Sensitivity Analysis and Risk Assessment

Council’s Long Term Financial Plan has been in place since 2005, with strong links to our Asset Management Strategy.

We are therefore confident of the stability of the plan and its incorporated financial model.

However, the following risk factors have been considered in the development of the Long Term Financial Plan. Some of these factors would have only a minor impact on our projections, while others could have a more significant impact.

Areas which would have a particular impact on our projections, should they occur, include:

• rate increases being lower than anticipated, noting a review of the method of rate peg determination is underway by IPART • substantial fluctuation to the quantum or timing of population increase projections, noting that regional migration is anticipated to be higher than projected following the COVID 19 pandemic • inflation being higher than anticipated

• construction costs being higher than anticipated • changes to legislation with significant implementation costs to Council • significant fluctuation in the rate of return on investments

• staffing related costs increasing more an anticipated.

There are also external factors beyond the scope of Council which could impact on the model. These include:

• the cap placed on contributions from developers, and removal of community infrastructure from development contribution plans • market conditions impacting on the rate at which land releases are made by the development industry • dedication of new assets to Council as new suburbs are completed, with the value and

timing difficult to predict, and therefore impacts on workforce and maintenance may vary • a reduction in grants attained by council, due to changing State or Federal Government priorities • changes to the local government rating regime • changes to the superannuation guarantee legislation • fluctuation in government and statutory charges to Council • changes to the value of the mandatory pensioner on Council rates • impact of continuing pandemic on both revenue and expense • natural disaster, in particular flooding.

To mitigate these risks, Council undertakes annual monitoring to ensure that adjustments can be made to expenditure that ensure financial sustainability and meet the core operating requirements of local government.