2021-06-30 Special Meeting Agenda

SPECIAL MEETING AGENDA   30 JUNE 2021




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SPECIAL MEETING AGENDA                                                                     30 JUNE 2021

   FINANCIAL SUSTAINABILITY POLICY

   COUNCIL POLICY

   Operating Surplus
   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 one of the
   three (3) key measures of financial sustainability required under legislation. It calculates the
   operating surplus (or deficit) as a percentage of Council operating revenue. The target operating
   surplus ratio set by the state government is between 0% and 10%.
   Council will target to achieve an operating surplus commensurate with mitigating known risks with
   respect to appropriately funding future trunk infrastructure requirements, whilst also ensuring that
   the operating surplus ratio is contained within the required benchmarks.
   Liquidity Management
   The cash expense cover ratio is a key indicator utilised to measure Council liquidity (i.e. current
   financial health) and to assess ongoing financial sustainability risk. This ratio calculates how long
   Council can continue paying its day-to-day expenses from cash at bank without needing additional
   cash flow injections. Council will target achieving a minimum cash expense cover of three months
   operating expenditure held as restricted cash in any given financial year. The cash expense cover
   ratio will be reported to Council on a monthly basis.
   Expenditure Management
   Council will ensure that expenditure on goods and services to meet established service levels will
   be undertaken efficiently and effectively. This will be achieved via the development of the annual
   operating expenditure budget from a zero base, ensuring staff compliance with Council’s policies
   and procedures as well as partnering with key stakeholders such as Local Buy to ensure efficient
   cost procurement options are implemented.
   Expenditure management outcomes will be measured by how Council performs annually against its
   operating and capital expenditure budget allocations.
   Physical and Natural Asset Management
   Council will ensure that it maintains its physical and natural assets on an ongoing basis at defined
   levels to ensure that services are able to be provided effectively to the community.
   The asset sustainability ratio is one of the three (3) key measures of financial sustainability required
   under legislation. This ratio is calculated by measuring the annual expenditure on the renewal and
   rehabilitation of Council’s assets against the annual depreciation charge. It is a measure of whether
   Council is reinvesting appropriately in existing infrastructure assets.
   Council will target over the life of the ten (10) year financial plan to achieve a minimum asset
   sustainability ratio of 90% (including plant, fleet and office equipment renewals) consistent with the
   benchmark unless condition based renewal forecasts demonstrate a percentage lower than 90% in
   any given year. Investment in natural assets will be prioritised according to biodiversity value and
   ecosystem service benefits realised for the community.
   Established management plans for Council’s asset and infrastructure classes will incorporate annual
   maintenance financial estimates as well as ten (10) year renewal / replacement forecasts developed
   from regular asset condition assessments. Asset management plan financial forecasts will be
   incorporated into Council's ten (10) year financial plan and annual budget to ensure financial
   sustainability implications are appropriately considered.

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