2016-02-02 P&O Committee - Item 7 - Attachment 1 - Waste Management PBA Draft Report

4.3       Financial Assessment of Business Models
The impact assessment analysis in the preceding section identified a number of qualitative
financial implications associated with the adoption of each business model, including additional
compliance related costs as well as the potential commercial benefits that may be realised under
the CBU model.

Additional ongoing compliance costs for the CBU business model were estimated according to the
specific legislative obligations that would be incurred if adopted. It was estimated that one
additional employee would be required under the CBU model given the greater level of compliance
required compared to the FCP business model.

In terms of establishment costs for the CBU business model, it was assumed that any incurred
costs could be absorbed within the current business expenditure base. Also, any identified
efficiencies associated with internal service levels negotiated under the CBU model were not
included (given Council will have to reallocate these costs internally). Other operating expenses
associated with compliance were also estimated and included (such as branding and advertising,
recruitment costs, publication costs, etc.). The total ongoing compliance costs under each model
were estimated as follows:
Table 4.3: FCP and CBU Annual Compliance Cost Estimates
Description                            FCP Model           CBU Model
Salaries (including on costs)          $-                  $100,000
Other Operating Expenses               $-                  $40,000
Financial and Pricing Model            $20,000             $20,000
Total                                  $20,000             $160,000


4.4       Impact Assessment Outcomes
Table 4.4: Impact Assessment Summary
Impact Area            Impact Criteria                   FCP                    CBU
Business Unit          Pricing                           NET COST (very low)    NET COST (very low)
Financial Position     Non-commercial activities         NIL IMPACT             NIL IMPACT
                       Administration                    NET COST (medium)      NET COST (medium)
                       Operational Efficiency            NET COST (low)         NET BENEFIT (low)
                       Business Definition               NET BENEFIT (medium)   NET BENEFIT (low)
Noosa Council          Community Service Provision       NET BENEFIT (medium)   NET BENEFIT
Budget Position                                                                 (medium)
                       Financial Sustainability          NET BENEFIT (high)     NET BENEFIT
                                                                                (medium)
                       Ratepayer Impact                  NET BENEFIT (high)     NET BENEFIT
                                                                                (medium)
                       Compliance                        NET BENEFIT (medium)   MIXED IMPACT
Market                 Market Pricing                    NET BENEFIT (high)     NET BENEFIT (low)
                       Competitive Neutrality            NET BENEFIT (high)     NET BENEFIT (high)
Business Staff         Resourcing                        NIL IMPACT             NET COST (low)
                       Morale                            NIL IMPACT             MIXED IMPACT
Customers              Pricing                           NET BENEFIT (high)     NET BENEFIT (high)
                       Customer Service Provision        NET BENEFIT (medium)   MIXED IMPACT
Regional               Supporting Regional Development   NET BENEFIT (medium)   NET BENEFIT (low)
Development and        Sustainable Investment            NET BENEFIT (low)      NET BENEFIT (low)
Economic Stability
Social Welfare and     Equity Between Customers          NET BENEFIT (medium)   NET BENEFIT
Equity                                                                          (medium)
                       Ratepayer Equity                  NET BENEFIT (low)      NET BENEFIT (low)
                       Inter-generational Equity         NET BENEFIT (high)     NET BENEFIT (high)
                       Community Affordability           NIL IMPACT             NET COST (low)
Environment            Resource Sustainability           NET BENEFIT (low)      NET COST (low)
                       Environmental Outcomes            MIXED IMPACT           MIXED IMPACT
CONSOLIDATED OUTCOME                                     NET BENEFIT            NET BENEFIT


Waste Management Public Benefit Assessment                                                    Page 24