Agenda of Special Meeting - 13 August 2015

Agenda – Special Meeting of Council 13 August 2015 Page 12 of 13

6.3.1 LONG TERM FINANCIAL PLAN 2015-2030

LOCATION/ADDRESS: Nil

APPLICANT: Nil

FILE: ADM20

AUTHOR: Director Corporate Services

CONTRIBUTOR/S: Nil

RESPONSIBLE OFFICER: Director Corporate Services

DISCLOSURE OF INTEREST: Nil

DATE OF REPORT: 2 August 2015

SUMMARY: Following the review and adoption of the Shire’s Strategic Community Plan and Corporate Business Plan at the Special Meeting of Council held 19 February 2015, Council is requested to receive the Long Term Financial Plan 2015-2030 as part of the 2015/2016 Annual Budget adoption.

BACKGROUND

Previous Considerations

SMC 27 June 2013 Item 9.1.1

OMC 17 October 2013 Item 9.4.4

All Local Governments in Western Australia are required to develop a Plan for the Future as prescribed under Section 5.56(1) of the Local Government Act 1995. In 2011, amendments were made to the Local Government (Administration) Regulations 1996, specifically the inclusion of regulation 19BA, which in summary, states that a Plan for the Future is to incorporate a Strategic Community Plan and a Corporate Business Plan.

The Strategic Community Plan (SCP) provides the long term view (10 plus year timeframe) for the Shire and sets out the vision, aspirations and objectives of the community and was formally adopted by Council on 27 June 2013. The Corporate Business Plan (CBP) is responsible for translating the strategic direction of the Shire, articulated within the SCP, into specific priorities and actions at an operational level. These two documents are the core of the Integrated Planning Framework and provide a transition from a 10 year vision through to informing the annual budget process. The CBP is required to be reviewed annually in line with the budget process to ensure priorities are achievable and effectively timed.

The full Integrated Planning Framework includes a number of informing strategies including the Long Term Financial Plan (LTFP), Asset Management Plans and Workforce Plan. At the meeting of 17 October 2013, Council resolved the following:

That Council:

1. Adopts the Shire of Broome Corporate Business Plan 2013 - 2017 as attached.

2. Provides public notice of the adoption of the Corporate Business Plan in accordance with legislative requirements.

3. Receives the Long Term Financial Plan as attached.

4. Requests the Chief Executive Officer to commence a full review of the Integrated Planning Framework (Shire of Broome’s Strategic Community Plan, Corporate Business Plan, Asset Management Plans and Workforce Plan) with regard for the following:

a) the attached Long Term Financial Plan; and

b) 2040 Visioning Project outcomes (when available)

5. Request the Chief Executive Officer to complete the review of the Integrated Planning Framework within a timeframe to inform the 2014/15 Annual Budget process.

6. Requests the Chief Executive Officer to forward the Corporate Business Plan and Long Term Financial Plan to the Department of Local Government.

Since this time a number of the informing strategies have been reviewed and updated and continue to evolve. Regulation 19C(4) of the Local Government (Administration) Regulations 1996 requires the SCP to be reviewed at least once every 4 years. The Department of Local Government and Communities' Integrated Planning and Reporting Framework and Guidelines include the need for a minor (desktop) review every two years, and this was recently commenced in October 2014. The review was undertaken by UHY Haines Norton consultants and included a review of both the SCP and CBP. This was undertaken with significant regard and subsequent review and update of the Shire’s LTFP.

As part of this process the Shire’s 14/15 annual budget was utilised to reset the baseline financial data contained within the original Long Term Financial Plan. All allocations towards Asset Management Plans were reviewed with a view to ensure allocations were provided for renewal expenditure over the longer term. All actions proposed within the CBP in addition to future capital expenditure were financially modelled into the LTFP.

At the Ordinary Meeting of Council held on 19 February 2015, Council resolved the following:

That Council:

1. Adopts the Shire of Broome Strategic Community Plan 2015-2025 as attached,

2. Adopts the Shire of Broome Corporate Business Plan 2015-2019 as attached subject to the following amendment:

within the 2016 / 2017 Capital Schedule, decrease Shire municipal funding for the itinerant camping project from $500K to $200K and the balance of funds being $300K be redistributed to reduce nominated transfers from reserves in 2016 / 2017.

3. Provides Local Public Notice of the adoption of the reviewed plans.

4. Notes the revised Long Term Financial Plan schedule as attached, supports the implementation of these documents and requests the Chief Executive Officer to review the organisational structure to identify operational savings and other opportunities.

As per the above resolution, Council endorsed the amendments required in the adoption of the reviewed SCP and CBP. As a result, the financial schedules and associated text in the LTFP document have been revised to reflect these amendments. The draft LTFP is presented for consideration and is to be received by Council.

COMMENT

The reviewed Strategic Community Plan 2015 – 2025 and the Corporate Business Plan 2015 – 2019 are both effective 1 July 2015 and have informed the 2015/16 annual budget process. The Shire’s LTFP has been reviewed with consideration for these revised documents. The objective of the revised LTFP is to reduce the overall reliance on reserve funding and to prioritise the funding capacity for the forecasted expenditure detailed in the Shire’s proposed Capital Renewal program. Funding of renewal expenditure through municipal funds provides for long term financial viability and there has been a focus on achieving an improved operating surplus.

In summary the significant Shire funded (in part or fully) capital projects identified as priorities over the next four years include:

a) Asset Renewal Expenditure towards Transport, Building and Information and Communications Technology (ICT)

b) Redevelopment of the Kimberley Regional Offices

c) Closure of the existing Waste Facility and construction of New Waste Management Facility

d) Upgrade and renewal of the Aquatic facilities at BRAC

e) Chinatown Revitalisation

f) Itinerant Accommodation

g) Jetty to Jetty Revetment Component only.

As previously workshopped with Council and Executive, the Corporate Business Plan itemises a number of strategic operational actions and capital expenditure which require additional expenditure as detailed from page 9 of the plan. These are actions which cannot be achieved through the Shire’s current internal resource capacity (financial or human) and require a Council contribution sourced from operating revenue or external funding (grants). These additional actions represent Council’s priorities for the district. Therefore, the LTFP has detailed a number of key assumptions and funding strategies utilised to meet these additional objectives over and above Council’s normal activities and demonstrates the ‘informing’ linkage between the SCP, CBP and LTFP.

There are some key variances between the forecasted assumptions detailed in the LTFP and the forecasted funding requirements outlined in the draft 2015/2016 annual budget. It should be noted during the 2015/2016 annual budget process, officers have identified significant savings and efficiencies primarily gained within the Engineering Operations Services area of approximately $800K per annum. The organisational restructure process conducted in February 2015 resulted in approximately $1.8M of savings in employee costs per annum, which is higher than the original projected per annum savings of $1.4M. These savings achieved beyond the projected savings in the LTFP have enabled the draft budget to be developed to deliver upon Council service levels and asset renewal with a general rate increase of 3.97% as opposed to the LTFP assumption of an annual rates increase of 5%. Additionally, these savings have meant that the $1M dividend transfer from Waste Operations is not required as forecasted in the LTFP.

Council should note that the LTFP contains assumptions based on the best available information at the time of development and maintains a long term perspective in forecasting. The annual budget process will be based on more current assumptions as they become apparent during development with a short term – 12 month view. Therefore, upon Council adopting the draft 2015/2016 annual budget, officers will seek to commence the annual review of the LTFP to reset the baseline to reflect the financial outcomes represented in the budget as per Action Number 4.3.1.1 detailed in the current CBP.

CONSULTATION

Consultant – Russell Barnes – UHY Haines Norton

The Draft LTFP was presented to a Council Workshop held on 2 June 2015 attended by Councillors G. Campbell, H. Tracey and C. Mitchell.

STATUTORY ENVIRONMENT

Local Government Act 1995

5.56. Planning for the future

(1) A local government is to plan for the future of the district.

(2) A local government is to ensure that plans made under subsection (1) are in accordance with any regulations made about planning for the future of the district.

[Section 5.56 inserted by No. 49 of 2004 s. 42(6).]

Local Government (Administration) Regulations 1996

19BA. Terms used

In this Part —

corporate business plan means a plan made under regulation 19DA that, together with a strategic community plan, forms a plan for the future of a district made in accordance with section 5.56;

strategic community plan means a plan made under regulation 19C that, together with a corporate business plan, forms a plan for the future of a district made in accordance with section 5.56.

[Regulation 19BA inserted in Gazette 26 Aug 2011 p. 3482-3.]

19C. Strategic community plans, requirements for (Act s. 5.56)

(1) A local government is to ensure that a strategic community plan is made for its district in accordance with this regulation in respect of each financial year after the financial year ending 30 June 2013.

(2) A strategic community plan for a district is to cover the period specified in the plan, which is to be at least 10 financial years.

(3) A strategic community plan for a district is to set out the vision, aspirations and objectives of the community in the district.

(4) A local government is to review the current strategic community plan for its district at least once every 4 years.

(5) In making or reviewing a strategic community plan, a local government is to have regard to —

(a) the capacity of its current resources and the anticipated capacity of its future resources; and

(b) strategic performance indicators and the ways of measuring its strategic performance by the application of those indicators; and

(c) demographic trends.

(6) Subject to subregulation (9), a local government may modify its strategic community plan, including extending the period the plan is made in respect of.

(7) A council is to consider a strategic community plan, or modifications of such a plan, submitted to it and is to determine* whether or not to adopt the plan or the modifications.

*Absolute majority required.

(8) If a strategic community plan is, or modifications of a strategic community plan are, adopted by the council, the plan or modified plan applies to the district for the period specified in the plan.

(9) A local government is to ensure that the electors and ratepayers of its district are consulted during the development of a strategic community plan and when preparing modifications of a strategic community plan.

(10) A strategic community plan for a district is to contain a description of the involvement of the electors and ratepayers of the district in the development of the plan or the preparation of modifications of the plan.

[Regulation 19C inserted in Gazette 26 Aug 2011 p. 3483-4.]

19DA. Corporate business plans, requirements for (Act s. 5.56)

(1) A local government is to ensure that a corporate business plan is made for its district in accordance with this regulation in respect of each financial year after the financial year ending 30 June 2013.

(2) A corporate business plan for a district is to cover the period specified in the plan, which is to be at least 4 financial years.

(3) A corporate business plan for a district is to —

(a) set out, consistently with any relevant priorities set out in the strategic community plan for the district, a local government’s priorities for dealing with the objectives and aspirations of the community in the district; and

(b) govern a local government’s internal business planning by expressing a local government’s priorities by reference to operations that are within the capacity of the local government’s resources; and

(c) develop and integrate matters relating to resources, including asset management, workforce planning and long‑term financial planning.

(4) A local government is to review the current corporate business plan for its district every year.

(5) A local government may modify a corporate business plan, including extending the period the plan is made in respect of and modifying the plan if required because of modification of the local government’s strategic community plan.

(6) A council is to consider a corporate business plan, or modifications of such a plan, submitted to it and is to determine* whether or not to adopt the plan or the modifications.

*Absolute majority required.

(7) If a corporate business plan is, or modifications of a corporate business plan are, adopted by the council, the plan or modified plan applies to the district for the period specified in the plan.

[Regulation 19DA inserted in Gazette 26 Aug 2011 p. 3484-5.]

19DB. Transitional provisions for plans for the future until 30 June 2013

(1) In this regulation —

former regulation 19C means regulation 19C as in force immediately before 26 August 2011 and continued under subregulation (2);

former regulation 19D means regulation 19D as in force immediately before 26 August 2011;

plan for the future means a plan for the future of its district made by a local government in accordance with former regulation 19C.

(2) Except as stated in this regulation, former regulation 19C continues to have effect on and after 26 August 2011 until this regulation expires under subregulation (7).

(3) A local government is to ensure that a plan for the future applies in respect of each financial year before the financial year ending 30 June 2014.

(4) A local government is not required to review a plan for the future under former regulation 19C(4) on or after 26 August 2011.

(5) If, for the purposes of complying with subregulation (3), a local government makes a new plan for the future, local public notice of the adoption of the plan is to be given in accordance with former regulation 19D.

(6) If a local government modifies a plan for the future under former regulation 19C(4), whether for the purposes of complying with subregulation (3) or otherwise —

(a) the local government is not required to comply with former regulation 19C(7) or (8) in relation to the modifications of the plan; and

(b) local public notice of the adoption of the modifications of the plan is to be given in accordance with former regulation 19D.

(7) This regulation expires at the end of 30 June 2013.

[Regulation 19DB inserted in Gazette 26 Aug 2011 p. 3485-6.]

19D. Adoption of plan, public notice of to be given

(1) After the adoption of a strategic community plan, or modifications of a strategic community plan, under regulation 19C, the local government is to give local public notice in accordance with subregulation (2).

(2) The local public notice is to contain —

(a) notification that —

(i) a strategic community plan for the district has been adopted by the council and is to apply to the district for the period specified in the plan; and

(ii) details of where and when the plan may be inspected;

(b) where a strategic community plan for the district has been modified —

(i) notification that the modifications to the plan have been adopted by the council and the plan as modified is to apply to the district for the period specified in the plan; and

(ii) details of where and when the modified plan may be inspected.

POLICY IMPLICATIONS

Nil

FINANCIAL IMPLICATIONS

The CBP is designed to deliver on the outcomes and strategies identified in the SCP. The Long Term Financial Plan (LTFP) forecasts the long term financial impact on Council’s future financial sustainability and funding requirements as a result of implementing Council’s priorities and objectives contained in the adopted SCP and CBP. The LTFP details key assumptions and risks that may assist or prevent Council from achieving these strategic priorities and objectives. The LTFP incorporates all material contingencies to address these financial impacts to provide the best financial planning strategy to support Council in achieving its objectives and provide public value.

RISK

The Long Term Financial Plan serves as an informing document which provides for a more strategic approach to financial management, resulting in a coordinated approach to capital renewal expenditure and project delivery. The plan aims to mitigate the extreme risk associated with project over-expenditure, by integrating with Council’s Workforce Plan to ensure the organisation has the capacity to deliver.

STRATEGIC IMPLICATIONS

The Long Term Financial Plan provides the Shire with a long term funding strategy to achieve the current Strategic Goals, Strategies, Outcomes and Actions contained within the Strategic Community Plan 2015-2025 and Corporate Business Plan 2015- 2019.

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Effective communication

Affordable services and initiatives to satisfy community need

Accessible and safe community spaces

Participation in recreational activity

A healthy and safe environment

High level social capital that increases community capacity

Our Place Goal – Help to protect the nature and built environment and cultural heritage of Broome whilst recognising the unique sense of the place:

Realistic and sustainable land use strategies for the Shire within state and national frameworks and in consultation with the community

A built environment that reflects arid tropical climate design principles and historical built form

A unique natural environment for the benefit and enjoyment of current and future generations

A preserved, unique and significant historical and cultural heritage of Broome

Retention and expansion of Broome’s iconic tourism assets and reputation

Best practice asset management to optimise Shires’ infrastructure whilst minimising life cycle costs.

Council is able to mobilise resources to deliver municipal services to Indigenous communities that are compliant, effective and within Council’s capacity.

Our Prosperity Goal – Create the means to enable local jobs creation and lifestyle affordability for the current and future population:

Affordable and equitable services and infrastructure

Affordable land for residential, industrial, commercial and community use

Key economic development strategies for the Shire which are aligned to regional outcomes working through recognised planning and development groups/committees

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

An organisational culture that strives for service excellence

Sustainable and integrated strategic and operational plans

Responsible resource allocation

Effective community engagement

Retention and attraction of staff

Improved systems, processes and compliance

VOTING REQUIREMENTS

Simple Majority

REPORT RECOMMENDATION:

That Council:

1. Receives the Long Term Financial Plan 2015-2030 as attached; and

2. Requests the Chief Executive Officer to review the Long Term Financial Plan 2015-2030 after the adoption of the 2015/2016 Annual Budget to reset the baseline for future financial forecasting in the 2016/2017 budget process and to incorporate the actual results of the savings achieved through the organisational restructure and other operational savings as identified during the budget formulation.

Attachments

1.	Draft Long Term Financial Plan 2015-2030

Agenda – Special Meeting of Council 13 August 2015 Page 20 of 21

6.3.2 ADOPTION OF SANITATION - GENERAL REFUSE FEES AND CHARGES 2015/2016

LOCATION/ADDRESS: NIL

APPLICANT: N/A

FILE: ACC01; RES 40813.9

AUTHOR: Waste Coordinator

CONTRIBUTOR/S: Nil

RESPONSIBLE OFFICER: Director of Engineering Services

DISCLOSURE OF INTEREST: NIL

DATE OF REPORT: 11 June 2015

SUMMARY: This report provides details of the proposed refuse fees and charges and recommends that Council adopts the Sanitation General Refuse Fees and Charges for the 2015/2016 financial year.

BACKGROUND

Previous Considerations

SMC 11 July 2007 Item 9.3.10

SMC 24 July 2008 Item 9.1.5

SMC 30 July 2009 Item 9.1.5

SMC 30 July 2010 Item 9.1.4

SMC 17 August 2011 Item 9.1.4

OMC 09 August 2012 Item 9.4.8

OMC 06 September 2012 Item 9.4.8

SMC 28 August 2013 Item 9.4.1

SMC 27 June 2014 Item 9.4.1

At the SMC on 27 June 2014, Council resolved;

1. Adopts the Sanitation General Refuse Fees and Charges for the 2014/2015 financial year (excluding per-bin lifts, applied to Caravan Parks); and

2. For the 2014/2015 financial year only, delegate to the Chief Executive Officer discretionary authority to issue up to a maximum of six vouchers per assessment.

At the same meeting Council also resolved;

1. Adopts the single kerbside collection fee, plus a single unit rate per-bin lift thereafter to Caravan Parks, at the per-lift rate of $4.50 (240 litre receptacle) and $6.17 (360 litre receptacle).

The revenue generated from the Sanitation General Refuse Fees and Charges represents a significant component of the Shire’s annual revenue and for this reason it is reported to Council as a separate item. This revenue is required to fund the expenses incurred in providing the kerbside collection service and to undertake operational activities and capital works at the Waste Management Facility.

COMMENT

This report considers the Sanitation General Refuse Fees and Charges proposed for 2015/16. More specifically the fees and charges for:-

- Landfill levy;

- Waste and recycling kerbside collections;

- Caravan Parks; and

- The Buckleys Road Waste Management Facility

Landfill Levy

At a Special Meeting of Council held on 30 July 2009, Council introduced a landfill levy for the Buckleys Road Waste Management Facility. The purpose of the landfill levy was to generate income to cover the capital works expenditure at the Buckleys Road Waste Management Facility including the landfill closure and rehabilitation.

In 2014/2015, the landfill levy charge was $88.00 per assessment for all properties within 40km of the town site.

In 2015/16, it is proposed that the landfill levy is removed and that the income required for capital works at the Buckleys Road Waste Management Facility be raised through the refuse site charges. This approach would see waste generators paying for the landfill space consumed through a more direct user pays system.

Waste and recycling kerbside collection

The waste and recycling collection contract covers the town site of Broome and provides waste and recycling collection services. This service is offered to premises within the town site and the fee is added to the rate notice billing as a separate item. This is a direct fee-for-service with the strategic aim of a stand alone system to cover all costs of the service provision.

A Councillor Workshop on the proposed 2015/16 Fees and Charges was held on 31 March 2015. At this workshop, various options were presented to Councillors regarding the percentage increase in the kerbside collection service fee and refuse site charges to offset the reduced revenue due to the removal of the landfill levy. A 13% increase in kerbside collection services and a 9% increase in refuse site charges are recommended as providing the best outcome for both rate payers and customers at the Waste Management Facility. These increases will assist in balancing operational costs and the costs of facility closure with the removal of the levy.

The standard kerbside service includes a weekly 240 litre waste bin collection and either a fortnightly 240 litre recycling bin or fortnightly 360 litre recycling bin collection. The service fee for the standard service for 2015/2016 is proposed to be increased from $395.00 to $445.00, which is a 13% increase.

The 13% increase in the kerbside service encompasses the increase in operational expenditure under the collection contract rise and fall provisions plus the 9% increase in the refuse site charges.

For a standard household within the town site of Broome, the combination of removing the landfill levy and increasing the kerbside collection service fee is an overall reduction of $38.00.

2014/2015 kerbside collection service fee including landfill levy	$ 483.00
2015/2016 kerbside collection service fee	$ 445.00
Nett reduction	$ 38.00

To complement the standard kerbside service, additional kerbside waste and recycling collections are available, with the service billed on an annual basis to the owner or the tenant. Like the standard service, the additional services are proposed to be increased by 13%.

Throughout the year and for varying reasons, kerbside bins are damaged and require repair or replacement. If the bin can be repaired by replacing the lid or the wheels, then the Shire provides this service free of charge. If the bin is beyond repair and requires replacement through damage other than that expected of reasonable wear and tear, then the property owner is charged. For a 240 litre waste or recycling bin, the proposed replacement fee will remain at $106.00; and for a 360 litre recycling bin, the proposed replacement fee will remain at $145.00, as in 2014/2015.

Caravan Parks

In previous years, Council has resolved to charge a single kerbside unit rate per bin lift to Caravan Parks. This fee type is designed to encourage more recycling at the Caravan Parks and is applicable to 240L waste and recycling bins or 360L recycling bins. The proposed per lift rates for 2015/2016 will increase by 13%, which is in line with the kerbside collection service. The 13% increase in the service encompasses the 4% increase in operational expenditure under the collection contract rise and fall provisions plus the 9% increase in refuse site charges. The proposed per lift rates are as follows:-

Bin Type	2014/2015	2015/2016
240L Waste or Recycle	$ 4.50	$ 5.09
360L Recycle	$ 6.17	$ 6.97

Buckleys Road Waste Management Facility

All waste entering the Buckleys Road Waste Management Facility is assessed for its type and volume and thereafter applicable fee types are charged. It is proposed to increase the refuse site charges by 9%. This increase is required to cover operational expenses, capital works and the removal of the landfill levy. It applies directly to waste generators and is therefore a way of charging the waste generator for the landfill space consumed.

The fee type ‘non compacted mixed rubbish’ is the most commonly applied fee type at the Buckleys Road Waste Management Facility and accounts for approximately 66% of the income received. In 2014/2015, the fee for ‘non compacted mixed rubbish' was $48.00 per cubic meter and it is proposed that for 2015/2016 the fee will be $52.50, which is a 9% increase.

For 2015/2016, several fee types are proposed to be removed, including ‘refrigerators, air conditioners or freezers requiring degassing’ and ‘gas bottles’. The removal of these two fee types would see these waste items able to be incorporated under the ‘household and domestic refuse’ fee. This would allow the annual Household Domestic Refuse Vouchers to be used for their disposal. It is believed that this would contribute to a reduction in the number of these hazardous items being illegally dumped or placed out for collection in the Shire’s pre-cyclone collection. The outcome would be safer and more environmentally friendly for the Shire.

Household Domestic Refuse Vouchers

Included within the Sanitation General Refuse Fees and Charges is the provision for six vouchers for one cubic metre of household domestic refuse. These vouchers are to be provided to premises within the GRV – Residential and GRV – Tourism rating categories and will be mailed out with the rates notices for 2015/2016.

The rating categories not eligible for the waste vouchers will be;

- GRV – Residential Vacant;

- GRV – Commercial;

- UV – Rural;

- UV – Commercial Rural;

- UV – Mining; and

- Any Exempt GRV assessments.

In some circumstances, residents within a rating category not eligible for the refuse vouchers may wish to apply in writing to the Chief Executive Officer for consideration to receive the refuse vouchers. To allow consideration of requests, it is recommended that the Chief Executive Officer be given delegated authority for 2015/2016 to issue up to a maximum of six vouchers per assessment where the Chief Executive Officer determines there is an anomaly. Those applicants that do receive vouchers as an outcome of their request shall be advised that this is an interim voucher only and that it may or may not be continued in the future.

Implementation of Refuse Fees and Charges

It is anticipated that the Shire of Broome 2015/16 Annual Fees and Charges will be adopted with the 2015/16 Annual Budget on 13 August 2015. To allow commercial waste customers time to re-calculate their costs and communicate any changes in their fee structure to their customers, it is recommended that the implementation of the Buckleys Road Waste Management Facility Refuse Site Charges occurs on 1 September 2015.

A full list of Sanitation General Refuse Fees and Charges is incorporated into the attachment for the report as follows in this agenda ‘Adoption of Fees and Charges and Councillor Sitting Fees 2015/16’. This shows comparisons from 2014/2015 to 2015/2016 with a percentage variation change. Comments have been provided to clarify the variation change, removal or addition of the charge.

CONSULTATION

Consultant – Russell Barnes – UHY Haines Norton

STATUTORY ENVIRONMENT

Waste Avoidance and Resource Recovery Act 2007

66. Local government may impose waste collection rate

(1) A local government may impose on rateable land within its district, and cause to be collected, an annual rate for the purpose of providing for the proper performance of all or any of the waste services it provides.

(2) The annual rate must not exceed —

(a) 12 cents in the dollar on the gross rental value; or

(b) where the system of valuation on the basis of the unimproved value is adopted, 3 cents in the dollar on the unimproved value of the land in fee simple.

(3) The provisions of the Local Government Act 1995 relating to the making, payment and recovery of general rates apply with respect to rates referred to in subsection (1).

67. Local government may impose receptacle charge

(1) A local government may, in lieu of, or in addition to a rate under section 66, provide for the proper disposal of waste, whether within its district or not, by making an annual charge per waste receptacle, payable in one sum or by equal monthly or other instalments in advance, in respect of premises provided with a waste service by the local government.

(2) The charge is to be imposed on the owner (as defined in section 64(1)) or occupier, as the local government may decide, of any premises provided with a waste service by the local government.

(3) The provisions of the Local Government Act 1995 relating to the recovery of general rates apply with respect to a charge referred to in subsection (1).

(4) In the case of premises being erected and becoming occupied during the year for which payment is to be made, the charge for the service provided is to be the sum that proportionately represents the period between the occupation of the premises and the end of the year for which payment is made.

(5) Notice of any charge made under this section may be included in any notice of rates imposed under section 66 or the Local Government Act 1995, but the omission to give notice of a charge does not affect the validity of the charge or the power of the local government to recover the charge.

(6) A charge may be limited to premises in a particular portion of the area under the control of the local government.

(7) Charges under this section may be imposed in respect of and are to be payable for all premises in respect of which a waste service is provided, whether such premises are rateable or not.

(8) A local government may make different charges for waste services rendered in different portions of its district.

68. Fees and charges fixed by local government

Nothing in this Part prevents or restricts a local government from imposing or recovering a fee or charge in respect of waste services under the Local Government Act 1995 section 6.16.

Local Government Act 1995

6.16. Imposition of fees and charges

(1) A local government may impose* and recover a fee or charge for any goods or service it provides or proposes to provide, other than a service for which a service charge is imposed.

* Absolute majority required.

(2) A fee or charge may be imposed for the following —

(a) providing the use of, or allowing admission to, any property or facility wholly or partly owned, controlled, managed or maintained by the local government;

(b) supplying a service or carrying out work at the request of a person;

(c) subject to section 5.94, providing information from local government records;

(d) receiving an application for approval, granting an approval, making an inspection and issuing a licence, permit, authorisation or certificate;

(e) supplying goods;

(f) such other service as may be prescribed.

(3) Fees and charges are to be imposed when adopting the annual budget but may be —

(a) imposed* during a financial year; and

(b) amended* from time to time during a financial year.

* Absolute majority required.

POLICY IMPLICATIONS

Nil

FINANCIAL IMPLICATIONS

The revenue collected from the 2015/16 Sanitation General Refuse Fees and Charges offset the cost of provision of the Shire’s Waste Management services.

RISK

The adoption of the 2015/16 Sanitation General Refuse Fees and Charges provides a sound approach to the financial management of the Shire’s waste management services. It provides a coordinated method to the generation of the revenue required to cover the expenses incurred in providing the kerbside collection service and to undertake operational activities and capital works at the Waste Management Facility. The 2015/16 Refuse Fees and Charges mitigate the extreme financial risk associated with generating insufficient revenue to manage the Shire’s waste management services.

STRATEGIC IMPLICATIONS

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Affordable services and initiatives to satisfy community need

Our Place Goal – Help to protect the nature and built environment and cultural heritage of Broome whilst recognising the unique sense of the place:

A unique natural environment for the benefit and enjoyment of current and future generations

Best practice asset management to optimise Shires’ infrastructure whilst minimising life cycle costs.

Our Prosperity Goal – Create the means to enable local jobs creation and lifestyle affordability for the current and future population:

Affordable and equitable services and infrastructure

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

Responsible resource allocation

Improved systems, processes and compliance

VOTING REQUIREMENTS

Absolute Majority

REPORT RECOMMENDATION:

That Council:

1. Adopts the Sanitation General Refuse Fees and Charges for the 2015/2016 financial year;

2. Agrees to implement the Buckleys Road Waste Management Facility Refuse Site Charges from 1 September 2015; and

3. Delegates authority to the Chief Executive Officer to issue up to a maximum of six household domestic refuse vouchers per assessment for residents within a rating category not eligible for the refuse vouchers, for the 2015/2016 financial year only.

(Absolute Majority Required)

Attachments

Nil

Agenda – Special Meeting of Council 13 August 2015 Page 28 of 29

6.4.1 ADOPTION OF FEES AND CHARGES AND COUNCILLOR SITTING FEES 2015/2016

LOCATION/ADDRESS: Nil

APPLICANT: Nil

FILE: ACC01

AUTHOR: Acting Financial Services Coordinator

CONTRIBUTOR/S: Manager Financial Services

RESPONSIBLE OFFICER: Director Corporate Services

DISCLOSURE OF INTEREST: Nil

DATE OF REPORT: 31 July 2015

SUMMARY: Council is requested to consider adoption of Fees & Charges and Councillor Sitting fees and Allowances for the 2015/16 financial year.

BACKGROUND

Previous Considerations

SMC 27 June 2014 Item 9.4.2

In accordance with Sections 6.16 to 6.19 of the Local Government Act 1995, a Local Government may impose a fee or charge for any goods or service it provides. Fees and charges must be imposed when adopting the annual budget, however may also be imposed or amended during the course of the year if necessary.

Councillor Sitting Fees and Allowances are also reviewed annually. The Local Government (Administration) Regulations 1996 prescribe minimum and maximum amounts for Councillor Fees and Allowances.

It was identified by UHY Haines Norton in the draft Long Term Financial Plan that revenue sourced from fees and charges should be maximised. With this target as the focus, responsible officers conducted an extensive review to optimise fees and charges revenue. Council was presented with the results of this review at a Council Workshop on the Draft 2015/2016 Fees and Charges Schedule held 31 March 2015. The draft schedule was updated with the changes identified by Council at that workshop. Council is requested to adopt the 2015/2016 Fees and Charges Schedule and proposed Councillor sitting fees and allowances as part of the annual budget adoption.

COMMENT

Council reviews all fees and charges on an annual basis, prior to finalisation of Council’s annual budget. This year, officers adopted a focus on improving revenue raised through fees and charges based on full cost recovery through a user pays principle. This was conducted through considerable consultation and engagement with responsible officers accountable for individual fees and charges levied. As a result, the budgeted revenue from Council charges, licences and statutory fees in 2015/16 is $11.2M compared with 2014/15 of $10.2M. With the removal of the Public Landfill levy and the annual $600K revenue it generates, the overall increase in fees and charges revenue includes the corresponding increase in Sanitation General Refuse fees and charges for the Waste Management Facility to offset the removal.

The basis for imposing fees and charges for Council services can be categorised as either statutory fees and charges, or fees and charges for goods/services. There are a number of statutory fees and charges determined under other legislation which dictate the level of fees and charges that may be imposed by Council. Each statutory fee has been referenced to its relevant legislative head of power and noted in the attached schedule. The schedule also details the prior year comparison with the 2014/15 fees & charges. Should subsequent updates to statutory fees be received after adoption of the 2015/2015 Fees & Charges Schedule, the new amount will apply and take into effect from 1 July 2015.

The proposed 2015/2016 Fees and Charges Schedule is proposed to take effect from 1 September 2015, excluding statutory fees and charges. This will allow time for notification to external stakeholders and system updates for billing purposes. The draft schedule contains various changes as requested by Council during the March workshop, including the deletion, increase/decrease, or other amendment to some of the fees and charges as detailed in the attachment. It is recommended that Council adopt the proposed 2015/2016 Fees and Charges Schedule.

Councillor Sitting Fees & Allowances

The Salaries and Allowances Tribunal (SAT) has reviewed the Sitting Fees and Allowances, with a determination issued on Wednesday 17 June 2015, with no changes made to the prescribed minimum and maximum amounts.

It is recommended that the proposed Councillor sitting fees and the President and Deputy President allowances are based on 75% of the maximum allowable limit in line with the percentage set by Council as part of the 2014/2015 budget. The option does exist, however, for Council to set the allowances at 100% of the fee set by the SAT. Allowances for Information Communication and Technology are proposed at 100% of the maximum allowable limit. Similarly, the Travel Allowance is proposed at 100%.

The following table provides a comparative summary of the proposed Councillor Sitting Fees and Allowances for 2014/15 and 2015/16:

Fee/Allowance	2014/15	2015/16 Proposed	% of Maximum
Sitting Fee – President	$22,789	$22,789	75%
Sitting Fee – (x 8 Councillors)	$16,995	$16,995	75%
Allowance – President	$46,350	$46,350	75%
Allowance – Deputy President	$11,587	$11,587	75%
ICT Allowance - (x9 Councillors)	$3,500	$3,500	100%
Travel Allowance – (x9 Councillors)	$50	$50	100%

The total of all proposed Councillor Sitting Fees and Allowances for 2015/16 will be $248,636, remaining unchanged from the 2014/15 financial year.

CONSULTATION

Nil

STATUTORY ENVIRONMENT

Local Government Act 1995

6.16. Imposition of fees and charges

(1) A local government may impose* and recover a fee or charge for any goods or service it provides or proposes to provide, other than a service for which a service charge is imposed.

* Absolute majority required.

(2) A fee or charge may be imposed for the following —

(a) providing the use of, or allowing admission to, any property or facility wholly or partly owned, controlled, managed or maintained by the local government;

(b) supplying a service or carrying out work at the request of a person;

(c) subject to section 5.94, providing information from local government records;

(d) receiving an application for approval, granting an approval, making an inspection and issuing a licence, permit, authorisation or certificate;

(e) supplying goods;

(f) such other service as may be prescribed.

(3) Fees and charges are to be imposed when adopting the annual budget but may be —

(a) imposed* during a financial year; and

(b) amended* from time to time during a financial year.

* Absolute majority required.

6.17. Setting level of fees and charges

(1) In determining the amount of a fee or charge for a service or for goods a local government is required to take into consideration the following factors —

(a) the cost to the local government of providing the service or goods;

(b) the importance of the service or goods to the community; and

(c) the price at which the service or goods could be provided by an alternative provider.

(2) A higher fee or charge or additional fee or charge may be imposed for an expedited service or supply of goods if it is requested that the service or goods be provided urgently.

(3) The basis for determining a fee or charge is not to be limited to the cost of providing the service or goods other than a service —

(a) under section 5.96;

(b) under section 6.16(2)(d); or

(c) prescribed under section 6.16(2)(f), where the regulation prescribing the service also specifies that such a limit is to apply to the fee or charge for the service.

(4) Regulations may —

(a) prohibit the imposition of a fee or charge in prescribed circumstances; or

(b) limit the amount of a fee or charge in prescribed circumstances.

Dog Act & associated Regulations

Freedom of Information Act & associated Regulations

Health Act 1911 & associated Regulations

Litter Act & associated Regulations

Town Planning Act and associated Regulations

Waste Avoidance and Resource Recovery Act 2007

5.98. Fees etc. for council members

(1A) In this section — determined means determined by the Salaries and Allowances Tribunal under the Salaries and Allowances Act 1975 section 7B.

(1) A council member who attends a council or committee meeting is entitled to be paid.

(a) the fee determined for attending a council or committee meeting; or

(b) where the local government has set a fee within the range determined for council or committee meeting attendance fees, that fee.

(2A) A council member who attends a meeting of a prescribed type at the request of the council is entitled to be paid —

(a) the fee determined for attending a meeting of that type; or

(b) where the local government has set a fee within the range determined for meetings of that type, that fee.

(2) A council member who incurs an expense of a kind prescribed as being an expense —

(a) to be reimbursed by all local governments; or

(b) which may be approved by any local government for reimbursement by the local government and which has been approved by the local government for reimbursement,

is entitled to be reimbursed for the expense in accordance with subsection (3).

(3) A council member to whom subsection (2) applies is to be reimbursed for the expense —

(a) where the extent of reimbursement for the expense has been determined, to that extent; or

(b) where the local government has set the extent to which the expense can be reimbursed and that extent is within the range determined for reimbursement, to that extent.

(4) If an expense is of a kind that may be approved by a local government for reimbursement, then the local government may approve reimbursement of the expense either generally or in a particular case but nothing in this subsection limits the application of subsection (3) where the local government has approved reimbursement of the expense in a particular case.

(5) The mayor or president of a local government is entitled, in addition to any entitlement that he or she has under subsection (1) or (2), to be paid —

(a) the annual local government allowance determined for mayors or presidents; or

(b) where the local government has set an annual local government allowance within the range determined for annual local government allowances for mayors or presidents, that allowance.

(6) A local government cannot —

(a) make any payment to; or

(b) reimburse an expense of,

a person who is a council member or a mayor or president in that person’s capacity as council member, mayor or president unless the payment or reimbursement is in accordance with this Division.

(7) A reference in this section to a committee meeting is a reference to a meeting of a committee comprising —

(a) council members only; or

(b) council members and employees.

5.98A. Allowance for deputy mayor or deputy president

(1) A local government may decide* to pay the deputy mayor or deputy president of the local government an allowance of up to the percentage that is determined by the Salaries and Allowances Tribunal under the Salaries and Allowances Act 1975 section 7B of the annual local government allowance to which the mayor or president is entitled under section 5.98(5).

* Absolute majority required.

(2) An allowance under subsection (1) is to be paid in addition to any amount to which the deputy mayor or deputy president is entitled under section 5.98.

5.99. Annual fee for council members in lieu of fees for attending meetings

(a) the annual fee determined by the Salaries and Allowances Tribunal under the Salaries and Allowances Act 1975 section 7B; or

(b) where the local government has set a fee within the range for annual fees determined by that Tribunal under that section, that fee.

* Absolute majority required.

5.99A. Allowances for council members in lieu of reimbursement of expenses

(a) the annual allowance determined by the Salaries and Allowances Tribunal under the Salaries and Allowances Act 1975 section 7B for that type of expense; or

(b) where the local government has set an allowance within the range determined by the Salaries and Allowances Tribunal under the Salaries and Allowances Act 1975 section 7B for annual allowances for that type of expense, an allowance of that amount, and only reimburse the member for expenses of that type in excess of the amount of the allowance.

* Absolute majority required.

Local Government (Administration) Regulations 1996:

5.98. Fees etc. for council members

Classification of a prescribed meeting for a councillor member who attends a meeting entitled for payment. Each of the following meetings is a meeting of a prescribed type for the purposes of section 5.98(1)and 5.98(2A).

(2A) A council member who attends a meeting of a prescribed type at the request of the council is entitled to be paid

(a) meeting of a WALGA Zone, where the council member is representing a local government as a delegate elected or appointed by the local government;

(b) meeting of a Regional Road Group established by Main Roads Western Australia, where the council member is representing a local government as a delegate elected or appointed by the local government;

(c) council meeting of a regional local government where the council member is the deputy of a member of the regional local government and is attending in the place of the member of the regional local government;

(d) meeting other than a council or committee meeting where the council member is attending at the request of a Minister of the Crown who is attending the meeting;

(e) meeting other than a council meeting or committee meeting where the council member is representing a local government as a delegate elected or appointed by the local government.

(3C) A council member is not entitled to be paid a fee for attending a meeting of a type referred to in subregulation (3A) if —

(a) the person who organises the meeting pays the council member a fee for attending the meeting; or

(b) the council member is paid an annual fee in accordance with section 5.99; or

(c) if the meeting is a meeting referred to in subregulation (3A)(c), the member of the regional local government is paid an annual fee in accordance with section 5.99.

POLICY IMPLICATIONS

1.1.4 Councillor Fees

1.1.8 Councillor Information Technology Provision, Service & Use

FINANCIAL IMPLICATIONS

The Draft Operating budget for 2015/16 has been prepared with consideration of the Draft Fees and Charges Schedule as attached, with the estimated income of $11.2M for the 2015/16 financial year.

The cost to Council for the President and Councillor sitting fees and allowances is $248,636, for the 2015/16 financial year. The operating budget preparation includes the proposed Councillor Sitting Fees and Allowances in accordance with the Salaries and Allowances Tribunal.

RISK

The possible risk associated with not adopting the proposed 2015/2016 Schedule of Fees and Charges is that it may result in a reduction of anticipated income. The length of the delay of implementation of the draft fees and charges could alter the possible level of impact from ‘High’ ($50,000-$150,000) to ‘Catastrophic’ (more than $150,000).

If fee and charges are not increased, the likelihood of this outcome is considered to be ‘Almost Certain’

The Risk Rating is therefore determined as ‘Extreme’

To mitigate the ‘Extreme’ risk, it is recommended that Council adopts the 2015/2016 Schedule of Fees and Charges.

STRATEGIC IMPLICATIONS

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Effective communication

Affordable services and initiatives to satisfy community need

Our Prosperity Goal – Create the means to enable local jobs creation and lifestyle affordability for the current and future population:

Affordable and equitable services and infrastructure

Key economic development strategies for the Shire which are aligned to regional outcomes working through recognised planning and development groups/committees

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

An organisational culture that strives for service excellence

Sustainable and integrated strategic and operational plans

Responsible resource allocation

Effective community engagement

VOTING REQUIREMENTS

Absolute Majority

REPORT RECOMMENDATION:

That Council:

1. Adopts the Schedule of Fees and Charges as attached for 2015/16 effective from 1 September 2015 excluding statutory fees; and

2. Adopts the following annual amounts for member sitting fees and allowances for 2015/2016 effective from 1 July 2015;

*Fee Allowance*	$
Sitting Fee – President	$22,789
Sitting Fee – (x 8 Councillors)	$16,995
Allowance – President	$46,350
Allowance – Deputy President	$11,587
ICT Allowance – (x 9 Councillors)	$3,500
Travel Allowance – (x 9 Councillors)	$50

3. Endorses that all member sitting fees are paid quarterly in advance.

(Absolute Majority Required)

Attachments

1.	2015/16 SCHEDULE of FEES AND CHARGES

Agenda – Special Meeting of Council 13 August 2015 Page 35 of 36

6.4.2 2015/2016 DIFFERENTIAL GENERAL RATES AND MINIMUM PAYMENT

LOCATION/ADDRESS: Nil

APPLICANT: Nil

FILE: ARA01

AUTHOR: Manager Financial Services

CONTRIBUTOR/S: Acting Financial Services Coordinator

RESPONSIBLE OFFICER: Director Corporate Services

DISCLOSURE OF INTEREST: Nil

DATE OF REPORT: 31 July 2015

SUMMARY: Council is requested to consider adoption of the differential general rates and minimum payment for the 2015/16 financial year.

BACKGROUND

Previous Considerations

SMC 23 July 2015 Item 6.4.1

As part of the annual budget process, and in order to make up the budget deficiency, Council is required to impose a general rate on rateable land within its district. In accordance with Section 6.32 of the Local Government Act 1995 (LGA), this may be imposed uniformly or differentially.

In addition to this, Council at its discretion may also impose a minimum payment on rateable land within its district. Pursuant to Section 6.36 of the Local Government Act 1995, the proposed rates in the dollar and minimum payment must firstly be endorsed by Council, and then be advertised for a minimum period of 21 days, seeking public submissions. The Local Government is required to consider any submissions prior to imposing the proposed rate or minimum payment, with or without modification.

At a Special Meeting of Council held on 16 June 2015, proposed differential rates for the 2015/16 financial year were considered by Council and endorsed for advertising.

Local public notice calling for submissions on differential rates was advertised on Saturday 20 June 2015 in the West Australian and Thursday 25 June 2015 in the Broome Advertiser.

Public notices were also placed on notice boards located at the Shire Administration Centre and Library, with the submission period closing at 4pm, Monday 13 July 2015.

At the Special Meeting of Council (SMC) held 23 July 2015, Council resolved the following:

That Council:

1. Receives the submissions and notes the objections contained therein.

2. In accordance with Section 6.36 of the Local Government Act 1995 endorses the following proposed differential general rates and minimum payments as advertised:

DIFFERENTIAL RATE CATEGORY	RATE IN THE DOLLAR (cents)	MINIMUM PAYMENT
Residential (GRV)	9.3990	$1,224
Residential – Vacant (GRV)	15.2200	$1,224
Commercial (GRV)	10.3800	$1,224
Tourism (GRV)	14.7150	$1,224
Mining (UV)	12.2250	$1,224
Rural (UV)	0.5836	$1,224
Commercial Rural (UV)	2.9656	$1,224

3. Adopts the Objects and Reasons for each of the proposed differential general rates and minimum payments in point 2 above as Attached.

4. Resolves to apply the concessions to those affected properties to the same value as was applied in 2014/15:

Property Type	Current 2014/15 Concession	2015/16 Concession
Horticultural Land Use	11%	11%
12 Mile	27%	27%
Coconut Well	48%	48%

5. Requests the Chief Executive Officer to review Policy 2.1.5 Rural Rating Policy in consultation with the Department of Local Government and Communities and related property owners.

6. Acknowledges the importance of the Commonwealth’s Financial Assistance Grants in assisting the Shire of Broome in delivering quality services and infrastructure to its community.

7. Requests the Chief Executive Officer to appoint an independent consultant to review the concessional properties in relation to GRV and UV and report to Council by December 2015 with recommendations for consideration.

8. Authorises the Chief Executive Officer to appoint an independent person(s) to review rating methodology and report to a Chief Executive Officer Rates Advisory Group, consisting of representatives of the Coconut Wells, 12 Mile and Horticultural areas.

9. Requests the Chief Executive Rates Advisory Group reports its finding to Council by February 2016.

The Department of Local Government and Communities (DLGC) advised that the Minister requires evidence of Council consideration of any submissions received. The minutes of the SMC held 23 July 2015 were forwarded to the DLGC as part of the application for exemption as per Sections 6.33 and 6.35 of the LGA.

Under Section 6.33 of the LGA, the proposed UV Mining and UV Commercial differential rates are set at more than twice the base UV Rural rate. Under 6.35 of the LGA, there are more than half the number of GRV Residential Vacant properties on the minimum payment. Both require Ministerial approval. Council has made an application to the Minister for Local Government and Communities for an exemption to impose differential rates as per above and the exemption has been granted as per the attached letter.

Council are now required to adopt the imposition of the proposed differential general rates and minimum payment.

COMMENT

Councillors participated in a number of budget workshops held in April and May, with a fully detailed draft budget presented as a program report, including all operating and capital expenditure proposed and collated through the budget preparation process. The draft budget was primarily developed with reference to Council’s adopted Corporate Business Plan 2015 – 2019, draft 2015 – 2030 Long Term Financial Plan and informing Asset Management Plans. Consideration was also given to a number of project briefs that were submitted by staff and presented to Council through the aforementioned workshops.

The Executive endeavoured to prioritise objectives within the context of a balanced draft budget, using reasonable funding estimations. The draft budget as proposed will be based upon a general increase in rates of 3.97%, aligned to Council’s draft 2015-2030 Long Term Financial Plan (LTFP) and Corporate Business Plan.

Following deliberations at the Budget Workshop on 7 May 2015 and feedback provided by Councillors, amendments have been made to the draft budget documents (circulated to Councillors 29 May 2015). The draft documents include a general rate increase of 3.97% as compared to actual rate revenue received to date for the 2014/15 year.

At the Special Meeting of Council held 19 February 2015, Council resolved to adopt the new Shire of Broome Corporate Business Plan 2015-19 (CBP), taking effect 1 July 2015. In review of this document, Council has had significant regard for the financial capacity of the organisation to deliver priority initiatives, achieve desired levels of service and maintain adequate levels of asset renewal. As part of this process and to achieve a more sustainable future, a review of the organisation’s structure was undertaken, resulting in a restructure that has achieved savings in operational expenses in the order of $1.8M annually.

This adjustment has improved the long term financial sustainability of the Shire of Broome. It has resulted in a reduction in the reliance on Reserve funding and improved the Shire’s conformity with financial ratio targets prescribed by the DLGC. Key achievements in this year’s budget include:

· Improved efficiencies realising further savings in the Parks and Gardens and Works and Services areas.

· A focus by officers on leveraging Council funds to attract significant grant funding has been successful and this is reflected in the proposed capital projects in the 2015/2016 financial year.

· A focus on revenue raised through fees and charges based on an improved user pays philosophy.

All of these factors have resulted in a proposed rate increase of 3.97% to deliver the priorities and services of Council. This proposed increase is below the indicative figure of 5% included within the Shire’s Long Term Financial Plan.

The basis of the proposed rate modelling (including the GRV and UV revaluations) to achieve these capital projects and normal operational services is outlined below. Background is also provided on a review of concessions that has been undertaken as part of an overarching rates review for Council’s consideration.

Gross Rental Value (GRV) Revaluations

The Valuer General’s Office determines the valuation of ‘individual’ properties utilising a GRV methodology, to which Council then applies its rates in the dollar. This rating methodology explains the individual property variances that occur throughout all GRV rating categories. It is significant to note that the Valuer General’s triennial GRV revaluation was undertaken in September 2014 and this will take effect in the 2015/2016 financial year. The impacts of this revaluation are explained further below.

The revaluations for all GRV properties were received in full by the Shire on 22 May 2015. Officers have assessed the revaluations for the impact on each rating category, ratepayers in general and with regard for the general rate requirement. The following factors have been considered in the rates analysis due to their significant impact on ratepayers and yield:

· The number of rateable properties compared to last year has grown by 2.83% (or 188 properties). This is consistent with growth in previous years but needs to be accounted within the setting of the proposed rate in the dollar.

· Movements in valuations have fluctuated between rating categories and in summary the following has occurred:

o Rateable values on average in the GRV Residential, GRV Tourism, UV Rural and UV Commercial Rural categories have decreased; and

o Rateable values on average in the GRV Residential Vacant, GRV Commercial and UV Mining categories have increased slightly.

o 86.5% of properties have decreased in valuation

o 6.2% of properties have increased in valuation

o 7.3% of properties have had no change to the valuation

· Minimum payments are proposed to increase 2% to $1,224 from $1,200 in 2014/2015.

· There have been no boundary changes to affect rates for 2015/16.

Rates in the dollar for each rate category have been adjusted to reflect these new valuations whilst maintaining individual rate yields. The above significant factors have been incorporated into the proposed objects and reasons for Differential Rating proposed for 2015/16. The only changes to last year reflect percentage comparisons within the GRV objects and reasons to the base rate GRV Differential Rating category (i.e. GRV Residential).

Minister’s Approval

In accordance with Section 6.33 and 6.35 of the Local Government Act 1995, Minister’s approval has been received to impose a differential rate more than twice the lowest differential rate in the UV Mining and UV Commercial rating categories and to impose a minimum payment on vacant land where more than half of the number of properties are on the minimum payment.

Final comment

In summary, if Council supports the report recommendation, the overall rate yield will be approximately $20,905,834. The general rate increase of 3.97% has been calculated to meet the demands of general costs increases, reduction in grants, plus the impact of new projects identified during budget deliberations.

CONSULTATION

Nil

STATUTORY ENVIRONMENT

Local Government Act 1995

6.32. Rates and service charges

(1) When adopting the annual budget, a local government —

(a) in order to make up the budget deficiency, is to impose* a general rate on rateable land within its district, which rate may be imposed either —

(i) uniformly; or

(ii) differentially;

(b) may impose* on rateable land within its district —

(i) a specified area rate; or

(ii) a minimum payment;

and

(c) may impose* a service charge on land within its district.

* Absolute majority required.

6.33. Differential general rates

(1) A local government may impose differential general rates according to any, or a combination, of the following characteristics —

(a) the purpose for which the land is zoned, whether or not under a local planning scheme or improvement scheme in force under the Planning and Development Act 2005;

(b) a purpose for which the land is held or used as determined by the local government;

(c) whether or not the land is vacant land; or

(d) any other characteristic or combination of characteristics prescribed.

(2) Regulations may —

(a) specify the characteristics under subsection (1) which a local government is to use; or

(b) limit the characteristics under subsection (1) which a local government is permitted to use.

(3) In imposing a differential general rate a local government is not to, without the approval of the Minister, impose a differential general rate which is more than twice the lowest differential general rate imposed by it.

(4) If during a financial year, the characteristics of any land which form the basis for the imposition of a differential general rate have changed, the local government is not to, on account of that change, amend the assessment of rates payable on that land in respect of that financial year but this subsection does not apply in any case where section 6.40(1)(a) applies.

(5) A differential general rate that a local government purported to impose under this Act before the Local Government Amendment Act 2009 section 39(1)(a) came into operation 1 is to be taken to have been as valid as if the amendment made by that paragraph had been made before the purported imposition of that rate.

[Section 6.33 amended by No. 38 of 2005 s. 15; No. 17 of 2009 s. 39; No. 28 of 2010 s. 34.]

6.36. Local government to give notice of certain rates

(1) Before imposing any differential general rates or a minimum payment applying to a differential rate category under section 6.35(6)(c) a local government is to give local public notice of its intention to do so.

(2) A local government is required to ensure that a notice referred to in subsection (1) is published in sufficient time to allow compliance with the requirements specified in this section and section 6.2(1).

(3) A notice referred to in subsection (1) —

(a) may be published within the period of 2 months preceding the commencement of the financial year to which the proposed rates are to apply on the basis of the local government’s estimate of the budget deficiency;

(b) is to contain —

(i) details of each rate or minimum payment the local government intends to impose;

(ii) an invitation for submissions to be made by an elector or a ratepayer in respect of the proposed rate or minimum payment and any related matters within 21 days (or such longer period as is specified in the notice) of the notice; and

(iii) any further information in relation to the matters specified in subparagraphs (i) and (ii) which may be prescribed;

and

(c) is to advise electors and ratepayers of the time and place where a document describing the objects of, and reasons for, each proposed rate and minimum payment may be inspected.

(4) The local government is required to consider any submissions received before imposing the proposed rate or minimum payment with or without modification.

(5) Where a local government —

(a) in an emergency, proposes to impose a supplementary general rate or specified area rate under section 6.32(3)(a); or

(b) proposes to modify the proposed rates or minimum payments after considering any submissions under subsection (4), it is not required to give local public notice of that proposed supplementary general rate, specified area rate, modified rate or minimum payment.

POLICY IMPLICATIONS

2.1.5 Rural Rating Policy

2.1.6 Tourism Administration Policy

FINANCIAL IMPLICATIONS

As outlined, the proposed general rates increase of 3.97%, resulting in a total rate revenue yield of $20,905,834.

RISK

The risk of not implementing the differential general rates and minimum payment for the 2015/16 financial year will have implications for the 2015/16 budget adoption, council operations and capital projects proposed for 2015/16. The financial impact has been calculated to be greater than $150,000; the impact is determined to be Level 5, ‘Catastrophic’. To mitigate this risk, the budget and proposed rates have been previously workshopped with Council and supporting justification for the increases has been supplied to allow Council make an informed decision when adopting the imposition of the rates.

STRATEGIC IMPLICATIONS

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Affordable services and initiatives to satisfy community need

Our Prosperity Goal – Create the means to enable local jobs creation and lifestyle affordability for the current and future population:

Affordable and equitable services and infrastructure

Key economic development strategies for the Shire which are aligned to regional outcomes working through recognised planning and development groups/committees

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

Sustainable and integrated strategic and operational plans

Responsible resource allocation

VOTING REQUIREMENTS

Absolute Majority

REPORT RECOMMENDATION:

That Council:

1. In accordance with Sections 6.32, 6.33, 6.34, 6.35, 6.36 and 6.47 of the Local Government Act 1995, for the purpose of yielding the deficiency in the 2015/16 Annual Budget,

a) Imposes the following Differential General Rates and Minimum Payment on Gross Rental Value (GRV) and Unimproved Value (UV) rateable land as follows :

DIFFERENTIAL RATE CATEGORY	RATE IN THE DOLLAR (cents)	MINIMUM PAYMENT
Residential (GRV)	9.3990	$1,224
Residential – Vacant (GRV)	15.2200	$1,224
Commercial (GRV)	10.3800	$1,224
Tourism (GRV)	14.7150	$1,224
Mining (UV)	12.2250	$1,224
Rural (UV)	0.5836	$1,224
Commercial Rural (UV)	2.9656	$1,224

b) Grants the following concessions:

Concession Category	Concession in %
UV rated properties in the locality of Coconut Wells (Waterbank)	48%
UV rated properties in the locality of 12 Mile (Roebuck)	27%
UV rated properties with a Horticulture recorded land use (various locations) under Section 6.33 (1)(b) of the Local Governments Act 1995	11%
These concessions do not apply on minimum rates.

c) Adopts the 2015/2016 Differential Rating Objects and Reasons.

(Absolute Majority Required)

Attachments

1.	2015/16 Differential Rating Objects and Reasons
2.	Ministerial Letters of Approval

Agenda – Special Meeting of Council 13 August 2015 Page 43 of 44

6.4.3 ADOPTION OF RATES INSTALMENT PAYMENT ARRANGEMENTS, INTEREST AND PENALTY CHARGES

LOCATION/ADDRESS: Nil

APPLICANT: Nil

FILE: ARA01

AUTHOR: Acting Financial Services Coordinator

CONTRIBUTOR/S: Manager Financial Services

RESPONSIBLE OFFICER: Director Corporate Services

DISCLOSURE OF INTEREST: Nil

DATE OF REPORT: 31 July 2015

SUMMARY: Council is requested to consider adoption of rates instalment payment arrangements, interest and penalty charges for the 2015/16 financial year.

BACKGROUND

Previous Considerations

NIL

Council is requested to adopt the proposed interest rates, fees and charges for instalment payments, administration fees, penalty interest and due dates for the payment of rates in full, by instalments and treatment of non-payment of debts. Provision is proposed for one full payment option, a two payment option and 4 payment options. Dates are based on a rates notice issue date of 31 August 2015.

COMMENT

Instalment Dates, Overdue and Instalment Rates and Charges

Under Section 6.51(1) of the Local Government Act 1995 (LGA), Council is able to charge interest on unpaid rates and rates on an instalment plan. The maximum interest rate for unpaid rates and other monies owed to Council is prescribed by Regulation 70 of the Local Government (Financial Management) Regulations 1996 (FMR) and is currently 11%. Instalment interest is set at 5.5% of the prescribed rate under FMR 68.

Under FMR 67, instalment charges are set to provide a full or partial reimbursement of administration costs. The individual instalment transaction fee of $7.00 is set to reflect the administration cost in handling the 2 or 4 instalment options provided to ratepayers.

The following due dates for the payment of rates are proposed:

Instalment Option

Payment Due Date

Full Payment

5 October 2015

Two Instalment Option

First instalment

Second and final instalment

5 October 2015

8 February 2016

Four Payment Option

First instalment

Second instalment

Third instalment

Fourth and final instalment

5 October 2015

7 December 2015

8 February 2016

8 April 2016

Further to this, in accordance with Section 6.51 of the LGA, Council may consider charging interest on unpaid rates and instalment plans. Details of the interest and penalty charges proposed are detailed in the table below. As a conservative measure, the proposed 2015/2016 budgeted revenue of $254,250 for rates penalty interest, instalment and administration charges has been set at a lower level than what was actually received in 2014/2015, but is set at a higher amount than the original 2014/2015 revenue budget of $207,500 which represents a 23% increase.

Other Administration Fees & Charges

As detailed in the report for the adoption of the 2015/2016 Fees & Charges Schedule, officers have proposed several additional administration cost recovery fees and charges to be implemented for the 2015/16 financial year. A $25 fee proposed for requesting a copy of the rates notice and preparation of a debt clearance letter. The reissue of rates notice fee is to recover the administration costs of extracting and forwarding copies of rates notices from prior year and duplicated copies of the current year.

The notice of discontinuance fee is to recover the administration costs for preparation and lodgement of the notice of discontinuance. The fee proposed will recover 100% of the actual lodgement cost associated with the debt agency.

Under Section 6.13 of the LGA and prescribed under FMR 19A, Council may consider charging penalty interest at the full statutory rate of 11% for all other sundry debt outstanding after 45 days as proposed in the 2015/2016 Fees & Charges Schedule. However, Council may consider whether penalty interest rates be applied after 60 days instead to allow adequate time for debtors to pay their overdue debts. This is the first year of introducing the charge to encourage earlier payment and maximise Council’s liquidity. Individual debtors will be provided notice of the new charge effective 1 September 2015. The objective of this new penalty rate is to reduce the number of sundry debtors that present as outstanding in the 90 Day Debtor outstanding debt turnover ratio. As this is the first year of applying the penalty interest rate, as a conservative measure no provision was made for the potential revenue in the draft 2015/2016 budget due to the level of uncertainty of this rate being utilised.

Interest and Instalments Charges		Interest Rate/ Charge		Total Charges
		Budget	Actual	Budget	Actual
Type of Interest Charge/Income		15/16	14/15	15/16	14/15
Interest on Rates Unpaid		11.00%	11.00%	$120,000	$152,863
Interest on Outstanding Sundry Debts		11.00%	0.00%	$0	$0
Interest on Instalments Plan		5.50%	5.50%	$97,000	$96,600
Charges on Instalments Plans – Per Instalment after the first		$7.00	$7.00	$36000	$35,532
Charge on Approved Payment Plan per Plan or Variation		$0.00	$0.00	$0	$0
Reissue Rate Notice		$25.00	$0.00	$1,000	$0
Notice of Discontinuance		Actual cost	$0.00		$0
Debt Clearance Letter		$25.00	$0.00	$250	$0
Pensioner Deferred Rate Interest Income		**	**
	Totals			$254,250	$284,995

** Long term bond rate as determined under Section 17(2) Rates and Charges (Rebates & Deferments) Act 1992.

Assistance for Financial Hardship

Council currently provides a service to assist ratepayers experiencing genuine financial hardship that prevents them from paying their rates by the due dates. Alternative payment plans are available and provide an option to pay rates on a payment plan that falls outside of the standard arrangements. Eligibility for assistance is assessed on an individual basis.

CONSULTATION

N/A

STATUTORY ENVIRONMENT

Local Government Act 1995

6.13. Interest on money owing to local governments

(1) Subject to any other written law, a local government may resolve* to require a person to pay interest at the rate set in its annual budget on any amount of money (other than rates and service charges) which —

(a) that person owes to the local government; and

(b) has been owed for the period of time referred to in subsection (6).

* Absolute majority required.

(2) A resolution under subsection (1) is to be included in the annual budget.

(3) The rate of interest that may be set by the local government under this section is not to exceed the rate for the time being prescribed as the maximum rate of interest that may be set for the purposes of this section.

(4) Where a local government imposes interest under subsection (1) on any outstanding amount of money the local government is not to also impose an additional charge in relation to that amount.

(5) Accrued interest is, for the purpose of its recovery, taken to form part of the money owed to the local government on which it is charged.

(6) A local government is not to impose interest on any amount of money under subsection (1) until the money has been owed to the local government for the period of time set by the local government in its annual budget (not being less than 35 days) after the date which is stated on the relevant account for payment as being the date the account was issued.

(7) Regulations may provide for the method of calculation of interest.

6.51. Accrual of interest on overdue rates or service charges

(1) A local government may at the time of imposing a rate or service charge resolve* to impose interest (at the rate set in its annual budget) on —

(a) a rate or service charge (or any instalment of a rate or service charge); and

(b) any costs of proceedings to recover any such charge,

that remains unpaid after becoming due and payable.

* Absolute majority required.

(2) The rate of interest that may be set by the local government under this section is not to exceed the rate for the time being prescribed as the maximum rate of interest that may be set for the purposes of this section.

(3) Accrued interest is, for the purpose of its recovery, taken to be a rate or service charge, as the case requires, that is due and payable.

(4) If a person is entitled under the Rates and Charges (Rebates and Deferments) Act 1992 or under this Act (if the local government in a particular case so resolves) to a rebate or deferment in respect of a rate or service charge —

(a) no interest is to accrue in respect of that rate or service charge payable by that person; and

(b) no additional charge is to be imposed under section 6.45(3) on that person.

(5) Regulations may provide for the method of calculation of interest.

[Section 6.51 amended by No. 1 of 1998 s. 21(1); No. 49 of 2004 s. 62.]

6.45. Options for payment of rates or service charges

(1) A rate or service charge is ordinarily payable to a local government by a single payment but the person liable for the payment of a rate or service charge may elect to make that payment to a local government, subject to subsection (3), by —

(a) 4 equal or nearly equal instalments; or

(b) such other method of payment by instalments as is set forth in the local government’s annual budget.

(2) Where, during a financial year, a rate notice is given after a reassessment of rates under section 6.40 the person to whom the notice is given may pay the rate or service charge —

(a) by a single payment; or

(b) by such instalments as are remaining under subsection (1)(a) or (b) for the remainder of that financial year.

(3) A local government may impose an additional charge (including an amount by way of interest) where payment of a rate or service charge is made by instalments and that additional charge is, for the purpose of its recovery, taken to be a rate or service charge, as the case requires, that is due and payable.

(4) Regulations may —

(a) provide for the manner of making an election to pay by instalments under subsection (1) or (2);

(b) prescribe circumstances in which payments may or may not be made by instalments;

(c) prohibit or regulate any matters relating to payments by instalments;

(d) provide for the time when, and manner in which, instalments are to be paid;

(e) prescribe the maximum amount (including the maximum interest component) which may be imposed under subsection (3) by way of an additional charge; and

(f) provide for any other matter relating to the payment of rates or service charges.

Local Government (Financial Management) Regulations 1996

19A. Maximum rate of interest prescribed (Act s. 6.13(3))

The maximum rate of interest to be imposed under section 6.13(1) is prescribed as 11%.

70. Maximum rate of interest on overdue rates and service charges — s. 6.51(2)

The maximum rate of interest to be imposed under section 6.51(1) is prescribed as 11%.

[Regulation 70 amended in Gazette 18 Jun 1999 p. 2640; 20 Apr 2012 p. 1705; 29 Jun 2012 p. 2954.]

68. Maximum interest component in instalments — s. 6.45(4)(e)

The maximum rate of interest to be imposed under section 6.45(3) is prescribed as 5.5%.

[Regulation 68 amended in Gazette 18 Jun 1999 p. 2639; 20 Apr 2012 p. 1705; 29 Jun 2012 p. 2954.]

67. Additional charge for payment by instalments

For the purpose of determining the additional charge to be imposed where payment of a rate or service charge is made by instalments, the local government is to —

(a) have regard to the additional costs of administration; and

(b) consider the additional charge as a full or partial reimbursement of those costs and not a charge for the purpose of making a profit.

POLICY IMPLICATIONS

2.1.3 Rates Debt Recovery

FINANCIAL IMPLICATIONS

Total budgeted interest and charges for 2015/16 is $254,250

RISK

The risk of not implementing the proposed interest rates, fees and charges for instalment payments, administration fees, penalty interest and due dates for the payment of rates in full, by instalments and treatment of non-payment of debts for the 2015/16 financial year will have implications for Council operations and cash flow management. The financial impact has been calculated to be greater than $150,000; the impact is determined to be Level 5, ‘Catastrophic’. To mitigate this risk, the budget and proposed fees, charges and penalty interest rates have been previously workshopped with Council and supporting justification for the rates has been supplied to allow Council make an informed decision.

STRATEGIC IMPLICATIONS

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Affordable services and initiatives to satisfy community need

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

Sustainable and integrated strategic and operational plans

Responsible resource allocation

Effective community engagement

VOTING REQUIREMENTS

Absolute Majority

REPORT RECOMMENDATION:

That Council:

1. Pursuant to Section 6.45 of the Local Government Act 1995 and Regulation 64(2) of the Local Government (Financial Management) Regulations 1996, offers the option for the payment of rates in full or by instalments with the following nominated due dates:

a) Option 1 - Full Payment

§ Payment due 5 October 2015

b) Option 2 - Two Payment Option

§ First Payment due 5 October 2015

§ Second Payment due 8 February 2016

c) Option 3 – Four Payment Option

§ First Payment due 5 October 2015

§ Second Payment due 7 December 2015

§ Third Payment due 8 February 2016

§ Fourth Payment due 8 April 2016

2. Pursuant to Section 6.5(1) and subject to Section 6.51(4) of the Local Government Act 1995 and Regulation 70 of the Local Government (Financial Management) Regulations 1996, adopts an interest rate of 11% for rates (and charges) and costs of proceedings to recover such charges that remain unpaid after becoming due and payable.

3. Pursuant to Section 6.45 of the Local Government Act 1995 and Regulation 68 of the Local Government (Financial Management) Regulations 1996, adopts an interest rate of 5.5% where the ratepayer has elected to pay rates and charges through an instalment option.

4. Pursuant to Section 6.45 of the Local Government Act 1995 and Regulation 67 of the Local Government (Financial Management) Regulations 1996, adopts an instalment charge where the ratepayer has elected to pay rates (and charges) through an instalment option of $7.00 for each instalment after the initial instalment is paid.

5. Pursuant to Section 6.13 of the Local Government Act 1995 and Regulation 19A of the Local Government (Financial Management) Regulations 1996, adopts an interest rate of 11% for any amount owing to Council (other than rates and service charges) and costs of proceedings to recover such charges that remain unpaid after becoming due and payable 45 days from date of issue.

(Absolute Majority Required)

Attachments

There are no attachments for this report.

Agenda – Special Meeting of Council 13 August 2015 Page 50 of 51

6.4.4 MATERIALITY IN FINANCIAL REPORTING

LOCATION/ADDRESS: Nil

APPLICANT: Nil

FILE: FRE02

AUTHOR: Manager Financial Services

CONTRIBUTOR/S: Acting Financial Services Coordinator

RESPONSIBLE OFFICER: Director Corporate Services

DISCLOSURE OF INTEREST: Nil

DATE OF REPORT: 31 July 2015

SUMMARY: Council is requested to consider the annual adoption of a policy on materiality to be used in statements of financial activity for reporting material variances. A number of amendments have been made to the policy in light of the Audit Regulation (Reg) 17 Action Improvement Plan requirements to improve the clarity and legislative compliance of the policy.

BACKGROUND

Previous Considerations

OMC 7 June 2007 Item 10.1

SMC 30 July 2009 Item 9.1.7

SMC 30 July 2010 Item 9.1.7

SMC 17 August 2011 Item 9.1.7

SMC 28 August 2013 Item 9.4.5

SMC 27 June 2014 Item 9.4.5

OMC 2 June 2015 Item 10.1

Section 6.4(1) of the Local Government Act 1995 states that “A local government is to prepare an annual financial report for the preceding financial year and such other financial reports as are prescribed.”

Regulation 34(1) of the Local Government (Financial Management) Regulations 1996 states that “A local government is to prepare each month a statement of financial activity.”

Regulation 34(5) follows that “Each financial year, a local government is to adopt a percentage value, calculated in accordance with AAS5, to be used in statements of financial activity for reporting material variances.”

It is a requirement to report biannually to the Audit Committee on the progress of the improvement plan which is one of the actions listed within the plan. At the Ordinary Meeting of Council held 2 June 2015, Council adopted the revised Audit Reg 17 Improvement plan and timelines as attached to the minutes of the Audit Committee meeting held 12 May 2015. One of the actions listed as point IC1.6 requires the review of Policy 2.1.1 Materiality in Financial Reporting to provide additional clarity in the policy wording.

COMMENT

There are a number of changes made to the materiality policy from last year, and it must be adopted each financial year as attached to this report. Changes are indicated through additions typed in red and deletions marked as ~~struck through~~. The changes have been made in consultation with the Audit Manager of Moore Stephens (formerly UHY Haines Norton) who conducted the Audit Reg 17 review report, seeking clarification on the requirements to update the policy wording for clarity and compliance. It was identified that the policy required updating to reflect alignment with Regulation 34(5) of the Local Government (Financial Management) Regulations 1996 (FMR) and distinguish other material variance thresholds from this base legislative requirement.

The objective of this policy is to ensure compliance with Australian Accounting Standard (AAS) 1031 Materiality and FMR 34(5). The policy represents a key mechanism of internal control procedures and processes to prevent financial or reputational loss caused by an omission, misstatement or non-disclosure of financial information. To prevent administrative inefficiency, materiality thresholds are set by the local government in accordance with risk management thresholds to ensure only those variances that represent a medium and higher level of risk be reported and explained to management and Council.

The policy formalises a position where materiality thresholds are set to provide guidance in the reporting of material variations on;

a) Budget line item level (general ledger account or job codes),

b) Statutory program, core service, or nature and type reporting level; and

c) Total organisational forecast level.

As per FMR 34(5), materiality thresholds can be set as a percentage, or dollar value, against an appropriate base amount. The policy provides both; the advantage being is that a minimum value threshold can be set as well as a proportional value threshold, relevant to major items or subtotals. Threshold levels should not be so high as to allow material variances to go unnoticed, and by the same token, should not be so low as to cause administrative burden.

For the purposes of monthly financial reporting, 10% would be considered a reasonable guide for highlighting variances. Council may also wish to adopt a value rather than a percentage, or incorporate a minimum value threshold into the materiality consideration. The policy provides $20,000 as a minimum value for reporting in the monthly statement of financial activity. This threshold sits within the medium range on the risk matrix.

As a guide, an overall level based upon total revenue of Council could be employed. This has been set at 1% which would represent a deficit of $367,982 based on the total operating revenue in the 2015/2016 draft budget. This amount is more than twice the risk matrix financial impact threshold of $150K which places it beyond the extreme level. The remedial outcome as per the risk matrix requires immediate intervention and management have set other internal thresholds for reporting material variances to mitigate the occurrence of an overall deficit greater than $300K.

Budgets, at their lowest line item level, are set against an account or job number. The existing policy is to report variations of a minimum value of $10,000 for operating revenue and expenditure accounts/jobs and $20,000 for capital revenue and expenditure accounts/jobs in order to maintain significance in reporting and focus on material exceptions. Set amounts for materiality provide clear guidance for reporting, and line item forecast variations are reviewed monthly by Responsible Officers and reported through the Monthly Financial Activity Report and internally through the quarterly Finance and Costing Review (FACR) process. The Shire of Broome’s total operating revenue budget is $36,798,275; therefore, $10,000 at the lowest line item level would appear to be a reasonable starting figure for variance materiality.

It is noted that when establishing materiality values and percentages, they are a trade off between the volume of information compared to the significance of that information, however the amount alone does not always dictate whether an item is material, and disclosures should be adjusted where necessary. Variances can consist of either timing or permanent variances. For example, a timing variance occurs when grant funding was received in a month later than originally budgeted, as opposed to a permanent variance when the grant funding will not be received as budgeted.

It is recommended that Council adopted the reviewed policy with the recommended material variance threshold as detailed.

CONSULTATION

Moore Stephens

STATUTORY ENVIRONMENT

Local Government (Financial Management) Regulations 1996

34. Financial activity statement required each month (Act s. 6.4)

(1A) In this regulation —

committed assets means revenue unspent but set aside under the annual budget for a specific purpose.

(1) A local government is to prepare each month a statement of financial activity reporting on the revenue and expenditure, as set out in the annual budget under regulation 22(1)(d), for that month in the following detail —

(a) annual budget estimates, taking into account any expenditure incurred for an additional purpose under section 6.8(1)(b) or (c); and

(b) budget estimates to the end of the month to which the statement relates; and

(c) actual amounts of expenditure, revenue and income to the end of the month to which the statement relates; and

(d) material variances between the comparable amounts referred to in paragraphs (b) and (c); and

(e) the net current assets at the end of the month to which the statement relates.

(2) Each statement of financial activity is to be accompanied by documents containing —

(a) an explanation of the composition of the net current assets of the month to which the statement relates, less committed assets and restricted assets; and

(b) an explanation of each of the material variances referred to in subregulation (1)(d); and

(c) such other supporting information as is considered relevant by the local government.

(3) The information in a statement of financial activity may be shown —

(a) according to nature and type classification; or

(b) by program; or

(c) by business unit.

(4) A statement of financial activity, and the accompanying documents referred to in subregulation (2), are to be —

(a) presented at an ordinary meeting of the council within 2 months after the end of the month to which the statement relates; and

(b) recorded in the minutes of the meeting at which it is presented.

(5) Each financial year, a local government is to adopt a percentage or value, calculated in accordance with the AAS, to be used in statements of financial activity for reporting material variances.

POLICY IMPLICATIONS

2.1.1 Materiality in Financial Reporting

FINANCIAL IMPLICATIONS

As per AAS 1031 Materiality, Information is material if its omission, misstatement or non-disclosure has the potential, individually or collectively, to;

a) Influence the economic decisions of users taken on the basis of the financial statements; or

b) Affect the discharge of accountability by the management or governing body of the entity.

The proposed thresholds in the policy of at least $10K to $365K (1% of total operating revenue) are deemed to be set at a moderate level.

RISK

The materiality thresholds in the policy have been set after analysing the following key risks of the occurrence of material variances:

HIGH - Material variances greater than 10% of the summarised revenue and expenditure by Program, Business Unit, Nature and Type or Asset Class are likely to occur at least once a year.

HIGH – Material variances greater than $10,000 for operating and $20,000 for capital account/job line items are likely to occur at least once a year.

EXTREME – Material variances greater than a forecast deficit of 1% of Operating Revenue are likely to occur at least once a year.

Management has set internal thresholds at 50% of the full materiality thresholds to act as an early warning system for investigation to mitigate the above risks prior to reporting to Council. Additionally, staff are to immediately formulate an action plan to remedy the position, once a material variance has been identified, reported and an explanation is provided.

*Almost Certain*	H	H	E	E		E

*Likely*	M	H	H	E		E

*Possible*	L	M	H	E		E

*Unlikely*	L	L	M	H		E

*Rare*	L	L	M	H		H

Likelihood	*Insignificant*	*Minor*	*Moderate*	*Major*		*Catastrophic*
and Impact

*Legend*	*Remedial Outcome*
E	Extreme Risk - Immediate intervention required
H	High Risk - Director or CEO must be informed and aware
M	Medium Risk - Management responsibility to monitor
L	Low Risk - Operationally address

*Frequency*	*Likelihood of Incident Occurring*
Almost Certain	Expected to occur in most circumstances				More than once per year
Likely	Will probably occur in most circumstances				At lease once per year
Possible	Should occur at some time				At least once in three years
Unlikely	Could occur at some time				At least once in ten years
Rare	May occur, only in exceptional circumstances				Less than once in fifteen years

*Level*	*Description*	*Financial Impact*	*Health*	*Reputation*	*Operation*
1	Insignificant	Less than $1,000	No injuries	Unsubstantiated, low impact, low profile or no news item	Little impact
2	Low	$1,000 to $10,000	First aid treatment	Substantiated, low impact, low media profile	Inconvenient delays
3	Medium	$10,000 to $50,000	Medical treatment	Substantiated, public embarrassment, moderate impact, moderate media profile	Significant delays to major deliverables
4	High	$50,000 to $150,000	Death or extensive injuries	Substantiated, public embarrassment, high impact media profile, third party actions	Non achievement of major deliverables.
5	Extreme	More than $150,000	Multiple deaths or severe permanent disablements	Substantiated, public embarrassment, very high multiple impacts, high widespread multiple media interactivity, third party action.	Non achievement of key objectives.

STRATEGIC IMPLICATIONS

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Effective communication

Affordable services and initiatives to satisfy community need

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

An organisational culture that strives for service excellence

Sustainable and integrated strategic and operational plans

Responsible resource allocation

Improved systems, processes and compliance

VOTING REQUIREMENTS

Simple Majority

REPORT RECOMMENDATION:

That Council adopts the attached policy 2.1.1 Materiality in Financial Reporting for 2015/2016.

Attachments

1.	Policy 2.1.1. Materiality - Reviewed

Agenda – Special Meeting of Council 13 August 2015 Page 56 of 57

6.4.5 ADOPTION OF 2015/2016 ANNUAL BUDGET

LOCATION/ADDRESS: Nil

APPLICANT: Nil

FILE: ACC01

AUTHOR: Acting Financial Services Coordinator

CONTRIBUTOR/S: Manager Financial Services

RESPONSIBLE OFFICER: Director Corporate Services

DISCLOSURE OF INTEREST: Nil

DATE OF REPORT: 31 July 2015

SUMMARY: Council is requested to consider adoption of the 2015/2016 Annual Budget.

BACKGROUND

Previous Considerations of the 2015/2016 Annual Budget

Nil

Budget Process

The budget process is to be undertaken in order to adopt the annual budget in accordance with the Local Government Act 1995 (LGA) and Local Government (Financial Management) Regulations 1996 (FMR).

Under Section 6.2(1) FMR, Council is required to prepare and adopt an annual budget for each financial year. The form and content of the annual budget is required to include statements of income, cash flow and rates setting, required by the Regulations which support the Act.

The draft budget was developed with regard for Council’s 2015-2019 Corporate Business Plan, 2015-2030, Long Term Financial Plan, Workforce Plan, Draft Information Communication and Technology (ICT) Plan, Asset Management Plans and Plant Replacement Program. Any proposed new initiatives and projects over $8,000 were subject to a project brief submission process, scrutinised by the Executive staff, prior to inclusion for presentation to Council.

The draft consolidated budget was prepared and presented to Council at briefings and numerous workshops held during April and May. The process commenced with the presentation of the Draft Fees and Charges Schedule, followed by further workshops on the Draft Operating Budget, Rates, Draft Capital Budget and Project Briefs. A bus trip was also coordinated to permit site inspections of key capital projects proposed for consideration of inclusion.

Full Capital programs were presented at the workshops for all asset classes with regard for the Shire’s Building Asset Management Plan and Transport Asset Management Plan. All Reserve Accounts were reviewed in detail to determine capacity to fund proposed projects, with consideration of future, longer term commitments to renewal expenditure in particular. The Executive then endeavoured to prioritise objectives within the context of a balanced draft budget, using reasonable funding estimations and the draft budget, as proposed, incorporates a general increase in rates of 3.97%, which compares to the previous year’s general increase of 5.97%.

The budget document itself is in statutory form and includes statutory statements and notes, supporting program schedules and appendices including the organisational structure and is presented for Council consideration and adoption.

COMMENT

The 2015/2016 proposed Annual Budget has a predicted carried forward balance of $2,305,519. The majority of this carried forward balance of $1,486,197 is a result of the Federal Assistance Grants (FAG’s) received in advance. 50% of the annual allocation of 2015/16 was received on the 30 June 2015; the Shire of Broome has quarantined this income.

The remaining $819,322 anticipated carry forward amount is the result of a number of capital works projects that have been identified as not being able to be completed by 30 June 2015 and have now been included in the 2015/16 budget as recounted projects, net of grant funding. These funds have been identified as carry-over and effectively assist to balance the 2015/16 Budget. Some of the significant carry over projects of note are identified in the table below;

Capital Carry Over Project

Frederick St Trunk Drain

Key Worker Housing – Construction Land and Building Staff Housing

Frederick street and Dampier Connection

Denham Road construction

Construction of a Community Storage Facility

Vehicle / plant replacement and renewal

Crab Creek Road realignment works

BRAC Building Renewal – Dry – Hard Court

Intranet Upgrade

Payroll System Upgrade

The draft budget has been prepared using the advertised general rate increase of 3.97%. This is a lower increase compared to the 5.97% from the previous year. It is of note that there have been some significant external factors that have been addressed within the budget that are different to last year, and these include net increases or decreases as per below:

· $185k increase in street lighting/power costs

· $980k increase in Council charges, licences and statutory fees levied, as a result of organisational focus on fees and charges

· $144k reduction in Financial Assistance Grants

· $356K reduction in loan repayments

· $800k reduction in Engineering operations works

New submissions and projects of interest include initiatives such as;

· Stage 2 of the Buckleys Road Landfill Closure/Rehabilitation

· Chinatown Revitalisation

· Broome Aquatic and Recreation Centre upgrade

· Kimberley Regional Office Building Construction

· Weighbridge at Buckleys Rd Waste Facility

· Cemetery upgrade public toilet facility

· Archer Street & McDaniel Street intersection upgrade

· Cable Beach East / Reid Road roundabout construction

· Hamersely and Haas Street Road roundabout construction

In macro dollar terms, Council will invest $30.9 million in asset construction/acquisition, upgrades and renewal activities including;

· $5.6 million for buildings works

· $19.8 million for roads, drainage, parks and other infrastructure works

· $4.5 million of fixed and mobile plant and equipment acquisitions and

· $657K for Information, Communication Technology, other furniture and equipment acquisition.

The capital works projects proposed for 2015/16 financial year includes $12M capital expenditure on economic development for Chinatown Revitalisation depending on funding being secured.

Funding for the capital activities is derived from grants and developer contributions totalling $16.1 million; sale of assets of $230K; and a $3.5 million net reliance on reserve funds compared to the LTFP of $3.7M. In 2015/2016, the Shire is investing a total of $63.9M into the Broome community with expenditure in key statutory programs of:

· Recreation & Culture - $13.5M is budgeted for the Shire’s community facilities, public library, swimming areas and beaches, cultural events, Civic Centre and the BRAC.

· Community Amenities - $11.9M is budgeted for rubbish and recycling collection, pre-cyclone clean up, waste management, storm water drainage, town planning, environmental protection and litter control.

· Economic Services - $13.5M is budgeted for economic initiatives, Chinatown revitalisation, provision of tourism and visitor services, building control and swimming pool inspections and caravan parks facilities.

· Transport - $10.3M is budgeted for maintenance of roads, kerbing, footpaths, car parks, verges, parking control, street lighting, bus shelters and facilities and flood damage.

· Other Properties & Services - $6.7M is budgeted for the KRO redevelopment, community facilities, cafe/restaurants, Records and ICT management, corporate services, private works and other infrastructure operations.

· Governance - $3.7M is budgeted for civic and citizenship activities, community sponsorship programs, promotion and engagement, Sister City relations, youth development and $593K of Kimberley Regional Collaborative Zone grant funded initiatives.

· Housing - $1.3M is budgeted for construction of housing for staff attraction and retention funded from grants and leasing recovered in full from staff contributions.

· Law, Order & Public Safety - $1.1M is budgeted for legislative compliance and local laws enforcement, ranger operations, fire prevention, emergency planning and services and animal control.

· Education & Welfare - $783K is budgeted for community development programs, community safety, crime prevention, not for profit organisation support and community engagement and events.

· Health - $775K is budgeted for public health regulation and inspections, food premise licensing, mosquito and pest control and commercial pool inspections.

· General Purpose Funding - $246K is budgeted for management of the Shire’s grants, rates review initiatives and debt/revenue management and control.

Significant Accounting Policies

FMR 5A the annual budget and financial report and other reports of a local government must comply with the Australian Accounting Standards (AAB). The purpose of the Significant Accounting Policy is to disclose the accounting policies that apply in the notes of the Financial Statements. Significant accounting policies are reviewed annually, after consultation and advice from external auditors. The accounting policies are disclosed in Note 1 of the draft annual budget and annual financial report. Policy 2.1.4 Significant Accounting Policies has been reviewed since it was adopted at the OMC held 27 November 2014 and no changes have been made, therefore this policy will now apply in the 2015/2016 financial year.

Commonwealth Financial Assistance Grants Scheme (FAGS)

FAGs are a vital part of the revenue base of all councils, and this year Councils will receive $2.3 billion from the Australian Government under this important program. The Government’s decision in the 2014 Federal Budget to freeze the indexation of FAGs for three years beginning in 2014-15 will unfortunately cost Councils across Australia an estimated $925 million by 2017-18. The Australian Local Government Association and the state local government associations are seeking the support of Council for advocacy to have the Federal Government reverse the decision to freeze the indexation of FAGs.

While the FAGs are paid through each state’s Local Government Grants Commission (LGGC), the funding originates with the Commonwealth and it is important it is recognised as such. Council, and every other Council in Australia, have been asked to pass a resolution acknowledging the importance of the Commonwealth's Financial Assistance Grants in assisting Council to provide important community infrastructure.

Council is also being asked to acknowledge the receipt of Financial Assistance Grants from the Commonwealth in media releases and Council publications, including your annual report and to highlight to the media a Council project costing a similar size to the FAGs received by Council so that the importance and impact of the grants can be more broadly appreciated.

The Shire of Broome FAGS funding has been reduced by over $800K over a number of years. The recent Federal decision to place a freeze on the indexation rate applied to the overall pool of funding will have a further negative impact directly to the Shire of Broome. Essentially, the indexation generally applied at Federal level will not occur over the next two years, resulting in a stagnation of growth in funding flowing through to the State’s for distribution. The indexation freeze already in effect for 2014/2015 and the reduction in State allocations already applied to the Shire of Broome have made significant impacts. Further freezing of the FAGS Federal allocation will worsen this situation. The time that will be required to return to 2011/12 allocation levels will now be further extended.

The significant contribution is acknowledged, made by the Commonwealth, through the WALGGC via its FAGS funding in excess of $2M annually towards the achievement of the district’s annual and long term strategic objectives, as well as the goods and services supplied by the Shire that benefit the Broome community and visitors alike. Without this vital funding, either services levels would be significantly lower or rates significantly higher to maintain the same standards and expectations. Accordingly it is recommended that Council acknowledge the support provided by FAGS funding.

CONSULTATION

Department of Local Government and Communities

STATUTORY ENVIRONMENT

Local Government Act, 1995

6.2. Local government to prepare annual budget

(1) During the period from 1 June in a financial year to 31 August in the next financial year, or such extended time as the Minister allows, each local government is to prepare and adopt*, in the form and manner prescribed, a budget for its municipal fund for the financial year ending on the 30 June next following that 31 August.

* Absolute majority required.

(2) In the preparation of the annual budget the local government is to have regard to the contents of the plan for the future of the district made in accordance with section 5.56 and to prepare a detailed estimate for the current year of —

(a) the expenditure by the local government;

(b) the revenue and income, independent of general rates, of the local government; and

(c) the amount required to make up the deficiency, if any, shown by comparing the estimated expenditure with the estimated revenue and income.

(3) For the purposes of subsections (2)(a) and (b) all expenditure, revenue and income of the local government is to be taken into account unless otherwise prescribed.

(4) The annual budget is to incorporate —

(a) particulars of the estimated expenditure proposed to be incurred by the local government;

(b) detailed information relating to the rates and service charges which will apply to land within the district including —

(i) the amount it is estimated will be yielded by the general rate; and

(ii) the rate of interest (if any) to be charged by the local government on unpaid rates and service charges;

(c) the fees and charges proposed to be imposed by the local government;

(d) the particulars of borrowings and other financial accommodation proposed to be entered into by the local government;

(e) details of the amounts to be set aside in, or used from, reserve accounts and of the purpose for which they are to be set aside or used;

(f) particulars of proposed land transactions and trading undertakings (as those terms are defined in and for the purpose of section 3.59) of the local government; and

(g) such other matters as are prescribed.

(5) Regulations may provide for —

(a) the form of the annual budget;

(b) the contents of the annual budget; and

(c) the information to be contained in or to accompany the annual budget.

Local Government (Financial Management) Regulations 2006

5A. Local governments to comply with AAS

Subject to regulation 4, the annual budget, annual financial report and other financial reports of a local government must comply with the AAS.

POLICY IMPLICATIONS

2.1.4 Significant Accounting Policies

FINANCIAL IMPLICATIONS

The budget is the primary financial document for the 2015/16 financial year. The intention is that a budget will be balanced such that all expenditures are matched by revenues. Rate modelling adopted for advertising at the SMC held 16 June 2015 provided for a balanced budget. Following advertising of proposed Differential Rates, it is noted that at the SMC held 23 July 2015, Council resolved to maintain concessions applied to Coconut Well, 12 Mile and properties with a Horticultural land use at the same levels compared to 2014/15. The budget therefore reflects a $58k deficit that is attributed to maintaining these concessions at last year’s levels as opposed to phasing them out over a three year period.

RISK

The following risks have been identified in relation to the adoption of the 2015/2016 annual budget:

1) Extreme – the unlikely event of Council resolving not to adopt the budget which poses a catastrophic level of financial impact greater than $150,000. To mitigate this risk, all associated informing plans, schedules, rating strategies and budget formulation workings have been circulated and communicated to Council through key budget workshops as endorsed by Council in the 2015/2016 Budget Process timeline set in December 2014. Any cause for doubt over the information contained within the budget working papers have been resolved and communicated to Council prior to the formal adoption process.

2) Extreme – Disclosure of any future events that may impact the budget estimates as they come apparent is required in relation to the fair value revaluation of Council’s infrastructure assets as part of the 2014/2015 annual end of financial year reporting process. The revaluation process is likely to result in a depreciation variance against the proposed 2015/2016 budget due to a higher valuation level based on fair value as compared to current infrastructure class valuation set at historical cost for transport, drainage, public open space, footpaths, bridges, car park and street lighting and other infrastructure. This poses a catastrophic level of financial impact and is almost certain to occur resulting in an extreme level of risk. To mitigate this risk any material variance will be disclosed in the monthly financial activity statement, however, as depreciation represents a non-cash impact, when this occurs the only treatment available is to report and explain the variance to Council. The 2016/2017 proposed budget will then contain the updated estimates for depreciation.

STRATEGIC IMPLICATIONS

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

Effective communication

Affordable services and initiatives to satisfy community need

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

An organisational culture that strives for service excellence

Responsible resource allocation

VOTING REQUIREMENTS

Absolute Majority

REPORT RECOMMENDATION:

That Council:

1. Adopts the 2015/2016 Annual Budget and structure consisting of;

Part A – Staff Budget Version (by programme)

Part B – Statutory Budget Version as attached; and

2. Acknowledges the importance of federal funding through the Financial Assistance Grants program for the continued delivery of councils services and infrastructure, including a total allocation of $2.9 million for the 2015/2016 financial year for general purpose funding, untied road grants and indigenous access roads; and

3. Requests the Chief Executive Officer to ensure that this federal funding, and other funding provided by the Federal Government under relevant grant programs, is appropriately identified as Commonwealth grant funding in Council publications, including annual reports.

(Absolute Majority Required)

Attachments

1.	2015/2016 STATUTORY BUDGET
2.	2015/2016 STAFF BUDGET
3.	ORGANISATIONAL CHART BY DIRECTORATE

FINANCIAL INTEREST
Councillor	Item No	Item	Nature of Interest

IMPARTIALITY
Councillor	Item No	Item	Nature of Interest