Our Long Term Financial Plan 2021/22 - 2030/31 was adopted at the Council Meeting on 26 October 2021.
You can read the final plan via the document library on the right hand side of this page.
Ongoing financial sustainability of Council is essential to ensure we continue to deliver valued services to the community and look after our $3.4 billion worth of community assets.
The Long Term Financial Plan provides a 10-year financially sustainable projection regarding how the strategies of our Council Plan may be funded to achieve the Wyndham 2040 Community Vision. The Plan is a requirement of the new Local Government Act 2020 and is being shared with the community for the first time. It will be updated and published each year going forward.
Defining Financial Sustainability
Maintaining financial sustainability is a key objective for Council, as this is needed to allow Council to meet its responsibilities to the community in relation to service delivery and investment in building and maintenance of community assets. Council defines financial sustainability as: “The ability to fund ongoing service delivery and the renewal and replacement of assets without incurring excessive debt or rate increases, whilst also funding the capital investments required as a result of population growth.”
Wyndham is a growing municipality. Designated as a growth corridor, residential land use has grown steadily since 2017 with an average of 4,500 new dwellings approved each year. Over the next 20 years an extra 220,000 people will call Wyndham home, taking the total population of Wyndham in 2040 to 505,822 (id, 2021). The area that is expecting to experience the highest rate of growth is Tarneit with an estimated population of 129,645 people, an increase of 93,263 people since 2016 (id, 2021).
Given the volume and speed of the growth occurring across Wyndham, it is a challenge for the Council to ensure that the right infrastructure and services our community needs to prosper, are up and running when they are needed. Out-of-sequence development happens when people are permitted to move into housing estates before infrastructure and services are properly in place.
In addition, Developer Contributions (DCs) used to build much needed community infrastructure in new areas are not necessarily calculated according to population densities that are being experienced today. Therefore, they are often inadequate as the sole funding source for growth infrastructure requiring Council to contribute capital to ensure the community assets are built.
Whilst the impacts of COVID over the last 12-18mths may have tempered growth through international migration or shift from metro to regional areas, construction activity has remained strong and forward estimates suggest that population growth will rebound over the short term.
The introduction of a yearly rate cap in 2015 limited Council’s ability to generate revenue from rates and this creates a major challenge for Council in managing its financial position. In addition, Council has also needed to manage the impacts of cost shifting, and instances where funding from other levels of Government for co-funded services hasn’t kept pace with growth e.g. MCH. This has placed additional funding burden on Council. As a result, Council’s employee wage growth is outpacing revenue growth.
At the same time, Council has seen its share of core Government Grants reduce in real terms such as Financial Assessment Grants (FAGs) and the Growing Suburbs Fund (GSF).
Council is currently managing assets to the value of $3.4 billion (excluding land) that are increasing by approximately $300 million or almost 10% each year. The asset stock mainly comprises long life infrastructure assets with an increasing demand for investment in renewal and maintenance works.
As Wyndham ages, the maintenance, renewal and replacement of assets will have a significant impact on Council’s financial operations and long-term financial sustainability. Rapid population and asset growth are a challenge as both increase demand for services, which exceed available resources.
The demand for capital to build the new infrastructure needed by growing communities in Wyndham is currently greater than what Council can afford. In addition, due to Council contributing heavily to the capital investments, the current investment in renewal spend is, at best, barely adequate. This renewal spend within the ensuing four to five years will be insufficient to maintain current service standards and ensure upkeep of assets. Based on current levels of expenditure the asset renewal gap could be $1 billion by 2045.
How will we manage these challenges?
Council will aim to raise sufficient revenue to provide sustainable services to the community based on principles of intergenerational equity and deemed capacity of our residents to pay for these services.
Through its Revenue and Rating plan Council will outline the principles of municipal rates and will consider application of special rates and charges as well as other fees for Council provided services.
Council will aim to achieve positive cashflows by prudent financial management. This is through the daily monitoring of cash holdings, cashflow forecasting to ensure adequate liquidity is achieved at all times and investment of any balances surplus to current needs within investment policy guidelines to maximise returns.
Council will consider loan borrowings to fund new assets that provide inter-generational equity where the asset life and benefit to the community is greater than one generation. This includes the acquisition of land, where the acquisition will have a long-term benefit to the community or where there is potential for commercial or other economic benefit i.e. capital appreciation from acquisition of assets that will flow to the community.
Council will not consider loan borrowings to fund recurrent operating expenditure other than meeting funding calls made on Council in relation to the Defined Benefit Superannuation Fund. Other external sources of structured funding through government and/or commercial partnership models will also be considered for specific projects.
Through improved service demand data analysis, service planning, asset management and capital allocation policy, Council will ensure focused and prioritised expenditure to ensure the most efficient use of funds for the build and maintenance of community assets.
In modelling the LTFP, a cost efficiency factor is assumed each year. This factor recognises that delivering productivity in the way we operate is an important consideration for Council. It provides a starting point in terms of determining productivity targets for Council which can be further informed by strategic priorities. Areas of primary focus include realization of benefits from investment in technology, workforce productivity through managing wages growth, continuous improvement in operational processes, discretionary cost containment and effective balance sheet management.
Council will focus on targeted advocacy to the Federal and State Government that presents Wyndham’s long-term priorities for funding. The advocacy approach will be implemented as per Council’s strategic approach to advocacy and intergovernmental relations. This includes prosecuting long-term priorities as well as being responsive to the Governments of the day. This strategy is linked to addressing the rate cap impact Councils, contribution of funds to limit the gap Council makes up and land use planning issues.
Two more important plans were also recently adopted!
These three draft documents – the Wyndham City Council Plan, Municipal Public Health and Wellbeing Plan and Long Term Financial Plan – have been developed with our community to help shape Wyndham's future.