2014-02-25 Planning & Organisation Committee Meeting Agenda

PLANNING & ORGANISATION COMMITTEE MEETING AGENDA   25 FEBRUARY 2014




                                                       Page 55 of 92

PLANNING & ORGANISATION COMMITTEE MEETING AGENDA                           25 FEBRUARY 2014

                                                                              ATTACHMENT 1
NCP Reform Options
1.    Significant Business Activities
Competition reforms may be applied to significant business activities via Full Cost Pricing or
Commercialisation.

Full Cost Pricing
e   Reform option is determined via a public benefit assessment process.
e   Retention of the business activity within Council's current organisational structure.
¢   Setting prices in accordance with commercial full cost recovery principles, including recovery
    of:
       -   Efficient operating expenses;
       -   Areturn of capital (i.e. depreciation expense); and
       -   Areturn on capital (i.e. cost of debt plus return on equity invested in the business).
e   Full cost pricing reform implies the application of competitive neutrality principles.
Commercialised Business Unit

e   Reform option is determined via a public benefit assessment process.
e   Creation of a commercialised business unit (not a separate legal entity) to manage the
    business.
e   Setting prices in accordance with commercial full cost recovery principles, including recovery
    of:
       -   Efficient operating expenses;
       -   Areturn of capital (ie. depreciation expense); and
       -   A returm on capital (i.e. cost of debt plus return on equity invested in the business).
e   Implied that an increase in managerial autonomy for day-to-day operations is provided.
e   Implied that there is a greater ability to source inputs from outside of Council.
e   Own business and operating plan.
e   Implied that there is more of a commercial orientation than full cost pricing.
e   Additional reporting obligations such as annual tax equivalent retums, annual performance
    plan and separate reporting of performance in Council's annual report.
¢   Commercialisation requires the application of competitive neutrality principles.
2.    Prescribed or Voluntarily Recognised Business Activities
Code of Competitive Conduct
e   Reform option applied via annual Council resolution.
e   Retention of the business activity within Council's current organisational structure.
e   Setting prices in accordance with commercial full cost recovery principles, including recovery
    of:
       -   Efficient operating expenses;
       -   Areturn of capital (ie. depreciation expense); and
       -   Areturn on capital (i.e. cost of debt plus retum on equity invested in the business).
«   Code of competitive conduct implies the application of competitive neutrality principles.
e   Automatic application of the code of competitive conduct to prescribed activities under
    legislation (i.e. building certification and competitive roads activities).

                                                                                    Page 55 of 92