Regional Transition Group

Shire of Koorda Shire of Mt Marshall Shire of Trayning

Feasibility Study

12 October 2011

In October 2010 the Shire’s of Koorda Mt Marshall and Trayning resolved to enter into an agreement with the State Government to explore the issues associated with merging our three local governments. The process funded by the State will enable each local government to determine whether it wishes to pursue the proposal to merger as part of the State Structural Reform Program. This report is the first step which will allow each of the local governments to determine whether they wish to advance the merger proposal.

Before each Council decides on this proposal the Board has recommended that our communities be consulted. The process of considering this feasibility study will be undertaken over the period November 2011 to February 2012. Each member Council is to convey its decision to the Regional Transition Group Board by March 2012 so that the Minister for Local Government can be advised of the results of this stage of the process.

If there is agreement to merge then a further report will need to be prepared and presented to the Local Government Advisory Board.

This feasibility study represents several months of research, analysis, review and discussion by the Regional Transition Group Board. It is intended to provide each of the members the background information that will enable them to make an informed decision.

It is appropriate to acknowledge the commitment made by the elected members of the three Shires, the Chief Executive Officers and staff of our Councils, representatives from the Department of Local Government and our local government consultants who provided advice to the Board and enable this report to be prepared.

………………………………… J Brooks Presiding Member 12 October 2011

Shire of Koorda Shire of Mt Marshall Shire of Trayning President Janet Brooks President Paul Gillett President Trevor Lamond Councillor Rick Storer Councillor Noel Miguel Councillor Geoff Waters

Chief Executive Officer David Burton Matthew Gilfellon Niel Mitchell

How this Report is structured

This report is structured as follows:

 An Executive Summary draws out the main issues associated with a possible merger of the three Shires, the benefits and the potential disincentives;  An examination of the current state of the local governments, their merged state, transitional issues, rates and financial issues, and other associated matters (Sections 1 to 5);  A series of detailed tables and information that provides more detail if required (Attachments 1 to 5).  The report generally structure follows the format in the ‘Department of Local Government Regional Transition Groups – Business Planning Template’.

As noted above, the report is based on the template, but with the following exceptions:  Information in relation to each local government has been aggregated to allow easier comparison (template Part 2), and then any material differences dealt with (template Part 3);  There is no ‘Part 6 - Summary Position’. This is represented in the Executive Summary instead;  As noted above, detailed information is presented in Appendices;  The template uses the term ‘Regional Business Plan’, whereas ‘Feasibility Study’ has been used;  Similarly, ‘merger’ has been used in preference to ‘amalgamation’;  Given the importance of this category of asset, an assessment of the condition of the road networks of each local government was undertaken;  At the request of the local governments, commentary on the social impact of the communities within the Shires was undertaken.

Abbreviations ABS Australian Bureau of Statistics CEO Chief Executive Officer CPI Consumer Price Index DLG Department of Local Government DRDL Department of Regional Development and Lands FESA Fire and Emergency Services Authority FTE Full Time Equivalent GIS Geographical Information Systems GRV Gross Rental Value HACC Home and Community Care HR Human Resources ISP Internet Service Provider IT Information Technology K Shire of Koorda KMT Koorda Mt Marshall Trayning KPI Key Performance Indicator LG Local Government LGMA Local Government Managers Australia MM Shire of Mount Marshall NEWROC North Eastern Wheatbelt Regional Council NRM Natural Resource Management ROMAN Road Management System RBP Regional Business Plan or Feasibility Study RDC Regional Development Commission RTG Regional Transition Group SAT Salaries and Allowances Tribunal SES State Emergency Service SSL Self Supporting Loan T Shire of Trayning UV Unimproved Value VBFB Volunteer Bush Fire Brigade VES Voluntary Emergency Services (Shire of Trayning) WALGA Western Australian Local Government Association WALGCI Western Australian Local Government Cost Index WALGGC Western Australian Local Government Grants Commission

Regional Transition Group – Koorda, Mt Marshall, Trayning

TABLE OF CONTENTS

Executive Summary ______i 1 Introduction ______1 1.1 Background ______1 1.2 Regional Transition Group ______2 1.3 The Process ______2 1.4 Guiding Principles ______5 1.5 Timeframe ______5 2 Current State ______6 Key Findings ______6 2.1 Overview of the Current State ______7 2.1.1 Community overview______7 Environment and Economic Activity ______7 Population ______9 Population Demographics ______9 2.1.2 Organisation Overview ______10 Representation and Methods of Representation ______10 Organisational structures ______11 Financial Position ______12 Issues affecting financial sustainability ______15 Shire of Koorda ______15 Shire of Mt Marshall ______16 Shire of Trayning ______16 2.2 Strategic direction ______18 2.2.1 Functional considerations ______18 Governance‐ Strategic plan ______18 Governance ‐ Representation and wards ______20 Governance (Corporate) ‐ Legislation ______20 Administration ‐ Chief Executive Officer ______20 Administration ‐ Committees ______21 Administration ‐ Reporting ______21 Administration ‐ Corporate branding ______21 Community engagement ______21 Town (local) planning schemes ______21 2.2.2 Financial considerations ______22 2.3 Services ______22 2.3.1 Functional considerations ______22 Details of Program Services/Facilities ______22 2.3.2 Financial considerations ______44 2.4 Systems ______45 2.4.1 Functional considerations ______45 2.4.2 Financial considerations ______46 Expenses ______46 2.5 Operating matters ______46 2.5.1 Functional considerations ______46 Other operational issues ______51

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2.6 People ______52 2.6.1 Functional considerations ______52 Policy ______52 Plans ______53 Human resources ______54 2.7 Strengths, Weakness, Opportunities and Threats (SWOT analysis) ______55 3 Amalgamated State ______57 Key Findings ______57 Guiding Principles ______57 3.1 Overview of Amalgamated State ______58 3.1.1 Community overview ______58 Environment and Economic Activity______58 Population ______59 3.2 Strategic direction ______59 3.2.1 Functional considerations ______59 Governance‐ Strategic plan – A Vision for the next 10 years to 2021 ______59 Governance ‐ Representation and wards ______63 Governance (Corporate) ‐ Legislation ______64 Administration ‐ Chief Executive Officer ______65 Administration ‐ Committees ______66 Administration ‐ Reporting ______66 Administration ‐ Corporate branding ______67 Community engagement ______67 Town (local) planning schemes ______67 3.2.2 Financial considerations ______68 3.3 Services ______68 3.3.1 Functional considerations ______68 Accommodation ______68 Customer service ______69 3.3.2 Financial considerations ______69 3.3.3 Community cost outcomes ______69 3.4 Systems ______70 3.4.1 Functional considerations ______70 3.4.2 Financial considerations ______70 3.5 Operating matters ______72 3.5.1 Functional considerations ______72 Finance issues ______72 Financial reporting ______72 Roles and responsibilities ______73 Revenue / income ______73 Expenditure ______76 Investment management ______76 Debt management ______76 Asset management ______77 3.5.2 Other operational issues ______78 Occupational Health and Safety ______78 Access to information ______78 Contracts ______78 Legal proceedings ______78 Leases ______78 Local laws ______79 3.5.3 Financial considerations ______79

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3.6 People ______80 3.6.1 Overall Considerations ______80 3.6.2 Possible Organisational Structure ______81 3.6.3 Other Matters ______82 Policy ______82 Staffing Plans ______82 Human Resources Issues ______82 3.6.4 Financial considerations ______83 3.7 Retention of Community Benefit ______83 3.7.1 Community Branding ______83 3.7.2 Representation ______84 3.7.3 Lobbying ______85 3.7.4 Economic and Social Cost to Communities ______85 3.7.5 Amelioration of Costs to Communities ______87 3.8 Strengths, Weakness, Opportunities and Threats (SWOT analysis) ______87 4 TRANSITIONAL CONSIDERATIONS AND COSTS ______88 Key Findings ______88 4.1 Rate equalisation ______88 4.2 Transitional costs ______91 5 RATE SETTING STATEMENT ______93 Key Findings ______93 5.1 Rate Setting Statement (merged) ______94 5.2 Issues affecting financial sustainability ______95 5.2.1 Current position ______95 5.2.2 Financial Impacts Arising from Merger Proposal ______96 5.2.3 Issues Arising from Existing Constraints ______96 5.3 Ten year Forward Estimates ______97 ATTACHMENTS AND SUPPORTING DOCUMENTS ______102 ATTACHMENT 1 ‐ Introduction ______103 Member Local Governments ______103 Shire of Koorda ______103 Shire of Mt Marshall ______103 Shire of Trayning ______104 ATTACHMENT 2 – Current State ______105 2.1 OVERVIEW ______106 2.1.1.1 Environment and Economic Activity ______106 2.1.1.2 Population ______108 ORGANISATION OVERVIEW ______109 2.1.2.2 Organisational structures ______109 2.1.2.3 Financial Position ______112 Shire of Koorda ______112 Shire of Mt Marshall ______117 Shire of Trayning ______121 2.2 STRATEGIC DIRECTION ______125

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Governance (Corporate) ‐ Legislation ______125 Administration ‐ Chief Executive Officer ______126 Financial considerations ______128 2.3 SERVICES ______129 2.3.1 Current Services ______129 Waste collection ______129 Landcare Programs ______130 Waste water treatment ______131 Cemeteries ______131 Health and Building ______132 Economic Development ______132 Plant Nursery ______132 Operation of Caravan Parks ______133 Aged Persons Homes______133 Provision of Medical Centres and Support Services ______134 Bush Fire Control, Volunteer Fire Brigades, Support to SES ______134 Ranger Services ______135 Aquatic Centres ______135 Libraries ______136 Museums and Historical Sites ______136 Radio and TV Re‐Broadcasting, Mobile Telephone Coverage ______137 Depots, Road Construction and Road Maintenance ______138 Road Condition Survey and Assessment ______139 2.4 SYSTEMS ______142 Information Technology – Hardware and Software ______142 Records management ______146 2.5 OPERATING MATTERS ______147 2.5.1.1.1 Financial Reporting ______147 Plan for the future ______147 Annual budget______147 Budget reviews ______147 Annual and monthly financial reporting______147 Annual reports ______147 Application of materiality ______147 Chart of Accounts ______148 Compliance Audit Return ______148 Rate setting statement ______148 2.5.1.1.2 Roles and Responsibilities ______148 Auditors ______148 Delegations ______149 Policy Manuals ______149 Payment of accounts ______149 Review of financial management systems ______149 Tendering and purchasing ______150 2.5.1.1.3 Revenue / income ______150 Rates ______150 Financial assistance grant ______153 Other grants ______155 Fees and charges ______156 Service charges ______156 Other revenue / income ______156 2.5.1.1.4 Expenditure ______157 Insurance ______157 Other expenditure ______157 2.5.1.1.5 Investment management ______158 2.5.1.1.6 Debt Management ______160

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2.5.1.1.7 Asset management ______161 2.5.1.1.8 Asset classification and valuation ______161 Asset control ______162 Value to community ______163 2.5.1.2 Other operational issues ______163 Local laws ______163 Attachment 3 – Amalgamated State______166 3.2 STRATEGIC DIRECTION ______166 3.2.1.2 Governance ‐ Representation and wards ______166 3.5.3 Financial considerations ______169 ATTACHMENT 4 – Transition Costs and Issues ______171 4.1 Rating and Rate Equalisation ______171 Existing Rates and Charges ______171 Rate Distribution between Rural and Non Rural ______171 Existing Rate Revenue ______173 Options for Rate Equalisation ______173 Scenario 1 – equalisation in first year of merger ______175 Scenario 2 – equalisation over three years of merger ______186 Scenario 3 – equalisation over five years of merger ______197 Transitional costs ______208 ATTACHMENT 5 – Rate Setting Statement ______232 Statement of Comprehensive Income (merged entity) ______232 5.1 Rate Setting Statement (merged entity) ______233 5.3 Long Term Financial estimates ______234

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Executive Summary In August 2010 the Shire’s of Koorda, Mt Marshall and Trayning resolved to enter into an agreement with the State Government to form a Regional Transition Group to undertake a number of activities associated with the Local Government Structural Reform Program. One of those processes was to prepare a Regional Business Plan to assess the feasibility of the three local governments becoming one entity.

As part of the Board’s contractual obligations this Regional Business Plan was to be prepared using a business template provided by the Department of Local Government. Whilst the term Regional Business Plan is used in many instances by the State and its Departments the Board has titled this report as a Feasibility Study. Therefore in this report the terminology Regional Business Plan and Feasibility Study are interchangeable.

The purpose of this Feasibility Study is to enable the Regional Transition Group to understand the potential high level cost and benefits of merger into a single entity by 2013. This study is to be presented to the member local governments so they may decide on whether or not to proceed with this aspect of the Structural Reform Process.

The study was undertaken by the Regional Transition Group Board which consisted of one elected member and one elected deputy member of each of the three participating local governments.

Guiding Principles The Board formulated a series of guiding principles under which the local governments might consider merging, which guided most of the significant aspects of the Feasibility Study.

The Board also added to the scope an examination of the concept of ‘Retention of Community Benefit’, including matters relating to: • community branding • representation • lobbying • identification of economic and social costs to the communities • amelioration of the identified costs to the communities

The following guiding principles were agreed. Economic sustainability - The Board acknowledged the knock on effect of local government employees residing within the towns to each community’s economic activities in the towns and the region. As a major employer group in the district the Board considered any process that reduces employment opportunities in the district will not be in the interest of the broader community.

Any amalgamated entity will be based on maintaining current staffing numbers of the participating local governments in the towns so as to lessen any negative economic impact on local communities. It is acknowledged that some staff may need to be trained to undertake different roles.

Level of service – any amalgamation should not result in a reduction of services and facilities to the community. Services and facilities arising from an amalgamation shall, as a minimum, increase to the highest level currently being delivered by any one of the participating local governments.

Elected Member representation – any amalgamation should not be seen as disenfranchising electors’ representation in the newly formed entity. The success of an amalgamation will require considerable involvement of the elected members with

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the community. In recognition of this and the additional knowledge, workload and involvement placed on elected members it is considered that the States preferred number of elected members of between six and nine would not be appropriate. Also with any transitional arrangements electoral wards along the lines of the existing local government’s boundaries would be advantageous.

The effect of the first point above is that under this analysis, there will be no centralisation of the merged organisations into one office or one centre, with discrete parts of the organisation based in the existing three towns where the Shires are currently located. In addition, the Board also stipulated that a road construction and maintenance function is also to continue in each town as is the case at present.

Any positions that may no longer be required after merger are to be used for other roles in lobbying other levels of government, economic and community development, engineering/asset management, and IT support. This should result in an increased scope and capacity for the merged entity.

While the cost of employing persons in those roles would be less than the senior staff displaced, there are not expected to be any significant changes to operating costs, which may increase slightly due to the need to establish reliable data links between the towns of Koorda, Bencubbin and Trayning.

Given the size of the road networks and the dependence on their condition by the local community for economic activity as well as determining the extent of any possible liability for a potentially newly formed local government, an assessment of the condition of local roads was also undertaken to determine if any funding gap was evident.

General Statistics The Regional Transition Group comprises of a combined area of 14,428 km2 and a combined population of 1,520. The local governments are located within the Wheatbelt area of Western Australia and north east of Perth. There are common boundaries between the Shire of Mt Marshall and the other two local governments, but no common boundary between the Shire’s of Koorda and Trayning. Year ending 30 June 2010 Koorda Mt Marshall Trayning Totals Area (km2) 2,662 10,134 1,632 14,428 Dsitance from Perth 238 273 235 Population(ABS ‐ 2010) 474 653 393 1,520 Population (LG ‐ 2011) 487 615 433 1,535 Km Roads ‐ unsealed 816.7 1,422.1 607.1 2,846 Km Roads ‐ sealed 249.2 299.8 148.3 697 Town sites 1 2 2 5 Plus a Major Centres Bencubbin, Trayning, number of Koorda Beacon Kununoppin smaller sites Density (Persons/km2) 0.178 0.064 0.241 0.105 ACLG Classification RAS RAS RAS Elected members 7 7 7 21 No Rate assessments 386 545 359 1,290 No of Electors 335 394 341 1,070 No of Dwellings 295 328 242 865

(All figures for 2009/10 Financial Year unless noted otherwise. RAS = Rural Agricultural Small)

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Demographics and Economic Activity Population levels are stable, albeit ageing. There are no significant differences between the Regional Transition Group members in terms of population characteristics. The members of the group are classified as small rural local governments with a stable but ageing population.

Local economic activity is centred on agriculture. Some diversification of economic activity may assist the area in terms of reducing dependence on only one major area.

Service Levels Each of the three Shires provides a wide range of facilities and services commensurate with the community’s needs and financial capacity. Major activities revolved around the provision of road networks and recreation services. Other than a lack of a large recreation centre to cater for active indoor sport by the Shire of Trayning, there are no significant differences in levels of services between the three. Trayning has though, plans to develop one that suits its present requirements.

Members of the group have over time developed limited resource sharing arrangements such as a shared Environmental Health Officer, a regional (but informal) grouping of local governments in the area (NEWROC), and some tourism initiatives (NEWTravel).

Community Consultation As part of the process, community consultation was undertaken to consider the communities long term aspirations and needs for the period to 2021. All ratepayers in all three Shires were sent a single page questionnaire and an accompanying sheet asking for feedback as to their vision for their community over the next 10 years, a sample size of 100%. Workshops were also held in Trayning, Kununoppin, Beacon, Bencubbin and Trayning with elected members, staff and members of the community.

Feedback from the local communities indicates a general satisfaction with the quality and level of service/facilities provided by each of the local governments. Community concerns though focussed on the state or level of services provided by other bodies in relation to education, health, telecommunications and Police, as well as economic activity. This will be an issue for the local governments whether they merge or not; given that these are areas over which they have no direct control.

Each local government brings to the group a good assortment of skills and knowledge. Processes and practices vary to a minor degree between each of the local governments, but are not considered significantly different.

Financial Positions and Rates The relative financial strength of each of the members is however, different. Some are carrying debt and relatively substantial reserve funds whilst others have high levels of debt and low or no reserve funds. In all cases members rely on grant funding to provide local government services (both required by statute and discretionary). The effect of removal of the Roads to Recovery grant funding (expected to cease after the 2013/14) will be significant for these individual local governments’ irrespective of any merger proposals.

There are major differences in the rating regimes between the three local governments. In particular, the rate in the dollar applied by Trayning in its 2011/12 budget of 0.1018 on properties using Unimproved Values (UV) is significantly below that applied by Koorda 0.1760) and Mt Marshall (0.15913). The UV rating category is the largest in all of the Shires and affects the majority of ratepayers, both in terms of rate revenue and number of properties.

Assuming the same amount of rate revenue is raised, this differential of around 73% from highest to lowest will mean that those ratepayers in Trayning whose properties are rated under

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UVs will see substantial increases in rates should the three merge and a uniform UV rate applied. Those in Koorda and Mt Marshall should though, see decreases.

However, the financial position of the present Shire of Trayning is the weakest of the three, and its ratepayers may well experience increases irrespective of merger proposals. Trayning’s Council adopted a budget for 2011/12 that saw substantial increases in the UV rate, albeit still at a level well below that of Koorda and Mt Marshall.

To overcome the disparity in rating regimes, differential rating by Wards (if established) based on the former local governments districts could be used to phase in changes over time (subject to inclusion in any Orders to create the merged entity). This does though mean that ratepayers owning similar properties in the same rating categories in a single district will be paying different amounts, even though their Unimproved Values might be identical.

In addition, it would be reasonable for the Regional Transition Group member local governments to also request that:

 The cash held in those Reserve Funds currently held for specific or location based purposes (in particular, Koorda has substantial amounts set aside) must be spent in those areas; and  Additional rates raised as part of the equalisation process from a particular area should be spent in that area. For example, ratepayers of Trayning might see changes in the rates collected from the district as a result of the equalisation process spent on an improved or new community or recreation centre, which is a service/facility that the Shire has identified, would be beneficial.

A merged local government of the three Regional Transition Group members would also have the added benefit of overcoming any restrictions on borrowings presently applied to Trayning that might otherwise impede funding of this facility by borrowings.

Road Condition Assessment The road condition assessment showed, across the three members, a road network in good condition. Based on the written down value of the road network the assessment shows the Shire of Koorda is in the strongest position at 79.4%, Mt Marshall at 76.8% and Shire of Trayning at 72.9%. Based on 2011/12 budget expenditure patterns the Shire of Koorda is meeting its renewal needs, whilst the Shire’s of Mt Marshall and Trayning are slightly under the requirements for renewal needs. In dollar terms for the Shire of Mt Marshall to equal the asset consumption ratio of Koorda (79.4%) would require $11.0m spent and $3.1m by the Shire of Trayning.

The road condition assessment (details in section 2.3.1) estimated a 15 years capital (renewal) program for the Shire of Koorda of $12,150,688 which equates to an annual outlay of $810,046. The corresponding calculations for the Shire of Mt Marshall were $23,007,013 (15 yr) at $1,533,801 per annum. Whilst for the Shire of Trayning the calculations were $10,799,558 (15 yr) at $719,971 per annum.

Transitional Costs The transitional cost to merge the three local governments is estimated at $1.53m, a significant proportion of which is redundancy costs for senior staff. Additional capital works could be in the region of $4.762m. Prior to any final merger decision, given their dependence on sound IT links between centres, the Regional Transition Group may wish to consider a more technically focussed study on data links between the towns of Bencubbin, Koorda and Trayning and approach the State for additional funding to develop a solution.

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The benefits and costs of merging can be summarised below:

Benefits arising from a merged local government

 Level of service - arising from the Boards governing principles, current service levels are to be maintained and where feasible, any merged entity will provide services at the highest level current delivered by any one of the three members. Current differences in discretionary services are not however substantial and improvements may not be extensive, particularly those that are location based (swimming pools, recreation centres).

 Increased scope of activity - by reassigning staff resources currently dedicated to administrative functions in the existing organisational structures, greater capacity will be created for a new local government to provide a wider range of services which could have beneficial impact on the wider community. These could be undertaken via the creation of new positions or retraining existing staff, re-allocated to community development, tourism, economic development and natural resource management roles which cannot be provided currently without increases in costs.

 Improved Corporate Services - the pooling of corporate services across the three local governments has the ability to allow specialist staff to be engaged in production of a range of corporate and compliance matters. This will allow the new entity to be more self-reliant and reduce the requirement to engage external service providers for corporate services functions such as compiling budgets and financial statements.

 Reduced Governance costs - the resources required to maintain three councils (agendas and minutes, notices of meetings, Council chambers, and three sets of meetings per month reduced to one) will be reduced. While not substantial, direct member expenses such as Shire Presidents allowances, telephone and travel allowances and elected members sitting fees) will also be reduced.

 Better use of plant and equipment - by consolidating the operations for maintenance and capital works across the three districts the opportunity exists to make better use of existing levels of plant and equipment. The Board’s model of having three service centres where three construction and maintenance operations will be based may limit this, and makes precise gains difficult to quantify but the new entity will have the ability (for example) to concentrate its entire fleet of heavy equipment on one project at the same time if need be, which may be useful where time or access constraints are present.

 Enhanced ability to deal with staff turnover or vacancies - the consolidation of an organisation (even one spread over three sites) will provide greater flexibility to utilise staff over a wider area and number of venues to provide better coverage for staff leave, sickness and vacancies. The new entity will be better able to respond to fluctuating staffing needs to deliver services. In addition, the local government’s workforces engaged in plant operation appear to be in many cases older than the average staff member. A workforce plan is beyond the scope of this project, but it may be difficult to replace these skilled workers in the current market.

 Funding opportunity for structural reform - under the current structural reform program initiated by the State government and the financial support being offered provides an opportunity to undertake structural reform at cost of state and federal funding rather than by local government ratepayers. The opportunity exists for the members of the group to take a positive position and determine their own destiny rather than the future being determined by others.

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 Enhanced lobbying power - whilst the new entity will not be substantial in terms of population it will be larger in terms of area and the level of agricultural activity it will represent. This could provide opportunities for a stronger lobbying position in terms of regional activities and resources.

 Reduce focus on individual towns - by amalgamating the three local government districts the focus on small towns will be diluted. By servicing a number of towns the local government would need to focus on the broader issues in the district. This could also have the impact of strengthening those local communities. As one town in many the community will tend to foster stronger community bonds in each of the individual towns.

Potential to respond to future costs escalations or revenue reductions– under the model developed via this process, any funds freed up by a merger could be directed towards increased service capacity and/or partially offset future costs escalations and revenue reductions (e.g. grants).

Dis-incentives to a merged local government

 Reduced financial assistance grant – under the current allocation methodology, the resultant reduction in the financial assistance grant after 5 years to the merged local government compared to their grants when separate provides dis-incentive for the existing local governments to amalgamate. Under the current methodology the group can expect a decrease of approximately $0.5m in general purpose grants to a combined local government after 5 years of being merged.

However during the course of this study, the WA Local Government Grants Commission (WALGGC) Board advised that it is considering a new allocation methodology that addresses a number of issues that previously disadvantage local governments that merge. While early indications are that the new methodology will be approved by the WALGGC Board, the impact is unknown and therefore some degree of caution should be exercised. It is hoped that the position will be clarified before 2012.

 Reduced access to some general grants - in many cases grants are generally distributed to individual local governments. By amalgamating three local governments into one the potential exists to reduce the amount of grants flowing to the district by two thirds.

By way of example The Australian Government’s Regional and Local Community Infrastructure Program (RLCIP) provides allocations on the following basis - o All Councils will receive a base grant of $30,000. o Councils classified as ‘urban fringe’ or ‘urban regional’ according to the Australian Classification of Local Governments Code and who have at least 30,000 residents will receive an additional growth component of $150,000. o All Councils with at least 5,000 residents will share in the distribution of the remaining funds in proportion to their 2009-10 general purpose Financial Assistance Grant.

When grants are allocated to individual local governments a merger would result in the total amount flowing into the district reduced by two thirds. By amalgamating the combined population of 1,520 would exclude the district from gaining access to any remaining funds because the population threshold is 5,000.

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 Merger may not improve those non local government services identified as being deficient by local communities – while it may have a greater ability to lobby for change, the merged local government will not have the financial resources to provide those State and Commonwealth Government services identified by the local communities of the three Shires as requiring attention (health, education, telecommunications, or police).

 Rate equalisation issues - there will be a redistribution of the rate burden between sectors of the community arising from a merger. This arises because the current rating structures (rate in $, discounts, minimums etc) are not the same. A merged local government will look to equalise the rating structures which will result in some ratepayers receiving a reduction whilst others will see a substantial increase. Whilst the impact of this can be phased in, the result is that some members of the community will see rate increases substantially above what might be seen as reasonable for what will basically be the same services that they enjoy at present. This may create resentment amongst affected ratepayers and this, plus the administrative effort required, will be challenging for the merged new local government to manage.

 Reduced electoral representation – a merged local government with a reduced number of elected members across the three districts from 21 to initially 13 and then possibly to between six and nine could be perceived as a reduction in access to elected representation.

 Greater workloads for elected members – an increased workload relative to the present situation in terms of distance to be covered to attend meetings and a greater number of electors to represent, may discourage some members of the community from seeking election to office.

 Increased data and communications costs - under the guiding principles with the requirement to have a substantial organisational presence in the towns of Koorda, Bencubbin and Trayning and the associated administrative systems, data and communication costs could be substantial. Mobile phone coverage is non-existent in Koorda and Bencubbin, with internet connection speeds poor compared to metropolitan or other wheatbelt town standards. Provision of what would comprise a suitable network and precisely what this might cost is beyond the scope of this project, but is estimated at an additional $120,000 pa in operating costs ($90,000 pa to rent a dedicated ADSL2 line and $30,000 pa estimated for data exchange costs) for the merged entity.

 Travelling costs - a combination of the three shires will present itself with increased travelling requirements by staff and elected members.

 Small towns in a bigger Shire - notwithstanding the requirement to undertake extensive community consultation introduced during the course of this study as part of formulation of an integrated strategic plan, members of the community expressed concern that the ability of individual towns to be ‘heard’ may be reduced if the three local governments were merged into a larger entity. Communities expressed their pride in the local area and did not wish to see that community identity diluted by absorption in to a larger local government.

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1 Introduction This Part gives a general background about the three local governments participating in the study, the process undertaken, and the guiding principles adopted and applied to the analysis.

1.1 Background Since 2005 a number of reports have been undertaken in various states of Australia addressing the issue of financial sustainability of local government. In Western Australia two notable reviews were undertaken by -

1. Local Government Advisory Board (LGAB) “Local Government Reform in Western Australia – Ensuring the Future Sustainability of Communities”, April 2006 2. Western Australian Local Government Association’s (WALGA) “Systemic Sustainability Study “In Your Hands - Shaping the future of Local Government in Western Australia”, December 2006.

In December 2008 the Western Australian Local Government Association released its report “The journey: sustainability into the future shaping the future of local government in Western Australia”. The publication of this plan represents the conclusion of the extended research, investigation and consultation process known as the Systemic Sustainability Study for Local Government in Western Australia.

On 5th February, 2009 the Local Government Minister, John Castrilli, announced strategies for local government reform based on a voluntary reduction in the number of individual councils.

The Minister considered that a period of six months from the date of this announcement would be enough time for each council to advise him of its clear intentions for amalgamations and reductions in the total number of elected members.

He also requested all local governments to form appropriate regional groupings of councils to assist with the efficient delivery of their services. This would be in line with proposed grants to local government, under the recently announced Country Local Government Fund which services individual councils and their regional organisations.

As part of the reform process the State Government provided an avenue for local governments to pursue the structural reform process through the formation of a Regional Transition Group (Regional Transition Group).

In 2010 the Shire’s of Koorda, Mt Marshall and Trayning resolved to enter into an agreement with the State government to form a Regional Transition Group and subsequently undertake a Regional Business Plan to assess the feasibility of the three local governments becoming one entity.

The group comprises a total combined area of 14,483 km2 and a combined population of 1,520. The local governments are located within the Wheatbelt area of Western Australia and north east of Perth. There are common boundaries between the Shire of Mt Marshall and the other two local governments.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

1.2 Regional Transition Group The Shire’s of Koorda, Mt Marshall and Trayning entered into an agreement with the State Government in 2010 to investigate reform options to deliver increased capacity and provide optimal service provision and governance to local communities. A Regional Transition Group Board was established consisting of two members from each local government.

As part of the Board’s contractual obligations with the Department of Local Government a Regional Business Plan is to be prepared utilising the template provided by the Department.

The purpose of this Regional Business Plan is to enable the Regional Transition Group to understand the potential high level cost and benefits of amalgamation into a single entity by 2013. The local governments that form the Regional Transition Group have prepared this Regional Business Plan in partnership with the State Government and with assistance from the consultants, R J Back and Associates.

This Regional Business Plan presents the current and amalgamated states of local government assets and business, covering both the financial and non-financial functions. These functions are categorised as strategic direction, services, system, operational issues, and people. The completion of the Plan will enable Regional Transition Group members to take an informed decision about whether to proceed to a merger.

Whilst the Plan provides a high level overview of the costs and benefits of amalgamation versus the current operational arrangements, it does not constitute a detailed amalgamation or transitional plan. More detailed analysis of the transition of the amalgamation process (and risks therein) will be required if and once an in-principle decision to move towards amalgamation has been taken.

Given the decision making process at this stage allows for each local government to make a decision as to it continuing on the amalgamation process, this report is referred to as a feasibility study and addresses issues so that members Councils can make an informed decision on the matter.

1.3 The Process The Regional Transition Group (RTG) Information Sheet (Department of Local Government WA, April 2010) provides that:

“The participation in a Regional Transition Group is on a voluntary basis. Once a Council is a signatory to a model agreement, it confirms its commitment to participate fully in the planning and adoption of common systems and services. These are to be scoped in a Regional Business Plan.

At the conclusion of developing a Regional Business Plan, local governments is to decide whether or not to proceed. This does not preclude local governments from moving to another Regional Transition Group where there is agreement by all participants. Subsequently, if 50% or more of participating members wish to withdraw the agreement may be terminated.

Each participating local government is required to be a signatory to a model agreement which formalises the establishment of the Regional Transition Group.

Once the model agreement is signed by participating local governments, the Group, with assistance from the Department of Local Government, will initiate processes required to progressively align the existing structures by 2013.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Member local governments of a Regional Transition Group are required to: . Appoint a board comprising one elected member and one elected deputy member for each participant together with such other members as the participants agree . Appoint an elected member from one of the participants to be the chairperson of the Board, and an elected member from a different participant to be the deputy chairperson of the Board . Have regular meetings . Nominate a participating council to act as banker and secretariat . Establish a process for decision making and meeting procedures, and . Report on the activities of the Regional Transition Group.

Each Regional Transition Group is required to develop a Regional Business Plan using the Department of Local Government’s Business Planning Template to scope services and transition costs. It is recommended that Business Plans be finalised within nine months of signing an Agreement.

The Regional Business Plan is to provide for specific actions to ensure that community engagement and representation is incorporated into the decision making processes of the new local government post-amalgamation, including the establishment of: . Place planning approaches, including customer advocates . Precinct committees and community advisory committees . Modern community engagement techniques . Community associations (progress associations).

Where communities are concerned about representation, the Minister is willing to approve arrangements that facilitate councillor representation from each of the current local governments for two full election cycles post-amalgamation.”

The following processes were undertaken in the preparation of the feasibility study (Regional Business Plan) – The Board engaged the services of local government consultants, R J Back and Associates, Met monthly to consider various aspects of the study, Gathered a considerable amount of information to complete the Department of Local Government’s business planning template, Reviewed services and facilities to consider the level of service required for a new entity, Considered various options for the administration of a new entity, A review of electoral representation was undertaken, A financial analysis was undertaken of the three local governments, Review of rating structures was undertaken to consider the impact on rates, The Board undertook some strategic planning processes as individual local governments and as a combined entity, The Board considered and determined the guiding principles to facilitate a new entity, Community consultation was undertaken throughout the area to consider the communities long term aspirations and needs, Condition assessment for the road network was commissioned to determine if any detrimental funding gap was evident.

Following the preparation of the Feasibility Study (Regional Business Plan) the report will be presented to the Department of Local Government, Regional Transition Group Board, each member Council and the relevant communities.

The process following the consideration of the feasibility study will depend on the decision made by each of the member Councils. The proposal could be rejected and would not proceed further or if accepted would require the preparation of a submission to the Local Government Advisory Board to enable the local governments to amalgamate.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

PROCESS TO DATE

1 JULY 2013

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Regional Transition Group – Koorda, Mt Marshall, Trayning

1.4 Guiding Principles As information was being collated the Regional Transition Group Board discussed a number of issues associated with formulating some guiding principles upon which the Regional Business Plan could be prepared. This process addressed the likely structure of an amalgamated entity and agreed to some shaping principles to be applied in formulating the services, facilities and structures. The following guiding principles were agreed.

Economic sustainability - The Board acknowledged the knock on effect of local government employees residing within the towns to community economic activities in the towns and the region. As elected members of a major employer group in the district the Board considers any process that reduces employment opportunities in the district will not be in the interest of the broader community.

Any amalgamated entity will be based on maintaining staffing numbers of the participating local governments in the towns so as to lessen any negative economic impact on local communities. It is acknowledged that some staff may need to be trained to undertake other duties.

Level of service – any merger should not result in a reduction of services and facilities to the community. Services and facilities arising from an amalgamation shall, as a minimum, increase to the highest level currently being delivered by any one of the participating local governments.

Elected Member representation – any amalgamation should not be seen as disenfranchising electors’ representation in the newly formed entity. The success of an merger will require considerable involvement of the elected members with the community. In recognition of this and the additional knowledge, workload and involvement placed on elected members it is considered that a membership of between six and nine would not be appropriate. Also with any transitional arrangements electoral wards along the lines of the existing local government’s boundaries would be advantageous.

1.5 Timeframe The timeframe determined by the Board for the consideration of the Feasibility Study Report was varied by agreement between the parties to allow proper consideration of a number of issues that arose during the course of the study, in particular a roads condition assessment, Council elections in October 2011, harvesting season, and the need to avoid end of year holiday periods that might affect community participation.

At the time of writing, final decisions by the participating Regional Transition Group members were expected in March or April 2012.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

2 Current State This section gives a high-level understanding of the profile, characteristics and activities of each local government that is a member of the Regional Transition Group.

In this section the information is generally presented for each of the local governments plus the collective information to enable an overall perspective to be considered.

For ease of reference much of the analysis has been undertaken in Part 2 in respect of the ‘current state’ of Regional Transition Group members and will inform how an amalgamated entity might operate.

Key Findings

 The three Shires have similar characteristics in terms of their demographics.

 Agriculture is the predominant economic activity. Unemployment levels are low (around 1.3%). Average incomes fluctuate commensurate with harvest levels.

 Population levels are stable, albeit ageing. There are no significant differences between the RTG members in terms of population characteristics.

 The three provide a scope and level of services that are comparable, although Trayning does not have a large recreation centre catering for active indoor sports. It has plans to build a centre that it considers appropriate for its needs.

 The most significant service in terms of asset value and recurrent cost is road construction and maintenance. The three local governments directly employ staff to provide this service.

 A road condition assessment showed, across the three members, a road network in good condition. Based on the written down value of the road network the assessment shows the Shire of Koorda is in the strongest position at 79.4%, Mt Marshall at 76.8% and Shire of Trayning at 72.9%.

 Based on the 2009/10 annual financial reports - o The Shire of Koorda has a strong financial position with a good operating performance, no debt and a good level of reserves. The Shire has also indicated that rate revenue will increase above CPI to ensure funds are available for asset renewal, o The Shire of Mount Marshall is in a marginally sustainable financial position with a reasonable operating performance, debt of $0.926m and good level of reserves. Indicators on consumption of assets indicate a strong position that the written down value of property, plant and equipment asset classes are improving. Consumption of the road network however would suggest a minor deterioration in the written down of the network. The Shire has indicated that it will maintain its rating regime in line with consumer price index movements over the next few years. o The Shire of Trayning is the weakest of the three local governments. Whilst the operating result is reasonable it underestimates the consumption of asset through the depreciation charges. The Shire carries debt of $0.467m and $0.626m in reserves. Indicators of the consumption of properties, plant and equipment for assets shows a decline. Indicators for road infrastructure indicate a declining position. The Shire has indicated that over the next three years it will be lifting rates by 13%, 13% and 8% which will contribute to a stronger financial position.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

2.1 Overview of the Current State

The group comprises a total combined area of 14,428 km2 and a combined population of 1,520 (Koorda 2,662 km2 and population of 474, Mt Marshall 10,134 km2 and 653 persons and Trayning 1,632 km2 with a population of 393), all three are located within the Wheatbelt area of Western Australia.

General Statistics Year ending 30 June 2010 Koorda Mt Marshall Trayning Totals Area (km2) 2,662 10,134 1,632 14,428 Dsitance from Perth 238 273 235 Population(ABS ‐ 2010) 474 653 393 1,520 Population (LG ‐ 2011) 487 615 433 1,535 Km Roads ‐ unsealed 816.7 1,422.1 607.1 2,846 Km Roads ‐ sealed 249.2 299.8 148.3 697 Town sites 1 2 2 5 Plus a Major Centres Bencubbin, Trayning, number of Koorda Beacon Kununoppin smaller sites Density (Persons/km2) 0.178 0.064 0.241 0.105 ACLG Classification RAS RAS RAS Elected members 7 7 7 21 No Rate assessments 386 545 359 1,290 No of Electors 335 394 341 1,070 No of Dwellings 295 328 242 865

(All figures for 2009/10 Financial Year unless noted otherwise. RAS = Rural Agricultural Small)

2.1.1 Community overview

Environment and Economic Activity Predominant economic activity in all three Shires is agriculture, which accounted for 237 out of a total of 330 (or 72%) of businesses in 2007 in the Regional Transition Group area.

Weather, land care and transport are issues that clearly have a significant impact on the agricultural industry, with an associated effect on the economic health of the communities of Koorda, Mt Marshall and Trayning. At present, drought, salinity and climate change are issues for the communities in the Regional Transition Group.

In its ‘Climate Science Update of March 2010’, the Department of Agriculture and Food advises that:

‘In 2010 much of the Wheatbelt, South West and Rangelands experienced a dry and patchy season and estimates are for average to below average crop yields returns.

WA has seen its share of significant change in the recent past, with mean temperatures increasing by approximately 0.8ºC in the past 60 years.

While rainfall has increased over much of the State, significant rainfall decline has been observed in western parts of the Southwest Land Division causing significant management issues for water resources managers in particular.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Pre-instrumental records of past climate in WA are rare and lack certainty when attempting to characterise trends over the most recent 1000 years. Studies of climate proxies such as tree rings suggest that 20–30 year dry spells are a normal part of the climate of southern WA, but the recent 35 year dry spell is testing these limits.

Some of the projected changes are inevitable even if greenhouse gas emissions are capped quickly. Likely effects for WA may include:  lower average winter rainfall  less run-off to dams  decreased aquifer recharge  increased variability between and within seasons  increased risk of prolonged drought  higher average temperatures  rising atmospheric carbon dioxide concentrations  more extreme events such as hot days, storms and wild fires.’

In its February 2010 Climate Change Response Strategy, the Department concluded that the weight of scientific evidence indicates that:

‘Human-induced global climate change is occurring and is having biophysical, social and economic impacts at local, regional and national scales that will likely become more severe over the coming decades.

Discerning and measuring long term climate change, as distinct from climate variability, is complex, difficult and uncertain. Predicting future climate change is even more so. This new requirement is beyond individual farmers.

Climate change presents both opportunities and threats for different agricultural products and for the communities that depend on them.

Communities and their component sectors will vary in their vulnerability to the impacts of climate change, and some may reach critical thresholds sooner than others.’

The Department further noted that climate change and policies introduced to reduce emissions will affect the agricultural sector and will lead to social and economic outcomes.

Notably for the Regional Transition Group, the Department also noted that …’the cost of climate change will greatly depend on how well prepared communities are to respond. How risks are managed could mean the difference between costly remedial or crisis action, affecting the economic and social well being and stability of either Western Australia’s rural and urban communities, or managed, integrated change enabling rural communities to continue to be sustainable in the long term.’

In relation to economic activity, a detailed extract from the Australian Bureau of Statistics Census data is shown as Attachment 2.1.1.1.

Due to the relatively low numbers involved, it is difficult to draw any firm conclusions in terms of trends within the Regional Transition Group, but some selected statistics are:

 In 2008, unemployment across the Regional Transition Group was low, between 1.3% (Mt Marshall) and 1.6% (Trayning);  Total wage and salary earners within the Regional Transition Group declined from 481 in 2004 to 460 in 2007, a reduction of 4.3%;  The number of businesses in the Regional Transition Group dropped from 339 in 2004 to 330 in 2007, a drop of around 2.7%;

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Regional Transition Group – Koorda, Mt Marshall, Trayning

 Total personal income grew from $19.2m in 2004 to $29m in 2007. There are however, considerable fluctuations in this statistic from year to year – e.g. the figure for 2005 was $33.9m, reflecting possibly the dependence of the area on seasonal changes from year to year.

Population There are 5 main population centres in the Regional Transition Group, being Trayning, Kununoppin, Bencubbin, Beacon and Koorda. While Mt Marshall comprises a relatively large geographic area, its overall population density is a low 0.064 persons/km2 as compared to Trayning with 0.241 persons/km2.

Overall, the Regional Transition Group has a combined population of some 1,520 people, occupying an area of 14,428 km2, or one person for every 0.105 persons/km2.

Areas, populations and densities are shown below - Koorda Mt Marshall Trayning Totals Area (km2) 2,662 10,134 1,632 14,428 Population(ABS) 474 653 393 1,520 Density (Persons/km2) 0.178 0.064 0.241 0.105

There has been a slight reduction to the population of the three Shires comprising the Regional Transition Group over the past 5 years. Based on the ABS provisional figures for 2009/10 the reduction in 12 twelve months is similar to the reduction in the previous five years (see Attachment 2.1.1.2).

Population Demographics The age profile of the Regional Transition Group is reflective of the general population trends with an ageing population. The region has difficulty retaining its youth due to employment and education constraints. As school-aged children are required to seek education outside the district it means that families will follow and therefore placing pressure on population growth in the district. People will return to the district post education if employment opportunities exist, however with a depressed agricultural sector, due to low rainfall, this again restricts population growth.

Given the small numbers involved some caution should be exercised, but the population of all Shires appears to be ageing, with the distribution of the age of residents between 2004 and 2008 shown below:

Shire of Koorda 60 50 2004 2008 40 30 20 10 0

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mt Marshall 80 70 2004 2008 60 50 40 30 20 10 0

Shire of Trayning 40 35 30 25 20 15 10 2004 2008 5 0

There are no significant ethnic minority, culturally and linguistically diverse or indigenous communities within the local governments in the Regional Transition Group.

2.1.2 Organisation Overview

Representation and Methods of Representation Each of the local governments in the Regional Transition Group has an elected body of 7 Councillors, making a total of 21. None of the Shire use wards, with Councillors elected from across the entire district.

Other features, costs and a comparison with local governments of the size (population and area) of the combined Regional Transition Group are shown below: Koorda Mt Marshall Trayning Totals Area (km2) 2,662 10,134 1,632 14,428 Population 474 653 393 1,520 No of elected members 7 7 7 21 Electors at last election 335 394 341 1,070 Electors per elected member 47.9 56.3 48.7 51.0 Population per elected member 67.7 93.3 56.1 72.4 Individually, the 3 Councils have similar ratios of representation, with Trayning the highest number of Councillors per head of population (1:56) and Mt Marshall the lowest (1:93) with an average across the Regional Transition Group of 1 elected member per 72.4 persons.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

2011/12 Budget Koorda Mt Marshall Trayning Totals Meeting fees $4,232 $20,848 $20,000 $45,080 President's allowance 7,000 5,000 3,000 15,000 Deputy Presidents allowance 1,500 1,250 750 3,500 Travelling Expenses 2,245 5,754 1,900 9,899 Telecommunications allowance ‐ 4,314 5,250 9,564 IT Allowance ‐ ‐ 3,500 3,500 Totals $14,977 $37,166 $34,400 $86,543 Cost/Elected Member $2,140 $5,309 $4,914 $4,121 In person (2007 ‐ Method of election In person Postal) In person

Each local government Council meets on a monthly basis. None of the local governments use a ‘standing’ committee system, but there are a number of management bodies, ad hoc committees and liaison groups used and which are listed in section 2.2.1.

Organisational structures The Regional Transition Group local governments employ just fewer than 66 full time equivalent (FTE) staff between them. Mount Total by Organisational Area Koorda Marshall Trayning Total Org Area Position Executive CEO 1.00 1.00 1.00 3.00 4.40 Executive Assistant 1.00 1.00 Project Officer 0.40 0.40 Finance/Admin/Corporate D/CEO 1.00 1.00 2.00 11.50 Senior Admin/Finance Officer 1.00 1.00 Finance/Admin officers 2.50 3.00 3.00 8.50 Community Dev/Recreation ‐ Community Development/Recreation staff 1.00 1.00 3.10 Pool Manager/staff 0.60 0.90 0.60 2.10 Environmental Health/Building Environmental Health Officer 0.20 0.20 0.20 0.60 0.60 NRM Natural Resource Officers 0.40 1.00 0.60 2.00 2.00 Engineering Admin Shire Engineer 1.00 1.00 7.30 Engineering Admin 0.30 1.00 1.30 Mechanic/Plant Maintenance 1.00 1.00 2.00 Works Supervisors 1.00 1.00 1.00 3.00 Works Works Team Leader 1.00 1.00 2.00 25.00 Works staff 7.00 10.00 6.00 23.00 Parks/ Building or Town Maintenance Parks and Gardens/ town maintenance 2.80 3.00 1.75 7.55 11.65 Building Maintenance 1.20 1.20 Cleaners 0.65 1.50 0.75 2.90 Totals 20.65 27.60 17.30 65.55 65.55

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Regional Transition Group – Koorda, Mt Marshall, Trayning

The individual organisational charts are shown in Attachment 2.1.2.2

The organisational and staffing structures reflect the main activities of the three members of the Regional Transition Group. There is an emphasis on road construction and maintenance, with 25 out of 66 (or nearly 40%) of staff being employed in the works area. The staff also tend to be multi skilled in multiple roles depending on the needs of a situation.

Services are discussed in section 2.3, but refuse collection services are provided by a contractor, Avon Waste. All three members of the Regional Transition Group use the same service provider. Health and building services are provided by a shared employee.

All Shires have a well developed range of recreational facilities, with 3 swimming pools, 3 middle sized recreation centres, and numerous smaller community buildings.

Financial Position The latest available audited financial reports for the local governments are for the financial year ended 30 June 2010. The following represents an overview of the financial position of the three local governments in the Regional Transition Group as at that date. Details of each local government financials for the period 2005/06 to 2009/10 are included in Attachment 2.1.2.3

The following table is an extract from the annual financial report for 2009/10. as at 30 June 2010 Koorda Mount Marshall Trayning Combined BALANCE SHEET Asse ts Current Assets 3,887,978 3,470,171 714,036 8,072,185 Non Current Assets 0 85,251 4,493 89,744 Property, Plant & Equipment 4,342,282 7,121,901 4,287,776 15,751,959 Infrastructure 42,914,612 69,540,318 7,432,484 119,887,414 Total Assets 51,144,872 80,217,641 12,438,789 143,801,302 Liabilities Current Liabilities 297,601 435,994 355,835 1,089,430 NON Current Liabilities 25,024 848,616 423,513 1,297,153 Total Liabilities 322,625 1,284,610 779,348 2,386,583 Net Assets 50,822,247 78,933,031 11,659,441 141,414,719 EQUITY Retained funds 44,342,745 47,356,059 11,033,308 102,732,112 Reserves 2,931,232 2,007,474 626,133 5,564,839 Revaluation reserves 3,548,270 29,569,498 0 33,117,768 50,822,247 78,933,031 11,659,441 141,414,719 000 Financial Ratios Current ratio 620% 372% 197% Debt Ratio 0.6% 2.0% 6.0% Debt Service Ratio 0.0% 6.0% 7.0% Rate coverage Ratio 20.0% 29.0% 20.0% Outstanding Rate Ratio 3.5% 4.0% 5.0% Gross debt to Revenue 0% 26% 40% Untied cash to trade creditors 791% 622% 0% Gross debt to economically realisable 0.0% 8.0% 13.0% Economic Dependency 65% 63% 71%

All three local governments have operating results that will need strengthening in the future to meet future asset renewal requirements. The use of Royalties for Regions and Roads to Recovery grants have in some way ameliorated the decline of all major infrastructure classes maintained by each of the Shires.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Debt Management

Koorda Mount Marshall Trayning Total Debt LT Debentures 0 926,368 467,654 1,394,022 Debt Service Costs Principal repayments 0 133,902 66,411 200,313 Interest expense on LT debt 0 74,678 29,620 104,298 0 208,580 96,031 304,611 Key Performance ratios Debt /General Funds 0.00% 34.12% 30.18% 21.7% Proportion of General Funds(general rates and untied grants) provided as security for debt(section 6.20 Local Government Act WA 199 Debt/LG Revenues 0.00% 27.23% 27.70% 16.8% Total loan debentures outstanding as a percentage of local government revenue(LG Revenue). Debt Service/LG Revenues 0.00% 6.13% 5.69% 3.7% Amount of local government revenues(LG Revenues) applied to debenture interest and principal.

Operating Results (Statement of Income) Mount as at 30 June 2010 Koorda Marshall Trayning Combined Statement of Comprehensive Income Operating Revenues Rates 707,636 1,027,975 507,570 2,243,181 Specified Area Rates 0 7,717 0 7,717 Service Charges 0 0 1,673 1,673 Fees and Charges 290,373 225,165 157,045 672,583 Operating Grants, subsidies 1,556,262 1,876,916 1,376,956 4,810,134 Capital contributions/grants 759,078 928,137 389,927 2,077,142 P/L on sale of assets 46,302 121,238 0 167,540 Municipal Interest 64,388 42,909 15,823 123,120 Reserve interest 109,518 91,155 5,797 206,470 Other revenues 30,279 145,859 48,563 224,701 Operating Revenues 3,563,836 4,467,071 2,503,354 10,534,261 Operating Expenditures Employee Costs 598,093 999,543 937,528 2,535,164 Material & contractors 698,363 726,254 599,335 2,023,952 Depreciation 1,200,181 2,301,977 666,939 4,169,097 Loss on sale 4,931 62,017 7,492 74,440 Insurance 102,271 115,167 78,172 295,610 Utilities 107,347 119,649 64,423 291,419 L/T debt interest 0 74,678 29,620 104,298 Other Expenses 151,088 235,952 49,764 436,804 Operating Expenditures 2,862,274 4,635,237 2,433,273 9,930,784 Net operating 701,562 (168,166) 70,081 603,477 Other non ordinary Revaluation of assets 831,651 0 0 831,651 831,651 0 0 831,651 Gross operating result 1,533,213 (168,166) 70,081 1,435,128

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Cash Backed Reserve Accounts 2009/10 Actual Koorda Mt Marshall Trayning Totals Reserves General Reserves 2,456,584 1,304,771 182,876 3,944,231 Restricted 474,648 702,703 443,257 1,620,608 2,931,232 2,007,474 626,133 5,564,839 Net Debt v's Reserves General Reserves 2,456,584 1,304,771 182,876 3,944,231 Long Term Debt 0 926,368 467,654 1,394,022 Net 2,456,584 378,403 (284,778) 2,550,209

Key Performance Ratio 3,229,477 3,402,620 1,688,056 8,320,153 Reserves/LG Revenues 90.8% 59.0% 37.1% 66.9% Measures the savings capacity through accumulated cash reserves compared to local government revenue Reserves held for ‐ Employee Liabilities 266,338 88,926 24,597 379,861 Plant Replacement 308,176 430,660 15,993 754,829

The following table identifies the strengths and weaknesses of each member based on the financial accounts produced from 2005/06 to 2009/10.

Based on the information provided in the annual financial reports the following observations are made – Koorda Mt Marshall Trayning Combined Operating Results Result exclude revaluations '000 702 (168) 70 603 Operating surplus ratio* ‐14.0% ‐111.6% ‐61.5% good and Negative with Negative with Trend improving improvement improvement Operating grants/Operating Revenue 55.5% 53.0% 65.2% 56.9% Rates/Operating Revenue 25.2% 29.0% 24.0% 26.5% Balance Sheet Net assets (community assets) $50.822m $78.933m $11.659m $141.415m Current ratio consistently consistently Improving good good Investments subject to risk none none none Land held for resale Nil Nil Nil Debt levels 0 926,368 467,654 1,394,022 Increasing/decreasing Type Nil Housing, SSL Housing, plant Debt Service Costs/General Funds 0.0% 7.7% 6.2% Debt /General Funds 0.0% 34.1% 30.2% Future capacity Strong Limited Limited Level of cash backed reserves 2,931,232 2,007,474 626,133 5,564,839 Level of Employee cash backed 109.1% 50.6% 15.0% 65.1% Level of Cost of Plant cash backed 8.4% 9.9% 0.6% 7.2%

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Koorda Mt Marshall Trayning Combined Assets Asset comsumption ratios (based on current balance sheet values) Buildings 73.9% 85.3% 75.5% Plant and Equipment 34.2% 59.0% 41.3% Road Infrastructure 70.6% 71.5% 46.3% Operating result trends Strength weakness weakness Operating surplus ratio* weakness weakness weakness Level of debt Strength weakness weakness Leverage capacity Strength weakness weakness Reserves Strength Strength weakness Asset consumption Buildings Strength Strength Strength Plant and Equipment weakness Strength weakness Road Infrastructure Strength Strength weakness

Issues affecting financial sustainability

The question of assessing as to what constitutes financial sustainability has not been quantified for local governments in Western Australia. The Department of Local Government has published “statutory key performance indicators” which may be of assistance, but some require refinement or are not readily extracted from the financial information currently produced by local governments under the legislation and Accounting Standards.

Consequently the opinions expressed below need to be considered in the light of the reliability of the financial information presented.

The following comments are made in relation to the financial position of the group members as at 30 June 2010.

Shire of Koorda The operating result produced in 2009/10 was a surplus of $1.533m. However after consideration of the revaluation of assets ($0.832m) the underlying result was a deficit of $0.057m. On a turnover of operating expense of $2.8 million this represent a deficit of 2% in the operations of the Shire. If grants for non-operating activities are considered then the Shire shows an operating surplus of $0.701m.

The Shire has no debt and strong level of cash backed reserves. Specified reserves are maintained for leave entitlements and planned asset replacement. This provides the Shire with some leverage to meet future capital needs of the community.

Indicators on the rate of consumption for assets in all categories is stable and in most cases improving which would suggest that a more than reasonable effort has been made to ensure asset renewal has been maintained. The road condition survey does not show a funding gap for roads which would suggest that the Shire is maintaining the quality of its assets to the community.

The Shire could increase its capacity through revenue or operating cost reduction to improve its position. This should not be at the expense of maintaining assets within the community. The Shire has indicated a higher than CPI increase in rating over the next 4 years which strengthen its position.

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Based on the operating position for 2009/10 financial year the reports would indicate that the Shire should be considered as sustainable.

Shire of Mt Marshall The operating result for 2009/10, excluding capital grants, was a deficit of $1.1 million. After considering capital grants the deficit was $0.168m.

The Shire has debt of $0.926m and $2.0m in cash backed reserves. Of the $2.0m in reserves some $0.700m relates to unspent grants. These remaining reserves cover such matters as housing, recreation facilities, employee entitlements and plant replacement. This will enable the Shire to react positively to future capital requirements.

Indicators on consumption of assets indicate a strong position that the written down value of property, plant and equipment asset classes are improving. Consumption of the road network however would suggest a minor deterioration in the written down of the network.

The Shire has indicated that it will maintain its rating regime in line with consumer price index movements over the next few years.

Based on the information presented in the 2009/10 financial reports and the operating results from that year the Shire would be considered marginally unsustainable. This arises from a deficit in the operating results and a downward trend of in the condition of the road network. This position is confirmed by a recently completed road condition survey.

Shire of Trayning The Shires operating results for 2009/10 produced a surplus of $0.070m. After considering grants for capital improvements the net result for the Shire was $0.743m.

The Shire carries debt of $0.467m and only $0.626m in cash backed reserves. The reserves apply to employee entitlements and plant replacement is considered inadequate given the level of assets that need to be maintained.

In section 2.1.2 of this report the depreciation expense per road length is low when compared to the adjoining local governments. This would suggest that based on a current valuation of the road network the operating result would be somewhat less.

Indicators of the consumption of properties, plant and equipment for assets shows a gradual decline. More importantly the decline is quite marked for plant and equipment. This would indicate that the Shire is not contributing enough funds for the timely replacement of plant and equipment. Indicators for road infrastructure indicate a stable position but low asset base.

The Shire has indicated that over the next three years it will be lifting rates by 13%, 13% and 8% which will contribute to a better financial position.

Considering the financial reports of 2009/10 would indicate this Council could be considered as marginally sustainable. However concerned is raised as to the appropriate level of depreciation expense reflected in the operating statement. This position was clarified with the completion of the road condition survey. The asset consumption ratio was the lowest of the three local governments.

All three Shires have will need to address the issues detailed in section 5.1.3 below over the coming years and the impact of those changes may have on the financial sustainability of each local government.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

The following ratios are based on the "Long Term Financial Planning Framework and Guidelines for Western Australian Local Governments" publication 2011 which identifies the proposed sustainability performance indicators for Western Australian local governments. Those indicators with a * signifies ratios prescribed by the Department. as at 30 June 2010 Koorda Mount Marshall Trayning Current ratio* 6.204 : 1 3.72 : 1 1.97 : 1 A measure of a local government’s liquidity and its ability to meet its short term financial obligations from unrestricted current assets.. Calculated as - (current assets LESS restricted assets) DIVIDED BY (current liabilities LESS liabilities associated w ith restricted assets) Statutory KPI - Target is greater than or equal to 1:1. 6.20 3.72 1.97 Operating surplus ratio* -13.97% -111.57% -61.54% An indicator of the extent to w hich revenue raised not only covers operational expenses, but also provides for capital funding.. Calculated as - Operating revenue(Exc Capital grants & Profit on sales) LESS operating expense(Exclude loss on sales) DIVIDED BY Ow n Source Revenue(Rates) Statutory KPI - Target is betw een 0% and 15%. -0.1 -1.1 -0.6 Operating surplus ratio (adjusted) 19.69% -3.76% 2.80% This is an indicator of the extent to w hich revenues raised cover operational expenses only or are available for capital funding purposes or other purposes.. Calculated as - Net result divided by total operating revenue (adjusted for abnormal and unsustainable revenues). Benchmark = equal to or greater than 0% 0.2 -0.0 0.0 Rate coverage Ratio* 24.77% 22.65% 20.92% An indicator of a local government’s ability to cover its costs through its ow n tax revenue efforts.. Calculated as - Total Rate Revenue DIVIDED BY Total Expenses Statutory KPI - Target is This is greater than or equal to 40%. 24.77% 22.65% 20.92% Debt Service Ratio* na 5.9 4.0 An indicator of a local government’s ability to generate sufficient cash to cover its debt payments.. Calculated as - Operating Revenue LESS Operating Expenses(excl Depreciation and Interest) DIVIDED BY Debt Service Costs(Principal and interest) Statutory KPI - Target is greater than of equal to 2. 300.00% 585.45% 400.08% Asset Sustainability Ratio* na na na An indicator of the extent to w hich assets managed by a local government are being renew ed or replaced as they reach the end of their useful lives.. Calculated as - Capital expenditure on replacement or renew al of assets divided by the depreciation expense Statutory KPI - Target betw een 90% to 110%. na na na Sustainability ratio 183.82% 107.02% 195.96% Capital expenditure divided by total depreciation expense.. Calculated as - Capital Outlays DIVIDED BY Depreciation expense

Benchmark = equal to or greater than 100% 1.8 1.1 2.0 Asset Consumption Ratio* na na na This ratio highlights the aged condition of a local government's physical assets.. Calculated as - Depreciated replacement cost(DRC) of assets (Written dow n value) divided by current replacements costs (CRC) of depreciable assets. Statutory KPI - Target betw een 50% to 75%. na na na Asset Consumption Ratio 69.37% 71.59% 50.76% This ratio show s the w ritten dow n value of the depreciable assets relative to their costs (historical or fair value). This ratio seeks to highlight the aged condition the stock of physical assets.. Calculated as - Written dow n value of infrastructure assets divided by gross current replacement cost of infrastructure assets. Benchmark = equal to or greater than 50% 69.37% 71.59% 50.76% Asset Renewal Funding Ratio* na na na Indicates w hether the local government has the financial capacity to fund asset renew al at existing revenue and service levels.. Calculated as - The net present value of planned capital expenditure on renew als over ten years divided by the net present value of the required capital expenditures on renew als over the same period. Statutory KPI - Target betw een 95 and 105%. na na na * signifies ratios prescribed in the "Long Term Financial Planning Framew ork and Guidelines for Western Australian Local Governments" publication 2011. Asset Sustainability Ratio* - requires the separate identification of capital outlays in either new or renew al amounts. Financial reports produced by local governments do not require this disclosure. Asset Consumption Ratio* - requires asset values based on replacement costs. Financial reports under the Accounting Standards use historical costs or fair value. Asset Renewal Funding Ratio* - requires a calculation based on the net present value of planned capital expenditure on renew als over ten years divided by the net present value of the required capital expenditures on renew als over the same period. This information is not required to be produced before 2013 and therefore is not available.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

2.2 Strategic direction This section examines issues that may impact on the strategic management, governance and administration of the members of the Regional Transition Group. The key areas are: • Governance – strategic planning, wards and representation, legislation • Administration issues – Chief Executive Officers, committees, reporting, and corporate branding • Community engagement • Local planning schemes.

2.2.1 Functional considerations While the business planning template suggests that the Regional Transition Group should consider the annual recurrent costs associated with performing such functions, no separate record is kept of these figures.

Governance- Strategic plan The Regional Transition Group members use the following devices to undertake strategic planning - Koorda Mt Marshall Trayning

5 Year Plan for the Future Forward Capital Works Plan (all Draft Forward capital works plan infrastructure except plant, furniture prepared November 2010 (covers and equipment) considered at roads, land and buildings, December 2010 Council meeting commercial activities and other infrastructure) for 5 year period 2011 – 2016.

5 year Forward Capital Works Plan 5 year Forward Capital Works Plan 5 year Forward Capital Works Plan

5 Year Housing Forward Program Five Year Strategic Plan 2001 (covers 5 Year Plan for the Future 2011/12 to 2015/15 (includes staff, issues in relation to road incorporating 5 year financial plan ‐ Police, Community Housing maintenance and construction, plant includes plant replacement, Road Program, Joint Venture homes) and machinery, asset management, Asset management, Housing, & organisational changes, resource various one off projects sharing, governance and PR, local

economic development and environmental concerns)

5 Year Buildings Forward Program Plan for the future 2003/4 to 2008/9 2011/12 to 2015/16 (includes (a reasonably well developed and refuse site, bowling green, pool, integrated plan highlighting projects, depot, caravan park) funding sources and shortfalls where apparent, use of Reserve Funds, loan funding, and others).

5 Year Road Works Forward Plan 10 Year Road Program 2010‐2020 2011/12 to 2015/16 (includes

major upgrades, footpaths, kerbing, draining, lighting) and funding sources

5 Year Bushfire Equipment Plan Plant Replacement Program 2010‐ 10 Year 2020

Annual budget Annual budget Annual budget

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Other than the Shire of Koorda which addresses strategic issues via its Plan for the Future, the members of the Regional Transition Group do not have integrated strategic plans.

There are however a number of elements used in forward planning that may assist the local governments in developing an integrated strategic plan, for example:

• The members of the Regional Transition Group also use their annual budgets as a means of integrating projects on a year by year basis and how they are to be funded. Annual reports are also used to report general issues of concern or overall strategic direction as well as a review of the past financial year. • The above plans are generally financial projections, although all highlight a general dependency on external Grant funding for the successful implementation of capital works projects. A concern over the state and utilisation of buildings appears to be a common theme. • Koorda in particular, in its 2010 Annual report noted that asset management was a crucial issue, and while it was setting aside funds in Reserve Accounts for future requirements, actual amounts set aside were likely to be less than 25% of forecast needs. • In addition, the consultant putting together Mt Marshall’s Forward Capital Works Plan suggested that Council should consider renewal or replacement of existing items, before considering any extra assets. • A recurrent theme appears to be basing spending on capital works according to available funding rather than perhaps by need. There are no major failures of assets or apparent though that might indicate a problem with this approach, but this should be subject to the asset condition survey described in Section 2.5.1.

Amendments to the Local Government (Administration) Regulations 1996 were made in August 2011 that now require local governments to produce a ‘strategic community plan’, and a ‘corporate business plan’.

There is a dependency of the members of the Regional Transition Group on grant or external funds to maintain assets. Ironically, over time many grant programs from other levels of government have been aimed at the provision of new facilities( a requirement of the grant), which initially require little refurbishment after construction but over time exacerbate the problem of having large asset stocks (buildings in particular) which now need substantial sums spent on them to keep in a reasonable condition. If a local government falls behind with its asset maintenance, it runs the risk that the facilities may become unusable, but must allocate additional funding to close any gaps in required funding until it reaches a sustainable level.

All members of the Regional Transition Group have a wide range of facilities which facilitates self contained communities. The cost of the renewal of these in future without ongoing external funding assistance may be an issue for the sustainability of each of the Regional Transition Group members.

Other than the format of their annual financial statements, the members of the Regional Transition Group do not have a great level of commonality between them in terms of the strategic plans developed.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Governance - Representation and wards None of the members of the Regional Transition Group use electoral wards. Each local government has seven (7) elected members. In accordance with the provisions of the Local Government Act, Shire Presidents are elected for 4 year terms by the Council.

The table below shows ratios and electors represented in each of the members of the Regional Transition Group and collectively as a merged entity.

Koorda Mt Marshall Trayning Totals Area (km2) 2,662 10,134 1,632 14,428 Population 474 653 393 1,520 No of elected members 7 7 7 21 Electors at last election 335 394 341 1,070 Electors per elected member 47.9 56.3 48.7 51.0 Population per elected member 67.7 93.3 56.1 72.4 In person (2007 ‐ Method of election In person Postal) In person

While on face value, there are differences between the ratio of elected members per elector or the number of people per elected member between the member Shires, in absolute terms there is little difference. There is a significantly larger geographic area for the Shire of Mt Marshall. In all three local governments there is a relatively high ratio of elected members per elector.

Governance (Corporate) - Legislation Delegations of Authority All three members of the Regional Transition Group have well documented registers of Delegations of Authority that set out the procedural matters relating to delegations to Committees, those under the Local Government Act, Local Government (Miscellaneous Provisions) Act, Bush Fires, Health, and Dog Acts. Trayning’s is under review as at January 2011.

There are differences between the three, but none which on face value that would appear to be of critical concern.

Administration - Chief Executive Officer Across the Regional Transition Group, the local governments employ 3 Chief Executive Officers. The salary and/or employment benefits paid to a Chief Executive Officer of a member of the Regional Transition Group will vary depending on his/her background and skills bought to the job and the specific needs of the Council at the time. The cost to the local government will also vary with the time a Chief Executive Officer might spend in his/her position, generally increasing over time.

It is likely then that a merged local government would also be classed as Band 2 as recommended by the State Salaries and Allowances Tribunal. Given the workload in merging three Shires, the ‘new’ Council may have to consider milestone payments or a higher than normal compensation arrangement equivalent to (say) Band 3 (total reward package $134,638 - $182,303). Again, using the median of this Band, a new local government might expect its

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Chief Executive Officer to be rewarded with a package of around $158,705. The precise mix of this package would depend on negotiations with the appointee.

The members of the Regional Transition Group do not have ‘Executive Teams’ as described in the template document, but Mt Marshall and Trayning employ a deputy Chief Executive Officer. Koorda employs a Senior Administration Finance Officer.

Administration - Committees There are no administrative committees as such that would have any influence on the Regional Transition Group.

All Chief Executive Officers participate in executive meetings of Chief Executive Officers of the North Eastern Wheatbelt Regional Council (NEWROC).

Administration - Reporting The reporting process is in accordance with the Local Government Act 1995 and the appropriate Regulations. Each administration reports to its respective Council at least monthly in accordance with legislative requirements.

Standard reports are - Mount Marshall - Balance Sheet, Income Statement and accounts paid. Trayning - Activity Reports for Natural Resource Management, Works, Projects, Health and Building. Standard finance reports include statements, lists of payments, investments, and variances to budget. Koorda – works progress report, Balance Sheet, Income Statement and accounts paid.

Administration - Corporate branding Each member of the Regional Transition Group has its own logo applied to stationery, facility identification etc, but not use an external marketing service. While none of the group have developed ‘brands’ as such, their logos contain similar themes reflecting the strong basis in agriculture in all three of sheep and wheat.

While the corporate ‘brands’ as such are not likely to influence a decision about merger or otherwise, a sense of community identity is more likely to be the issue.

Community engagement Mount Marshall has adopted a community consultation Policy, whilst the Shire’s of Trayning and Koorda do not have specific policies or processes in place. However, with small communities access to staff and elected members on community issues is freely available. Issues tend to the treated on a case by case basis. All local governments circulate a free community newsletter on a regular basis.

Town (local) planning schemes Koorda’s Local Planning Scheme No 3 was reviewed in 2008 with the assistance of Planwest Planning Consultants and gazetted on 9 July 2010.

Mt Marshall’s Local Planning Scheme No 2 was gazetted in June 1996 and an updated Scheme is also development. Trayning’s Local inaugural Planning Scheme is under development and is being advertised for public comment.

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All three Shires used Planwest as part of a NEWROC project.

As an observation though, in all cases the planning functions of the members of the Regional Transition Group are not so much related to managing development as trying to encourage it.

2.2.2 Financial considerations Figures are not kept that readily allow identification of expenses, income and other matters that can be identified as a component of the ‘strategic direction’ of a local government. This area does though, broadly equate to the ‘Governance’ Program of the members of the Regional Transition Group.

Revenue and expenses under the Governance Program for Regional Transition Group members for the budget year ending 30 June 2012 are:

2011/12 Budget Koorda Mt Marshall Trayning Revenue Members of Council 1,450 ‐ 50 Other Governance* 44,466 307,154 29,960 Total 45,916 307,154 30,010 Expenditure Members of Council (326,171) (299,902) (211,936) Other Governance* (78,937) (332,939) 12,000 Total (405,108) (632,841) (199,936) Net (359,192) (325,687) (169,926) * ‐ Mt Marshall includes $306,954 for RTG projects. 2.3 Services This section considers the current services provided to the community in terms of the type, level, and associated costs. It enables the local governments in the RTG to understand the commonality and differences in service provision and whether the current range of services reflect the external drivers, such as population and community needs.

Each of the local governments provides a range of facilities and services. The cost in providing these services is accounted for in accordance the program level activities in the Local Government Act (Financial Management) Regulations and Department of Local Government Accounting Manual 2008). The financial considerations are listed in section 2.3.2.

In practice though, local government organisations are not structured in this manner with staff, buildings, plant and equipment not necessarily totally and separately identifiable with the programs under the legislation.

2.3.1 Functional considerations

Details of Program Services/Facilities Most services where employees are used require the need to be multi-skilled and be capable of attending to the duties that the local government needs them to, limited only by their hours of employment and capabilities. In many cases, a ‘service’ is often one of a number provided by a staff member as part of a range of duties undertaken, and in many instances costs are

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Regional Transition Group – Koorda, Mt Marshall, Trayning

simply not separately kept in relation to the service at the level of detail suggested in the business planning template.

If the three local governments were to merge, overhead areas such as the number of members of a Council, Chief Executive Officer’s and administrative services staff, main offices and depots are likely to be those affected. This has a ‘knock on’ effect to other areas for possible cost savings in associated areas such as staff housing and light vehicles.

Services that are required to be provided or regulated via statutory obligation may change in that it may be more efficient to administer them via a single point, or pool expertise to allow them to be undertaken more easily. However, unless the Act or Regulation requiring that ‘service’ to be provided is changed, there will still be a need for it to be continued whether the local community want them to be provided or not. This also may have a crowding out effect on services that might be discretionary where new statutory requirements are introduced.

Services that are dependent on mobile plant and equipment like road construction or grading may be affected by a merger in that it may be possible to better utilise major or costly items. Major services that might be provided by contractors (domestic waste collection is possibly the best example) will still be likely to be continued after a possible merger. It is possible that some savings can be realised through greater bargaining power or where a single contract entered into or one contractor engaged instead of 3 separately. This should be tempered against the large geographic area of the new entity (nearly 15,000 km2) and any “local” purchasing policy applied by a local government.

It is considered that provision of location specific services like rubbish tips, cemeteries, community centres and swimming pools are unlikely to change in the short term and while a future merged entity may decide whether or not to continue their provision or operation, it would seem unlikely that a Shire would agree to participate in a merger where a reduction in services was likely.

Finally some services are of such a small scale that they are unlikely to have a bearing on a decision to merge or not.

The table below provides a listing of a range of services currently provided by each of the Regional Transition Group members. Areas where there are differences between the three Shires are highlighted. Also discussed below are some opportunities to provide services in a more efficient manner and those where perhaps a service is currently not fully provided could be added.

The Regional Transition Group Board defined as a guiding principle that services level should be applied at the highest common denominator.

This section provides a list of:  The type, range and level of services are currently provided by each of the Regional Transition Group members.  Where applicable, the frequency of service delivery for each service provided.  Whether or not the service is provided directly by the local government, by volunteers or outsourced.  Where service is affected by a contract that might be material to a merger decision (value of over (say) $50,000 over the life of the contract).

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Community Removal of dead animals Ad hoc by works staff Ad hoc by works staff Ad hoc by works No Amenities - staff environment Recycling - kerbside No (under Recycling Service 2 per month (Avon Yes Potential additional cost consideration) provided two times Waste) consideration for Koorda per month town site (Contracted to Avon Waste) Recycling – at tip site Self sorting by Self sorting by No No members of the public members of the public using the tip and into using the tip and into areas allocated and areas allocated and signed signed

Other Recycling: Scrap Metal, aluminium cans, car batteries & spectacles – Lions Ink & toner cartridges – Post Office Mobile Phones & Accessories – Post Office & Shire Drum muster - Shire Land care program Service funded by Full-time NRM Officer Partially funded by Yes Programs may need Council – share an funded by shire. NRM State and synchronisation; may be officer (2 days p/w) with projects are heavily Commonwealth preferable through to Dowerin & reliant on external programs gradually phase in Wyalkatchem. funding. NRM Officer shared changes over time in with Nungarin order to keep location- specific knowledge and programs. Removal of household Weekly household Weekly household Yes Same contractor but Community Weekly household waste collection provided by collection provided different contract expiry Amenities – collection provided by contractor (Avon by contractor (Avon date(s). waste contractor (Avon Feasibility Study Page 24

Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments collection Waste). Contract Waste). Contract Waste). Contract expires on 01/07/2013 extended to December expires in May 2012. 2012. Trayning have advised Avon waste that it extend on week to week to try to align contracts with MM and WM Removal of public litter Weekly street bins By Parks & Garden Generally weekly by Yes Potential variation to AW collection provided by crew Avon Waste contract to include Mt Avon Waste Marshall? Removal of builders No service - Nil No No waste arrangement with Shire as private works Removal of commercial or No service - Cardboard boxes Weekly by Avon No other waste arrangement with Shire removed by Parks & Waste as private works Garden crew Avon waste provides weekly rubbish collection to commercial premises

Provision of bulk bins No Nil No – but available No privately through Avon Waste

Waste water treatment Koorda town site waste Nil No Yes Merged Shire may seek plant water treatment plant to recover costs from provided and operated Koorda town site by Shire (1.5FTE’s) residents; other towns sites may seek similar works

Sewerage Koorda townsite Seepage pond located No Yes Merged Shire will need to sewerage reticulation in Bencubbin to decide service levels for provided and

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Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments maintained by Shire service some houses. towns. Provision of Septic Truck for septic pump outs.

Community Provision of bus shelters Nil No No Amenities - public Provision of public Toilets provided for Toilets provided for Toilets provided for No conveniences (toilets) general public use in general public use in general public use Koorda townsite by Bencubbin. Beacon in Trayning (2), Shire public toilets are Kununoppin (2) and owned by Beacon Yelbeni townsites Sports Club but by Shire maintained by the Shire.

Provision of street Provided for general Yes. Few seats, Yes – in high use No furniture and seats public use in Koorda rubbish bins in each areas townsite by Shire town.

Cemeteries Cemeteries provided Cemetery provided Cemeteries No May need to review fees and operated by Shire and operated by Shire provided and and charges if significant near Koorda townsite near Bencubbin operated by Shire differences exist (as will townsite and Beacon near Trayning, be the case with respect townsite. Kununoppin and to all fees and charges). Yelbeni townsite

Removal and sale of No Yes. Has happened Yes – occasional No abandoned vehicles once in the last ten years.

Community Water and stormwater Managed as per Dept of Yes. Half of Yes No Amenities - drainage Water guidelines as Bencubbin and 20% of drainage and required by Shire Beacon.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments disposal Refuse site operations Managed by the Shire Refuse sites located in Trayning tip unused No Management of closure of Bencubbin (30yrs life) but remains Trayning tip by merged & Beacon(50yrs life). officially open. entity. Mainly used for disposal of contaminated waste (asbestos etc)

Kununoppin and Yelbeni tips both open and used

Community Dust abatement programs No Nil No No Amenities – non Transfer station operation No Nil No No categorised

Economic Issuing of building permits By EHO/BS (shared by EHO/BS employed Yes – shared with 5 No May be opportunity to Services – 5 shires – Koorda, Mt one day per week and Shires increase outputs by construction Marshall, Mukinbudin, responsible for issuing reduced travel time/ over regulation Trayning & building permits. head costs for person Wyalkatchem). having to deal with 2 less Shires (3 merged into 1)

Inspection of buildings By EHO/BS (shared by EHO/BS employed Yes under construction 5 shires – Koorda, Mt one day per week and Marshall, Mukinbudin, responsible for Trayning & building inspections Wyalkatchem).

Economic Regulation of advertising Have a few council Yes – Local Laws Yes May need to merge local Services – signs and hoardings policies on it. laws or policies advertising regulation

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Economic Swimming pool By EHO/BS (shared by EHO/BS employed Yes No Services - inspections 5 shires – Koorda, Mt one day per week and public Marshall, Mukinbudin, responsible for Trayning & swimming pool Wyalkatchem). inspections.

Business centres or No Nil No No Potential to redeploy business incubators resources into economic development position?

Provision of post office Private enterprise Nil Private No service

Operation of a By arrangement with Nil No – but available at No weighbridge CBH CBH

Operation of quarries or Gravel extracted by No operation of Gravel pits for Shire No gravel pits Shire from pits on quarries or gravel pits. use only private land (farms) Gravel is from pits on farmers properties. We do pay for the gravel taken.

Provision of rural bus No Nil No No service

Operation of plant No Community nursery No Yes Potential for spreading nurseries owned and run by the costs over larger rate Shire. This service is base/ greater span of being reviewed. operations

Support to tourism Contribute to Yes – generally in Yes May need to consider operations NEWTravel. Joint kind rather than levels of support provided tourism group. financial by merged entity commitment to

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments projects. Contribute to NEWTravel joint tourism group

Provision of scenic Provision of information Information bay in Yes – information No lookouts and information bay Beacon and bay in each town. bays Bencubbin. Shire does manage some reserves that are used for tourism. Also have a peppercorn lease for Pergandes (tourist site just out of Bencubbin)

Operation of caravan Yes – caravan park (no Caravan park in Yes – Trayning No Does the potential exist parks and on site chalets on site chalets). Beacon and caravan Park, no for the private sector to Bencubbin. Both have chalets operate these sites? The two units. three RTG members have 4 caravan parks between Barracks in Beacon them. are also available for accommodation. Bencubbin has a ‘consultants unit’ available for visiting police, nurses consultants.

Operation or provision of No One saleyard located No No saleyards at the Recreation Ground.

Weed and pest plant Shire staff conduct Perform some Public roads and No May need to standardise control program roadside spraying Council property service levels (Major roads). only, as needed

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments Perform some spraying around town.

Vermin control and Ad hoc, a fox shoot is Shire contributes to Yes – feral cats and Yes May need to standardise destruction arranged from time to the “Eastern species dogs, pigeons, service levels time. Shire provides declared animals corellas under bait layers for hire to group” who employ a licence, as needed, land owners. dogger. generally through NRM programs

Rural counselling services Share and support CDO position is partly No Yes May need to standardise Wheatbelt service. funded by Dept Child service levels Protection to act as a Family Support Officer

Provision of stand pipes Shire maintains 4 Yes One in each town No standpipes in district

Economic Economic development No Nil No No Merged Shires may be services – program able to put more other resources into this area.

Provision of local No Nil No No Potential for Shire of KMT enterprise centres to become involved?

Abattoirs No Nil No No

Education After school care, child Provided building for In the process of trying Volunteer play Yes May need to standardise and welfare - care centres, crèches, use by play group and to transfer child care group supported by service levels youth child minding centres, youth group building into our name. Council play groups (This is a tricky situation)

School bus service Private enterprise Nil Ed Dept No

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

School prizes and Give school prize, no Book to Bencubbin Yes No scholarships scholarships Primary School for a prize.

Kindergartens No – combined with Nil No No primary school

Pre-school centres No – combined with Nil No No primary school

Education Aged persons centres No 4x Aged care units in Assisted aged care Yes May need to standardise and welfare – Bencubbin (Joint at Hospital service levels but merged adult and venture arrangement) entity unlikely to cease aged Independent living provision. 2x Aged care units in units (6) – Shire Beacon (Wholly owned)

Frail aged assistance No Nil HACC through No Hospital

Assistance to P&C Yes as per requests Nil Yes – general in- No Associations kind support

Education Meals on wheels service No Nil Hospital No and welfare – specialised Home help service No Nil Hospital No

Podiatry service No Nil Hospital No

Education Provision of Community No – contract CDO to Nil No No and welfare – Resource Centre CRC other Community training and No Nil No No development

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Health – Ambulance services No – St John’s Nil (Volunteer) St Johns No hospital Ambulance provides health service (assist as per services requests)

Provision of Medical Provide building and Part owner in Medical Practice Yes May need to standardise centres some equipment Kununoppin Medical located in hospital, service levels Practice operated in partnership with Mt Marshall, Mukinbudin, Nungarin

Immunisation, inoculation No Nil (Silver chain) Hospital / doctor No programs

Health - Community health No Nil No No Specialised services health services Silverchain nursing No Own house in Beacon No No for Silverchain Nurse.

Environmental health Share an officer with Mt Environmental Health Yes – with KD, WM, Yes May be possible to officer Marshall, Mukinbudin, Officer (EHO)/Building MM, WA increase available time to Trayning and Surveyor (BS) visits community by pooling Wyalkatchem. one day per week. I day per week employment currently between 3 Shires.

Health - Food Food sampling By EHO/BS (shared by EHO performs food Yes – with KD, WM, Yes As per comment above health 5 shires – Koorda, Mt inspections. There are MM, WA services Marshall, Mukinbudin, minimal food outlets. 1 day per week Trayning & Wyalkatchem).

Meat inspection No Nil No No

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Health - Non- Fly and mosquito control No Some mosquito control Mozzies – bait 2-3 Yes May need to standardise categorised performed a few times times a year service levels per year.

Rodent eradication No Nil No No program, vermin control.

Housing Aged persons homes No 4x units Bencubbin Shire has 6 units for Yes May need to standardise independent living service levels but merged 2x Units in Beacon entity unlikely to cease Have a lot of joint provision. venture housing as well.

Law, Order Bush fire control and In conjunction with Yes. Through VES No and Public management/prevention VBFBs Safety - Emergency Voluntary fire brigades Yes Koorda and Kulja Yes. Have seven Through VES No services brigades

Roadside clearing Yes – Works crew carry Yes. Performed by Yes No Extent of service level out road side clearing grader drivers. may go up if merged?

Support to State Support local SES Nil Through VES No Emergency Service (however coordinator position vacant)

Law, Order Community policing No Nil No No and Public program Safety – Public safety Neighbourhood watch Yes – provide signage Yes. Not really active Yes No and promote

Safety house program Promote Nil No No

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Rural watch program Yes – provide signage Nil No Yes May need to standardise and promote service levels but not a major issue

Law, Order Cattle pounds No Nil No No and Public Safety - Law Dog catcher Use wheatbelt ranger Nil Regional Scheme Yes May need to renegotiate and Order service based in through Merredin contract with Merredin to Management Merredin include Mt Marshall

Dog registrations Yes Yes. Yes No

Impounded vehicles No Nil Yes – occasional Yes May need to renegotiate contract with Merredin to include Mt Marshall

Provision of ranger to Use wheatbelt ranger Nil Regional Scheme Yes May need to renegotiate enforce council local laws service based in through Merredin contract with Merredin to – eg parking Merredin include Mt Marshall Quarter day a week

Recreation Aquatic centre Manage and operate Yes. Bencubbin. Yes – 25m 6 lane No Opportunity to ‘pool’ and Culture – swimming pool 33m x 6 maintenance contracts? sports lanes services Basketball courts Yes part of sporting Yes. Bencubbin has Yes - 4 No complex – 2 courts one indoor and a couple of outdoor courts. Beacon has some outdoor courts.

Bicycle paths/racks No Yes. Shared path Dual use No around Bencubbin.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Bowling clubs Part of Koorda Sports Two. Minimal ($1,000) Private No Club support provided. Privately owned.

Change rooms As part of the At Bencubbin and No No recreational facilities Beacon Rec Centres

Children playgrounds Shire controls and Four. (Two Bencubbin, Yes – Trayning and No maintains 3 two Beacon) Kununoppin

Golf course/clubs Part of Koorda Sports Nil. Volunteer No Club (shire assists with mowing fairways)

Fitness centre No Yes. One in Yes – key No Potential effect if usage Bencubbin. membership, arrangements are Committed to building unstaffed standardised but would one in Beacon. appear minimal – note through that this applies to all community facilities and services in a merged entity.

Netball courts Part of sporting One indoor Bencubbin. Yes – with No complex – 2 courts One outdoor Beacon. basketball courts

Ovals and grounds Part of sporting Two. One Beacon, School – MOU for No complex One Bencubbin, public access

Racecourses No Nil No No

Sporting complexes One centre with the Two. One Bencubbin, No No facilities as mentioned one Beacon.

Tennis clubs and courts, Yes part of sporting Two. One in Beacon Volunteer – 4 grass No

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments complex – 2 synthetic and one in Welbungin. courts courts Welbungin is privately owned but support is given by the Shire.

Recreation Art galleries No Nil No No and Culture – culture Auditorium No Nil No No services Libraries Yes in administration Two. One Bencubbin Yes – Shire office Yes Libraries in all three local building shire office. One in governments are housed Beacon Telecentre. in their main Beacon is visited once administration centres. per week by admin Support is provided by staffer. staff who are also normally based at the admin centre and issue books and the like as part of their other duties.

Historical sites Yes Lease of pergandes. Yes No

Museums Assist with building Nil. Yes No ‘Museum’ facilities in the repairs & maintenance three Shires are a mixture of buildings provided by the local governments, community facilities and all are effectively run by volunteers. All are assets a merged entity would have under its care, control and management.

Masonic lodge No Yes. Bencubbin. No No The Bencubbin former Masons Lodge is effectively a community

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments building and is another of the assets a merged entity would have under its care, control and management.

Radio re-broadcasting Provide 1 FM station – Nil Yes Yes May need to standardise ‘Hot FM’ service levels but effect not seen as material.

Television re- Provide 4 TV stations – Two. Beacon & Yes No broadcasting ABC, GWN, WIN & Bencubbin (This will SBS cease in 2013)

Recreation Wildlife reserve Assist preservation of Yes. DEC No and Culture – nature flora & fauna outdoor reserves services Drive-in theatres Maintain infrastructure Nil No No The Koorda drive-in is another of the assets a merged entity would have under its care, control and management.

Public gardens No gardens only parks Yes. Botanic garden Yes No in Bencubbin.

Transport - Crossover subsidy No Yes No Required by Local roads program Government (Uniform Local Provisions) Regulations

Depots A large depot with Three. One Beacon. Trayning Yes Some rationalisation of workshops, machinery Works & aggregate depots likely if a merger protection and staff depot Bencubbin. Stockpiles etc at the proceeds Pig Yards 3 km east facilities of Trayning

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Road construction Shire staff with Yes. Yes No This is a major area of assistance of operations of the contractors supplying members of the RTG. bitumen or emulsion Opportunity to pool plant and equipment to increase utilisation rates.

Road maintenance Shire staff carry out Yes. Yes No Some checks on asset road maintenance conditions may be necessary

Provision and Shire staff carry out Yes. (Native trees. Yes No maintenance of street maintenance of street Care needed only in trees trees first year)

Transport – Aerodromes Shire staff keep the Two airstrips. Beacon Sealed airstrip at No The maintenance required related unlicensed airstrip & Bencubbin Kununoppin appears minimal infrastructure maintained and services Bridges and culverts Shire staff keep the Yes. Yes No culverts maintained, no bridges

Transport - Provision of footpaths Shire staff construct Yes. Both towns have Yes No others footpaths with nearly 100% footpaths. assistance of contractors

Street lighting Shire fund street Yes. Minimal. Yes No lighting upgrades & running costs

Street sweeping Shire staff carry out Yes. Both towns twice Major – 2 a year No street sweeping per year. Minor – as needed

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Program & Service Koorda Mt Marshall Trayning Potential Effect on RTG? Sub-Program Yes/No Comments

Vehicle registration Shire provides service Yes. Licensing agent. Agent for DoT No to local residents - – agency for DoT

Vehicle examination No. Yes. No Yes.

These differences in services or levels noted above that could be considered significant are discussed below (note that areas where there are common threads have been grouped together, rather than separated by Program descriptions used in the Accounting Manual.

Waste collection It should be feasible to let a single contract for the provision of collection services for the new, combined entity (subject to compliance with the requirements of the Local Government (Functions and General) Regulations with respect to tendering for contracts with a value of over $100,000) with services for the former Shire districts coming into effect on expiry of any current contracts, and with a standardised service level between the areas to be serviced.

The new entity would need to manage final closure of the Trayning tip. Access though to the Bencubbin site which appears to have significant life left in it would be of benefit to Koorda and Trayning in the longer term.

Landcare Programs A larger local government may be better placed to attract grant funding, which this area of activity is currently dependent on, particularly those programs where a measure of co-funding is required. Similarly, if national or State government support were to be reduced or withdrawn in future, a single entity with the combined rate base of the three Regional Transition Group members may find it easier to fund such programs from its own resources.

Waste water treatment A new local government could decide to extend Mt Marshalls septic tank pumping service to Trayning residents, or simply require them to contact a private contractor.

Health and Building Contributions are made by participating local governments on an agreed basis (Mukinbudin and Wyalkatchem being the other participants other than the Regional Transition Group members).This includes issuing of building permits, inspection of buildings under construction, environmental health, inspection of food premises, enforcement of Health local laws and associated matters.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

The combined local governments could use the services of the same person for 3 days a week. Depending on the amount of time spent on site, productivity could be improved by reduced travel time between former Regional Transition Group member offices as well.

Economic Development None of the Regional Transition Group members have a well developed economic development program or are able to dedicate resources to economic development initiatives. There is some support provided to tourism initiatives but on the whole this appears ad hoc and subject to higher priorities.

In this regard while their service levels are similar, and arguably it is outside their mandate as local governments, economic growth would appear to be an area in which the resources freed up by a merged entity could be put to good use.

All three local governments have a number of buildings and halls which appear underutilised. Subject to further analysis, re-use of some (for example a business incubator) could be considered. As well as support to the agricultural sector via NRM and associated programs, tourism development, business attraction and other initiatives could be explored.

Caravan Parks Visually, all appear to be of a reasonable/good standard. Trayning’s has recently been upgraded and it is well located adjacent to its swimming pool.

An opportunity to tie in the facilities as part of a tourism development strategy, pool maintenance contracts, development booking systems or websites, etc would be open to a larger entity (or potentially leased to a private sector operator).

Aquatic Centres There may be the opportunity to gain some economies of scale by pooling the maintenance and supply contracts that exist and standardise operational practices such as chemical storage and the like, plus ease any problems with operational issues like opening when staff are on leave or ill by synchronising opening times to allow coverage.

Museums and Historical Sites There are a variety of historical sites and facilities within the Regional Transition Group area. In many cases, the buildings are owned by the Shires who have either bought or been given them over the passage of time. Operations are undertaken by volunteers or on an ad hoc basis by Shire staff if and when time allows, as is promotion.

The co-ordination of these facilities across the district could tie in well with an economic and tourism development strategy.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Road Network – Construction/Maintenance The following details of each of the member’s road network are taken from the road condition survey undertaken in August 2011. Unformed Formed Paved Paved and sealed Total Koorda 36.2 304.1 476.5 249.2 1,065.9 Mt Marshall 25.2 686.8 710.1 299.8 1,721.9 Trayning 20.0 44.6 542.5 148.3 755.4 81.4 1,035.5 1,729.0 697.2 3,543.1 Source : Cardno Road condition survey September 2011.

The majority of the network is located in the rural sector of the district. ROAD TYPES ROAD TYPES Non Built Up Access Roads Local Distributor District Distributor Total Built Up Area Total Area Koorda 852.37 183.60 29.89 1,065.86 ‐ Koorda 7.54 1,058.32 1,065.86 ‐ Mt Marshall 1,290.24 369.29 62.33 1,721.86 ‐ Mt Marshall 9.32 1,712.54 1,721.86 ‐ Trayning 356.34 321.86 77.16 755.36 ‐ Trayning 15.20 740.16 755.36 ‐ 2,498.95 874.75 169.38 3,543.08 32.06 3,511.02 3,543.08 percentage 71.2% 24.9% 4.8% percentage 0.9% 99.1%

1,800 100% 1,600 80% 1,400 1,200 60% 1,000 800 40% 600 400 20% 200 0% ‐ Koorda Mt Marshall Trayning Koorda Mt Marshall Trayning

Access Roads Local Distributor District Distributor Built Up Area Non Built Up Area

Source : Cardno Road condition survey September 2011. Source : Cardno Road condition survey September 2011.

Road Network – Construction/Maintenance The value of the existing road network is approximately $200.0m with a written down value of $153.4m which represents a consumption ratio of 77% which represents a strong performance indicator based on the benchmarks suggested by the Department of Local Government.

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Regional Transition Group – Koorda, Mt Marshall, Trayning VALUATIONS Road Length Sealed Unsealed Repacement Depreciated WDV ACR Koorda 1,065.9 249.2 816.7 64,724,719 13,318,798 51,405,921 79.4% Mt Marshall 1,721.9 299.8 1,422.1 87,329,239 20,303,198 67,026,041 76.8% Trayning 755.4 148.3 607.1 47,947,811 12,986,974 34,960,837 72.9% 3,543.1 697.2 2,845.9 200,001,769 46,608,970 153,392,799 76.7% Source : Cardno Road condition survey September 2011. ACR = Asset Consumption ratio Network Profile ‐ Replacement costs Written Down Values Formation Pavement Seal/Kerb Total Formation Pavement Seal/Kerb Total Koorda 30,602,932 21,192,384 12,929,403 64,724,719 Koorda 0 13,921,504 6,881,485 20,802,989 Mt Marshall 44,070,201 26,486,300 16,772,738 87,329,239 Mt Marshall 0 14,764,076 8,191,764 22,955,840 Trayning 19,384,063 20,249,975 8,313,773 47,947,811 Trayning 0 11,600,488 3,976,286 15,576,774 94,057,196 67,928,659 38,015,914 ‐200,001,769 40,286,068 19,049,535 59,335,603 Source : Cardno Road condition survey September 2011. Source : Cardno Road condition survey September 2011.

PROFILE ‐ Road Network

100% Profile Formation Pavement Seal/Kerb Total 80% Koorda 47.3% 32.7% 20.0% 100.0%

60% Mt Marshall 50.5% 30.3% 19.2% 100.0% Trayning 40.4% 42.2% 17.3% 100.0% 40% Total 47.0% 34.0% 19.0% 100.0%

20%

0% Koorda Mt Marshall Trayning

Formation Pavement Seal/Kerb

Source : Cardno Road condition survey September 2011.

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Regional Transition Group – Koorda, Mt Marshall, Trayning ROAD PROGRAM ‐ 15 years 4.00

3.50 Millions

3.00

2.50

2.00

1.50

1.00

0.50

0.00 Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

Koorda Mt Marshall Trayning

Source : Cardno Road condition survey September 2011.

Annual 15 yr program annual need $ pa/km Depreciation Koorda 12,150,688 810,046$ 760 760,178 Mt Marshall 23,007,013 1,533,801$ 891 1,957,615 Trayning 10,799,558 719,971$ 953 310,991

Based on 2011/12 budget expenditure patterns the Shire of Koorda is meeting its renewal needs, whilst the Shire’s of Mt Marshall and Trayning are slightly under the requirements for renewal needs. In dollar terms for the Shire of Mt Marshall to equal the asset consumption ratio of Koorda (79.4%) would require $11.0m spent and $3.1m by the Shire of Trayning.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

2.3.2 Financial considerations The following table shows the revenue and expenditure by sub program for Regional Transition Group members for the 2011/12 budget year:

Koorda Mt Marshall Trayning Revenue Expenditure Revenue Expenditure Revenue Expenditure GENERAL PURPOSE FUNDING Rate Revenue 784,362 (52,634) 1,093,226 (64,240) 609,583 (33,323) Grants ‐ untied 1,258,304 0 1,404,796 0 1,169,157 0 Interest Earnings 212,000 (28,396) 98,849 (3,899) 11,927 (27,695) Other 0 0 0 0 0 0 2,254,666 (81,030) 2,596,871 (68,139) 1,790,667 (61,018) GOVERNANCE Members of council 1,450 (326,171) 0 (299,902) 50 (211,936) Other governance 44,466 (78,937) 307,154 (332,939) 29,960 12,000 45,916 (405,108) 307,154 (632,841) 30,010 (199,936) LAW, ORDER & PUBLIC SAFETY Fire prevention 22,062 (94,241) 18,500 (52,009) 5,000 (31,032) Animal control 795 (16,739) 600 (7,247) 600 (18,528) Other law, order, public safety 17,620 (27,741) 0 0 9,295 (27,667) 40,477 (138,721) 19,100 (59,256) 14,895 (77,227) EDUCATION & WELFARE Pre‐school 0 (11,050) 0 (12,329) 0 (10,571) Other education 0 0 0 0 0 (4,156) Aged & disabled ‐ Senior citizens 0 0 0 (1,569) 0 0 Aged & disabled ‐ Meals on whee 0 0 0 (3,520) 0 0 Aged & disabled ‐ Other 0 0 15,600 (31,865) 0 (100) Other welfare 0 (1,560) 7,616 (85,083) 0 0 0 (12,610) 23,216 (134,366) 0 (14,827) HEALTH Preventive services ‐ Admin/insp 125,111 (171,079) 0 (43,867) 254 (36,372) Preventive services ‐ Pest contro 0 (2,415) 0 (7,717) 0 (8,909) Preventive services ‐ Other 0 (1,756) 0 (3,131) 0 (500) Other health 5,980 (97,898) 0 (49,483) 36,196 (177,082) 131,091 (273,148) 0 (104,198) 36,450 (222,863) HOUSING Staff housing 14,040 0 34,320 (134,375) 0 0 Other housing 96,692 (124,505) 27,040 (86,189) 58,466 (100,256) 110,732 (124,505) 61,360 (220,564) 58,466 (100,256) COMMUNITY AMENITIES Sanitation ‐ Household 50,618 (85,186) 39,495 (82,720) 42,660 (84,301) Sanitation ‐ Other 0 0 5,400 (26,677) 4,101 (30,393) Sewerage 89,438 (82,887) 5,000 (19,294) 0 0 Protection of environment 0 0 20,600 (131,064) 20 0 Town planning & regional develo 177 (16,493) 0 (8,942) 300 (16,163) Other community amenities 3,400 (55,879) 4,500 (35,513) 1,000 (21,921) 143,633 (240,445) 74,995 (304,210) 48,081 (152,778)

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Financial considerations … continued Koorda Mt Marshall Trayning Revenue Expenditure Revenue Expenditure Revenue Expenditure RECREATION & CULTURE Public halls, Civic Centre 1,055 (42,330) 2,240 (65,266) 7,430 (49,317) Swimming Pool 6,259 (163,868) 10,000 (108,541) 6,000 (131,014) Other recreation and sport 5,273 (310,309) 5,000 (279,006) 5,196 (176,827) Television and radio re‐broadcas 0 (7,208) 0 (17,250) 2,017 (20,409) Libraries 142 (32,709) 0 (25,459) 60 (74,066) Other culture 0 (40,293) 2,000 (28,024) 500 (7,486) 12,729 (596,717) 19,240 (523,546) 21,203 (459,119) TRANSPORT Road Infrastructure 101,000 (1,201,982) 140,851 (2,768,229) 73,163 (858,225) Road plant/equipment 127,600 (25,954) 0 (63,845) 0 0 Airport 0 (17,904) 0 (11,028) 0 (34,168) Traffic control 0 0 10,500 (39,239) 0 0 228,600 (1,245,840) 151,351 (2,882,341) 73,163 (892,393) ECONOMIC SERVICES Rural services 6,174 (154,333) 0 (19,849) 30,695 (154,303) Tourism and area promotion 3,500 (50,350) 43,500 (105,892) 6,311 (175,194) Building control 2,501 (9,297) 0 (38,942) 2,080 (12,885) Economic Development 0 0 0 (28,337) 0 0 Other economic services 16,725 (34,664) 31,000 (34,006) 1,500 (19,623) 28,900 (248,644) 74,500 (227,026) 40,586 (362,005) OTHER PROPERTY & SERVICES Private works 6,656 (7,009) 17,100 (17,115) 59,000 (57,665) Public works overheads 2,279 0 8,000 (5,704) 12,615 (1) Plant operations 6,717 0 15,500 (13,280) 4,000 0 Unclassified 0 0 0 (636) 2,100 (2,600) 15,652 (7,009) 40,600 (36,735) 77,715 (60,266) 3,012,396 (3,373,777) 3,368,387 (5,193,222) 2,191,236 (2,602,688)

2.4 Systems Local governments use various IT systems to record, manage and support their business activities. The type and level of such systems is dependent on the specific needs of the local government. The following section includes a high level discussion around the issues that may need to be considered in the maintenance and management of local government’s various technology systems under current organisational structures.

2.4.1 Functional considerations Details of all operating systems are included in Attachment 2.4. The Shire’s of Mt Marshall and Trayning use the same supplier for the accounting system. All Shire’s rely on external support at some level, for technical or professional matters. Upgrades to systems used are driven by industry requirements and therefore the Shire’s are not exposed to any risk associated with any sole provider.

The Shire’s use supplier based training on a need by needs basis. The operating systems are adequate of the group’s current needs; although better use could be made of software and web based applications or payment systems.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Opportunities do exist for shared facilities and knowledge base within the group. However, the standard of data and IT communications links between and within the Regional Transition Group area is poor.

2.4.2 Financial considerations

Expenses 2011/12 Budget Koorda Mt Marshall Trayning Totals IT Support 17,680 25,000 ‐ 42,680 Accounting Services 62,899 ‐ ‐ 62,899 Computer equip Maint ‐ 5,000 27,600 32,600 Office Equip Maint 6,760 ‐ 2,500 9,260 Expenditure $87,339 $30,000 $30,100 $147,439

Outlays on staff/casual staff and contractors are not disclosed separately.

2.5 Operating matters This section covers those internal functions that support the local government’s service delivery operations. This includes the financial framework, legal issues, and other key operational issues such as Occupational Health and Safety (OHS) and access to information.

The operating matters relating to finance and responsibilities are determined by the legislative requirements of the Local Government Act (WA) 1996 and the associated regulations.

2.5.1 Functional considerations Finance issues Financial reporting There no issues noted in past audits associated with the financial reporting arrangements for any of the members of the Regional Transition Group.

A spot check of the most recent statutory compliance returns by members of the Regional Transition Group does not show any major issues, other than in one case an 8 year review of local laws not undertaken under s3.21 of the Act. This however may relate more to the question than the issue – if the review was not undertaken in the year that the audit relates to, then the answer to the question would be ‘no’. It may have been undertaken in previous years.

Details of the financial reporting are included in Attachment 2.5.1.1.1

Roles and responsibilities There are differences between Regional Transition Group members in terms of Policy detail and content. While this is a subjective area in terms of whether or not differences may be considered major, on the face of things there do not appear to be so different that a material effect on any merger decision is likely. What may influence a decision though could be the loss of ‘local’ discretion in how a particular matter might be interpreted or decision made in future.

No issues of significance were noted by auditors of any of the Regional Transition Group members in their most recent sets of financial statements regarding the payment of accounts.

Details of the roles and responsibilities and tendering are included in Attachment 2.5.1.1.2.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Revenue / income Operating revenues by nature/type for the Regional Transition Group in the 2011/12 budgets are as follows - Koorda Mt Marshall Trayning Operating Revenues Rates 776,843 1,086,026 600,908 2,463,777 Operating grants, subsidies, contributi 1,401,024 1,911,326 1,362,800 4,675,150 Capital Grants, subsidies, contributions 1,287,119 1,802,405 1,539,634 4,629,158 Profit on asset disposals 140,029 0 0 140,029 Fees and charges 445,716 238,535 193,272 877,523 Service charges 0 0 2,017 2,017 Interest earnings 52,107 17,500 7,732 77,339 Reserve fund interest 162,000 80,000 5,927 247,927 Other revenue 34,677 35,000 18,580 88,257 Total Operating Revenue 4,299,515 5,170,792 3,730,870 13,201,177

Rates All use of mixture of Unimproved Values for rural properties and Gross Rental Values for commercial and residential properties (non rural) in town sites. The rating regimes vary with rates in the dollar levied on the various categories different in many cases.

The minimum rate applied, discount allowed and period in which a discount can be claimed also vary. Rates levied in 2011/12 (budgets) are shown in detail in Attachment 2.5.1.1.3, with extracts shown below. Budget 2011/12 Mt Rate Details Koorda Marshall Trayning Koorda Mt Marshall Trayning Koorda Mt Marshall Trayning Total Rateable Properties Valuations Rates Gross rental Properties Townsite 171 144 634,877 429,019 92,231 74,634 166,865 Residential 131 569,641 ‐ 66,118 ‐ 66,118 Commercial 8 13 32,970 74,377 4,165 12,075 16,240 Industrial 16 ‐ 124,388 ‐ 14,343 ‐ 14,343 Special Rural 12 ‐ 30,543 ‐ 3,796 ‐ 3,796 Vacant ‐ ‐ ‐ ‐ 757,542 634,877 503,396 ‐ ‐ Unimproved Values ‐ ‐ Rural 220 348 202 42,538,703 65,276,777 54,102,100 749,251 1,046,155 542,618 2,338,024 Mining 2 2 2,948 55,349 440 554 994 389 519 361 42,541,651 65,276,777 54,157,449 838,113 1,138,386 629,881 2,606,380 Discounts (66,177) (72,500) (24,404) (163,081) Ex Gratia Rates 4,907 12,940 0 17,847 Specified Area Rate 0 8,400 0 8,400 Rates written off 0 (1,200) (4,569) (5,769) 776,843 1,086,026 605,477 2,463,777

Service Charges Amounts charged by, and received by the Regional Transition Group members for service charges under sections 6.25 to 6.82 of the Local Government Act are negligible and relate to television and radio re-broadcasting services in the Shire of Trayning.

GRANTS Financial assistance grant The Financial Assistance Grant funding provided to local governments is untied, that is there are no conditions on how these funds should be spent.

Total funding available is divided into two parts, a general purpose component and a local roads component. The funding provided to local governments is allocated on the basis of Feasibility Study Page 47

Regional Transition Group – Koorda, Mt Marshall, Trayning

horizontal equalisation, to ensure that each local government in the State is able to function at a standard not lower than the average standard of other local governments. Budget allocations for 2011/12 were –

2011/12 Budget Koorda Mt Marshall Trayning Totals General Purpose Grant 768,235 779,710 743,661 2,291,606 Road Component 450,537 625,086 425,346 1,500,969 Totals 1,218,772 1,404,796 1,169,007 3,792,575

Rates Levied 776,843 1,086,026 600,908 2,463,777

Additional information is included in Attachment 2.5.1.1.3

Other Operating Grants/Capital contributions/grants The majority of other grants are for capital works associated with road works. Major funding sources come from Royalties for Regions, Roads to Recovery and Regional Road Group. Additional information is included in Attachment 2.5.1.1.3

Fees and Charges Budget 2011/12 estimates show the following fees and charges - Koorda Mt Marshall Trayning 2011/12 2011/12 2011/12 Fees and Charges 2010/11* 2010/11* 2010/11* Budget Budget Budget Governance ‐ ‐ 462 4,800 3,538 3,380 General Purpose Funding 2,852 1,250 570 ‐ 1,050 1,200 Law, Order & Public Safety 5,051 21,519 663 600 752 620 Health 102,511 124,480 5,808 ‐ 8,100 8,314 Education & Welfare ‐ ‐ ‐ 15,600 ‐ ‐ Housing 100,774 110,732 53,802 59,800 51,099 58,466 Community Amenities 120,579 143,633 26,005 54,495 38,480 44,336 Recreation & Culture 14,157 9,729 11,979 11,240 8,781 8,386 Transport 1,935 ‐ 4,355 2,500 ‐ ‐ Economic Services 29,751 27,467 71,278 74,500 4,334 7,970 Other Property & Services 12,377 6,906 37,178 15,000 30,971 60,600 Total 389,987 445,716 212,100 238,535 147,105 193,272 2010/11* estimate from 2011/12 budget papers

The major areas for fees and charges relate to the provision of health services, housing, refuse services, recreation amenities and caravan parks.

Additional information is included in Attachment 2.5.1.1.3

P/L on sale of assets Represent the disposal of Council owned plant and equipment.

Interest Earnings (Municipal and Reserve interest) Relates to interest earnings on funds held in banking institutions. There are no funds invested in financial instruments outside the Australian banking institutions.

Details of all revenues are included in Attachment 2.5.1.1.5.

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Expenditure The following represents a summary of operating expenditures are proposed for the year 2011/12. Koorda Mt Marshall Trayning Total Operating Expenses Employee costs (662,623) (962,368) (899,960) (2,524,951) Material and contracts (1,260,143) (1,430,314) (872,896) (3,563,353) Utility charges (electricity, gas, water e (117,637) (104,660) (72,040) (294,337) Depreciation on non‐current assets (1,028,311) (2,349,494) (584,967) (3,962,772) Loss on asset disposal (28,654) (77,013) 0 (105,667) Interest expenses 0 (48,147) (33,169) (81,316) Insurance expenses (123,589) (118,836) (84,597) (327,022) Other expenditure (152,820) (102,390) (55,059) (310,269) Operating Expenses (3,373,777) (5,193,222) (2,602,688) (11,169,687)

Details of all insurance policies are included in Attachment 2.5.1.1.4. Investment management There are there no significant barriers to amalgamation in the agreements which exist at each local government organisation in terms of their existing agreements with banks or other institutions, although in Bencubbin the banking agency (Bankwest) is the only bank shopfront in town so this may have some bearing on the Shire of Mt Marshall’s decision on merger if a new entity might consider changing to another bank.

Additional information is included in Attachment 2.5.1.1.5

Debt management

Long term borrowings across the members are predominately for housing and plant/equipment. The Shire of Koorda has no debt and utilises reserves, grants or recurrent funding to address capital funding requirements.

Budget 2011/12 estimates the following debt levels as at 30 June 2012 –

2011/12 Budget Koorda Mt Marshall Trayning Totals Staff Housing ‐ 508,983 156,702 665,685 GEHA Housing ‐ ‐ 94,414 94,414 Accommodation Units ‐ 93,415 ‐ 93,415 Gym Equipment ‐ ‐ 33,225 33,225 Vibrating Roller ‐ ‐ 25,668 25,668 Grader ‐ 10,263 163,589 173,852 Caravan Park ‐ ‐ 20,568 20,568 Self Supporting Loans ‐ 65,948 ‐ 65,948 Total ‐ 678,609 494,166 $1,386,733 Note ‐ The Shire of Koorda does not have any long term borrowings.

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Key financial indicators as at 30 June 2010 were as follows - as at 30 June 2010 Koorda Mount Marshall Trayning Combined Debt Long Term Debentures 0 926,368 467,654 1,394,022 Debt Service Costs Principal repayments 0 133,902 66,411 200,313 Interest expense on LT debt 0 74,678 29,620 104,298 0 208,580 96,031 304,611 Key Performance ratios Debt Ratio 0.6% 2.0% 6.0% Debt Service Ratio 0.0% 6.0% 7.0% Gross debt to Revenue 0.0% 26.0% 40.0% Gross debt to economically realisa 0.0% 8.0% 13.0% Debt Service Costs/General Funds 0.00% 7.68% 6.20% Percentage of General Funds (general rates + untied grants) applied to repay debt interest and principal. Debt /General Funds 0.00% 34.12% 30.18% 21.7% Proportion of General Funds(general rates and untied grants) provided as security for debt(section 6.20 Local Government Act WA 199 Debt/LG Revenues 0.00% 27.23% 27.70% 16.8% Total loan debentures outstanding as a percentage of local government revenue(LG Revenue). Debt Service/LG Revenues 0.00% 6.13% 5.69% 3.7% Amount of local government revenues(LG Revenues) applied to debenture interest and principal.

The Shire of Trayning has a condition imposed by WA Treasury Corporation (WATC) that no further loans or overdrafts will be given without their Board’s approval. This has the potential to reduce the debt raising capacity of the Shire.

Details of all are included in Attachment 2.5.1.1.7. Asset management

This section covers issues related to the management of local government assets. The effective acquisition, maintenance, renewal and disposal of assets is crucial to the delivery of services and the overall sustainability of local government. It is therefore important that assets are managed effectively and responsibly.

As noted in section 2.3.1, a condition assessment of the roads under the care, control and management of Regional Transition Group members was undertaken as part of this project. Asset classification and valuation There are policies and procedures in place at each local government that outline the treatment, management, capitalisation and control of assets. Significant accounting policies are listed in policy manuals and in each local government’s annual financial statements.

Other than Koorda, which had building assets assessed and revalued in 2009/10, there is little activity in terms of the frequency of revaluation of assets. Mt Marshall reviewed asset depreciation rates in 2009/10.

While each Shire has guidelines to differentiate between capital and operating expenditure on assets, in all cases these appear low (as small as $300 in one case) and should be reviewed by a combined entity. Asset control All Regional Transition Group members use asset registers to record asset location, acquisition, disposal, transfer and other relevant transactions. The registers are reviewed annually.

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Value to community There are few assets held by Regional Transition Group members where the commercial value is significantly more or less than the community value. However, the Koorda depot partially occupies freehold land which seems in excess of needs. The Shire advises though that power supply to this land is an issue. Similarly, while all three local governments own a number of properties, disposal may not necessarily bring in significant returns.

All Shires are significant owners of housing and freehold properties within their ‘main’ towns. The Shire of Mt Marshall undertook a residential subdivision within the Bencubbin townsite. While they do not appear to be actively marketed, many remain unsold.

Details of all are included in Attachment 2.5.1.1.8.

Other operational issues Occupational health and safety All Regional Transition Group members have a written occupational health safety (OHS) policy. The number of OHS representatives in each local government are - • Koorda and Trayning (one each) – Works Supervisor • Mt Marshall (two) - inside & outside representatives

Mt Marshall also has an Occupational Health and Safety Committee in place. Access to information None of the local governments in the Regional Transition Group have a have a permanent Freedom of Information Officer. Contracts Mt Marshall maintains a running inventory of all current contracts. Trayning does not maintain a register, but advises that ‘as a contract that might span multiple periods is agreed, records are kept (except for SG Fleet and Avon Waste as the contract is for a defined period), defined parameters, and details agreed and known before’.

Contracts of employment that currently exist are: • Mt Marshall – 3 (CEO, deputy CEO and Engineer). The contract for the Shire Engineer expires in 2015 and the D/CEO in February 2012. • Trayning – 5 FT staff, 2 shared for doctor and for EHO. • Koorda - Chief Executive Officer None of the Shires report any significant contractual disputes yet to be resolved. Legal proceedings None of the Regional Transition Group members reported any current or foreseeable legal proceedings. Leases Mt Marshall leases houses to its staff, and has recently signed a 10 year lease/buy agreement for a commercial shed site in Bencubbin.

Trayning has an agreement with SG Fleet and Interleasing for light vehicles. Local laws The three members of the Regional Transition Group maintain a range of local laws. All have local laws that cover the main areas that are normally regulated by local governments.

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An extract of the local laws currently in place and extracted from a register maintained by the Department of Local Government indicates the following, listed in subject order is detailed at Attachment 2.5.8.

Revenue from fines, penalties and infringements associated with these local laws is negligible and likely to remain so.

Trayning is presently reviewing its local laws.

2.6 People This section includes policies, procedures, plans, and human resource functions. It addresses how these functions are currently arranged, including any associated annual costs.

All employees in the Regional Transition Group are engaged under the Local Government Industry Award 2010.

Chief Executive Officers are required to be employed by contract under s5.39 of the Local Government Act 1995. Regulation 18B of the Local Government (Administration) Regulations 1996 provides that those contracts are to in essence cap any payments that may be triggered if the contracts are terminated before their expiry to a maximum of one year. Section 2.1.2.2 lists the number of employees (FTE’s) are currently employed, and where applicable, for each service. Organisational charts are shown in Attachment 2.1.2.2.

The Regional Transition Group local governments employ some 66 FTE’s between them. Employee costs budgeted for 2010/11 for operational costs was - • Koorda $797,483 • Mt Marshall $1,095,816 • Trayning $865,490

Total salaries/wages (operating and capital) budgeted for in 2010/11 was - • Koorda $1,155,000 • Mt Marshall $1,277,552 • Trayning $900,177 ------$3,332,729

2.6.1 Functional considerations

Policy All of the local governments participating in the Regional Transition Group have Policy Manuals, which are attached in Attachment 2.5.2. The extent to which topics are dealt with varies between members.

Koorda Mt Marshall Trayning

What current policies does the See Policy Manual Administration, Refer Policy Manual local government have in place – (Attachment 2.5.2.3) Community Support, Additional are planned human resources, finance, Council & Councillors, for new Policy Manual planning, and other? Employees & Employment, Environmental Health, Finance & Rating, Fire Control, Roads & Vehicle Usage, Shire Property, Signs and Posters, Sport &

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Koorda Mt Marshall Trayning Recreation, The Environment & Land Conservation, Town Planning

To what degree and level does As required Employees & Employment Limited, but will each of the existing policies would be the main one. improve with current address the key aspects of the Has quite specific review organisation? conditions of employment

How often are the policies Annually Reviewed last year. Currently under review reviewed to ensure they reflect Individual policies taken (combined policy the local government’s operation to council more regularly manual and delegations and strategic direction? on an as needs basis of authority)

What procedural documents does Nil the local government currently have? How complementary are these procedures to existing policy?

Do the following key documents None – other than the None – other than the None – other than the exist: Code of Conduct Code of Conduct Code of Conduct  Governance Framework,  Risk Management Framework,  Code of Conduct/ Ethics Policy,  Fraud Control Plan?

Plans

Koorda Mt Trayning Marshall

Does the local government currently have Community No Yes No Safety and Crime Prevention Plans?

Does the local government currently have Disability Access Yes No No and Inclusion Plans?

Does the local government currently have Equal No No No Opportunity Management Plans, per s. 145(1) of the Equal Opportunity Act 1984?

Does the local government currently have a plan on how Yes No(FCWP Yes to develop its future? addresses some issues)

Does the local government currently have Waste Yes Yes No Management Plans?

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Human resources None of the Regional Transition Group members employ dedicated staff to administer human resource functions, but the following functions are dealt with as noted below - Koorda Mt Marshall Trayning

Payroll Snr Admin/Finance Payroll/CSO Officer DCEO, Finance Officer

Recruitment CEO Engineer/CEO CEO, DCEO, Works Supervisor

Induction Supervisor Supervisor DCEO, FO, WS, Team Leader

Staff counselling and/or CEO and supervisor Eng/CEO CEO, DCEO, WS, TL performance management

In general, all employees are covered by the Local Government Industry Award 2010, and were transferred from two old awards effective 1 July 2010. Awards and agreements are recorded and managed using a mixture of IT based systems (e.g. Synergy for payroll, individual’s personnel file).

In terms of dealing with workplace grievances, most issues appear to be resolved without formal guidelines.

The Shire of Trayning has a policy which is under review and reports via that policy in terms of grievances lodged (successful and otherwise). Most grievances are resolved and no recent formal grievances have been lodged. If grievances cannot be addressed at the management (Chief Executive Officer) level, external assistance is used to address the issues.

In terms of filling positions, the function of recruitment is undertaken internally by all Regional Transition Group members except for Chief Executive Officer recruitment. Methods and sources used for advertising of positions include local papers & West Australian depending on position, the Merredin Mercury, and employment agencies.

None of the local governments have recently undergone organisational change which has resulted in displaced employees. All advised they would use Award provisions to deal with the issue of displaced employees if need be.

No external support is used to manage this process (e.g. placement services), and/or employee support services.

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2.7 Strengths, Weakness, Opportunities and Threats (SWOT analysis)

As part of the process of assessing their current positions the members of the Regional Transition Group were asked what they considered to be strengths, weaknesses, opportunities and threats associated with their current states at a workshop held on 9 December 2010.

The results are shown below. Common areas are shown, as were the matters raised by each local government specific to it. There are a considerable number of issues that are common to each local government.

Strengths Weaknesses All All  Each local government provides a comprehensive array of community  Lack of resources to do what we want to do amenities  Competing for limited resources  Ability to pursue own direction  Duplicating similar services

Koorda Mt Marshall Trayning Koorda Mt Marshall Trayning Good admin facility Roads and buildings Reliable power supply Hard to attract Doubling up of facilities Ageing/ lack of population Good depot and plant condition Reticulated scheme water businesses without between towns Smallest of 3 Shires facilities High level of Synthetic bowling green mobile phone coverage Large area, distances Least capacity to attract Staff stability overall accountability to VES Unit Lack of tradespeople and between towns grants Good other facilities – ratepayers Hospital services for agriculture Seasonal effects Number of old buildings to condition Community spirit/ Sealed airstrip Seasonal conditions Telecommunications maintain Western Power and CBH determination Shire housing generally Ageing staff and Health services Lack of businesses in town depots Selfishness in driving town good standard population Salt affected land Doctor/ health services issues Wheat bin (strategic) Decline in population Lack of opportunities Plan for the future Balance sheet Local roads are good (reduced demand for Loss of Police station Pre‐planned budget, Councillors – Good mobile phone facilities) plant, buildings demographics coverage Road network condition If autonomous, more Koorda sewerage likely to retain population reticulated Community self reliance/ action Conservation Park (1 of few) Regional St Johns, Kununoppin base

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Regional Transition Group – Koorda, Mt Marshall, Trayning Opportunities Threats All Ageing populations may reduce rate base Declining use of community facilities Effects of climate change on economic activity Combining with others will mean a reduction in independence Will Government Grants last forever?

Koorda Mt Marshall Trayning Koorda Mt Marshall Trayning Increased funding Resource sharing – Tourism ‘wheatbelt way’ Season/climate variability Loss of employment – CBH – routes Western Power and CBH engineering, NRM, grader Retirement village linked Loss of population and drought and funding Loss of doctor employment to hospital effect on local service Larger landholdings Lack of rain opportunities New doctors surgery provision Declining population/ Amalgamation – cost to Tourism market as a Community centre Age of business owners ageing community whole and in conjunction proposal Lack of water Reduced rail use – effect with Trail Utilisation of GM‐MD on roads New trades/services road Age of infrastructure people Further development of Resource sharing – Kununoppin airstrip for health/doctor, NRM training Low cost housing

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3 Amalgamated State This section is intended to present a high-level understanding of what an amalgamated entity may look like. It attempts to identify and understand the key external factors likely to impact on the operation of the amalgamated local government entity.

Much of this analysis will be informed by the work conducted in respect of the ‘current state’ through the consolidation of information and costs down to one single entity.

For ease of reference much of the analysis has been undertaken in Part 2 in respect of the ‘current state’ of Regional Transition Group members and will inform how an amalgamated entity might operate.

The template supplied by Department of Local Government recommends that the detailed organisational structure and design not be developed until the completion of the ‘amalgamated state’ analysis, or until a decision of whether to amalgamate has been confirmed. However, it was necessary for Regional Transition Group to develop a high level sketch of the likely structures of an amalgamated entity once initial decisions have been taken in respect of service (range and frequency) and representation.

Key Findings

 Community aspirations and concerns for the next 10 years relate to Health, Education, Police and telecommunications services. These are not under the direct control of the local governments.  A further concern related to economic development. The local governments may be able to exert some influence in this area.  The guiding principles adopted by the Board provide for a decentralised organisation, with total employee numbers the same as at present.  A new Council could be established with 13 members elected from 3 wards based on the current local government districts with only minor adjustments to reflect ‘one vote, one value’ principles  The existence of, and cost to rent data lines between the three ‘centres’ will increase operating costs.  There are some operating cost savings to be gained by reducing the numbers of senior staff; these savings are likely to be placed into increasing the scope of operations of the merged entity.  A merger of the three local governments would see a saving of $0.529m. However given the impact of the guiding principles (no reduction in employee numbers), added communication/travel cost the net saving will be $139,000. The major component of the savings will be in the governance and administration programs. Whilst much of the initial savings will be applied to additional services/functions this has the effect of increasing the capacity of the merged entity.

Guiding Principles As previously stated the Regional Transition Group Board established the guiding principles that would underpin any new entity comprising of the three member local governments.

Economic sustainability - The Board acknowledged the knock-on effect of local government employees residing within the towns to community economic activities in the towns and the region. As elected members of a major employer group in the district the Board considers any process that reduces employment opportunities in the district will not be in the interest of the broader community. Should the new local government reduce the number of employees then

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the effect will be for families to leave the district thus impacting on other services (private sector) throughout the area.

Any amalgamated entity will be based on maintaining staffing numbers of the participating local governments in the towns so as to lessen any negative economic impact on local communities. It is acknowledged that some staff may need to be trained to undertake other duties.

Level of service – any merger should not result in a reduction of services and facilities to the community. Services and facilities arising from an amalgamation shall, as a minimum, increase to the highest level currently being delivered by any one of the participating local governments.

Elected Member representation – any amalgamation should not be seen as disenfranchising electors’ representation in the newly formed entity. The success of a merger will require considerable involvement of the elected members with the community. In recognition of this and the additional knowledge, workload and involvement placed on elected members it is considered that a membership of between six and nine would not be appropriate. Also with any transitional arrangements electoral wards along the lines of the existing local governments would be advantageous.

These principles have been applied when developing what might constitute the form and role of the new merged local government. They should also be borne in mind in terms of the factors as to what a merged entity might do, how it might be governed and the likely organisational structure.

3.1 Overview of Amalgamated State

3.1.1 Community overview Wherever relevant, the combined statistical overview for the 3 local governments forming the Regional Transition Group has been shown in Part 2 together with comments on issues that may arise should the proposal to merge proceed.

Environment and Economic Activity While the area of the Shires of Mt Marshall, Trayning and Koorda does not contain any significant topographical or physical features of any note, the geographic size (some 14,428km2) and dispersal of the current communities (5 town sites plus a number of smaller communities) with their associated servicing requirements will have a significant impact on the service delivery obligations of the potential new local government.

The predominant economic activity of the combined entity will still be agriculture and the related support services. The effects of prolonged drought, potential for more frequent extreme weather events, and the like would indicate that some measure of diversification of economic activity would assist the Regional Transition Group members in maintaining the future of their communities.

Economic development has not been considered a core local government activity, at least to date. The total population of the combined entity (some 1,520 persons) will still make it a small local government relative to even others within the State at present. Even combined, the ability of the Regional Transition Group to have any meaningful influence over economic activity may not be high.

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Population The population movements in the region are a direct result of the need to meet the needs of the agricultural sector. Recent trends have seen a drift to the area of people seeking lower cost accommodation away from urban and regional centres. Generally the population base would be considered as stable if not with a small decline. Good seasons in the region for agricultural production would likely see the population rise as workers return for employment opportunities. Koorda Mt Marshall Trayning Totals Area (km2) 2,662 10,134 1,632 14,428 Population(ABS) 474 653 393 1,520 Density (Persons/km2) 0.178 0.064 0.241 0.105 As noted in Part 2, while forecasts are that the population will remain stable although ageing.

Regional Transition Group – Age Profile 200

150

100 2004 2008

50

0

There are no significant ethnic minority or indigenous communities within the Regional Transition Group.

3.2 Strategic direction This section addresses the strategic direction, management, governance and administration as an amalgamated entity.

3.2.1 Functional considerations

Governance‐ Strategic plan – A Vision for the next 10 years to 2021 As part of the community consultation process in developing Strategic Plans under the proposed ‘Integrated Planning and Reporting’ guidelines issued by the WA Department of Local Government a number focus group sessions were undertaken across the three local government areas.

The purpose of the consultation process was to both inform interested community members about the transition group process and to gather information about the community’s expectations over the next 10 years for the Integrated Strategic Planning process.

In respect to the merger process the information presented was about the due processes to be undertaken and the potential future community involvement in the decision making process. For the Integrated Planning process the consultation was focused on the community’s aspirations over the next ten years as separated local government entities.

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The process was based on the ‘Integrated Planning and Reporting’ guidelines issued by the WA Department of Local Government and dated October 2010. Those guidelines suggest that local governments should develop a forward planning system with that has a number of components:

 A strategic community plan, for a minimum of 10 years and detailing the short, medium and long term priorities in terms of social, economic, environmental, demographics/land use, and civic leadership. This plan should be reviewed every 4 years after the election of a new Council, and with a desktop review every two years.

 A corporate business plan, for at least 4 years. This should detail priorities for a 4 year period and be subject to an annual review. It draws together other plans such as asset management (which in turn could have sub-components like plant and equipment, buildings, IT systems, etc), long term financial plans, local area plans, economic development, tourism, urban renewal, and major road works or capital projects.

 An annual budget, and

 An annual report which details progress towards achievement of the goals and aspirations of the community.

To ensure the views of potentially affected stakeholders were widely canvassed, 12 workshops were held across the Shire’s of Trayning, Mt Marshall and Koorda from 28 March to 4 April 2011 with residents, elected members and staff.

To assist with the process, a facts sheet about each local government was prepared and mailed to each resident beforehand, together with an invitation to attend the workshops and to complete a questionnaire about the future of their local government and what they might see it looking like by the year 2021.

The workshops were attended by some 122 community members, elected members, and Shire staff. This represents under 8.5% of the combined populations of the three Shires. Attendance varied by location, with 3 being the lowest number and 23 being the highest.

As noted above, the workshops were divided into two segments, the first being an explanation of the Regional Transition Group process and how the legislation regarding merging two or more local governments is applied. This was of considerable benefit as many attendees had a number of questions and queries about this issue in particular.

The second part of the process involved asking the attendees what they felt were the strengths and weaknesses of their communities, what opportunities might be ‘out there’ and what threats they might face over the next 10 years to 2021 by using an open and interactive process.

Overall, there was a general feeling of opposition to any mergers. However, in Trayning, Kununoppin, Beacon and Bencubbin community members in particular expressed more of identification with the town or immediate area they lived in rather than with the local government. This was perhaps understandable given that the purpose of the gatherings was primarily to gauge community aspirations for the future rather than a merger but it was fair to say that there was an overall concern by all as the potential for their issues to be ‘lost’ in a bigger local government.

In terms of the SWOT analysis, while there was some degree of difference in terms of particular issues confronting particular communities, there was a remarkable degree of commonality of issues identified. In terms of looking forward for the next 10 years, the themes that were common to two or more of the Shires were:

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Strengths Weaknesses Strong sense of, and identification with, Dependence on agriculture. local communities. Lack of job opportunities and services. Excellent sporting and community facilities Poor or nil mobile telephone coverage in 3 like community centres, pools, sporting out of 5 towns. clubs. Poorly run local services/ businesses, and Good road networks. restricted opening hours. Existence of community networks like Need to send children out of the area after volunteer fire brigades, neighbourhood primary school: watch.  ‘They don’t come back’; Natural environment – granite outcrops,  Effects on local sporting teams; wildflowers.  Towns end up with young and old but Kununoppin Hospital. no one in between; Kununoppin sealed airstrip.  Loss of Year 7 exacerbates this. GP medical services available. Relaxed lifestyles. A sense of competing for limited resources Public safety. and ‘town versus town’. Slow Police response times in those towns where there was no presence. Community resistance to closure of underutilised buildings. Inability to attract staff and ageing workforces. Lack of a reliable or adequate electricity supply Opportunities Threats Diversification of the local economy: Lack of rain.  Tourism, promotion of the area; Effects of more intense weather events.  Provision of services to the mining Ageing populations. sector; Retaining population(s).  Manufacturing businesses such as Potential closure of Kununoppin Hospital. food pellets; Loss of State services like Police.  Agricultural products other than Lack of schooling beyond Year 7 grains or sheep; Shifting of bulk grain haulage from rail to  Rehabilitation of low risk offenders; local roads - damage to roads and safety  Biofuels; for other vehicles.  Value adding to sandalwood Too much competition between individual processing towns at present - a merger will make this worse.  Wind or solar farms Becoming harder to become a volunteer –  Attracting those services or constant need for permits, qualifications, industries that others might not. certificates. Development of a local agricultural school. Rising oil prices and the effects on fuel and Build greater community spirit. fertilisers. Low real estate prices. Loss of identity if merged. Amalgamations are inevitable – take control of the future. Give kids something to do – e.g. free pool entry. Temporary business support measures. Development of services for the aged. Improve banking facilities. Improve town streetscapes. A merged local government might find it easier to make the tough decisions.

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The results are comparable above to a similar exercise conducted with Regional Transition Group Board members in November 2010 and as detailed in sections 2.7 and 3.8 of this report.

In terms of the possible implications for a merger of the three Regional Transition Group participants and this process, some saw merger as an opportunity, others saw it as a threat. On one hand the view was expressed that mergers were inevitable and that the opportunity to take some measure of control over the future was desirable.

On the other, those who saw it as a threat considered that their issues would be ‘swamped’ in a local government with 5 separate towns.

The response rate for the written surveys was disappointing. At the time of writing this report, 12 had been received from Trayning Shire residents, 9 from Mt Marshall, and 9 from Koorda making a total of 30.

However, the responses received generally reflected the views expressed at the workshops held. A summary of the questions and responses is below:

 What is it you value most and want to keep about the Shire of…? In general, most valued a sense of community, a feeling of safety and low crime levels, good sporting facilities, good road networks, the natural environment, present medical services, and a spirit of volunteerism. One respondent from Koorda indicated that they felt the Shire was in a sound financial position.

 What would you like to change about it? A desire to see improved services (mainly private sector services such as businesses, tradespersons), an increase in the population of younger persons, provision of a retirement lodge (Koorda), more industrial land (Mt Marshall), more communication to/from the community from the Shire(s), more forward or strategic planning, more opportunities for younger people, more rain(!), promotion of tourism and local events, diversification of industry, better cooperation between communities, and destruction of flora on roadside verges. Two respondents from Trayning expressed a desire to see a greater sense of optimism or community spirit.

 What are two important issues you think your community will face in future? The effects of climate change on agriculture and local infrastructure (storms), a reduction in funding from external sources, power and water shortages, maintaining numbers at local primary schools and the flow on effects to sporting teams, rising fuel costs, declining populations, possible effects of low cost housing and lower socio- economic profiles, maintaining populations, keeping a sense of identity, employment opportunities for young people, closure or changes to CBH receival points, losing health services, ‘let people know about us’, attracting more populations to the area, ability to maintain roads, forced amalgamation, lack of services from local businesses.

 What are 3 key features for your vision for the Shire of … in 2021? Economic development featured heavily here – comments like financially successful small businesses (plus better shopping and services), increased population, ability to generate local jobs, and alternate businesses and work opportunities were all mentioned. Others included solid infrastructure, attractive townsites, increased industrial development, strong community attitude, equality between towns, transparency (in decision making?), a designated youth officer, and a better sense of community optimism or spirit.

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 Could this vision be better achieved if the Shire was part of a bigger local government? Responses to this question were generally polarised, with some for and some against the idea that perhaps this vision might be better achieved if the community was part of a larger local government. Those who were opposed to any potential merger were concerned about loss of identity and a sense that they may be competing with others for attention and funding.

Generally, the issues raised from this process (except for a view that roads were generally good, and that community sporting facilities were of a high standard) are not under the direct control of any of the local governments. Health, education, law and order services, telecommunications, and (arguably) economic development are matters that traditionally have been dealt primarily by State or Federal Governments.

Some are where it could influence the outcome, but many are those where it would at best have little or no control, and merger may not necessarily have any effect on the ability of the local government(s) to deal with them. Even so, the ability of what would still be a small local government in the scheme of things to realistically influence those outcomes would not be high.

Those issues where some influence could be exerted are -  Economic development – this is a broad area, but potentially encompasses a number of categories: o Diversification of economic activity – attracting new industries other than agriculture; o Assisting potential growth areas such as tourism; o Assistance to the agricultural sector in dealing with climate change; and/or o Assistance to existing businesses to improve outcomes.  Community development initiatives.  A capacity to develop and implement communication and marketing initiatives (increasing the profile of the area to boost its visibility, possible attraction of population, more e-commerce, and links to tourism development).  A capacity to lobby other levels of government or to provide funding supplements where those services may be threatened or withdrawn.

Another observation that could be drawn is that the populations of the Regional Transition Group members, while stable do appear to be ageing. This has implications for the use of community facilities that are based around traditional or active sports. Usage may decline and demand for those facilities or services that involve less active pastimes pursued increase, or services that are not currently or traditionally provided increase, particularly those related to healthcare or ageing.

Overall, the issues identified by the communities as to their aspirations for the 10 years to 2021 imply an increased rather than reduced workload for Regional Transition Group members.

Governance ‐ Representation and wards Currently, the combined local governments have some 21 elected members between them. None use wards. The Minister for Local Government’s view is that Councils should be made up of between 6 and 9 elected members.

Some concern was expressed at the Regional Transition Group Board that if combined, there may be some community concern about loss of representation from the current three, separate local governments. As such, it was considered that the use of wards, based on the current local government boundaries within the Regional Transition Group would be useful.

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Schedule 2.2 of the WA Local Government Act 1995 requires all options in relation to the use and establishment of wards must be assessed against the following prescribed factors -

Communities of interest - In terms of establishing wards within the current boundaries of the three Shires participating in this study, the existing towns provide clear and readily defined communities of interest.

Physical and topographical features - It is considered that there are no physical or topographical features within the members of the Regional Transition Group that would make good ward boundaries, although the Shire of Mount Marshall alone makes up 70% of the combined area of the Regional Transition Group.

Demographic trends - while the populations of the members of the Regional Transition Group may be ageing, there are no significant differences or factors in terms of trends, age, gender or occupation that might affect where a ward boundary could be placed.

Economic factors - The predominant economic activity amongst all Shires is agriculture. There are no significant differences insofar as ward boundaries are considered however.

The Board was of the view that the level of representation should consider the following – • An odd number of elected members was preferred; • Some recognition of the area and population of the current Shire of Mt Marshall should be considered; and • Wards should be based initially on the current local government boundaries, with an adjustment to future boundaries phased in over time to reflect equal ratios of electors to elected members, within the 10% allowable variation.

While the Minister for Local Government may have a preference for between 6 and 9 elected members, the firm view of the Regional Transition Group Board was that a Council made up of 13 members would be necessary. This could operation in the initial 8 years and be reviewed by a new local government at the end of that period.

Koorda Mt Marshall Trayning Total Number/Value % of total Number/Value % of total Number/Value % of total Area (km2) 2,662 18.5% 10,134 70.2% 1,632 11.3% 14,428 Population 474 31.2% 653 43.0% 393 25.9% 1,520 Elected Members (13) 4 30.8% 5 38.5% 4 30.8% 13 Electors 335 31.3% 394 36.8% 341 31.9% 1,070 Electors per Councillor 83.8 78.8 85.3 82 Population per member 118.5 130.6 98.3 117

The Board considered other options and a comparison of electoral representatives considering the effect of 7 or 13 members against the current arrangements is included in Attachment 3.2.1

The ratio of councillors to electors in the various wards - The general rule of thumb is that electors should have equal representation on the Council of a local government where possible. Where deviations do exist, a variation of no more than 10% should apply.

Governance (Corporate) ‐ Legislation If a merger proceeds, Regulation 6(4)(h) of the Local Government (Constitution) Regulations provides that existing delegations made by the previous local governments will remain valid after a merger.

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However, the new entity will need to review delegations to the Chief Executive Officer (and committees if considered appropriate) under s5.42 and bearing in mind the limits imposed by s5.43 of the Local Government Act as soon as possible as in many cases there are slight differences which ought to be made consistent. Any one of the Regional Transition Group members has a register of delegations of authority which could be used as a basis.

None of the Regional Transition Group members currently use extensive delegations to committees under s5.17. Some consideration of expansion of this area could be used to manage the day to day operations of dispersed facilities such as clubrooms and the like.

The Regional Transition Group Board is proposing an organisational structure (see under Part 3.6 ‘People’) where the elements of the organisation are dispersed amongst current towns (Koorda – Chief Executive Officer, community services, economic development; Bencubbin – Engineering and technical services; Trayning – corporate services; all towns – road construction and maintenance, town maintenance, shop front services, library and swimming pool operation). Given this dispersed nature it may be necessary for a higher level of delegation to the Chief Executive Officer than at present. The Chief Executive Officer of the merged entity might consider further delegations to other employees under s5.44.

Similarly, the new entity will need to appoint authorised persons under section 9.10 of the Local Government Act, as well as under the Dog, Bush Fires, Health and Local Government (Miscellaneous Provisions) Acts amongst others. Again, given the potentially dispersed nature of the new organisation, this may need to be wider than at present.

Administration ‐ Chief Executive Officer Appointment of a new Chief Executive Officer for the newly merged entity will need to be done in accordance with the requirements of Regulations 18A – 18F of the Local Government (Administration) Regulations 1996. Amongst other things, this requires the position to be advertised, selection criteria developed and other things.

Providing the correct process is adhered to, this does not preclude the new entity from appointing a Chief Executive Officer from the present Chief Executive Officers. There may be some benefit in having an existing Chief Executive Officer appointed (both from the point of view of reduced costs associated with any early contract terminations and more importantly, continuity) but the Commissioners of the new entity might consider it appropriate that the newly elected Council appoints its ‘own’ Chief Executive Officer.

While this would be a matter for the new local government to decide, given the complexity and workload associated with establishing the new entity appointment of a Chief Executive Officer should be undertaken as early as possible.

Similarly, given the proposed dispersed nature of the new entity, it would be wise to appoint a deputy Chief Executive Officer and Engineer. These three positions could make up an executive management team and would also allow the presence of a senior staff member in each of the three towns that re the present ‘seats’ of the current local governments. Again, depending on how the Chief Executive Officer was to be appointed by the new entity, ideally these appointments would be made by the new Chief Executive Officer but under the circumstances may need to be filled at the same time as the Chief Executive Officer position itself.

If the three existing positions of Chief Executive Officer and Deputy Chief Executive Officer/Senior Staff (6 senior in total) are assessed using the Salaries and Allowances Tribunal bands outlined in section 2.2.1.4, the total combined cost to the Regional Transition Group members of Chief Executive Officers is $416,282 pa. The members of the Regional Transition Group do not have ‘Executive Teams’ as described in the DLG documentation, but Trayning

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employs a deputy Chief Executive Officer (Mt Marshall has a position which is vacant). Koorda employs a Senior Administration Finance Officer.

Assuming an average estimation for the total rewards package for a deputy Chief Executive Officer or second most senior staff member would be around 75% of that of the Chief Executive Officer, the combined cost to the Regional Transition Group members of three deputy Chief Executive Officer’s is around $333,025 pa. The combined cost of all six positions is therefore approximately $750,000 pa.

In estimating the band classification the Salaries and Allowances Tribunal would assign to a newly created position we have relied upon comparative local governments. The Shire’s of Wongan-Ballidu, Lake Grace, Goomalling and Kondinin are placed in Band 2 (total reward package $121,979 - $165,708) by the SAT. It is likely a merged local government would also be classed as Band 2.

However, given the workload in merging three Shires, the ‘new’ Council may have to consider milestone payments or a higher than normal compensation arrangement equivalent to (say) Band 3 (total reward package $134,638 - $182,303). Again, using the median of this Band, a new local government might expect its Chief Executive Officer to be rewarded with a package of around $158,705. The precise mix of this package would depend on negotiations with the appointee.

Applying the same logic to a deputy, and Shire Engineer position, at 75% of the Chief Executive Officer position cost would amount to $119,028.

All three positions would cost $396,762, a difference of approximately $353,000 pa.

There may also be redundancy costs associated with reducing the current 6 CEO and Deputy type Chief Executive Officer positions to 2. Under Regulation 18B of the Local Government (Administration) Regulations 1996, this is capped at 1 year’s salary package value as a maximum. Provision should be therefore made for redundancy of 2 Chief Executive Officers at (say) $140,000 each and 2 Deputy Chief Executive Officers at (say) $111,000 each.

Preference should be given to up-skilling existing employees to fill the positions where possible.

Administration ‐ Committees While there are no statutory or mandatory issues relating to administrative committees that would have any significant bearing on a merger decision, the new merged entity would be likely to maintain its membership of current external groups such as NEWROC, land care initiatives operating in the area and the like. Multiple memberships of the same committees that the current separate local governments are members of would obviously not be required.

Those committees that are community based and which (for example) might relate to the operation of a community facility would need to be continued, although over time the new entity could consider rationalisation.

Administration ‐ Reporting With a merged local government no significant changes will be required for financial reporting (financial reporting against budget, performance reporting, and progress against strategic and operation plans etc) to the Chief Executive Officer are expected. The frequency and extent will depend on operational requirements, the project or event, and its significance.

Similarly, the reporting structures under an amalgamated entity are not expected to change significantly from at present, although given the proposed nature of locations of the new entity

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(see Part 3.6) over 3 sites a degree of devolved authority in relation to the day to day operation of works crews based in each town will be necessary.

During the initial amalgamation stages, reporting between the Chief Executive Officer and Commissioner(s) is not expected to be different to that which might be expected for when the ‘Council’ is in place. It may be that more frequent meetings are required or updates on a more frequent basis needed while any changes that might occur as a result of the merger take place. Once the new Council has been elected, the frequency might decrease depending on the extent of any progress made.

Allowing for some decision making time and for the statutory processes of the Local Government Advisory Board to be duly followed (including the possibility of any poll) the precise date for any merger (if one does proceed) is most likely to be 1 July 2013. Assuming this to be the case, the new entity will have the additional workload of preparing final annual reports and financial statements for the current 3 separate local governments for the year ending 30 June 2013. The Commissioners of the former local governments will also need to hold an annual general meeting of electors for the ‘old’ local governments.

Administration ‐ Corporate branding A new local government will represent a significant change from the current Shires and the district will likely carry a name that bears no relationship to the current Shire. There will be substantial resource required for new branding and identity.

Matters that will need to be addressed include stationary, publications, calendars, gifts, development of a new website, and altering signs where required. The three local governments at present do not have a large investment in logos or websites. Staff uniforms are generic ‘local government’ issue and others can simply be used until stocks are depleted. A final decision on the branding and logo of the new entity might be held back until a duly elected Council is in place, with some interim material used while Commissioner(s) are in place.

The new entity would still be a Shire, as defined under the Local Government Act for the foreseeable future.

Community engagement Given the dispersed nature of a merged entity, and the concerns that were expressed during the community consultation phase of the pre-merger exercise, it may be necessary for the new local government to develop measures that while responding to local needs also break down the ‘town vs town’ sense that seems to be prevalent in at least 2 of the current local governments.

There is no evidence to suggest that any of the town sites that are in the existing local governments are treated in a significantly different manner, but the perception exists.

As such, while (see Part 3.6) the new entity could maintain a significant presence in each town, steps like rotating Council meetings around town sites and combining them with open community forums might help.

Town (local) planning schemes The process to make a new Local Planning Scheme for the new entity is a long and drawn out process. This task may not have the same level of urgency as others actions to be addressed as a result of a merger.

As noted in Part 2, at least two of the local governments have used the same consultants to prepare their current Local Planning Schemes. There are no overlapping or potentially conflicting land use issues noted at present, and uses at the boundaries of all the local

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governments appear compatible (i.e. rural). It would be of benefit to engage the same firm to prepare a new Scheme for the merged entity as over time, development of a single Scheme may be necessary.

While the issue of potentially conflicting land uses are not likely to be problematic, matters such as definitions and allowable uses within ‘town’ type zones will need to be made common. There is no current major State or regional planning policies that might impact the merged Shires.

A prevalent concern of all communities is economic development – so any new local planning strategy for the amalgamated entity should be framed from the point of view of encouraging the establishment of new commercial activities, rather than perhaps regulating specific locations or activities.

3.2.2 Financial considerations Estimates for Governance function with forecast savings (costs). 2011/12 Budget Merger Merged Koorda Mt Marshall Trayning Adjustment Council Revenue Members of Council 1,450 ‐ 50 ‐ 1,500 Other Governance* 44,466 307,154 29,960 0 381,580 Total 45,916 307,154 30,010 0 383,080 Expenditure Members of Council (326,171) (299,902) (211,936) (838,009) Other Governance* (78,937) (332,939) 12,000 259,200 (140,676) Total (405,108) (632,841) (199,936) 259,200 (978,685) Net (359,192) (325,687) (169,926) 259,200 (595,605) * ‐ Mt Marshall includes $306,954 for RTG projects. 3.3 Services As noted in Part 2.3 of this report, the services provided by each local government are comparable. A comprehensive list and the potential effects or issues that will need to be dealt with if merger does proceed are shown in section 2.3.1.

3.3.1 Functional considerations The Regional Transition Group Board, when considering this issue decided that for the purposes of a merger study, services would be bought up to a highest common denominator.

While there are no significant differences between service levels, as noted in section 2.3.1 there are some differences in execution or the extent to which a service is performed. Over time, it is likely that a new entity will seek to reduce these differences.

Accommodation As noted below in Part 3.6, the Regional Transition Group Board has been reluctant to commit to locations for its ‘home’ or for some or all of these employees, but for the purposes of this report, the following has been assumed:

• Koorda – Chief Executive Officer and all community services, economic development, IT, a road construction and maintenance crew, location specific staff such as pool or town area maintenance, and a general enquiries/library staff member;

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• Mt Marshall – all engineering staff, all road construction staff, a road construction and maintenance crew, location specific staff such as pool or town area maintenance, and a general enquiries/library staff member; • Trayning – all finance staff, a road construction and maintenance crew, location specific staff such as pool or town area maintenance, and a general enquiries/library staff member.

The Koorda Council Chambers would be capable of housing meetings of a Council comprising 13 members.

While the existing 3 sets of Shire offices and depots appear suitable for municipal use; with minimal changes (in the case of both Trayning and Mt Marshall the current Council chambers and Chief Executive Officer offices) these facilities could be readily be adapted for staff use; with the transportable buildings used by engineering staff at Bencubbin disposed of, and the Koorda Council chambers used for Council meetings. This is not considered an ideal model and over time the tendency will be for a merged entity to seek to centralise its administrative operations. Logically this would be the town site of Bencubbin, given that it is relatively central to the new entity if the three Shires were to merge.

The existing Shire of Mt Marshall offices are not adequate to house the administrative operations of the merged entity. Given the direction taken by the Regional Transition Group Board, we have not examined what would be required but assuming some 25 staff are to be housed in an office in Bencubbin then an office of around 750m2 (which would include a Council chamber) would be required, which includes a provision for any space that might be necessary for a library as is the case at present.

For a single storey building with standard finishes, some internal partitioning, offices, a general reception area, a staff amenities area, and air conditioning, costs of around $3000/m2 might be expected. Assuming utility services are readily available and that the existing site in Bencubbin is large enough, construction costs alone would be around $2.1m. Demolition, design, supervision and site costs should also be added, which could then see costs of around $2.9m.

Some care should be taken with this figure and proper architectural advice sought to allow a more precise figure to be determined.

Customer service None of the current local governments have a ‘Customer Service Charter’ as such. Given though the devolved nature of operations of a merged entity, it may be worthwhile developing one.

3.3.2 Financial considerations Financial considerations are dealt with in section 3.5.3 below.

3.3.3 Community cost outcomes While the DLG template suggests that in order to understand the cost outcomes of services (i.e., cost savings or cost increase) and whether the service level under an amalgamated state is better meeting community needs than that which exists under the current state, a ‘traffic light’ tool should be implemented when filling in the Business Planning Report

As noted earlier, the Regional Transition Group Board has decided that where there are differences in service levels, a move ‘up’ to the highest level is the desired outcome. Generally, the service levels between the local governments do not differ greatly.

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There may be an increased role for the Shires in terms of economic development initiatives (which have also been traditionally a State responsibility) but there was little enthusiasm for a greater role for the merged local government in these areas when the results were discussed at the Regional Transition Group Board.

3.4 Systems The dispersed nature of the merged entity will create a challenge for communication links and access to records between the three intended sites. A critical issue will be to ensure timely access to and update of information and records.

Data links between the three sites will need to be of a standard and capacity that is suitable for the merged local government.

In addition, as noted in Part 2 two of the local governments use the same core software, so while this may not necessarily be the choice of the merged entity, for the purposes of this analysis it is assumed that the IT Vision product, ‘SynergySoft’ would be used.

Similarly as the IT requirements of the Regional Transition Group members are not overly complex, basic tools such as MS Office software products like Access and Excel are likely to satisfy the majority of other needs.

In order to improve efficiencies, and (again) given the dispersed nature of the merged local government, an enhanced web presence and greater use of tools to conduct business over the internet is recommended.

3.4.1 Functional considerations Possible system requirements for around 30 users are listed in Attachment 2.4.1. As also previously noted, the SynergySoft product should most of the needs of the merged entity, and the opportunity could be taken to add additional modules.

It may be useful for the new local government to consider purchasing asset management software. This though, needs to be carefully considered as while there are a number of products that are available, in our view they tend to be inordinately complex relative to the task at hand. The most significant assets managed by the local governments (which would be the same in a merged entity) are road networks. Any product used must ‘talk to’ the ROMAN software used by all Regional Transition Group members.

Other asset management tools can be as simple as Excel spread sheets.

Records management is an area that will need careful consideration. As well as compliance with the State Records Act 2000, there are a number of practical measures that will be needed. The SynergySoft product has a records management module that the merged entity may want to consider adding to the suite of software used, but assistance will be needed to set up a new system to deal with matters such as: • File tracking systems (vital if spread over 3 or more sites) • Retention and disposal schedules • File master plan • Distribution of mail and in/outwards correspondence • Dealing with the records of the merging local governments.

3.4.2 Financial considerations As noted above, overall the data links between the towns of Koorda, Bencubbin and Trayning need to be of sufficient capacity to allow live exchanges of data. IT Vision (suppliers of the SynergySoft product) advises that connections to ADSL2 standard are required. We were

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further advised by Annitel (who were assisting IT Vision in examining data links for another two local governments considering merging) that ADSL1 links exist (subject to ports being available) but that the merged local government should consider a 2M/2M link. The cost to rent this type of link would be $2,500 per month per site plus data costs, or $90,000 pa for rent and (say) $30,000 for data depending on volumes, making a total of $120,000 pa for communication and data costs.

Alternatively, an operating cost of $120,000 pa could service a loan of around $1.5m over 25 years at an interest rate of 7.25% pa, and linking the three towns via fibre optic cable could also be considered.

A distance of around 80km is involved. The cost to do so is beyond the scope of this paper, as there are a considerable number of unknown factors and variables, but could involve:

Rate/m Item (assumed) Possible cost Fibre optic cable $2.50 $ 200,000 Pipe costs $4 $ 320,000 Trenching and pits $15 $ 1,200,000 Head end work x 3 $ 54,000 Design and supervision $ 88,700 Total $ 1,862,700

Note that these are purely speculative rates which would need to be the subject of a proper assessment investigation and design. Prior to any final merger decision, given their dependence on sound IT links between centres, the Regional Transition Group may wish to consider a more technically focussed study on data links between the towns of Bencubbin, Koorda and Trayning.

There are issues about whether or not the local government would be allowed to own the cable; if it will be built anyway under the proposed Federal National Broadband Network scheme or if this could be considered a transition cost.

This would allow those who may be on the route to connect to it at a later stage. The standard of infrastructure outside a terminus and connection of the new Shire to external links may also affect performance.

As part of a merger proposition to the State, the Regional Transition Group members could request funding for a detailed technical assessment of the data links needed, and provision of funding towards capital costs.

IT system support will be an issue. In our view, a reasonable ratio of in house IT support staff to users is around 1:60. The merged entity would have at most 30 office based staff, which would only allow a 0.5 FTE which may be difficult to attract. It may be possible to justify a full FTE, but even so it is unlikely that he/she would have the range of skills to be able to deal with all the needs that may arise. As such, some provision should be made for additional support services, given the dependence of the new entity on IT systems and its dispersed nature.

Offsite data storage could be considered, providing the links from the storage point and the local government offices are also adequate.

Data migration from the current IT systems to a new one could be approximately $30,000.

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Setting up a new records management system is a task that should not be underestimated. Records management has become a specialised area of expertise, and while some of the more routine tasks could possibly be undertaken by the current local government staff, given the additional work posed during a merger it is recommended that external expertise be sought. This is estimated to cost around $22,500.

3.5 Operating matters As outlined under “current state”, this section covers those internal functions that support the local government’s service delivery operations.

3.5.1 Functional considerations

Finance issues An effective finance function is a key element in ensuring that local governments have an accurate picture of their operating income and expenditure and that an effective internal financial control environment is in place across the new entity.

Financial reporting Under s5.56 and 6.2(2) of the Local Government Act 1995, the merged entity will need to develop a new Plan for the Future that reflects the issues that might be confronting the local governments separately. In August 2011, the Local Government (Administration) Regulations 1996 were amended to require local governments to produce a strategic community plan, and a corporate business plan. Together, these could be considered an ‘integrated strategic plan’.

Based on guidelines issued, the process for developing an integrated strategic plan could be: • The first element is to develop a ‘strategic community plan’ and seeking community views and aspirations about where the community should be in 2021.

• Service expectations, aspirations, and vision are all part of the project.

• It is expected that the process will lead to the development of priorities for social, economic, environmental, changing demographics and land use, and civic leadership. Goals will be set for the short, medium and long terms.

• These goals will then be incorporated into a Corporate Plan for a rolling 10 year period, which in itself will include 4 year priorities for areas like asset management, local area plans, economic development, major projects, and the like. The Corporate Plan will be subject to an annual review.

• The annual budget will further break this down into financial years, with the annual report detailing progress towards goals listed.

Assistance will be required to set up financial management procedures for the new entity. The processes used by the existing local governments to develop the annual budget for the new entity could be readily used as a basis to:

• Determine how the cost of services delivered by the amalgamated entity informs the development of the budget; • How the amalgamated entity ensures that the budget accurately represents the operating requirements of the new entity; • What the process for preparing, considering and approving the annual budget of the amalgamated entity; • The budget monitoring process for the new entity. Feasibility Study Page 72

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Similarly, the current processes for budget review can be readily adapted to decide: • The process for conducting the budget review; • How significant variances between the actual and budgeted figures are managed and accounted for.

The local governments have similar annual and monthly financial reporting regimes, but there are some differences in areas such as depreciation rates, provisions for employee entitlements, and asset valuation. The application of materiality and what guidelines should be used will need deciding and external assistance. Note too that the amalgamated will need to comply with AASB 2008-11 “Amendments to Australian accounting standard – Business combinations among not for profit entities”.

A new chart of accounts will be needed, although given their similarities and relatively low level of complexity, one of the existing local governments could be used as a basis. This should encompass all asset, liability, income, revenue and equity accounts as well as services provided by the previously separate local governments.

Roles and responsibilities The new entity will need to appoint auditors. There may be costs incurred in terminating existing audit contracts.

The new entity will also need to establish an Audit Committee. There should be no additional costs to any incurred at present (and two less Committees in total).

The new entity should engage additional assistance to ensure that this requirement under Part 7 of the Local Government Act 1995 and the Local Government (Audit) Regulations 1996 for statutory requirements relating to auditors is complied with.

In terms of delegations, the new entity should also decide what duties and powers will the amalgamated entity and Chief Executive Officer delegated, including a financial delegation of authority.

Similarly, the existing policies and procedures of any one of the existing local government in relation to the payment of accounts could be readily adapted for use in the new local government, as well as controls around the payment of accounts, which should be centralised. Similarly, tendering and purchasing policies and procedures using existing documents as the basis should be developed.

Revenue / income Rates Rate and related issues are discussed in more detail in Part 4. As noted in Part 2, there are significant differences between the local governments in terms of rating regimes. While the same total of rates could be raised from the merged group of ratepayers, the merging local governments should carefully consider the effects of what will be (in effect) a redistribution of the tax burden in terms of who is paying what.

Grants The WA Local Government Grants Commission (WALGGC) is currently reviewing the methodology used to calculate the General Purpose Grant component of Financial Assistance Grants. During the period of the review the WALGGC has pegged grants at 2007/08 levels and increased grants each year by the percentage increase in the State funding pool after minimum grant local governments have been removed.

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The Amalgamation Policy of the WALGGC would see the combined total of the individual grants in 2011/12 be preserved for a period of 5 years and increased by the annual percentage increase in the State funding pool after minimum grant local governments have been removed. This annual increase is estimated at 5% however will fluctuate according to population growth in WA and National Consumer Price Index rate fluctuations.

It is likely that the grant for the amalgamated local government would trend downwards following the expiration of the preservation period; however the WALGGC has resolved that the situation of each amalgamated local government will be considered at the end of the 5th year, to ensure that the new local government is not heavily impacted by any decrease in grants.

Under the current allocation method it is not possible to project with any certainty the grants for the amalgamated local government in the years following the expiration of Amalgamation Policy preservation period; however it is certain that the WALGGC will look favourably upon amalgamating local governments to ensure that they are not significantly impacted by the amalgamation.

In response to a request for advice as to what effect a merger may have on the members of the Regional Transition Group, the WALGGC advises that:

“As you are aware, the WA Local Government Grants Commission (WALGGC) is currently reviewing the methodology used to calculate the General Purpose Grant component of Financial Assistance Grants. During the period of the review the WALGGC has pegged grants at 2007/08 levels and increased grants each year by the percentage increase in the State funding pool after Minimum Grant local governments have been removed. To facilitate the methodology review the WALGGC has not produced the detailed Balanced Budget calculations since 2007/08, which are used to determine the Equalisation Requirement of local governments and in turn used to calculate grants. As a result of not producing the Balanced Budget since 2007/08 there is limited data available on which to base projections. The following information however should provide a detailed indication of the likely effect on Financial Assistance Grants for an amalgamation of the Shires of Koorda, Mount Marshall and Trayning commencing in 2012/13.

The Amalgamation Policy of the WALGGC would see the combined total of the individual grants in 2011/12 be preserved for a period of 5 years and increased by the annual percentage increase in the State funding pool after Minimum Grant local governments have been removed. This annual increase is estimated at 5% however will fluctuate according to population growth in WA and National CPI rate fluctuations.

Projections of the effect of the WALGGC Amalgamation Policy preservation period identify a benefit of approximately $4 million during the 5 years. It is likely that the grant for the amalgamated local government would trend downwards following the expiration of the preservation period, however the WALGGC has resolved that the situation of each amalgamated local government will be considered at the end of the 5th year, to ensure that the new local government is not heavily impacted by any decrease in grants.

The extent to which the amalgamated local governments grant decreases following the expiration of the Amalgamation Policy preservation period will depend upon the outcomes of the methodology review. Trends prior to 2007/08 indicated that grants for Koorda, Mount Marshall & Trayning have fluctuated up and down. One of the main reasons behind the methodology review was Feasibility Study Page 74

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to address downward trending grants, particularly in wheatbelt areas and as such the WALGGC expects significant changes to grant outcomes following the implementation of the new methodology. It is not possible to project with any certainty the grants for the amalgamated local government in the years following the expiration of Amalgamation Policy preservation period, however it is certain that the WALGGC will look favourably upon amalgamating local governments to ensure that they are not significantly impacted by the amalgamation.

We realise that it is difficult to provide a business case for an amalgamation without accurate grant projections, and in normal circumstances the WALGGC could provide projections of future grants, however due to the methodology review any accurate projections can not be produced.” 17 February 2011

“Until such time as the Commission is satisfied with the new methodology, any modelling undertaken at this point beyond six years post-amalgamation would be highly questionable at best. The Commission has given an undertaking to mitigate against any significant GP grant reductions for amalgamating local governments in year six following an amalgamation. The Commission already applies a "maximum drop" policy of 15% but has indicated that it would review this if necessary to ensure the stability of the GP grant for an amalgamated entity. We are though able to estimate with a reasonable degree of confidence the GP grant for 6 years following the amalgamation.

Please note the following grant estimates for the years 2012/13 to 2017/18: 2012/13 $2.958m 2013/14 $3.106m 2014/15 $3.262m 2015/16 $3.425m 2016/17 $3.596m 2017/18 $3.056m’ 18 February 2011

Based on the above, after 2016/17, a loss of $540,000 pa in the General Purpose Grant for the combined Regional Transition Group members may occur. This is equivalent to a reduction of some 15% of grant funding from the previous year. While the comments regarding the review of allocation methodology should be borne in mind, this is a significant amount.

Further discussion with officers of the WA Local Government Grants Commission (WALGGC) in August 2011 revealed that the proposed new allocation methodology addresses a number of issues that previously disadvantage local governments that amalgamate. In particular the fixed components in the current allocations for administration and recreation will no longer be considered it determining the general purpose component of the grant. Should this be the case then a major disincentive in merger will be addressed and the issue of losing grants for the group will no longer exist.

Given the new methodology is currently under consideration by the WALGGC Board and the impact of the “new methodology” is unknown and therefore some degree of caution should be exercised in forecasting the impact of these grants. It is likely that the position will not be clarified before 2012 following the WALGGC Board’s considerations and an assessment of other issues such as disability factors.

An amalgamated local government could expect the grants received from the WA Local Government Grants Commission (WALGGC) will be –

 Reduced under the current grant allocation method, OR

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 Not materially changed if the Board adopts a model that addresses the “disincentive” for amalgamating local governments,  No detrimental effect will arise on the road component if the existing methodology applies.

Fees and charges Fees and charges will be levied across the amalgamated entity are negligible and not expected to change greatly. As part of its budget process, a new entity will need to adopt uniform charges however. Again, some assistance in gathering current charges, comparing them and devising new schedules will be necessary.

Service charges As noted in Part 2, other than a sewerage charge by Koorda, the three local governments collect minimal amounts from service charges.

There is little effect or work required to deal with commercial activities (there are none as such) or other revenue / income.

Expenditure Insurance The local governments share the same insurance provider for major areas of required cover. Some minor cost savings can be delivered by consolidating insurance policies.

Other expenditure Other significant expenditure that the amalgamated entity might undertake is dealt with in Part 5. However, as also previously noted, the overall guiding principle is that services levels will go ‘up’ to a highest common level.

Payments will be made as at present, but the new entity could simply require all payments to be made by EFT (with the necessary controls in place). The amalgamated entity will need to obtain a new ABN.

Investment management The amalgamated entity could use any of the banks that are currently used by members. However, given the feedback from the community consultation process a new entity may wish to explore opportunity to establish a community based bank that would be prepared to provide a better level of service in the district.

Reserve accounts will reflect current balances maintained at the time of the merger. Were reserves is aligned to a particular locality or function in a particular area then steps should be included in the merger documentation to partition to those locations. This would ensure funds raised by member local governments are applied in the districts that originally provided the funds.

In concert with the development of policies for the new entity an Investment Policy is prepared to ensure optimal performance and discharge the requirements of the Trustees Act 1962 and the “Local Government Operational Guideline # 19 Investment Policy”.

Debt management The combined debt of the three members is not inordinately high ($1.4m). Whilst some members of the group will bring debt to the merged entity the overall debt capacity will be improved.

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Asset management It is understood that the asset management guidelines developed by the Department of Local Government will be used by the members in the second stage of the agreement with the State.

Asset classification and valuation Policies and procedures in relation to the capitalisation and control of assets are reasonably consistent across all three members. There will be few minor amendments required to the existing policies that will enable the three entities in to amalgamate.

A merged local government will assume ownership of the existing assets held by the three members. There are no unusual holdings that will impede the merger of the three local governments.

As previously mentioned all three members will undertake (stage two) the establishment of a for asset management plan in accordance with the guidelines issued by the Department of Local Government. Included in that plan will be the provision to revalue all major classes of assets and undertake appropriate asset condition surveys.

Asset purchases and disposals Given that the Regional Transition Group Board has elected to maintain a significant presence in each town should merger proceed, there are few assets that will be redundant and available for sale post-amalgamation. The opportunity to dispose of any assets will need to be considered in the light of the administrative structures described in Part 3.6.

The depots in each town (other than perhaps Trayning) are large in relation to the scale of operations, particularly Koorda. Other than part of the Koorda depot however, the land is mostly Crown Reserves. Disposal would not produce any income to the merged local governments. If the local governments were able to acquire freehold title, rationalisation may be possible but the market for industrial land in the three towns has not been assessed.

While the current Regional Transition Group Board desire is to see a decentralised organisation, over time a new local government will seek to centralise. As noted in section 3.3.1, an obvious location is Bencubbin; however its office would require significant improvement in order to be functional. Given the Board’s direction on this matter, we have not examined the issue in detail, but if not funded as part of the transitional costs, the new entity could face a significant future capital work cost.

Depending on the administrative and workforce arrangements and the cost of data communication links (rented or installed if possible) no other significant asset purchases will be required to enable the new amalgamated entity to deliver services that are better in line with community needs.

Asset control The merged entity will need some one-off assistance to undertake development of: • An asset register be developed to maintain records of locations, acquisitions, disposals, transfers and other relevant transactions; • Procedures to ensure the asset register is reviewed and kept up-to-date; • Procedures to conduct stocktakes be conducted to reconcile the asset register to physical stock on hand; • An asset maintenance and renewal schedule, although as noted above, needs to be appropriate for the size of the merged local governments and their available skills and resources.

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Value to community Subject to the outcomes of office and depot locations as noted above and elsewhere, there are no assets where the commercial value is significantly more or less than the community value.

3.5.2 Other operational issues

Occupational Health and Safety The amalgamated entity will need to develop an Occupational Health safety (OHS) Policy. This could be based on one of the existing local governments, and deal with the number of OHS representatives, and the need or otherwise for a Safety and Health Committee.

Access to information It is not anticipated that there will be a significant number of requests for information (particularly during the initial amalgamation process) to warrant creation of a position to undertake the role of a Freedom of Information Officer.

Contracts As noted in the ‘services’ area, there are a number of contracts that will need to be merged over time, the main one being refuse collection (but for which the merging local governments use a common contractor).

The amalgamated entity will need to create contracts for future employment. In the main, these will be government by Award provisions (it is understood that Mt Marshall uses a national Award, but that Trayning and Koorda are on State ones), but a new contract for the Chief Executive Officer and designated ‘senior employees’ will be necessary, but for which a number of templates exist (WALGA and LGMA) that could be readily adapted.

Existing contracts under the individual local governments that will need to be terminated due to the amalgamation will be those of the existing Chief Executive Officers and (where relevant) Deputies. The cost will depend on the precise contractual arrangements and when a merger might take effect from – which by our estimation would be unlikely to happen until July 2013.

This, and what could happen between now and July 2013 may change but at present there do not appear to be any significant outstanding contractual disputes retained from the former local governments that would require the new entity to deal with.

Legal proceedings Similarly, while this could change between now and when a merger does occur, there are no major legal proceedings against any of the Regional Transition Group local governments that might require a merged entity to make a provision or decided on how it will handle these proceedings.

Leases It is understood there are no leases of any significant effect required for the amalgamated entity to operate.

The Shire of Trayning has a number of operating leases in place for light vehicles and for some items of major equipment, which would be transferred to the new entity. While the other local governments tend to use reserve funds to pay for purchases of this nature, assuming a use can be found for the light vehicles there appears to be reason why a merged entity should not maintain these leases until expiry.

Again, if a decision is in fact made to merge, the leases could be ‘run down’ between now and the effective merger date.

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Local laws It is considered that the social and environmental demographics of the amalgamated entity will have no effect on the need for creation and/or amendment of local laws, but that some assistance will be needed to merge them.

Rather than try to devise a new set of local laws, it will be simpler for the new entity to adopt new ones based on models developed by the WA Local Government Association. This is a drawn out process but external assistance may help, for which a provision of (say) $25,000 over two financial years may be necessary, plus any legal advice if required.

There is a negligible amount of fines, penalties and infringements associated with the existing, and nor would there be much expected from any new local laws. Little ‘annual income’ could be expected to be generated as a result of breaches of these local laws.

3.5.3 Financial considerations

The table below indentifies the program areas of the merged entity based on the 2011/12 budgets of the three members Shires. Budget Budget Budget Merger Merged 2011/12 2011/12 2011/12 Adjustment Council Koorda Mt Marshall Trayning Revenue Governance 45,916 307,154 30,010 0 383,080 General Purpose Funding 2,254,666 2,596,871 1,790,667 0 6,642,204 Law, Order & Public Safety 40,477 19,100 14,895 0 74,472 Health 131,091 0 36,450 0 167,541 Education & Welfare 0 23,216 0 0 23,216 Housing 110,732 61,360 58,466 0 230,558 Community Amenities 143,633 74,995 48,081 0 266,709 Recreation & Culture 12,729 19,240 21,203 0 53,172 Transport 228,600 151,351 73,163 0 453,114 Economic Services 28,900 74,500 40,586 0 143,986 Other Property & Services 12,952 40,600 77,715 0 131,267 Operating revenues 3,009,696 3,368,387 2,191,236 0 8,569,319 Expenditure Governance (405,108) (632,841) (199,936) 259,200 (978,685) General Purpose Funding (81,030) (68,139) (61,018) 0 (210,187) Law, Order & Public Safety (138,721) (59,256) (77,227) 0 (275,204) Health (273,148) (104,198) (222,863) 0 (600,209) Education & Welfare (12,610) (134,366) (14,827) 0 (161,803) Housing (124,505) (220,564) (100,256) 0 (445,325) Community Amenities (240,445) (304,210) (152,778) 0 (697,433) Recreation & Culture (596,717) (523,546) (459,119) (60,000) (1,639,382) Transport (1,245,840) (2,882,341) (892,393) (60,000) (5,080,574) Economic Services (248,644) (227,026) (362,005) 0 (837,675) Other Property & Services (4,309) (36,735) (60,266) 0 (101,310) Operating expenditures (3,371,077) (5,193,222) (2,602,688) 139,200 (11,027,787)

Net (361,381) (1,824,835) (411,452) 139,200 (2,458,468)

A merger of the three local governments would see a saving of $0.529m. However given the impact of the guiding principles (no reduction in employee numbers), add communication/travel cost the net saving will be $139,000. The major component of the

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savings will be in the governance and administration programs. Details of expected savings/costs are included in Attachment 3 section 3.5.3.

Whilst much of the initial savings will be applied to additional services/functions this has the effect of increasing the capacity of the merged entity.

3.6 People

3.6.1 Overall Considerations As noted earlier, amongst other things, the Regional Transition Group Board has established the principles that: 1. Employment between the three local governments should not reduce; 2. Services should come up to a highest common denominator; and 3. Where possible, employee numbers based in each town should be maintained.

Total salaries/wages (operating and capital) budgeted for in 201011 was - • Koorda $1,155,000 • Mt Marshall $1,277,552 • Trayning $900,177 ------$3,332,729

Current staff levels of 66 are as shown in section 2.1.2 and below. It is difficult to find an equivalent local government, but by comparison those with a population of around 1,500 include Wongan Ballidu (area 3,368km2) which employs 33 staff, Gnowangerup (area 5,000km2) employs 31 staff, and Kondinin (area 7,340km2) has 27 staff.

While this is significantly less than the combined Regional Transition Group group, the merged entity though would have 5 town sites and their associated service requirements. Its area is also larger than those listed above.

In addition, from the community consultation process, a number of areas where resources might be needed emerged and where additional staff could be employed:

• Economic development – (say) 1 FTEs – business support and development, and tourism development; • A capacity to develop and implement communication and marketing initiatives (increasing the profile of the area to boost its visibility, possible attraction of population, more e- commerce, and links to tourism development) – 1 FTE; • A capacity to lobby other levels of government, or to provide funding supplements where those services may be threatened or withdrawn – say 1 FTE; • Community development initiatives – 1 FTE.

Other additions might include: • Engineering Technical Officer - (say 1 FTE) - to improve efficiency and effectiveness of managing a larger and more dispersed road network. • Administration - (say 1 FTE) - given the dispersed nature of the new entity, an improved level of IT capacity or support may be needed;

The Regional Transition Group Board has been reluctant to commit to locations for its ‘home’ or for some or all of these employees, but for the purposes of this report, the following has been assumed:

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• Koorda – Chief Executive Officer and all community services, economic development, IT, a road construction and maintenance crew, location specific staff such as pool or town area maintenance, and a general enquiries/library staff member; • Mt Marshall – all engineering staff, all road construction staff, a road construction and maintenance crew, location specific staff such as pool or town area maintenance, and a general enquiries/library staff member; • Trayning – all finance staff, a road construction and maintenance crew, location specific staff such as pool or town area maintenance, and a general enquiries/library staff member.

3.6.2 Possible Organisational Structure The points listed in 3.6.1 result in the following:

Mount Total by +/‐ Organisational Area Koorda Marshall Trayning Total Org Area Possible Change Locatn Comment Position ? Executive CEO 1.00 1.00 1.00 3.00 4.40 1.00 K Executive Assistant 1.00 1.00 1.00 K Economic and tourism Project Officer 0.40 0.40 ‐ 3.00 K development Finance/Admin/Corporate D/CEO 1.00 1.00 2.00 11.50 1.00 T Senior Admin/Finance Officer 1.00 1.00 1.00 1.00 T Finance/Admin officers 2.50 3.00 3.00 8.50 4.00 1.00 T Additional IT support Community Dev/Recreation ‐ Community Development/Recreation staff 1.00 1.00 3.10 1.00 1.00 K Pool Manager/staff 0.60 0.90 0.60 2.10 2.50 KMT Environmental Health/Building Environmental Health Officer 0.20 0.20 0.20 0.60 0.60 0.60 KMT NRM Natural Resource Officers 0.40 1.00 0.60 2.00 2.00 2.00 K Engineering Admin Shire Engineer 1.00 1.00 7.30 1.00 MM Engineering technical Engineering Admin 0.30 1.00 1.30 1.00 1.00 MM officer Mechanic/Plant Maintenance 1.00 1.00 2.00 2.00 KMM Works Supervisors 1.00 1.00 1.00 3.00 2.00 KMT Works Works Team Leader 1.00 1.00 2.00 25.00 3.00 KMT Works staff 7.00 10.00 6.00 23.00 23.00 KMT Parks/ Building or Town Maintenance Parks and Gardens/ town maintenance 2.80 3.00 1.75 7.55 11.65 7.50 KMT Building Maintenance 1.20 1.20 2.00 KMT Cleaners 0.65 1.50 0.75 2.90 3.00 KMT Totals 20.65 27.60 17.30 65.55 65.55 58.60 7.00

Change 6.95 7.00

While this seems to be a comparatively large number of employees, at the end of the day, the structure needed to deliver the services required by the community is up to the local government itself. The possible new structure outlined above also takes into account some of the issues raised during the community visioning process and provides some resources to assist. This also takes into account the reduced overhead required to service one instead of three Councils and the associated statutory and compliance requirements.

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3.6.3 Other Matters

Policy The new entity will need to develop a policy manual to compare, contrast and merge the policies of the current Regional Transition Group members for initial adoption by commissioners and then review by an elected Council. The current policy manuals of the existing local governments could be used as a starting point.

Additional assistance to ensure this is done in a timely manner should be engaged.

Staffing Plans The local governments do not have ‘staffing plans’. The merged entity would still not be large enough to consider development of such a document as an immediate priority. However, under the Integrated Reporting Guidelines issued by the State, local governments will require a Workforce Plan by 1/7/2012. While this has not come into effect at the date of this report, it is understood that this will apply regardless of whether they are amalgamated or not.

Human Resources Issues Human Resource Staff It is considered that the new, merged organisation would still not be large enough to warrant employment of an in house HR function, although development of a manual to guide supervisors through typical functions such as recruitment, induction, performance management, dealing with grievances and the like should be undertaken, using external assistance.

Payroll should be undertaken by the corporate services area.

Key Human Resource Roles Change management (culture) could be a critical issue, given that three organisations are to merge into one. This task will be made more difficult by the Regional Transition Group Board’s preference for a major presence in each of the current local government areas, which will tend to work against the new entity establishing its own culture.

Over the short to medium term, additional resources will assist to develop plans to address post-merger cultural issues. Ideally, this should start before merger actually takes place. This plan should include measures to inform the community to ensure that they are communicated with about changes occurring within their local government, as well as advising government and other organisations of the changes that have occurred.

Given the Regional Transition Group Board’s position, there will be minimal overall changes in staffing numbers from the combined Regional Transition Group organisational structures compared to the envisaged amalgamated entity’s organisational structure. There will be at least two CEO and Deputy CEO type roles made redundant.

In addition, depending on the direction chosen, roles may also change for some staff, particularly those currently engaged in corporate services areas. The location (Koorda, Bencubbin, or Koorda) will also change as noted in Part 3.6.2.

External resources should be engaged to assist with this process, from a number of perspectives: • Merging of payroll issues – while all the local governments use similar Award provisions, it is highly likely that there are differences in Levels for similar jobs, the way matters such as overtime are treated, pay run dates, the presence or otherwise of allowances like service pay, tool provision, etc; • Negotiation of termination of employment for those who will be displaced; Feasibility Study Page 82

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• Development of a fair process to allocate those roles where there is no change to job requirements, but where merger produces less specific jobs than there are staff currently doing them; • Assessment of suitability for and if so, development of training needs where a current staff member may be consider for one of the new roles suggested in Part 3.6.2; • Where a change in job location may arise, whether or not any assistance in terms of relocation or a transport subsidy will be given; • Decisions where an existing employee cannot be found a new position, or is not considered able to take up any of the new roles; • Identification of the processes associated with redundancies/severance payouts, including a plan for displaced employees who are entitled to work for two years within their award/agreement if they opt not to take the severance payout option; • Development of a plan to deal with risks associated with industrial disharmony issues that can be caused as a result of displaced employees, and • How will the records and management of employee awards and agreements will be conducted

3.6.4 Financial considerations Financial considerations are dealt with in section 3.5.3 above. .

3.7 Retention of Community Benefit As part of the scope for examining the costs and benefits of a possible merger, the Regional Transition Group requested that an issue relating to ‘Retention of Community Benefit’ is to be addressed. This includes: • community branding • representation • lobbying • identification of economic and social costs to the communities • amelioration of the identified costs to the communities

There is some measure of subjectivity in terms of what might or might not be reasonable levels or outcomes in relation to these points, and hence the extent to which they may be affected by a merger of the three local governments. The effects might also depend on just how the merger process is managed and what decisions are made as part of that process.

With this limitation in mind, some of these issues are dealt with in the discussion above, and a recent study by the Australian Centre for Excellence in Local Government completed in May 2011 looked at just what effect local government reform in other States may have had on similar issues, which may be of interest here, and where relevant, points noted. The full report is available at www acelg.org.au.

3.7.1 Community Branding In relation to communities, a brand could be said to be a theme, set of values and/or symbol that is associated with a particular community or organisation. Generally, a brand or symbol is designed to communicate what that theme, values or message might be. The existing logos or brands of Koorda, Mt Marshall and Trayning convey a message as to what their communities are about. A consistent theme in particular is the agricultural constants of wheat and sheep. In this regard: • Koorda uses the “corn dolly” as its symbol and brand;

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• Mt Marshall’s name is taken from a geographical feature in the district, not from any of the towns or smaller communities; • Trayning incorporates the names of three town sites of Kununoppin, Trayning and Yelbeni in its brand.

All three have websites with basic information.

It is clear from the community consultation undertaken that residents of all Shires have a strong sense of identification with their local community. Interestingly though, notwithstanding the inclusive nature of their current brands, in the case of both Trayning and Mt Marshall residents identified a stronger affinity with the individual towns of Trayning and Kununoppin, and Bencubbin and Beacon - rather than the local government district. The Beacon community in particular markets itself as a destination or brand, rather than as part of the Shire of Mt Marshall.

The issue here is the extent (or concern) about a loss of identity should the local governments merge – a strong perception arising from the community consultation undertaken in March and April 2011 was to the effect that the needs of individual communities would be ‘drowned out’ in a larger local government. This was stronger in the meetings held with Beacon residents in particular, who felt that they were given a lower priority for attention behind Bencubbin. Kununoppin residents expressed a similar view in relation to Trayning.

In our view, there are few differences in local government services that could be considered to have a discernable impact on the various towns within the three local governments. The issue may well be one of perception, rather than reality.

In addition, the local governments are relatively homogenous in terms of geography, land uses, and demographics. There is little on which to differentiate between them or other communities in the region that could be tied to a brand that could be said to be distinctive and identifiable with their individual communities.

That aside, pooling whatever resources and efforts that are currently directed towards community branding separately by the individual local governments into one area may have some benefit, in that promoting one brand instead of 3 or more will have a greater impact. Exactly how this is done needs to be the subject of a marketing exercise in itself, but if the opposite view is taken, this may well present an opportunity to ‘brand’ the 5 towns within the Regional Transition Group as separate and identifiable communities within a larger local government.

Doing so might actually be spurred on by a merger process from a number of perspectives: • Differentiating between what are presently homogenous areas within a local government might actually lead to greater external interest over and above a perception that the larger Shire is ‘just another one of the same’; and • The process could lead to building an even greater sense of community within those towns.

3.7.2 Representation This issue is dealt with mainly in section 3.2.2 of this report.

Section 2.17(2) of the local Government Act provides that a Shire council is to comprise between 6 and 15 members. The State Minister for Local Government has expressed a desire that this should be no more than 9.

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The combined number of Councillors in the three Shires comprising the Regional Transition Group is 21, and the Regional Transition Group Board has expressed a view that this could be reduced to 13 if merger was to go ahead. Note that even under this potential arrangement, the ratio of councillors to population would still be higher than most local governments in the State. The area of the combined local governments is also some 15,000km2, and there were some concerns about the capacity of essentially volunteers to deal with issues over such an area. There may also be a sense of loss of local control over decision making.

As noted in section 3.2.2 in order to reduce any concerns about loss of local representation it was considered that the use of wards, based on the current local government boundaries within the Regional Transition Group may be of use. This would also allow elected members the ability to focus on smaller areas, while recognising that they are still to make decisions that are in the best interests of the whole of the district, not ‘their’ ward(s).

In addition, the ability by Councillors to participate in meetings using instantaneous communications (ie telephone, internet, etc) as provided by Regulation 14A of the Local Government (Administration) Regulations 1996 could also be used to alleviate the need to drive long distances for meetings.

Finally, the new merged Council could rotate meetings between towns to improve a sense of local representation and participation.

3.7.3 Lobbying There is a school of thought that the impact of lobbying by three separate local governments on other levels of government may be higher than one. In essence, the argument is that the ‘noise’ of three is likely to be more effective than one.

A local government with a population of some 1,500 is still not large enough to carry a great deal of weight anyway, but it is hard to definitively state if its voice would or would not be ‘louder’ than three local governments with populations of around 500 each.

The effect of merging three local governments into one would be that its vote on those committees or bodies where one vote carries one value would be diminished, but it is again hard to conceive of many situations where this could be of a practical disadvantage.

This matter is subjective, and while the outcome of any lobbying ought to depend on the issue under consideration and its merits rather than anything else, other factors such as the skills and attributes of the persons lobbying, community involvement, funding, or media attention are just as likely to have a significant impact.

On balance though, it is hard to see that there would be any practical difference.

3.7.4 Economic and Social Cost to Communities Given that government is funded by taxes on communities, a reduction in the size and cost of government on face value would mean that taxpayers would have more discretionary income, spend more, and boost the local economy. However, in this case a significant amount of funding of the participating local governments is though also provided by general purpose grants (ie from taxpayers outside the district).

Notwithstanding their relatively small scale, the local governments in the Regional Transition Group are the largest employers within each district. Employees are generally housed locally, and those with children attending local schools. Concern was expressed by the Regional Transition Group Board that a merger could see operations centralised in one location. If staff

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were also relocated, there would be a significant cost in terms of re-housing as well as knock- on effect to local economic activity.

Given that the organisational model adopted by the Regional Transition Group Board as detailed in section 3.6.2 is to: • maintain roughly the same numbers of employees presently employed by the three local governments; and • establish an organisation with roughly one-third of total staff deployed in each location, with numbers more or less as at present,

Then the economic or social costs to individual communities within the Regional Transition Group can be minimised.

In addition, if the merged local government is able to successfully redirect some staff resources from overhead or corporate areas into economic or community development activity, there will be benefits to communities.

Some concern was expressed at the Regional Transition Group Board that some specialised roles may be more difficult to fill than others.

This may be the case where a degree of technical qualification is required in order to undertake a particular task, such as engineering design, town planning, IT support or similar. This is however, not unique to the Regional Transition Group – all local governments experience this need. In addition, it is noted that all three local governments have employed CEOs from outside their district – there is nothing wrong with this; it simply reflects the issues facing them and all other local governments.

While specialisation in some roles should assist the local government in getting the results its communities might seek, the scale of the organisation if merged will still not be large – staff will still need to have a broad based range of skills. There may also be benefits in having the opportunity to undertake different roles other than basic clerical functions, and the merged entity could offer more choices and arguably a better career path than the three local governments as separate entities might – for example, the skills needed to provide good customer service are not much different to that needed to market a tourism strategy to a bigger audience.

A concern was also expressed by the Regional Transition Group Board that there may be a tendency for a merged entity to seek to make purchases centrally, and that businesses in the other towns would ‘miss out’.

The practical effect though of a merger may well not be high on local procurement - most expenses are staff related; as noted above the Board has decided on a decentralised organisational model. Plant and equipment is purchased from external sources, as is materials such as road base, and sealing products. Materials such as gravel would still be sourced locally, and it would also make sense for servicing of heavy equipment and the like to be done at or close to the base of operations (the current 3 depot sites).

The new entity will need to ensure its procurement policies are developed to ensure that ratepayers receive value for money, and it should not unreasonably subsidise an inefficient, but locally based business simply because it is local.

However, it is also able to develop a local price preference policy as part of this process. Under the decentralised model being used by the Regional Transition Group Board, it would make sense for procurement to be localised wherever possible to reduce transport costs.

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3.7.5 Amelioration of Costs to Communities Noting the comments in section 3.7.4 above, there will be a measure of disruption and distraction while a merger is undertaken. The effect will be that the merged local government is likely to focus on its own internal affairs for at least a 3 year period after merger formally occurs.

There is no way of avoiding this, but as noted in Part 4 below, funding for qualifying and direct transitional costs can be obtained from the State Government to assist with the process. If the Regional Transition Group members choose not to merge, but are forced to under different circumstances in future and where assistance might not be provided, then the costs might be borne entirely by the communities of the local governments, as has been the case in a number of other States.

3.8 Strengths, Weakness, Opportunities and Threats (SWOT analysis) As part of the process of assessing their current positions (see section 2.7) the three Shires were also asked to consider what strengths, opportunities, weaknesses and threats might arise from a possible merger. The results are below: Strengths Weaknesses Same economic profile (agriculture) Ageing population Same issues Loss of representation More influential in future amalgamated state Potential to reduce voluntary capacity Similar interests Greater travelling – elected members, staff, plant Less likely to attract voluntary elected members Staff more remote from communities Parochial towns Loss of grass roots level Reduced Grants – WALGGC and YSR One local govt of 1500 may have less influence than three separate Opportunities Threats Cost savings from amalgamation Reduction in staff may mean reduction in Greater bargaining power families Greater ability to attract funding Increased competition between towns Ability to increase volunteering (several towns in one district) for facilities Opportunity to choose merger partners (rather than Declining due to amalgamation threats forced) Ageing population Larger = better services No action = no choice Employees can specialise Potential for elected members to become Pooling of resources – efficiencies political Combine administrative services – IT Vision products, ROMAN Provide additional services Equality vs equal Ability to influence future funding Reduce the number of elected members:  21 to 12 as a transition to 9?  Less members means better chance of agreement  Ward per town? 3 Wards with 4 elected members  Public perception

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4 TRANSITIONAL CONSIDERATIONS AND COSTS Purpose: This section of the study lists the key transition tasks and any costs that may be incurred (or income generated) should transition to an amalgamated entity be pursued. The relevance of this section is to gain an understanding of the potential risks, barriers, one-off costs and revenue windfalls likely to arise as a consequence of any future amalgamation.

Key Findings  The three local governments have varying rate(s) in the dollar, discounts, fees and charges. The outcome of any merger would require a new entity to formulate a rating policy based on equality and fairness. The difference between each of the local governments is substantial and will have a material impact on this new rating policy.

 Any move to equalise rates will have the following impact – o Substantial increases will result in GRV rated (town) properties in Koorda (29%), Mt Marshall (11%) and Trayning commercial (70%), o Substantial increases will flow to UV rated (rural) properties in the Trayning district (42%), o Increases of 33% would be required for minimum rated properties in the districts of Koorda and Trayning, o These would be partially offset by increases in the discount offered in Trayning (from 5% to 10%) and in Mt Marshall (from 7.5% to 10%).

 The estimate to facilitate the merger of the three local governments in the Regional Transition Group is $1.532m.

 Additional Capital Works could be in the region of $4.762m.

4.1 Rate equalisation The outcome of any merger would see the new entity formulating a rating policy based on equality and fairness. At present the three local governments have varying rates in the dollar, discounts, fees and charges. The difference between each of the local governments is substantial and will have a material impact on any new rating policy.

The table below shows the differences in rates/minimums imposed in the 2011/12 budget. Variations Minimum Minimum Rate in $ Rate in $ Rate Rate Gross rental Properties Koorda 11.4000 220.00 100% 100% Mt Marshall 13.1323 300.00 115% 136% Trayning 16.0502 230.00 141% 105% Trayning ‐ Commercial 9.4215 230.00 83% 105% Unimproved Values Koorda 1.7600 220.00 173% 100% Mt Marshall 1.5913 300.00 156% 136% Trayning 1.0180 230.00 100% 105% Variations measured against lowest non concessional rate levied.

In the above table the variation in the rates levied is material and based on the comparison with the lowest rate levied the following issues will impact on the ratepayers in the district -  The rate in the $ for gross rental values properties (town sites) in Trayning and Mt Marshall are 41% and 15% higher than in Koorda;

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 The rate in the dollar GRV concession for commercial properties in Trayning is 70% of the residential rate;  The rate in the dollar for UV properties in Trayning would need to increase by 73% to match the rate in Koorda. Similarly there is a 56% variation in the Trayning UV rate to that applied by Mt Marshal;,  Minimum rate would need to increase in Koorda (36%) and Trayning (31%) to match the minimum imposed by the Shire of Mt Marshall; and  There would also need to change the discount offered in Trayning (from 5% to 10%) and in Mt Marshall (from 7.5% to 10%) for early payment of rates.

With such a disparity in the current rating charges any merger would require to address the impact of rate equalisation.

Rate modelling was undertaken based on the on the property databases provided by each Shire. Various scenarios were tested to determine the impact that the rate equalisation would have on individual properties throughout the three districts.

The rate modelling addressed the following –  Provides for the forecast movements by each Shire for the 2011/12 to 2013/14 budgets assuming a merger may come into effect on 1 July 2013;  Projected the rating impact for up to 10 years post 2013/14;  Provides for equalisation of, and apportionment of the rate burden between UV and GRV rated properties, the likely UV/GRV rate in the dollar, minimum rates, discounts and other related charges.

A number of scenarios were reviewed and the following three examined in detail to assess the likely impact of the of the merger proposal: 1. All rates equalised in first year to yield 2012/13 budget amount either increased by Consumer Price Index or likely percentage increase identified over the interim years (2011/12 to 2013/14) by the Regional Transition Group members; 2. Phase in all variations over three years from 2013/14; 3. Phase in all variations over five years from 2013/14.

The Shire of Koorda has indicated that future rate increases will be in line with their long-term financial plan i.e. 5% per annum. The Shire of Trayning has indicated that increases will be of the magnitude 13%, 13% and 8% over the next three years. Indications from the Shire of Mt Marshall are that rate increases will be in line with the Consumer Price index.

Full details of the modelling are included in Attachment 4.1.

For the purpose of demonstrating the impact of the current disparities in the current rating regimes the following tables show the impact if the rating equalisation was made at the commencement of the merged entity (ie from 1 July 2013). The estimates are made on the basis of raising current rating revenues given the proposed increases or CPI.

The issue of the rate distribution between rural and non-rural properties would need to be addressed. That is; what proportion of the total rate burden should be appointed between gross rental value properties (townsite) and unimproved value properties (rural)? Currently the apportionment varies from 87:13 to 92:8. Any new rate policy would need to address a rate distribution between rural and new and non-rural before individual rates in the dollar can be struck.

The table below shows the impact of a rate distribution if the process was initiated in the first year. For GRV rated (town) properties averages have been shown as the property distribution curve resemble a ‘bell curve’:

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Average $ 2011/12 2012/13 Gross rental value properties Budget Budget year 1 Koorda 34.16 28.46 162.76 Mt Marshall 25.71 17.49 68.73 Trayning 93.31 34.44 ‐29.62 Average % Change 2011/12 2012/13 Gross rental value properties Budget Budget year 1 Koorda 5.7% 5.9% 29.1% Mt Marshall 5.1% 3.1% 11.4% Trayning 19.9%8.4%0.5%

The effect of minimum rates lessens the overall impact (marginally). Properties in Koorda and Mt Marshall would on average, pay increased rates of $162 and $68 respectfully.

GRV rated properties in Trayning would enjoy a reduction, except for commercial properties.

UV rated (rural) properties reflect a reverse result. Because of the diversity of property sizes the median (centre point) change has been used. UV rated properties in Trayning would experience rate increases of 13%, 13% and 41% over the next three years. UV rated (rural) properties in Koorda would be the major beneficiaries with this rate redistribution:

Median $ 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1 Koorda 118.40 130.24 ‐322.64 Mt Marshall 74.72 89.89 ‐27.43 Trayning 196.35 246.84 897.60 Median % Change 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1 Koorda 4.8% 5.0% ‐11.8% Mt Marshall 3.0% 3.5% ‐1.0% Trayning 11.5% 13.0% 41.7%

These forecasts will also be impacted upon by property revaluations between 2010/11 and 2013/14. UV (rural) properties will be revaluated annually whilst a revaluation of GRV rated (town) properties is due before 2013/14. At the time of preparing this report the revaluation of rural properties for 2011/12 had been undertaken however initial review would suggest only minor changes have been made to the values used in this report.

As noted above, modelling with respect to phasing in of rate equalisation regimes over a three or five year period is shown in attachment 4.1. Note though that the phasing in process brings with it a degree of administrative complexity that will be challenging for the merged entity to both manage, and explain to ratepayers in a succinct manner.

The rating policy for the new merged local government will in due course result in a rate equalisation. In the interest of spreading the impact of the policy any arrangements for rating should allow for - Phase in restructure of UV and GRV rates over the first five years, Discounts to be changed over the same period to 10%

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Minimum rate be lifted over that five period based on the Mt Marshall rate plus CPI increases Administration charges, interest charge be normalised in year one.

The Regional Transition Group members believe that changes should be phased-in over a five year period would be the most appropriate.

4.2 Transitional costs The following estimates are considered necessary to facilitate the amalgamation of the three local governments in the Regional Transition Group. Item Cost Comments The Council Commissioner Expenses 40,000 Fees plus travel and accommodation Establish new meetings structure 1,500 Development of paper to canvass options (in conjunction with delegations of authority) Review delegations of authority to 3,500 Committees and CEO, appointments of authorised persons Induction of Councillors into expanded role 15,000 ADMINISTRATION Overall project management 70,000 Need to develop project plan with timeline and detailed list of matters to be addressed and when; may be able to undertake other tasks depending on capacity. Casual Staff during implementation 50,000 Additional resources to assist administration Staffing Issues Recruitment cost of new CEO 25,000 Cost to engage recruitment company but excluding advertising costs HR advice and support for transition issues 45,000 Includes moving staff to one Award, negotiating redundancies, placement of staff into new roles, payroll transition and advice Redundancy costs 802,000 Refer Reg 18B of the Local Government (Administration) Regulations 1996 ‐ capped at 1 year maximum. Provision made for 2 CEOs at 1 year @ $140,000 ea; 2 D/CEOs at 1 year @$111,000 ea; and (say) 4 others @$75,000 each on average. Staff training 35,000 New roles where identified and suitable Corporate Operations Communications Study 50,000 Commission expert study Develop new Policy Manual 12,500 Prepare Merge/develop new local laws 25,000 Using WALGA models. Excludes any major legal advice that may be needed. Development of 'new' and merged 12,000 OH&S legislation requirements, Disability Services Act, Freedom of documents required by other external Information Act (information statement), etc legislation Review of external services contracts and 45,000 Mainly waste collection, but affects others such as medical development of synchronisation plan services, EHO, regional ranger service, others. Excludes legal advice if required. Development of new corporate identity 45,000 Includes logo, letterheads, website establishment, entry statements and signage on all facilities. Establishment of new records system 22,500 Legal advice 40,000 New telephone system 22,700 Office changes 12,500 Minor internal alterations only. Based on '3 towns' scenario ‐ note comments in Part 3.3.1.1 Information Technology Changes to financial systems 47,000 Development of new chart of accounts, budget and associated financial processes, payment and receipting procedures, issues, stocktakes, merger of asset registers, developing new procurement procedures, and implementation of same. IT data migration and mergers 40,000 Assumes IT Vision SynergySoft product used System hardware changes 15,000 Based on central server, additional routers, hubs etc Community Consultation/Information Communications to community during 15,000 Newsletters, mail outs, public meetings if required transition Community satisfaction survey 16,000 Pre merger and post merger survey Town Planning Scheme Merge/develop new Local Planning 75,000 Incorporate all schemes Scheme Total 1,582,200

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The majority of these costs should be met by the State when considering the ‘Local Government Structural Reform Program 2009-2011 Funding Guidelines for Amalgamating Local Governments’. All costs with the exception of the costs for commissioners would be eligible under the guidelines.

It should be noted that the largest single item above relates to possible redundancy payments to senior staff. It may be possible to utilise their skills as part of the implementation of the transition to the new entity, allowing retention of their institutional knowledge, as well as reducing the cost of early contract termination. This may not be feasible though, and as such the provision has been made.

A full checklist from the Business Planning Template is attached as Attachment 4.2.

As noted in Part 3, there are concerns that the ‘3 towns’ distribution of the merged entity may not necessarily be maintained over the long term, and that there will be a trend towards centralisation in Bencubbin. In itself, this could be a major transitional cost, so it and other factors that might be considered outside the funding guidelines, but may present themselves as part of the merger are shown below:

It would be appropriate that with any merger proposal that an approach be made to the State for the funding of a specialised communications study to evaluate and fully cost the options to resolve the communication issues for the combined area of a new local government. A provision of $50,000 has been included in the transitional costs in the above table.

Additional Capital Works Data line - Koorda-Bencubbin-Trayning $1,862,700 May not be possible to fund Office - Bencubbin $2,900,000 See comments above ------$4,762,700

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5 RATE SETTING STATEMENT This section provides direction to Regional Transition Groups on how to develop a comparative Rate Setting Statement covering both the current state and future state scenarios.

The Rate Setting Statement is part of the budgeting process and shows how much rates are required to pay for the local government’s operations.

Key Findings The following issues will have a financial impact on the proposed merger given the structures resulting from the guiding principles determined by the Board –

 Based on the 2011/12 budget estimates the merger of the three member Shires will provide net savings of $139,200 per annum which represents 5.6% of the combined rates. In addition resources of $250,000 will be applied in increasing the capacity of the merged entity to address other activities. This will require an investment of $1.532m (operating) and potentially $4.763m in capital.

 The current method for the allocation of united grants by the WA Local Government Grants Commission (WALGGC) effectively penalises local governments that merge. This is under review by the Commission and if replaced with a new methodology which ameliorates the “disincentives” for local government considering amalgamation then there should be no negative impact on the untied grants received. The outcome of this review will not be known until early 2012.

 In respect to some federal and state government grants allocated by local government the merged entity would potentially lose two of the three fixed component grants whilst the combined population of the group would not reach the existing population threshold that would entitle the new entity to additional grants.

 At this stage the Roads to Recovery grant program is set to continue to 2013/14. If the program does not continue after that date then all local governments will be required provide the equivalent funds to maintain the condition of the road network.

 The general purpose grant administered by the WA Local Government Grants Commission is likely to be reduced to three instalments in 2012/13. The normal arrangements will be re- instated by 2013/14. This will have the effect of materially reducing the cash flow to local governments in the 2012/13 budget.

 The direct funding from Royalties for Regions of capital works for the member local governments is phasing out and will no longer provide the opportunity for local governments to directly access these funds unless they are on a regional basis.

 The road condition assessment (details in section 2.3.1) estimated a 15 years capital (renewal) program for the Shire of Koorda of $12,150,688 which equates to an annual outlay of $810,046. The corresponding calculations for the Shire of Mt Marshall were $23,007,013 (15yr) at $1,533,801 per annum. Whilst for the Shire of Trayning the calculations were $10,799,558 (15yr) at $719,971 per annum.

 The population of the three members remains static if not in decline. As families leave the district it places a greater pressure on businesses, education, health and law and order to downgrade.

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5.1 Rate Setting Statement (merged)

Budget Budget Budget Merger Amalgamated Rate Setting Statement 2011/12 2011/12 2011/12 Adjustment Council Koorda Mt Marshall Trayning Operating Rates 776,843 1,086,026 600,908 0 2,463,777 Other Program revenues 2,232,853 2,282,361 1,590,328 0 6,105,542 Program Expenditures (3,371,077) (5,193,222) (2,602,688) 139,200 (11,027,787) Proceeds from normal operations (361,381) (1,824,835) (411,452) 139,200 (2,458,468)

Write back non cash items Profit on asset disposals (111,375) 77,013 0 0 (34,362) Depreciation 1,028,311 2,349,494 584,967 0 3,962,772 Loss on asset disposals 0 0 0 0 0 Employee entitlements 0 0 0 0 0 0 0 0 0 0 0 0 Other Non current assets/liabilities 0 0 0 0 Net operating 555,555 601,672 173,515 139,200 1,469,942 Capital Grants, Subsidies and Contributions 1,287,119 1,802,405 1,539,634 0 4,629,158 Contributed Assets 0 Proceeds from Sale of Non‐Current Ass 415,000 213,500 15,000 643,500 Gifted Assets 0 Land & Buildings (1,300,430) (1,060,689) (996,292) 0 (3,357,411) Plant & Equipment (844,000) (543,500) (110,000) 0 (1,497,500) Furniture & Equipment (32,000) 0 (25,000) 0 (57,000) Infrastructure ‐ Roads (1,213,000) (1,683,638) (683,594) 0 (3,580,232) Infrastructure ‐ Other (464,400) (370,889) (40,000) 0 (875,289) Net capital (2,151,711) (1,642,811) (300,252) 0 (4,094,774) Reserve Transactions Transfers (to) Reserves (443,800) (585,372) (265,197) 0 (1,294,369) Transfers from Reserves 1,003,453 359,620 381,412 0 1,744,485 Net Transfers (to)/From Reserves 559,653 (225,752) 116,215 0 450,116 Debt Funding Borrowings 0 0 0 0 0 Re‐finance loans 0 0 0 0 0 Loans to Community 0 (200,000) 0 0 (200,000) Principal Repayments 0 (121,690) (91,264) 0 (212,954) Repayment of Loans by Community Gro 0 7,861 0 0 7,861 0 (313,829) (91,264) 0 (405,093) Net Funding (1,036,503) (1,580,720) (101,786) 139,200 (2,579,809) Net current assets 1 July Surplus/(Deficit) 1,036,503 1,582,220 104,385 0 2,723,108 LESS 30 June Surplus/(Deficit) 0 1,500 2,599 4,099 1,036,503 1,580,720 101,786 0 2,719,009

Budget (Deficit)/Surplus 0 0 0 139,200 139,200

Based on the 2011/12 budget estimates the merger of the three member Shires will provide net savings of $139,200 per annum which represents 5.6% of the combined rates. In addition, in accordance with the Boards guiding principles resources of $250,000 will be applied in increasing the capacity of the merged entity to address other activities. This will require an investment of $1.532m (operating) and potentially $4.763m in capital.

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5.2 Issues affecting financial sustainability The issue of financial sustainability was addressed by considering the current position of the three members against the proposed financial sustainability indicators to be introduced for local government in Western Australia.

To assess the future financial sustainability of a merged entity, forward estimates for a ten year period were prepared to identify potential risk events in that period.

5.2.1 Current position The question of assessing as to what constitutes financial sustainability has not been quantified for local governments in Western Australia. The Department of Local Government has published “statutory key performance indicators” which may be of assistance, but some require refinement or are not readily extracted from the financial information currently produced by local governments under the legislation and Accounting Standards.

Based on the key performance indicators presented in the "Long Term Financial Planning Framework and Guidelines for Western Australian Local Governments" (2011) and the Departmental models an assessment of the three local governments for the year ended 30 June 2010 would be as follows -

Key Performance Indicator Koorda Mount Marshall Trayning

Current Ratio

Operating surplus ratio

Rate coverage Ratio

Debt Service Ratio

Asset Sustainability Ratio

Asset Consumption Ratio

Asset Renewal Funding Ratio not available not available not available

At this stage industry guidelines have not been prepared as to which indicators or combination of indicators are required to meet benchmarks that would allow a local government to be considered “financially sustainable”.

Given the nature of the calculations used to determine the “Rate coverage ratio” (rate revenue/operating expenses) none of the three local governments are close to the 40% benchmark required by the Department. A merger would not change that outcome.

However when considering the “operating surplus ratio” the Shire of Koorda is only marginally below the required level and is within acceptable limits. In addition if all revenues were included in the calculations then all three Shires would either meet benchmark or be within acceptable limits.

Generally, the Shire of Koorda would be considered the most sustainable of the three members, followed by Mt Marshall and then Trayning.

The biggest challenge for a local government is to ensure it is in a position to replace or renew existing assets at the appropriate time in the asset life cycle. Generally local governments in Western Australia have benefited from the provision of federal and state funds in the form of roads to recovery and royalties for regions. In particular the road to recovery which has been in operation since 2001 allows the Shires to maintain road condition at the appropriate level.

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5.2.2 Financial Impacts Arising from Merger Proposal The following issues will have a financial impact on the proposed merger given the structures resulting from the guiding principles determined by the Board –

 Economies of scale – a combination of employee and material costs should save the group approximately $230,000 pa. This arises from savings in payroll cost by reducing the number of senior staff and replacing them with other staff members at lesser remuneration package. In addition there are savings to be made under the governance/corporate services operations for such items as audit fees, IT support, accounting services and members expenses.

 Communication Costs - the inadequate lines of communication between the proposed operating centres will add an additional operating expense of approximately $120,000 per annum. This arises as a direct result of having three administrative centres and the need to ensure communications are such a standard not to in negatively impact on the transfer/access of information between the proposed centres.

 Financial Assistance Grant – If the current allocation method for the allocation of united grants by the WA Local Government Grants Commission (WALGGC) is maintained then the grants (general purpose) to an amalgamated local government will be reduced by about $.500m pa after the five year moratorium provided by the Commission. This is simply as a result of the method of calculating untied grants, which is unavoidable. The arrangements put in place by the Commission will ease the transition over the long term by easing in the differential amounts.

However if the WALGGC Board endorses a new methodology which ameliorates the “disincentives” for local government considering amalgamation then there should be no negative impact on the untied grants received by the Regional Transition Group members, collectively or singularly.

This issue is of such material importance that the Regional Transition Group members should seek clarification from the WALGGC of the impact of the new methodology by February 2012.

 Other grants – From time to time both federal and state governments provide “stimulus” grants to local communities to meet their own policy directions. These usually take the form of fixed grants per local government and recently tend to focus on population as a driving factor. By combining the group the new entity would lose two of the three fixed component grants and unfortunately the combined population of the group would not reach the population threshold to access more grants.

5.2.3 Issues Arising from Existing Constraints  Roads to recovery – At this stage the program is set to continue to 2013/14. If the program does not continue after that date then all local governments will be required provide the equivalent funds to maintain the condition of the road network.

 Grants Commission Review – The WALGGC is currently reviewing the methodology of distributing untied grants throughout Western Australia. The review is unlikely to result in major shifts in the way that the grants are allocated due to the need to meet federal government assessment criteria. It is possible that each of the three member local governments may see a stagnation or small change in the level of funds provided under a revised formula. It will not be until 2012 that the results of this review and the financial impact it may have will be available.

 Royalties for regions – direct funding of capital works for the members local governments is phasing out and will no longer provide the opportunity for local

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governments to directly access these funds unless they are on a regional basis. The funds provided to date have had a positive impact on the financial sustainability of local governments. By reducing the access to these funds in the future financial sustainability of councils will be negatively impacted.

 Use of the road network - the road networks of the three councils are the largest program use of financial resource and as such impacts on financial sustainability. Local governments are required to react to road condition which may be facilitated by changes in cartage routes by grain supplies. As the local government must maintain these roads over the long term they can have a negative impact on the financial sustainability of each of the members.

 Condition of road network - The road condition assessment (details in section 2.3.1) estimated a 15 years capital (renewal) program for the Shire of Koorda of $12,150,688 which equates to an annual outlay of $810,046. The corresponding calculations for the Shire of Mt Marshall were $23,007,013 (15 yr) at $1,533,801 per annum. Whilst for the Shire of Trayning the calculations were $10,799,558 (15 yr) at $719,971 per annum. Generally these outlays are achievable given the current grant levels and some increase in rate revenues. However the previous comment regarding royalties for regions will have a material impact on the future financial sustainability of each of the members, separately or as a merged entity.

 Adverse population change - as previously mentioned the population of the three members remains static if not in decline. As families leave the district it places a greater pressure on businesses, education, health and law and order to downgrade. To some degree the rating revenue of the three members is not reliant on population with approximately 90% of its rate revenue arises from the rural sector.

5.3 Ten year Forward Estimates Based on the 2011/12 budgets of the member Shires forecast were made using cost drivers, capital replacement needs, the 5 year capital works programs and the following assumptions.

 Rates - These estimates provide for rate revenue to be consistent with the current rating philosophies of the member Shires. They provide for a CPI increase in revenues.  General Purpose Grants (WALGGC) - The general purpose component for 2012/13 will be reduced to three instalments. The normal arrangements will be re-instated by 2013/14. The new allocation process of the general purpose grant will not materially impact on the total allocation to the three Shires.  Roads to Recovery Grant (Federal) - The estimated are prepared on the basis that this grant will not continue after 2013/14.  Country Local Government Fund (Royalties for Regions)- The allocation of direct grants are based on the formula that for 2011/12 - 50.0% of the 2008/09 allocation and 2012/13 - 50.0%. All other funds will be allocated to a Regional Grouping for projects considered to be of regional significance.  Capital Outlays - Capital outlays are based on asset replacement requirements for each class of assets and individual projects indentified in each Shires 5 year works program.  Merger Expenses (2013/14) - The establishment cost of the proposed merger is included as $1.532m. (operating) This will be funded by grants of $1.492m.  Reserves - The used of reserve funds has only been included where there is a clear purpose and identified applications in these estimates. Reserves are estimated to rise from $2.75m to $6.26m over the period. Clearly some of these funds could be applied to mitigate some of the deficits over this period.

Full details are provided in Attachment 5.3.

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Ten year Forward Estimates Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Funding Statement Operating Revenues(Excluding capital contributions) Rates 8 2,463.8 2,624.6 2,735.6 2,840.0 2,944.1 3,048.0 3,151.1 3,262.0 3,376.4 3,494.3 3,617.2 3,743.6 Operating grants, subsidies, contribution 6 4,675.2 3,607.0 6,257.7 4,880.2 5,050.7 5,227.2 5,409.8 5,598.9 5,794.5 5,997.0 6,206.6 6,423.5 Profit on asset disposals 140.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees and charges 7 877.5 907.2 937.9 969.7 1,002.6 1,036.7 1,072.0 1,108.5 1,146.2 1,185.3 1,225.8 1,267.7 Service charges 2.0 2.1 2.2 2.2 2.3 2.4 2.5 2.6 2.7 2.7 2.8 2.9 Interest earnings 9 77.3 75.5 84.3 67.9 68.9 71.3 73.9 76.7 79.5 82.4 85.4 88.5 Reserve fund interest 11 247.9 178.5 165.3 170.3 183.8 191.8 201.8 212.6 233.9 242.0 254.8 269.7 Other revenue 88.3 91.4 94.6 97.9 101.3 104.8 108.5 112.3 116.2 120.3 124.5 128.9 8,572.0 7,486.3 10,277.5 9,028.3 9,353.7 9,682.3 10,019.6 10,373.5 10,749.4 11,124.1 11,517.1 11,924.8 Operating Expenses(Excluding interest expense) Employee costs (2,525.0) (2,613.3) (2,594.6) (2,685.4) (2,779.4) (2,876.7) (2,977.3) (3,081.6) (3,189.4) (3,301.0) (3,416.6) (3,536.2) Material and contracts (3,563.4) (3,314.7) (4,988.5) (3,580.9) (3,706.2) (3,835.9) (3,970.2) (4,109.1) (4,252.9) (4,401.8) (4,555.9) (4,715.3) Utility charges (electricity, gas, water etc. (294.3) (323.8) (340.7) (355.6) (371.1) (387.4) (404.3) (422.0) (440.5) (459.7) (479.8) (500.8) Depreciation on non‐current assets 10 (3,962.8) (4,145.4) (4,336.6) (4,536.9) (4,746.7) (4,966.4) (5,196.5) (5,437.5) (5,689.9) (5,954.3) (6,231.3) (6,521.5) Loss on asset disposal (105.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Insurance expenses (327.0) (344.2) (339.3) (351.2) (363.5) (376.2) (389.4) (403.0) (417.1) (431.7) (446.8) (462.5) Other expenditure (310.3) (321.1) (332.4) (344.0) (356.0) (368.5) (381.4) (394.8) (408.6) (422.9) (437.7) (453.0) 1,2,3 (11,088.4) (11,062.5) (12,932.0) (11,853.9) (12,322.9) (12,811.0) (13,319.1) (13,847.9) (14,398.4) (14,971.5) (15,568.1) (16,189.2) Proceeds from normal operations (2,516.4) (3,576.3) (2,654.5) (2,825.7) (2,969.2) (3,128.7) (3,299.5) (3,474.4) (3,649.0) (3,847.4) (4,051.0) (4,264.4) Write back non cash items (Profit) /Loss on asset disposals (34.4) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Depreciation 10 3,962.8 4,145.4 4,336.6 4,536.9 4,746.7 4,966.4 5,196.5 5,437.5 5,689.9 5,954.3 6,231.3 6,521.5 Write back non cash items 3,928.4 4,145.4 4,336.6 4,536.9 4,746.7 4,966.4 5,196.5 5,437.5 5,689.9 5,954.3 6,231.3 6,521.5 Net operating funds 1,412.1 569.1 1,682.2 1,711.3 1,777.5 1,837.7 1,897.0 1,963.1 2,040.9 2,107.0 2,180.4 2,257.1 carried forward

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Ten year Forward Estimates …continued ……. Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Carried forward net funds 1,412.1 569.1 1,682.2 1,711.3 1,777.5 1,837.7 1,897.0 1,963.1 2,040.9 2,107.0 2,180.4 2,257.1 Capital 13 Grants, Subsidies and Contributions 5 4,629.2 4,142.2 2,739.3 1,254.8 1,055.8 1,109.3 1,165.6 1,224.8 1,286.9 1,352.3 1,420.9 1,493.0 Proceeds from Sale of Non‐Current Assets 12 643.5 369.0 365.0 483.0 504.0 428.7 463.9 522.2 311.3 410.5 394.7 372.2 Land & Buildings 15 (3,357.4) (1,286.9) (1,343.7) (584.2) (307.0) (317.7) (328.9) (340.4) (352.3) (364.6) (377.4) (390.6) Plant & Equipment 16 (1,497.5) (986.0) (922.0) (1,221.0) (1,273.3) (1,160.8) (1,162.0) (1,180.0) (998.8) (1,087.3) (1,070.0) (1,107.4) Furniture & Equipment 17 (57.0) (78.7) (81.5) (84.3) (87.3) (90.3) (93.5) (96.7) (100.1) (103.6) (107.3) (111.0) Infrastructure ‐ Roads 14 (3,580.2) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) Infrastructure ‐ Other 18 (875.3) (99.9) (103.8) (107.8) (112.1) (116.5) (121.0) (125.8) (130.7) (135.9) (141.3) (146.8) Net capital (4,094.8) (1,159.6) (2,566.0) (3,478.9) (3,439.2) (3,366.6) (3,295.2) (3,215.2) (3,203.0) (3,148.0) (3,099.6) (3,110.0) Reserve Transactions 11 Transfers (to) Reserves (1,294.4) (575.0) (631.8) (636.1) (766.6) (805.3) (772.6) (746.1) (868.4) (687.8) (700.6) (715.5) Transfers from Reserves 1,744.5 749.2 715.3 841.0 596.1 621.6 537.9 497.3 368.1 503.6 395.1 381.2 Net Transfers (to)/From Reserves 450.1 174.2 83.5 204.9 (170.5) (183.7) (234.7) (248.8) (500.3) (184.2) (305.5) (334.3) Debt Management 4 Loans to Community (200.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Debt Service costs (Prin+Int) (294.3) (275.4) (264.9) (264.9) (252.5) (209.4) (150.4) (120.8) (103.2) (68.1) (62.2) 0.0 Repayment of Loans by Community Group 7.9 11.8 11.8 11.8 11.8 11.8 11.8 11.8 11.8 5.9 0.0 0.0 Debt Management (486.4) (263.7) (253.1) (253.1) (240.7) (197.6) (138.7) (109.0) (91.5) (62.2) (62.2) 0.0

Net Funding (2,719.0) (679.9) (1,053.4) (1,815.9) (2,072.9) (1,910.2) (1,771.5) (1,610.0) (1,753.9) (1,287.5) (1,287.0) (1,187.2) Net current assets 1 July Surplus/(Deficit) 2,723.1 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 LESS 30 June Surplus/(Deficit) 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net current assets 2,719.0 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Budget (Deficit)/Surplus 0.0 (675.8) (1,053.4) (1,815.9) (2,072.9) (1,910.2) (1,771.5) (1,610.0) (1,753.9) (1,287.5) (1,287.0) (1,187.2)

Feasibility Study Page 99

Regional Transition Group – Koorda, Mt Marshall, Trayning

The immediate impact of the reduction in capital grants will have a material effect on the financial sustainability of a merged entity. This is not as a result of the merger proposal but rather a change in federal and State policy. The graph below shows the downturn in the capital grants and the resulting effect on the operating result of the merged entity.

Operating results ($'m)

20.00

15.00

10.00

5.00

‐

‐5.00

revenue expenditures Operating result

The most dramatic effect on the finances of these local governments is the policies of both federal and State governments in the allocation of operating and capital grants. The graph below shows volatile nature of grants likely to face these local governments in the near future.

Operating Revenues ($'m) 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00

Rates Operating grants, subsidies, contributions Capital Grants, subsidies, contributions Fees and charges Other revenue

Forward estimates to establish the budget deficit use the rate setting statement to account for operating, capital, financing and reserve transactions. By building the report using the capital replacement requirements it is possible to quantify the funding gap for the merged entity.

In the graph below the deficit (funding gap) rises immediately as a result of the change in funding (instalments) for the Grants Commission Grants, the cessation of the direct funding from Royalties for Regions, the cessation of the Roads to recovery in 2014/15.

Over the ten year period the deficit could be reduced by the ongoing effects of the savings arising from the merger and the reduced debt servicing requirements.

Feasibility Study Page 100

Regional Transition Group – Koorda, Mt Marshall, Trayning

Budget (deficit) surplus ($'m) Reserve Funds 7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

Budget Deficit Reserve Funds

Reserve funds continue to grow and subject to the financial policies of a new local government may be rationalised to mitigate the funding gap over the ten year period.

Local governments faced with funding gaps will address the shortfall by addressing operating needs, seeking alternative grants sources, reducing or deferring capital funding, leveraging capital outlays, increasing rates or a combination of all of these. The initial gaps can be readily addressed up to 2013/14; however the major concern will arise for the five year period commencing 2015/16.

In summary, the merger of these three local governments will not substantially improve the financial position of the merged local government.

This is because the operating savings generated will be redirected into additional activities with a wider scope by the proposed structure given the guiding principles established by the Board. Any alternative structure is likely to have a negative impact on the broader economy of district (particularly the towns) arising from a potential knock-on effect of a reduced population and the impact on other community services.

Feasibility Study Page 101

Regional Transition Group – Koorda, Mt Marshall, Trayning

ATTACHMENTS AND SUPPORTING DOCUMENTS

Feasibility Study Page 102

Regional Transition Group – Koorda, Mt Marshall, Trayning

ATTACHMENT 1 - Introduction

Member Local Governments

Shire of Koorda Allenby Street [PO Box 20] KOORDA WA 6475 Telephone 9684 1219 Facsimile 9684 1379 Email: [email protected] Website : www. koorda.wa.gov.au

Localities - Koorda 6475

Local industries - Grain production; Sheep & wool production, Tourism

President J P (Janet) Brooks Deputy President F J (Ricky) Storer

Councillors J P (Janet) Brooks R R (Rosemary) Fisher A J (Andrew) Leeke L C (Ian) McWha S E (Shane) Boyd G V (Gerry) Pauley F J (Ricky) Storer Meets third Wednesday of each month (except -January)

Chief Executive Officer D (David) Burton

Shire of Mt Marshall

80 Monger Street (PO Box 20) BENCUBBIN WA 6477 Telephone 9685 1202 Facsimile 9685 1299 Email: [email protected] Website: www.mtmarshall.wa.gov.au

Localities – Beacon 6472; Bencubbin 6477; Cleary 6472; Gabbin 6476; Welbungin 6477; Wialki 6473

Local Industries - Broadacre cereal, legume and pulse farming; sheep; cattle; pigs; pastoral; sandalwood; seed cleaners; agriculture support industries, tourism

Feasibility Study – Attachment 1- Introduction Page 103

Regional Transition Group – Koorda, Mt Marshall, Trayning

President P A (Paul) Gillett Deputy President I N (Noel) Miguel

Councillors W J (John) Beagley R N (Robert) Breakell D A (Des) Miguel I N (Noel) Miguel P A (Paul) Gillett M P (Michael) Hogan C J (Chris) Kirby Meets third Wednesday of each month (except January) at 12:45 pm

Chief Executive Officer M (Matthew) Gilfellon

Shire of Trayning Railway Street (PO Box 95) TRAYNING WA 6488 Telephone 9683 1001 Facsimile 9583 1040 Email: [email protected]. gov.au Website: www.trayning.wa.gov.au

Localities Kununoppin 6489, Trayning 6488; Yelbeni 6487

Local industries – wheat grains, legumes; sheep; cattle; pigs; broadacre farming, tourism.

President T R (Trevor) Lamond Deputy President G F (Geoffrey) Waters,

Councillors J S (Jennifer) Francis V M (Valda) Knott P P (Pace) Vernon G F (Geoffrey) Waters W R (Wallace Knott) R (Trevor)] Lamond A G (Andrew) Woodfield

Meets third Wednesday of each month (except January)

Chief Executive Officer N (Niel) Mitchell

Feasibility Study – Attachment 1- Introduction Page 104

Regional Transition Group – Koorda, Mt Marshall, Trayning

ATTACHMENT 2 – Current State List of additional information relating to Section 2 2.1.1 Community Overview 2.1.1.1 Environment and Economic Activity 2.1.1.2 Population 2.1.1 Organisation Overview 2.1.2.2 Organisational structures Shire of Koorda Shire of Mt Marshall Shire of Trayning 2.1.2.3 Financial Position Shire of Koorda Shire of Mt Marshall Shire of Trayning 2.2 Strategic Direction Governance 2.3 Services 2.3 Current Services 2.4 Systems 2.4 Systems 2.5 Operating Matters 2.5.1 Functional Considerations 2.5.1.1.1 Financial Reporting 2.5.1.1.2 Roles and Responsibilities 2.5.1.1.3 Revenue/Income Rates General Purpose Grants Other Grants Fees and Charges 2.5.1.1.4 Expenditure Insurances 2.5.1.1.5 Investment Management Reserves Interest earnings 2.5.1.1.6 Debt Management 2.5.1.1.7 Asset management Asset classification and valuation 2.5.1.2 Other operational issues Local Laws 2.6 People 2.6.1 Functional Considerations 2.6.1.1 Policy Plans Human resources

Feasibility Study – Attachment 2 – Current State Page 105

Regional Transition Group – Koorda, Mt Marshall, Trayning

2.1 OVERVIEW

2.1.1.1 Environment and Economic Activity Indicators of economic activity from 2004 – 2008

Koorda Mt Marshall Trayning 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Unemployed persons no. 11 6 8 8 5 7 2 4 5 6 5 5 3 2 4 Unemployment rate %3.3 1.8 2.3 2.3 1.4 1.6 0.4 0.9 1.1 1.3 2.1 2.1 1.2 0.8 1.6 Non‐taxable individuals no. ‐ ‐ 86 109 ‐ ‐ ‐ 91 95 ‐ ‐ ‐ 66 61 ‐ Taxable individuals no. ‐ ‐ 202 177 ‐ ‐ ‐ 257 248 ‐ ‐ ‐ 156 155 ‐ Age Pension ‐ Centrelink no. 33 33 33 34 37 26 29 24 23 23 33 28 28 27 31 Wage and salary earners no. 165 162 162 160 ‐ 183 177 179 182 ‐ 125 127 123 120 ‐ Wage and salary income $m 4.0 4.5 5.1 4.9 ‐ 4.4 4.3 4.7 5.0 ‐ 3.5 4.3 3.6 3.7 ‐ Average Wage and salary income $ 24,396 27,634 31,618 30,696 ‐ 23,780 24,407 26,017 27,604 ‐ 28,105 33,798 29,580 30,995 ‐ Own unincorporated business earners no. 156 136 130 125 ‐ 198 198 197 202 ‐ 117 113 99 106 ‐ Own unincorporated business income $m ‐ 4.5 2.2 1.3 ‐ 1.8 6.6 4.7 6.9 ‐ 1.6 5.4 1.3 2.0 ‐ Average Own unincorporated business income $ 139 33,003 17,040 10,685 ‐ 8,904 33,404 23,741 34,314 ‐ 13,805 47,803 12,693 18,722 ‐ Investment earners no. 179 162 164 164 ‐ 250 255 240 246 ‐ 151 156 151 149 ‐ Investment income $m 0.8 0.9 1.0 1.3 ‐ 1.7 1.9 1.8 2.2 ‐ 1.1 1.1 1.3 1.1 ‐ Average Investment Income $ 4,578 5,804 6,371 7,895 ‐ 6,903 7,342 7,681 9,099 ‐ 7,293 7,281 8,540 7,184 ‐ Superannuation and annuity earners no. 8 6 6 9 ‐ 6 5 5 ‐ ‐ ‐ 7 5 5 ‐ Superannuation and annuity income $m 0.1 0.1 0.1 0.2 ‐ 0.1 0.1 0.1 ‐ ‐ ‐ 0.1 0.4 0.3 ‐ Average Superannuation and annuity income $ 12,170 15,244 24,032 19,410 ‐ 17,984 22,139 14,752 ‐ ‐ ‐ 12,350 84,147 69,052 ‐ Other income earners (excl. Government pensions & allowances) no. 16 14 16 23 ‐ 35 38 42 37 ‐ 26 18 15 16 ‐

Total income (excl. Government pensions & allowances) $m 5.0 10.0 8.5 7.7 ‐ 8.0 13.0 11.3 14.2 ‐ 6.2 10.9 6.6 7.1 ‐

Feasibility Study – Attachment 2 – Current State Page 106

Regional Transition Group – Koorda, Mt Marshall, Trayning

Indicators of economic activity from 2004 – 2008 … continued

Koorda Mt Marshall Trayning 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 WAGE AND SALARY EARNERS Males ‐ Total no. 84 90 90 86 ‐ 100 93 93 95 ‐ 62 66 58 57 ‐ Females ‐ Total no. 80 71 72 74 ‐ 86 84 85 89 ‐ 63 60 67 66 ‐ Managers and Administrators no. 13 9 14 13 ‐ 18 16 26 23 ‐ 6 5 13 12 ‐ Professionals no. 14 16 15 16 ‐ 18 20 20 26 ‐ 22 14 19 20 ‐ Associate Professionals no. 10 11 5 6 ‐ 5 5 10 6 ‐ 5 5 ‐ 5 ‐ Tradespersons and Related Workers no. 15 20 23 20 ‐ 22 15 12 15 ‐ 19 16 13 17 ‐ Advanced Clerical and Service Workers no. 5 6 6 5 ‐ ‐ 5 5 5 ‐ 5 ‐ ‐ ‐ ‐ Intermediate Clerical, Sales and Service Workers no. 28 20 21 21 ‐ 27 25 20 21 ‐ 12 16 17 14 ‐ Intermediate Production and Transport Workers no. 13 12 10 16 ‐ 14 15 13 18 ‐ 15 14 15 10 ‐ Elementary Clerical, Sales and Service Workers no. 10 5 5 8 ‐ 5 12 5 7 ‐ ‐ 5 5 ‐ ‐ Labourers and Related Workers no. 41 49 50 37 ‐ 48 41 46 48 ‐ 23 36 30 31 ‐ Not Stated no. 19 16 16 16 ‐ 28 22 22 14 ‐ 21 18 13 10 ‐ Total wage and salary earners no. 168 164 165 158 ‐ 185 176 179 183 ‐ 128 129 125 119 ‐ Businesses ‐ at 30 June Non‐employing businesses no. 42 48 48 48 ‐ 78 72 75 75 ‐ 66 60 57 54 ‐ Employing businesses: 1 to 4 employees no. 30 30 24 27 ‐ 57 60 60 63 ‐ 24 27 27 27 ‐ Employing businesses: 5 or more employees no. 15 15 12 12 ‐ 18 18 15 18 ‐ 9 9 6 6 ‐ Total businesses no. 87 93 84 87 ‐ 153 150 150 156 ‐ 99 96 90 87 ‐ Non‐employing business entries no. 3 3 6 3 ‐ 3 9 3 3 ‐ 6 6 3 12 ‐ Employing business entries no. ‐ ‐ ‐ ‐ ‐ 3 3 3 6 ‐ 3 3 6 ‐ ‐ Total business entries no. 3 3 6 3 ‐ 6 12 6 9 ‐ 9 9 9 12 ‐ Non‐employing business exits no. 12 ‐ 12 3 ‐ 12 3 3 15 ‐ 6 9 ‐ 3 ‐ Employing business exits no. ‐ ‐ ‐ 3 ‐ ‐ ‐ 9 6 ‐ ‐ ‐ 6 3 ‐ Total business exits no. 12 ‐ 12 6 ‐ 12 3 12 21 ‐ 6 9 6 6 ‐

Feasibility Study – Attachment 2 – Current State Page 107

Regional Transition Group – Koorda, Mt Marshall, Trayning

Indicators of economic activity from 2004 – 2008 … continued

Koorda Mt Marshall Trayning 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Agriculture, forestry and fishing no. 63 69 63 63 ‐ 108 108 108 117 ‐ 63 60 57 57 ‐ Manufacturing no. ‐ ‐ ‐ ‐ ‐ 3 3 3 3 ‐ ‐ ‐ ‐ ‐ ‐ Construction no. 3 ‐ ‐ ‐ ‐ 3 3 3 6 ‐ 3 3 3 3 ‐ Wholesale trade no. 6 6 6 6 ‐ 3 3 3 ‐ ‐ ‐ ‐ ‐ ‐ ‐ Retail trade no. 3 3 3 3 ‐ 9 9 9 9 ‐ 15 15 12 9 ‐ Accommodation, cafes and restaurants no. ‐ ‐ ‐ ‐ ‐ 3 3 3 3 ‐ 3 3 3 3 ‐ Transport and storage no. 3 3 3 3 ‐ 6 3 3 ‐ ‐ 3 3 3 3 ‐ Finance and insurance no. ‐ 3 3 6 ‐ 3 3 3 3 ‐ ‐ ‐ ‐ ‐ ‐ Property and business services no. 9 9 6 6 ‐ 12 12 12 12 ‐ 6 9 9 9 ‐ Health and community services no. ‐ ‐ ‐ ‐ ‐ 3 3 3 3 ‐ 3 3 3 3 ‐ Cultural and recreational services no. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3 ‐ ‐ ‐ ‐ Total businesses no. 87 93 84 87 ‐ 153 150 150 156 ‐ 99 96 90 87 ‐

© Commonwealth of Australia 2010 2.1.1.2 Population

Estimated Residential Population at 30 June Change 2005‐ 2001 2002 2003 2004 2005 2006 2007r 2008r 2009r 2010p 2010 2009r ‐2010p no. no. no. no. no. no. no. no. no. no. % no. % Koorda 488 488 491 498 485 474 476 472 473 474 ‐2.3% 1 0.2% Mount Marshall 673 669 667 663 656 655 656 674 686 653 ‐0.5%‐ 33 ‐4.8% Trayning 392 390 396 410 413 413 401 407 400 393 ‐4.8%‐ 7 ‐1.8% Combined 1,553 1,547 1,554 1,571 1,554 1,542 1,533 1,553 1,559 1,520 ‐2.2%‐ 39 ‐2.5% WA comparison 2.6% 2.2% Source: Regional Population Grow th, Australia, 2009-10 (cat. no. 3218.0)

Feasibility Study – Attachment 2 – Current State Page 108

Regional Transition Group – Koorda, Mt Marshall, Trayning ORGANISATION OVERVIEW

2.1.2.2 Organisational structures Shire of Koorda Organisational Chart

Council

CEO

EHO Handyman Snr Admin Officer NRM Officer Works Supervisor Pool Manager (0.2 FTE) (1.2 FTE)

Town Maintenance/ Cleaners Admin Officers Gardeners Team Leader Mechanic (0.65 FTE) (2.5FTE) (2.8FTE)

Plant Operators (7 FTE)

Notes: 1. Full time equivalents – 20.65 2. Environmental Health Officer shared with Trayning, Mukinbudin, Wyalkatchem, Mount Marshall 3. Chief Executive Officer retires in July 2011.

Feasibility Study – Attachment 2 – Current State Page 109

Regional Transition Group – Koorda, Mt Marshall, Trayning Shire of Mt Marshall Organisational Chart

Council

CEO

EHO NRM Officer Shire Engineer D/CEO Executive CDRO (0.2 FTE) Assistant

Works Customer Pool Attendants Admin Officer Supervisor Finance Officer Admin Officer Service Officer (35 hrs pw)

Construction Maint Crew Parks and Cleaner/Parks Plant Maint Crew (5 FTE) (5 FTE) Gardens (3 FTE) (1.5 FTE) Officer

Notes: 1. Total full time equivalents – 27.6 2. Chief Executive Officer position currently vacant 3. Environmental Health Officer position shared with Trayning, Koorda, Mukinbudin and Wyalkatchem

Feasibility Study – Attachment 2 – Current State Page 110

Regional Transition Group – Koorda, Mt Marshall, Trayning Shire of Trayning Organisational Chart

Council

CEO

Projects Pool Manager Works EHO NRM Officer D/CEO Officer (0.4 (0.6 FTE) Supervisor FTE) (0.2 FTE) (0.6 FTE)

Office staff Cleaner Town Crew Team Leader (3 FTE) (0.75 FTE) (1.75 FTE)

Works Crew (6 FTE)

Notes: 2. Total full time equivalents – 17.7 3. Environmental Health Officer shared with Mt Marshall, Koorda, Mukinbudin and Wyalkatchem 4. NRM Officer shared with Nungarin

Feasibility Study – Attachment 2 – Current State Page 111

Regional Transition Group – Koorda, Mt Marshall, Trayning

2.1.2.3 Financial Position

Shire of Koorda Note – adjustments have been made to the annual financial reports for capital outlays on roads previously charged to the operating statement. Shire of Koorda OPERATING ACTIVITIES

Statement of Income 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 560,987 585,684 612,283 658,391 707,636 Operating Grants, subsidies contributio 1,707,392 1,246,611 1,475,697 1,597,314 1,556,262 Fees and Charges 219,146 243,855 322,090 337,518 290,373 Profit on sale of assets 14,322 26,851 56,456 311 46,302 Interest revenue 117,159 162,069 199,338 225,139 173,906 Other revenue 3,685 3,478 0 16,470 30,279 Operating Revenue 2,622,691 2,268,548 2,665,864 2,835,143 2,804,758 Expenditures Employee Costs (794,287) (830,631) (722,906) (551,708) (598,093) Material & contractors (616,357) (790,494) (791,694) (789,594) (698,363) Loss on sale of assets (8,026) (54,770) (7,714) (24,581) (4,931) Depreciation (875,273) (1,266,400) (1,118,886) (1,162,491) (1,200,181) Insurance (85,594) (73,213) (90,418) (80,703) (102,271) Utilities (83,498) (53,316) (81,227) (75,803) (107,347) Interest expense 0000 0 Other expenditure (11,660) (5,947) (71,013) (74,507) (151,088) Operating Expenditure (2,474,695) (3,074,771) (2,883,858) (2,759,387) (2,862,274) Net operating 147,996 (806,223) (217,994) 75,756 (57,516) Other Capital grants, contributions 419,544 849,330 590,494 1,781,457 759,078 Revaluation of assets (755,676) 0 0 838,099 831,651 Asset contributed/gifted0000 0 Other (336,132) 849,330 590,494 2,619,556 1,590,729 0 0 0 0 0 Net operating result (188,136) 43,107 372,500 2,695,312 1,533,213

Feasibility Study – Attachment 2 – Current State Page 112

Regional Transition Group – Koorda, Mt Marshall, Trayning

OPERATING EXPENDITURES Operating Expenditures 2004/2005 2009/2010

Employee Employee Depreciati costs costs on Depreciati on

Materials/ Contracts Materials/ Contracts

Interest Interest

Debt Management

Cash Backed Reserves Local governments acquire wealth through savings in cash backed reserves. These reserves can be used to offset future financial demands for operational and asset renewal.

There is no "correct" position in terms of reserve holdings. By their nature they are an instrument that allows a local government to accumulated funds for future financial needs. Reserve

accounts can be a sound financial tool for ensuring assets or liabilities, such as employee entitlements, can be replaced at the appropriate time.

Some reserve accounts are required by legislation. These relate to unapplied funds raised through specified area rates and service charges.

Feasibility Study – Attachment 2 – Current State Page 113

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda FINANCIAL ACTIVITY STATEMENT

Statement of Financial Activity 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 560,987 585,684 612,283 658,391 707,636 Specified Area Rates0000 0 Service Charges 0000 0 Operating Grants, subsidies contributio 1,707,392 1,246,611 1,799,697 1,921,314 2,027,283 Fees and Charges 219,146 243,855 322,090 337,518 290,373 Interest revenue 117,159 162,069 199,338 225,139 173,906 Other revenue 3,685 3,478 0 16,470 30,279 Revenues generated 2,608,369 2,241,697 2,933,408 3,158,832 3,229,477 Expenses Employee Costs (794,287) (830,631) (1,058,769) (1,081,675) (1,132,543) Material & contractors (616,357) (790,494) (1,015,603) (1,142,906) (1,054,663) Insurance (85,594) (73,213) (90,418) (80,703) (102,271) Utilities (83,498) (53,316) (81,227) (75,803) (107,347) Interest expense 0000 0 Other expenditure (11,660) (5,947) (71,013) (74,507) (151,088) Applied to operations (1,591,396) (1,753,601) (2,317,030) (2,455,594) (2,547,912) Net 1,016,973 488,096 616,378 703,238 681,565 Other Non cash items 622 (817) (14,591) 19,545 55,819 Abnormal Items 0000 0 Capital Capital grants, contributions 419,544 849,330 266,494 1,457,457 288,057 Proceeds from sale 193,276 133,813 244,797 113,303 121,099 Gifted assets 0000 0 Property Plant & Equipment (433,244) (888,350) (862,139) (731,548) (1,157,974) Infrastructure (474,213) (463,262) (292,227) (162,023) (157,447) (294,637) (368,469) (643,075) 677,189 (906,265) Debt Management New/Re‐financed Loans0000 0 Self Supporting Loans ‐ advance/repay00000 Principal repayments0000 0 Contribution from SSL0000 0 Other 0000 0 Reserve Transactions Transfers to reserves (646,812) (657,721) (591,069) (643,235) (825,990) Funds applied 36,800 515,000 679,000 454,950 346,200 (610,012) (142,721) 87,931 (188,285) (479,790)

Add Opening funds Surplus/(Deficit) 62,391 175,337 151,426 336,515 1,548,202 LESS Closing funds Surplus/(Deficit) 175,337 151,426 198,069 1,548,202 899,531 Net 0000 0

Feasibility Study – Attachment 2 – Current State Page 114

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda FINANCIAL ACTIVITY STATEMENT

Statement of Financial Activity 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 560,987 585,684 612,283 658,391 707,636 Specified Area Rates0000 0 Service Charges 0000 0 Operating Grants, subsidies contributio 1,707,392 1,246,611 1,475,697 1,597,314 1,556,262 Fees and Charges 219,146 243,855 322,090 337,518 290,373 Interest revenue 117,159 162,069 199,338 225,139 173,906 Other revenue 3,685 3,478 0 16,470 30,279 Revenues generated 2,608,369 2,241,697 2,609,408 2,834,832 2,758,456 Expenses Employee Costs (794,287) (830,631) (722,906) (551,708) (598,093) Material & contractors (616,357) (790,494) (791,694) (789,594) (698,363) Insurance (85,594) (73,213) (90,418) (80,703) (102,271) Utilities (83,498) (53,316) (81,227) (75,803) (107,347) Interest expense 0000 0 Other expenditure (11,660) (5,947) (71,013) (74,507) (151,088) Applied to operations (1,591,396) (1,753,601) (1,757,258) (1,572,315) (1,657,162) Net 1,016,973 488,096 852,150 1,262,517 1,101,294 Other Non cash items 622 (817) (14,591) 19,545 55,819 Abnormal Items 0000 0 Capital Capital grants, contributions 419,544 849,330 590,494 1,781,457 759,078 Proceeds from sale 193,276 133,813 244,797 113,303 121,099 Gifted assets 0000 0 Property Plant & Equipment (433,244) (888,350) (862,139) (731,548) (1,157,974) Infrastructure (474,213) (463,262) (851,999) (1,045,302) (1,048,197) (294,637) (368,469) (878,847) 117,910 (1,325,994) Debt Management New/Re‐financed Loans0000 0 Self Supporting Loans ‐ advance/repay00000 Principal repayments0000 0 Contribution from SSL0000 0 Other 0000 0 Reserve Transactions Transfers to reserves (646,812) (657,721) (591,069) (643,235) (825,990) Funds applied 36,800 515,000 679,000 454,950 346,200 (610,012) (142,721) 87,931 (188,285) (479,790)

Add Opening funds Surplus/(Deficit) 62,391 175,337 151,426 336,515 1,548,202 LESS Closing funds Surplus/(Deficit) 175,337 151,426 198,069 1,548,202 899,531 Net 0000 0

Feasibility Study – Attachment 2 – Current State Page 115

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda BALANCE SHEET

30 June 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Current Assets$$$$ $ Cash Assets/Investment 2,477,463 2,589,315 2,565,026 4,061,151 3,786,827 Trade and other receivables 0000 0 Rates (net of DD) 6,682 12,518 21,168 14,417 35,642 Other (Net of DD) 27,718 33,634 28,524 27,483 50,533 Inventories 6,978 9,704 23,011 19,374 14,976 Current Assets 2,518,841 2,645,171 2,637,729 4,122,425 3,887,978 Non Current Assets 0000 0 Property, Plant & Equipment 0000 0 COST Land and Buildings 2,586,326 2,781,937 3,069,877 3,365,828 4,074,580 Less Depreciation (820,184) (871,997) (929,344) (991,458) (1,063,687) COST Furn & Equipment 204,841 226,637 249,554 215,179 252,494 Less Depreciation (158,735) (180,319) (198,855) (150,981) (173,440) COST Plant & Equipment 2,695,043 3,158,887 3,270,411 3,501,235 3,664,450 Less Depreciation (1,483,695) (1,750,918) (1,844,324) (2,173,894) (2,412,115) Property, Plant & Equipment 3,023,596 3,364,227 3,617,319 3,765,909 4,342,282 Infrastructure 0000 0 COST Infrastructure 59,436,776 60,416,308 60,543,260 60,849,228 61,046,019 Less Depreciation (18,143,670) (18,308,273) (18,202,452) (18,225,406) (18,131,407) Infrastructure 41,293,106 42,108,035 42,340,808 42,623,822 42,914,612 Total Assets 46,835,543 48,117,433 48,595,856 50,512,156 51,144,872 Current Liabilities 0000 0 Trade and other payables 96,523 64,098 52,584 122,781 78,447 Provisions 42,614 96,450 123,919 196,779 219,154 Borrowings 0000 0 Current Liabilities 139,137 160,548 176,503 319,560 297,601 Non Current Liabilities 0000 0 Provisions 63,010 48,302 51,602 12,812 25,024 Borrowings 0000 0 Non Current Liabilities 63,010 48,302 51,602 12,812 25,024 Total Liabilities 202,147 208,850 228,105 332,372 322,625 Net Assets 46,633,396 47,908,583 48,367,751 50,179,784 50,822,247 EQUITY 0000 0 Retained funds 44,429,029 44,325,415 44,226,074 45,011,723 44,342,745 Reserves 2,204,367 2,351,088 2,263,157 2,451,442 2,931,232 Revaluation reserves 0 1,232,080 1,878,520 2,716,619 3,548,270 46,633,396 47,908,583 48,367,751 50,179,784 50,822,247

Financial Statements Indicators Current ratio 491.0% 1803.7% 712.3% 905.0% 620.4% Debt Ratio 0.0% 4.0% 5.0% 7.0% 6.0% Debt Service Ratio 0.0% 0.0% 0.0% 0.0% 0.0% Rate coverage Ratio 18.0% 22.3% 18.9% 14.3% 20.0% Outstanding Rate Ratio 1.0% 1.8% 3.4% 2.1% 3.5% Gross debt to Revenue 0.0% 0.0% 0.0% 0.0% 0.0% Untied cash to trade creditors 794.0% 746.8% 792.3% 892.9% 790.5% Gross debt to economically realisable a 0.0% 0.0% 0.0% 0.0% 0.0% Economic Dependency 68.9% 66.8% 63.1% 73.2% 65.0% 0000 0

Feasibility Study – Attachment 2 – Current State Page 116

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mt Marshall Shire of Mount Marshall OPERATING ACTIVITIES

Statement of Income 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 879,362 923,920 907,705 998,496 1,027,975 Operating Grants, subsidies contributio 1,408,077 993,019 2,074,085 2,190,064 1,876,916 Fees and Charges 156,606 128,581 226,243 225,560 225,165 Profit on sale of assets 30,226 0 36,777 101,218 121,238 Interest revenue 93,890 123,175 144,368 140,733 134,064 Other revenue 126,008 116,903 27,226 152,847 138,500 Operating Revenue 2,707,192 2,292,800 3,423,433 3,816,395 3,531,575 Expenditures Employee Costs (1,197,743) (962,971) (1,216,247) (934,891) (999,543) Material & contractors (795,276) (704,385) (510,007) (648,714) (726,254) Loss on sale of assets 0 (106,746) (41,543) (35,605) (62,017) Depreciation (1,277,710) (2,160,417) (2,195,835) (2,238,786) (2,301,977) Insurance (93,246) (91,667) (71,861) (94,190) (115,167) Utilities (45,256) (128,439) (92,558) (95,944) (119,649) Interest expense (50,910) (59,924) (61,192) (51,140) (74,678) Other expenditure 0 (85,287) (42,665) (237,273) (235,952) Operating Expenditure (3,460,141) (4,299,836) (4,231,908) (4,336,543) (4,635,237) Net operating (752,949) (2,007,036) (808,475) (520,148) (1,103,662) Other Capital grants, contributions 1,381,992 1,405,962 794,967 1,947,925 928,137 Revaluation of assets0000 0 Asset contributed/gifted0000 0 Other 1,381,992 1,405,962 800,720 1,955,398 935,496 0 0 0 0 0 Net operating result 629,043 (601,074) (7,755) 1,435,250 (168,166)

Feasibility Study – Attachment 2 – Current State Page 117

Regional Transition Group – Koorda, Mt Marshall, Trayning

Debt Management

Cash Backed Reserves Local governments acquire wealth through savings in cash backed reserves. These reserves can be used to offset future financial demands for operational and asset renewal.

There is no "correct" position in terms of reserve holdings. By their nature they are an instrument that allows a local government to accumulated funds for future financial needs. Reserve accounts can be a sound financial tool for ensuring assets or liabilities, such as employee entitlements, can be replaced at the appropriate time.

Some reserve accounts are required by legislation. These relate to unapplied funds raised through specified area rates and service charges.

Feasibility Study – Attachment 2 – Current State Page 118

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mount Marshall FINANCIAL ACTIVITY STATEMENT

Statement of Financial Activity 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 879,362 923,920 907,705 998,496 1,027,975 Specified Area Rates 13,023 7,202 7,029 7,477 7,717 Service Charges 0000 0 Operating Grants, subsidies contributio 1,408,077 993,019 2,074,085 2,190,064 1,876,916 Fees and Charges 156,606 128,581 226,243 225,560 225,165 Interest revenue 93,890 123,175 144,368 140,733 134,064 Other revenue 126,008 116,903 27,226 152,847 138,500 Revenues generated 2,676,966 2,292,800 3,386,656 3,715,177 3,410,337 Expenses Employee Costs (1,197,743) (962,971) (1,216,247) (934,891) (999,543) Material & contractors (795,276) (704,385) (510,007) (648,714) (726,254) Insurance (93,246) (91,667) (71,861) (94,190) (115,167) Utilities (45,256) (128,439) (92,558) (95,944) (119,649) Interest expense (50,910) (59,924) (61,192) (51,140) (74,678) Other expenditure 0 (85,287) (42,665) (237,273) (235,952) Applied to operations (2,182,431) (2,032,673) (1,994,530) (2,062,152) (2,271,243) Net 494,535 260,127 1,392,126 1,653,025 1,139,094 Other Non cash items 13,425 (4,070) 125,289 (29,357) (16,158) Abnormal Items 0000 0 Capital Capital grants, contributions 1,381,992 1,405,962 794,967 1,947,925 928,137 Proceeds from sale 309,865 229,706 332,203 410,781 325,674 Gifted assets 0000 0 Property Plant & Equipment (653,174) (590,163) (865,539) (1,423,125) (1,368,605) Infrastructure (1,548,981) (1,276,365) (1,431,494) (1,382,838) (1,094,949) (510,298) (230,860) (1,169,863) (447,257) (1,209,743) Debt Management New/Re‐financed Loans 370,000 180,000 0 545,000 0 Self Supporting Loans ‐ advance/repay 0 0 0 (90,000) 0 Principal repayments (123,253) (102,956) (114,483) (107,460) (133,902) Contribution from SSL 0 0 0 1,702 7,047 Other 246,747 77,044 (114,483) 349,242 (126,855) Reserve Transactions Transfers to reserves (171,123) (215,177) (240,955) (851,675) (363,523) Funds applied 100,000 14,895 23,800 152,875 234,195 (71,123) (200,282) (217,155) (698,800) (129,328)

Add Opening funds Surplus/(Deficit) 724,007 897,293 799,252 815,166 1,642,019 LESS Closing funds Surplus/(Deficit) 897,293 799,252 815,166 1,642,019 1,299,029 Net 0000 0

Feasibility Study – Attachment 2 – Current State Page 119

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mount Marshall BALANCE SHEET

30 June 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Current Assets$$$$ $ Cash Assets/Investment 1,662,180 1,775,242 1,938,550 3,429,195 3,201,516 Trade and other receivables 180,418 000 0 Rates (net of DD) 0 28,520 29,978 39,551 42,171 Other (Net of DD) 0 77,510 94,366 162,604 179,053 Inventories 33,188 115,228 119,135 38,703 47,431 Current Assets 1,875,786 1,996,500 2,182,029 3,670,053 3,470,171 Non Current Assets 0000 0 Property, Plant & Equipment 0000 0 COST Land and Buildings 3,910,437 4,107,558 4,243,848 4,565,932 5,141,655 Less Depreciation (451,920) (528,530) (606,012) (682,513) (755,867) COST Furn & Equipment 287,795 399,385 344,270 394,827 446,280 Less Depreciation (210,066) (287,558) (248,653) (264,315) (288,168) COST Plant & Equipment 3,607,634 3,453,216 3,713,938 4,174,235 4,369,593 Less Depreciation (1,709,488) (1,768,120) (1,867,425) (1,789,877) (1,791,592) Property, Plant & Equipment 5,434,392 5,375,951 5,579,966 6,398,289 7,121,901 Infrastructure 0000 0 COST Infrastructure 92,116,622 93,387,323 94,730,405 96,113,243 97,195,831 Less Depreciation (20,134,150) (21,982,416) (23,853,697) (25,744,436) (27,667,873) Infrastructure 71,982,472 71,404,907 70,876,708 70,368,807 69,540,318 Total Assets 79,296,650 78,781,358 78,642,703 80,529,447 80,217,641 Current Liabilities 0000 0 Trade and other payables 216,584 240,889 186,352 197,761 182,628 Provisions 66,495 87,249 132,078 125,783 127,461 Borrowings 94,588 114,650 105,757 133,902 125,905 Current Liabilities 377,667 442,788 424,187 457,446 435,994 Non Current Liabilities 0000 0 Provisions 63,812 27,491 20,782 44,436 48,153 Borrowings 565,581 622,563 516,973 926,368 800,463 Non Current Liabilities 629,393 650,054 537,755 970,804 848,616 Total Liabilities 1,007,060 1,092,842 961,942 1,428,250 1,284,610 Net Assets 78,289,590 77,688,516 77,680,761 79,101,197 78,933,031 EQUITY 0000 0 Retained funds 47,958,182 47,156,826 46,931,916 47,653,553 47,356,059 Reserves 761,910 962,192 1,179,347 1,878,146 2,007,474 Revaluation reserves 29,569,498 29,569,498 29,569,498 29,569,498 29,569,498 78,289,590 77,688,516 77,680,761 79,101,197 78,933,031

Financial Statements Indicators Current ratio 101.0% 159.0% 197.0% 342.0% 372.0% Debt Ratio 1.0% 1.0% 1.0% 2.0% 2.0% Debt Service Ratio 6.0% 6.0% 5.0% 4.0% 6.0% Rate coverage Ratio 33.0% 25.0% 22.0% 27.0% 29.0% Outstanding Rate Ratio 2.0% 3.0% 3.0% 4.0% 4.0% Gross debt to Revenue 16.0% 17.0% 18.0% 29.0% 26.0% Untied cash to trade creditors 59.0% 152.0% 486.0% 571.0% 622.0% Gross debt to economically realisable a 1.0% 10.0% 8.0% 10.0% 8.0% Economic Dependency 68.2% 64.3% 61.7% 71.7% 62.8% 0000 0

Feasibility Study – Attachment 2 – Current State Page 120

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning

Shire of Trayning OPERATING ACTIVITIES

Statement of Income 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 385,461 422,772 471,225 473,385 507,570 Operating Grants, subsidies contributio 1,026,282 1,124,031 811,614 1,751,957 953,258 Fees and Charges 73,818 89,173 134,805 100,414 157,045 Profit on sale of assets 5,869 24,836 0 97,715 0 Interest revenue 33,141 35,904 48,588 20,459 21,620 Other revenue 14,159 36,803 25,396 19,085 48,563 Operating Revenue 1,540,494 1,735,241 1,493,522 2,464,730 1,689,729 Expenditures Employee Costs (755,924) (703,735) (739,995) (730,952) (937,528) Material & contractors (425,555) (429,146) (465,429) (392,762) (599,335) Loss on sale of assets (3,916) (51,794) (2,274) 0 (7,492) Depreciation (583,140) (654,365) (581,726) (626,370) (666,939) Insurance (60,736) (68,470) (49,683) (67,083) (78,172) Utilities (55,066) (57,443) (51,504) (57,681) (64,423) Interest expense (8,483) (24,551) (24,007) (29,620) (29,620) Other expenditure (63,337) (33,581) (43,991) (40,754) (49,764) Operating Expenditure (1,956,157) (2,023,085) (1,958,609) (1,945,222) (2,433,273) Net operating (415,663) (287,844) (465,087) 519,508 (743,544) Other Capital grants, contributions 612,472 407,717 815,572 1,085,765 813,625 Revaluation of assets0000 0 Asset contributed/gifted0000 0 Other 612,472 407,717 815,572 1,085,765 813,625 0 0 0 0 0 Net operating result 196,809 119,873 350,485 1,605,273 70,081

Feasibility Study – Attachment 2 – Current State Page 121

Regional Transition Group – Koorda, Mt Marshall, Trayning

Debt Management

Cash Backed Reserves Local governments acquire wealth through savings in cash backed reserves. These reserves can be used to offset future financial demands for operational and asset renewal.

There is no "correct" position in terms of reserve holdings. By their nature they are an instrument that allows a local government to accumulated funds for future financial needs. Reserve accounts can be a sound financial tool

for ensuring assets or liabilities, such as employee entitlements, can be replaced at the appropriate time.

Some reserve accounts are required by legislation. These relate to unapplied funds raised through specified area rates and service charges.

Feasibility Study – Attachment 2 – Current State Page 122

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning FINANCIAL ACTIVITY STATEMENT

Statement of Financial Activity 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Revenues $$$$ $ Rates 385,461 422,772 471,225 473,385 507,570 Specified Area Rates0000 0 Service Charges 1,764 1,722 1,894 1,715 1,673 Operating Grants, subsidies contributio 1,026,282 1,124,031 811,614 1,751,957 953,258 Fees and Charges 73,818 89,173 134,805 100,414 157,045 Interest revenue 33,141 35,904 48,588 20,459 21,620 Other revenue 14,159 36,803 25,396 19,085 48,563 Revenues generated 1,534,625 1,710,405 1,493,522 2,367,015 1,689,729 Expenses Employee Costs (755,924) (703,735) (739,995) (730,952) (937,528) Material & contractors (425,555) (429,146) (465,429) (392,762) (599,335) Insurance (60,736) (68,470) (49,683) (67,083) (78,172) Utilities (55,066) (57,443) (51,504) (57,681) (64,423) Interest expense (8,483) (24,551) (24,007) (29,620) (29,620) Other expenditure (63,337) (33,581) (43,991) (40,754) (49,764) Applied to operations (1,369,101) (1,316,926) (1,374,609) (1,318,852) (1,758,842) Net 165,524 393,479 118,913 1,048,163 (69,113) Other Non cash items 30,307 (5,613) 34,684 8,306 16,504 Abnormal Items 0000 0 Capital Capital grants, contributions 612,472 407,717 815,572 1,085,765 813,625 Proceeds from sale 90,255 218,137 10,000 164,721 6,690 Gifted assets 0000 0 Property Plant & Equipment (829,810) (425,082) (178,292) (1,084,880) (633,085) Infrastructure (593,745) (643,684) (694,797) (830,179) (673,845) (720,828) (442,912) (47,517) (664,573) (486,615) Debt Management New/Re‐financed Loans 390,000 65,000 0 220,000 0 Self Supporting Loans ‐ advance/repay00000 Principal repayments (18,166) (35,633) (43,595) (54,559) (66,411) Contribution from SSL0000 0 Other 371,834 29,367 (43,595) 165,441 (66,411) Reserve Transactions Transfers to reserves (215,756) (18,148) (115,206) (761,271) (437,329) Funds applied 395,167 171,750 44,294 227,979 704,600 179,411 153,602 (70,912) (533,292) 267,271

Add Opening funds Surplus/(Deficit) 127,449 153,697 281,620 273,193 297,238 LESS Closing funds Surplus/(Deficit) 153,697 281,620 273,193 297,238 (41,126) Net 0000 0

Feasibility Study – Attachment 2 – Current State Page 123

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning BALANCE SHEET

30 June 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 Current Assets$$$$ $ Cash Assets/Investment 512,043 450,105 530,859 872,947 508,665 Trade and other receivables 0000 0 Rates (net of DD) 32,403 25,906 20,086 25,206 27,057 Other (Net of DD) 43,296 134,596 146,471 435,145 93,697 Inventories 10,019 12,643 15,443 15,825 84,617 Current Assets 597,761 623,250 712,859 1,349,123 714,036 Non Current Assets 0000 0 Property, Plant & Equipment 0000 0 COST Land and Buildings 2,472,167 2,699,731 2,749,044 3,556,022 4,142,331 Less Depreciation (774,391) (823,729) (876,346) (930,554) (1,016,206) COST Furn & Equipment 344,698 344,698 424,830 431,587 446,218 Less Depreciation (208,897) (232,375) (251,250) (279,096) (307,027) COST Plant & Equipment 2,502,627 2,343,931 2,358,942 2,468,685 2,478,510 Less Depreciation (930,430) (1,006,931) (1,152,735) (1,259,624) (1,456,050) Property, Plant & Equipment 3,405,774 3,325,325 3,252,485 3,987,020 4,287,776 Infrastructure 0000 0 COST Infrastructure 13,190,775 13,834,459 14,532,007 15,347,170 16,021,014 Less Depreciation (7,180,181) (7,566,124) (7,911,727) (8,239,739) (8,588,530) Infrastructure 6,010,594 6,268,335 6,620,280 7,107,431 7,432,484 Total Assets 10,014,538 10,218,118 10,586,832 12,444,979 12,438,789 Current Liabilities 0000 0 Trade and other payables 9,568 62,085 92,985 178,292 148,007 Provisions 74,647 61,961 110,086 121,274 137,397 Borrowings 30,015 43,595 46,268 66,411 70,431 Current Liabilities 114,230 167,641 249,339 365,977 355,835 Non Current Liabilities 0000 0 Provisions 33,971 48,480 31,279 22,218 26,290 Borrowings 352,838 368,625 322,357 467,654 397,223 Non Current Liabilities 386,809 417,105 353,636 489,872 423,513 Total Liabilities 501,039 584,746 602,975 855,849 779,348 Net Assets 9,513,499 9,633,372 9,983,857 11,589,130 11,659,441 EQUITY 0000 0 Retained funds 9,070,697 9,344,172 9,623,745 10,695,726 11,033,308 Reserves 442,802 289,200 360,112 893,404 626,133 Revaluation reserves0000 0 9,513,499 9,633,372 9,983,857 11,589,130 11,659,441

Financial Statements Indicators Current ratio 135.7% 82.5% 56.0% 123.0% 197.0% Debt Ratio 5.0% 5.7% 6.0% 7.0% 6.0% Debt Service Ratio 1.7% 3.5% 5.0% 3.0% 7.0% Rate coverage Ratio 17.9% 19.9% 21.0% 15.0% 20.0% Outstanding Rate Ratio 10.2% 5.5% 4.0% 3.0% 5.0% Gross debt to Revenue 24.9% 23.8% 25.0% 22.0% 40.0% Untied cash to trade creditors 0.0% 0.0% 0.0% 0.0% 0.0% Gross debt to economically realisable a 9.6% 10.4% 9.0% 10.0% 13.0% Economic Dependency 76.1% 71.5% 70.5% 79.9% 70.6% 0000 0

Feasibility Study – Attachment 2 – Current State Page 124

Regional Transition Group – Koorda, Mt Marshall, Trayning

2.2 STRATEGIC DIRECTION

Governance (Corporate) - Legislation Delegations of Authority Sections 5.16 and 5.42 of the Local Government Act allow a Council to delegate certain powers to Committees, and it’s Chief Executive Officer.

All three members of the Regional Transition Group have well documented registers of Delegations of Authority that set out the procedural matters relating to delegations to Committees, those under the Local Government Act, Local Government (Miscellaneous Provisions) Act, Bush Fires, Health, and Dog Acts. Trayning’s is under review as at January 2011.

There are differences between the three, but none which on face value that would appear to be of critical concern. A new entity would need to decide which of its powers and duties to delegate, and develop a new Register of Delegations of Authority.

While a matter for the local governments themselves, many of the delegations appear to be minor or procedural issues. There is a grey area between what a local government Council should do and what it might expect its Chief Executive Officer to do in the normal course of business, but each member of the Regional Transition Group might consider the issues that are on the Council’s monthly agenda with a view to perhaps increasing what could be delegated.

Given its geographic spread and increased size, a potentially merged entity comprising the three Shires might consider adopting a provision that Koorda has in its Delegations of Authority:

‘(1) Following the adoption of the budget, the Chief Executive Officer is delegated authority to use management discretion in: (a) implementing expenditure programs contained in the budget the detail of which has been finalised; (b) the appointment of consultants and contractors to enable the proper administration of the Council’s business; (c) prioritising work, unless otherwise directed by the council; (d) determining whether or not to call tenders or sell by tender or auction where an obligation does not exist to do so under the Act; (e) initiating arrangements for loans subject to referral to Council for adoption; (f) authorising overtime; (g) engaging temporary staff. ‘

This delegation also contains some restrictions, but gives a clear instrument of authority to the Chief Executive Officer to get on with the business of the local government once the Council has set a budget for a financial year.

Feasibility Study – Attachment 2 – Current State Page 125

Regional Transition Group – Koorda, Mt Marshall, Trayning Administration - Chief Executive Officer Across the Regional Transition Group, the local governments employ 3 Chief Executive Officers between them. The State Salaries and Allowances Tribunal (SAT) recommend salaries for local government Chief Executive Officers. While Councils do not have to follow its recommendations, it provides a guide as to what it believes is appropriate. The Tribunal uses a ‘total rewards package’ to value various components. It also allocates local governments into 9 bands, and uses a set criteria to do so (for more information about the Tribunal and its methodology, refer to www.sat.wa.gov.au). According to the SAT, the total reward package is made up of the following components:  Base salary  Annual leave loading  Associated FBT accrued  Association membership fees  Attraction/retention allowance  Benefit value of provision of motor vehicle for private use  Cash bonus and performance incentives  Cash in lieu of vehicle  Fitness club fees  Grooming/clothing allowance  Health insurance subsidy  Private phone  Recognition programme benefits  School fees and child’s uniforms (ongoing)  Superannuation  Travel or any other benefit taken in lieu of salary  Unrestricted entertainment allowance

The Tribunal excludes the following components as either a tool of trade benefit, a reimbursement for genuine work related expenses or compensation for specific disadvantages:

 Airfare to home base  Appointment/relocation expenses  Computer provision  Entertainment allowance (business restricted)  Expense of office (business restricted)  Isolation/location allowance

Feasibility Study – Attachment 2 – Current State Page 126

Regional Transition Group – Koorda, Mt Marshall, Trayning  Mobile phone  Professional development and library allowance  Rental subsidy #  Travel on business  Water/power subsidies #

(# The payment of these subsidies may be appropriate in some cases such as in remote locations in the state). In its June 2010 recommendations, the Tribunal recommended that Koorda and Mt Marshall be classed as Band 2 for Chief Executive Officer salaries (total reward package $121,979 - $165,708) and Trayning as Band 1 ($109,321 - $147,871). Exactly what salary or benefit is paid to a Chief Executive Officer of a member of the Regional Transition Group will vary depending on his/her background and skills bought to the job and the specific needs of the Council at the time. The cost to the local government will also vary with the time a Chief Executive Officer might spend in his/her position, generally increasing over time. The Chief Executive Officer of Koorda has indicated he will retire by July 2011, but a replacement has since been recruited. Mt Marshall also recruited a replacement for its Chief Executive Officer in March 2011. In order to determine a cost to each local government, rather than using current costs/total reward packages as they will vary over time a median Band 1 or 2 cost as appropriate to the Shire’s SAT classification has been used:

Koorda Mt Marshall Trayning

Average of Band $143,843 $143,843 $128,596

Using this approach, the total combined cost to the Regional Transition Group members of Chief Executive Officers is therefore $416,282 pa. Exactly where a local government made up of the three members of the Regional Transition Group would sit is not known, but for comparative purposes the Shires of Wongan-Ballidu, Lake Grace, Goomalling and Kondinin are also placed in Band 2 (total reward package $$121,979 - $165,708) by the SAT. It is likely then that a merged local government would also be classed as Band 2. Given the workload in merging three Shires, the ‘new’ Council may have to consider milestone payments or a higher than normal compensation arrangement equivalent to (say) Band 3 (total reward package $134,638 - $182,303). Again, using the median of this Band, a new local government might expect its Chief Executive Officer to be rewarded with a package of around $158,705. The precise mix of this package would depend on negotiations with the appointee. The members of the Regional Transition Group do not have ‘Executive Teams’ as described in the template document, but Mt Marshall and Trayning employ a deputy Chief Executive Officer. Koorda employs a Senior Administration Finance Officer. Feasibility Study – Attachment 2 – Current State Page 127

Regional Transition Group – Koorda, Mt Marshall, Trayning Assuming an average approach again, and that the total rewards package for a deputy Chief Executive Officer or second most senior staff member would be around 75% of that of the Chief Executive Officer, the combined cost to the Regional Transition Group members of a deputy Chief Executive Officer is around $333,025 pa. Mount Marshall employs an Executive Assistant.

Financial considerations Figures are not kept that readily allow identification of expenses, income and other matters that can be identified as a component of the ‘strategic direction’ of a local government. This area does though, broadly equate to the ‘Governance’ Program of the members of the Regional Transition Group.

Revenue and expenses under the Governance Program for Regional Transition Group members for the year ending 30 June 2010 from the Statement of Income contained in the Annual Reports for Regional Transition Group members were: Mt Koorda Trayning Totals Marshall Revenue $2,264 $38,617 $31,689 $72,570 Expenditure 273,447 255,947 414,505 943,899

Budgeted Governance Program income and expenditure for 2010/11 was: Mt Koorda Trayning Totals Marshall Revenue 22,394 9,960 29,830 62,184 Expenditure 394,969 269,777 242,716 907,462

The single largest component making up expenditure under this Program is administrative costs allocated to Governance. This will depend on the final structure of the merged local governments, but for comparative purposes for the same periods, figures for the Shire’s of Lake Grace and Kondinin were: Lake Grace Kondinin Revenue $ 33,784 $ 22,121 Expenditure $ 576,424 $ 219,667

Feasibility Study – Attachment 2 – Current State Page 128

Regional Transition Group – Koorda, Mt Marshall, Trayning 2.3 SERVICES

2.3.1 Current Services

Waste collection All Shires provide a domestic rubbish removal service as required under the Health Act 1911. All three contract Avon Waste (AW) to provide the service, which for general domestic waste collection is a weekly kerbside emptying of a 240 litre wheeled bin in serviced areas (generally town sites). Other services include a kerbside recycling service using a separate bin, with a service once every second week undertaken by Mt Marshall and Trayning. Koorda does not provide kerbside recycling.

Arrangements for commercial services vary, with those premises Trayning making direct arrangements with a waste contractor (again, Avon Waste) with Mt Marshall and Koorda providing via the Shires (but also using Avon Waste). A summary of fees and charges between Regional Transition Group members is shown below: Koorda Mt Marshall Trayning Average/comments Domestic collection - fee per bin pa $140 $150 $150 $146.67

Domestic collection - fee Merged entity will need to consider per bin pa (Pensioner) if it is prepared to offer 'Koorda' $40 discount to pensioners $101.33 (Koorda adopted a fee in its budget as the service was under Recycling fee per bin PA $138 $100 $66 consideration but not yet provided) Recycling fee per bin pa (Pensioner) $50 Expiry date of current 11-Dec-12 (2 year 01-Jul-13 01-Mar-11 contract with Avon Waste option exercised - 2010)

Commercial properties - annual fee per bin pa $140 $200 $150 Removal of public litter Weekly street bins By Parks & Garden Generally weekly by collection(Avon crew Avon Waste Waste) Refuse site operations Managed by the Refuse sites located in Trayning tip unused but Shire Bencubbin (30yrs life) & remains open. Kununoppin Beacon(50yrs life). and Yelbeni tips both open and used

Feasibility Study – Attachment 2 – Current State Page 129

Regional Transition Group – Koorda, Mt Marshall, Trayning

As noted above though, while there are some differences there is more commonality between members of the Regional Transition Group in terms of the major area of activity - domestic waste collection. The annual charge levied by each local government does not vary greatly although the discount offered by Koorda to pensioners may need to be reviewed by the merged entity or the same discount offered to pensioners in Mt Marshall and Trayning.

It should be feasible to let a single contract for the provision of collection services for the new, combined entity (subject to compliance with the requirements of the Local Government (Functions and General) Regulations with respect to tendering for contracts with a value of over $100,000) with services for the former Shire districts coming into effect on expiry of any current contracts, and with a standardised service level between the areas to be serviced. The new entity would need to manage final closure of the Trayning tip. Access though to the Bencubbin site which appears to have significant life left in it would be of benefit to Koorda and Trayning in the longer term.

Landcare Programs All members of the Regional Transition Group are involved in Land care programs. All employ Natural Resource Management (NRM) officers between them – Koorda 0.4 FTE shared with the Shires of Dowerin and Wyalkatchem, Mt Marshall 1.0 FTE and Trayning 0.6 FTE (shared with Nungarin). Koorda currently has no officer, due to a recent resignation.

These staff members make up a total of 2 full time equivalents, although as noted above those at Koorda and Trayning are shared with other local governments outside the Regional Transition Group. The programs are partially funded via State and Commonwealth Government grants. All three are members of the North Eastern Wheatbelt Regional Organisation of Councils (NEWROC) which amongst other things provides a forum for areas of common interest such as land care to be discussed.

For example, the Mt Marshall Environmental Protection Plan sets out a number of priority issues for NRM within the Shire:  Salinity and water logging;  Obtaining funding and Government support;  Community awareness and participation;  Soil erosion, structure decline, nutrient decline;  Catchment approach to management;  Sustainable land and resource use.

Koorda, also a member of NEWROC, notes that a formal partnership has been signed between NEWROC and the World Wide Fund for Nature, with co-operative projects being undertaken with the Avon Catchment Council, CSIRO, the Department of Agriculture, the Department of Conservation and Land Management, the Department of Planning and Infrastructure, Environs Australia, Rio Tinto, Sinclair Knight Merz, University of Western Australia – Centre for Water Research and the WA Local Government Association.

Feasibility Study – Attachment 2 – Current State Page 130

Regional Transition Group – Koorda, Mt Marshall, Trayning Given that the main economic activity in all three Shires is agriculture, land management and associated issues would appear to be an area where future involvement by members of the Regional Transition Group may need to increase. This may be magnified in the light of dealing with climatic change.

Arguably, a larger local government may be better placed to attract grant funding, which this area of activity is currently dependent on, particularly those programs where a measure of co-funding is required. Similarly, if national or State government support were to be reduced or withdrawn in future, a single entity with the combined rate base of the three Regional Transition Group members may find it easier to fund such programs from its own resources.

Finally, the separate programs undertaken may benefit from a measure of synchronisation. It may though be preferable through to gradually phase in changes over time in order to keep location-specific knowledge and programs running.

Waste water treatment The Koorda town site is serviced by reticulated sewerage installed and operated by the Shire. To recover costs it charges a sewerage rate, with a minimum of $185 pa and a maximum of $698 pa. Other town sites within the Regional Transition Group area are serviced by septic tanks. The Shire of Mt Marshall provides a pumping out service for a fee. Obviously a combined entity would not shut down Koorda’s sewerage scheme, but it may seek to recover the cost of operation from residents of the Koorda town site via a service charge levied under s6.38 of the Local Government Act 1995. This would not be an additional charge for Koorda residents but the new entity would have to manage the service (both operationally and with respect to collection of a sewerage rate). Note too that Koorda currently levies a charge to cover cost of annual operation with balance of funds raised placed in a reserve account, which is a licence requirement. A new local government could decide to extend Mt Marshalls septic tank pumping service to Trayning residents, or simply require them to contact a private contractor.

Cemeteries The members of the Regional Transition Group operate 7 cemeteries between them (Koorda - 2, Mt Marshall - 2, and Trayning - 3). While not considered significant in terms of a merger decision, there are considerable variations in fees charged between Regional Transition Group members which should be addressed when dealing in what can be a sensitive area. Unless there are valid reasons for differences then some harmonisation of fees by a new merged entity would be required.

Feasibility Study – Attachment 2 – Current State Page 131

Regional Transition Group – Koorda, Mt Marshall, Trayning Health and Building There are a variety of activities undertaken by a single shared environmental health officer on behalf of the members of the Regional Transition Group and other local governments in the region under a regional scheme, currently administered by Koorda. Contributions are made by participating local governments on an agreed basis (Mukinbudin and Wyalkatchem being the other participants other than the Regional Transition Group members). This includes issuing of building permits, inspection of buildings under construction, environmental health, inspection of food premises, enforcement of Health local laws and associated matters. The KMT Regional Transition Group members engage the same employee for a day a week each, making a total on 0.6 FTE. If this were to continue, the combined local governments could use the services of the same person for 3 days a week. Depending on the amount of time spent on site, productivity could be improved by reduced travel time between former Regional Transition Group member offices as well.

Economic Development None of the Regional Transition Group members have a well developed economic development program or are able to dedicate resources to economic development initiatives. There is some support provided to tourism initiatives but on the whole this appears ad hoc and subject to higher priorities. In this regard while their service levels are similar, and arguably it is outside their mandate as local governments, economic growth would appear to be an area in which the resources freed up by a merged entity could be put to good use. All three local governments have a surfeit of buildings and halls which appear underutilised. Subject to further analysis, re-use of some (for example a business incubator) could be considered. As well as support to the agricultural sector via NRM and associated programs, tourism development, business attraction and other initiatives could be explored.

Plant Nursery The Shire of Mt Marshall operates a plant nursery at its depot in Bencubbin. Neither Koorda nor Trayning provide this service.

If merged, there are a number of options for the new Shire: 1. Close down the operation and source plants from the private sector (potential business development initiative); or 2. Expand its capacity to provide stock to the additional areas.

Feasibility Study – Attachment 2 – Current State Page 132

Regional Transition Group – Koorda, Mt Marshall, Trayning Operation of Caravan Parks The Shires operate 4 caravan parks between them:

Koorda Mt Marshall Trayning

Koorda town site caravan park (no on Caravan park in Beacon and Bencubbin. Both Trayning town site caravan park, no chalets site chalets but owns 6 self contained have two on site units. units off site). Barracks in Beacon are also available for accommodation. Bencubbin has a ‘consultants unit’ available for visiting police, nurses consultants.

Visually, all appear to be of a reasonable/good standard. Trayning’s has recently been upgraded and it is well located adjacent to its swimming pool. In all cases, major maintenance or upgrading is though dependent of the availability of grant funds. An opportunity to tie in the facilities as part of a tourism development strategy, pool maintenance contracts, development booking systems or websites, etc would be open to a larger entity (or potentially leased to a private sector operator).

Aged Persons Homes The Shires have some 19 accommodation units for aged persons between them:

Koorda Mt Marshall Trayning

6 joint venture units of which 5 occupied 4x Aged care units in Bencubbin (Joint venture Assisted aged care at Hospital by aged persons. arrangement) Independent living units (6) – Shire 2x Aged care units in Beacon (Wholly owned)

There may be the need to standardise service levels but it is considered that a merged entity unlikely to cease provision unless an alternate owner/operator could be engaged. Some economies could be realised by pooled management of all 14 units but this is not of a large scale and may not be significant. On the other side of the coin, fees (rent) charged may need to be examined but unlikely to change depending on contracts with tenants.

Feasibility Study – Attachment 2 – Current State Page 133

Regional Transition Group – Koorda, Mt Marshall, Trayning Provision of Medical Centres and Support Services The provision of medical services in rural and regional areas is a concern for many local governments. Levels of involvement across the members of the Regional Transition Group vary:

Koorda Mt Marshall Trayning

Provide building and some equipment, Part owner in Kununoppin Medical Practice Medical Practice located in hospital, operated subsidy of medical practitioner service. in partnership with Mt Marshall, Mukinbudin, Nungarin Contract direct with current Doctor. The contract expires in October 2011. Total contract value approximately $200,000. Again, it is considered that a merged entity would be unlikely to cease provision. Subject to precise contractual arrangement, if significantly different a merged entity may actually find management of services with different features harder to manage than at present, but there may be the opportunity to pool any service contracts with medical practitioners or other service providers.

Bush Fire Control, Volunteer Fire Brigades, Support to SES All members of the Regional Transition Group have some involvement with local bush fire brigades and SES Units, but the level varies:

Koorda Mt Marshall Trayning

Bush fire control and In conjunction with VBFBs Yes. Through VES management/prevention

Voluntary fire brigades Yes Koorda and Kulja Yes. Have seven brigades Through VES

Support to State Emergency Service Support local SES (however Nil Through VES coordinator position vacant)

No change is seen should the Shires merge, although it may be easier to operate a larger service than three separate ones at present.

Feasibility Study – Attachment 2 – Current State Page 134

Regional Transition Group – Koorda, Mt Marshall, Trayning Ranger Services Ranger services are generally provided via a wheatbelt wide service based in Merredin:

Koorda Mt Marshall Trayning

Dog catcher Use wheatbelt ranger service Nil Regional Scheme through based in Merredin Merredin

Impounded vehicles No Nil Yes – occasional

Provision of ranger to enforce council local Use wheatbelt ranger service Nil Regional Scheme through laws – eg parking based in Merredin Merredin Quarter day a week

A merged entity may need to renegotiate the service to include the Mt Marshall area. This though, is not considered a significant issue.

Aquatic Centres There are 3 aquatic centres operated by the Regional Transition Group members between them. All are of a similar age, and will require significant funds over their life cycles on capital work to ensure they are usable and functional. A community facilities study is beyond the scope of this review but on one hand, operation of 3 facilities for a relatively small population of 1500 seems high, particularly given the operating and capital costs of each. On the other, as with many of the community facilities in these Shires, the distance between each town is such that closure in one will mean a degree of travel of around 80km to visit. As a result, while closure might reduce operating costs, patronage may well be unchanged. In addition, a merger under which a service like the local aquatic centre could be closed is unlikely to gain community support. As such, it is assumed that the merged Shire will wish to continue operation of all three. There may be the opportunity to gain some economies of scale by pooling the maintenance and supply contracts that exist and standardise operational practices such as chemical storage and the like, plus ease any problems with operational issues like opening when staff are on leave or ill by synchronising opening times to allow coverage.

Feasibility Study – Attachment 2 – Current State Page 135

Regional Transition Group – Koorda, Mt Marshall, Trayning Libraries All three Shires have a library as part of their administration centres. Mt Marshall provides an additional outlet at the Beacon telecentre, which is serviced once per week. In all cases support is provided by staff that is also normally based at the administration centres and issue books and the like as part of their normal duties. If two of the administration centres close, then the new Shire would need to decide whether to continue the provision of this service and form that service would take. Earlier discussions with Regional Transition Group representatives indicated a desire to maintain some ‘shopfront’ presence in at least the locations where the three Shires currently have offices (which over time, could be established in Kununoppin). This is discussed in Part 3, but operation of a library as part of this service is on face value a viable solution to the problem.

Museums and Historical Sites There are a variety of historical sites and facilities within the Regional Transition Group area. In many cases, the buildings are owned by the Shires who have either bought or been given them over the passage of time. Operations are undertaken by volunteers or on an ad hoc basis by Shire staff if and when time allows, as is promotion. Efforts by local groups are commendable, but none of the facilities are of a size or standard that could be said to be an attraction in their own right. The members of the Regional Transition Group have community buildings which appear to be in excess of requirements, or which are underutilised. Establishment of a regional facility by a merged entity would be more likely to attract grant funding than the three separate local governments, as would its ability to match funding for those programs that require it. Both the Koorda and Trayning town halls are rarely used; Mt Marshall’s houses a supermarket after the existing one in the town burnt down. Either one could be the home for a museum (and combined with the shop front and library for that town if the administration centre is located elsewhere). This could tie in well with an economic and tourism development strategy.

Feasibility Study – Attachment 2 – Current State Page 136

Regional Transition Group – Koorda, Mt Marshall, Trayning

Radio and TV Re-Broadcasting, Mobile Telephone Coverage All Regional Transition Group members are involved in re-broadcasting of radio or television services to towns in their districts in some way:

Koorda Mt Marshall Trayning

Radio re-broadcasting Provide 1 FM station Nil Yes

Television re-broadcasting Provide 4 TV stations (To Two. Beacon & Bencubbin Yes cease in 2013) (This will cease in 2013)

Trayning levies a service charge on properties within the broadcasting range to recover costs. Koorda and Mt Marshall incorporate this cost in their general rates and do not levy a separate fee.

A merged entity will need to consider service levels and issues associated with the advent of digital television services.

In addition, mobile telephone coverage is poor in most areas except for the Trayning town site and its surrounds, and the immediate area of Beacon.

Businesses that rely on mobile telephones as a foundation of communications will be reluctant to base themselves in areas where coverage is poor or no-existent. Similarly, more and more transactions are conducted using wireless and digital technology. The current service levels detract from the ability of those without adequate signal strength or coverage to develop an economic development strategy with any prospect of success.

Arguably, mobile phone coverage is not an issue that the Shires in the Regional Transition Group should have to address, but if they wished to do so, have been advised of costs of in the order of $500,000 per town. This seems excessive particularly given that there are already substantial structures within each town where repeater stations could be readily attached such as:

 Water towers,  Wheat bins and silos (as is the case in Trayning), or  The Shire’s own TV and radio re-broadcasting towers.

It seems more likely that commercial carriers would be reluctant to install and maintain the necessary equipment due to the small customer bases serviced.

Feasibility Study – Attachment 2 – Current State Page 137

Regional Transition Group – Koorda, Mt Marshall, Trayning

This issue needs investigation and exactly what is required detailed, but the ability of a larger merged entity to consider funding or facilitating what is required would be higher than the three Shires separately.

Depots, Road Construction and Road Maintenance

Road construction and maintenance is the most significant area of service provision and activity by all Regional Transition Group members.

Trayning’s depot area is approximately 8,000m2, Mt Marshall has two depots – a main facility at Bencubbin (area approx. 15,000m2) and a sub depot at Beacon (10,000m2). Koorda has a very large depot at approximately 40,000m2, which is subdivided into 7 lots. The following assets and equipment that could be affected by a merger or are mobile and could potentially be part of some efficiency gains: Koorda Mount Marshall Trayning Totals Depots 1 2 1 4 Utilities 9 3 4 13 Graders 3 4 2 9 Trucks 5 8 3 19 Water Tankers 1 1 0 2 Backhoes 0 1 1 3 Bobcat 1 0 0 1 Tractors 2 0 0 2 Front end loaders 2 2 1 6 Rollers 3 1 1 5 Bulldozers 1 0 0 1 Low loaders 1 1

Required levels of equipment, locations of main or service depots and workforces required are a combination of service levels, minimum and agreed standards for road construction and maintenance; and the current state or condition of road networks.

This issue needs discussion, but specifically information about when condition surveys of Regional Transition Group members road network was last done, what were the results, what is in place to undertake the next one, and if the Shire has used the survey to assist with making an assessment of the potential gap between current and desirable road condition, is needed.

Feasibility Study – Attachment 2 – Current State Page 138

Regional Transition Group – Koorda, Mt Marshall, Trayning

Koorda appears to have used contractors (Cardno) to manage and extract data from the ROMAN (road management) system to project its requirements and has costed projections for the next 5 years on a rolling basis.

Road Condition Survey and Assessment

Roads comprise the major area of activity for all three Shires. Given the importance of road networks to the local economy which will probably increase over time, it was felt that an assessment of the condition of the respective road networks in each Shire would be of value.

In March 2012, the Regional Transition Group members agreed to appoint a consulting firm to undertake data collection, input and validation for their road networks using the ROMAN system to allow for comparisons between members. This was changed to Cardno in June 2011.

Road lengths of Regional Transition Group members were estimated to be: Sealed Unsealed Total Koorda 245 840 1,085 Mt Marshall 307 1,440 1,747 Trayning 181 594 775 Total 733 2,874 3,607 The road condition survey identified the road length as 3,532 km rather than previously considered 3,607 km.

The following details are provided from the road condition survey.

VALUATIONS Road Length Sealed Unsealed Repacement Depreciated WDV ACR Koorda 1,065.9 249.2 816.7 64,724,719 13,318,798 51,405,921 79.4% Mt Marshall 1,721.9 299.8 1,422.1 87,329,239 20,303,198 67,026,041 76.8% Trayning 755.4 148.3 607.1 47,947,811 12,986,974 34,960,837 72.9% 3,543.1 697.2 2,845.9 200,001,769 46,608,970 153,392,799 76.7% Source : Cardno Road condition survey September 2011. ACR = Asset Consumption ratio

Feasibility Study – Attachment 2 – Current State Page 139

Regional Transition Group – Koorda, Mt Marshall, Trayning Network Profile ‐ Replacement costs Written Down Values Formation Pavement Seal/Kerb Total Formation Pavement Seal/Kerb Total Koorda 30,602,932 21,192,384 12,929,403 64,724,719 Koorda 0 13,921,504 6,881,485 20,802,989 Mt Marshall 44,070,201 26,486,300 16,772,738 87,329,239 Mt Marshall 0 14,764,076 8,191,764 22,955,840 Trayning 19,384,063 20,249,975 8,313,773 47,947,811 Trayning 0 11,600,488 3,976,286 15,576,774 94,057,196 67,928,659 38,015,914 ‐200,001,769 40,286,068 19,049,535 59,335,603 Source : Cardno Road condition survey September 2011. Source : Cardno Road condition survey September 2011.

KOORDA Network Condition Averages

3.50 C o 3.00 n d 2.50 i t i 2.00 o n 1.50

R 1.00 a t 0.50 i n 0.00 g Local Surface Cracking Pavement Binder Stone Asphalt Unsealed Unsealed Edge Open Drain Defects Index Deformation Condition Condition Condition Shape Shoulder Condition Condition Index Condition Index

Feasibility Study – Attachment 2 – Current State Page 140

Regional Transition Group – Koorda, Mt Marshall, Trayning MT MARSHALL Network Condition Averages

C o 3.50 n d 3.00 i t 2.50 i 2.00 o n 1.50 R 1.00 a t 0.50 i n 0.00 g Local Surface Cracking Pavement Binder Stone Asphalt Unsealed Unsealed Edge Open Drain Defects Index Deformation Condition Condition Condition Shape Shoulder Condition Condition Index Condition Index

TRAYNING Network Condition Averages

C 3.50 o n 3.00 d i 2.50 t i 2.00 o n 1.50 R 1.00 a t 0.50 i n 0.00 g Local Surface Cracking Pavement Binder Stone Asphalt Unsealed Unsealed Edge Open Drain Defects Index Deformation Condition Condition Condition Shape Shoulder Condition Condition Index Condition Index

The impact of the current condition survey and the financial consequences are address in Section 5.1.1.

Feasibility Study – Attachment 2 – Current State Page 141

Regional Transition Group – Koorda, Mt Marshall, Trayning 2.4 SYSTEMS

Information Technology – Hardware and Software The focus of this section is on the various IT systems used by the members of the Regional Transition Group to record, manage and support their activities. An overview of the IT infrastructure used by the participating local governments is as follows:

Significant Systems Koorda Mt Marshall Trayning and Related Matters Accounting Quickbooks IT Vision - Synergy - Version Synergy 7.2.17 Rates/Property Rate Book Online (Haines Norton) IT Vision - Synergy - Version Synergy 7.2.17 Payroll Quickpay IT Vision - Synergy - Version Synergy 7.2.17 GIS Arcview N/A Others eg MS Office Microsoft Office 2007 Windows 2008 Server, Microsoft Microsoft Office Office 2007 (some computers still running 2003), Windows XP/Vista/7

Engineering - Arcview & AutoCAD (also arcview for NRM) Library - Amlib Library - Amlib (Used in Beacon and Bencubbin) Medical Practice - Quickbooks 09/10 Description of 1 server, 6 PCs, 4 laptops, 1 2x Servers (One for email and 9 PC’s and 6 printers 1 Server hardware c/printer, 1 c/phopocopier, 1 storage, second for Synergy) photocopier, 1 fax, 8x PC's, 2x Laptops (1 used by staff member everyday, 1 for projector in chambers)

1x PC located in Beacon Library (not networked)

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Regional Transition Group – Koorda, Mt Marshall, Trayning Significant Systems Koorda Mt Marshall Trayning and Related Matters Next G internet (Telstra). #m Roof Mounted antenna. Have a wired/wireless network (wireless for silver chain located next door, total 2 wireless access points)

2x photocopier Licensing computer (supplied by Dept. Transport) Are office/depot Admin office networked, no 3x dongas connected by data Yes linked by data connections to other office/depots cable cables? 2x offices in town hall connected by data cable (one as records room, second used by community newspaper)

Silver chain connected through wireless network (2 wireless access points)

Technical support - Wallis Computer Services PCS (Computer Consultants who Perfect Computer Solutions (PCS) hardware Dalwallinu have experience in IT Vision) Technical support - AA or Haines Norton IT Vision for SynergySoft product IT Vision for SynergySoft product, software Perfect Computer Solutions (PCS) for others

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Regional Transition Group – Koorda, Mt Marshall, Trayning Significant Systems Koorda Mt Marshall Trayning and Related Matters Any issues with or No The main issue is with the No concerns about distance everything is attempted technical support to be fixed remotely. This is a long and expensive way of doing it (expensive due to the time taken to fix them). Onsite technical support allows the technician to find the problem quickly and fix the problem. Remote support seems slower and with any major problems it can end up being the (technical) consultant trying to run a non-technical officer through the fix. Training in use of IT Yes, both Wheatbelt Computer IT Vision is readily available. Also Mostly in house training where products? Available Services & Haines Norton are have webinars which helps to required. ITV training is readily and useful? good with QuickBookss and never reduce travel time available and relevant. any issues with Rate Books Online that aren’t sorted almost immediately. ISP Telstra - expensive but reliable Website Koorda is still using Linking Hosted by ‘City of Lights’. Provided by 'City of Lights', Councils however exploring other Maintained by staff at the shire. maintained internally and with options for the near future as it is assistance from provider expensive also.

It is noted that both Trayning and Mt Marshall use SynergySoft. This product is widely used by a number of local governments throughout Australia. In all instances, data is kept centrally at each local government’s administration office. Day to day system operation and maintenance is undertaken by the person considered most capable in each local government, usually the Deputy Chief Executive Officer. No issues are apparent with respect to licensing or security. If the local governments in the Regional Transition Group were to merge, the scale of operations is such that no major data or integration issues are likely to arise. However, should it choose the SynergySoft product used by 2 of the Regional Transition Group members, transition costs in terms of developing familiarity with new systems may be reduced. While not all modules are used by these Shires, standard

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Regional Transition Group – Koorda, Mt Marshall, Trayning applications contained within SynergySoft are listed below, with the modules currently used by Mt Marshall and Trayning highlighted and indicated by an ‘MM’ or a ‘T’:

Agendas and Minutes Excel Integration (T)(MM) Rates Modelling (T)(MM) Animal Control Facility Bookings Receipting(T) Bank Reconciliation (T) Financials (Assets, Costing, Creditors, Debtors, General Record Management Building Applications Ledger, Loans, Plant, & Trust Accounts) (T)(MM) Report Manager (T)(MM) Cemeteries Health Reserves System Cemetery Mapping Human Resources SQL Views Community Information Infringements Stores Customer Service Mapping (GIS) Interface (T – for rates but not GIS Swimming Pools DIY (Rapid Development Tool component) Synergy.Online (Web Based for customer specific databases) Payroll (MM) Applications) Dog Control (T)(MM) Planning Workflow Electoral Roll (MM) Purchase Requisitions and Ordering Electricity Billing Rates and Property (MM)

Training and software support is provided by IT Vision, a Perth based company. Additional software to deal with other uses such as word processing, email, web site development and maintenance and other aspects would also be required, but the core business needs of the combined members of the Regional Transition Group could be satisfied using this product. On face value, all of the local governments in the Regional Transition Group have sufficient hardware and software to satisfy their current needs. None though use online payment systems or web-based applications to automate processes or workloads. A larger entity though, may well require additional servers and other support software depending on the number of users. In this regard, should the merged local governments use the SynergySoft product, hardware requirements for up to 30 concurrent users suggested by IT Vision are included in the document “Hardware for SynergySoft 8.1”. It is noted that the local governments currently have 4 servers between them as well as enough PCs and associated equipment to support current staff levels. Subject to verification of system capacity (memory space, processor speed, correct software, etc) on face value the pooled capacity of the Regional Transition Group members appears capable of supporting their combined needs, although some provision should be made to ensure similar versions of common use software are used across the organisation as there appear to be some differences between the three. As a rule of thumb, in a local government context one FTE in IT support for every 60 or so users is considered reasonable. At an estimated 30 or so concurrent users the combined Regional Transition Group would not however, be a large enough entity to warrant its own in house IT support and would still need to rely on external contractors to maintain their networks, even if it were able to employ a part time IT support officer. Feasibility Study – Attachment 2 – Current State Page 145

Regional Transition Group – Koorda, Mt Marshall, Trayning In addition, should the local governments merge the precise nature, activities and physical locations of the organisation or parts of it will need to be established, as this will have some effect. On face value, data links between the towns of Koorda, Bencubbin and Trayning are not to a standard where a live link could be maintained and some upgrading of IT infrastructure may be required. The extent though is dependent on the scope of activities and range of services to be provided. For example:  If the Regional Transition Group members wish to simply maintain a presence in the three main towns of Koorda, Bencubbin and Trayning via ‘shopfronts’, then a link between the outlets and wherever a main centre may be located will be required, with regular (overnight) updating.  If the organisation is to be separated into divisions based at each town, live links will be needed. There are at least two examples of local governments that employ a similar practice:  The Shire of Ashburton has an area of 105,000 km2 and population of 6,000 with a main office in Tom Price and a western region office based in Onslow;  The Shire of Coolgardie, area 30,400km2, population 5,900 has offices approximately 75km apart in Coolgardie and Kambalda. Matters to be addressed in a merger include data integration and migration. Crucial areas are the property system data bases, asset registers, and payroll.

Records management All Regional Transition Group members have asset registers that include buildings, plant and other significant assets. These registers would need to be combined to produce a single version for a merged entity, together with a stocktake or physical verification process. Asset management systems are based around Excel spreadsheets which could be readily integrated. In terms of general records:  All have records management policies.  Trayning uses a paper based records management system. Material is filed based on an alphabetical subject listing.  Koorda is paper based and uses ‘Keyword for Councils’.  Mt Marshall uses a paper based system. Other than in relation to perhaps property based files, it would not be worth attempting to integrate these existing systems.

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Regional Transition Group – Koorda, Mt Marshall, Trayning A merged entity would need to develop a new system, but maintain indexes and search facilities for the old Shires. It may be possible to phase out some over time or convert them to other storage mediums.

2.5 OPERATING MATTERS The Regional Transition Group template requires a section on internal functions that support a local government’s service delivery operations in relation to financial frameworks, legal issues etc.

2.5.1.1.1 Financial Reporting In terms of financial reporting, relevant policies and disclosures are contained in the annual financial statements for each local government. There are some differences in terms of accounting policies and the like for specific areas, but none of which are considered likely to have an influence on a decision as to whether or not to merge.

Plan for the future As noted earlier, Koorda has a Plan for the Future which draws on other Plans and is used to inform the annual budget. A report on progress and outcomes is contained in the annual report. Mount Marshalls was under development at the time of writing but appears incomplete. Trayning’s Plan for the Future is under review.

Annual budget Each local government uses a similar format when compiling their annual budgets.

Budget reviews Budget reviews are conducted in accordance with the Local Government (Financial Management) Regulations.

Annual and monthly financial reporting Each local government Chief Executive Officer provides a monthly financial report to the relevant member Council. The formats used are not identical but not overly dissimilar either.

Annual reports As well as statutory financial reports, each local government issues and annual report detailing any highlights of the past financial year. This is usually tabled for discussion at the annual general meeting of electors.

Application of materiality All Regional Transition Group members use a similar approach. No significant differences are noted.

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Regional Transition Group – Koorda, Mt Marshall, Trayning Chart of Accounts The Regional Transition Group members use a similar Chart of Accounts at Program level but there are some differences at sub-program and account detail level. As operations are similar, it would not be overly difficult to produce a new chart detailing requirements for a merged entity.

Compliance Audit Return A perusal and random spot check of the most recent statutory compliance returns by members of the Regional Transition Group does not show any major issues, other than in one case an 8 year review of local laws not undertaken under s3.21 of the Act. This however may relate more to the question than the issue – if the review was not undertaken in the year that the audit relates to, then the answer to the question would be ‘no’. It may have been undertaken in previous years.

Rate setting statement Each local government uses a similar process to develop a rate setting statement (note though that this is well guided by Regulation).

An extract from each of the local government’s financial reports showing the salient features of their Rate setting statements is shown in Attachment 2.1.2.3. Section 5 of the report addresses the current and an “amalgamated” position of the Rate Setting Statement for each of the members.

2.5.1.1.2 Roles and Responsibilities

Auditors

Koorda Mt Marshall Trayning

Current auditors Anderson Munro and Wyllie UHY Haines Norton UHY Haines Norton

Expiry date for audit contract 30 June 2011 30 June 2014 30 June 2011 Annual Financial Report was Any issues noted in audit for No Nothing other than a couple not submitted to DLG within 30 2009/10 Financial Year? of administrative matters of receipt of auditor’s report. Composition of audit committee Shire President and 2 Councillors All councillors Shire President/ 2 Councillors There are no major issues with the most recent audit undertaken, or auditors, that are apparent. It may be worthwhile for Trayning and Koorda to consider a joint procurement for new auditors when the current contracts expire – at the time of writing; quotes were being sought for consideration by their respective Councils.

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Regional Transition Group – Koorda, Mt Marshall, Trayning Delegations Each local government has delegated duties and powers to its Chief Executive Officer and maintains a register as noted in section 2.2.1.3 and as attached as an Attachment to this report. There are also a number of Policies in place to guide decision making (see 2.5.2.3). The level of detail varies between members of the Regional Transition Group as do formats but there is a general level of consistency. For example with respect to financial management delegations of authority: Koorda Mt Marshall Trayning Implementation of the Budget Payments from Municipal and Trust Fund Acquisition of Assets and Investment of Surplus Funds Goods/Services – Tenders for supply Make Payments from the Municipal Fund Investment of Surplus Funds Disposal of Assets and Trust Fund Write Off Money owed to the Shire Creditor payments Contract Variations Recoup BankWest Shortfalls Investment of surplus funds Rating Write-off of minor outstanding amounts

These delegations (Council to Chief Executive Officer and Chief Executive Officer to others) are reviewed annually. Financial reporting appears well maintained with each Chief Executive Officer submitting a monthly list of payments to the Council for perusal.

Policy Manuals Note too that each local government has a number of policies in place to guide decision making (for consistency) and how certain matters that fall between the need for a decision by Council and a day to day function of the Chief Executive Officer. There are differences between Regional Transition Group members in terms of Policy detail and content. While this is a subjective area in terms of whether or not differences may be considered major, on the face of things there do not appear to be so different that a material effect on any merger decision is likely. What may influence a decision though could be the loss of ‘local’ discretion in how a particular matter might be interpreted or decision made in future. Trayning’s is currently going through a full review and is expected to be considered by its Council in April or May 2011.

Payment of accounts No issues of significance were noted by auditors of any of the Regional Transition Group members in their most recent sets of financial statements regarding the payment of accounts.

Review of financial management systems Regulation 5(2)(c) of the Local Government (Financial Management) Regulations require regular reviews of the financial management systems in place in a local government. No issues were noted in their most recent audits.

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Regional Transition Group – Koorda, Mt Marshall, Trayning Tendering and purchasing The Local Government (Functions and General) Regulations require that all contracts with a value of over $100,000 be subject to a tender process (with certain exemptions). This area is regulated in some detail by s3.57 of the Act and the Local Government (Functions and General) Regulations. We have not undertaken an investigation or audit into of any of the tenders that the Regional Transition Group members may have undertaken in recent times may or may not have achieved value for money as this is an audit function. In terms of procurement limits, the need for written specifications and the like, and regional price preference policies there are some differences between members of the Regional Transition Group that will need synchronisation should a merger proceed.

2.5.1.1.3 Revenue / income

Rates A major source of funding for all Regional Transition Group members are taxes levied on properties in the districts (rates). All use of mixture of Unimproved Values for rural properties and Gross Rental Values for commercial and residential properties in town sites, The rating regimes vary somewhat, with rates in the dollar levied on the various categories different in many cases. The minimum rate applied, discount allowed and period in which a discount can be claimed also vary. Rates levied in 2010/11 and 2011/12 (budgets) are shown in detail in Attachment 4.1, with extracts shown below.

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Regional Transition Group – Koorda, Mt Marshall, Trayning as at 30 June 2012

Koorda Mount Marshall Trayning Total Rating Information as at 30 June 2012 Asse ssme nts GRV Assessments 167 171 157 495 UV Assessments 222 348 204 774 Total Assessments 389 519 361 1,269 Valuations GRV Revaluation year 2008 2008 2008 UV Revaluation year 2011 2011 2011 Gross Rental Values 757,542 634,877 503,396 1,895,815 Unimproved Values 42,541,651 65,276,777 54,157,449 161,975,877 Rates Levied Gross Rental Values 83,362 80,231 77,969 241,562 Unimproved Values 748,151 1,036,555 543,172 2,327,878 Total Rates Levied 831,513 1,116,786 621,141 2,569,440 Minimum Rates Gross Rental Values 5,060 12,000 8,740 25,800 Unimproved Values 1,540 9,600 1,380 12,520 6,600 21,600 10,120 38,320 Total Rates 838,113 1,138,386 631,261 2,607,760 % raised through minimum 0.79% 1.90% 1.60% 1.47% General Rate in $GRV 11.40000 13.13230 16.05020 General Rate in $UV 1.76000 1.59130 1.01800 General rate in $ is rate applying to the most properties. Underlying GRV rate in $ 11.67222 14.52738 17.22481 14.102747 Underlying UV rate in $ 1.76225 1.60264 1.00550 1.444905 Underlying rate in $ is determined by dividing the total rate revenue(Levied and Minimum) by the total valuations. Rate in $GRV Residential 11.40000 13.13230 16.05020 Min Rate $ Res 220.00 300.00 230.00 Domestic Rubbish charge 143.00 155.00 170.00 Averages Average GRV 4,536 3,713 3,206 3,830 Average UV 191,629 187,577 265,478 209,271 Average rates GRV $ 529 $ 539 $ 552 540.13 Average Rates UV $ 3,377 $ 3,006 $ 2,669 3,023.77 Rates per population 1,783 1,626 1,578 1,660.99 Rates per sq km 315 112 387 180.06

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Regional Transition Group – Koorda, Mt Marshall, Trayning Rates levied in 2010/11 From the above, it is noted that the rate in the dollar levied on properties subject to Unimproved Values (UV) by Koorda and Mt Marshall are reasonably similar (0.01680 and 0.01545 respectively), but there is a significant difference in the rate in the dollar levied by Trayning on properties in this category (0.009013). This difference between properties in the same rating category between properties on Unimproved Values between Trayning and the other two in the Regional Transition Group is an issue that will need to be considered by the members should a merger proceed. Trayning advises that it has used past income from a gypsum mine (now closed) and kept the UV rate frozen for a 10 year period. It has recently introduced a process to ‘catch up’ by increasing the UV rate in the dollar by 5% pa. This may assist, but in terms of the Regional Transition Group it may take around 13 years for Trayning to reach the average UV rate in the dollar applied by Koorda and Mt Marshall if it applied an increase of 5% PA, plus CPI (assuming it remains around 4 or 5% pa for the foreseeable future):

Koorda/MM Year CPI Average Trayning Difference 0 Base 0.016125 0.0090 0.0071 1 3% 0.01660875 0.009734 0.0069 2 3% 0.017107013 0.010513 0.0066 3 4% 0.017791293 0.011459 0.0063 4 4% 0.018502945 0.01249 0.0060 5 5% 0.019428092 0.013739 0.0057 6 5% 0.020399497 0.015113 0.0053 7 5% 0.021419471 0.016624 0.0048 8 5% 0.022490445 0.018287 0.0042 9 4% 0.023390063 0.019933 0.0035 10 4% 0.024325665 0.021727 0.0026 11 4% 0.025298692 0.023682 0.0016 12 4% 0.02631064 0.025813 0.0005 13 5% 0.027626172 0.028395 -0.0008

This assumes that Mt Marshall and Koorda have their current rate in the dollar set at an appropriate level, and that other changes do not have a material effect. There is also the question about whether or not might current funding levels are

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Regional Transition Group – Koorda, Mt Marshall, Trayning adequate to maintain Trayning’s infrastructure during those 13 years or so and if there might be a backlog when it reaches a similar UV rate in the dollar as the other Regional Transition Group members.

There are also differences in the minimum rate applied ($285 for Mt Marshall vs $195 and $190 for Koorda and Trayning respectively). Managing any change as a result of a merger will need some careful consideration. A merged entity would struggle to deal with the large difference in the UV rate in the dollar between Trayning and the other two local governments. It may be possible to consider a differential rate under s6.34 of the Local Government Act for the former districts in order to phase in a change to rates over time, but given that the major difference is between the rates in the dollar levied on unimproved values, which is essentially homogenous farmland, would be difficult to justify. It does not seem that the merged local government would be able to rely on s6.34(1)(a), (b) or (c) of the Local Government Act as there are few differences between the land classified as UV between the three districts on which a merged Council could establish a differential rate.

Section 6.34(d) does though allow for other circumstances which may be prescribed. In this regard, the Department of Local Government advises that it is possible to make provisions to go onto the Governor's Order that is made when local governments are merged which override the principles of the LG Act for a reasonable transitional period. It would therefore seem possible to devise a differential rating scheme that could phase in the changes across the new municipality for say a period of 5 years. Yet another variation on this theme could be to provide concessional rates to those areas that might be subject to a ‘catch up’ while a uniform rate is being phased in. This issue is seen as critical and as such is discussed in some detail in Part 5 (Rate Setting Statement).

Financial assistance grant The Financial Assistance Grant funding provided to local governments is untied - there are no conditions on how these funds should be spent. Total funding available is divided into two parts, a general purpose component and a local roads component. The funding provided to local governments is allocated on the basis of horizontal equalisation, to ensure that each local government in the State is able to function at a standard not lower than the average standard of other local governments. All local governments are entitled to receive at least the minimum grant. That minimum grant cannot be less than 30% of what the local government would receive if all grants were allocated on a per capita basis.

The WA Local Government Grants Commission (WALGGC) calculates the equalisation requirement of each local government by assessing the revenue raising capacity and expenditure need of each local government. Eight categories (called standards) are used to calculate revenue raising ability and seven categories have been used to establish expenditure need. The

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Regional Transition Group – Koorda, Mt Marshall, Trayning equalisation requirement is the difference between the assessed expenditure need and the assessed revenue raising capacity of each local government. A range of disability factors are also applied by the Commission, e.g. location, population dispersion and climate, and these are applied to the standards to recognise the additional costs a local government faces due to its physical or demographic characteristics.

In determining the local road funding for local governments, the Commission uses an Asset Preservation Model. This model is used to assess the cost of maintaining a local government’s road network and takes into account annual and recurrent maintenance costs and the costs of reconstruction at the end of a road’s useful life. (Source: Dept of Local Govt)

The amount of the Financial Assistance Grant for 2011/12 budgeted for by each of the Regional Transition Group local governments by the WA Local Government Grant Commission was – 2011/12 Budget Koorda Mt Marshall Trayning Totals General Purpose Grant 768,235 779,710 743,661 2,291,606 Road Component 450,537 625,086 425,346 1,500,969 Totals 1,218,772 1,404,796 1,169,007 3,792,575

Under the current allocation methodology, a merger of the Regional Transition Group local governments would see this allocation fall. The Department of Local Government has though issued a circular dated August 2010 about Local Government Reform and Grant Funding, advised that: 1. If the number of local governments in WA are reduced, then any potential reduction in grant funding will be less; 2. Current grant methodology and grant funding arrangements are under review; 3. Changes in underlying key data such as populations, valuations, road lengths, and other local governments will affect the funding allocations; and 4. Funds available in the total pool change.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Other grants Other grants received or administered by Regional Transition Group members and listed in their 2011/12 budgets are shown below.

Mt Grants Koorda Marshall Trayning Combined Notes 2010/11 2010/11 2010/11 2010/11 By Source Budget Budget Budget Budget Royalties for Regions - Direct Grant from Reduces to 50/50 in 2011-12 DRDL $460,000 $609,164 $300,932 $1,340,064 and 2012-13, then 100% via Royalties for Regions - Grant via Wheatbelt Development Wheatbelt Development Commission $244,733 $261,688 $213,166 $719,587 Commission in 2013-14 RLCIP $30,000 $30,000 $30,000 $90,000 Landcare Grants $23,250 $23,250 Grants and Subsidy - SES/FESA $16,310 $57,500 $3,800 $77,610 Crime Prevention Grant $1,200 $6,200 $7,400 Pool subsidy $3,000 $3,000 $3,000 $9,000 Federal Roads to Recovery $324,000 $446,491 $222,566 $993,057 Regional Road Group Grant $290,000 $410,000 $271,900 $971,900 Fwd Capital Planning Grant $35,000 $35,000 MRD Direct Grant (Roads) $91,000 $130,000 $65,527 $286,527 MRD Blackspot Grants $86,200 $86,200 Healthways(T), Family Support Grant (MM), Airstrip Others $30,464 $10,500 $40,964 (T) Totals $1,898,715 $2,571,941 $1,558,471 $6,029,127

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Regional Transition Group – Koorda, Mt Marshall, Trayning Fees and charges Each local government sets fees and charges in its annual budget and which are shown in detail in Attachment 2.5.3.4. A summary by Program appears below: Koorda Mt Marshall Trayning Total 2011/12 2011/12 2011/12 2011/12 Fees and Charges 2010/11* 2010/11* 2010/11* 2010/11* Budget Budget Budget Budget Governance ‐ ‐ 462 4,800 3,538 3,380 4,000 8,180 General Purpose Funding 2,852 1,250 570 ‐ 1,050 1,200 4,472 2,450 Law, Order & Public Safety 5,051 21,519 663 600 752 620 6,466 22,739 Health 102,511 124,480 5,808 ‐ 8,100 8,314 116,419 132,794 Education & Welfare ‐ ‐ ‐ 15,600 ‐ ‐ ‐ 15,600 Housing 100,774 110,732 53,802 59,800 51,099 58,466 205,675 228,998 Community Amenities 120,579 143,633 26,005 54,495 38,480 44,336 185,064 242,464 Recreation & Culture 14,157 9,729 11,979 11,240 8,781 8,386 34,917 29,355 Transport 1,935 ‐ 4,355 2,500 ‐ ‐ 6,290 2,500 Economic Services 29,751 27,467 71,278 74,500 4,334 7,970 105,363 109,937 Other Property & Services 12,377 6,906 37,178 15,000 30,971 60,600 80,526 82,506 Total 389,987 445,716 212,100 238,535 147,105 193,272 749,192 877,523 2010/11* estimate from 2011/12 budget papers Note that Koorda manages a sewerage scheme under the ‘Community Amenities’ program.

Service charges Amounts charged by, and received by the Regional Transition Group members for service charges under sections 6.25 to 6.82 of the Local Government Act are negligible and relate to television and radio re-broadcasting services.

Other revenue / income The Regional Transition Group members do not receive any significant amounts of other revenue or income. Some sources are a small commission from being Bankwest agency, some payment for Shire staff assistance to other local governments. Private works are undertaken but are minimal and inconsistent.

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Regional Transition Group – Koorda, Mt Marshall, Trayning 2.5.1.1.4 Expenditure

Insurance Insurance policies held by Regional Transition Group members, expiry dates and current claims against each are summarised below. Koorda Mt Marshall Trayning Bush fire Motor Vehicle Electrical equipment Casual hirers liability Statutory & Business Practices Multi Risks Councillors & officers liability Councillors & Officers Liability Machinery Breakdown Fidelity guarantee Freight Professional Indemnity Marine cargo Bushfire Motor vehicle and plant Motor vehicle Contract Works Personal accident Personal accident Personal Accident Salary continuance Journey Injury LGIS property scheme LGIS Property Scheme LGIS property scheme LGIS liability scheme LGIS workcare scheme LGIS workcare scheme Business Practices protection – specialist underwriting agencies Journey injury top up cover All expire on 30 June All expire on 30 June All expire on 30 June Currently there is a claim against the Shire from a motor cyclist following an accident (2007). A court hearing is scheduled for 2011. The Shire does not believe that it was negligent in any way.

Main insured categories (plant and equipment, buildings, and workcare) are provided via Local Government Insurance Services, which is a mutual scheme run through the WA Local Government Association. A merged entity would be likely to continue these arrangements.

Other expenditure Each member of the Regional Transition Group has an ABN. In the event of a merger the new entity would need to obtain its own ABN.

Feasibility Study – Attachment 2 – Current State Page 157

Regional Transition Group – Koorda, Mt Marshall, Trayning 2.5.1.1.5 Investment management The Regional Transition Group members hold bank accounts for Municipal, Trust and Reserve, with corresponding investment accounts. The Shire of Mt Marshall has an additional bank account for the medical practice.

Term deposits are used for reserves and excess funds on other accounts.

Each local government has a number of Reserve Funds established under s6.11 of the Local Government Act 1995. Anticipated balances at the end of 2011/12 are shown below.

2011/12 Budget Koorda Mt Marshall Trayning Totals Restricted/ Binding on new LG? Plant Replacement Reserve 254,034 315,189 37,593 606,816 No Aged Care Units ‐ 58,643 ‐ 58,643 Yes ‐ generally subject to DHW agreements Community Housing 114,743 33,698 ‐ 148,441 Yes ‐ generally subject to DHW agreements Council Staff Housing ‐ 15,141 ‐ 15,141 No Employee Entitlements 199,204 103,914 23,129 326,247 No ‐ should be held to meet liabliities Landcare or NRM 14,953 ‐ ‐ 14,953 No Caravan Park Upgrades ‐ 22,038 ‐ 22,038 No Public Amenities and Buildings ‐ 255,271 5,822 261,093 No Roads 299,317 62,486 ‐ 361,803 No Television and Radio Broadcas 71,676 26,871 ‐ 98,547 No Unspent Grants ‐ 251,740 ‐ 251,740 Yes ‐ restricted by grant Community Bus Replacement 74,707 51,895 ‐ 126,602 No Bencubbin Recreation Complex ‐ 23,945 ‐ 23,945 No ‐ but new LG may wish to quarantine Office Equipment and IT 100,236 13,741 ‐ 113,977 No Buildings 632,230 ‐ 50,169 682,399 No ‐ but new LG may wish to quarantine Recreation and Community Fac 235,685 ‐ 191,370 427,055 No ‐ but new LG may wish to quarantine Medical 198,937 ‐ 44,046 242,983 No Sewerage 494,625 ‐ ‐ 494,625 Yes ‐ licence requirement for Koorda Town site Industrial Shed Reserve ‐ 22,500 ‐ 22,500 Yes ‐ licence requirement for Koorda Town site Waste Management 59,932 ‐ 11,953 71,885 No Swimming Pool Reserve ‐ 148,193 41,418 189,611 No ‐ but new LG may wish to quarantine Totals 2,750,279 1,405,265 405,500 4,561,044

Feasibility Study – Attachment 2 – Current State Page 158

Regional Transition Group – Koorda, Mt Marshall, Trayning A new merged entity would assume the rights and responsibilities of the Regional Transition Group local governments, including any obligation to set aside funds in Reserve Funds that current members have.

Regional Transition Group members have expressed the view that they would prefer to see Reserve Funds spent in the districts where the funds were originally raised. This should be achievable where Reserves are location specific, but members of the Regional Transition Group should note that under s6.11(3)(a) of the Act, it is possible for a Council may change the purpose of a reserve fund as part of adoption of its annual budget.

In addition to the above, both Mt Marshall and Trayning have placed unspent Grants into Reserves, which would carry restrictions on where they may be spent, and how.

As shown above, while the new merged entity would appear to have a relatively healthy level of Reserves of around $4.5M, the source is not altogether even.

2011/12 Budget2011/12 Unrestricted Budget Unrestricted KoordaTrayning, 2,750,279 Koorda 1,941,707 405,500 Mt Marshall 1,405,265 Mt Marshall 934,770 Trayning 405,500 Trayning 382,371 Restricted 1,302,196 Restricted, Koorda, 1,302,196 Mt Marshall, 1,941,707 1,405,265 Koorda, 2,750,279

Mt Marshall, 934,770 Trayning, 382,371

Investment policies:  Koorda has a Policy but it does not provide a great deal of guidance and simply quotes Regulation 19 of the Local Government (Financial Management) Regulations 1996;  Mt Marshall’s policy simply provides for funds to be invested in ‘Council’s Banking Institution’ and others where a more advantageous financial outcome might be expected;  Trayning has a well developed and comprehensive investment policy (actually contained in its Register of Delegations of Authority) which guides day to day and longer term investment decisions.

Feasibility Study – Attachment 2 – Current State Page 159

Regional Transition Group – Koorda, Mt Marshall, Trayning

Interest earnings by Regional Transition Group members from bank and investment accounts, rate instalments, rate arrears and debtors are shown below. In general, they appear to be declining over the past 3 financial years (except for Trayning’s, which are generally modest, probably reflecting relatively lower Reserve amounts available for investment), with total interest earned dropping from almost $400,000 in 2008/9 to a forecast of $326,000 for 2011/12. Koorda Mt Marshall Trayning Total 2011/12 2011/12 2011/12 2011/12 2009/10 2010/11 2009/10 2010/11 2009/10 2010/11 2009/10 2010/11 Interest earnings budget budget budget budget Reserve Funds 109,518 170,199 162,000 91,155 102,921 80,000 5,797 11,357 5,927 206,470 284,477 247,927 Other Funds 59,074 50,825 50,000 42,909 20,906 15,000 12,618 5,731 6,000 114,601 77,462 71,000 Other Interest Revenue 5,314 5,360 2,107 7,359 4,709 3,849 3,205 1,613 1,732 15,878 11,682 7,688 Totals 173,906 226,384 214,107 141,423 128,536 98,849 21,620 18,701 13,659 336,949 373,621 326,615

There are there no significant barriers to amalgamation in the agreements which exist at each local government organisation in terms of their existing agreements with banks or other institutions, although in Bencubbin the banking agency (Bankwest) is the only bank shopfront in town so this may have some bearing on the Shire of Mt Marshall’s decision on merger if a new entity might consider changing to another bank.

2.5.1.1.6 Debt Management Estimated debt levels and borrowings for the year ending 30 June 2012 are shown below. Koorda has no debt, with large purchases or capital works funded by Reserves, grants or recurrent funding. Mt Marshall has borrowed for housing type works and equipment. Trayning’s borrowings are for similar items: Financial and operating leases for the year ending 30 June 2010(latest available information) were: as at 30 June 2010 Koorda Mt Marshall Trayning Total Payable: Under 1 year 7,588 ‐ 66,767 74,355 Between 1 and 5 years 1,265 ‐ 55,190 56,455 Over 5 Years ‐ ‐ ‐ ‐ Total $8,853 $0 $121,957 $130,810

Feasibility Study – Attachment 2 – Current State Page 160

Regional Transition Group – Koorda, Mt Marshall, Trayning Interest expenses incurred by each local government are summarised below: KoordaMt Marshall Trayning Total 2011/12 2011/12 2011/12 2011/12 2009/10 2010/11 2009/10 2010/11 2009/10 2010/11 2009/10 2010/11 Interest earnings budget budget budget budget Interest on Overdraft ‐ ‐ ‐ ‐ ‐ ‐ 53 306 500 53 306 500 Debentures ‐ ‐ ‐ 74,678 56,191 48,147 29,337 28,027 32,669 104,015 84,218 80,816 Totals ‐ ‐ ‐ 74,678 56,191 48,147 29,390 28,333 33,169 104,068 84,524 81,316 Trayning has a condition imposed by WA Treasury that no further loans or overdrafts will be given without their Board’s approval.

2.5.1.1.7 Asset management This section covers issues related to the management of local government assets. The effective acquisition, maintenance, renewal and disposal of assets is crucial to the delivery of services and the overall sustainability of local government. It is therefore important that assets are managed effectively and responsibly.

2.5.1.1.8 Asset classification and valuation There are there policies and procedures in place at each local government that outline the treatment, management, capitalisation and control of assets. Significant accounting policies are listed in policy manuals and in each local governments annual financial statements. Other than Koorda, which had building assets assessed and revalued in 2009/10, there is little activity in terms of the frequency of revaluation of assets. Mt Marshall reviewed asset depreciation rates in 2009/10. While each Shire has guidelines to differentiate between capital and operating expenditure on assets, in all cases these appear low (as small as $300 in one case) and should be reviewed by a combined entity.

Depreciation rates applied for each type of asset, and the differences between the local governments are shown below Depreciation of non‐current assets Koorda Mt Marshall Trayning Method Straight-line Straight-line Straight-line Non- Period - Buildings 2% pa 30- 50 years 40 years infrastructure Furniture and Equipment 10-25% pa 4 to 10 years 10 years Assets Plant and Equipment 15-25% pa 10 years Plant and Equipment - Heavy 10 years

Feasibility Study – Attachment 2 – Current State Page 161

Regional Transition Group – Koorda, Mt Marshall, Trayning Depreciation of non‐current assets Koorda Mt Marshall Trayning Plant and Equipment - Light 5 years Tools 5 years Computer Equipment and Software 5 years Value over which assets capitalised $300 Method Straight-line Straight-line Straight-line Sealed roads - clearing and earthworks Not depreciated Sealed roads - road base 50 years 50 years Sealed Roads - aggregate 25 years Sealed Roads - bituminous 20 years 10 years Sealed Roads - asphalt 25 years Unsealed roads 35 years Unsealed roads - clearing and earthworks Not depreciated Unsealed roads - road base 50 years 50 years Infrastructure Unsealed roads - gravel sheeting 12 years 10 years assets Formed roads - unsealed - clearing and earthworks Not depreciated Formed roads - unsealed - construction- road base 50 years 50 years Footpaths 10 years Footpaths - slab 40 years Footpaths - asphalt 50 years Drains - storm water 75 years 75 years 40 years Sewers 75 years 100 years Airfield Runways 12 years Airstrip - gravel sheet 10 years Airstrip - bitumen 10 years

Asset control All Regional Transition Group members use asset registers to record asset location, acquisition, disposal, transfer and other relevant transactions. The registers are reviewed annually.

Feasibility Study – Attachment 2 – Current State Page 162

Regional Transition Group – Koorda, Mt Marshall, Trayning Value to community There are few assets held by Regional Transition Group members where the commercial value is significantly more or less than the community value. However, the Koorda depot partially occupies freehold land which seems in excess of needs. The Shire advises though that power supply to this land is an issue. Similarly, while all three local governments own a number of properties, disposal may not necessarily bring in significant returns. All Shires are significant owners of housing and freehold properties within their ‘main’ towns. The Shire of Mt Marshall undertook a residential subdivision within the Bencubbin townsite. While they do not appear to be actively marketed, many remain unsold.

2.5.1.2 Other operational issues

Local laws The three members of the Regional Transition Group maintain a range of local laws. All have local laws that cover the main areas that are normally regulated by local governments. An extract of the local laws currently in place and extracted from a register maintained by the Department of Local Government indicates the following, listed in subject order:

Local Gazette Page Action Title Government Date Mount Marshall 8/11/1996 6218–20 Adopt Aerodromes Koorda 10/08/2010 3747 Amend Cemeteries Amendment Local Law 2010

Koorda 21/03/2000 1553-69 Adopt / Repeal Cemeteries Local Law

Trayning Shire 28/09/2001 5449 Adopt / Repeal Cemeteries

Trayning 6/11/1981 4876/8 Amend Cemetery - Fees Mount Marshall 8/07/1970 2015/6 Cemetery Bencubbin and Beacon

Koorda 19/01/2000 331-40 Adopt / Repeal Dogs Local Law

Trayning 28/09/2001 5448 Adopt / Repeal Dogs Local Law

Koorda 13/04/2010 1375–6 Amend Dogs Local Law Amendment Mount Marshall 22/12/1998 6878/82 Adopt Dogs Local Law

Feasibility Study – Attachment 2 – Current State Page 163

Regional Transition Group – Koorda, Mt Marshall, Trayning

Local Gazette Page Action Title Government Date

Trayning 28/09/2001 5443-5444 Adopt / Repeal Extractive Industries

Mount Marshall 14/09/1999 4532/4536 Adopt Fencing

Koorda 23/10/2009 4146 & 4148 Amend Health (Food) Local Laws 2009

Koorda 26/10/2010 5291–4 Amend Health Amendment Local Law 2010

Koorda 11/01/2002 69-116 Adopt / Repeal Health Local Laws 2001

Mount Marshall 30/04/2002 2195 Adopt / Repeal Health Local Laws 2002

Trayning 21/05/2002 2592 Adopt / Repeal Health Local Laws 2002

Koorda 19/01/2000 317-30 Adopt / Repeal Local Government Property

Trayning 28/09/2001 5446 Adopt / Repeal Local Government Property

Koorda 27/08/2010 4112 Amend Local Government Property Amendment Local Law 2010

Trayning 29/04/1949 906 Adopt Long Service Leave Trayning 2/02/1973 316 Minute Book

Trayning 28/09/2001 5445 Adopt / Repeal Parking and Parking Facilities

Trayning 12/02/1954 218 Parking Prevention of Damage To Streets - Draft Model By-Law No. Trayning 2/04/1968 879 Adopt 15 Recreation Reserves, Water pipes, Vehicles, Streets, Mount Marshall 30/06/1998 3538 Repeal Refuse removal, Pest plants Koorda 25/09/1998 5317-8 Adopt Standing Orders

Feasibility Study – Attachment 2 – Current State Page 164

Regional Transition Group – Koorda, Mt Marshall, Trayning

Local Gazette Page Action Title Government Date Mount Marshall 6/10/1998 5551 Adopt Standing Orders

Trayning 7/07/1998 3615 Adopt / Repeal Standing Orders

Mount Marshall 8/07/1970 1980 Adopt / Repeal Storage of Inflammable Liquid - Draft Model by-law No. 12

Trayning 28/09/2001 5439-5442 Adopt / Repeal Thoroughfares

Koorda 8/09/1961 2640 Adopt Uniform Building By–laws

Mount Marshall 10/12/1976 4884 WBBs - extension of application

If the local governments merge, then the above local laws will need to be repealed and replaced with ones covering the entire district. While the ‘old’ Shire versions can remain in place until replaced, others will require more immediate attention such as Standing Orders.

Local laws are in themselves an area of study that could take up considerable time, but on face value there are no major areas that are not regulated in some way or gaps between the three that would require immediate attention if a merger were to go ahead.

Without comparing each area in detail it is not possible to say if there are major differences between the various local laws listed, but in this regard many contentious areas are now dealt with by State Acts or Regulation, would be a necessary but not urgent task. There are a number of options, but simply starting afresh with a new suite based on the WA Local Government Association models would be efficient, seen as independent, and reflect some of the existing local laws anyway.

Revenue from fines, penalties and infringements associated with these local laws is negligible and likely to remain so. Trayning is presently reviewing its local laws. End of Attachment 2

Feasibility Study – Attachment 2 – Current State Page 165

Regional Transition Group – Koorda, Mt Marshall, Trayning

Attachment 3 – Amalgamated State

Overview 3.2 Strategic direction 3.2.1 Functional considerations 3.2.1 Governance ‐ Representation and wards

Operating matters 3.5 Operating matters 3.5.1 Functional considerations 3.5.3 Financial considerations – projected savings

3.2 STRATEGIC DIRECTION

3.2.1.2 Governance ‐ Representation and wards The combined local governments have some 21 elected members between them. None use wards.

The current State Minister for Local Government’s view is that Councils should be made up of between 6 and 9 elected members.

Some concern was expressed at the Regional Transition Group meeting held in December 2010 that if combined, there may be some community concern about loss of representation from the current three, separate local governments.

As such, it was considered that the use of wards, based on the current local government boundaries within the Regional Transition Group may be of use.

Schedule 2.2 of the WA Local Government Act 1995 requires all options in relation to the use and establishment of wards must be assessed against the following prescribed factors:

Communities of interest - A ‘community of interest’ includes those parts of a district that share common interests, values, characteristics, or issues giving rise to a separate sense of identity or community. Factors contributing to a sense of identity or community include shared interests and shared use of community facilities. For example, sporting, leisure and library facilities create a focus for the community. The use of shopping areas and the location of schools also act to draw people together with similar interests. This can also give indications about the direction that people travel to access services and facilities.

In terms of establishing wards within the current boundaries of the three Shires participating in this study, the existing towns provide clear and readily defined communities of interest.

Physical and topographical features - Physical and topographic features may be natural or man-made and will vary from area to area, and include: • water features (such as rivers); • catchment boundaries; • coastal plain and foothills; • parks and reserves; and • man made features (such as railway lines or freeways).

Feasibility Study – Attachment 3 – Amalgamated State Page 166

Regional Transition Group – Koorda, Mt Marshall, Trayning

It is considered that there are no physical or topographical features within the members of the Regional Transition Group that would make good ward boundaries, although the Shire of Mount Marshall alone makes up 70% of the combined area of the Regional Transition Group.

Demographic trends - Local Governments should consider the following characteristics when determining the demographics within its locality: • population size; • population trends; • distribution by age; • gender; and • occupation.

Current and projected population factors will be relevant as well as similarities and differences between areas within the local government.

As noted in the analysis of economic and demographic trends, while the populations of the members of the Regional Transition Group may be ageing, there are no significant differences or factors in terms of trends, age, gender or occupation that might affect where a ward boundary could be placed. The population of the Shire of Mt Marshall is though, approximately 40% of the total of the Regional Transition Group.

Economic factors - Economic factors can include any factor that reflects the character of economic activities and resources in the area including: • industries within the local area; • distribution of community assets; and • infrastructure.

The predominant economic activity amongst all Shires is agriculture. There are no significant differences insofar as ward boundaries are considered however.

The ratio of councillors to electors in the various wards - The general rule of thumb is that electors should have equal representation on the Council of a local government where possible. Where deviations do exist, a variation of no more than 10% should apply.

Discussion amongst representatives of the three Shires comprising the Regional Transition Group established the following principles:

• An odd number of elected members was preferred; • While the Minister for Local Government may have a preference for between 6 and 9 elected members, the firm view of the Regional Transition Group Board was that a Council made up of 13 members would be necessary; • Some recognition of the area and population of the current Shire of Mt Marshall should be considered; and • Wards should be based initially on the current local government boundaries, with an adjustment to future boundaries phased in over time to reflect equal ratios of electors to elected members, within the 10% allowable variation.

The present areas, elected members, populations, and electors for each local government (based on most recent elections) are as follows:

Feasibility Study – Attachment 3 – Amalgamated State Page 167

Regional Transition Group – Koorda, Mt Marshall, Trayning

Koorda Mt Marshall Trayning Total Number/Value % of total Number/Value % of total Number/Value % of total Area (km2) 2,662 18.5% 10,134 70.2% 1,632 11.3% 14,428 Population 474 31.2% 653 43.0% 393 25.9% 1,520 Elected Members 7 33.3% 7 33.3% 7 33.3% 21 Electors 335 31.3% 394 36.8% 341 31.9% 1,070 Electors per Councillor 47.9 56.3 48.7 51 Population per member 67.7 93.3 56.1 72

As noted above, the Regional Transition Group members could consider a 13 member local government. Recognising the larger area and population of the present Shire of Mt Marshall, 4 elected members could represent the present local governments of Koorda and Trayning, and 5 for Mt Marshall, which would result in the following:

Koorda Mt Marshall Trayning Total Number/Value % of total Number/Value % of total Number/Value % of total Area (km2) 2,662 18.5% 10,134 70.2% 1,632 11.3% 14,428 Population 474 31.2% 653 43.0% 393 25.9% 1,520 Elected Members (13) 4 30.8% 5 38.5% 4 30.8% 13 Electors 335 31.3% 394 36.8% 341 31.9% 1,070 Electors per Councillor 83.8 78.8 85.3 82 Population per member 118.5 130.6 98.3 117

Under this scenario, the ratio of electors per Councillor is close for all wards, and well within the 10% variation that may be allowable.

While not supported by the Regional Transition Group Board, a 7 member local government, with wards again based on the current local government boundaries could be:

Koorda Mt Marshall Trayning Total Number/Value % of total Number/Value % of total Number/Value % of total Area (km2) 2,662 18.5% 10,134 70.2% 1,632 11.3% 14,428 Population 474 31.2% 653 43.0% 393 25.9% 1,520 Elected Members (7) 2 28.6% 3 42.9% 2 28.6% 7 Electors 335 31.3% 394 36.8% 341 31.9% 1,070 Electors per Councillor 167.5 131.3 170.5 153 Population per member 237.0 217.7 196.5 217

Note under the ‘7 member Council’ scenario above, the average ratio of electors per elected member is 153:1. A 10% variation on this ratio gives a required ratio of between 138 to 168 electors per Councillor.

Therefore, 20 electors would need to be moved from 'Trayning' Ward to 'Mt Marshall' Ward to ensure ratio of electors per Councillor stays within 10% of the average (above number shows electors after change) under this scenario.

Note that if a merger was to occur, the current Councils would be replaced by appointed Commissioners during the transition period and until elections for a new local government can be held. To provide for some measure of continuity and community confidence, it may assist if the Presidents of each Shire immediately prior to merger were appointed as Commissioners.

Feasibility Study – Attachment 3 – Amalgamated State Page 168

Regional Transition Group – Koorda, Mt Marshall, Trayning

3.5.3 Financial considerations The following estimates are made of potential savings (costs) associated with merging the three local governments. Separation costs are addressed in section 4 of the study.

Description Combined $ Debt Credit Comments Employee Costs 353,000 Reduce to 1 CEO Employee Costs 70,000 Economic development 1 FTE Employee Costs 60,000 Community development officer 1 FTE Employee Costs 60,000 Engineering Technical Officer 1 FTE Employee Costs 60,000 Administration IT support 1 FTE savings 103,000 Costs/savings arising from amalgamation Members of Council President's Allowances (15,000) 0 5,000 Savings ‐ President's Allowances Meeting Fees (54,279) 0 20,700 Savings ‐ Meeting Fees Members Travelling (14,131) 7,100 0 Additional costs ‐ Members Travelling Members ‐ other expenses (38,304) 0 14,600 Savings ‐ Members ‐ other expenses Elections (10,050) 5,000 0 Additional costs ‐ Elections Insurance (21,635) 0 8,200 Savings ‐ Insurance Subscriptions (38,193) 0 5,700 Savings ‐ Subscriptions savings 42,100 Costs/savings arising from amalgamation Other Governance Audit Fees (38,880) 0 17,900 Savings ‐ Audit Fees Accounting Services (62,899) 0 42,900 Savings ‐ Accounting Services IT Support (72,280) 0 20,000 Savings ‐ IT Support Communications 0 120,000 0 Additional costs ‐ Communications Bank Charges (6,702) 0 3,500 Savings ‐ Bank Charges Training/conferences (38,360) 0 3,900 Savings ‐ Training/conferences Insurance (76,068) 0 7,600 Savings ‐ Insurance Office/Equipment maintenance (118,011) 0 11,800 Savings ‐ Office/Equipment maintenance Vehicle expenses (47,902) 4,800 0 Additional costs ‐ Vehicle expenses Postage, Printing & Stationary (30,969) 0 3,100 Savings ‐ Postage, Printing & Stationary Utilities/Telephone (25,375) 2,500 0 Additional costs ‐ Utilities/Telephone additional costs (16,600) Costs/savings arising from amalgamation Other programs 0 0 Additional costs ‐ Animal control (13,789) 0 700 Savings ‐ Animal control Sanitation ‐ Household (86,933) 0 8,700 Savings ‐ Sanitation ‐ Household Town planning & regional development (12,823) 0 1,300 Savings ‐ Town planning & regional development savings 10,700 Costs/savings arising from amalgamation

savings 139,200

Feasibility Study – Attachment 3 – Amalgamated State Page 169

Regional Transition Group – Koorda, Mt Marshall, Trayning

Budget Budget Budget Merger Merged Rate Setting Statement 2011/12 2011/12 2011/12 Adjustment Council Koorda Mt Marshall Trayning Operating Rates 776,843 1,086,026 600,908 0 2,463,777 Other Program revenues 2,232,853 2,282,361 1,590,328 0 6,105,542 Program Expenditures (3,371,077) (5,193,222) (2,602,688) 139,200 (11,027,787) Proceeds from normal operations (361,381) (1,824,835) (411,452) 139,200 (2,458,468) Write back non cash items Profit on asset disposals (111,375) 77,013 0 0 (34,362) Depreciation 1,028,311 2,349,494 584,967 0 3,962,772 Net operating 555,555 601,672 173,515 139,200 1,469,942 Capital Grants, Subsidies and Contributions 1,287,119 1,802,405 1,539,634 0 4,629,158 Proceeds from Sale of Non‐Current Ass 415,000 213,500 15,000 643,500 Land & Buildings (1,300,430) (1,060,689) (996,292) 0 (3,357,411) Plant & Equipment (844,000) (543,500) (110,000) 0 (1,497,500) Furniture & Equipment (32,000) 0 (25,000) 0 (57,000) Infrastructure ‐ Roads (1,213,000) (1,683,638) (683,594) 0 (3,580,232) Infrastructure ‐ Other (464,400) (370,889) (40,000) 0 (875,289) Net capital (2,151,711) (1,642,811) (300,252) 0 (4,094,774) Reserve Transactions Transfers (to) Reserves (443,800) (585,372) (265,197) 0 (1,294,369) Transfers from Reserves 1,003,453 359,620 381,412 0 1,744,485 Net Transfers (to)/From Reserves 559,653 (225,752) 116,215 0 450,116 Debt Funding Loans to Community 0 (200,000) 0 0 (200,000) Principal Repayments 0 (121,690) (91,264) 0 (212,954) Repayment of Loans by Community Gro 0 7,861 0 0 7,861 0 (313,829) (91,264) 0 (405,093) Net Funding (1,036,503) (1,580,720) (101,786) 139,200 (2,579,809) Net current assets 1 July Surplus/(Deficit) 1,036,503 1,582,220 104,385 0 2,723,108 LESS 30 June Surplus/(Deficit) 0 1,500 2,599 4,099 1,036,503 1,580,720 101,786 0 2,719,009 Budget (Deficit)/Surplus 0 0 0 139,200 139,200 ‐ End of Attachment 3

Feasibility Study – Attachment 3 – Amalgamated State Page 170

Regional Transition Group – Koorda, Mt Marshall, Trayning

ATTACHMENT 4 – Transition Costs and Issues

4.1 Rating and Rate Equalisation The outcome of any merger would see the new entity formulating a rating policy based on equality and fairness. At present the three local governments have varying rate in $, discounts, fees and charges when considering rating. The difference between each of the local governments is substantial and will have a material impact on any new rating policy.

Existing Rates and Charges The information contained in the 2010/11 and 2011/12 budgets has been used as the basis for this comparison. The following is an extract from the 2011/12 budget that shows the various rates in the dollar, minimum rates, discounts, and rate instalment fees for each of the local governments. Material variations exist in the rates of in the dollar for rural and non-rural properties and the minimum rates charged by each local government. Budget 2011/12 Mt Mt Rate Details Koorda Marshall Trayning Koorda Marshall Trayning Rate in $ Minimum Rate Gross rental Properties Townsite 11.4000 13.1323 16.0502 220.00 300.00 230.00 Residential 11.4000 13.1323 16.0502 220.00 300.00 230.00 Commercial 11.4000 13.1323 16.0502 220.00 300.00 230.00 Industrial 11.4000 13.1323 16.0502 220.00 300.00 230.00 Special Rural 11.4000 13.1323 16.0502 220.00 300.00 230.00 Vacant

Unimproved Values Rural 1.7600 1.5913 1.0180 220.00 300.00 230.00 Mining 1.7600 1.5913 1.0180 220.00 300.00 230.00

Discounts for early payment 10.0% 7.5% 5.0% Period for rates discount 35 35 21 Interest Charge for unpaid rates 10.0% 11.0% 11.0% Admin fee for instalments$ 16.00 $ 10.00 $ 10.00 Interest Charge for Instalment payments 0.0% 5.5% 5.5%

Any move to equalise the rates within a merged district will see some ratepayers with substantial increases whilst others could have reductions in the amount of rates they pay.

Rate Distribution between Rural and Non Rural Each of the local governments has addressed that issue of rate distribution between rural and non-rural in a different way. The apportionment varies from 87:13 to 92:8. Any new rate policy would need to address a rate distribution between rural and new and non-rural before individual rates in the dollar can be struck.

Feasibility Study – Attachment 4 – Transitional Issues - Rating Page 171

Regional Transition Group – Koorda, Mt Marshall, Trayning

Each of the local governments has addressed that issue of rate distribution between rural and non-rural in a different way. The apportionment varies from 87:13 to 92:8. Any new rate policy would need to address a rate distribution between rural and new and non-rural before individual rates in the dollar can be struck.

For the purpose of this report the valuations were extracted from each of the Shires records in March 2011. These represent the values adopted in the 2010/11 budget with adjustment and new values since 1 July 2010. The tables below show the distribution of both GRV and UV properties for each of the three Shires.

The distribution curve for each of the Shire’s GRV‘s these are similar, however the Shire of Koorda does have a higher concentration of properties around the $5,000 GRV range.

Feasibility Study – Attachment 4 – Transitional Issues - Rating Page 172

Regional Transition Group – Koorda, Mt Marshall, Trayning

The distribution curve for unimproved values shows little synergy between each of the local governments. It is important to note that the Shire of Trayning has a much higher proportion of properties in excess of $380,000 UV.

Existing Rate Revenue The following is an extract from each of the local governments 2011/12 budget showing the level of rate revenue and associated charges for properties within each district. Budget 2011/12 Mt Rate Details Koorda Marshall Trayning Koorda Mt Marshall Trayning Koorda Mt Marshall Trayning Total Rateable Properties Valuations Rates Gross rental Properties Townsite 171 144 634,877 429,019 92,231 74,634 166,865 Residential 131 569,641 ‐ 66,118 ‐ 66,118 Commercial 8 13 32,970 74,377 4,165 12,075 16,240 Industrial 16 ‐ 124,388 ‐ 14,343 ‐ 14,343 Special Rural 12 ‐ 30,543 ‐ 3,796 ‐ 3,796 Vacant ‐ ‐ ‐ ‐ 757,542 634,877 503,396 ‐ ‐ Unimproved Values ‐ ‐ Rural 220 348 202 42,538,703 65,276,777 54,102,100 749,251 1,046,155 542,618 2,338,024 Mining 2 2 2,948 55,349 440 554 994 389 519 361 42,541,651 65,276,777 54,157,449 838,113 1,138,386 629,881 2,606,380 Discounts (66,177) (72,500) (24,404) (163,081) Ex Gratia Rates 4,907 12,940 0 17,847 Specified Area Rate 0 8,400 0 8,400 Rates written off 0 (1,200) (4,569) (5,769) 776,843 1,086,026 605,477 2,463,777

Options for Rate Equalisation Rate modelling was undertaken based on the on the property databases provided by each Shire. Various scenarios were tested to determine the impact that the rate equalisation would have on individual properties throughout the three districts.

The rate modelling addressed the following –  Provides for forecast movements by each Shire for the 2011/12 to 2013/14 budgets;

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 Projects rating impact for up to 10 years post 2013/14;  Provides for equalisation for apportionment of between is UV and GRV properties, UV/GRV rate in the $, minimum rates, discounts and other related charges.

A number of scenarios were reviewed and the following three are detailed to test the likely impact of the of the merger proposal. These were - 1. All rates equalised in first year to yield 2012/13 budget amount either increased by Consumer Price Index or percentage increase identified over the interim years(2011/12 to 2013/14); 2. Phase in all variations over three years from 2013/14; 3. Phase in all variations over five years from 2013/14.

Reports have been produced show the impact on properties in each of the local government districts.

The Shire of Koorda has indicated that future rate increases will be in line with their long-term financial plan i.e. 5% per annum. The Shire of Trayning has indicated that increases will be of the magnitude 13%, 13% and 8% over the next three years. Indications from the Shire of Mt Marshall are that rate increases will be in line with the Consumer Price index.

as at 30 June 2010

Koorda Mount Marshall Trayning Total

Rating Information as at 30 June 2010 Asse ssm e nts GRV Assessments 166 196 155 517 UV Assessments 220 349 204 773 Total Assessments 386 545 359 1,290 Valuations GRV Revaluation year 2008 2009 2008 UV Revaluation year 2010 2010 2010 Gross Rental Values 744,869 653,241 494,039 1,892,149 Unimproved Values 43,729,701 65,440,161 52,391,932 161,561,794 Rates Levied Gross Rental Values 74,142 74,318 61,452 209,912 Unimproved Values 675,312 985,299 457,704 2,118,315 Total Rates Levied 749,454 1,059,617 519,156 2,328,227 Minimum Rates Gross Rental Values 4,118 17,325 7,740 29,183 Unimproved Values 1,740 9,625 860 12,225 5,858 26,950 8,600 41,408 Total Rates 755,312 1,086,567 527,756 2,369,635 % raised through minimum 0.78% 2.48% 1.63% 1.75% General Rate in $GRV 10.20000 12.14000 13.79990 General Rate in $UV 1.55000 1.50000 0.87500 General rate in $ is rate applying to the most properties. Underlying GRV rate in $ 10.50655 14.02897 14.00537 12.636161 Underlying UV rate in $ 1.54827 1.52036 0.87526 1.318715 Underlying rate in $ is determined by dividing the total rate revenue(Levied and Minimum) by the total valuations. Rate in $GRV Residential 10.20000 12.14000 13.79990 Min Rate $ Res 190.00 275.00 180.00 Averages Average GRV 4,487 3,333 3,187 3,660 Average UV 198,771 187,508 256,823 209,006 Average rates GRV $ 471 $ 468 $ 446 462.47 Average Rates UV $ 3,078 $ 2,851 $ 2,248 2,756.20 Rates per population 1,532 1,770 1,219 1,538.72 Rates per sq km 284 107 323 163.61

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Scenario 1 – equalisation in first year of merger This scenario works on the assumption that in the first year of the merger all rates and charges will be based on a uniform method throughout the district. This will see a general rate in the dollar for GRV and UV properties, the same minimum rates and the same discount offered to all ratepayers.

2010/11 2011/12 2012/13 SUMMARY OF REVENUE Budget Budget Budget year 1year 2year 3year 4year 5 Gross Rental Values $$$$$$$$ Rates Levied 217,592 240,563 251,182 280,118 289,927 300,080 310,578 321,456 Minimum 23,860 25,580 28,065 33,180 34,335 35,490 36,750 38,010 241,452 266,143 279,247 313,298 324,262 335,570 347,328 359,466 Unimproved Values Rates Levied 2,212,513 2,332,294 2,476,644 2,627,835 2,719,729 2,814,847 2,913,190 3,014,756 Minimum 11,530 12,910 13,130 15,168 15,696 16,224 16,800 17,376 2,224,043 2,345,204 2,489,774 2,643,003 2,735,425 2,831,071 2,929,990 3,032,132 Total 2,465,495 2,611,347 2,769,022 2,956,302 3,059,687 3,166,641 3,277,317 3,391,598 Discount (152,240) (160,320) (169,060) (228,620) (236,630) (244,880) (253,450) (262,280) Net rates 2,313,255 2,451,027 2,599,962 2,727,682 2,823,057 2,921,761 3,023,867 3,129,318 $ change 145,853 157,674 187,280 103,386 106,954 110,676 114,281 % change 5.9% 6.0% 6.8% 3.5% 3.5% 3.5% 3.5% Consumer Price Index 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Results Under this scenario a uniform rate of 15.45c in the $grv, 1.63c in the $uv, a minimum of $316 and uniformed discount of 10% is provided. Based on the current rating tariffs and increases indentified previously the shift in year 1 of a merged local government would apply.

Increase/(decrease) in rates (dollar and percentage) Average $ 2011/12 2012/13 Gross rental value properties Budget Budget year 1year 2year 3year 4year 5 Koorda 34.16 28.46 162.76 25.30 26.13 27.11 28.03 Mt Marshall 25.71 17.49 68.73 21.79 22.47 23.37 24.12 Trayning 93.31 34.44 ‐29.62 19.49 20.07 20.92 21.56 Average % Change 2011/12 2012/13 Gross rental value properties Budget Budget year 1year 2year 3year 4year 5 Koorda 5.7% 5.9% 29.1% 3.5% 3.5% 3.5% 3.5% Mt Marshall 5.1% 3.1% 11.4% 3.5% 3.5% 3.5% 3.5% Trayning 19.9% 8.4% 0.5% 3.5% 3.5% 3.5% 3.5% Median $ 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1year 2year 3year 4year 5 Koorda 118.40 130.24 ‐322.64 84.36 87.32 90.28 93.24 Mt Marshall 74.72 89.89 ‐27.43 91.99 95.21 98.45 101.67 Trayning 196.35 246.84 897.60 106.59 110.33 114.07 117.81 Median % Change 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1year 2year 3year 4year 5 Koorda 4.8% 5.0% ‐11.8% 3.5% 3.5% 3.5% 3.5% Mt Marshall 3.0% 3.5% ‐1.0% 3.5% 3.5% 3.5% 3.5% Trayning 11.5% 13.0% 41.7% 3.5% 3.5% 3.5% 3.5%

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Median $Gross rental value properties Changes 200.00

150.00

100.00

50.00

0.00 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐50.00

‐100.00

‐150.00

Koorda Mt Marshall Trayning

Median % Change Gross rental value properties

35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% ‐5.0% 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐10.0% ‐15.0% ‐20.0%

Koorda Mt Marshall Trayning

Median $Unimproved Value Properties

1,000.00

800.00

600.00

400.00

200.00

0.00 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐200.00

‐400.00

Koorda Mt Marshall Trayning

Median % Change Unimproved Value Properties

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐10.0%

‐20.0%

Koorda Mt Marshall Trayning

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda – equalisation 2013/14 Impact - Rate burden shifts to town properties with a reduction in rural properties. Overall reduction in rates raised in the district.

Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 29.1% 3.5% 3.5% 3.5% 3.5% +/‐ Rates levied $ 27,018 4,199 4,338 4,499 4,653 % change 29.1% 3.5% 3.5% 3.5% 3.5% Minimum Rate 71.00 11.00 11.00 12.00 12.00 % change 29.0% 3.5% 3.4% 3.6% 3.4% Unimproved value properties Rate in the $uv ‐11.8% 3.5% 3.5% 3.5% 3.5% +/‐ Rates levied $ (91,975) 24,271 25,119 25,977 26,825 % change ‐11.7% 3.5% 3.5% 3.5% 3.5% Minimum Rate 71.00 11.00 11.00 12.00 12.00 % change 29.0% 3.5% 3.4% 3.6% 3.4% Discount 10.0% 10.0% 10.0% 10.0% 10.0% Overall raised in district (64,957) 28,471 29,457 30,476 31,477

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Residential 10.7000 11.4000 11.9700 15.4500 15.9910 16.5510 17.1300 17.7300 GRV Commercial 10.7000 11.4000 11.9700 15.4500 15.9910 16.5510 17.1300 17.7300 GRV Minimum Rate GRV Residential 195.00 220.00 245.00 316.00 327.00 338.00 350.00 362.00 GRV Commercial 195.00 220.00 245.00 316.00 327.00 338.00 350.00 362.00 Rate in $ UV Rural 1.680 1.760 1.848 1.630 1.687 1.746 1.807 1.870 UV Mining 1.680 1.760 1.848 1.630 1.687 1.746 1.807 1.870 UV Minimum Rate UV Rural 195.00 220.00 245.00 316.00 327.00 338.00 350.00 362.00 UV Mining 195.00 220.00 245.00 316.00 327.00 338.00 350.00 362.00

Discount 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 78,266 83,386 87,316 112,702 116,648 120,733 124,956 129,333 UV Levied 713,042 746,997 784,347 691,242 715,415 740,435 766,304 793,020 791,309 830,383 871,663 803,944 832,063 861,168 891,260 922,354 GRV Minimums 4,290 4,840 5,635 7,268 7,521 7,774 8,050 8,326 UV Minimums 1,365 1,540 1,715 2,844 2,943 3,042 3,150 3,258 5,655 6,380 7,350 10,112 10,464 10,816 11,200 11,584 Total 796,964 836,763 879,013 814,056 842,527 871,984 902,460 933,938 Discount (61,630) (64,710) (67,980) (62,950) (65,160) (67,430) (69,790) (72,220) 735,334 772,053 811,033 751,106 777,367 804,554 832,670 861,718 Rate revenue increase Amount 36,720 38,980 (59,927) 26,261 27,187 28,116 29,047 percentage 4.99% 5.05% ‐7.39% 3.50% 3.50% 3.49% 3.49% average GRV amount 34.16 28.46 162.76 25.30 26.13 27.11 28.03 average UV amount 155.13 170.57 (418.07) 110.32 114.18 118.08 121.93

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Shire of Koorda - equalisation 2013/14 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 78,266 83,386 87,316 112,702 116,648 120,733 124,956 129,333 Minimum GRV 4,290 4,840 5,635 7,268 7,521 7,774 8,050 8,326 82,556 88,226 92,951 119,970 124,169 128,507 133,006 137,659 Number of Properties Rates levied GRV 144 144 143 143 143 143 143 143 Minimum GRV 22 22 23 23 23 23 23 23 166 166 166 166 166 166 166 166 Rates paid Small 195.00 220.00 245.00 316.00 327.00 338.00 350.00 362.00 Median 467.38 497.95 522.85 674.86 698.49 722.95 748.24 774.45 Average 497.33 531.48 559.95 722.71 748.01 774.14 801.24 829.27 Large 3,338.40 3,556.80 3,734.64 4,820.40 4,989.19 5,163.91 5,344.56 5,531.76 $ Changes Total amount 5,670 4,725 27,018 4,199 4,338 4,499 4,653 Smallest $ 14.00 11.86 71.00 11.00 11.00 12.00 12.00 Median $ 30.57 25.00 152.01 23.63 24.46 25.29 26.21 Average $ 34.16 28.46 162.76 25.30 26.13 27.11 28.03 Largest $ 218.40 177.84 1,085.76 168.79 174.72 180.65 187.20 % Changes Overall % 6.9% 5.4% 29.1% 3.5% 3.5% 3.5% 3.5% Smallest % change 0.0% 5.0% 29.0% 3.5% 3.4% 3.5% 3.4% Median % Change 6.5% 5.0% 29.1% 3.5% 3.5% 3.5% 3.5% Average % Change 5.7% 5.9% 29.1% 3.5% 3.5% 3.5% 3.5% Largest % change 6.5% 11.4% 29.1% 3.5% 3.5% 3.6% 3.5% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 713,042 746,997 784,347 691,242 715,415 740,435 766,304 793,020 Minimum GRV 1,365 1,540 1,715 2,844 2,943 3,042 3,150 3,258 714,407 748,537 786,062 694,086 718,358 743,477 769,454 796,278 Number of Properties Rates levied GRV 213 213 213 211 211 211 211 211 Minimum GRV 7 7 7 9 9 9 9 9 220 220 220 220 220 220 220 220 Rates paid Small 195 220 245 316 327 338 350 362 Median 2,486 2,605 2,735 2,412 2,497 2,584 2,674 2,768 Average 3,247 3,402 3,573 3,155 3,265 3,379 3,498 3,619 Large 17,556 18,392 19,312 17,034 17,629 18,246 18,883 19,542 $ Changes Total amount 34,129 37,525 (91,975) 24,271 25,119 25,977 26,825 Smallest $ 13.60 14.96 (2,278.10) 11.00 11.00 12.00 12.00 Median $ 118.40 130.24 (322.64) 84.36 87.32 90.28 93.24 Average $ 155.13 170.57 (418.07) 110.32 114.18 118.08 121.93 Largest $ 836.00 919.60 71.00 595.65 616.55 637.45 658.35 % Changes Overall % 4.8% 5.0% ‐11.7%3.5%3.5%3.5%3.5% Smallest % change 4.8% 5.0% ‐11.8%3.5%3.4%3.5%3.4% Median % Change 4.8% 5.0% ‐11.8%3.5%3.5%3.5%3.5% Average % Change 5.0% 5.2% ‐10.4%3.5%3.5%3.5%3.5% Largest % change 12.8%11.4%29.0%3.5%3.5%3.6%3.5%

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Shire of Koorda - equalisation 2013/14 All Properties $ changes 2011/12 2012/13 Budget Budget year 1year 2year 3year 4year 5 Less than $‐230 0 0 44 0 0 0 0 between $‐230 and $‐138 0 0 50 0 0 0 0 between $‐138 and $‐46 0 0 83 0 0 0 0 between $‐46 and $46 282 271 86 311 308 307 301 between $46 and $138 90 94 117 70 72 73 78 between $138 and $230 11 18 2 5 6 6 6 greater than $230 3 3 4 0 0 0 1 386 386 386 386 386 386 386 All Properties $ changes 0 0 0 0 0 0 0

350

300 Less than $‐ 230 250 between $‐230 and $‐138 200 between $‐138 and $‐46 between $‐46 150 and $46 between $46 100 and $138 between $138 50 and $230 greater than $230 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐25.% to ‐15% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐15.% to ‐5% ‐ ‐ 212 ‐ ‐ ‐ ‐ between ‐5.% to 5% 235 288 1 386 386 386 386 between 5.% to 15% 151 98 ‐ ‐ ‐ ‐ ‐ between 15.% to 25% ‐ ‐ ‐ ‐ ‐ ‐ ‐ greater than 25.% ‐ ‐ 173 ‐ ‐ ‐ ‐ 386 386 386 386 386 386 386 All Properties % changes 0 0 0 0 0 0 0

400

350

300 Less than ‐25.% 250 between ‐25.% to ‐15% 200 between ‐15.% to ‐5% 150 between ‐5.% to 5%

100 between 5.% to 15% between 15.% to 25% 50 greater than 25.% ‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mt Marshall - equalisation 2013/14 Impact Rate burden shifts to town properties with a minor reduction in rural properties. Overall reduction in rates raised in the district is negligible. Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 13.7% 3.5% 3.5% 3.5% 3.5% Rates levied $11,683 3,704 3,820 3,973 4,101 % change 12.4% 3.5% 3.5% 3.5% 3.5% Minimum Rate 11.00 11.00 11.00 12.00 12.00 % change 3.6% 3.5% 3.4% 3.6% 3.4% Unimproved value properties Rate in the $uv ‐1.0% 3.5% 3.5% 3.5% 3.5% Rates levied $ (10,804) 37,731 39,042 40,386 41,697 % change ‐1.0% 3.5% 3.5% 3.5% 3.5% Minimum Rate 11.00 11.00 11.00 12.00 12.00 % change 3.6% 3.5% 3.4% 3.6% 3.4% Discount 10.0% 10.0% 10.0% 10.0% 10.0% Overall raised in district 879 41,436 42,862 44,359 45,798

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Townsite 12.5070 13.1323 13.5919 15.4500 15.9910 16.5510 17.1300 17.7300 GRV Commercial 12.5070 13.1323 13.5919 15.4500 15.9910 16.5510 17.1300 17.7300 GRV Minimum Rate GRV Townsite 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 GRV Commercial 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 Rate in $ UV Rural 1.545 1.591 1.647 1.630 1.687 1.746 1.807 1.870 UV Mining 1.545 1.591 1.647 1.630 1.687 1.746 1.807 1.870 UV Minimum Rate UV Rural 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 UV Mining 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00

Discount 7.5% 7.5% 7.5% 10.0% 10.0% 10.0% 10.0% 10.0%

2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 75,436 79,207 82,285 93,855 97,142 100,544 104,061 107,706 UV Levied 1,013,459 1,043,830 1,080,367 1,068,906 1,106,285 1,144,975 1,184,977 1,226,291 1,088,895 1,123,037 1,162,652 1,162,761 1,203,427 1,245,519 1,289,038 1,333,996 GRV Minimums 11,400 12,000 11,895 12,008 12,426 12,844 13,300 13,756 UV Minimums 8,835 9,300 9,455 10,112 10,464 10,816 11,200 11,584 20,235 21,300 21,350 22,120 22,890 23,660 24,500 25,340 Total 1,109,130 1,144,337 1,184,002 1,184,881 1,226,317 1,269,179 1,313,538 1,359,336 Discount (68,250) (70,420) (72,860) (91,630) (94,840) (98,150) (101,580) (105,120) 1,040,880 1,073,917 1,111,142 1,093,251 1,131,477 1,171,029 1,211,958 1,254,216 Rate revenue increase Amount 33,037 37,225 (17,891) 38,226 39,552 40,929 42,258 percentage 3.17% 3.47% ‐1.61% 3.50% 3.50% 3.50% 3.49% average GRV amount 25.71 17.49 68.73 21.79 22.47 23.37 24.12 average UV amount 88.86 105.74 (31.14) 108.74 112.51 116.39 120.17

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Shire of Mt Marshall - equalisation 2013/14 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 75,436 79,207 82,285 93,855 97,142 100,544 104,061 107,706 Minimum GRV 11,400 12,000 11,895 12,008 12,426 12,844 13,300 13,756 86,836 91,207 94,180 105,863 109,568 113,388 117,361 121,462 Number of Properties Rates levied GRV 130 130 131 132 132 132 132 132 Minimum GRV 40 40 39 38 38 38 38 38 170 170 170 170 170 170 170 170 Rates paid Small 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 Median 500.78 525.82 544.22 618.62 640.28 662.70 685.89 709.91 Average 510.80 536.51 554.00 622.73 644.52 666.99 690.36 714.48 Large 3,001.68 3,151.75 3,262.06 3,708.00 3,837.84 3,972.24 4,111.20 4,255.20 $ Changes Total amount 4,371 2,973 11,683 3,704 3,820 3,973 4,101 Smallest $ 15.00 5.00 11.00 11.00 11.00 12.00 12.00 Median $ 25.04 18.40 74.40 21.66 22.42 23.19 24.02 Average $ 25.71 17.49 68.73 21.79 22.47 23.37 24.12 Largest $ 150.07 110.31 445.94 129.84 134.40 138.96 144.00 % Changes Overall % 5.0% 3.3% 12.4% 3.5% 3.5% 3.5% 3.5% Smallest % change 5.0% 1.7% 3.6% 3.5% 3.4% 3.5% 3.4% Median % Change 5.0% 3.5% 13.7% 3.5% 3.5% 3.5% 3.5% Average % Change 5.1% 3.1% 11.4% 3.5% 3.5% 3.5% 3.5% Largest % change 5.3% 3.5% 13.7% 3.5% 3.5% 3.6% 3.5% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 1,013,459 1,043,830 1,080,367 1,068,906 1,106,285 1,144,975 1,184,977 1,226,291 Minimum GRV 8,835 9,300 9,455 10,112 10,464 10,816 11,200 11,584 1,022,294 1,053,130 1,089,822 1,079,018 1,116,749 1,155,791 1,196,177 1,237,875 Number of Properties Rates levied GRV 316 316 316 315 315 315 315 315 Minimum GRV 31 31 31 32 32 32 32 32 347 347 347 347 347 347 347 347 Rates paid Small 285 300 305 316 327 338 350 362 Median 2,493 2,568 2,658 2,631 2,723 2,818 2,916 3,018 Average 2,946 3,035 3,141 3,110 3,218 3,331 3,447 3,567 Large 39,876 41,071 42,509 42,070 43,541 45,064 46,639 48,265 $ Changes Total amount 30,836 36,692 (10,804) 37,731 39,042 40,386 41,697 Smallest $ 8.80 5.00 (438.77) 11.00 11.00 11.90 12.00 Median $ 74.72 89.89 (27.43) 91.99 95.21 98.45 101.67 Average $ 88.86 105.74 (31.14) 108.74 112.51 116.39 120.17 Largest $ 1,195.00 1,437.62 11.00 1,471.17 1,522.79 1,574.41 1,626.03 % Changes Overall % 3.0% 3.5% ‐1.0% 3.5% 3.5% 3.5% 3.5% Smallest % change 3.0% 1.7% ‐1.0% 3.5% 3.4% 3.5% 3.4% Median % Change 3.0% 3.5% ‐1.0% 3.5% 3.5% 3.5% 3.5% Average % Change 3.2% 3.3% ‐0.6% 3.5% 3.5% 3.5% 3.5% Largest % change 5.3% 3.5% 3.6% 3.5% 3.5% 3.6% 3.5%

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Shire of Mt Marshall - equalisation 2013/14 2011/12 2012/13 All Properties $ changes Budget Budget year 1year 2year 3year 4year 5 Less than $‐20 0 0 217 0 0 0 0 between $‐20 and $‐12 0 0 65 0 0 0 0 between $‐12 and $‐4 0 0 30 0 0 0 0 between $‐4 and $4 0 0 4 0 0 0 0 between $4 and $12 4 75 69 74 73 0 0 between $12 and $20 91 82 1 24 20 90 86 greater than $20 422 360 131 419 424 427 431 517 517 517 517 517 517 517 All Properties $ changes 0 0 0 0 0 0 0

450

400 Less than $‐20 350 between $‐20 300 and $‐12 between $‐12 250 and $‐4 200 between $‐4 and $4 150 between $4 and $12 100 between $12 and $20 50 greater than $20 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐25.% to‐15% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐15.% to‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to5% 410 517 385 517 517 517 517 between 5.% to15% 107 ‐ 132 ‐ ‐ ‐ ‐ between 15.% to25% ‐ ‐ ‐ ‐ ‐ ‐ ‐ greater than 25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ 517 517 517 517 517 517 517 All Properties % changes 0 0 0 0 0 0 0

600

500 Less than ‐ 25.% between ‐ 400 25.% to‐15% between ‐ 15.% to‐5% 300 between ‐5.% to5% between 5.% 200 to15%

100

‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning - equalisation 2013/14 Impact Rate burden shifts from town properties with a major increase in rural properties. Overall reduction in rates raised in the district is substantial. Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv ‐14.8% 3.5% 3.5% 3.5% 3.5% Rates levied $ (4,651) 3,060 3,150 3,285 3,385 % change ‐5.0% 3.5% 3.5% 3.5% 3.5% Minimum Rate 71.00 11.00 11.00 12.00 12.00 % change 29.0% 3.5% 3.4% 3.6% 3.4% Unimproved value properties Rate in the $uv 41.7% 3.5% 3.5% 3.5% 3.5% Rates levied $ 256,009 30,420 31,484 32,556 33,620 % change 41.7% 3.5% 3.5% 3.5% 3.5% Minimum Rate 71.00 11.00 11.00 12.00 12.00 % change 29.0% 3.5% 3.4% 3.6% 3.4% Discount 10.0% 10.0% 10.0% 10.0% 10.0% Overall raised in district 251,358 33,479 34,634 35,841 37,005

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Residential 14.2037 16.0502 18.1367 15.4500 15.9910 16.5510 17.1300 17.7300 GRV Commercial 8.3376 16.0502 10.6463 15.4500 15.9910 16.5510 17.1300 17.7300 GRV Minimum Rate GRV Residential 190.00 230.00 245.00 316.00 327.00 338.00 350.00 362.00 GRV Commercial 190.00 230.00 245.00 316.00 327.00 338.00 350.00 362.00 Rate in $ UV Rural 0.913 1.018 1.150 1.630 1.687 1.746 1.807 1.870 UV Mining 0.913 1.018 1.150 1.630 1.687 1.746 1.807 1.870 UV Minimum Rate UV Rural 190.00 230.00 245.00 316.00 327.00 338.00 350.00 362.00 UV Mining 190.00 230.00 245.00 316.00 327.00 338.00 350.00 362.00

Discount 5.0% 5.0% 5.0% 10.0% 10.0% 10.0% 10.0% 10.0%

2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 63,890 77,970 81,581 73,561 76,137 78,804 81,560 84,417 UV Levied 486,011 541,468 611,931 867,687 898,030 929,437 961,909 995,445 549,901 619,437 693,512 941,249 974,167 1,008,240 1,043,469 1,079,862 GRV Minimums 8,170 8,740 10,535 13,904 14,388 14,872 15,400 15,928 UV Minimums 1,330 2,070 1,960 2,212 2,289 2,366 2,450 2,534 9,500 10,810 12,495 16,116 16,677 17,238 17,850 18,462 Total 559,401 630,247 706,007 957,365 990,844 1,025,478 1,061,319 1,098,324 Discount (22,360) (25,190) (28,220) (74,040) (76,630) (79,300) (82,080) (84,940) 537,041 605,057 677,787 883,325 914,214 946,178 979,239 1,013,384 Rate revenue increase Amount 68,016 72,729 205,538 30,889 31,964 33,061 34,145 percentage 12.66% 12.02% 30.32% 3.50% 3.50% 3.49% 3.49% average GRV amount 93.31 34.44 (29.62) 19.49 20.07 20.92 21.56 average UV amount 271.48 339.87 1,236.76 146.95 152.10 157.27 162.42

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning - equalisation 2013/14 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 63,890 77,970 81,581 73,561 76,137 78,804 81,560 84,417 Minimum GRV 8,170 8,740 10,535 13,904 14,388 14,872 15,400 15,928 72,060 86,710 92,116 87,465 90,525 93,676 96,960 100,345 Number of Properties Rates levied GRV 114 119 114 113 113 113 113 113 Minimum GRV 43 38 43 44 44 44 44 44 157 157 157 157 157 157 157 157 Rates paid Small 190.00 230.00 245.00 316.00 327.00 338.00 350.00 362.00 Median 509.63 584.23 650.74 562.38 582.07 602.46 623.53 645.37 Average 458.98 552.29 586.73 557.10 576.59 596.66 617.58 639.14 Large 2,254.49 4,339.97 2,878.76 4,177.68 4,323.97 4,475.39 4,631.95 4,794.19 $ Changes Total amount 14,650 5,406 (4,651) 3,060 3,150 3,285 3,385 Smallest $ 26.78 (1,461.21) (195.59) 11.00 11.00 12.00 12.00 Median $ 68.17 73.77 (95.00) 19.69 20.39 21.07 21.84 Average $ 93.31 34.44 (29.62) 19.49 20.07 20.92 21.56 Largest $ 2,085.48 151.90 1,298.92 146.29 151.42 156.56 162.24 % Changes Overall % 20.3% 6.2% ‐5.0% 3.5% 3.5% 3.5% 3.5% Smallest % change 13.0% ‐33.7% ‐14.8% 3.5% 3.4% 3.5% 3.4% Median % Change 13.0% 13.0% ‐14.8% 3.5% 3.5% 3.5% 3.5% Average % Change 19.9% 8.4% 0.5% 3.5% 3.5% 3.5% 3.5% Largest % change 92.5% 13.0% 45.1% 3.5% 3.5% 3.6% 3.5% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 486,011 541,468 611,931 867,687 898,030 929,437 961,909 995,445 Minimum GRV 1,330 2,070 1,960 2,212 2,289 2,366 2,450 2,534 487,341 543,538 613,891 869,899 900,319 931,803 964,359 997,979 Number of Properties Rates levied GRV 200 198 199 200 200 200 200 200 Minimum GRV 7 9 8 7 7 7 7 7 207 207 207 207 207 207 207 207 Rates paid Small 190 230 245 316 327 338 350 362 Median 1,707 1,904 2,151 3,048 3,155 3,265 3,379 3,497 Average 2,354 2,626 2,966 4,202 4,349 4,501 4,659 4,821 Large 13,330 14,863 16,790 23,798 24,630 25,492 26,382 27,302 $ Changes Total amount 56,196 70,353 256,009 30,420 31,484 32,556 33,620 Smallest $ 27.30 15.00 71.00 11.00 11.00 12.00 12.00 Median $ 196.35 246.84 897.60 106.59 110.33 114.07 117.81 Average $ 271.48 339.87 1,236.76 146.95 152.10 157.27 162.42 Largest $ 1,533.00 1,927.20 7,008.00 832.20 861.40 890.60 919.80 % Changes Overall % 11.5% 12.9% 41.7% 3.5% 3.5% 3.5% 3.5% Smallest % change 11.5% 6.5% 29.0% 3.5% 3.4% 3.5% 3.4% Median % Change 11.5% 13.0% 41.7% 3.5% 3.5% 3.5% 3.5% Average % Change 11.9% 12.7% 41.3% 3.5% 3.5% 3.5% 3.5% Largest % change 21.1% 13.0% 41.7% 3.5% 3.5% 3.6% 3.5%

Feasibility Study – Attachment 4 – Transitional Issues - Rating Page 184

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning - equalisation 2013/14 2011/12 2012/13 All Properties $ changes Budget Budget year 1year 2year 3year 4year 5 Less than $‐641 0 1 0 0 0 0 0 between $‐641 and $‐385 0 2 0 0 0 0 0 between $‐385 and $‐128 0 3 4 0 0 0 0 between $‐128 and $128 210 194 157 270 269 267 267 between $128 and $385 97 93 26 83 84 85 83 between $385 and $641 40 49 37 10 10 10 12 greater than $641 17 22 140 1 1 2 2 364 364 364 364 364 364 364 All Properties $ changes 0 0 0 0 0 0 0 300

250 Less than $‐ 641 between $‐641 200 and $‐385 between $‐385 and $‐128 150 between $‐128 and $128 100 between $128 and $385 between $385 50 and $641 greater than $641 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ 9 ‐ ‐ ‐ ‐ ‐ between ‐25.% to‐15% ‐ 2 ‐ ‐ ‐ ‐ ‐ between ‐15.% to‐5% ‐ ‐ 104 ‐ ‐ ‐ ‐ between ‐5.% to5% ‐ 1 ‐ 364 364 364 364 between 5.% to15% 306 352 1 ‐ ‐ ‐ ‐ between 15.% to25% 46 ‐ 2 ‐ ‐ ‐ ‐ greater than 25.% 12 ‐ 257 ‐ ‐ ‐ ‐ 364 364 364 364 364 364 364 All Properties % changes 0 0 0 0 0 0 0

400

350 Less than ‐ 25.% 300 between ‐ 25.% to‐15% 250 between ‐ 15.% to‐5% 200 between ‐5.% to5% 150 between 5.% to15% 100

50

‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

Feasibility Study – Attachment 4 – Transitional Issues - Rating Page 185

Regional Transition Group – Koorda, Mt Marshall, Trayning

Scenario 2 – equalisation over three years of merger This scenario provides for a phasing in of change over the first three years of a merged local government.

2010/11 2011/12 2012/13 SUMMARY OF REVENUE Budget Budget Budget year 1year 2year 3year 4year 5 Gross Rental Values $$$$$$$$ Rates Levied 217,592 240,563 251,182 278,228 306,282 333,754 345,443 357,531 Minimum 23,860 25,580 28,065 30,816 32,688 35,152 36,400 37,648 241,452 266,143 279,247 309,044 338,970 368,906 381,843 395,179 Unimproved Values Rates Levied 2,212,513 2,332,294 2,476,644 2,586,808 2,696,105 2,805,706 2,904,049 3,005,615 Minimum 11,530 12,910 13,130 13,660 15,069 16,224 16,800 17,376 2,224,043 2,345,204 2,489,774 2,600,468 2,711,174 2,821,930 2,920,849 3,022,991 Total 2,465,495 2,611,347 2,769,021 2,909,513 3,050,144 3,190,836 3,302,692 3,418,170 Discount (152,240) (160,320) (169,060) (197,100) (229,020) (246,760) (255,410) (264,340) Net rates 2,313,255 2,451,027 2,599,961 2,712,413 2,821,124 2,944,076 3,047,282 3,153,830 $ change 145,853 157,674 140,491 140,631 140,692 111,856 115,479 % change 5.9% 6.0% 5.1% 4.8% 4.6% 3.5% 3.5% Consumer Price Index 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%

Results Increase/(decrease) in rates (dollar and percentage)

Average $ 2011/12 2012/13 Gross rental value properties Budget Budget year 1year 2year 3year 4year 5 Koorda 34.16 28.46 98.34 98.37 98.37 29.97 30.94 Mt Marshall 25.71 17.49 59.46 59.59 59.59 25.69 26.48 Trayning 93.31 34.43 21.43 22.08 22.14 22.89 23.56 Average % Change 2011/12 2012/13 Gross rental value properties Budget Budget year 1year 2year 3year 4year 5 Koorda 5.7% 5.9% 17.2% 14.6% 12.8% 3.5% 3.5% Mt Marshall 5.1% 3.1% 9.9% 8.9% 8.1% 3.5% 3.5% Trayning 19.9% 8.4% 4.9% 4.5% 4.1% 3.5% 3.5% Median $ 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1year 2year 3year 4year 5 Koorda 118.40 130.24 ‐53.28 0.00 0.00 90.28 93.24 Mt Marshall 74.72 89.89 50.03 50.03 50.03 98.45 101.67 Trayning 196.35 246.84 368.39 368.39 368.39 114.07 117.81 Median % Change 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1year 2year 3year 4year 5 Koorda 4.8% 5.0% ‐1.9% 0.0% 0.0% 3.5% 3.5% Mt Marshall 3.0% 3.5% 1.9% 1.8% 1.8% 3.5% 3.5% Trayning 11.5% 13.0% 17.1% 14.6% 12.8% 3.5% 3.5%

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Median $Gross rental value properties Changes 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5

Koorda Mt Marshall Trayning

Median % Change Gross rental value properties

20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5

Koorda Mt Marshall Trayning

Median $Unimproved Value Properties

400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 0.00 ‐50.00 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐100.00

Koorda Mt Marshall Trayning

Median % Change Unimproved Value Properties

20.0%

15.0%

10.0%

5.0%

0.0% 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐5.0%

Koorda Mt Marshall Trayning

Feasibility Study – Attachment 4 – Transitional Issues - Rating Page 187

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda – phase-in over 3 years Impact Rate burden shifts to town properties with an increase of 13-18% pa over the three year period. A small reduction occurs across rural properties during the same period. Overall there is a reduction in real terms in rates raised in the initial 3 years of this scenario.

Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 17.9% 15.2% 13.2% 3.5% 3.5% +/‐ Rates levied $ 16,325 16,330 16,330 4,975 5,135 % change 17.6% 14.9% 13.0% 3.5% 3.5% Minimum Rate 31.00 31.00 31.00 12.00 12.00 % change 12.7% 11.2% 10.1% 3.6% 3.4% Unimproved value properties Rate in the $uv ‐1.9% ‐2.0% ‐2.0% 3.5% 3.5% +/‐ Rates levied $ (15,062) (15,057) (15,009) 25,977 26,825 % change ‐1.9% ‐2.0% ‐2.0% 3.5% 3.5% Minimum Rate 31.00 31.00 31.00 12.00 12.00 % change 12.7% 11.2% 10.1% 3.6% 3.4% Discount 10.0% 10.0% 10.0% 10.0% 10.0% Overall raised in district 1,262 1,273 1,321 30,951 31,960

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Residential 10.7000 11.4000 11.9700 14.1093 16.2486 18.3879 19.0319 19.6979 GRV Commercial 10.7000 11.4000 11.9700 14.1093 16.2486 18.3879 19.0319 19.6979 GRV Minimum Rate GRV Residential 195.00 220.00 245.00 276.00 307.00 338.00 350.00 362.00 GRV Commercial 195.00 220.00 245.00 276.00 307.00 338.00 350.00 362.00 Rate in $ UV Rural 1.680 1.760 1.848 1.812 1.776 1.740 1.801 1.864 UV Mining 1.680 1.760 1.848 1.812 1.776 1.740 1.801 1.864 UV Minimum Rate UV Rural 195.00 220.00 245.00 276.00 307.00 338.00 350.00 362.00 UV Mining 195.00 220.00 245.00 276.00 307.00 338.00 350.00 362.00

Discount 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 78,266 83,386 87,316 103,204 118,852 134,500 139,211 144,082 UV Levied 713,042 746,997 784,347 769,067 753,486 737,891 763,759 790,476 791,309 830,383 871,663 872,271 872,338 872,391 902,970 934,558 GRV Minimums 4,290 4,840 5,635 6,072 6,754 7,436 7,700 7,964 UV Minimums 1,365 1,540 1,715 1,932 2,456 3,042 3,150 3,258 5,655 6,380 7,350 8,004 9,210 10,478 10,850 11,222 Total 796,964 836,763 879,013 880,275 881,548 882,869 913,820 945,780 Discount (61,630) (64,710) (67,980) (68,070) (68,170) (68,280) (70,670) (73,140) 735,334 772,053 811,033 812,205 813,378 814,589 843,150 872,640 Rate revenue increase Amount 36,720 38,980 1,172 1,173 1,211 28,561 29,490 percentage 4.99% 5.05% 0.14% 0.14% 0.15% 3.51% 3.50% average GRV amount 34.16 28.46 98.34 98.37 98.37 29.97 30.94 average UV amount 155.13 170.57 (68.47) (68.44) (68.22) 118.08 121.93

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda – phase-in over 3 years 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 78,266 83,386 87,316 103,204 118,852 134,500 139,211 144,082 Minimum GRV 4,290 4,840 5,635 6,072 6,754 7,436 7,700 7,964 82,556 88,226 92,951 109,276 125,606 141,936 146,911 152,046 Number of Properties Rates levied GRV 144 144 143 144 144 144 144 144 Minimum GRV 22 22 23 22 22 22 22 22 166 166 166 166 166 166 166 166 Rates paid Small 195.00 220.00 245.00 276.00 307.00 338.00 350.00 362.00 Median 467.38 497.95 522.85 616.29 709.74 803.18 831.31 860.40 Average 497.33 531.48 559.95 658.29 756.66 855.04 885.00 915.94 Large 3,338.40 3,556.80 3,734.64 4,402.10 5,069.56 5,737.02 5,937.95 6,145.74 $ Changes Total amount 5,670 4,725 16,325 16,330 16,330 4,975 5,135 Smallest $ 14.00 11.86 31.00 31.00 31.00 12.00 12.00 Median $ 30.57 25.00 93.44 93.45 93.44 28.13 29.09 Average $ 34.16 28.46 98.34 98.37 98.37 29.97 30.94 Largest $ 218.40 177.84 667.46 667.46 667.46 200.93 207.79 % Changes Overall % 6.9% 5.4% 17.6% 14.9% 13.0% 3.5% 3.5% Smallest % change 0.0% 5.0% 12.7% 11.2% 10.1% 3.5% 3.4% Median % Change 6.5% 5.0% 17.9% 15.2% 13.2% 3.5% 3.5% Average % Change 5.7% 5.9% 17.2% 14.6% 12.8% 3.5% 3.5% Largest % change 6.5% 11.4% 17.9% 15.2% 13.2% 3.6% 3.5% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 713,042 746,997 784,347 769,067 753,486 737,891 763,759 790,476 Minimum GRV 1,365 1,540 1,715 1,932 2,456 3,042 3,150 3,258 714,407 748,537 786,062 770,999 755,942 740,933 766,909 793,734 Number of Properties Rates levied GRV 213 213 213 213 212 211 211 211 Minimum GRV 7 7 7 7 8 9 9 9 220 220 220 220 220 220 220 220 Rates paid Small 195 220 245 276 307 338 350 362 Median 2,486 2,605 2,735 2,682 2,628 2,575 2,665 2,759 Average 3,247 3,402 3,573 3,505 3,436 3,368 3,486 3,608 Large 17,556 18,392 19,312 18,935 18,559 18,183 18,820 19,479 $ Changes Total amount 34,129 37,525 (15,062) (15,057) (15,009) 25,977 26,825 Smallest $ 13.60 14.96 (376.20) 0.00 0.00 12.00 12.00 Median $ 118.40 130.24 (53.28) 0.00 0.00 90.28 93.24 Average $ 155.13 170.57 (68.47) (68.44) (68.22) 118.08 121.93 Largest $ 836.00 919.60 31.00 31.00 31.00 637.45 658.35 % Changes Overall % 4.8% 5.0% ‐1.9% ‐2.0% ‐2.0% 3.5% 3.5% Smallest % change 4.8% 5.0% ‐1.9% 0.0% 0.0% 3.5% 3.4% Median % Change 4.8% 5.0% ‐1.9% 0.0% 0.0% 3.5% 3.5% Average % Change 5.0% 5.2% ‐1.5% ‐1.6% ‐1.6% 3.5% 3.5% Largest % change 12.8% 11.4% 12.7% 11.2% 10.1% 3.6% 3.5%

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda – phase-in over 3 years All Properties $ changes 2011/12 2012/13 Budget Budget year 1year 2year 3year 4year 5 Less than $‐38 0 0 3 3 3 0 0 between $‐38 and $‐23 0 0 16 16 16 0 0 between $‐23 and $‐8 0 0 91 91 91 0 0 between $‐8 and $8 210 203 135 135 135 231 227 between $8 and $23 88 88 134 134 134 96 94 between $23 and $38 58 55 1 1 1 38 44 greater than $38 30 40 6 6 6 21 21 386 386 386 386 386 386 386 All Properties $ changes 0 0 0 0 0 0 0

250

Less than $‐38 200 between $‐38 and $‐23 150 between $‐23 and $‐8 between $‐8 100 and $8 between $8 and $23 50 between $23 and $38 greater than $38 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐25.% to ‐15% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐15.% to ‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to 5% 235 288 213 213 212 386 386 between 5.% to 15% 151 98 29 29 174 ‐ ‐ between 15.% to 25% ‐ ‐ 144 144 ‐ ‐ ‐ greater than 25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ 386 386 386 386 386 386 386 All Properties % changes 0 0 0 0 0 0 0

400

350

300 Less than ‐25.% 250 between ‐25.% to ‐15% 200 between ‐15.% to ‐5% 150 between ‐5.% to 5%

100 between 5.% to 15% between 15.% to 25% 50 greater than 25.% ‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

Feasibility Study – Attachment 4 – Transitional Issues - Rating Page 190

Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mt Marshall – phase-in over 3 years Impact Rate burden shifts to town properties with an increase of 9-12% pa over the three period. .A small increase occurs (less than CPI) across rural properties during the same period. Overall there is a reduction in real terms in rates raised in the initial 3 years of this scenario.

Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 11.8% 10.5% 9.5% 3.5% 3.5% Rates levied $ 10,108 10,130 10,130 4,368 4,502 % change 10.7% 9.7% 8.9% 3.5% 3.5% Minimum Rate 11.00 11.00 11.00 12.00 12.00 % change 3.6% 3.5% 3.4% 3.6% 3.4% Unimproved value properties Rate in the $uv 1.9% 1.8% 1.8% 3.5% 3.5% Rates levied $ 20,676 20,678 20,681 40,386 41,697 % change 1.9% 1.9% 1.8% 3.5% 3.5% Minimum Rate 11.00 11.00 11.00 12.00 12.00 % change 3.6% 3.5% 3.4% 3.6% 3.4% Discount 8.0% 9.0% 10.0% 10.0% 10.0% Overall raised in district 30,783 30,808 30,810 44,754 46,199

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Townsite 12.5070 13.1323 13.5919 15.1906 16.7893 18.3880 19.0320 19.6980 GRV Commercial 12.5070 13.1323 13.5919 15.1906 16.7893 18.3880 19.0320 19.6980 GRV Minimum Rate GRV Townsite 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 GRV Commercial 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 Rate in $ UV Rural 1.545 1.591 1.647 1.678 1.709 1.740 1.801 1.864 UV Mining 1.545 1.591 1.647 1.678 1.709 1.740 1.801 1.864 UV Minimum Rate UV Rural 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 UV Mining 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00

Discount 7.5% 7.5% 7.5% 8.0% 9.0% 10.0% 10.0% 10.0%

2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 75,436 79,207 82,285 91,964 101,991 111,703 115,615 119,661 UV Levied 1,013,459 1,043,830 1,080,367 1,100,701 1,120,712 1,141,040 1,181,043 1,222,356 1,088,895 1,123,037 1,162,652 1,192,665 1,222,703 1,252,743 1,296,658 1,342,017 GRV Minimums 11,400 12,000 11,895 12,324 12,426 12,844 13,300 13,756 UV Minimums 8,835 9,300 9,455 9,796 10,464 10,816 11,200 11,584 20,235 21,300 21,350 22,120 22,890 23,660 24,500 25,340 Total 1,109,130 1,144,337 1,184,002 1,214,785 1,245,593 1,276,403 1,321,158 1,367,357 Discount (68,250) (70,420) (72,860) (82,430) (92,390) (98,710) (102,170) (105,740) 1,040,880 1,073,917 1,111,142 1,132,355 1,153,203 1,177,693 1,218,988 1,261,617 Rate revenue increase Amount 33,037 37,225 21,213 20,848 24,490 41,294 42,629 percentage 3.17% 3.47% 1.91% 1.84% 2.12% 3.51% 3.50% average GRV amount 25.71 17.49 59.46 59.59 59.59 25.69 26.48 average UV amount 88.86 105.74 59.58 59.59 59.60 116.39 120.17

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mt Marshall – phase-in over 3 years 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 75,436 79,207 82,285 91,964 101,991 111,703 115,615 119,661 Minimum GRV 11,400 12,000 11,895 12,324 12,426 12,844 13,300 13,756 86,836 91,207 94,180 104,288 114,417 124,547 128,915 133,417 Number of Properties Rates levied GRV 130 130 131 131 132 132 132 132 Minimum GRV 40 40 39 39 38 38 38 38 170 170 170 170 170 170 170 170 Rates paid Small 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 Median 500.78 525.82 544.22 608.23 672.24 736.26 762.04 788.71 Average 510.80 536.51 554.00 613.46 673.04 732.63 758.32 784.81 Large 3,001.68 3,151.75 3,262.06 3,645.74 4,029.43 4,413.12 4,567.68 4,727.52 $ Changes Total amount 4,371 2,973 10,108 10,130 10,130 4,368 4,502 Smallest $ 15.00 5.00 11.00 11.00 11.00 12.00 12.00 Median $ 25.04 18.40 64.01 64.01 64.02 25.78 26.67 Average $ 25.71 17.49 59.46 59.59 59.59 25.69 26.48 Largest $ 150.07 110.31 383.68 383.69 383.69 154.56 159.84 % Changes Overall % 5.0% 3.3% 10.7% 9.7% 8.9% 3.5% 3.5% Smallest % change 5.0% 1.7% 3.6% 3.5% 3.4% 3.5% 3.4% Median % Change 5.0% 3.5% 11.8% 10.5% 9.5% 3.5% 3.5% Average % Change 5.1% 3.1% 9.9% 8.9% 8.1% 3.5% 3.5% Largest % change 5.3% 3.5% 11.8% 10.5% 9.5% 3.6% 3.5% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 1,013,459 1,043,830 1,080,367 1,100,701 1,120,712 1,141,040 1,181,043 1,222,356 Minimum GRV 8,835 9,300 9,455 9,796 10,464 10,816 11,200 11,584 1,022,294 1,053,130 1,089,822 1,110,497 1,131,176 1,151,856 1,192,243 1,233,940 Number of Properties Rates levied GRV 316 316 316 316 315 315 315 315 Minimum GRV 31 31 31 31 32 32 32 32 347 347 347 347 347 347 347 347 Rates paid Small 285 300 305 316 327 338 350 362 Median 2,493 2,568 2,658 2,708 2,758 2,808 2,907 3,008 Average 2,946 3,035 3,141 3,200 3,260 3,319 3,436 3,556 Large 39,876 41,071 42,509 43,309 44,109 44,909 46,484 48,110 $ Changes Total amount 30,836 36,692 20,676 20,678 20,681 40,386 41,697 Smallest $ 8.80 5.00 5.89 6.05 6.04 11.90 12.00 Median $ 74.72 89.89 50.03 50.03 50.03 98.45 101.67 Average $ 88.86 105.74 59.58 59.59 59.60 116.39 120.17 Largest $ 1,195.00 1,437.62 800.11 800.11 800.11 1,574.41 1,626.03 % Changes Overall % 3.0% 3.5% 1.9% 1.9% 1.8% 3.5% 3.5% Smallest % change 3.0% 1.7% 1.9% 1.8% 1.8% 3.5% 3.4% Median % Change 3.0% 3.5% 1.9% 1.8% 1.8% 3.5% 3.5% Average % Change 3.2% 3.3% 2.0% 2.0% 2.0% 3.5% 3.5% Largest % change 5.3% 3.5% 3.6% 3.5% 3.4% 3.6% 3.5%

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Mt Marshall – phase-in over 3 years 2011/12 2012/13 All Properties $ changes Budget Budget year 1year 2year 3year 4year 5 Less than $‐36 0 0 0 0 0 0 0 between $‐36 and $‐21 0 0 0 0 0 0 0 between $‐21 and $‐7 0 0 0 0 0 0 0 between $‐7 and $7 0 71 4 3 3 0 0 between $7 and $21 99 122 100 100 100 93 89 between $21 and $36 144 31 65 66 66 122 126 greater than $36 274 293 348 348 348 302 302 517 517 517 517 517 517 517 All Properties $ changes 0 0 0 0 0 0 0

350

300 Less than $‐36

250 between $‐36 and $‐21 200 between $‐21 and $‐7 between $‐7 150 and $7 between $7 100 and $21 between $21 50 and $36 greater than $36 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐25.% to‐15% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐15.% to‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to5% 410 517 386 385 385 517 517 between 5.% to15% 107 ‐ 131 132 132 ‐ ‐ between 15.% to25% ‐ ‐ ‐ ‐ ‐ ‐ ‐ greater than 25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ 517 517 517 517 517 517 517 All Properties % changes 0 0 0 0 0 0 0

600

500 Less than ‐ 25.% between ‐ 400 25.% to‐15% between ‐ 15.% to‐5% 300 between ‐5.% to5% between 5.% 200 to15%

100

‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning – phase-in over 3 years Impact Overall town properties have a net reduction in real terms; however the commercial properties will have above CPI increases. Rural properties have increases in the region of 12-16% pa over the three year period. There is an increase in real terms in rates raised in the district in the initial 3 years of this scenario. Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 0.5% 0.5% 0.5% 3.5% 3.5% Rates levied $3,365 3,466 3,476 3,594 3,699 % change 3.7% 3.6% 3.5% 3.5% 3.5% Minimum Rate 31.00 31.00 31.00 12.00 12.00 % change 12.7% 11.2% 10.1% 3.6% 3.4% Unimproved value properties Rate in the $uv 17.1% 14.6% 12.8% 3.5% 3.5% Rates levied $ 105,081 105,085 105,085 32,556 33,620 % change 17.1% 14.6% 12.8% 3.5% 3.5% Minimum Rate 31.00 31.00 31.00 12.00 12.00 % change 12.7% 11.2% 10.1% 3.6% 3.4% Discount 7.0% 9.0% 10.0% 10.0% 10.0% Overall raised in district 108,446 108,551 108,561 36,150 37,319

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Residential 14.2037 16.0502 18.1367 18.2205 18.3043 18.3881 19.0321 19.6981 GRV Commercial 8.3376 16.0502 10.6460 13.2267 15.8073 18.3880 19.0320 19.6980 GRV Minimum Rate GRV Residential 190.00 230.00 245.00 276.00 307.00 338.00 350.00 362.00 GRV Commercial 190.00 230.00 245.00 276.00 307.00 338.00 350.00 362.00 Rate in $ UV Rural 0.913 1.018 1.150 1.347 1.544 1.741 1.802 1.865 UV Mining 0.913 1.018 1.150 1.347 1.544 1.741 1.802 1.865 UV Minimum Rate UV Rural 190.00 230.00 245.00 276.00 307.00 338.00 350.00 362.00 UV Mining 190.00 230.00 245.00 276.00 307.00 338.00 350.00 362.00

Discount 5.0% 5.0% 5.0% 7.0% 9.0% 10.0% 10.0% 10.0% 2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 63,890 77,970 81,581 83,061 85,439 87,550 90,617 93,788 UV Levied 486,011 541,468 611,931 717,040 821,907 926,775 959,247 992,783 549,901 619,437 693,511 800,100 907,346 1,014,326 1,049,864 1,086,571 GRV Minimums 8,170 8,740 10,535 12,420 13,508 14,872 15,400 15,928 UV Minimums 1,330 2,070 1,960 1,932 2,149 2,366 2,450 2,534 9,500 10,810 12,495 14,352 15,657 17,238 17,850 18,462 Total 559,401 630,247 706,006 814,452 923,003 1,031,564 1,067,714 1,105,033 Discount (22,360) (25,190) (28,220) (46,600) (68,460) (79,770) (82,570) (85,460) 537,041 605,057 677,786 767,852 854,543 951,794 985,144 1,019,573 Rate revenue increase Amount 68,016 72,729 90,066 86,691 97,251 33,350 34,429 percentage 12.66% 12.02% 13.29% 11.29% 11.38% 3.50% 3.49% average GRV amount 93.31 34.43 21.43 22.08 22.14 22.89 23.56 average UV amount 271.48 339.87 507.64 507.66 507.66 157.27 162.42

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning – phase-in over 3 years 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 63,890 77,970 81,581 83,061 85,439 87,550 90,617 93,788 Minimum GRV 8,170 8,740 10,535 12,420 13,508 14,872 15,400 15,928 72,060 86,710 92,116 95,481 98,947 102,422 106,017 109,716 Number of Properties Rates levied GRV 114 119 114 112 113 113 113 113 Minimum GRV 43 38 43 45 44 44 44 44 157 157 157 157 157 157 157 157 Rates paid Small 190.00 230.00 245.00 276.00 307.00 338.00 350.00 362.00 Median 509.63 584.23 650.74 663.23 666.28 669.33 692.77 717.01 Average 458.98 552.29 586.72 608.16 630.23 652.37 675.27 698.83 Large 2,254.49 4,339.97 2,878.68 3,576.49 4,274.30 4,972.12 5,146.25 5,326.34 $ Changes Total amount 14,650 5,406 3,365 3,466 3,476 3,594 3,699 Smallest $ 26.78 (1,461.29) 1.31 1.96 1.96 12.00 12.00 Median $ 68.17 73.77 3.53 3.53 3.53 23.44 24.24 Average $ 93.31 34.43 21.43 22.08 22.14 22.89 23.56 Largest $ 2,085.48 151.90 697.81 697.81 697.82 174.13 180.09 % Changes Overall % 20.3% 6.2% 3.7% 3.6% 3.5% 3.5% 3.5% Smallest % change 13.0% ‐33.7% 0.5% 0.5% 0.5% 3.5% 3.4% Median % Change 13.0% 13.0% 0.5% 0.5% 0.5% 3.5% 3.5% Average % Change 19.9% 8.4% 4.9% 4.5% 4.1% 3.5% 3.5% Largest % change 92.5% 13.0% 24.2% 19.5% 16.3% 3.6% 3.5% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 486,011 541,468 611,931 717,040 821,907 926,775 959,247 992,783 Minimum GRV 1,330 2,070 1,960 1,932 2,149 2,366 2,450 2,534 487,341 543,538 613,891 718,972 824,056 929,141 961,697 995,317 Number of Properties Rates levied GRV 200 198 199 200 200 200 200 200 Minimum GRV 7 9 8 7 7 7 7 7 207 207 207 207 207 207 207 207 Rates paid Small 190 230 245 276 307 338 350 362 Median 1,707 1,904 2,151 2,519 2,887 3,256 3,370 3,488 Average 2,354 2,626 2,966 3,473 3,981 4,489 4,646 4,808 Large 13,330 14,863 16,790 19,666 22,542 25,419 26,309 27,229 $ Changes Total amount 56,196 70,353 105,081 105,085 105,085 32,556 33,620 Smallest $ 27.30 15.00 31.00 31.00 31.00 12.00 12.00 Median $ 196.35 246.84 368.39 368.39 368.39 114.07 117.81 Average $ 271.48 339.87 507.64 507.66 507.66 157.27 162.42 Largest $ 1,533.00 1,927.20 2,876.20 2,876.20 2,876.20 890.60 919.80 % Changes Overall % 11.5% 12.9% 17.1% 14.6% 12.8% 3.5% 3.5% Smallest % change 11.5% 6.5% 12.7% 11.2% 10.1% 3.5% 3.4% Median % Change 11.5% 13.0% 17.1% 14.6% 12.8% 3.5% 3.5% Average % Change 11.9% 12.7% 17.0% 14.5% 12.7% 3.5% 3.5% Largest % change 21.1% 13.0% 17.1% 14.6% 12.8% 3.6% 3.5%

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Trayning – phase-in over 3 years 2011/12 2012/13 All Properties $ changes Budget Budget year 1year 2year 3year 4year 5 Less than $‐263 0 6 0 0 0 0 0 between $‐263 and $‐158 0 0 0 0 0 0 0 between $‐158 and $‐53 0 3 0 0 0 0 0 between $‐53 and $53 65 58 160 158 158 189 189 between $53 and $158 163 151 27 29 29 91 89 between $158 and $263 45 49 37 37 37 50 49 greater than $263 91 97 140 140 140 34 37 364 364 364 364 364 364 364 All Properties $ changes 0 0 0 0 0 0 0 200

180 Less than $‐ 160 263 140 between $‐263 and $‐158 120 between $‐158 and $‐53 100 between $‐53 80 and $53 between $53 60 and $158 40 between $158 and $263 20 greater than $263 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ 9 ‐ ‐ ‐ ‐ ‐ between ‐25.% to‐15% ‐ 2 ‐ ‐ ‐ ‐ ‐ between ‐15.% to‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to5% ‐ 1 107 104 104 364 364 between 5.% to15% 306 352 50 251 251 ‐ ‐ between 15.% to25% 46 ‐ 207 9 9 ‐ ‐ greater than 25.% 12 ‐ ‐ ‐ ‐ ‐ ‐ 364 364 364 364 364 364 364 All Properties % changes 0 0 0 0 0 0 0

400

350 Less than ‐ 25.% 300 between ‐ 25.% to‐15% 250 between ‐ 15.% to‐5% 200 between ‐5.% to5% 150 between 5.% to15% 100

50

‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Scenario 3 – equalisation over five years of merger This scenario provides for a phasing in of change over the first five years of a merged local government.

2010/11 2011/12 2012/13 SUMMARY OF REVENUE Budget Budget Budget year 1year 2year 3year 4year 5 Gross Rental Values $$$$$$$$ Rates Levied 217,592 240,563 251,182 276,819 296,549 315,381 334,796 353,502 Minimum 23,860 25,580 28,065 28,940 30,468 32,940 34,868 37,648 241,452 266,143 279,247 305,759 327,017 348,321 369,664 391,150 Unimproved Values Rates Levied 2,212,513 2,332,294 2,476,644 2,576,693 2,676,499 2,775,657 2,875,457 2,974,195 Minimum 11,530 12,910 13,130 13,548 14,211 15,526 16,255 18,100 2,224,043 2,345,204 2,489,774 2,590,241 2,690,710 2,791,183 2,891,712 2,992,295 Total 2,465,495 2,611,347 2,769,021 2,896,000 3,017,728 3,139,505 3,261,376 3,383,445 Discount (152,240) (160,320) (169,060) (189,780) (119,150) (229,810) (146,870) (261,660) Net rates 2,313,255 2,451,027 2,599,961 2,706,220 2,898,578 2,909,695 3,114,506 3,121,785 $ change 145,853 157,674 126,979 121,728 121,777 121,871 122,069 % change 5.9% 6.0% 4.6% 4.2% 4.0% 3.9% 3.7% Consumer Price Index 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%

Results Increase/(decrease) in rates (dollar and percentage)

Average $ 2011/12 2012/13 Gross rental value properties Budget Budget year 1year 2year 3year 4year 5 Koorda 34.16 28.46 69.16 69.20 69.20 69.20 69.46 Mt Marshall 25.71 17.49 44.43 44.46 44.51 44.73 44.73 Trayning 93.31 34.43 47.63 14.10 14.33 14.34 14.97 Average % Change 2011/12 2012/13 Gross rental value properties Budget Budget year 1year 2year 3year 4year 5 Koorda 5.7% 5.9% 12.1% 10.8% 9.7% 8.9% 8.2% Mt Marshall 5.1% 3.1% 7.5% 6.9% 6.5% 6.1% 5.8% Trayning 19.9%8.4%7.8%3.3%3.2%3.0%3.0% Median $ 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1year 2year 3year 4year 5 Koorda 118.40 130.24 ‐1.48 0.00 0.00 0.00 0.00 Mt Marshall 74.72 89.89 64.56 64.55 64.56 64.55 64.55 Trayning 196.35 246.84 259.93 259.93 259.93 259.93 259.93 Median % Change 2011/12 2012/13 Unimproved Value Properties Budget Budget year 1year 2year 3year 4year 5 Koorda 4.8% 5.0% ‐0.1% 0.0% 0.0% 0.0% 0.0% Mt Marshall 3.0% 3.5% 2.4% 2.4% 2.3% 2.3% 2.2% Trayning 11.5% 13.0% 12.1% 10.8% 9.7% 8.9% 8.1%

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Median $Gross rental value properties Changes 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5

Koorda Mt Marshall Trayning

Median % Change Gross rental value properties

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0% 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5

Koorda Mt Marshall Trayning

Median $Unimproved Value Properties

300.00

250.00

200.00

150.00

100.00

50.00

0.00 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐50.00

Koorda Mt Marshall Trayning

Median % Change Unimproved Value Properties

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0% 2011/12 Budget 2012/13 Budget year 1year 2year 3year 4year 5 ‐2.0%

Koorda Mt Marshall Trayning

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda – phase-in over 5 years Impact Rate burden shifts to town properties with the shift spread over 5 years at annual increases of 10- 12%. A very small change is required for rural properties with a static rate in the dollar over the period. The redistribution is evenly spread over the 5 years without substantial rate increases. Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 12.5% 11.1% 10.0% 9.1% 8.4% +/‐ Rates levied $ 11,481 11,487 11,487 11,487 11,531 % change 12.4% 11.0% 9.9% 9.0% 8.3% Minimum Rate 23.00 23.00 23.00 23.00 25.00 % change 9.4% 8.6% 7.9% 7.3% 7.4% Unimproved value properties Rate in the $uv ‐0.1% ‐0.1% ‐0.1% ‐0.1% ‐0.1% +/‐ Rates levied $ (263) (264) (263) (240) (203) % change ‐0.0% ‐0.0% ‐0.0% ‐0.0% ‐0.0% Minimum Rate 23.00 23.00 23.00 23.00 25.00 % change 9.4% 8.6% 7.9% 7.3% 7.4% Discount 10.0% 10.0% 10.0% 10.0% 10.0% Overall raised in district 11,218 11,223 11,224 11,246 11,328 2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Residential 10.7000 11.4000 11.9700 13.4712 14.9724 16.4736 17.9748 19.4760 GRV Commercial 10.7000 11.4000 11.9700 13.4712 14.9724 16.4736 17.9748 19.4760 GRV Minimum Rate GRV Residential 195.00 220.00 245.00 268.00 291.00 314.00 337.00 362.00 GRV Commercial 195.00 220.00 245.00 268.00 291.00 314.00 337.00 362.00 Rate in $ UV Rural 1.680 1.760 1.848 1.847 1.846 1.845 1.844 1.843 UV Mining 1.680 1.760 1.848 1.847 1.846 1.845 1.844 1.843 UV Minimum Rate UV Rural 195.00 220.00 245.00 268.00 291.00 314.00 337.00 362.00 UV Mining 195.00 220.00 245.00 268.00 291.00 314.00 337.00 362.00

Discount 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 78,266 83,386 87,316 98,537 109,517 120,498 131,478 142,459 UV Levied 713,042 746,997 784,347 783,922 783,498 782,760 782,335 781,570 791,309 830,383 871,663 882,459 893,015 903,258 913,814 924,030 GRV Minimums 4,290 4,840 5,635 5,896 6,402 6,908 7,414 7,964 UV Minimums 1,365 1,540 1,715 1,876 2,037 2,512 2,696 3,258 5,655 6,380 7,350 7,772 8,439 9,420 10,110 11,222 Total 796,964 836,763 879,013 890,231 901,454 912,678 923,924 935,252 Discount (61,630) (64,710) (67,980) (68,840) (69,710) (70,580) (71,450) (72,330) 735,334 772,053 811,033 821,391 831,744 842,098 852,474 862,922 Rate revenue increase Amount 36,720 38,980 10,358 10,353 10,354 10,376 10,448 percentage 4.99% 5.05% 1.28% 1.26% 1.24% 1.23% 1.23% average GRV amount 34.16 28.46 69.16 69.20 69.20 69.20 69.46 average UV amount 155.13 170.57 (1.20) (1.20) (1.19) (1.09) (0.92)

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Shire of Koorda – phase-in over 5 years 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 78,266 83,386 87,316 98,537 109,517 120,498 131,478 142,459 Minimum GRV 4,290 4,840 5,635 5,896 6,402 6,908 7,414 7,964 82,556 88,226 92,951 104,433 115,919 127,406 138,892 150,423 Number of Properties Rates levied GRV 144 144 143 144 144 144 144 144 Minimum GRV 22 22 23 22 22 22 22 22 166 166 166 166 166 166 166 166 Rates paid Small 195.00 220.00 245.00 268.00 291.00 314.00 337.00 362.00 Median 467.38 497.95 522.85 588.42 653.99 719.57 785.14 850.71 Average 497.33 531.48 559.95 629.11 698.31 767.50 836.70 906.16 Large 3,338.40 3,556.80 3,734.64 4,203.01 4,671.39 5,139.76 5,608.14 6,076.51 $ Changes Total amount 5,670 4,725 11,481 11,487 11,487 11,487 11,531 Smallest $ 14.00 11.86 23.00 23.00 23.00 23.00 25.00 Median $ 30.57 25.00 65.57 65.57 65.58 65.57 65.57 Average $ 34.16 28.46 69.16 69.20 69.20 69.20 69.46 Largest $ 218.40 177.84 468.37 468.38 468.37 468.38 468.37 % Changes Overall % 6.9% 5.4% 12.4% 11.0% 9.9% 9.0% 8.3% Smallest % change 0.0% 5.0% 9.4% 8.6% 7.9% 7.3% 7.4% Median % Change 6.5% 5.0% 12.5% 11.1% 10.0% 9.1% 8.4% Average % Change 5.7% 5.9% 12.1% 10.8% 9.7% 8.9% 8.2% Largest % change 6.5% 11.4% 12.5% 11.1% 10.0% 9.1% 8.4% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 713,042 746,997 784,347 783,922 783,498 782,760 782,335 781,570 Minimum GRV 1,365 1,540 1,715 1,876 2,037 2,512 2,696 3,258 714,407 748,537 786,062 785,798 785,535 785,272 785,031 784,828 Number of Properties Rates levied GRV 213 213 213 213 213 212 212 211 Minimum GRV 7 7 7 7 7 8 8 9 220 220 220 220 220 220 220 220 Rates paid Small 195 220 245 268 291 314 337 362 Median 2,486 2,605 2,735 2,734 2,732 2,731 2,729 2,728 Average 3,247 3,402 3,573 3,572 3,571 3,569 3,568 3,567 Large 17,556 18,392 19,312 19,301 19,291 19,280 19,270 19,259 $ Changes Total amount 34,129 37,525 (263) (264) (263) (240) (203) Smallest $ 13.60 14.96 (10.45) 0.00 0.00 0.00 0.00 Median $ 118.40 130.24 (1.48) 0.00 0.00 0.00 0.00 Average $ 155.13 170.57 (1.20) (1.20) (1.19) (1.09) (0.92) Largest $ 836.00 919.60 23.00 23.00 23.00 23.00 25.00 % Changes Overall % 4.8% 5.0% 0.0% 0.0% 0.0% 0.0% 0.0% Smallest % change 4.8% 5.0% ‐0.1% 0.0% 0.0% 0.0% 0.0% Median % Change 4.8% 5.0% ‐0.1% 0.0% 0.0% 0.0% 0.0% Average % Change 5.0% 5.2% 0.2% 0.2% 0.2% 0.2% 0.2% Largest % change 12.8% 11.4% 9.4% 8.6% 7.9% 7.3% 7.4%

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Shire of Koorda – phase-in over 5 years All Properties $ changes 2011/12 2012/13 Budget Budget year 1year 2year 3year 4year 5 Less than $‐1 0 0 0 0 0 0 0 between $‐1 and $‐1 0 0 0 0 0 0 0 between $‐1 and $ 0 0 0 0 0 0 0 between $ and $ 191 191 245 245 245 245 245 between $ and $1 74 67 134 134 134 134 134 between $1 and $1 51 52 1 1 1 1 1 greater than $1 70 76 6 6 6 6 6 386 386 386 386 386 386 386 All Properties $ changes 0 0 0 0 0 0 0

250

Less than $‐1 200 between $‐1 and $‐1 150 between $‐1 and $ between $ and 100 $ between $ and $1 50 between $1 and $1 greater than $1 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐25.% to ‐15% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐15.% to ‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to 5% 235 288 213 213 213 212 211 between 5.% to 15% 151 98 173 173 173 174 175 between 15.% to 25% ‐ ‐ ‐ ‐ ‐ ‐ ‐ greater than 25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ 386 386 386 386 386 386 386 All Properties % changes 0 0 0 0 0 0 0

300

250

200 Less than ‐25.% between ‐25.% to ‐15% 150 between ‐15.% to ‐5% between ‐5.% to 5% 100 between 5.% to 15% 50 between 15.% to 25% greater than 25.% ‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Shire of Mt Marshall – phase-in over 5 years Impact The shift in the rate burden is to town properties; however the distribution over the five years is not substantial. Increases for rural properties are less than CPI.

Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 8.7% 8.0% 7.4% 6.9% 6.4% Rates levied $7,554 7,558 7,567 7,605 7,605 % change 8.0% 7.4% 6.9% 6.5% 6.1% Minimum Rate 11.00 11.00 11.00 12.00 12.00 % change 3.6% 3.5% 3.4% 3.6% 3.4% Unimproved value properties Rate in the $uv 2.4% 2.4% 2.3% 2.3% 2.2% Rates levied $26,579 26,579 26,582 26,615 26,618 % change 2.4% 2.4% 2.3% 2.3% 2.2% Minimum Rate 11.00 11.00 11.00 12.00 12.00 % change 3.6% 3.5% 3.4% 3.6% 3.4% Discount 8.0% 8.5% 9.0% 9.5% 10.0% Overall raised in district 34,133 34,137 34,149 34,220 34,223

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Townsite 12.5070 13.1323 13.5919 14.7687 15.9455 17.1223 18.2991 19.4759 GRV Commercial 12.5070 13.1323 13.5919 14.7687 15.9455 17.1223 18.2991 19.4759 GRV Minimum Rate GRV Townsite 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 GRV Commercial 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 Rate in $ UV Rural 1.545 1.591 1.647 1.687 1.727 1.767 1.807 1.847 UV Mining 1.545 1.591 1.647 1.687 1.727 1.767 1.807 1.847 UV Minimum Rate UV Rural 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 UV Mining 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00

Discount 7.5% 7.5% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 75,436 79,207 82,285 89,410 96,865 104,014 111,163 118,312 UV Levied 1,013,459 1,043,830 1,080,367 1,106,605 1,132,844 1,158,746 1,184,977 1,210,488 1,088,895 1,123,037 1,162,652 1,196,015 1,229,709 1,262,761 1,296,140 1,328,800 GRV Minimums 11,400 12,000 11,895 12,324 12,426 12,844 13,300 13,756 UV Minimums 8,835 9,300 9,455 9,796 10,137 10,816 11,200 12,308 20,235 21,300 21,350 22,120 22,563 23,660 24,500 26,064 Total 1,109,130 1,144,337 1,184,002 1,218,135 1,252,272 1,286,421 1,320,640 1,354,864 Discount (68,250) (70,420) (72,860) (82,660) 0 (95,420) 0 (104,780) 1,040,880 1,073,917 1,111,142 1,135,475 1,252,272 1,191,001 1,320,640 1,250,084 Rate revenue increase Amount 33,037 37,225 24,333 116,797 (61,271) 129,640 (70,557) percentage 3.17% 3.47% 2.19% 10.29% ‐4.89% 10.88% ‐5.34% average GRV amount 25.71 17.49 44.43 44.46 44.51 44.73 44.73 average UV amount 88.86 105.74 76.60 76.60 76.60 76.70 76.71

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Shire of Mt Marshall – phase-in over 5 years 2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 75,436 79,207 82,285 89,410 96,865 104,014 111,163 118,312 Minimum GRV 11,400 12,000 11,895 12,324 12,426 12,844 13,300 13,756 86,836 91,207 94,180 101,734 109,291 116,858 124,463 132,068 Number of Properties Rates levied GRV 130 130 131 131 132 132 132 132 Minimum GRV 40 40 39 39 38 38 38 38 170 170 170 170 170 170 170 170 Rates paid Small 285.00 300.00 305.00 316.00 327.00 338.00 350.00 362.00 Median 500.78 525.82 544.22 591.34 638.46 685.58 732.70 779.82 Average 510.80 536.51 554.00 598.43 642.89 687.40 732.13 776.87 Large 3,001.68 3,151.75 3,262.06 3,544.49 3,826.92 4,109.35 4,391.78 4,674.22 $ Changes Total amount 4,371 2,973 7,554 7,558 7,567 7,605 7,605 Smallest $ 15.00 5.00 11.00 11.00 11.00 12.00 12.00 Median $ 25.04 18.40 47.12 47.12 47.12 47.12 47.12 Average $ 25.71 17.49 44.43 44.46 44.51 44.73 44.73 Largest $ 150.07 110.31 282.43 282.43 282.43 282.43 282.44 % Changes Overall % 5.0% 3.3% 8.0% 7.4% 6.9% 6.5% 6.1% Smallest % change 5.0% 1.7% 3.6% 3.5% 3.4% 3.6% 3.4% Median % Change 5.0% 3.5% 8.7% 8.0% 7.4% 6.9% 6.4% Average % Change 5.1% 3.1% 7.5% 6.9% 6.5% 6.1% 5.8% Largest % change 5.3% 3.5% 8.7% 8.0% 7.4% 6.9% 6.4% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 1,013,459 1,043,830 1,080,367 1,106,605 1,132,844 1,158,746 1,184,977 1,210,488 Minimum GRV 8,835 9,300 9,455 9,796 10,137 10,816 11,200 12,308 1,022,294 1,053,130 1,089,822 1,116,401 1,142,981 1,169,562 1,196,177 1,222,796 Number of Properties Rates levied GRV 316 316 316 316 316 315 315 313 Minimum GRV 31 31 31 31 31 32 32 34 347 347 347 347 347 347 347 347 Rates paid Small 285 300 305 316 327 338 350 362 Median 2,493 2,568 2,658 2,723 2,787 2,852 2,916 2,981 Average 2,946 3,035 3,141 3,217 3,294 3,370 3,447 3,524 Large 39,876 41,071 42,509 43,541 44,574 45,606 46,639 47,671 $ Changes Total amount 30,836 36,692 26,579 26,579 26,582 26,615 26,618 Smallest $ 8.80 5.00 7.60 7.60 7.80 7.80 8.00 Median $ 74.72 89.89 64.56 64.55 64.56 64.55 64.55 Average $ 88.86 105.74 76.60 76.60 76.60 76.70 76.71 Largest $ 1,195.00 1,437.62 1,032.40 1,032.40 1,032.40 1,032.40 1,032.40 % Changes Overall % 3.0% 3.5% 2.4% 2.4% 2.3% 2.3% 2.2% Smallest % change 3.0% 1.7% 2.4% 2.4% 2.3% 2.3% 2.2% Median % Change 3.0% 3.5% 2.4% 2.4% 2.3% 2.3% 2.2% Average % Change 3.2% 3.3% 2.5% 2.5% 2.4% 2.4% 2.3% Largest % change 5.3% 3.5% 3.6% 3.5% 3.4% 3.6% 3.4%

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Shire of Mt Marshall – phase-in over 5 years 2011/12 2012/13 All Properties $ changes Budget Budget year 1year 2year 3year 4year 5 Less than $‐46 0 0 0 0 0 0 0 between $‐46 and $‐28 0 0 0 0 0 0 0 between $‐28 and $‐9 0 0 0 0 0 0 0 between $‐9 and $9 3 71 4 4 3 3 1 between $9 and $28 188 142 101 101 102 102 104 between $28 and $46 87 43 104 104 104 104 104 greater than $46 239 261 308 308 308 308 308 517 517 517 517 517 517 517 All Properties $ changes 0 0 0 0 0 0 0

350

300 Less than $‐46

250 between $‐46 and $‐28 200 between $‐28 and $‐9 between $‐9 150 and $9 between $9 100 and $28 between $28 50 and $46 greater than $46 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐25.% to‐15% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐15.% to‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to5% 410 517 386 386 385 385 385 between 5.% to15% 107 ‐ 131 131 132 132 132 between 15.% to25% ‐ ‐ ‐ ‐ ‐ ‐ ‐ greater than 25.% ‐ ‐ ‐ ‐ ‐ ‐ ‐ 517 517 517 517 517 517 517 All Properties % changes 0 0 0 0 0 0 0

600

500 Less than ‐ 25.% between ‐ 400 25.% to‐15% between ‐ 15.% to‐5% 300 between ‐5.% to5% between 5.% 200 to15%

100

‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Shire of Trayning – phase-in over 5 years Impact The shift of the rate burden to rural properties is achieved with annual rate increases of 9-12% over the five year period. Change in rates year 1year 2year 3year 4year 5 Gross rental value properties Rate in the $grv 1.5% 1.5% 1.4% 1.4% 1.4% Rates levied $7,477 2,214 2,251 2,251 2,350 % change 8.1% 2.2% 2.2% 2.2% 2.2% Minimum Rate 23.00 23.00 23.00 23.00 25.00 % change 9.4% 8.6% 7.9% 7.3% 7.4% Unimproved value properties Rate in the $uv 12.1% 10.8% 9.7% 8.9% 8.1% Rates levied $74,151 74,154 74,154 74,154 74,168 % change 12.1% 10.8% 9.7% 8.9% 8.1% Minimum Rate 23.00 23.00 23.00 23.00 25.00 % change 9.4% 8.6% 7.9% 7.3% 7.4% Discount 6.0% 7.0% 8.0% 9.0% 10.0% Overall raised in district 81,628 76,368 76,405 76,405 76,518

2010/11 2011/12 2012/13 Budget Budget Budget year 1year 2year 3year 4year 5 Rate in $ GRV Residential 14.2037 16.0502 18.1367 18.4046 18.6725 18.9404 19.2083 19.4762 GRV Commercial 8.3376 16.0502 10.6460 18.4046 18.6724 18.9403 19.2081 19.4760 GRV Minimum Rate GRV Residential 190.00 230.00 245.00 268.00 291.00 314.00 337.00 362.00 GRV Commercial 190.00 230.00 245.00 268.00 291.00 314.00 337.00 362.00 Rate in $ UV Rural 0.913 1.018 1.150 1.289 1.428 1.567 1.706 1.845 UV Mining 0.913 1.018 1.150 1.289 1.428 1.567 1.706 1.845 UV Minimum Rate UV Rural 190.00 230.00 245.00 268.00 291.00 314.00 337.00 362.00 UV Mining 190.00 230.00 245.00 268.00 291.00 314.00 337.00 362.00

Discount 5.0% 5.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

2010/11 2011/12 2012/13 SUMMARY Budget Budget Budget year 1year 2year 3year 4year 5 Revenues GRV Levied 63,890 77,970 81,581 88,873 90,167 90,869 92,155 92,731 UV Levied 486,011 541,468 611,931 686,165 760,158 834,151 908,144 982,137 549,901 619,437 693,511 775,038 850,325 925,020 1,000,299 1,074,868 GRV Minimums 8,170 8,740 10,535 10,720 11,640 13,188 14,154 15,928 UV Minimums 1,330 2,070 1,960 1,876 2,037 2,198 2,359 2,534 9,500 10,810 12,495 12,596 13,677 15,386 16,513 18,462 Total 559,401 630,247 706,006 787,634 864,002 940,406 1,016,812 1,093,330 Discount (22,360) (25,190) (28,220) (38,280) (49,440) (63,810) (75,420) (84,550) 537,041 605,057 677,786 749,354 814,562 876,596 941,392 1,008,780 Rate revenue increase Amount 68,016 72,729 71,568 65,208 62,035 64,795 67,388 percentage 12.66% 12.02% 10.56% 8.70% 7.62% 7.39% 7.16% average GRV amount 93.31 34.43 47.63 14.10 14.33 14.34 14.97 average UV amount 271.48 339.87 358.22 358.23 358.23 358.23 358.30

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Shire of Trayning – phase-in over 5 years

2010/11 2011/12 2012/13 Gross rental values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 63,890 77,970 81,581 88,873 90,167 90,869 92,155 92,731 Minimum GRV 8,170 8,740 10,535 10,720 11,640 13,188 14,154 15,928 72,060 86,710 92,116 99,593 101,807 104,057 106,309 108,659 Number of Properties Rates levied GRV 114 119 114 117 117 115 115 113 Minimum GRV 43 38 43 40 40 42 42 44 157 157 157 157 157 157 157 157 Rates paid Small 190.00 230.00 245.00 268.00 291.00 314.00 337.00 362.00 Median 509.63 584.23 650.74 669.93 679.68 689.43 699.18 708.93 Average 458.98 552.29 586.72 634.35 648.45 662.79 677.13 692.10 Large 2,254.49 4,339.97 2,878.68 4,976.59 5,049.02 5,121.45 5,193.88 5,266.31 $ Changes Total amount 14,650 5,406 7,477 2,214 2,251 2,251 2,350 Smallest $ 26.78 (1,461.29) 4.18 4.18 4.87 4.88 5.57 Median $ 68.17 73.77 11.28 11.15 11.28 11.28 11.29 Average $ 93.31 34.43 47.63 14.10 14.33 14.34 14.97 Largest $ 2,085.48 151.90 2,097.91 72.43 72.43 72.43 72.43 % Changes Overall % 20.3% 6.2% 8.1% 2.2% 2.2% 2.2% 2.2% Smallest % change 13.0% ‐33.7% 1.5% 1.5% 1.4% 1.4% 1.4% Median % Change 13.0% 13.0% 1.5% 1.5% 1.4% 1.4% 1.4% Average % Change 19.9% 8.4% 7.8% 3.3% 3.2% 3.0% 3.0% Largest % change 92.5% 13.0% 72.9% 8.6% 7.9% 7.3% 7.4% 2010/11 2011/12 2012/13 Unimproved Values Budget Budget Budget year 1year 2year 3year 4year 5 Rates levied GRV 486,011 541,468 611,931 686,165 760,158 834,151 908,144 982,137 Minimum GRV 1,330 2,070 1,960 1,876 2,037 2,198 2,359 2,534 487,341 543,538 613,891 688,041 762,195 836,349 910,503 984,671 Number of Properties Rates levied GRV 200 198 199 200 200 200 200 200 Minimum GRV 7 9 8 7 7 7 7 7 207 207 207 207 207 207 207 207 Rates paid Small 190 230 245 268 291 314 337 362 Median 1,707 1,904 2,151 2,410 2,670 2,930 3,190 3,450 Average 2,354 2,626 2,966 3,324 3,682 4,040 4,399 4,757 Large 13,330 14,863 16,790 18,819 20,849 22,878 24,908 26,937 $ Changes Total amount 56,196 70,353 74,151 74,154 74,154 74,154 74,168 Smallest $ 27.30 15.00 23.00 23.00 23.00 23.00 25.00 Median $ 196.35 246.84 259.93 259.93 259.93 259.93 259.93 Average $ 271.48 339.87 358.22 358.23 358.23 358.23 358.30 Largest $ 1,533.00 1,927.20 2,029.40 2,029.40 2,029.40 2,029.40 2,029.40 % Changes Overall % 11.5% 12.9% 12.1% 10.8% 9.7% 8.9% 8.1% Smallest % change 11.5% 6.5% 9.4% 8.6% 7.9% 7.3% 7.4% Median % Change 11.5% 13.0% 12.1% 10.8% 9.7% 8.9% 8.1% Average % Change 11.9% 12.7% 12.0% 10.7% 9.7% 8.8% 8.1% Largest % change 21.1% 13.0% 12.1% 10.8% 9.7% 8.9% 8.1%

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Shire of Trayning – phase-in over 5 years 2011/12 2012/13 All Properties $ changes Budget Budget year 1year 2year 3year 4year 5 Less than $‐186 0 6 0 0 0 0 0 between $‐186 and $‐111 0 1 0 0 0 0 0 between $‐111 and $‐37 0 4 0 0 0 0 0 between $‐37 and $37 7 52 155 166 166 166 166 between $37 and $111 190 127 26 24 24 24 24 between $111 and $186 51 37 38 35 35 35 35 greater than $186 116 137 145 139 139 139 139 364 364 364 364 364 364 364 All Properties $ changes 0 0 0 0 0 0 0 200

180 Less than $‐ 160 186 140 between $‐186 and $‐111 120 between $‐111 and $‐37 100 between $‐37 80 and $37 between $37 60 and $111 40 between $111 and $186 20 greater than $186 0 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

2011/12 2012/13 All Properties % changes Budget Budget year 1year 2year 3year 4year 5 Less than ‐25.% ‐ 9 ‐ ‐ ‐ ‐ ‐ between ‐25.% to‐15% ‐ 2 ‐ ‐ ‐ ‐ ‐ between ‐15.% to‐5% ‐ ‐ ‐ ‐ ‐ ‐ ‐ between ‐5.% to5% ‐ 1 107 117 115 115 115 between 5.% to15% 306 352 245 247 249 249 249 between 15.% to25% 46 ‐ 1 ‐ ‐ ‐ ‐ greater than 25.% 12 ‐ 11 ‐ ‐ ‐ ‐ 364 364 364 364 364 364 364 All Properties % changes 0 0 0 0 0 0 0

400

350 Less than ‐ 25.% 300 between ‐ 25.% to‐15% 250 between ‐ 15.% to‐5% 200 between ‐5.% to5% 150 between 5.% to15% 100

50

‐ 2011/12 2012/13 year 1year 2year 3year 4year 5 Budget Budget

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Transitional costs Extract from the Department of Local Government Business Planning Template – User Guide “section 4 Transitional considerations and costs”. The table below provides a list of the key tasks involved in amalgamating and any associated transitional costs that may need to be considered. These may include, but are not limited to, the following: Function/Activity Task Transitional cost / revenues

Strategic direction

Administration - CEO Appointment of a single CEO which will have transitional costs Transitional costs may include - associated with recruiting a CEO and establishing their role.  advertising costs;

 interviewing costs;

 fees for contracting an external recruitment officer/s to undertake the process;  start-up costs once the CEO is appointed, such as relocation costs, induction, various training and administration costs.

 In addition, there will be transitional costs in reducing the current number of CEOs of the local governments involved in the potential

amalgamation to one. This could include –

 In the short term, severance packages may need to be paid to the CEOs that have been made redundant as a result of the amalgamation; along with other associated costs. Refer to ‘People – Human Resources – Displaced Employees’ for more information around transitional costs and tasks. Note - Although in the longer term significant savings will be realised in not paying multiple CEO salaries, these will be recurrent savings rather than transitional.

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Regional Transition Group – Koorda, Mt Marshall, Trayning

Function/Activity Task Transitional cost / revenues

Governance (Corporate) Review all delegations and authorisation arrangements with the  Any associated transitional costs to perform Legislation applicable statutory legislation, reflecting any staff movements. this review could be absorbed internally by local government personnel.

 The transitional costs associated with this Create a delegations register for the local government. task could be absorbed internally by the role of the CEO or appropriate operations manager.

Administration - Clarify the required reporting structures of the amalgamated  Possible external consultant costs to Reporting entity and what reports need to be developed for approval per develop a comprehensive reporting the applicable legislative requirements. framework to meet the needs of the new entity (although this may be addressed at broader local government level).

Administration - Develop a new design and brand (name, logo, image) to reflect Associated transitional costs may include – Corporate branding the amalgamated entity.  Contracting a marketing and graphics Note – for tasks and costs associated with change of designer to develop the new branding address, refer to “Services – Accommodation”. design.  Publication and printing costs to market the new branding on all appropriate material, such as: stationary, publications, calendars, gifts, internet, marketing material and other documentation that is provided by the local government to the public.  Web design costs to create and/or publish the branding on the local government website, and any other government based website which may reference the amalgamated entity.  Consulting with the community on their thoughts about what their new local government should be represented as. For Feasibility Study – Attachment 4 – Transitional Issues Page 209

Regional Transition Group – Koorda, Mt Marshall, Trayning

Function/Activity Task Transitional cost / revenues example, this may occur via the method of a community competition design, public forum, or via a survey.

Town planning schemes Develop a single town-planning framework that will be If the town-planning framework is not to be consistent with the new local government. Due to the developed internally, transitional costs to be complexity of this task, it is envisaged that it will require some considered could include; time to achieve a finalised scheme.  Contracting an external town planner to develop the scheme.  In addition, consultation with external agencies and the public will be required and may have associated costs such as the development and publication of a discussion paper, information forums and/or questionnaires.

Committees Review existing committees in regards to their effectiveness  Administration costs associated with and operation. The amalgamated entity should consider terminating existing committees and whether existing committees are appropriate for future needs, forming new ones or if new committees should be formed.

Community Consideration should be given to community participation Depending on the method of community engagement during the amalgamation process. engagement, transition costs may include: The amalgamated entity also needs to determine what will be  Postage and mail-out costs the most effective and efficient mechanism/s of community engagement to ensure that councillors appropriately represent  Development of brochures, pamphlets, the electors’ interests. information packets, etc.  Venue hire and catering costs for forums or workshops

Services

Review of services The amalgamated entity needs to determine what services they  External fees should the review of services will provide. Existing services should be reviewed to determine be outsourced. If this task is undertaken how they will be affected by the amalgamation. internally, there may be associated

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Function/Activity Task Transitional cost / revenues Consideration should be given as to whether services will be opportunity costs merged, continued or sold off. This could be expedited by the use of predetermined criteria (such as number of people using the service, legislative requirements, community expectations, etc.) to determine whether the service is necessary. The review should also consider whether extra income will be generated (or lost) as a result of the amalgamation.

The amalgamated entity should determine what operating  Procurement of additional operating requirements are needed for the efficient and effective requirements provision of services. This should identify the goods, services, equipment and assets that can be retained from the former  Income from the sale of duplicate or local governments, and whether there are any additional obsolete equipment requirements that need to be procured.

Change of details If the service is outsourced, the providers will need to be This may include minor costs such as phone notified of the existence of the new amalgamated entity so the calls, emails, or letters (postage) to notify of relevant details can be changed. the changes.

Accommodation Either moving to a new establishment/s or staying in current  Leasing or buying a new premise to accommodation will involve many transitional costs depending accommodate both permanent staff and on what the amalgamated entity decide on. displaced staff who will need an office space for the short term  Contracting a designer to assist with office design, space planning and overall ergonomics  Contracting appropriate tradespeople to renovate the accommodation and fit it out with the required office structures;  Purchase of administration/ office equipment such as desks, whiteboards, tables, chairs, stationary, kitchen utilities.  Changing all documentation (including letterheads, business cards…) with the new

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Function/Activity Task Transitional cost / revenues accommodation location.  Income may also be generated from the sale of existing furniture, fittings or equipment.

It may be necessary to create a new office environment by  For associated transitional costs, refer to changing the ergonomics and look to signify a fresh and new ‘People – Change management (cultural). start to the amalgamated entity, particularly in enhancing a positive cultural change.  Contracting a designer to assist with office design, space planning and overall ergonomics  Contracting appropriate tradespeople to renovate the accommodation and fit it out with the required office structures.  Purchase of administration/ office equipment such as desks, whiteboards, tables, chairs, stationary, kitchen utilities.

Customer service Develop a new customer service charter which articulates  Associated transitional costs may be standards and protocols of service delivery across the absorbed internally if service delivery and spectrum of services provided by the amalgamated entity. management develop the charter, however there could be associated fees if the amalgamated entity request assistance from WALGA.

Advise customers of any new changes to the operation of  Advertising the changes in the local paper services. How customers are advised will dictate the type of or through mailbox flyers. transitional costs.  Creating a ‘customer service’ hotline where customers can call and receive information across all service areas.

Contracts Review existing contracts across all local governments who are Associated transitional costs may include – involved in the amalgamation process and decide on what contracts will be required under the amalgamated entity.  Termination/early breaking fees for those contracts for goods and/or services; and

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Function/Activity Task Transitional cost / revenues  Legal advice around certain contract issues.

Conduct an audit of all employment contracts and temporary  Associated costs may include severance payouts for breaking the contract early. staff who deliver services to determine the impact that these contractual arrangements will have on the amalgamated entity in terms of employment payments.  This may have transitional costs associated with legal and/or other fees to draft up or novate contracts. New contracts will need to be created with relevant companies and contractors with the new amalgamated entity’s details (or previous contracts novated to the new entity).

Systems

Selection There should be a method in place to ensure that the most  External fees where the review and advice appropriate system is selected for the amalgamated entity, of system supports be outsourced. If this whether it be one that is already used or a new system entirely. task is undertaken internally, there may be associated opportunity costs This could include a review of the existing and future system needs, and if necessary the development of document (such as  Provider fees if a customised system is a checklist) to guide selection of the system. developed This may include the development of an IT strategy for the  Purchase cost of new system and amalgamated entity. associated hardware

Integration and There should be a cost-effective means of integrating and  External fees should the integration process implementation implementing systems. This could include the establishment of of systems be outsourced. If this task is an Information Technology Working Party to manage the audit undertaken internally, there may be and review of IT systems. associated opportunity costs It is unlikely that amalgamating local governments will have all the skilled IT staff necessary to ensure a seamless transition to a single entity and consideration will need to be given to the effective use of consultants to fill any skill gaps.

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Function/Activity Task Transitional cost / revenues and conditions.  Contract termination fees The process should also outline whether the old system will operate alongside the new one for a certain period of time, and if it will be deleted or archived once it is no longer in use.

Migration of data An audit of data to ensure it is accurate before it is migrated to  External fees should the audit of data be the new system. outsourced.

The migration of data into one system will need to be  Fees to the system provider completed efficiently and effectively, such that the integrity of the data is maintained.  External fees to undertake the process of migration and ensure that data integrity is maintained.

Operating issues

Plan for the Future The local governments will need to align their processes for  It is assumed that the associated developing the Plan for the Future. This may involve aligning transitional costs should be absorbed relevant policies and procedures internally by local government personnel.

Annual budget The local governments will need to align their processes for  Procurement costs of budgeting software. developing the annual budget. This may be through choosing an existing process and expanding on it, or developing a new process entirely (such as procuring budgeting software).

There should be a process in place to ensure that financial data  External fees to migrate financial data and is transferred smoothly and accurately. (Refer to “Systems - audit for integrity should this process be Migration of data” under Section 4 “Transitional Considerations outsourced. If this task is undertaken and Costs.” Consideration should be given as to whether internally, there may be associated multiple financial systems will be running in parallel and if the opportunity costs. accounts will have a set close-off date.  Technical support fees for specialist advice about the financial systems

The first budget for the amalgamated entity must be completed  External fees if support resources are by the 31st of August. The amalgamated entity should contracted to meet the 31st August

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Function/Activity Task Transitional cost / revenues determine whether it has sufficient resources to meet this deadline. deadline, or if an extension from the Minister must be sought.

Budget items need to be standardised across all the local  It is assumed that the associated governments. These include rates, fees, charges, rates in the transitional costs should be absorbed dollar for GRV and UV, discounts for early payments of rates, internally by finance personnel. interest on overdue rates, etc.

An audit of carryover balances from the former local  External fees should the audit of carryover government budgets may be conducted to ensure that they are balances be outsourced. If this task is accurate. It is recommended that the Department of Local undertaken internally, there may be Government’s operational guideline, “Opening and Closing associated opportunity costs. Funds in the Annual Budget” be used as a reference for consistency.

Budget review The local governments must align their processes for budget  It is assumed that the associated reviews. transitional costs should be absorbed internally by finance personnel.

Annual and monthly Accounting policies must be standardised across the local  It is assumed that the associated financial reporting governments. The resulting policies should enable a true and transitional costs should be absorbed fair view of the financial position and performance of the internally by finance personnel. amalgamated entity.

The date of transition will be critical in determining how many  External fees to audit multiple financial financial reports will be produced and the level of information in statements if necessary each. The local governments need to determine what the date of amalgamation will be and how this will impact on the financial reports to be produced.

To ensure an accurate audited opening balance in the first  External fees for the audit of interim amalgamated financial report, a policy should be developed accounts outlining how subsequent adjustments will be made once the information has been audited. The local governments may also consider having their interim accounts audited.

The amalgamated entity must determine whether it will have  Costs of running multiple systems in

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Function/Activity Task Transitional cost / revenues sufficient resources to compile an integrated statement of parallel financial activity in the first few months following amalgamation. If this is not feasible, it may be necessary to produce separate statements for each of the local governments during the early stages of amalgamation.

The amalgamated entity needs to determine who the statement  It is assumed that the associated of financial activity will be presented to during the early stages transitional costs should be absorbed of transition. This may be to the Commissioner until such time internally by finance personnel. as the council is elected.

Annual report The format of the annual report needs to be determined so as  It is assumed that the associated to accurately describe the activities of the past financial year. transitional costs should be absorbed The first annual report of the amalgamated entity should internally by finance personnel. include a detailed outline of the amalgamation process, why it was undertaken, and how it will effect the community.

Application of materiality The local governments will need to align their guidelines for  Any associated costs should be absorbed materiality levels. The resulting guidelines should ensure that internally by appropriate personnel. meaningful differences and errors are detected.

Australian Accounting The amalgamating entity must ensure that they comply with  External fees should the process to ensure Standards applying to AASB 2008-11 “Amendments to Australian Accounting that the amalgamated entity complies with amalgamations Standard – Business Combinations Among Not-for-Profit AASB standards be outsourced. If this task Entities”, which provides for the treatment of assets and is undertaken internally, there may be liabilities during a local government restructure. associated opportunity costs.

Chart of accounts Accounts must be standardised and consolidated. There must  It is assumed that the associated be a process to ensure that the transfer of information is transitional costs should be absorbed appropriate, for example assets should be transferred at fair internally by finance personnel. value or written down at cost. This may involve the creation of a conversion table from the old charts to the new chart of accounts to ensure that all line items have been properly coded and are subject to an audit trail.

All records should be retained for future reference, which  Costs associated with the retention of includes information prepared under the previous chart of records, such as storage and retrieval

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Function/Activity Task Transitional cost / revenues accounts for the former local governments. costs.

Compliance audit return Given that the compliance audit is for the period 1 January to  External fees should the compliance audit 31 December each year, the amalgamated entity must be outsourced. If this task is undertaken determine how the date of amalgamation will effect the number internally, there may be associated of audits which must be completed. The amalgamated entity opportunity costs. may be exempted from completing a return.

During the transition period in the possible absence of a council  No assumed transitional costs are and CEO, the amalgamated entity must determine who the associated with this activity. compliance audit return will be presented to and who will certify it.

Rate Setting Statement The local governments will need to align their processes for  Any associated costs should be absorbed developing the Rate Setting Statement. internally by appropriate personnel.

Auditors The amalgamated entity needs to determine who will be their  Costs of tendering the audit contract auditor. They may decide to utilise the services of an incumbent or put the contract out to tender.  Termination fees for existing audit contracts Consideration should be given as to how the amalgamated entity will achieve value for money now that only one auditor will be required.

The Audit Committee and its terms of reference should be  Any associated costs should be absorbed established with appropriate representation from the former internally by appropriate personnel. local governments.

The amalgamated entity will need to determine who will sign  No assumed transitional costs are the Management Letter during the transition period. associated with this activity.

Delegations The RTG needs to determine what duties and powers will be  Any associated costs should be absorbed delegated to committees and CEO and/or Commissioner during internally by appropriate personnel. the transition period. This should include an interim financial delegation of authority.

A process needs to be developed to ensure a smooth handover  Any associated costs should be absorbed

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Function/Activity Task Transitional cost / revenues of powers from the individual local governments, to appropriate internally by appropriate personnel. personnel during the transition period, to the amalgamated entity. This process should be documented, transparent and communication to all staff.

Payment of accounts A process needs to be developed to ensure that creditors of all  Any associated costs should be absorbed the local governments continue to be paid during the transition internally by appropriate personnel. period. This process should also cover how creditors will be informed of the existence of the new amalgamated entity.

Review of financial The local governments will need to align their processes for  External fees should the review of financial management systems reviewing their financial systems. As part of the transition systems be outsourced. If this task is process, the RTG may decide to review all existing financial undertaken internally, there may be systems to determine which will be most suitable for the associated opportunity costs. amalgamated entity. This is covered under the transition tasks for “Systems”

Tendering and The local governments will need to align their processes for  Any associated costs should be absorbed purchasing tendering and purchasing. Consideration should also be given internally by appropriate personnel. as to whether any tendering or purchasing activities are currently being undertaken by the individual local governments,  Legal or termination fees if any contracts and whether these will remain active or be cancelled during the are cancelled transition period.

Rates Rates must be standardised. The amalgamated entity must  It is assumed that the associated determine how the amalgamation will effect the rates and the transitional costs should be absorbed impact this will have on equality. internally by finance and other appropriate personnel.

An audit of all properties in the rate book should be carried out  External fees should the audit be to ensure that valuations are up to date. It is recommended that outsourced. If this task is undertaken revaluation dates be discussed with the Valuer-General with a internally, there may be associated view to all valuations within the new district having the same opportunity costs. review date.

The amalgamated entity needs to determine if there is any  Loss of income from overdue rates action (such as the transfer or sale of land) pending on overdue

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Function/Activity Task Transitional cost / revenues rates from the former local governments

The amalgamated entity needs to determine if there is any  Legal fees legal action pending on rate recovery and any contingent liabilities for legal expenses or costs on unsuccessful claims from the former local governments

The amalgamated entity needs to determine if any rates  Write-off costs from bad debt considered irrecoverable from the former local governments have been written off.

Financial Assistance The amount of the Financial Assistance Grant from the WA  It is assumed that the associated Grants Local Government Grants Commission following amalgamation transitional costs should be absorbed needs to be determined. The amount of the grant will increase internally by finance personnel. every year for the first five years following amalgamation, after which it will decrease on the assumption that cost efficiencies will be in place.

Grants The amalgamated entity needs to determine the overall  External fees should the audit be number, type and amount of grants that they will receive. An outsourced. If this task is undertaken audit may be undertaken to ensure compliance with any internally, there may be associated milestones or reporting conditions. opportunity costs.

The grant provider/s needs to be advised of the new  No assumed transitional costs are amalgamated entity and to determine whether the associated with this activity. amalgamation has any impact on the grant conditions.

Fees and charges Fees and charges must be standardised to ensure consistency  Costs of advising the community of and fairness across the community. Policies may also need to changes in fees and charges (such as be reviewed and standardised to ensure compliance with the postage, envelopes, pamphlets) level of fees and charges.

The amalgamated entity needs to ensure that the fees and  It is assumed that the associated charges will provide sufficient revenue to complement the transitional costs should be absorbed overall income position of the government internally by finance personnel.

Service charges Service charges must be standardised to ensure consistency  Costs of advising the community of Feasibility Study – Attachment 4 – Transitional Issues Page 219

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Function/Activity Task Transitional cost / revenues and fairness across the community. Policies may also need to changes in service charges (such as be reviewed and standardised to ensure compliance with the postage, envelopes, pamphlets) level of service charges.

The amalgamated entity needs to ensure that the service  It is assumed that the associated charges will provide sufficient revenue to complement the transitional costs should be absorbed overall income position of the government internally by finance personnel.

Commercial activities The amalgamated entity should ensure that the amalgamation  Costs that amalgamation may have on does not adversely impact existing commercial activities. existing commercial activities Where this cannot be avoided, a strategy should be developed to minimise the impact on operations.

Other revenue/income The amalgamated entity needs to determine if any income from  Increase or decrease in income from services will be lost (or generated) as a result of amalgamation services as a result of the amalgamation

Revenue streams that existed between the local governments  It is assumed that the associated need to be reclassified and reported on in accordance with transitional costs should be absorbed Australian Accounting Standards. internally by finance personnel.

Insurance Opportunities for cost savings by consolidating insurance  It is assumed that the associated policies should be identified. transitional costs should be absorbed internally by finance personnel.

The amalgamated entity need to determine how they will  Fees associated with the early termination manage differing policy renewal dates to ensure consistent of policies coverage across the transition period.

Other expenditure Arrangements must be made to ensure that payments are not  Fees for altering account or payment details delayed. This involves advising creditors of the existence of the new amalgamated entity, ordering new cheque stationary,  New cheque stationary updating bank details, allocating new ABN’s and preparing Business Activity Statements.

Where commissioners are appointed, consideration should be  No assumed transitional costs are given as to whether delegation will be given to the CEO to associated with this activity. make payments from the Municipal and Trust Funds and if the

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Function/Activity Task Transitional cost / revenues CEO will prepare a list of payments for the information of commissioners in accordance with the provisions of Regulation 13 of the Local Government (Financial Management) Regulations 1996

A new ABN may need to be allocated. The Australian Tax  There may be costs associated with Office should be contacted for further advice. applying for a new ABN and terminating old ABN’s.

Investment Treasury policies must be standardised. There should also be a  It is assumed that the associated management - bank process in place to ensure that the treasury functions operate transitional costs should be absorbed accounts smoothly during the transition period. This should include a internally by finance personnel. transition delegation of authority and governance framework.

The amalgamated entity needs to decide how many accounts it  Account fees will maintain and with which institutions. Consideration should be given to the consolidation of accounts.  Bank fees associated with opening and closing accounts and transferring funds. Prior to consolidation, an audit of all existing bank accounts to determine the nature and level of transactions which are  External fees should the audit be processed may be conducted. The date of consolidation needs outsourced. If this task is undertaken to take into account the clearing of cheques and processing of internally, there may be associated electronic transactions. opportunity costs.

The banking institutions must be notified of the change in  Cheque stationary details, as well as any suppliers or customers using electronic transfers. New cheque stationary needs to be ordered.

Investment There must be a process in place that outlines how reserve  Bank fees associated with opening and management - reserve accounts are to be consolidated. The amalgamated entity closing accounts and transferring funds. accounts should determine whether there are restrictions in place regarding the transferring and closing of accounts.

Investment An audit of all investments and investment instruments of the  External fees for specialist investment management - local governments may be undertaken to gather a advice. If this task is undertaken internally, comprehensive understanding of what exists, their performance

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Function/Activity Task Transitional cost / revenues investments and how they should be consolidated. there may be associated opportunity costs.

The amalgamated entity need to determine whether the change  Fees associated with transfer of title in title will affect access to the investments. Financial institutions managing the investments need to be advised of the new amalgamated entity and relevant documentation needs to be changed.

The amalgamated entity needs to determine how investment  External fees for advice on the reporting of information will be consolidated and reported in their first investments. If this task is undertaken annual financial report The amalgamated entity must determine internally, there may be associated how the investments are to be valued, write-downs and the opportunity costs. existence of contingent liabilities.

Investment Administrators of the trust funds must be notified of the  Fees associated with the transfer of title management - funds existence of the new amalgamated entity. The amalgamated entity must determine if there will be difficulties associated with the transfer of title

Investment Financial institutions need to be notified of the existence of the  Fees associated with the change of details management – interest new amalgamated entity. The amalgamated entity needs to earnings determine if there will be any difficulties associated with transferring the interest earnings.

Debt management - Due diligence should be performed on all existing borrowings to  External fees to reform due diligence borrowings review their terms, conditions and extent. The amalgamated entity also needs to be determine whether amalgamation will  Bank fees effect any of the borrowing terms.  Interest penalties

Opportunities for cost savings via the consolidation of debt  It is assumed that the associated should be identified transitional costs should be absorbed internally by finance personnel.

Lending institutions need to be advised of the existence of the  Costs associated with the delivery (printing new amalgamated entity

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Function/Activity Task Transitional cost / revenues and postage) of such notifications.

Debt management – Financial institutions need to be informed of the existence of  Costs associated with the change of details interest expenses the new amalgamated entity.

The RTG should determine whether there are any cost savings  Cost savings to be achieved from consolidating interest repayments

Asset management The RTG should determine what assets need to be acquired  Income from the disposal of assets and disposed to effectively deliver services to be provided by the amalgamated entity.  Costs to acquire assets

Policies and procedures to manage assets (this includes  It is assumed that the associated acquisition, disposal, transfers, stocktakes, records etc.) need transitional costs should be absorbed to be aligned across the local governments internally by finance personnel.

Consideration needs to be given as to which asset register will  Costs of new asset register software be used by the amalgamated entity, and how information from the existing registers will be transferred efficiently and  External consultant fees if the migration of accurately data is outsourced. If this task is undertaken internally, there may be associated opportunity costs

Depreciation and valuation policies need to be aligned. This is  Gain or loss on due to changes in cost especially important if local governments measure the costs of measurement a particular asset class differently. For example, one local government may measure their buildings at cost, while another  External consultant fees if the process to may use fair value. The RTG needs to determine what method change the measurement basis is will most accurately represent the true value of the asset, and outsourced. If this task is undertaken internally, there may be associated then apply this consistently across the local governments opportunity costs before amalgamation. This may result in significant changes to asset values.

Occupational Health Ensure that there is up to date Occupational Health and Safety  Refer to the ‘People’ section under this and Safety policy. table for associated transitional costs. Establish an OHS representative for each office across the Transitional costs may include the provision of appropriate training for those representatives

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Function/Activity Task Transitional cost / revenues amalgamated entity. who have not previously undertaken this role. Consideration should be given as to whether the amalgamated  There may be administration costs in entity will have a Safety and Health Committee. Although this establishing such a Committee. is not mandatory, some of the existing local governments that

are forming the amalgamation may have such committees and the future state of these committees will need to be decided.  Occupational Health and Safety materials and equipment. All offices (including services and depot operations) falling under the amalgamated entity should be provided with appropriate OHS materials and equipment.

Access to information  Recruiting a Freedom of Information Officer to assist with  Transitional costs associated with this will any FOI request during the initial amalgamation stages. include:  Advertising, interview and recruitment costs

 Salary costs

 Administration costs (office space, etc).

If this position is to be temporary then costs associated with salary should be flagged as a transition cost. However, if it is thought by the amalgamated entity that this role should be permanent, such salary and administrative costs should be absorbed as an annual cost under awards and agreements.  Develop an information statement for the amalgamated entity, as per section 94 of the Freedom of Information Act 1992 and publish a copy of this as per section 96 of this Act.  The CEO or appropriate staff should absorb any transitional costs associated with this activity.

Contracts  Review existing contracts across all local governments  Associated transitional costs may include – who are involved in the amalgamation process and decide on what contracts will be required under the amalgamated entity.  Termination/early breaking fees for those contracts relating to employment,

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Function/Activity Task Transitional cost / revenues and lease agreements; and  Legal advice around certain contract issues.

 Associated costs may include severance  Conduct an audit of all employment contracts and payouts for breaking the contract early. temporary staff to determine the impact that these contractual arrangements will have on the amalgamated entity in terms of employment payments.  This may have transitional costs associated  New contracts will need to be created with relevant with legal and/or other fees to draft up companies, employees, and contractors with the new contracts. amalgamated entity’s details. Note – all transitional tasks and costs of contracts relating to goods and services (including employment relating to such a service) should be accounted for under ‘Services – contract’.

Legal proceedings  If any local government is involved in legal proceedings, Transitional costs may involve – the amalgamated entity may need to seek further legal advice  legal fees for the current legal proceeding as to how this will impact the new entity in terms of its and for legal advice on how the involvement with the proceedings and any cost implications amalgamated entity should deal with these that it may bring to the amalgamated entity. proceedings;  incurring any court fees and/or fines depending on the result of the proceedings.

Leases  An audit of current leases held by the individual local Associated transitional costs may governments compared to those leases required should be include – undertaken. This will inform the amalgamated entity as to  fees associated with termination and/or whether they require terminating leases, undertaking new new lease agreements; leases, and/or amending agreements of current leases to exist under the amalgamated entity opposed to the previous local  absorbing the costs of all local government government. leases depending on whether the amalgamated entity decides to terminate leases.

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Function/Activity Task Transitional cost / revenues

Local laws  Each local government will need to review their existing Associated transitional costs may include – local laws and assess the degree of difference and/or legal advice and/or legislative officer to commonality. Where local laws need to be repealed and new undertake the review of local laws, perform local laws drafted and enacted, the amalgamated entity should the drafting process of new local laws and have regard to the required process for instituting and repealing assist with the process of repealing local laws local laws. Refer to section 7.4 of the Local Government where the local government does not have Amalgamation Guidelines, the Local Government Act 1995 and internal resources to legal officers the State Law Publisher for further information. publication and review costs associated with providing public notice about the local law, allowing a minimum six-week gap for public submission to the proposed local law; and  costs associated with publishing the local laws within the Government Gazette.

People

Planning Review the individual local government plans to assess the  Staff should absorb costs internally. level of similarities of plans.

Assess the required plans for the amalgamated entity, based  Staff should absorb costs internally. on a needs assessment and legislative requirements.

Develop required plans for the amalgamated entity.  Associated transitional costs may include fees to WALGA for any assistance provided within this area.

Policy Review individual local government policies and procedures to  Staff should absorb costs internally. assess the degree of synergy and transferability into the amalgamated entity’s policy and procedures.

Develop one set of policies and procedures across the required  Associated transitional costs that may need operational areas (for example, human resources, finance, to be considered when reviewing and planning) that reflect the amalgamated entity. developing such policy and procedural documents may be fees to WALGA.

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Function/Activity Task Transitional cost / revenues

Human Resources Human Resource staff Transitional costs may include:  Recruitment of a human resource staff to complement the  advertising costs; amalgamated entities services and operations.  interviewing costs;

 fees for contracting an external recruitment officer/s to undertake the process;

 start-up costs, such as relocation costs, various training and administration costs.  In addition, there may be transitional costs in reducing the current number of Human Resource staff. This would include –  in the short term, severance packages may need to be paid

(unless employees opt for the two- year displacement program). See section ‘People – Human Resources – Displaced Employees’ for more information.

Note - In the longer term, the amalgamated Change management (culture) entity should realise a significant saving There are many aspects of change management, most of through maintaining a more efficient and which have been discussed under other services and activities effective HR service which requires a lower within this document. There is however the cultural side to number of HR staff. change management which needs to be considered. If it is not The associated costs could involve employing considered, it can pose a large risk to the local government’s an external change management consultant success. Key tasks and associated transitional costs may to work with the local government during and include: post the amalgamation stages.  Undertaking a cultural assessment of the new entity and The associated transitional costs may include implementing strategies to enhance a positive working culture. information sessions, letters advising of new structure and key contacts for various service  Undertaking community consultations to inform of the lines, and a survey of community satisfaction new organisational changes to their local government.

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Function/Activity Task Transitional cost / revenues  Conducting consultations with both State and of the new entity. Commonwealth Government and other organisations to inform The associated transitional costs with this them on the new structure of the local government, new may include forums, booklets/directory of the processes that may arise and service lines. local government and could include the Filling positions – establishment of MOUs/contract/Deeds if a working relationship exists.  Having an organisational structure and integration plan in place will dictate the type of positions that will need to be filled. This may involve transitional costs of – As a first step, it is important that the Commissioner and/or  Development of policies and CEO have a clear communication and retention plan where procedures for filling positions and they advise all employees of the process undertaken when which will be consistent with the filling the positions, and ensure that experienced and skilled legislation. employees are retained.  Holding information sessions, where  Recruiting of positions should be undertaken as a priority it may be desirable to contract an and it may be appropriate to use an external recruiting person external facilitator to ensure absolute to coordinate this process in order to reduce perceptions of objectivity. bias. Contracting an external recruitment officer will have transitional costs such as professional fees.  Ensuring that there is open and transparent communication at all times, where employees can contact an appropriate person to answer questions and provide adequate support. It is presumed that this role should be absorbed internally either Displaced employees by the local government entity, or the Department of Local Government.  Develop a policy for displaced employees that will address contract termination, payouts and voluntary severance.  Development of the actual policy, whereby The policy should be consistent with the contract of local governments may need to contract out employment and awards and agreements. the service to an expert within the industrial relations area.  Consult with relevant unions upfront and throughout this process to mitigate the industrial disharmony.  There are no anticipated transitional costs associated with this, as the time spent  Liaise with the Department of Local Government for liaising with the Department should be advice on contract provisions (awards and agreements) and absorbed internally at both ends. how it relates to specific termination payments.  Transitional costs should consider the  Forecast the numbers of displaced employees and the estimated net impact of the severances

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Function/Activity Task Transitional cost / revenues impact it will have on severance packages. packages as a total.  Have consideration to Schedule 2.1, Clause 11 (4) of the  The costs of paying employees for an Local Government Act 1995 which prescribes that permanent interim period of two years will need to be employees can continue working in an amalgamating estimated by the amalgamated entity. government for two years from the date of amalgamation order, or alternatively they can negotiate a suitable compensation.  Associated transitional costs of providing  Develop a support service system whereby displaced this service (including the frequency of employees can access general counselling and/or financial service) to displaced employees needs to be counselling services to assist them throughout the period. factored in. Dealing with grievances  Training and employing a person (outside of the local government entity) to work as a  Develop a process that will address staff grievances, grievance officer role for a specific amount particularly in the context of grievances arising as a result of of time until cultural and other changes the amalgamation. associated with the amalgamation are sorted;.

 Sub-contracting out the services to an external consultant to provide grievance officer duties on a casual basis, or as the need arises. Awards and agreements  An increase or decrease on the actual  The person responsible for human resources must be award costs for local government fully conversant with the current awards and agreements employees. applicable to Local Government and the cost impact it will have to each employee.  Transitional costs may include the recruitment of an external consultant to  The award and agreement structures need to be review the structure and provide standardised across the local governments. recommendations. This would also provide an independent evaluation and avoid conflicts of interest.  All awards and agreements relating to each employee  Most of these costs should be absorbed should be consolidated onto a single payroll and personnel internally through the human resource staff. system. For “system” transitional costs refer to the above section on systems.

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Function/Activity Task Transitional cost / revenues

Accommodation Either moving to a new establishment/s or staying in current  Leasing or buying a new premises to accommodation will involve many transitional costs depending accommodate both permanent staff and on what the amalgamated entity decide on. displaced staff who will need an office space for the short term  Contracting a designer to assist with office design, space planning and overall ergonomics  Contracting appropriate trades people to renovate the accommodation and fit it out with the required office structures;  Purchase of administration/ office equipment such as desks, whiteboards, tables, chairs, stationary, kitchen utilities.  Changing all documentation (including letterheads, business cards…) with the new accommodation location.

It is important to create a new office environment by changing  Contracting a designer to assist with office the ergonomics and look to signify a fresh and new start to the design, space planning and overall amalgamated entity, particularly in enhancing a positive cultural ergonomics change.  Contracting appropriate trades people to renovate the accommodation and fit it out with the required office structures;  Purchase of administration/ office equipment such as desks, whiteboards, tables, chairs, stationary, kitchen utilities.

Other

Commissioner  Employ a Commissioner until a Council is elected (if  The associated transitional costs of this required). include salary costs for up to one year, remuneration costs and allowances.

 The transitional costs associated with this

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Function/Activity Task Transitional cost / revenues  Develop an induction pack to assist Commissioner/s to may include – settle into their new role.  the development of the document’s content (staff hours to write it);  printing and publication costs; and  any associated training costs.

Organisational Chart On completion of the above assessments, an organisational  Consideration of contracting an Design chart may be designed. It is extremely important to understand independent party to develop a new that the organisational chart for the amalgamated entity cannot organisational structure may assist in

and should not be designed until all the planning of what will reducing conflicts of interests and constitute the organisation has been undertaken. That is, to perceptions of bias. Should the develop this organisational chart, regard needs to be given to amalgamated entity consider this, there will the type of business the new entity will have and the services it be transitional costs associated with will provide. contracting an external person to perform the task and should be sourced via government tendering.

Integration plan Alongside the organisational structure, the local government  The development of the integration plan should have regard to developing an integration plan which will could be mostly absorbed internally, unless

consider how to merge old and current human resource it is decided that it would be more beneficial systems, functions, culture and people together effectively. to outsource the service (or a health-check of the proposed plan). This will naturally have transitional costs such as tendering and contracting and external person to perform the work.

‘Amalgamation” Project A project of this nature would ordinarily require a Steering  External support costs for any aspects not leadership and Committee, Sponsor, project manager and/or additional able to be met internally from current management support. resources

End of Attachment 4

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ATTACHMENT 5 – Rate Setting Statement

Statement of Comprehensive Income (merged entity) Statement of Comprehensive Income Budget Budget Budget Merger Amalgamated 2011/12 2011/12 2011/12 Adjustment Council Koorda Mt Marshall Trayning Revenue Governance 45,916 307,154 30,010 0 383,080 General Purpose Funding 2,254,666 2,596,871 1,790,667 0 6,642,204 Law, Order & Public Safety 40,477 19,100 14,895 0 74,472 Health 131,091 0 36,450 0 167,541 Education & Welfare 0 23,216 0 0 23,216 Housing 110,732 61,360 58,466 0 230,558 Community Amenities 143,633 74,995 48,081 0 266,709 Recreation & Culture 12,729 19,240 21,203 0 53,172 Transport 228,600 151,351 73,163 0 453,114 Economic Services 28,900 74,500 40,586 0 143,986 Other Property & Services 12,952 40,600 77,715 0 131,267 Operating revenues 3,009,696 3,368,387 2,191,236 0 8,569,319 Expenditure Governance (405,108) (632,841) (199,936) 259,200 (978,685) General Purpose Funding (81,030) (68,139) (61,018) 0 (210,187) Law, Order & Public Safety (138,721) (59,256) (77,227) 0 (275,204) Health (273,148) (104,198) (222,863) 0 (600,209) Education & Welfare (12,610) (134,366) (14,827) 0 (161,803) Housing (124,505) (220,564) (100,256) 0 (445,325) Community Amenities (240,445) (304,210) (152,778) 0 (697,433) Recreation & Culture (596,717) (523,546) (459,119) (60,000) (1,639,382) Transport (1,245,840) (2,882,341) (892,393) (60,000) (5,080,574) Economic Services (248,644) (227,026) (362,005) 0 (837,675) Other Property & Services (4,309) (36,735) (60,266) 0 (101,310) Operating expenditures (3,371,077) (5,193,222) (2,602,688) 139,200 (11,027,787)

Net (361,381) (1,824,835) (411,452) 139,200 (2,458,468)

Non Operating grants, contributions Governance 0 0 0 0 0 General Purpose Funding 198,800 804,442 743,879 0 1,747,121 Law, Order & Public Safety 0 37,200 15,000 0 52,200 Health 0 0 0 0 0 Education & Welfare 0 0 10,000 0 10,000 Housing 360,000 0 0 0 360,000 Community Amenities 0 0 5,000 0 5,000 Recreation & Culture 110,319 0 216,355 0 326,674 Transport 618,000 835,763 405,388 0 1,859,151 Economic Services 0 125,000 144,012 0 269,012 Other Property & Services 0 0 0 0 0 Non Operating grants, contributions 1,287,119 1,802,405 1,539,634 0 4,629,158

Net result 925,738 (22,430) 1,128,182 139,200 2,170,690

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5.1 Rate Setting Statement (merged entity) Budget Budget Budget Merger Merged Rate Setting Statement 2011/12 2011/12 2011/12 Adjustment Council Koorda Mt Marshall Trayning Operating Rates 776,843 1,086,026 600,908 0 2,463,777 Other Program revenues 2,232,853 2,282,361 1,590,328 0 6,105,542 Program Expenditures (3,371,077) (5,193,222) (2,602,688) 139,200 (11,027,787) Proceeds from normal operations (361,381) (1,824,835) (411,452) 139,200 (2,458,468) Write back non cash items Profit on asset disposals (111,375) 77,013 0 0 (34,362) Depreciation 1,028,311 2,349,494 584,967 0 3,962,772 Net operating 555,555 601,672 173,515 139,200 1,469,942 Capital Grants, Subsidies and Contributions 1,287,119 1,802,405 1,539,634 0 4,629,158 Proceeds from Sale of Non‐Current Ass 415,000 213,500 15,000 643,500 Land & Buildings (1,300,430) (1,060,689) (996,292) 0 (3,357,411) Plant & Equipment (844,000) (543,500) (110,000) 0 (1,497,500) Furniture & Equipment (32,000) 0 (25,000) 0 (57,000) Infrastructure ‐ Roads (1,213,000) (1,683,638) (683,594) 0 (3,580,232) Infrastructure ‐ Other (464,400) (370,889) (40,000) 0 (875,289) Net capital (2,151,711) (1,642,811) (300,252) 0 (4,094,774) Reserve Transactions Transfers (to) Reserves (443,800) (585,372) (265,197) 0 (1,294,369) Transfers from Reserves 1,003,453 359,620 381,412 0 1,744,485 Net Transfers (to)/From Reserves 559,653 (225,752) 116,215 0 450,116 Debt Funding Loans to Community 0 (200,000) 0 0 (200,000) Principal Repayments 0 (121,690) (91,264) 0 (212,954) Repayment of Loans by Community Gro 0 7,861 0 0 7,861 0 (313,829) (91,264) 0 (405,093) Net Funding (1,036,503) (1,580,720) (101,786) 139,200 (2,579,809) Net current assets 1 July Surplus/(Deficit) 1,036,503 1,582,220 104,385 0 2,723,108 LESS 30 June Surplus/(Deficit) 0 1,500 2,599 4,099 1,036,503 1,580,720 101,786 0 2,719,009 Budget (Deficit)/Surplus 0 0 0 139,200 139,200 ‐

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5.3 Long Term Financial estimates

Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Statement of Comprehensive Income Operating Revenues 1,2,3 Rates 8 2,463.8 2,624.6 2,735.6 2,840.0 2,944.1 3,048.0 3,151.1 3,262.0 3,376.4 3,494.3 3,617.2 3,743.6 Operating grants, subsidies, contribution 6 4,675.2 3,607.0 6,257.7 4,880.2 5,050.7 5,227.2 5,409.8 5,598.9 5,794.5 5,997.0 6,206.6 6,423.5 Capital Grants, subsidies, contributions 5 4,629.2 4,142.2 2,739.3 1,254.8 1,055.8 1,109.3 1,165.6 1,224.8 1,286.9 1,352.3 1,420.9 1,493.0 Profit on asset disposals 140.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees and charges 7 877.5 907.2 937.9 969.7 1,002.6 1,036.7 1,072.0 1,108.5 1,146.2 1,185.3 1,225.8 1,267.7 Service charges 7 2.0 2.1 2.2 2.2 2.3 2.4 2.5 2.6 2.7 2.7 2.8 2.9 Interest earnings 9 77.3 75.5 84.3 67.9 68.9 71.3 73.9 76.7 79.5 82.4 85.4 88.5 Reserve fund interest 11 247.9 178.5 165.3 170.3 183.8 191.8 201.8 212.6 233.9 242.0 254.8 269.7 Other revenue 88.3 91.4 94.6 97.9 101.3 104.8 108.5 112.3 116.2 120.3 124.5 128.9 Total Operating Revenue 13,201.2 11,628.4 13,016.8 10,283.0 10,409.5 10,791.7 11,185.2 11,598.3 12,036.4 12,476.4 12,938.0 13,417.8 Operating Expenses 1,2,3 Employee costs (2,525.0) (2,613.3) (2,594.6) (2,685.4) (2,779.4) (2,876.7) (2,977.3) (3,081.6) (3,189.4) (3,301.0) (3,416.6) (3,536.2) Material and contracts (3,563.4) (3,314.7) (4,988.5) (3,580.9) (3,706.2) (3,835.9) (3,970.2) (4,109.1) (4,252.9) (4,401.8) (4,555.9) (4,715.3) Utility charges (electricity, gas, water etc. (294.3) (323.8) (340.7) (355.6) (371.1) (387.4) (404.3) (422.0) (440.5) (459.7) (479.8) (500.8) Depreciation on non‐current assets 10 (3,962.8) (4,145.4) (4,336.6) (4,536.9) (4,746.7) (4,966.4) (5,196.5) (5,437.5) (5,689.9) (5,954.3) (6,231.3) (6,521.5) Loss on asset disposal (105.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest expenses 4 (81.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Insurance expenses (327.0) (344.2) (339.3) (351.2) (363.5) (376.2) (389.4) (403.0) (417.1) (431.7) (446.8) (462.5) Other expenditure (310.3) (321.1) (332.4) (344.0) (356.0) (368.5) (381.4) (394.8) (408.6) (422.9) (437.7) (453.0) Operating Expenses (11,169.7) (11,062.5) (12,932.0) (11,853.9) (12,322.9) (12,811.0) (13,319.1) (13,847.9) (14,398.4) (14,971.5) (15,568.1) (16,189.2)

Proceeds from normal operations 2,031.5 565.9 84.8 (1,570.9) (1,913.4) (2,019.3) (2,133.8) (2,249.6) (2,362.0) (2,495.1) (2,630.1) (2,771.4)

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Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Funding Statement Operating Revenues(Excluding capital contributions) Rates 8 2,463.8 2,624.6 2,735.6 2,840.0 2,944.1 3,048.0 3,151.1 3,262.0 3,376.4 3,494.3 3,617.2 3,743.6 Operating grants, subsidies, contribution 6 4,675.2 3,607.0 6,257.7 4,880.2 5,050.7 5,227.2 5,409.8 5,598.9 5,794.5 5,997.0 6,206.6 6,423.5 Profit on asset disposals 140.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees and charges 7 877.5 907.2 937.9 969.7 1,002.6 1,036.7 1,072.0 1,108.5 1,146.2 1,185.3 1,225.8 1,267.7 Service charges 2.0 2.1 2.2 2.2 2.3 2.4 2.5 2.6 2.7 2.7 2.8 2.9 Interest earnings 9 77.3 75.5 84.3 67.9 68.9 71.3 73.9 76.7 79.5 82.4 85.4 88.5 Reserve fund interest 11 247.9 178.5 165.3 170.3 183.8 191.8 201.8 212.6 233.9 242.0 254.8 269.7 Other revenue 88.3 91.4 94.6 97.9 101.3 104.8 108.5 112.3 116.2 120.3 124.5 128.9 8,572.0 7,486.3 10,277.5 9,028.3 9,353.7 9,682.3 10,019.6 10,373.5 10,749.4 11,124.1 11,517.1 11,924.8 Operating Expenses(Excluding interest expense) Employee costs (2,525.0) (2,613.3) (2,594.6) (2,685.4) (2,779.4) (2,876.7) (2,977.3) (3,081.6) (3,189.4) (3,301.0) (3,416.6) (3,536.2) Material and contracts (3,563.4) (3,314.7) (4,988.5) (3,580.9) (3,706.2) (3,835.9) (3,970.2) (4,109.1) (4,252.9) (4,401.8) (4,555.9) (4,715.3) Utility charges (electricity, gas, water etc. (294.3) (323.8) (340.7) (355.6) (371.1) (387.4) (404.3) (422.0) (440.5) (459.7) (479.8) (500.8) Depreciation on non‐current assets 10 (3,962.8) (4,145.4) (4,336.6) (4,536.9) (4,746.7) (4,966.4) (5,196.5) (5,437.5) (5,689.9) (5,954.3) (6,231.3) (6,521.5) Loss on asset disposal (105.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Insurance expenses (327.0) (344.2) (339.3) (351.2) (363.5) (376.2) (389.4) (403.0) (417.1) (431.7) (446.8) (462.5) Other expenditure (310.3) (321.1) (332.4) (344.0) (356.0) (368.5) (381.4) (394.8) (408.6) (422.9) (437.7) (453.0) 1,2,3 (11,088.4) (11,062.5) (12,932.0) (11,853.9) (12,322.9) (12,811.0) (13,319.1) (13,847.9) (14,398.4) (14,971.5) (15,568.1) (16,189.2) Proceeds from normal operations (2,516.4) (3,576.3) (2,654.5) (2,825.7) (2,969.2) (3,128.7) (3,299.5) (3,474.4) (3,649.0) (3,847.4) (4,051.0) (4,264.4) Write back non cash items (Profit) /Loss on asset disposals (34.4) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Depreciation 10 3,962.8 4,145.4 4,336.6 4,536.9 4,746.7 4,966.4 5,196.5 5,437.5 5,689.9 5,954.3 6,231.3 6,521.5 Write back non cash items 3,928.4 4,145.4 4,336.6 4,536.9 4,746.7 4,966.4 5,196.5 5,437.5 5,689.9 5,954.3 6,231.3 6,521.5 Net operating funds 1,412.1 569.1 1,682.2 1,711.3 1,777.5 1,837.7 1,897.0 1,963.1 2,040.9 2,107.0 2,180.4 2,257.1 carried forward

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Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Carried forward net funds 1,412.1 569.1 1,682.2 1,711.3 1,777.5 1,837.7 1,897.0 1,963.1 2,040.9 2,107.0 2,180.4 2,257.1 Capital 13 Grants, Subsidies and Contributions 5 4,629.2 4,142.2 2,739.3 1,254.8 1,055.8 1,109.3 1,165.6 1,224.8 1,286.9 1,352.3 1,420.9 1,493.0 Proceeds from Sale of Non‐Current Assets 12 643.5 369.0 365.0 483.0 504.0 428.7 463.9 522.2 311.3 410.5 394.7 372.2 Land & Buildings 15 (3,357.4) (1,286.9) (1,343.7) (584.2) (307.0) (317.7) (328.9) (340.4) (352.3) (364.6) (377.4) (390.6) Plant & Equipment 16 (1,497.5) (986.0) (922.0) (1,221.0) (1,273.3) (1,160.8) (1,162.0) (1,180.0) (998.8) (1,087.3) (1,070.0) (1,107.4) Furniture & Equipment 17 (57.0) (78.7) (81.5) (84.3) (87.3) (90.3) (93.5) (96.7) (100.1) (103.6) (107.3) (111.0) Infrastructure ‐ Roads 14 (3,580.2) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) (3,219.3) Infrastructure ‐ Other 18 (875.3) (99.9) (103.8) (107.8) (112.1) (116.5) (121.0) (125.8) (130.7) (135.9) (141.3) (146.8) Net capital (4,094.8) (1,159.6) (2,566.0) (3,478.9) (3,439.2) (3,366.6) (3,295.2) (3,215.2) (3,203.0) (3,148.0) (3,099.6) (3,110.0) Reserve Transactions 11 Transfers (to) Reserves (1,294.4) (575.0) (631.8) (636.1) (766.6) (805.3) (772.6) (746.1) (868.4) (687.8) (700.6) (715.5) Transfers from Reserves 1,744.5 749.2 715.3 841.0 596.1 621.6 537.9 497.3 368.1 503.6 395.1 381.2 Net Transfers (to)/From Reserves 450.1 174.2 83.5 204.9 (170.5) (183.7) (234.7) (248.8) (500.3) (184.2) (305.5) (334.3) Debt Management 4 Loans to Community (200.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Debt Service costs (Prin+Int) (294.3) (275.4) (264.9) (264.9) (252.5) (209.4) (150.4) (120.8) (103.2) (68.1) (62.2) 0.0 Repayment of Loans by Community Group 7.9 11.8 11.8 11.8 11.8 11.8 11.8 11.8 11.8 5.9 0.0 0.0 Debt Management (486.4) (263.7) (253.1) (253.1) (240.7) (197.6) (138.7) (109.0) (91.5) (62.2) (62.2) 0.0

Net Funding (2,719.0) (679.9) (1,053.4) (1,815.9) (2,072.9) (1,910.2) (1,771.5) (1,610.0) (1,753.9) (1,287.5) (1,287.0) (1,187.2) Net current assets 1 July Surplus/(Deficit) 2,723.1 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 LESS 30 June Surplus/(Deficit) 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net current assets 2,719.0 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Budget (Deficit)/Surplus 0.0 (675.8) (1,053.4) (1,815.9) (2,072.9) (1,910.2) (1,771.5) (1,610.0) (1,753.9) (1,287.5) (1,287.0) (1,187.2)

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NOTES Rates These estimates provide for rate revenue to be consistent with the current rating philosophies of the member Shires. They provide for a CPI increase in revenues. General Purpose Grants (WALGGC) The general purpose component for 2012/13 will be reduced to three instalments. The normal arrangements will be re‐instated by 2013/14. The new allocation process of the general purpose grant will not materially impact on the total allocation to the three Shires. Roads to Recovery Grant (Federal) The estimated are prepared on the basis that this grant will not continue after 2013/14. Country Local Government Fund (Royalties for Regions) The allocation of direct grants are based on the formula that for 2011/12 ‐ 50.0% of the 2008/09 allocation and 2012/13 ‐ 50.0%. All other funds will be allocated to a Regional Grouping for projects considered to be of regional significance. Capital Outlays Capital outlays are based on asset replacement requirements for each class of assets and individual projects indentified in each Shires 5 year works program. Merger Expenses The establishment cost of the proposed merger is included as $1.532m. (operating) This is the be funded by grants of $1.492m. Reserves The used of reserve funds has only been included where there is a clear purpose and identified applications in these estimates. Reserves are estimated to rise from $2.75m to $6.26m over the period. Clearly some of these funds could be applied to mitigate some of the deficits over this period.

1 Price Drivers 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Consumer Price index 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Road Construction materials 0.00% 5.08% 5.08% 5.08% 5.08% 5.08% 5.08% 5.08% 5.08% 5.08% 5.08% 5.08% WALGGC GP grant 0.00% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Petroleum Products 0.00% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25% Employee costs 0.00% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Utility Costs 0.00% 10.00% 4.38% 4.38% 4.38% 4.38% 4.38% 4.38% 4.38% 4.38% 4.38% 4.38% Insurance Costs 0.00% 5.25% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 2 Changes arising from merger Employee costs 0.0 0.0 110.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Material and contracts 0.0 0.0 24.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Utility charges (electricity, gas, water etc.) 0.0 0.0 (2.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Insurance expenses 0.0 0.0 16.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0.0 0.0 148.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

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Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 3 Changes for one off expenditures 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 RTG Expenditure 0.0 307.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Local Government reform 0.0 66.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0.0 373.3 (1,582.2) 1,582.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4 Borrowings 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 #111 House 229 Murray Street MM (17.1) (17.1) (17.1) (17.1) (8.5) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 #115 Housing Upgrade MM (33.5) (33.5) (33.5) (33.5) (33.5) (33.5) 0.0 0.0 0.0 0.0 0.0 0.0 #118 Staff Housing MM (62.2) (62.2) (62.2) (62.2) (62.2) (62.2) (62.2) (62.2) (62.2) (62.2) (62.2) 0.0 #116 Grader MM (21.1) (10.6) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 #117 Accommodation Units MM (24.1) (24.1) (24.1) (24.1) (24.1) (24.1) (12.1) 0.0 0.0 0.0 0.0 0.0 #119 Benny Mart MM (11.8) (11.8) (11.8) (11.8) (11.8) (11.8) (11.8) (11.8) (11.8) (5.9) 0.0 0.0 #119 Benny Mart SSL MM 11.8 11.8 11.8 11.8 11.8 11.8 11.8 11.8 11.8 5.9 0.0 0.0 Loan 63 ‐ Construction of GEHA House T (26.9) (26.9) (26.9) (26.9) (26.9) (13.5) 0.0 0.0 0.0 0.0 0.0 0.0 Loan 62 ‐ Gymnasium Equipment T (10.6) (10.6) (10.6) (10.6) (10.6) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Loan 62 ‐ Portion of Vibe Roller T (7.7) (7.7) (7.7) (7.7) (3.9) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Loan 64 ‐ Construction Loader T (7.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Loan 66 ‐ Grader T (35.1) (35.1) (35.1) (35.1) (35.1) (35.1) (35.1) (17.6) 0.0 0.0 0.0 0.0 Loan 62 ‐ Stage 1 Caravan Park Relocatio T (6.6) (6.6) (6.6) (6.6) (6.6) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Loan 65 ‐ Construction of Works Crew Ho T (29.2) (29.2) (29.2) (29.2) (29.2) (29.2) (29.2) (29.2) (29.2) 0.0 0.0 0.0 5Capital Grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Roads to Recovery 993.1 993.1 993.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Regional road group 866.1 910.0 956.2 1,004.8 1,055.8 1,109.3 1,165.6 1,224.8 1,286.9 1,352.3 1,420.9 1,493.0 Royalties for regions ‐ regional /backlog 996.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Royalties for regions ‐ standard 1,110.2 1,149.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other grants 0.0 1,090.0 790.0 250.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 4,629.2 4,142.2 2,739.3 1,254.8 1,055.8 1,109.3 1,165.6 1,224.8 1,286.9 1,352.3 1,420.9 1,493.0

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Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 6Operating Grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 WALGGC ‐ General Purpose Grant 2,291.6 1,778.9 2,454.8 2,540.8 2,629.7 2,721.7 2,817.0 2,915.6 3,017.6 3,123.2 3,232.6 3,345.7 WALGGC ‐ Road Component 1,501.0 1,165.1 1,607.9 1,664.2 1,722.4 1,782.7 1,845.1 1,909.7 1,976.5 2,045.7 2,117.3 2,191.4 State operating grant ‐ untied 39.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 FESA Operating Subsidy 45.4 47.0 48.7 50.4 52.1 53.9 55.8 57.8 59.8 61.9 64.1 66.3 SES Subsidy/Control 24.4 25.3 26.2 27.1 28.0 29.0 30.0 31.1 32.2 33.3 34.4 35.7 Crime Prevention Grant 2.4 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Preventive services ‐ Admin/inspection 118.5 122.6 126.9 131.4 136.0 140.7 145.7 150.8 156.0 161.5 167.2 173.0 Protection of environment 20.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Swimming Pool 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 RTG Expenditure 307.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MRD Direct Grant 311.9 322.8 334.1 345.8 357.9 370.4 383.4 396.8 410.7 425.0 439.9 455.3 Natural Resources Officer 29.6 29.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fuel & Oil 24.1 25.0 25.8 26.7 27.7 28.6 29.6 30.7 31.8 32.9 34.0 35.2 Transitional costs 0.0 0.0 1,542.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 UNCLASSIFIED 76.7 79.3 82.1 85.0 88.0 91.1 94.2 97.5 101.0 104.5 108.1 111.9 Other Grants 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 3,133.0 3,607.0 6,257.7 4,880.2 5,050.7 5,227.2 5,409.8 5,598.9 5,794.5 5,997.0 6,206.6 6,423.5 0 1,542.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7 Fees and charges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Governance 8.2 8.5 8.8 9.1 9.4 9.7 10.1 10.4 10.8 11.1 11.5 11.9 General Purpose Funding 2.5 2.5 2.6 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.5 3.6 Law, Order & Public Safety 22.7 23.5 24.4 25.2 26.1 27.0 28.0 28.9 29.9 31.0 32.1 33.2 Health 132.8 137.4 142.3 147.2 152.4 157.7 163.2 169.0 174.9 181.0 187.3 193.9 Education & Welfare 15.6 16.1 16.7 17.3 17.9 18.5 19.2 19.8 20.5 21.3 22.0 22.8 Housing 229.0 237.0 245.3 253.9 262.8 272.0 281.5 291.3 301.5 312.1 323.0 334.3 Community Amenities 242.5 251.0 259.7 268.8 278.2 288.0 298.1 308.5 319.3 330.5 342.0 354.0 Recreation & Culture 29.4 29.4 29.4 29.4 29.4 29.4 29.4 29.4 29.4 29.4 29.4 29.4 Transport 2.5 2.6 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.4 3.5 3.6 Economic Services 109.9 113.8 117.8 121.9 126.2 130.6 135.1 139.9 144.8 149.8 155.1 160.5 Other Property & Services 82.5 85.4 88.4 91.5 94.7 98.0 101.4 105.0 108.6 112.4 116.4 120.5 0 877.5 907.2 937.9 969.7 1,002.6 1,036.7 1,072.0 1,108.5 1,146.2 1,185.3 1,225.8 1,267.7 Service Charge 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Television and radio re‐broadcasting 2.0 2.1 2.2 2.2 2.3 2.4 2.5 2.6 2.7 2.7 2.8 2.9

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Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 8Rate Revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Koorda 838.1 879.0 890.2 901.5 912.7 923.9 935.3 968.2 1,002.2 1,037.2 1,073.7 1,111.3 Mt Marshall 1,138.4 1,184.0 1,218.1 1,252.3 1,286.4 1,320.6 1,354.9 1,402.5 1,451.7 1,502.3 1,555.1 1,609.5 Trayning 629.9 706.0 787.6 864.0 940.4 1,016.8 1,093.3 1,131.8 1,171.5 1,212.5 1,255.1 1,299.0 Discount 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Koorda (66.2) (68.0) (68.8) (69.7) (70.6) (71.5) (72.3) (74.9) (77.5) (80.2) (83.0) (85.9) Mt Marshall (72.5) (72.9) (78.8) (85.0) (91.4) (98.0) (104.8) (108.5) (112.3) (116.2) (120.3) (124.5) Trayning (24.4) (28.2) (38.3) (49.4) (60.8) (72.2) (84.6) (87.5) (90.6) (93.8) (97.1) (100.5) Exgratia 23.8 24.7 25.5 26.4 27.3 28.3 29.3 30.3 31.4 32.5 33.6 34.8 0 2,467.1 2,624.6 2,735.6 2,840.0 2,944.1 3,048.0 3,151.1 3,262.0 3,376.4 3,494.3 3,617.2 3,743.6 Interest Charges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Arrears and instalments 0.0 6.5 6.8 7.1 7.4 7.6 7.9 8.2 8.5 8.8 9.1 9.4 9 Interest earnings Municipal 0.0 69.0 77.2 60.8 61.5 63.7 66.0 68.5 71.0 73.6 76.3 79.1 10 Depreciation expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Land and Buildings (267.5) (276.9) (286.6) (296.6) (307.0) (317.7) (328.9) (340.4) (352.3) (364.6) (377.4) (390.6) Furniture and Equipment (76.0) (78.7) (81.5) (84.3) (87.3) (90.3) (93.5) (96.7) (100.1) (103.6) (107.3) (111.0) Plant and Equipment (758.5) (785.1) (812.5) (841.0) (870.4) (900.9) (932.4) (965.0) (998.8) (1,033.8) (1,070.0) (1,107.4) Roads (2,764.6) (2,904.9) (3,052.3) (3,207.2) (3,370.0) (3,541.0) (3,720.7) (3,909.5) (4,107.9) (4,316.4) (4,535.4) (4,765.6) Other Infrastructure (28.5) (29.5) (30.5) (31.6) (32.7) (33.8) (35.0) (36.3) (37.5) (38.8) (40.2) (41.6) Footpaths (27.3) (28.2) (29.2) (30.3) (31.3) (32.4) (33.6) (34.7) (35.9) (37.2) (38.5) (39.8) Drainage (4.7) (4.9) (5.2) (5.5) (5.7) (6.0) (6.3) (6.6) (7.0) (7.3) (7.7) (8.1) Airstrip (19.9) (21.0) (22.0) (23.1) (24.3) (25.6) (26.8) (28.2) (29.6) (31.1) (32.7) (34.4) Parks & Ovals (15.7) (16.2) (16.8) (17.4) (18.0) (18.6) (19.3) (20.0) (20.7) (21.4) (22.1) (22.9) 0 (3,962.8) (4,145.4) (4,336.6) (4,536.9) (4,746.7) (4,966.4) (5,196.5) (5,437.5) (5,689.9) (5,954.3) (6,231.3) (6,521.5)

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Combined Merged Entity Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 11 Reserves 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Opening Balance 3,309.9 4,561.0 4,386.8 4,303.3 4,098.4 4,268.9 4,452.6 4,687.3 4,936.1 5,436.4 5,620.6 5,926.1 Interest earnings 162.0 178.5 165.3 170.3 183.8 191.8 201.8 212.6 233.9 242.0 254.8 269.7 Transfers to reserves 281.8 396.5 466.5 465.8 582.8 613.5 570.8 533.5 634.5 445.8 445.8 445.8 Reserves used (1,003.5) (749.2) (715.3) (841.0) (596.1) (621.6) (537.9) (497.3) (368.1) (503.6) (395.1) (381.2) Closing Balance 2,750.3 4,386.8 4,303.3 4,098.4 4,268.9 4,452.6 4,687.3 4,936.1 5,436.4 5,620.6 5,926.1 6,260.4 Reserve Interest 162.0 178.5 165.3 170.3 183.8 191.8 201.8 212.6 233.9 242.0 254.8 269.7 Reserves applied 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 For operational purposes 0.0 25.0 85.0 35.0 2.0 2.0 15.0 2.0 2.0 2.0 2.0 2.0 For capital purposes 1,003.5 724.2 630.3 806.0 594.1 619.6 522.9 495.3 366.1 501.6 393.1 379.2 0 1,003.5 749.2 715.3 841.0 596.1 621.6 537.9 497.3 368.1 503.6 395.1 381.2 12 Disposal of assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Sale proceeds 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Plant & Equipment 643.5 369.0 365.0 483.0 504.0 428.7 463.9 522.2 311.3 410.5 394.7 372.2 0 643.5 369.0 365.0 483.0 504.0 428.7 463.9 522.2 311.3 410.5 394.7 372.2 13 Capital Works Program 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Capital Outlays (9,367.4) (5,670.8) (5,670.2) (5,216.7) (4,998.9) (4,904.6) (4,924.7) (4,962.2) (4,801.3) (4,910.8) (4,915.2) (4,975.2) Grants 4,629.2 4,142.2 2,739.3 1,254.8 1,055.8 1,109.3 1,165.6 1,224.8 1,286.9 1,352.3 1,420.9 1,493.0 Sales 643.5 369.0 365.0 483.0 504.0 428.7 463.9 522.2 311.3 410.5 394.7 372.2 Reserves 1,003.5 724.2 630.3 806.0 594.1 619.6 522.9 495.3 366.1 501.6 393.1 379.2 Net funds required (3,091.3) (435.4) (1,935.7) (2,672.9) (2,845.1) (2,747.0) (2,772.3) (2,719.9) (2,836.9) (2,646.4) (2,706.5) (2,730.8)

End of documentation

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