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Attachment 2

C O U N C I L P L A N 2 0 0 8 – 2 0 1 2

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

2.1 Financial Plan 2007-2011 4

2.2 Principles and Objectives 4

2.3 Key Assumptions 5

2.4 Borrowing Strategy 5

2.5 Fees and Charges Strategy 6

2.6 Rate Strategy 6

2.7 Differential Rate for Various Property Categories 6

3. Human Resources 7

3.1 Staffing Profile 7

3.2 Staff Composition 7

3.3 Salary Expenditure and Budget Arrangements 7

4. Infrastructure Strategy 8

5.1 Statement of Financial Performance 2008-2012 9

5.2 Statement of Financial Position 2008-201210

5.3 Statement of Cash Flows 2008-201211

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5.4 Statement of Capital Works 2008-2012 12

5.5 Key Strategic Activities

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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 non-financial, 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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The following diagram shows the strategic planning framework:

LONG TERM

Need for financial sustainability

MEDIUM TERM

Is the Council Plan affordable?

SHORT TERM

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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Identifying Community Needs, Objectives,

Strategies and Activities

Council Plan

Department Annual Plans

Strategic Resource Plan

Annual Budget

Various Council Strategies



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.

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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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.

YearPercentage Increase in Revenue

from Rates & Charges

1999/2000 6.0%2000/2001 11.3%2001/2002 5.0%2002/2003 5.9%2003/2004 7.95%2004/2005 7.75%2005/2006 11.8%2006/2007 3.6%2007/2008 6.7%2008/2009 7.0%2009/2010 7.0%2010/2011 7.0%2011/2012 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 Description % of Gen Rate

G Residential & Vacant Land 100%U Industrial Properties 100%C Commercial Properties 100%F Farm rate 65%S Cultural & Recreation Properties 58%

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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 INFRASTRUCTURE STRATEGY

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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 CouncilStandard Income StatementFor the years ending 30 June 2008 - 2012

Budget Projection Projection Projection Projection

07/08 08/09 09/10 10/11 11/12

'000's '000's '000's '000's '000's

Revenues from ordinary activitiesRates & Charges 9,178 9,822 10,509 11,245 12032User Fees and Charges 2,598 2,650 2,703 2,757 2812Government Grants - Operational 6,089 6,090 6,217 6,354 6498Government Grants - Capital 2,343 2,000 1,956 1,914 1994Contributions 444 457 471 485 500Other 67 69 73 75 78

Total Revenues 20,719 21,088 21,929 22,830 23914 Expenses from ordinary activitiesEmployee Costs 8,574 8,874 9,185 9,552 9934Materials and Services 6,294 6,424 6,658 6,904 7165Other Expenses 912 799 986 863 999Borrowing Costs 151 136 105 78 46Depreciation 4,410 4,400 4,400 4,400 4400 Total Expenses 20,341 20,633 21,334 21,797 22544 Interest from Investments 214 223 231 241 250

Net Surplus (deficit) from operations 592 678 826 1,274 1620 Movements in EquityNet increase (decrease) in asset revaluation reserve - - - - Increase (decrease) in accumulated surplus on - - - -adoption of new Accounting Standard Total changes in equity 592 678 826 1,274 1620

5.2 STRATEGIC RESOURCE PLANNorthern Grampians Shire Council

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Standard Balance SheetFor the years ending 30 June 2008 - 2012


07/08 08/09 09/10 10/11 11/12

'000's '000's '000's '000's '000's

Current AssetsCash Assets 2,928 3,023 3,038 3,076 3065Receivables 1,485 1,484 1,484 1,484 1484Inventories 294 294 294 294 294Prepayments 361 362 362 362 362Non Current Assets Held for SaleTotal Current Assets 5,068 5,163 5,178 5,216 5205 Non current assetsReceivables 151 - - - -Property, plant and equipment 171,401 172,104 172,490 173,275 174511Other 552 - - - -Total non-current assets 172,104 172,104 172,490 173,275 174511 Total assets 177,172 177,267 177,668 178,491 179716 Current LiabilitiesPayables 1,279 1,229 1,178 1,129 1075Interest bearing liabilities 581 425 451 387 389Employee benefits 1,542 1,593 1,643 1,693 1743Other 96 96 96 96 96Total current liabilities 3,498 3,343 3,368 3,305 3303 Non-current liabilitiesInterest bearing liabilities 1,864 1,434 983 596 205Employee benefits 279 279 279 279 279Other - -Total non-current liabilities 2,143 1,713 1,262 875 484 Total Liabilities 5,641 5,056 4,630 4,180 3787 Net Assets 171,531 172,211 173,037 174,311 175929 EquityAccumulated surplus 108,369 109,048 109,874 111,148 112766Asset revaluation reserve 61,145 61,145 61,145 61,145 61145Other reserves 2,017 2,018 2,018 2,018 2018Total Equity 171,531 172,211 173,037 174,311 175929



Standard Cash Flow Statement

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For the years ending 30 June 2008 – 2012


07/08 08/09 09/10 10/11 11/12

'000's '000's '000's '000's '000's

Operating activities Income (20,934) (21,311) (22,160) (23,071) (24,164)

Expenditure 15,932 16,230 16,931 17,394 18,144

Net Operating (5,002) (5,081) (5,229) (5,677) (6020)

Investing ActivitiesCapital Expenditure 6,260 5,150 5,350 5,750 6,200

Capital Income (1003) (752) (564) (564) (564)

Net Investing Activities 5,257 4,398 4,786 5,186 5636

Financing ActivitiesNew Loans (500) - - - -

Principal Repayments 651 589 428 455 392

Total Financing Activities 151 589 428 455 392

Net Movements for Year 406 (94) (15) (36) (8)

Opening Cash 3,334 2,928 3,022 3,037 3073

Closing Cash 2,928 3,022 3,037 3,073 3,065



Standard Capital Works Statement

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Key Strategic Activities

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07/08 08/09 09/10 10/11 11/12

'000's '000's '000's '000's '000's

Bridges & Culverts 377 310 322 346 373

Buildings 951 782 813 874 942

Computers/Information Technology 161 132 138 148 160

Plant & Motor Vehicles 1,015 835 867 932 1005

Parks & Gardens 250 206 214 230 248

Projects 478 393 409 439 473

Roads/Footpaths 2,205 1815 1884 2025 2183

Streetscapes 265 218 226 243 263

Water Management 558 459 477 513 553

Total Capital Works 6,260 5,150 5,350 5,750 6200

Represented by:

Renewal 3,134 3,800 4,200 4,400 4400New 1,453 650 450 550 900

Expansion 1,673 700 700 800 900

Total Capital Works 6,260 5,150 5,350 5,750 6200




BudgetProjectio

nProjectio

nProjectio

nProjectio

n 07/08 08/09 09/10 10/11 11/12

Financial PerformanceActual Operating Surplus/(Deficit) v’s Budget 100% 100% 100% 100% 100%Operating Surplus as % of Total Recurrent revenue

2.9% 3.2% 3.8% 5.6% 6.8%

Change in Net Assets from previous year 0.35% 0.40% 0.48% 0.74% 0.93%Working Capital Ratio 144.9% 154.4% 153.7% 157.8% 157.6%Total Debt Servicing costs % of Rates & Charges 1.6% 1.4% 1.0% 0.7% 0.4%% of Rates & Charges outstanding at 30 June 3.0% 3.0% 3.0% 3.0% 3.0%

Risk Management% Movement in Rates & Charges Revenue 6.7% 7.0% 7.0% 7.0% 7.0%Rates & Charges per assessment $1,004 $1,074 $1,148 $1,227 $1313Rates & Charges per Capita $697 $747 $799 $854 $914Rates & Charges as a % of CIV 0.56% 0.54% 0.57% 0.56% 0.56%Average Rates & Charges per assessment – Residential $957 $1,024 $1,096 $1,172 $1254

Average Rates & Charges per assessment – Farm $1004 $1,074 $1,149 $1,230 $1316Average Rates & Charges per assessment – Comm./Indus

$1,483 $1,587 $1,698 $1,817 $1944

Rates & Charges as a % of Total Recurrent Revenue

43.8% 46.6% 47.9% 49.3% 50.3%

Capital ExpenditureCapital per assessment $685 $563 $584 $624 $672% Achievement of Capital program 90% 95% 96% 98% 98%Ratio of Capital Expenditure to Depreciation 1.42 1.17 1.22 1.31 1.41

Operating ExpensesNet Operating Expenditure per assessment $2,227 $2,256 $2,330 $2,378 2459Net Operating Expenditure per Capita $1,547 $1,569 $1,622 $1,657 1714

Community SatisfactionOverall Performance of Council 66 67 68 69 70Overall Performance in Key Service Areas and Responsibilities 69 70 71 72 72

Rating of Council’s interaction and responsiveness in dealing with the Public 75 75 76 76 76

Rating for Council’s Advocacy and Community Representation 68 69 70 70 70

Rating for Council’s engagement in Decision making on Key Issues 62 63 64 65 65

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