Shoalhaven City Council Report on Strategic Direction Introduction In October 2012 NSW Treasury Corporation presented a Financial Assessment and Benchmarking Report on Shoalhaven City Council. The analysis was based on historical performance, current financial position, and long term financial forecasts. Further to this it benchmarked Council against its peers using key ratios. The review found that: Council has been well managed over the review period based on the following observations: Whilst Council has incurred operating deficits (excluding grants and contributions for capital purposes), Council’s underlying operating result (measured using EBITDA) has improved from $40.3m in 2009 to $45.1m in 2011. Approximately 76% of the Council’s revenue base is derived from own sourced revenue (annual charges, and user charges and fees). They can rely upon these revenue streams on an ongoing basis for financial flexibility. The Council is facing pressure from rising employee and material and contract costs above inflation but it has acknowledged the issue and is seeking to address this through expenditure review measures. However the key observations from the review of the Council’s 10 year forecasts for its General Fund are: The forecast shows deficit positions excluding capital grants and contributions in all forecast years, this already has factored in Transformation Program savings year on year. The Council’s forecast liquidity position is starts to weaken from 2015 when the Unrestricted Current falls to 1.74:1, limiting available funding. Council’s of fiscal flexibility, as indicated by its above benchmark Own Source Operating Revenue Ratio, is sound when excluding the impact of internal transactions. In addition to this Council has reported $43.1m of Infrastructure Backlog in 2011 which represents 2.3% of its infrastructure asset value of $1,873m and this backlog is trending upwards, particularly in the roads asset category (77.9% of the backlog). It should be recognised that the elected council in 2012 made a decision to increase rates and to also introduce an efficiency review. In response to this in February 2013 Blackadder Associates Pty Ltd prepared a report after an organisational structure and associated review, with an emphasis on savings and efficiencies and improvements to customer service. Council further sought direction on achieving financial sustainability. The review highlighted eight (8) areas for improvement:
Shoalhaven City Council Report on Strategic Direction Introduction In October 2012 NSW Treasury Corporation presented a Financial Assessment and Benchmarking Report on Shoalhaven City Council. The analysis was based on historical performance, current financial position, and long term financial forecasts. Further to this it benchmarked Council against its peers using key ratios. The review found that: Council has been well managed over the review period based on the following observations: Whilst Council has incurred operating deficits (excluding grants and contributions for capital purposes), Council’s underlying operating result (measured using EBITDA) has improved from $40.3m in 2009 to $45.1m in 2011. Approximately 76% of the Council’s revenue base is derived from own sourced revenue (annual charges, and user charges and fees). They can rely upon these revenue streams on an ongoing basis for financial flexibility. The Council is facing pressure from rising employee and material and contract costs above inflation but it has acknowledged the issue and is seeking to address this through expenditure review measures. However the key observations from the review of the Council’s 10 year forecasts for its General Fund are: The forecast shows deficit positions excluding capital grants and contributions in all forecast years, this already has factored in Transformation Program savings year on year. The Council’s forecast liquidity position is starts to weaken from 2015 when the Unrestricted Current falls to 1.74:1, limiting available funding. Council’s of fiscal flexibility, as indicated by its above benchmark Own Source Operating Revenue Ratio, is sound when excluding the impact of internal transactions. In addition to this Council has reported $43.1m of Infrastructure Backlog in 2011 which represents 2.3% of its infrastructure asset value of $1,873m and this backlog is trending upwards, particularly in the roads asset category (77.9% of the backlog). It should be recognised that the elected council in 2012 made a decision to increase rates and to also introduce an efficiency review. In response to this in February 2013 Blackadder Associates Pty Ltd prepared a report after an organisational structure and associated review, with an emphasis on savings and efficiencies and improvements to customer service. Council further sought direction on achieving financial sustainability. The review highlighted eight (8) areas for improvement: