The council satisfies the scale and capacity criterion.
• The council does not satisfy the financial criteria overall. Although it satisfies the infrastructure and service management and efficiency criteria, it does not satisfy the sustainability criterion.
• The council does not satisfy the sustainability criterion as a result of its forecast for a negative operating performance ratio by 2024-25.
• We consider a council’s operating performance ratio is a key measure of financial sustainability that all Fit for the Future (FFTF) councils should meet, therefore the council is not fit.
Scale and capacity – satisfies
• The council’s proposal is consistent with the ILGRP preferred option to stand alone and to collaborate to form the Tablelands JO.
• Given the ILGRP’s preferred option, the council was not required to demonstrate how it met each of the elements of scale and capacity.
• Our analysis has not identified evidence for a better alternative to the council’s proposal to stand alone.
Sustainability – does not satisfy
• The council does not meet the sustain-ability criterion based on its forecast for a negative operating performance ratio by 2024-25 and a building and infrastructure asset renewal ratio below the benchmark by 2019-20.
• The council’s FFTF proposal relies on a successful application for and adoption of a special variation from 2016-17 of 50.4% cumulative over 5 years (37.2% above the rate peg).
• In addition, the council has recently informed us it does not intend to proceed with the special variation discussed in its FFTF proposal until after the September 2016 elections due to the receipt of additional Roads to Recovery funding from the Federal Government. This unexpected change in approach by the council to the key improvement strategy suggests the council may not be able to return to the operating balance or surplus in the required timeframe.
• The operating performance ratio is forecast to be -13% without the rate increase, even with a possible 37% real increase in rates, the council does not achieve a surplus, and still leaves the council vulnerable to unanticipated shocks.
• The council has forecast it will meet the benchmark for the own source revenue ratio by 2019-20.
• The council has forecast the building and infrastructure asset renewal ratio will be 73.5% by 2019-20, which is below the benchmark.
Infrastructure and service management – satisfies
• The council satisfies the criterion for infrastructure and service management based on its forecast to meet the benchmarks for the asset maintenance ratio and the debt service ratio by 2019-20.
• The council has forecast a reduction in its infrastructure backlog to 4.5% by 2019-20.
• The council is prioritising maintenance requirements over asset renewal, although it projects increased expenditure on renewals, to stabilise its infrastructure backlog including using debt in the short-term.
• The council’s proposal notes the infrastructure backlog ratio stabilises from 2019-20 before slowly reducing from 2023-24 onwards.
Efficiency – satisfies
• The council meets the efficiency criterion based on its forecast for a decrease in real operating expenditure per capita over the outlook period to 2019-20.
Other relevant factors
Social and community context
Yass Valley Council’s proposal indicates its proximity to Canberra is seen as both a strength (eg, services, employment and growth) and weakness (eg, resident expectations for services and infrastructure).
Community consultation
The council consulted with its community on its Action Plan to become FFTF. The council develped the proposal by collaborating with a specially formed FFTF Community Working Group of 40 members (plus Councillors) to assist in framing and assessing various options to fund future services. The results of the council’s consultation process appear to be inconclusive. Yass Council consulted on the basis of no rate increase and two SV scenarios, its proposal is a combination of the two SRV scenarios.
Based on submissions provided by Yass Valley in its FFTF proposal the issue of whether rate increases are required to become Fit for the Future is a key issue for the community. Further, as noted in submissions, some members of the community are questioning the need for rises without the consideration of improvements to efficiency.
Water and/or sewer
Yass Valley achieved 100% compliance for sewer and water with the best practice management framework. Yass Valley does not have an infrastructure backlog for both water and sewer. Further, the council operates it water and sewer operations on a break-even basis. However, the council has not been paid a dividend from its water and sewer businesses as at June 2014.
Submissions
We received eight submissions in relation to Yass Valley Council’s submission during the submission period. The submissions received had a common theme of dissatisfaction with the performance of the council, and one submission was in favour of mergers even though the ILGRP did not recommend this option for Yass Valley. For example:
• A number of submissions consider the council is poorly run including its financial management, governance and strategic management.
• One submission considers the decision to ‘go it alone’ ignores the interest of ratepayers, and considers smaller councils have high overheads.
• Two anonymous submissions consider Yass Valley is not Fit for the Future based on how the council has prioritised (incorrectly) spending on land acquisition compared to infrastructure maintenance, and the use rate increases to maintain or improve infrastructure.
• Three submissions raised the issue of limited consultation with a perceived bias.
• A submission was also received about potential boundary changes for towns in Upper Lachlan and Palerang in the event of amalgamations for these respective councils.
We also received two late submissions. One submission is directly related to the FFTF process:
• The council’s FFTF proposal and public consultation, in particular identifying the rate increases and associated works program is now contradicted by council resolution (ie, to not proceed with the proposed SV). The submission considers the council’s FFTF proposal should be scrutinized and given it does not meet the FFTF benchmarks should be deemed unfit. The second submission discusses matters outside the scope for consideration.