Budget Report 2013 2014 Vol 1

Budget

2013-2014

Budget and Rating Resolutions including supporting documents and policies

Volume 1

TRC Budget 2013-2014

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Contents - Volume 1

MAYOR'S MESSAGE ...................................................................................................................................1

CEO STATEMENT........................................................................................................................................5

1. FORECAST FINANCIAL POSITION 30 JUNE 2013 .......................................................................7

2. 2013 - 2014 BUDGETED FINANCIAL STATEMENTS....................................................................9

2.1 Income Statement................................................................................................................9 2.2 Balance Sheet....................................................................................................................10 2.3 Statement of Cash Flows...................................................................................................11 2.4 Statement of Changes in Equity.........................................................................................12 2.5 Notes to the Financial Statements for the year ended 30 June 2013 ................................13

3. 2013 - 2014 LONG TERM FINANCIAL PLAN (2013-2014 / 2022-2023) ......................................27

3.1 Overview ............................................................................................................................27 3.2 Key Assumptions ...............................................................................................................28 3.3 Long Term Financial Plan Strategies / Policies .................................................................30 3.4 Consolidated Results .........................................................................................................35

4. APPENDICES - LONG TERM FINANCIAL PLAN 2013-2014.......................................................45

4.1 Appendix 1 - 2013 - 2014 Revenue Policy.........................................................................45 4.2 Appendix 2 - 2013 - 2014 Investment Policy......................................................................47 4.3 Appendix 3 - 2013 - 2014 Borrowing Policy .......................................................................49 4.4 Appendix 4 - 2013 - 2014 Procurement Policy ..................................................................51

ATTACHMENT 1 - OPERATIONAL PLAN.................................................................................................63


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Mayor's Message

Today I present the Tablelands Regional Council Budget for the 2013-2014 financial year. This $101 million budget has been particularly complex and challenging as it covers the period in which the Tablelands Regional Council is to de-amalgamate in to the new Tablelands Regional Council and the new Mareeba Shire Council, after just six months of the 2013-2014 financial year. With a large part of any council's activities often stretching over a number of years, preparing a Budget that includes a break-up such as required for this separation has been something to which Councillors and Staff have devoted significant amounts of time. I would like to particularly state our appreciation to our Staff for their diligence and hard work in relation to this matter and I am confident the result is that this Budget will continue to deliver more efficient and better services for ratepayers. In recognition of today's tough economic times, this Council has maintained its focus on keeping costs to ratepayers, as low as possible. We face a broad economic climate that is still putting great stress on all Local Governments. State and Federal support is at very low levels and expected to go even lower, while costs for Councils and the community continue to climb. We continue to see this region face difficult times for all of our industries. For example agriculture and horticulture, where exports face the barriers of a high Australian dollar and input costs such as water, electricity and insurance continue to soar. Despite these challenges, I am pleased to announce that this Budget includes an average overall increase in the general rate of 3.68 per cent, which is less than last year's, and reflects this Budget's frugal nature. Last year I spoke of a lack of bells and whistles and this Budget follows a similar pathway. We are capitalizing on significant improvements in productivity savings of more than 15 per cent, which have already been achieved, in this Council's term so far. These gains have been necessary due to the increased costs and reduced income anticipated in coming years. Additional complexities we have faced have been due to the impending de-amalgamation of the Tablelands Regional Council. Under legislation, de-amalgamation costs are to be met by the new Mareeba Shire. The process this is taking is that the Tablelands Regional Council has opened a working capital facility with the Queensland Treasury and is, essentially, billing Queensland Treasury for all associated costs. On its creation, the new Mareeba Shire Council will become responsible for paying off this facility within 12 months. This year our Budget considerations, unlike in a normal Budget process, have had to resolve the full scope of financial issues across the entire existing Tablelands Regional Council for only the first six months of the 2013-14 financial year.


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We have then had to develop a Budget for the second half of the financial year that deals only with the new Tablelands Regional Council, which will have just 17.5 per cent of the land mass and 57 per cent of the rateable properties of the current Council. Under legislation, we are also required to develop a budget for the new Mareeba Shire. The State Government has also indicated it is planning to change legislation to allow the new de-amalgamating Mareeba Shire Council to change their Budget once the new Council is in place, should it so wish. This means there is no real certainty for the second half of the financial year, for ratepayers of a new Mareeba Shire, until their new Council decides what it wants to do. Under the Budget presented today, the overall average rate increase is 3.68 per cent resulting in the main residential categories of A (Urban Residential) and M (Rural Residential), having an average rate rise of 4.08 per cent. That means 86.6 per cent of residential ratepayers in Category A will pay between $0 and $50 a year more in their general rate. The announced rates, fees, charges and rebates will continue to apply to the new Tablelands Regional Council after 1 January 2014, but for ratepayers in the new Mareeba Shire Council they may change in the new calendar year. The current rate remission on General Rates for approved Not-for-Profit organisations of 50%, has had the maximum remission increased from $500 to $1,000 per year. A new remission on utility charges for approved Not for Profit organisations will also be introduced at 20%, up to a maximum of $200 per year. Operational fees and charges have also been carefully considered across all areas. The waste management levy will increase by $4 to $135.00 a year. Atherton, Herberton, Malanda and Mareeba will now all pay the same kerbside collection charge of $241.00 a year. Water access and consumption charges will rise by 5 per cent across the different water schemes. The charge for residential sewerage, under the Tablelands Regional Council’s consolidated sewerage scheme, will rise from $600 to $630. This council has kept very tight control on the Capital Works Program, to ensure we are able to limit rates increases as much as possible while still addressing essential maintenance and necessary upgrades or new facilities. Highlights in this Budget include an investment of $34.88 million, including $8.44 million in capital works for roads, bridges, drainage and footpaths. Maintenance of roads and bridges has been allocated $8.89 million. This is boosted by an extra $17.55 million in the form of State and Federal funding for repairs to roads and causeways damaged in recent natural disasters. Plant and equipment considerations have resulted in an allocation of $5.48 million for replacement and renewal. Sheds and fencing for the re-established Buy-back Shop at the Atherton Waste Transfer Station has attracted $193,200. This facility answers the community's call for its re-establishment.


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$4.42 million will be spent on capital renewals, upgrades or new assets for water and waste-water treatment and reticulation. The appearance and tidiness of our region is a vital part of our tourist appeal. Coupled with our great climate and landscape it underpins the efforts our tourist operators make in attracting visitors to our region as well, of course, as ensuring this is a great place to live for our locals. We will spend $7.9 million on maintaining and improving our parks, gardens and reserves and on mowing, street lighting, cleaning, and maintaining public amenities across the region. The Budget allows for $2.04 million in additional projects to be delivered in the form of sport and recreation initiatives, improvements to swimming pools, community halls, buildings and caravan parks. Council will also spend $2.3 million on operating and improving our 11 library branches; $680,000 on supporting and operating our visitor information centres, $110,000 to operate our art galleries and cultural facilities, and $350,000 to provide financial and in-kind assistance to community groups. I would like to recognise the efforts of Councillors and staff in working through the complexities of this unique de-amalgamation budgetary process. I am confident this is a strong, balanced budget, combining the smallest rate increase possible with continued high levels of service delivery. The coming 12 months will see de-amalgamation concluded and the region will take on a new direction. This Council will continue to deliver strong value for money for every cent of ratepayer funds we collect. ROSA LEE LONG MAYOR


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CEO Statement

As the Mayor has noted in her Budget Message, the preparation of the 2013/14 budget has been particularly complex due to the impending de-amalgamation of the new Mareeba Shire Council, (MSC), from the Tablelands Regional Council, (TRC). The TRC budget is based on the existing organisation for the period 1 July 2013 to 31 December 2013 and the continuing TRC, excluding the new MSC, from 1 January 2014 to 30 June 2014. The Mayor’s Budget Message provides the highlights of the 2013/14 budget so I do not intend to repeat them here. Rather, I would like to raise in everyone’s mind the issue of long term financial sustainability. This issue will apply equally to the continuing TRC and the new MSC. As I’m sure everyone experiences these days, preparing a budget from year to year, whether it’s for your household or a business, and making it balance is becoming increasingly difficult. As householders we have to pay for all the normal ongoing expenses, pay the mortgage or rent, find money for the kid’s expenses, pay for the car, ensure there is enough money set aside for property maintenance and to upgrade the car, and finally, hopefully have something left over to pay for those discretionary items such as holidays. Council experiences the same problems, particularly with the loss of State Government infrastructure subsidies and price rises for significant inputs such as electricity and insurance well beyond our control. In the TRC’s case the consequences of State and Federal Government expenditure reductions will not only reduce one off grant subsidies, but may also adversely impact Council’s recurrent revenue; for example the Financial Assistance Grant which is a major source of untied revenue for the TRC. In addition third party works from State Government departments are likely to decrease and/or be tendered to the open market rather than offered to Council as has been the case in the past.

As households, in order to pay for those ongoing expenses and put some money aside to replace the car or upgrade that worn out bathroom, I am sure that many of you are making adjustments to what you spend money on and what you see as priorities. You are probably also trying to find efficiencies in the way you run things; simple things like reducing the number of take away meals and buying many items in bulk, or more fundamental, long term changes such as reducing loans or maximizing our income by setting money aside for a term deposit . These sorts of changes are exactly what Council needs to evaluate and implement in order to ensure long term financial sustainability.

I have asked Councillors to allocate time over the next 12 months to review what they see as core business and to also review the levels at which services are provided. This evaluation will need to be consistent with our Long Term Asset Management Plan and Long Term Financial Plan so that we remain financially viable. This will lead to Council doing exactly what you are having to do as householders; that is, thinking about what we spend our money on and what our priorities are, finding efficiencies in the way we do things and making those fundamental changes that will set us up for the future. I think the following catch phrase sums things up very nicely; “Budgets – where hope meets reality”. In our own lives, we always hope that we can afford to buy whatever we want. The reality is we cannot afford it! The budget process is where hope meets reality and we need to make choices about what we can afford and what we can’t afford. Council needs to do the same thing.


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I would like to say a big thank you to Councillors and staff for preparing the 2013/14 budget and working your way through those complexities created by the de-amalgamation. Keeping the general rate increase to 3.68% given the significant price increases that have been absorbed is a commendable achievement. IAN M CHURCH CHIEF EXECUTIVE OFFICER


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1. FORECAST FINANCIAL POSITION 30 JUNE 2013


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2. 2013 - 2014 BUDGETED FINANCIAL STATEMENTS

2.1 INCOME STATEMENT

TABLELANDS REGIONAL COUNCIL

Income Statement

For the year ended 30 June 2014 MSC

Budget Budget Budget Budget

2013/14 2014/15 2015/16 2013/14

Note $ $ $

Income

Rates and charges 43,524,285 31,628,348 32,577,198 12,817,165

Less Discounts and Pensioner Remissions (2,907,180) (2,125,055) (2,188,807) (844,000)

Net Rates and Utility Charges 1 40,617,105 29,503,293 30,388,392 11,973,165

Fees and Charges 1,701,950 1,111,766 1,145,119 451,886

Operating Grants and Subsidies 3 15,623,990 13,030,617 13,421,535 7,761,032

Operating Contributions 3 360,000 - - 360,000

Interest Revenue 2,427,294 1,755,161 1,807,816 902,254

Works for Third Parties 5,655,760 1,740,916 1,793,143 3,965,550

Other Revenue 4,174,624 2,454,052 2,527,674 2,144,354

Total Operating Revenue 70,560,723 49,595,805 51,083,679 27,558,241

Expenditure

Employee Expenses 25,125,284 18,436,118 18,989,202 7,858,603

Materials and Services 28,822,472 18,397,317 18,949,237 16,078,207

Depreciation expenses 4 12,630,867 11,137,031 11,549,237 3,373,516

Finance and Borrowing costs 2 553,656 395,499 373,577 37,550

67,132,279 48,365,965 49,861,252 27,347,876

Total Operating Expenses

Operating Surplus/(Deficit) 3,428,444 1,229,840 1,222,427 210,365

Capital Income

Capital Contributions 3 1,350 - - 1,350

Capital Grants and Subsidies 3 2,120,500 875,500 901,765 990,500

Profit/(Loss) on Sale of Asset - - - -

2,121,850 875,500 901,765 991,850

Net Result 5,550,294 2,105,340 2,124,192 1,202,215

The above statement should be read in conjunction with the accompanying notes to the financial statements.

TRC


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2.2 BALANCE SHEET


Balance Sheet

at 30 June 2014

MSC


2013/14 2014/15 2015/16 2013/14

Note $ $ $

Current Assets

Cash assets 48,544,168 44,454,203 43,226,883 23,909,814

Receivables 5 3,831,000 3,754,380 3,679,292 3,011,000

Inventories 6 1,838,836 1,863,007 1,918,898 3,680,566

54,214,004 50,071,590 48,825,073 30,601,380

Non-Current Assets

Receivables 5 - - - -

Property, plant and equipment 375,960,922 385,054,331 390,696,002 309,113,990

Capital works in progress 21,993,016 18,963,209 16,470,255 61,889,580

397,953,938 404,017,540 407,166,257 371,003,570

TOTAL ASSETS 452,167,942 454,089,130 455,991,330 401,604,950

Current Liabilities

Payables 7 5,700,207 5,814,211 5,930,496 5,485,362

Interest bearing liabilities 8 254,525 439,069 463,156 260,000

5,954,732 6,253,280 6,393,652 5,745,362

Non-Current Liabilities

Interest bearing liabilities 8 5,619,001 4,995,387 4,508,144 1,936,278

Payables 7,045,700 7,186,614 7,330,347 7,795,668

12,664,701 12,182,001 11,838,491 9,731,946

TOTAL LIABILITIES 18,619,433 18,435,282 18,232,142 15,477,308

NET COMMUNITY ASSETS 433,548,509 435,653,849 437,759,188 386,127,642

Community Equity

Asset revaluation reserve 9 38,927,328 38,927,328 38,927,328 28,054,820

Retained surplus 373,461,570 375,070,925 375,748,976 338,336,848

Other reserves 10 21,159,611 21,655,596 23,082,884 19,735,974

TOTAL COMMUNITY EQUITY 433,548,509 435,653,849 437,759,188 386,127,642

(0) (0) 0 0


TRC


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2.3 STATEMENT OF CASH FLOWS


Statement of Cash Flows

For the year ended 30 June 2014

MSC


2013/14 2014/15 2015/16 2013/14

Note $ $ $

Cash flows from operating activities

Receipts from customers 69,214,891 49,595,805 51,083,679 26,880,328

Interest received 2,427,294 1,755,161 1,807,816 902,254

Cash inflows from operating activities 71,642,185 51,350,966 52,891,494 27,782,582

Payments to suppliers and employees

Employee costs (25,761,846) (18,436,118) (18,989,202) (7,858,603)

Materials and services (28,822,472) (18,397,317) (18,949,237) (16,078,207)

(54,584,318) (36,833,435) (37,938,438) (23,936,810)

Borrowing costs 2 (553,656) (395,499) (373,577) (37,550)

(55,137,974) (37,228,934) (38,312,015) (23,974,360)

Net cash inflow from operating activities 16,504,211 14,122,032 14,579,479 3,808,222

Cash flows from investing activities

Payments for property, plant and equipment (21,148,075) (20,230,440) (17,190,908) (3,354,002)

Subsidies and contributions for new capital 2,121,850 875,500 901,765 991,850

Proceeds from sale of property, plant and equipment 1,077,000 1,583,000 945,500 483,000

Net cash (outflow) from investing activities (17,949,225) (17,771,940) (15,343,643) (1,879,152)

Cash flows from financing activities

Proceeds from borrowings 11 - - - -

Repayment of borrowings 11 (354,800) (440,057) (463,156) (129,256)

Transfer of funds re de-amalgamation (22,110,000) 22,110,000

Net cash inflow (outflow) from financing activities (22,464,800) (440,057) (463,156) 21,980,744

Net increase in cash held (23,909,814) (4,089,965) (1,227,320) 23,909,814

Cash at beginning of reporting period 72,453,982 48,544,168 44,454,203 -

Cash at end of reporting period 48,544,168 44,454,203 43,226,883 23,909,814

0 - - (0)


TRC


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2.4 STATEMENT OF CHANGES IN EQUITY


Statement of Changes in Equity


Total

Budget Budget Budget Budget Budget Budget Budget Budget

2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 2013/14 2013/14

$ $ $ $ $ $ $ $

Balance at beginning of period ########## ########## ########## ########## ########## ########## - -

- - - -

Net result for the period 5,550,294 2,105,340 2,105,340 5,550,294 2,105,340 2,105,340 1,202,215 1,202,215

- - - -

Transfers to reserves - - - (5,422,250) (3,345,517) (5,338,103) - (2,050,051)

- - - 309,079,812 290,313,721

Transfers from reserves - - - 3,843,336 2,849,532 3,910,814 - 1,080,169

########## ########## - ########## -

Asset revaluation adjustment (28,054,820) - - - - 28,054,820

- - - -

Balance at end of period ########## ########## ########## ########## ########## ########## 338,336,848 290,546,054

Asset

Revaluation

Reserve

Budget Budget Budget Budget Budget Budget Budget Budget

2013/14 2014/15 2015/16 2013/14 2014/15 2015/16 2013/14 2013/14

$ $ $ $ $ $ $ $

Balance at beginning of period 66,982,148 38,927,328 38,927,328 38,346,788 21,159,611 21,655,596 - -

Net result for the period - - - - - - - -

Transfers to reserves - - - 5,422,250 3,345,517 5,338,103 - 2,050,051

18,766,092

Transfers from reserves - - - (3,843,336) (2,849,532) (3,910,814) - (1,080,169)

(18,766,092)

Asset revaluation adjustment (28,054,820) - - - - - 28,054,820 -

Balance at end of period 38,927,328 38,927,328 38,927,328 21,159,611 21,655,596 23,082,884 28,054,820 19,735,974

23,884,116 23,884,116 25,747,571

The above statement should be read in conjunction with the accompanying notes to the financial statements.(2,724,505) (2,228,520) (2,664,687)

Other Reserves

Retained Surplus

MSC

MSC

Retained

Surplus

TRC

Total

Asset Revaluation Reserve

TRC

Other Reserves


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2.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013


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Notes to the Financial Statements


MSC


2013/14 2014/15 2015/16 2013/14

Note $ $ $ $

7 Payables

Current

Creditors and accruals 4,250,000 4,335,000 4,421,700 4,250,000

Annual leave 1,274,719 1,300,213 1,326,217 1,085,871

Long Service Leave 175,489 178,998 182,578 149,490

5,700,207 5,814,211 5,930,496 5,485,362

8 Interest bearing liabilities

Current

Loans 11 254,525 439,069 463,156 260,000

254,525 439,069 463,156 260,000

Non-Current

Loans 11 5,619,001 4,995,387 4,508,144 1,936,278

5,619,001 4,995,387 4,508,144 1,936,278

9 Asset revaluation reserve

Movements in the asset revaluation reserve were as follows:

Balance at beginning of period 66,982,148 38,927,328 38,927,328 -

Net adjustment to non-current assets at end of period to reflect a change in current fair value:

Land and improvements (2,106,659) - - 2,106,659

Buildings (5,594,732) - - 5,594,732

Roads and bridges (4,748,308) - - 4,748,308

Water (11,805,267) - - 11,805,267

Sewerage (3,571,389) - - 3,571,389

Other Infrastructure (228,466) - - 228,466

(28,054,820) - - 28,054,820

Balance at end of the year 38,927,328 38,927,328 38,927,328 28,054,820

Asset revaluation reserve analysis

The closing balance of the asset revaluation reserve is comprised of the following asset categories:

Land and improvements 4,089,396 4,089,396 4,089,396 2,106,659

Buildings 6,838,005 6,838,005 6,838,005 5,594,732

Roads and bridges 4,942,116 4,942,116 4,942,116 4,748,308

Water 16,302,512 16,302,512 16,302,512 11,805,267

Sewerage 6,349,135 6,349,135 6,349,135 3,571,389

Other Infrastructure 406,163 406,163 406,163 228,466

38,927,328 38,927,328 38,927,328 28,054,820

TRC


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10 Other reserves

(a) Summary of reserves held for funding future

capital expenditure 11,752,872 11,752,872 11,752,872 9,234,399

11,752,872 13,440,157 15,428,212 9,234,399

(b) Summary of reserves held for funding future

recurrent expenditure 12,131,244 11,524,682 10,948,448 9,531,692

12,131,244 12,307,414 14,179,463 9,531,692

Total reserves 23,884,116 25,747,571 29,607,675 18,766,091

12,990,400 12,990,401

11 Loans 16,617,275 5,775,690

Queensland Treasury Corporation 5,629,326 5,251,306 4,849,200 2,196,278

Interest Free Loan (State Government) 244,200 183,150 122,100 -

5,873,526 5,434,456 4,971,300 2,196,278

Classified as :

Current 254,525 439,069 463,156 260,000

Non-current 5,619,001 4,995,387 4,508,144 1,936,278

5,873,526 5,434,456 4,971,300 2,196,278


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Statement of Appropriations


MSC


2013/14 2014/15 2015/16 2013/14

Note $ $ $ $

Retained surplus (deficiency) from prior years 1,200,022 - - -

Net result for the period from the statement of financial performance 5,550,294 2,105,340 2,124,192 1,202,215

6,750,316 2,105,340 2,124,191 1,202,215

Transfers (to) from capital account:

(Profit) loss on sale of capital assets - - - -

Non monetary capital revenue - - - -

General revenue used for capital purposes (3,307,732) (2,063,107) (496,760) -

Unspent capital revenue transferred from capital

Adjustment for unfunded depreciation 1,875,000 2,000,000 2,000,000 625,000

Adjustment from capital for assets revalued down - - - -

Net capital account transfers (1,432,732) (63,107) 1,503,240 625,000

Transfer from (to) the constrained works reserve (1,350)

Transfer from (to) Capital Grants, Subsidies and Contributions (2,121,850) (875,500) (901,765) (990,500)

Retained surplus available for transfer to reserves 3,195,734 1,166,733 2,725,666 835,365

Transfers (to) from reserves for future funding purposes:

Non-capital grants reserve 104,666

Water reserves (439,575) - (1,642,069) (627,702)

Sewerage operating reserve (1,543,096) (1,687,285) (1,988,055) (911,552)

Garbage maintenance reserve (1,317,729) (782,732) (806,214) (510,797)

Retained surplus (deficiency) available for general funding (0) (1,303,284) (1,710,672) (1,214,686)

*CFS - Denotes Capital Funding Statement


Capital Funding Statement


MSC


2013/14 2014/15 2015/16 2013/14

Sources of capital funding Note $ $ $ $

General revenue used for capital purposes 3,307,732 2,063,107 496,760 -

Excess capital revenue transferred from capital to retained surplus

Other capital revenue sources:

External Loan monies expended - - - -

Internal Loan monies expended 900,000 1,234,969 692,902 304,256

Funded depreciation and amortisation 11,365,520 11,764,101 10,433,288 1,615,833

Proceeds from the sale of capital assets 1,077,000 1,583,000 945,500 483,000

Transfers from capital reserve 1,212,450 998,496 1,955,434 54,169

Donated and contributed physical assets - - -

Constrained grants, subsidies and contributions 3,224,980 875,500 901,765 920,500

Constrained public contributions reserve 476,040 2,150,336 2,228,415 105,500

21,563,722 20,669,509 17,654,064 3,483,258

Application of capital funding

Non current capital assets 21,148,075 20,230,440 17,190,908 3,354,002

Principal loan redemptions :

Queensland Treasury Corporation 415,647 439,069 463,156 129,256

21,563,722 20,669,509 17,654,064 3,483,258

TRC

TRC


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Income Statement by Fund


MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Revenue

Rates and utility charges 25,545,665 18,524,563 19,080,300 7,560,666

Less Discounts and Pensioner Remissions (2,907,180) (2,125,055) (2,188,807) (844,000)

Net Rates and Utility Charges 22,638,485 16,399,508 16,891,493 6,716,666

Fees and Charges 1,671,950 1,111,766 1,145,119 421,886

Operating Grants and Subsidies 15,623,990 13,030,617 13,421,535 7,761,032

Operating Contributions 360,000 - - 360,000

Interest Revenue 1,652,254 1,219,005 1,255,575 476,754

Works for Third Parties 5,507,230 1,727,670 1,779,500 3,829,880

Other Revenue 2,681,108 2,019,392 2,079,974 1,205,330


Expenditure

Employee Expenses 22,758,249 16,627,848 17,126,683 7,249,535


Depreciation expenses 9,236,955 8,525,084 8,858,932 2,494,823

Finance and Borrowing costs 282,500 139,207 373,577 37,550

53,110,223 38,811,242 40,283,868 22,611,234


Operating Surplus/(Deficit) (2,975,206) (3,303,284) (3,710,672) (1,839,686)

254,000 254,000 254,000 254,001

Capital Income

Capital Contributions 1,350 - - 1,350

Capital Grants and Subsidies 2,050,500 875,500 901,765 920,500

Profit/(Loss) on Sale of Asset - - - -

Interest on Constrained Works - - - -

2,051,850 875,500 901,765 921,850

Net Result (923,356) (2,427,784) (2,808,907) (917,836)

1,653,100 1,653,100 1,653,100

General Fund

TRC


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Statement of Appropriations by Fund


MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Retained surplus (deficiency) from prior years 1,200,022 - - -

Net result for the period from the statement of financial performance (923,356) (2,427,784) (2,808,907) (917,836)

276,666 (2,427,784) (2,808,907) (917,836)




General revenue used for capital purposes (204,482) - - -


Adjustment for unfunded depreciation 1,875,000 2,000,000 2,000,000 625,000


Net capital account transfers 1,670,518 2,000,000 2,000,000 625,000

Transfer from (to) the constrained works reserve - - - (1,350)

Transfer from (to) Capital Grants, Subsidies and Contributions (2,051,850) (875,500) (901,765) (920,500)

Retained surplus available for transfer to reserves (104,666) (1,303,284) (1,710,672) (1,214,686)

Transfers (to) from reserves for future funding purposes: 104,666 - - -

Retained surplus (deficiency) available for general funding (0) (1,303,284) (1,710,672) (1,214,686)


Capital Funding Statement by Fund


MSC


2013/14 2014/15 2015/16 2013/14

Sources of capital funding $ $ $ $

General revenue used for capital purposes 204,482 - - -

Excess capital revenue transferred from capital to retained surplus - - - -

Other capital revenue sources: - - - -

External Loan monies expended - - -

Internal Loan monies expended 900,000 1,234,969 692,902 304,256

Funded depreciation and amortisation 9,899,520 10,899,848 10,433,288 1,615,833

Proceeds from the sale of capital assets 1,077,000 1,583,000 945,500 483,000

Transfers from capital reserve 1,002,450 998,496 1,955,434 54,169

Donated and contributed physical assets - - -

Constrained grants, subsidies and contributions 3,224,980 875,500 901,765 920,500

Constrained public contributions reserve 325,540 2,150,336 2,228,415 105,500

16,633,972 17,742,149 17,157,304 3,483,258


Non current capital assets 16,441,175 17,535,440 16,935,908 3,354,002


Queensland Treasury Corporation 192,797 206,709 221,396 129,256

16,633,972 17,742,149 17,157,304 3,483,258

TRC

General Fund

General Fund

TRC


A-21




MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Revenue


Less Discounts and Pensioner Remissions - - - -


Fees and Charges - - - -

Operating Grants and Subsidies - -

Operating Contributions - -

Interest Revenue 60,940 43,198 44,494 190,000

Works for Third Parties - - - -

Other Revenue 1,333,516 434,660 447,700 779,024


Expenditure

Employee Expenses 1,150,431 918,333 945,883 258,846


Depreciation expenses 137,362 141,483 145,727 20,651

Finance and Borrowing costs - -

5,165,478 3,621,849 3,730,504 2,017,826


Operating Surplus/(Deficit) 1,600,929 782,732 806,214 510,797

636,100 636,100 636,100 636,100

Capital Income

Capital Contributions

Capital Grants and Subsidies - - - -

Interest on Constrained Works

- - - -

Net Result 1,600,929 782,732 806,214 510,797

636,100 636,100 636,100

Waste Services

TRC


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MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Retained surplus (deficiency) from prior years - - -

Net result for the period from the statement of financial performance 1,600,929 782,732 806,214 510,797

1,600,929 782,732 806,214 510,797




General revenue used for capital purposes (283,200) - - -

Unspent capital revenue transferred from capital - - -

Adjustment for unfunded depreciation - - - -


Net capital account transfers (283,200) - - -

Transfer from (to) the constrained works reserve - - - -

Transfer from (to) Capital Grants, Subsidies and Contributions - - - -

Retained surplus available for transfer to reserves 1,317,729 782,732 806,214 510,797

Transfers (to) from reserves for future funding purposes: (1,317,729) (782,732) (806,214) (510,797)

Retained surplus (deficiency) available for general funding (0) (0) (0) (0)




MSC


2013/14 2014/15 2015/16 2013/14


General revenue used for capital purposes 283,200 0 0 0



External Loan monies expended

Internal Loan monies expended

Funded depreciation and amortisation

Proceeds from the sale of capital assets

Transfers from capital reserve 0 0 - -

Donated and contributed physical assets

Constrained grants, subsidies and contributions 0 0 - -

Constrained public contributions reserve

283,200 0 0 0


Non current capital assets 283,200 0 - -


Queensland Treasury Corporation 0 0 0 0

283,200 0 0 0

TRC

Waste Services

Waste Services

TRC


A-23




MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Revenue




Fees and Charges 30,000 - - 30,000

Operating Grants and Subsidies - - - -

Operating Contributions - - - -


Works for Third Parties 75,000 - - 75,000

Other Revenue - - - -


Expenditure

Employee Expenses 401,546 252,551 260,128 156,932

Materials and Services 1,450,380 952,044 980,605 411,970

Depreciation expenses 1,309,939 1,018,305 1,048,854 321,293

Finance and Borrowing costs 271,156 256,292 - -

3,433,021 2,479,192 2,289,587 890,195



114,200 114,200 114,200 114,200

Capital Income

Capital Contributions -

Capital Grants and Subsidies - - - -

Interest on Constrained Works - - - -

- - - -

Net Result 2,755,946 2,039,645 2,364,815 911,552

114,200 114,200 114,200

Sewerage Services

TRC


A-24




MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Retained surplus (deficiency) from prior years - - - -

Net result for the period from the statement of financial performance 2,755,946 2,039,645 2,364,815 911,552

2,755,946 2,039,645 2,364,815 911,552




General revenue used for capital purposes (1,212,850) (352,360) (376,760) -




Net capital account transfers (1,212,850) (352,360) (376,760) -

Transfer from (to) the constrained works reserve - -

Transfer from (to) Capital Grants, Subsidies and Contributions - - - -

Retained surplus available for transfer to reserves 1,543,096 1,687,285 1,988,055 911,552

Transfers (to) from reserves for future funding purposes: (1,543,096) (1,687,285) (1,988,055) (911,552)

Retained surplus (deficiency) available for general funding (0) (0) (0) (0)




MSC


2013/14 2014/15 2015/16 2013/14


General revenue used for capital purposes 1,212,850 352,360 376,760 0



External Loan monies expended 0 - - -


Funded depreciation and amortisation 1,195,000 - - -


Transfers from capital reserve 0 - - -


Constrained grants, subsidies and contributions - - - -

Constrained public contributions reserve 0

2,407,850 352,360 376,760 0


Non current capital assets 2,185,000 120,000 135,000 -


Queensland Treasury Corporation 222,850 232,360 241,760 0

2,407,850 352,360 376,760 0

TRC

Sewerage Services

Sewerage Services

TRC


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MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Revenue




Fees and Charges - - - -

Operating Grants and Subsidies - - - -

Operating Contributions - - - -


Works for Third Parties 73,530 13,246 13,643 60,670

Other Revenue 160,000 - - 160,000


Expenditure

Employee Expenses 815,058 637,386 656,508 193,290


Depreciation expenses 1,946,611 1,452,159 1,495,724 536,749

Finance and Borrowing costs - - - -

5,423,557 3,453,682 3,557,292 1,828,621



267,800 267,800 267,800 267,800

Capital Income

Capital Contributions - - - -

Capital Grants and Subsidies 70,000 - - 70,000

Interest on Constrained Works

70,000 - - 70,000

Net Result 2,116,775 1,710,747 1,762,069 697,702

667,800 667,800 667,800

Water Services

TRC


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MSC


2013/14 2014/15 2015/16 2013/14

$ $ $ $

Retained surplus (deficiency) from prior years - - - -

Net result for the period from the statement of financial performance 2,116,775 1,710,747 1,762,069 697,702

2,116,775 1,710,747 1,762,069 697,702




General revenue used for capital purposes (1,607,200) (1,710,747) (120,000) -




Net capital account transfers (1,607,200) (1,710,747) (120,000) -

Transfer from (to) the constrained works reserve - - - -

Transfer from (to) Capital Grants, Subsidies and Contributions (70,000) - - (70,000)

Retained surplus available for transfer to reserves 439,575 (0) 1,642,069 627,702

Transfers (to) from reserves for future funding purposes: (439,575) - (1,642,069) (627,702)

Retained surplus (deficiency) available for general funding (0) (0) 0 (0)




MSC


2013/14 2014/15 2015/16 2013/14


General revenue used for capital purposes 1,607,200 1,710,747 120,000 -



External Loan monies expended


Funded depreciation and amortisation 271,000 864,253 - -


Transfers from capital reserve 210,000 - - -


Constrained grants, subsidies and contributions - - - -

Constrained public contributions reserve 150,500

2,238,700 2,575,000 120,000 0


Non current capital assets 2,238,700 2,575,000 120,000 -


Queensland Treasury Corporation 0 0 0 0

2,238,700 2,575,000 120,000 0

TRC

Water Services

Water Services

TRC


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3. 2013 - 2014 LONG TERM FINANCIAL PLAN (2013-2014 / 2022-2023)

3.1 OVERVIEW

Under Section 171 of the Local Government Regulation 2012, & Section 104 of the Local Government Act 2009, Councils are required to have a Long Term Financial Plan as part of their financial management, planning and accountability documents. A long-term financial plan is a document that: (a) outlines the local government’s goals, strategies and policies for managing the local

government’s finances, during the period covered by the plan, including the following policies:

(i) an investment policy; (ii) a debt policy; (iii) a procurement policy; (iv) a revenue policy; and

(b) covers a period of at least 10 years after the commencement of the plan. The Long Term Financial Plan is designed as a ‘high-level’ summarised document towards the future planning of Council’s financial operations – particularly in relation to key components such as rate movements, service levels to our community, future asset maintenance and renewal needs, loan indebtedness and internal cash reserves. On this basis, and given the ‘high-level’ nature of the document, the Plan has been developed based on a number of key assumptions which are outlined in Section 2. Further, Council has endorsed a number of strategic financial policies (refer Section 3) which have also driven the formulation of the Plan. With such a significant fixed asset base, being predominantly comprised of major community infrastructure such as roads, buildings, stormwater drainage, water and wastewater, it is imperative that there is an appropriate link and consistency between the Asset Management Plan and the Long Term Financial Plan. The Long Term Financial Plan incorporates financial projections for future asset maintenance and renewals consistent with that identified as cost-effectively warranted in Council's Asset Management Plan. Section 167 of the Local Government Regulation 2012, also prescribes that Councils must have a long term Asset Management Plan to guide the future replacement, renewal and maintenance of our significant fixed asset. The emphasis of the Act is to shift local government planning processes from the short-term (annual budget) focus to a longer term perspective on the ongoing sustainability of the local government.

3.1.1 Financial Sustainability

3.1.1.1 Definition Sustainability is defined, as follows; "A Local Government is financially sustainable if the Local Government is able to maintain its financial capital and infrastructure capital over the long-term". Under the Act a local government is required to have a long-term financial forecast covering a forward period of at least 10 years.


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3.1.1.2 Why is it important? Financial sustainability is about local governments being able to maintain their infrastructure and financial capital over the long-term. Debt needs to be used sensibly and prudently to fund important infrastructure and this will help local governments achieve the financial sustainability objectives and continue to provide a reliable level of service to the community. To ensure that this occurs, Council must have:

• asset management plans in place, and ensure that the Councillors have considered the services, service levels, costs and risks associated with the services offered;

• the financial forecasts associated with the asset linked to a long-term financial forecast; and

• the local government consistently reviewing its operations, looking for more efficient ways

of delivering their services. 3.1.1.3 How is it measured? The Local Government Regulation 2012 includes the relevant measures of financial sustainability at s.169 (5) (a) to (c). These ratios are further discussed in detail in Section 4.3

3.2 KEY ASSUMPTIONS

The preparation of the Long Term Financial Plan (LTFP) has been based on a number of key assumptions endorsed by Council.

3.2.1 Major Key Assumption Plan – Review changes

Long term financial planning is an iterative process - it occurs on a regular basis and experience suggests that it will take many attempts to ‘get it right’. As new information is included in the planning process – from the latest advice on interest rates to information from the community on expected service standards – the Plans are discussed, reviewed and finetuned. Long Term Financial Plans are developed in order to promote an understanding of the nature of Council revenues and expenditures. From this thinking comes a deeper knowledge and understanding of the needs of the community and the Council. The depth of knowledge and understanding contributes to the ability to roll with the punches’ when change occurs and Plans need to be revised to cope with the unexpected. This Plan is based on existing service levels remaining constant for the next 10 years. With this in mind, each annual review process provides an opportunity to introduce new assumptions or enhance the information base as required. There is an inherent risk that the underlying assumptions may not be appropriate given funding support by State and Federal Governments for example. The review processes will establish the most current knowledge and apply this to the long term financial models. The Plan reflects the decrease in the size of operations from 1 January 2014 resulting from the de-amalgamation of the former Mareeba Shire. The following assumptions below refer to the 2014/15 year moving forward. 3.2.1.1 Operating Income Rates On average, for existing ratepayers this will translate to general rate revenue increases as outlined below:


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• General Rates - increased by 3% per annum • Special Rates & Charges - nil increase • Water Charges - increased by 3% per annum • Sewerage Charges - increased by 3% per annum • Waste Charges - increased by 3% per annum • Discounts - increased by 3% per annum • Pensioner Remissions - increased by 3% per annum

The Rate Revenue increase shown above is the average rate increase, the increase for individual ratepayers will vary from this percentage depending on valuation movements. Fees & Charges

• Fees & Charges to increase by 3% per annum Sales - Contract and Recoverable Works

• Sales - Contract & Recoverable works to increase by 3% per annum. Grants & Subsidies

• Operating Grants to increase by 3% per annum. • Existing ongoing grant funded programs to continue

Investment Income

• Investment Income for deposits held based on cash holding at annual intervals. Other Revenue

• Other Revenue to increase by 3% per annum. 3.2.1.2 Operating Expenditure Employee Costs

• Staff levels will remain constant and staffing costs to increase by 3% p.a Materials & Services

• Materials & Services to increase by 3% per annum

Finance Costs

• Finance costs are reflective of the actual financing costs for the borrowings included in the Plan.

Depreciation

• Depreciation has been calculated using consumption of Council’s assets over their useful lives.

Other Expenses

• Other expenses to increase by 3% per annum. 3.2.1.3 Capital Expenditure Indexing & Revaluation No indexation or revaluation has been applied for expenditure on the construction and/or purchase for renewal /replacement of assets for the life of the Plan.


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3.3 LONG TERM FINANCIAL PLAN STRATEGIES / POLICIES

3.3.1 Funding the Long Term Financial Plan

It is important that Councils have an appropriate funding mix in financing the myriad of services provided to our community. As it is a generally accepted industry practice that recurrent services must be funded solely from recurrent revenue (i.e. a combination of general rate revenue and user charges, etc) and not loan borrowings, key funding decisions rest with the financing of the important replacement/renewal of Council’s significant fixed assets – most notably the extensive road and stormwater infrastructure throughout the district. There are limited funding sources available to Tablelands Regional Council and these include:

• Rates - General, Special & Utility Charges • Fees and Charges • Borrowings • Investment/Interest • Grants & subsidies • Contract & recoverable works - Third Party Works • Disposal proceeds - sale of assets • Reserves - constrained works, general reserves, funded depreciation

The key question is determining what component should be funded from current ratepayers (general rate revenue) or future ratepayers (loan borrowings). Council has adopted a number of policies to provide direction in terms of managing financial affairs with direct impact on the Long Term Financial sustainability of Council. These policies are further defined below:

• Revenue Policy • Investment Policy • Debt Policy (Borrowing) • Procurement Policy

3.3.1.1 Revenue Policy Council has adopted a Revenue Policy which identifies the principles used by Council for making and levying rates and utility charges, exercising powers to grant rebates and concessions, for recovering unpaid amounts of rates and charges and the setting of miscellaneous fees and charges. This policy is included in Appendix A. 3.3.1.2 Investment Policy Council's Investment Policy applies to the investment of all surplus funds held by Tablelands Regional Council. For the purpose of this policy, investments are defined as arrangements that are undertaken or acquired for producing income and apply only to the cash investments of Tablelands Regional Council. This policy is included in Appendix B. 3.3.1.3 Borrowing (Debt) Policy The intent of Council's Debt Policy is to detail the principles upon which Council bases its decisions when considering the type of expenditure to be funded by borrowing for the financial years 2013/14 to 2022/23, the total current and projected borrowings and the ranges of periods over which they will be repaid.


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This policy is included in Appendix C. 3.3.1.4 Procurement Policy This document sets out Council’s policy for the acquisition of goods and services and carrying out of procurement principles. This policy applies to the procurement of all goods, materials, equipment and related services, construction contracts, service contracts (including maintenance) and consultancies. Reference is also made throughout this document to the Guideline for Workplace Health and Safety, Guidelines for Calling Tenders and Administering Contracts and the Guidelines for Engagement and Management of Consultants, each of which must also be complied with in accordance with this policy. This policy is included in Appendix D.

3.3.2 Asset Management

3.3.2.1 Asset Management Policy & Plan As noted in the overview in Section 1, the Local Government Act 2009 prescribes that Councils must have a long term Asset Management Plan as part of its suite of forward planning documents, towards the effective and efficient programmed replacement/renewal and maintenance of the Council’s significant fixed asset stock. An Asset Management Plan provides critical expenditure projections as input for the long-term financial plan. Asset Management Plans have been drafted for the following infrastructure assets:

• Transport (Adopted) • Building and Facilities • Water • Wastewater

Council's Asset Management Policy provides the overall framework for sustainable asset management throughout the Council area ensuring that:

• Assets are effectively and efficiently managed through the course of their life cycle; • Community needs and expectations are satisfied; • Legislative and regulatory requirements are met for asset management; • Best value practices are incorporated in asset management strategies and implementation

activities; • Financial, social and environmental resources are used in a sustainable way; • Exposure to risk is managed through the application of sound operational principles and

practices; and • There is continuous improvement in asset management and service delivery

As part of the continuous improvement Council undertakes an annual organisation wide Maturity Review by a cross-sectional team. The purpose of the review is to measure Council's core maturity against the requirements of the National Asset Management Framework and the planning and accountability documents as prescribed in the Queensland Local Government Act 2009. As a result of this, a progressive approach to improving the Asset Management Plan to a more detailed level, including service level standards has been instigated. It may well result in Council requiring a review of asset replacement / renewal and maintenance funding to that provided for in this update to the long term financial plan. Whilst there will always be community demand for the provision of new and upgraded assets, it is imperative that capital expenditure priority is given to the replacement and renewal of existing assets before considering the construction or purchase of new assets.


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Providing Council has a sound, sustainable financial strategy it should be able to raise additional borrowings to accommodate peak asset management needs. This will minimise whole of life costs of assets and therefore long-run expenses of the organisation. Additionally, with finite financial resources, it is also important that Council give consideration to the disposal of surplus or non-performing assets – thereby releasing financial resources to more appropriate asset management activities. 3.3.2.2 Capital Expenditure Land Capping of two landfill has been allowed for in 2015/16

Land Capital Expenditure

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2013/14 2014/15 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

New

Replacement

Buildings Replacements are in accordance with a independent audit undertaken in 2012/13.

Buildings Capital Expenditure

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2013/14 2014/15 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

New

Replacement

Comment [TRC1]: I'd think Council and the community would prefer to see all expenditure categories (i.e. O&M, Renewal, Upgrade & New) with a brief description of each major capital project for each asset class. These in theory should be sourced from the AMP.

Comment [ET2R1]:


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Plant and Equipment Fleet replacement $61m over ten years.

Plant & Equipment Capital Expenditure

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2013/14 2014/15 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

New

Replacement

Roads Includes Reseals, Resheets and Capital Upgrades

Roads, Drainage & Bridge Network

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

2013/14 2014/15 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

New

Replacement


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Water New Reservoir $2.4m in 2014/15, Atherton Treatment Plant upgrade $2.7m over two years 2018/19 to 2019/20 and various renewals for reticulation, meters, pumps, pipes and valves.

Water Capital Expenditure

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2013/14 2014/15 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

New

Replacement

Wastewater Various renewals for reticulation, telemetry, power, pumps and pipes.

Wastewater Capital Expenditure

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2013/14 2014/15 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24

New

Replacement

3.3.2.3 Asset Sales

With this Plan, asset sales are included for the replacement of existing items along with the disposal of assets surplus to Council requirements, in order to achieve financial sustainability and debt management policy targets are to be met.


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As part of the asset life-cyclic management process, Council replaces existing Fleet. The trade-in received provides income to offset the purchase cost of the new asset. The income included in the Plan for these trade-ins varies from $800K to $1.1M per year for the next ten years. Council has not identified any other assets considered surplus both for the needs of the community and its operations at this time.

3.3.3 Service Delivery Strategy

As outlined in the influences on the preparation of the Long Term Financial Plan, the Plan reflects existing recurrent service levels to our community being maintained. Council’s budget process considers on-going Services Delivery and Commitments and New Expenditure items which can be explained as follows: 3.3.3.1 On-going Service Delivery & Commitments It is the nature of Council expenditures that many of them are regular and on-going, even in the long-term. The Asset Management Plan is a key source of information about such expenditures, along with the repayment schedule for long-term borrowings. To some extent, the on-going commitments are the core of a Council’s long-term financial plan. However, it is essential that such commitments are carefully reviewed to ensure that they are indeed continuing commitments and that if the commitment ceases - e.g. transfer of an asset, long-term borrowing repaid – or the commitment is variable, then the expenditure forecast is adjusted. 3.3.3.2 New Expenditure Items There will always be bids for new expenditures. The key to dealing with these bids is to ensure that consideration is given only to those items which meet the following criteria:

• They meet a clearly defined policy direction of the Council and are reflected in the goals and objectives of the Council as expressed in the Asset Management Plan(s); and

• They are complete – that is, they include information in relation to recurrent and capital expenditures, and the impact of their implementation on future budgets is clearly identified – e.g. a bid for an additional staff member includes salary, salary on-costs, travel, training, support service, office space and other costs or a new piece of Plant includes the purchase cost and the operating costs, including any wages costs for its operation.

It is important that Council regularly reports on (and seeks feedback from) the level of services provided to our community.

3.4 CONSOLIDATED RESULTS

3.4.1 Expenditure / Revenue Analysis

3,4.1.1 Operating Expenditure Analysis (a) Employee Costs Employee costs include all labour related expenses such as wages and salaries, and on costs such as allowances, workers compensation insurance, leave entitlements and employer superannuation. (b) Materials & Services

Materials include payments for physical goods, such as office consumables, water, fuel, electricity and road making materials.


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Contracts include payments for the external provision of services, such as domestic waste collection, plant & machinery hire, cleaning services, and lawn mowing/grass slashing services. (c) Finance Costs

Finance costs cover the costs of financing the Council’s activities through borrowings or other types of financial accommodation. (d) Depreciation Depreciation is an accounting measure which records the consumption of Council’s buildings, road infrastructure, stormwater drainage, plant and equipment, water and wastewater, and other infrastructure assets over their useful lives. 3.4.1.2 Operating Revenue Analysis (a) Rates Rates include revenue from General rates, Special rates and charges and Utility rates/charges (Refuse, Water, Wastewater). (b) Grants & Subsidies Includes grants and subsidies from all sources but excludes grants and subsidies specifically provided for new/upgraded assets. The main grants received by Council include Federal Governments Local Roads and untied general Financial Assistance grants and Disaster Recovery Assistance grants. (c) Investment Income Includes interest earnings on cash reserve funds and surplus funds during the year not immediately required. (d) Fees & Charges

Charges include fees for regulatory services. They are associated with the regulation of an activity (e.g. Development application fees, dog registration fees, etc) or the granting of a permit/licence. Development application fees are determined on an annual basis by Council. Charges also relate to the recovery of service delivery costs through the charging of fees to users of Council’s services. They include hire of community facilities (e.g. recreational facilities, swimming pools, rubbish dump fees, road rents) and cemetery fees. (e) Other Revenue Includes revenue from commercial activities, reimbursements and other sundry minor activities. Commercial activities revenue primarily includes fees received from Council’s commercial waste operations.


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3.4.1.3 Balance Sheet Analysis

Assets (a) Current Assets

Outstanding rates and other debtor balances are not expected to change significantly and are at acceptable levels. (b) Non-Current Assets Non-current assets include ‘fixed’ assets such as Land & Buildings, Infrastructure (e.g. Roads and Stormwater drainage) and Plant and Equipment. An increase in the value of fixed assets will arise from the value of capital improvement works undertaken each year, and will decrease due to depreciation and any sales/disposals of fixed assets. Ideally, there should be a continual increase in Council’s fixed assets over the life of the Plan, consistent with the growth of infrastructure assets (e.g. via new land developments) and the appropriate replacement/renewal of fixed assets over their useful life. Liabilities No borrowings are scheduled to occur over the ten year period. Accumulated Surplus / Funded Reserves The movement in the total of Accumulated Surplus / Funded Reserves is determined by the net operating surplus / (deficit), including capital revenues, illustrated on the budgeted Income Statement – an operating surplus will increase the overall balance whilst a deficit result will reduce it. The Plan reflects the utilisation of internal funded reserves before undertaking external borrowings.


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3.4.2 Financial Reports

3.4.2.1 Budgeted Income Statement


A-39

3.4.2.2 Budgeted Balance Sheet


A-40

3.4.2.3 Budgeted Statement of Cash Flows


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3.4.2.4 Budgeted Statement of Changes in Equity

4.2.4 STATEMENT OF CHANGES OF EQUITY

Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget

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

$ $ $ $ $ $ $ $ $ $

Balance at beginning of period 765,132,847 433,548,508 435,653,848 437,759,188 439,883,379 442,171,500 444,602,898 447,153,124 449,638,007 452,096,505

- - - - - - - - - -

Net result for the period 5,550,294 2,105,340 2,105,340 2,124,192 2,288,121 2,431,398 2,550,226 2,484,883 2,458,498 2,694,113

- - - - - - - - - -

Transfers to reserves - - - - - - - - - -

- - - - - - - - - -

Transfers from reserves - - - - - - - - - -

(309,079,812) - - - - - - - -

Asset revaluation adjustment (28,054,821) - - - - - - - - -

- - - - - - - - - -

Balance at end of period 433,548,508 435,653,848 437,759,188 439,883,379 442,171,500 444,602,898 447,153,124 449,638,007 452,096,505 454,790,619


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

$ $ $ $ $ $ $ $ $ $


Net result for the period 5,550,294 2,105,340 2,105,340 2,124,192 2,288,121 2,431,398 2,550,226 2,484,883 2,458,498 2,694,113

Transfers to reserves (5,422,250) (3,345,517) (5,338,103) (928,818) (956,682) (985,383) (1,014,944) (1,045,393) (1,076,755) (1,109,057)

Transfers from reserves 3,843,336 2,849,532 3,910,814 104,018 138,882 174,723 211,567 249,444 288,383 328,414

(290,313,721)

Asset revaluation adjustment - - - - - - - - -



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

$ $ $ $ $ $ $ $ $ $


Net result for the period - - - - - - - - - -

Transfers to reserves - - - - - - - - - -

Transfers from reserves - - - - - - - - - -

Asset revaluation adjustment (28,054,821) - - - - - - - - -



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

$ $ $ $ $ $ $ $ $ $


Net result for the period - - - - - - - - - -

Transfers to reserves 5,422,250 3,345,517 5,338,103 928,818 956,682 985,383 1,014,944 1,045,393 1,076,755 1,109,057

Transfers from reserves (3,843,336) (2,849,532) (3,910,814) (104,018) (138,882) (174,723) (211,567) (249,444) (288,383) (328,414)

(18,766,092)

Asset revaluation adjustment - - - - - - - - - -


Total

Asset Revaluation Reserve

Other Reserves

Retained Surplus


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3.4.3 Financial Indicators

The Local Government Regulation 2012 includes the relevant measures of financial sustainability at s169 (5) (a) to (c). The measures are to be used to evaluate the financial sustainability of local governments in Queensland. These measures are separately categorised as being related to the sustainability of infrastructure capital and financial capital in accordance with the definition in the Act.

3.4.3.1 Asset Sustainability Ratio

This ratio indicates whether a local government is renewing or replacing existing non-financial assets at the same rate that its overall stock of assets is wearing out. Target: Capital outlays on renewing/replacing assets net of proceeds from sale of replaced assets is greater than 90% of depreciation. The ratio above indicates that Council is renewing and replacing assets as they reach the end of their useful lives – which is often overlooked due to community pressures to establish new assets. 3.4.3.2 Net Financial Liabilities Ratio

This ratio indicates the extent to which the net financial liabilities of a local government can be serviced by its operating revenues. Target: Net financial liabilities ratio is not greater than 60%. Councils net financial liabilities is less than 60% indicating Council has the financial capacity to fund its financial liabilities and to increase its loan borrowings if necessary.

Year Ended Benchmark Asset

Sustainability Ratio

Net Financial Liability

Ratio

Operating Surplus Ratio

Minimum 90% 0% Maximum 60% 10%

30 June 2014 114% 26% 8% 30 June 2015 132% 37% 4% 30 June 2016 110% 36% 4% 30 June 2017 116% 34% 4% 30 June 2018 102% 33% 4% 30 June 2019 112% 32% 5% 30 June 2020 111% 32% 4% 30 June 2021 104% 31% 4% 30 June 2022 108% 30% 4% 30 June 2023 114% 29% 6%

Forecast Period Average

2013/2014 to 2022/2023

112% 32% 5%


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3.4.3.3 Operating Surplus Ratio

This ratio indicates the extent to which revenues raised cover operational expenses only or are available for capital funding purposes or other purposes. Target: To achieve an operating surplus ratio of between 0% and 10% Industry proposed targets are that a Council should achieve an operating surplus ratio over any five year period, as a measure towards ensuring the financial sustainability of Council’s operations in the long term. A positive ratio indicates that surplus revenue is available and may be used to support the funding of capital expenditure or used to offset past or future operating deficits. Council is currently sitting within the target measures.


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4. APPENDICES - LONG TERM FINANCIAL PLAN 2013-2014

4.1 APPENDIX 1 - 2013 - 2014 REVENUE POLICY

4.1.1 POLICY INTENT

To identify the principles used by Council for making and levying rates and utility charges, exercising powers to grant rebates and concessions, for recovering unpaid amounts of rates and charges and the setting of miscellaneous fees and charges.

4.1.2 SCOPE

This policy applies to Tablelands Regional Council and all related business activities.

4.1.3 BACKGROUND/SUPPORTING INFORMATION

This Revenue Policy complies with Section 193 of The Local Government Regulation 2012.

4.1.4 POLICY STATEMENT

4.1.4.1 The Making of Rates and Utility Charges (a) In general it is Council’s policy that a user pays principle applies to all specific services

provided to ratepayers and other users in Tablelands Regional Council. (b) Exceptions to the user pays principle include general services to the community as a whole

when it is in the community interest to do so. (c) Council will have regard to the principles of:

• Transparency in the making of rates and charges; • Having in place a rating regime that is as simple and inexpensive as possible; • Equity by taking account of the different levels of capacity to pay within the local community;

and • Flexibility to take account of changes in the local economy.

(d) In pursuing the abovementioned principles Council may avail itself of the following:

• A system of differential general rating • Minimum general rates • Utility charges • Special rates and charges • Separate charges • Limitation of rate increases (rate capping)

4.1.4.2. Levying of Rates and Charges

In levying rates Council will apply the principles of:

• making clear what is the Council’s and each ratepayers’ responsibility to the rating system (Council may allow a discount for prompt payment);

• making the levying system as simple as possible to administer; • timing the levy of rates where possible to take into account the financial cycle of local economic

activity, in order to assist smooth running of the local economy; and • equity through flexible payment arrangements for ratepayers with a lower capacity to pay.


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4.1.4.3. Concessions for Rates and Charges

In considering the application of concessions, Council will be guided by the principles of:

• equity by having regard to the different levels of capacity to pay within the local community, • the same treatment for ratepayers with similar circumstances; • transparency by making clear the requirements necessary to receive concessions, and • flexibility to allow Council to respond to local economic issues

4.1.4.4. The Recovery of Rates and Charges

(a) Council will exercise its rate recovery powers in order to reduce the overall rate burden on

ratepayers.

(b) It will be guided by the principles of:

• transparency by making clear the obligations of ratepayers and the processes used by Council in assisting them meet their financial obligations;

• making the processes used to recover outstanding rates and charges clear, and as simple to administer and as cost effective as possible (refer to Council’s Debt Recovery Policy);

• capacity to pay in determining appropriate arrangements for different sectors of the community;

• equity by having regard to providing the same treatment for ratepayers with similar circumstances; and

• flexibility by responding, where necessary, to changes in the local economy.

4.1.4.5. The Setting of Miscellaneous Fees and Charges

Council will be guided by the following principles in the setting of miscellaneous fees and charges:

• Fees associated with regulatory services will be set at the full cost of providing the service or taking the action for which the fee is charges. Council may choose to subsidise the fee from other sources if it is in the community interest to do so.

• Commercial services charges will be set to recover the full cost of providing the service and, if provided by a Business of Council, may include a component for return on Council's investment.

This policy is to remain in force until otherwise determined by Council.


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4.2 APPENDIX 2 - 2013 - 2014 INVESTMENT POLICY

4.2.1 POLICY INTENT

To outline Tablelands Regional Council's guidelines regarding the investment of surplus funds, with the objective of maximising earnings within approved risk guidelines, to ensure security of Council funds.

4.2.2 SCOPE

For the purpose of this policy, investments are defined as arrangements that are undertaken or acquired for producing income and apply only to the cash investments of Tablelands Regional Council. This policy applies to the investment of all surplus funds held by Tablelands Regional Council.


Tablelands Regional Council has been granted authority to exercise Category 1 investment power under Part 6 of the Statutory Bodies Financial Arrangement Act 1982.


4.2.4.1 Authority

All investments are to be made in accordance with: Statutory Bodies Financial Arrangements Act 1982 Statutory Bodies Financial Arrangements Amendment Regulation (No. 1) 2013

4.2.4.2 Delegation of Authority

Authority for implementation of the Investment Policy is delegated by Council to the Chief Executive Officer in accordance with the Local Government Act 2009, Section 257 (1)(b) - Delegation of Local Government powers. Authority for the day-to-day management of Council's Investment Portfolio is to be delegated by the Chief Executive Officer to the Manager Finance and subject to regular reviews with the General Manager Corporate and Community Services and Chief Executive Officer.

4.2.4.3 Investment Objectives

Tablelands Regional Council's overall objective is to invest its funds at the most advantageous rate of interest available to it at the time, for that investment type, and in a way that it considers most appropriate given the circumstances. This can include investing in Community Banks even if the rate is not the highest, but within reason, because part of the Banks profits go back into the community to support local projects, groups and organisations. If Community Banks have more than one branch within the Council Region, Council should give consideration to spread funds to all Branches to ensure benefits are gained across the whole community. In priority, the order of investment activities shall be preservation of capital, liquidity, and return.

4.2.4.4 Authorised Investments

This policy entitles the following investments; • Interest bearing deposits • QTC Capital Guaranteed Cash Fund, debt offset facility, fixed rate deposit (up to 12 months

and QTC Working Capital Facility)


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4.2.4.5 Investment Guidelines

The following table shows the credit ratings and counterparty limits for Tablelands Regional Council:

Short Term Rating (Standard & Poor's) or equivalent

Individual Counterparty Limit

Maximum % of Total Investments

A1+ 30% 80% A1 15% 50% A2 - Financial Institutions Only 10% 30% A3 - financial Institutions Only 5% 10% Unrated Nil Nil QTC Pooled Cash Management Fund 100% 100%

A Financial Institution is defined as an authorised deposit-taking institution within the meaning of the Banking Act 1959 (Cwlth), Section 5. The Manager Finance may approve limits for unrated securities after being satisfied that adequate analysis has been performed to demonstrate above average credit quality. It is noted that for the purposes of this investment portfolio, the percentage limits apply effective from the date of purchase as a percentage of the market value of the portfolio.

4.2.4.6 Investment in Financial Institutions within Local Communities

Investments in related financial institutions within local communities by the Tablelands Regional Council shall not exceed 10% of the total percentage of the market value of the portfolio.

4.2.4.7 Maturity

The maturity structure of the portfolio will reflect a maximum term to maturity of one year.

4.2.4.8 Liquidity Requirement

Given the nature of the funds invested, at least 20 per cent of the portfolio can be called at no cost or will mature within 0-7 days.

4.2.4.9 Credit Ratings

If any of the financial institutions' credit rating is downgraded or the credit rating is placed on a negative watch, Council will revise downwards its credit limits or divest the investment as soon as practicable.



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4.3 APPENDIX 3 - 2013 - 2014 BORROWING POLICY

4.3.1 POLICY INTENT

The intent of this policy is to detail the principles upon which Council bases its decisions when considering the type of expenditure to be funded by borrowing for the financial years 2013/14 to 2023/24, the total current and projected borrowings and the ranges of periods over which they will be repaid.

4.3.2 SCOPE

This policy applies to all borrowing of the Council.


Pursuant to Section 192 Local Government Regulation 2012, Council’s adopted Policy on Borrowings for the period 2013/14 to 2023/24 is set out below.


The Council will not use long-term debt to finance current operations. Long term debt is only to be used for income producing assets or those assets that can be matched to a revenue stream. Consequently repayments for the borrowings will be funded from the revenue streams generated by the asset acquisition in question. Consideration must also be given to the long-term financial forecast before planning new borrowings. Council will utilise long-term borrowing only for capital improvement projects that cannot be financed from existing sources. Capital projects are to only be undertaken after a thorough process of evaluation (including whole of life costing and risk assessment), prioritisation and review. When Council finances capital projects through borrowings it will generally pay back the loans in a term not exceeding 20 years. However in certain circumstances particularly assets with long useful lives borrowings may be for a longer period whereby repayments would match the income stream of the asset in question. Existing loans will be paid back within the fixed term provided for in the loan agreement. Council will continue to ensure repayment schedules are well within Council’s operating capability so as to ensure the Community is not burdened with unnecessary risk. Projected Future Borrowing Predictions:

Year Project Term Borrowings

2013/14 - -

2014/15 - -

2015/16 - -

2016/17 - -

2017/18 - -

2018/19 - -

2019/20 - -

2020/21 - -

2021/22 - -

2022/23 - -

2023/24 - -


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Level of Existing Debt - As at the 30 June 2013 Tablelands Regional Council's outstanding loan balance is estimated to be $8.6m.



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4.4 APPENDIX 4 - 2013 - 2014 PROCUREMENT POLICY

4.4.1 POLICY INTENT

This document sets out Council’s policy for the acquisition of goods and services and carrying out of procurement principles. This policy applies to the procurement of all goods, materials, equipment and related services, construction contracts, service contracts (including maintenance) and consultancies. Reference is also made throughout this document to the Guideline for Workplace Health and Safety, Guidelines for Calling Tenders and Administering Contracts and the Guidelines for Engagement and Management of Consultants, each of which must also be complied with in accordance with this policy. All Council purchases must be carried out in compliance with the Local Government Act 2009 (the “Act”) and the Local Government Regulation 2012 (the "Regulation"). In particular, Chapter 4, Part 3 Financial Sustainability and Accountability, section 106 – Sound Contracting Principles of the Act and Chapter 6, Part 3 – Default contracting procedures of the Regulation applies. Council's policy is to support local businesses and industries where practicable to support the viability of local businesses in all townships within the Tablelands Regional Council area.

4.4.2 SCOPE

4.4.2.1 Employees

All Council employees responsible for purchasing goods and services of any kind must comply with this policy. It is the responsibility of Council employees involved in the procurement process to understand the meaning and intent of this policy. Council employees must undertake procurement activities in accordance with their delegation of authority. Failure to comply with the substance and intention of the Act or Finance Regulations may constitute a significant breach of Council’s Code of Conduct and could carry significant consequences. Employees are responsible for familiarising themselves with Council’s policies, guidelines and procedures, as a failure to do so may be accepted as grounds for a breach. Some of these include: • Guideline for Workplace Health and Safety Procurement • Guideline for Calling Tenders and Administering Contracts • Guideline for Engagement of Consultants • Advertising Spending Policy • Entertainment and Hospitality Policy • Petty Cash procedures • Non-Current Asset Policy • Gift and Interests Register • Code of Conduct A number of examples of procurement practices which Council deems to be breaches of this policy are included at Schedule 3. 4.4.2.2 Procurement Team

The Procurement Team has been established to contribute a monitoring and oversight role to the procurement activity. The responsibilities of this team include, but are not limited to - training employees in the use of Council's electronic purchasing order system and relevant policies and procedures; reviewing purchase requisitions for compliance with the Procurement Policy (and other relevant policies and guidelines) prior to releasing them; undertaking compliance checks and reporting findings to management. Council has introduced a number of measures to monitor compliance with this policy and its associated guidelines. Monitoring will occur on an ongoing basis at an officer and department level to identify and track instances, patterns and recurrence of breaches, for training purposes and, where repeated, formal performance management. This responsibility will be assumed by the Procurement Team.


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4.4.2.3 Management/Supervisors

Instances of breaches identified by the Procurement Team are to be reported to the employees manager/supervisor as soon as is practicable. The manager/supervisor will negotiate a preferred method of handling the situation with the Procurement representative, which may initially involve further training to be carried out by the Procurement Team, however repeated instances may lead to disciplinary action.


Council’s procurement and contracting activities aim to achieve advantageous outcomes for the organisation and the community by following the Sound Contracting Principles mandated in the Act. Sound Contracting Principles (SCP) are: 1. Value for Money; and 2. Open and Effective Competition; and 3. The Development of Competitive Local Business and Industry; and 4. Environmental Protection; and 5. Ethical Behaviour and Fair Dealing. In accordance with Finance Regulations, this policy defines the requirements to be complied with when undertaking procurement activities on behalf of the Council.


4.4.4.1 Sound Contracting Principles

Council employees must have regard to the following contracting principles in all procurement activities:

4.4.4.2 Value for Money Council must harness its purchasing power to achieve the best value for money. The concept of value for money is not restricted to price alone. The value for money assessment must include consideration of: • contribution to the advancement of Council’s priorities; and • fitness for purpose, quality, services and support; and • whole-of-life costs including costs of acquiring, using, maintaining and disposal; and • internal administration costs; and • technical compliance issues; and • risk exposure; and, • the value of any associated environmental benefits; and • the value of building or maintaining capacity in-house; and • utilisation of existing inventory items/consumables held in stores/workshop. 4.4.4.3 Open and Effective Competition

Purchasing should be open and result in effective competition in the provision of goods and services. Council must give fair and equitable consideration to all prospective suppliers. 4.4.4.4 Development of Competitive Local Business and Industry Council encourages the development of competitive local businesses and industry within the Tablelands Regional Council. Local Business Preference In accordance with section 106(3)(c) of the Act, Council wishes to pursue the principle and objectives of enhancing the capabilities of local business and industry as part of the process of making its purchasing decisions. For this purpose local suppliers shall be allowed certain concessions in respect to contracted arrangements:


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I. Price Prices offered by local suppliers shall be considered to be comparable with non-local suppliers where the local supplier’s offered price is no more than 10% higher (up to the tolerance of $5,000) than the lowest priced offered. (Eg the local supplier can be evaluated as price comparable when the local supplier price is less than or equal to the non-local supplier price, excluding GST + 10%, where the 10% margin is less than $5,000.)

II. Local Business Development

In the evaluations of tenders or offers, Council may attribute a portion of the selection criteria to local business preference. The score weighting applied to the local business preference criteria shall be no more than a 10% weighting within the overall criteria (100%).

In order to apply the Local Business Preference component, employees must seek and evaluate tenders and offers from non-local suppliers. It is not intended that this preference be granted at officer discretion. In this policy, a “Local Supplier” is a supplier that: • is beneficially owned by persons who are residents or ratepayers in the Tablelands Regional Council;

or • has its principle place of business/registered office within the Tablelands Regional Council; or • otherwise has a place of business within the Tablelands Regional Council which solely or primarily

employs persons who are residents or ratepayers of the Shire.

In this policy, a “Non-Local Supplier” is a supplier that is not a local supplier. Subject to the local business preference principles above, where price, performance, quality, suitability and other evaluation criteria are comparable, the following areas may be considered in evaluating offers and tenders: • creation of local employment opportunities; • more readily available servicing support; • more convenient communications for contract management; • economic growth within the local area; and • benefit to Council of associated local commercial transaction

4.4.4.5 Environmental Protection

Council promotes environmental protection through its purchasing procedures. In undertaking any purchasing activities Council will: (i) Promote the purchase of environmentally friendly goods and services that satisfy value for money

criteria; and (ii) Foster the development of products and processes of low environmental and climatic impact; and (iii) Provide an example to business, industry and the community by promoting the use of climatically and

environmentally friendly goods and services; and (iv) Encourage environmentally responsible activities; and (v) Endeavour to reduce, recycle and reuse surplus and scrap materials.

4.4.4.6 Ethical Behaviour and Fair Dealing

Council employees involved in purchasing are to behave with impartiality, fairness, independence, openness, integrity, and professionalism in their discussions and negotiations with suppliers and their representatives. All employees must:

(i) Perform the procurement task honestly and without favour or prejudice; and

(ii) spend Council funds efficiently and effectively and in accordance with the law and Council policy; and

(iii) deal fairly, impartially and consistently with suppliers and prospective suppliers; and

(iv) keep confidential all sensitive information obtained as part of the procurement activity; and

(v) not have an actual conflict of interest in relation to the procurement activity; and

(vi) not seek or accept any remuneration, gift or advantage.


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The use of probity advisors or probity auditors shall be considered where the large-scale procurement arrangement is sensitive, highly complex, of public interest or likely to be challenged.

4.4.4.7 Compliance with TRC Workplace Health and Safety Procurement Procedures To ensure compliance with • Workplace Health and Safety Act 1995, • Workplace Health Safety Regulation 2008

• ISO 30001 and AS/NZS 4360:2004 Standards on Risk Management, Council employees involved in purchasing are to abide by Council's Workplace Health and Safety Procurement procedures (Guideline – WHS Procurement Requirements).

4.4.5 PROCUREMENT THRESHOLDS - GOODS & SERVICES

4.4.5.1 Purchases Under $15,000 (Exclusive OF GST)

All purchases must be duly authorised by an officer with a financial delegation up to their authorised limit as listed in Schedule 1. Purchase requisitions and orders must be raised in Council's electronic purchase order system. In cases where an identified need exists for purchases to be made outside of normal working hours or in cases of emergency, a Manual Purchase Order (“Field Order”) may be used. Please note that all purchases made as an emergency must retrospectively reported to Council. Employees must comply with the Section 106 – Sound Contracting Principles under the Act, irrespective of the size of the procurement. Requisition and order splitting to reduce the value of one larger procurement transaction in to a number of small transactions, in strictly prohibited by this policy. Employees shall aggregate procurement of like materials and services to the extent possible in order to obtain better value for money from suppliers. Procurement of items and services on a piecemeal basis is generally not accepted.

4.4.5.2 Minor and Petty Cash purchases up to $100 (Exclusive of GST)

Purchases of minor amounts of goods and services to the value of $40 may be made from petty cash as an expense reimbursement. However, expense reimbursements of up to $100 may be made by petty cash where an emergency or immediate payment is required. Petty cash reimbursements are to be made only when a petty cash voucher has been completed and duly supported by relevant documentation and approved by an authorised person other than the person making the claim. Normal expenditure such as telephone/mobile phone reimbursement is to be made through an expense reimbursement claim to accounts payable and duly supported by relevant documentation. These types of transactions shall not be paid through Petty Cash. Please refer to the Petty Cash Procedures for further information. 4.4.5.3 Purchases up to $2,000 (Exclusive of GST)

Purchases of goods and services to the value of $2,000 must be raised in Council's electronic purchase order system. There is no requirement for multiple quotes for purchases up to $2,000. Low value items (purchases valued at less than $2,000) may be made by corporate credit card where purchases are irregular and where it is more cost effective to do so. 4.4.5.4 Purchases between $2,000 and up to $15,000 (Exclusive GST)

Goods and services acquired between the values of $2,000 and $15,000 (Ex GST) must be made through the Council's electronic purchase order system.


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Goods or services to this value require a minimum of two (2) written (or faxed/emailed) quotes except where the acquisition was an emergency purchase or acquired from a sole-supplier or under a formal preferred supplier arrangement. Details of quotes are to be input into the purchase requisition, attached to the requisition and provided to the authorising officer for evaluation either electronically or in hardcopy. In cases of a genuine emergency or where a sole supplier exists a notation shall be included in the electronic purchase order system field. Where a preferred supplier arrangement is being used, the contract number of the preferred supplier arrangement shall be placed in the relevant field within Council’s electronic purchase order system.

4.4.6 MEDIUM SIZED CONTRACTS - PURCHASES BETWEEN $15,000 AND UP TO $200,000 (EXCLUSIVE OF GST)

4.4.6.1 Purchases between $15,000 and $50,000 (Exclusive of GST)

Section 225 of the Regulation states that a local government can not enter into a medium-sized contract unless it first invites written quotes for the arrangement, and requires that:

(i) The invitation must be given to at least 3 persons/entities who the local government considers can meet the requirements, at competitive prices, and

(ii) The local government may decide not to accept any of the quotes received.

(iii) If the local government does decide to accept a quote, it must accept the quote most advantageous to the organisation, having regard to the sound contracting principles in section 106.

(iv) Certain exceptions to the above requirements exist. See section 5.6 of this policy for further details.

Records of offers received must be kept on file along with decisions made regarding sound contracting principles, input into the purchase requisition and provided to the authorising officer for evaluation. In relation to the purchase of fleet and plant, a minimum of three (3) sealed quotations must be sourced for each and every asset under $200,000, no matter it's purpose. Where a supplier is invited to quote and the same manufacturer has an alternate representative within Tablelands Regional Council they must also be invited to quote. When inviting suppliers to quote the originator must ensure that all suppliers for that particular asset are invited to quote. Specifications must not be developed as to advantage or disadvantage a supplier therefore creating anticompetitive behaviour. The only exception to this is for vehicles being sourced for the CEO, General Managers and Managers. These purchases are to be done so in accordance with the Vehicle Policy and are to be treated as Medium Sized Contracts. Where purchases of fleet and plant are $200,000 or above they are to be treated as Large Sized Contracts. 4.4.6.2 Purchases between $50,000 and $200,000 (Exclusive of GST)

Section 225 of the Regulation states that a local government can not enter into a medium-sized contract unless it first invites written quotes for the arrangement, and requires that:

(i) The invitation must be given to at least 3 persons/entities who the local government considers can meet the requirements, at competitive prices, and these quotes must be sealed and be delivered via the Tender Box or Electronic Tender Box.

(ii) Suppliers are to be given a minimum of seven (7) days to provide their quotation.

(iii) The local government may decide not to accept any of the quotes received.

(iv) If the local government does decide to accept a quote, it must accept the quote most advantageous to the organisation, having regard to the sound contracting principles in section 106.

(v) Certain exceptions to the above requirements exist. See Section 5.6 of this Policy document for further details.

Please refer to the Guideline for Calling Tenders and Administering Contracts for further information.

Records of offers received must be kept on file along with decisions made regarding sound contracting principles, input into the purchase requisition and provided to the authorising officer for evaluation.


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4.4.7 LARGE SIZED CONTRACTS - PURCHASES ABOVE $200,000 (EXCLUSIVE OF GST)

Section 226 of the Regulation states that a local government can not enter into a large-sized contract unless it first invites written tenders in accordance with section 228. Section 228(2) requires that Council invite written tenders under section 228(4) or invite expressions of interest under section 228(5) before considering whether to invite written tenders. Please refer to the Guideline for Calling Tenders and Administering Contracts. 4.4.7.1 Invitations to Tender

Section 228(4) specifies the invitation must be advertised in a newspaper circulating generally in Council’s local government area and allow at least 21 business days after the day of the advertisement for the submission of tenders. If Council changes its tender specifications, and the original Invitation to Tender documentation allows Council to later invite all tenderers to change their tenders to take into account changes in tender specifications, Council may invite all tenderers to change their submissions before a decision is made. Tenders are to be submitted to the Tender Box or Electronic Tender Box. Records of tenders received must be kept on file, entered into Council’s electronic purchase requisition and provided to the authorising officer(s) for evaluation. Council may decide not to accept any tenders it receives, however if it does decide to accept a tender, it must be the most advantageous to Council having regard to the Sound Contracting Principles in Section 4 of this Policy document.

4.4.7.2 Expressions of Interest Invitations

Section 228(3)(a) & (b), requires that where Council believes that it would be in the public interest to invite expressions of interest before seeking written tenders, this decision must be formally resolved and recorded in minutes. The Expression of Interest invitation must be advertised in a newspaper circulating generally in Council’s local government area and allow at least 21 days after the day of the advertisement for the submission of tenders. Under Section 228(6), if Council invites Expressions of Interest, the local government may prepare a shortlist and invite written tenders from shortlisted parties. 4.4.7.3 Variations to Tender or Contract

Variation Procedures are as follows:

(i) Each variation can only be approved by the relevant officer up to their authorised financial delegation then by a Manager or General Manager with the appropriate financial delegation.

(ii) A signed variation authorisation form is to be attached to the requisition (iii) Each variation requires an additional requisition to the original project purchase order stating the

original purchase order number in the comments. (iv) A separate invoice is to be receipted.

Approved Variations:

(i) The paragraph below details Council's policy for a post acceptance variation, that is, a variation of a contract after acceptance (by Council or its delegate) of a relevant tender or quotation as distinct from a variation of Council specification (which forms part of an invitation to tender or quote) prior to acceptance.

(ii) When considering any variation, the question is one of whether or not the variation, in substance,

alters the nature of the contract (already entered into by Council) such that further or more favourable


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tenders or quotations (depending on whether the cost is more or less than $200,000) may have been received if the changed specification had been:

a. Advertised - in the case of a tender; or b. Distributed - in the case of a quotation.

(iii) This question applies regardless of whether Council has made a contract for the carrying out of work, or the supply of goods or services, involving a cost of more or less than $200,000. In other words, the question applies regardless of whether Council entered into the contract after a tender or quotation process.

(iv) Subject to the constraints identified in paragraph (ii) and (iii), so long as the cost of the variation to

the original purchase order or contract amount is within budget and the financial delegation of the officer responsible for the approval of the variation, the officer is authorised to approve the variation subject to the following:

a. for an original purchase order involving cost between $50,000 and $200,000, if the cumulative

value of the variations exceeds 20% of the value of the original purchase order or $20,000 which ever is the lesser, that variation and all further variations must be authorised by a Manager or General manager.

b. for an original purchase order involving a cost of more that $200,000, if the cumulative value of

variations exceeds 10% of the value of the original purchase order or $220,000, whichever is the lesser, that variation and all further variations must be authorised by a Manager or General manager.

4.4.8 SUMMARY OF PROCUREMENT THRESHOLDS

Purchase of Goods and Services

Exclusive of GST Inclusive of GST Documentation required Less than $2,000 Less than $2,200 One (1) Verbal Quote $2,000 to $15,000 $2,200 to $16,500 Two (2) Written Quotes $15,000 to $50,000 $16,500 to $55,000 Three (3) Written Quotes $50,000 to $200,000 $55,000 to $220,000 Three (3) Written Sealed Quotes Greater than $200,000 Greater than $220,000 Sealed Tenders

4.4.9 ASSESSING PROCUREMENT VALUE

For procurement arrangements likely to exceed $150,000, employees shall perform a risk assessment to ascertain whether the entire contract value could exceed the minimum large-sized contracting threshold of $200,000 (Exclusive of GST), before inviting written quotations. Where it is possible that the value of the contractual arrangement could exceed $200,000, employees shall invite tenders or expressions of interest. Invitations to tender or submit expressions of interest shall be used for all Schedule of Rates/Bill of Quantities arrangements likely to exceed $200,000. The entire contract value includes contracted sum, possible variations, possible project overruns, project contingencies, retainers and retentions. Where, after written quotations have been received, it is clear that the arrangement value will exceed $200,000 (Ex GST), employees shall return to the market inviting formal tenders or expressions of interest. In this instance please refer to the Guidelines for Calling Tenders and Administering Contracts.

4.4.10 EXCEPTIONS TO REQUIREMENTS TO INVITE WRITTEN QUOTATIONS & TENDERS

The following exceptions apply to medium-sized contracts (value between $15,000 - $200,000) and large-sized contracts (value over $200,000).


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4.4.10.1 Register of Pre-Qualified Suppliers - Section 232, Regulations

The organisation may enter into an arrangement without first inviting tenders or quotations if it is entered with a supplier from a register of pre-qualified suppliers only where a register of pre-qualified suppliers has been determined by Council resolution. A register of pre-qualified suppliers of particular goods or services may be established only if:

(a) the preparation and evaluation of invitations each time the goods or services are needed would be costly; or

(b) the capability or financial capacity of the supplier of the goods or services is critical; or (c) the supply of the goods or services involves significant security considerations; or (d) a precondition of an offer to contract for the goods or services is in compliance with particular

standards or conditions decided by Council; or (e) the ability of local business to supply the goods or services needs to be identified or developed. A Pre-Qualified supplier is a supplier who has been assessed by the local government as having the technical, financial and managerial capability necessary to perform contracts on time and in accordance with agreed requirements.

4.4.10.2 Preferred Supplier Arrangements – Section 233, Regulations

The organisation may enter into an arrangement without first inviting tenders or quotations if the Council, only where a preferred supplier arrangement has been determined by Council resolution, where Council:

(a) Needs goods or services in large volumes on a frequent basis; and (b) Is able to obtain better value for money by accumulating the demand for goods and services; and (c) Is able to describe the goods and services in terms that are well understood in the relevant industry;

and (d) Tenders are invited for the preferred supplier arrangement describing the terms of the preferred

supplier arrangement and are in accordance with section 7.1 or 7.2 above; and (e) Applies the sound contracting principles in section 4 above; and (f) Includes terms that allow the contract to be terminated for poor performance; and (g) Is entered into for a term for more than 2 years only if the Council is satisfied that the organisation

will achieve better value by doing so.

4.4.10.3 Other Exceptions – Section 235, Regulations

Section 235 of the Regulations specifies that Council can only enter a medium or large sized contract without first inviting quotes or tenders if: (a) Council resolves that it is satisfied that there is only one supplier reasonably available to it; or (b) Council resolves that, because of the specialised or confidential nature of the services that are

sought, it would be impractical or disadvantageous for the local government to invite quotes or tenders; or

(c) a genuine emergency exists; or (d) the contract to purchases goods is made at an auction; or (e) the contract is for the purchases second-hand goods; or (f) the contract is made with, or under an arrangement with a government body.

Sole Supplier is defined as a supplier of goods or services that no other suppliers can provide or with the constraints of distance it not being viable for other suppliers to compete for the supply of goods or services. Employees are to comment on how they achieved the knowledge that a supplier is sole supplier with references to communication and description why. Emergent works considered as late notice of requirements to purchase but still require the full provisions of the purchasing policy. Emergent works that are urgent due to emergency events such as a disaster require an event to be declared by the state or federal governing bodies, otherwise by a General Manger can declare the transactions as emergency and only for a short period after the event.


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4.4.10.4 Exception for LGA Arrangement – Section 234, Regulations

Under this provision the organisation may enter into an arrangement without first inviting written quotes or tenders if the contract is an LGA arrangement. An LGA arrangement is one that has been entered into by LGAQ Ltd or an associate entity which LGAQ Ltd is the only shareholder, such as Local Buy which is the Local Government Association of Queensland’s procurement services company. The term Local Buy does not mean Council’s local business preference described in section 4(c) of this policy.

4.4.10.5 Exception for Tender Consideration Plan – Section 230, Regulations The Council may enter into a contract without first inviting written quotes or tenders if Council decides, by resolution, to prepare a quote or tender consideration plan and formally prepares and adopts the plan. A quote or tender consideration plan is a document stating:

(a) the objectives of the plan; and (b) how the objectives are to be achieved; and (c) how the achievement of the objectives will be measured; and (d) any alternative ways of achieving the objectives, and why the alternative ways were not adopted; and (e) the proposed terms of the contract for the goods or services; and (f) a risk analysis of the market from which the goods or services are to be obtained.

4.4.10.6 Exception for Contractor on an Approved Contractor list – Section 231, Regulations

The exception to seek written quotations and tenders from Contractors is available if Council has an Approved Contractor list and adheres to the following requirements when making the Contractor list:

(a) inviting expressions of interest from suitably qualified persons, by an advertisement in a newspaper that circulates generally in the local government area; and

(b) allowing expressions of interest to be given to the local government for at least 21 days after the invitation is advertised; and

(c) choosing persons for the approved contractor list on the basis of the sound contracting principles.

4.4.11 Electronic & Paper Tendering

Tender submissions may be made electronically via electronic tender boxes (where this option is provided) or made on printed official tender documents. The same terms and conditions will apply to either method of submission and the tender process must be strictly adhered to at all times.

4.4.12 Australian Business Registration Number (ABN)

Council will only procure from suppliers who can provide an ABN. The only exception to this will be where a supplier is eligible to complete the Australian Taxation Office Statement by a Supplier form, and provides the completed form to Council prior to making the supply or providing the service to Council. This exemption may apply in the following circumstances: (a) A supplier under 18 years of age and the payment does not exceed $120 a week (b) A payment of less than $75 (excluding GST) (c) A supply that is wholly input taxed (d) A supplier who has provided a statement that the supply is done as a hobby or a domestic or

private nature. (e) A supplier who does not expect to make a profit or gain (f) A supplier who is not entitled to an ABN as they are not carrying on a enterprise in Australia (g) A payment that is exempt income for the supplier.


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4.4.13 Publish details of contracts worth $200,000 (EXclusive of GST) or more

Section 237 of the Regulations requires that as soon as practicable after entering the contract, a local government must publish relevant details on the Council’s the website and display relevant details conspicuously in the Council’s public office. The relevant details required to be published are:

(a) the person or entity with whom Council contracted; and (b) the value of the contract; and (c) the purpose of the contract

4.4.14 Delegations

The attached Schedule 1 lists the positions and authorised financial delegation limits assigned to each department. The positions so listed are authorised to contract on behalf of Council or sign requisitions, for expenditure up to their financial delegation limits. By signing a requisition/purchase order all employees are confirming that they have taken full notice of this policy and will comply with all of the requirements of this policy. A good internal control system in the procurement process requires a separation of duties such that the whole process from requisitions to payments cannot be completed by one person. To enforce internal control, a small number of employees will be provided with the delegation to release a purchase order. The main function of this delegation is to check and ensure that Council's procurement policies listed above have been adhered to before releasing the purchase order. These employees will not be able to raise a purchase requisition themselves but may have a financial delegation to authorise purchases up to the limit set out in Schedule 1 (this is necessary due to the dispersed work locations of the Tablelands Regional Council). Similarly, specific functions enforced by Council's corporate purchasing system require delegated authority to perform these functions for example: ability to authorise the posting of large batches and journals and invoice matching. This delegated authority is also noted in Schedule 1

4.4.15 Corporate Credit Cards

Corporate Credit Cards will be issued to each Human Resources Manager, General Manager, Chief Executive Officer and Mayor if they choose to have one, for credit purchases made on behalf of Council up to a limit of $5,000. The cardholder will be personally responsible for the card's security and any disputed charges are the responsibility of the cardholder to resolve. Low value items (purchases valued at less than $2,000) may be made by corporate credit card where purchases are irregular and where it is more cost effective to do so. SCHEDULE 1 - PROCUREMENT DELEGATION LIMITS (EXCLUSIVE OF GST)

Delegation Level Position

$1,000,000 • Chief Executive Officer $200,000 • GM Infrastructure & Maintenance

• GM Corporate & Community Services $150,000

• GM Planning & Development • Manager Construction & Maintenance • Manager Water, Wastewater & Waste Operations • Manager Parks & Conservation • Manager Project Delivery • Manager Plant & Facilities

$100,000

• Manager Finance • Manager HR • Manager Customer & Community Services • Manager Information Management

$80,000 • Stores Coordinator


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Delegation Level Position

$50,000

• Manager Urban & Regional Planning • Manager Regulatory Services • Manager Corporate Planning, Performance & Risk • Infrastructure & Maintenance Coordinators • Project Delivery • Senior Stores Officer • Senior Fleet Administration

$30,000

• Corporate & Community Services Coordinators • Planning & Development Coordinators • Office of the Mayor/CEO Coordinators • Workshop Supervisors

$20,000 • Infrastructure & Maintenance Supervisors/Foremen • Fleet Administration

$10,000 • Corporate & Community Services Supervisors • Planning & Development Supervisors • Office of the Mayor/CEO Supervisors

$5,000 • Senior Administration staff $2,000 • Administration staff $500 • Other staff The Local Disaster Coordinator has delegated authority to expend funds during disaster events up to a maximum of $10,000 in a single purchase and up to $50,000 in total without further reference to the Executive Management Team.

All contracts for the acquisition of goods and services in excess of $200,000 are to be authorised by Council. All contracts for the acquisition of consultants in excess of $50,000 are to be authorised by Council. The following privileges are to be applied to the following roles: Approval & Posting Journals/Batches in excess of $1,000,000

• Manager Finance • Financial Accountant

Invoice Matching/Processing Invoices against Orders • Accounts Payable Officers Purchase Order Releasing • Procurement Officers

• Manager Finance SCHEDULE 2 – CORPORATE CREDIT CARD HOLDERS

Positions authorised for Corporate Credit Card

• Mayor • Chief Executive Officer • General Manager Infrastructure & Maintenance Services • General Manager Corporate & Community Services • General Manager Planning & Development • Human Resources Manager

SCHEDULE 3 – EXAMPLES OF POLICY BREACHES The following list represents examples of common procurement practices that constitute a breach of this policy. This list in not intended to be exhaustive and provides guidance only.

• Inappropriate use of field orders - When employees have access to computers but do not prepare requestions on the system or choose to use field orders for convenience or need to use field orders due to poor planning on projects.

• Requisition/Order splitting – Where the total value of a procurement transaction is broken into smaller pieces (“split”) to bring the value under a certain level to remain within an officer’s delegation limit or fall into a less onerous procurement category.

Comment [M.H3]: This is normal manager level which is OK in an event


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• Failure to utilise stock, consumables and standardised equipment acquired by Council In an attempt to achieve value for money and standardise equipment, Council aggregates common use items to the extent possible. Common use items may be acquired in bulk, such as stationery, for all employees to utilise on an as needed basis. Failure to use the items already procured by Council and acquire similar items to suit individual preferences represents unnecessary, inappropriate expenditure (irrespective of whether a budget exists for such items) and does not represent a legitimate business need.

• Inaccurate/inappropriate use of sole supplier provision – The use of the term “sole supplier” to justify procurement where an officer feels that there is only one qualified supplier in the market is inaccurate and inappropriate and fails to abide by the sound contracting principles within this policy. Sole supplier status can usually only be demonstrated by testing the market through request for quotations or tenders from various parties.

• Inaccurate/inappropriate use of “local buy” arrangements – Attributing the status of “local buy” to Council’s local business preference and failing to obtain quotations or tenders on the basis that Council is required to spread its procurement amongst the suppliers within the TRC district. Failure to obtain the relevant numbers of quotes or seek tenders is in direct contravention of the Finance Regulations and Council’s policy. The only legitimate mechanism Council has to obtain services in a Local Buy arrangement is from the LGAQ Local Buy service.

• Inappropriate use of “emergency” procurement provisions – Failure to adequately plan or schedule projects and procurement needs resulting in the inability to undertake formal tendering and quotations due to time pressure does not constitute “emergency” procurement. All emergency procurement must be retrospectively approved by Council irrespective of the reason it was required.

• Historical or informal contracting arrangements – Ad hoc, informal or historical supplier arrangements that have developed over many years are a breach of this policy. All arrangements with suppliers must be contracted either through quotation or tender, or satisfy the tests for exceptions detailed in the policy.

• Unauthorised or implicit contract extensions – Failure to track and renew contracts that have expired, whilst continuing to utilise the supplier’s services. All contracting arrangements entered by Council have expiry dates including preferred supplier and pre-qualified supplier arrangements. The expiry dates may be detailed within the contract or cease when a specific procurement activity or project is fulfilled.

• Knowingly creating inaccurate purchase orders - To generate a purchase order number simply to provide to a supplier and then amending/varying the purchase order at a later time to reflect the actual price on the invoice.

• Procuring items without a purchase order – Subsequently creating or directing the creation of a purchase order after the invoice has been received. This example does not apply to utilities invoices, bank charges, loan payments, employee expense claims, which are legitimately processed without purchase orders.

• Acceptance of low value gifts, promotional material, items of interest, giveaways, hospitality, loyalty bonuses, prizes, supplier events, free or discounted tickets etc – Which could be perceived to engender favour or promote bias when inviting quotations or awarding contracts, irrespective of value, or when aggregated these items exceed the dollar thresholds for declaration in Council’s Gifts and Interests register.



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ATTACHMENT 1 - OPERATIONAL PLAN


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Budget Report 2013 2014 Vol 1

Documents

Transcript of Budget Report 2013 2014 Vol 1