2017-06-29 Special Meeting Agenda

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.

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.

Asset management

Council will ensure that it maintains its infrastructure and 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. The target asset sustainability
ratio set by the state government is greater than 90%.

Council will target over the life of the ten (10) year financial plan to achieve a minimum asset
sustainability of 90% consistent with the benchmark.

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.

Annual depreciation forecasts will be developed on an asset by asset basis utilising methodology
endorsed by the Queensland Audit Office, with assets regularly revalued in accordance with
legislative requirements

The QTC project decision framework will be utilised for business case analysis for all new and
replacement capital projects in accordance with policy. The outcomes from the analysis will be used
to inform Council of whole of life costing implications associated with each project.




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