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Town of Gawler Audit Committee Agenda

13 April 2016 ATTACHMENTS UNDER SEPARATE COVER

Item 7.1 – Risk Management Improvement Action Plan ATTACHMENT 1 Risk Management Improvement Action Plan 2015/16

Item 7.2 – Audit Committee Workplan 2015/2016 – Progress Report

ATTACHMENT 1 2015/2016 Audit Committee Workplan – Progress Report

Item 7.4 – 2015/16 2nd Quarter Budget Review (January 2016)

ATTACHMENT 1 2015/16 2nd Quarter Budget Review (January 2016)

Item 9.1 – Independent Infrastructure Assets Depreciation Review Report

ATTACHMENT 1 Independent Gawler valuation Review 2015 V5 – Asset Engineering

Item 9.2 – LGA Financial Sustainability Information Paper 17 – Depreciation and Related Issues

ATTACHMENT 1 LGA Financial Sustainability Information Paper 17 – Depreciation and Related Issues

Item 9.3 – Local Government Risk Services 2015 Scheme Highlights

ATTACHMENT 1 Local Government Risk Services 2015 Scheme Highlights

TOWN OF GAWLER AUDIT COMMITTEE MEETING

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ATTACHMENTS UNDER SEPARATE COVER

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Item 7.1 – Risk Management Improvement Action Plan ATTACHMENT 1 Risk Management Improvement Action Plan 2015/16


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Category Liability/Risk concerns–considering current Controls

Action Required Status Responsible Person

Due Date

1. Risk andGovernance

Question 1.1: Please provide elements/details of Council’s Risk Management framework and/or general procedure to assess & manage core/strategic risks.

Partially Provided All in place except gap –fully developed & populated Corporate Risk Register.

Development of Corporate Risk Register.

The LGA Board endorsed a Risk Management Framework Program in April, Burnside and Holdfast Bay Councils were part of the pilot program with great success. Town of Gawler will start the Risk Management Framework Program in May. Elements of the program and the consultant overseeing program will be outlined at the next Audit Committee with a representative from LG Risk Services attending the meeting. This program is provided free of charge as LG Risk Services are covering the cost.

LT & WHS / Risk Management Officer

December 2016

Question 1.5: Has Council developed and implemented a process to manage requests from Emergency Control Agents (SAPol, CFS, SES, etc.) for use of defined Council plant/staff in the event of an emergency.

Documented and partially implemented Training has not yet taken place but is planned for June 2015. Policy is adopted but not fully ratified & signed off. Lists of plant and staff identified.

Implement I-Responda framework, which was developed by the LGA in conjunction with emergency services agencies.

All training has occurred for identified staff, procedure has been created and will go out for staff consultation during April with expected endorsement May 2016

LT & WHS / Risk Management Officer

May 2016

ATTACHMENT 1


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Due Date

4. Volunteers /Vulnerable Groups / Committees Question 4.18: Provide a component of Council’s (central) Volunteer Registration process for all volunteer programmes.

Partially Provided Majority of requirements developed and implemented- however Job Descriptions are being developed & finalised and will be matched to skills, TNA and up dated training plans.

Develop Position Descriptions for Volunteers.

There are four role statements to be finalised – currently with Team Leader of the department expected completion date May 2016

Volunteer Development Officer & WHS / Risk Management Officer

May 2016

Training Needs Analysis and Training Plans for Volunteers will then be developed with relevant staff for each Volunteer TNA & training plans/schedules will be updated & aligned to include additional PD training requirements.

A meeting was held on the 8th February with a Draft plan developed. It was decided that where possible the training will be scheduled in with staff to assist in cost saving and integration.

Volunteer Development Officer & WHS / Risk Management Officer

July 2016

5. Environment /Vegetation / Trees Question 5.23: Provide Council’s planting assessment criteria for consideration of planting trees on roads & community land.

Developed but not fully implemented at time of Review.

Finalise the development and sign off of Councils - Tree Management Plan 2015 – consultation with sign off isscheduled for December2015.

The Tree Management Plan is being presented to Council for adoption in April 2016

Team Leader Engineering & Operations & Environment Officer

April 2016


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Due Date

7. Road ManagementQuestion 7.36: Has Council entered into a Railway Interface Agreement with the Railway Commissioner - pursuant to the new Railway National Law Safety Act 2012.

NOT RATED

Requirements should be investigated.

Agreement due for review.

(LGA, LGA Mutual Liability Scheme and DPTI developed an agreement template for use as a guide for best practice – Refer Circular 34.8)

Council entered into a Railway Interface Agreement in 2013 with the Agreement signed off on 26/03/2013. – Refer CR13/6812.

Team Leader Engineering

Completed

8. Third Party Use offacilities / land

Develop a form/policy for the use of council/public land for the use of commercial entities

Develop a “Use of Community Land for Commercial Fitness Training” Policy.

The Policy was endorsed for the purposes of public consultation at the November 2015 meeting. A further report will be tabled to Council via the Corporate & Community Services Committee in July. This was deferred from the March meeting due to priority being given to the Open Space Sport and Recreation Plan.

Team Leader Recreation Services

July2016


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Item 7.2 – Audit Committee Workplan 2015/2016 – Progress Report

ATTACHMENT 1 2015/2016 Audit Committee Workplan – Progress Report


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Action Motion Ref. Resp Officer Status Status Comments Oct Dec Feb April May

Monitor and report on internal controls Tony Amato On-going

Review annual LGA Mutual Liability Scheme Risk Management Review report

Nathan Hall Completed The annual review report was tabled to the October 2015 meeting

Review progress reports received relating to Risk Management Improvement Action Plan

Nathan Hall On-going Refer Agenda Item 7.1

Oversee Council's relationship with external Auditors relative to matters raised within audit management letters received

Tony Amato On-going Refer Agenda Item 14.1

In-Camera Review with Auditors Tony Amato CompletedAn in-camera review with the Auditors was held at the 14 October 2015 Committee meeting.

Submit annual report of the Audit Committee's activities to the Council

Tony Amato CompletedThe 2014/2015 Audit Committee Annual Report was tabled to the 8 December 2015 meeting.

Submit minutes of meetings to Council Annette Ferrari On-going Minutes of meetings are tabled to

Council

1. Internal Controls & Risk Management Systems

2. External Audit

3. Reporting

4. Review of Strategic Documents

ATTACHMENT 1


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Review of annual update to the Long Term Financial Plan Paul Horwood In Progress

Development in progress. Workshop held with Committee Members prior to the 11 February 2016 meeting. Further update to be presented to May 2016 Committee meeting.

Review of Draft Annual Budget / Business Plan Paul Horwood In Progress

Development of the 2016/17 Draft Budget / Business Plan is in progress - Council Workshop held 29 March 2016 with further workshop scheduled for 18 April 2016. Report to be tabled to May 2016 Committee meeting.

Review annual update to Infrastructure & Asset Management Plan (Long Term Capital Works Program)

Sam Dilena In Progress

Plan to be tabled to May 2016 Committee meeting. Proposed funding requirements have been incorporated within the Long Term Financial Plan.

Development of Service Level Policies Paul Horwood On-going

Service Level Policies for Parking Control, Records Management and Preventive Health Services were endorsed at the October 2015 meeting. No further action due to competing priorities.

Review Policy 6.4 - Treasury Management Policy Erin McGarry Completed

The Treasury Management Policy was reviewed at the 8 December 2015 meeting.

Review Policy 6.5 - Funding Policy Erin McGarry Completed The Funding Policy was reviewed at the 8 December 2015 meeting.

5. Policy Review


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Review Policy 6.7 - National Competition Policy & Complaints Mechanism

Paul Horwood CompletedThe National Competition Policy & Complaints Mechanism was reviewed at the 8 December 2015 meeting.

Review Policy 6.10 - Rate Rebates Paul Horwood In Progress A review of the Policy will be tabled to the May 2016 Committee meeting.

Review Policy 2.8 - Prudential Management Tony Amato Completed

The Prudential Management Policy was reviewed at the 8 December 2015 meeting.

Review Policy 4.3 - Risk Management Policy Nathan Hall Completed

The Risk Management Policy was reviewed at the 11 February 2016 meeting.

Audit Committee Workplan - Progress report Annette Ferrari On-going Refer Agenda Item 7.2

Treasury Management Review Erin McGarry Completed The 2014/15 review was tabled to the October 2015 Committee meeting

Innovation, Efficiency & Effectiveness Program - Update reports

Paul Horwood In Progress

BRS have been appointed as successful tenderer. An initial meeting has been held, and a regular meeting schedule is currently being developed. A verbal report can be provided at the meeting.

Depreciation Methodology review, as a result of changes to Accounting Standard AASB116

Tony Amato In Progress Refer Agenda Item 9.1

6. Other


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Review Audit Committee Terms of Reference Paul Horwood Completed

The Terms of Reference was reviewed at the 11 February 2016 meeting.

Review Debtor Analysis Report Joanne Glazbrook On-going Refer Agenda Item 7.3

Review Council Comparative Data Report

Joanne Glazbrook Completed

Comparative Data (as at 30 June 2014) was tabled to the October 2015 Committee meeting

Review 2014/2015 Financial Statements Erin McGarry Completed

The 2014/15 Financial Statements and a 2014/15 Financial Performance Summary report were tabled to the October 2015 Committee meeting.

Table Quarterly Budget Review In Progress Refer Item 7.4

7. Financial Reporting


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Item 7.4 – 2015/16 2nd Quarter Budget Review (January 2016)

ATTACHMENT 1 2015/16 2nd Quarter Budget Review (January 2016)


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TOWN OF GAWLER QUARTERLY BUDGET REVIEW

(AS AT 31 JANUARY 2016) FOR THE YEAR ENDING 30 JUNE 2016

CONTENTS Page

Executive Summary 2-6

Statutory Financial Reports: Budgeted Statement of Comprehensive Income 7 Budgeted Balance Sheet 8 Budgeted Statement of Changes in Equity 9 Budgeted Cashflow Statement 10 Budgeted Uniform Presentation of Finances 11 Financial Indicators 12

Supporting Information: Budgeted Cash Surplus/(Deficit) Reconciliation Budgeted Funding Statement

13 14

Projected Reserve Funds movement 15 Income Statement by Function 16-19Capital Expenditure Analysis 20-22Appendix 1 – Non-Financial Data Report Appendix 2 – List of Proposed Budget variations

ATTACHMENT 1


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EXECUTIVE SUMMARY

In accordance with Section 123 of the Local Government Act 1999 and the Local Government (Financial Management) Regulations 2011, this report comprises the second of three quarterly budget reviews for the 2015/2016 financial year.

The primary purpose of this report is to review the 2015/2016 budget in consideration of the current financial year actual performance.

All budget variations have been processed by staff in accordance with the Budget Management Policy. Appendix 2 summarises budget transfers approved by Managers/CEO in accordance with the policy thresholds (Section A & Section B), whereas Section C summarises recommended budget variations requiring the authorisation of Council (being recommended budget variations above staff authorisation thresholds).

The budget variations incorporated within this review provide for a decrease of $741,942 in the projected operating surplus for 2015/16 (from $1,055,720 to $313,777), and a net increase of $943,942 in the projected cash deficit (refer Table 3 on page 4). The estimated decrease in the operating surplus is driven by an increase of $818,000 in depreciation (without which the surplus is estimated to increase by $76,058), whereas the estimated increase in the underlying cash deficit is driven by the lack of progress of $1m of surplus property assets (without which the cash deficit is estimated to decrease by $56,058).

An overview of the main budget variations included in this review is outlined below.

1. Statement of Comprehensive Income

Table 1 – Summary of Proposed Operating & Capital Expenditure / Revenue budget variations

Item Variations (Favourable) Unfavourable

$ $ Recurrent Budget Variations: Defer portion of Gawler & Surrounds Stormwater Management Plan income/expenditure to 2016/17 (net result)

30,000

Additional infrastructure depreciation based on changes to Australian Accounting Standards and independent review

818,000

Local Government Risk Services special distribution rebate

(35,000)

Increase in volume of burials partly offset by additional burial costs

(20,000)

Refund of contribution to Gawler Christmas Carols as event cancelled due to extreme weather

(25,790)

Reduction in estimated canteen sales/fees at Sport & Community Centre (partly offset by reduction in associated costs)

25,000

Part deferral of Residential & Character DPA and Rural Areas Development Plan to 2016/17

(33,219)

Assistance provided to Pinery fire control (incl. use of facilities as a Relief Centre)

19,500


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Engagement of independent consultant to undertake infrastructure assets depreciation review

25,000

Reduced Wages expenses due to additional capacity to undertake Capital works

(100,000)

Reduction in Food Audits activity outside of Council area

18,000

Provision for increased postage costs from 1 January 2016

9,250

Payment of accumulated Rally SA funds 15,300 Soft Plastics Trial (budget b’fwd from 2014/15) 5,000 Other sundry variations (net) (9,099) Net Recurrent Budget variations - unfavourable 741,942

Other Budget Variations: Reduction in proceeds from the sale of surplus property assets due to on-going delay of particular asset sales as presented to Council

1,000,000

Increase in net operating surplus for Willaston Cemetery allocated to associated Equity Reserve

20,000

Net Other Budget variations - unfavourable 1,020,000

A detailed analysis of proposed budget variations incorporated within this review is included in Appendix 2.

The tables below disclose the revised projected operating surplus and cash deficit results for the 2015/2016 financial year:

Table 2: Projected Operating Result 2015/2016

$’000s Adopted Operating Surplus - 2015/2016 912 Add: Budget variations included in the 1st quarter review 144 Add: Recommended budget variations incorporated in this review (742) Revised Projected Operating Surplus - 2015/2016 314

Table 3: Projected Cash Deficit 2015/2016

$’000s Projected cash deficit b’fwd from 2014/2015 per adopted budget (3,613) Variation to projected cash deficit b'fwd from 2014/2015 961 Actual cash deficit b’fwd from 2014/2015 (2,652)

Projected increase in cash deficit 2015/2016 per adopted budget (2,161) Add: Budget variations included in the 1st quarter review (excluding non-cash items)

(643)

Add: Budget variations included in this review (excluding non-cash items) (944) Revised projected increase in cash deficit - 2015/2016 (3,748)

Revised projected Cash Deficit - 2015/2016 * (6,400)

* The Cash deficit discloses the cash shortfall that would occur if there was a call on all of Council’s fundedliabilities as at the reporting date.

2. Infrastructure Assets – Depreciation Expense

As a result of both changes to, and in the interpretation of, Australian Accounting


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Standard AASB116 Property, Plant and Equipment, the carrying value of infrastructure assets as at 30 June 2015 increased by $28.353M. The revised projections for 2015/16 indicate that this increase in carrying value will also significantly increase the depreciation charge for 2015/16. This change is estimated to have an adverse impact on both the annual depreciation charge and the operating result in the order of $935,000.

In June 2015, the Australian Accounting Standards Board (AASB) clarified its definition and interpretation of the term “residual value”. As Council currently uses residual values for several specific road categories in a manner inconsistent with this interpretation, these residual values will need to be removed from the assets records. Given the removal of residual values, we will now need to replace each impacted asset with both a long life asset and a short life asset component. This change will require extensive data processing and is estimated to also have an adverse impact on both the annual depreciation charge and the operating result in the order of $56,000.

Investigations involving the sample coring of roads has revealed that, for roads constructed prior to 1980, the road pavement depths were incorrectly recorded. These corrections have necessitated reductions of the useful lives of these road assets. This change is estimated to have an adverse impact on both the annual depreciation charge and the operating result in the order of $23,000.

Roads constructed post 1980 will now be split into both long life and short life assets, thereby reflecting the differing useful lives of the pavement components. This componentisation process is unlikely to have a significant impact on either the annual depreciation charge or the operating result.

Seal and pavement costs have been removed from the depreciable asset values of stormwater conduits as these costs have been included elsewhere in the depreciable asset values of roads. This reduction in asset values will result in a decrease in both the annual depreciation charge and an increase in the operating surplus result of $63,000.

Seal and pavement costs have been removed from the depreciable asset values of kerbs and gutters as these costs have been included elsewhere in the depreciable asset values of roads. This reduction in asset values will result in a decrease in the annual depreciation charge and an increase in the operating surplus result of $133,000.

It has also been decided to reassess both the condition and useful / residual lives of the infrastructure assets. However, these assessments are not scheduled to be completed until the 2016/17 financial year as the work to be undertaken will be detailed, complex and time consuming. As such, it is extremely difficult to estimate the likely net financial impact of this assessment at this time.

In total, the above changes have resulted in an increase in the annual depreciation charge and a decrease in the operating result (surplus) of $818,000.

In order to assess and undertake all of the above work, it has been necessary to engage external specialist consultants to assist with the development of appropriate methodologies, the condition assessment and useful / residual life reviews of the infrastructure assets as well as the data processing of all identified changes noted above ($25,000 has been included as a budget variation within this review). Council’s external auditors have been and will continue to be consulted as each stage is undertaken. Engineering staff have taken a lead role in this process but will be proactively supported by Finance staff as appropriate.


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To date, three (3) administrative meetings have been held to discuss all the relevant issues outlined above and to prepare a work plan encompassing all the processes to be undertaken. To this end, Mr Steve Walker of Asset Engineering has been appointed to provide guidance and to develop appropriate methodologies for the processes identified. Onsite soil investigations to determine the condition of the road structures have now been completed. The final independent report has recently been received and will be presented to the April 2016 Audit Committee meeting. Actions completed to date and future actions to be taken will be either supported by or based on this report.

As the timeframe for this work will extend over many months, updates on the progress of this critical work will continue to be provided on a regular basis.

3. Sundry Projects Fund

The Sundry Projects Fund has been established in recent years to provide contingency funding for unforeseen expenditure and/or towards co-contribution funding that may be required as part of grant funding applications.

Allocations from the fund require the approval of Council.

A summary of allocations from the Sundry Projects Fund for the seven months ending 31 January 2016 is provided below.

Sundry Projects Fund Balance as at 31 January 2016

No Item Council Meeting

Motion No Allocation $

Balance $

1 Adopted Budget 2015/2016 23-June-15 - 200,000 2 Restoration of War Memorials 25-August-15 2015:08:335 20,000 180,000

4. Balance Sheet

The revised total annual comprehensive income incorporated within the Statement of Comprehensive Income ($14,425m) reconciles to the projected increase in net assets disclosed in the Budgeted Balance Sheet (i.e. from $235.819m to $250.244m). This projected increase is predominantly due to an estimated $14m worth of fixed assets received free of charge from property developers (e.g. the value of fixed assets such as roads, footpaths, stormwater drains, etc. as part of new residential land developments).

The revised cash balance as at 30 June 2016 is estimated to decrease by $924,000 (from $1.487m as per the October 2015 Review to $563,000) as disclosed in the Budgeted Cash Flow Statement. This is due to the deferral of $1m of surplus property assets to future financial years.


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5. Pinery Fire

The Town of Gawler provided valued assistance as part of the combined efforts to contain the Pinery Fire and the recovery thereafter.

Council’s costs associated with assisting the recovery effort during and following the Pinery Fire amounted to $19,500 (including free use of the Sport & Community Centre as an emergency relief Centre, and supply of staff and resources to assist).

6. Capital Expenditure

The capital expenditure budget for 2015/2016 is unchanged at $7.54M. At this time, it is considered that all capital projects will be completed on time and within budget. All capital projects will be further reviewed in the coming months and will be further reported on at the time of the third quarter budget review. As at the reporting date, $1.948M of capital works has been expended.

7. Non-Financial Statistics (Appendix 1)

Revenue budgets are being increasingly driven and aligned with non-financial data provided within Appendix 1.

The volume of parking expiations issued continues to be considerably less than that previously forecasted in the adopted budget. However, with the recent engagement of an additional Ranger (contract position) and the implementation of automated expiation technology, it is planned that the level of activity will increase over coming months to address the current shortfall – a primary focus of which is carparking availability in the town centre and public safety.

With the non-financial data comparative analysis provided as far back as 2011/12, the data is increasingly providing useful trend data relative to the various non-financial statistics.

8. Summary

The projected deterioration in the operating surplus result (from $1.056m to $314,000) is due to an estimated increase of $818,000 in depreciation expense relating to infrastructure assets (refer Section 2 above). This translates to the estimated Operating Surplus Ratio reducing from 5.5% to 1.6% (which is still within the Council policy position of between 0-10%).

In relation to the projected overall financial position, the Net Financial Liabilities ratio is estimated to increase from 48% (per the October 2015 review) to 51%, based on the deferral of $1m of surplus property sales to future financial years. A forecast result of 51% is consistent with the ratio result originally estimated in the 2015/16 adopted budget.

Tony Amato

TEAM LEADER – FINANCE


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2014/2015 Actuals

2015/2016 Adopted Budget

2015/2016 Revised Budget

(October Review)

2015/2016 Actual YTD

2015/2016 Revised

Budget YTD

% of YTD Budget Rec'd / Spent

Proposed Budget

Variation

2015/2016 Revised Annual Budget

$'000 $'000 $'000 $'000 $'000 $'000 $'000

INCOME

18,564 19,429 19,500 Rates 19,477 19,469 100% 0 19,500701 734 749 Statutory charges 448 530 85% (18) 731

1,276 1,299 1,278 User charges 813 813 100% 20 1,2983,547 2,814 3,006 Grants, subsidies and contributions 1,262 1,203 105% (31) 2,975

141 99 99 Investment income 62 66 94% 0 99349 322 322 Reimbursements 273 259 105% 95 417

18 51 51 Other income 24 27 89% 0 51135 33 33 Net gain - Joint ventures & associates 0 0 0 33

24,731 24,781 25,038 Total Income 22,359 22,367 100% 66 25,104

EXPENSES

8,849 9,264 9,488 Employee costs 5,453 5,436 100% (51) 9,43710,175 10,469 10,358 Materials, contracts & other expenses 5,489 5,543 99% 41 10,399

741 690 690 Finance costs 411 411 100% 0 6903,323 3,446 3,446 Depreciation, amortisation & impairment 1,689 1,721 98% 818 4,264

65 0 0 Net loss - Joint ventures & associates 0 0 0 023,153 23,869 23,982 Total Expenses 13,042 13,111 99% 808 24,790

1,578 912 1,056 OPERATING SURPLUS / (DEFICIT) 9,317 9,256 101% (742) 314

(323) (24) (24) Asset disposal & fair value adjustments 0 0 0 (24)1,199 660 135 Amounts specifically for new or upgraded assets 90 65 138% 1355,461 14,000 14,000 Physical resources received free of charge (39) (40) 98% 14,000

7,915 15,548 15,167 NET SURPLUS / (DEFICIT) transferred to EquityStatement 9,368 9,281 101% (742) 14,425

Other Comprehensive Income

36,620 0 Changes in revaluation surplus - Infrastructure,Property, Plant & Equipment 0 0 0

(119) 0 Changes in revaluation surplus - Joint ventures &associates 0 0 0

36,501 0 0 Total Other Comprehensive Income 0 0 0 0

44,416 15,548 15,167 TOTAL COMPREHENSIVE INCOME 9,368 9,281 101% (742) 14,425

TOWN OF GAWLERQUARTERLY BUDGET REVIEW (JANUARY 2016)

BUDGETED STATEMENT OF COMPREHENSIVE INCOMEfor the year ending 30 June 2016


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2014/2015 Actuals

2015/2016 Adopted

Budget


(October Review)


$'000 ASSETS $'000 $'000 $'000Current Assets

4,899 Cash and cash equivalents 1,487 5631,406 Trade & other receivables 1,287 1,406 1,406

20 Inventories 17 20 206,325 Total Current Assets 1,304 2,913 1,989

Non-current Assets66 Financial Assets 44 44 44

3,527 Equity accounted investments inCouncil businesses 3,675 3,560 3,560

241,084 Infrastructure, Property, Plant &Equipment 232,238 259,398 259,580

1,915 Work in Progress 0 0 0246,592 Total Non-current Assets 235,957 263,002 263,184

252,917 TOTAL ASSETS 237,261 265,915 265,173LIABILITIESCurrent LiabilitiesBank Overdraft 1,400

3,994 Trade & Other Payables 1,971 3,994 3,9942,169 Borrowings 1,231 1,231 1,2312,132 Provisions 1,699 2,132 2,1328,295 Total Current Liabilities 6,301 7,357 7,357

Non-current Liabilities8,652 Borrowings 7,421 7,421 7,421

151 Provisions 147 151 151Liability - Equity accounted Council businesses 7 0 0

8,803 Total Non-current Liabilities 7,575 7,572 7,57217,098 TOTAL LIABILITIES 13,876 14,929 14,929

235,819 NET ASSETS 223,385 250,986 250,244

EQUITY45,272 Accumulated Surplus 70,182 61,048 60,286

187,696 Asset Revaluation Reserve 151,195 187,696 187,6962,851 Other Reserves 2,008 2,242 2,262

235,819 TOTAL EQUITY 223,385 250,986 250,244


BUDGETED BALANCE SHEETfor the year ending 30 June 2016


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2014/2015 Actuals



(October Review)


$'000 $'000 $'000 $'000

ACCUMULATED SURPLUS35,677 Balance at end of previous reporting period 54,044 45,272 45,2727,915 Net Result for Year 15,548 15,167 14,425

Transfers to Other Reserves (157) (163) (183)1,680 Transfers from Other Reserves 747 772 772

Equity Accounted Council Businesses45,272 Balance at end of period 70,182 61,048 60,286

ASSET REVALUATION RESERVE151,195 Balance at end of previous reporting period 151,195 187,696 187,696

36,620 Gain on revaluation of infrastructure, property,plant & equipment 0 0

(119) Gain on revaluation of Joint ventures &associates 0 0

187,696 Balance at end of period 151,195 187,696 187,696

OTHER RESERVES4,531 Balance at end of previous reporting period 2,598 2,851 2,851

0 Transfers from Accumulated Surplus 157 163 183(1,680) Transfers to Accumulated Surplus (747) (772) (772)

2,851 Balance at end of period 2,008 2,242 2,262

235,819 TOTAL EQUITY AT END OF REPORTINGPERIOD 223,385 250,986 250,244


BUDGETED STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2016


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2014/2015 2015/2016 2015/2016 2015/2016Actuals Adopted

BudgetRevised Budget

(October Review)

Revised Budget

$'000 $'000 $'000 $'000CASH FLOW FROM OPERATING ACTIVITIESReceipts

24,177 Operating receipts 24,649 24,906 24,972141 Investment receipts 99 99 99

Payments

(17,428) Operating payments to employees andsuppliers (19,733) (19,846) (19,836)

(741) Finance payments (690) (690) (690)

6,149Net Cash Provided by (or used in)Operating Activities 4,325 4,469 4,545

CASH FLOW FROM INVESTING ACTIVITIESReceipts

1,199Amounts specifically for new or upgraded assets 60 135 135

173 Sale of replaced assets 172 172 1720 Sale of surplus assets 1,500 1,500 500

20 Loan repayments from community groups 22 22 22Payments

(2,370)Expenditure on renewal/replacement of assets (2,780) (3,359) (3,334)

(3,860) Expenditure on new/upgraded assets (4,481) (4,182) (4,207)0 Loan payments to community groups 0 0

(4,838)Net Cash Provided by (or used in) Investing Activities (5,507) (5,712) (6,712)CASH FLOWS FROM FINANCING ACTIVITIESReceipts

160 Proceeds from Borrowings 0 0 0Payments

(1,078) Repayment of Borrowings (2,169) (2,169) (2,169)0 Repayment of Bonds & Deposits 0 0 0

(918)Net Cash Provided by (or used in) Financing Activities (2,169) (2,169) (2,169)

393NET (DECREASE)/INCREASE IN CASH HELD (3,351) (3,412) (4,336)

4,506CASH AT BEGINNING OF REPORTING PERIOD 1,951 4,899 4,899

4,899 CASH AT END OF REPORTING PERIOD (1,400) 1,487 563


BUDGETED CASH FLOW STATEMENTfor the year ending 30 June 2016


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2014/2015 Actuals

2015/2016 Adopted

Budget


(October Review)


$'000 $'000 $'000 $'000

24,731 Operating Revenues 24,781 25,038 25,104(23,153) less Operating Expenses (23,869) (23,982) (24,790)

1,578 Operating Surplus / (Deficit) before CapitalAmounts 912 1,056 314

less Net Outlays on Existing Assets

(2,371) Capital Expenditure on renewal andreplacement of Existing Assets (2,780) (3,359) (3,334)

3,323 less Depreciation, Amortisation andImpairment 3,446 3,446 4,264

173 less Proceeds from Sale of Replaced Assets 172 172 172

1,125 838 259 1,102

less Net Outlays on New and Upgraded Assets

(3,860)Capital Expenditure on New and Upgraded Assets (4,481) (4,182) (4,207)

1,199 less Amounts received specifically for Newand Upgraded Assets

660 135 135

0 less Proceeds from Sale of Surplus Assets 1,500 1,500 500(2,661) (2,321) (2,547) (3,572)

42 Equals: Net Lending / (Borrowing) forFinancial Year (571) (1,232) (2,156)

Net Lending / (Borrowing) equals Operating Surplus / (Deficit), less Net Outlays on non-financial assets.The Net Lending / (Borrowing) result is a measure of the Council's overall (i.e. Operating and Capital)budget on an accrual accounting basis. The Net Lending / (Borrowing) result can be expected tofluctuate from year to year, given the lumpy nature of some capital expenditure.Achieving a zero result on the Net Lending / (Borrowing) measure in any one year essentially means that the Council has met all of its expenditure (both operating and capital) from the current year's revenues. The amount of Net Lending in any one year decreases the level of Net Financial Liabilities in the year by that amount. Conversely, the amount of Net Borrowing increases the level of Net Financial Liabilities.

BUDGETED UNIFORM PRESENTATION OF FINANCES


for the year ending 30 June 2016


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13 APRIL 2016

TOWN OF GAWLER

FINANCIAL INDICATORS2014/2015

Actuals2015/2016 Adopted Budget


(October Review)


$'000 $'000 $'000 $'000

Operating Surplus / (Deficit) RatioOperating Surplus / (Deficit) 9% 4.8% 5.5% 1.6%Rates - general & other less NRM levy

Adjusted Operating Surplus / (Deficit) RatioOperating Surplus / (Deficit) 5% 4.8% 5.5% 1.6%Rates - general & other less NRM levy

Net Financial Liabilities 10,727 12,545 11,992 12,916

Net Financial Liabilities RatioNet Financial Liabilities 43% 51% 48% 51%Total Operating Revenue

Asset Sustainability RatioNet Asset Renewals 127% 210% 182% 182%Infrastructure & Asset ManagementPlan required expenditure

QUARTERLY BUDGET REVIEW (JANUARY 2016)

This ratio is the Operating Surplus / (Deficit ) Ratio but is adjusted for the impact of the advance payment of 2 quarters of the Federal Financial Assistance Grant for the following year.

Net Financial Liabilities are defined as total liabilities less financial assets (excluding equity accounted investments in Council businesses).

Net asset renewals expenditure is defined as net capital expenditure on the renewal and replacement of existing assets, and excludes new capital expenditure on the acquisition of additional assets.

This ratio expresses the operating surplus as a percentage of general and other rates, net of NRM levy.

Net Financial Liabilities are defined as total liabilities less financial assets (excluding equity accounted investments in Council businesses). These are expressed as a percentage of total operating revenue.


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13 APRIL 2016

2014/2015 Actuals

2015/2016 Adopted

Budget


(October Review)


$'000 $'000 $'000 $'000

Cash / Investments 4,899 (1,400) 1,487 563

less : Funded Current assets / liabilities:

Debtors & Other Receivables 1,426 1,304 1,426 1,426Creditors & Other Payables (3,994) (1,971) (3,994) (3,994)Provisions (2,132) (1,699) (2,132) (2,132)Reserves (2,851) (2,008) (2,242) (2,262)

(7,551) (4,374) (6,942) (6,962)

Cash Surplus / (Deficit) * (2,652) (5,774) (5,455) (6,399)


BUDGETED CASH SURPLUS / (DEFICIT) RECONCILIATION

*The cash surplus / (deficit) result discloses the overall cash surplus / deficit position that would occur if there was acollective call on all of Council's funded liabilities as at the reporting date.

However, as the Council is an on-going concern, it is unlikely that there would be an instance of a call on all of its funded liabilities at the same time.


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13 APRIL 2016

2014/2015 Actuals



(October Review)


$'000 $'000 $'000 $'000Revenue

Operating Revenue 24,596 24,748 25,005 25,071Capital Revenue 1,199 660 135 135Loan Borrowings 160 0 0 0Loan repayments - Community Groups 20 22 22 22Transfers from Reserves 1,680 747 772 772Asset Sales 173 1,672 1,672 672Cash Deficit c/fwd 2,652 5,774 5,455 6,399

TOTAL REVENUE 30,480 33,623 33,061 33,071

Expenses

Operating Expenditure (excl Deprec'n) 19,765 20,423 20,536 20,526Loan repayments (Principal) 1,078 2,169 2,169 2,169Capital Expenditure 6,231 7,261 7,541 7,541Transfers to Reserves 0 157 163 183Loan payments to Community Groups 0 0 0 0Cash Deficit b/fwd 3,406 3,613 2,652 2,652

TOTAL EXPENSES 30,480 33,623 33,061 33,071


BUDGETED FUNDING STATEMENT

The Budgeted Funding Statement illustrates how Council's total estimated cash outlays (i.e. excluding non-cash items such as depreciation) are to be funded.

For the fifth consecutive year, the 2015/16 budget is predicated on no new long-term fixed loan borrowings Since 2010/11, Council has repaid $3.878m of loan debt, and will repay a further $2.169m during 2015/16.

The estimated debt as at 30 June 2016 is $8.652m, which represents a 41% reduction since 2010/11.


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Actual Audited Opening Balance 1/7/2015

Transfers to Reserve (Revised Budget)

2015/2016

Transfers from

Reserve (Revised Budget)

2015/2016

Projected Closing Balance

30/6/2016 Note$'000 $'000 $'000 $'000

Asset Revaluation Reserve 187,696 - - 187,696

Other Reserves:

Carparking 436 10 (20) 426 Open Space 183 (100) 83 Dog & Cat Management 113 32 (40) 105 Stormwater Drainage 156 50 (204) 2 Plant & Machinery Replacement 193 (87) 106 Property 1,435 33 (50) 1,418 Waste Management Service Charge 53 (34) 19 Willaston Cemetery 47 52 (89) 10

Infrastructure & Community Assets Project (ICAP) Reserve 211 (146) 65 Historic Walls Scheme 24 24 Discretionary Rate Rebates Withheld - 6 (2) 4 Total Other Reserves 2,851 183 (772) 2,262

PROJECTED RESERVE FUNDSfor the year ending 30 June 2016



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ANNUAL ADOPTED

BUDGET

REVISED BUDGET

(OCTOBER REVIEW) ACTUAL BUDGET VARIANCE %

PROPOSED BUDGET

VARIATION

REVISED ANNUAL BUDGET DESCRIPTION NOTE

$ $ $ $ $ $ $

(43,000) (58,200) Building Control (31,132) (33,957) 2,825 92% - (58,200) Development application fees(112,026) (112,026) Caravan Park (62,772) (66,389) 3,617 95% - (112,026) Property lease fees(118,000) (118,000) Cemeteries (101,125) (68,838) (32,287) 147% (30,000) (148,000) Burial / Plot Lease fees 21

(1,550) (1,550) Children & Youth Services (175) (950) 775 18% - (1,550) OSHC/Vacation user fees0 0 Communication & Marketing (40,000) (40,000) - (80,000) (80,000) Farmers Market Grant 22

0 0 Community Assistance (Volunteer Services) (12) (12) - - 0

(999) (999) Community Centres & Halls (917) (999) 82 92% - (999)(3,335) (3,335) Community Support (3,952) (3,335) (617) 119% (3,900) (7,235) 32

(46,000) (46,000) Customer Service (26,263) (26,831) 568 98% - (46,000) Property Search fees

(1,200) (1,200) Depot (854) (700) (154) 122% - (1,200) Training rebates; sundry sales(274,012) (274,012) Dog and Cat Control (224,258) (243,462) 19,204 92% - (274,012) Registrations, Expiation fees

(45,000) (45,000) Elderly Citizens Facilities (23,759) (25,250) 1,491 94% - (45,000) Hire of Elderly Centre(10,000) (10,000) Elected Member Services (6,250) (5,831) (419) 107% - (10,000) Mayoral vehicle contribution

(7,359) (7,359) Emergency Services (4,095) (7,210) 3,115 57% - (7,359)Inflammable undergrowth slashing expiations

(165,000) (145,000) Engineering Services (38,516) (38,750) 234 99% 130,000 (15,000) 14

(1,276,857) (1,271,627) Finance (363,520) (367,821) 4,301 99% - (1,271,627)Investment income and grant funding

(294,000) (309,000) Gawler Aquatic Centre (231,961) (248,950) 16,989 93% - (309,000)

(176,500) (185,113) General Administration (179,434) (170,402) (9,032) 105% (35,000) (220,113)

Vehicle contributions, LGAInsurance Schemes distributions and performance rebates 15

(629,000) (646,000) Home Assistance Scheme (482,487) (487,172) 4,685 99% - (646,000) Grant funding 0 0 Human Resources (4,682) (4,682) - (5,000) (5,000) First Aid training program 34

(25,000) (25,000) Immunisation (8,486) (10,669) 2,183 80% - (25,000)(7,500) (7,500) Information Technology (5,279) (4,324) (955) 122% - (7,500) Vehicle contribution

(119,767) (119,767) Investment Properties (63,565) (67,233) 3,668 95% (8,000) (127,767) Lease fees & reimbursements 20

(97,550) (97,550) Library (103,150) (83,855) (19,295) 123% (18,855) (116,405)

Operating Grant, other Council contributions, photocopying, donations, etc 9

0 0 Occupancy (5,192) (5,192) - (9,423) (9,423) Vehicle contribution 5

(314,443) (314,443) Other Environmental Services (314,486) (312,524) (1,962) 101% - (314,443)State Govt NRM levy funds collected

0 0 Other Regulatory Services (384) (384) - - 0(132,567) (132,567) Parking Control (33,548) (77,329) 43,781 43% - (132,567) Parking expiation fees

0 0 Parks & Gardens (239) (239) - - 0(11,750) (11,750) Plant & Machinery (6,527) (6,853) 326 95% - (11,750) Fuel Tax credits(35,300) (35,300) Preventive Health Services (10,665) (20,712) 10,047 51% 18,000 (17,300) Food inspections, audits 13

(17,209,087) (17,279,751) Rates Administration (17,224,144) (17,228,501) 4,357 100% (4,500) (17,284,251)General Rates, Fines, rebates, etc 18

(100) (100) Records Management (66) (56) (10) 118% - (100)(729,429) (915,140) Roads (264,818) (265,378) 560 100% - (915,140) Local Roads Grant(440,410) (440,410) Sports Facilities - Indoor (235,618) (261,634) 26,016 90% 30,000 (410,410) Sports & Community Centre 29

Operating Income by Function

**************YEAR TO DATE**************

TOWN OF GAWLER

INCOME STATEMENT BY FUNCTIONFOR THE YEAR ENDING 30 JUNE 2016



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ANNUAL ADOPTED

BUDGET

REVISED BUDGET


PROPOSED BUDGET

VARIATION


$ $ $ $ $ $ $

**************YEAR TO DATE**************

TOWN OF GAWLER



(52,814) (52,814) Sports Facilities - Outdoor (22,165) (42,039) 19,874 53% (3,000) (55,814)Lease/Licence fees, sundry reimbursements 28

(163,000) (163,000) Support to Local Businesses (Gawler Bus Dev Board) (162,745) (163,000) 255 100% - (163,000) Separate Rate revenue

(75,100) (75,100) Tourism (Visitor Information Centre) (51,316) (45,674) (5,642) 112% - (75,100)

Souvenir sales, commissions, etc

(305,200) (305,200) Town Planning (222,781) (184,939) (37,842) 120% (46,389) (351,589) Development Application Fees 8

(1,857,877) (1,827,877) Waste Management (1,795,308) (1,795,292) (16) 100% - (1,827,877)

Waste Collection Service Charge, Net gain joint ventures (NAWMA)

(24,780,732) (25,037,690) TOTAL OPERATING INCOME (22,356,646) (22,366,859) 10,213 100% (66,067) (25,103,757)


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ANNUAL ADOPTED

BUDGET

REVISED BUDGET


PROPOSED BUDGET

VARIATION


$ $ $ $ $ $ $

**************YEAR TO DATE**************

TOWN OF GAWLER



Operating Expenditure by Function

143,385 210,185 Building Control 93,737 120,729 (26,992) 78% (17,368) 192,817 Development Assessment (Bldg) 7

148,688 128,688 Car Parks 53,421 70,576 (17,155) 76% (3,500) 125,188 7

23,082 23,082 Caravan Park 14,241 9,883 4,358 144% 3,900 26,982 7

86,110 86,110 Cemeteries 52,664 48,462 4,202 109% 10,000 96,110 21

129,847 129,847 Children & Youth Services 63,245 58,424 4,821 108% (247) 129,600 Youth Officer, Youth events 7

189,726 189,726 Communication & Marketing 125,107 82,598 42,509 151% 62,852 252,578

Incl Gawler Farmers Market, Murray St banners, Community magazine, etc 22,39

127,091 127,091 Community Assistance (Volunteer Services) 61,261 63,418 (2,157) 97% (2,175) 124,916 VRC, Graffiti Removal team 7

97,465 97,465 Community Centres & Halls 52,384 56,352 (3,968) 93% (2,928) 94,537 Evanston Gardens Comm Centre, Gawler Institute 5,7

327,460 330,260 Community Support 231,207 215,807 15,400 107% 7,910 338,170 Community Grants, Community events

19,26,32,37

25,405 25,405 Crime Prevention (CCTV) 10,333 13,682 (3,349) 76% (3,750) 21,655 7

583,152 583,152 Customer Service 313,172 341,418 (28,246) 92% (686) 582,466 Customer Service salaries (Town Hall & High St office) 7

(590,150) (590,150) Depot (259,921) (337,127) 77,206 77% (450) (590,600) Budget includes wages overhead costs recovered 7,40

242,121 202,121 Dog and Cat Control 111,829 99,495 12,334 112% 9,047 211,168 7,12

78,569 78,569 Elderly Citizens Facilities 41,141 45,596 (4,455) 90% (394) 78,175 Elderly Centre 7

309,126 309,126 Elected Member Services 173,004 181,210 (8,206) 95% (5,709) 303,417 EM allowances & expenses. 7

15,377 15,377 Emergency Services 22,378 3,782 18,596 592% 18,617 33,994

Inflammable undergrowth management, Pinery fires support 30

1,316,348 1,316,348 Engineering Services 796,092 678,548 117,544 117% (116,888) 1,199,460 14,36

1,306,433 1,286,433 Finance 768,798 769,801 (1,003) 100% (10,646) 1,275,787

Accounting / Finance services, Audit Committee, Loan repayments 17

652,284 710,884 Gawler Aquatic Centre 402,423 418,694 (16,271) 96% (1,603) 709,281 24

1,735,261 1,616,726 General Administration 866,957 860,138 6,819 101% (42,886) 1,573,840 General admin, OHS&W, Agenda/Minutes preparation 7,27,31

67,267 87,267 Heritage 6,289 6,408 (119) 98% - 87,267

Heritage collection maintenance, Statues & monuments maintenance

629,000 646,000 Home Assistance Scheme 348,033 344,068 3,965 101% (259) 645,741 7

534,819 534,819 Human Resources 276,653 298,181 (21,528) 93% 2,044 536,863 24

66,034 66,034 Immunisation 17,349 23,729 (6,380) 73% (86) 65,948 7

975,640 975,640 Information Technology 638,385 616,014 22,371 104% 1,952 977,592 7

9,440 9,440 Investment Properties 5,949 4,691 1,258 127% (50) 9,390 7

998,482 998,482 Library 562,638 600,177 (37,539) 94% 36,359 1,034,841 7,9,27

113,400 113,400 Litter Control 53,309 65,531 (12,222) 81% (5,000) 108,400 Programmed collection of litter/rubbish from litter bins 40

505,227 505,227 Occupancy 242,173 271,421 (29,248) 89% (27,125) 478,102 Property Management admin, Town Hall maintenance 5


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ANNUAL ADOPTED

BUDGET

REVISED BUDGET


PROPOSED BUDGET

VARIATION


$ $ $ $ $ $ $

**************YEAR TO DATE**************

TOWN OF GAWLER



436,817 436,817 Other Activities NEC 226,042 247,765 (21,723) 91% (18,845) 417,972 Road Reserves maintenance, Rapid Response Team costs 40

550,599 550,599 Other Environmental Services 276,740 288,259 (11,519) 96% (2,791) 547,808 Payment of State Govt NRM levy collected 16

3,000 3,000 Other Regulatory Services 6,752 2,581 4,171 262% - 3,000 132,567 190,370 Parking Control 75,111 84,996 (9,885) 88% 962 191,332 7

1,381,514 1,381,514 Parks & Gardens 635,729 729,141 (93,412) 87% (39,110) 1,342,404 Programmed maintenance of parks, gardens & reserves. 40

4,200 4,200 Pest Control 54 2,430 (2,376) 2% - 4,200

2,203 2,203 Plant & Machinery 73,019 (65,173) 138,192 -112% 162,072 164,275 Includes internal plant hire costs recovered 7

148,984 148,984 Preventive Health Services 82,148 88,474 (6,326) 93% (10,418) 138,566 7

119,945 119,945 Public Conveniences 60,815 69,159 (8,344) 88% 5,423 125,368 40

271,930 267,030 Rates Administration 155,847 174,221 (18,374) 89% 6,234 273,264

Rates Officers, Property valuations, Debt collection, Rate notice printing, etc. 18

255,431 271,245 Records Management 155,183 153,972 1,211 101% 8,897 280,142 Records staff, Postage, etc. 35

160,168 160,168 Regional Development 34,379 61,551 (27,172) 56% 1,735 161,903 Barossa RDA contribution, Grants Submission Writer, etc. 7

3,081,649 3,081,649 Roads 1,572,027 1,599,479 (27,452) 98% 912,869 3,994,518 Programmed maintenance & repairs. 6

543,683 542,283 Sports Facilities - Indoor 315,221 312,756 2,465 101% 5,137 547,420 Sports & Community Centre 7,25,29

745,054 745,054 Sports Facilities - Outdoor 245,578 349,491 (103,913) 70% (15,237) 729,817 Programmed ovals maintenance 7

835,511 835,511 Stormwater Drainage 456,424 459,499 (3,075) 99% (63,497) 772,014 Drain cleaning, repairs & maintenance. 40

110,468 110,468 Street Cleaning 74,437 64,435 10,002 116% - 110,468 393,013 393,013 Street Lighting 197,272 197,426 (154) 100% - 393,013

424,722 424,722 Streetscaping 186,277 240,517 (54,240) 77% (40,000) 384,722

Tree replacement/removal and maintenance, Garden beds maintenance 40

163,000 163,000 Support to Local Businesses (Gawler Bus Dev Board) 163,000 163,000 - 100% - 163,000

Payment of costs covered by Separate Rate levied

218,252 218,252 Tourism (Visitor Information Centre) 116,260 122,364 (6,104) 95% (360) 217,892 Staff & Bldg maintenance costs 7

1,011,815 1,121,034 Town Planning 638,156 616,267 21,889 104% (15,993) 1,105,041 Planning staff salaries, Growth management costs, etc. 8,10,23

155,879 155,879 Traffic Management 94,200 86,993 7,207 108% - 155,879 Street/traffic control signs maintenance

12,241 12,241 Transfer Station 5,530 5,711 (181) 97% - 12,241 Facility closed 28 Feb 2013

1,860,036 1,830,036 Waste Management 1,051,519 1,023,818 27,701 103% - 1,830,036 Kerbside waste collection & disposal.

23,868,770 23,981,971 TOTAL OPERATING EXPENSES 13,041,971 13,110,838 (68,867) 99% 808,009 24,789,980

(911,962) (1,055,719) NET OPERATING RESULT (9,314,675) (9,256,021) (58,654) 101% 741,942 (313,777)


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ANNUAL ADOPTED BUDGET

REVISED BUDGET

OCTOBER

YTD ACTUAL

YTDBUDGET

YTD % SPENT

BUDGET VARIATION

REVISED ANNUAL BUDGET

NOTE NO.

$ $ Project Scope of works $ $ $ $ $

250,000 250,000 Rehabilitate Historic Gawler Mill Inn Bridge The scope was revised to high priority items only in 2015/16. 2,640 3,000 88% 0 250,000

- 10,000 Murray Street Upgrade Stage 5Finalise design details for construction of intersection of Murray St / Calton Rd (b'fwd from 2014/15) 13,063 10,000 131% 0 10,000

70,000 70,000 Multi-Level Car Park Undertake repairs to cracked concrete slab edge & connections 0 831 0% 0 70,000 10,000 10,000 Visitor Information Centre Decking repairs, hot water system replacement, etc. 0 5,831 0% 0 10,000 12,000 12,000 Gawler Caravan Park Install handrails & replace stainless steel plate on pumping station 0 7,000 0% 0 12,000

12,000 12,000 Works Depot, Paxton Street Overhead data/security/power cable to be placed underground (WHS issue) & replace 2 hot water units 12,660 12,000 105% 0 12,000

142,000 142,000 Gawler Sport & Community Centre Various remediation & upgrade projects throughout centre 20,451 22,831 90% 0 142,000 230,000 230,000 Gawler Aquatic Centre Various remediation & upgrade projects throughout centre 200,550 200,000 100% 0 230,000

35,000 35,000 Gawler Aquatic Centre Replace pool blankets for all three pools to reduce evaporation 0 419 0% 0 35,000 20,000 20,000 Fencing Replacement Replace fencing at Thomas Terrace & Clonlea Reserves 0 0 - 0 20,000

30,000 30,000 Install Irrigation Systems at Various Locations Upgrade irrigation systems at Lions & Pioneer Parks & Gawler South Playground 0 0 - 0 30,000

1,080,000 480,000 Murray St Upgrade - Stage 6 Upgrade works between Southern Hotel and Mitre 10 45,088 50,000 90% 0 480,000

20,000 20,000 Renew Street Furniture Program Replace street / park furniture that is broken or otherwise unusable across multiple locations 871 11,669 7% 0 20,000

- 60,000

South Gawler Football Club Facilities Renew fire safety services. Council is responsible as per Lease agreement (b'fwd from 2014/15) 4,500 5,000 90% 0 60,000

80,000 80,000 Upgrade Traffic Signals to required Standard 3 traffic signals are obsolete & need to be upgraded to current technical &

operating standards. 0 6,662 0% 0 80,000 185,000 185,000 Construct Stormwater Outlets Gawler Urban Rivers Repair of stormwater outlets at Nth Para River & Sth Para 19,964 17,912 111% 0 185,000

15,000 15,000 Replace Stormwater Side Entry Pit Cover & Frame Replacement of side entry pit cover and frames 2,010 8,750 23% 0 15,000 12,000 12,000 Replace Public Lighting Program Improve existing public lighting 0 0 - 0 12,000 36,000 36,000 Renew Street Asset Program Renew street signs, traffic control devices and existing assets 0 1,000 0% 0 36,000

450,000 635,711 Road Reseal Program Programmed reseal of various road surfaces 3,702 10,818 34% 0 635,711 80,000 80,000 Footpath Program - Renewal Renew Footpaths which are below the required service level 72,784 80,000 91% 0 80,000

270,436 270,436 Light Fleet - Vehicles Replacement as per Plant & Equipment Policy 0 7,745 0% 0 270,436 506,364 506,364 Heavy Fleet - Plant & Equipment Replacement as per Plant & Equipment Policy 249,485 245,365 102% 0 506,364

90,000 90,000 Unsealed Roads Resheeting Program Programmed resheeting of gravel roads 35,600 52,500 68% 0 90,000

- 40,000 General Ledger Rewrite ProjectRedesign General Ledger Chart of Accounts to streamline financial data capture and reporting 14,380 23,331 62% (25,000) 15,000 38

- 27,000 Playground EquipmentRemove old equipment; design / install new playground equipment & rubber softfall, safety fencing and remedial work (b'fwd from 2014/15) 14,519 15,750 92% 0 27,000

3,635,800 3,358,511 712,266 798,414 89% (25,000) 3,333,511

----------------YEAR TO DATE----------------

ASSET REPLACEMENT/RENEWAL

TOWN OF GAWLERQUARTERLY BUDGET REVIEW AS AT 31 JANUARY 2016

CAPITAL EXPENDITURE ANALYSIS

TOTAL ASSETS - REPLACEMENT / RENEWAL


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REVISED BUDGET

OCTOBER

YTD ACTUAL

YTDBUDGET

YTD % SPENT

BUDGET VARIATION


NOTE NO.


----------------YEAR TO DATE----------------



190,000 190,000 Implement Willaston Cemetery Action Plan Increase number of burial plots & spaces for ashes and Beams 0 10,831 0% 0 190,000 55,000 55,000 Stormwater Discharge Rehabilitation - Thomas St Completion of Thomas Terrace Stormwater System Stage 2 325 2,081 16% 0 55,000

- 40,000 Gawler Going Green Project Installation of energy efficient air-conditioning, ceiling fans, lighting controls, insulation and hot water timer controls 77,484 40,000 194% 0 40,000

200,000 200,000 Capitalisation of Engineering & Civil Salaries 2015/16 Capitalisation of salaries directly incurred in the completion of capital

projects. 4,286 0 - 0 200,000

- 70,000 Capitalise internal plant hire Capitalisation of plant hire directly incurred in the completion of capital

projects. 0 0 - 0 70,000

- 7,500 Pinforce Mobile Enforcement Program Implementation of Pinforce Automated Infringement System - software, hardware & training 4,442 4,375 102% 0 7,500

20,000 20,000 Upgrade Dog Pound Facilities at Depot Repair / maintain existing Town of Gawler dog pound. 0 11,669 0% 0 20,000 20,000 20,000 Remove Asbestos from Council Owned Buildings Commence program to remove asbestos materials from buildings 0 11,540 0% 0 20,000

10,000 10,000

Gawler Sport & Community Centre (Roller skating equipment) Upgrade equipment that is used & hired to ensure safety

9,977 10,000 100% 0 10,000 25,000 25,000 Install Disability Access & Ramp Improvements Provide disabled access facilities that meet current standards 4,674 5,000 93% 0 25,000 25,000 25,000 Streetscape Improvement Works - Graetz St Streetscape works as required 20,658 21,000 98% 0 25,000 20,000 20,000 Design Dog Off-Leash Facilities Prepare a design for Dog Park and on/off leash areas. 0 0 - 0 20,000 50,000 50,000 Upgrade Willaston Oval Carpark Overlay existing carpark area with AC10 hotmix 9,889 10,000 99% 0 50,000

- 164,000 Apex Park Fitness & Recreation Precinct Project Installation of fitness trail and playground (b'fwd from 2014/15)- Completed 163,138 164,000 99% 0 164,000

- 95,000 Playgrounds Enhancement Project Install enhancements to playgrounds at Humphrey George Reserve and 15th Street (b'fwd from 2014/15) 94,820 95,000 100% 0 95,000

600,000 600,000 Construct New Footpaths Program Construct new footpaths 181,769 180,000 101% 0 600,000 64,000 64,000 Construct New Kerb & Gutter Program New kerbs & gutters to manage stormwater & pavement structures 1,741 2,000 87% 0 64,000

120,000 120,000 Gawler Urban Rivers Erosion Control & Revegetation Various erosion control and revegetation works 20,280 20,000 101% 0 120,000

- 6,000 Renew park fencing program Remove old perma pine posts at various locations - Australian Standard ASNZ 4486.1-1997 (b'fwd from 2014/15) 8,743 6,000 146% 0 6,000

70,000 70,000 Design Kerb/Gutter & Footpaths - Main Nth Rd & Willaston Install kerbing & guttering ; construct footpaths on major entrance road 45,916 50,000 92% 0 70,000

30,000 30,000 Upgrade Records Management Software Upgrade Records Management software to latest version 7.4 29,740 30,000 99% 0 30,000

- 22,560

Implement Cemetery Management software moduleCompliance with Burial and Cemeteries Act 2013 which requires appropriate registers of interments, rights of interment, renewal of rights, etc. (b'fwd from 2014/15) 16,920 17,000 100% 0 22,560

- 20,000 Jack Bobridge Bike Path Construct additional shared path to complete project. Jack Bobridge bike path connects to Gawler East (b'fwd from 2014/15) 202 1,669 12% 0 20,000

- 10,000 Coleman Parade Playground Shade Cover Installation of shade cover (b'fwd from 2014/15) - Completed 4,844 5,831 83% 0 10,000 10,000 10,000 Install Gawler History Plaques Installation of plaques to explain Gawler's history 0 5,831 0% 0 10,000 12,000 12,000 Asset Management Software System Asset Management System - addition of maintenance module. 0 0 - 0 12,000 30,000 30,000 Undertake Conservation Works at Deadmans Pass Restore Dead Man's Pass waterhole & stormwater pollution works 0 2,500 0% 0 30,000 50,000 50,000 Investigate Water Reuse for Southern Urban Areas Investigate water reuse for Southern Urban Areas 0 4,169 0% 0 50,000 20,000 20,000 Investigate Pavement Stabilisation of Unsealed Rds Investigate the pavement stabilisation of southern rural area roads 0 1,669 0% 0 20,000

150,000 150,000 Upgrade Pavement Duffield Street, Gawler East Pavement reconstruction with deep lifting & surfacing with asphalt concrete 70 1,000 7% 0 150,000

100,000 100,000 Design urban precinct & vicinity Implement urban precinct design study 0 3,331 0% 0 100,000

NEW/UPGRADED ASSETS


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13 APRIL 2016


REVISED BUDGET

OCTOBER

YTD ACTUAL

YTDBUDGET

YTD % SPENT

BUDGET VARIATION


NOTE NO.


----------------YEAR TO DATE----------------



5,000 5,000

Review pollution control for Springfield Retention Basin Design improvements to the pollution control

0 2,919 0% 0 5,000 26,000 26,000 Install New Public Lighting Program Install new street lighting at selected locations 17,031 17,000 100% 0 26,000 33,000 33,000 Install New Street Asset Program Implement traffic management improvements 0 250 0% 0 33,000

- 25,000 Depot Administration Office Expansion Additional office space to support depot restructure 19,040 19,000 100% 0 25,000

1,690,000 1,690,000

Gawler Connect Building Project Initial planning, design & preliminary works relating to the renovation of the Town Hall and Institute buildings. 471,504 470,822 100% 0 1,690,000

- 10,000 Southern Urban Areas Stormwater Design Deed Implement the Southern Urban Areas Deed of Agreement (b'fwd from 2014/15) 5,021 5,831 86% 0 10,000

- - Purchase of Civica HR/WHS software module Purchase and implementation of HR software module (funded from LGA Risk Management distribution payment) - 25,000 25,000 15

- 87,000 Gawler East Link Road consultation / design Preliminary consultation / design work in conjunction with State Government 23,542 25,743 91% 0 87,000

3,625,000 4,182,060 1,236,054 1,258,061 98% 25,000 4,207,060

7,260,800 7,540,571 1,948,320 2,056,475 95% 0 7,540,571TOTAL ASSETS - CAPITAL EXPENDITURE

TOTAL ASSETS - NEW / UPGRADED


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13 APRIL 2016

Town of Gawler Non-Financial Indicators Report

for the period 01 July 2015 – 31 January 2016

for the year ending 30 June 2016

Caravan Park

Graph 1.1

Community Assistance (Volunteer Services)

Graph 2.1

7%

9.4%

12% 12.4% 13.0%

0%

2%

4%

6%

8%

10%

12%

14%

Financial Years

% R

etur

n of

Inve

stm

ent

Net Return on Investment

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 Actuals

1,533 1,482

935 866

433

- 200 400 600 800

1,000 1,200 1,400 1,600 1,800

Financial Years

Hour

s Rem

ovin

g G

raff

iti

Volunteer Hours Removing Graffiti

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 YTD Actuals

Comments:

Due to a number of contributing factors such as stricter graffiti laws, youth programs, efficient volunteers, school workshops and other positive initiatives, Council has been able to significantly reduce the number of graffiti hits and hours taken to remove graffiti since 2012/2013.

Comments:

This indicator represents the annual return (property rent received) as a percentage of the carrying value of the asset.

Appendix 1


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13 APRIL 2016

Graph 2.2

Customer Service

Graph 3.1

2,837

7,297

3,250

2,183 1,634

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Financial Years

Num

ber o

f Hits

Rem

oved

Graffiti Hits Removed

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 Actuals

790 802 834 840

482

- 100 200 300 400 500 600 700 800 900

Financial Years

Num

ber o

f Pro

pert

y Se

arch

es Property Searches

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

Due to a number of contributing factors such as stricter graffiti laws, youth programs, efficient volunteers, school workshops and other positive initiatives, Council has been able to reduce the number of graffiti hits and hours taken to remove graffiti since 2012/2013.

Comments:

The level of property searches YTD is consistent with the 2014-2015 YTD result (485 Searches). There was no provision for an increase in the number of searches incorporated in the 2015-2016 Budget, therefore we are anticipating to have a result similar to 2014-2015 (840 Searches).


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13 APRIL 2016

Graph 3.2

Dog & Cat Control

Graph 4.1

2,835

4,206 4,066

4,807

2,811

-

1,000

2,000

3,000

4,000

5,000

6,000

Financial Years

Num

ber o

f Cus

tom

er A

ctio

n Re

ques

ts

Customer Action Requests

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


4,829 5,475 5,313 5,165

4,600 4,370

5,110

0

1,000

2,000

3,000

4,000

5,000

6,000

Fianancial Years

Num

ber o

f Reg

iste

red

Dogs

Registered Dogs

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 Annual Budget

2015/2016 YTD Budget


Comments:

The increase in the volume of requests has been partly due to an increase in the ease of customers being able to lodge requests on-line (2,726 YTD 2014-2015).

https://eservices.gawler.sa.gov.au/eservice/crm/selectCategory.do?key_num=700&nodeNum=3234&nodeNum=3234

Comments:

Council staff predicated the budget on 4,600 dogs being registered in 2015-2016 at an average of $48. The amount of dogs registered has exceeded expectation by 510 dogs. However, the concessions offered to owners of dogs microchipped, desexed, trained or working dog have decreased the average dog registration to $40.

Currently, Dog Registrations are unfavourable by $11K. The Council doorknock is currently in progress and expected to be completed late February.


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13 APRIL 2016



Graph 4.2

Graph 4.3

249

135

706

25

161

-

100

200

300

400

500

600

700

800

Financial Years

Num

ber o

f Exp

iatio

ns Is

sued

Dog Expiations

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


36

30

26

28

30

32

34

36

38

Financial Years

Num

ber o

f Dog

Att

acks

Dog Attacks

2014/2015 Actuals


Comments:

The large increase in the volume of expiations during 2013/2014 was due to a Council wide dog door knock survey undertaken.

The planned dog door knock for 2015-2016 has recently commenced and will be completed by the end of February. This door knock is restricted to un-registered dogs only.

Comment:

Objective 3.0 of the Animal Management Plan adopted by Council on the 22 April 2014 has a number of key strategies to ensure that the community are able to enjoy amenities provided by Council without fear or harassment by uncontrolled dogs.


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13 APRIL 2016

Graph 4.4

General Administration

Graph 5.1

988

219

-

200

400

600

800

1,000

1,200

Financial Years

Num

ber o

f Rep

orts

Dogs Reported Wandering at Large

2014/2015 Actuals


30.39 33.66 34.2

41.5

05

1015202530354045

Year Election Held

% o

f Pop

ulat

ion

Number of Voters as % of Population

2003

2006

2010

2014

Comments:

Self-Explanatory

Comment:

The Animal Management Plan adopted by Council on the 22 April 2014 has an emphasis on responsible dog ownership. This includes educating the community and promoting dog obedience programs. This, along with sufficient identification, will hopefully reduce the number of dogs wandering at large and, if they are found, reuniting them with their owner within a short time-frame.


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13 APRIL 2016

General Inspectorate

Graph 6.1

Graph 6.2

267 197

1,076

570

424

-

200

400

600

800

1,000

1,200

Financial Years

Fire

Pre

vent

ion

Not

ices

Sen

t Fire Prevention Notices

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


18

29

- 1

13

-

5

10

15

20

25

30

35

Financial Years

Num

ber o

f Exp

iatio

ns Is

sued

Fire Prevention Notices Expiations

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The significant increase in fire prevention notices in 2013/2014 was due to Inspectorial Staff taking a proactive approach and inspecting all properties in Gawler. In previous years only those properties known to cause concern or complaints were inspected.

2014/2015 also saw a significant number of fire prevention notices issued as the inspection program was carried out once again. Compliance with notices was high and only one expiation notice was issued.

Comments:

No Fire Expiation Notices were issued in 2013/2014.

For the 2014/2015 bushfire season, one expiation notice was issued. This was an excellent outcome as land and property owners complied with the requirements of the notice.


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13 APRIL 2016

Human Resources

Graph 7.1

Graph 7.2

15%

12%

15%

10%

2%

0%2%4%6%8%

10%12%14%16%18%

Financial Years

% o

f Sta

ff Tu

rnov

er

Staff Turnover

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


627

748 656

614

404

-

100

200

300

400

500

600

700

800

Financial Years

Num

ber o

f Sic

k Da

ys T

aken

Staff Sick Days

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

Consistent with all organisations, some staff turnover is to be expected each year. At the same reporting date in 2014-2015, staff turnover was at 6%.

Comments:

Based on 115 full-time equivalent staff, the number of days taken YTD in 2015/2016 equates to 3.5 days per employee.


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13 APRIL 2016

Graph 7.3

Graph 7.4

15.5

65.8

38.7

61.4

18

0

10

20

30

40

50

60

70

Financial Years

Days

Los

t

Number of Days Lost to Work Injuries

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


$796,351 $846,529

$786,354

$962,190 $998,127

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Financial Years

$

Annual Leave Liability

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The increase in 2012/2013 and again in 2014/2015 was a result of the type of injuries incurred by staff which required additional days off work. The decrease in 2013-2014 was a direct consequence of additional resources allocated to the area of WHS, and was a contributing factor towards an increase in Councils LGA Workers Compensation Scheme Performance Rebate.

Comments:

The decline in 2013/2014 was due to a termination payout for a staff member who had accrued an extraordinarily high amount of annual leave.


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13 APRIL 2016

Graph 7.5

Immunisations

Graph 8.1

$79,041

$98,240

$130,336 $131,545 $130,534

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Financial Years

$

Time in Lieu Liability

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


3,226

4,328

3,083

1,397

362

-

1,000

2,000

3,000

4,000

5,000

Financial Years

Tota

l Num

ber o

f Vac

cina

tions

Vaccinations

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

Peak times for student immunisations are September – November & February – July. Peak times for flu immunisations are March – May.

The decline in 2014-2015 was due to the reduction in school contracts & discontinuing the Hep B vaccine offered through the public clinic.

Comments:

Council’s TOIL liability has remained static in the last 3 financial years despite substantial payouts for excessive leave accrued in 2014/2015 ($30K). Despite the static result in recent years, the TOIL liability is still substantial.


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13 APRIL 2016

Information Technology

Graph 9.1

Library

Graph 10.1

88,653 103,144

116,666 122,026

65,650

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Financial Years

Num

ber o

f Vis

its to

Web

site

Visits to Council Website

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


13,288 14,352

10,550 8,933 8,265

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Financial Years

Num

ber o

f Ac

tive

Borr

ower

s Library Active Borrowers

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The introduction in the 2013/2014 financial year of the State-wide One Card System allows users to choose one library location which is where their library membership is assigned. Previous to the One Card system, users had various library cards to a host of libraries. Library users become inactive when a user has not been active for a period of 3 years.

Comments:

This graph illustrates an on-going increase in the number of visits to www.gawler.sa.gov.au


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13 APRIL 2016

Graph 10.2

Graph 10.3

120,679 115,643 123,222 124,339

75,679

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Financial Years

Num

ber o

f Loa

ns

Library Loans

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


55% 60%

44% 37% 34%

0%

10%

20%

30%

40%

50%

60%

70%

Financial Years

% o

f Pop

ulat

ion

Library Users as a % of Population

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The number of loans has remained relatively stable over the last 4 years with 2015-2016 continuing to be consistent with these results.

Comment:

This statistic shows what percentage of the population (obtained from the 2011 census) has recorded Gawler as their primary library through the State-wide One Card System.


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13 APRIL 2016

Open Space

Graph 11.1

Parking Control

Graph 12.1

318.56 349.91 354.26

0

50

100

150

200

250

300

350

400

Financial Years

Hect

ares

Mai

ntai

ned

Hectares of Open Space Maintained

2013/2014 Actuals

2014/2015 Actuals


1,234

1,780

1,453 1,548

1,800

1,050

525

-

500

1,000

1,500

2,000

Financial Years

Num

ber o

f exp

iatio

ns is

sued

Parking Expiations

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals




Comments:

The number of YTD Parking expiations issued is 50% behind the annual adopted budget estimate.

The acquisition of automated hand-held technology (Pinforce) for the issuing of expiations has recently been implemented and will deliver future operational efficiencies.

Due to operational KPI’s implemented internally within the General Inspectorate department, Council has elected not to review this revenue budget in the 2nd Qtr. Budget Review.

Comments:

This number represents all Council owned land that is maintained with activities such as mowing, slashing, poisoning, planting, etc. This figure does not include untouched areas which equate to approximately 60 hectares. The increase in 2015-2016 is due to the addition of 4.350 hectares of land obtained at the intersection of Tiver Rd and Main North Rd.


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13 APRIL 2016

Plant Utilisation

Graph 13.1

Preventative Health Services

Graph 14.1

92% 86%

99.6% 100%

66.8%

0%

20%

40%

60%

80%

100%

120%

Financial Years

Plant Utilisation

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 Budget


121

191 178 187 178

103 100

-

50

100

150

200

250

Financial Years

Num

ber o

f Foo

d In

spec

tions

Food Inspections

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals




Comments:

Food premises inspections are based on risk ratings which determine the frequency of the inspection e.g. 6, 12 and 18 month intervals.

The current inspection program is on target to meeting all risk based inspections.

Comments:

This percentage represents the usage of Council’s plant (tractors, trucks, utilities, vehicles, etc.) compared to the utilisation estimated within the revised budget.

Due to a new procedure for capturing costs of our light fleet, the plant utilisation now only includes heavy fleet/plant. As the budget was prepared using the old method an adjustment will incorporated in the 2nd Qtr. Budget Review.


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13 APRIL 2016

Graph 14.2

Rates Administration

Graph 15.1

75 78

53 55

85

49

13

- 10 20 30 40 50 60 70 80 90

Financial Years

Num

ber o

f Foo

d Au

dits

Food Audits 2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals




7.4%

5.3% 4.36%

4.87%

3.5% 4.37%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Financial Years

%

% of Rate Debtors in Arrears

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 Target Result


Comments:

Food Audits are carried out by Council staff. Food Audits are required by law for any business providing food to vulnerable populations and are rated using a risk classification method.

Businesses can select their auditors from a list of accredited auditors across the State.

In 2015-2016 Council has elected to reduce the number of food audits conducted by staff (outside of the Council area) to focus more on statutory requirements.

Comments:

The level of outstanding rate debtors will fluctuate during a financial year based on where the reporting date falls within the quarterly billing cycle.

Council’s existing business plan target is to achieve outstanding rate debtors of less than 3.5% as at 30 June 2016.


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13 APRIL 2016

Graph 15.2

Records Management

Graph 16.1

10,007 9,820 10,066 10,388 10,834

-

2,000

4,000

6,000

8,000

10,000

12,000

Financial Years

Num

ber o

f Rat

eabl

e Pr

oper

ties Rateable Properties

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


49,230

61,920 58,411

71,584

45,037

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Financial Years

Num

ber o

f Inc

omin

g Re

cord

s Corporate Records Recorded

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals

2015/2016 Actuals

Comments:

The number of rateable properties has increased by over 2.5% for the last four financial years. The reduction in 2011-2012 was solely due to the consolidation of properties at the Hillier Park Residential Village.

Comments:

These records are incoming, outgoing and internal Council documents that are registered by all employees into the electronic Records Management database. The improvement is a direct result of training provided to staff at the end of the 2013/2014 financial year and it is envisaged that this will continue to improve.

It is increasingly important, and a legislative requirement under the State Records Act, that all Council records are captured in the electronic data base.


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13 APRIL 2016

Graph 16.2

Swimming Pool

Graph 17.1

5

8

6 5

4

-

2

4

6

8

10

Financial Years

Num

ber o

f Req

uest

s

Freedom of Information Requests

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


49,270 56,144 58,335 55,725

36,261

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Financial Years

Num

ber o

f Vis

itors

Swimming Pool Visitors

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The 2015/2016 pool season has had a much improved attendance in comparison to the end of January 2015 (29,197 Pool Visitors). This has been a result of increased programs held by the Gawler Aquatic Centre, the warmer than usual weather we have been experiencing and also the general appearance and maintenance of the pool.

Comment:

The Freedom of Information Act 1991 allows individuals the legal right to view Council’s documents, request an amendment to documents about that individual which are incomplete, incorrect or out of date or seek a review of a decision made by Council.


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13 APRIL 2016

Graph 17.2

Tourism

Graph 18.1

653

839

620

-

100

200

300

400

500

600

700

800

900

Financial Years

Num

ber o

f Enr

olm

ents

Swim School Enrolments

2013/2014 Actuals

2014/2015 Actuals


24,600 21,331

19,481 19,447

11,749

-

5,000

10,000

15,000

20,000

25,000

30,000

Financial Years

Num

ber o

f Vis

itors

to G

awle

r

Visitors to Gawler Information Ctr.

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The graph indicates that there has been a consistent decline in visitors to the Visitor Information Centre, although the severity of the decline reduced in 2014/2015.

Comments:

This amount represents the enrolments in swim school for both term 1 and term 4.


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13 APRIL 2016

Town Planning

Graph 19.1

Waste Management

Graph 20.1

655

821 774 791

600

350

466

-

100

200

300

400

500

600

700

800

Financial Years

Num

ber o

f Dev

elop

men

t App

licat

ions

Lo

dged

Development Applications

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals




4,322 4,512 4,470 4,582

2,501

-

1,000

2,000

3,000

4,000

5,000

Financial Years

Tonn

es

General Waste Collected - NAWMA

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The volume of applications increased in 2015-2016 by 5% compared to YTD in 2014-2015 (370 applications). The 2015-2016 budget was based on the 2014-2015 revised budget which Council exceeded.

Development application revenue is heavily driven by the nature of the application; therefore whilst the number of development applications exceeds the YTD Budget by 33%, the revenue collected is reporting a YTD unfavourable variance of $5K.

Comments:

The volume of general waste collected has remained relatively stable over the last 5 years.


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13 APRIL 2016

Graph 20.2

Graph 20.3

2,045 1,940 1,962 1,946

977

-

500

1,000

1,500

2,000

2,500

Financial Years

Tonn

es

Waste Collected - NAWMA Recycled

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


1,534 1,489

1,880 1,732

970

-

500

1,000

1,500

2,000

Financial Years

Tonn

es

Waste Collected - NAWMA Green

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The volume of recyclable waste collected has remained relatively stable over the last 5 years.

Comments:

The volume of green waste collected has increased in the last 2 years after a nominal reduction in the 2 prior years.


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13 APRIL 2016

Willaston Cemetery

Graph 21.1

Graph 21.2

93 85

68 79

68

-

20

40

60

80

100

Financial Years

Num

ber o

f Bur

ials

Burials

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


121% 103% 103%

150%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Financial Year

Cemetery- Cost Recovery Rate

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

Income generated at the cemetery includes cremations, lease permits, pre-purchased leases, memorial permits, transfer & extension of leases, purchase of headstones, placement of ashes, etc.

Council is reporting a 47% favourable variance for income generated at the Cemetery at the end of January.

Council staff have incorporated a $30K favourable variance in 2nd Qtr. Budget Review for expected revenue at the cemetery.

Comments:

This indicator shows revenue from the cemetery as a percentage of associated operating costs. A result above 100% indicates an operating surplus for the cemetery.

Surpluses realised from the cemetery operations are transferred to an associated internal equity reserve fund which is used to contribute to the funding of future development and enhancement of the cemetery (including implementation of the Cemetery Conservation Management Plan).


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13 APRIL 2016

Water Consumption

Graph 22.1

Graph 22.2

64,146 62,253 62,752

84,316

63,000

7,069

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Financial Years

Kilo

litre

s Water Consumption - Sports Facilities

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals



25,010 19,333

24,979

44,856

3,720

05,000

10,00015,00020,00025,00030,00035,00040,00045,00050,000

Financial Years

Parks & Gardens - Water Consumption

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comments:

The fluctuation in water consumption is impacted by annual rainfall, seasonal demand, special events, vandalism, horticulture maintenance and shared water services.

The demand for water in irrigating Council’s sporting facilities is determined by the automated monitoring and irrigation system that was installed two years ago

Council has not received its 2nd Qtr. water consumption charges as at the reporting date.

Comments:

The fluctuation in water consumption is impacted by annual rainfall, seasonal demand, special events, vandalism, horticulture maintenance and shared water services. Parks and Gardens water consumption is also based on the agreed service level of the “class” that the particular park or garden falls into.

The demand for water in irrigating Council’s parks and gardens is determined by the automated monitoring and irrigation system that was installed two years ago

Council has not received its 2nd Qtr. water consumption charges as at the reporting date.


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Graph 22.3

Graph 22.4

115,386 110,270 116,806

166,465

43,661

- 20,000 40,000 60,000 80,000

100,000 120,000 140,000 160,000 180,000

Financial Years

kl's

used

Total Water Consumption (Council Wide)

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


361.8 322.2

485

261.4

173.4

0

100

200

300

400

500

600

Financial Years

mm

's YTD Rainfall

2011/2012 Actuals

2012/2013 Actuals

2013/2014 Actuals

2014/2015 Actuals


Comment:

This is the total water consumed by Council including building, parks and gardens and open space. A report on water consumption for 2014/2015 was prepared for Council.

Council had not received its 2nd Qtr. Water Consumption charges as at the reporting date.


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Note Function Description of variation Council TOTAL TOTALNo. Motion Statutory User Oper. Grants Reimburse. Employee Depreciation OPERATING Transfers Transfers

No. Charges Charges & Contrib. Costs RESULT to Res. from Res.

1Information Tech'y / General Admin IT Department independent strategic review $0 $0 $0

2Community Development Internal transfer of costs between projects $0 $0 $0

3 Elderly Centre Internal transfer of hire fees between venues $0 $0 $04 Youth Development Internal transfer of costs between projects / events $0 $0 $0

5 Property ManagementVarious property savings applied to planned & unplanned expenditure & offset with staff motor vehicle contribution ($9,423) $9,423 $0 $0

NIL $0 $0

6 DepreciationNet adjustment due to compliance with amended AASB116 and removal of residual values $818,000 $818,000 $818,000

7 VariousReallocation of fuel, plant hire, workers compensation, income protection & asset insurance costs to multiple cost centres ($4,190) $3,288 ($902) ($902)

8 Town Planning Legal fees & settlement costs offset by reimbursements ($46,389) $46,389 $0 $09 Library PLS local purchase materials optional grant increase ($18,855) $18,855 $0 $0

10 Town PlanningDevelopment application & policy planning assistance - transfer casual salaries budget to consultants ($50,000) $50,000 $0 $0

11Communication & Marketing Journalist services provided offset by savings in printing costs $0 $0 $0

12 Environment Little corellas research program $5,000 $5,000 $5,000

13Preventative Health Services Reduction in food audits conducted external to Council area $18,000 $18,000 $18,000

14 Engineering Gawler & Surrounds Stormwater Management Plan deferred to 2016/17 $130,000 ($100,000) $30,000 $30,00015 Human Resources Purchase of Civica HR/WHS module funded from LGA distribution ($35,000) ($35,000) $25,000 ($10,000)16 Environment NAWMA Soft Plastics Trial - approved funding from 2014/15 $5,000 $5,000 $5,00017 Finance Internal controls audit cost deferred to 2016/17 & other minor savings ($10,774) ($10,774) ($10,774)18 Rates Administration BPayview setup costs reimbursed plus additional advertising costs ($4,500) $6,533 $2,033 $2,03319 Community Support Refund of cancelled 2015 Christmas carols event contribution ($25,790) ($25,790) ($25,790)

20 Property Management Increase in SA Ambulance pro-rata annual property rent ($8,000) ($8,000) ($8,000)21 Cemeteries Additional burials revenue partly offset by increased burial costs ($30,000) $8,000 $2,000 ($20,000) $20,000 $0

22Communications & Marketing

Gawler Farmers Market establishment grant & contribution costs. Net contribution of $30k represents value of in-kind support to be provided ($80,000) $30,000 $80,000 $30,000 $30,000

23 Town PlanningPart deferral of Residential & Character DPA & Rural Areas Development Plan to 2016/17 ($33,219) ($33,219) ($33,219)

24Gawler Aquatic Centre Internal adjustment between agency & employee costs $25,000 ($25,000) $0 $0

25Sports Facilities - Indoor

Transfer of hire fees between venues & from agency / hire costs to casual salaries $0 $27,600 ($22,600) $5,000 $5,000

26Community Development Residual expenditure for Travel Green & Travel Gawler Projects $4,000 $4,000 $4,000

27Library / General Admin

Additional library casual salaries to cover for staff illnesses funded from vacant position ($5,000) ($5,000) ($5,000)

28 Property Management Additional hire fees for Princes Park ($3,000) ($3,000) ($3,000)

29Sports Facilities - Indoor Reduction of user charges for canteen & services provided $30,000 ($5,000) $25,000 $25,000

30 Emergency ServicesPinery fire assistance costs - salaries, wages, plant hire & use of Recreation Centre as a Relief Centre $15,394 $4,106 $19,500 $19,500

31 General Admin Additional venue user charges (Elderly & Recreation Centres) $6,000 $6,000 $6,00032 Community Support Rally SA additional costs & contributions ($3,900) $19,200 $15,300 $15,30033 Customer Service Transfer costs from staff salaries to casual wages $0 $0 $034 Human Resources First Aid training program - regional collaboration ($5,000) $2,500 ($2,500) ($2,500)

35 Records ManagementIncrease in postage costs - Australia Post base rate increase from $0.70 to $1 from January 2016 $9,250 $9,250 $9,250

36 EngineeringEngagement of specialist consultant advice - Intrastructure assets / depreciation review $25,000 $25,000 $25,000

37 Community Support Gawler Show - additional event costs incurred (including in-kind support) $1,993 $12,051 $14,044 $14,04438 Finance General Ledger restructure program partly deferred to 2016/17 $0 ($25,000) ($25,000)

39Communications & Marketing Interpretive signage project partly deferred to 2016/17 ($45,000) ($45,000) ($45,000)

40 DepotReduction in operating wages due to continuing restructure, service level reviews & capital projects ($100,000) ($100,000) ($100,000)

41 Finance Reduced revenue due to deferral of surplus property assets sales $0 $1,000,000 $1,000,000

TOTAL $18,000 ($19,900) $31,145 ($95,312) ($51,203) $41,212 $818,000 $741,942 $0 $1,000,000 $20,000 $0 $1,761,942

OPERATING REVENUE OPERATING EXPENSESContracts, Materials &

Section C - Budget Variations for approval by Council

EQUITY RESERVESASSET INVESTMENTCapital

ExpenditureCapital Grants /

Asset Sales

Section B - Unspent Operating Initiatives & Capital Project funds rolled over from previous financial year

Section A - Budget transfers approved by staff in accordance with Budget Management Policy (limited to $15K Operating, $30K Capital - provided no change in Service levels)

Appendix 2


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13 APRIL 2016

Item 9.1 – Independent Infrastructure Assets Depreciation Review Report

ATTACHMENT 1 Independent Gawler Valuation Review 2015 V5 – Asset Engineering


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client

project valuation review

contact Steve WalkerPrincipal Asset EngineeringPO Box 2211South PlymptonSA 5038ph 0400 232256

ATTACHMENT 1


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Document Control

Document ID: Gawler Valuation Review 2015

Rev No Date Revision Details Author Verifier Approver

1 15/12/15 Initial draft for comment minus conclusion and annexures

SW (AE)

2 16/12/15 Draft for comment including conclusion and annexures SW (AE) WK (ToG) WK (ToG)

3 4/2/16 Significant revision including update for draft depreciation calculations and inclusion of kerb and

stormwater assets

SW (AE)

4 7/3/16 Revision to useful lives and unit rates together with correction of errata from V3

SW (AE) WK (ToG) WK (ToG)

5 9/3/16 Minor corrections and qualifications SW (AE) WK (ToG) WK (ToG)

6 5/4/16 Correction to UL of Collector Roads PM 380 SW (AE) WK (ToG) WK (ToG)

7 6/4/16 Rates for kerbing amended to include Council overheads of 5%

SW (AE) WK (ToG) WK (ToG)


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Contents

1 Introduction & Background .................................................................................. 32 Residuals ............................................................................................................ 43 Composition of Existing Road Pavements .......................................................... 54 Valuation of existing sealed road pavements ...................................................... 6

4.1 Alternative to the modern equivalent asset approach .............................................. 74.2 Calculation of estimated annual depreciation .......................................................... 8

5 Valuation of existing unsealed road pavements ................................................ 116 Valuation of existing footpaths .......................................................................... 117 Valuation of existing kerbing ............................................................................. 118 Valuation of existing stormwater conduits ......................................................... 129 Audit inspection of road seals, pavements, kerb and footpaths ........................ 1410 Conclusion & Summary ..................................................................................... 1511 Annexure A - Borelogs ...................................................................................... 1712 Annexure B – Field Inspection .......................................................................... 18


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1 Introduction & Background

Clarity has recently been added to the use of the Australian Accounting Standards (through theboard) for the purpose of Asset Valuations. In effect this means that the use of residuals for thepurpose of valuations is prohibited unless the residual involves a financial transaction i.e. trade in ofa motor vehicle.

It is understood that the Town of Gawler has recognised residuals in the valuation of roadpavements with a commensurate reduction in annual depreciation of approximately $573k.

The purpose of this report is to investigate the Councils valuation practices in accordance with theAccounting Standards

The investigation involved in the preparation of this report has included the following:

Audit inspection of road seals, roads pavements, kerbs and footpaths to determineintervention levels.

Coring of some road pavements to determine pavement depth

Investigation of useful lives and unit rates

Investigation of current valuation practices

Exploring alternative valuation practices for road, kerb and stormwater assets


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2 Residuals

Recently the Australian Accounting Standards Board ruled that:

Residual values should only be applied to reflect expected net receipts from disposal of an assetto another party, and

Expected savings to an organisation from renewal rather than replacement of an asset shouldnot be recognised as a residual value.

Such ‘savings’ should instead be recognised by apportionment of assets for accounting purposes

into shorter and longer-lived components.

The Town of Gawler has established unit rates for the purpose of asset valuation and renewalplanning via a spreadsheet that uses current Council schedule of rates contracts and RawlinsonsAustralian Construction Handbook based on a ‘modern equivalent asset’. This spreadsheet and thedocumentation suppled with it assumed that no residuals would be applied to the rates i.e. theformulation of the rates made no allowance for the reuse of materials since this was consideredimpractical. In the calculation of valuations Council however has applied the following residuals:

Asset Category Residual* Approx. AnnualDepreciation Residual

‘Saving’ ($)*Rd Pavement Asphalt 50% 21,800Rd Pavement Granular Collector 50% 233,076Rd Pavement Granular Local 50% 263,060Rd Surface Unsealed 33% 55,621Total 573,557

*calculated using output from Councils Asset Management System


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3 Composition of Existing Road Pavements

In order to establish an alternative valuation methodology a sample of Councils road pavementswere ‘cored’ and logged by FMG Engineering on 8 th December, 2015. The initial primary purposewas to establish whether the pavements could be broken up into base and sub-base componentswith differing lives i.e. the sub-base may have twice the life of the base where the preferred renewaltechnique for the pavement is to apply deep lift asphalt (replacing the base & retaining the sub-base).

The established pavement depths for the tested roads are shown in the table below. The completelogged cores (to 1m depth) are shown in Annexure A. The comments column indicates bores thatare abnormal with a greater depth recoded than should otherwise be the case.

ID No. Road Name From To Suburb Actual Pavement Depth (mm)

Comments

BH1 Alexandra Av Trinity Dr Sunnyside Dr Evanston Park 130

BH2 Sunnyside Dr Alexandra Av Purcell Gr Evanston Park 230

BH3 Jennifer St Tingara Rd Panorama Rd Evanston Park 100

BH4 Potts Rd Main North Rd Sunnyside Dr Evanston Park 160

BH5 Dalton St Bacton St Longford St Evanston 130

BH6 Para Rd Hillier Rd Railway Cr Evanston 190

BH7 Musgrave St Hindmarsh Bvd Fergusson Tce Evanston gardens 240

BH8 One Tree Hill Rd

Gawler Tce Potts Rd Gawler South 260 marginal material

BH9 23rd St 22nd St 18th St Gawler South 120

BH10 22nd St 23rd St Adelaide Rd Gawler South 80

BH11 13th St 12th St 18th St Gawler South 200

BH12 14th St 13th St Lawrence Av Gawler South 120

BH13 19th St Adelaide Rd 23rd St Gawler South 200

BH14 Fifth St Adelaide Rd Seventh St Gawler South 120

BH15 Dean St Barnet St Railway Tce Gawler West 290

BH16 Gosford St Ryde St End Gawler West 150

BH17 Scheibener Tce Tod St Fotheringham Tce Gawler 190

BH18 Thomas Tce Nixon Tce Queen St Gawler 120

BH19 Victoria Tce Main North Rd Hallam Dr Gawler 140

BH20 Bright St Paxton St Weaver Dr Willaston 190

BH21 Jane St Redbanks Rd Chamberlain Rd Willaston 220

BH22 Bella St Lyndoch Rd End Gawler East 170

BH23 Popham St Barossa Av Cheek Ave Gawler East 140

BH24 Phillips Av Stithians Dr Norman Ct Gawler East 200

BH25 Coombe St Ayers St McKinlay Ave Gawler East 310 appears road surface raised

It appears from the above that the pavement depths generally are very shallow and with theexception of some of the more recently constructed roads would not meet current engineeringdesign standards.

Since the pavement depths are shallow it would not be appropriate to further componentise theminto a base (short relative life) and sub-base (long life) since renewal practices would require thesub-base to remain in place and act as a working platform for a deep lift AC pavement (or similar).This would not be possible however due to the amount of material available.

The conclusion that can be drawn from this is that the apportionment of the pavements foraccounting purposes (across the entire network) into shorter and longer-lived components is notappropriate.


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4 Valuation of existing sealed road pavements

Council currently values its road pavements based on the modern equivalent asset methodologyi.e. a modern equivalent asset can be considered as ‘an asset that replicates what is in existencewith the most cost effective asset performing the same level service’. Using current localgovernment best practice techniques Council has established its unit rates based on an estimate ofthe cost to replace the road pavement to modern standard / service level using current engineeringpractice. This would normally necessitate a thicker pavement than currently exists prior to renewalwhich is generally unknown by most Councils. Commensurate to this, useful lives adopted byCouncil are those that would be expected for a current standard road pavement. Th is techniquewhich is used by most Councils has the following advantages (assuming no residuals are used) toother methods:

The calculated annual depreciation provides a realistic indication of sustainable requiredannual renewal funding in a network comprised of varied assets on average half waythrough their useful life, such as the Town of Gawler.

There is a direct linkage with the data used in the compilation of the asset managementplan and no need to establish a separate register

Less confusion to elected members and ratepayers on why Council should be funding therenewal projections contained within the asset management plan which may be vastlydifferent to the calculated annual depreciation

The table below gives a comparison between ‘Actual Pavement Depth’ as measured from the cores and ‘Valued Pavement Depth’ based on Councils current modern equivalent asset methodology, assuming a granular pavement. Those bores with an abnormal pavement depth have beenremoved from this table.

ID No. Road Name Actual Pavement Depth

Comments Hierachy Valued Pavement Depth

BH1 Alexandra Av 130 Rd Pavement Granular Collector 380

BH2 Sunnyside Dr 230 Rd Pavement Granular Local 300

BH3 Jennifer St 100 Rd Pavement Granular Local 300

BH4 Potts Rd 160 Rd Pavement Granular Collector 380

BH5 Dalton St 130 Rd Pavement Granular Local 300

BH6 Para Rd 190 Rd Pavement Granular Collector 380

BH7 Musgrave St 240 Rd Pavement Granular Local 300

BH9 23rd St 120 Rd Pavement Granular Local 300

BH10 22nd St 80 Rd Pavement Granular Local 300

BH11 13th St 200 Rd Pavement Granular Local 300

BH12 14th St 120 Rd Pavement Granular Collector 380

BH13 19th St 200 Rd Pavement Granular Local 300

BH14 Fifth St 120 Rd Pavement Granular Collector 380

BH15 Dean St 290 Rd Pavement Granular Local 300

BH16 Gosford St 150 Rd Pavement Granular Collector 380

BH17 Scheibener Tce 190 Rd Pavement Granular Collector 380

BH18 Thomas Tce 120 Rd Pavement Granular Collector 380

BH19 Victoria Tce 140 Rd Pavement Granular Collector 380

BH20 Bright St 190 Rd Pavement Granular Local 300

BH21 Jane St 220 Rd Pavement Granular Local 300

BH22 Bella St 170 Rd Pavement Granular Collector 380

BH23 Popham St 140 Rd Pavement Granular Local 300

BH24 Phillips Av 200 Rd Pavement Granular Local 300

Also included in the table is the Council defined hierarchy of the road.


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Clearly the depth of the actual road pavement is significantly less than the depth of the pavementthat Council recognises through the valuation process. As previously stated this is not uncommonin local government and is the preferred solution.

4.1 Alternative to the modern equivalent asset approach

Instead of valuing road pavements at the cost of what they may be replaced with using modernengineering design principles it is possible to value the pavements based on their existing structure.In some cases, and for some Councils however the replacement cost of these pavements may behigher, even though they are thinner. An example of this is macadam pavements which werelargely hand laid using large stone. In the case of Gawler however the bores indicate that theexisting pavements are constructed from conventional quarry material. If this step is taken theCouncil needs to acknowledge the negatives as documented above and it is strongly recommendedthat Council develops and endorses within the long term financial plan a robust asset managementplan which focuses on developing a sustainable renewal and upgrade program over the period of10/20 years.

If the ‘current asset’ approach is considered for road pavements it will mean that Council will needto fund a portion of road pavement replacement through an upgrade / new budget line rather thanthrough renewal. The amount funded through the upgrade / new budget will be the differencebetween the actual replacement cost and the calculated ‘current asset’ cost. It will also benecessary to define realistic useful lives for the ‘current asset’ approach. The existing useful lives are considered too long for thin pavements.

Defining pavement depths for the ‘current asset’ methodology

Clearly it is not viable to core every road pavement within the Gawler Council to determine actualpavement depths for the purpose of valuation. It is therefore necessary to place the roads into‘groups’ of similar estimated depths.

Grouping by hierarchy

Normally it would be expected that pavement depths would be greater on roads with higher trafficvolumes and this would form the basis of the grouping of assets. Using the table above theaverage pavement depths by hierarchy have been calculated as follows:

Hierachy Average Pavement DepthRd Pavement Granular Collector 149Rd Pavement Granular Local 180Overall average 167

Clearly therefore there is no specific trend observed between Councils defined road hierarchy andthe actual pavement that has been constructed (often many years ago) with local roads on averagerecording a greater pavement depth than collector roads.

Grouping by age

Council has estimated the age of the pavement for roads as tested and this is documented in thetable below. The ages have been grouped into 2 broad groups ‘new’ and ‘old’ with new being 1980 and after construction date and old before 1980. This reflects the estimated period of the use ofmodern engineering design in road pavements.


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ID No. Road Name Estimated Age

New/Old Actual Pavement Depth

Valued Pavement Depth*

BH1 Alexandra Av 59 old 130 380

BH2 Sunnyside Dr 20 new 230 300

BH3 Jennifer St 59 old 100 300

BH4 Potts Rd 22 new 160 380

BH5 Dalton St 50 old 130 300

BH6 Para Rd 50 old 190 380

BH7 Musgrave St 39 old 240 300

BH9 23rd St 37 old 120 300

BH10 22nd St 59 old 80 300

BH11 13th St 37 new 200 300

BH12 14th St 45 old 120 380

BH13 19th St 19 new 200 300

BH14 Fifth St 59 old 120 380

BH15 Dean St 35 new 290 300

BH16 Gosford St 59 old 150 380

BH17 Scheibener Tce 20 new 190 380

BH18 Thomas Tce 59 old 120 380

BH19 Victoria Tce 19 new 140 380

BH20 Bright St 59 old 190 300

BH21 Jane St 29 new 220 300

BH22 Bella St 50 old 170 380

BH23 Popham St 59 old 140 300

BH24 Phillips Av 24 new 200 300

Interrogation of the above table for new/old and pavement depth has revealed the followingaverages:

Pavement age (yrs) Average depth (mm)new 203old 143Overall average 167

This is to be expected with the newer roads which are designed to modern standards having thegreater depth.

It is understood that ‘old’ road pavements comprise approximately 40% of the Council network.

If Council wishes to follow the path of valuation to ‘current asset’ standard, the following course of action is recommended:

4.2 Calculation of estimated annual depreciation

A draft annual depreciation figure has been calculated for road pavements via separating thepavements into new (post 1980) and old (pre 1980) and using the following methodology:

For ‘new’ roads

Since ‘new’ roads (construction after 1980) are much closer to the modern equivalent assumedpavement depth the modern equivalent pavement depth has been used to determine valuationswith the following amendments Compared to Councils existing methodology:


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Pavements have been separated (componentised) into base (150mm) and sub base(remaining pavement depth)

Unit rates have been calculated for the base and sub base using Council ’s existingmethodology

Useful lives have been amended commensurate with the componentisation process withthe useful life of the base having half the useful life of the sub-base i.e. it is assumed thatthe sub-base can be reused (in place) at the next renewal of the base course

For the next base renewal, a ‘full depth’ asphalt pavement has been assumed whereby theexisting sub-base will act as a working platform

This componentisation of the ‘new’ pavements into base and sub-base is based on theassumption that the next renewal will be a deep lift asphalt treatment where the existingsub-base could be used as a working platform for same therefore giving the sub-base anadditional life. It is not expected that the sub-base could be reused for a third life. Notethat this next renewal (deep lift asphalt) will generally come at a higher cost than a fulldepth granular pavement and will need to be reflected in the asset management plan.

The following table documents the rates and lives used in the calculation of the draft annualdepreciation figure for ‘new’ pavements:

Road Hierarchy Base Rate ($) Sub BaseRate ($)

RoadClass

ULExisting

ULBase

UL SubBase

Access PM220 24.19 15.62 9 85 75 150Access PM300 24.19 15.62 8 85 75 150Access QR100 24.19 15.62 8 85 75 150Collector AC100 35.97 38.55 7 55 50 100Collector AC190 35.97 38.55 6 55 50 100Collector AC210 35.97 38.55 6 55 50 100Collector PM380 24.90 39.25 7 85 50 100Collector PM420 24.90 45.59 6 55 50 100Connector AC150 35.97 38.55 7 55 50 100Connector AC210 35.97 38.55 6 55 50 100Laneway PM220 24.19 15.62 9 85 75 150Laneway PM300 24.19 15.62 9 85 75 150Local PM220 24.19 26.28 8 85 75 150Local PM260 24.19 26.28 8 85 75 150Local PM270 24.19 26.28 8 85 75 150Local PM300 24.19 26.28 8 85 75 150Local PM330 24.19 26.28 8 85 75 150Local PM380 24.19 26.28 8 85 75 150Local PM400 24.19 26.28 8 85 75 150Local PM420 24.19 26.28 8 85 75 150Parking PM220 24.19 15.62 9 85 75 150

The following is an explanation of the columns in the above table:

Road Hierarchy: road classification by hierarchy and construction typeBase Rate: rate in $/m2 of the road baseSub Base Rate: rate in $/m2 of the sub baseRoad Class: NAASRA road classUL Existing: Existing useful life used in valuations for combined base and sub-baseUL Base: Assumed useful life of base component onlyUL Sub Base Assumed useful life of sub base component only


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For ‘old’ roads

For ‘old’ roads (constructed prior to 1980) an assumed pavement depth of 150mm has been used indeveloping draft annual depreciation figures which have been generated using the followingassumptions:

Pavements have been considered as a single component of 150mm depth (close to theirexisting surveyed depth on average)

Unit rates have been calculated for the pavement using Council’s existing methodology

Useful lives have been amended (reduced) commensurate with the shallower pavement

The following table documents the rates and lives used in the calculation of the draft annualdepreciation figure for ‘old’ pavements:

Road Description Rate UL Amended UL ExistingCollector old $29.81 60 55Connector old $29.81 60 55Laneway old $28.96 80 85Local old $28.96 80 85

The useful life of collector and connector roads was reviewed from 55 years to 60 years throughlooking at the age of Council existing assets i.e. the percentage of collector and connector roadsover 50 years old is currently 87%.

Estimated annual depreciation

The following table documents the estimated annual depreciation using the above methodology i.e.separation of pavements into ‘new’ and ‘old’ types:

Description Exiting AD Proposed AD‘New’ roads

Proposed AD‘Old’ roads

Total

Road pavementsproposed

$498,449 $202,455 $700,904

Road pavementsexisting

$670,181 $670,181

Note the following in relation to the table above:

All figures have been calculated via a spreadsheet and not using Council’s AssetManagement System, as a consequence the final figures may change

The existing annual depreciation calculation has allowed for residuals ‘New’ roads have been componentised ‘Old’ roads are based on the existing estimated constructed depth and not a modern

equivalent


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5 Valuation of existing unsealed road pavements

It is understood that Council currently applies a 33% residual to unsealed roads. The princip lemechanism of unsealed road aging is the loss of the sheeting material to the environment i.e.10mm per year by example, depending on traffic volume. Using this example, the useful life of thesheeting material for a 150mm thick pavement will be 15 years. Accordingly, the separation of thepavement into base and sub base is less important since the base will only have a life dictated byits thickness. Given the relative small length of unsealed roads within the Council area it is notconsidered worthwhile to explore componentisation of them.

An annual depreciation estimate has been calculated outside of Council’s Asset Management System for the purpose of the preparation of this report. The existing depreciation (with allowancefor residual) compared to the proposed depreciation (no residual) is shown in the table below:

Description Notes Annual depreciationUnsealed roads proposed No residual $139,053Unsealed roads existing 33% residual $111,242

The proposed annual depreciation figure has been calculated through amending the useful life from10 (existing) to 12 years (proposed) following Council reviewing the age of unsealed roads at thetime of resheeting.

6 Valuation of existing footpaths

Currently Council considers asphaltic concrete (AC) footpaths as a single component i.e. surfaceand pavement. In theory this could be separated into a base and seal with the base being usedagain following a reseal of the surface (in a similar manner to roads). An inspection of asset thatwas carried out however revealed that Council is allowing the footpaths to deteriorate to such anextent before renewal is carried out that complete replacement of the seal and pavement isrequired. Accordingly, no change to existing practice is recommended.

7 Valuation of existing kerbing

Council rates for kerbing (barrier & mountable) include reinstatement of the road shoulder and roadseal. This is included since it is required in order to replace the asset (accommodation works) inaccordance with the accounting standards. It could be argued however that the road seal andpavement (shoulder) are already valued elsewhere and accordingly could be removed from thederivation of the unit rates used for valuation.

Using Councils unit rates derivation spreadsheet, revised valuation rates have been estimated forkerbing by removing the seal and pavement reinstatement. These are compared to existing rates inthe table below:

Kerb Type Existing Rate Amended RateBarrier Kerb $104.34 $86.32Barrier Kerb & Gutter $173.89 $143.86Median Kerb $116.51 $96.39Mountable Kerb $86.95 $71.93Mountable Kerb & Gutter $173.89 $143.86

Semi Mountable Kerb $86.95 $71.93Slate Barrier Kerb $359.23 $324.34Spoon Drain $243.45 $201.40


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An annual depreciation estimate has been calculated outside of Council’s Asset Management System for the purpose of the preparation of this report. The existing depreciation (with roadshoulder reinstatement) compared to the proposed depreciation (no road shoulder reinstatement) isshown in the table below:

Description Notes Annual depreciationKerb proposed No road shoulder reinstatement $555,990Kerb existing Road shoulder reinstatement $668,649

8 Valuation of existing stormwater conduits

In a similar manner to kerbing Council rates for stormwater conduits include reinstatement of theroad seal and pavement

Using Councils unit rates derivation spreadsheet, revised valuation rates have been estimated forstormwater conduits by removing the seal and pavement reinstatement. These are compared toexisting rates in the table below:

Stormwater ConduitType

Conduit size Existing Rate Amended Rate

Pipe 300 257.70 182.53Pipe 375 291.54 216.37Pipe 450 354.64 276.09Pipe 525 411.75 328.11Pipe 600 474.22 385.50Pipe 675 551.79 457.99Pipe 750 639.60 540.72Pipe 825 742.51 638.55Pipe 900 852.41 743.36Pipe 1050 1044.50 925.29Pipe 1200 1267.80 1138.43Pipe 1350 1512.55 1373.01Pipe 1500 1782.03 1632.33Pipe 1650 2064.85 1904.99Pipe 1800 2419.43 2249.40Pipe 1950 2803.58 2623.39Pipe 2100 3167.51 2977.16Box Culvert 300 x 100 496.07 408.48Box Culvert 300 x 150 532.56 444.97Box Culvert 300 x 225 618.51 530.92Box Culvert 375 x 150 623.05 530.75Box Culvert 375 x 225 676.33 584.03Box Culvert 375 x 300 728.20 635.90Box Culvert 450 x 150 748.50 651.49Box Culvert 450 x 225 810.94 713.93Box Culvert 450 x 300 869.59 772.58Box Culvert 600 x 225 1,004.77 898.33Box Culvert 600 x 300 1,067.18 960.74Box Culvert 600 x 375 1,127.52 1,021.08Box Culvert 600 x 450 1,187.23 1,080.79


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Stormwater ConduitType

Conduit size Existing Rate Amended Rate

Box Culvert 600 x 600 1,308.09 1,201.65Box Culvert 750 x 225 1,178.32 1,062.46Box Culvert 750 x 300 1,242.47 1,126.61Box Culvert 750 x 375 1,305.99 1,190.13Box Culvert 750 x 450 1,368.04 1,252.18Box Culvert 750 x 600 1,489.89 1,374.03Box Culvert 750 x 750 1,608.74 1,492.88Box Culvert 900 x 300 1,472.24 1,346.96Box Culvert 900 x 375 1,533.71 1,408.43Box Culvert 900 x 450 1,598.92 1,473.64Box Culvert 900 x 600 1,722.32 1,597.04Box Culvert 900 x 750 1,842.46 1,717.18Box Culvert 900 x 900 1,963.28 1,838.00Box Culvert 1200 x 300 1,782.06 1,637.93Box Culvert 1200 x 375 1,846.76 1,702.63Box Culvert 1200 x 450 1,912.62 1,768.49Box Culvert 1200 x 600 2,040.66 1,896.53Box Culvert 1200 x 750 2,166.44 2,022.31Box Culvert 1200 x 900 2,291.32 2,147.19Box Culvert 1200 x 1200 2,526.64 2,382.51

An annual depreciation estimate has been calculated outside of Council’s Asset Management System for the purpose of the preparation of this report. The existing depreciation (with roadreinstatement) compared to the proposed depreciation (no road reinstatement) is shown in the tablebelow:

Description Notes Annual depreciationStormwater proposed No road reinstatement $474,374Stormwater existing Road reinstatement $537,871

In the preparation of the ‘proposed’ figures in the above table, the useful life of box culverts hasbeen amended from 100 years to 70 years. This is consistent with recent box culvert failuresexhibited within the industry.


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9 Audit inspection of road seals, pavements, kerb and footpaths

Annexure B contains notes and photographs relating to an inspection of assets undertaken withCouncil officers on 24 / 25 November, 2015.

The following are a summary of issues found during this inspection:

Intervention Levels:

Councils assets are currently assigned a condition of 1-5 within the asset management system (1good, 5 bad) and are depreciated from their replacement cost (condition 1) to $0 (condition 5) overtheir assigned useful life. Councils current intervention practices reflect an intervention at between2.5 – 3.5 however. At the time of the renewal the depreciated replacement cost is ‘written off’ as a loss on disposal. This loss on disposal is significant across the broad range of assets and in thefinancial year 2014/15 totalled $239,337k.

The intervention levels (levels of service) Council has established are considered low in comparisonto some Councils i.e. intervention at a poor condition and it is considered that the condition rankingshould reflect this which in turn will limit the loss on disposal.

Action: review of condition ranking, deterioration pattern, intervention levels

Pavement Reconstruction:

Council officers have stated that Gawler has not undertaken any significant pavementreconstructions to date. During the inspection process several roads were observed as requiringreconstruction (19th street and Jane St). It is recommended that particular attention be paid topavement reconstruction in the next draft of the asset management plan

Condition rating – kerb and footpath

Kerb and footpaths have been condition rated at a course level of 1-5 with the majority being 2.This level of condition rating does little to provide input into the development of renewal programs.It is recommended that the next condition gathering exercise provides more detail that can be usedfor both valuations and renewal planning.


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10 Conclusion & Summary

Councils currently undertakes valuations assuming a residual applied against certain infrastructureassets. A recent determination by the Accounting Standards Board however has identified that thispractice is not appropriate. Investigations involved in the preparation of this report have identifiedan alternative valuation methodology for some of Council’s infrastructure assets wh ich involves thefollowing:

Road Pavements: splitting road pavements into ‘new’ (post 1980 build) and old (pre 1980 build). For new pavements the pavement can be split into base and sub base components, with the subbase having a life twice that of the base. For old pavements there is the potential to value thembased on the estimated constructed thickness (150mm), rather than a modern equivalent assetapproach.

Unsealed Road Pavements: It is recommended that the existing residual be removed and thepavements be valued at the full CRC.

Footpaths: No change to existing footpath valuation practices is recommended

Kerbing: There is the potential to remove the cost associated with the reinstatement of the adjacentseal and pavement from the valuation unit rates since this is valued and depreciated elsewherewithin Councils asset register.

Stormwater: There is the potential to remove the cost associated with the reinstatement of the sealand pavement from the valuation unit rates since this is valued and depreciated elsewhere withinCouncils asset register.

The table below summarises the estimated changes to annual depreciation in light of the above:

Asset Category Existing AnnualDepreciation

Modified AnnualDepreciation

Difference

Road Pavement 670,181 700,904 30,723Unsealed Road Pavement 111,242 139,053 27,811Kerbing 668,649 555,990 -112,659Stormwater Conduits 537,871 474,374 -63,497Total potential change -117,622

A change in derivation of unit rates for valuation purposes only however should be considered withdue regard to the following factors:

The existing calculated annual depreciation provides a realistic indication of sustainablerequired annual renewal funding in a network comprised of varied assets on average halfway through their useful life, such as the Town of Gawler.

There is a direct linkage with the data used in the compilation of the asset managementplan and no need to establish a separate register such as would be the case if alternativerates and valuation methodology is adopted as detailed in this report

Less confusion to elected members and ratepayers on why Council should be funding therenewal projections contained within the asset management plan which may be vastlydifferent to the calculated annual depreciation

The change in valuation methodology will create disparity between renewals predicted byan asset management plan and funded through the long term financial plan and thecalculated annual depreciation i.e. the annual depreciation figure may be significantly lessthan that required by Council to fund sustainable infrastructure renewal


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Given the above it is recommended that Council develops and endorses within the long termfinancial plan a robust asset management plan which focuses on developing a sustainable renewaland upgrade program over the period of 10/20 years.

The review has also found that the condition ranking and end of life intervention levels should bereviewed since there is currently a significant ‘loss on disposal’ recorded annually through undertaking asset renewals.

It is further recommended that Council undertake an updated condition assessment of the road,footpath and kerb network and that this condition assessment be used as the basis for revisinguseful lives and developing a sustainable Capital works program associated with updated AssetManagement Plans.


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11 Annexure A - Borelogs


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12 Annexure B – Field Inspection


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Item 9.2 – LGA Financial Sustainability Information Paper 17 – Depreciation and Related Issues

ATTACHMENT 1 LGA Financial Sustainability Information Paper 17 – Depreciation and Related Issues


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Financial Sustainability

Information Paper 17

Depreciation and Related Issues

Revised February 2016

ATTACHMENT 1


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LGA ‘Financial Sustainability’ Information Paper No. 17: Depreciation and Related Issues – Revised February 2016

2

ECM 635341 LGA Financial Sustainability Program – www.lga.sa.gov.au/FSP

Introduction

This Information Paper is one of a series of Information Papers about Financial Sustainability and Financial Governance in Local Government.

The series of Information Papers was originally published in 2006 to 2011 as a part of the Financial Sustainability Program. The history of that program and a complete list of Information Papers and other resources including a glossary of terms and abbreviations is provided on the LGA’s “Financial Sustainability” web page: www.lga.sa.gov.au/FSP.

The entire series of Papers was revised in early 2012, and again in 2015-16 to take account of legislative changes and other developments. These Papers are addressed to, and written primarily for the benefit of Council Members and staff, but they are also available as a resource for the general public, and students of Local Government.

Depreciation – what is it?

Depreciation is an accounting concept that measures and spreads the cost associated with the consumption of an asset over its useful life. The Australian Accounting Standards define depreciation as ‘the systematic allocation of the depreciable amount of an asset over its useful life’.1 For most Councils, depreciation is the third largest expense item appearing in the annual financial statements. (‘Employee costs’ is usually the largest, followed by ‘materials, contracts and other expenses’.)

This Information Paper explains why accounting for depreciation is important, and discusses how it can be measured. The Paper aims to provide an overview of these issues rather than providing technical detail. More detailed and technical information is available, however via hyperlinks and footnotes.

What do the Act and Australian Accounting Standards require?

Every Council, Council subsidiary and regional subsidiary must comply with Australian Accounting Standards in preparing its annual financial statements.2 Accounting systems, processes and data therefore need to be structured and maintained to achieve this requirement.

The annual financial statements must include reported values for assets held at the end of the financial year that are not materially different to the fair value of those assets.

Accounting standards recognise two different types of assets: • Current assets; and• Non-current assets.3

1 Australian Accounting Standards Board AASB 116 “Property, Plant and Equipment” Definitions p12 2 Local Government (Financial Management) Regulations 2011 at Regulation 11. 3 AASB 101 provides at paragraph 66, that an entity must define an asset as a “current” asset when:

“(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle; (b) it holds the asset primarily for the purpose of trading;(c) it expects to realise the asset within twelve months after the reporting period; or(d) the asset is cash or a cash equivalent (as defined in AASB 107) unless the asset is restricted

from being exchanged or used to settle a liability for at least twelve months after the reportingperiod.

An entity shall classify all other assets as non-current.”


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Current assets are liquid items (cash or items such as rates and other receivables that are expected to be converted into cash) or items like inventories that will be used in operations. Non-current assets typically are items held for use over several years and include land, buildings, plant and equipment and infrastructure such as roads, drains and footpaths.

The Local Government (Financial Management) Regulations 2011 (“the Regulations”) require councils, council subsidiaries or regional subsidiaries to undertake revaluation of all material non-current assets at a frequency that satisfies the requirements of Australian Accounting Standard AASB 116.4 AASB 116 requires that revaluations be made with sufficient regularity to ensure that the carrying amount of an asset does not differ materially from that which would be determined using fair value at the end of the reporting period.5

“Fair value” is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”6 Effectively “fair value is based on the exit price likely to be achieved in an active market by a willing but not anxious seller”.7 Fair value can also be thought of as the maximum amount that a market participant buyer in normal circumstances would be prepared to pay to acquire the benefits of the asset if it did not currently own it.8

Determining classes of non-current assets that are material and therefore require regular revaluation and those that are not, requires judgement and consideration of qualitative and quantitative factors. Materiality is an entity-specific aspect of relevance based on the nature or magnitude, or both. It is not possible to specify a uniform quantitative threshold for materiality or predetermine what could be material in a particular situation. Information is material if omitting it or misstating it could influence decisions that users make.9 In practice this will typically mean that most Councils will need to revalue land and land improvements, buildings and infrastructure but not plant, equipment, furniture and fittings.

A revaluation must be carried out in accordance with Australian Accounting Standard AASB 116 which requires a revaluation to be based on “fair value”. Revaluations of long-lived assets such as roads are not necessarily required every year, unless there would be a “material” difference, from one year to the next, in the value of the asset.10

AASB 116 also requires that the residual value and useful life assigned to an asset and the depreciation method applied to depreciate it must be reviewed at least at the end of each year.11

Why worry about depreciation?

Calculating depreciation is both more critical and challenging for Local Governments than for most other Governments and businesses. Councils’ audited financial statements for 2013-14

4 Local Government (Financial Management) Regulations 2011 at Regulation 12. 5 AASB 116 at paragraph 31. 6 AASB 113 at paragraph 9. 7 See LGA’s SA Model Financial Statements, p.89. 8 See Section 12.7 of Australian Infrastructure Financial Management Manual 2015 for a discussion on fair value. 9 See Sections 7.8 and 12.6 of Australian Infrastructure Financial Management Manual 2015 for a discussion on materiality. 10 AASB 116 at paragraph 31. For more information on how frequently assets should be revalued, see:

• page 10 below under the heading “Regularly Revaluing Assets” and

• the Model Financial Statements for the current year, at www.lga.sa.gov.au/FSP under theheading “Frequency of Revaluation”

11 AASB 116 at paragraphs 31, 61.


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indicated that depreciation represented 22% of their total operating expenses. Councils have a wide range and large number of high value assets, relative to their revenue. Many of these are long-lived infrastructure assets that are held for their entire usable life. There is no market for trading second-hand infrastructure assets, so their fair value at any time is hard to determine. Nor is it easy to determine exactly how long they will last in service.

Even though it does not directly result in a cash outlay, depreciation is a real cost of conducting business and given its magnitude, warrants close attention.

Depreciation is not easy to measure but with care and understanding a reliable estimate can be made, in a cost-effective manner. An understanding of depreciation expenses is vital when:

• making decisions about the level and nature of services that the Council cansustainably provide, based on an understanding of the full costs of providing allservices;

• setting annual budgets;• developing long-term financial plans;• making pricing decisions even if full cost is not the basis for pricing; and• ensuring that all operating costs are included in rating decisions.

A Council which does not have a sound estimate of its depreciation expenses risks making decisions blind to its long-term financial situation. It would not have reliable information on which to base its rating and charging decisions. For example, significantly under-estimating the cost of consumption (the using-up) of assets in providing services could lead to inequitable rating between ratepayers at different points in time (inter-generational inequity). It could also lead to an inability by the Council to be able to accommodate required asset renewal in future and therefore maintain preferred service levels without additional rate increases.

A Council may consciously and explicitly decide not to replace certain assets, or to operate with fewer or lower-standard assets, and thus provide fewer services, or lower standards of services in future.12 However, if a Council wishes to at least maintain existing services and service levels on an ongoing basis, it should generally strive to ensure that operating revenue at least matches operating expenses (including depreciation costs).

Reliably calculating depreciation expenses necessitates keeping asset values up to date, recognising and applying residual values to assets as appropriate and regularly reviewing asset useful lives generally (and remaining useful lives of individual assets).

Depreciation has been used in the past as the numerator in the calculation of a Council’s Asset Sustainability Ratio performance that all Councils are required to report against. The contemporary requirement is for this ratio to be based not on depreciation but on renewal expenditure requirements documented in a Council’s Infrastructure & Asset Management Plan (I&AMP). The annual estimate of depreciation may or may not closely correlate with renewal requirements in any given year.

Accounting for assets

Accountants report costs differently depending on whether they are capital costs, or operating costs.

12 See a discussion of this issue in Financial Sustainability Information Paper No. 26: Service Range and Levels at www.lga.sa.gov.au/FSP


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Capital costs are costs of significant value that are expected to generate benefits over a period longer than a year. They are shown as ‘assets’ in a balance sheet. Buildings, plant and equipment are common classes of Local Government assets but usually infrastructure assets such as roads are far more significant in total value.

Operating costs are typically day to day expenses. Generally, the benefits from the expenditure are consumed in the short-term (e.g. fuel or electricity) to support either ongoing activities or one-off initiatives that do not generate measurable long-lived benefits. Costs of maintaining an asset (e.g. servicing a vehicle or fixing a pothole, patrol grading of an unsealed road) are also operating expenses because they do not extend the expected life of an asset but are necessary to ensure that its assumed useful life and service potential are able to be realised.

Depreciation is an example of an operating expense for a period that does not involve cash spending. It is included along with all other operating expenses in the financial statements and results in a reduction in the carrying value of assets in an entity’s balance sheet.

The amount of the depreciation expense shown in a Council’s financial statements will depend on a number of factors including the:

• value of the Council’s assets and their expected residual value;• useful life of assets (which is influenced by the operating environment and the

Council’s required service standards from the assets);• Council’s asset maintenance programs; and,• method used to calculate the depreciation expense.

When should asset related costs be capitalised and when should they be expensed?

In order for a Council to be able to make responsible financial decisions based on information contained in its financial statements, it is important that all underlying accounting information be appropriately recorded. This requires a Council to have clear and sound accounting policies and practices about when outlays will be capitalised and when they will be expensed.13 Capitalising a cost means that it will be spread over a number of financial reporting periods while expensing a cost results in it being recognised in the operating result of a Council wholly in a single financial year.

A small value purchase like a $9.95 calculator might last a long time and provide ongoing benefits but its modest cost would not warrant its capitalisation and subsequent depreciation over future accounting periods. Instead it would be fully expensed in the financial year in which it was acquired. Its impact on the statement of comprehensive income (also commonly known as the income statement) of fully expensing it in one year, rather than over several, would be immaterial.

The cost of resealing a road should normally be capitalised (subject to the outlay meeting the Council’s expenditure capitalisation threshold). The life of the whole road won’t be extended by so doing, but AASB 116 requires individual component parts of assets to be recorded separately where their cost is relatively significant (see also discussion below on depreciating assets by their component parts). As such the seal of a road is treated as an individual asset and it therefore follows that the cost of its eventual replacement (i.e. resealing the road) should be capitalised.

13 See Financial Sustainability Information Paper No. 18: Financial Policies and Procedures at www.lga.sa.gov.au/FSP


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A decision on whether a cost should be treated as a capital cost or expensed is not always clear cut. Where road repairs involve resealing or re-sheeting a relatively large area (e.g. because it is cost effective to do so) should this be treated as an expense? In practice, a long road is broken down in an asset register not only into component parts but also into section lengths (e.g. between intersections). If, when carrying out repairs, the whole of a road between two intersections is resealed or re-sheeted, and to a standard that would make it unnecessary to do so again when adjoining sections are resealed or re-sheeted, the outlay may be appropriately capitalised.

Adopting a policy on the threshold for the recognition of expenses as capital or maintenance (this will vary for different assets) will make these sorts of decisions easier and consistent.14

How is depreciation measured?

Careful consideration is required on the best approach to calculating the appropriate annual depreciation expense so as not to understate or overstate operating expenses on which revenue decisions are made and financial performance is assessed. There is no single correct answer applicable in all circumstances.

Australian Accounting Standards require that depreciation methods reflect “the pattern in which the asset’s future economic benefits are expected to be consumed.”15

The economic benefits available from an asset can be thought of as its service potential. Depreciation simply attempts to objectively account for the using-up of an asset’s service potential.

Long-lived assets often deteriorate negligibly early in their lives and the rate of condition deterioration gradually increases over time. An asset’s value is based on its remaining service potential which may or may not be materially related to condition, depending upon the services it is intended to provide. Remaining service potential may be consumed equally over time, even if the rate of asset deterioration increases over time. In many instances services generated from an asset are similar, if not identical, when an asset is older and in poorer condition, than when it was newer and in better condition.

Even when service levels are closely correlated with condition it does not follow that an asset’s value correlates with condition, nor that its loss of value (depreciation) correlates with decline in condition between periods. Where condition is a key factor in determining the value of an asset it is not current condition but expected condition over the remaining useful life that determines its value. An asset may be in good condition now, but if its condition is expected to rapidly deteriorate in the near future it will have a lower value than an asset in similar condition which is expected to have a slower rate of future condition degradation.

An asset should be held for the amount of usage or length of time for which it can provide service at the required level in the most cost effective manner. An asset’s remaining useful life is therefore the amount of time until it is expected to be replaced or renewed. The value of the asset when it is disposed of to another party at the end of its useful life (less any material associated disposal costs) is its residual value. Expected savings from renewing rather than replacing an asset at the end of its useful life are not to be treated as a residual value.16

14 See Financial Sustainability Information Paper No. 18: Financial Policies and Procedures at www.lga.sa.gov.au/FSP 15 AASB 116 at paragraph 60. 16 See also the AASB Action Alert issue no. 172 of 29 May 2015


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If councils consider there are savings from renewing assets (and therefore that they retain value at time of renewal) then it is likely that they may need to further componentise such assets and assign a longer useful life to one or more of these components.17

It is not always easy to reliably predict how long an asset will provide a cost-effective service, what its value will be on disposal or at the end of its useful life (“residual value”) and the pattern in which its service potential is expected to be consumed. It is therefore also not easy to determine how much of the asset’s value to expense via a depreciation charge each financial year.

So how should the consumption of assets be measured and apportioned over time?

Asset Consumption and Asset Lives

Depreciation methods are all based either upon the period that an asset is expected to be available for use, or its pattern of usage or production during this period. A Council should choose a method that best practically reflects the way an asset’s service potential is used up.

If an asset’s consumption is influenced more by usage than by its age, and it is easy to measure usage, then it makes sense to base depreciation rates on the measured usage. Plant, like graders for example, may be depreciated on the basis of hours of operation and vehicles perhaps on kilometres travelled.

Many Local Government assets provide relatively similar levels of service continuously over their useful lives (e.g. possibly a computer, building, footpath, road or stormwater drain) and are more appropriately depreciated on the basis of the period of expected ownership (i.e. the asset’s useful life to the owner) rather than usage.

Within a Council, or between Councils, similar assets may have different useful lives and therefore be depreciated at different rates. Even with regular patrol grading, the pavement on an unsealed road will gradually wear away. Councils need to determine the ride quality they wish, and can afford, to strive to maintain18 and this, together with material quality and availability, safety, and operational and environmental factors will determine how often such roads are to be re-sheeted. As a result, a Council might have some unsealed roads that it believes warrant re-sheeting frequently, say every 8 years, and others that it considers should be re-sheeted only say, every 15 years. The period over which the pavement is depreciated should be consistent with these varying expected useful lives. Where a road is formed but not sheeted, or was originally sheeted but the pavement has effectively worn away and is no longer re-sheeted (either for reasons of financial constraint or changes in needs) then there is no pavement to depreciate.

In each case above the depreciation expense reported in the 'Statement of Comprehensive Income' should reflect the service potential that was consumed in the financial year. A Council that effectively provides a lower standard of service, or has favourable environmental and operating conditions that enable assets to last longer, can expect lower annual depreciation expenses.

Remaining useful lives need to be reviewed at least at the end of each annual reporting period and adjusted whenever there is reason to do so. In the early and middle years of the

17 See Section 12.8 of Australian Infrastructure Financial Management Manual 2015 for a discussion on residual value and suggested accounting treatments to appropriately recognise the value remaining in assets that are renewed rather than disposed of. 18 See Financial Sustainability Information Paper No. 26: Service Range and Levels at www.lga.sa.gov.au/FSP


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expected useful life of a long-lived asset there may be little evidence to warrant an adjustment to an asset’s life. By the time the asset has reached two-thirds or three-quarters of its initial assumed useful life it is likely that judgements reviewing remaining useful life can be made with greater confidence. It is likely that adjustments to remaining useful life will need to be made with more frequency as the asset approaches the end of its remaining useful life.19

Councils sometimes find that assets they have in service have been fully depreciated. In practice, if an asset is still providing service then it must have value. In these circumstances it is likely that its rate of depreciation was over-stated and its remaining useful life or carrying value hasn’t been appropriately revised upwards when warranted. This should be addressed when the relevant class of assets is next re-valued.

Approaches to calculating depreciation

AASB 116 refers approvingly to the straight-line method, the diminishing balance method and the units of production methods of calculating depreciation but does not exclude other methods.20 AASB Interpretation 1030 prohibits condition-based depreciation.21

Any one of the three supported methods referred to in AASB 116 may be more appropriate for use in Local Government, in different circumstances. They are briefly described below.22

Straight-line method The straight-line method allocates an equal amount of depreciation each year (ignoring the impact of any review of asset values, useful lives and residual values) based on the difference between the initial purchase price and the expected value at the time of anticipated disposal, spread over the full period of ownership.

Diminishing balance method Assets that have a well established second-hand market like motor vehicles often lose proportionately more resale value early in their lives. In these circumstances the diminishing balance method, which calculates depreciation by applying a fixed percentage rate to the value of the asset net of the accumulated depreciation to date, may be most appropriate. This method results in a proportionately lower depreciation charge each subsequent year over the useful life of an asset (ignoring the impact of any review of asset values, useful lives and residual values).

Units of production method This method results in a charge based on the use or output of the asset each period. It may be an appropriate choice when service potential consumption is related more to usage of the asset than time. For example, the rate of consumption of the service potential of a piece of plant or equipment such as a backhoe or grader may correlate best with hours of use, or a truck based on kilometres travelled. In these cases the depreciation charge would be expressed on a per-operating hour and per-kilometre travelled rate respectively, and the annual charge would vary with actual usage.

19 See the LGA’s Paper: Infrastructure Assets Useful Lives - SA Councils’ Current Practices at: http://www.lga.sa.gov.au/webdata/resources/files/Infrastructure%20Assets%20Useful%20Lives%202014.pdf 20 AASB 116 at paragraph 62. 21 AASB 1030 at paragraph 8. 22 For a more extensive discussion of depreciation methods, see IPWEA Australian Infrastructure Financial Management Manual 2015, section 12.10.


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Depreciating assets by their component parts

Paragraph 43 of AASB 116 requires each part of an item of property, plant and equipment with a cost that is significant in relation to the item’s total cost, to be depreciated separately. The benefits of doing this are particularly apparent when the component parts have significantly different useful lives.

A sealed road for example can be thought of as made up of three key components (and possibly further sub-components):

• its base (earthworks);• the pavement itself and• an asphalt seal.

The base can normally be expected to last a very long time (in many cases indefinitely23 refer to AASB Interpretation 1055 an assessment for depreciation of road earthworks) with the pavement having a shorter expected life (e.g. 50 years) and the seal a much shorter life (e.g. 25 years). Each of these three components needs to be recognised separately (since they are of material value and have different assumed useful lives). In this typical example, the pavement and seal should be depreciated at different rates and the base should not be depreciated at all (if it is assumed that the base has an indefinite life). If the pavement and seal were depreciated as one asset then this could lead to a significant over or under-statement of costs for a period depending on which life expectancy was used.

For example, if it was assumed that the pavement and seal would last 50 years then the depreciation expense calculated and recognised in the accounts would be lower than the rate of deterioration of the seal component, leading to an understating of the cost of consumption of the combined asset. It would then be more likely that current users of the road would be undercharged for their usage. Conversely, depreciating the pavement and seal together over 25 years would mean that the rate of consumption of the road had been overstated, with the likelihood that users would have been charged more than the cost of the services that had been used up.

Unsealed roads should be depreciated taking a similar approach, having regard to the separate components of the base, and the sheeting.

Measuring Asset Values

The depreciation rate and method selected should reflect the rate of consumption of an asset’s service potential. In order to determine the cost of this consumption, the depreciation rate needs to be applied to the value of the asset. Valuing assets for recognition in financial statements is not as simple as it may first appear.

Australian Accounting Standard AASB 116 requires assets to be recorded either at fair value or at historical cost less accumulated depreciation. However, as noted above, the Local Government (Financial Management) Regulations 2011 require regular revaluations of the carrying value all material non-current assets to their updated ‘fair value’.

The Australian Accounting Standards Board issued AASB 13 ‘Fair Value Measurement’ in 2013. It requires observable inputs (e.g. market values) to be used in preference to unobservable inputs whenever assets are valued at ‘fair value’. In the absence of market based evidence, depreciated replacement cost, i.e. the cost of replacing the asset today less

23 Refer to AASB Interpretation 1055, ‘Accounting for Road Earthworks’ particularly paragraphs 5 to 8 for further discussion including when it might be appropriate to depreciate road earthworks.


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the value of the asset that has been ‘used up’, may often be a suitable basis of determination of fair value.24

Given that there is no market for the sale and acquisition of many local government infrastructure assets they should typically be re-valued based on their estimated depreciated replacement cost (unless they would not be replaced). There is, however, usually a market for land and buildings. Where relevant evidence exists such assets should be valued based on market prices.25

Where the specialised nature of the item of property, plant and equipment means that market-based evidence of fair value is not available it does not automatically follow that an asset should be valued based on a depreciated replacement cost approach. The Australian Infrastructure Financial Management Manual 2015 (AIFMM) advises that; ‘Where the future economic benefits embodied in the asset would not rationally be replaced if the entity was deprived of the asset, the asset should be measured at the net present value of future cash flows from its highest and best use if this information is able to be derived. Where there is no regular cash flow generated from the asset, the net present value of future cash flows is the disposal value’.26

Councils often receive assets free of charge or at less than market value e.g. infrastructure provided by developers. These assets need to be recorded upon acquisition not at their cost of acquisition, but at fair value.27 This allows stakeholders to appreciate the full value of assets a Council is responsible for managing and the cost of using up their service potential as reflected in the recorded annual depreciation charge.

Regularly revaluing assets

Assets can have a change in value for reasons other than as a result of their consumption with use or age. As a result of inflation it often costs more to replace an asset than its original purchase price. Advances in technology, exchange rate movements and changes in market supply and demand conditions can also mean that prices for some assets may increase by considerably more or less than the inflation rate (and may even decrease in price) between periods.

Paragraph 31 of AASB 116 requires revaluations to be made with sufficient regularity so as to ensure that the carrying amount of assets at the reporting date is not materially different from that which would be determined using the ‘fair value’ definition. In practice external auditors are usually satisfied if a Council formally reviews all asset values about every 3 to 5 years (given general inflation rates of 3% or less) but also may require some classes to be reviewed more frequently where there is reason to believe that fair value has changed significantly. By keeping asset values up to date a Council provides readers of its financial

24 For further information regarding AASB 13 see LGA Local Government Financial Sustainability Guidance Paper AASB13: Fair Value Measurement June 2014. The Australian Infrastructure Financial Management Manual 2015 (at Section 12.7) also discusses AASB 13. The LGA’s Model Financial Statements at www.lga.sa.gov.au/FSP also provide information regarding AASB 13 under the heading ‘The Fair Value Model’ as part of the content supporting Note 7 – “Fixed” Assets. 25 LGA Local Government Financial Sustainability Guidance Paper AASB13: Fair Value Measurement June 2014 suggests that because land under the care and control of a council that is classified as community land cannot be sold whilst it has that designation it therefore does not have a market value and a reliable basis of valuation for such land may not be able to be determined (in which case the land will not be recognised in a council’s financial statements). Buildings affixed to such land cannot therefore have a market value either. They would typically be valued based on their estimated depreciated replacement cost (unless they would not be replaced). 26 AIFMM 2015, p.12.45. 27 See AASB 116 paragraph Aus 15.1.


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statements with more accurate information on the current value of assets that it has under management and the cost, in today’s prices, of the consumption of its assets’ service potential during the period.

Where a Council re-values all of its assets in one period and then not again for a period of 3 or more years it may then discover that the large increase in the value of its assets following revaluation has caused a corresponding jump in its recorded depreciation expenses and a marked downturn in its financial operating result. The reality is that the reported operating result for such a Council in the intervening years between revaluations would probably have been ‘flattering’ because its depreciation expense would have been based on asset values that were progressively becoming out of date.

Re-valuing (say) one-third of all assets (by value) each year rather than all assets every (say) three years would generally result in more up to date information over the three years and smooth the impact, arising from changing asset values, on the depreciation expense recorded in the operating statement. Where a Council re-values only a proportion of its assets in a year it must re-value an entire class of assets (e.g. all sealed roads) and not just particular assets within a class.28

The more regularly assets are re-valued the more reliable will be a Council’s reported depreciation. There is obviously an additional cost in more regularly revaluing assets and the costs of so doing need to be considered relative to the benefits. It should not be assumed that Councils need to engage professional valuers or external consultants to determine ‘fair value’ revaluations of all their physical assets. Valuers are well positioned to assist where markets exist for the sale of assets (e.g. land and buildings) but market-based evidence is usually lacking in regard to the valuation of most infrastructure assets. Councils are often likely to have the knowledge and evidence in-house from their infrastructure construction and asset management work to accurately assess the replacement value of an asset and the proportion of useful life remaining in existing assets. Providing that this evidence is well documented, it is likely to be acceptable to an external auditor as a basis for in-house revaluation of infrastructure assets. Councils adopting this approach should consider obtaining, from time to time, independent expert advice on the appropriateness of the valuation methodology being used.

Councils should also consider annually adjusting asset classes with significant value (e.g. infrastructure) by a suitable index, or by adjustment of unit rates (sometimes referred to as a ‘desktop revaluation’) between comprehensive periodic revaluations. Australian Accounting Standards are silent on the issue of indexing asset values between revaluations. An external auditor will wish to be satisfied that an applied indexing factor is appropriate to the Council’s circumstances.

The Australian Bureau of Statistics (ABS) produces a range of price indices which might be appropriate and Transport SA has developed an index which it applies to its road network annually (and which is approved for such use by its auditor, the Auditor-General). Where a Council has built a road during the year and as a result is aware of up-to-date costs, this information also may be useful in determining current standard unit rates that can be applied to revalue its other similar assets. Regardless of which index is used it needs to be recognised that it is by definition no more than an approximation and is not a substitute for a formal regular periodic revaluation of asset values.

28 AASB 116 at paragraph 36. Arguably though a council may decide having regard to materiality considerations and potential revaluation costs not to seek revaluation of assets of insignificant value within any asset class.


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Impairment of assets

An asset is considered to be impaired when the value at which it is carried in a Council’s financial statements is greater than its “recoverable amount” i.e. its depreciated replacement cost.29 While depreciation estimates the planned consumption of an asset, impairment measures unexpected losses in its value (e.g. damage to a road caused by a flood). An impairment loss is recorded as an expense at the time the impairment is identified. 30

AASB 136 requires reporting entities to take into account a range of factors to determine whether an asset is impaired, including (but not limited to) evidence of physical damage. 31 At each reporting date an assessment must be made as to whether there is any indication that any assets are impaired.32

‘Greenfields’ and ‘brownfields’ considerations in valuing assets

Engineers often refer to the initial construction of an asset on otherwise undeveloped land as a ‘greenfield’ situation and the replacement of it, on a now developed site, as a ‘brownfield’ situation. The term ‘brownfield’ can also apply when a new asset is constructed on a site that has previously been developed for other purposes and there are either additional costs or savings with construction of a new asset at this site compared with at a ‘greenfield’ location.

There is sometimes conjecture amongst engineers, asset managers, accountants and others in Local Government and elsewhere as to whether assets should be valued (and therefore the annual depreciation expense determined) based on a ‘greenfields’ or ‘brownfields’ scenario.

Australian Accounting Standards make no reference to the terms ‘greenfields’ and ‘brownfields’. The AIFMM 2015 discourages use of the terms and encourages instead a focus on the cost of modern equivalent replacement assets.33 Ensuring assets are recorded by their significant component parts makes it easier to determine fair value taking account costs that would be incurred in their replacement in varying circumstances.

So which depreciation method should Councils use?

A Council’s pricing and rating decisions should be based on recovering operating expenses. However some depreciation methods result in higher or lower depreciation expenses in any particular year depending on whether an asset is old or new. The community may find it hard to embrace pricing and rating decisions that are impacted by the age of the Council’s assets. For example the use of the diminishing-value method would lead to recording a higher cost for the operation of a community bus when the bus is new than when it is old (all other things being equal).

Australian Accounting Standard AASB 116; Property, Plant and Equipment requires the method chosen to reflect “the expected pattern of consumption of the future economic benefits embodied in an asset”.34 However, st raight line depreciation is commonly applied in Local Government and elsewhere. It is widely accepted by external auditors as appropriate for application in depreciating infrastructure assets and conforming to Australian

29 AASB 136 Impairment of Assets, at paragraph 8. 30 See Australian Infrastructure Financial Management Manual 2015 Section 12.12 for more information on accounting for impairment. 31 AASB 136 at paragraph 12 (e). 32 AASB 136 at paragraph 9. 33 See for example AIFMM 2015 Sections 12.7.6 and 12.7.8. 34 AASB 116 at paragraph 61.


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Accounting Standards since in many instances such assets’ service potential is consumed consistently between periods. This method is easy to calculate and understand and it makes sense therefore to use the straight-line method coupled with frequent re-valuation of assets unless an alternative is considered more appropriate.

Consideration also needs to be had to the costs and benefits in gathering information on the pattern of consumption of the future economic benefits from use of the asset. The AASB Framework for the Preparation and Presentation of Financial Reports states “the benefits derived from information should exceed the cost of providing it”.35

Most Councils have a wide range of different types of assets with a relatively even spread of remaining useful lives.36 In these circumstances it is unlikely there would be a material difference in aggregate annual depreciation expenses regardless of the method of depreciation applied providing that assets:

• are regularly and appropriately revalued;• are appropriately componentised for depreciation purposes;• have been assigned appropriate useful lives that are regularly reviewed to take

account of actual asset performance; and• have been assigned appropriate residual values.

Can we compare depreciation between Councils?

It is sometimes suggested that where two Councils have a similar stock of assets their annual calculated depreciation expense should also be similar. However, there are several reasons why even when Councils have identical assets they might appropriately record significantly different depreciation expenses in any given year.

First, two Councils might have similar stock of assets but their communities might have different service level requirements or expectations from some, or all, of these assets. The impact of this might be that one Council adopts a longer life and therefore records a lower depreciation expense for these assets than the other Council.

Second, an asset might have cost one Council (and/or be appropriately valued by it at) much more, or much less than the other. For example constructing or re-sheeting a road in a locality where materials must be trucked long distances is likely to add significantly to road work costs. There are also significant legitimate differences between Councils as to the magnitude of costs they treat as overheads and how they are then allocated. Some Councils have higher overhead costs or allocate a higher proportion of their indirect costs as overheads to the cost of works and services compared with others (for example their ratio of direct capital to direct operating costs upon which overheads are apportioned may be higher). Therefore, even when the depreciation rate is the same between Councils the ‘cost’ or ‘value’ to which the rate is applied can vary, resulting in a difference in the depreciation expense recorded.

Furthermore an identical asset might last longer or wear out more quickly if it is used in different circumstances. A road heavily trafficked by large vehicles is likely to reach the end of its economic life (i.e. the point where it is more cost-effective to replace than repair) much sooner than a lightly used one that is very rarely used by heavy vehicles. Where such circumstances can be reliably predicted depreciation rates should reflect actual usage in practice. Similarly, soil or climatic conditions and/or the quality of available materials can

35 Framework for the Preparation and Presentation of Financial Reports, AASB, 2007, Para 44, p19. 36 See the LGA’s Paper: Infrastructure Assets Useful Lives - SA Councils’ Current Practices.


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have a big impact on the expected life of a road. If the impact of these factors is material and can be reliably predicted then depreciation rates should take this into account.

Even if two Councils were identical in all respects they would still record different levels of depreciation expenses if they both re-valued their assets in aggregate and at the same frequency but in different years (unless they both re-valued annually).

In their work, external auditors review the carrying value of assets and the depreciation method and rates applied, to satisfy themselves that all conform to Australian Accounting Standards. Typically, an auditor will seek to establish that the values and useful lives assigned to assets and methods and rates of depreciation are consistently applied and appropriate, based on local environmental and operating circumstances, and relative to accepted practices elsewhere.

Acknowledgements

Development of this paper has benefited from contributions by: • John Comrie of JAC Comrie Pty Ltd• David Hope of Skilmar Systems Pty Ltd,

and funding from the Local Government Research and Development Scheme.


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Item 9.3 – Local Government Risk Services 2015 Scheme Highlights

ATTACHMENT 1 Local Government Risk Services 2015 Scheme Highlights


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2015LOCAL GOVERNMENT SCHEME HIGHLIGHTS

LGRS

LGRS

OUR SUPPORT FOR

THE LOCAL GOVERNMENT

SECTOR SPANS OVER 30 YEARS

DEEP, SPECIALIST

KNOWLEDGE IN YOUR

INDUSTRY

60+ LOCAL

GOVERNMENT SPECIALISTS

IN SOUTH AUSTRALIA

RISK AND CLAIMS SUPPORT

PROTECTING COUNCILS AND COMMUNITIES

STAUNCH ADVOCACY

ON COUNCILS’ BEHALF

FOR FURTHER INFORMATION PLEASE CONTACT

GARY OKELY Director T: +61 8 8235 6410 M: +61 411 206496 [email protected]

TONY GRAY Executive Manager T: +61 8 8235 6408 M: +61 429 067 430 [email protected]

ROBYN DALY Divisional Manager T: +61 8 8235 6427 M: +61 411 206 462 [email protected]

ANTHONY GENOVESE Divisional Manager T: +61 8 8235 6493 M: +61 421 610 282 [email protected]

LGRS

Asset Mutual FundLGRS

Customised Risk Advice

CLAIMS DISCRETION AND CONFIDENTIALITY

INDUSTRY RELATIONSHIPS

AND TRUST

SPECIAL DISTRIBUTIONS FOR MEMBERS

LGRS

Income Protection

Fund

5027

Workers Compensation Scheme


ROB EDWARDS Divisional Manager T: +61 8 8235 6465 M: +61 419 148 489 [email protected]

GREG NAULTY Divisional Manager T: +61 8 8235 6495 M: +61 401 145 381 [email protected]

5027_16_BR_EM_2015 Local_Goverment_ Scheme_Highlightsv8_FINAL.indd 1 17/02/2016 2:34:17 PM

ATTACHMENT 1


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• LGAMLS continues to provide all SA Councils with themost extensive civil liability protection in Australia. Backedby the Treasurers Indemnity, Councils are provided withunlimited protection without exclusions, despite thechanging nature and demands on Council risk profiles

• From the LGAMLS, Councils receive unique, customisedservices designed to minimise risk outcomes. We cansupport your team to navigate the complex topics ofemergency, resilience and disaster management

• LGAWCS provides Councils with customised safetysystems and claims management programs whichhave driven annual claims to an all-time low

• Independent actuarial estimates confirm that the LocalGovernment has saved $16.1 million during 2015, due tooperating a Self-Insured scheme instead of Councils beingregistered with ReturntoWorkSA

CONTRIBUTIONS AFTER SPEC DIST

95%

90%

85%

80%

75%

70%

65%

55%

50%30% 40% 50% 60% 70% 80%

Lobbying/ advocacy

PERFORMANCE

Procurement/ shared services

Research and analysis

Training for Elected Members

Templates and procedures

Conferences

Advice re: legal issues and governance

Training for Council staff

Codes, guidelines & manuals

LGA INSURANCE SCHEMES

100%

95%

90%

85%

60%

75%

70%

65%

60%

55%

50%30% 40% 50% 60% 70% 80%

Lobbying/ advocacy

PERFORMANCE

Procurement/ shared services

Research and analysis

Training for Elected Members

Templates and procedures

Conferences

Advice re: legal issues and governance

Training for Council staff

Codes, guidelines & manuals

LGA INSURANCE SCHEMES

IMP

OR

TAN

CE

IMP

OR

TAN

CE

Financial sustainability program

• LGRS offers customised risk products and services toevery SA local government authority. We understand theunique risks associated with different Councils. Our teamof specialist consultants works hand-in-hand with Councilteams on customised risk management services

• For Councils, our services include:- WHS Systems- Claims management- Customised advice on risk issues- On-site development and training of Council staff- Regional risk workshops

Local Government Risk Services

• LGAAMF provides all Councils with a unique, tailoredprotection programme for Council assets includinginfrastructure, computers, machinery and motor vehicles

• LGAMF provides subsidised business continuity andmaintenance programmes as well as Council propertysurveys and thermoscanning programs designed toassess the risk profile of Council assets

• The LGAAMF has also recently included cyber data securityprotection without any increased cost to Councils

The LGIPF offers discretionary indemnity and claims management services to its members for employees in respect of loss of income resulting from a non-work related injury or illness. Fund benefits include:

• 100% Actual gross weekly wages• 104-week benefit period• Workers Compensation Top Up Benefit• $15,000 Capital Benefit• Crisis Illness Benefit

• Funeral Benefit• Education Benefit• Low waiting periods• No age restriction

The LGIPF continues to offer significant value to Local Government and its employees - providing benefits that are well beyond external market alternatives

Local Government Income Protection Fund

EMPLOYMENT

1999 2005 2010 2015

+38%

0%

-50%CLAIMS

MO

VE

ME

NT

COUNCIL REVENUES INCREASE EVERY YEAR, BUT NETT CONTRIBUTIONS TO THE SCHEME REMAINS FLAT

In 2015, the LGAMLS delivered strong financial results, due in large part to Councils performing well. As a result, for 2015 a Special Distribution totalling $1.5 million will be issued to all Councils, equivalent to a 13% reduction

2015 SUMMARY

CONTRIBUTIONS

LGA Asset Mutual Fund

Local Government Risk Services has been delivering value-added protection and risk management services for Councils across South Australia since pioneering the self-insurance mutual concept in 1986. Throughout this time, we have consistently provided quality outcomes for Councils through our specialist local resources, our relationships with the Local Government Association and deep sector knowledge. Our commitment to investing in the local government sector, is reflected in our ability to deliver quality advice.

We are delighted to highlight some of the key financial benefits of the Local Government Risk Schemes within South Australia delivered during the past year.

KEY POINTSAnother successful year for the Local Government Risk Schemes has resulted in Special Distributions for South Australian Councils totalling $3.7 million. These payments are the equivalent of an approximately 8% reduction and are in addition to performance bonuses

This significant benefit results from membership in a sector based self insurance mutual approach that redistributes funds back to Councils, as well as the reinvestment of funds into customised services designed to identify and minimise risk and prevent injury.

LGRS remains committed to investing into the Local Government sector, providing customised training programmes to enable staff to implement WHS systems. Councils also benefit from in-house claims management, a team of Risk Consultants that live in the local communities and a suite of customised programmes to assist Councils to understand their risk profile and effectively minimise risk

The Local Government Association of South Australia Marketing Review conducted in July 2015 by Greenhill Research and Planning confirmed the value of the Local Government Risk Schemes, ranking our schemes as the Highest Performing (>85%) and Most Important (>85%) LGA service to Local Government

SERVICE DELIVERY RATING OF IMPORTANCE

2005/06 2010/11 2014/15


In 2015, the LGAWCS continues its financially strong performance due to Councils performing well. As a result, for 2015 a Special Distribution totalling $1 million will be issued to all Councils, equivalent to a 5% reduction

12,000,000

10,000,000

8,000,000

6,000,000

$

REGIONALMETROPOLITAN

In 2015, the LGAMF continues its financially strong performance due to Councils performing well. As a result, a Special Distribution totalling $1.2 million will be delivered to all Councils equivalent to an 8% reduction

Financial sustainability program

2015 CLAIMS AN ALL-TIME LOW AT 669

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