CHAPTER 6: Resourcing Strategy

Integrated Strategic Plan 2017CHAPTER 6: Resourcing Strategy

SHOALHAVEN CITY COUNCIL | Integrated Strategic Plan 2027

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Contents1 WORKFORCE PLANNING 2791.1 Purpose 279

1.2 Overview 279

1.3 Workforce Trends & Needs 279

1.4 Current Workforce Challenges 282

1.5 Forecasted Future Needs 282

1.6 Resourcing Estimates 282

1.7 Shoalhaven City Council Workforce Strategies 282

1.8 Strategy 283

1.9 Organisational Structure 284

1.10 Resourcing 285

1.11 Succession Planning 286

1.12 Leadership and Professional Development 288

1.13 Community 289

1.14 Culture 290

1.15 Communication 290

1.16 Technology 291

2 ASSET MANAGEMENT PLANNING 2932.1 Introduction 293

2.2 Assets Sustainability 293

2.3 Asset Management Strategy 294

2.4 Asset Management Policy 294

2.5 Risk Management Strategies for Critical Assets 298

2.6 Asset Management Plans 301

2.7 Reporting 302

2.8 Asset Management Improvement Plan 303

2.9 Priority Asset Managemnt Actions 303

3 LONG TERM FINANCIAL PLAN 3053.1 Introduction 305

3.2 Financial scenarios 305

3.3 Financial modelling framework 306

3.4 Shoalhaven Water 307

3.5 Financial Planning Assumptions 307

3.6 Long Term Financial Statements 310

3.7 Capital Works Program 354

3.9 Risk Assessment 358

3.10 Performance Monitoring 360

3.11 Updating and Review 365

CHAPTER 6: Resourcing Strategy 2017-2021

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The Shoalhaven City Council Resourcing Strategy forms part of Council’s Integrated Planning and Reporting (IPR) framework.

The Resourcing Strategy is intended to:

• establish a high level, strategic view of the means by which Council can achieve the objectives and strategies (Themes and Key Priorities) set out in its CSP

• align resource allocation to support strategic directions and priorities

• outline the fundamental principles that will support financially sustainable resource allocation

• integrate the resource needs and priorities identified by asset management planning and workforce planning (in particular) with the resourcing capacity of the Long Term Financial Plan (LTFP).

The Resourcing Strategy includes:

• Workforce Planning • Asset Management Planning• Long Term Financial Planning (LTFP)

The central theme for the resourcing strategy is based around transforming the organization into a financially sustainable, best practice Council that is more efficient and effective, making sure our ratepayers receive “high quality” and “value for money” in the services we deliver.


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High quality

Value for money

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1 WORKFORCE PLANNING 1.1 PurposeThe purpose of this document is to present a workforce plan that is aligned to Shoalhaven City Council’s (SCC) Integrated Strategic Plan and the needs of the workforce in the future. It will act as a roadmap to guide key workforce initiatives within the planning horizon to ensure SCC can meet future workforce and organisational challenges. A workforce plan considers the future needs of the organisation and the factors that will influence workforce needs and provides strategies and actions that will positon SCC well to respond to and meet those needs.

1.2 OverviewShoalhaven City Council (SCC) is finalising the planning process for the development of its 2027 Community Strategic Plan and the supporting plans/ strategic documents including the Delivery Program (4 years) /Operational Plan (Annual) and Resourcing Strategy in line with the Integrated Planning and Reporting Requirements for Councils in NSW. As part of the Resourcing Strategy, Council needs to develop its 4 year Workforce Management Plan (2017 – 2021). The Workforce Plan must support the organisation to deliver its community and organisational objectives into the future.

The development of the Workforce Plan will be aligned with the 2027 Community Strategic Plan, supporting SCC to reach strategic objectives. Alignment will ensure the capacity and capability development activities align to deliver on the requirements of SCC moving into the future. The Workforce Plan will guide activities required to align the SCC workforce with the Community Strategic Plan and be flexible and adaptable to any changes facing Council over the coming years.

This Workforce Plan focuses on Workforce Trends, Needs and Workforce Strategies.

1.3 Workforce Trends & Needs

Workforce DistributionAs at December 2016, Shoalhaven City Council had a total headcount of 1224 staff. Staff are distributed across five areas as shown in Table 1. Full-time equivalent numbers in Table 1 exclude casual positions.

Table 1. Workforce Distribution

Group Headcount Percentage Full time Equivalent Percentage

General Manager’s Office 20 1.6% 20 2.2%

Finance, Corporate & Community Services

466 38.0% 215 23.6%

Shoalhaven Water 191 15.6% 187 20.5%

Assets & Works 378 31.0% 354 38.9%

Planning, Environment & Development

169 13.8% 135 14.8%

Total 1224 100% 911 100%


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AgeShoalhaven has an ageing workforce, with 41% of staff are aged 50 or older. Further, 11% are at retirement age (65) or will be eligible for retirement within the next five years. This contrasts to only 17% of workers aged under 30. While the ageing workforce is an issue across the organisation, it is most pertinent in Assets & Works, where 47% of staff are 50 years or older. Table 2 displays the age distribution across Council. Council has in place an established traineeship and apprenticeship program to assist in attracting and retaining young people within the organisation through an agreement with a third party provider with on average 50 participants involved. These externally engaged trainees are not included within the numbers below.

Table 2. Age Distribution

Age Total General Manag-er’s Office

Finance, Corpo-rate & Community Services

Shoalhaven Water Assets & Works Planning Envi-ronment & Devel-opment

Services

16 – 19 2.8% 0% 6.9% 0% 0.3% 0.6%

20 – 29 14.0% 0% 17.4% 16.8% 9.8% 12.4%

30 – 39 17.0% 30.0% 16.5% 20.4% 15.1% 16.0%

40 – 49 25.7% 30.0% 22.1% 23.1% 27.8% 33.7%

50 – 59 29.6% 20.0% 26.4% 28.3% 34.9% 29.0%

60 - 69 10.5% 10.0% 9.9% 11.0% 12.1% 8.3%

70+ 0.4% 0% 0.9% 0.5% 0% 0%

In general, Shoalhaven has a low turnover rate (11%), with the majority of the workforce holding a long tenure. However, this is contrast with figures for new hires, where in FY15 there was 18.2% turnover from new hires in their first year of employment at SCC. Of those employed for less than 12months 85% were male and 15% were female. Within those resigning within the first year there were 8 staff over 35yrs and 5 staff under 35yrs

GenderThe overall percentage of women in the SCC workforce has increased from 35% women in FY14 to 41% as at December 2016. As Table 2 displays, the percentage of women is highest in the General Manager’s Office, and lowest in Shoalhaven Water.

Table 3. Gender Diversity

Group % Women % Men

General Manager’s Office 75% 25%

Finance, Corporate & Community Services 67.4% 32.6%

Shoalhaven Water 13.1% 86.9%

Assets & Works 17.0% 83.0%

Planning, Environment & Development Ser-vices

52.7% 47.3%

Total Workforce 41% 59%

In reviewing the gender balance in management levels the following statistics are relevant:

Total number of Managers 64 Male - 45 (70%) Female - 19 (30%)

Total number of Section Managers 17 Males - 10 (59%) Female - 7 (41%)

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1.4 Current Workforce ChallengesCurrent workforce challenges facing SCC are focused around building a capable and agile workforce. Based on consultation and the need to respond to the workforce profile identified above the workforce plan should target the following areas:

• Planning for an ageing workforce• Addressing knowledge management• Succession Planning• Attraction and retention• Staff capability and capacity to harness technological advances• Developing a resilient and agile workforce• Capability uplift around effective stakeholder management (both community and councillors)• Attracting and retaining local staff including youth, Aboriginal and Torres Strait Islander and

people with a disability • Increasing operational effectiveness through communication and collaboration across Council• Employee learning and development• Leadership and Management Capability development

1.5 Forecasted Future NeedsShoalhaven City Council needs to remain agile, with a continuing focus on customer service while developing a more proactive and planned approach to undertaking work. Council needs to position itself as an employer of choice and effectively plan for the retirement of a large portion of the workforce. The SCC workforce needs to be in a position to:

• Retain knowledge as older workers exit the workforce• Have a cohort of leaders ready to step into management positions as older workers retire• Collaborate effectively across the different areas of council• Harness innovations in technology• Remain agile in changing environments• Meet and manage the needs of stakeholders• Attract and retain the right staff for the right roles.

1.6 Resourcing Estimates In addition to the strategies contained in this plan it will be necessary to consider resourcing needs in relation to implementation of the Workforce Plan. Resource estimates have been provided on a project basis (number of days) and an FTE basis (ongoing need).

To implement the plan in its entirety it is estimated that 115 project days are needed to implement quick wins and associated actions. This time could be resources internally or externally. On an annualised basis it is estimated that 2 FTE are required to implement the plan in addition to the project days. At the present time this is an unfunded need.

1.7 Shoalhaven City Council Workforce StrategiesThe recommendations included in this report are strategic. Where appropriate, Ulrich’s 6 “Bs” of Workforce Planning have been linked to key actions. The 6 “Bs” are represented in the diagram below and are choices an organisation can make for developing and selecting employees to align with the organisation’s strategy. They should enable SCC to focus on priority actions to be taken and develop specific actions that will contribute to strategic requirements.

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Increase Workforce• Buy - Acquire new talent by recruiting individuals from outside the organisation • Borrow - Partner with consultants, vendors, customers, or suppliers outside the firm to garner new

ideas/provide services• Boost - Incentives/remuneration packages to increase the calibre of candidates being attracted

Maintain Workforce• Bind - Retain the most talented employees• Build - Train or develop talent through formal education, on-the-job training, job rotation, job

assignments, coaching etc

Reduce Workforce• Bounce - Remove low-performing or under-performing individuals or roles/services which have

been made redundant

Council has increased its revenue (Special Rate Variation) for 2017/2018 to be expended on additional maintenance works (roads, parks and buildings) and asset renewal works (roads, streetscapes).

Council’s Workforce Strategy will be responsive and flexible, responding to short and longer term increases in Establishment. This will be achieved through the 6 “Bs” above.

1.8 StrategyThe workforce needs to understand how their work aligns with Council strategy. Team and individual activities should clearly link to overarching strategic objectives. The following actions will assist SCC to achieve strategic priorities.

Strategy Action Success Indicator Resource Estimate Accountable Timeframe

1.1 Align strategic language about future direction in all relevant docu-ments

• Review key strategic doc-uments, to ensure align-ment and consistency

• All managers to regularly communicate with staff regarding the strategic intent and how their work aligns with the approach

• Staff use a shared language to artic-ulate the future direction of SCC and can see how their work sup-ports the strategy

Within existing resources

General Manager, Group Directors, Exec Manager, Communications

2017/2018

1.2 Enhance clarity and line of sight between teams and individual roles, & organisa-tional strategy.

• Cascade strategic and operation goals into team and individual achieve-ment plans

• All teams can ar-ticulate how their work contributes to achieving the Community Stra-tegic Plan and the boarder direction of Council.


Group Directors, Exec Manager, Communications, HR, Governance & Customer Service Section

2017/2018

.1 FTE ongoing Section Managers 2018/2019• Ensure performance man-agement system shows clear link to strategic plan


Section Managers 2017/2018• Managers and teams to develop a “plan on a page” outlining how the work of their team con-tributes to SCC’s strategic goals.


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1.9 Organisational Structure The workforce structure will be instrumental in driving and supporting Council’s strategy. The structure needs to support an agile workforce and should position staff to incorporate technological innovations in their work.


2.1 Align struc-ture to support future direction of Council.

• Review recent changes to organisational structure and ensure outcomes are being met

• Commence review of those areas not changed in recent restructure e.g. corporate services

• Staff and man-agement report a high degree of confidence in the structure

5 FTE for 6months HR, Governance & Customer Service Section

2017/2018

• Undertake process map-ping as part of Councils system implementa-tion to determine key organisational interfaces and create overt links be-tween operational areas

• Higher levels of lateral integration can be observed

Part of new system implementation

Corporate Business Improvement Unit

Ongoing

• Assess and quantify the benefits of offering more roles with flexible work-ing arrangements or part-time/ casual arrange-ments to better meet the needs of staff and council within the structure

• SCC developed and reported on metrics to align workforce to business strategy

Refer above HR, Governance & Customer Service Section

2017/2018

2.2 Adapt work-force structure to best utilise advanc-es in technology

• Undertake functional analysis and forecasting of how technology can be integrated into the workforce, and therefore forecast any changes in workforce structure

• The structure will enable the innovative use of technology in the workforce

.2 FTE for 3months HR, Governance & Customer Ser-vice Section; in consultation with Corporate Business Improvement Unit & Information Services Section

2020/2021

• Provide analysis to Exec-utive on how technology innovation could reduce resources and increase efficiency over time

• Utilise technology to im-prove inclusiveness and diverse ways of commu-nicating

.2 FTE for 3months HR, Governance & Customer Ser-vice Section; in consultation with Corporate Business Improvement Unit & Information Services Section

Ongoing

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1.10 ResourcingStrategic recruitment and forecasting of resource needs will enable an effective workforce. Recruitment processes will be transparent and implemented Council-wide and SCC will be recognised as an employer of choice in the region. To recruit the most suitable candidates, recruitment processes will consider both internal and external candidates and Council will engage in targeted recruitment of minority groups. Council will effectively utilise the skill sets of the workforce and resource requirements will be regularly forecast to prepare for any potential skill gaps.

Strategy Action Success Indicator Resource Estimate

Accountable Timeframe

3.1 Forecasting and resourcing needs

• Actively forecast human resourc-ing trends throughout the year taking into account peak periods and staff leave

• Resourcing needs are identified in advance and can be planned for

.1 FTE ongoing Group Directors, HR, Governance & Customer Ser-vice Section

Ongoing

3.2 Implemen-tation of Strate-gically Aligned Recruitment Practices

• Re-define the recruitment pro-cesses to align with the work-force plan

• Develop consistent processes for including both internal and ex-ternal applicants in the recruit-ment process

• Standardised re-cruitment practices are utilised through SCC.

.1 FTE ongoing HR, Governance & Customer Ser-vice Section

2017/2018

3.3 Ensure recruitment practices de-liver a diverse workforce that is representative of the Commu-nity

• Develop an Aboriginal and Torres Strait Islander Recruit-ment Plan to increase attraction of Aboriginal and Torres Strait Islander trainees and candidates including use of alternative advertising mediums

• Higher representa-tion of Aboriginal and Torres Strait Islander, minority groups and people with a disability in applicant pools

.2 FTE ongoing plus external expertise will be engaged to assist with stakeholder consulta-tion Budget $10,000

HR, Governance & Customer Service Section in consultation with Communi-ty Development Unit

2017/2018: Stakeholder consultation 2018/2019: Develop plan

2019/2020 onwards: implement plan

• Develop practices to attract the recruitment of minority groups and work with community or-ganisations to increase applica-tion rates

• Partner with employment providers to ensure recruitment practices are inclusive of people with a disability

• Disability inclusion and awareness training and tool box talks are com-pleted

Budget – ex-ternal provider $20,000

HR, Governance & Customer Service Section in consultation with Communi-ty Development Unit

2017/2018: Identify needs 2018/2019: Implement

3.4 Develop and refine strat-egies to attract and recruit staff

• Develop an Employee Value Proposition seeking staff input.

• Employee Value Proposition (EVP) developed

• Staff survey shows staff awareness of EVP and positive brand association

• Consideration given to defining customer survey metrics related to brand recognition

• No of providers who Council has partnerships with

10 days HR, Governance & Customer Ser-vice Section

2017/18

• Investigate options to develop stronger and more positive brand recognition for Council


2019/2020 (next survey period)

• Develop strategies which en-courage youth within the local area to consider Council as a career option

• Develop strategies which build partnerships with Disability Em-ployment Service organisations



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3.5 Proactively manage skills utilisation across Council

• Undertake Council wide skills audit of current staff skills which includes disability access

• Utilise skills audit to support forecasting requirements and determine gaps

• Utilise skills audit to undertake staff rotation program and cross skill staff across multiple roles

• Skills audit is undertaken and utilised annually

• No of staff attend-ing training or professional devel-opment

• Staff are agile and able to fill multiple roles across Council

• Levels of staff win-ning roles internally in different areas to current roles increases

.1 FTE ongoing HR, Governance & Customer Ser-vice Section

2020/2021

3.6 Develop support mech-anisms for new hires

• Develop a ‘New Hire Support Program’ to ensure retention of new staff to Council and settlement into the Shoalhaven community

• Turnover of staff within their first 12months is reduced (NB Set Target)


2017/2018

1.11 Succession PlanningCouncil will engage in organisation wide skills development and knowledge sharing to effectively address succession planning requirements. Council will utilise the knowledge of experienced staff through knowledge management processes to ensure in-depth Council knowledge is retained. Transition programs will support staff as they enter retirement and create appropriate time for handover to their successors.


4.1 Organisa-tion-wide ap-proach to succes-sion planning

• Council to develop a Succession Plan strategy and guidelines for all key roles

• Number of internal staff applying for roles is increasing

• Numbers of in-ternal promoted is increasing over time (based on merit)

• Age profile of Assets and Works is more balanced

• Numbers of internal verses external appoint-ment (based on merit)

15 days HR, Governance & Customer Service Section

2017/2018: Develop Strategy & Guidelines

• Develop a targeted succession plan for Assets and Works to address the high percentage of aged workers

• Use EPR process to assist employees identify their careers paths and the milestones they need to achieve the outcomes

.2 FTE ongoing Group Directors, Section Managers

2017/2018: Pilot Program In Assets & Works

2018/ 2019 onwards: succession plans de-veloped for all Groups

4.2 Ensure effective knowledge man-agement processes are core to opera-tional approach

• Implement ‘pass it on’ style programs such as mentoring programs and internal professional de-velopment sessions run by subject matter experts

• Involve experienced staff in developing training materials and ‘handover guides’ for new staff or those who may take over in the future staff

• Council will have formalised processes for retaining key knowledge from experienced and retiring staff

.2 FTE ongoing HR, Governance & Customer Service Section, Group Directors, Section Managers

2018/2019 and then ongoing

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4.3 Refresh Transi-tion to Retirement Support Services

• Review the existing Planned Departure Program to support staff as they transition to retirement

• Knowledge is retained within SCC

10 days HR, Governance & Customer Service Section

2017/2018


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1.12 Leadership and Professional DevelopmentCouncil will look to innovative ways to include professional development opportunities into every-day work. There will be opportunities for staff to act in different roles and learn from internal subject matter experts. Professional development activities will be informed by a capability framework aligned to strategic objectives, which will outline behaviours needed for success at each level of Council. Leaders will understand what behaviours are required for success. Leaders will be effective in having performance conversations and giving feedback to staff. Performance management processes will be transparent and consistent across Council.



5.1 Capability Framework aligned to Strategic Work-force Plan

• Develop a capability frame-work aligned to the Workforce Plan and use this when assess-ing professional development needs of staff and future recruitment needs

• Capability framework developed and incor-porated into profes-sional development process

• Internal capability will be built in identified areas of skill develop-ment

• Required capabili-ties will be clearly and consistently understood across the organisation and pathways to com-petency designed around realising or-ganisational require-ments.

15 days ex-ternal consul-tant Budget $30,000

HR, Gover-nance & Cus-tomer Service Section

2018/2019 Develop Framework

• Utilise the capability frame-work to target key skills aligned to supporting Council strategy such as technology, managing stakeholder rela-tionships, developing resil-ience and agility, and develop-ing business acumen

• Utilise subject matter experts for internal training and capa-bility uplift for staff

.2 FTE ongoing HR, Gover-nance & Cus-tomer Service Section

Assess profession-al develop-ment needs

5.2 Create strong focus on Leader-ship Development Opportunities

• Implement a leadership program to support staff to experience different leadership roles and grow their leadership skills

• More experienced staff will be actively involved in develop-ing the capabilities and knowledge of other staff

• Increased awareness of staff regarding the opportunity for professional devel-opment through seconded roles, ed-ucation sessions and role shadowing.

• KPIs are met.



2019/2020

• Develop KPIS regarding secondments, education sessions and role shadowing and promote as a professional development opportunity.


Group Direc-tors

2020/2021

5.3 Proactively develop Leaders

• Implement leadership devel-opment program for middle management staff including consideration of a 360degree assessment process

• Implement coaching and men-toring ‘program for frontline supervisory staff

• Develop a Manager as Coach toolkit to assist managers in mentoring their staff

• Ensure leadership develop-ment targets in performance management plans

• Self Assessments of Leaders pre and post development pro-grams show increase in confidence and capability

• 360degree process shows perceptions of leaders have im-proved

20 days Plus .1 FTE ongoing


2019/2020

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5.4 Capability uplift to enhance perfor-mance outcomes in engaging in diffi-cult conversations

• Professional development for leaders to increase capability and confidence in having feedback conversations and managing difficult interactions

• Leaders are effec-tively able to give constructive feedback and facilitate difficult conversations



Ongoing

5.5 Create a consis-tent approach to performance man-agement across Council

• Upskill all leaders such that they understand how to effec-tively utilise existing perfor-mance management processes

• Develop guidelines for fre-quency of formal and informal performance discussions

• People management practices are consis-tent across SCC.



Ongoing

5.6 Managers effectively leading through change

• Increase manager capabili-ty around leading through change

• Leaders have capa-bilities required to manage their team through change

10 days – ex-ternal training provider Bud-get $30000


2019/2020

5.7 Leadership capabilities clearly defined

• Leadership capability frame-work developed that clearly aligns with strategic direction

• Integrate into the performance management processes.

• Integration of leadership capability framework in to the performance man-agement processes

Leadership Capability Framework – refer above


2018/2019

1.13 CommunityCouncil will utilise training programs to increase employment of local staff. Council will use innovations in technology to effectively communicate and interact with the community. Staff will have the capabilities to effectively navigate interactions with the community. Also, where possible and appropriate, Council will engage in partnering relationships with local organisations.



6.1 Expand Train-ee Programs

• Assess how trainee programs can be expanded to more areas of Council

• Increase community awareness about availability of trainee programs

• Develop marketing materials to show how a traineeship can lead to a career at Council

• Trainee programs are conducted throughout all areas of Council

• The Shoalhaven community has a great awareness of availability of trainee programs at Council

.1 FTE ongo-ing

HR, Governance & Customer Service Section, Group Directors

2017/2018 – initial review as part of structure review Ongoing

6.2 Capability Uplift for Staff Engagement with Community

• Develop guidelines and pro-vide training for best-outcome ways to manage community expectations and hold effective conversation with stakeholders

• Provide training/guidance in verbal and written communica-tion skills for staff when engag-ing with the local community

• Staff feel confident when engaging with stakeholders and the community

• The community is satisfied with Coun-cil interactions

15 days To be resourced externally Budget $30,000

HR, Governance & Customer Service Section, Exec Mgr., Communications

2017/2018

6.3 Develop partnering model with Community organisations

• Investigate benefits of part-nering and consider workplace exchanges with community organisations to deliver more effectively on Council goals while increasing knowledge and attractiveness of Council as an employer

• Community or-ganisations have effective working relationships with Council

Within exist-ing resources

HR, Governance & Customer Service Section with Com-munity Develop-ment Unit

2020/2021


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6.4 Ensure SCC is an inclusive employer and is representative of the Shoalhaven community

• Work with community organi-sations to increase application rates from diverse segments of the community

• Partner with employment providers to ensure increase applications from people with a disability

• Higher representa-tion of Aboriginal and Torres Strait Islander, minority groups and people with a disability in applicant pools

Refer 3.3 above

Refer 3.3 above Refer 3.3 above

1.14 CultureThe workforce will have a strong culture of agility and flexibility, joint accountability, collaboration, innovation, and customer service. Staff will be able to clearly see how desired behaviours to support the culture are aligned with achieving strategic goals.



7.1 Proactively work on enhanc-ing and aligning Councils culture to align with strategic direction

• Develop Artefacts and Sign-posts that communicate the desired culture

• Engage staff in developing be-haviours aligned to this culture and the organisations values

• Teams to develop individ-ual team action plans with required behaviours that align with the desired strategy and how they will enhance their approach over time

• Involved staff to refresh the values and develop behaviours that align to the future culture

• Include the values behaviours in the performance devel-opment and management process.

• Staff engagement survey shows awareness of and commitment to the SCC values and desired be-haviours

.1 FTE ongoing HR, Governance & Customer Service Section, Group Directors, Section Managers

Ongoing

1.15 CommunicationCollaboration and communication between Council areas will become integrated into Council’s way of working. Communication will be aligned with strategic objectives to ensure the strategy is part of core shared language at Council. There will be clear processes for internal communication throughout Council such that messages are effectively cascaded to all levels of Council. External communications to stakeholders and the community will harness technological innovations.



8.1 Strategy is part of core shared language

• Communication session is conducted with managers and leaders regarding the SCC strategy and the requirements to cascade goals to teams and individuals

• Sessions are conducted with leaders and mangers to support the development of cascaded goals within their teams

• Common language is used and promoted throughout SCC regarding strategy and its role.

• Staff have a shared language regarding strategy

• Sessions on cas-cading strategy are completed.


General Man-ager, Group Directors, Exec Mgr., Communications

17/18 and ongoing

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8.2 Lateral inte-gration between departments

• Completion of process map-ping to understand interac-tion points throughout the organisation

• Develop communication chan-nels throughout the teams

• Support the lateral integration through secondments and role shadowing

• Conduct cross function and lateral integration team work-shops

• Increase opportunities for information relationship build-ing events

• Active collaboration between depart-ments

• Increased ad hoc and timely commu-nication between teams and depart-ments.

.1 FTE ongoing Group Directors 2019/2020

8.3 Formalised information and sharing proce-dures

• Develop guidelines on internal communication processes Implement communications plans for cascading informa-tion through the organisation Engage managers in effective cascading of information En-sure effective communication and information sharing is part of the performance develop-ment process.

• Information com-municated in a timely and equitable manner.


Group Directors, Exec Mgr., Communications

2017/2018

8.4 Frequent Staff Forums

• Conduct staff forums as a channel for two way communi-cation and to ensure increased lateral relationship building Ensure equitable access to these forums for frontline staff Ensure the process of giving information and receiving feedback is common place Encourage areas to work to-gether across SCC to improve outcomes

• Staff forums are held frequently

• Attendance rates are high

Facilitated ses-sions initially (5 days) then within existing resources

Group directors Section Man-agers

Ongoing

8.5 External communication to utilise innova-tions in technol-ogy

• Investigate new and innova-tive ways to communicate with the community and external stakeholders A core compo-nent of communication roles is to communicate with Commu-nity via technology

• Council is effectively utilising technology to communicate with the Community and external stake-holders


Exec Mgr, Communications

Ongoing

1.16 TechnologyTechnology will become an integral part of how Council operates and how Council interacts with the community. Council will harness technological advances to increase internal efficiencies and improve interactions with the community.



9.1 Effective utilisation of technology to en-hance workforce outcomes

• Capability uplift for staff to increase skills in using tech-nology

• Development continual im-provement processes to devel-op and implement innovations in technology

• Staff will effectively implement and use innovative technol-ogies to create effi-ciencies at Council

.1 FTE ongoing Group Direc-tors, Section Managers, HR, Governance & Customer Ser-vice Section

Ongoing


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2 ASSET MANAGEMENT PLANNING2.1 IntroductionCurrently the Shoalhaven City Council is the custodian of community assets with a replacement value of approximately $3 billion. There are legislative and community expectations that council assets are managed to provide the greatest benefits, at the lowest whole-of-life costs, for all residents, landowners and visitors. Asset Management Planning principles are adopted in all service and infrastructure provision activities to support the Community Strategic Plan (CSP) and Delivery Program (DP).

Council has accounted for and planned for all existing assets and new assets proposed in the CSP and DP by:

• Developing and reviewing a complete suite of Asset Management Plans (AMPs) which cover all of Council’s assets

• Depending on the outcome of the Special Rate Variation, the updating of the 10 year Long Term Financial Plan (LTFP) to include the forecast costs of providing services, maintenance and renewals from AMPs and the forecast costs of proposed new assets from Council’s Contributions Plan and other strategies

• Adopting an Asset Management Policy and• Developing an Asset Management Strategy

2.2 Assets SustainabilityThe condition of Council’s assets is reported in the annual financial statements.

Special Schedule 7 to the 2015/16 Annual Financial Report indicates that Council’s infrastructure backlog works, based on Asset Management Plan data and accounting principles, is over $38 million. Schedule 7 also indicates an annual maintenance requirement of some $57.8 million, met in 2015/16 with an expenditure of some $45 million. In the 2015/16 year, the reported Infrastructure Renewal Ratio was 59% (it should ideally be 100%).

Sustainability relies on the long term funding of asset renewals. Council’s aim is to progress towards the ‘Fit for the Future’ targets as outlined in its application to IPART for the Special Rate Variation and in Section 3 – Long Term Financial Plan of this Resourcing Strategy. However, the LTFP (Scenario 3) still shows: the Infrastructure Backlog Ratio exceeding 2% after 2023; the Infrastructure Renewal Ratio fluctuating around 70% when it should be over 100%; and the Asset Maintenance Ratio meeting the 100% target in most years.

16%Buildings

Public Roads 38%Water

19%

Sewerage21%

6%Drainage Works

Figure 4.1 Total Current Value of Assets 2015/16


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Roads is the asset category with the highest infrastructure backlog (about $23 million). The LTFP includes increasing annual allocations for road renewals by 10% per year. This approach is expected to eliminate the backlog of road surface renewals by 2024/25 and for road pavement renewals by 2029/30. However, the overall average condition of the buildings asset category is likely to deteriorate slightly over this period owing to the diversion of available funds to roads unless special rate variation funds are received.

The CSP and DP respectively contain the key priority and goal “improve and maintain our road and transport infrastructure” and “ building and improving roads, bridges and drainage”. These are included to directly address the infrastructure backlog issue.

2.3 Asset Management StrategyCouncil’s Asset Management Strategy (AMS) is based on the following principles:

• The planning horizon for

• the AMS and AMPs will be 10-20+ years

• the DP will be 4 years

• the Operational Plan is one year• the AMS must include an overarching council endorsed Asset Management Policy• the AMS must identify assets that are critical to Council’s operations and outine the risk

management strategies for these assets• the AMS must include specific actions to improve asset management capability and projected

resource requirements and timeframes.

2.4 Asset Management PolicyCouncil will adopt a revised Asset Management Policy in 2017. This overarching document provides some principles for the implementation and use of Asset Management.

The current Policy is detailed below.

AimThe aim of this Policy is to guide the strategic management of Council’s infrastructure assets. It will be complemented by:

1. An Asset Management Strategy (AMS)2. Individual Asset Management Plans (AMPs) for specific asset classes3. An Asset Management Information System (AMIS)4. Risk Management Policy and Procedures5. Asset Management Improvement Plan (AMIP)6. Asset Accounting Procedure

Objectives• Manage Shoalhaven City Council’s infrastructure assets to best meet a balance between short-term

and long-term community needs and resource restraints • Provide an equitable approach to the planning, delivery, operation, renewal and disposal

of infrastructure assets through strategies based on risk, legal obligations, funding levels, sustainability, utilisation, best practice and good governance

• Maximise asset service delivery potential and manage related risks through cost effective lifecycle approach (from cradle to grave)

• Ensure that the community is involved in determining appropriate ‘levels of service’ (LOS) (quality & quantity) for physical assets and services

• Ensure that assets are managed in accordance with relevant legislation and the Community

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Strategic Plan (CSP), Resourcing Strategy, Long Term Financial Plan (LTFP), Delivery Program and Operational Plan. Maintain a suite of AMPs that adequately describe to the community the plans in place for the management of infrastructure assets, and that guide Council’s staff

• Create awareness, seeking an integrated approach amongst Council staff, elected members and the community of the importance of asset management

STATEMENTThis policy guides in the development, implementation, acquisition, ongoing management and disposal of infrastructure assets under Council’s control.

Asset Management is the systematic and coordinated activity and practices to optimally and sustainably deliver objectives through the cost effective lifecycle management of assets.

Council recognises that infrastructure assets are important to the local community as they make up the provision of fundamental delivery of services

Planning and responsibility for assets require strong and informed Council and executive oversight which is crucial to achieving strategic asset management and financial management outcomes. This is a key function of Council and is fundamental to ensure the provision of assets are maintained to meet community needs.

ScopeThis policy applies to all asset classes managed and under the care and control of Shoalhaven City Council that have a:

• Useful life greater than 12 months and a replacement cost greater than $5,000.• It excludes:• Plant and equipment (including fleet)• Office equipment, furniture and IT hardware

Physical asset include but are not limited to Roads, paths, kerb & gutter, bridges, drainage, buildings & structures

BackgroundCouncil owns, manages and maintains a wide range of infrastructure assets. These assets need to be maintained to a standard that makes them appropriate to community requirements, fit for use and which makes best use of the limited available funds. To deliver these outcomes Council is required by the Local Government Act and under the Integrated Planning and Reporting (IP&R) has specific requirements for asset management. These include the development of:

• Long term resource strategy to achieve the objectives of the CSP (money)A. Long term financial planningB. Asset management planning including (assets):

• Accounting and planning for new and existing assets

• Development of an AMS and AMPs

• Identification of critical assets and their associated risk management strategies

• Development of an AMIPC. Workforce planning (people)

These are a requirement under the integrated Planning & reporting Guidelines issued by the Division of Local Government in line with Section 406 of the Local Government Act 1993.

Relationship to Other Documents


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In the development of best practice asset management Council shall be guided by reference to the:

• AMS • Individual AMPs• CSP• Resourcing strategy• LTFP• Risk management policy & procedures• NAMS.PLUS guidance notes• Institute of Public works Engineering Australia (IPWEA) International Infrastructure Management

Manual (IIMM) 2015• Australian Infrastructure Financial Management guidelines• Australian Accounting Standards

DefinitionsAsset Management Strategy (AMS)A strategy for asset management covering development and implementation of plans and programs for asset creation, operation, maintenance, rehabilitation/replacement, disposal and performance monitoring to ensure desired level of service and other operational objectives are achieved at optimum cost. The Asset Management Strategic Plan typically has a 10-25 year horizon. It is a high level long term approach to Asset Management, including action plans and objectives for managing assets (IPWEA, 2015).

Asset Management Plan (AMP)A plan developed for the management of one or more infrastructure assets that combines multi disciplinary management techniques (including technical and financial) over the lifecycle of the assets in the most cost effective manner to provide a specified level of service.

Asset Management Information System (AMIS)An Asset Management Information System is the foundation of all Asset Management practices. It is a combination of processes, data, software and hardware applied to provide the essential outputs for effective asset management such as reduced risk, optimised decision making. The Asset Management Information System should integrate with other information systems within Council such as the Property System, Geographic Information System (GIS), financial system, Land Information System (LIS), Maintenance Management System (MMS), Action Request System, costing solutions, modelling solutions, drawing catalogues and Electronic Document Management System (EDMS).

Asset Management Improvement Plan (AMIP)This plan identifies current asset management practices and the gap between future desired.

Infrastructure AssetInfrastructure assets are typically large, interconnected networks or portfolios of composite assets, comprising components and sub-components that are usually renewed or replaced individually to continue to provide the required level of service from the network. Some examples are: roads; footpaths and cycleways; bridges; and community buildings.

Level of Service (LOS)Defining and meeting community expectations in relation to the quality and quantity of assets and services delivered by Council.

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PROVISIONS• Principles• Asset management plans shall be developed for all of Council’s infrastructure assets. • Council recognises that the preference is to allocate resources to maintain and renew existing

assets.• Council recognises the need to maintain its asset base and will target a long term asset

sustainability index (actual replacement/renewal budget versus required funding as per AMPs) averaging 90-95% for each of the asset types above.

• The Asset Management Strategy will guide the development and review of AMPs and specify appropriate LOS with community consultation.

• To agree on LOS asset performance • The management of Council’s assets shall be overseen by the Asset Management Planning

Committee (AMPC).• Risk management, environment, social, good governance, best practice and sustainability will be

considered in the development of asset strategies.• Asset acquisition shall include consideration of the ‘whole of life cost’ of the new asset including

initial capital cost, operation, maintenance, rehabilitation and disposal costs.• Annual operation/maintenance budgets shall include an allowance for additional costs arising

from addition of new assets through development, acquisition, dedication or leasing and/or licencing as well as an allowance to cover cost increases in line with indices relevant to each asset class.

• Adequate resources shall be provided to undertake regular agreed levels of inspections for risk, identifying programmed works, asset condition and renewal priorities.

• Utilisation and operating/maintenance costs shall be monitored to ensure that costs do not outweigh the benefits derived.

• Systematic and cyclic reviews will be applied to asset classes to ensure assets are managed, valued and depreciated in accordance with best practice and applicable Australian standards.

• Minimum utilisation measures shall be determined for all assets to determine surplus assets.

Roles and responsibilitiesResponsibilities for Asset Management

• Councils Elected Representatives• Councils General Manager and Group Directors• Asset Management Planning Committee (AMPC)

Group Directors• To establish and periodically review the Asset Management Policy in line with the Council policy

framework• To review and implement the corporate Asset Management Strategy with agreed resources• To ensure all staff are educated in asset management and that responsibilities are included in job

descriptions

Asset Management Planning Committee (AMPC)• Provide corporate support and oversee the management of Councils assets. The steering

committee has cross organisation representation that meets regularly

Asset Custodian• To act as custodians for infrastructure assets• To ensure that accurate and reliable information is presented to Council for decision making• To monitor and review performance of Council staff in achieving the Asset Management Strategy

(AMS)• To develop, oversee, review, monitor and update AMPs for individual asset groups• To implement identified tasks in the AMIP


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• To identify LOS to agreed risk and cost standards and to provide this recommendation to Council

Information Technology• Implement an integrated software solution that links

• AMIS to FIS, GIS, EDMS, LIS, MMS, requesting system, drawing catalogue, modelling solution & costing solution

• Ensure all staff involved with asset management are able to view, validate and report on assets they are involved with

• To implement identified tasks in the AMIP

Asset Management Section• To provide leadership & coordination for the implementation of asset management across the

business units• To raise awareness and provide education of asset management across Council• To develop, review and oversee the Asset Management policy, AMS, AMPs and practices. Then to

peer review AMP’s when asset custodian take ownership of AMPs• To identify resource gaps/issues in implementing AMPs & record in the AMIP• To implement strategic plans (such as programmed, capital works programs) in accordance with

AMPs

Finance• To verify and validate costing associated with individual assets• To update general ledger and profit loss with asset transactions in accordance with standards

All Staff• Any staff member that manages or has a responsibility to program, instigate, govern or oversee

work that results in the creation, upgrade, renewal, receipt (contributed, gifted or otherwise) or disposal of assets that are owned or held in the custody of Council, at the completion of each specific asset’s activity and at a minimum interval of each month end must:

• Collect all required asset information and ensure that all asset information is either entered into the relevant Council systems(s), or details provided to Asset Management Unit

• Every four years or• As directed by Council• A change occurs to legislation that affects the policy

APPLICATION OF ESD PRINCIPLESCouncil staff have inspected Council community buildings for energy, water and waste initiatives. Current ESD principles and proposed future principles were investigated. These findings are to be implemented into the Asset Management Information System (AMIS) and Asset Management Plans (AMPs).

All construction whether it be asset replacement/ renewal/ upgrade or new must consider ecological sustainable development

2.5 Risk Management Strategies for Critical AssetsThe AMS identifies assets which are critical to Council’s operations and outlines the risk management strategies for these assets.

Critical assets include:

• water infrastructure such as storages; treatment plants and reticulation system• waste water infrastructure such as treatment plants; pump stations and reticulation system• city administrative centre, Nowra

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• the Ulladulla office.

Risk management procedures have been developed for these assets including emergency response; business continuity; and condition monitoring.

An example of the risk management approach is provided for ‘Wastewater Supply’.Other asset types also have risk management procedures and these are detailed in the individual AM Plans.

CriticalityThis section of the AMP summarises the framework in place to identify critical assets, the process followed to develop this framework, the critical assets identified and general strategies in place for their management. Improvement tasks are identified to further improve the criticality assessment.

It is important that Shoalhaven Water has a clear understanding of which assets within these systems are critical and why they are critical. Identifying critical assets will allow Shoalhaven Water to develop appropriate management strategies that minimise the risk of catastrophic events and achieve an optimum balance between the risk of asset failure and the lifecycle costs of inspecting, maintaining, repairing, and renewing assets.

Criticality framework development and assessmentIn 2012-2013 Shoalhaven Water, developed a criticality assessment framework and general management strategies for critical assets, and subsequently utilised the framework to identify critical wastewater assets. A series of workshops were conducted involving relevant staff across the organisation to agree upon the criticality criteria for each asset type. Analysis was carried out to identify which assets are critical and datasets were produced for use in management systems planning. The entire network was then assessed in further workshops to identify which assets were critical.

To ensure the new or gifted assets are assessed, as assets are brought into Shoalhaven Water systems they continue to be assessed and updated in the AMS and GIS system.

The definitions of critical assetsAsset criticality is defined in terms of the consequences of asset failure. Three criticality grades have been defined as follows:

Extremely Critical: Assets where the consequences of failure are unacceptable and must therefore be reduced.

Critical: Assets where the consequences of failure are sufficiently serious that it is desirable to avoid the failure of these assets to the extent that it is practicable to do so.

Non-critical: Assets where the consequences of failure are not significant enough that Shoalhaven Water should actively commit resources to preventing their failure.

Critical asset identification criteriaAssets are potentially critical if their failure would have significant detrimental impacts on service delivery or compliance, on the local community, or on the financial performance of Shoalhaven Water.

The wastewater assets considered for the criticality test included treatment plants, pump stations, pipes (gravity and rising mains), manholes and odour control devices.

Generally the following attributes discussed in this section apply to potentially critical assets. Assets which fall under the categories explained below were assessed based on the significance of the consequences of asset failure which include both operational and social impacts.

Operational impacts of the asset failure are the effects on Shoalhaven Water’s ability to operate,


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measured by the cost and time required to repair the asset, and the effect on Shoalhaven Water’s ability to maintain compliance with legislative requirements.

Social impacts of the asset failure are the effects on customers and the community, measured by the severity of the effects, their magnitude or scale, and their duration.

The following criteria were used to define critical assets:

Table 2 1 Critical Asset Identification Criteria

Criteria Description

Assets serving large populations For wastewater, asset failures do not result in a disruption of service. However the failure of wastewater assets serving large populations can potentially pose significant health risk or cause environmental damage due to the resulting overflow volumes. They are also typically larger, more expensive to repair and take longer to repair. The population and pipe size thresholds for critical wastewater assets are ≥ 10,000 and ≥ 300mm, respectively. These thresholds are indicative based on previous experience with comparable wastewa-ter service providers.

Assets near critical receiving environments

Overflows of untreated wastewater pose a public health risk or can cause environmental damage. Wastewater assets are considered potentially critical if they are located inside or within 50m from the edge of waterways and beaches, boundary of food production sites, or environments of ecological significance. The 50m buffer zone is recommended, but this should be reviewed dependent on the topography and extended as appropriate.

They are also considered critical if failure of the asset would likely cause untreated waste-water to flow into any of the specified environments above, and are within the specified floodplain (either the 100, 50, or 25 year ARI as agreed by Shoalhaven Water).

Assets serving extremely critical customers

Critical customers are stakeholders or customers particularly sensitive to the public health risk or disruption posed by wastewater overflows. Liquid trade waste customers and the owners and operators of facilities (private and public) such as beaches, water bodies, and food production sites where contamination is an issue, areas with a significant public pres-ence (e.g. public mall), and facilities with sensitive or mobility restricted populations (e.g. kindergartens, hospitals, schools, prisons) are considered critical customers.

Assets likely to disrupt critical infrastructure or services

Critical infrastructure or services include heavily trafficked roads or rail lines, access to emergency services (such as hospitals, fire stations, police station, or ambulance sta-tions), and access to key facilities (such as airports and ports). The failure of assets in these locations can result in significant disruption to the local community or other infrastructure services. Disruption may occur as a direct result of damage caused by failure of the waste-water asset.

Assets required for compliance with legislative requirements

Some levels of service and monitoring requirements are mandated by legislation. Failure of assets which provide those levels of service or monitoring functions would cause Shoal-haven Water to be non-compliant with legislative requirements. Wastewater assets which fall under this category include wastewater treatment plant assets identified through Environmental Protection Authority (EPA) license agreements, and wastewater treatment plant re-use scheme assets.

Critical assetsA summary of critical wastewater assets is provided in the table below. All of the treatment plants and surcharge mains are considered critical.

Table 2 2 Wastewater Critical Assets (as at Sep 2015 based on Criticality Assessment)

Asset Category Asset Sub-category Asset Class Total quantity Percentage critical

Treatment Plants 12 100%

Pipe System Gravity Pipes Gravity Mains 324 km of 996 km 32.5%

Outfall Mains 4.7 km of 4.7 km 100%

Overflow Mains 1.4 of 1.6 km 87.5%

Total 300 km of 996 km 33%

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Asset Category Asset Sub-category Asset Class Total quantity Percentage critical

Rising Mains (excludes low pressure mains)

Rising Mains 159 km of 188 km 85%

Surcharge Mains 9.1 km 100%

Total 168 km of 197 km 85%

Total Pipes (Gravity + Rising) 498 km of 1,193 km 42%

Manholes 2201 of 22,337 9.8%

Pump Stations 133 of 225 59%

Odour Control Devices 1 of 4 25%

The total quantities on the table above are reliant on GIS data and only include in-service Shoalhaven Water owned assets. Note that above ground or facility assets were assessed at facility level only, and not to the component level.

The knowledge of critical assets can be used to enhance various operation and maintenance regimes such as the following:

• To develop, assign and implement appropriate management strategies for critical assets• To develop an accurate renewals program that programs critical assets for replacement before

their anticipated failure date• To inform shutdown procedures for planned and unplanned shutdowns involving critical assets or

customers• To flag incidents involving critical assets for rapid response or escalation• To achieve operational efficiencies by targeting more frequent inspections to critical assets,

and potentially reducing frequency of inspection, maintenance or replacement of assets whose consequence of failure is not critical.

Critical wastewater pump stationsThe table in Appendix 1 lists the wastewater pump stations determined to be critical, including the rationale for the criticality grading.

The data in the Storage Available and 2011 Storage Requirement columns (marked *) has been extracted from the Wastewater Servicing Strategy, June 2013 (GHD), where available, to provide an indication of the hours of storage available at each pump station. Storage time availability should not be used as a criterion for increasing/decreasing criticality; however it can be used to assess the likelihood of failure and inform the development of appropriate management strategies.

2.6 Asset Management PlansAsset management plans (AMPs) have been developed on the following principles:

• AMPs encompass all assets under Council’s control• AMPs identify asset service standards• AMPs contain long term projections of asset maintenance, rehabilitation and replacement costs• AMPs follow the ‘best practice’ AMP format from the International Infrastructure Manual (2015

Edition)

Asset Management Plans have been developed for the following asset categories:• Administration buildings• Aquatic facilities• Arts and crafts buildings• Bridges and culverts• Bus shelters

• Car parks – commercial• CCTV• Cemeteries• Coastal and estuary assets• Commercial buildings


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• Community buildings• Courts – tennis and netball• Cultural centre’s• Early childhood services• Emergency Services• Fire Trails• Flood mitigation drainage structures• Footpaths and cycleways• Kerb and gutter• Libraries• Natural Areas (land)• Parks and reserves• Playgrounds• Public amenities• Public halls and community centres• Scout and guides club facilities• Sealed roads

• Shoalhaven animal shelter• Shoalhaven Entertainment Centre• Stormwater drainage• Streetscapes• Surf lifesaving clubs• Telecommunications infrastructure• Tourist Parks• Traffic facilities• Ulladulla Civic Centre• Unsealed roads• Walking tracks• Waste Disposal Facilities• Wastewater assets• Water assets• Waterways infrastructure (boating facilities)• Works depots.

AMPs are in a ‘best practice’ format and contain:

• a description of the asset category and the services delivered• the key standards, systems and guidelines which influence asset management activities• levels of service (current and desired) and a system of performance measures• factors influencing future demand and the impacts of changing demand• management of risk• summary of life cycle strategies• long term cash flow projections• links to the CSP, LTFP, Delivery Program and Operational Plan, through capital and maintenance

programs.

2.7 ReportingCouncil is the custodian and the trustee of public assets, and is responsible for the management of those assets (including statutory reporting and accounting compliance). Annual reporting to the community is an important part of transparent and accountable governance.

Asset reporting is in accordance with:

• the Local Government Act and Regulations• the NSW Local Government Code of Accounting Practice and Financial Reporting and • the Australian Accounting Standards.

The annual report includes:

• assets acquired during the year• assets held for each principal activity• condition of public works:

• estimate of amount of money to bring works up to a satisfactory standard

• estimate of annual expense to maintain the works at that standard

• program of maintenance in respect of the works.

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2.8 Asset Management Improvement PlanAs part of the Asset Management Strategy (AMS), an Asset Management Improvement Plan (AMIP) has been developed to include specific actions required to improve Council’s asset management capability and projected resource requirements and timeframes.

Details actions necessary to progress from the current situation to eventually achieving the expected outcomes of the CSP. The Improvement Plan therefore fills the gaps or deficiencies in asset knowledge, systems, resources and service levels to meet these outcomes. The current version of the AMIP contains about 500 tasks necessary to meet the ‘maturity’ gap in the AM system and is summarised in the following groupings:

• AM preparation• AM process improvement• AM information system improvement• AM data improvement• AM organisation and training.

2.9 Priority Asset Managemnt Actions

AM PreparationPrincipal Activities:

• Regularly update all Asset Management Plans (AMPs) and ensure they adequately inform the CSP and DP and meet Office of Local Government (OLG) requirements

• Confirm current levels of service and performance measures for each asset category align with the CSP and DP

• Update financial and demand projections in all AMPs to align with IPART submissions for Special Rate Variations

• Ensure all assets are constructed and maintained to meet agreed levels of service

Improve AM ProcessesPrincipal Activities:

• Annually review valuation, depreciation and effective life procedures for each asset category to meet annual audit requirements

• Refine the procedures for recording asset acquisition and for the recognition of contributed assets.• Re-define processes, as necessary, to suit new integrated AM and financial software (Technology

One)• Implement AM actions from Audit Committee and OLG Infrastructure Audit Report

Improve AM SystemsPrincipal Activities:

• Re-format and ‘cleanse’ AM data for ready inclusion in new integrated AM and financial software (Technology One)

• Maintain links from Conquest to Geographic Information System (GIS); the Maintenance Management System; and the customer request system (Merit) until an integrated system is fully implemented

• Continue to use decision optimisation tools such as pavement management system (dTIMS).

Improve AM dataPrincipal Activities:

• Record works and cost information per asset for optimum whole-of-life calculations• Include proposed assets and predicted cash-flows in integrated system. (Technology One)


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• Record outcomes of statutory inspections per asset in integrated system (Technology One)

Actions for AM organisation and trainingPrincipal Activities:

• Review resource requirements as AM system functionality and maturity changes• Review the frequency of condition assessments and risk inspections for various asset categories• Develop training and succession plans for staff involved in AM• Complete the integration of the AM system with corporate systems.• Review the roles and responsibilities of asset ‘custodians

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3 LONG TERM FINANCIAL PLAN3.1 IntroductionThe Long Term Financial Plan (LTFP) aims to ensure Council remains financially sustainable into the future, reflecting the strategic priorities of Council and the community in the context of forecast economic parameters, service levels and revenue expectations.

Council’s annual budget is developed having regard to:

• the Community Strategic Plan• the Delivery Program and Operational Plan• the settings within the draft LTFP, developed as an early step in the budget cycle and based on

Sustainable Resourcing Principles (see Section 1.3)• the achievement of financially sustainable forecast outcomes

Shoalhaven City Council has three main funds for its operations: General; Water; and Sewer. The three funds have different revenue structures and their separate treatment allows for a more accurate assessment of the long term financial sustainability of each fund. The LTFP provides financial statements and performance measures for the whole of Council and for the three funds separately. This enables comparisons of our financial reports over time, as well as comparisons of the separate funds with other Local Government Areas.

3.2 Financial scenariosOver the 10 year planning horizon of the LTFP, Council has examined three scenarios for the General Fund:

1. Base Case (Rate Peg only) The ‘base case’ scenario shows the financial implications of delivering current levels of service, where possible, while adopting only the rate peg increase of 1.5% in 2017/18 and increases of 2.5% in the out years. This scenario does not allow Council to meet its Fit for the Future benchmarks within the required timeframe.

2. IPART approved one-off Special Variation (13.2% in 2017/18) The IPART approved scenario allows Council to address some of its asset renewal and maintenance backlogs in 2017/18, but does not allow Council to meet its Fit for the Future benchmarks within the required timeframe.

3. Special Variation as per Council’s application to IPART The IPART application scenario shows the financial implications of continuing the 13.2% increase in future years, together with a permanent increase of 14.0% from 2018/19. It reproduces the LTFP submitted to IPART in February 2017 and is the one that provides Council the best chance to meet its Fit for the Future benchmarks.


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3.3 Financial modelling framework

Phas

e 1

Phas

e 2

Phas

e 3

ExpendituresLong Term Financial Plan

& Budget Settings Revenue-LG Cost Index or CPI, adjusted for-productivity target-Wages + salaries as per Award &/or EBAs

Current strategy is 4% for road maintenance, otherwise CPI

Identify budget line items that escalate above CPI, e.g. power, fuel, waste levy, others held to minimum of Nil increase

New development rates revenuee.g., 0.5%

+ Development Contribution Reserve Funds where projects align+ Matching capital, by project

Remaining capacity,@ sustainable setting

Remaining capacity,@ sustainable setting

Remaining capacity, including grant and tied funding

Program Continuity- Recurrent Operating

Asset Renewal Continuity,by class/group

Approved OperationalVariations

Growth –Operating Programs

Growth –Capital Works

New –Operating Programs

New –

Capital Works

New –

Dedicated Capital

Revenue @ adopted sustainable LTFP settings

Rates

New development rates

Special rates/levies

Fees + charges

Known grant revenue

Reserve transfers

Any resolved loans

Other revenue

Explanatory NotesContextBudget development is part of the LTFP process and the resultant forecast of financial sustainability measures. The approach to the three budget phases informs the settings adopted for the draft LTFP.PHASE 1 PHASE 2 PHASE 3Recurrent OperatingCurrent, continuing op-erating budget programs – same services; same scope – are indexed as per LTFP assumptions / provisions, which may include a savings target created through efficiencies, cost savings, rationalisation, etc.[Provision may be CPI or Local Government Cost Index (LGCI), or similar, less productivity target]

Growth Operatinga. Increased operational services and activities,

where the current services are provided to a growing community (but not new services or expanded service levels/scope), funded as per LTFP assumptions / provisions and assessed / pri-oritised based on agreed criteria. Some services / programs may ‘grow’ in a ‘lumpy’ pattern, others in a relatively ‘straight line’ pattern. [Typically, the LTFP provision will be equivalent to the new revenue attributable to forecast city growth, pro rata for operating expenditures]

b. Hold any remaining ‘city growth’ budget items for Phase 3 consideration.

New OperatingNew operating budget items (i.e., services, activities, programs, beyond the parameters of recurrent and growth categories), as per LTFP assumption / provision, if any. New initiative proposals, plus remaining unfunded ‘growth’ items are assessed / prioritised based on agreed criteria (CSP priorities heavily weighted). Subject to review and revision of earlier budget phase decisions and revenue assumptions, the financial capacity for ‘new operating’ may increase above the LTFP provision. Any variation to revenue as-sumptions must have regard to the impact on fi-nancial sustainability measures / targets and will be reflected in the adopted LTFP post-budget.

Capital RenewalCapital renewal and maintenance programs, based on Asset Manage-ment Plan (AMP) settings and priorities, indexed as per LTFP assumptions / provisions.[Could include a ‘gap closing’ margin above an-nual AMP requirements, at least until the renewal backlog is removed and maintenance/renewal programs fully funded]

Growth Capitala. New or upgraded infrastructure and facilities,

where the current levels of service and facilities are provided to a growing community (but not new kinds of infrastructure, facilities or expanded service levels/scope), funded as per LTFP assump-tions / provisions and assessed / prioritised based on agreed criteria (including Development Con-tributions funded projects as highest priorities). [Typically, the LTFP provision will be equivalent to the new revenue attributable to forecast city growth, pro rata for capital expenditures, plus LTFP provision for Development Contributions funds to be applied to capital projects]

b. Hold any remaining ‘city growth’ budget items for Phase 3 consideration.

New CapitalNew and upgrade capital budget items (i.e., projects, infrastructure, facilities, beyond the parameters of the recurrent and growth catego-ries), as per LTFP assumption / provision, if any. New capital project proposals, plus remaining unfunded ‘growth’ items are assessed / prioritised based on agreed criteria (CSP priorities heavily weighted). Subject to review and revision of earlier budget phase decisions and revenue/debt assumptions, the financial capacity for ‘new cap-ital’ may increase above the LTFP provision. Any variation revenue and/or debt assumptions must have regard to the impact on financial sustain-ability measures / targets and will be reflected in the adopted LTFP post-budget

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3.4 Shoalhaven WaterShoalhaven City Council has responsibility for water and sewerage services for the Shoalhaven local government area under the Local Government Act 1993. Council meets these responsibilities and delivers water and sewerage services through Shoalhaven Water, a business group of Council.

Both the water and sewerage operations are designated as Category 1 Business Units (i.e., the annual gross operating income is greater than $2 million). As such, the operations of the funds are subject to Competitive Neutrality Principles and the water and sewer businesses are subject to the same corporatisation principles as State Government business activities. This requires that the businesses apply full cost attribution, including tax equivalent regime payments and to operate within the same regulatory framework as private businesses. Pricing structures should reflect these requirements, including an appropriate rate of return from the business.

Water and Sewer funds are, therefore, managed and planned separately from Council’s General Fund. The Local Government Act 1993 specifies that money raised from water and sewer charges may only be used for the purpose of these activities (i.e. water and sewer funds cannot be used to fund general fund activities). However, Council may, in some circumstances, declare a dividend from both the water and sewer funds to be applied towards any purpose allowed under the Act.

Water and sewer income is derived from annual charges and use charges. Other major income is from grants under the Country Towns Water Supply and Sewerage Program and from Developer Income (also referred to as Section 64 income). Water and Sewerage capital works can also be funded through borrowings.

In addition to the Sustainable Resourcing Principles, the resourcing of Shoalhaven Water services and works is guided by the following specific principles:

• network expansion and enhancement costs are recovered across the whole of the network• network expansion to meet city growth needs is forecast in advance but required capital works are

only activated when the known location and scale of development demands are confirmed• scoping, prioritising, procurement, implementation and commissioning of network expansion

capital works must be able to occur rapidly• generally, Section 64 development contribution funds will provide a guide to network expansion

priorities and project scope• the funds will provide a modest and transparent community dividend to Council each year, in

accordance with the CSP.

However, a dividend from Sewer Fund is not intended to be paid over the next three years due to the large capital works program Associated with the REMS Scheme.

The water and sewer funds provide for capital programs each year for:

• renewal/replacement works• new works for growth• new works for asset enhancement (including backlog sewerage works).

The resourcing framework for these programs is summarised below.

Capital Works – Water and Sewerage

Renewal/Replace-ment

New Works (Growth) New Works (Asset Enhancement)

Asset Management Plans

Developer Servic-ing Plans (Section 64)

Water Supply Headworks Strat-egy

Pollution Reduction Programs

Changes in regula-tory and operating standards

Backlog Sewerage Program

3.5 Financial Planning Assumptions


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3.5.1 Planning FrameworkThe key principles used to set Council’s budgets and long term financial forecasts are:

• separate treatment of ‘General Fund’ and Shoalhaven Water and Sewer operations and finances, with water and sewer services operating on a full-cost recovery basis

• maintaining a similar balance of cash reserves, i.e., no deficit budgeting• creation of the Industrial Land Reserve Fund, so that the proceeds of Council’s industrial land sales

(cash basis) are transferred to that reserve and are not treated as operational revenue. This reserve is used to fund further industrial land initiatives (with less or no debt)

• Shoalhaven Water dividend revenues directed to Strategic Projects Reserve Fund• general policy of not borrowing to finance operating activities• continued borrowing for commercial or ‘special’ programs, if any• “similar levels of service” planned, unless specifically highlighted• steady increases in infrastructure maintenance expenditure projected, together with marked

increases in some capital construction areas

Council’s ten year forecasts include a forward program of capital works, both renewal and upgrade/new works, informed by Council’s adopted Asset Management Plans, Section 94 Plans and other Council resolutions. Projected capital works include major new community and cultural facilities, recreation and leisure facilities, roads and drainage projects, footpaths and cycle way works, various land acquisitions and Rural Fire Service buildings.

3.5.2 2017 to 2027 LTFP AssumptionsThe LTFP reflects the following assumptions about our operating environment:

Revenue ForecastsRates

It is anticipated that the number of assessable properties will increase by 1% per year.

The rate peg for 2017/2018 was set by the Independent Pricing and Regulatory Tribunal (IPART) at 1.5%. In response to Council’s application, IPART determined a Special Variation for 2017/18 only of 13.2% (including the rate peg). It should be noted that Council has yet to approve a rate increase for 2017/18 and the matter will be considered at its June meeting.

Water and Sewer

The pricing of water and sewer services is guided by State Government Best Practice Pricing Guidelines. Council has adopted a two part tariff for water supply, consisting of an access charge and a usage charge. Access charges are related to the size of the water meter for non-residential properties. The guidelines require that at least 75% of revenue for residential customers should be generated through the usage component. Sewer tariffs adopted by Council consist of a uniform sewerage charge for residential properties, a two part tariff for non-residential customers and appropriate fees and charges for liquid trade waste dischargers.

Fees and Charges

Fees and charges for services are determined according to the pricing methodologies adopted by Council: full cost recovery; subsidised/partial cost recovery; rate of return; market; statutory.

Grants and Subsidies

In line with the 2017/18 federal budget, the general and local roads components of the Financial Assistance Grant will increase by expected CPI in each of the forward years. However, approximately half of the expected 2017/18 grant will be paid in 2016/17.

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Other recurrent government grants are assumed to increase by 2% and capital grants are estimated according to the capital projects to be constructed. The Roads to Recovery grant is $1,315,819 in 2017/18 and adjusted according to the pattern for NSW funding in the forward estimates that are part of the Federal Budget papers (43.4% in 2018/19; 56.7% in each of the next two years).

Council will continue to seek grant and partnership funding for a range of well-aligned projects and programs and these will be reflected in budgets and the LTFP, as and when specific arrangements are confirmed. In particular, opportunities will be explored for participation in the National Partnership for Regulatory Reform in 2017/18 and in the National Housing Infrastructure Facility to support affordable housing from 2018/19. While we expect to continue to have reasonable success in this area, we have adopted the prudent position of making no assumption that this source of funds can be relied upon for the purposes of forward forecasting of resourcing and financial sustainability. Successful increases in revenue through grants and partnerships will be treated as windfalls, to be leveraged for maximum benefit, and may well enable flow-on improvement in our position with respect to planned projects and programs, which will in turn be reflected in successive LTFPs.

Interest Income

Interest on investments is assumed at 3.15% on cash held. The interest earned on the balances of the Waste Management, Section 94, Water and Sewer reserves will be allocated to these reserves, with the remainder going to General Fund.

Developer Contribution

Contributions received are held in separate reserves and are spent on projects according to the Contributions Plan.

Borrowings

The LTFP provides for limited new loans for specific capital project works. Council may also borrow for commercial projects, where they have a capacity from future income inflows to repay the loan. The loans for general fund have a ten year repayment schedule, and water and sewer loans have a repayment schedule of 15 years.

Expenditure ForecastsEmployee Costs

Salary and wage cost increases of 2.4% are assumed for 2017/2018 and 2.4% for the out years, with an on-cost rate of 38.9% to cover leave accrued and superannuation paid for employees. There is no specific provision for growth in Council’s workforce to meet either the service needs of a growing community or new services that might be identified as required.

Materials and Contracts

Electricity costs are assumed to increase 2.5% for street lighting. Road construction materials are anticipated to increase by 1.5% every year. Other material and contracts costs are anticipated to increase by 1.5%.

Interest Expenses

The interest for existing loans is as provided for in the existing contracts and the interest assumed on new loans is 4.0%.

Depreciation

Depreciation cost will be based on estimated useful life of assets and reviewed every year. In the LTFP, depreciation in future years is increased by a standard rate of 2% for renewals, with additions for the depreciation expected from planned new capital works. Revaluations are undertaken every 5 years or sooner if required.


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Other Expenses

A number of expense budget lines have had no CPI increase factored in for the 2017/2018 budget, with an increase of 1.5% applied only for specific expenditure items affecting continuing operations.

The LTFP also provides for the additional cost of operations and maintenance of newly constructed or upgraded assets.

3.5.3. Long Term Financial SustainabilityThe LTFP is premised on achieving long term financial sustainability. Where possible, future services and programs are planned and delivered within the capacity available, through a resourcing approach that is sustainable in the long term. The Office of Local Government Capital Expenditure Guidelines will be a major project consideration and a basis for prudent project governance and management.

General FundThe 2017/18 budget shows the following operating results, excluding capital grants and contributions, under each of three financial planning scenarios:

Scenario 2017/18 Net Result (excl capital grants & contributions)

1 Base Case (Rate Peg only) -$9.237m

2 IPART Determined Special Variation (13.2% increase in 2017/18 only)

-$2.992m

3 Special Variation application (13.2% increase in 2017/18; 14% increase in 2018/19)

-$2.992m

To address declining results, Council set operational savings targets which commenced in 2011/12 and reached a level of $1 million per annum by 2014/15. An organisational review undertaken by Council in 2013/14 and initiatives in the Transformation Program achieved net savings of $6.5 million per annum after three years.

As part of the Fit For The Future strategy, Council needs to be in surplus by 2019/20. It is vital for Council to improve its operating result to become financially sustainable and reduced operating expenditure is part of the strategy being pursued to achieve this outcome, in addition to pursuing rate increases to address asset renewal and maintenance issues to better serve the community.

It is important to note that planning for resourcing capacity and project priorities in the short term (one to two years) is more certain, while estimates for the medium to long term (three to ten years) is subject to greater potential variation due to unforeseen external factors, changes to assumptions and settings and the requirement that successive elected Councils must review the Community Strategic Plan and respond to changing community demands and aspirations.

Council will need to carefully consider and engage the community on operating program expectations, capital project priorities and resourcing solutions that may provide increased capacity for infrastructure and facilities investment.

3.6 Long Term Financial StatementsThe Long Term Financial Plan includes projected income and expenditure, balance sheet and cash flow statements. The format of these statements is in accordance with the current Code of Accounting Practice. The statements are provided for the Consolidated Council, General Fund, Water Fund and Sewer Fund

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3.6.

1 Co

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Scen

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ER 6

: RES

OU

RCIN

G S

TRAT

EGY

337


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

338

Plea

se n

ote:

• Co

mm

unic

atio

ns to

wer

s fu

nds

are

show

n as

incr

easi

ng b

ut

addi

tiona

l ren

ewal

/rep

lace

men

t wor

ks o

n to

wer

s w

ill o

ccur

–

prog

ram

not

yet

det

erm

ined

• In

dust

rial l

and

deve

lopm

ent r

eser

ve- n

ew s

ubdi

visi

on w

orks

ex

pect

ed to

occ

ur –

pro

gram

not

yet

det

erm

ined

and

dep

ends

on

actu

al la

nd s

ales

and

sto

ck h

eld

• La

nd d

econ

tam

inat

ion

rese

rve

– ba

lanc

e is

hig

hly

likel

y to

be

spen

t on

wor

ks y

et to

be

dete

rmin

ed

• S9

4 D

evel

oper

Con

trib

utio

ns –

bal

ance

is n

ot e

xpec

ted

to in

crea

se

to $

43M

bef

ore

the

spec

ial S

94 R

evie

w te

am re

com

men

ds c

hang

es

to e

nabl

e ex

pend

iture

of t

hese

fund

s on

impo

rtan

t inf

rast

ruct

ure

• Co

asta

l man

agem

ent &

Infr

astr

uctu

re re

serv

e –

bala

nce

will

not

in

crea

se to

>$4

M a

s a

coas

tal w

orks

pro

gram

will

be

dete

rmin

ed a

nd

wor

ks u

nder

take

n

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

339

Scen

ario

3:

Spec

ial V

aria

tion

appl

icat

ion

(13.

2% in

crea

se in

201

7/18

; 14%

incr

ease

in 2

018/

19)


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

340

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

341


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

342

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

343


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

344

3.6.

3 W

ater

Fun

d Fi

nanc

ial S

tate

men

ts

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

345


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

346

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

347


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

348

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

349

3.6.

4 Se

wer

Fun

d Fi

nanc

ial S

tate

men

ts


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

350

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

351


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

352

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

353


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

354

3.7

Capi

tal W

orks

Pro

gram

Coun

cil h

as a

dopt

ed S

usta

inab

le R

esou

rcin

g Pr

inci

ples

as

part

of t

he R

esou

rcin

g St

rate

gy. T

he fi

rst p

riorit

y fo

r cap

ital p

roje

cts

expe

nditu

re is

rene

wal

an

d re

plac

emen

t wor

ks, t

he s

econ

d pr

iorit

y is

pro

ject

s th

at a

ddre

ss th

e gr

owth

of t

he C

ity a

nd th

e la

st p

riorit

y is

the

cons

truc

tion

of n

ew a

sset

s to

de

liver

new

faci

litie

s or

incr

ease

d le

vels

of s

ervi

ce.

Scen

ario

1:

Base

Cas

e (R

ate

Peg

only

)

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

355

Scen

ario

2:

IPA

RT D

eter

min

ed S

peci

al V

aria

tion

(13.

2% in

crea

se in

201

7/18

onl

y)


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

356

Scen

ario

3:

Spec

ial V

aria

tion

appl

icat

ion

(13.

2% in

crea

se in

201

7/18

; 14%

incr

ease

in 2

018/

19)

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

357


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

358

3.8

Sens

itivi

ty A

naly

sis

The

tabl

e be

low

ana

lyse

s th

e se

nsiti

vity

of t

he o

pera

ting

resu

lt, b

efor

e ca

pita

l gra

ns a

nd c

ontr

ibut

ions

, to

chan

ges

to k

ey in

puts

:

Ass

umpt

ion

Sens

itiv

ity

Resu

lt

Reve

nue

Gen

eral

Rat

es ln

com

e

lmes

tme

nt In

tere

st

Fees

and

Cha

rges

1% R

educ

tion

1% R

educ

tion

1% R

educ

tion

-$77

6, 1

10 R

educ

ed g

ener

al ra

te re

ve-

nue

rece

ived

in

the

first

yea

r

-$1

,576

,750

Red

uced

inte

rest

re-

ceiv

ed in

the

first

yea

r

-$53

7,09

0 Re

duce

d Re

venu

e in

the

first

yea

r

Expe

ndit

ure

Loan

Inte

rest

Rat

e

Mat

eria

ls &

Con

trac

ts

Expe

nse

(ope

ratin

g)

1%A

dditi

onal

incr

ease

on

a $

1 ,0

00,0

00 lo

an

1 %

Hig

her t

han

fore

cast

$5,9

81 A

dditi

onal

cos

t of r

epay

men

ts

per y

ear

$537

,090

Add

ition

al c

osts

of m

ater

i-al

s an

d Co

ntra

cts

in th

e fir

st y

ear

3.9

Risk

Ass

essm

ent

A ri

sk a

sses

smen

t has

bee

n pe

rfor

med

on

the

finan

cial

pla

nnin

g as

sum

ptio

ns, i

n ac

cord

ance

with

Cou

ncil’

s Ri

sk A

sses

smen

t Pro

cedu

re

(PRD

09/1

69):

Risk

Mat

rix

Cons

eque

nce

1 N

eglig

ible

2

Min

or

3 M

oder

ate

4 M

ajor

5

Seve

re

Likelihood

5 A

lmos

t Cer

tain

M

ediu

m

Hig

h H

igh

Extr

eme

Extr

eme

4 Li

kely

M

ediu

m

Med

ium

H

igh

Hig

h Ex

trem

e

3 Po

ssib

le

Low

M

ediu

m

Hig

h H

igh

Hig

h

2 U

nlik

ely

Low

Lo

w

Med

ium

M

ediu

m

Hig

h

1 Ra

rely

Lo

w

Low

M

ediu

m

Med

ium

H

igh

Like

lihoo

d

5

Alm

ost C

erta

in Is

exp

ecte

d to

occ

ur in

som

e ci

rcum

stan

ces

4

Like

ly M

ay o

ccur

at s

ome

time

3

Poss

ible

Not

exp

ecte

d to

occ

ur

2

Unl

ikel

y Li

kely

to o

ccur

in e

xcep

tiona

l circ

umst

ance

s

1

Rare

ly H

ighl

y un

likel

y to

occ

ur in

the

fore

seea

ble

futu

re

Cons

eque

nce

1

Neg

ligib

le N

eglig

ible

fina

ncia

l los

s - u

p to

1%

of C

ounc

il’s

budg

et

2

Min

or M

inor

fina

ncia

l los

s - u

p to

3%

of C

ounc

il’s

Budg

et

3

Mod

erat

e Si

gnifi

cant

fina

ncia

l los

s - u

p to

10%

of C

ounc

il’s

Budg

et

4

Maj

or M

ajor

fina

ncia

l los

s - u

p to

20%

of C

ounc

il’s

Budg

et

5

Seve

re E

xten

sive

fina

ncia

l los

s - u

p gr

eate

r tha

n 20

% o

f Cou

ncil’

s bu

dget

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

359Th

e fo

llow

ing

tabl

e id

entifi

es ri

sks,

rate

s th

em a

nd c

onsi

ders

the

poss

ible

impa

ct o

n Co

unci

l:

Risk

Li

kelih

ood

Cons

eque

nce

Risk

Rat

ing

Pote

ntia

l Lia

bilit

ies

Inac

cura

te p

roje

cted

est

imat

es o

f exp

endi

ture

Li

kely

M

inor

M

ediu

m

Poss

ible

ser

vice

leve

l or c

apita

l pro

ject

cut

s

Unc

erta

inty

of r

even

ue s

trea

m

Rare

ly

Min

or

Low

Po

ssib

le s

ervi

ce le

vel o

r cap

ital p

roje

ct c

uts

Poss

ible

impa

cts

on e

xpen

ditu

re

Empl

oyee

wag

e in

crea

se h

ighe

r tha

n 2.

5%

Unl

ikel

y M

inor

M

ediu

m

Poss

ible

ser

vice

leve

l or c

ap it

al p

roje

ct c

uts

CPI g

reat

er th

an 2

.5%

Po

ssib

le

Min

or

Low

Po

ssib

le s

ervi

ce le

vel o

r cap

ital

pro

ject

cut

s

Borr

owin

g in

tere

st ra

te h

ighe

r tha

n 4.

0%

Like

ly

Min

or

Med

ium

M

ay n

ot b

e ab

le to

con

st ru

ct m

ajor

wor

ks th

at a

re lo

an fu

nded

Incr

ease

of s

uper

annu

atio

n %

Po

ssib

le

Min

or

Hig

h Po

ssib

le s

ervi

ce le

vel o

r cap

ital p

roje

ct c

uts

Cont

ribut

ions

Pla

n (s

94) p

roje

cts

requ

ired

earli

er th

an

affor

dabl

ePo

ssib

le

Maj

or

Hig

h Ca

pita

l pro

ject

s cu

ts. N

ot m

eetin

g ob

ligat

ions

.

Unp

lann

ed ir

nfra

stru

ctur

e fa

ilure

or n

eces

sary

rene

wal

Po

ssib

le

Mod

erat

e H

igh

Poss

ible

ser

vice

leve

l or c

apita

l pro

ject

cut

s

Clim

ate

Chan

ge -

impa

cts

on in

fras

truc

ture

Po

ssib

le

Maj

or

Hig

h M

ajor

redi

rect

ion

of c

apita

l pro

ject

and

mai

nten

ance

bud

gets

Poss

ible

impa

cts

on re

venu

es

Rate

peg

ging

low

er th

an 2

.5%

Po

ssib

le

Min

or

Med

ium

Po

ssib

le s

ervi

ce le

vel o

r cap

ital p

roje

ct c

uts

Fina

ncia

l Ass

ista

nce

Gra

nt re

duct

ion

Unl

ikel

y M

inor

Lo

w

Poss

ible

ser

vice

leve

l or c

apita

l pro

ject

cut

s

Inab

ility

to u

se H

olid

ay H

aven

gen

erat

ed in

com

e on

ot

her c

row

n re

serv

esPo

ssib

le

Mod

erat

e H

igh

Poss

ible

ser

vice

leve

l or c

apita

l pro

ject

cut

s

Inte

rest

pai

d on

inve

stm

ents

is lo

wer

than

3.1

5%

Poss

ible

M

inor

Lo

w

Poss

ible

ser

vice

leve

l or c

apita

l pro

ject

cut

s

Land

Sal

es ta

rget

s no

t met

Po

ssib

le

Mod

erat

e H

igh

May

not

be

able

to c

onst

ruct

wor

ks fu

nded

from

Str

ateg

ic P

roje

cts

Rese

rve

or S

trat

egic

Pro

pert

y A

cqui

sit i

on R

eser

ve

Coun

cil i

nves

tmen

ts fa

il to

retu

rn p

rinci

pal

Poss

ible

M

inor

M

ediu

m

Poss

ible

ser

vice

leve

l or c

apita

l pro

ject

cut

s

Oth

er ri

sks

asso

ciat

ed w

ith

key

proj

ects

Recl

aim

ed E

fflue

nt M

anag

emen

t Sch

eme

gran

t not

av

aila

ble

- sub

sidi

sed

sche

me

Unl

ikel

yM

ajor

M

ediu

mPr

ojec

t may

be

spre

ad o

ver a

long

er t

ime

perio

d, b

orro

w fu

nds,

Se

wer

age

fees

may

incr

ease

Nor

th N

owra

Str

ateg

ic R

oads

- ap

prov

als

requ

irem

ent

beyo

nd b

udge

tPo

ssib

leM

ajor

H

igh

Capi

tal p

roje

ct c

uts


CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

360

3.10

Per

form

ance

Mon

itori

ngCo

unci

l will

mon

itor i

ts a

ctua

l per

form

ance

aga

inst

the

Long

Ter

m

Fina

ncia

l Pla

n an

d as

sess

its

long

term

fina

ncia

l sus

tain

abili

ty, t

hrou

gh

the

use

of p

erfo

rman

ce m

easu

res.

A b

road

rang

e of

mea

sure

s ha

ve b

een

chos

en, s

ome

are

curr

ently

repo

rted

by

Coun

cil i

n N

ote

13 o

f the

Gen

eral

Pu

rpos

e Fi

nanc

ial R

epor

t, In

com

e St

atem

ent,

Not

es 2

and

3 o

f the

Sp

ecia

l Pur

pose

Fin

anci

al R

epor

t. A

dditi

onal

mea

sure

s ha

ve b

een

chos

en

from

the

Aus

tral

ian

Infr

astr

uctu

re F

inan

cial

Man

agem

ent G

uide

lines

to

ensu

re a

com

preh

ensi

ve v

iew

of C

ounc

il’s

finan

cial

sus

tain

abili

ty.

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

3613.

10.1

.1

Defi

nitio

ns a

nd H

isto

rica

l Res

ults

Perf

orm

ance

Mea

sure

s - D

efini

tion

s an

d H

isto

rica

l Res

ults

lndi

cato

rD

escr

iptio

nFo

rmul

aTa

rget

Act

ual R

esul

t - 2

015/

16

Cons

olid

ated

Gen

eraI

Wat

erSe

wer

Gen

eral

Pur

pose

Fin

anci

al R

epor

t - N

ote

13

Ope

ratin

g Pe

r-fo

rman

ce R

atio

Mea

sure

Cou

ncil’

s ac

hiev

emen

t of

con

tain

ing

oper

atin

g ex

pen-

ditu

re w

ithin

ope

ratin

g re

venu

e

Tota

l con

tinui

ng o

pera

ting

reve

nue

(exc

l Cap

Gra

nts

& C

ontr

ib)

- Ope

ratin

g Ex

pens

es

Tota

l con

tinui

ng o

pera

ting

reve

nue

(exc

l Cap

Gra

nts

& C

ontr

ib)

Benc

hmar

k is

03.

79%

-5.0

9%18

.69%

25.8

%

Ow

n So

urce

Op-

erat

ing

Reve

nue

Ratio

Mea

sure

fisc

al fl

exib

ility

. It i

s th

e de

gree

of r

elia

nce

on e

xter

nal

fund

ing

sour

ces

such

as

oper

at-

ing

gran

ts a

nd c

ontr

ibut

ions

Tota

l con

tinui

ng o

pera

ting

reve

nue

(less

ALL

gra

nts

and

cont

ri-bu

tions

)

Tota

l con

tinui

ng o

pera

ting

reve

nue

Abo

ve 6

0%78

.66%

76

.12%

92.6

4%87

.58%

Unr

estr

icte

d Cu

rren

t Rat

ioTo

ass

ess

the

adeq

uacy

of w

ork-

ing

capi

tal &

its

abili

ty to

sat

isfy

ob

ligat

ions

in th

e sh

ort t

erm

fo

r the

unr

estr

icte

d ac

tiviti

es o

f Co

unci

l

Curr

ent A

sset

s le

ss a

ll Ex

tern

al R

estr

ictio

ns

Curr

ent L

iabi

litie

s le

ss S

peci

fic P

urpo

se L

iabi

litie

sA

bove

1.5

0x2.

14x

1.92

x 21

.31x

4.36

x

Deb

t Ser

vice

Co

ver R

atio

Mea

sure

s th

e av

aila

bilit

y of

op

erat

ing

cash

to s

ervi

ce d

ebt

incl

udin

g in

tere

st, p

rinci

pal a

nd

leas

e pa

ymen

ts

Ope

ratin

g Re

sult

befo

re c

apita

l exc

ludi

ng E

BITD

A

Prin

cipa

l Rep

aym

ents

+

Borr

owin

g In

tere

st C

osts

2 or

abo

ve4.

99x

3.88

x69

.22x

3.32

x

Rate

s, A

nnua

l Ch

arge

s, In

tere

st

& E

xtra

Cha

rges

O

utst

andi

ng

Perc

enta

ge

To a

sses

s th

e im

pact

of u

ncol

-le

cted

rate

s an

d an

nual

cha

rges

on

liqu

idity

and

the

adeq

uacy

of

reco

very

effo

rts

Rate

s, A

nnua

l and

Ext

ra C

harg

es O

utst

andi

ng

Rate

s, A

nnua

l and

Ext

ra C

harg

es C

olle

ctib

le5%

7.51

%4.

99%

14.6

011

.44%

Cash

Exp

ense

Co

ver R

atio

To a

sses

s th

e nu

mbe

r12

x Cu

rren

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at th

e w

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d se

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age

busi

ness

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eet

the

requ

irem

ents

of N

atio

nal

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petit

ion

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y to

ach

ieve

fu

II co

st re

cove

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nue

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ope

ratio

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pera

tion,

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ance

and

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nses

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3.10

.1.2

Lo

ng T

erm

Fin

anci

al P

lan

Resu

lts

CH

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: RES

OU

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G S

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EGY

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CH

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: RES

OU

RCIN

G S

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EGY

364

CH

APT

ER 6

: RES

OU

RCIN

G S

TRAT

EGY

365

3.11

Upd

atin

g an

d Re

view

Th

e LT

FP is

revi

ewed

eac

h ye

ar, a

s pa

rt o

f the

dev

elop

men

t of t

he

Ope

ratio

nal P

lan.

The

revi

ew w

ill in

clud

es a

n as

sess

men

t of t

he p

revi

ous

year

’s pe

rfor

man

ce in

term

s of

acc

urac

y of

the

proj

ectio

ns m

ade

com

pare

d to

the

actu

al re

sults

. Maj

or d

iffer

ence

s be

twee

n bu

dget

and

ac

tual

figu

res

are

docu

men

ted

with

an

expl

anat

ion.

A fu

ll re

view

of t

he

LTFP

is c

ondu

cted

eve

ry fo

ur y

ears

, in

line

with

the

revi

ew o

f the

CSP

.


CH

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: RES

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366

Bridge Rd, Nowra NSW 2541 02 4429 3111Deering St, Ulladulla NSW 2539 02 4429 8999

Address all correspondence to The General Manager, PO Box 42, Nowra NSW 2541 Australia

DX5323 Nowra Fax 02 4422 1816

CHAPTER 6: Resourcing Strategy

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