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LG Sustainability Stage one and two. Towards a sustainable future. LG Sustainability - Background. MAV and VAGO assessments Differing assessments of financial risk 2010- 20 Councils facing risk One is extremely high risk, four very high risk and fifteen are high risk

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LG Sustainability Stage one and two


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lg sustainability stage one and two

LGSustainabilityStage one and two

Towards a sustainable future

lg sustainability background
LG Sustainability - Background
  • MAV and VAGO assessments
  • Differing assessments of financial risk
  • 2010- 20 Councils facing risk
  • One is extremely high risk, four very high risk and fifteen are high risk
  • MAV - E and H risk Councils require external funding assistance
lg sustainability
LG Sustainability
  • Is information to assess Council’s financial sustainability credible?
  • What strategies does Council have to maintain a financially sustainable position?
  • What assistance does Council need from government?
lg sustainability project outcome
LG Sustainability - Project outcome
  • To determine, in partnership with the Council:
    • whether all management responses to its financial sustainability position have been exhausted and;
    • ultimately and legitimately requires assistance from State /Federal Government
lg sustainability pilot councils 2008 09
LG Sustainability – Pilot Councils 2008/09
  • Central Goldfields
  • Hepburn
  • Horsham
  • Ararat
  • Gannawarra
  • Corangamite
  • Yarriambiack
  • Towong
  • Loddon
  • West Wimmera
lg sustainability 2 2009 10
LG Sustainability (2) – 2009/10
  • Baw Baw
  • Colac Otway
  • East Gippsland
  • Glenelg
  • Hindmarsh
  • Hume City
  • Indigo
  • Kingston
  • Macedon Ranges
  • Maroondah
  • Moira Shire Council
  • Moorabool
  • Moyne
  • Southern Grampians
  • Strathbogie
  • Wellington
  • Wodonga City
lg sustainability self assessment
LG Sustainability - Self Assessment
  • Self Assessment - 8 key success factors:
    • Understanding Financial Sustainability
    • Corporate Governance
    • Service and Asset Management Plans
    • Financial Reporting
    • Annual Planning ,Budgeting and Rating
    • Long Term Financial plans
    • Service provision
    • Skill Development
lg sustainability gap analysis
LG Sustainability – Gap Analysis

WOMBAT SHIRE COUNCIL GAP ANALYSIS CHART

lg sustainability findings
LG Sustainability – Findings
  • Understanding financial sustainability
  • SRP’s – Policies and financial strategies
  • No substantial LTFP’s
  • Disparate /incomplete Asset Registers
  • Condition Data/Intervention levels
  • Depreciation charges not related to condition
  • Short term Capital Works program
lg sustainability findings13
LG Sustainability - Findings
  • Balance Sheet versus Moloney
  • Whole of life costing –not practiced.
  • Community consultation/LOS.
  • Budget in service level terms/SAMP’s
  • Performance reporting – Audit Committee
  • Rating strategy – future funding
lg sustainability pilot findings
LG Sustainability – Pilot findings
  • 8 of the 10 Councils are rating below average
  • 9 of the 10 Councils have underlying operating deficits
  • 2 of the 10 Councils have lower than average depreciation charges
  • 4 of the 10 Councils have overstated depreciation charges
  • 2 of the 10 Councils are over funding renewal gap.
  • Inconsistency in renewal valuation rates;
  • All Brownfield valuations on Balance Sheet
lg sustainability pilot capital
LG Sustainability Pilot - CAPITAL
  • Total Capital expenditure $62 million
  • Renewal Demand $48 million
  • Renewal investment $ 34 million
  • Unexpended CAPEX $7.8 million
  • 71 % of renewal demand funded
  • 55 % of total CAPEX was renewal
  • 45 % of CAPEX was new and upgrade
  • 12.5 % of budgeted CAPEX was not delivered.
lg sustainability 2 capital
LG Sustainability (2) - CAPITAL
  • Total Capital exp $222.76 million
  • Renewal Demand $160.40 million
  • Renewal investment $109.44 million
  • Unexpended CAPEX $56.96 million
  • 68 % of renewal demand funded
  • 49 % of total CAPEX was renewal
  • 29 % of CAPEX was upgrade
  • 22% of CAPEX was new
  • 26 % of Budgeted CAPEX was not delivered.
lg sustainability outcomes
LG Sustainability – Outcomes
  • Need robust Strategic Resource Plan
    • Long Term Financial Plan
    • Financial policies/ target ratios
    • 10 year CAPEX programme – R,U,N
    • Rating and revenue raising
    • Council engaged/report performance – Audit Committee
  • Review of Asset Management Strategy and practices
    • Asset Registers/Condition Assessments/Intervention levels
    • Renewal Valuations
    • Document management strategies – LOS/Rationalisation
  • Whole of organisation approach
  • Training
lg sustainability strategic resource plan

Debt

Strategy

Capital Works projects and funding

Revenue

Raising

(rating) strategy

STRATEGIC

RESOURCE

PLAN

Asset

Management

Strategies

Operational

Expenses

(service levels)

Notional

Reserve

Funds

Grants

and

Fees

LG Sustainability :Strategic Resource Plan
lg sustainability ltfp
LG Sustainability - LTFP
  • SRP – provided policy parameters for LTFP
  • Councils have increased rates significantly
  • 10 year Capital works program
  • Escalation factors
  • Financial Ratios
  • Charts
  • Financial Statements
  • Renewal Demand versus renewal annuity
  • Rating options
lg sustainability conclusion
LG Sustainability - Conclusion
  • Focus on determining issues impacting on sustainability
      • Self Assessment Framework
      • Data Review
      • Improvement Plan/cross functional team
  • Tools and techniques
      • Strategic Resource Plan
      • Long Term Financial Plan
  • Sustainable future