Meeting papers

GENERAL COMMITTEE MEETING                                                         20 JANUARY 2025



Finance
Budget Review 2 continues Council’s focus on, and compliance with, its Financial Sustainability
Policy. Council has an ongoing responsibility to ensure that it has sufficient resources now and
into the future to provide levels of service that are both affordable and considered appropriate
by the community. This responsibility encompasses how decisions are made regarding the
allocation of ratepayer funds to Council’s day to day operations as well as towards the
replacement of existing assets and procurement of new assets.

The key measurement criteria for whether Council is achieving its financial sustainability objectives
over the short and medium term are the achievement of set targets for a variety of financial
sustainability ratios which are required to be published under legislation. These ratios effectively
allow the community to determine:
1. If Council is appropriately funding its day to day operations and asset consumption costs (i.e.
   the operating surplus ratio);
2. Ensuring its debt is at a level that can be repaid from current operating revenues (i.e. the net
   financial liabilities ratio); and
3. Replacing community infrastructure when required and to ensure asset service levels can be
   maintained (i.e. the asset sustainability ratio).
Budget Review 2 continues Council’s financial sustainability commitment with all ratios within the
benchmark ranges set by the Queensland Government:
                                                                    Original
Indicator                               Target                                       BR1        BR2
                                                                    Budget
Council Controlled Revenue Ratio        No set target                 75.9%         75.2%     74.05%

Operating Surplus Ratio                 Greater than 0%               0.10%         (0.1%)      0.1%

Operating Cash Ratio                    Greater than 0%              18.10%         17.7%      17.8%

Unrestricted Cash Expense Cover Ratio Greater than 3 months       7.7 months    7.3 months 7.4 months

Total Cash Expense Cover Ratio          Greater than 3 months     8.9 months    9.4 months 9.5 months

Asset Sustainability Ratio              Greater than 80%            102.70%        136.7%     116.6%

Leverage Ratio                          0-3 times                   1.1 times    1.2 times 0.94 times

Net Liabilities Ratio                   Less than 60%                 0.70%         (3.2%)     (7.0%)




Risk & Opportunities
In order to manage and mitigate these risks Council uses various tools which include monthly
ongoing financial reporting to identify and address emerging issues, conservative budgeting,
compliance with the Financial Sustainability Policy, regular budget reviews, effective liquidity
management to ensure sufficient fiscal flexibility, as well as adhering to the Reserves and Restricted
Cash policy which requires that Council maintains both a disaster management reserve and a
minimum 3 months cash cover to fund emergent matters.

Some examples of potential risks that may impact on Council’s operational performance, capital
program delivery, cashflow and cash reserves include:
•   substantial damage to or failure of Council infrastructure due to natural disaster or other
    emergent issue that may require significant unplanned investment;



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