Archive for July 25th, 2013

The recent VAGO Report - Organsisational Sustainability for Small Councils tabled on 12th June 2013 identifed some finanical sustainabiltiy indicators for counsils.  These are reproduced below

Financial sustainability indicators for councils

Indicator Formula Description
Underlying result (per cent) Adjusted net surplus/ total underlying revenue A positive result indicates a surplus. The larger the percentage, the stronger the result. A negative result indicates a deficit. Operating deficits cannot be sustained in the long term.Underlying revenue does not take into account non-cash developer contributions and other one-off (non‑recurring) adjustments.
Liquidity Current assets/ current liabilities Measures the ability to pay existing liabilities in the next 12 months.A ratio higher than 1:1 means there is more cash and liquid assets than short‑term liabilities.
Self-financing (per cent) Net operating cash flows/ underlying revenue Measures the ability to replace assets using cash generated by the entity’s operations.The higher the percentage, the more effectively this can be done.
Indebtedness (per cent) Non-current liabilities/ own-sourced revenue Comparison of non-current liabilities (mainly comprised of borrowings) to own-sourced revenue. The higher the percentage, the less able to cover non‑current liabilities from the revenues the entity generates itself.Own-sourced revenue is used (rather than total revenue) because it does not include capital grants, which are usually tied to specific projects.
Capital replacement Capital expenditure/ depreciation Comparison of the rate of spending on infrastructure with its depreciation. Ratios higher than 1:1 indicate that spending is faster than the depreciation rate.This is a long-term indicator, as capital expenditure can be deferred in the short term if there are insufficient funds available from operations, and borrowing is not an option.
Renewal gap Renewal and upgrade expenditure/depreciation Comparison of the rate of spending on existing assets through renewing, restoring, and replacing existing assets with depreciation. Ratios higher than 1:1 indicate that spending on existing assets is greater than the depreciation rate.Similar to the investment gap, this is a long‑term indicator, as capital expenditure can be deferred in the short term if there are insufficient funds available from operations, and borrowing is not an option.

Source: Victorian Auditor-General’s Office.

Risk assessment criteria for financial sustainability indicators

Figure A2 Risk assessment criteria for financial sustainability indicators

Source: Victorian Auditor-General’s Office.

Overall financial sustainability risk assessment

Figure A3 Risk assessment criteria for financial sustainability indicators

Source: Victorian Auditor-General’s Office.

The Victorian Auditor General’s Office has released a report on the Orgnisational Sustainability of Small Councils, tabled 12th June 2013.

Find the report to read at this url http://www.audit.vic.gov.au/reports_and_publications/latest_reports/2012-13/20130612-small-councils.aspx

Findings included advice around:

  • Financial trends
  • Effective financial planning and asset management
  • Effective and efficient service delivery
  • Recruiting and retaining qualified and skilled staff
  • Population ageing and/or population changes
  • Defined benefits superannuation shortfall
  • Support and guidance

The 7 Recommendations made:

  1. Councils should clearly identify and publicly report their sustainability challenges and associated strategies and actions, including how they will monitor, report and evaluate their effectiveness, using relevant and appropriate performance indicators.
  2. Yarriambiack Shire Council should develop a long-term financial plan and all councils should update their existing plans in accordance with better practice.
  3. Councils should review service planning and delivery in accordance with Best Value Principles as a priority, including:
  • assessing overall service delivery levels to determine appropriate levels and provide the rationale for their decision
  • consulting with their communities on their ability and willingness to pay for desired services in the development of the council plan
  • developing a plan to regularly review all services over time.

The Department of Planning and Community Development should:

  1. review and update its asset management guidance
  2. consider making the development of a long-term financial plan mandatory and provide support and guidance in the development of these
  3. routinely review the guidance and support it provides so that it is aligned with areas of highest need and addresses gaps in councils’ capability and capacity
  4. expedite implementation of the planned local government performance reporting framework and make sure it includes appropriate sustainability indicators.

Mildura Solar Plant has opened.  It is capable of providing electricty for 500 homes.

Click on the picture from ABC Radio for more information

 

 

 

 

 

Read this artilce from the Weekly Times 17th July 2013 edition regarding the project http://www.weeklytimesnow.com.au/article/2013/07/17/576923_latest-news.html

 

 

 

 

 

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