Future of Local Government Summit Local Government Sustainability

1. Future of Local Government SummitLocal Government Sustainability

2. Sustainability • To support the community and to continue to provide services the Council must remain sustainable • Future financial performance is an indicator of sustainability • Solutions are not always financial

3. Council Capacity Continuum Where does your Council sit now? Where will it be in 10 years time? Financially Secure Wants Regional Aquatic Centres, Community Centres, Performing Arts Centres Financially Capable Intermediate Needs Infant Welfare Services, Home Help, Preschool, Parks & Gardens Financially Challenged Basic Needs Roads, Garbage, Health Services

4. Challenges – Broader Environment • Globalisation • Environment Changes • Changing community and social expectations • Decline of traditional industries – agriculture, food processing, manufacturing • Growth in communications – people want access to information ‘now’ • Debt management (national, state & local) • Demographic changes • Smaller Government • Low Carbon Future - Peak oil

5. Challenges – Local Environment • Two Speed Local Government Sector Rural • Population decline (22/47 Councils recorded negative pop growth 2009-2012) • Low median household income (35/47 Councils median less than $700/wk) • 81% of the Communities registered an increase in disadvantage between 2006 -2011 (as measured by the socio-economic disadvantage index) • Average age of population has increased • Aggregation of landholding operations • Peri-Urban Councils and Regional Cities fair better than rest of the Rural Councils • Urban • Population growth (2/32 Councils recorded negative pop growth 2009-2012) • Higher median household income (4/32 Councils median less than $700/wk) • 66% of the Communities registered an increase in disadvantage between 2006 -2011 (as measured by the socio-economic disadvantage index) • Average age of population more stable • Increase in population • Growth in properties

6. Local Environment - Rural

7. Challenges – Local Government • Changing community and social expectations • Pressure on Councils to retain their identity and independence • Tighter public sector funding in the future • Community resistance to large rate increases • Transfer of service provision • Most Councils have an unfunded community infrastructure gap over next 20 years • $2.3 billion unfunded community infrastructure gap over next 10 years

8. Challenges – Local Government Rural • Area of State – 217,000 km^2 (95.6%) • Population – 1,220,000 • Pop Density – Min 0.5 h/km^2 – Max 360h/km^2 • Road Length – 105,000 km • Urban • Area of State – 10,100 km^2 (4.4%) • Population – 4,400,000 • Pop Density – Min 61 h/km^2 – Max 4,860h/km^2 • Road Length – 24,500 km

9. Challenges – Organisational • Changing community and social expectations • Managing expectations • Priority setting • Aging Workforce • Skill shortages • Vested interests resist change • Staff are struggling to find the time and resources to do their duties

10. Council Finances

11. Employee Costs • Annual Increase 5.0~5.5%

12. Materials & Services • Annual Increase 3.9~4.5%

13. Operating Expenses • Annual Increase ~4.4% • Reduction managed by lowering service standards each year

14. Capital Investment

15. Total Income • Annual Increase 4.4~4.6%

16. Rates & Charges • Inflation Rate (CPI) – 2.5~2.9%

17. Long Term Financial Plan Objectives • It should be based on an organisation achieving its affordable service level objectives whilst maintaining its financial sustainability* Strategy • It should include a description of the financial strategy that is based on Review • It should be reviewed annually * Long Term Financial Planning – Practice Note 6 (IPWEA/ACELG) - 2012

18. Financial Management Sustainability Measures – The importance of a GOOD LTFP • Must manage in a resource constrained environment • Community will not continue to accept large rate increases • Ensure that the financial modelling advice provided is sound

19. Underlying Operating Position

20. Action Required • The current way of doing things is no longer sustainable • Costs increasing above resident’s capacity to pay • Service delivery under threat • Asset degrading • Risk of government intervention • Need a new way

21. Council Finances

22. Service Driven View Customers/Residents/Community Council Services External Focused Services Asset Support Services Internal Services

23. Service Delivery Service Planning (Effectiveness) • Strategic integrated planning • Linked to other levels of government • Customer/community focused • Allocate available resources to highest need • Comparative choice • Improve service outcomes • Improve customer satisfaction • Transparency and accountability Procurement (Efficiency)

24. Support Services Target efficiency gains of over 30% Efficiency considerations • Build systems that are customer and service centric • Adaptive and responsive • Integrated systems linked to other levels of government • Joined up Government • Common systems and processes across Councils • Shared Services • Regional Hubs • Shared staff • Contracts • Use of advanced technology • Cloud computing (software as a service) • Bureau Services • Common data sets • Common systems and processes across Councils

25. Capital Works • Fund renewal demand • New and Upgrades to support changes in service delivery • Account for all life cycle costs • Decisions based on need within financial capacity

26. Summary Management & Financial Systems of the future must be: • Customer focused • Adaptive • Flexible • Responsive • Robust • Integrity

27. End Presenter Ian Mann CT Management Group ianm@ctman.com.au 0429 941 435