fit for the future...fit for the future requires all councils to respond by 30 june. the city of...

Morrison Low © Except for all client data and factual information contained herein, this document is the copyright of Morrison Low. All or any part of it may only be used, copied or

reproduced for the purpose for which it was originally intended, except where the prior permission to do otherwise has been sought from and granted by Morrison Low. Prospective

users are invited to make enquiries of Morrison Low concerning using all or part of this copyright document for purposes other than that for which it was intended.

Fit for the Future

24 June 2015

local government © Morrison Low Ref: 7072 2

Introduction

Fit for the Future requires all councils to respond by 30 June. The City of

Botany Bay was identified by the Independent Review Panel for potential

structural change (merger with 4 other councils into the Global City of

Sydney)

• While Council does not support forced mergers Council is considering the

proposed merger and other options while preparing its response

Any response other then that proposed by the Independent Panel needs to

be a superior proposal (IPART). Proposals will be assessed against;

• Scale and capacity

• The 7 Fit for the Future benchmarks

Morrison Low and Council staff have been working to develop a series of

improvement opportunities and to forecast Council’s performance against

the benchmarks


This report provides an update on the draft improvement opportunities and

the performance of Council against the Fit for the Future benchmarks

If Council were to implement the following proposals identified to date then

Council can meet all of the benchmarks by 2020

• Improvement opportunities; and

• Without an SRV

Council’s revaluation of roads assets and review of building depreciation

are likely to lead to a reduction in depreciation. Any such change will have

a (positive) impact on the Operating Performance, Asset Renewal and

Infrastructure Backlog benchmarks.

• At this stage a conservative allowance for the likely reduction in depreciation

has been allowed for.

Introduction


Description of Scenarios

1. Base Case

• Based on the councils previous Long Term Financial Plan, financial

statements and updated financial projections relating to income, proposed

renewal expenditure, depreciation

2. Updated forecast

• Council has identified a number of areas for improvements in services and

service delivery

– Council has made reasonable and conservative estimates of the financial impacts

of each opportunity, where these can be made; and

• Council has updated future revenue forecasts to account for predicted

residential growth

• Council is currently reviewing depreciation and a conservative allowance for

the expected reduction has been modelled in


Performance against the Benchmarks

The following graphs demonstrate the impact of implementing the

improvement opportunities and allocation of the savings identified to

renewal and maintenance expenditure over the period to 2023 • The red line represents the base case

• The blue lines represents the adjusted version (improvement opportunities

and allocation to Infrastructure assets)

• Where no difference exists only the red line shows

A summary of the performance to 2020 is set out first • 2020 is the date by which IPART requires the following ratios to be met

– Operating Performance Ratio

– Own Source Revenue

– Debt Service Ratio

– The remaining ratios need to show improvement by 2020


Summary of performance

against the ratios to 2020

Indicator Base Case Updated forecasts

Operating Performance ×

Own Source Revenue

Debt Service Cover

Asset Maintenance ×

Asset Renewal ×

Infrastructure Backlog ×

Real Operating Expenditure


Operating Performance (Greater than or equal to breakeven – average over 3 years)

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021

Pe

rce

nta

ge

Year

Operating Performance Ratio

Botany - Updated

City of Botany Bay


Own Source Revenue (Greater than 60% – average over 3 years)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021

Pe

rce

nta

ge

Year

Own source revenue Ratio

Botany Bay - Updated

City of Botany Bay


Debt Service (Greater than 0% and less than or equal to 20%

– average over 3 years)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Pe

rce

nta

ge

Year

City of Botany Bay - Adjusted City of Botany Bay


Asset Maintenance (Greater than 100% – average over 3 years)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021

Pe

rce

nta

ge

Year

Maintenance Ratio


City of Botany Bay


Building and Infrastructure Renewal (Greater than 100% – average over 3 years)

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

2013 2014 2015 2016 2017 2018 2019 2020 2021

Pe

rce

nta

ga

Year

Renewals Ratio


City of Botany Bay


Infrastructure Backlog (Less than 2%)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021

Pe

rce

nta

ge

Year

Backlog Ratio


City of Botany Bay


Real Operating Expenditure (Decreasing)

$980

$1,000

$1,020

$1,040

$1,060

$1,080

$1,100

$1,120

$1,140

$1,160

2012 2014 2016 2018 2020 2022 2024 2026

Exp

en

tdit

ure

/ C

apit

a

Operating Expenditure per Capita


City of Botany Bay


Improvement Opportunities

A number of opportunities for improvement have been identified within

Council

• Where Council has a reasonable basis for quantifying the estimated likely

financial impacts of the opportunity, savings have been included

• Where the likely financial impacts cannot reasonably be quantified at this

stage, no financial benefit has been attributed

• Some have implementation costs

• Council is mainly concerned with the net benefit

Together the opportunities identified to date provide savings to the council

in the order of $1.3 - $1.8M per annum (excluding rates growth)


Advertising • Increase revenue from selling advertising on appropriate council sites

Desktop Publishing • Reduce the expenditure on the design of publishing documents

Development Compliance • Greater oversight and enforcement in relation to compliance with development

consent and swimming pool inspection fees

Parking • Introduction of additional residential parking schemes



E services

• Make better use of website and electronic publications

Increase in Fees and Charges

• Across council facilities and services

Fleet Management

• Review of Fleet

Linking remote sites

• Putting all remote location offices on a single IT system



Overtime

• Reducing staff overtime expenditure

Telecommunications

• Review of telecommunication contracts and hardware

Utilities

• Savings from new contracts to Utility Providers

Depreciation

• Likely reduction in depreciation due to alignment with current rates and latest

construction techniques



Key parameters in the Modelling

Projections are based on information provided by Council

Improvement opportunities are realised in the next financial year

Council has invested additional funds into building & infrastructure renewal

in order to meet the Fit for the Future benchmarks

Morrison Low © Except for all client data and factual information contained herein, this document is the copyright of Morrison Low. All or any part of it may only be used, copied or

reproduced for the purpose for which it was originally intended, except where the prior permission to do otherwise has been sought from and granted by Morrison Low. Prospective

users are invited to make enquiries of Morrison Low concerning using all or part of this copyright document for purposes other than that for which it was intended.

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