Attachment 2

COUNCIL PLAN 2008 – 2012

STRATEGIC RESOURCE PLAN

NORTHERN GRAMPIANS SHIRE COUNCIL

Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

TABLE OF CONTENTS Section Page
1. Executive Summary 3 1.1 Purpose of a Strategic Resource Plan 3 1.2 Content of a Strategic Resource Plan 3 1.3 Connection of Strategic Resource Plan to Planning Framework 3 2. Financial Resources 4 4 4

2.1 Financial Plan 2007-2011 2.2 Principles and Objectives 2.3 Key Assumptions 5 2.4 Borrowing Strategy 2.5 Fees and Charges Strategy 2.6 Rate Strategy 2.7 Differential Rate for Various Property Categories 6 3. 7 Human Resources

5 6 6

3.1 Staffing Profile 7 3.2 Staff Composition 7 3.3 Salary Expenditure and Budget Arrangements 4. 8 Infrastructure Strategy 7

5.1 Statement of Financial Performance 2008-2012 9 5.2 Statement of Financial Position 2008-2012 10 5.3 Statement of Cash Flows 2008-2012 11

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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

5.4 Statement of Capital Works 2008-2012 5.5 Key Strategic Activities 13

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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

1.0 EXECUTIVE SUMMARY
1.1 Purpose of a Strategic Resource Plan
Under Section 126 of the Local Government Act 1989 as amended by the Local Government (Democratic Reform) Act 2003, Council is required to prepare a Strategic Resource Plan in conjunction with the Council Plan. The Strategic Resource Plan (SRP) provides a high level, medium term view on how Council intends to utilise its resources to achieve the strategic objectives and strategies adopted in the Council Plan for 2008-2012.

1.2 Content of a Strategic Resource Plan
The content of Northern Grampians Shire Council’s Strategic Resource Plan is as follows:  The SRP document attempts to establish a financial framework over the next four years which considers and implements financial strategies to achieve particular objectives. The SRP assists in ensuring that Council complies with sound financial management principles, as required by the Local Government Act (1989), and plans for the long-term sustainability of Council. The SRP identifies and assesses the resources, financial and nonfinancial, required to achieve the objectives and strategies adopted in the Council Plan. Non-financial resources include human resources, plant & machinery, information technology, and Council’s asset base. The SRP formulates a basis by which Council’s adherence to policies and strategies can be measured. The document considers the relationship between the level of Council services and internal resources needed to deliver these services.

 

1.3 Connection of Strategic Resource Plan to Planning Framework
The Strategic Resource Plan (SRP), which is included with the Council Plan, summarises the financial and non-financial impacts of the objectives and strategies and determines the affordability of these items, whilst maintaining financial sustainability of Council. The SRP document is also updated on an annual basis in conjunction with the Council Plan review.

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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

The following diagram shows the strategic planning framework:

LONG TERM

Identifying Community Needs, Objectives, Strategies and Activities
Need for financial sustainability

MEDIUM TERM

Council Plan

Strategic Resource Plan
Is the Council Plan affordable?

SHORT TERM

Department Annual Plans

Annual Budget

Various Council Strategies

2.0 FINANCIAL RESOURCES
2.1 Financial Plan 2008-2012
The following pages present the Financial Plan for the years 2008-2012, which is in line with the Council Plan time frames. The Financial Plan considers the objectives and strategies specified in the Council Plan and attempt to express them in financial terms.

2.2 Principles and Objectives
In preparing the financial plan, Council has complied with the following guidelines:       Prudent financial management principles; Ensure that rate increases are not excessive, and are fairly distributed; The financial impacts on future generations from Council decisions must be considered; Achievement of a balanced cash budget each year; Maintenance of strong liquidity position for Council; and The budgeted amounts of both income and expenditure are made on a conservative basis and in practice this has proved to be appropriate and prudent to the unforseen occurring.

2.3 Key Assumptions
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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

Generally, the Financial Plan is prepared on the basis that Council will continue to provide the same or similar level of service as per previous year; Allowance for increases in the cost of goods and services of around 3% per annum i.e. CPI; Salaries and wages include an increase to the next band level for budgetary purposes in accordance with the relevant Awards; and an EBA wage increase of 4% per annum for the life of the plan; Victorian Grants Commission funding has been updated to reflect anticipated increase in allocation for 20082009; Capital works funding for Roads to Recovery maintained at $1,117,000 in 2008/2009 and then remain consistent up to 2011/2012. Existing fees and charges will be increased by the Consumer Price Index (CPI) per annum. (indicative amount set at 3% per annum). Based on current estimates overall income from User Fees & Charges is estimated to only increase by 2%; Operating grants to be based on confirmed funding levels; Capital grants are predicted to decrease from the high levels of recent years. The Capital Works program allowed for from 2008/2009 have reduced to over current levels to reflect this anticipated decrease in Capital grants; Investment interest rates are expected to be 6.5% per annum on average during the four years of the Strategic Resource Plan; Increase in overall rate revenue allowed for at 7% per annum; Garbage charges to be set in line with cost increases of providing the service; Depreciation expense is based on current estimated asset values at 30 June 2007; however this is subject to asset revaluations from time to time.

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2.4 Borrowing Strategy
The plan currently provides for no new loan funds to be raised. Council has also allowed for no further borrowings for the remainder of the plan. Council reserves the right to plan for new loans should the need arise.

2.5 Fees and Charges Strategy

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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

Proposed in the 2008/2009 Annual Budget, fees and charges make up 12.4% of total Council’s revenue. For the past three years, fees have been generally increased by 3% per annum. A review of charge was undertaken in June 2008. This new fee base will be adjusted by 3% per annum for the remainder of the plan period. However, fees and charges for each area are considered individually, and set according to the costs involved and estimated volumes.

2.6 Rate Strategy Introduction
In developing the long term financial plan, rates and charges were identified as an important source of revenue, accounting for 43.8% of the total operating revenue received by Council annually. Planning for future rate increases has therefore been an important component of the long term financial planning process. In the long term, however, it must be acknowledged that Northern Grampians rate levels need to be assessed to ensure that with the increasing demands on infrastructure and the burden of additional costs shifted to Local Government, the Council is able to deliver the level of service required.
Year 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 Percentage Increase in Revenue from Rates & Charges 6.0% 11.3% 5.0% 5.9% 7.95% 7.75% 11.8% 3.6% 6.7% 7.0% 7.0% 7.0% 7.0%

2.7 Differential Rate for Various Property Categories
Following a review of the differential rating systems Council has determined that there will be no change this year in the rating differentials that were established for 2007-2008.
Rating Code G U C F S Description Residential & Vacant Land Industrial Properties Commercial Properties Farm rate Cultural & Recreation Properties % of Gen Rate 100% 100% 100% 65% 58%

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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

3.0

HUMAN RESOURCES

The Northern Grampians Shire Council is a dynamic organisation that is an integral part of the community. The Council acknowledges that its greatest resource is our employees. Without these people, there is no Council.

3.1 Staffing Profile
The Northern Grampians Shire Council has a stable operating environment with service levels predicted to remain constant during the coming four year period.

3.2

Staff Composition

The demographic projections indicate to us that our population level will remain relatively static but consistent with the national average will continue to show further signs of ageing. The impact of an ageing population will be felt in terms of Council’s services in the area of Home Care. Continued cost shifting by other levels of government may also require additional staffing. Occupational Health and Safety and consultation with staff are important elements of Council’s staff management process. Training of staff is also of great importance, particularly in the areas where there is continual technological change. Council’s Budget both reflects the need and the commitment of Council to meet that need in the areas of Occupational Health and Safety and training. Staff performance will continue to be reviewed on an annual basis We will continue in 2008/09 year with the setting of indicators to measure, challenge and monitor our efficiency. Coupled with a more streamlined reporting structure, Northern Grampians will begin to reap the rewards of a more focused organisation that is constantly reviewing and renewing the way it does its job.

3.3

Salary Expenditure and Budget Arrangements

Forecast expenditure on staff costs in the 2008/2009 budget is $9.2 million. The total in the future financial years, if the existing service delivery arrangements are retained or enhanced, will increase in-line with identified salary increases.

4.0
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INFRASTRUCTURE STRATEGY

Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

An important element of any strategic financial plan is how the proposed funding levels for asset preservation affect the condition of the assets. If sufficient funds are not allocated then the conditions of those assets will deteriorate and the value of Council’s investment in those assets will drop. The long-term difficulties in achieving full sustainability are evidenced by comparing the funds required to those that are budgeted in this area. Whilst the Strategic Resource Plan makes continued progress in increasing funding, the gap is not eradicated. The funding level increases represent a strong commitment to the issue. The Strategic Resource Plan provides for Northern Grampians Shire Council to be sustainable by 2011-2012 by progressively increasing capital renewal expenditure in line with depreciation expense. This means that we are spending sufficient resources to maintain the assets we have. In the development of this plan Council has assumed that the Roads to Recovery funding will continue beyond the life of the plan. Looking broader than road management, the challenges in other areas of infrastructure are similar to that portrayed above. Council will develop an appropriate asset management strategy that will determine the needs of the community owned buildings and facilities. It has been identified that there is a significant gap between what we are spending on existing building assets and what should be spent. As we analyse this position in detail we will be able to determine the funding required to maintain these assets. The infrastructure funding problem is not unique to Northern Grampians. All councils are grappling with it, but the problem is most acute in small rural councils which simply do not have the resources to maintain thousands of kilometres of roads and other infrastructure assets. The funding gap can only be bridged if the Federal and State Governments adopt permanent, guaranteed sources of funding Local Government responsibilities which are permanent and on-going.

5.1 STRATEGIC RESOURCE PLAN
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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

Northern Grampians Shire Council Standard Income Statement For the years ending 30 June 2008 - 2012
Budget Projection Projection Projection Projection

07/08 '000's Revenues from ordinary activities Rates & Charges User Fees and Charges Government Grants - Operational Government Grants - Capital Contributions Other Total Revenues Expenses from ordinary activities Employee Costs Materials and Services Other Expenses Borrowing Costs Depreciation Total Expenses Interest from Investments Net Surplus (deficit) from operations Movements in Equity Net increase (decrease) in asset revaluation reserve Increase (decrease) in accumulated surplus on adoption of new Accounting Standard Total changes in equity

08/09 '000's

09/10 '000's

10/11 '000's

11/12 '000's

9,178 2,598 6,089 2,343 444 67 20,719 8,574 6,294 912 151 4,410 20,341 214 592

9,822 2,650 6,090 2,000 457 69 21,088 8,874 6,424 799 136 4,400 20,633 223 678

10,509 2,703 6,217 1,956 471 73 21,929 9,185 6,658 986 105 4,400 21,334 231 826

11,245 2,757 6,354 1,914 485 75 22,830 9,552 6,904 863 78 4,400 21,797 241 1,274

12032 2812 6498 1994 500 78 23914 9934 7165 999 46 4400 22544 250 1620

-

-

-

-

592

678

826

1,274

1620

5.2 STRATEGIC RESOURCE PLAN Northern Grampians Shire Council
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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

Standard Balance Sheet For the years ending 30 June 2008 - 2012

Budget

Projection

Projection

Projection

Projection

07/08
'000's

08/09
'000's

09/10
'000's

10/11
'000's

11/12
'000's

Current Assets Cash Assets Receivables Inventories Prepayments Non Current Assets Held for Sale Total Current Assets Non current assets Receivables Property, plant and equipment Other Total non-current assets Total assets Current Liabilities Payables Interest bearing liabilities Employee benefits Other Total current liabilities Non-current liabilities Interest bearing liabilities Employee benefits Other Total non-current liabilities Total Liabilities Net Assets Equity Accumulated surplus Asset revaluation reserve Other reserves Total Equity

2,928 1,485 294 361 5,068 151 171,401 552 172,104 177,172 1,279 581 1,542 96 3,498 1,864 279 2,143 5,641 171,531 108,369 61,145 2,017 171,531

3,023 1,484 294 362 5,163 172,104 172,104 177,267 1,229 425 1,593 96 3,343 1,434 279 1,713 5,056 172,211 109,048 61,145 2,018 172,211

3,038 1,484 294 362 5,178 172,490 172,490 177,668 1,178 451 1,643 96 3,368 983 279 1,262 4,630 173,037 109,874 61,145 2,018 173,037

3,076 1,484 294 362 5,216 173,275 173,275 178,491 1,129 387 1,693 96 3,305 596 279 875 4,180 174,311 111,148 61,145 2,018 174,311

3065 1484 294 362 5205 174511 174511 179716 1075 389 1743 96 3303 205 279 484 3787 175929 112766 61145 2018 175929

5.3 STRATEGIC RESOURCE PLAN Northern Grampians Shire Council Standard Cash Flow Statement
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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

For the years ending 30 June 2008 – 2012
Budget Projection Projection Projection Projection

07/08
'000's

08/09
'000's

09/10
'000's

10/11
'000's

11/12
'000's

Operating activities Income Expenditure Net Operating Investing Activities Capital Expenditure Capital Income Net Investing Activities Financing Activities New Loans Principal Repayments Total Financing Activities Net Movements for Year Opening Cash Closing Cash

(20,934) 15,932 (5,002)

(21,311) 16,230 (5,081)

(22,160) 16,931 (5,229)

(23,071) 17,394 (5,677)

(24,164) 18,144 (6020)

6,260 (1003) 5,257

5,150 (752) 4,398

5,350 (564) 4,786

5,750 (564) 5,186

6,200 (564) 5636

(500) 651 151 406 3,334 2,928

589 589 (94) 2,928 3,022

428 428 (15) 3,022 3,037

455 455 (36) 3,037 3,073

392 392 (8) 3073 3,065

5.4 STRATEGIC RESOURCE PLAN Northern Grampians Shire Council Standard Capital Works Statement

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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

For the years ending 30 June 2008 – 2012

Budget

Projection

Projection

Projection

Projection

07/08
'000's

08/09
'000's

09/10
'000's

10/11
'000's

11/12
'000's

Bridges & Culverts Buildings Computers/Information Technology Plant & Motor Vehicles Parks & Gardens Projects Roads/Footpaths Streetscapes Water Management Total Capital Works Represented by: Renewal New Expansion Total Capital Works

377 951 161 1,015 250 478 2,205 265 558 6,260

310 782 132 835 206 393 1815 218 459 5,150

322 813 138 867 214 409 1884 226 477 5,350

346 874 148 932 230 439 2025 243 513 5,750

373 942 160 1005 248 473 2183 263 553 6200

3,134 1,453 1,673 6,260

3,800 650 700 5,150

4,200 450 700 5,350

4,400 550 800 5,750

4400 900 900 6200

5.5 STRATEGIC RESOURCE PLAN Northern Grampians Shire Council Key Strategic Activities
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Northern Grampians Shire Council Strategic Resource Plan – 2008-2012

For the years ending 30 June 2008 – 2012
Projectio n Projectio n Projectio n Projectio n

Budget

07/08 Financial Performance Actual Operating Surplus/(Deficit) v’s Budget Operating Surplus as % of Total Recurrent revenue Change in Net Assets from previous year Working Capital Ratio Total Debt Servicing costs % of Rates & Charges % of Rates & Charges outstanding at 30 June Risk Management % Movement in Rates & Charges Revenue Rates & Charges per assessment Rates & Charges per Capita Rates & Charges as a % of CIV Average Rates & Charges per assessment – Residential Average Rates & Charges per assessment – Farm Average Rates & Charges per assessment – Comm./Indus Rates & Charges as a % of Total Recurrent Revenue Capital Expenditure Capital per assessment % Achievement of Capital program Ratio of Capital Expenditure to Depreciation Operating Expenses Net Operating Expenditure per assessment Net Operating Expenditure per Capita Community Satisfaction Overall Performance of Council Overall Performance in Key Service Areas and Responsibilities Rating of Council’s interaction and responsiveness in dealing with the Public Rating for Council’s Advocacy and Community Representation Rating for Council’s engagement in Decision making on Key Issues 100% 2.9% 0.35% 144.9% 1.6% 3.0% 6.7% $1,004 $697 0.56% $957 $1004 $1,483 43.8%

08/09 100% 3.2% 0.40% 154.4% 1.4% 3.0% 7.0% $1,074 $747 0.54% $1,024 $1,074 $1,587 46.6%

09/10 100% 3.8% 0.48% 153.7% 1.0% 3.0% 7.0% $1,148 $799 0.57% $1,096 $1,149 $1,698 47.9%

10/11 100% 5.6% 0.74% 157.8% 0.7% 3.0% 7.0% $1,227 $854 0.56% $1,172 $1,230 $1,817 49.3%

11/12 100% 6.8% 0.93% 157.6% 0.4% 3.0% 7.0% $1313 $914 0.56% $1254 $1316 $1944 50.3%

$685 90% 1.42 $2,227 $1,547 66 69 75 68 62

$563 95% 1.17 $2,256 $1,569 67 70 75 69 63

$584 96% 1.22 $2,330 $1,622 68 71 76 70 64

$624 98% 1.31 $2,378 $1,657 69 72 76 70 65

$672 98% 1.41 2459 1714 70 72 76 70 65

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