Attachment 2

COUNCIL PLAN 2008 – 2012

STRATEGIC RESOURCE PLAN

NORTHERN GRAMPIANS SHIRE COUNCIL

 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

TABLE OF CONTENTS

Section
Page
1. Executive Summary 3
1.1 Purpose of a Strategic Resource Plan
3
1.2 Content of a Strategic Resource Plan
3
1.3 Connection of Strategic Resource Plan to Planning Framework
3

2. Financial Resources 4
2.1 Financial Plan 2007-2011 4
2.2 Principles and Objectives 4
2.3 Key Assumptions
5
2.4 Borrowing Strategy 5
2.5 Fees and Charges Strategy 6
2.6 Rate Strategy 6
2.7 Differential Rate for Various Property Categories
6

3. Human Resources
7
3.1 Staffing Profile
7
3.2 Staff Composition
7
3.3 Salary Expenditure and Budget Arrangements 7

4. Infrastructure Strategy
8

5.1 Statement of Financial Performance 2008-2012

9
5.2 Statement of Financial Position 2008-2012
10
5.3 Statement of Cash Flows 2008-2012
11

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Strategic Resource Plan – 2008-2012

5.4 Statement of Capital Works 2008-2012 12

5.5 Key Strategic Activities
13

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

1.0 EXECUTIVE SUMMARY

1.1 Purpose of a Strategic Resource Plan

Under Section 126 of the Local Government Act 1989 as amended by the
Local Government (Democratic Reform) Act 2003, Council is required to
prepare a Strategic Resource Plan in conjunction with the Council Plan.
The Strategic Resource Plan (SRP) provides a high level, medium term
view on how Council intends to utilise its resources to achieve the strategic
objectives and strategies adopted in the Council Plan for 2008-2012.

1.2 Content of a Strategic Resource Plan

The content of Northern Grampians Shire Council’s Strategic Resource Plan

is as follows:
 The SRP document attempts to establish a financial framework over the
next four years which considers and implements financial strategies to
achieve particular objectives.
 The SRP assists in ensuring that Council complies with sound financial
management principles, as required by the Local Government Act
(1989), and plans for the long-term sustainability of Council.
 The SRP identifies and assesses the resources, financial and non-
financial, required to achieve the objectives and strategies adopted in
the Council Plan. Non-financial resources include human resources,
plant & machinery, information technology, and Council’s asset base.
 The SRP formulates a basis by which Council’s adherence to policies and
strategies can be measured.
 The document considers the relationship between the level of Council
services and internal resources needed to deliver these services.

1.3 Connection of Strategic Resource Plan to Planning

Framework

The Strategic Resource Plan (SRP), which is included with the Council Plan,
summarises the financial and non-financial impacts of the objectives and
strategies and determines the affordability of these items, whilst
maintaining financial sustainability of Council. The SRP document is also
updated on an annual basis in conjunction with the Council Plan review.

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

The following diagram shows the strategic planning framework:

Identifying Community
LONG TERM Needs, Objectives,
Strategies and
Activities

Need for financial sustainability

MEDIUM TERM Council Plan Strategic Resource

Plan
Is the Council Plan affordable?

SHORT TERM Department Annual Annual Budget

Plans

Various Council
Strategies

2.0 FINANCIAL RESOURCES

2.1 Financial Plan 2008-2012

The following pages present the Financial Plan for the years 2008-2012,
which is in line with the Council Plan time frames. The Financial Plan
considers the objectives and strategies specified in the Council Plan and
attempt to express them in financial terms.

2.2 Principles and Objectives

In preparing the financial plan, Council has complied with the following
guidelines:
 Prudent financial management principles;
 Ensure that rate increases are not excessive, and are fairly distributed;
 The financial impacts on future generations from Council decisions must
be considered;
 Achievement of a balanced cash budget each year;
 Maintenance of strong liquidity position for Council; and
 The budgeted amounts of both income and expenditure are made on a
conservative basis and in practice this has proved to be appropriate and
prudent to the unforseen occurring.

2.3 Key Assumptions

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

 Generally, the Financial Plan is prepared on the basis that Council will
continue to provide the same or similar level of service as per previous
year;
 Allowance for increases in the cost of goods and services of around 3%
per annum i.e. CPI;
 Salaries and wages include an increase to the next band level for
budgetary purposes in accordance with the relevant Awards; and an
EBA wage increase of 4% per annum for the life of the plan;
 Victorian Grants Commission funding has been updated to reflect
anticipated increase in allocation for 20082009;
 Capital works funding for Roads to Recovery maintained at $1,117,000
in 2008/2009 and then remain consistent up to 2011/2012.
 Existing fees and charges will be increased by the Consumer Price Index
(CPI) per annum. (indicative amount set at 3% per annum). Based on
current estimates overall income from User Fees & Charges is estimated
to only increase by 2%;
 Operating grants to be based on confirmed funding levels;
 Capital grants are predicted to decrease from the high levels of recent
years. The Capital Works program allowed for from 2008/2009 have
reduced to over current levels to reflect this anticipated decrease in
Capital grants;
 Investment interest rates are expected to be 6.5% per annum on
average during the four years of the Strategic Resource Plan;
 Increase in overall rate revenue allowed for at 7% per annum;
 Garbage charges to be set in line with cost increases of providing the
service;
 Depreciation expense is based on current estimated asset values at 30
June 2007; however this is subject to asset revaluations from time to
time.

2.4 Borrowing Strategy

The plan currently provides for no new loan funds to be raised.

Council has also allowed for no further borrowings for the remainder of the
plan. Council reserves the right to plan for new loans should the need
arise.

2.5 Fees and Charges Strategy

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Strategic Resource Plan – 2008-2012

Proposed in the 2008/2009 Annual Budget, fees and charges make up

12.4% of total Council’s revenue. For the past three years, fees have been
generally increased by 3% per annum. A review of charge was undertaken
in June 2008. This new fee base will be adjusted by 3% per annum for the
remainder of the plan period. However, fees and charges for each area are
considered individually, and set according to the costs involved and
estimated volumes.
2.6 Rate Strategy
Introduction
In developing the long term financial plan, rates and charges were
identified as an important source of revenue, accounting for 43.8% of the
total operating revenue received by Council annually. Planning for future
rate increases has therefore been an important component of the long
term financial planning process.
In the long term, however, it must be acknowledged that Northern
Grampians rate levels need to be assessed to ensure that with the
increasing demands on infrastructure and the burden of additional costs
shifted to Local Government, the Council is able to deliver the level of
service required.
Percentage Increase in Revenue
Year from Rates & Charges

1999/2000 6.0%
2000/2001 11.3%
2001/2002 5.0%
2002/2003 5.9%
2003/2004 7.95%
2004/2005 7.75%
2005/2006 11.8%
2006/2007 3.6%
2007/2008 6.7%
2008/2009 7.0%
2009/2010 7.0%
2010/2011 7.0%
2011/2012 7.0%

2.7 Differential Rate for Various Property Categories

Following a review of the differential rating systems Council has
determined that there will be no change this year in the rating differentials
that were established for 2007-2008.
Rating Code Description % of Gen Rate
G Residential & Vacant Land 100%
U Industrial Properties 100%
C Commercial Properties 100%
F Farm rate 65%
S Cultural & Recreation Properties 58%

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Strategic Resource Plan – 2008-2012

3.0 HUMAN RESOURCES

The Northern Grampians Shire Council is a dynamic organisation that is an

integral part of the community. The Council acknowledges that its greatest
resource is our employees. Without these people, there is no Council.

3.1 Staffing Profile

The Northern Grampians Shire Council has a stable operating environment

with service levels predicted to remain constant during the coming four
year period.

3.2 Staff Composition

The demographic projections indicate to us that our population level will

remain relatively static but consistent with the national average will
continue to show further signs of ageing. The impact of an ageing
population will be felt in terms of Council’s services in the area of Home
Care. Continued cost shifting by other levels of government may also
require additional staffing.

Occupational Health and Safety and consultation with staff are important
elements of Council’s staff management process. Training of staff is also of
great importance, particularly in the areas where there is continual
technological change. Council’s Budget both reflects the need and the
commitment of Council to meet that need in the areas of Occupational
Health and Safety and training.

Staff performance will continue to be reviewed on an annual basis

We will continue in 2008/09 year with the setting of indicators to measure,

challenge and monitor our efficiency. Coupled with a more streamlined
reporting structure, Northern Grampians will begin to reap the rewards of a
more focused organisation that is constantly reviewing and renewing the
way it does its job.

3.3 Salary Expenditure and Budget Arrangements

Forecast expenditure on staff costs in the 2008/2009 budget is $9.2 million.

The total in the future financial years, if the existing service delivery
arrangements are retained or enhanced, will increase in-line with identified
salary increases.

4.0 INFRASTRUCTURE STRATEGY

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

An important element of any strategic financial plan is how the proposed

funding levels for asset preservation affect the condition of the assets. If
sufficient funds are not allocated then the conditions of those assets will
deteriorate and the value of Council’s investment in those assets will drop.

The long-term difficulties in achieving full sustainability are evidenced by

comparing the funds required to those that are budgeted in this area.
Whilst the Strategic Resource Plan makes continued progress in increasing
funding, the gap is not eradicated. The funding level increases represent a
strong commitment to the issue.

The Strategic Resource Plan provides for Northern Grampians Shire Council
to be sustainable by 2011-2012 by progressively increasing capital renewal
expenditure in line with depreciation expense. This means that we are
spending sufficient resources to maintain the assets we have. In the
development of this plan Council has assumed that the Roads to Recovery
funding will continue beyond the life of the plan.

Looking broader than road management, the challenges in other areas of

infrastructure are similar to that portrayed above. Council will develop an
appropriate asset management strategy that will determine the needs of
the community owned buildings and facilities. It has been identified that
there is a significant gap between what we are spending on existing
building assets and what should be spent. As we analyse this position in
detail we will be able to determine the funding required to maintain these
assets.

The infrastructure funding problem is not unique to Northern Grampians.

All councils are grappling with it, but the problem is most acute in small
rural councils which simply do not have the resources to maintain
thousands of kilometres of roads and other infrastructure assets. The
funding gap can only be bridged if the Federal and State Governments
adopt permanent, guaranteed sources of funding Local Government
responsibilities which are permanent and on-going.

5.1 STRATEGIC RESOURCE PLAN

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

Northern Grampians Shire Council

Standard Income Statement
For the years ending 30 June 2008 - 2012

Budget Projection Projection Projection Projection

07/08 08/09 09/10 10/11 11/12
'000's '000's '000's '000's '000's

Revenues from ordinary activities

Rates & Charges 9,178 9,822 10,509 11,245 12032
User Fees and Charges 2,598 2,650 2,703 2,757 2812
Government Grants - Operational 6,089 6,090 6,217 6,354 6498
Government Grants - Capital 2,343 2,000 1,956 1,914 1994
Contributions 444 457 471 485 500
Other 67 69 73 75 78

Total Revenues 20,719 21,088 21,929 22,830 23914

Expenses from ordinary activities

Employee Costs 8,574 8,874 9,185 9,552 9934
Materials and Services 6,294 6,424 6,658 6,904 7165
Other Expenses 912 799 986 863 999
Borrowing Costs 151 136 105 78 46
Depreciation 4,410 4,400 4,400 4,400 4400

Total Expenses 20,341 20,633 21,334 21,797 22544

Interest from Investments 214 223 231 241 250

Net Surplus (deficit) from operations 592 678 826 1,274 1620

Movements in Equity
Net increase (decrease) in asset revaluation
reserve - - - -

Increase (decrease) in accumulated surplus on - - - -

adoption of new Accounting Standard

Total changes in equity 592 678 826 1,274 1620

5.2 STRATEGIC RESOURCE PLAN

Northern Grampians Shire Council

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

Standard Balance Sheet

For the years ending 30 June 2008 - 2012

Budget Projection Projection Projection Projection

07/08 08/09 09/10 10/11 11/12
'000's '000's '000's '000's '000's
Current Assets
Cash Assets 2,928 3,023 3,038 3,076 3065
Receivables 1,485 1,484 1,484 1,484 1484
Inventories 294 294 294 294 294
Prepayments 361 362 362 362 362
Non Current Assets Held for
Sale
Total Current Assets 5,068 5,163 5,178 5,216 5205

Non current assets

Receivables 151 - - - -
Property, plant and equipment 171,401 172,104 172,490 173,275 174511
Other 552 - - - -
Total non-current assets 172,104 172,104 172,490 173,275 174511

Total assets 177,172 177,267 177,668 178,491 179716

Current Liabilities
Payables 1,279 1,229 1,178 1,129 1075
Interest bearing liabilities 581 425 451 387 389
Employee benefits 1,542 1,593 1,643 1,693 1743
Other 96 96 96 96 96
Total current liabilities 3,498 3,343 3,368 3,305 3303

Non-current liabilities
Interest bearing liabilities 1,864 1,434 983 596 205
Employee benefits 279 279 279 279 279
Other - -
Total non-current liabilities 2,143 1,713 1,262 875 484

Total Liabilities 5,641 5,056 4,630 4,180 3787

Net Assets 171,531 172,211 173,037 174,311 175929

Equity
Accumulated surplus 108,369 109,048 109,874 111,148 112766
Asset revaluation reserve 61,145 61,145 61,145 61,145 61145
Other reserves 2,017 2,018 2,018 2,018 2018
Total Equity 171,531 172,211 173,037 174,311 175929

5.3 STRATEGIC RESOURCE PLAN

Northern Grampians Shire Council
Standard Cash Flow Statement

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

For the years ending 30 June 2008 – 2012

Budget Projection Projection Projection Projection

07/08 08/09 09/10 10/11 11/12
'000's '000's '000's '000's '000's

Operating activities
Income (20,934) (21,311) (22,160) (23,071) (24,164)
Expenditure 15,932 16,230 16,931 17,394 18,144
Net Operating (5,002) (5,081) (5,229) (5,677) (6020)

Investing Activities
Capital Expenditure 6,260 5,150 5,350 5,750 6,200
Capital Income (1003) (752) (564) (564) (564)
Net Investing Activities 5,257 4,398 4,786 5,186 5636

Financing Activities
New Loans (500) - - - -
Principal Repayments 651 589 428 455 392
Total Financing Activities 151 589 428 455 392

Net Movements for Year 406 (94) (15) (36) (8)

Opening Cash 3,334 2,928 3,022 3,037 3073

Closing Cash 2,928 3,022 3,037 3,073 3,065

5.4 STRATEGIC RESOURCE PLAN

Northern Grampians Shire Council
Standard Capital Works Statement

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

For the years ending 30 June 2008 – 2012

Budget Projection Projection Projection Projection

07/08 08/09 09/10 10/11 11/12
'000's '000's '000's '000's '000's

Bridges & Culverts 377 310 322 346 373

Buildings 951 782 813 874 942
Computers/Information Technology 161 132 138 148 160
Plant & Motor Vehicles 1,015 835 867 932 1005
Parks & Gardens 250 206 214 230 248
Projects 478 393 409 439 473
Roads/Footpaths 2,205 1815 1884 2025 2183
Streetscapes 265 218 226 243 263
Water Management 558 459 477 513 553

Total Capital Works 6,260 5,150 5,350 5,750 6200

Represented by:
Renewal 3,134 3,800 4,200 4,400 4400
New 1,453 650 450 550 900
Expansion 1,673 700 700 800 900

Total Capital Works 6,260 5,150 5,350 5,750 6200

5.5 STRATEGIC RESOURCE PLAN

Northern Grampians Shire Council
Key Strategic Activities

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 Northern Grampians Shire Council

Strategic Resource Plan – 2008-2012

For the years ending 30 June 2008 – 2012

Projectio Projectio Projectio Projectio

Budget
n n n n
07/08 08/09 09/10 10/11 11/12

Financial Performance
Actual Operating Surplus/(Deficit) v’s Budget 100% 100% 100% 100% 100%
Operating Surplus as % of Total Recurrent
2.9% 3.2% 3.8% 5.6% 6.8%
revenue
Change in Net Assets from previous year 0.35% 0.40% 0.48% 0.74% 0.93%
Working Capital Ratio 144.9% 154.4% 153.7% 157.8% 157.6%
Total Debt Servicing costs % of Rates & Charges 1.6% 1.4% 1.0% 0.7% 0.4%
% of Rates & Charges outstanding at 30 June 3.0% 3.0% 3.0% 3.0% 3.0%

Risk Management
% Movement in Rates & Charges Revenue 6.7% 7.0% 7.0% 7.0% 7.0%
Rates & Charges per assessment $1,004 $1,074 $1,148 $1,227 $1313
Rates & Charges per Capita $697 $747 $799 $854 $914
Rates & Charges as a % of CIV 0.56% 0.54% 0.57% 0.56% 0.56%
Average Rates & Charges per assessment –
$957 $1,024 $1,096 $1,172 $1254
Residential
Average Rates & Charges per assessment – Farm $1004 $1,074 $1,149 $1,230 $1316
Average Rates & Charges per assessment – $1,698 $1,817
$1,483 $1,587 $1944
Comm./Indus
Rates & Charges as a % of Total Recurrent
43.8% 46.6% 47.9% 49.3% 50.3%
Revenue

Capital Expenditure
Capital per assessment $685 $563 $584 $624 $672
% Achievement of Capital program 90% 95% 96% 98% 98%
Ratio of Capital Expenditure to Depreciation 1.42 1.17 1.22 1.31 1.41

Operating Expenses
Net Operating Expenditure per assessment $2,227 $2,256 $2,330 $2,378 2459
Net Operating Expenditure per Capita $1,547 $1,569 $1,622 $1,657 1714

Community Satisfaction
Overall Performance of Council 66 67 68 69 70
Overall Performance in Key Service Areas and
69 70 71 72 72
Responsibilities
Rating of Council’s interaction and
75 75 76 76 76
responsiveness in dealing with the Public
Rating for Council’s Advocacy and Community
68 69 70 70 70
Representation
Rating for Council’s engagement in Decision
62 63 64 65 65
making on Key Issues

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