Long Term Financial Plan

159 Pages·2013·1.18 MB·English

SHIRE OF CUNDERDIN
LONG TERM FINANCIAL PLAN
2013-14 TO 2022-23
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TABLE OF CONTENTS

EXECUTIVE SUMMARY ........................................................................................................................................................... i
1.0 STRATEGIC OVERVIEW ............................................................................................................................................... 3
1.1 PURPOSE OF THE PLAN ......................................................................................................................................................... 3
1.2 LEGISLATIVE OBLIGATIONS .................................................................................................................................................. 3
1.3 STRATEGIC ALIGNMENT ........................................................................................................................................................ 4
1.3.1 Strategic Community Plan ................................................................................................................................................... 4
1.3.2 Corporate Business Plan ..................................................................................................................................................... 4
1.4 STRATEGIC FINANCIAL DIRECTION ...................................................................................................................................... 4
1.5 STRATEGIC PLANNING FRAMEWORK .................................................................................................................................. 5
2.0 THE SHIRE IN PROFILE ................................................................................................................................................ 7
2.1 OUR AREA ................................................................................................................................................................................ 7
2.2 OUR ECONOMY ........................................................................................................................................................................ 7
2.3 OUR PEOPLE ........................................................................................................................................................................... 7
2.4 OUR ENVIRONMENT ................................................................................................................................................................ 8
2.5 OUR KEY CHALLENGES AND RISKS ..................................................................................................................................... 8
2.6 STATISTICAL SNAPSHOT ....................................................................................................................................................... 8
3.0 OUR SERVICES ............................................................................................................................................................. 9
3.1 CURRENT SERVICES ............................................................................................................................................................... 9
3.1.1 Findings .............................................................................................................................................................................21
3.1.2 Outsourced Service Delivery Arrangements .......................................................................................................................21
3.2 FUTURE SERVICES ................................................................................................................................................................22
4.0 INFRASTRUCTURE ASSET MANAGEMENT ............................................................................................................. 23
4.1 ASSET MANAGEMENT PLANS ..............................................................................................................................................23
4.2 FUNDING GAP .........................................................................................................................................................................23
4.3 ASSET MANAGEMENT PLAN FINDINGS ...............................................................................................................................24
5.0 FINANCIAL SUSTAINABILITY .................................................................................................................................... 25
5.1 WHAT IS LONG TERM FINANCIAL SUSTAINABILITY ..........................................................................................................25
5.2 HOW IS LONG TERM FINANCIAL SUSTAINABILITY MEASURED .......................................................................................25
6.0 FINANCIAL PRINCIPLES AND STRATEGIES ............................................................................................................ 27
6.1 FINANCIAL PRINCIPLES ........................................................................................................................................................27
6.2 FINANCIAL STRATEGIES .......................................................................................................................................................27
6.2.1 Rating Strategy ..................................................................................................................................................................27
6.2.2 Cash Investments ..............................................................................................................................................................29
6.2.2.1 Local Government (Financial Management) Regulations 1996 ............................................................................................................ 29
6.2.2.2 Trustees Act 1962 .................................................................................................................................................................................. 30
6.2.2.3 Shire’s Investment Policy ....................................................................................................................................................................... 30
6.2.2.4 Impact on Interest Earned ..................................................................................................................................................................... 33
6.2.3 Fees and Charges ..............................................................................................................................................................33
6.2.4 Grants ................................................................................................................................................................................33
6.2.4.1 Financial Assistance Grants .................................................................................................................................................................. 33
6.2.4.2 Roads to Recovery Grants .................................................................................................................................................................... 34
6.2.4.3 Royalties for Regions Grant Funding .................................................................................................................................................... 35
6.2.4.4 State Road Funds to Local Government ............................................................................................................................................... 37
6.2.4.5 Black Spot Program ............................................................................................................................................................................... 38
6.2.4.6 Regional and Local Community Infrastructure Program ....................................................................................................................... 39
6.2.4.7 Grain Freight Network Funding ............................................................................................................................................................. 39
6.2.4.8 Other Grants and Capital Contributions ................................................................................................................................................ 40
6.2.5 Borrowings .........................................................................................................................................................................41
6.2.6 Reserves (Cash Backed) ...................................................................................................................................................41
6.2.7 Budget Surplus/Deficit ........................................................................................................................................................42
6.2.8 Capital Investments ............................................................................................................................................................43
7.0 WORKFORCE PLANNING .......................................................................................................................................... 45
7.1 CURRENT WORKFORCE BY AGE GROUP ...........................................................................................................................45
7.2 STAFFING LEVELS .................................................................................................................................................................46
7.3 FORECAST GROWTH IN LABOUR COSTS ...........................................................................................................................46
8.0 LONG TERM FINANCIAL PLAN – SCENARIO MODELLING .................................................................................... 47
8.1 SCENARIO 1 (BASELINE) .......................................................................................................................................................47
8.2 SCENARIO 2 ............................................................................................................................................................................48
8.3 SCENARIO 3 ............................................................................................................................................................................48
9.0 LONG TERM FINANCIAL PLAN ASSUMPTIONS ...................................................................................................... 51
9.1 EXTERNAL INFLUENCES .......................................................................................................................................................51
9.2 INTERNAL INFLUENCES ........................................................................................................................................................51
9.3 ASSUMPTIONS ........................................................................................................................................................................51
9.3.1 Population Growth ..............................................................................................................................................................51
9.3.2 Cost Indices .......................................................................................................................................................................52
9.3.2.1 Consumer Price Index ........................................................................................................................................................................... 52
9.3.2.2 Local Government Cost Index ............................................................................................................................................................... 52
9.3.2.3 Wage Price Index and Enterprise Bargaining Agreement ..................................................................................................................... 52
9.3.3 Rates .................................................................................................................................................................................53
9.3.3.1 Natural Growth ....................................................................................................................................................................................... 53
9.3.3.2 Rate Increases ....................................................................................................................................................................................... 53
9.3.3.3 Interest Charges on Late Payment of Rates, Instalment Interest and Administration Fees ................................................................. 53
9.3.4 Cash Investments ..............................................................................................................................................................53
9.3.5 Fees and Charges ..............................................................................................................................................................54
9.3.6 Grants ................................................................................................................................................................................54
9.3.7 Loan Borrowings ................................................................................................................................................................54
9.3.7.1 Current Borrowings ................................................................................................................................................................................ 54
9.3.7.2 New Borrowings ..................................................................................................................................................................................... 54
9.3.8 Type and Range of Services ..............................................................................................................................................55
9.3.9 Asset Renewal Funding Levels ..........................................................................................................................................55
9.3.9.1 Roads and Bridges ................................................................................................................................................................................ 55
9.3.9.2 Footpaths ............................................................................................................................................................................................... 55
9.3.9.3 Buildings and Structures ........................................................................................................................................................................ 55
9.3.10 Balanced Budget Approach ................................................................................................................................................55
9.3.11 Cash Reserves ..................................................................................................................................................................56
9.3.12 Depreciation .......................................................................................................................................................................56
10.0 RATIO ANALYSIS AND LONG TERM SUSTAINABILITY ....................................................................................... 57
10.1 CURRENT RATIO ....................................................................................................................................................................57
10.2 OPERATING SURPLUS RATIO ...............................................................................................................................................57
10.3 RATES COVERAGE RATIO.....................................................................................................................................................58
10.4 DEBT SERVICE COVER RATIO ..............................................................................................................................................58
10.5 ASSET SUSTAINABILITY RATIO ............................................................................................................................................59
10.6 ASSET CONSUMPTION RATIO ..............................................................................................................................................59
10.7 ASSET RENEWAL FUNDING RATIO ......................................................................................................................................60
10.8 SUMMARY ...............................................................................................................................................................................60
11.0 RISK ASSESSMENT................................................................................................................................................. 61
12.0 FINANCIAL PROJECTIONS ..................................................................................................................................... 63
13.0 PROJECTS NOT FUNDED IN THE LONG TERM FINANCIAL PLAN ..................................................................... 65
14.0 CONCLUSION – IMPLEMENTATION AND REVIEW OF THE LTFP ....................................................................... 67
APPENDIX 1 – SCENARIO 1 (BASELINE) ........................................................................................................................... 69
APPENDIX 2 – SCENARIO 2 ................................................................................................................................................. 77
APPENDIX 3 – SCENARIO 3 ................................................................................................................................................. 85
APPENDIX 4 – CAPITAL WORKS PLAN BY CLASS ........................................................................................................... 93
APPENDIX 5 – CASH RESERVES ...................................................................................................................................... 103
APPENDIX 6 – LOAN REPAYMENT SCHEDULES ............................................................................................................ 109
APPENDIX 7 – DEPRECIATION SCHEDULES ................................................................................................................... 121
APPENDIX 8 – 10 YEAR FINANCIAL PLAN ....................................................................................................................... 133
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EXECUTIVE SUMMARY
The Shire of Cunderdin’s Long Term Financial Plan (LTFP) is an important part of Council’s Integrated Planning process. The LTFP is
aligned with Council’s Strategic Community Plan and Corporate Business Plan, and will form the basis for the preparation of Council’s
annual budgets.
The Long Term Financial Plan covers a 10 year planning period, from 2013-14 to 2022-23 and therefore cannot be set in concrete.
The Plan includes the modelling of three scenarios based on a range of assumptions and assesses the Council’s revenue capacity
against community demands and service levels.
Projections contained in the statutory schedules attached to this Plan reveal that over the next 10 years the Shire will require revenue
from rates to grow faster than the anticipated Consumer Price Index, estimated over the life of the Plan of between 3% and 3.25%.
Scenario 1 sets the rate increases at 5.0% per annum over the life of the Plan. This is based on the Western Australian Local
Government Association Local Government Cost Index of 3.2% plus 1.8% for future infrastructure provisions.
The adoption of such a strategy will allow the Council keep rates at a reasonable levels and maintain existing service levels.

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