Council meeting agenda - 4 June 2012 - Clarence City Council

CLARENCE CITY COUNCIL – GOVERNANCE- 4 JUNE 2012 106
2.5. Major factors affecting Council’s rating requirement include a further stage of
budget “repair” following water reform, further increased effort in funding
infrastructure renewal and the introduction of carbon pricing by the Australian
Government.
2.6. Transitional issues associated with water reform – in particular the short term
loss of dividend revenue from equity in Southern Water – continue to have an
impact on the recurrent estimates. The 2011/2012 Estimates were supported
by an amount of $400,000 from reserves in response to these issues.
Aldermen considered a strategy to eliminate this reserve support over coming
years and the 2012/2013 Estimates contain support of $167,000 with this
amount planned to reduce to nil in 2013/2014. The draft Estimates therefore
require rating effort of $233,000 to meet this difference.
2.7. The draft Estimates also provide for an increase in the level of additional
effort dedicated to infrastructure renewal funding. Modelling considered by
Aldermen during preparation of the draft Estimates confirmed a long term
shortfall in renewal funding. A strategy to address this shortfall was
considered and this strategy is reflected in the draft Estimates. An additional
amount of $150,000 in increased funding is proposed for 2012/2013, together
with an inflation adjustment of $168,000 to maintain the value of the existing
level of effort in real terms, giving a total nominal increase of $318,000.
These amounts assume that new funding (real terms) will rise to $350,000
each year from 2014/2015 and rely on future dividends from Southern Water
being applied entirely to infrastructure renewal.
2.8. Through this mechanism, the draft Estimates continue Council’s Policy of
moving to full funding of future infrastructure renewal.
2.9. Closely related to Council’s strategy for funding infrastructure renewal is
interest earned on investments. This is estimated to increase by $600,000
against the 2011/2012 estimate due to the level of Council’s cash holdings,
which have largely been driven by Council’s infrastructure renewal strategy
and a range of funded capital projects which have yet to be completed.