Meeting papers

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, asset consumption and asset renewal ratios are the three (3) key
measures of financial sustainability relating to the management of Council’s assets required under
legislation.

The asset sustainability ratio is calculated by measuring the expenditure on the renewal and
rehabilitation of Council’s existing infrastructure assets against the annual depreciation charge
relating to infrastructure assets. It is a measure of whether Council is reinvesting appropriately in
existing infrastructure assets as they reach the end of their useful lives.

Council will target over the life of the ten (10) year financial plan to achieve a minimum asset
sustainability ratio of 80% measured as a single year result and as a five-year average result
(excluding plant, fleet and office equipment renewals) consistent with the benchmark unless
condition based renewal forecasts demonstrate a percentage lower than 80% in any given year.

The asset consumption ratio measures the extent to which Council’s infrastructure assets have
been consumed compared to the cost of building a new asset with the same benefit to the
community. It is calculated by measuring the written down replacement cost of infrastructure assets
compared to the current replacement cost of those assets. A target of greater than 60% measured
a single year result and a five-year average result has been set to ensure that Council’s infrastructure
assets are being consumed in line with their estimated useful lives.

The asset renewal funding ratio measures the ability of Council to fund its projected infrastructure
asset replacement in the future. It is calculated by measuring planned capital expenditure on
infrastructure assets as a percentage of required capital expenditure on infrastructure asset as
outlined in Council’s asset management plans and forecasts. The ratio should be as close to 100%
as possible as this indicates that Council is appropriately funding and delivering the entirety of its
required capital program as set out in its asset management plans.

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.

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


                                                                                                 Page 3
                                                                                                 Page 12 of 392