2022-06-28 Special Meeting Agenda

SPECIAL MEETING AGENDA   28 JUNE 2022




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SPECIAL MEETING AGENDA                                                                            28 JUNE 2022

              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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