Future of Local Government Summit Local Government Sustainability

™ Future of Local Government Summit Local Government Sustainability ™ © CT Management Group Pty Ltd 2014

Sustainability � � � To support the community and to continue to provide services the Council must remain sustainable Future financial performance is an indicator of sustainability Solutions are not always financial ™ © CT Management Group Pty Ltd 2014

Council Capacity Continuum Where does your Council sit now? Where will it be in 10 years time? Financially Secure Wants Regional Aquatic Centres, Community Centres, Performing Arts Centres Financially Capable Intermediate Needs Infant Welfare Services, Home Help, Preschool, Parks & Gardens Financially Challenged Basic Needs Roads, Garbage, Health Services ™ © CT Management Group Pty Ltd 2014

Challenges – Broader Environment � Globalisation � Environment Changes � Changing community and social expectations � Decline of traditional industries – agriculture, food processing, manufacturing � Growth in communications – people want access to information ‘now’ � Debt management (national, state & local) � Demographic changes � Smaller Government � Low Carbon Future - Peak oil ™ © CT Management Group Pty Ltd 2014

Challenges – Local Environment Two Speed Local Government Sector Rural � � � Population decline (22/47 Councils recorded negative pop growth 2009 -2012) Low median household income (35/47 Councils median less than $700/wk) 81% of the Communities registered an increase in disadvantage between 2006 -2011 (as measured by the socio-economic disadvantage index) Urban � � � Population growth (2/32 Councils recorded negative pop growth 2009 -2012) Higher median household income (4/32 Councils median less than $700/wk) 66% of the Communities registered an increase in disadvantage between 2006 -2011 (as measured by the socio-economic disadvantage index) � Average of population has increased � Average of population more stable � Aggregation of landholding operations � Increase in population � Growth in properties � Peri-Urban Councils and Regional Cities fair better than rest of the Rural Councils ™ © CT Management Group Pty Ltd 2014

Local Environment - Rural ™ © CT Management Group Pty Ltd 2014

Challenges – Local Government � � Changing community and social expectations Pressure on Councils to retain their identity and independence � Tighter public sector funding in the future � Community resistance to large rate increases � Transfer of service provision � Most Councils have an unfunded community infrastructure gap over next 20 years � $2. 3 billion unfunded community infrastructure gap over next 10 years ™ © CT Management Group Pty Ltd 2014

Challenges – Local Government Rural Urban � Area of State – 217, 000 km^2 (95. 6%) � Area of State – 10, 100 km^2 (4. 4%) � Population – 1, 220, 000 � Population – 4, 400, 000 � � Pop Density – Min 0. 5 h/km^2 – Max 360 h/km^2 Road Length – 105, 000 km � � Pop Density – Min 61 h/km^2 – Max 4, 860 h/km^2 Road Length – 24, 500 km ™ © CT Management Group Pty Ltd 2014

Challenges – Organisational � Changing community and social expectations � Managing expectations � Priority setting � Aging Workforce � Skill shortages � Vested interests resist change � Staff are struggling to find the time and resources to do their duties ™ © CT Management Group Pty Ltd 2014

Council Finances ™ © CT Management Group Pty Ltd 2014

Employee Costs � Annual Increase 5. 0~5. 5% ™ © CT Management Group Pty Ltd 2014

Materials & Services � Annual Increase 3. 9~4. 5% ™ © CT Management Group Pty Ltd 2014

Operating Expenses � � Annual Increase ~4. 4% Reduction managed by lowering service standards each year ™ © CT Management Group Pty Ltd 2014

Capital Investment ™ © CT Management Group Pty Ltd 2014

Total Income � Annual Increase 4. 4~4. 6% ™ © CT Management Group Pty Ltd 2014

Rates & Charges � Inflation Rate (CPI) – 2. 5~2. 9% ™ © CT Management Group Pty Ltd 2014

Long Term Financial Plan Objectives � It should be based on an organisation achieving its affordable service level objectives whilst maintaining its financial sustainability* Strategy � It should include a description of the financial strategy that is based on Review � It should be reviewed annually * Long Term Financial Planning – Practice Note 6 (IPWEA/ACELG) - 2012 ™ © CT Management Group Pty Ltd 2014

Financial Management Sustainability Measures – The importance of a GOOD LTFP � Must manage in a resource constrained environment � Community will not continue to accept large rate increases � Ensure that the financial modelling advice provided is sound ™ © CT Management Group Pty Ltd 2014

Underlying Operating Position ™ © CT Management Group Pty Ltd 2014

Action Required � The current way of doing things is no longer sustainable � Costs increasing above resident’s capacity to pay � Service delivery under threat � Asset degrading � Risk of government intervention � Need a new way ™ © CT Management Group Pty Ltd 2014

Service Driven View Customers/Residents/Community Council Services External Focused Services Asset Support Services Internal Services ™ © CT Management Group Pty Ltd 2014

Service Delivery Service Planning (Effectiveness) � Strategic integrated planning � � � Customer/community focused Allocate available resources to highest need � � Linked to other levels of government Comparative choice Improve service outcomes Improve customer satisfaction Transparency and accountability Procurement (Efficiency) ™ © CT Management Group Pty Ltd 2014

Support Services Target efficiency gains of over 30% Efficiency considerations � Build systems that are customer and service centric � � Integrated systems linked to other levels of government � � � Adaptive and responsive Joined up Government Common systems and processes across Councils Shared Services Regional Hubs � Shared staff � Contracts � � Use of advanced technology Cloud computing (software as a service) � Bureau Services � � � Common data sets Common systems and processes across Councils ™ © CT Management Group Pty Ltd 2014

Capital Works � � Fund renewal demand New and Upgrades to support changes in service delivery Account for all life cycle costs Decisions based on need within financial capacity ™ © CT Management Group Pty Ltd 2014

Summary Management & Financial Systems of the future must be: � � � Customer focused Adaptive Flexible � � � Responsive Robust Integrity ™ © CT Management Group Pty Ltd 2014