2014-01-13 Item 6.3 Appendices 1-5

Ratings

                      changes to the range of and/or quality of services offered. It may experience
                      difficulty in managing core business risks.

Very Weak             A local government with a limited capacity to meet its financial commitments in
                      the short and medium-term, and a very limited capacity long-term. It has a
                      record of reporting significant operating deficits. It is highly unlikely to be able
                      to address its operating deficits, manage unforeseen financial shocks and any
                      adverse changes in its business without the need for structural reform and
                      major revenue and/or expense adjustments. The expense adjustments are
                      likely to result in significant changes to the range and/or quality of services
                      offered and it may need the assistance from higher levels of government. It will
                      have difficulty in managing its core business risks.

Distressed            A local government with a very limited capacity to meet its short-term financial
                      commitments and no capacity to meet its medium to long-term financial
                      commitments. It has a record of reporting significant operating deficits. To be
                      able to address its operating deficits, meet its medium and long-term
                      obligations, manage unforeseen financial shocks and any adverse changes in
                      its business, major revenue and expense adjustments and structural reform
                      will be required. The local government is unlikely to have the capacity to
                      manage core business risks and may need assistance from higher levels of
                      government.


Outlooks

A ratings outlook generally focuses on the potential movement in an entity’s rating in the short-term
(ie, less than 24 months). Outlooks may be positive, neutral or negative.

Positive/Negative     As a result of a foreseeable event or circumstance occurring, there is the
                      potential for enhancement/deterioration in the local government’s capacity to
                      meet its financial commitments (short and/or long-term) and resultant change
                      in its rating. However, it does not necessarily indicate that a rating change
                      may be forthcoming.

Neutral               There are no known foreseeable events that would have a direct impact on
                      the local government’s capacity to meet its financial commitments. It may be
                      possible for a rating upgrade or downgrade to occur from a neutral outlook, if
                      such an event or circumstance warranted as such.




De-amalgamation Analysis of Sunshine Coast Regional Council                                         Page 39