2014-01-13 Item 6.3 Appendices 1-5

1.3      Financial effect per rateable property – Base Case versus
         Breakeven Case
QTC undertook an assessment of the impact to ratepayers of de-amalgamation by comparing
the average net rates and utilities per rateable property that would apply under the Base Case
for the Proponent and Remaining Councils, to the average net rates and utilities per rateable
property that would apply for the Proponent and Remaining Councils to achieve a balanced
operating result (ie, the Breakeven Case).

1.3.1 Base Case average annual rates per rateable property

Table 2 shows the average net rates and utilities per rateable property that would apply using
QTC’s Base Case for the Proponent and Remaining Councils.

TABLE 2 – BASE CASE AVERAGE ANNUAL NET RATES AND UTILITIES PER RATEABLE PROPERTY

                            FY2013    FY2014    FY2015    FY2016       FY2017

Proponent Council ($)       1,894      2,000     2,114        2,234    2,362
Remaining Council ($)       1,651      1,735     1,851        1,953    2,059



1.3.2 Breakeven average annual rates per rateable property

QTC considers that a balanced operating result is essential to a council’s long term financial
sustainability. Table 3 shows the estimated incremental increase / (decrease) in net rates and
utilities per rateable property that would apply if de-amalgamation was successful and the
Proponent and Remaining Councils were to achieve a balanced operating result (ie, the
breakeven rates).

TABLE 3 - CHANGE IN AVERAGE ANNUAL NET RATES AND UTILITIES PER RATEABLE PROPERTY
– BREAKEVEN CASE INCREMENTAL TO BASE CASE

                             FY2013    FY2014    FY2015       FY2016   FY2017
Breakeven case
Proponent Council ($)           101        14        23          46         4
Change from Base Case (%)        5%        1%        1%          2%        0%

Remaining Council ($)            29        52        61          76        52
Change from Base Case (%)        2%        3%        3%          4%        3%



The required increases per rateable property in the Breakeven Case when compared to the
Base Case forecasts reflect:
      the elimination of operating deficits in the current five year forecasts where they existed
      the cost increases attributable to the impact of de-amalgamation, with the upfront costs
       being incurred in FY2013 and other costs expensed in future years, and
      the impact of increased operating expenses associated with a reduction in economies of
       scale and efficiency.



De-amalgamation Analysis of Sunshine Coast Regional Council                                  Page 6