Byron Shire Council Draft Long Term Financial Plan 2016-2026

13.2 - Attachment 4

Section 1 - Introduction

The Long Term Financial Plan (LTFP) is a requirement under the Integrated Planning and Reporting framework for New South Wales (NSW) Local Government and forms part of the Resourcing Strategy. The Resourcing Strategy is a document that Council is required to develop to detail the provision of resources required to implement the strategies established by the Community Strategic Plan (CSP). The Long Term Financial Plan (LTFP) can be described as a decision making and problem solving tool where long term community aspirations can be tested against financial realities.

Specifically, the requirement to develop a Long Term Financial Plan (LTFP) is a requirement of Section 403(2) of the Local Government Act 1993.

The Long Term Financial Plan (LTFP) provides a framework in which a Council can assess its revenue building capacity to meet the activities and level of services outlined in its Community Strategic Plan. It also:

Þ Establishes greater transparency and accountability of Council to the Community.

Þ Provides an opportunity for early identification of financial issues and any likely impacts in the longer term.

Þ Provides a mechanism to solve financial problems as a whole, see how other plans fit together and understand the impact of some decisions on other plans or strategies.

Þ Provides a means of measuring Council’s success in implementing strategies.

Þ Confirms that Council can remain financially sustainable in the longer term.

The Long Term Financial Plan (LTFP) must support or provide for the following essential elements:

Þ Must be used to inform the decision making during the finalisation of the Community Strategic Plan and the development of the Delivery Program.

Þ Must be for a minimum of 10 years.

Þ Must be updated at least annually as part of the development of the Operational Plan.

Þ Must be reviewed in detail as part of the four yearly review of the Community Strategic Plan.

The basic structure of the Long Term Financial Plan (LTFP) must include the following:

Þ Projected income/expenditure and financial statements.

Þ Planning assumptions used.

Þ Methods of monitoring financial performance.

Þ Sensitivity analysis and modelling for different scenarios.

Section 1 - Introduction

The Long Term Financial Plan (LTFP) should be updated on a regular basis at least annually. This update is for the period 2016-2026 and covers all operations of Council including Council’s General, Water and Sewerage Funds. There is also separate disclosure for each Fund operated by Council. Specifically further throughout this document in Sections 6, 7, and 8 there is specific modelling on the General Fund in relation to three Special Rate Variation (SRV) scenarios.

The base case for this Long Term Financial Plan (LTFP) incorporates the strategies implemented from Council’s adopted Council Improvement Plan (CIP) submitted as part of its response to the NSW Government ‘Fit for the Future’ program and has been updated to incorporate the outcomes realised since the date of lodgement in June 2015. This Long Term Financial Plan (LTFP) utilises the adopted 2016/2017 original budget estimates as the starting point.

The Scenarios in this document representative of three Special Rate Variation (SRV) options to be considered are as follows:

1. A Special Rate Variation of 7.5% per annum for four years commencing in 2017/2018 defined by Council as the ‘Deteriorate’ option.

2. A Special Rate Variation of 10.0% per annum for four years commencing in 2017/2018 defined by Council as the ‘Maintain’ option.

3. A Special Rate Variation of 12.5% per annum for four years commencing in 2017/2018 defined by Council as the “Improve” option.

The rationale for the proposed SRV options has been the subject of an engagement process with the Byron Shire Council community. Council has engaged with the Community under the banner ‘Funding our Future’. The community has consistently told Council that assets such as roads, bridges, footpaths and drainage are important to them but Council needs to improve their condition. Community satisfaction surveys in 2013 and 2016 rated roads as the most important asset to the extent in the 2016 survey, 80% of the community said rural and urban roads should be a priority and more funding needs to be invested.

As part of Council’s ‘Fit for the Future’ submission, a review of asset condition and long term financial modelling revealed a significant funding gap that revealed the need to increase investment in the maintenance and renewal of Council’s ageing infrastructure.

Subsequent pages to this document detail the Long Term Financial Plan (LTFP) for Byron Shire Council for the period 2016 to 2026 taking into consideration the assumptions detailed in Section 3 – Modelling Assumptions and the scenario parameters outlined directly above. This includes disclosure of the base case scenario for the General Fund and modelling as to the impacts of the identified three SRV options on the General Fund.

Section 2 - Historical Financial Statistics

As a snapshot, the following table provides consolidated historical financial information for Byron Shire Council for the five year period from 2011/2012 to 2015/2016 on a Consolidated basis including General, Water and Sewerage Fund Operations combined:

Statistic	2011/2012 $’000	2012/2013 $’000	2013/2014 $’000	2014/2015 $’000	2015/2016 $’000
Revenue/Expenditure
Total Operating Revenue	71,506	68,442	77,665	85,560	90,620
Total Operating Expenditure	74,951	76,272	74,229	78,715	74,646
Operating Result – Surplus/(Deficit)	(3,445)	(7,830)	3,436	6,845	15,974
Operating Result before capital grants & contributions – Surplus/(Deficit)	(12,187)	(10,397)	(4,952)	(425)	3,267
General Rate Income	16,131	16,815	17,529	18,055	18,622
Financial Assistance Grant	3,130	2,358	1,440	2,611	2,774
Interest Expense on Loans	5,297	5,392	5,2,77	4,976	4,887
Depreciation Expense	16,808	18,810	14,599	12,766	13,234

Cash and Investments
Externally Restricted Cash	43,212	45,738	50,180	55,043	57,838
Internally Restricted Cash	15,637	12,401	12,222	16,790	20,506
Unrestricted Cash	0	242	1,036	1,143	1,145
Total Cash and Investments	58,849	58,381	63,438	72,975	79,489

Other Non Current Assets/Liabilities
Outstanding Loan Principal	72,784	72,879	69,548	66,286	62,721
Written Down Value of Property, Plant and Equipment	789,851	818,038	840,661	674,715	720,697

Performance Indicators
Unrestricted Current Ratio	2.89	2.93	2.79	2.91	2.96
Debt Service Ratio	13.17%	13.99%	N/A*	N/A*	N/A*
Rates and Annual Charges Coverage Ratio	40.04%	44.83%	N/A*	N/A*	N/A*
Rates and Charges Outstanding Ratio	5.23%	5.28%	4.48%	3.81%	4.00%
Buildings and Infrastructure Renewals Ratio	34.38%	21.50%	53.55%	37.46%	136.80%

*Debt Service Ratio and Rates and Annual Charges Ratio no longer reported from 2013/2014 financial year onwards.

Section 3 – Modelling Assumptions

The 2016-2026 Draft Long Term Financial Plan for Byron Shire Council has provided a Base Case Scenario outcome utilising assumptions. Council’s Finance Advisory Committee considered assumptions to be utilised in compiling the 2016-2016 Draft Long Term Financial Plan at its Meeting held on 18 August 2016. Following that consideration, the following assumptions are generally applied to the Base Case Outcome outlined in Section 4 of this document with some assumptions updated where new information has become available:

Þ Unrestricted cash balance target of $1,000,000 for the General Fund as a measure of short term liquidity.

Þ 2016/2017 Financial Year provides the base financial year as per the original budget estimates adopted by Council on 29 June 2016 (Resolution 16-348). These budget estimates includes the gains or outcomes achieved to date from Council’s Financial Sustainability Plan implemented since 2013.

Þ Unregulated fees and charges be increased in line with Consumer Price Index (CPI) as a minimum.

Þ Rate pegging for 2017/2018 identified at 1.50% with remaining future years of the LTFP identified at 2.50%.

Þ Growth in Financial Assistance Grant to be set at 1% per annum from the 2017/2018 financial year.

Þ Salary and wage indexation to be set at Consumer Price Index (CPI) plus 0.50%.

Þ All other costs to be indexed by the Consumer Price Index (CPI) less continuation of an efficiency dividend.

Þ Investment rates will be the 90 day bank bill rate reported monthly averaged over the last twelve months. An assessment will be made to compare this to current investment rates for reasonableness

Þ Loan borrowing rates will be assumed at the current investment bill rate for the respective term plus 1.00%.

Þ New loan borrowings will only be for the following:

o Capital works where funding for annual recurrent operational costs attributable to new assets has been factored into the budget as affordable and funded.

o To reduce the funding gap for the renewal of existing infrastructure.

o When it is for commercial purpose and repayments can be met from additional revenue sources.

o The term of the loan must also accord with Council’s loan borrowing policy 09/006 in that the loan borrowing term should be relevant to the useful life of the asset being funded from the loan borrowings.

In addition to the above the Byron Shire Council Long Term Financial Plan (LTFP) is assumed to have as its base case all of the outcomes identified by the Community Strategic Plan, Delivery Program, Operational Plan and Strategic Asset Management Plan for the General Fund (SAMP) so by virtue of that is linked to those documents.

Section 4 – Financial Outcomes (Base Case)

The financial outcomes identified in the base case of the 2016-2026 Draft Long Term Financial Plan are outlined below incorporating the assumptions outlined in Section 3 on a Consolidated basis (General Fund, Water Fund and Sewerage Fund combined):

Section 4 – Financial Outcomes (Base Case)

More importantly is the financial outcomes of the General Fund which includes all operations and assets of the Council except for Water and Sewerage. The base case for the 2016-2026 Draft Long Term Financial Plan is indicated below:

Section 4 – Financial Outcomes (Base Case)

Detailed in Section 9 of this document are definitions of six performance indicators. Applying these performance indicators to the financial outcomes of the General Fund Base Case reveals the following:

1. Operating Performance Ratio

2. Own Source Revenue

Section 4 – Financial Outcomes (Base Case)

3. Debt Service Cover Ratio

4. Asset Maintenance Ratio

Section 4 – Financial Outcomes (Base Case)

5. Infrastructure Renewal Ratio

6. Infrastructure Backlog Ratio

Section 4 – Financial Outcomes (Base Case)

General Fund Base Case Financial Outcome Commentary

Council has done significant work over the last four years through the implementation of its Financial Sustainability Plan. Council is continuing to progress initiatives in its Financial Sustainability Plan Council has:

1. Reviewed expenditure and revenue.

2. Implemented paid parking in Byron Bay CBD to generate additional revenue to reinvest into infrastructure.

3. Reviewed assets surplus to requirements.

4. Undertaken an Organisation Restructure

5. Developed and progressing a Strategic Procurement Roadmap.

6. Refinanced and early repayment of outstanding loans where a financial advantage existed.

Having progressed the above, and as part of Council’s Fit for the Future response, it has been flagged that Council needs to seek additional revenue through a Special Rate Variation. As the performance indicators indicate in the Base Case scenario for the General Fund, there is a progressive increase in the infrastructure backlog. Whilst Council appears to be managing asset maintenance it is doing this only on the basis of addressing ‘high risk’ assets but it is not stopping the decline in existing assets. There are also assets that are approaching poor condition but these have been left out of the calculation of asset maintenance as they are considered low risk.

The Infrastructure Renewal ratio does not meet benchmark after 2016/2017 as Council does not have the revenue to allocate to asset renewals whilst maintaining existing service levels. The Cashflow statement for the General Fund Base Case scenario shows growth over time but these funds are restricted for specific purposes. Of the $61million restricted in the General Fund projected by the end of 2025/2026, $41million in subject to external restriction including $38million in developer contributions with a further $7million reserved for waste management and $5million reserved from Holiday Park operations. Whilst these funds exist, they cannot be used for asset maintenance nor asset renewal in the General Fund.

Investment in infrastructure during 2015/2016 and 2016/2017 has and is at record levels. It needs to be recognised this has been achieved through use of sale proceeds from assets, reallocation of internal reserves to infrastructure works and grant funding. These funding sources are not recurrent and as such are creating the impression of additional works then is the norm. As these funding sources cannot be sustained, this is why the levels of infrastructure renewals falls below benchmark after 2016/2017.

Based on the condition assessment of the transportation network, Council’s predictive asset condition modelling indicates the failure of significant assets and sections of road network. The financial outcome of those failures will be to increase the Council’s Infrastructure Asset Backlog and the estimated costs to reinstate failed assets and bring the assets back to an acceptable condition would be beyond Council’s current capacity to fund.

Section 5 – Modelling Assumptions – Sensitivity Analysis/Scenarios

Sensitivity Analysis

Long Term Financial Plans (LTFP) are by their nature based on assumptions and predictions. The longer the term of a plan in years the greater the impact on the relevance of assumptions used for the latter years, in terms of their accuracy, as events may occur in future years that at this point in time are not known. Consequently if assumptions are wrong they can possibly have a significant impact upon the Long Term Financial Plan (LTFP) results which can vary depending upon the degree of variance in assumptions. If the assumptions identified in Section 4 of this document are not correct, Council will need to reconsider the financial outcomes and whether this will impact upon the ability to provide the financial resources to deliver outcomes identified in the Community Strategic Plan. It is on this basis that the Long Term Financial Plan (LTFP) will need to be regularly reviewed (at least annually).

Scenarios

A Long Term Financial Plan (LTFP) should also provide the ability to predict financial outcomes if Council chose to alter service levels within programs or increase service levels. The Draft 2016-2026 Long Term Financial Plan is modelling three scenarios from the Base Case scenario of the General Fund that incorporate three options for Special Rate Variations (SRV) as outlined below:

· Base Case Scenario – Current Original 2016/2017 Budget Estimates plus 9 year projections based on current service levels as per resolution 16-348 as outlined in Section 4 of this document and assumptions as outlined in Section 3 of this document. Under this scenario Council’s existing assets would deteriorate with transportation assets deteriorating at an accelerated rate. 43% of the transportation network is currently rates as poor to very poor condition. Council’s asset condition predictive modelling indicates the imminent failure of a number of significant assets (including bridges). This option would see the infrastructure backlog increase and also dramatically increase the costs to bring assets to acceptable condition from a high risk poor condition. Council under this option would not be able to afford the funding for the renewal of bridges. The cumulative increase of this option over four years would see average rates increase by 10.3% over the period.

· Scenario 1 ‘Deteriorate’– This scenario involves an SRV of 7.5% per annum each year for four years commencing from 2017/2018. The SRV if approved would be retained as a permanent addition to rate income. Under this scenario Council’s existing assets would still deteriorate but the focus would be to invest the funds raised into high risk poor condition asset renewal and maintenance. This option would generate an additional $10.78 million over four years. In addition Council would borrow an additional $6million over three years allocated specifically to renewal of bridges. The cumulative increase of this option over four years would see average rates increase by 33.5% over the period.

Section 5 – Modelling Assumptions – Sensitivity Analysis/Scenarios

· Scenario 2 ‘Maintain” – This scenario involves an SRV of 10.0% per annum each year for four years commencing from 2017/2018. The SRV if approved would be retained as a permanent addition to rate income. Under this scenario Councils would be able to stop the deterioration of existing assets with the focus to invest funds raised into high risk poor condition asset renewal and maintenance. This option would generate an additional $16.47million over four years. In addition Council would borrow an additional $6million over three years allocated specifically to renewal of bridges. The cumulative increase of this option over four years would see average rates increase by 46.4% over the period.

· Scenario 3 ‘Improve’ – This scenario involves an SRV of 12.5% per annum each year for four years commencing from 2017/2018. The SRV if approved would be retained as a permanent addition to rate income. Under this scenario Council would be able to improve the quality of existing assets and be able to fund required asset renewal and maintenance. This option would generate an additional $22.45million over four years. In addition Council would borrow an additional $6million over three years allocated specifically to renewal of bridges. The cumulative increase of this option over four years would see average rates increase by 60.2% over the period.

· The overall impact on ratepayers in terms of average rates is indicated below:

Section 6 – Financial Outcomes Scenario 1 ‘ Deteriorate’

Applying Scenario 1 provides the following financial outcomes for the General Fund in relation to the 2016-2026 Draft Financial Plan

Section 6 – Financial Outcomes Scenario 1 ‘ Deteriorate’

Section 6 – Financial Outcomes Scenario 1 ’Deteriorate’

Detailed in Section 9 of this document are definitions of six performance indicators. Applying these performance indicators to the financial outcomes of the General Fund Scenario 1 ‘Deteriorate’ reveals the following:

1. Operating Performance Ratio

2. Own Source Revenue

Section 6 – Financial Outcomes Scenario 1 ‘Deteriorate’

3. Debt Service Cover Ratio

4. Asset Maintenance Ratio

Section 6 – Financial Outcomes Scenario 1 ‘Deteriorate’

5. Infrastructure Renewal Ratio

6. Infrastructure Backlog Ratio

Section 6 - Financial Outcomes Scenario 1 ‘Deteriorate’

General Fund Scenario 1 ‘Deteriorate’ Outcome Comment

As can be seen from the results of the Infrastructure Renewal Ratio and the Infrastructure Backlog ratio, Scenario 1 still sees an overall deterioration in the state of Council’s infrastructure. Projections suggests whilst there is improvement in both the Infrastructure Renewal Ratio and Infrastructure Backlog Ratio, it is still not enough to meet benchmark and arrest the decline in Council’s infrastructure assets but is certainly an improvement to the Base Case Scenario outlined in Section 4 of this document.

If comparison is made against the infrastructure performance benchmarks, the following results are achieved:

Infrastructure Renewal Ratio

	2016/2017	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
Benchmark	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00
Base Case	1.88	0.85	0.51	0.53	0.46	0.44	0.41	0.38	0.39	0.35
Scenario 1	1.88	1.22	0.97	1.09	0.87	0.85	0.81	0.78	0.78	0.74

Infrastructure Backlog Ratio

	2016/2017	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
Benchmark	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%
Base Case	13.14%	13.39%	14.22%	15.73%	16.63%	17.57%	18.56%	19.61%	21.05%	22.58%
Scenario 1	13.14%	13.27%	13.92%	15.19%	15.88%	16.60%	17.33%	18.10%	19.20%	20.34%

Section 7 - Financial Outcomes Scenario 2 ‘Maintain’

Applying Scenario 2 provides the following financial outcomes for the General Fund in relation to the 2016-2026 Draft Financial Plan

Section 7 - Financial Outcomes Scenario 2 ‘Maintain’

1. Operating Performance Ratio

2. Own Source Revenue

Section 7 - Financial Outcomes Scenario 2 ‘Maintain’

3. Debt Service Cover Ratio

4. Asset Maintenance Ratio

Section 7 - Financial Outcomes Scenario 2 ‘Maintain’

5. Infrastructure Renewal Ratio

6. Infrastructure Backlog Ratio

Section 7 - Financial Outcomes Scenario 2 ‘Maintain’

General Fund Scenario 2 ‘Maintain’’ Outcome Comment

This scenario in terms of Infrastructure Backlog Ratio, Infrastructure Renewal Ratio and Infrastructure Backlog Ratio identifies that by 2025/2026 Council is able to invest funds to stop the decline of its infrastructure assets. Council is able to renew assets at the same pace they are wearing out plus from the year 2019/2020 allocate substantially more funding towards asset maintenance as the same time. Consistent with the Strategic Asset Management Pl (SAMP), it is indicated that the current infrastructure backlog will be eliminated by the end of the 2025/2026 financial year.

If comparison is made against the infrastructure performance benchmarks, the following results are achieved:

Infrastructure Renewal Ratio

	2016/2017	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
Benchmark	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00
Base Case	1.88	0.85	0.51	0.53	0.46	0.44	0.41	0.38	0.39	0.35
Scenario 1	1.88	1.22	0.97	1.09	0.87	0.85	0.81	0.78	0.78	0.74
Scenario 2	1.88	1.27	1.07	1.25	1.10	1.07	1.03	1.00	1.00	0.95

Infrastructure Backlog Ratio

	2016/2017	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
Benchmark	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%	2.00%
Base Case	13.14%	13.39%	14.22%	15.73%	16.63%	17.57%	18.56%	19.61%	21.05%	22.58%
Scenario 1	13.14%	13.27%	13.92%	15.19%	15.88%	16.60%	17.33%	18.10%	19.20%	20.34%
Scenario 2	13.14%	11.31%	9.68%	7.70%	6040%	5.11%	3.19%	2.55%	0.96%	0.00%

Section 8 - Financial Outcomes Scenario 3 ‘Improve’

Applying Scenario 3 provides the following financial outcomes for the General Fund in relation to the 2016-2026 Draft Financial Plan

Section 8 - Financial Outcomes Scenario 3 ‘Improve’

1. Operating Performance Ratio

2. Own Source Revenue

Section 8 – Financial Outcomes Scenario 3 ‘Improve’

3. Debt Service Cover Ratio

4. Asset Maintenance Ratio

Section 8 – Financial Outcomes Scenario 3 ‘Improve’

5. Infrastructure Renewal Ratio

6. Infrastructure Backlog Ratio

Section 8 – Financial Outcomes Scenario 3 ‘Improve’

General Fund Scenario 3 ‘Improve’ Outcome Commentary

Following from Scenario 2 the performance indicators identify further improvement and given there is more funding, the infrastructure backlog reduction would be accelerated. This option is providing also the ability to increase asset maintenance to further strengthen the condition of assets.

If comparison is made against the infrastructure renewal benchmark and asset maintenance benchmark, the following results are achieved:

Infrastructure Renewal Ratio

	2016/2017	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
Benchmark	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00
Base Case	1.88	0.85	0.51	0.53	0.46	0.44	0.41	0.38	0.39	0.35
Scenario 1	1.88	1.22	0.97	1.09	0.87	0.85	0.81	0.78	0.78	0.74
Scenario 2	1.88	1.27	1.07	1.25	1.10	1.07	1.03	1.00	1.00	0.95
Scenario 3	1.88	1.32	1.17	1.42	1.34	1.31	1.27	1.23	1.23	1.19

Asset Maintenance Ratio

	2016/2017	2017/2018	2018/2019	2019/2020	2020/2021	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
Benchmark	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00	1.00
Base Case	1.03	1.03	1.02	1.02	1.01	1.01	1.00	1.00	1.00	1.00
Scenario 1	1.03	1.04	1.08	1.12	1.20	1.21	1.23	1.24	1.26	1.27
Scenario 2	1.03	1.04	1.15	1.24	1.37	1.39	1.41	1.43	1.45	1.47
Scenario 3	1.03	1.08	1.22	1.36	1.55	1.57	1.60	1.63	1.66	1.69

Section 9 – Key Performance Indicator Definitions

It is important with any Long Term Financial Plan (LTFP) to establish Key Performance Indicators (KPI)s that are relevant and set against benchmarks to highlight any forecasted trends that require attention if projected results fall below acceptable benchmarks. To assist the evaluation of the Byron Shire Council Draft Long Term Financial Plan 2016-2026, the following six performance benchmarks are identified to measure the performance of the General Fund

Benchmark	Calculation Basis	Description	Benchmark Requirement
Operating Performance Ratio	Total continuing operating revenue (excl capital grants and contributions less operating expenses ------------------------------------------------- Total continuing operating revenue (excl capital grants and contributions)	Provides an indication of how a Council generates income and allocates expenditure. It is an indicator of continued capacity to meet ongoing expenditure commitments.	Greater then or equal to break-even
Own Source Revenue Ratio	Total continuing operating revenue less all grants and contributions ----------------------------------------------- Total continuing operating revenue inclusive of capital grants and contributions	Measures the degree of reliance on external funding sources ie grants and contributions. Councils with a higher own source revenue have a greater ability to control or manage their own operating performance and financial sustainability.	Greater then 60%
Debt Service Cover Ratio	Operating result before capital excluding interest and depreciation -------------------------------------------------- Loan principal repayments plus interest costs	This ratio measures the availability of operating cash to service debt including interest, principal and lease payments	Greater then 2.00

Section 9– Key Performance Indicator Definitions

Benchmark	Calculation Basis	Description	Benchmark Requirement
Infrastructure Renewal Ratio	Asset renewals (infrastructure) ----------------------------------------------- Depreciation, amortisation and impairment (infrastructure)	Measures the proportion spent on infrastructure assets renewals and compares to the same assets deterioration.	Greater then 100%
Infrastructure Backlog Ratio	Estimated cost to bring assets to a satisfactory condition ------------------------------------------------- Total (WDV) of infrastructure, buildings, other structures and depreciable land improvement assets	Measures the proportion of backlog against the total value of Council’s infrastructure assets. Higher backlog ratios and the inability to reduce will create future struggles with service delivery and infrastructure demands.	Less then 2%
Asset Maintenance Ratio	Actual asset maintenance ------------------------------------------- Required asset maintenance	Measures the actual asset maintenance expenditure relative to the required asset maintenance. Ratio provides a measure of asset degradation.	Greater then 100%

Specific performance measure outcomes using the indicators defined in this section are presented in the following sections of the document as follows:

1. Section 4 – Financial Outcomes for the Base Case

2. Section 6 – Financial Outcomes for Scenario 1 ‘Decline’

3. Section 7 – Financial Outcomes for Scenario 2 ‘Maintain’

4. Section 8 – Financial Outcomes for Scenario 3 ‘Improve’

2016-2026 Draft Long Term Financial Plan Section	Pages
Section 1 – Introduction	1
Section 2 – Historical Financial Statistics	3
Section 3 – Modelling Assumptions	4
Section 4 – Financial Outcomes – Base Case	5
Section 5 – Modelling Assumptions – Sensitivity Analysis/Scenarios	15
Section 6 – Financial Outcomes – Scenario 1 ‘Deteriorate’	17
Section 7 – Financial Outcomes – Scenario 2 ‘Maintain’	24
Section 8 – Financial Outcomes – Scenario 3 ‘Improve’	31
Section 9 – Key Performance Indicator Definitions	38