o n e c i t y d i v e r s e p l a c e s

City of SwanLong Term Financial Plan

2013/14 to 2022/23

AbbreviationsABS Australian Bureau of Statistics

AMP Asset Management Plan

CBD Commercial Business District

CEO Chief Executive Offi cer

CPI A Consumer Price Index Australia

CPI P Consumer Price Index Perth

DLG Department of Local Government WA

FTE Full Time Equivalent

GRV Gross Rental Value

ha Hectare

HACC Home and Community Care

km Kilometres

KPI Key Performance Indicator

LG Local Government

LGCI Western Australian Local Government Cost Index

LTFP Long Term Financial Plan

SCP Strategic Community Plan

UCL Unallocated Crown Land

WALGA Western Australian Local Government Association

WALGGC Western Australian Local Government Grants Commission

1

1 INTRODUCTION 2

1.1 Background 2

1.2 Key Statistics 3

1.3 Integrated Planning Framework 4

1.4 Strategic Directions 5

1.5 Our Services 8

1.5.1 Service Programs 8

1.5.2 Service Levels 10

1.5.3 Asset Management 10

2 LONG TERM FINANCIAL FORECASTS 12

2.1 Informing Strategies and Price Indicators 12

2.1.1 Informing Plans and Policies 13

2.1.2 Financial Strategies and Principles 13

2.1.3 Economic and Social Environment Indicators 14

2.2 Summary of Financial Plan 16

2.2.1 Overview 16

2.2.2 Operating Results 18

2.3 Financial Statements 19

2.3.1 Statement of Comprehensive Income – by program 20

2.3.2 Statement of Comprehensive Income – by nature/type 21

2.3.3 Key Performance Indicators 22

2.3.4 Summary of Financial Activity (Rate Setting Statement) 23

2.3.5 Capital Outlays 24

2.3.6 Statement of Financial Position 27

2.3.7 Statement of Equity 28

2.3.8 Statement of Cash Flows 29

2.4 Debt Management 30

2.5 Cash Reserves 31

2.6 Scenario Modelling and Sensitivity Analysis 33

2.7 Implementation and Review of the Long Term Financial Plan 34

ATTACHMENTS AND SUPPORTING DOCUMENTS 35

Attachment 1 – Glossary 35

Attachment 2 – Informing Documents and Policies 39

Long Term Financial Plan2013/14 to 2022/23

Table of contents

2

1 Introduction

With a residential population that is predicted to increase by 50% over the next 15 years, the City of Swan offers access to a growing local market as well as a number of distinct competitive advantages.

1.1 BackgroundThe City of Swan is geographically the largest local government in the Perth metropolitan area and is one of the fastest growing urban corridors in Australia. Located 20 km north-east of the Perth CBD, Midland is the gateway to the northern and eastern wheatbelt region, giving it a large customer catchment and employee base. The area is an established mixed-use area, including industrial, commercial and residential land uses.

At over 1,044 square kilometres, it offers a diverse range of business spaces from rural through to high tech industrial and diversity in the workforce to match. The City contains within its boundaries the area known as the Swan Valley with its associated coastal plains to the west; the Ellenbrook and lower Chittering Districts to the north; and the Hills District to the east. It also contains the historic towns of Guildford and Midland to the south. It thus comprises the major and most populated parts of areas which were known since the early days of the Swan River Colony as the Swan District.

The City of Swan can trace its lineage directly back to the Guildford Town Trust and the Swan Districts Roads Committee. The Swan City Council is therefore an historic body, which administers an area of great importance in the history of the State of Western Australia.

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1.2 Key StatisticsGeneral Statistics

Area (sq km) 1,044 km2

Population 121,089

Rateable Properties 49,822

Electors 68,558

Permanent staff 650

Full time staff 590

Part time staff 60

Assets/Facilities

Land Assets 2,365 Land Portions

Building Assets 211 Buildings

Park & Streetscape Assets395 ha1043 Parks and Streetscapes

Natural Resource Management1184 ha44 Nature Reserves73 Foreshore Reserves

Roads 2430 roads (1329 km)

Paths 988,602m2 (555 km)

Bridges

14 Boardwalks38 Footbridges6 Canoe Ramp/Pontoons32 Road Bridges4 Underpasses

Drainage25,366 Objects approx.607 km of pipe

Car Parks108 Off Street Car Parks429 On Street Parking Zones

Localities

Altone Ward Beechboro, Bennett Springs, Caversham, Kiara, Lockridge, Whiteman

Ballajura Ward Ballajura, Cullacabardee, Lexia, Malaga, Noranda, Whiteman

Ellenbrook Ward Ellenbrook, Aveley

Swan Valley/Gidgegannup Ward

Baskerville, Bennett Springs, Belhus, Brabham, Brigadoon, Dayton, Caversham, Gidgegannup, Henley Brook, Herne Hill, Middle Swan, Millendon, Red Hill, West Swan, Whiteman

Guildford Ward Guildford, Hazelmere, Perth Airport, South Guildford

Midland Ward Bellevue, Jane Brook, Koongamia, Middle Swan, Midland, Midvale, Red Hill, Stratton, Swan View, Viveash, Woodbridge

North Ward Bullsbrook, Lexia, Melaleuca, The Vines, Upper Swan

INFORMING STRATEGIESFinance

WorkforceAssets

ServicesIssue Specific Strategies etc

STRATEGIC COMMUNITY PLAN

COMMUNITY ENGAGEMENT

MEASUREMENT AND REPORTING

CORPORATE BUSINESS PLAN

ANNUAL BUDGET

OUTPUTS: Plan Monitoringand Annual Reporting

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1.3 Integrated Planning FrameworkLong Term Financial Planning is a key element of the Integrated Planning and Reporting Framework. It enables the City to set priorities, based on their resourcing capabilities, for the delivery of short, medium and long term community priorities.

The Long Term Financial Plan is a ten year rolling plan that informs the Corporate Business Plan to activate Strategic Community Plan priorities. From these planning processes, Annual Budgets that are aligned with strategic objectives can be developed.

This plan indicates the City’s long term fi nancial sustainability, allows early identifi cation of fi nancial issues and their longer term impacts, shows the linkages between specifi c plans and strategies, and enhances the transparency and accountability of the Council to the community.

The following fi gure illustrates how the Long Term Financial Plan informs the Integrated Planning and Reporting Framework.

‘… The clear direction set by the

Council ensures asset and service

provision is focused to meet the

requirements of the community,

now and into the future …’

STRATEGIC PRIORITIES(4–5 YEARS)

STRATEGIC COMMUNITY PLAN(10 YEARS)STRATEGIES

COMMUNITY VISION

PLACE PLANS

PLANNING STRATEGYSERVICE PLANS

RESOURCING• FINANCIAL• ASSETS• WORKFORCE

BUDGET(1 YEAR)

CORPORATE BUSINESS PLAN(4–5 YEARS)

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1.4 Strategic Directions

Vision: one city diverse placesThe overarching directions for this plan are provided by the City of Swan Strategic Community Plan 2012–2022.

‘… The Strategic Community Plan will become the principal strategy and planning document for the City, and will provide the blueprint for our activities over at least the next 10 years …’

The Strategic Community Plan sets out the vision, aspirations and objectives for the Swan community over the next 10 years. It is the principal strategy and planning document. This means that it governs all of the work that the City undertakes, either through direct service delivery, partnership arrangements or advocacy on behalf of the community. The clear direction set by the Council ensures asset and service provision is focused to meet the requirements of the community, now and into the future.

The Strategic Community Plan is a legislative requirement to ensure that we appropriately plan for the future of the Swan region. When setting the direction for the City, it is conscious of the fi nancial, asset and workforce constraints that it will work within.

City of Swan Integrated Planning Framework

6

Economic: Thriving, sustainable business capacity and growth

Our vision“The City of Swan will be nationally and globally recognised as a great place and strategic location to invest, visit and establish commercial and business centres. We will provide easy access to Perth, intrastate, national and international transport routes. Midland will be developed as an economic centre, which is strategically located at the northern/eastern gateway to WA and Australia.

We will have developed partnerships with government and business to ensure local commerce is supported and sustainable. Local employment opportunities will attract and sustain our community, who will have access to local services, shopping, health and education.”

Natural environment: Environmentally sustainable leadership and stewardshipOur vision

“Our City will lead by example, responding to the changing global climate and its impact on the environment. We will progress our City and our residents to a more sustainable future. Our City is committed to the principles of environmental, social and economic sustainability, which will drive our actions and which inspire and motivate all our stakeholders to improve and enhance sustainable performance. We will manage our resource consumption, including water and energy, building partnerships with stakeholders and the community.

Our City is proud of the green, rural nature of Swan, blessed with many natural assets, including high value natural lands, open spaces, the Swan River, wetlands and waterways which we will maintain and protect.

We will preserve and protect the ecology and biodiversity of our natural ecosystems.

Our City will take a leadership role in emergency planning, necessary because we are experiencing longer and later summer seasons and more frequent extreme storm events.”

Built environment: Diverse, connected, sustainable placesOur vision“Our City will lead the state in providing diverse and connected Places, providing housing options for our growing and diverse population, young and old. Our growth will be supported by adaptable and fl exible planning to ensure our vision and actions match our rate of growth. Our Places will refl ect our local identities providing safe, central community hubs, with supporting open spaces and facilities, such as libraries and community centres to meet, connect and recreate.

Our community will take pride in its Places, with attractive, safe and maintained built assets, roads and streetscapes, whilst protecting our local heritage.

Our City will be accessible, providing sustainable transport solutions, including public, pedestrian and cycle access.”

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City of Swan Strategic Community Plan 2012–2022.

This plan refl ects the objectives and strategies included in the City of Swan Strategic Community Plan 2012–2022 and the fi nancial resources required to achieve those outcomes.

Governance: A sustainable and capable CouncilOur vision“The City of Swan will be regarded as a leader across Local Government. We will be proactive, sustainable and known as a Council that provides good governance. This will be displayed through our accountable, transparent and fi scally responsible management of competing community demands.

We will reliably provide high quality assets and excellent customer services. Our workforce will be highly skilled and focused on improvement, seeing Swan as a great place to work.

The City will be well positioned and strengthened to deliver community lifestyle choices through successful advocacy and ongoing collaborative partnerships with government, industry, service providers and community.”

Social: Connected, safe, inclusiveOur vision“In response to changing and increasing community expectations, the City will strengthen its Place based approach, building on the uniqueness and diversity of culture and age providing local services within safe central hubs and central locations across identifi ed Places.

The City will support our diverse, intergenerational community throughout the lifespan through services and facilities that promote community wellbeing.

The City will support our community to ‘age in place’ by responding to changes and demands in health

and lifestyle requirements. Our Council will advocate for services and work in partnership with a variety of providers to facilitate service provision for our children, families, youth and aged.

Cultural and social diversity enhances and differentiates our community and will be supported and enhanced through engagement and service partnerships. Our communities are inclusive and connected, and have a sense of belonging, building the community together within safe and supportive environments.”

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1.5 Our Services

1.5.1 Service ProgramsThe City delivers a wide range of services and facilities to the community. The revenues and expenditure of the City are required to be classifi ed in accordance with legislation. The Local Government (Financial Management) Regulations 1996 (Schedule 1 Part 1) specify the minimum program classifi cations to be disclosed. A summary of those programs and current venues are listed below.

General Purpose FundingOBJECTIVE: To collect revenue to allow for the provision of services.

ACTIVITIES: Rates, general purpose government grants and interest revenue.

GovernanceOBJECTIVE: To provide a decision making process for the effi cient allocation of scarce

resources.

ACTIVITIES: Administration and operation of facilities and services to members of council; Other costs that relate to the tasks of assisting elected members and ratepayers on matters which do not concern specifi c City services.

VENUES/FACILITIES: Administration Building, Altone Place Offi ce, Ellenbrook Place Offi ce.

Law Order and Public SafetyOBJECTIVE: To provide services to help ensure a safer community.

ACTIVITIES: Supervision of various by-laws, fi re prevention, emergency services and animal control.

VENUES/FACILITIES: Swan Emergency Services Facility, West Swan Fire Station.

HealthOBJECTIVE: To provide an operational framework for good community health.

ACTIVITIES: Food and water quality, pest control, immunisation services, child health services and health education.

VENUES/FACILITIES: Beechboro Family Centre, Midland Female Health Centre.

Education and Welfare

OBJECTIVE: To meet the needs of the community in these areas.

ACTIVITIES: Management and support for families, children, youth and the aged within the community by providing Youth, Aged and Family Centres, Home and Community Aged Care Program, Junior Council and assistance to schools.

VENUES/FACILITIES: Alice Daveron Centre, Midland Youth Services Hub, Swan Child Care Centre.

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HousingOBJECTIVE: To help ensure adequate housing.

ACTIVITIES: Maintain and administer Elvire Chalets.

VENUES/FACILITIES: Elvire Chalets.

Community Amenities

OBJECTIVE: Provide services required by the community.

ACTIVITIES: Rubbish collection services and disposal of waste, urban stormwater drainage, protection of environment, town planning and regional development, and other community amenities (bus shelters, public toilets).

VENUES/FACILITIES: Depot, Bullsbrook Transfer Station.

Recreation and CultureOBJECTIVE: To establish and manage effi ciently infrastructure and resources which

will help the social wellbeing of the community.

ACTIVITIES: Public halls, Civic Centre, recreation and aquatic centres, parks and reserves, libraries, heritage and culture.

VENUES/FACILITIES: Midland Town Hall, Swan Park Leisure Centre, Altone Park Complex.

TransportOBJECTIVE: To provide effective and effi cient transport services to the community.

ACTIVITIES: Construction and maintenance of roads, footpaths, bridges; street cleaning and lighting, road verges, streetscaping and depot maintenance.

VENUES/FACILITIES: Operation Centre, Hepburn Avenue, Gnangara Road.

Economic ServicesOBJECTIVE: To help promote the Municipality and improve its economic wellbeing.

ACTIVITIES: The regulation and provision of tourism, area promotion, building control, saleyards, noxious weeds, vermin control and standpipes.

VENUES/FACILITIES: Swan Valley Visitor & Noongar Cultural Centre, Guildford Visitor Centre.

Other Property and ServicesACTIVITIES: Private works, public works overheads, plant and equipment operations,

town planning schemes and activities not reported in the above programs.

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1.5.2 Service LevelsIt is proposed that existing service levels will be maintained for all operational areas in formulating this plan. However, a key objective in the Corporate Business Plan is to improve existing service levels in the longer term whilst continuing to achieve annual operating surpluses each year to fund the provision of infrastructure.

1.5.3 Asset ManagementThe City has developed a strategic approach to asset management and prepared asset management plans based on the total life cycle of assets. The Asset Management Plans will assist the Council in predicting infrastructure consumption and asset renewal needs and identifi es the cost required to renew or preserve the asset (renewal gap). This renewal gap is being addressed in the Long Term Financial Plan and will be the focus of future budgets.

Funding for the renewal of assets has been increased to ensure sustainability in the longer term. The continued allocation of funding towards the renewal of assets and funding for maintenance and upgrades will result in a positive investment for the community in future. Asset acquisitions and capital works projects are funded from rate revenue, specifi c cash reserves, and sales of existing land assets, government grants or external borrowings.

The City has nine Asset Management Plans. These plans contain high level details on each asset class. A snapshot of information for each class can be found below:

Land The management of the City’s ‘Land Assets’ differentiates itself from other asset classes as it relates more to procedures and legislation dealing with land which is owned by the City. The management of Land Assets excludes any infrastructure or improvements located over the land parcel including bushland, parks and buildings which are referenced and included in other Asset groups.

BuildingsThe City has a number of ‘Building’ assets that support the delivery of community services and act as focal points for community life. This contributes to the social, cultural and economic development of the local community. The City’s building portfolio consists of a variety of building categories that have been constructed over many years and to varying building standards and codes.

Parks & StreetscapesThe City provides ‘Parks & Streetscaping’ that are visually attractive and well maintained. Quality public open space is an important element of a community’s urban fabric and enhances quality of life. Public open space assists in defi ning a community’s identity and provides social, environmental and economic benefi ts. Public open space is provided in several different ways which includes sporting grounds, neighbourhood parks and landscaped medians, verges & roundabouts.

Natural Resource ManagementThe City’s ‘Natural Resource Management’ covers the bushland and foreshore reserves that the City manages for fauna and fl ora conservation and public recreation. The City currently manages 44 bushland reserves and 73 foreshore reserves. The asset management plan for the natural areas does not currently include information on any roadside vegetation, compensation basins, Unallocated Crown Land (UCL), unmade road reserves or bridle trails that have ecological value.

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RoadsThe City provides and maintains a working ‘Road Network’ in partnership with Main Roads WA, to enable effective transport of road users through the City of Swan. This includes all roads from district distributors and through to access roads. The City does not maintain highways and arterial roads, such as Great Eastern, Great Northern, Reid and Roe Highways. These roads are the responsibility of Main Roads WA.

FootpathsThe City’s ‘Path Network’ supports the delivery of community services and acts as focal points for community life, contributing to the social, cultural and economic development of the local community. The Path Network portfolio consists of a variety of Asset categories and surface types that have been constructed over many years and to varying standards, codes and quality.

BridgesThe City’s ‘Bridge Infrastructure’ provides the community with safe access across obstacles and includes both vehicle and pedestrian bridges. Bridges enhance the effi ciency of vehicle and pedestrian movements, in some cases bridges are so fundamental as to be the determining factor in whether those movements are indeed possible. Main Roads WA has input into the management and maintenance of the City’s bridges.

DrainageThe City’s ‘Stormwater Drainage’ infrastructure ensures the removal of the damaging or disadvantageous effects of stormwater for rain events of a specifi ed design severity. The drainage infrastructure protects residents’ property from damage, and also protects the surrounding services from damage or deterioration, which allows infrastructure such as roads, footpaths, car parks etc, to achieve their intended useful lives. In addition, the drainage infrastructure protects the environment by including devices that improve the water quality before it is discharged into the waterways.

Car ParksThe City’s ‘Car Park’ infrastructure supports the community by allowing access to facilities and areas after travelling by vehicle. Car park assets enhance the road infrastructure for users other than through traffi c and those with privately or commercially provided parking facilities. The parking lots (on road and off road) enhance the amenity of the Council area and support commerce and leisure.

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2 Long Term Financial Forecasts2.1 Informing Strategies and Price Indicators

This plan has been prepared to support the strategic planning process for the City. The plan addresses the operating and capital needs placed on the City over the next 10 years.

The plan will be reviewed every 12 months to refl ect the prevailing economic conditions and changing community needs placed on the City. In compiling this long term plan consideration has been given to the economic drivers that will infl uence the future cost of providing facilities and services. The values disclosed in this plan therefore represent estimated future prices and costs.

This Long Term Financial Plan is set against economic uncertainty. The plan addresses operating and capital renewal of the period 2013/14 and concluding in 2022/23. The changing economic circumstances have meant that projections for growth and therefore community demand as facilities and services are subject to how the Australian and State economy recovers from its current position.

This plan represents a fi nancial solution to meeting the competing demands of services and facilities to the community. There are numerous ways that will enable the City to achieve its objectives. This plan balances the funding needs of renewal and new infrastructure assets, existing services against rating expectations, reasonable fees, debt leverage and the use of accumulated funds held in reserve accounts.

Australia’s real GDP is forecast to grow 3.0% per cent in 2012/13 and 2.75% in 2013/14. Federal Government Budget forecasts for 2014/15 to 2016/17 estimate GDP to be at 3.0% per annum.

‘… this plan represents a fi nancial

solution to meeting the competing

demands of services and facilities

to the community…’

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2.1.1 Informing Plans and PoliciesTo assist in the implementation and activation of the City’s Strategic Community Plan this fi nancial plan considers the City’s current and future fi nancial resources capacity. The Corporate Business Plan will assist in the realisation of our community’s vision and aspirations in the medium term. It details the actions, services, operations and projects the City will deliver within a 5 year period, the resources available and associated costs. Other critical informing strategies associated with this plan are the Asset Management and Workforce Plans.

The Long Term Financial Plan will guide the City’s fi nancial management in a responsible and sustainable manner. The City’s fi nancial sustainability is fostered by maintaining adequate fi nancial reserves to meet long term needs, seeking alternative funding sources and partnerships from the community and other levels of government. The City will continue to explore funding innovations as a means to improve services and infrastructure.

2.1.2 Financial Strategies and PrinciplesThe following assumptions have been applied in formulating the fi nancial strategies underpinning the Long Term Financial Plan. These include:

Continuous improvement in the fi nancial capacity and sustainability of the City through:– strengthening results to ensure long term fi nancial sustainability;– prudent use of debt; and– accumulation of funds to meet the cash fl ow demands for asset renewal etc.

The maintenance of a fair and equitable rating structure.

Maintaining or improving service level standards.

Maintaining / increasing funding for asset maintenance and renewal.

Draft Developer Contribution Plans.

Development of infrastructure and Specifi ed Area Rates.

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2.1.3 Economic and Social Environment IndicatorsThe following economic and social drivers have been used to develop this plan:

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

NATIONAL ECONOMIC AND SOCIAL INDICATORS

Gross Domestic Product (GDP)ABS 5206.0 Australian National Accounts: National Income, Expenditure and Product. Projection Source: Federal Government—Mid-year Economic and Fiscal Outlook 2012–13 Table 1.2: Major economic parameters

2.75% 3.00% 3.00% 3.25% 3.25% 3.50% 3.75% 3.75% 3.75% 3.75%

Gross State Product WAABS 5220.0 Australian National Accounts: State Accounts. Projection Source: 2012–13 State Budget— Economic and Fiscal Outlook Budget Paper No.3

4.75% 4.25% 4.25% 4.04% 3.84% 4.21% 4.97% 4.52% 4.52% 4.52%

Population WAABS 3218.0 Regional Population Growth, Australia. Projection Source: 2012–13 State Budget— Economic and Fiscal Outlook Budget Paper No. 3

1.97% 1.94% 1.91% 1.88% 1.85% 1.81% 1.78% 1.75% 1.72% 1.68%

Population PerthABS 3218.0 Regional Population Growth, Australia. Projection Source: TABLE 89. Population projections, By age and sex, Australia—Series B

2.11% 2.08% 2.05% 2.01% 1.98% 1.95% 1.91% 1.88% 1.85% 1.81%

PRICE INDICES AND COST DRIVERS

Consumer Price Index AustraliaABS Publication—Catalogue No.6401.0. Projection Source: Federal Government—Mid-year Economic and Fiscal Outlook 2012–13 Table 1.2: Major economic parameters

2.25% 2.25% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

Consumer Price Index PerthABS Publication—Catalogue No.6401.0. Projection Source: 2011–12 State Government Mid-year Financial Projections Statement—WA Treasury

2.35% 2.35% 2.45% 2.45% 2.40% 2.40% 2.64% 2.64% 2.64% 2.64%

WALGA—Local Government Cost IndexWALGA Economic Briefi ng. Projection Source: WALGA Economic Briefi ng May 2012

2.15% 2.40% 2.79% 2.54% 2.47% 2.54% 2.81% 2.77% 2.77% 2.78%

Non-residential building construction IndexABS 6427.0 Producer Price Indexes, Australia. Projection Source: 6427.0 Producer Price Indexes, Australia Table 15 and 16. Non-residential building construction (4313) Western Australia (A2333763W)

2.25% 2.38% 2.62% 2.49% 2.44% 2.47% 2.73% 2.70% 2.71% 2.71%

Road and bridge construction indexABS 6427.0 Producer Price Indexes, Australia. Projection Source: 6427.0 Producer Price Indexes, Australia Table 15 and 16. Road and bridge construction (4121) Western Australia (A2333769K)

3.53% 3.53% 3.68% 3.68% 3.60% 3.60% 3.96% 3.96% 3.96% 3.96%

Electricity—PerthABS 6401.0 Consumer Price Index. Projection Source: TABLE 13. CPI: Group, Sub-group and Expenditure Class, Index Numbers by Capital City

4.00% 2.35% 2.45% 2.45% 2.40% 2.40% 2.64% 2.64% 2.64% 2.64%

General InsuranceABS 6401.0 Consumer Price Index. Projection Source: TABLE 13. CPI: Group, Sub-group and Expenditure Class, Index Numbers by Capital City

2.35% 2.35% 2.45% 2.45% 2.40% 2.40% 2.64% 2.64% 2.64% 2.64%

FINANCIAL INDICATORS

Cash management ratesReserve Bank—F04 Retail Deposit and Investment Rates

3.10% 3.45% 3.60% 3.61% 3.62% 3.74% 3.79% 3.80% 3.81% 3.81%

3 Months Banks’ term deposits ($10,000)Reserve Bank—F04 Retail Deposit and Investment Rates

4.25% 4.73% 4.94% 4.95% 4.97% 5.13% 5.20% 5.21% 5.23% 5.23%

WATC 10 year borrowing rateWATC Investment Rates

4.00% 4.50% 4.70% 4.70% 4.70% 4.90% 4.90% 4.90% 4.90% 4.90%

SPECIFIC INDICATORS FOR THE CITY OF SWAN

Population—City of SwanLocal population forecasts. Projection Source: .id consulting pty ltd. 2012

3.56% 3.60% 3.50% 3.40% 3.36% 3.28% 3.23% 3.13% 2.86% 2.71%

Enterprise Bargain AgreementLocal awards

4.00% 4.00% 4.00% 3.45% 3.40% 3.40% 3.64% 3.64% 3.64% 3.64%

4.00%3.50%3.00%2.50%2.00%1.50%1.00%1.00%0.50%0.00%

Popu

latio

n an

nual

gro

wth

2011/

12

2012/

13

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

Population WAPopulation – City of Swan

15

PopulationThis plan has been developed on the following demographic trends and forecast of residential population.

Projected annual growth in population

Service delivery and service levelsService delivery and service levels will continue at the existing standards. Service level standards from the community strategic plan relate primarily to the creation of new facilities for a growing population. The asset management plans also are based on the provision of existing standards and services.

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2.2 Summary of Financial Plan

2.2.1 OverviewThe plan shows a balanced budget for each fi nancial year. There is a steady growth in operating result arising from the proposed operating revenues and expenditures that enables funds to fl ow to the provision and renewal of community assets. These results enhance the long term fi nancial sustainability of the City.

The plan will be continuously reviewed to refl ect the prevailing economic conditions and changing community needs placed on the City. In compiling the plan consideration has been given to the economic drivers that will infl uence the future cost of providing facilities and services. The values disclosed in the plan therefore represent estimated future prices and costs. The plan addresses the City’s operating and capital requirements from 2013/14 to 2022/23.

One of the key challenges for City is to ensure it achieves ongoing fi nancial sustainability in order to provide appropriate services and infrastructure for the community into the future. The long term fi nancial estimates are an integral part of Council’s strategic planning process and represent a ten year rolling plan that informs the Corporate Business Plan to activate Strategic Community Plan priorities. It indicates the City’s long term fi nancial sustainability, allows early identifi cation of fi nancial issues and their longer term impacts. This plan addresses the operating and capital needs placed on the City over the next 10 years. It also shows the linkages between specifi c plans and strategies, and enhances the transparency and accountability of the City to the community.

The key fi nancial strategies underpinning the plan are:✓ achieving operating surpluses

✓ continuous improvement in fi nancial position

✓ maintaining a positive unrestricted cash

✓ development of alternative revenue streams

✓ maintaining and improving service levels

✓ adequately funding for asset renewal/replacement

✓ maintaining a fair and equitable rating structure.

The strong positioning of the reserve indicators refl ect the advantages gained by the positive result arising from the property strategy and the accumulation of reserve funds.

ExclusionsThere will be projects and facilities that at this stage are not suffi ciently detailed to be included in this plan, but will be incorporated into future plans when clarity around timing and likely revenue, expenditure and capital is known. Those not included are the development of regional open space (Whiteman Park), Midland Oval redevelopment and the possible development of a Performing Arts Centre.

Other revenues

Capital asset grants, contributions, gifted etcNew borrowings

Fees/charges

Retained fundsRates/Service chargesOperating grants/contributions

Sales of assets

2.0% 0.3%

22.5%

2.4%3.3%

14.1% 3.5%

51.9%

Increase in reserves

Capital outlays new

Capital outlays renewal

Debt serviceOperations

17.2%

3.6%1.0%

48.8%

29.4%

11.3%

7.7%

9.7%

15.5%

29.4%

26.4%

TransportEconomic and other services

Law, Order, Health, Welfare, Education, Housing

GovernanceRecreation & CultureCommunity Amenities

5.8% 0.4%

25.5%

9.4%7.6%

51.3%

TransportEconomic and other services

Law, Order, Health, Welfare, Education, Housing

GovernanceRecreation & CultureCommunity Amenities

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Source and Application of Funds 2013/14 to 2022/23

Source of Funds Application of Funds

Operating Outlays Capital Outlays

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2.2.2 Operating ResultsThe plan shows a balanced budget for each fi nancial year. There is a steady growth in operating result arising from the proposed operating revenues and expenditures that enables funds to fl ow to the provision and renewal of community assets. These results enhance the long term fi nancial sustainability of the City.

Revenues

RatesThe plan has applied an increase of 5% from 2013/14 to 2016/17 in addition to new assessments. In subsequent years an increase of 3% in 2017/18 onwards has been applied.

Fees and ChargesFees and charges assumptions are based on the CPI Perth indicators, statutory charges and projected increase in population. Discretionary fees and charges are planned to also be increased by CPI to match estimated additional costs in service delivery. The City does not recover the full cost of providing services but is working towards full cost recovery for services such as waste collection.

State controlled fees: Applications fees for building licences and planning and development approvals are limited by regulations preventing full cost recovery of these services.

Grants and ContributionsIn developing this long term model it is anticipated that using the CPI Perth Indicator to forecast Operating Grants and Contributions is to be a reasonable estimate over the ten year period.

The fi nancial year 2013/14 will see the normalisation of the local government assistance grant as administered by the West Australian Local Government Grants Commission. This follows a number of years in which the Federal Government made advance instalments from one fi nancial year to another.

The City will continue to pursue grant funding for strategic capital works from the State and Federal Government.

Interest EarningsForecasts on Council’s investment portfolio are based on the 90 day Bank Bill index in line with the Council’s Investment Policy and Strategy.

Expenditures

Employee costsEstimates for employee costs are based on requirements outlined in the workforce plan and estimates associated or linked to growth drivers. Price escalation is based on the enterprise bargaining agreement of 3–4% per annum over the period of this plan.

Material and ContractsVarious price drivers have been used to escalate materials and contracts on a case-by-case basis. Real increases are based on growth drivers expected over the 10 year period.

Utilities (gas electricity water)Increases in utility costs have been based on commitments made by incoming governments in early 2013. Recent announcements by the State government that cost escalations are expected to be above CPI Perth, in some cases up to twice the indicative rate.

InsuranceCPI Perth Infl ation rate is considered a reasonable estimate to forecast insurance expenses for the ten year period.

DepreciationProperty, plant, equipment and infrastructure (except for Land) have been depreciated on a straight line method using rates based on 2012/13 depreciation rates. Asset values in this plan have not been adjusted to refl ect the application of “fair value” to be applied progressively to asset classes from 2013/14 onwards.

Interest ExpenseForecast borrowing (interest) costs are based on the forecast 10 year Western Australian Treasury Corporation Indicative Rates.

19

2.3 Financial StatementsThe following fi nancial statements have been prepared for the 10 years covered in this plan. These estimates have been prepared on the basis of the assumption shown previously in this document.

Statement of Comprehensive IncomeThe Statement of Comprehensive Income for the City has been prepared in two formats; by program and by nature/type.

Statement of Comprehensive Income by Program identifi es the cost of goods and services provided and the extent to which those costs are recovered from revenues. Programs are defi ned by Regulation under the Local Government Act (WA).

Statement of Comprehensive Income by Nature/type identifi es the inputs by nature of the revenue or expense. Descriptions are defi ned by Regulation under the Local Government Act (WA).

The Statement of Comprehensive Income is prepared on an accrual basis. This process recognises income as it is earned and expenses as they are incurred. In addition it makes adjustments for unearned income, credit sales, re-payments, accrued expenses and non-cash provisions (i.e. depreciation and leave entitlements). This method provides a more accurate refl ection of the transactions which actually occurred during the accounting period, and is a better refl ection of the actual business activities undertaken by the City.

Depreciation, which is an expense charged in the

Statement of Comprehensive Income to refl ect the value of capital assets consumed during the accounting period.

Accounting Standard AASB 1004 Contributions requires contributions to be recognised as revenue (i.e. in the Statement of Comprehensive Income) when the City obtains control over the assets comprising the contributions, notwithstanding that those contributions may be a grant for a capital item. Given this requirement, grants for capital works have the potential to signifi cantly affect the operating result in a particular year.

Rate Setting StatementThis statement summarises the operating, capital, debt and reserves transactions. It utilises the same reporting procedures required formulating the City’s annual budget under the Local Government Act (WA). The plan identifi es the funds necessary to balance the budget in each fi nancial year.

Statement of Financial Position (Balance Sheet)The purpose of the Statement of Financial Position is to provide a “snap-shot” of the overall fi nancial position of the City. This statement is constructed according to well defi ned accounting principles which are embodied in the Australian Accounting Standards. The ratepayer equity in the Council can be calculated by deducting total liabilities from total assets.

The Statement discloses transactions as current and non-current assets, and current and non-current liabilities and equity.

20

2.3.1 Statement of Comprehensive Income – by program

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

OPERATING REVENUE $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

General Purpose Funding 104,159 106,849 115,398 123,965 131,254 141,990 143,062 148,175 159,433 160,350

Governance 22,702 18,477 14,216 17,130 13,357 14,832 13,649 11,351 7,188 9,196

Law, Order & Public Safety 1,986 2,062 2,144 2,229 2,316 2,391 2,475 2,561 2,651 2,745

Health 256 262 268 275 282 288 296 304 312 320

Education & Welfare 4,506 6,209 6,367 4,808 4,925 5,046 5,041 5,058 4,990 5,122

Housing 50 51 52 54 55 56 58 59 61 63

Community Amenities 16,850 17,825 18,857 19,934 21,056 22,225 23,505 24,838 26,183 27,563

Recreation & Culture 18,123 27,638 7,469 10,293 21,616 9,800 9,247 9,491 10,978 9,999

Transport 31,115 42,786 38,473 34,866 36,284 28,865 34,738 39,937 39,761 20,426

Economic Services 1,742 1,783 1,827 1,872 1,917 1,963 2,015 2,068 2,122 2,178

Other Property & Services 1,804 1,846 1,891 1,938 1,984 2,032 2,085 2,140 2,197 2,255

OPERATING REVENUE 203,293 225,789 206,963 217,361 235,046 229,489 236,171 245,983 255,877 240,217

OPERATING EXPENSES

General Purpose Funding (2,453) (2,532) (2,621) (2,704) (2,788) (2,862) (2,948) (3,036) (3,127) (3,220)

Governance (11,432) (12,794) (13,604) (14,361) (15,136) (15,944) (16,604) (17,336) (18,068) (18,803)

Law, Order & Public Safety (5,335) (5,540) (5,766) (5,978) (6,195) (6,365) (6,568) (6,775) (6,989) (7,211)

Health (1,520) (1,595) (1,674) (1,749) (1,826) (1,878) (1,942) (2,008) (2,077) (2,148)

Education & Welfare (8,279) (8,638) (9,026) (9,394) (9,770) (10,073) (10,402) (10,740) (11,090) (11,452)

Housing (142) (146) (150) (153) (157) (161) (166) (170) (175) (180)

Community Amenities (19,113) (20,262) (21,515) (22,748) (24,030) (25,233) (26,575) (27,966) (29,383) (30,846)

Recreation & Culture (37,862) (39,508) (41,557) (43,336) (45,210) (47,047) (48,790) (50,925) (52,882) (54,825)

Transport (30,820) (32,655) (35,369) (37,882) (40,378) (42,849) (45,315) (48,559) (51,507) (54,216)

Economic Services (5,312) (5,559) (5,824) (6,073) (6,329) (6,506) (6,727) (6,956) (7,192) (7,436)

Other Property & Services (1,766) (2,005) (2,245) (2,471) (2,707) (2,862) (3,014) (3,187) (3,360) (3,534)

OPERATING EXPENSES (124,033) (131,232) (139,350) (146,851) (154,525) (161,779) (169,051) (177,659) (185,849) (193,870)

BORROWING COSTS EXPENSE

Governance (202) (162) (164) (163) (148) (131) (115) (100) (85) (68)

Recreation & Culture (542) (970) (1,155) (1,111) (991) (865) (734) (597) (455) (308)

Transport (344) (341) (449) (536) (465) (390) (311) (239) (182) (134)

Other Property & Services (567) (416) (349) (697) (1,047) (994) (540) (83) (26) (3)

BORROWING COSTS EXPENSE (1,655) (1,889) (2,116) (2,507) (2,651) (2,381) (1,700) (1,020) (748) (513)

NET OPERATING RESULT 77,604 92,668 65,498 68,003 77,870 65,328 65,420 67,304 69,280 45,834

21

2.3.2 Statement of Comprehensive Income – by nature/type

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

OPERATING REVENUE $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Rate revenue 92,803 99,570 107,290 115,178 121,334 126,701 132,318 138,162 144,156 150,423

Operating grants/subsidies/contribution 7,281 7,504 7,746 7,995 8,249 8,512 8,812 9,123 9,448 9,785

Non-operating grants/contributions 14,918 23,353 11,540 8,261 13,021 5,294 4,537 4,595 5,809 4,753

Developers Contributions 11,770 10,466 6,611 8,253 12,213 6,843 5,318 4,152 5,427 5,848

Profi t on asset disposals 2,336 55 34 34 41 34 48 53 50 42

Service Charges 976 1,029 1,086 1,145 1,206 1,254 1,308 1,364 1,422 1,483

Fees and Charges 27,355 28,594 29,910 31,222 32,595 34,088 35,643 37,255 38,889 40,566

Interest earnings 3,756 4,614 5,321 5,871 6,873 7,258 7,400 6,501 6,561 6,055

Other Revenue 1,577 1,646 1,721 1,797 1,877 1,960 2,051 2,145 2,241 2,339

OPERATING REVENUE 162,771 176,832 171,257 179,756 197,409 191,943 197,433 203,351 214,003 221,292

OPERATING EXPENSES

Employee costs (60,329) (63,782) (67,396) (70,801) (74,311) (76,887) (79,738) (82,695) (85,758) (88,934)

Material and Contracts (26,960) (28,209) (29,349) (30,450) (31,646) (33,107) (34,483) (36,041) (37,494) (39,008)

Utilities (gas elect water) (5,449) (5,577) (5,713) (5,853) (5,994) (6,137) (6,300) (6,466) (6,637) (6,812)

Depreciation (29,293) (30,994) (34,149) (36,932) (39,688) (42,686) (45,485) (49,325) (52,740) (55,805)

Insurance (379) (388) (398) (407) (417) (427) (438) (450) (462) (474)

Interest (1,655) (1,889) (2,116) (2,507) (2,651) (2,381) (1,700) (1,020) (748) (513)

Other expenses (1,624) (2,281) (2,345) (2,407) (2,470) (2,534) (2,607) (2,681) (2,758) (2,837)

OPERATING EXPENSES (125,688) (133,121) (141,466) (149,358) (157,177) (164,161) (170,751) (178,678) (186,596) (194,383)

PROFIT(LOSS) – NORMAL OPERATIONS 37,082 43,712 29,792 30,398 40,233 27,783 26,682 24,673 27,406 26,909

OTHER

Share of interests in joint ventures using the equity method 5,000 0 0 0 0 4,846 0 0 5,028 0

Asset contributed/gifted 35,476 48,957 35,706 37,605 37,637 32,699 38,738 42,632 36,847 18,925

OTHER 40,476 48,957 35,706 37,605 37,637 37,545 38,738 42,632 41,874 18,925

PROFIT/(LOSS) 77,558 92,668 65,498 68,003 77,870 65,328 65,420 67,304 69,280 45,834

OTHER COMPREHENSIVE INCOME

Changes in the fair value of available-for-sale fi nancial assets 46 0 0 0 0 0 0 0 0 0

OTHER COMPREHENSIVE INCOME 46 0 0 0 0 0 0 0 0 0

NET OPERATING RESULT 77,604 92,668 65,498 68,003 77,870 65,328 65,420 67,304 69,280 45,834

22

2.3.3 Key Performance Indicators

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Operating Surplus RatioFunding Ratio

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020

/21

2021/

22

2022

/23

Perc

enta

ge

All performance indicators show a position improvement over the ten year period.

Operating Surplus Ratio – Meets base level

Funding Ratio – Meets advanced level

Below Base Base Advanced

Operating Results 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

Operating Surplus Ratio Operating Surplus Ratio Base: 0% to 15% Advanced: greater than 15%.

8.1%

7.3% 8.0% 8.9% 9.1% 9.1% 9.4% 8.6% 8.4% 8.1%

Funding Ratio Funding Ratio Base: 20% to 30% Advanced: greater than 30%.

27.9% 28.6% 29.9% 31.1% 31.7% 32.4% 33.2% 33.5% 34.0% 34.2%

Own Source Revenue Coverage Ratio Own Source Revenue Coverage Ratio Base: 40% to 60% Advanced: greater than 60%.

102.5% 101.8% 102.8% 103.9% 104.3% 104.3% 104.7% 103.8% 103.6% 103.4%

Debt Management 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

Debt Service Cover Ratio Debt Service Cover Ratio Base: 2 or greater. Advanced: greater than 5.

7.5 6.9 6.8 6.9 7.1 7.5 2.4 9.8 11.3 15.0

Operating Surplus Ratio An indicator of the extent to which revenue raised not only covers operational expenses, but also provides for capital funding. (Operating revenue (excluding capital grants and profi t on sales) less operating expense (excluding loss on sales) divided by own source revenue). Meets base level.

Funding Ratio Operating revenue minus operating expense divided by local government revenues. Meets advanced level.

Own Source Revenue Coverage Ratio Means the ratio determined by dividing own source operating revenue by operating expense. Meets advanced level.

Debt Service Cover Ratio An indicator of a local government’s ability to generate suffi cient cash to cover its debt payments. (Operating Revenue less operating expenses (excluding depreciation and interest) divided by debt service costs (principal and interest). Meets advanced level.

23

2.3.4 Summary of Financial Activity (Rate Setting Statement)

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

OPERATING REVENUE $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

General rates 90,888 97,609 105,281 113,043 119,112 124,396 129,915 135,696 141,625 147,825

Specifi ed rates 1,915 1,960 2,009 2,135 2,222 2,305 2,403 2,466 2,531 2,598

Operating grants/subsidies/contributions 7,281 7,504 7,746 7,995 8,249 8,512 8,812 9,123 9,448 9,785

Service Charges 976 1,029 1,086 1,145 1,206 1,254 1,308 1,364 1,422 1,483

Fees and Charges 27,355 28,594 29,910 31,222 32,595 34,088 35,643 37,255 38,889 40,566

Interest earnings 3,756 4,614 5,321 5,871 6,873 7,258 7,400 6,501 6,561 6,055

Other Operating Revenue 1,577 1,646 1,721 1,797 1,877 1,960 2,051 2,145 2,241 2,339

OPERATING REVENUES 133,748 142,959 153,073 163,209 172,134 179,772 187,530 194,551 202,716 210,649

OPERATING EXPENSES

Employee costs (60,329) (63,782) (67,396) (70,801) (74,311) (76,887) (79,738) (82,695) (85,758) (88,934)

Material and Contracts (26,960) (28,209) (29,349) (30,450) (31,646) (33,107) (34,483) (36,041) (37,494) (39,008)

Utilities (gas elect water) (5,449) (5,577) (5,713) (5,853) (5,994) (6,137) (6,300) (6,466) (6,637) (6,812)

Insurance (379) (388) (398) (407) (417) (427) (438) (450) (462) (474)

Interest (1,655) (1,889) (2,116) (2,507) (2,651) (2,381) (1,700) (1,020) (748) (513)

Other expenses (1,624) (2,281) (2,345) (2,407) (2,470) (2,534) (2,607) (2,681) (2,758) (2,837)

OPERATING EXPENSES (96,395) (102,126) (107,317) (112,426) (117,489) (121,475) (125,266) (129,353) (133,856) (138,578)

Profi t (Loss) – normal operations 37,352 40,833 45,756 50,783 54,645 58,298 62,264 65,198 68,860 72,071

Movement in Non Current Assets/Liabilities 424 0 0 0 0 0 0 0 0 0

NET OPERATING DEMAND 37,776 40,833 45,756 50,783 54,645 58,298 62,264 65,198 68,860 72,071

CAPITAL TRANSACTIONS

Non-operating grants/contributions 14,918 23,353 11,540 8,261 13,021 5,294 4,537 4,595 5,809 4,753

Developers Contributions 11,770 10,466 6,611 8,253 12,213 6,843 5,318 4,152 5,427 5,848

Asset contributed/gifted 35,476 48,957 35,706 37,605 37,637 32,699 38,738 42,632 36,847 18,925

Proceeds from Sale of Non-Current Assets 3,844 3,653 12,054 1,688 6,057 10,700 12,679 2,640 2,522 2,115

Land (4,682) (6,923) (1,998) (5,546) (582) (7,580) (4,399) (4,247) (3,897) (7,767)

Capital Outlays on Property Plant & Equipment (28,824) (30,961) (28,425) (41,138) (41,356) (20,080) (13,767) (27,327) (21,936) (15,170)

Capital Outlays on Infrastructure (74,358) (97,158) (76,969) (61,991) (57,165) (75,529) (80,008) (100,703) (87,253) (86,680)

NET CAPITAL (41,856) (48,614) (41,480) (52,868) (30,175) (47,652) (36,901) (78,258) (62,481) (77,976)

RESERVE TRANSACTIONS

Transfers (to) Reserves (32,973) (28,901) (35,458) (28,018) (37,594) (38,113) (38,174) (25,977) (27,931) (28,339)

Transfers from Reserves 23,854 32,067 25,897 17,949 16,921 33,104 37,486 44,699 26,893 38,497

NET TRANSFERS (TO)/FROM RESERVES (9,119) 3,166 (9,561) (10,069) (20,673) (5,009) (688) 18,722 (1,039) 10,158

DEBT MANAGEMENT

Proceeds from New Debentures 9,829 8,909 9,918 18,844 0 0 0 0 0 0

Repayment of Debentures (3,851) (4,324) (4,930) (5,207) (5,472) (5,742) (24,742) (5,729) (5,409) (4,326)

Proceeds from Self Supporting Loans 96 93 100 93 99 106 67 68 69 73

NET DEBT 6,074 4,678 5,088 13,730 (5,373) (5,637) (24,675) (5,661) (5,341) (4,253)

1 July Surplus/(Defi cit) 7,259 134 197 0 1,576 0 0 0 0 0

LESS 30 June Surplus/(Defi cit) 134 197 0 1,576 0 0 0 0 0 0

7,125 (63) 197 (1,576) 1,576 0 0 0 0 0

BUDGET (DEFICIT)/SURPLUS 0 0 0 0 0 0 0 0 0 0

5.8% 0.4%

25.5%

9.4%7.6%

51.3%

TransportEconomic and other services

Law, Order, Health, Welfare, Education, Housing

GovernanceRecreation & CultureCommunity Amenities

160

140

120

100

80

60

40

20

0

Mill

ions

($)

NewRenewalContributed Assets

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

24

2.3.5 Capital OutlaysThese long term fi nancial estimates refl ect the growth of new assets in the initial fi ve years followed by a period of lower activity in the creation of new assets and a shift of focus on asset renewal. The creation of new assets will come from both the City’s asset program and new assets created by developers. The plan provides for increased resources to be applied to the renewal or upgrade of existing building and infrastructure assets. The provision of these funds allows the City to meet the key fi nancial indicator in relation to expenditures on asset renewal compared to depreciation.

The key components of the plan are as follows:

Capital Outlays by Program

Capital – New, Renewal and Contributed Assets

25

Capital Works Program

PROGRAM 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Governance 13,151 9,192 10,432 10,109 2,454 8,701 9,118 12,373 2,539 6,557

Law, Order & Public Safety 100 307 84 54 55 57 58 60 61 63

Health 3 0 0 0 0 0 0 0 0 0

Education & Welfare 260 1,637 1,680 32 33 34 35 36 37 38

Community Amenities 6,761 5,214 5,261 6,878 4,286 4,381 5,975 9,569 6,154 10,234

Recreation & Culture 32,103 54,456 17,321 14,684 39,001 18,287 17,801 38,190 32,326 19,436

Transport 46,257 53,482 65,323 51,396 45,764 62,823 56,661 61,801 62,526 65,906

Economic Services 203 150 199 102 148 0 103 0 108 0

Other Property & Services 9,026 10,604 7,090 25,420 7,362 8,905 8,422 10,249 9,334 7,383

TOTAL 107,863 135,042 107,391 108,675 99,103 103,188 98,173 132,277 113,085 109,617

FUNDING 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

Road Grants 8,145 14,909 4,259 4,712 3,170 3,682 3,828 3,979 4,137 4,301

Grants Funds 5,662 4,268 1,648 1,534 9,056 113 0 0 0 0

Asset Sale 1,900 921 10,374 0 4,000 9,000 10,265 0 0 0

Trade-in 1,944 2,732 1,681 1,688 2,057 1,700 2,414 2,640 2,522 2,115

Other Contributions 1,310 4,176 5,633 2,014 796 1,499 709 616 1,672 452

Gifted Assets 24,748 41,154 28,315 28,948 36,717 24,940 30,643 35,675 35,334 15,832

Gifted Assets (DCP) 10,728 7,803 7,391 8,658 920 7,760 8,095 6,957 1,513 3,093

Developers Contributions 11,770 10,466 6,611 8,253 12,213 6,843 5,318 4,152 5,427 5,848

Opening Funds 2,997 0 0 0 0 0 0 0 0 0

Reserve Funds 20,262 28,947 24,073 15,933 14,475 30,658 16,658 43,057 25,325 37,219

Transfers to Reserves (14,780) (11,858) (17,890) (9,154) (17,008) (16,664) (16,292) (4,768) (5,863) (6,300)

Loan Funding 9,829 8,909 9,918 18,844 0 0 0 0 0 0

Rates/General Funds 23,350 22,617 25,379 27,245 32,708 33,659 36,535 39,969 43,019 47,057

TOTAL 107,863 135,042 107,391 108,675 99,103 103,188 98,173 132,277 113,085 109,617

OUTLAYS 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

Outlays – New 44,143 54,127 40,203 39,958 37,772 36,877 20,047 41,909 31,343 44,112

Outlays – Renewal 28,244 31,959 31,482 31,111 23,694 33,612 39,388 47,736 44,896 46,580

Outlays – New (Gifted Assets)

24,748 41,154 28,315 28,948 36,717 24,940 30,643 35,675 35,334 15,832

Outlays – New (Gifted Assets DCP)

10,728 7,803 7,391 8,658 920 7,760 8,095 6,957 1,513 3,093

TOTAL 107,863 135,042 107,391 108,675 99,103 103,188 98,173 132,277 113,085 109,617

1200

1000

800

600

400

200

0

Mill

ions

($)

2012/13F2022/23

Current Assets Property, Plant & Equipment

Infrastructure

60.00

50.00

40.00

30.00

20.00

10.00

0.00

Asset RenewalDepreciation

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

Mill

ions

($)

50.0045.0040.0035.0030.0025.0020.0015.0010.005.000.00

Mill

ions

($)

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020

/21

2021/

22

2022

/23

AMP projectedLong Term Financial Plan 80.0

60.0

40.0

20.0

0.0

Mill

ions

($)

Reserves Debt

2000

1500

1000

500

0M

illio

ns ($

)Net Assets

2012/13F2022/23

26

Key Performance Indicators

Assets Assets Renewal vs Depreciation

All Assets – Asset Management Plan projections compared to estimates in the Long Term Financial Plan

Key Financial Milestones

27

2.3.6 Statement of Financial Position

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

CURRENTS ASSETS $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cash & Cash Equivalents 67,480 65,589 74,954 86,599 105,696 110,705 111,392 92,671 93,710 83,551

Investments 1,212 0 0 0 0 0 0 0 0 0

Trade and Other Receivables

6,244 6,361 6,125 6,373 6,125 6,355 6,072 6,373 6,060 6,401

Inventories 109 121 96 122 94 124 92 126 91 128

TOTAL CURRENT ASSETS 75,045 72,072 81,175 93,094 111,914 117,184 117,556 99,170 99,860 90,080

CURRENT LIABILITIES

Trade and Other Payables 10,273 10,397 10,143 10,411 10,128 10,427 10,111 10,445 10,092 10,465

Provisions 8,564 8,564 8,564 8,564 8,564 8,564 8,564 8,564 8,564 8,564

Borrowings (current) 4,324 4,930 5,207 5,472 5,742 24,742 5,729 5,409 4,326 3,479

TOTAL CURRENT LIABILITIES 23,161 23,891 23,913 24,447 24,434 43,733 24,403 24,418 22,982 22,508

NET CURRENT ASSETS/(CURRENT LIABILITIES) 51,884 48,181 57,262 68,647 87,481 73,451 93,153 74,752 76,878 67,572

NON-CURRENT ASSETS

Receivables 2,007 1,908 1,815 1,716 1,610 1,544 1,476 1,407 1,334 1,256

Other Financial Assets 35,874 35,874 35,874 35,874 35,874 40,720 40,720 40,720 45,748 45,748

TOTAL 37,881 37,782 37,689 37,590 37,484 42,264 42,196 42,127 47,081 47,003

PROPERTY, PLANT, EQUIPMENT INFRASTRUCTURE

Land 23,543 29,954 21,578 27,124 27,706 35,286 39,685 43,932 47,829 55,596

Property Plant and Equipment 131,652 150,555 167,282 195,559 218,555 214,743 202,045 211,759 215,191 211,490

Infrastructure 743,758 818,893 871,763 908,029 937,851 983,919 1,032,276 1,098,679 1,149,224 1,196,896

TOTAL 898,953 999,402 1,060,623 1,130,712 1,184,111 1,233,948 1,274,005 1,354,370 1,412,244 1,463,982

TOTAL ASSETS 1,011,879 1,109,256 1,179,488 1,261,396 1,333,510 1,393,395 1,433,757 1,495,667 1,559,185 1,601,066

NON-CURRENT LIABILITIES

Payables 93 93 93 93 93 93 93 93 93 93

Provisions 1,493 1,493 1,493 1,493 1,493 1,493 1,493 1,493 1,493 1,493

Long Term Borrowings 31,827 35,806 40,517 53,888 48,146 23,404 17,675 12,266 7,940 4,460

Bonds/Deposits 4,462 4,462 4,462 4,462 4,462 4,462 4,462 4,462 4,462 4,462

TOTAL NON-CURRENT LIABILITIES 37,874 41,854 46,565 59,936 54,194 29,452 23,723 18,314 13,987 10,508

NET ASSETS 950,843 1,043,512 1,109,010 1,177,013 1,254,883 1,320,211 1,385,631 1,452,935 1,522,216 1,568,050

EQUITY

Accumulated Surplus 690,323 786,157 842,093 900,028 957,225 1,017,544 1,082,276 1,168,302 1,236,544 1,292,536

Cash Backed Reserves 60,082 56,916 66,478 76,546 97,219 102,228 102,916 84,194 85,233 75,075

Asset Revaluation Reserve 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439

TOTAL EQUITY 950,843 1,043,512 1,109,010 1,177,013 1,254,883 1,320,211 1,385,631 1,452,935 1,522,216 1,568,050

28

2.3.7 Statement of Equity

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

ACCUMULATED FUNDS $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance as at 1 July 621,883 690,323 786,157 842,093 900,028 957,225 1,017,544 1,082,276 1,168,302 1,236,544

Net Result 77,558 92,668 65,498 68,003 77,870 65,328 65,420 67,304 69,280 45,834

Reserve Transfers (9,119) 3,166 (9,561) (10,069) (20,673) (5,009) (688) 18,722 (1,039) 10,158

BALANCE AS AT 30 JUNE 690,323 786,157 842,093 900,028 957,225 1,017,544 1,082,276 1,168,302 1,236,544 1,292,536

CASH BACKED RESERVES

Balance as at 1 July 50,963 60,082 56,916 66,478 76,546 97,219 102,228 102,916 84,194 85,233

Interest 1,349 2,435 2,971 3,435 4,408 4,772 4,847 3,911 3,950 3,423

Transfers to 31,624 26,466 32,487 24,583 33,186 33,341 33,327 22,067 23,981 24,916

Funds Utilised (23,854) (32,067) (25,897) (17,949) (16,921) (33,104) (37,486) (44,699) (26,893) (38,497)

BALANCE AS AT 30 JUNE 60,082 56,916 66,478 76,546 97,219 102,228 102,916 84,194 85,233 75,075

REVALUATION RESERVES

Balance as at 1 July 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439

Balance as at 30 June 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439 200,439

TOTAL EQUITY 950,843 1,043,512 1,109,010 1,177,013 1,254,883 1,320,211 1,385,631 1,452,935 1,522,216 1,568,050

Key Performance Indicators (see page 22)

BALANCE SHEET 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

CURRENT RATIO

Current RatioBase: 100% or greater.

51.9% 51.7% 50.2% 58.7% 50.6% 26.8% 52.6% 55.0% 58.4% 63.4%

CURRENT RATIO (ADJUSTED FOR DEBT)

Current Ratio (adjusted for debt)Base: 100% or greater.

65.4% 67.2% 66.8% 79.3% 70.0% 72.5% 74.1% 76.2% 77.2% 79.5%

CURRENT ASSET RATIO (TO MEET LIABILITIES)

Current Asset Ratio (to meet liabilities)Base: 100% or greater.

55.1% 52.7% 67.2% 61.7% 73.5% 96.2% 136.5% 138.8% 166.6% 189.2%

Current Ratio A measure of a City’s liquidity and its ability to meet its short term fi nancial obligations from unrestricted current assets. (Current assets less restricted assets divided by current liabilities less liabilities associated with restricted assets). Statutory KPI – Target is greater than or equal to 1:1.

Current Ratio (adjusted for debt) Adjusted ratio for future principal repayments included in the following years budget.

Current Ratio (to meet liabilities) Adjusted ratio for level of currents assets (excluding reserves held under SAR, DCP etc) to meet liabilities of the City.

29

2.3.8 Statement of Cash Flows

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

CASH FLOWS FROM OPERATING ACTIVITIES $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

RECEIPTS

Rate revenue 93,170 99,570 107,290 115,178 121,334 126,701 132,318 138,162 144,156 150,423

Operating grants/subsidies/contributions 7,281 7,504 7,746 7,995 8,249 8,512 8,812 9,123 9,448 9,785

Service Charges 976 1,029 1,086 1,145 1,206 1,254 1,308 1,364 1,422 1,483

Fees and Charges 27,355 28,483 30,138 30,980 32,850 33,818 35,927 36,955 39,207 40,230

Interest earnings 3,756 4,614 5,321 5,871 6,873 7,258 7,400 6,501 6,561 6,055

Goods and Services Tax 3,753 3,800 3,900 4,100 4,300 4,500 4,700 4,900 5,100 5,300

Other Revenue 1,577 1,646 1,721 1,797 1,877 1,960 2,051 2,145 2,241 2,339

137,867 146,648 157,201 167,068 176,689 184,003 192,515 199,150 208,134 215,613

PAYMENTS

Employee costs (60,027) (63,782) (67,396) (70,801) (74,311) (76,887) (79,738) (82,695) (85,758) (88,934)

Material and Contracts (26,420) (28,098) (29,577) (30,208) (31,902) (32,838) (34,767) (35,740) (37,811) (38,672)

Utilities (gas elect water) (5,538) (5,577) (5,713) (5,853) (5,994) (6,137) (6,300) (6,466) (6,637) (6,812)

Insurance (379) (388) (398) (407) (417) (427) (438) (450) (462) (474)

Interest (1,655) (1,889) (2,116) (2,507) (2,651) (2,381) (1,700) (1,020) (748) (513)

Goods and Services Tax (3,965) (3,800) (3,900) (4,100) (4,300) (4,500) (4,700) (4,900) (5,100) (5,300)

Other expenses (1,624) (2,281) (2,345) (2,407) (2,470) (2,534) (2,607) (2,681) (2,758) (2,837)

(99,608) (105,815) (111,445) (116,285) (122,044) (125,705) (130,250) (133,952) (139,274) (143,542)NET CASH FROM OPERATING ACTIVITIES 38,258 40,833 45,756 50,783 54,645 58,298 62,264 65,198 68,860 72,071

CASH FLOWS FROM INVESTING ACTIVITIESPayments for:Land (4,135) (6,364) (1,998) (2,046) 0 (5,909) (2,396) 0 (2,873) (5,913)

Property, Plant & Equipment (28,854) (30,961) (28,425) (41,138) (41,356) (20,080) (13,767) (27,327) (21,936) (15,170)

Infrastructure (39,399) (48,760) (41,263) (27,885) (20,110) (44,501) (43,273) (62,318) (51,430) (69,609)

Proceeds from:Non Operating Subsidies and Contributions 14,918 23,353 11,540 8,261 13,021 5,294 4,537 4,595 5,809 4,753

Developers Contributions 11,770 10,466 6,611 8,253 12,213 6,843 5,318 4,152 5,427 5,848

Disposal of assets 3,844 3,653 12,054 1,688 6,057 10,700 12,679 2,640 2,522 2,115Investments:Proceeds from Sale of Investments 0 1,212 0 0 0 0 0 0 0 0

Other:Trust Fund 199 0 0 0 0 0 0 0 0 0

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (41,657) (47,402) (41,480) (52,868) (30,175) (47,652) (36,901) (78,258) (62,481) (77,976)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from New Debentures 9,829 8,909 9,918 18,844 0 0 0 0 0 0

Repayment of Debentures (3,851) (4,324) (4,930) (5,207) (5,472) (5,742) (24,742) (5,729) (5,409) (4,326)

Proceeds from Self Supporting Loans 96 93 100 93 99 106 67 68 69 73

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 6,074 4,678 5,088 13,730 (5,373) (5,637) (24,675) (5,661) (5,341) (4,253)Net Increase (Decrease) in Cash Held 2,675 (1,891) 9,365 11,645 19,097 5,009 688 (18,722) 1,039 (10,158)

Cash at Beginning of Year 64,806 67,480 65,589 74,954 86,599 105,696 110,705 111,392 92,671 93,710

at the End of the Year 67,480 65,589 74,954 86,599 105,696 110,705 111,392 92,671 93,710 83,551

706050403020100

Mill

ions

($)

New DebtOutstanding Long Term Debt

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

300

250

200

150

100

50

0

Forecast Long Term DebtDebt Service Cover Ratio @ 5xGross Debt to Revenue @ 55.0%Debt Service Cover Ratio @ 2xDebt Service Ratio @ 7.5%

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

Mill

ions

($)

30

2.4 Debt ManagementThe use of long-term borrowings is strongly infl uenced by the competing capital needs of building new community assets, upgrading infrastructure assets, investment decisions, and funding urban growth corridor projects where funding shortfalls are present. This plan requires borrowings of $47.5m in the fi rst four years.

New Debt and Long Term Debt Balance (Indexed by price)

The plan provides for the following:

Borrowings of $18.2 million to fund developments in Ellenbrook, Aveley and Bullsbrook over the period 2013/14 to 2015/16.

Borrowings to fund the developer contributions plan presented to Council will require the raising of debt of some $3.9 million (over three years) to meet the shortfall in the cash fl ow of the proposed capital works program. The funding shortfall will require debt raising over 5 to 10 fi nancial years. The debt servicing for this program will be met from the cash backed reserves provided to administer the various developer contributions plans.

Borrowing to leverage the City’s property development program in 2016/17 of $18.8 million for the Midland Oval redevelopment project. Repayments will be met from land sales.

Other borrowings include funding for Operations Depot and Core System Replacement.

Whilst this plan has a greater emphasis on raising long-term borrowings to meet the capital demands of the City it does not exceed the borrowing thresholds applied to the local government industry. This plan will see the City’s debt peak at $59.4 million in 2016/2017. All key fi nancial indicators relating to debt continue to be positive (see page 26).

Debt Ceiling based on Key Financial Indicators (Indexed by price)

Information source: Long term Financial Plan forecasts, DLG Guidelines, Advisory Standards

31

2.5 Cash ReservesThe City maintains the following reserves:

Aged Persons AccommodationThe fund was established in 1987/88 to assist with the future maintenance of Elvire Chalets aged persons accommodation units. Income is from residents’ in-going contributions and the net result of Elvire Chalet operations.

Aged Services Asset Replacement ReserveSince 2001/02, this reserve has accumulated funds for the replacement of vehicles and other assets used for the provision of Aged Care and related services. Funds are maintained by an annual transfer of unspent HACC Non-Recurrent capital grants.

Midland District Drainage Development ReserveSince 1982/83, this reserve has been used to upgrade the stormwater drainage system in Bellevue and Midvale. A Specifi ed Area Rate provides funding on an annual basis and the City has a current policy that requires developers to contribute $59,700 per hectare towards this fund.

General Insurance ReserveSince 1991/92 this reserve holds the value of excess on general insurance claims and any difference between the maximum premium and standard workers compensation premium paid. An annual transfer of the difference between the standard premium payable and the actual premium is charged under City Policy.

Gravel Pit Rehabilitation ReserveFunds from this reserve are used for the remediation of the existing quarry and to acquire land for future quarries. An annual allocation is charged for gravel which is extracted from the quarry and used on the City’s works.

Plant & Equipment ReserveThis reserve fi nances the purchase of motor vehicles, plant and equipment associated with the City’s works. The reserve is funded by an annual allocation of an amount equivalent to the plant replacement component which is charged for plant used on all City works.

Hazelmere/Guildford Drainage ReserveSince 2005/06, this reserve has been used to upgrade the stormwater drainage system in Hazelmere and Guildford. A Specifi ed Area Rate provides funding on an annual basis and the City has a current policy that requires developers to contribute $59,700 per hectare towards this fund.

Waste Management ReserveAfter the amalgamation in 1992/93 of the Sanitation Reserve and West Midland Rehabilitation Reserve, this fund has been used to pay for operations and the development of the City’s sanitation service. Incoming funds are an annual allocation equivalent to the net ‘surplus’ in the sanitation operation and a plant replacement component.

City Asset Replacement ReserveCreated in 2006/07 from the retention of rates funds for the repair, maintenance and replacement of infrastructure and capital assets.

Ellenbrook Community Facilities ReserveThis fund was established in 1994/95 to provide community facilities and services within the Ellenbrook Estate. Income is from the Ellenbrook Joint Venture and matching contributions from the City’s Municipal Fund.

Vale Community ReserveThe Vale Community Facilities and Services Reserve fund was established in July 2005, to provide community facilities and services within the Vale and the region. Income is from the developers (Multiplex Energy Pty Ltd) of Vale and matching contributions from the City’s Municipal Fund.

Employee Entitlements – LSL ReserveTo fund long service leave requirements. To be used as required.

Urban Growth Corridor Sub-Regional Contributions Reserve created in 2010/2011 to hold funds and to allow the payment for infrastructure that relates to sub-regional community facilities for the Swan Urban Growth Corridor which comprises the Development Contribution Areas of Brabham, Caversham, Dayton and West Swan West.

Strategic Development – Land AcquisitionReserve created in 2010/2011 to hold funds for the acquisition of land in fee simple to meet the City’s strategic development needs.

Hazelmere Industrial Area Infrastructure ReserveReserve created in 2010/2011 to upgrade infrastructure in the Hazelmere Industrial Area. Holds funds collected through a Specifi ed Area Rate matched by a $3 to $1 contribution by the City.

32

Hazelmere Industrial Area Infrastructure Reserve – (2)New reserve created to upgrade infrastructure in the Hazelmere Industrial Area. The current Specifi ed Area Rate will be stopped at the end of the 2012/13 fi nancial year and this new Specifi ed Area Rate will be introduced in the 2013/14 fi nancial year. This will include all properties in the current and future industrial area. Funds collected through a Specifi ed Area Rate matched by a $3 to $1 contribution by the City.

Restricted Cash ReserveA reserve established in 1994/95 to refl ect the City’s restricted cash commitment in respect to various contributions received for works not yet undertaken. This reserve is maintained by allocations from the Municipal Fund, equivalent to the value of contributions received.

The accumulation of funds in reserve accounts over a ten-year period provides the City with capacity to meet community demands for waste management, asset replacement and new strategic developments.

Reserve Accounts – Transfers and Balances

120

100

80

60

40

20

0

Transfers to ReservesReserves UtilisedBalance

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

Mill

ions

($)

120

100

80

60

40

20

0

OperatingAsset ReplacementNew AssetsDrainageDevelopment ContributionsOther

2013/

14

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

Mill

ions

($)

The accumulation of funds in reserve accounts over a ten-year period provides the City with capacity to meet community demands for waste management, asset replacement and new strategic developments. To a lesser degree additional funds are held for other infrastructure improvements.

Reserve Accounts by Purpose

‘… capacity to meet

community demands for

waste management, asset

replacement and new strategic

developments.…’

15

10

5

0

-5

-10

-15

High GrowthBaseLow Growth

Mill

ions

($)

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

6040200

-20-40-60-80

-100-120-140

Base caseWorst case price drivers higher by 3.0% interest rates higher by 2.0%Best case price drivers lower by -1.0% interest rates higher by 2.0%

Mill

ions

($)

2014/

15

2015/

16

2016/

17

2017/

18

2018/

19

2019/

20

2020/2

1

2021/2

2

2022/2

3

33

2.6 Scenario Modelling and Sensitivity AnalysisThe City’s activities are subject to a variety of risks that have been considered in preparing the Long Term Financial Plan. Asset Management Plans also identify assets that are critical to the City’s operations and outline specifi c risk management strategies (POL-C-067 – Risk Management) for these assets.

For specifi c projects, the ability to accurately quantify the fi nancial risks over a long period is hampered by uncertainties surrounding the availability of funding such as grants and contributions from State and Federal governments.

Scenario Analysis

Sensitivity Analysis

Scenario ModellingScenario modelling has been undertaken to determine the level of fl exibility in the Long Term Financial Plan to enable alternative considerations to be made to meet community expectations should variations occur in a range of factors or assumptions.

Modelling has been undertaken on the basis of high growth, base and low growth within the next 5 years.

The impact on the base case is refl ected in the graph on the right.

Sensitivity AnalysisAnalysis of the plan outcomes have been modelled for high and low changes to key price drivers such as CPI estimates, employee cost increments, interest rates, annual rate increases etc.

The graph on the right shows the impact of benefi cial and negative changes compared to the current plan. The results are for the overall plan surplus or defi cit for each fi nancial year.

This plan is sensitive to price movements. The current low infl ation and interest rates means the capacity of price and interest drivers is greater on the upward movement. Rapid upward movements create a fi nancial risk to the City and the projects in this plan.

34

2.7 Implementation and Review of the Long Term Financial PlanThe Council will consider the content of the Long Term Financial Plan when preparing the Annual Budget for 2013/14 and subsequent years and it is expected that adopted budgets will be closely aligned with the proposals in the Long Term Financial Plan and assumptions underpinning this.

Some minor review of the Long Term Financial Plan will occur each year as budgets are prepared to account for performance information and changing circumstances. However, a detailed desktop review is planned for 2015 and a full review will be undertaken in 2017 in conjunction with formal reviews of the Strategic Community Plan.

The Council is confi dent that the Long Term Financial Plan will allow the City to set priorities within its resourcing capabilities to sustainably deliver the assets and services required by the community.

‘… to sustainably deliver the

assets and services required

by the community…’

35

Attachments and Supporting Documents

Attachment 1 – Glossaryannual operating surplus before interest and depreciation means operating revenue minus net operating expense;1

asset consumption ratio means the ratio determined as follows:depreciated replacement cost of assets

current replacement cost of depreciable assets;1

asset renewal funding ratio means the ratio determined as follows:NPV of planned capital renewals over 10 years

NPV of required capital expenditure over 10 years;1

asset sustainability ratio means the ratio determined as follows:capital renewal and replacement expenditure

depreciation expense;1

capital renewal and replacement expenditure means expenditure to renew or replace existing assets;1

current assets means the total current assets as shown in the balance sheet;1

current liabilities means the total current liabilities as shown in the balance sheet;1

current ratio means the ratio determined as follows:current assets minus restricted assets

current liabilities minus liabilities associated with restricted assets;1

current replacement cost of depreciable assets means the cost of replacing assets at current prices;1

debt service cover ratio means the ratio determined as follows: annual operating surplus before interest and depreciation principal and interest

principal and interest;

depreciable assets has the meaning given in the AAS;1

Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Accounting Standard AASB 116 Property, Plant and Equipment

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Accounting Standard AASB 116 Property, Plant and Equipment

The depreciation method used shall refl ect the pattern in which the asset’s future economic benefi ts are expected to be consumed by the entity. Accounting Standard AASB 116.60 Property, Plant and Equipment

depreciated replacement cost of assets has the meaning given in the AAS;1

depreciation expense has the meaning given in the AAS;1

Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. Accounting Standard AASB 116 Property, Plant and Equipment

36

General purpose fi nancial statements (referred to as ‘fi nancial statements’) are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs. Accounting Standard AASB 101 Presentation of Financial Statements

liabilities associated with restricted assets means the lesser value of a current liability or the cash component of restricted assets held to fund that liability;1

net interest expense means interest expense less interest received from self-supporting loans;1

net operating expense means operating expense excluding net interest expense and depreciation expense;1

NPV means net present value;1

operating expense means the expense that is operating expense for the purposes of the AAS, including net interest expense and depreciation expense;1

operating revenue means the revenue that is operating revenue for the purposes of the AAS, excluding:(a) grants for the development or acquisition of assets; and(b) contributions for the development or acquisition of assets; and(c) other comprehensive income;1

operating surplus ratio means the ratio determined as follows:operating revenue minus operating expense

own source operating revenue;1

other comprehensive income has the meaning given in the AAS;1

Other comprehensive income comprises items of income and expense (including reclassifi cation adjustments) that are not recognised in profi t or loss as required or permitted by other Australian Accounting Standards. Accounting Standard AASB 101.7 Presentation of Financial Statements

The components of other comprehensive income include:(a) changes in revaluation surplus (see AASB 116 Property, Plant and Equipment and AASB 138

Intangible Assets);(b) actuarial gains and losses on defi ned benefi t plans recognised in accordance with

paragraph 93A of AASB 119 Employee Benefi ts;(c) gains and losses arising from translating the fi nancial statements of a foreign operation

(see AASB 121 The Effects of Changes in Foreign Exchange Rates);(d) gains and losses on remeasuring available-for-sale fi nancial assets (see AASB 139 Financial

Instruments: Recognition and Measurement); and(e) the effective portion of gains and losses on hedging instruments in a cash fl ow hedge (see

AASB 139).

own source operating revenue means revenue from rates and service charges, fees and user charges, reimbursements and recoveries, interest income and profi t on disposal of assets;1

own source revenue coverage ratio means the ratio determined as follows:own source operating revenue

operating expense;1

planned capital renewals means capital renewal and replacement expenditure as estimated in the long-term fi nancial plan;1

principal and interest means all principal and interest expenses for borrowings under section 6.201

required capital expenditure means capital renewal and replacement expenditure as estimated in the asset management plan;1

self-supporting loans means money borrowed for a work or undertaking in respect to which persons or organisations are required to repay all or part of the principal or interest.1

37

References1 Local Government (Financial Management) Regulations 1996 [Regulation 50 amended in Gazette 20 Jun 1997 p. 2842; 31 Mar 2005 p. 1051–2; 20 Jun 2008 p. 2726; 20 Apr 2012 p. 1701–4.]

Accounting Standard Framework for the Preparation and Presentation of Financial Statements

Accounting Standard AASB 1 First-Time Adoption of Australian Equivalents to International Financial Reporting Standards

Accounting Standard AASB 2 Share-based Payment

Accounting Standard AASB 3 Business Combinations

Accounting Standard AASB 4 Insurance Contracts

Accounting Standard AASB 5 Non-Current Assets Held for Sale and Discontinued Operations

Accounting Standard AASB 6 Exploration for and Evaluation of Mineral Resources

Accounting Standard AASB 7 Financial Instruments: Disclosures

Accounting Standard AASB 13 Fair Value Measurement

Accounting Standard AASB 101 Presentation of Financial Statements

Accounting Standard AASB 102 Inventories

Accounting Standard AASB 107 Cash Flow Statements

Accounting Standard AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors

Accounting Standard AASB 110 Events after the Balance Sheet Date

Accounting Standard AASB 111 Construction Contracts

Accounting Standard AASB 112 Income Taxes

Accounting Standard AASB 114 Segment Reporting

Accounting Standard AASB 116 Property, Plant and Equipment

Accounting Standard AASB 117 Leases

Accounting Standard AASB 118 Revenue

Accounting Standard AASB 119 Employee Benefi ts

Accounting Standard AASB 120 Accounting for Government Grants and Disclosure of Government Assistance

Accounting Standard AASB 123 Borrowing Costs

Accounting Standard AASB 124 Related Party Disclosures

Accounting Standard AASB 127 Consolidated and Separate Financial Statements

Accounting Standard AASB 128 Investments in Associates

Accounting Standard AASB 129 Financial Reporting in Hyperinfl ationary Economies

Accounting Standard AASB 131 Interests in Joint Ventures

Accounting Standard AASB 132 Financial Instruments: Presentation

Accounting Standard AASB 133 Earnings per Share

Accounting Standard AASB 134 Interim Financial Reporting

Accounting Standard AASB 136 Impairment of Assets

Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets

Accounting Standard AASB 138 Intangible Assets

Accounting Standard AASB 139 Financial Instruments: Recognition and Measurement

Accounting Standard AASB 140 Investment Property

Accounting Standard AASB 141 Agriculture

Accounting Standard AASB 1004 Contributions

Accounting Standard AASB 1023 General Insurance Contracts

Accounting Standard AASB 1031 Materiality

Accounting Standard AASB 1038 Life Insurance Contracts

Accounting Standard AASB 1039 Concise Financial Reports

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Accounting Standard AASB 1048 Interpretation and Application of Standards

Accounting Standard AASB 1049 Whole of government and General Government Sector Financial Reporting

Accounting Standard AASB 1050 Administered Items

Accounting Standard AASB 1051 Land Under Roads

Accounting Standard AASB 1052 Disaggregated Disclosures

Accounting Standard AAS 25 Financial Reporting by Superannuation Plans

Adjusted operating ratio – Operating result excludes capital contributions, reserve interest, extra-ordinary items and the profi t/loss on sale of assets/LG Revenue.

Building construction index – Building construction for WA (411) ABS Publication 6427.0 Producer Price Indexes, Australia

Capital Grants/Contributions – Payments made to, or “revenues” received for the specifi ed purpose of acquiring, constructing non-current assets. These can be provided by way of grants from governments or contributions from the private sector.

CPI – Aust – Consumer Price Index for All Capital Cities in ABS Publication – Catalogue No 6401.0

CPI – Perth – Consumer Price Index for Perth in ABS Publication – Catalogue No 6401.0

Financial Sustainability‘Financial sustainability’ therefore can be taken to address whether we can sustain the current practices in fi nancial or economic terms. For Local Government, fi nancial sustainability poses the question: Can we continue the sort of revenue and expenditure patterns of recent years while maintaining the levels of service expected by the community? LGA South Australia Financial Sustainability Information Paper – June 2007, re-issued.The fi nancial sustainability of a council is determined by its ability to manage expected fi nancial requirements and fi nancial risks and shocks over the long term without the use of disruptive revenue or expenditure measures; which is determined by: healthy fi nances in the current period and long term outlook based on continuation of the council’s present spending and

funding policies and given likely economic and demographic developments; and ensuring infrastructure renewals/replacement expenditure matches forward looking asset management plan expenditure

needs. ALGA – National fi nancial sustainability study of local government (PwC Report)

A council’s long-term fi nancial performance and position is sustainable where planned long-term service and infrastructure levels and standards as prioritised through community engagement and consultation are met without unplanned increases in rates and charges or disruptive cuts to services. LOCAL GOVERNMENT AND PLANNING MINISTERS’ COUNCIL Local Government Financial Sustainability Nationally Consistent Frameworks Framework 1 CRITERIA FOR ASSESSING FINANCIAL SUSTAINABILITY, March 2007

General Funds – As defi ned in Section 6.21 of the Local Government Act 1995 being: general funds means the revenue or income from:(a) general rates; (b) Government grants which were not given to the local government for a specifi c purpose; and(c) such other sources as are prescribed.

Gross Domestic Product (GDP) – Economic trend series as shown in the Australian Bureau of Statistics Publication 5206.0 – Australian National Accounts: National Income, Expenditure and Product.

Gross operating ratio – Gross operating surplus/LG revenue.

Gross state product – Table 1. Gross State Product, Chain volume measures and current prices.

Income Statement – General purpose fi nancial statements prepared in accordance with the Australian equivalents to International Financial Reporting Standards, issued by the Australian Accounting Standards Board. Previously referred to as Statement of Financial Performance or Operating Statement or Profi t and Loss Statement.

LG Revenue – Local Government Revenue – Rates, Grants Commission grants, fees and charges and interest earnings as reported in the income statement.

Own Source Revenues – rates and charges, and user fees and charges.

Road/bridge construction index – Road and bridge construction index for WA. (4121) ABS Publication 6427.0 Producer Price Indexes, Australia

Attachment 2 – Informing Documents and Policies

Integrated Planning Framework Documents Community Strategic Plan

Asset Management Plan

Corporate Business Plan

Workforce Plan

Policies

General POL-C-100 – Asset Management (Approved OCM 12/12/2012)

POL-C-108 Building Facilities Management (Approved OCM 28/04/2010)

POL-C-153 – Community Engagement (Approved OCM 19/05/2010) 

Rating POL-C-026 – Farmland Rating Concession (Approved OCM 17/03/2010)

POL-C-146 – Rating Exemption under the Heritage Act WA (Approved OCM 17/03/2010) 

Investments POL-C-018 – Investment of Surplus Funds (Approved OCM 12/12/2012)

Risk Management POL-C-067 – Risk Management (Approved OCM 22/05/2013) 

POL-M-137 – Risk Management Framework (Approved MANEX 29/11/2012)

Public Art POL-C-142 – Public Art (Approved OCM 28/04/2010)

POL-M-144 – Public Art Collection Acquisitions, Commissions & Management (Approved MANEX 16/03/2010)

POL-LP-1.10 – Provision of Public Art (Approved OCM – 27/07/2011)

Drainage POL-C-062 – Hazelmere (Residential Areas) Drainage Improvement Fund (Approved OCM 12/12/2012)

POL-C-096 – Guildford and South Guildford District Drainage Fund (Approved OCM 12/12/2012) 

Developer Contribution POL-C-088 – Subdivider Contributions – Henley Brook and Millhouse Road (Under Review) Council Adoption: 15/12/2004

POL-C-102 – Urban Growth (Under Review) Council Adoption: 24/05/2006.

Planning POL-C-083 – Commercial Centres Strategy (Under Review) Council Adoption: 30/06/2004

POL-C-087 – Gidgegannup Rural Strategy (Under Review) MANEX/Council Adoption: 24/11/2004

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Environment POL-C-084 – Sustainable Environment (Approved OCM 24/02/2010) 

POL-C-104 – Environmental Planning (Under Review) Council Adoption: 24/05/2006

POL-C-105 – Community and Economic Planning (Under Review) Council Adoption: 24/05/2006

POL-C-106 – Guildford Conservation Precincts (Under Review)

POL-C-111 – Woodbridge Conservation Precincts (Under Review) Council Adoption: 24/05/ 006

POL-C-112 – Public Open Space – Residential Areas (Under Review) Council Adoption: 18/10/2006 Amended: 07/2007

Building and Development POL-TP-122 – Building and Development Standards – General (Under Review) (Approved OCM 19/03/2007)

POL-TP-123 – Building and Development Standards – Midland Strategic Centre (Under Review) (Approved OCM 18/03/2008)

POL-TP-124 – Building and Development Standards – Industrial Zones (Under Review) (Approved OCM 18/03/2008)

POL-TP-125 – Building and Development Standards – Commercial Zones (Under Review) (Approved OCM 18/03/2008)

POL-TP-126 – Building and Development Standards – Rural Zones (Under Review) (Approved OCM 18/03/2008)

POL-TP-127 – Building and Development Standards – Other Zones (Under Review) (Approved OCM 18/03/2008)

POL-TP-128 – Building and Development Standards – Residential Zones (Under Review) (Approved OCM 18/03/2008)

POL-TP-129 – Building and Development Standards – Vehicle Parking (Under Review) (Approved OCM 18/03/2008)

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w.sw

an.wa.gov.au

City of Swan 2 Midland Square Midland

PO Box 196 Midland WA 6936 t (08) 9267 9267f (08) 9267 9444 COS00671