2014-01-13 Item 6.3 Appendices 1-5

Financial viability and sustainability
QTC financial analysis
QTC has had a long‐standing relationship with local governments in Queensland. Of
particular note was QTC’s major review of the financial sustainability of 109 of
Queensland’s local governments in July 2007. QTC has also undertaken and continues to
undertake regular credit reviews of local governments.

QTC was engaged to assist in conducting a comprehensive, objective analysis of both the
proposed NSC and remaining SCRC. The full report De‐amalgamation Analysis of Sunshine
Coast Regional Council is attached (Appendix 1).

During this process, QTC participated in the consultation process with representatives of
NIA to clarify details of the financial model provided. QTC also engaged with SCRC to
understand the allocation of revenue, costs, assets and liabilities between NSC and the
remaining local government. QBC gave broad guidance on what may constitute de‐
amalgamation costs, however each proposal was considered on a case‐by‐case basis.

It was assumed from the outset there would be disparity in the figures provided by the
de‐amalgamation proponents and the SCRC. QTC made adjustments to the assumptions
proposed where they were not considered to be complete and/or reasonable.

For the purpose of this review, a five‐year timeframe was used to create financial
forecasts, and also included consideration of the impact of de‐amalgamation from service,
community, financial and economic perspectives.

A sustainability rating was provided by QTC on the Base Case scenario. The Base Case
scenario indicates how a council is expected to perform against key performance
indicators in the coming years taking into account revenue, service delivery levels and the
operational environment.

The sustainability rating also takes into account de‐amalgamation costs (both one‐off and
fixed asset costs) and incremental annual recurring costs. Incremental annual recurring
costs are not strictly de‐amalgamation costs, but are expected to be incurred to operate a
new NSC.

A new NSC is expected to have minor operating deficits for the five‐year forecast period
(Appendix 1, table 14 – page 24). Long‐term operating deficits are unsustainable. How a
new NSC would manage this matter over the long term could take different forms. Rates
could be increased and/or service levels reduced. While a break‐even budget scenario is
provided to ensure completeness of information (Appendix 1, table 3 – page 6), it is
acknowledged that, should the proposed NSC be reconstituted, the council will make its
own decisions on revenue and expenditure.

Rating figures provided by QTC do not take into account the differential rating systems
used by Queensland councils. This was deliberate and ensures the effective comparison
between the proposed NSC and the proposed remaining SCRC.

                                      Queensland Boundaries Commissioner Report – Proposed Noosa De-amalgamation
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