Objectives of the Long-Term Financial Plan
LONG TERM FINANCIAL PLAN 2022 - 2031
The objectives of this LTFP (not prioritised) are as follows: ▪
The achievement of a prudent balance between meeting the service needs of our community (both now and future) and remaining financially sustainable for future generations.
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An increased ability to fund both capital works in general and meet the asset renewal requirements as outlined in asset management planning.
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Endeavouring to maintain a sustainable Council in an environment where Council must either constrain its net operational costs or reduce funds available to capital expenditure due to the capping of council rates and low increases in government grant funding.
For the purposes of this strategy, financial sustainability is defined in the below diagram, modelled essentially on a hierarchy of needs approach.
•
Long Term Sustainability
• •Spending more on asset • renewal than consumption • Fully funded replacement gap • Meeting community service needs
Medium Term Sustainability • • Operating surplus achieved net of abnormal items and capital funding
Critical, Short Term Sustainability • • •
• Working capital • Cash liquidity • Debt levels
It could readily be argued that over the past ten years, the Council has maintained a position as outlined in the Long Term Sustainability section of the triangle. The challenge for Council will be, however, to avoid an outcome where it gradually drops through the sections back into the red zone over the next ten years on the back of capped revenue capacity and rising costs. To avoid this outcome, Council will have to critically evaluate all of its current service provision and may have to make a series of difficult decisions, particularly where costs in services part funded by State and Federal Government increase by an amount greater than Council’s ability to increase general revenues.
LONG TERM FINANCIAL PLAN 2022 - 2031 CITY OF GREATER DANDENONG
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