2026/27 FINANCIAL POLICIES · Attachment 1 - Financial Sustainability Policy

Attachment 1 – Financial Sustainability Policy

 A Financial Sustainability (Sustainability) Guideline has also been developed by the state
 government, with this document requiring Council to calculate and publish relevant measures of
 financial sustainability which show whether Council is achieving its financial sustainability objectives
 over the short and medium term.

 The key measurement criteria for whether Council is achieving its financial sustainability objectives
 are the nine financial sustainability ratios required to be published under section 169 of the Local
 Government Regulation 2012 (the Regulation), namely the:
 1.    Council controlled revenue ratio*
 2.    Population growth ratio*
 3.    Operating surplus ratio
 4.    Operating cash ratio
 5.    Unrestricted cash expense cover ratio
 6.    Asset sustainability ratio
 7.    Asset consumption ratio
 8.    Asset renewal funding ratio*
 9.    Leverage ratio.
 *These ratios are for contextual purposes only meaning there is no set target for these measures, nor will they be subject to audit. They are
 included only to provide further information about Council’s financial capacity and asset management.


 Council’s current and expected financial sustainability performance will be measured and reported
 against the benchmarks set by the state government in its Financial Sustainability (Sustainability)
 Guideline, as well as by ongoing periodic sustainability assessments undertaken by the Queensland
 Treasury Corporation (QTC).

 COUNCIL POLICY

 Operating Performance

 Council will ensure that it maintains an operating surplus each year over the life of the ten (10) year
 financial plan. An operating surplus is achieved when operating revenues are greater than operating
 expenses (including depreciation and interest on debt).

 The operating surplus ratio is a key measure of financial sustainability required under legislation.
 It calculates the operating surplus (or deficit) as a percentage of operating revenue. An operating
 surplus ratio above 0% indicates that Council is managing its finances within its existing funding
 envelope and generating surplus funds for capital funding or other purposes. The target band for
 Council is greater than 0% measured as a single year result and a five-year average result.

 The operating cash ratio measures Council’s ability to cover its core operational expenses and to
 generate a cash surplus (excluding depreciation, amortisation and finance costs). A positive cash
 ratio indicates that Council is generating surplus cash from its operations and has the ability to self-
 fund its capital expenditure requirements. The target set by the state government for this ratio is also
 greater than 0% measured as a single year result and a five-year average result.

 Council will target to achieve an operating surplus commensurate with mitigating known risks with
 respect to appropriately funding future trunk infrastructure and capital expenditure requirements,
 whilst also ensuring that the operating surplus ratio and operating cash ratios are contained within
 the required benchmarks.




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