Attachment 12 - Resourcing Strategy 2012-2013.pdf - IPART - NSW ...

Shoalhaven City Council has three main funds for operations:
General Fund, Water Fund and Sewerage Fund. The Long Term
Financial Plan will provide Financial Statements and Performance
Measures for the whole of Council and the three funds separately.
The information for the whole of Council (consolidated accounts) will
enable comparisons with our Financial Reports. It is also necessary
show this information by the three separate funds. This will enable
comparisons with other Local Government Areas, as some may not
have Water and Sewerage functions. Also, the three funds have
different revenue structures; therefore the separation allows for a
more accurate assessment of the long term financial sustainability of
each fund.
2.2. Shoalhaven Water
Shoalhaven City Council has responsibility for water and sewerage
services for the Shoalhaven local government area. Council exercises
water supply and sewerage functions under Division 2 Part 3 Chapter
6 of the Local Government Act 1993. Council meets these
responsibilities and delivers water and sewerage services through
Shoalhaven Water, a business group of Council.
Both the water and sewer operations are designated as Category 1
Business Units (i.e. the annual gross operating income is greater than
$2 million). As such, the operations funds are subject to Competitive
Neutrality Guidelines and the water and sewer businesses are subject
to the same corporatisation principles as State Government business
activities. This requires the businesses to apply full cost attribution,
including tax equivalent regime payments and to operate within the
same regulatory framework as private businesses. Pricing structures
should reflect these requirements, including an appropriate rate of
return from the business.
sewerage funds cannot be used to fund general fund activities).
However, Council may in some circumstances declare a dividend
from both the water and sewerage funds to be applied towards any
purpose allowed under the Local Government Act.
Water and sewerage income is derived from annual charges and
charges for use. Other major income is from grants under the Country
Towns Water Supply and Sewerage Program and from Developer
Income (also referred to as Section 64 income). Water and Sewerage
capital works can also be funded through loan borrowings.
The Community Strategic Plan includes the following in relation to
Shoalhaven Water:
OBJECTIVE 1.6 SUSTAINABLE WATER SUPPLY AND SEWERAGE
SERVICES PROVIDING RESPONSIBLE
COMMUNITY RETURNS
Strategies
1.6.1 Review and implement the Shoalhaven Water Strategic
Business Plan in accordance with the Best Practice
Management of Water Supply and Sewerage
Guidelines.
1.6.2 Deliver to Council an appropriate annual community
dividend from the Shoalhaven Water operations.
1.6.3 Implement a range of new services and/or strategic
infrastructure through the use of Shoalhaven Water
community dividends for targeted priority purposes.
Figure 6. Sustainable Water Supply and Sewerage Services
Water and Sewerage funds are therefore managed and planned
separately from Council’s General Fund. The Local Government Act
1993 specifies that money raised from water and sewerage charges
may only be used for the purpose of these activities (i.e. water and
Shoalhaven City Council – Resourcing Strategy Page 17