Item 7.1 - Attachment 3

Long Term Financial Plan









Parramatta City Council’s

 Financial Future





Long Term

Financial Plan

Item 7.1 - Attachment 3

Long Term Financial Plan



Executive Summary


Like most Council’s in NSW, Parramatta faces a challenge in funding its ongoing operations and adequately maintaining its community assets. The growth in the cost of labour and materials, increasing demand for services and cost shifting from other levels of government  combined with a legislated cap in revenue generated from rates, have created a challenging financial environment.

At the core of Parramatta City’s future financial sustainability will be the ability to adapt and respond to the challenges we face in delivering services more efficiently, reducing expenditure, developing opportunities to generate additional revenue sources and to deliver projects and initiatives such as Civic Place which are central to the future positioning of Parramatta.

In order to achieve its objectives and financial sustainability, there must be in place a Long Term Financial Plan (LTFP) which will outline the steps the Council will take to realistically address the major financial challenges and opportunities which will impact on the way we do business over the next ten years. 

The LTFP influences and ultimately reflects the Community Management Plan Parramatta Twenty25. It is also integrated with the Strategic Asset Plan and the Workforce Management Plan. The LTFP will underpin the content of Council’s 4 year Delivery Program and annual Operational Plan.

The LTFP is an integral part of Parramatta City Council’s ongoing strategic planning cycle. On an annual basis, the plan will be updated with actual financial data and the planning and financial assumptions will be reviewed for continued accuracy. Changes to the plan will be driven by changes in strategic direction as reflected in the implementation plan for Parramatta Twenty25.

Item 7.1 - Attachment 3

Long Term Financial Plan




Purpose of the Long Term Financial Plan


The Long Term Financial Plan will seek to answer the questions:

§ Can we afford what the community wants?

§ How can we go about achieving these outcomes?

§ Can we survive the pressures of the future?

§ What are the opportunities for future income and economic growth?



The Long Term Financial Plan (LTFP) is a decision-making and problem-solving tool. It is not intended that the LTFP is set in concrete – it is a guide for future action. The modelling that occurs as part of the plan will help Council to decide how and if, it can meet the community’s aspirations.  It will also provide an opportunity for Council to identify financial issues at an earlier stage and gauge the effect of these issues in the longer term.

The LTFP exists to facilitate the delivery of the outcomes expressed in the Community Plan ParramattaTwenty25 in a financially sustainable and responsible manner. 

In addition to acting as a resource plan, the LTFP further endeavours to:

1)            establish a prudent and sound financial framework, combining and integrating financial strategies to achieve a planned outcome

2)            establish a financial framework encompassing appropriate performance measures against which Council’s strategies, policies and financial performance can be measured

3)            ensure that Council complies with sound financial management principles, as required by legislation and plans for the long-term financial sustainability of Council.

The LTFP will be revised annually to ensure ongoing alignment with Council’s Community Plan.

The main objectives of the plan for the period 2010/11 to 2019/20 include:

1)            Identifying the financial capacity for the delivery of key initiatives arising out of the Parramatta Twenty25 Community Strategic Plan

2)            Identifying adequate levels of funding to ensure provision of required services at the appropriate service levels

3)            Identifying the financial capacity, through revenue generation, cash/investments and reserves, for the acquisition, renewal and replacement of assets in line with the recommendations arising out of the Strategic Asset Management Plan

4)            Maintaining stable and predictable rate increases

5)            Identifying appropriate levels of debt

6)            Achieving a situation of financial health for Council that is sustainable in the long term

Background and Influences

About Parramatta

The City of Parramatta is located at the head of the Parramatta River 24km west of Sydney Harbour. Parramatta takes its name from the Burramatta Clan, the traditional owners of this area. Parramatta was the first self sustaining European settlement and the local community of today reflects the diversity of the broader Australian people.

The population of Parramatta was estimated in March 2010 by the Australian Bureau of Statistics (ABS) to be 167,400 at 30 June 2009, making it the eleventh largest Local Government Area in NSW. In the year to June 2009 an additional 4,800 residents moved into the area. This was a growth rate of 3% compared to an overall growth of 1.7% for the State. Parramatta’s increase in numbers was the second highest for all local government areas and the fifth highest growth rate of all local government areas. The Parramatta Local Government Area covers an area of 61 sq km.

It is estimated that the population will continue to grow and forecasts for the future were:

2015                175,000

2120                182,000


The above forecasts pre-dated the latest estimates by the ABS and will be reviewed.

This forecast growth will be reflected in the number of dwellings which were forecast to be:

2010                62,000

2015                68,234

2120                73,000


These forecasts will also be reviewed in light of the latest population data.

The City of Parramatta supports a workforce of 89,000 in a diverse economy in the legal, manufacturing, retail trade, construction, health, finance, education, public administration, business services and information technology sectors.

Parramatta is the major central business district in western Sydney. With the population of Sydney set to increase by approximately 1.1 million people over the next 25 years, Parramatta’s role as a central business district (CBD) will only strengthen. By 2030 Parramatta is expected to have 30,000 new workers. 


The NSW Government supports Parramatta’s role as Sydney’s second CBD with Parramatta being identified as a Regional City under the State Government’s Metropolitan Strategy. One of our challenges is to ensure that our partnership with State and Federal government agencies is optimised to deliver these aspirations for the city.

These growth projections create demand for extra services and infrastructure and place additional demands on our existing services. Despite Parramatta City Council increasing resources to provide leadership and services to our burgeoning City, there are significant challenges ahead.


§ Expected pressures that will affect the community socially, environmentally and economically and the drivers behind this change

§ Expected economic growth rates – significant workforce growth predicted

§ Significant population growth

§ The community’s aspirations and priorities for improving its economic, environmental and social outcomes

§ The community’s priorities in terms of expected levels of service and community projects.

§ Cost pressures related to employee costs and other resources


Item 7.1 - Attachment 3

Long Term Financial Plan



Parramatta Local Government Area Map



Item 7.1 - Attachment 3

Long Term Financial Plan



Key Council Strategic Plans and Policies


In developing the Long Term Financial Plan, key Council plans and policies have been considered to ensure that any strategies developed are within existing policy guidelines.

Community Strategic Plan - Parramatta Twenty25

The Leading City at the Heart of Sydney

Parramatta Twenty25 was adopted in December 2006 and is Council’s Community Strategic Plan and vision for the City.

The plan was developed following extensive community consultation and research and sets out a sustainable plan for the future of Parramatta through seven destinations covering the economy, environment, social issues and neighbourhood issues.

1)            Land and water that is protected, respected and sustained

2)            A society that is healthy and compassionate

3)            Businesses that are dynamic, prosperous and socially responsible

4)            Neighbourhoods that are liveable and distinctive

5)            A community that is diverse and cohesive

6)            People and places that are linked by sustainable transport and communication networks

7)            A city that is innovative and inspirational


The plan underpins Council’s priorities for:

§ service delivery

§ project development

§ asset management


The implementation plan for Twenty25 sets out the key actions and projects to be delivered to ensure the realisation of the Twenty25 vision and destinations.

Six key strategic actions have been developed:

§ Perceptions of the LGA

§ Key city sites

§ Growth management

§ A city of choice for business

§ Great neighbourhoods to live in

§ Sustainable transport


The on going development of the Implementation Plan will pose challenges for the Council as it seeks to redirect services and resources towards the aims and priorities set out in Parramatta Twenty25.

Delivery Program and Operational Plan

The Delivery Program outlines the strategic direction the Council plans to take over the next four years to achieve the objectives of the Community Strategic Plan and details how this will be achieved. This is the point where the community’s strategic goals are systematically translated into actions. These are the principal activities to be undertaken by the Council to implement the strategies established by the Community Strategic Plan.


Supporting the Delivery Program is an annual Operational Plan. It spells out the details of the Program – the individual projects and activities that will be undertaken each year to achieve the commitments made in the Delivery Program.

Strategic Asset Management Plan

The Strategic Asset Management Plan (SAMP) provides a strategy for the management of Parramatta City Council’s $3.5 billion asset portfolio. Of these assets, $0.8 billion are depreciating assets that need to be maintained, renewed and eventually replaced.


The SAMP allows Council to make informed decisions on the most cost effective use of its assets over the longer term to achieve the objectives of the Community Strategic Plan, support service delivery within available resources and a prudent risk profile. Strategic asset planning:

§ Analyses the key issues that may influence the Council’s requirements for assets in the medium to long term;

§ Analyses the appropriateness of existing assets in relation to the Council’s strategic plan and the needs of the community;

§ Identifies the need for new assets and develop strategies to meet the needs;

Further, the SAMP informs decisions about:

§ achieving and maintaining the appropriate level of operational performance for assets;

§ maintaining physical assets in an appropriate condition;

§ disposing of assets that are surplus to Council’s requirements.


Pricing Policy

The Local Government Act requires Council to include in its Operational Plan, a Statement of the Council’s Pricing Policy with respect to the goods and services provided by it. The purpose of the Pricing Policy is to explain the rationale behind each fee and charge set out in Council’s annual Schedule of Fees and Charges.

The Council’s Pricing Policy is made up of a number of Pricing Principles and the Pricing Base which Council considers when setting the level of its fees and charges. Some fees are set by State Government legislation and Council cannot exceed the limits on these fees.

Fees and Charges outlined under the Pricing Policy are reviewed annually as part of the Operational Plan process.

Loan Borrowing Policy

This policy guides Council in its loan borrowing decisions, emphasising the need for maintaining Council’s financial viability in terms of debt servicing and overall debt level.


In 1996 Council adopted a policy to restrict new annual borrowings so as not to exceed the amount of principal to be repaid in the same financial year. This had the effect of ensuring that the level of debt did not increase. In 2000/01 the debt level under this policy was $29.3 million.

In 2001/02 Council adopted a one-off strategy to borrow an additional $15 million (in three instalments of $5 million over three years) to fund major capital projects referred to as “The Big Seven” major capital items.  These loans are being progressively repaid over a period of 15 years.

Council also received two special loan allocations totalling $55 million for strategic property acquisitions in respect of the Civic Place Redevelopment Project – $35 million in the latter part of the 2002/03 financial year and $20 million in 2003/04. These loans were taken up on an interest – only basis, with the servicing costs being met by income derived from leasing the properties purchased and interest income from the unexpended loan portfolio. These loans were renewed in June 2008 on an interest – only basis for a period of five years. However, the terms of the new loans include the flexibility to make repayments or redraw on the $55 million facility according to Council’s needs in relation to Civic Place financial requirements.

Council has determined that it maintain a debt service ratio (debt service costs/revenue from continuing operations excluding capital grants & contributions) of less than 8%

Investment Policy


This policy establishes the framework within which investment principles are to apply to the investment of Council funds.  It details:

§ Council funds’ covered by the Investment Policy Statement;

§ Council’s objectives for its investment portfolio/s;

§ how investments are to be undertaken;

§ the applicable risks to be managed;

§ the strategy adopted by Council to achieve the investment objectives;

§ any constraints and other prudential requirements to apply to the investments of funds having regard to the applicable legislation and regulations governing Council investment;

§ the manner in which compliance with the Policy & Strategy will be monitored and reported;

§ the expected level of future returns; and

§ appropriate benchmarks for each category of investments.


Policy for Purchase & Disposal of Property


The objective of this policy is to document Council approved guidelines for the acquisition and/or disposal of land and/or buildings by Council.  These are conducted to fulfill the following requirements:

§ To ensure Council's and the public's interest are protected in all commercial transactions;

§ To assure probity in all Council dealings;

§ To ensure all transactions are carried out in accordance with legislative and community requirements;

§ To ensure all transactions are conducted as transparently as possible;

§ To assist Council in making decisions relating to its property portfolio;

§ To assist Council to optimise commercial returns and satisfy Council’s strategic objectives.


Key Planning Assumptions



§ Population forecasts – there has been an average annual growth of 2.6% over the four years 2005 to 2009. Estimated annual growth in the term of the LTFP will be in the 1-2% range but this may have to be reviewed given the most recent data available.


§ Anticipated levels of local economic growth - Parramatta’s Gross Regional Product is growing at a faster rate than NSW. Parramatta’s GRP in 2007/08 increased by 9.1% compared to 7.2% for NSW.


§ Capital works expenditure has had to be constrained in the first five years of the LTFP but has been increased thereafter.


§ Inflation forecasts are in the range of 3% to 3.3%


§ Interest rates have been estimated at 7% in the long term.


§ Rating structures have been assumed to remain essentially the same as currently exist


§ Civic Place – impacts of the development have been included in line with the development agreement entered into with Grocon




Key Financial Assumptions

Operating Statement Assumptions

The following are the general assumptions that have been applied. Where specific information is known about revenue and expenditure trends, this has been factored into forecasts.


Revenue assumptions



Factor 2010/11

Factor 2011/2 to 2019/20


Indexed by estimated NSW State Government rate pegging. Included special rates variation approval in years 2010/11 to 2013/14

2.6% rate pegging plus 4.9% special variation approved. (2.9% to continue existing plus additional 2%)

3.3% rate pegging plus special variation of 1% in 2011/12 to 2013/14

Rates and Annual Charges growth

Supplementary levies

$400K per annum

$400K per annum

User Charges and Fees

Indexed to CPI

(Generally 3%, but some higher to reflect cost recovery, statutory fees no change)


Interest and Investment Revenue

Not indexed to CPI, based on average real expected return across portfolio as determined by Grove Financial.



Grants and Contributions – Operating

Indexed to CPI


3% plus specific know additional grants

3% plus specific know additional grants

Grants and Contributions – Capital

Indexed to CPI

Capital grants from State and Federal Agencies. These grants are used in the construction and improvement of roads, cycleways and the natural environment.

Varies due to levels of expenditure and available funding from state and federal government. In general 3% plus specific know additional grants

3% plus specific know additional grants

Other Revenue

Indexed to CPI

Incorporates parking fines and property lease rentals on Connection Arcade and Macquarie House.

3% plus any known reductions

3% plus known reductions



Expenditure assumptions



Factor 2010/11

Factor 2011/2 to 2019/20

Employee Benefits and On Costs

Indexed to competency / performance based salary system and annual award movements.

In line with salary system provisions and award entitlements

2011/12 to 2014/15 as per 2010/11. From 2015/16 to 2019/20 4%

Materials and Contracts

The plan currently assumes a flat increase across all materials and contract expenditure and has not specifically included the following information that may be available for outer year projections:


§ Parking Meters

§ Carparks



Borrowing Costs

Based on current loan portfolio and Council’s Borrowing Policy. Principal repayments are re-borrowed each year on regular loans (excludes Big 7 and Civic Place). For fixed loans interest expenses and repayments are known. For future loans including Civic Place that are on variable terms a rate of 7% has been used.

Varies – refer to commentary

Varies – refer to commentary

Depreciation and Amortisation

Assumes maintenance of existing arrangements for the purchase and sale of assets. Directly impacted by the Strategic Asset Management Plan and the impact of any revaluation in asset classes.


Varies due to timing of asset purchases up to 2014/15.  3% for 2015/16 to 2019/20

Other Expenses

Incorporates such items of expenditure as Insurance, Telecommunication and Utility charges.

The plan assumes a flat increase and has not specifically included the following information that may be available for outer year projections:

§ Street Lighting and Energy Consumption across Council buildings.

§ Parking Meters

§ Tipping Fees







The primary objective of Council’s financial planning is to enable the delivery of Council’s vision as set out in the Community Strategic Plan while ensuring Council’s continued financial sustainability. An analysis of Council’s current financial situation and longer term financial forecasts showed that there was an unsustainable gap between operating expenditure and revenue that must be addressed. Council could not continue on a “business as usual” basis. Not addressing this operational deficit would ultimately jeopardise the adequate funding of capital expenditure to maintain and replace existing community assets and the additional capital expenditure identified in Council’s Strategic Asset Management Plan.   In addition to the annual operating result Council needs to focus on some other key financial parameters.  These include the prudent build up and use of Reserve Funds (Internally and Externally Restricted), Liquidity and Unrestricted Cash (reflected by a healthy Working capital position), Borrowings and Debt servicing, Asset replacement and maintenance, new Capital project initiatives.

By focusing on these key areas and setting improvement targets for each of them over the period of the Delivery Program (5 years) Council aims to improve the financial health of the organisation to a desirable level that can be sustained in the long term.


In recent years Council has undertaken some significant new capital works (including the major upgrade of its pools and increased allocation for roads, footpaths, neighbourhood centres and capital works in the CBD.  This has resulted in a significant forecast decline in our Reserve balances in the 2009/10 budget year.  This increased level of capital expenditure allocation cannot be sustained for prolonged periods of time.  For the period of the Delivery Program, Council has therefore attempted to curtail annual capital expenditure, so that a consistent and sustainable allocation can be achieved over a prolonged period of time.  This has been done using a prioritisation methodology aligned with Council’s strategic planning outcomes, with minimum impact on ongoing service delivery and organisational capacity utilisation.

The long term financial model estimates show that this strategy would reverse the recent declining trend in reserve balances and enable Council to delivery a satisfactory and consistent level of capital expenditure allocation.


Liquidity and Unrestricted Cash

Liquidity is a key factor in the viability of any organisation regardless of whether it is in the commercial or government sectors. The ability to meet short term funding requirements is equally relevant to a Council as it is to any business. Council monitors its short term funding requirements daily and produces cash flow estimates on both a short and long term basis. This monitoring and forecasting informs its investment strategies and decisions so as to ensure that adequate liquidity is maintained.  Council will also, as part of its reserves strategy, continue to provide for adequate levels of reserves to fund such less predictable outlays such as major employee leave entitlement payments.

Borrowings and Debt servicing

As noted earlier, Council has adopted a policy to restrict new annual borrowings so as not to exceed the amount of principal to be repaid in the same financial year. Council has also adopted a strategy of containing its annual debt servicing to less than 8% of its revenue from continuing operations.

This strategy will enable Council to stabilise its debt levels within manageable limits while still recognising that borrowing prudently is a valid funding source for long term capital purposes.

Asset replacement and maintenance

Parramatta City Council is responsible for assets worth approximately $0.8 billion including roads, library collections, heritage material, drains, bridges, footpaths, parks, plant, vehicles and public buildings.

The financial impact on Parramatta City Council’s budget from assets is substantial and increasing as new assets are created and existing assets age. Council aims to maintain its infrastructure and assets to a standard acceptable to the community to ensure delivery of services to agreed standards. This involves developing and integrating long-term infrastructure and asset management plans with the LTFP to provide for the continued investment in maintenance, renewal and replacement of asset stock. An emphasis must be placed on allocating funds to maintain and enhance the existing asset base so that current service levels are not compromised.


New capital project initiatives

Civic Place is the major new capital project that is incorporated within the LTFP and has significant influence in Council’s LTFP. Council is committed to this essential urban renewal project as it is a vital element in the development of Parramatta as the second major Sydney CBD.

Other new capital expenditure will have to be provided to meet the infrastructure needs flowing from the anticipated growth in resident and worker populations. Funding for these projects will be sourced primarily from development contributions, capital grants, loan funds and the prudent allocation of reserve funds.

Operating Result: Council has adopted a strategy to achieve a break even position in its operating statement (excluding capital grants and contributions and profit/loss on asset disposals) by 2014/15 and then moving into surplus in the years beyond. Achieving this will mean that Council will be generating sufficient recurrent revenue to maintain existing services and to fully fund the depreciation cost of its assets as part of a sustainable capital program. Part of this strategy is to maintain an adequate level of reserves to fund our on going capital program and new initiatives including the Civic Place project. Council recognised that it would take a combination of expenditure and revenue initiatives to address the deficit and these could only be achieved by making some fundamental changes to the way it does business and acknowledging that this could only be achieved over a number of years.

To address the deficit, Council has decided to focus on the following areas to generate additional revenues and to deliver services in a more cost effective manner:

ü   Implementing a new industrial relations framework to contain employee costs

ü   A comprehensive review of the services that are provided by the organisation, both internal and external

ü   IT systems replacement

ü   Property strategy to optimise returns on Council’s portfolio

ü   Fleet management

ü   Rating strategies


Employee costs

In recent years employee costs had been growing by a rate that exceeded the increase in revenues from rates, fees and charges. The continuation of this trend would have been unsustainable. The growth in employee costs was attributable to an increase in staff numbers as a result of implementing new services and enhancing some existing services, the provisions of the salary and wages system that was in place together with the normal award increases and significant increases in on-costs such as superannuation in relation to the defined benefits schemes. In addition to the pressure being placed on Council’s operating statement, having in excess of 700 employees operating under various employment agreements governing hours of employment and conditions of employment added to the complexity in both managing and maintaining consistency in our processes.

Action was taken in 2008 to impose a “freeze” on staff recruitment and following a review of staffing requirements, the removal of 10 positions from the establishment averaging $1 million per annum savings. In conjunction with these measures a new industrial relations framework was negotiated and in late 2009 agreement was reached on a new salary and wages system. The new arrangements will result in significant savings in employee costs in the period 2009/10 to 2014/15 of approximately $3.5 million as shown below.















Services Review

In 2009 Council commenced a review of all service areas- both internal and external. The first review was in City Operations and became the COMBI Project –City Operations Making Business Improvements. COMBI has identified recurrent savings/revenue initiatives for 2010/11 of $800K with additional savings of $378K to be confirmed. Revised work practices, work force restructuring and improved cost/revenue analysis have delivered confirmed savings in staffing for facilities maintenance, cleansing services and parks maintenance totalling $500K. An additional $300K will be generated from an increased profit margin on restoration services. Additional savings to be confirmed include capital expenditure reduction in vehicle purchases of $142K and recurrent staffing costs of $236K.

The COMBI Project has set a target of $1.5 million recurrent savings/revenue by 2012/13 and is on track to achieve this with in excess of $1 million already identified.

A review of all other service areas is underway and will be completed by June 2010. Every Council business unit will undertake a structured review involving:

§ Defining customers and services

§ Determining how customers measure the value of these services and establishing key performance indicators

§ Documenting the processes by which services are delivered

§ Confirming the alignment of services delivered with Council’s charter, strategic community plan and the corporate plan

§ Measuring and benchmarking current performance

§ Recommending any changes to the service delivery model that can improve productivity and quality, reduce costs or provide additional revenue opportunities


The reviews will be led by each business unit manager and will involve all team members. The review process has been supported by a series of training and education sessions with assistance from an in-house support team.  Each manager will present the outcomes of their review to a panel of senior management and peers who will provide feedback and mentoring with at least one follow up session to assess the results. All recommendations will be reviewed by the Senior Executive Team before going to Council for consideration.


Council has set itself a target of $2.4 million in recurrent savings/additional revenues from the services review. It is recognised that while some initiatives can be quickly realised, there will be many that will require a longer timeframe to be delivered. Council’s financial strategy provides for $1.2 million to be realised in 2011/12 and the balance in 2012/13.

IT systems replacement

Since 2004 Council had been part of the Councils Online group. In 2009 Council was faced with a significant cost to upgrade the system and took the opportunity to review the terms of the agreement and resolved to exit the arrangement in 2010. Council subsequently went to tender and new IT systems will be implemented commencing June 2010. The new arrangements will result in savings in operational expenditure and greater control over systems support and development. The new IT systems combined with the Services Review will develop efficiencies across our corporate and service delivery functions via improved alignment of information technology systems and processes. This improved control will result in greater responsiveness to Council’s business requirements and increases in productivity and the quality of management information. The following estimated operating cost savings from these new arrangements have been included in forecasts:











Property Strategy

Council owns a number of revenue generating properties within the LGA with the most significant of these being the multi-storey car parks in the Parramatta CBD. Council has recently altered the management arrangements of the car parks to generate additional returns and will undertake a review of pricing structures with the objective of generating additional future revenues. In the longer term Council will be evaluating the use of these sites to ensure that they are optimally meeting Council’s strategic objectives for CBD development, traffic and transport infrastructure and financial sustainability.

Council also owns a number of other properties within the LGA which are surplus to Council’s needs or that could potentially be better used. Council’s property strategy is reviewing a range of options including disposal and re-investment and re-development. Opportunities being considered include developing new car park locations on the edge of the CBD e.g. Park ‘n Ride facilities with leverage off Council’s shuttle bus service “The Loop”.

The timeframes to deliver parts of this strategy will vary depending on the characteristics of the property and any associated facilities that will be relocated or re-developed.

Council has established a target for the overall property strategy of $1.2 million in recurrent savings/revenues to be achieved in 2011/12.

Fleet Management

A review has been undertaken of Council’s fleet requirements, vehicle usage patterns and leaseback arrangements. As noted above in comments on the COMBI project, savings have been identified in capital expenditure costs on plant and vehicles by eliminating the need for certain fleet items or by utilising less expensive but equally suitable vehicles. This also results in a flow on to savings in operating costs. The review also indicated that benefits could be obtained by extending the changeover of vehicles from 2 to 3 years and this practice is now in place.

The necessity for vehicles to be allocated to staff has also been reviewed following a comprehensive data collection exercise in 2009. As a result, in any staff replacement process the need for new staff to have a vehicle must be justified by a documented business case. Council’s gap closing initiatives have targeted an attrition of 2 vehicles per annum which would yield recurrent savings in operating costs and FBT liabilities of $27,000 cumulative per annum.

A strategy has also been put in place to recover a greater component of vehicle operating costs from leaseback arrangements with staff. Historically the leaseback arrangements have recovered about 33% of operating costs. Council has adopted a strategy that will move towards a staged recovery of 50%. This is estimated to generate an additional $200,000 by 2011/12. 

Rating strategy

Revenue from rates constitutes about 54% of Council’s total recurrent operating income. The State Government imposes a maximum limit by which Councils can increase their rates revenue – rate pegging. Councils may apply to the Minister for Local Government for an increase in excess of rate pegging and Council is seeking a special variation for the period 2010/11 to 2013/14 as part of a financial strategy to achieve two main objectives. The first is the renewal of a special variation that expires in 2009/10 to enable the continuation of infrastructure and economic development works and services that are critical in supporting the role of Parramatta as Sydney’s second CBD and the major CBD in Western Sydney.  The second objective is to improve Council’s financial health, achieving some set targets for predetermined financial parameters and maintaining that financial health at those levels thereafter.

If the 2000/01 special variation is not continued, Council will be required to remove approximately $2.4 million from its base revenue in 2010/11. Details of where this will occur are shown below.

The additional special variation component sought is 2% above rate pegging of 2.6% in 2010/11 and 1% plus an assumed rate pegging limit of 3.3% in the three following years. These increases would cumulatively add the following estimated amounts to Council’s rates revenue in the years shown.











In 2000/01 the Minister approved a special variation of to general income under Section 508(2) of the Local Government Act for a period of 10 years. The additional revenue has been raised via special rates for the following purposes –

CBD Infrastructure Enhancement Program                           $1.7M 

Suburban Infrastructure Improvement Program                    $0.1M

Economic Development Program                                          $0.6M

Under the terms of the Minister’s consent this special variation ceases at the end of 2009/10 and Council will have to reduce its 2010/11 rates income by the above $2.4M unless a new special rates variation is approved by the Minister to retain the funding. Continuing this income requires Council to seek a special rate variation of 2.9% in 2010/11.

The achievements from works and services provided by these Programs have been significant, the need for these Programs is on-going and Council’s consultation confirms that the relevant stakeholders support the continuation of the Programs.

Subject to the Minister approving the special variation, Council proposes to continue to utilise special rates levied on business properties within the CBD and other business localities to raise the funds for the CBD Infrastructure and Economic Development programs. Those business ratepayers’ will benefit from the maintenance and continuing improvement of the CBD infrastructure which has encouraged investment and growth in the CBD. Business will also benefit from the on going economic development programs which will promote Parramatta as a major retail, commercial and tourist destination. Council’s economic development strategies to attract future industries and major events to the area will increase job opportunities for the wider Western Sydney community. Providing such job opportunities closer to Sydney’s population centre reduces commuter travel times and the burden on transport systems while increasing the quality of life of people in the West.   


Other strategies

A number of other strategies have been identified and are being further developed that will contribute to the progressive improvement in Council’s financial position. At this time the potential savings through expense reduction, productivity improvements or revenue generation have not been quantified and are therefore not yet factored into the forward financial estimates. These include:

§ On going implementation of Council’s Asset Management Plan to improve asset management, leading to a reduction in the maintenance and refurbishment costs of buildings and an increase in the useful lives of assets. This will include ensuring all new assets undertake lifecycle assessments and the development of programmed maintenance cycles for existing assets, regular review and clarity around our investment and return on plant and equipment and developing more flexible assets to support a number of services which will lower average operation and maintenance costs for services.

§ Increase revenue by reviewing user fees and charges or finding new charge points. This will include an annual strategic review of comparative fees and charges imposed by neighbouring Councils to ensure anomalies are reviewed and the relevance to Parramatta City assessed.

§ Increase commercial sponsorship or advertising arrangements via key Council events (Riverbeats, Australia Day) or locations on Council land or buildings and/or initiatives focusing on tourism (Website: “Welcome to Parramatta”).

§ Maximise grant revenue to undertake work that is of priority to all levels of government while remaining aware of potential for grants that create financial pressure on Council and/or direct effort away from strategic priorities, particularly where matching funds are required.

§ Expanding the use of technology (eInvoicing, eTendering, eContractor, library technology to reduce resource requirements.



Attached are the following financial forecasts:

Attachment 1

This graph shows the projections of the “business as usual” scenario and the projections when Council’s primary “gap closing strategies” are included. FRANCIS SUGGESTED DELETING THIS AND SUBSTITUTING A GRAPH OF THE OPEARTING RESULT OF THE THREE SCENARIOS MODELLED.

Attachment 2 to 4

These reports show operating statements, balance sheets and cash flow statements for the following scenarios:

i.          Council’s applications for continuing the expiring special rate variation and the additional special variation are approved (PLANNED APPROACH)

ii.        Council’s application for continuing the expiring special rate variation is approved. Approval for the additional special variation is not approved (OPTIMISTIC CONSERVATIVE APPROACH)

iii.         Neither the application for the continuation of the expiring variation nor the additional variation is approved (CONSERVATIVE PESSIMISTIC APPROACH)





Council has adopted the following indicators as measures of its financial health with the targeted objectives shown






Net operating result before grants and contributions provided for capital purposes

Capital income is used to fund capital expenditure and it is therefore prudent to exclude this from the operating result. It is desirable to breakeven on this result before capital income.

Breakeven by 2014/15. Surplus going forward

Unrestricted current ratio

Represents the ability to meet expenditure commitments and it is an indication of Council’s liquidity.


Debt service ratio

Represents the proportion of income used to service debt(principal and interest)


Rates coverage ratio

The proportion of untied income provided by rates.


Rates outstanding ratio

Uncollected rates as a proportion of rates levied.


Asset renewal ratio

Council’s expenditure on the renewal of its fixed assets as a proportion of depreciation.




Item 7.1 - Attachment 3

Long Term Financial Plan











Item 7.1 - Attachment 3

Long Term Financial Plan








Item 7.1 - Attachment 3

Long Term Financial Plan




Item 7.1 - Attachment 3

Long Term Financial Plan



Item 7.1 - Attachment 3

Long Term Financial Plan




Item 7.1 - Attachment 3

Long Term Financial Plan