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LG Sustainability Stage one and two

LG Sustainability Stage one and two. Towards a sustainable future. LG Sustainability - Background. MAV and VAGO assessments Differing assessments of financial risk 2010- 20 Councils facing risk One is extremely high risk, four very high risk and fifteen are high risk

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LG Sustainability Stage one and two

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  1. LGSustainabilityStage one and two Towards a sustainable future

  2. LG Sustainability - Background • MAV and VAGO assessments • Differing assessments of financial risk • 2010- 20 Councils facing risk • One is extremely high risk, four very high risk and fifteen are high risk • MAV - E and H risk Councils require external funding assistance

  3. LG Sustainability • Is information to assess Council’s financial sustainability credible? • What strategies does Council have to maintain a financially sustainable position? • What assistance does Council need from government?

  4. LG Sustainability - Project outcome • To determine, in partnership with the Council: • whether all management responses to its financial sustainability position have been exhausted and; • ultimately and legitimately requires assistance from State /Federal Government

  5. LG Sustainability – Pilot Councils 2008/09 • Central Goldfields • Hepburn • Horsham • Ararat • Gannawarra • Corangamite • Yarriambiack • Towong • Loddon • West Wimmera

  6. LG Sustainability (2) – 2009/10 • Baw Baw • Colac Otway • East Gippsland • Glenelg • Hindmarsh • Hume City • Indigo • Kingston • Macedon Ranges • Maroondah • Moira Shire Council • Moorabool • Moyne • Southern Grampians • Strathbogie • Wellington • Wodonga City

  7. LG Sustainability - Self Assessment • Self Assessment - 8 key success factors: • Understanding Financial Sustainability • Corporate Governance • Service and Asset Management Plans • Financial Reporting • Annual Planning ,Budgeting and Rating • Long Term Financial plans • Service provision • Skill Development

  8. LG Sustainability – Gap Analysis WOMBAT SHIRE COUNCIL GAP ANALYSIS CHART

  9. Benchmark results KSA’s

  10. Financial Ratios

  11. Renewal Gap

  12. LG Sustainability – Findings • Understanding financial sustainability • SRP’s – Policies and financial strategies • No substantial LTFP’s • Disparate /incomplete Asset Registers • Condition Data/Intervention levels • Depreciation charges not related to condition • Short term Capital Works program

  13. LG Sustainability - Findings • Balance Sheet versus Moloney • Whole of life costing –not practiced. • Community consultation/LOS. • Budget in service level terms/SAMP’s • Performance reporting – Audit Committee • Rating strategy – future funding

  14. LG Sustainability – Pilot findings • 8 of the 10 Councils are rating below average • 9 of the 10 Councils have underlying operating deficits • 2 of the 10 Councils have lower than average depreciation charges • 4 of the 10 Councils have overstated depreciation charges • 2 of the 10 Councils are over funding renewal gap. • Inconsistency in renewal valuation rates; • All Brownfield valuations on Balance Sheet

  15. LG Sustainability Pilot - CAPITAL • Total Capital expenditure $62 million • Renewal Demand $48 million • Renewal investment $ 34 million • Unexpended CAPEX $7.8 million • 71 % of renewal demand funded • 55 % of total CAPEX was renewal • 45 % of CAPEX was new and upgrade • 12.5 % of budgeted CAPEX was not delivered.

  16. LG Sustainability (2) - CAPITAL • Total Capital exp $222.76 million • Renewal Demand $160.40 million • Renewal investment $109.44 million • Unexpended CAPEX $56.96 million • 68 % of renewal demand funded • 49 % of total CAPEX was renewal • 29 % of CAPEX was upgrade • 22% of CAPEX was new • 26 % of Budgeted CAPEX was not delivered.

  17. LG Sustainability – Outcomes • Need robust Strategic Resource Plan • Long Term Financial Plan • Financial policies/ target ratios • 10 year CAPEX programme – R,U,N • Rating and revenue raising • Council engaged/report performance – Audit Committee • Review of Asset Management Strategy and practices • Asset Registers/Condition Assessments/Intervention levels • Renewal Valuations • Document management strategies – LOS/Rationalisation • Whole of organisation approach • Training

  18. Debt Strategy Capital Works projects and funding Revenue Raising (rating) strategy STRATEGIC RESOURCE PLAN Asset Management Strategies Operational Expenses (service levels) Notional Reserve Funds Grants and Fees LG Sustainability :Strategic Resource Plan

  19. LG Sustainability - LTFP • SRP – provided policy parameters for LTFP • Councils have increased rates significantly • 10 year Capital works program • Escalation factors • Financial Ratios • Charts • Financial Statements • Renewal Demand versus renewal annuity • Rating options

  20. LG Sustainability- LTFP

  21. LG Sustainability – LTFP

  22. LG Sustainability - Conclusion • Focus on determining issues impacting on sustainability • Self Assessment Framework • Data Review • Improvement Plan/cross functional team • Tools and techniques • Strategic Resource Plan • Long Term Financial Plan • Sustainable future

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