8-point plan to fix council's debt-ridden finances
THIS is Cr Andrew Baker's eight-point plan Clarence Valley Council accepted to fix its debt-ridden finances.
It was seconded by Cr Debrah Novak. Crs Jim Simmons, Peter Ellem, Debrah Novak, Karen Toms and Baker voted for the motion. Against was Cr Jason Kingsley, Crs Richie Williamson and Arthur Lysaught left the meeting at 4.41pm prior to the voting taking place. Cr Greg Clancy was an apology at the meeting.
1. Adopt a Fit for the Future Continual Compliance Policy for immediate implementation and a Nil-Deficit General Fund Budget Policy for 2017/18 and subsequent years with each General Fund Budget to encompass at least:
a. Operating Performance Ratio at or better than breakeven to satisfy Benchmark 1.
b. Building and Infrastructure Renewal at or better than 100% to meet or exceed Benchmark 3.
c. Infrastructure Backlog Ratio of 2% or less to satisfy Benchmark 5, after an initial utilization of $17.7 million of own Capital Reserves is applied to infrastructure backlog reduction by the actions required at 3 and 4 below.
d. Asset Maintenance Ratio of 100% or more to meet or exceed Benchmark 5.
e. Already-adopted efficiency measures, revenue increases, expenditure reductions and other measures adopted for financial sustainability purposes.
2. Commence Fit for the Future Continuing Compliance immediately by:
a. Adjusting the 2016/17 adopted budget deficit by any amounts realised from the adoption of this resolution and,
b. Adjusting current budget projections to include the results of a Business Case review of the Depot Rationalisation Project that is to include current known costs and projections together with the items at 7a, 7b and 7c below and with this revised business case to be reported to Council February 2017 and,
c. Implementing the actions required in following Sections 3 to 8 inclusive.
3. Adopt a Fleet Financing Policy that requires all fleet renewals and acquisitions to be financed by external commercial financing where item cost is prorated monthly over the planned economic life of the asset.
4. Create an Infrastructure Backlog Accelerated Reduction Reserve of $17.7 million by the transfer of all of the Fleet Reserve Fund of $10 million or such other final amount when calculated and by additional capital to emerge from the adoption of the Fleet Financing Policy and:
a. Apply Internal Fleet Hire funds emerging from this Fleet Financing Policy estimated: $3.53m remaining 6 months 2016/17, $3.33m 2017/18, $1.1 million 2018/19, $0.41 million 2019/20, $0.14 million 2020/21 for an estimated total $8.6 million over 54 months and subject to final calculation amount to be inserted here to firstly reach the $17.7 million required for the Infrastructure Backlog Accelerated Reduction Reserve amount and then to apply to other Benchmark shortfalls and,
b. Apply fleet disposal income funds emerging at end of economic life disposal of fleet items estimated at $8 million over 48 to 60 months and subject to final calculation amount to be inserted here to firstly reach the $17.7 million required for the Infrastructure Backlog Accelerated Reduction Reserve amount and then to apply to other Benchmark shortfalls.
5. After accounting for the adopted forecast reductions that will result from depot rationalisation natural attrition and other adopted efficiency savings measures, develop a workforce model that results in no nett reduction of adjusted workforce numbers with such model to be developed by inclusion of selected reductions to consultant and contract engagements in favour of maintaining at least current Council FTE workforce numbers.
6. Receive a report to the February 2017 Ordinary meeting and to subsequent meetings as necessary with such report to include:
a. Options and variations available for delivery of this resolution and,
b. Effects of implementation on subsequent budget forecasts and,
c. The capability and constraints of this resolution being implemented by existing Council management expertise alone and,
d. The likely cost and benefit of further resolving the implementation of this resolution by the engagement of external administration services.
7. Adopt a Business Case Reporting to Council Policy for pre-acquisition reporting on all proposed capital acquisitions of $100,000 or above to show all financial costs and benefits and alternatives if any with each report to include:
a. The Cost of Funds using best commercial borrowing rates available to Council at the time and,
b. The Cost of Funds using best commercial investment rates available to Council at the time and
c. Any depreciation amounts attributable to the expected life of the acquisition.
8. Make a Fit for The Future Submission to the Office of Local Government showing the amended budget results and forecasts resulting from adoption of this resolution Sections 1 to 7 inclusive together with any other already-adopted future savings and revenue-increase measures to be implemented by Council to achieve financial sustainability.