2014-01-13 Item 6.3 Appendices 1-5

1.1.2           Incremental annual recurring costs

Incremental annual recurring costs incurred by either the Proponent Council or the Remaining
Council are not considered a cost of de-amalgamation. QTC has identified these for the
Proponent Council in order to highlight the ongoing extra costs associated with operating as a
separate council.

Successful Proponent Councils will be required to pay their own incremental annual recurring
costs but will not be responsible for paying costs of this nature for the Remaining Council.
Incremental annual recurring costs incurred by the Remaining Council should be small in
comparison to those of the Proponent Council, but may include costs associated with lower
purchasing power and other operating inefficiencies. These costs, where applicable, have been
considered by QTC in the forecasts determined for the Remaining Council. To the extent that
they exist, these costs may impact QTC’s sustainability rating for the Remaining Council when
compared to the Existing Council and the average rates per rateable property of the Remaining
Council when compared to the Existing Council.

1.1.3 Summary of Proponent Council costs

Table 1 shows the estimated cost of de-amalgamation, including incremental annual recurring
costs, to the Proponent Council (column 1). It also shows how these costs translate into a cost
per rateable property (columns 2 and 3).

TABLE 1 - SUMMARY OF DE-AMALGAMATION COSTS
                                                                                                                QTC                   Average             Annualised
                                                                                                              Estimate                 Costs                Costs
                                                                                                                  $                      $                    $
 Total one-off costs                                                                                            3,605,000

 Average one-off costs per Proponent Council rateable property                                                                         121.34

 Total one-off fixed asset costs                                                                                7,415,000

 Average fixed asset costs per Proponent Council rateable property                                                                     249.57
 Annualised fixed asset costs per Proponent Council rateable property                                                                                       49.91

 Total incremental annual recurring costs                                                                       2,631,000
 Total incremental annual recurring costs per Proponent Council
                                                                                                                                                            88.55
rateable property

Note: Annualised fixed asset costs demonstrate the financial effect of spreading the cost of the asset over their useful life (ie depreciation expense)


Table 1 indicates that the one-off costs of de-amalgamation per rateable property will be $121
while the incremental annual recurring costs will be $138.

The following graph shows the financial impact of de-amalgamation, including incremental
recurring costs, per rateable property over five years.




De-amalgamation Analysis of Sunshine Coast Regional Council                                                                                                     Page 3