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

Requirement                                  Comments
Prepare revenue forecasts to demonstrate        FCP levels are determined utilising the financial and
revenue levels are meeting full cost             pricing model for the waste management business.
pricing obligations over a reasonable time
frame

Prepare the relevant governance reports         NCP reporting obligations are being complied with by
                                                 Council.




6.2         CBU Model
The intention of adopting the CBU model would be to create a more commercial operating
environment in the delivery of waste management activities in the region. Essentially, the day-to-
day operations of the business would be controlled by the commercial business manager and the
strategic direction of the business would be in accordance with established performance plans
approved by Council. Instead of being directly controlled by Council on a day-to-day basis, the
business unit would report its financial and non-financial performance against established targets
to Council on a regular basis.

The following table summarises the additional compliance/governance activities that a CBU model
would require. Under the CBU model, the business would need to prepare an Annual Performance
Plan (including business and operating plans), and Council would need to comply with additional
reporting requirements in its Corporate Plan and Operational Plan, as well as prepare an Annual
Operations Report for inclusion in its Annual Report.

Table 6.2: Implications of Adopting the CBU Model
Requirement                            Comments
Business Management                             Managerial control of the business unit would need to be
                                                 devolved to the managers within the unit.
                                                Clearly defined objectives/targets for the business unit
                                                 would need to be established by Council and agreed by
                                                 the business unit.
                                                Regulatory and policy functions would need to be
                                                 separated from the business to avoid conflict between
                                                 commercial and regulatory demands.

Financial                                       The business unit would be required to more formally
                                                 pay notional tax and dividend equivalents to Council
                                                An appropriate commercial capital structure may wish to
                                                 be established with a commercial debt to equity ratio.

Operational Plan                                Council’s Operational Plan would need to include the
                                                 outcomes and strategies outlined in the Corporate Plan,
                                                 the proposed outputs of the CBU, the activities which will
                                                 be carried out to deliver these outputs, and performance
                                                 measures concerning the delivery of these outputs.

Corporate Plan                                  Council’s Corporate Plan would need to include the
                                                 CBU’s objectives and the nature and scope of its
                                                 activities.




Waste Management Public Benefit Assessment                                                          Page 28