Northern Rivers Regional Grouping Options

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Northern Rivers Regional Grouping Options Northern Rivers regional grouping options The Panel recommends . Consideration of a new structural arrangement for the existing LGAs of Lismore, Ballina, Byron Bay, Kyogle, Richmond Valley and Tweed. Preferred Options (“Future Directions for NSW Local Government”) No change to existing LGAs Councils to form constituents of a new Northern Rivers County Council, based around the regional centre of Lismore NB: Data has been drawn from a number of sources including: ABS population figures, DPI population projections, TCorp analysis of councils, and information submitted by local councils in annual returns. The data should be used as a guide only for assessing the coun- cils’ size and financial challenges. Regional characteristics Northern Rivers Ballina Byron Kyogle Lismore Richmond Valley Tweed Geographical area (km2) 10,277 485 566 3,584 1,288 3,047 1,308 Population 2011 236,557 40,753 30,825 9,537 44,282 22,697 88,463 Projected 322,200 57,300 44,400 9,100 50,600 26,100 134,700 population 2036 Calculated annual popula- 1.24% 1.37% 1.47% -0.19% 0.53% 0.56% 1.70% tion growth rate to 2036 Electors 2012 164,557 29,716 21,740 6,521 30,334 15,576 60,670 Electoral arrangements TBD 3 wards, each with 3 No wards. 8 council- 3 wards, each with 3 No wards. 10 coun- No wards. 6 council- No wards. 7 council- councillors. Mayor is lors. Mayor is popu- councillors. Mayor is cillors. Mayor is popu- lors. Mayor is popu- lors. Mayor is elected popularly elected. larly elected. elected by council. larly elected. larly elected. by council. Total ratepayers 104,520 17,280 14,714 5,106 18,219 10,401 38,800 Version 1: Prepared to support the deliberations of the Independent Review of Local Government Panel Northern Rivers regional performance measures Results presented within these tables are derived from the 2012 What do the ratios mean? Financial sustainability TCorp analysis of NSW councils. Meets benchmark Below benchmark Sustainability rating and outlook Ballina Byron Kyogle Lismore Richmond Valley Tweed Sustainability Rating Moderate Weak Weak Moderate Weak Moderate Operating Ratio Benchmark = Better than negative 4% Outlook Neutral Negative Negative Negative Negative Neutral Measures a council’s ability to contain operating expendi- ture within operating revenue. Performance Interest Cover Ratio Benchmark = Greater than 4.0x Ballina Byron Kyogle Lismore Richmond Valley Tweed Indicates the extent to which a council can service its Operating Ratio (16.3%) (16.8%) (22.1%) (8.2%) (13.4%) 1.0% interest bearing debt and take on additional borrowings. Debt Service Cover Ratio (DSCR) Interest Cover Ratio 6.02x 2.33x 15.64x 5.62x 5.85x 3.99x Benchmark = Greater than 2.0x Measures the availability of cash to service debt including Debt Service Cover Ratio 2.67x 1.51x 13.50x 3.40x 3.60x 2.81x interest, principal and lease payments Unrestricted Current Ratio 2.90x 2.89x 8.39x 2.25x 1.93x 3.07x Unrestricted Current Ratio Benchmark = Greater than 1.5x Own Source Operating Revenue Ratio 55.5% 68.3% 47.5% 70.9% 58.7% 63.9% Specific to Local Government, designed to represent a councils ability to meet debt payments as they fall due. Cash Expense Ratio 6.6 months 6.5 months 11.3 months 5.7 months 8.6 months 1.6 months Own Source Operating Revenue Ratio Benchmark = Greater than 60% Infrastructure Measures the level of a council’s fiscal flexibility. It is the Ballina Byron Kyogle Lismore Richmond Valley Tweed degree of reliance on external funding sources such as operating grants and contributions. Infrastructure Backlog Ratio 0.02x 0.39x 0.20x 0.28x 0.19x 0.03x Cash Expense Cover Ratio Benchmark = Greater than 3.0 months Asset Maintenance Ratio 0.97x 0.56x 0.70x 0.84x 0.54x 1.00x Indicates the number of months a council can continue paying for its immediate expenses without additional cash Building & Infrastructure Asset Renewal Ratio 1.06x 0.34x 0.87x 0.53x 0.33x 0.37x inflow. Capital Expenditure Ratio 2.55x 0.73x 0.79x 1.01x 1.09x 1.43x Infrastructure Backlog Ratio Benchmark = Less than 0.02x Shows what proportion the backlog is against total value of a council’s infrastructure. Observations TCorp has assessed councils in this grouping with a moderate to weak sustainability rating with four out of the six councils receiving a Asset Maintenance Ratio negative outlook, with a deteriorating financial position over the next three years. Benchmark = Greater than 1.0x Measures actual spending on asset maintenance, com- Achieving operating surpluses are essential for reducing the infrastructure backlog and investing in new capital developments. Tweeds pared to required spending. the only council in this grouping able to achieve the required TCorp benchmark and return a surplus. There are substantial infrastructure challenges for Byron, Kyogle, Lismore and Richmond Valley. Tweed and Ballina are the only councils Building & Infrastructure Asset Renewal Ratio Benchmark = Greater than 1.0x able to achieve or come close to achieving the required TCorp infrastructure benchmarks. Compares the proportion spent on infrastructure asset TCorp has assessed some councils with the ability to service additional debt, however to service additional debt councils need to reduce renewals and the asset’s deterioration measured by its the continued operating deficits which are driving the growing infrastructure issues. accounting depreciation. The financial results for this grouping of councils suggest the need for a regional solution in addressing the sustainability and infrastruc- Capital Expenditure Ratio ture issues shared in common across the Northern Rivers Region. Benchmark = Greater than 1.1x This indicates the extent to which a council expects to expand its asset base with capital expenditure on both new assets, and replacement and renewal of existing Version 1: Prepared to support the deliberations of the Independent Review of Local Government Panel assets. Northern Rivers regional grouping options Regional outlook Financial sustainability: Financial sustainability: The outlook for councils within this grouping is challenging. All coun- Current position Projected rating cils (with the exception of Tweed) are running substantial operating deficits. Most are also underspending on asset maintenance and fac- ing increasing infrastructure backlogs. Based on TCorp’s assess- ments, most councils within the grouping will see a deterioration in their financial position over the next three years, with three ultimately being rated as “very weak”. This means these councils will have lim- ited capacity to deal with economic downturns or unforseen events and may need to cut services to survive. The region is moving to di- versify its economy from the traditional reliance on agriculture, alt- hough most local industry is small scale. Across the grouping, the em- ployment base is declining, with reduced numbers of working-age res- idents and increasing influx of retirees. New residents are most com- monly relocating from Sydney, the Central Coast and the Hunter. Financial data Based on 2011-2012 financial year. Northern Rivers income sources Revenue Source Northern Rivers Ballina Byron Kyogle Lismore Richmond Tweed (000’s) (000’s) (000’s) (000’s) (000’s) Valley (000’s) (000’s) Residential rates $82,468 $10,633 $11,852 $1,860 $14,779 $4,957 $38,387 Business rates $16,668 $2,940 $3,285 $224 $4,625 $1,114 $4,480 Farmland rates $12,782 $1,215 $994 $2,457 $3,849 $1,565 $2,702 Mining rates $0 $0 $0 $0 $0 $0 $0 Special rates $229 $0 $0 $0 $0 $0 $229 Total Rates $112,147 $14,788 $16,131 $4,541 $23,253 $7,636 $45,798 Rates and annual charges $204,070 $33,273 $28,630 $6,772 $39,603 $16,822 $78,970 User fees & charges $117,084 $14,582 $19,258 $6,102 $27,906 $14,854 $34,382 The combined revenue from councils in this grouping meets the TCorp benchmark for own source revenue Interest & investment revenue $24,184 $4,331 $3,113 $985 $2,572 $1,756 $11,427 and provides a good mixture of residential, business Grants and contributions for $81,677 $7,744 $9,451 $8,600 $16,492 $13,023 $26,367 and farmland revenue streams. Both Lismore and operating purposes Byron have high levels of own source revenue, con- Other revenue $8,841 $3,543 $970 $87 $1,808 $37 $2,396 tributing to the overall revenue performance for this grouping of councils. Total revenue TCorp $435,856 $63,473 $61,422 $22,546 $88,381 $46,492 $153,542 TCorp revenue figures may exclude some revenue line items unique to the council or for the 2012 period Version 1: Prepared to support the deliberations of the Independent Review of Local Government Panel Northern Rivers regional options Infrastructure management As with all coastal regions, councils within this grouping face particular infrastructure management challenges. The historic development of these areas in small farming lots has resulted in a large network of local roads and wooden bridges to maintain, with comparatively small population numbers to contribute to the cost of asset management. The area is also subject to frequent flood events, creating the need to replace or carry out emergency repairs on major assets outside of renewals schedules. Councils in the grouping also face increased pressure on assets through population growth, high tourism activity and coastal erosion. Current asset position Northern Rivers Ballina Byron Kyogle Lismore Richmond Valley Tweed Total Roads (kms) 5,382 587 546 1,077 1,081 1,009 1,082 Total Bridge Length (m) 18,079 971 2,130 5,571 2,696 3,050 3,660 Total Assets 2012 (TCorp 000's) $6,787,228 $1,137,219 $858,163 $301,445 $1,137,092 $604,666 $2,748,643 Assets Per Capita $28,692 $27,905 $27,840 $31,608 $25,678 $26,641 $31,071 Total Infrastructure backlog (TCorp $587,522 $12,065 $207,429 $42,875 $189,946 $80,038 $55,169 000's) 2012 Infra.
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