STEP Finance Program Consultant Peter Smith

Presentation Objective To provide information on the STEP Finance Program so that what has been learnt can be applied to increase Community Buy-in to Council Plans STEP Finance Program Consultant Peter Smith

STEP Finance Program Consultant Peter Smith

STEP Finance Program Key Themes Main thrust of the STEP Finance visit: • Council Plan objectives being funded in the LTFP (Council Plan not full of wish lists) • To promote the linkage between asset renewal funding requirements (ensuring they are recognised in the LTFP) • Council makes sound decisions for long term sustainability • Council understands the long term cost implications of • The services it delivers – service planning • The assets it manages – Capital investment plus “Whole of Life” costs • Council is sustainable into the long term – the LTFP has integrity, includes all appropriate assumptions and shows a sustainable future STEP Finance Program Consultant – Peter Smith

STEP Finance Program • Interim Summary of Results from this Program so far are; • There are still “gaps” in the data being presented by councils to their community during the annual budget preparation process. • Budget information is moving slowly towards clearer details on service levels so that the community can judge whether it is receiving value for money • The community is getting closer to a position whether it can judge whether Budget decisions are made in the context of informed improvement plans for a more sustainable future STEP Finance Program Consultant – Peter Smith

STEP Finance Program • Interim Overall Score Summaries from this Program are as follows (24 No.): STEP Finance Program Consultant – Peter Smith

STEP Finance Program • Interim Individual Score Summaries from this Program are as follows (24 No.): Question 1.1. Council has adopted financial sustainability, as one of its key strategies in its Council Plan. Rationale. Council has discussed the issues around sustainability, developed and adopted a policy. This policy has also been presented to the community or consultation was completed as part of its development. Highest: 85 Lowest: 30 Average: 76 STEP Finance Program Consultant – Peter Smith

STEP Finance Program • InterimIndividual Score Summaries from this Program are as follows (24 No.): Question 3.3. When proposing new assets in the capital works program the operating costs over the assets life (maintenance and operations ) are accounted for in Council's capital evaluation process Highest: 85 Lowest: 30 Average: 67 STEP Finance Program Consultant – Peter Smith

STEP Finance Program • InterimIndividual Score Summaries from this Program are as follows (24 No.): Question 5.1. Council has prepared its annual budget based on the requirements of its long term financial plan supported by its Service Plans and Asset Management Plans. Highest: 85 Lowest: 30 Average: 70 STEP Finance Program Consultant – Peter Smith

STEP Finance Program • InterimIndividual Score Summaries from this Program are as follows (24 No.): Question 6.1. Council has adopted a 10 year Long Term Financial Plan, including a 10 year capital works program with renewal demand meeting renewal investment within the planning timeframe. Highest: 85 Lowest: 30 Average: 67 STEP Finance Program Consultant – Peter Smith

STEP Finance Program • InterimIndividual Score Summaries from this Program are as follows (24 No.): Question 6.3. Council has determined its "critical renewal" level of service and has funded this over the next 10 years in its long term financial plan. Highest: 85 Lowest: 30 Average: 71 STEP Finance Program Consultant – Peter Smith

STEP Finance Program • InterimIndividual Score Summaries from this Program are as follows (24 No.): Question 7.3. Council has undertaken an assessment/review of the range of services provided and funding mechanisms to determine the level of service provided. Highest: 85 Lowest: 30 Average: 55 STEP Finance Program Consultant – Peter Smith

STEP Finance Program • InterimIndividual Score Summaries from this Program are as follows (24 No.): STEP Finance Program Consultant – Peter Smith

Towards Increasing Community Buy In What is needed for the community to want to “Buy in” more to what the Council is doing?Councils need to take more of a lead role to get the community on the same page, or as near to it as possibleWhat options are plausible? STEP Finance Program Consultant – Peter Smith

Towards Increasing Community Buy In Financial Frameworks and models for Good Governance STEP Finance Program Consultant – Peter Smith

Integrated Service Planning Framework VISION SERVICES ASSETS What are the community outcomes Council wants to achieve? What services are required to meet the vision? What assets are required to support the services? What is the management regime for assets and services? MANAGEMENT STEP Finance Program Consultant – Peter Smith

Integrated Service Planning Framework STEP Finance Program Consultant – Peter Smith

Role of the LTFP STEP Finance Program Consultant – Peter Smith

Conclusion and the Role of the SRP The SRP should not be viewed as simply a tool to help Council comply with the four year projections for the standard financial statements as per Section 126 of the Local Government Act (1989). As the custodians of more than $50 billion in assets, many having long lives, Victorian councils have an obligation to make hard decisions that will safeguard our future prosperity and provide a range of services that are acceptable to the community, as well as affordable. A service planning framework with an SRP informed by a robust LTFP that captures accurately the cost impacts of service options will move the mindset toward a path of reconciliation between short terms wants and long term needs. The SRP establishes the strategic financial direction for Council to meet the funding and investment challenges that lie ahead in the next 10-years. The SRP is prepared in conjunction with the Council Plan to ensure the affordability of activities included in the Council Plan STEP Finance Program Consultant – Peter Smith

Conclusion and the Role of the SRP The next step is to present the data in a manner that the users of the service can understand, such as an Executive Summary of the SRP, and seek more information if they so wish. An example here is the service plan template, a description of the service, responsibilities for the service, links to Council strategy, levels of service, current programs, activities and initiatives and the nett cost to ratepayers (now and evolving over time). There will always be many competing interests for scarce Council resources but the full disclosure of the ongoing costs and benefits of services and their role in the strategic aims of the council will ensure transparent decision-making for good governance. The process will ensure accountability at all levels of the decision making process and minimise waste in the form of non performing assets or services. The process will enable the community to make a judgement call on whether it is satisfied that decisions are being made with everyones best interests at heart. Accusations that a council is making decisions for the short term gain of a special interest group will be less plausible. STEP Finance Program Consultant – Peter Smith

Conclusion and the Role of the SRP Adopting this approach throughout the organisation will address many of the service delivery priorities and in turn community perceptions of Council performance. This will help move the Council to provide service outcomes, not just service outputs and lead to community engagement or “buy in”, not just community consultation that meets minimum statutory requirements. STEP Finance Program Consultant – Peter Smith

Questions? STEP Finance Program Consultant – Peter Smith

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Definitions Renewal/Refurbishment: Restores, rehabilitates, replaces existing asset to its original capacity, e. g. gravel resheets Upgrade/Improvements: Enhances existing asset to provide higher levels of service, e. g. widen seal New: Creation of an new asset to meet additional service level requirements, e. g. new building

Definitions Renewal/Refurbishment: Rehabilitates existing player to his original capacity, e. g. shoulder surgery in the off season Upgrade/Improvements: Enhances existing key position player to provide higher levels of service, e. g. trading a player in for a better performer from another club New: Acquire a new player to meet additional service level requirements such as longer life, e. g. No. 7 draft pick

STEP Finance Program Consultant Peter Smith