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Strategic Resource Plan 2018/19

CS.1 ATTACHMENTDRAFT

Strategic Resource Plan 2018/19 - draft presented to Council 18 April 2018

Strategic Resource Plan 2018/19 For public display from 24 April to 22 May 2018

Content Strategic Resource Plan 2018/19 ....................................................................................................................... 2 Introduction ......................................................................................................................................................... 3 1. Planning and Accountability Framework .................................................................................................... 4 2. Strategic Resource Plan – Legislative Requirements ................................................................................ 5 3. Strategic Resource Plan – Overview .......................................................................................................... 6 4. Borrowing Strategy ..................................................................................................................................... 7 5. Rating Strategy ........................................................................................................................................... 9 6. Capital Investment .................................................................................................................................... 13 7. Council Services ....................................................................................................................................... 15 8. Non-Financial Council Strategies ............................................................................................................. 17 9. Strategic Resource Plan – Financial Statements ..................................................................................... 20 10. Financial Assumptions ............................................................................................................................. 31 11. Glossary ................................................................................................................................................... 35


Introduction Effective planning and reporting by local councils is essential for showing the community where the money comes from and how it is spent. The primary objective of a local council is to endeavour to achieve the best outcomes for the local community having regard to the long-term and cumulative effects of decisions. Local councils, often do this in partnership with local community organisations and in conjunction with or with the support of other levels of government. Macedon Ranges Shire Council [Council] –

has functions and authority conferred upon us by the Victorian Parliament provides governance and leadership for the local community through advocacy, decision

making and leadership is accountable to the local community in the performance of our functions, the exercise of

our authority and the use of our resources. We are responsible for many services, facilities, assets and infrastructure, which provide a range of everyday benefits to the community. These responsibilities are undertaken with transparency and accountability by preparing and reviewing our plans each year in consultation with the community and reporting on our performance on a quarterly and annual basis. One of those plans is the Strategic Resource Plan, which Council prepares each year. The 2018/19 Strategic Resource Plan includes –

Planning and Accountability Framework: provides an overview of the relationship between the key planning and reporting documents in the Act.

Overview: provides an overview of the statutory requirements and best practice guidance for preparing a Strategic Resource Plan.

Strategies: provides an explanation of how our financial strategies will deliver the goals and objectives in the Council Plan. The 2018/19 document also includes coverage of organisation strategies, beyond our specific financial strategies, in order to disclose further correlation of how we will achieve the priorities in the Council Plan.

Statements: provides the 2018/19 Strategic Resource Plan financial statements prepared in accordance with the Act, Regulations and in the format required by the Local Government Model Financial Report.

Financial Assumptions: these are key assumptions on income and expense growth that underpin the financial statements.


1. Planning and Accountability Framework

The following diagram shows the relationships between the key planning and reporting documents as well as the opportunity for community engagement during the planning cycle.

The Council Plan sets out Council’s vision and priorities. Council adopted its 10 year plan (2017-2027) 12 months ago and draft year two (2018-2019) action items are currently out for community consultation in conjunction with the annual budget. The Council Plan will be reviewed annually, when we set new actions against which we will measure the achievement of those priorities. The Strategic Resource Plan includes our financial plan and our financial strategies to achieve the goals and objectives. It also includes the financial and non-financial resources that we require to achieve those goals and it is reviewed annually. The Budget is the short-term plan which specifies the resources required to fund our services and initiatives over the next 12 months. The Quarterly Report is not shown in the diagram, however, it is produced four times during each financial year and provides the community with a report on the progress we have made in the previous 3 months. The Annual Report is published in September each year and provides the community with a comprehensive report of our operations and finances during the previous financial year.

Council Plan

Strategic objectives Strategies Strategic indicators

Strategic Resource Plan

Financial statements Non-financial resources

Budget

Financial statements Services and initiatives Service outcome indicators Major initiatives

Annual Report

Report of operations -Service performance -Major initiatives -Governance & management

Financial statements -Financial statements -Capital works statement -Notes

Performance statement -Service performance outcomes -Financial performance -Sustainable capacity

Community

engagement


2. Strategic Resource Plan – Legislative Requirements

The “Planning and Accountability” requirements are found in Part 6 of the Local Government Act. In this Part of the Act, the Victorian Parliament requires local councils to prepare a Council Plan; a Strategic Resource Plan (SRP); a Budget and an Annual Report. The “Performance Reporting Framework” became mandatory for councils in the 2014/15 planning and reporting cycle when the Victorian Parliament approved the Local Government Amendment (Performance Reporting and Accountability) Act 2014. Amongst other things, Part 6 of the Local Government Act states that the Strategic Resource Plan is a plan of the resources required to achieve the council plan strategic objectives. It must – include the financial statements describing the financial resources in respect of at least the

next four financial years, include statements describing the non-financial resources including human resources in

respect of at least the next four financial years, take into account services and initiatives contained in any plan adopted by council and if

the council proposes to adopt a plan to provide services or take initiatives, the resources required must be consistent with the SRP.

In addition to Part 6 of the Act, Part 2 of the Local Government (Planning and Reporting) Regulations 2014 also prescribe that the SRP must include – financial statements including a statement of capital works in the form set out in the Local

Government Model Financial Report; a summary of planned capital works expenditure in relation to non-current assets, classified

in accordance with the asset classes and asset expenditure types specified in the Local Government Model Financial Report and a summary of funding sources in relation to the planned capital works expenditure;

a statement of human resources; and a summary of planned expenditure in relation to permanent human resources and a

summary of the planned number of permanent full time equivalent staff by organisational structure

From 2016/17 Council rate increases were limited to the annual increase in local government rates and municipal charge under the Victorian Government Fair Go Rates System. Under the Fair Go Rates System, local councils are not able to increase the average ratepayers rates and municipal charge by more than the average rate cap (unless they successfully apply to the Essential Services Commission for a higher cap).

The Victorian Government has set the 2018/19 average rate cap at 2.25% based on the change in the consumer price index over the financial year, plus or minus any adjustment, which may take into account factors such as wage pressures or efficiency dividends. Council has not chosen to apply for a higher cap for 2018/19.


3. Strategic Resource Plan – Overview

At Macedon Ranges, the purpose of our Strategic Resource Plan (SRP) has been and still is to assist us to maintain financial viability over the long term by –

adhering to principles of sound financial management; providing strategies to guide our financial decision making; and reviewing the long term financial statements on an annual basis.

The principles of sound financial management are to –

prudently manage financial risks relating to debt, assets and liabilities; provide reasonable stability in the level of rate burden; consider the financial effects of council decisions on future generations; and provide full, accurate and timely disclosure of financial information.

To achieve the priorities of the Council Plan, we have developed the financial strategies described in sections 4 to 7 inclusive. We have adopted a number of other non-financial strategies upon which the SRP provides resources to deliver. These strategies are outlined in section 8. The SRP includes strategies and resources, which we will need to achieve our priorities in the Council Plan. It expresses these through financial statements and statements of non-financial resources in section 9. The financial statements are our forecast of income, expenditure, assets, liabilities, equity, cash and capital works. They have been prepared in accordance with the Local Government Model Financial Report prepared by Chartered Accountants Australia and New Zealand and issued by the Department of Treasury and Finance. Our assumptions are described in section 10. The assumed revenue, expenses, borrowings and capital works in the forecast will be subject to annual review and amendment as part of the process of preparing and adopting the Budget Report each year. Our SRP does not replicate information, which is found in the Council Plan or the Budget Report; neither does it replicate information that is found in more appropriate documents. For example, detail on the management of assets can be found in the Asset Management Policy, Asset Management Strategy and the Asset Management Plans.


4. Borrowing and Investment strategies

4.1 Long Term Borrowing and Intergenerational Equity Subject to the principles of sound financial management, councils may borrow money to perform the functions and responsibilities required of them under the Local Government Act. The use of borrowed money (debt) to fund capital investment in an asset is an effective mechanism of linking the payment for the asset to future users who will receive the benefits the asset provides. This matching concept is frequently referred to as “intergenerational equity” because the costs of servicing the debt over the long term (which is usually ten years) by the revenue from rates and customer fees/charges enables the original cost of the asset to be matched with the benefits from consumption of the services provided by the asset, thereby promoting intergenerational equity. In determining an appropriate debt level, the following factors are seen as important –

level of debt servicing costs as a proportion of rate revenue; ability to raise revenue in addition to rates; level of realisable assets to support the indebtedness; achieving the right mix of capital projects and debt commitments; population growth and demographics; and community needs.

4.2 Future Debt Level We have a Long Term Capital Plan, which covers a 10 year period and is updated annually. The plan aligns with the SRP financial assumptions in section 9 with respect to expenditure and revenue. The plan predicts that in order to respond to the growing population there will be substantial capital investment in community buildings, community facilities and open space. Because of the intergenerational nature of this type of capital investment, we are willing to borrow money to fund capital investment. The following graph shows the estimated debt levels. It is expected that in the medium term the debt level will peak in 2017/18, noting, there are some further borrowing’s planned over the next four years of the plan to assist in funding anticipated capital works projects.


4. Borrowing and Investment strategies (Continued)

The estimated debt levels in the preceding graph are based on the assumption that all projects within the Long Term Capital Plan will proceed. Whether all projects proceed or not will depend upon circumstances at that time, particularly the availability of government grants. If a grant becomes available, it may allow a project to proceed and if we determine to proceed with a project we may also determine to borrow money to do so. If this occurs, then based on the principle of intergenerational equity, repayment of the borrowings would occur over a specified period of time, which is usually at least ten years. 4.3 Investments Council’s investment policy has been developed to provide staff a framework to manage Council’s investments and cash flow to meet operational requirements. The purpose of the policy is to safeguard Council’s investments while maximising returns. The Council is given authority to undertake investments under s.143 of the Local Government Act which outlines the types of investments in which Council can invest. Council will give preference to investing its funds in banks and financial institutions that do not invest in or finance the fossil fuel industry, providing that they meet the criteria for risk management, investment diversification and return on investment. 4.4 Strategies 1. We will borrow funds for investment in assets, which have a long term life cycle. 2. We will retain its debt commitment (interest and principal repayments) at or below 6% of

rate revenue on average. However, the ratio may be higher in some years when interest only loans are repaid in full.

3. We will ensure its debt level does not exceed $14 million over the ten year financial forecast.

Correlation of Strategic Resource Plan Strategies to Council priorities

These strategies predominantly assist us achieve our priorities of:

Protect the Natural Environment – through investment strategies that do not invest in or

finance the fossil fuel industry;

Improve the Built Environment – through investment in assets which have a long term life

cycle; and

Strong and Reliable Government – through efficient use of debt financing while ensuring

sound targets for our debt commitment and debt levels.


5. Rating Strategy

5.1 Introduction

Rates and charges are recognised as a significant source of revenue, planning for rate increases is therefore an important part of the resource planning process. This Rating Strategy establishes a framework by which rates and charges will be shared by the community. 5.2 Rating Strategy We will continue to provide a full range of facilities and services in accordance with our statutory and community service obligations. The appropriate setting of rates and customer fees (fee for service) is essential for the efficient recovery of the costs of providing services. If a service does not directly benefit identifiable individuals only then the costs are allocated to the community as a whole through the application of rates. In simple terms our total expenditure minus our total revenue from all sources such as customer fees, grants and borrowings is the amount that we need to raise from rates (including the municipal charge). Section 10 contains more information on the rate increases assumed in the 4 year financial projections. 5.3 Rating Structure We have established a rating structure, which is comprised of three key elements –

Property rates, which are based on property value Municipal Charge, which reflects a common contribution to the governance costs of

Council Waste service charges, which reflect the ratepayers use of kerb side waste collection.

The legislative basis for these charges can be found in Council's Budget Report each year. 5.4 Rating Differentials Striking a proper balance between these elements provides equity in the distribution of rates and charges across ratepayers. We make a further distinction, within the property value element, which is a differential rate. That is, rates based on the purpose for which the property is used. This distinction is based on the concept that property owners should pay a fair and equitable contribution to rates taking into account the benefit that their property type may derive from the services we provide.


5. Rating Strategy (Continued)

Section 161 of the Local Government Act allows a council to raise rates by a differential rate. Council determined to apply five Differential Rates. The general rate applies to all rateable properties except land that is used for business, agriculture; not for profit low income residential housing; and recreation. The business rate is set at 20% more than the general rate. The agricultural land rate set at 20% less than the general rate. The rate concession for land used by Not for Profit Organisations to provide low income residential housing is 50%. Under the Cultural and Recreational Lands Act 1963, we grant a rate concession of 50% to any “recreational lands” which meet the test of being “rateable land” under the Act. Our Statement of Differential Rates (in accordance with section 161 of the Local Government Act) can be found in the Budget Report. 5.5 Environmental Rebates We determine to provide funds for environmental protection of private land, by applying rate rebates to properties, which are registered with the Trust for Nature. Properties registered with the Trust for Nature are assessed and monitored by the Trust, and a covenant is placed on the property title to safeguard the environmentally significant areas. Covenants normally cover part of a property. The rebate will be calculated on the Site Value of the proportion of the property which is subject to the covenant. That is, the rebate = (Site Value) x (% Covenanted) x (Rate in Dollar). 5.6 Property Valuations

Valuations are conducted under the Valuation of Land Act and are carried out using Valuation Best Practice Specifications Guidelines as prescribed by the Valuer-General Victoria. In the past a General Valuation of all properties was required every two years, however in December 2017 the State government amended the legislation and from 2018/19 the General Valuations will be conducted annually. Additionally, the Valuer-General is now the valuation authority for the delivery of annual valuations within the shire for the purposes of council rates and the fire services levy. The annual date for setting the levels of value is 1 January each year.

A General Valuation establishes the value of a property relative to all other properties, that is, its market relativity. The relativity of property values changes over time depending upon fluctuations in the demand for property. For example, the price of a typical residential dwelling in one town may rise by 5% annually over a two year period whereas a similar dwelling in another town may rise by 3% over the same period. The General Valuation sets a level of value date that applies for the 2018/19 financial year of 1 January 2018.



The General Valuation does not in itself produce rate income. The level of rate income required is determined through the budget process. The General Valuation of all rateable properties within the Shire determines how the rate income is "shared" throughout the Shire based on the valuation of each property. As a result of each General Valuation, some property owners may be required pay more in rates and others will be required to pay less, depending on the new valuation of their property, relative to others. The greater the change in the property valuation between valuations; the greater will be the change in the rates payable. There are three methods of valuation we are required to calculate. However, we only uses the capital improved method of valuation (CIV) for rating purposes. The CIV is the market value of a property including the land, the buildings and other improvements such as swimming pools and fences. CIV is considered to be the fairest method of valuation because it is equitable for the industrial, commercial and retail sectors; and it has the flexibility to apply an unlimited range of rating differentials. Supplementary valuations are made during the financial year when a significant change occurs. The most common causes for supplementary valuations are:

construction of a new dwelling or building; subdivision of a property; or consolidation of properties.

As a result of a supplementary valuation, a rate notice is issued to reflect any change in rates. We presently undertake this task on a regular basis. 5.7 Waste Service Charges We levy a per bin charge for the kerbside collection and disposal of waste (that is, domestic garbage, recyclable material and garden waste) on each separate occupancy within the collection district. The purpose of these charges is to fully recover the costs of collection and disposal, landfill rehabilitation and associated administration costs which benefit properties within the collection district. 5.8 Rate Revenue compared to demand for services. Based on recent historical evidence, our long term forecast is that there will be a 1.5% growth each year in rate revenue due to new subdivisions and new constructions. The corresponding increase in population leads to an increase in the demand for our services. Experience has shown that the cost to Council in providing services to meet the increased demand is greater than the corresponding growth in rate revenue. The Fair Go Rates System (see Section 2) restricts our ability to increase income to meet the increase in community demands for services and facilities. However, the system allows us to seek approval for a variation to the cap if there is sufficient justification. The variation process is managed by the Essential Services Commission (ESC).



5.9 Strategies 1. We will continue to use the Capital Improved Value (CIV) as its valuation base. 2. For the next four years it is planned that rate increases will be in line with the rate cap set

by the Victorian Government. However, we will annually review the funding needed to meet community demands and asset renewal requirements. If it is found that the rate cap generates insufficient rate revenue to meet these demands and requirements then we may seek a variation.

3. We will continue to levy a municipal charge to ensure there is an equitable contribution from each Ratepayer (regardless of their property value). The municipal charge is not increasing in 2018/19 in line with the direction in the draft Local Government Act which is being developed by the State Government.

4. We will continue to ensure that the revenue from waste collection and disposal charges is sufficient to fully cover all direct and indirect costs of waste services including landfill rehabilitation, collection, sorting and disposal of garbage, recyclable materials, and green waste along with all associated administration costs.

5. We will continue to apply Differential Rates based on the purpose for which the property is used.



Protect the Natural Environment – through provision of appropriate environmental rebates

and collection of revenue to provide for management of waste;

Enhance the Social and Economic Environment – through levying a municipal charge

reflective of an equitable ratepayer contribution and the use of differential rates; and

Strong and Reliable Government – through ensuring compliance with our external regulatory

obligations to Victorian Government to have rate increases in line with the rate cap.


6. Capital Investment

6.1 Introduction Capital expenditure is an investment in assets, such as land, buildings, recreation facilities, roads, drains, open spaces, playgrounds and major plant and equipment. Capital investment is primarily on the construction of buildings, roads, drains, footpaths, kerbs and bridges. It also includes the purchase of land, buildings, facilities, major equipment, trucks, other plant, vehicles, IT systems and playgrounds. We have a Long Term Capital Plan to assist our planning and decision making. It is a plan to ensure that, in the future, we will be able to afford what we would like to do.

Despite the plan, our capital expenditure fluctuates from year to year mainly due to the fluctuating availability of government grants. Although we cannot control the availability of grants we can control our own sources of revenue, which is rates, borrowings and financial reserves.

From time to time our revenue also includes the net proceeds from the sale of vacant land, including “non open space” assets which become surplus to requirements and invest the proceeds from the sale in specified community facilities or assets.

The graph below shows the actual (through to 2016/17) and estimated levels of capital expenditure. It is expected that in the medium term the level of capital expenditure will peak in 2019/20.

The Long Term Capital Plan then projects a lower level of capital expenditure in the following two years because a lower level of government grants has been assumed. While the total capital varies each year, our underlying allocation of rate revenue to capital works is planned to increase by 5% each year. The total capital expenditure may be higher than projected if we are successful in obtaining higher grant funding.

Note – 2017/18 includes approved capital carry forwards.


6. Capital Investment (Continued)

6.2. Asset Expenditure Managing assets is fundamental to achieving the goal of long-term financial sustainability. This requires the recognition of all “life-cycle” costs associated with asset ownership including creation or acquisition, operations, maintenance, renewal, depreciation and disposal. In some cases, such as landfill sites, the “life-cycle” cost also includes rehabilitation. Asset (capital) expenditure may be one of three types, as follows –

New - capital expenditure on a new asset. Renewal - capital expenditure on an existing asset (or replacing an existing asset) that

returns the service capability of the asset to its original capability. Upgrade/expansion - capital expenditure that (a) upgrades an existing asset to provide a

better quality of service; or (b) extends the life of the asset beyond its original life (and as such provides benefits to new users at the same standard as is provided to existing users).

6.3 Asset Renewal We are facing the problem of ageing assets that are in need of renewal. This problem is common to local government throughout Victoria. To avoid the situation where assets are unable to provide the standard and level of service, which is expected from them, we give priority to capital expenditure on asset renewal. 6.4 Long Term Capital Plan The Long Term Capital Plan is reviewed annually and in accordance with the following parameters –

Capital expenditure shall align with the financial assumptions in section 10 of the SRP; Large one-off projects flagged in subsequent years shall require accurate costing to be

undertaken and their timing and priority finalised; Income assumptions shall remain conservative given they are less predictable; and Roads to Recovery income shall be assumed to continue at current level plus CPI and

shall be spread across relevant projects within the Roads Program. 6.5 Strategies 1. We will annually review and adjust our Long Term Capital Plan to strengthen our position

when targeting and focussing on grants that align with our overall strategic direction. 2. To address the renewal gap, we aim to increase the level of spending on underlying asset

renewal by an average of 5% per annum. 3. We may sell “non open space” assets, which are unused or underutilised and invest the net

proceeds from the sale in specified community facilities or assets.


6. Capital Investment (Continued)

7. Council Services

7.1 Introduction Our current range of services is a result of its statutory functions and obligations under the Local Government Act. The level (quantity) and standard (quality) of services, which we are capable of providing, and need to provide in order to meet community expectations is both diverse and complex. We currently provides a range of services, including community services, recreation services and asset related services such as roads, buildings, drains and open space. We also provides a range of planning and development services including community development, economic development and infrastructure planning. A full description of our services is provided each year in the Budget Report. 9.2 OPERATING EXPENDITURE/REVENUE 7.2 Operating Expenditure and Revenue A brief description and analysis of our operating expenditure and revenue is provided each year in our Budget Report. 7.3 Service Planning and Provision One of the key objectives of the Strategic Resource Plan is to ensure that we have the ability and capacity to maintain existing service levels and maintain a satisfactory financial position. Some years ago, we recognised that we needed Asset Management Plans and Service Plans to provide information and direction to help us to deliver reasonable standards and levels of services, efficiently and effectively while keeping rate increases within targeted levels. We have developed Asset Management Plans for roads, buildings, drainage and open space assets. The Asset Management Plans are reviewed and updated on a three year cycle.

We have Service Plans in place for our services and programs. The plans are regularly reviewed and the cost, level (quantity) and standard (quality) of our services as well as the benefits that are derived by ratepayers and residents are considered as part of the review.



Improve the Built Environment – through ensuring a focus on asset renewal and investment

of funds from unused or underutilised assets back into community facilities or assets; and

Strong and Reliable Government – through sound long term capital planning.


7. Council Services (Continued)

7.4 Strategies 1. We will annually determine the range and level of service provision through the budget

process based on an assessment of organisational capacity and financial capability. 2. Wherever possible, if a service directly benefits identifiable individuals we will recover all or

part of the costs of the service directly from the users of the service. Our Fees and Charges Policy outlines the principles for the setting of these fees.

3. Where infrastructure costs are directly attributable to individual property owners, we will recover all or part of those costs through the application of special charges and developer contributions.

4. We will continue to identify efficiencies to reduce the growth in operating expenditure (to improve the underlying position) and increase the allocation of rate revenue to capital works.



Improve the Built Environment – through ensuring property owners make appropriate

contributions for required infrastructure; and

Strong and Reliable Government – through the identification of efficiencies and provision of

customer services to the best of our capacity and capability.


8. Non-Financial Council Strategies

8.1 Introduction Besides the financial strategies outlined above within the Strategic Resource Plan, we have adopted a number of other strategies which assist in achieving the outcomes within the Council Plan. For visibility these other strategies are outlined below. These strategies will provide guidance regarding the manoeuvres that will be undertaken to achieve objectives within the Council Plan and are supported by the funding and resources allocated with this Strategic Resource Plan. 8.2 Non-Financial Council Strategies

Strategy Adopted 2018-2021 2022-2037

Asset Management Strategy 2014Asset management strategy ensures that Council’s assets are

capable of providing services in a sustainable manner for present

and future generations.

Communications Strategy 2014 …….. Under review in 2018/19.Sets out Council’s communications goals and objectives, and a

number of recommended approaches and activities for the

period 2014-2017.

Cultural Development Strategy 2011 …….. To be considered within Outlines how we aim to promote and support social,

recreational, cultural and community life by providing both

essential and innovative amenities, services and facilities in the

Macedon Ranges.

Economic Development Strategy 2009 …. Proposed for review Sets out actions and priorities for business and economic

development in the Macedon Ranges, taking into account

technological advances, the ever changing consumer and

globalisation.

Tourism Industry Strategic Plan 2011 …….Aligns the activities of the various bodies responsible for

delivering tourism in the Macedon Ranges to maximise funding

and resources.

Environment Strategy 2016Council’s key environmental policy document, guiding work

across Council to achieve objectives for climate change,

biodiversity, catchment management and resource efficiency.

Waste Management Strategy 2015A guide to Council and the community for taking action to reduce

waste going to landfill and increase recycling.

Weed and Pest Animal Strategy 2014Outlines Council’s strategic direction relating to the

management of weeds and pest animals in the Shire.

Arts and Culture

Strategy

Currently in Draft as

Visitor Economy

Strategy

in 2018/19


8. Non-Financial Council Strategies (Continued)

Strategy Adopted 2018-2021 2022-2037

Heritage Strategy 2014Establishes our approach to the management of heritage within

the Shire and provides us with an action plan of heritage related

projects to be undertaken for the period 2014-2018.

Leisure Strategy 2006 …….. Currently in draftProvides direction for the planning and provision of leisure and

recreation facilities and services within the shire.

Aquatic Strategy 2011 …….. Currently Under ReviewTo be considered withinThe primary purpose of the strategy is to develop an integrated

strategic approach to planning and provision of affordable

aquatic facilities across the shire.

Open Space Strategy 2013 Provides direction for the planning and provision of open space

within the shire in an ongoing manner over the next 10 or more

years.

Walking and Cycling Strategy 2014This strategy aims to increase walking and cycling opportunities

in the shire and promote healthy active lifestyles from 2014-

2024.

In the Rural Living Zone Strategy 2015 Provides a strategic basis for planning the future use and

development of land within the zone and for managing different

areas of rural living zoned land across the shire.

Settlement Strategy 2011Provides the overall direction for urban growth – consistent with

environmental constraints, community aspirations and

government policy – until 2036.

Youth Strategy 2013 …….. Currently in draftProvides overall direction for our Youth Development unit and

guides the programs, initiatives, advocacy and support work for

young people and their families.

Timeframe remaining for strategy

No specific end date set for strategy

Leisure Strategy 2018

Besides the outlined strategies above Council also has adopted a number of plans and policies which outline the steps we will take in delivering on our strategies and the guiding principles we follow when decisions are made. Significant plans that are not outlined above within our strategies include our Municipal Early Years Plan, the Positive Ageing Plan, the Community Access and Inclusion Plan and our Age Friendly Communities Action Plan. Key actions and initiatives from the strategies, the Council Plan and other plans that have a financial component between 2018/19 and 2020/21 have been taken into account in the Strategic Resource Plan financials in section 9.


8. Non-Financial Council Strategies (Continued)



Promote Health and Wellbeing – through provision of strategies which focus in on cultural

development, leisure,& youth and plans which focus in on early years, positive ageing,

community access and inclusion & age friendly communities;

Protect the Natural Environment – through provision of strategies which focus in on the

environment;

Improve the Built Environment – through provision of strategies which focus in on asset

management, heritage, rural living zone & settlements; and

Enhance the Social and Economic Environment – through provision of strategies which focus

in on economic development.


9. Strategic Resource Plan – Financial Statements

9.1 Comprehensive Income Statement For the four years ending 30 June 2022

Budget Budget 2017/18 2018/19 2019/20 2020/21 2021/22

$'000 $'000 $'000 $'000 $'000

IncomeRates and charges 45,943 48,449 50,387 52,403 54,499Statutory fees and fines 3,675 3,872 3,756 3,850 3,946User fees 6,402 6,735 6,903 7,076 7,253Grants - Operating 10,792 10,650 10,863 11,080 11,302Grants - Capital 7,550 6,890 7,058 10,882 7,117Contributions - monetary 1,874 672 685 699 713Contributions - non-monetary 10,500 10,380 10,400 10,500 10,600Fair value adjustments for investment property - 440 - - - Other income 1,838 2,215 2,270 2,327 2,385Total Income 88,574 90,303 92,322 98,817 97,815

ExpensesEmployee costs (31,766) (32,662) (33,830) (35,039) (36,292)Materials and services (20,223) (21,749) (22,510) (23,298) (24,114)Bad and doubtful debts (8) (6) (10) (11) (11)Depreciation and amortisation (13,500) (14,060) (14,562) (15,052) (15,542)Borrow ing costs (517) (447) (529) (495) (578)Other expenses (3,222) (3,044) (3,219) (3,299) (3,381)Total Expenses (69,236) (71,968) (74,660) (77,194) (79,918)

Surplus/(deficit) for the year 19,338 18,335 17,662 21,623 17,897

Other comprehensive incomeItems that w ill not be reclassif ied to surplus or deficit:

Net asset revaluation increment /(decrement) - 8,775 3,743 7,743 8,006Total comprehensive result 19,338 27,110 21,405 29,366 25,903

Strategic Resource Plan Projections


9.2 Balance Sheet For the four years ending 30 June 2022

Budget Budget 2017/18 2018/19 2019/20 2020/21 2021/22

$'000 $'000 $'000 $'000 $'000

AssetsCurrent assetsCash and cash equivalents 9,485 9,062 8,942 9,217 9,195Trade and other receivables 5,142 5,136 5,576 5,993 5,927Other f inancial assets 13,878 11,878 4,989 9,229 12,183Other assets 439 448 448 448 448Total current assets 28,944 26,524 19,955 24,887 27,753

12000 - Other financial asse

Non-current assetsOther f inancial assets 21 21 21 21 21Investments in associates and joint ventures 1,614 1,180 1,180 1,180 1,180Property, infrastructure, plant & equipment 709,631 748,533 774,263 800,630 825,079Investment property 4,402 4,842 4,842 4,842 4,842Intangible assets 469 231 219 208 196Total non-current assets 716,137 754,807 780,525 806,881 831,318Total assets 745,081 781,331 800,480 831,768 859,071

LiabilitiesCurrent liabilitiesTrade and other payables 6,587 6,583 6,828 7,083 7,328Trust funds and deposits 3,131 3,191 3,191 3,191 3,191Provisions 6,958 6,997 6,997 6,997 6,997Interest-bearing loans and borrow ings 617 4,679 485 508 208Total current liabilities 17,293 21,450 17,501 17,779 17,724

Non-current liabilitiesProvisions 4,949 4,967 5,066 5,168 5,271Interest-bearing loans and borrow ings 11,300 6,699 8,293 9,835 11,187Total non-current liabilities 16,249 11,666 13,359 15,003 16,458Total liabilities 33,542 33,116 30,860 32,782 34,182

Net assets 711,539 748,215 769,620 798,986 824,889

EquityAccumulated surplus 330,952 341,927 359,189 380,512 398,109Reserves 380,587 406,288 410,431 418,474 426,780Total equity 711,539 748,215 769,620 798,986 824,889



9.3 Statement of Changes in Equity For the four years ending 30 June 2022

Total Accumulated

Surplus

Revaluation

Reserve Other

Reserves$'000 $'000 $'000 $'000

2018/19Balance at beginning of the f inancial year 721,105 324,355 383,999 12,751Surplus/(deficit) for the year 18,335 18,335 - - Net asset revaluation increment/(decrement) 8,775 - 8,775 - Transfer (to)/from reserves - (763) - 763Balance at end of financial year 748,215 341,927 392,774 13,514


2020/21Balance at beginning of the f inancial year 769,620 359,189 396,517 13,914Surplus/(deficit) for the year 21,623 21,623 - - Net asset revaluation increment/(decrement) 7,743 - 7,743 - Transfer (to)/from reserves 0 (300) - 300Balance at end of financial year 798,986 380,512 404,260 14,214



9.4 Statement of Cash Flows For the four years ending 30 June 2022

Budget Budget Strategic Resource Plan Projections2017/18 2018/19 2019/20 2020/21 2021/22

$'000 $'000 $'000 $'000 $'000Cash flows from operating activitiesRates and charges 45,937 48,449 51,113 52,972 55,423

Statutory fees and f ines 3,675 3,872 3,810 3,892 4,013

User fees 6,352 6,735 7,003 7,153 7,376

Grants - operating 10,792 10,650 11,020 11,200 11,494

Grants - capital 7,550 6,890 7,160 11,000 7,238

Contributions - monetary 1,874 672 685 699 713

Interest received 388 461 466 471 476

Dividends received - - - - -

Trust funds and deposits taken 1,360 1,360 1,400 1,400 1,400

Other receipts 1,934 1,745 2,313 2,360 2,438

Net GST refund / payment 3,032 3,250 2,503 2,669 2,604

Employee costs (31,492) (32,710) (35,149) (36,402) (37,713)

Materials and services (20,088) (21,648) (23,388) (24,204) (25,058)

Trust funds and deposits repaid (1,300) (1,300) (1,400) (1,400) (1,400)

Other payments (6,855) (6,294) (3,242) (3,323) (3,406)

Net cash provided by/(used in) operating activities 23,159 22,132 24,294 28,487 25,598

Cash flows from investing activitiesPayments for property, infrastructure, plant and equipment (24,384) (23,969) (28,737) (25,607) (23,709)

Proceeds from sale of property, infrastructure, plant and equip 508 400 563 565 568

Proceeds from investments 1,150 2,000 6,889 (4,240) (2,953)

Net cash provided by/(used in) investing activities (22,726) (21,569) (21,285) (29,282) (26,094)

Cash flows from financing activitiesFinance costs (517) (447) (529) (495) (578)

Proceeds from borrow ings 485 1,185 2,000 2,050 1,560

Repayment of borrow ings (617) (539) (4,600) (485) (508)

Net cash provided by/(used in) financing activities (649) 199 (3,129) 1,070 474

Net increase/(decrease) in cash & cash equivalents (216) 762 (120) 275 (22)

Cash and cash equivalents at the beginning of the f inancial year 9,701 8,300 9,062 8,942 9,217

Cash and cash equivalents at the end of the financial year 9,485 9,062 8,942 9,217 9,195


9.5 Statement of Capital Works For the four years ended 30 June 2022

Adopted Budget

Budget Strategic Resource Plan Projections

2017/18 2018/19 2019/20 2020/21 2021/22

$'000 $'000 $'000 $'000 $'000

PropertyLand and land improvements 46 - - - - Buildings and building improvements 6,754 7,406 5,765 4,395 3,710 Total property 6,800 7,406 5,765 4,395 3,710

Plant and equipmentPlant, machinery and equipment 1,894 1,834 1,865 1,829 1,320 Fixtures, fittings and furniture - - - - - Computers and telecommunications 427 409 568 433 447 Total plant and equipment 2,321 2,243 2,433 2,262 1,767

InfrastructureRoads 7,675 6,622 8,522 8,949 9,375 Bridges 400 400 420 441 463 Footpaths and cycleways 1,593 1,565 4,452 3,857 1,200 Drainage 300 500 858 465 524 Recreational, leisure and community facilities 3,130 4,052 3,800 2,805 4,595 Parks, open space and streetscapes 1,433 117 220 475 225 Other infrastructure 982 1,064 180 30 30 Total infrastructure 15,513 14,320 18,452 17,022 16,412

Total capital works expenditure 24,634 23,969 26,650 23,679 21,889

Represented by:Asset renewal expenditure 15,291 13,749 14,806 13,692 13,371 New asset expenditure 4,958 4,458 9,240 6,939 5,290 Asset upgrade expenditure 4,385 5,762 2,604 3,048 3,229 Asset expansion expenditure - - - - - Total capital works expenditure 24,634 23,969 26,650 23,679 21,890

FundingGrants 7,550 6,890 7,058 10,882 7,117 Contributions 1,717 536 - - - Borrowings 485 1,185 2,000 2,050 1,560 Reserve transfers 3,326 2,414 2,304 2,800 1,184 Asset Sales 400 400 563 565 568 Council Contribution 11,156 12,544 14,725 7,382 11,461 Total capital works expenditure 24,634 23,969 26,650 23,679 21,890


9.6 Summary of Capital Works Program For the four years ended 30 June 2022

2018/19Capital

Expenditure ($'000)

Renewal ($'000)

Improvement ($'000)

New ($'000)

Grant and contributions

($'000)

Borrowings ($'000)

Reserve transfer ($'000)

Asset sales ($'000)

Council contribution

($'000)

Land - - - - - - - - Buildings 7,406 4,697 1,659 1,050 1,519 200 575 - 5,112 Total property 7,406 4,697 1,659 1,050 1,519 200 575 - 5,112

Plant and equipment 1,834 1,834 - - - - 1,434 400 - IT equipment 409 351 58 - - - - - 409 Total plant and equipment 2,243 2,185 58 - - - 1,434 400 409

Roads 6,622 3,105 3,462 55 3,101 - 33 - 3,488 Bridges 400 400 - - - - - - 400 Drainage 500 150 190 160 55 - - - 445 Footpaths and cyclew ays 1,565 800 50 715 500 - 22 - 1,043 Recreational, leisure and community facilities 4,052 2,261 230 1,561 1,736 500 350 - 1,466 Parks, open space and streetscapes 117 60 - 57 - - - - 117 Other infrastructure 1,064 91 113 860 485 485 - - 94 Total infrastructure 14,320 6,867 4,045 3,408 5,877 985 405 - 7,053

Total capital expenditure 23,969 13,749 5,762 4,458 7,396 1,185 2,414 400 12,574

2019/20Capital

Expenditure ($'000)

Renewal ($'000)

Improvement ($'000)

New ($'000)


($'000)

Borrowings ($'000)


Asset sales ($'000)


($'000)

Land - - - - - - - - - Buildings 5,765 4,565 200 1,000 300 2,000 75 - 3,390 Total property 5,765 4,565 200 1,000 300 2,000 75 - 3,390

Plant and equipment 1,865 1,865 - - - - 1,302 563 - Furniture and f ittings - - - - - - - - IT equipment 568 386 122 60 - - - 568 Total plant and equipment 2,433 2,251 122 60 - - 1,302 563 568

Roads 8,522 6,462 2,032 28 4,158 - 50 - 4,314 Bridges 420 420 - - - - - - 420 Drainage 858 208 150 500 - - - - 858 Footpaths and cyclew ays 4,452 250 50 4,152 1,500 - 427 - 2,525 Recreational, leisure and community facilities 3,800 300 - 3,500 1,100 - 450 - 2,250 Parks, open space and streetscapes 220 170 50 - - - - - 220 Other infrastructure 180 180 - - - - - - 180 Total infrastructure 18,452 7,990 2,282 8,180 6,758 - 927 - 10,767



9.6 Summary of Capital Works Program (Continued) For the four years ended 30 June 2022

2020/21Capital

Expenditure ($'000)

Renewal ($'000)

Improvement ($'000)

New ($'000)


($'000)

Borrowings ($'000)


Asset sales ($'000)


($'000)

Land - - - - - - - - - Buildings 4,395 3,145 650 600 2,400 1,000 75 - 920 Total property 4,395 3,145 650 600 2,400 1,000 75 - 920

Plant and equipment 1,830 1,830 - - - 1,265 565 - Furniture and f ittings - - - - - - - IT equipment 433 373 - 60 - - 433 Total plant and equipment 2,263 2,203 - 60 - - 1,265 565 433

Roads 8,948 6,801 2,058 89 4,157 - 250 - 4,541 Bridges 441 441 - - - - - - 441 Drainage 465 265 150 50 - - - - 465 Footpaths and cyclew ays 3,857 337 50 3,470 2,000 1,050 600 - 207 Recreational, leisure and community facilities 2,805 305 100 2,400 2,300 - 300 - 205 Parks, open space and streetscapes 475 165 40 270 - - 310 - 165 Other infrastructure 30 30 - - 25 - - - 5 Total infrastructure 17,021 8,344 2,398 6,279 8,482 1,050 1,460 - 6,029


2021/22Capital

Expenditure ($'000)

Renewal ($'000)

Improvement ($'000)

New ($'000)


($'000)

Borrowings ($'000)


Asset sales ($'000)


($'000)

Land - - - - - - - - - Buildings 3,710 3,045 665 - 787 1,560 75 - 1,288 Total property 3,710 3,045 665 - 787 1,560 75 - 1,288

Plant and equipment 1,320 1,320 - - - 752 568 - Furniture and f ittings - - - - - - - IT equipment 447 296 91 60 - - 447 Total plant and equipment 1,767 1,616 91 60 - - 752 568 447

Roads 9,376 7,173 1,723 480 4,230 - - - 5,146 Bridges 463 463 - - - - - - 463 Drainage 524 324 150 50 - - - - 524 Footpaths and cyclew ays 1,200 450 50 700 - - 287 - 913 Recreational, leisure and community facilities 4,595 95 500 4,000 2,100 - 70 - 2,425 Parks, open space and streetscapes 225 175 50 - - - - - 225 Other infrastructure 30 30 - - - - - - 30 Total infrastructure 16,413 8,710 2,473 5,230 6,330 - 357 - 9,726



9.7 Statement of Human Resources For the four years ending 30 June 2022


2018/19 2019/20 2020/21 2021/22

$'000 $'000 $'000 $'000

Staff expenditureEmployee costs - operating 32,662 33,830 35,039 36,292Employee costs - capital 686 700 719 744Total staff expenditure 33,348 34,530 35,758 37,036

EFT EFT EFT EFTStaff numbersEmployees 363 366 369 372Total staff numbers 363 366 369 372


9.8 (a) Summary of Planned Human Resources Expenditure For the four years ended 30 June 2022


2018/19 2019/20 2020/21 2021/22

$'000 $'000 $'000 $'000

Chief Executive : Permanent Full Time 2,038 2,111 2,186 2,265 Permanent Part Time 688 713 738 764 Total Chief Executive 2,726 2,823 2,924 3,029Assets & Operations: Permanent Full Time 8,828 9,144 9,471 9,809 Permanent Part Time 863 894 926 959 Total Assets & Operations 9,691 10,038 10,396 10,768Community Wellbeing : Permanent Full Time 3,152 3,265 3,381 3,502 Permanent Part Time 6,940 7,188 7,445 7,711 Total Community Wellbeing 10,092 10,453 10,827 11,214Planning & Environment : Permanent Full Time 3,678 3,810 3,946 4,087 Permanent Part Time 991 1,026 1,063 1,101 Total Planning & Environment 4,669 4,836 5,009 5,188Corporate Services : Permanent Full Time 2,871 2,974 3,080 3,190 Permanent Part Time 354 367 380 393

Total Corporate Services 3,225 3,340 3,460 3,583

Casuals & Other 2,475 2,564 2,655 2,750 Total 32,878 34,054 35,271 36,532Add: Other expenditure (1) 470 477 487 504Less: Capitalised Labour costs (686) (700) (719) (744) Total operating employee costs 32,662 33,830 35,039 36,292 (1) Other expenditure includes allowances and fringe benefits tax


9.8 (b) Summary of Planned Human Resources employee numbers For the four years ended 30 June 2022

Budget

Directorate 2018/19 2019/20 2020/21 2021/22EFT EFT EFT EFT

Chief Executive : Permanent Full Time 15 15 15 15 Permanent Part Time 9 9 9 9Total Chief Executive 24 24 24 24Assets & Operations: Permanent Full Time 103 104 105 106 Permanent Part Time 11 11 11 11Total Assets & Operations 114 115 116 117Community Wellbeing : Permanent Full Time 32 32 33 33 Permanent Part Time 89 89 90 90Total Community Wellbeing 121 121 123 123Planning & Environment : Permanent Full Time 31 32 32 33 Permanent Part Time 13 13 13 13Total Planning & Environment 44 45 45 46Corporate Services : Permanent Full Time 27 27 27 27

Permanent Part Time 4 4 4 4Total Corporate Services 31 31 31 31Casuals & Other 28 29 29 30Total EFT 363 366 369 372Less: Capitalised Labour costs -7 -7 -7 -7Total operating EFTs 356 359 362 365



9.9 Financial Performance Indicators and Measures For the four years ended 30 June 2022

Notes to indicators

1. Adjusted underlying result This ratio can vary from year to year with the timing of grant payments (paid in advance) and one off operating expenditure items (new initiatives).

2. Working Capital The ratio can vary year on year with the timing of grant payments, capital works expenditure and due dates of loan repayments. As current liabilities increase, due to loan payments due within 12 months, this indicator is reduces.

3. Unrestricted cash This indicator can vary year on year with the timing of grant payments, capital works expenditure and due dates on loan repayments. Indicator has reduced from 2017/18 budget as current liabilities have increased due to loans being classified as current in 2018/19 (due to be repaid within 12 months).

4. Debt compared to rates This ratio can vary year on year depending on when new loans are taken up and when debt is repaid.

5. Asset renewal This indicator varies depending on the quantity of capital expenditure on renewal projects. Higher renewal capital expenditure improves the indicator.

6. Rates concentration This indicator shows the percentage of rates revenue to total revenue excluding non-monetary and non-recurrent revenue. The ratio is increasing year on year as rates revenue increases.

Measure Notes Actual Budget Budget2016/17 2017/18 2018/19 2019/20 2020/21 2021/22

Adjusted underlying surplus (deficit) / Adjusted underlying revenue

1 11.1% 5.0% 4.0% 4.5% 4.5% 4.5%

Current assets / Current liabilities 2 230.1% 167.4% 123.7% 114.0% 140.0% 156.6%Unrestricted cash / Current liabilities 3 110.2% 97.3% 66.9% 41.9% 66.7% 83.4%

Interest bearing loans and borrowings / rate revenue

4 23.3% 26.2% 23.5% 17.4% 19.7% 20.9%

Interest and principal repayments on interest bearing loans and borrowings / rate revenue

1.7% 2.5% 2.0% 10.2% 1.9% 2.0%

Non-current liabilities / own source revenue 26.2% 28.3% 19.0% 21.1% 22.9% 24.2%Asset renewal expenditure / Depreciation 5 57.4% 113.3% 93.3% 102.1% 91.1% 87.3%

Rate revenue / adjusted underlying revenue 6 58.7% 62.4% 64.4% 65.0% 65.4% 65.8%Rate revenue / CIV of rateable properties in the municipality

0.4% 0.4% 0.4% 0.4% 0.4% 0.4%

Total expenditure / no. of property assessments $3,086 $3,136 $3,189 $3,260 $3,320 $3,387

Residential rate revenue / no. of residential property assessments

$1,987 $2,034 $2,102 $2,154 $2,207 $2,262

No. of permanent staff resignations & terminations / average no. of permanent staff for the financial year

10.7% 9.0% 9.0% 9.0% 9.0% 9.0%



10. Financial Assumptions

10.1 Introduction The following dynamic variables may influence the financial statements in section 9 –

Rating levels and supplementary rate income; Government grant revenue (both recurrent and capital); Contributed assets (both monetary and non-monetary); Asset revaluations (major impact on fixed asset value and depreciation); Asset sales; Mix of income and expenditure on capital investment compared to new initiatives; Level of development and population growth; and Level of demand, that is, the growth in demand as applied to services and expenditure.

10.2 Modelling Methodology The financial statements in section 9 are reproduced from data within an industry developed long term financial software model. 10.3 Financial Assumptions Consumer Price Index (CPI) The Victorian Treasury has forecast that Melbourne CPI for the next financial year will be 2.25% for 2018/19 and 2.5% in future years. 10.3.1 Employee costs Increases in employee costs are composed of three elements –

Enterprise Agreement outcomes, Position classification increments, and New positions, and Increases in casual hours due to service demand

On average we are forecasting a 3.4% increase for the four years in of the SRP for the four elements of employee costs. It is noted that a new Enterprise agreement will be negotiated prior to 2020/21. 10.3.2 Depreciation Depreciation estimates have been based on the projected increases in the fixed assets. 10.3.3 Materials and services Materials and services relate to operational expenditures, which do not result in the creation of an asset. It is assumed that the quantity and standard of materials and contracts will be generally maintained at their current levels throughout the life of the SRP. However, it is expected that there will be some increases in current costs due to increases in the shire’s population resulting in increased service demand and increases in assets that need to be maintained. It has been assumed in the SRP that materials and services will increase in line with the CPI forecast and that there will be a further 1% growth on top of CPI for increases in service demand,


eg additional bin collections, new initiatives, higher maintenance costs for new assets constructed by us and those transferred to us following subdivisions, etc. 10.3.4 Other expenses including special projects and new initiatives One-off expenditures that do not constitute the creation of an asset and have been maintained at constant levels throughout the life of the SRP. Based on what is likely to be affordable in the future, a financial assumption of approximately $400,000 per annum has been used for new initiatives that are ongoing, eg new staff. This cost has been included in the growth in employee costs and materials and contracts above. 10.3.5 Debt servicing and redemption Debt servicing (interest payments) and redemption (principal repayment) has been calculated according to the bank’s loan repayment schedules. In the past we have generally borrowed funds via bank loans. In 2014 the Local Government Funding Vehicle (LGFV) was development by the Municipal Association of Victoria (MAV). The LGFV operates in a similar way to government treasury departments which raise funds through issuing bonds. Money raised through the LGFV requires interest repayments only, the full amount of the principal shall be repaid when the repayment falls due. The LGFV money shall be repaid in full in 10 years and therefore one tenth of the balance is transferred to the debt repayment financial reserve each year. We borrowed funds through the LGFV for the first time in 2014/15. 10.3.6 Rate and charges income Commencing in 2016/17 the Victorian Government imposed annual rate capping based on the Victorian Government’s CPI forecast for the next financial year. The rate increase for 2018/19 has been aligned to the 2.25% rate cap advised by the Victorian Government. For the following years it has been assumed that the rate cap (and CPI) will be 2.5% in line with the Treasury Inflation forecast. Growth in the rate base from new subdivisions and new constructions also contribute to the growth in rate income. Based on historical evidence, it is expected that there will be a 1.5% growth in rate revenue in addition to the increase allowable under the rate cap. 10.3.7 Waste collection income (included under rates and charges in the income statement) Our Rating Strategy states that we will ensure that the revenue from waste collection and disposal charges is sufficient to fully cover the costs of waste services including collection and disposal of garbage, collection and sorting of recyclable materials, collection of green waste, rehabilitation of Landfills, payment to the Victorian Government for the EPA Landfill Levy and management and administration costs associated with waste services. In 2018/19 the cost of the waste service will increase significantly due to the expiry of the current contract and an increase in recycling cost due to the following China’s decision to stop the import of low quality mixed recyclable materials. In years 2019/20 to 2021/22, our financial assumption is that total kerbside collection revenue will increase by 4.0%. This is made up of 2.5% CPI plus 1.5% growth in services.


10.3.8 Grants - operating The largest component of the operating grants are the Federal Financial Assistance Grant (administered by the Victoria Grants Commission). Other major operating grants are for kindergarten and community support. Overall a 2.0% increase in operating grants has been assumed. This is slightly below the CPI forecast as the Federal Assistance Grant is not purely based on CPI, a range of other factors is considered when the allocations to each Council is determined. 10.3.9 Grants - capital Capital grant revenue has been forecast in accordance with the projects that have been included in the Long Term Capital Plan and our recurrent grant funding for roads. As outlined in section 6, Grant funds above or below the forecast amount will directly impact on the level of capital expenditure achievable. 10.3.10 User fees (Council service fees and charges) Our financial assumption is that revenue from fees, charges and contributions will increase by 2.5% per annum. 10.3.11 Statutory fees and fines We have no control over the amount we may charge for many statutory fees, which are prescribed by the Victorian Government including town planning, building, local laws and the animal pound. Therefore the financial assumption has been based on historical averages. In so far as fines is concerned, our practice is based on the principal of education and promotion in the first instance. Revenue from on-the-spot fines is not significant. Therefore, the financial assumption has been based on CPI increases. 10.3.12 Contributions – Non monetary assets Non-monetary assets are those handed over to us following the completion of a subdivision. These include land, roads, footpaths, kerb, channel and drainage. While these assets add to our overall asset base, they do not generate revenue, however, they generate an expense due to the obligation to maintain them and replace them at the end of their useful lives. Historical averages have been used to forecast granted assets in the future. 10.3.13 Interest on investments (under other income in the income statement) Interest on investments has been estimated based on predicted interest rates and cash flow. For many years, interest rates have been declining, however, our revenue from interest on investments is based on the financial assumption that interest rates will remain at the current (low) level.


10.3.14 Capital expenditure The capital expenditure in our forecast financial statements is a reflection of the Long Term Capital Plan which is reviewed and adjusted each year as part of the annual budget preparation process. Expenditure invested in capital projects includes new assets, asset upgrades and asset renewal. To address the “asset renewal gap” and improve to improve our financial sustainability ratios it is our strategy to increase the level of spending on underlying asset renewal by an average of 5% per annum. In the four year horizon, capital works peak in 2019/20 at $26.65m. This is due to several larger capital projects which are being delivered over multiple years predicted to incur a larger part of their expenditure in 2019/20. 10.4 Conclusion 10.4 CONCLUSION Our assumptions are included in the long term financial model and are depicted in the financial statements. Our assumptions (and strategies) will be reviewed annually through the budget process during February to April and, if required they will be adjusted in the SRP, which will be adopted prior to 30 June. Based on the assumptions above, the Macedon Ranges Shire Council will remain in a sustainable financial position in the coming years.


11. Glossary

Act means the Local Government Act 1989

Annual report means a report of the activities of the previous financial year and contains a report of operations, audited financial statements and an audited performance statement

Asset expansion expenditure

means expenditure that extends the capacity of an existing asset to provide benefits to new users at the same standard as is provided to existing beneficiaries

Asset expenditure type means the following types of asset expenditure: asset renewal expenditure; new asset expenditure; asset upgrade expenditure; asset expansion expenditure

Asset renewal expenditure means expenditure on an existing asset or on replacing an existing asset that returns the service capability of the asset to its original capability

Asset upgrade expenditure means expenditure that: enhances an existing asset to provide a higher level of service; or increases the life of the asset beyond its original life

Australian Accounting Standards (AASB)

means the accounting standards published by the Australian Accounting Standards Board

Budget means a plan setting out the services and initiatives to be funded for the financial year and how they will contribute to achieving the strategic objectives specified in the council plan

Capital works expenditure means expenditure on non-current assets and includes new assets, asset renewal, asset expansion and asset upgrade

Council The local government entity comprising of staff and councillors. Inclusive terms such as we, our and us are regularly used to represent Council.

Council plan means a plan setting out the medium-term strategic objectives, strategies, strategic indicators and resources reflecting vision and aspirations of the community for the next four year

Fair Go Rates system Victorian Government legislation that restricts Council rate revenue increases to a specified “cap” on the average increase in rates and municipal charge.

Financial resources means income, expenditure, assets, liabilities, equity, cash and capital works required to deliver the services and initiatives in the budget

Financial statements means the financial statements and notes prepared in accordance with the Australian Accounting Standards as they apply to the general purpose financial reports of local governments and a statement of capital works and included in the annual report

Financial year means the period of 12 months ending on 30 June each year

Human resources means the staff employed by a council

Indicator means what will be measured to assess performance

Initiatives means actions that are one-off in nature and/or lead to improvements in service

Major initiatives means significant initiatives that will directly contribute to the achievement of the council plan during the current year and have a major focus in the budget


Minister means the Minister for Local Government

Model budget means the Victorian City Council Model Budget prepared annually by the Institute of Chartered Accountants in Australia

New asset expenditure means expenditure that creates a new asset that provides a service that does not currently exist

Non-financial resources means the resources other than financial resources required to deliver the services and initiatives in the budget

Non-recurrent grant means a grant obtained on the condition that it be expended in a specified manner and is not expected to be received again during the period covered by a Council’s Strategic Resource Plan

Planning and accountability framework

means the key statutory planning and reporting documents that are required to be prepared by councils to ensure accountability to local communities in the performance of functions and exercise of powers under the Act

Performance statement means a statement including the results of the prescribed service outcome indicators, financial performance indicators and sustainable capacity indicators for the financial year and included in the annual report

Recurrent grant means a grant other than a non-recurrent grant Regulations (LGR) means the Local Government (Planning and Reporting) Regulations 2014

Report of operations means a report containing a description of the operations of the council during the financial year and included in the annual report

Services means assistance, support, advice and other actions undertaken by a council for the benefit of the local community

Statement of capital works means a statement which shows all capital expenditure of a council in relation to non-current assets and asset expenditure type prepared accordance to the model statement of capital works in the Local Government Financial Report

Strategic objectives means the outcomes a council is seeking to achieve over the next four years and included in the council plan

Strategic resource plan means a plan of the financial and non-financial resources for at least the next four years required to achieve the strategic objectives in the council plan

Strategies means high level actions directed at achieving the strategic objectives in the council plan

Statement of human resources

means a statement which shows all council staff expenditure and numbers of full time equivalent council staff

Statements of non-financial resources

means a statement which describes the non-financial resources including human resources

Summary of planned capital works expenditure

means a summary of capital works expenditure in relation to non-current assets classified according to the model statement of capital works in the Local Government Financial Report, by asset expenditure type and funding source

Summary of planned human resources expenditure

means a summary of permanent council staff expenditure and numbers of full time equivalent council staff categorised according to the organisational structure of the council

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