Agenda
About QTC
Products and Services
– Debt and Investments
– Economics Services
– Education Services
What’s new?
2
3
Overview of QTC
QTC continues to be the central financing authority and
corporate treasury services provider for the Queensland
Government. Queensland’s AA credit rating means lower
cost of funds
Services include:
– cost-effective debt funding and management;
– short-to-medium term cash management facilities;
– financial risk management advisory and
– specialist public finance training facilities to Queensland’s public
sector
4
Overview of QTC
Why QTC?
Value-for-money
QTC acts in the interests of the
Queensland public sector our
fees are charged on a ‘cost
recovery’ basis.
Experienced people
QTC values our staff and draw
on our range of specialist skills,
expertise and experience to
deliver high quality outcomes to
our clients.
Whole-of-state focus
QTC is committed to delivering
the best possible financial
outcomes for the State and our
public sector clients.
Trusted Government
advisor
QTC is a trusted and
independent service provider.
We understand the political
environment and policy context.
Strong and Stable
reputation
QTC has a strong reputation in the
global markets for consistency,
stability and transparency, which
provides the State with sustainable
access to cost-effective funding to
secure the growth of Queensland.
Client Focus
QTC builds strong partnerships
with our clients to deliver simple
and well designed solutions that
maximise value for our clients
and the State.
QTC has the knowledge and resources to provide LG with solutions
5
Overview of QTC
Queensland’s central financing authority
Raise and manage funds for public sector entities
Operate on a cost-recovery basis
Provide the following key services to our clients:
– Cash management and investment
– Financial risk management and advisory services
– Education, training and information services
What is QTC and what do we do
Policy maker
Commercial ‘bank’
Profit generator
Government owned corporation
Public service department
What QTC is not
Overview of QTC
6
Client Services DivisionCLIENT SERVICES
Rupert Haywood
Executive General Manager
STRATEGIC PARTNERS
Diana Lollato
General Manager
CENTRAL AGENCIES
Seamus Parker
Director
TREASURY & DEPARTMENTS
Peter Dann
General Manager
LOCAL GOVERNMENT &
STATUTORY BODIES
Michelle McMullan
General Manager
TREASURY DEPARTMENT
David Johnston
Director
UTILITIES
Catherine Black
Director (A/g)
TRANSPORT
Elise Williams
Director
DEPARTMENTS
Stuart Crockett
Director
URBAN LOCAL GOVERNMENT
& UNIVERSITIES
John Clifton
Director
REGIONAL LOCAL GOVERNMENT
Anthony Coates
Director
STATUTORY BODIES & REMOTE
LOCAL GOVERNMENT
Lidia Zazzera
Director
EDUCATION SERVICES
7
Overview of QTC
LEGEND
South-East Qld Local Govts
Regional Local Govts
Remote Local Govts
Indigenous & Islander Local
Govts
QTC’s Local Government Group
Overview of services to local governments
8
QTC’s objective is to support the State’s financial success with a focus on whole-of-State outcomes.
Advisory Education and training
Credit reviews
Strategic and Financial
Sustainability Reviews
Project Evaluation and
Business Case
Assessments
Financial modelling for
decision making
Corporate Financial
Management
Business Case analysis
and project evaluation
Understanding financial
statements
Governance for new
Councilors
32
3.1
3.2
3.3
3.4
2.1
2.2
2.3
2.4
Within QTC’s Client Services team, QTC delivers on its objectives through 3 keys areas
Debt and investment
Debt funding and liquidity
management
Cash management
1
1.1
1.2
General financial
guidance and advice2.5 Tailored Courses3.5
9
Products and services – debt and investmentInvestmentEnsures surplus cash not idle until needed with good rates of return on a risk-adjusted basis. Investment
Products include; Capital Guaranteed Cash Fund, Working Capital Facility and Fixed Rate Deposits
10
Capital Guaranteed Cash Fund - Overview
QTC’s Capital Guaranteed Cash Fund
provides strong relative returns and
investment security. The key benefits:
Size and liquidity: One of the largest
Cash Funds in Australia, with
approximately $9.4 billion in AUD.
It also provides daily liquidity.
Features include:
Security: Guaranteed 100% return on capital invested (monthly). Assets are composed of
high quality credit (A- minimum).
Diversity: Investments include money market securities, floating rate notes, RMBS and
derivatives.
Low fees: Just 0.103% p.a. with no establishment or transaction fees.
13%
28%
43%
15%
1%
Whole of Government Investment (October 2015)*
Whole of GovernmentInvestment
Departments
Government OwnedCorporations
Local Government
Universities
Other
*excluding internal investments
11
Competitive returns: Returns are consistently higher than Bloomberg Aus Bond Bank Bill Index
and its peers. Strong focus on adding value.
Capital Guaranteed Cash Fund - Performance
The Cash Fund outperformed the
Bloomberg AusBond Bank Bill Index
by 0.66 per cent during the month of
October 2015
12
Local government and QTC – debt funding
Whole of government debt $93 billion of which around 8% is local government
debt (July 2015)
Products and services – Economics Services
13
Tailored monthly economic chart packs and publications provided on a weekly and monthly basis. Presentations and
access to additional forecast data or research provided as and when required.
14
Products and services – Education Services
Courses and workshops include:
– Business Cases in Practice course
– Central Treasury Management course
– Corporate Financial Management course
– Cost of Capital workshop
– Credit Analysis course
– Financial Management for Decision Makers
course
– Procurement workshop
– Project Evaluation workshop
– Project Management workshop
– Understanding Derivatives workshop, and
– Understanding Financial Statements course Over 850 clients attended courses in 2014-15 (from
103 organisations, including 17 LG) - participants
rated services 8.8/10
Tailored for the public sector and offers a unique
whole-of-State overlay
15
What’s new?
Product simplification
Asset Management Planning and long term forecasting
LGFM v3
Project Decision Framework
Property forum
WISDOM
Strategic Financial Reviews
16
Product simplification – looking ahead
1. Industry standard products
2. New system
3. Streamlining QTC processes
Approach – from 1 July 2016
17
Product simplification
An overview
QTC is simplifying its products and processes:
– To align with industry standards and remove
complexity
– To allow QTC to be more responsive to clients’ needs
and economic and market conditions
– In direct response to client feedback
18
Product simplification
An overview
Benefits include:
– Increased cost certainty
– Loans that are more transparent and easy to understand
– Removal of annual loan agreements and varying terms and
conditions
QTC’s fees and cost of funds remain the lowest available
to clients for comparable products
Launch of new products aligning with commencement of
the 2016/17 State Borrowing Program
More information coming soon
19
Asset Management Planning and Long Term Financial Forecasting
Improving the link – integrated planning
20
Asset Management Planning and Long Term Financial Forecasting
Financial statements linked to AMPs through
non-current asset accounting policies
Consideration of current replacement cost,
planned maintenance, estimated useful lives
(and potential obsolescence), segmentation
and componentisation required
LTFFs supported by AMPs will be more
relevant and reflect true cost of capex,
maintenance and depreciation
Improving the link – financial statements and NCAAP
QTC assisting with understanding :
issues and challenges
extent and quality of linkages – AMP and financials and NCAAP
impact of AM decisions on sustainability
21
What’s new - LGFM V3
A key component in supporting financial sustainability is a robust
forecast model and process – significant rollout to LGs to date
Timelines and progress to date:
• LGFM v3.0 external roll-outSep-14
• LGFM v3.0.1 release, roll-out and on-going support and training
Jan-15
• LGFM v3.0.1 release June -15
• LGFM v3.1 release and roll-outComing soon
• Business requirements + scopeNov-12 to Jun-13
• Model specificationJun-13 to Aug-13
• Draft modelAug-13 to Nov-13
• Independent review + finalise modelNov-13 to Feb-14
• Client beta testing + model fixesFeb-14 to Aug-14
• External roll-outSep-14 onwards
aa
aa
22
What’s new - LGFM V3.0.2
Past and present
Setting the standard
• 3-way financial forecast
• 10 years horizon
• Op. revenue and expenses
• Loan calculator
• PP&E inc. depreciation
• Calculated interest revenue
on cash
• Standardised financial
ratios
Keeping the best of v2.5 -
adding
• Business units
• Additional debt types
• More accurate interest
• Drivers for revenues and
expenses
• Revaluations for assets
• Dashboards
• Latest metrics and ratios
• Scenarios
• More efficient formulas
LGFM v2.5 LGFM v3.0
23
What’s new - LGFM V3
Present and future
Building on v3.0
Suggested enhancements
have included:
• More business units
• More line items for
revenues, expenses and
capital expenditures
• Improved internal
transactions which more
accurately reflect practise
• User comments
Adapting to future needs
This will be guided by the
needs of our clients
• What features would help
improve financial
sustainability?
• What features would make
it easier to use?
• What extra internal and
external analysis would you
like to use it for?
LGFM v3.1 The Future
24
What’s new -LGFM V3
Recent updates
• The “Import LGFM Data” function
copies across user inputs as
formulas instead of values,
preserving links to external files
that may be in place
• Export charts from the output
worksheets of the Model to a new
Excel workbook
25
What is the Project Decision Framework?
Concept
selection
Pre-
feasibility
Feasibility
Project Proposals
$ $ $ $ $ $
Approval $$
Planning: Are we doing the right project?Delivery: Are we doing
the project right?
Mapped across a typical project life cycle
In scope
It’s a decision-making process
for selecting the most viable
projects against available
budget – using a ‘funnel effect’
26
Tools & templates – Policy and process
Policy
Process
1. Concept
Approval
template
1. Options
Analysis
template
2. Project Risk
Assessment
Tool (Initial)
3. Whole-of-life
Costing Tool
1. Business Case
template
2. Project Risk
Assessment Tool
(Comprehensive)
1. Project Plan
template1. Draft whole-of-
Council policy
2. Draft Terms of
Reference for
Decision Making
Group
3. Guiding principles
for evaluation of
proposals
Governance
Tools & templates
Process
Policy
Tools & templates
Project Portfolio Tool
27
What’s in the PDF kit? – QTC Connect
Outline for
Local Government Leaders
1. Council policy
2. Terms of Reference
3. Guiding Principles
4. Concept Approval
template
5. Options Analysis
template
6. Business Case
template
7. Project Plan
template
8. WOLC Tool & User Guide
9. Project Risk Assessment Tool & User Guide
10. Project Portfolio Tool & User Guide
11. Quick Reference Guide (A5 card)
Templates (Microsoft Word)
User Guide for practitioners
28
What’s new - Insights with QTC
The focus was on Qld and
matters relevant to public
sector portfolios
Over 40 attendees from across
state government agencies,
GOCs and Councils
QTC arranged economists and
analysts from Citigroup and
Urbis to give their views on:
the macro environment, and
emerging trends in the sector
Property forum – Oct 2015
29
Integrated Strategic Water Demand Options Model….WISDOM
Cost and
Revenue
Trunk Water
Network
Capacity
Water
Demand
Demand
management
initiatives
Optimise
B CA B CA
Better decisions …
What’s new – WISDOM
30
Dam 1
Pipeline 2 Pipeline 3
Reservoir 1
Pipeline 4
Pipeline 1
Network supply
Demand
Segment 1
Demand
Segment 2
Demand
Segment 3
End Use1 End Use 2End user demand
Water Service
Area 1
Water Service
Area 2
Demand
Initiative 1
Demand
Initiative 2
Demand management
campaignsDemand initiatives drive changes in consumption
patterns, which lead to changes in demand
New Asset
Project B
New Asset
Project C
New Asset
Project A
New Asset
Project D
CAPEX &
OP&M costs
Demand is balanced
against supply in each
water service area…
Each network element
is ‘optimised’ to
deliver the right
capacity at the right
time and at the lowest
cost…
How does WISDOM work?
31
WISDOM key outputs (continued)
Highlights from WISDOM dashboards
DM initiative mappings summary
Demand initiativeTiming Scenario Demand segment Water end use Profile Initiative description
Start year end End year end Bas
e ca
se
Sce
nario
A
Sce
nario
B
Sce
nario
C
Sce
nario
D
Sce
nario
E
DS
eg 1
DS
eg 2
DS
eg 3
DS
eg 4
DS
eg 5
DS
eg 6
DS
eg 7
DS
eg 8
DS
eg 9
DS
eg 1
0
End
Use
1
End
Use
2
End
Use
3
End
Use
4
End
Use
5
End
Use
6
End
Use
7
End
Use
8
End
Use
9
[End
Use
] 10
Ave
. Day
Pk.
Day
Sprinkler Jun-17 Jun-19 - 1 - - - - 1 - 1 1 - - - - - - - 1 - - - - - - - - 1 - Sprinkler trade-in program
Showerhead Jun-18 Jun-20 - 1 - - - - - 1 - 1 1 - - - - - - - - - - 1 - - - - 1 - Showerhead retrofit program
32
Strategic Financial Review
Council ‘health check’
Comprehensive analysis of key risks and issues
Focus on 4 main areas:
– Regional, economic & strategic factors
– Governance and planning processes
– Financial management
– Infrastructure management
Available to all Councils, including non-borrowers
What is it?
33
Strategic Financial Review
Considers alignment of financial strategy with broader corporate
strategy & external environment
Assessment of risk & mitigation
Practical recommendations to address any issues identified
‘Traffic light’ system to evaluate Council’s approaches in mitigating key
risks and issues
What’s in it for Council?
Approach
Assessment
Description
Appropriate approach
Approach may require some further consideration to enhance outcomes
Approach requires considerable review to achieve outcomes
Approach requires substantial review to achieve outcomes
34
Strategic Financial Review
Discussions with Council’s key financial, technical, engineering &
senior management staff
Considerations:
– Council’s long term financial forecast, performance metrics and budgetary
analysis
– Council’s strategic, community & asset management plans
– Internal financial reporting processes
– Capital project decision-making processes
– Management of commercial business units
– Sensitivity/scenario analysis to test key risks and issues
Approach
Questions?
35
Jodi Campbell
Telephone: 07 3842 4724
Email: [email protected]
Jan Xanthopoulo
Telephone: 07 3842 4757
Email: [email protected]
36
DisclaimerQTC has prepared this presentation for use solely for the Local Government Finance Professionals Association of
Queensland for general information purposes only.
The recipient shall not use the presentation for any purpose other than the purpose for which the presentation was
expressly provided. The presentation contains confidential information. None of its contents may be provided or disclosed
to any other party without QTC’s express written consent.
The information in this presentation is provided by QTC in good faith in relation to the information available at the time of
its preparation and on the basis of information supplied to QTC by third parties. QTC has not independently verified the
information supplied to it and accordingly does not represent that the information provided to QTC is accurate or complete
and it should not be relied upon as such. QTC is under no obligation or duty to notify anyone if there is any change in any
information or any new information or if it forms a different opinion at any time after the date of this presentation.
Neither QTC nor any of its employees or agents accepts any liability for any loss or damage suffered by any person as a
result of that person or any other person placing any reliance on, or acting on the basis of, the contents of this
presentation. To the extent permitted by law, QTC expressly excludes any representation or warranty in relation to the
accuracy, currency and completeness of the presentation. To the extent permitted by law, QTC limits its liability to the
amount of any fees paid to QTC for this presentation.
The recipient acknowledges that QTC is not a legal, tax or accounting advisor and that independent expert advice from
practitioners in the relevant disciplines should be obtained on those matters before acting upon the information contained
in this presentation.
© Queensland Treasury Corporation 2015
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