectations in the community and emerging
cost pressures.
Capital Works and renewal expenditure is funded by a mix of Council funds, Government grants,
community contributions to specific facilities and borrowings if required.
Funding is required to maintain and renew existing infrastructure as well as provide for new
facilities to meet emerging demands. Like most Councils in Victoria, Yarra Ranges and its
predecessors have not put sufficient resources to renewing existing infrastructure. This has
created a backlog known as the ‘renewal gap’.
Demands for new infrastructure continue to grow and far outweigh Council’s funding ability. The
allocation of capital funds requires careful consideration to ensure that maximum value is
achieved.
Loan borrowings can fund a short term boost in capital funding however, the repayments of
interest increase the recurrent expenditure profile and decrease cash through principal
repayments.
5.3 Debt position
Council has worked hard to reduce its debt, and continues to keep its debt levels as low as
possible.
Council has a low level of indebtedness with the projected principal outstanding as at 30 June
2014 being $11.43 million. The borrowing of this amount was to pay for the Defined Benefits
unfunded superannuation shortfall. Council would be debt free if not for the requirement to fund
this liability. This position has provided significant flexibility for future borrowings and is the one of
the funding sources to address Council’s ageing infrastructure in the earlier years of the plan.
Council proposes some further borrowings in future years to assist in funding infrastructure
upgrades and to address the asset renewal gap.
The increase in debt in future financial years relates primarily to an extended capital works
program which includes a further injection in the updated 10-year capital works program of $138
million to address the asset renewal gap. The 10-year capital works program will deliver new
purpose-built community, cultural and sporting facilities and along the way will stimulate
construction in the region and help support local jobs.
Borrowings can be accommodated within the financial model without compromising the overall
financial sustainability of the organisation. In terms of the VAGO Sustainability Model, this is
projected to see our indebtedness peak near the high end of low risk profile before dropping back
to a very low risk rating.
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Long Term Financial Plan 2014-15 to 2023-24
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5.4 Capital Expenditure
Council’s infrastructure challenges are significant and have been a key focus now for several
years. Funding from increased rates and previous debt repayments have been redirected into the
10-year capital works program budget. This has enabled Council to significantly increase the
funding it contributes to the capital program in recent years and into the future program. Council’s
capital works program includes both capital expenditure (forming assets) and major maintenance
and renewal of assets.
Under the National Consistency Framework, Council is obliged to prepare and endorse an Asset
Management Strategy and Asset Management Plans. This work is being undertaken in conjunction
with the development of service plans for the organization. An update of the strategy and plans
were endorsed by Council 2010 and are currently being reviewed.. The asset management
process has a significant impact on shaping the composition of Council’s 10-year Capital Works
Program, the Long term Financial Plan and the flow-on funding needs arising from this program.
5.5 Cash Position
Council’s cash position in recent years has been very strong and this cash has been utilised and
dedicated to retiring debt, funding additional capital works as part of dealing with the infrastructure
renewal facing Council, new capital works and other initiatives.
Council’s cash and short term investment balances are projected to be $15.3 million as at 30 June
2014. Some of these cash reserves are required to meet obligations such as developer
contributions to specific works.
Throughout the year the cash balance fluctuates significantly with a low point in January followed
by large cash receipts in February from payments of rates in full. This cyclical nature of cash flows
limits the amount of cash that can be made available to fund works and services.
The cash position at the end of the 10 year plan is required to cash back the defined benefits
superannuation unfunded liability.
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Long Term Financial Plan 2014-15 to 2023-24
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6. KEY CHALLENGES
This section provides an overview of the key challenges Council is facing with a likely financial
impact.
6.1 Infrastructure
Throughout the local government sector, there has been a significant focus on the level of
spending on infrastructure, and particularly the level of funding available to renew existing
infrastructure as distinct from creating new assets. Measuring the actual gap, that is, the difference
between the allocated funds to replace existing assets at the end of their useful life and the actual
funding that is required to achieve this, is inherently subjective. What is clear is the fact that
protection and renewal of existing infrastructure is a key long-term issue for local government and
that Council’s Capital Expenditure Program should be structured accordingly.
The Capital Works budget has increased over the last few years and has helped to address
immediate issues, however the existing standard and extent of assets within the municipality
remains a significant issue. The tension between allocating funds to new asset development
versus renewal and protection of existing assets remains.
Many of Council’s buildings were built 40 to 50 years ago as single purpose buildings with little
integration to other Council activities. This ageing infrastructure requires significant investment if it
is to meet the rising expectations of the community, and become multi-use facilities that ensure
value for money for the community.
Ensuring that the networks of roads, footpaths, bridges and drainage are maintained and renewed
into the future is also a key challenge for a municipality such as Yarra Ranges due to the
geographic spread and topography of the area.
A long term project is underway to systematically improve asset management practices and will
help Council identify service requirements and establish plans to maintain infrastructure that meets
our community’s service needs. This work is aligned to the National Consistency Framework for
asset management which is designed to facilitate the implementation of quality asset management
practices in local governments.
With a focus on reducing the current projected growth in the asset renewal gap, the Capital
Expenditure Program is reviewed annually to ensure the current base program capital of works is
in-line with existing asset management plans and expected service delivery. This recommended
base program can be delivered within funding available in the Long Term Financial Model and is in
line with the proposed strategies outlined in this Long Term Financial Plan. Also, other strategies
are outlined to support the reduction of the asset renewal gap.
It is important to continue to close the gap to ensure assets are well maintained for current and
future service needs and ensure the organisation’s long term financial sustainability.
It should be noted that the renewal model data is based on a number of assumptions about the
useful life of assets that are currently being reviewed and the accuracy of the current data requires
16
Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
refinement and validation. There is no doubt that a gap does exist and further asset management
modelling is required to build a picture of the renewal issue. Based on more informed asset data
and condition data there could be some change to asset renewal values in the future.
6.2 Environment
Yarra Ranges is one of Victoria’s largest, most varied and scenic municipalities. It balances a
mixture of urban and rural communities. One of the most defining features of the Yarra Ranges is
its natural environment. Boasting remarkable mountain ranges, rich valley floors, extensive
waterway networks and vast tracts of high rainfall temperate forest, the municipality contains areas
of high environmental importance and scenic value. The municipality is also home to a
considerable diversity of plant and animal species and ecosystems.
Some of the environmental issues faced within the Yarra Ranges municipality and surrounds
include energy supply, declining river health, land degradation and erosion, loss of native
vegetation and faunal habitat, spread of environmental and noxious weeds and feral pests. Council
currently has a number of programs in place to tackle some of these environmental issues, both
from a physical works and education perspective, however the expectation to consistently ‘do
more’ is unwavering. In addition, the increased frequency and severity of extreme weather events,
such as storms, floods, drought and fire, also pose a significant risk to operational budgets.
All of the issues mentioned above have significant implications for Council’s Long Term Financial
Plan. The cost of service provision for on-ground works (e.g. maintenance, response etc.) and
community education continues to rise. In addition, the expectations of the community for Council
to take a lead role in tackling local, regional, national and global issues is ever increasing. The
legislative landscape around environmental issues (particularly climate change) is largely
uncertain, which creates both challenges and opportunities for Council. Other agencies also place
great expectations on local government to deliver national strategies and programs.
6.3 Risk management requirements
On the back of natural disasters world wide there have been substantial increases in property
insurance and public liability insurance. 2012-13 saw a 14% increase in insurance premium costs
with a further 15% increase in the 2013-14 financial year. Other costs include a focus on managing
and reducing risk and occupational health and safety matters, and costs passed on by contractors
in their meeting of similar obligations. Increased financial pressure on risk management is likely to
continue to increase into future years. However, these costs should be offset by improvement in
the reduction of claims and subsequent management.
6.4 Service delivery and growing community expectations
The community demands and expectations on Council services are increasing. There are high
levels of socio economic disadvantage across various areas in the municipality, and access to and
the provision of services in the outer areas of the municipality create additional costs for service
delivery. The priorities of existing and potential new services needs to be continually reviewed,
particularly in light of funding trends in future years and changes in community and demographics.
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Long Term Financial Plan 2014-15 to 2023-24
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6.5 Government funding
The largest source of government funding to Council is through the annual Victorian Grants
Commission allocation. The projected annual grant for 2014-15 is $14.8 million and it is assumed
that this grant will be escalated by 2.5% pa for future years. The level of State and Federal
government funding toward recurring services has remained relatively flat resulting in a further
reliance on rates revenue to meet service delivery expectations. There is no doubt that local
government has, over a number of years, been impacted by decisions of Government to shift costs
as seen by the 2010 increase in landfill levies announced by the State Government which continue
to rise.
Yarra Ranges continues to argue that the difficulties of providing services to a dispersed
community on the urban/rural fringe are not fully reflected in the Grants Commission methodology.
6.6 Municipal emergency planning and preparedness
Council's budget addresses the significant costs of emergency planning and preparedness,
including bushfire preparation works. The increased frequency and severity of extreme weather
events also continues to have a significant impact on Council's financial resources. Financial
pressure in this area will continue as Council continues to respond to the recommendations of the
Bushfires Royal Commission, Floods Enquiry and the State Government’s Emergency
Management White Paper. State and Federal grant funding opportunities have also been utilised to
offset new programs and further test and advance community safety initiatives across the
municipality.
6.7 Accessibility
It is our plan to make Yarra Ranges a place where residents can continue to engage in the
community as they grow older, where their contribution to the day-to-day life of the community is
valued, their experience and wisdom are respected, their advice sought and active participation in
community life is ongoing.
Across Yarra Ranges, the number of people aged over 65 years continues to grow, due to
increasing life expectancy and the effect of the `baby boomer' generation moving into the older age
groups. According to the ABS, the Yarra Ranges population aged 65 and over is projected to rise
from 18,236 in 2010 to 19,368 in 2019 and to 31,325 in 2031. This is an increase overall of 58 per
cent between 2011 and 2031. By 2031 one in every five Yarra Ranges resident will be over the
age of 65.
With a growing older population there are increasing pressures on a number of our services. There
are currently funding challenges arising from both an increase in demand for services coupled with
government policy changes around service delivery. Without commensurate additional investment
from the State and Federal Governments, access to services for those who are most vulnerable
will be compromised.
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Long Term Financial Plan 2014-15 to 2023-24
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7. Addressing the challenges – our strategy
Overview
Council’s financial strategy aims to support the achievement of Council Plan objectives balanced
with a sustainable financial framework. The overriding financial challenge facing Council is the
allocation of resources between recurrent services, new capital works and renewal / rehabilitation
of existing assets, in addition to debt reduction and reserve funds for unfunded defined benefits
superannuation liabilities. This challenge is highlighted through factors such as growing customer
expectations and a stronger focus on Council’s role in community and township development.
The decisions on service delivery and capital funding help drive, and in turn are influenced by, the
financial framework within which Council operates. The recommended strategy surrounding this
framework is outlined below, expressed in terms of the major income and expenditure items
forming the financial equation.
Income items
The major sources of funds available to Council are rates, government funding, fees and charges,
borrowings and existing cash balances. Each of these is addressed in turn.
7.1 Rates
Rates revenue is Council’s largest income stream and the one it most directly controls. Rate
increases over recent years have been consistently above inflation primarily for the following
reasons:





to address existing infrastructure issues;
to compensate for the cost shifting imposed by other levels of government;
to cover wage increases which have generally exceeded the inflation rate;
to cover significant externally imposed costs such as the superannuation liability from the
defined benefits scheme, occupational heath & safety increases, waste costs;
to fund new initiatives with a recurrent budget impact and other one-off costs.
Rates must be struck at a fair and reasonable level sufficient to provide funding for required service
levels and capital work activities. The Local Government Act requires that Council pursue a rating
policy that is consistent with a reasonable level of stability in the level of the rates burden.
In setting rates, Council makes a distinction within the property value component of rates based on
the purpose for which the property is used, that is, whether the property is used for residential,
commercial/industrial, or farming purposes. This distinction is based on the concept that
commercial/industrial businesses should pay a fair and equitable contribution to rates taking into
account the benefits those businesses derive from the Council services provided in that area. Farm
land is rated at a lower amount to encourage the continuation of farming pursuits on rural land.
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Long Term Financial Plan 2014-15 to 2023-24
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A separate rating component based on the principle of ‘user pays’ is determined specifically for the
provision of waste management services.
Within Yarra Ranges a number of properties are held by their owners in prime locations and are
currently undeveloped and are being land banked for a future development opportunity or sale.
Council has adopted land use strategies through master plans and the Yarra Ranges Planning
Scheme to facilitate appropriate development, however this is dependant upon the owner and their
willingness / ability to act.
Strategy:
7.1.1 Over the longer term, Council will increase the average General Rate to address cost
movements, including movements in both labour and non-labour costs as sufficient
to cover required service levels, asset renewal, the Capital Works Program, debt
reduction, and unfunded defined benefits superannuation liabilities.
7.1.2 Whilst average rates will increase, Council will be conscious of the need to continue
to monitor expenditure, and will maintain an ongoing focus on operating efficiencies
and cost savings.
7.1.3 The waste management service charge (a separate rate component) will be
structured to reflect the cost of providing waste services to the community.
7.1.4 Differential rates will be applied to ensure appropriate allocation of rates considering
the use of land and will include; general land, vacant sub standard land, farm land,
commercial land and industrial land.
7.1.5 There will be no Municipal Charge.
7.1.6 Council will maintain a rate structure that addresses the various long term objectives
and maintain a reasonable degree of stability in the level of the rates burden.
7.2 Government funding
General funding through specific Government funding for services provided by Council has been
generally declining in real terms. This necessitates a greater reliance on other revenue sources
(notably rates) or an unavoidable reduction in level of service provided.
Strategy:
7.2.1 Council will continue to strongly advocate for a more equitable distribution of
Federal and State Government funding, particularly for funding currently only
available to rural designated Councils.
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Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
7.3 Fees and charges
Council’s fees and charges comprise 6.0% of total income in the 2014-15 budget ($9.9 million).
While many of the fees and charges are set through legislation, Council does have discretion over
the amounts charged for a large number of services. As such, it is important that fees are set at
appropriate levels.
Strategy:
7.3.1
Fees and charges will be reviewed annually for appropriateness as part of Council’s
budget process. This review should involve consideration of the cost of the service,
the price charged by comparable service-providers (where applicable), and the
extent to which Council is prepared to provide the service at less than full-cost
recovery to reflect community and social benefits. Where appropriate, these reviews
will be done every 2-3 years rather than annually.
7.4 Loan borrowings
The issue of borrowings is complex and the decision to borrow will depend on a number of
important factors.
Reducing debt had been a key financial strategy over the last decade. This has enabled former
loan repayments to be injected into the capital works program on an ongoing basis. Reducing debt
also increased Council’s flexibility to respond to unforeseen events and provided the capacity to
fund large capital projects required in the future.
Benefits and costs of borrowing
The main advantage of borrowing to fund asset purchases is to enable the community to enjoy the
benefit of an asset now, with the cost being repaid over a period of time.
Borrowing in government has different consequences from borrowing in the private sector. In the
private sector, the planned rate of return on assets purchased might exceed the cost of borrowing,
and so the private entity may ultimately benefit financially as a result. In local government, some
assets may bring a specific financial return to Council but the majority will provide non-financial
benefits to the community (e.g. social, environmental).
The cost of borrowing today is the future repayment of principal and interest, which reduces the
total funds available for other purposes in future years. The extent of this cost, and any future
financial pay-back to Council, needs to be clearly understood when considering any borrowing
decision.
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Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
Borrowing may be appropriate to assist in funding very large capital work items, where the
magnitude of a given project simply prohibits its funding from ongoing income sources. In
assessing any such projects, consideration needs to be given to factors including:





The impact of the borrowing on recurring expenditure in future years;
Any additional income projected from the asset being financed;
The community’s willingness to pay for the asset through either reduced recurring
expenditure or increases in rates;
The total level of outstanding borrowings and interest burden which Council is prepared to
bear the impact of;
The ongoing whole of life costs of the asset.
Council’s current level of indebtedness is very small for an organisation of this size and there is
capacity to undertake borrowings at financially sustainable levels of debt in coming years.
Resident Schemes
Bank borrowings have in the past been utilised successfully in funding Resident Special Charge
Schemes where the property owners contribute to the loan repayments. In such cases there is no
net cost to Council through taking out the borrowing.
Strategy:
7.4.1
Borrowings will be considered as an option to fund the acquisition of assets where a
detailed business case analysis factoring in actual and opportunity costs indicates
that borrowing is the most economical funding method and that recurrent operating
and maintenance costs can be met in the operating budget.
7.4.2 That the cost of capital works under Resident Schemes will be funded through
borrowings (if required) to the extent that property owners are responsible for the
cost of repayment.
7.4.3 That borrowing will not be utilised as an option to fund ongoing operational
expenditure.
7.4.4 That borrowing be undertaken to support funding of capital items identified as part
of the approved extended 10-year capital works program that could not otherwise be
funded from ongoing income sources.
7.4.5 That overall borrowing limit will be set at a financially sustainable level. VAGO’s risk
assessment measure for low risk indebtedness to self-sourced funding ratio of 40%
will be applied as the maximum target measure.
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Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
7.5 Cash
Council’s cash position is discussed in section 5.5. The cash flow pattern is subject to fluctuation
during the year resulting from key revenue and expenditure payment dates.
Strategy:
7.5.1 Cash flow will be managed bearing in mind the known fluctuations across the
financial year and that cash surplus to immediate requirements will continue to be
invested appropriately in order to generate interest returns to Council.
7.5.2 Surplus cash will be used to assist in funding the extended capital works program to
the extent possible without compromising Council’s cash position.
Expenditure items
Council’s expenditure can be split into recurrent operating items, new initiatives / additional cost
pressures, renewal/rehabilitation of existing assets and spending on new capital works. Each of
these elements is addressed in turn.
7.6 Recurrent operating expenditure
Providing ongoing services and activities efficiently and to a high quality standard is the key to
achieving Council’s Vision.
Strategy:
7.6.1
Funding available for recurrent operating expenditure will be increased annually in
line with general cost movements. This will generally include a cost escalation
component for non-labour costs (which will be actively minimised), and known or
expected Enterprise Agreement increases for labour costs.
7.6.2
Services provided by Council will continue to be reviewed in light of community
expectations and shifting demand for services.
7.6.3
Areas of ‘discretionary’ cost will be reviewed and separately targeted in terms of
efficiency gains and cost reduction each year as part of the annual budget process.
7.6.4
Service delivery issues identified within this Plan will be specifically considered
during business planning and budgeting processes in terms of their priority and
required funding in order that both short and long term financial forecasts can
accurately reflect the funding requirements and internal reallocations required above
normal growth factors.
7.6.5
Collaborative service provision in the form of shared services will be further
explored to seek further efficiencies in service expenditure.
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Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
7.7 New initiatives and cost pressures
While ongoing activities will form the key part of Council’s services, it is important that Council is
able to respond to needs for one-off funding, new initiatives and additional cost pressures (i.e. over
and above cost escalation provided)
Strategy:
7.7.1 A small allocation of additional funding will be available annually to specifically fund
one-off projects, new recurrent initiatives and additional recurrent cost pressures.
This will be allocated during the budget process based on assessed strategic
priorities. The consequences in future years of accepting recurrent new initiatives
and cost pressures should be clearly documented and factored into future budget
scenarios.
7.8 Capital works expenditure
A basic principle of a well balanced and sustainable capital works program should be the
protection of the existing asset base as the first priority, with new works funded from remaining
resources.
A significant amount of work has been conducted to identify the required level of asset
maintenance / protection spending on different asset classes based on various modelling
scenarios.
A major thrust of the financial strategy is to address the problems relating to ageing infrastructure
through the extended capital works program which is targeted at purpose built community
infrastructure in various strategic locations around the municipality.
Currently a project is underway with the objective of upgrading the Corporate Asset System, to
ensure more accurate asset data is maintained to support robust long term financial planning.
On going education and increased awareness has been initiated as part of the National
Consistency Framework to understand service level requirements and formulate asset strategies
and asset management plans that address the service requirements.
Strategy:
7.8.1
Sufficient resources will be dedicated to renewing the existing asset base in the
long term as the first priority in the Capital Works Program.
7.8.2
Remaining funds available for capital works will be allocated to spending on new
assets, if required.
7.8.3
Asset realisation, rationalisation and de-commissioning will be considered as a
method of funding required new assets, particularly relating to community facilities.
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Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
7.8.4
The impact of new assets on the ongoing operating budget will be clearly identified
and considered when assessing proposals for funding new assets.
7.8.5
Application for external funding for both new and renewal projects will be
undertaken for all capital projects where available.
7.8.6
Service level requirements will be established to achieve a closer alignment to
asset requirements.
7.8.7
A targeted capital injection will be made to address the asset renewal gap. (Based
on current modelling, an additional $138 million will be made available over and
above the current set program for allocation to asset renewal over next 10 years).
25
Long Term Financial Plan 2014-15 to 2023-24
Appendix 1 – Financial Projections
The following pages contain Council’s projected financial information following the completion of the draft 10-year Capital Works Program, 4year Strategic Resource Plan and 10-year Financial Model.
Forecast Comprehensive Statement Income Statement
This statement shows what is expected to happen in terms of revenue and expenses over the 10-year period. The bottom line result essentially
represents the change in the net worth of Council’s assets during each financial year.
Forecast Balance Sheet
The Statement of Financial Position presents Council’s balance sheet across the 10-year period, showing the expected movement in assets
and liabilities by major category.
Forecast Cash Flow Statement
The Cash Flow Statement shows the expected cash inflows and outflows across the 10-year period and is split into three main categories of
cash flow:
Operating activities the normal service delivery functions of Council;
Investing activities the enhancement/creation of infrastructure and other assets; and
Financing activities the financing of Council’s functions.
26
Long Term Financial Plan 2014-15 to 2023-24
Strategic Resource Plan
Future estimates
30-Jun-15
30-Jun-16
30-Jun-17
30-Jun-18
30-Jun-19
30-Jun-20
30-Jun-21
30-Jun-22
$
$
$
$
$
$
$
$
REVENUES
4.80%
Rates - general
(119,816,392)
Rates - special rates & charges
(600,000)
Grants-recurrent
(25,910,487)
Grants-Non recurrent
(2,302,857)
Contributions - cash
(1,667,064)
Statutory fees and fines
(2,232,000)
User fees
(7,671,734)
Reimbursements
(333,626)
Interest
(2,123,000)
ERL contribution
(120,000)
Other revenue
(1,421,400)
TOTAL REVENUES
(164,198,560)
EXPENSES
Employee Costs
Materials & services
Bad and doubtful debts
Depreciation & amortisation
Finance costs
Other expenses
TOTAL EXPENSES
(126,991,901) (134,716,671)
(3,702,125)
0
(26,767,162) (27,656,487)
(4,575,232)
(1,913,009)
(1,450,317)
(1,462,187)
(2,271,050)
(2,611,076)
(7,843,470)
(8,031,934)
(303,702)
(309,469)
(2,176,000)
(2,230,325)
(124,000)
(127,000)
(1,497,262)
(1,523,765)
(177,702,221) (180,581,923)
4.80%
4.80%
30-Jun-23
4.80%
30-Jun-24
4.80%
4.80%
(142,852,548) (151,112,692) (159,804,404) (168,949,276) (178,569,958) (188,690,211) (199,334,958)
0
0
0
0
0
0
0
(28,577,154) (29,458,344) (30,367,400) (31,305,223) (32,272,744) (33,270,925) (34,300,758)
(1,913,088)
(1,725,000)
(125,000)
(125,000)
(125,000)
(125,000)
(125,000)
(1,741,099)
(1,767,215)
(1,793,724)
(1,820,630)
(1,847,939)
(1,875,658)
(1,903,793)
(2,452,103)
(2,525,666)
(2,601,436)
(2,679,479)
(2,759,864)
(2,842,659)
(2,927,939)
(8,229,737)
(8,476,629)
(8,730,928)
(8,992,856)
(9,262,641)
(9,540,521)
(9,826,736)
(315,381)
(324,842)
(334,588)
(344,625)
(354,964)
(365,613)
(376,581)
(2,286,008)
(2,577,606)
(2,677,682)
(2,980,488)
(3,238,103)
(3,499,128)
(3,763,623)
(131,000)
(134,275)
(137,632)
(141,073)
(144,599)
(148,214)
(151,920)
(1,550,920)
(1,597,448)
(1,645,371)
(1,694,732)
(1,745,574)
(1,797,941)
(1,851,880)
(190,049,038) (199,699,718) (208,218,165) (219,033,382) (230,321,387) (242,155,871) (254,563,188)
62,827,673
58,567,745
17,500
22,256,000
2,649,089
6,429,419
152,747,426
64,832,894
60,550,395
17,650
22,620,000
2,797,166
6,531,782
157,349,887
67,344,300
62,764,275
17,802
23,226,000
3,095,830
6,639,506
163,087,713
69,987,036
64,276,206
17,959
23,466,000
3,088,443
6,783,816
167,619,460
73,590,270
66,652,945
17,960
23,854,975
2,615,509
6,987,330
173,718,989
77,715,434
68,943,783
17,961
23,714,857
2,349,402
7,196,950
179,938,387
82,292,037
71,390,317
17,962
23,617,907
1,995,463
7,412,859
186,726,545
87,421,364
73,622,305
17,963
23,967,408
1,619,708
7,635,245
194,283,994
93,139,808
75,830,974
17,964
24,402,249
1,220,790
7,864,302
202,476,087
99,486,027
78,105,903
17,965
24,779,610
797,281
8,100,231
211,287,016
300,000
310,000
320,000
330,000
0
0
0
0
0
0
Net (Surplus) /Deficit
Other comprehensive
income
Net asset reval increment
(11,151,134)
(20,042,334)
(17,174,210)
(22,099,578)
(25,980,729)
(28,279,778)
(32,306,837)
(36,037,393)
(39,679,784)
(43,276,171)
(26,499,475)
(27,240,082)
(27,839,838)
(28,411,878)
(29,230,959)
(29,456,716)
(30,062,592)
(30,624,918)
(31,169,619)
(32,169,429)
Comprehensive result
(37,650,609)
(47,282,417)
(45,014,048)
(50,511,456)
(55,211,688)
(57,736,494)
(62,369,429)
(66,662,311)
(70,849,402)
(75,445,601)
Net (gain)/loss on disposal of
Property,Plant & equip,
Infrastructure
27
Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
BUDGETED STANDARD STATEMENT OF FINANCIAL POSITION
10 Yr LTFP 14/15-23/24
BALANCE SHEET
Forecast
2013-14
$'000
Budget
2014-15
$'000
Budget
2015-16
$'000
Budget
2016-17
$'000
Budget
2017-18
$'000
Budget
2018-19
$'000
Budget
2019-20
$'000
Budget
2020-21
$'000
Budget
2021-22
$'000
Budget
2022-23
$'000
Budget
2023-24
$'000
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Non Current assets classified as held for sale
Other Assets
15,250
18,289
20
0
3,100
28,118
19,523
18
0
2,885
29,037
21,453
18
0
2,951
30,972
22,902
16
0
3,068
33,038
24,220
16
0
3,236
35,480
25,495
16
0
3,281
37,209
27,602
12
0
3,378
41,450
29,087
12
0
3,480
53,728
31,599
12
0
3,638
63,762
33,377
12
0
3,748
73,468
35,103
12
0
3,864
Total Current Assets
36,659
50,544
53,459
56,958
60,510
64,272
68,201
74,029
88,977
100,899
112,447
Non-Current Assets
Trade and other receivables
Investments in associates accounted for using the equity method
Property, plant and equipment ,infrastructure
Intangible assets
3,271
4,000
870,819
3,143
4,120
926,152
6,141
4,244
980,088
5,093
4,371
1,024,346
4,093
4,502
1,073,496
3,128
4,636
1,123,630
2,377
4,774
1,175,022
1,624
4,915
1,228,939
1,021
5,060
1,277,773
478
5,208
1,333,545
0
5,360
1,393,997
Total Non-Current Assets
878,090
933,415
990,473
1,033,810
1,082,091
1,131,394
1,182,173
1,235,478
1,283,854
1,339,231
1,399,357
Total Assets
914,749
983,959
1,043,932
1,090,768
1,142,601
1,195,666
1,250,374
1,309,507
1,372,831
1,440,130
1,511,804
Trade and other payables
Trust funds and deposits
Provisions
Interest bearing loans and borrow ings
12,546
1,283
13,860
1,094
12,903
1,336
14,424
3,876
13,298
1,393
16,133
5,195
13,708
1,441
17,794
5,889
14,130
1,491
19,597
6,619
14,564
1535
21,513
5,746
15,015
1581
23,507
6,100
15,414
1629
25,652
6,476
15,908
1678
27,928
6,875
16,402
1728
30,350
7,298
16,912
1780
32,917
3,109
Total Current Liabilities
28,783
32,539
36,019
38,832
41,837
43,358
46,203
49,171
52,389
55,778
54,718
Provisions
Interest bearing loans and borrow ings
3,526
10,335
3,774
37,891
4,701
46,175
4,785
45,101
4,903
43,301
5,054
39,482
5,280
33,382
5,552
26,906
5,872
20,031
6,231
12,733
6,629
9,624
Total Non-Current Liabilities
13,861
41,665
50,876
49,886
48,204
44,536
38,662
32,458
25,903
18,964
16,253
Total Liabilities
42,644
74,204
86,895
88,718
90,041
87,894
84,865
81,629
78,292
74,742
70,971
Net Assets
872,105
909,755
957,037
1,002,050
1,052,560
1,107,772
1,165,509
1,227,878
1,294,539
1,365,388
1,440,833
Equity
Accumulated surplus
Reserves
411,243
460,862
421,458
488,297
440,345
516,692
456,330
545,720
477,204
575,356
503,185
604,587
531,465
634,044
558,772
669,106
589,809
704,730
624,489
740,899
662,765
778,068
Total Equity
872,105
909,755
957,037
1,002,050
1,052,560
1,107,772
1,165,509
1,227,878
1,294,539
1,365,388
1,440,833
Current Liabilities
Non-Current Liabilities
28
Long Term Financial Plan 2014-15 to 2023-24
BUDGETED STANDARD STATEMENT OF CASHFLOWS
10 Yr LTFP 14/15-23/24
Forecast
2013-14
$'000
Budget
2014-15
$'000
Budget
2015-16
$'000
Budget
2016-17
$'000
Budget
2017-18
$'000
Budget
2018-19
$'000
Budget
2019-20
$'000
Budget
2020-21
$'000
Budget
2021-22
$'000
Budget
2022-23
$'000
Budget
2023-24
$'000
Cash Flow s from operating activities
Receipts
Rates
Statutory Fees & Fines
User Fees and other Fines
Grants Operating
Grants Capital
Contributions
Reimbursements
Interest
Other Receipts
Net GST refund/payment
Paym ents
Payments to suppliers
Payments to employees (including redundancies)
Other Payments
Net cash provided by (used in) operating activities
113,547
1,924
7,206
18,140
4,246
1,817
82
1,957
2,273
10,251
119,459
2,232
7,848
26,022
2,405
1,700
356
2,053
1,765
10,895
125,919
2,271
8,022
26,882
4,779
1,479
324
2,126
1,534
10,816
134,472
2,611
8,215
27,775
1,998
1,491
330
2,180
1,518
10,182
142,695
2,452
8,415
28,700
1,998
1,775
337
2,186
1,560
10,782
150,930
2,526
8,667
29,585
1,802
1,802
347
2,627
1,591
11,051
158,629
2,601
8,914
30,498
131
1,829
357
2,678
1,638
11,438
168,308
2,679
9,195
31,440
131
1,856
368
2,980
1,686
11,864
176,790
2,760
9,466
32,411
131
1,884
379
3,188
1,732
11,558
187,586
2,843
9,753
33,414
131
1,912
390
3,499
1,784
12,461
198,225
2,928
10,042
34,448
131
1,941
402
3,763
1,835
13,094
161,443
174,735
184,152
190,772
200,900
210,928
218,713
230,507
240,299
253,773
266,809
(77,115)
(60,844)
(7,732)
(69,042)
(60,996)
(8,124)
(70,993)
(62,905)
(6,509)
(72,457)
(65,305)
(7,629)
(74,577)
(67,827)
(7,733)
(77,214)
(71,299)
(7,903)
(79,794)
(75,282)
(8,159)
(82,717)
(79,714)
(8,263)
(84,543)
(84,687)
(8,515)
(87,649)
(90,244)
(8,741)
(90,535)
(96,417)
(8,990)
(145,691)
(138,162)
(140,407)
(145,391)
(150,137)
(156,416)
(163,235)
(170,694)
(177,745)
(186,634)
(195,942)
15,752
36,573
43,745
45,381
50,763
54,512
55,478
59,813
62,554
67,139
70,867
(33,450)
597
(32,853)
(51,737)
347
(51,390)
(49,903)
277
(49,626)
(40,309)
344
(39,965)
(45,027)
493
(44,534)
(45,257)
500
(44,757)
(46,149)
500
(45,649)
(47,972)
500
(47,472)
(42,676)
500
(42,176)
(49,504)
500
(49,004)
(53,561)
500
(53,061)
(651)
0
(1,428)
(2,079)
(2,653)
34,000
(3,662)
27,685
(2,803)
14,000
(4,397)
6,800
(3,101)
5,000
(5,380)
(3,481)
(3,093)
5,000
(6,070)
(4,163)
(2,621)
2,000
(6,692)
(7,313)
(2,354)
0
(5,746)
(8,100)
(2,000)
0
(6,100)
(8,100)
(1,624)
0
(6,476)
(8,100)
(1,226)
0
(6,875)
(8,101)
(802)
0
(7,298)
(8,100)
(19,180)
34,430
12,868
15,250
919
28,118
1,935
29,037
2,066
30,972
2,442
33,038
1,729
35,480
4,241
37,209
12,278
41,450
10,034
53,728
9,706
63,762
15,250
28,118
29,037
30,972
33,038
35,480
37,209
41,450
53,728
63,762
73,468
Cash Flow s from investing activities
Payments for property,plant and equipment,infrastructure
Proceeds from sale of property,plant and equipment,infrastructure
Net cash provided by (used in) investing activities
Cash Flow s from financing activities
Finance Costs
Proceeds from interest bearing loans and borrow ings
Repayment of interest bearing loans and borrow ings
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of financial year
Cash and cash equivalents at end of financial year
29
Long Term Financial Plan 2014-15 to 2023-24
_______________________________________________________________________
Standard Capital Works Statement
Forecast
30-Jun-14
Budget
2014-15
Budget
2015-16
Budget
2016-17
Budget
2017-18
Budget
2018-19
Budget
2019-20
Budget
2020-21
Budget
2021-22
Budget
2022-23
Budget
2023-24
Capital expenditure by Spend Category
Infrastructure
Bridges
Drainage
Footpaths and cycleways
Off street car parks
Parks, open space and streetscapes
Recreational, leisure and community facilities
Roads
Waste management
Plant and equipment
Computers and telecommunications
Fixtures, fittings and furniture
Plant, machinery and equipment
Property
Building Improvements
Buildings
Land
Land Improvements
Total
581
2,309
3,056
1,458
4,197
823
10,630
175
365
1,764
3,808
358
2,790
1,025
8,334
963
947
1,802
3,394
1,108
2,749
274
11,807
0
642
1,746
2,469
681
3,031
280
8,962
0
395
2,161
2,845
581
2,241
455
8,305
0
443
2,185
2,585
425
2,067
467
9,053
0
456
2,181
2,652
436
2,199
478
7,952
0
471
2,236
2,722
447
1,941
489
7,633
0
483
2,292
2,762
458
2,213
500
8,416
0
482
2,349
2,830
470
2,268
512
8,623
0
494
2,408
2,902
481
2,319
524
8,839
0
731
52
2,799
408
105
1,404
916
107
1,396
429
111
1,564
439
113
2,331
450
116
2,961
462
119
1,902
1,037
121
1,949
1,063
125
1,998
1,089
128
2,048
1,116
131
2,099
2,681
5,949
1,711
9,548
2,835
21,718
2,212
18,182
2,430
22,732
3,496
21,010
2,887
24,426
2,808
26,120
2,750
19,617
2,817
25,889
2,889
29,361
708
36,150
730
33,313
0
49,052
0
40,309
0
45,028
0
45,258
0
46,150
0
47,973
0
42,677
0
49,505
0
53,563
Types of capital works
Capital renewal
Capital upgrade
Capital expansion
Capital new
Total capital
14,943
12,269
6,259
2,679
36,150
14,188 15,971
9,124 16,541
4,420
5,639
5,581 10,900
33,313 49,052
24,254
9,409
4,511
2,136
40,309
30,473
8,319
3,987
2,248
45,028
31,698
8,265
3,498
1,798
45,258
34,100
6,474
3,708
1,868
46,150
35,425
6,878
3,747
1,922
47,973
35,555
3,753
1,943
1,426
42,677
42,204
3,847
1,993
1,462
49,505
46,078
3,944
2,042
1,499
53,563
Total expenditure funded by
-Council
-Proceeds from sale of plant
-External
Total funding
31,756
598
3,796
36,150
30,333
347
2,633
33,313
38,257
344
1,708
40,309
42,584
493
1,951
45,028
42,528
1,105
1,625
45,258
46,125
0
25
46,150
47,948
0
25
47,973
42,652
0
25
42,677
49,480
0
25
49,505
53,538
0
25
53,563
Carry Forward from 2013/14
19,961
40,690
277
8,085
49,052
30