2014-01-13 Item 6.3 Appendices 1-5

Appendix 5: QTC’s sustainability rating definitions

Ratings

Very Strong           A local government with a very strong capacity to meet its financial
                      commitments in the short, medium and long-term. It has a record of reporting
                      operating surpluses and is highly likely to be able to manage major unforeseen
                      financial shocks and any adverse changes in its business without revenue
                      and/or expense adjustments. Its capacity to manage core business risks is
                      very strong.

Strong                A local government with a strong capacity to meet its financial commitments in
                      the short, medium and long-term. It generally has a record of operating
                      surpluses and may occasionally report minor operating deficits. It is able to
                      address its operating deficits, manage major unforeseen financial shocks and
                      any adverse changes in its business, with minor revenue and/or expense
                      adjustments. The expense adjustments are likely to result in only minor
                      changes to the range of and/or quality of services offered. Its capacity to
                      manage core business risks is strong.

Sound                 A local government with an adequate capacity to meet its financial
                      commitments in the short, medium and long-term. While it is likely that it may
                      have a record of minor to moderate operating deficits, the local government is
                      expected to regularly report operating surpluses. It is likely able to address its
                      operating deficits, manage major unforeseen financial shocks and any adverse
                      changes in its business, with minor or moderate revenue and/or expense
                      adjustments. The expense adjustments are likely to result in some changes to
                      the range of and/or quality of services offered. Its capacity to manage core
                      business risks is sound.

Moderate              A local government with an adequate capacity to meet its financial
                      commitments in the short to medium-term and an acceptable capacity in the
                      long-term. While it has some record of reporting minor to moderate operating
                      deficits, the local government may also have recently reported a significant
                      operating deficit. It is likely able to address its operating deficits, manage
                      unforeseen financial shocks and any adverse changes in its business, with
                      moderate revenue and/or expense adjustments. The expense adjustments are
                      likely to result in a number of changes to the range of and/or quality of services
                      offered. Its capacity to manage core business risks is moderate.

Weak                  A local government with an acceptable capacity to meet its financial
                      commitments in the short to medium-term and a limited capacity in the long-
                      term. It has a record of reporting moderate to significant operating deficits with
                      a recent operating deficit being significant. It is unlikely to be able to address
                      its operating deficits, manage unforeseen financial shocks, and any adverse
                      changes in its business, without the need for significant revenue and/or
                      expense adjustments. The expense adjustments would result in significant



De-amalgamation Analysis of Sunshine Coast Regional Council                                         Page 38