2. BUSINESS

As part of the preparation of the 2009-19 Long Term Council Community Plan (LTCCP) Council needs to review its major financial policies.

One of those policies is the Revenue and Financing Policy.

This policy is one of the mandatory financial policies Council must adopt per section 102 (4) of the Local Government Act.

The policies must be adopted by special consultative procedure and may be adopted as part of the long-term council community plan. The policies may only be amended as an amendment to the long-term council community plan.

The Revenue and Financing Policy states the policies relating to the sources of funds for both operating and capital expenditure. The sources of funds available are listed in s 103(2). See the schedule detailing the relevant legislation at the foot of this report.　 The policy must show how the local authority has complied with s 101(3).

That section requires that the funding needs of the local authority must be met from those sources that the local authority determines to be appropriate, following consideration of,—

(a)  in relation to each activity to be funded,—

(i)   the community outcomes to which the activity primarily contributes; and

(ii)  the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; and

(iii) the period in or over which those benefits are expected to occur; and

(iv) the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and

(v)  the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities; and

(b) the overall impact of any allocation of liability for revenue needs on the current and future social, economic, environmental, and cultural well-being of the community.

Put more simply.

We have categorized these points into three Steps being

Step 1 - Identification of the Activity

Step 2 – Benefits

Step 3 – Funding.

This workshop proposes to only cover Steps 1 & 2 for each activity.　 Step 3 will be covered at a later workshop.

To commence the process we need to establish what activities Council undertakes.

The current LTCCP has been broken down into Groups of Activities.　 They are

We do not propose to revisit these Groupings.

Beneath each of the groups we have a series of activities and sub activities.

We will be focusing at the sub activity level.

Council staff have over the last couple of weeks been engaged in workshops to review the activity definitions and benefit distribution in order to assess if, in their opinion, there is a need to vary what we have had in the current LTCCP.

In most cases there has been considerable discussion around the definition of the activity.

A number of activities have been categorised on the basis of funding rather than function or use.　 Funding is the last step and should not drive the first two steps.　 This is partially behind the reason for leaving Step 3, ie Funding to another workshop.

As noted above we are finalizing the Activity breakdowns.　 It is not possible to provide each proposed definition at this time.　 This will not compromise the Workshop process.　

Noted as separate schedules I have attached the Activities either as we have identified them or as per the Current LTCCP.　 Where we consider they may vary from the current LTCCP we have noted them as such.　 Also included is a schedule of Community Outcomes per the LTCCP.　 We do not need to review those as part of the LTCCP preparation but they will need review for the 2012 LTCCP.

The identification of who benefits from an activity is more of an art than science.　 There is no manual with the correct answer.　 We need to discuss and debate the benefits of an activity and ascribe a private/public benefit split.

To do that we need to ask ourselves a series of questions.

Does the Activity generate benefits to the Community as a whole?　

If the answer to this is yes then there is likely to be public benefit.

Does the activity generate benefits to any readily identifiable part or sector of the community and if so who are they?　

If the answer is yes then there could well be private benefit.

Does the activity benefit individuals and if so who?　

If the answer is yes then there is also likely to be private benefit.

In addition to who benefits we need to understand when do they benefit.　 This is required to assess if benefits should be funded in future periods as opposed to the current financial year.

One way of considering the Public/Private split is to think of a continuum.

On the left we have 0% Public Benefit (or 100% Private Benefit) and on the right we have 100% Public Benefit.

Rarely are activities either 100% Public Benefit or 100% Private Benefit.　 Typically they are somewhere in between, but at what point on the continuum?

An activity would have 100% public benefit if it is not possible to identify any sector or identifiable individual that derives benefit.　 That doesn’t mean that individuals don’t benefit, just that they are not identifiable and they are just part of the community as a whole.　 For example, footpaths.　 Do individuals benefit?　 Yes, but can we identify them? No.　 Then it is likely to be very high Public Benefit.

In the case of footpaths it may be possible to identify a sector of the community that derives benefit, e.g. the central business district.　 Do they benefit for having footpaths? If the answer is yes then a decision needs to be made how far on the continuum should the benefit split be placed?　 In this case the odds are to be much more in favour of public benefit than private benefit so it may be 80% Public and 20% Private.

Legislation doesn’t provide the split.　 The split that our Council applies may well vary from what others have decided.　 What is relevant is that we have debated the relevant issues and have a rationale for what we have decided.

Another view of Private Benefit is can one individual or group consume an activity so that it temporarily deprives another group or individual from the benefit of the activity?

E.g. Library Books.　 An individual can take a book out of the library and deprive others the opportunity to read the book.　 That implies Private benefit.

Street Light.　 If one person stands beneath a street light others still benefit form the light so odds are this is Public Benefit.

We need to avoid considering what the funding implications are of the benefit attribution process.　 Funding need not reflect the Private/Public split.

To assist in how the process will work I will step through one activity.

The activity I have chosen is Dog Registration which is part of the Regulatory Group of Activities.

Dog Registration is the to ensure dogs are registered in the district under the Dog Control Act but excludes the control of wandering dogs which is part of Animal Control.

Refer to the Community Outcomes schedule at the back of this report.　 We need to link the activity to at least one of the outcomes.　 This activity is not straight forward.

The answer to this is probably Yes.　　　 A guide could be to ask what the intention of the Dog Control Act was in respect of requiring all dogs to be registered.

The answer to this is probably Yes.　 Owners of registered dogs benefit in that if their dog becomes lost or injured etc it can be readily identified who it belongs to so it can be returned provided the dog is wearing the tag or is chipped.

The answer to this is probably No.

So based on the above we need to determine a Public/Private split.

Does the benefit to the community exceed the benefit to the owner?

If the answer to this is Yes then it is likely that the Public Benefit would exceed 50%.

For the purposes of the example lets assume the split is 80% Public, 20% Private.

Please do not assume this is the funding split.　 It is not.　 It is solely the benefit split.

Exacerbator.

Answer definitely Yes.　 If people didn’t own dogs we wouldn’t need to carry out the function of registering them.

This fact will be used in conjunction with the Public/Private split and other factors to assess the funding.

i.e. it is likely in many cases that the public/private split will be modified by other factors to get to the funding.　 This is most likely where we can identify exacerbators.

This is as far as we wish to go in this workshop.　 To cover this off for each activity will take some time.　 We will run a subsequent workshop considering the funding options.

Please give some thought to the Public/Private split of other activities.　 Eg Water Supply, Libraries, Economic Development, Council, Solid Waste etc.　 We will cover all of the activities.

The key questions are　

Rex Leonhart

• Network Services

• Roading (The sub activities under here are being re considered)
  • Roading
  • Footpaths
  • Amenities
  • Safety
• Water
• Wastewater
• Land Drainage
• Urban Stormwater
• Solid Waste
  • Waste Minimisation
  • Refuse Transfer Stations
  • Collection Services