King Island Council Annual Report 2011-2012 (1921 kb)

King Island CouncilAnnual Report 2011 – 2012King Island Council – Annual Report 2011-2012Page 1

FRONT COVER: Cape Wickham Lighthouse celebrated 150 years in November 2011.ABOVE: Disappointment Bay – where the name doesn’t do justice to the stunning location.Photos courtesy of Beth VellekoopKing Island Council – Annual Report 2011-2012Page 2

ContentsKing Island .......................................................................................................................................... 4Mayor’s Message ............................................................................................................................... 5General Manager’s Report ................................................................................................................. 6Achievements 2011-2012 ................................................................................................................... 8Major Goals 2012-2013 ...................................................................................................................... 9Who we are ...................................................................................................................................... 10Vision Statement for King Island ...................................................................................................... 10Our Priorities .................................................................................................................................... 11Councillors ........................................................................................................................................ 12Elected Members Section 72 (1) (cb) ............................................................................................... 13Meeting Attendance Section 72 (1) (cc)........................................................................................... 14Organisational Structure .................................................................................................................. 15King Island Strategic Plan 2011-2020 ............................................................................................... 16Economic Viability ............................................................................................................................ 16Natural Environment ........................................................................................................................ 16Community Wellbeing ...................................................................................................................... 17Infrastructure and Facilities ............................................................................................................. 17Council Financial Sustainability ........................................................................................................ 17Community Development ................................................................................................................ 18Community & Economic Development ............................................................................................ 22Corporate Services ........................................................................................................................... 23Regulatory Services .......................................................................................................................... 24Public Health .................................................................................................................................... 25Infrastructure Services ..................................................................................................................... 26Commercial Undertakings ................................................................................................................ 27Engineering ....................................................................................................................................... 28Statutory Reporting Requirements .................................................................................................. 30Appendix – Financial Reports ........................................................................................................... 32King Island Council – Annual Report 2011-2012Page 3

King IslandAt the western entrance to Bass Strait lies anidyllic place known as King Island. An island richin history, with shipwrecks, lighthouses and jaggedreefs, bountiful with long stretching sandy beachesand lush green pasture. Midway between Victoriaand mainland Tasmania, 120 kilometres or fortyfiveminutes flying in either direction, the island hasbecome an ideal destination for that weekendescape.The Kelp Industry is a major part of the Islandeconomy with tourism becoming the growthindustry over recent times.The Island offers a great number of attractionsand activities which include visits to the museum,lighthouses, Sealers’ Wall, Calcified Forest,pheasant shooting and mutton bird seasons,horse racing, a 32 kilometre coast to coast footrace, recreational fishing, diving, bushwalking,beachcombing and much more.The Island, which is 64 kilometres north to south,and 27 kilometres east to west, has a population of1,638 permanent residents, of which 800 reside inthe township of Currie which is situated on thewest coast. There are two other towns-Naracoopaon the east coast, and Grassy to the south east.Tourists appreciate the Island’s naturalattractiveness, exquisite cuisine, the surfing,fishing, challenging golf course, maritime historyand the relaxed way of life.From our little paradise some of Australia’s finestnatural foods are produced. We are probably bestknown including the production of fine beef,superior dairy produce, magnificent seafood andpremium rain water products. King Island Dairieswith its award winning cheeses and creams, theabundant seafood and King Island Beef have allhelped to establish King Island’s reputation for finefoods.King Island has aninteresting history,commencing withits discovery in1798. Itsgeographic locationin Bass Strait hasresulted in a richmaritime historyassociated oftenwith shipwrecksand tragedies that are well documented.King Island Council – Annual Report 2011-2012Page 4

Mayor’s MessageOur ability to deal with this setback will certainly testour ingenuity as a community. The logistical task ofshipping some 40,000 head of cattle from the Islandwithout them losing too much of their value is amammoth task in itself.However, there are many positives to look forward tointo the future.GREG BARRATTMayorDuring the year our community has experienced amassive high with the celebration of the 150 yearanniversary of the Cape Wickham Lighthouse.However, we have suffered a massive setback sincethe end of 2011/2012 with the closure of the abattoir.The many people involved in organising theLighthouse Celebrations are to be congratulated.The event was probably the most successful one-offevent staged on King Island. Our Island wasshowcased Australia wide and even receivedconsiderable overseas coverage which will hopefullyhave benefits for future tourism.The highlight of course was the visit of the GovernorGeneral and her entourage who made an enormousimpression on our community and I am certain shewas greatly impressed with our Island. The HistoricalSociety’s effort in obtaining the original CapeWickham Lighthouse lens was a coup and after muchwork by the Historical Society Volunteers the lens isa major attraction at the museum.Our huge setback was JBS Swift’s decision to closetheir abattoir. The resulting loss of jobs and moneyflowing in to our community will put our economyunder enormous pressure.Council is undertaking an ambitious capital worksprogram in order to comply with Road to Recoveryrequirements and to provide some stimulus to oureconomy in the aftermath of the abattoir closure.The two Golf course projects are exciting futuredevelopments and it is hoped that real progress willoccur during the next year.Mining activities are still in the mix with one mineactually in production.The stimulus packages that are being negotiated inour Partnership Agreement with the StateGovernment will hopefully go a long way to restoringour economy to pre abattoir closure levels.With our staff lead by General Manager Mark Goode,encouraging development I am sure opportunities willbe nurtured to fruition.The crisis caused by the closure of the Abattoir hasinvigorated organisations like the Brand, Beef andShipping Groups and along with the TourismAssociation and the Chamber of Commerce therehas been immense cooperation and resolve to dealwith our dire situation.I am confident that the above mentionedorganisations along with elected council membersand staff will work hard to achieve positive outcomesfrom our present difficult situation.Councillor Greg BarrattMayorKing Island Council – Annual Report 2011-2012Page 5

General Manager’sReportI am pleased to present the King Island CouncilAnnual Report for 2011-12. The report outlines theCouncil’s achievements for the year, financialposition, services provided and compliance withstatutory requirements.The past year has been one of further improvementto Council’s financial position, with significantachievements in cash backing all reserves, adoptinga surplus budget and reducing staff costs despiteincreasing requirements for non-core compliance andreporting activities.It is always a challenge for a small organisation tomeet the requirements of infrastructure maintenance,respond to the aspirations of the community, andmanage the increasing statutory requirements, whilenot increasing rates beyond the ability of the ratepayer to fund.Building King Island’s EconomyMARK GOODEGeneral ManagerThe best way to grow the economy of a small remoteisland is to generate new income. Council has beenactively working to grow the economy over the past 3years, and the strategic priorities to achieve this havebeen to:• Create a positive and confident atmosphereto attract investors• Identify and then attract new developments(such as the two new world class golfcourses proposed for King Island)• Network and liaise with industry, investorsand government to identify and facilitatecommercial partnerships• Simplify Council processes and increaselevels of staff support to applicants• Increasing the level of funding to criticalinfrastructure needed to support business(roads, bridges, airports etc)• Build effective relationshipsOther significant achievements have been theScheelite and Mineral Sand Mines, which now haveall necessary approvals in place. The sand mine isslowly developing, and the Scheelite mine is currentlyseeking capital to commence operations.Strategic PlanDuring the year, Council updated its Strategic Plan,which is linked to its operational framework. The Planfocuses on balancing growth, the environment andimproving the community’s quality of life, whileensuring financial sustainability.Infrastructure and ServicesA key focus over the past few years has been thedelivery and improvement of services to thecommunity. A priority for us has been improvementsin waste management, roads, bridges andcommunity buildings.The commencement of the new Works Manager, MrArthur Johnstone has seen a significant improvementin outcomes. Our Development Services Coordinator,Ms Freja Petersen has overseen several majordevelopment applications, while increasing the levelof support to hospitality and food services.Communication and PartnershipsCommunication with the Community is a criticalfunction of Council. To assist in this goal, majorupgrades on both Council’s website and thecommunity website were completed.King Island Council – Annual Report 2011-2012Page 6

Achievements 2011-20121 Facilitated the approvals necessary for the Scheelite andMineral sand Mines to commence operation.2 Council’s financial position was improved through costefficiencies, resulting in a surplus operating budget, andcash backing of all the reserves.3 Council adopted the new Strategic Plan 2011-2020.4 Commenced preliminary negotiations with the view ofattracting a major development (National scale) to KingIsland. If progressed, this will have major positive impactson infrastructure, increased employment and othercommunity benefits.5 Cape Wickham golf course was approved in 2011-2012. Thisdevelopment encouraged a further separate $22m ‘Links’class golf development closer to Currie. The second golfcourse received development approval in 2012-2013.6 Coordinated and supported the major community event ofthe year which was the 150th anniversary of the CapeWickham Lighthouse.King Island Council – Annual Report 2011-2012Page 8

Major Goals 2012-20131 Approval of the second 22 million dollar golf coursedevelopment.2 Support of the sand and Scheelite mines, with the goal thatthey become fully operational as soon as possible.3 Continue negotiations of the major development (Nationalscale) for the benefit of the King Island and Australiancommunities.4 Completion of the Currie roundabout beautification project,and upgrades to tourist road signage.5 Increase airport car parking area and improve airportdrainage.6 Complete the sealing of Pegarah Road.7 Attraction of one or two additional major investors to theisland.King Island Council – Annual Report 2011-2012Page 9

Who we areVision Statement for King IslandTo preserve and improve the ‘King Island Way’ including freedom ofopportunities, community friendliness along with personal and industry security inan environmentally sustainable way appropriate to King Island.Vision Statement for King Island CouncilKing Island is a place with a dynamic economy, healthy environment, culturalvitality and a satisfied community.Our PurposeThe purpose of the Council is to deliver services and infrastructure to support thecommunity in its endeavours. Council is also an advocate for the Island withGovernment and other organisations.Council will show strong leadership in promoting the sustainable, economic,social, cultural and environmental welfare of King Island.Council continues to place an emphasis on economic development, which willresult in improved opportunities for King Island.Our ObjectivesA safe, clean and healthy environment.Equal rights and opportunities for all King Island residents.Appropriate representation of the interests of all King Island residents in dealingswith other spheres of government and agencies.A balance in the level and range of services provided against the ability of thecommunity to afford them.King Island Council – Annual Report 2011-2012Page 10

Our PrioritiesGoal One – Community Economic ViabilityTo ensure the economic viability, which is essential to the wellbeing of thewhole island.Goal Two – Natural EnvironmentTo support the Island’s biodiversity in a manner that not only improves theviability of threatened flora and fauna, but also acknowledges the social andeconomic benefits to the Island’s residents.Goal Three – Community WellbeingTo create quality of life for King Island residents and visitors.Goal Four – Infrastructure and FacilitiesTo provide cost effective management of Council’s physical assets.Goal Five – Council Financial SustainabilityTo manage Council’s finances and assets to ensure the long term viability ofKing Island Council.Cattle enjoy an early morning drink in pasture near Pass River.Photo courtesy of Beth VellekoopKing Island Council – Annual Report 2011-2012Page 11

CouncillorsMayor Greg BarrattMember since 1993Committee MembershipKing Island Shipping GroupKing Island Recreation Complex CommitteePhoenix Community HouseCradle Coast AuthorityKing Island Scheelite Consultative CommitteeNaracoopa Sand Mine Consultative CommitteeDeputy Mayor Royce ConleyMember since 2000Committee MembershipCradle Coast AuthorityNaracoopa Sand Mine Consultative CommitteeKing Island Natural Resource Management GroupCouncillor Duncan McFieMember since 2006Committee MembershipKing Island Brand Management GroupKing Island Youth Advisory CommitteeCode of Conduct PanelKing Island Tourism IncorporatedCouncillor Vernon PhilbeyMember since 1991Committee MembershipKing Island Shipping GroupYouth Centre Management CommitteeAustralian Airport AssociationKing Island Fire Management Area CommitteeKing Island Scheelite Community CommitteeKing Island Council – Annual Report 2011-2012Page 12

Councillor Jacqueline BeckmannMember since 2009Committee MembershipKing Island Cultural CentreKing Island Youth Advisory Committee (proxy)King Island Scheelite Community CommitteeCouncillor Susan FisherMember since 2011Committee MembershipKing Island Historical SocietyKing Island Multi Purpose Health CommitteeCouncillor David BrewsterMember since 1993Committee MembershipAustralian Airport AssociationKing Island Multi Purpose Health Committee(proxy)Councillor Sally HaneveerMember since 2011Committee MembershipKing Island Historical SocietyPhoenix Community HouseCradle Coast Authority (proxy)King Island Regional Development OrganisationElected MembersSection 72 (1) (cb)Total allowances paid to Mayor, Deputy Mayorand Councillors during the 2011-2012 financialyear were $95,528.Councillor Charles ArnoldMember since 2000King Island Council – Annual Report 2011-2012Page 13

Meeting Attendance Section 72 (1) (cc)OrdinaryMeetingsCouncilWorkshopsSpecialCouncilAnnualGeneralMeetingTotalMeetingsAttendedTotal Meetings Held 12 12 0 1 25Mayor Greg Barratt 12 12 1 25Deputy Mayor RoyceConleyCr Charles ArnoldCr Jacqueline BeckmannCr David BrewsterCr Sue Fisher **121111 910 119 86 (7) 6 (7)1 241 211 220 170 (1) 12 (15)Cr Sally Haneveer ** 8 (8) 8 (8) 0 (1) 16 (17)Cr Duncan McFieCr Vernon Philbey10 1111 101 221 22Cr Joris Weitjens ** 3 (3) 3 (3) 0 (0) 6 (6)Cr Peter Youd **3 (4) 3 (4)0 (0) 6 (8)** Where members have not been a councillor for the full twelve months, the eligible numbers are shown in brackets (*)Cr Weitjens resigned in September 2011. Cr Haneveer was elected in October 2011. Cr Fisher was elected in November 2011.Senior Council StaffMark GoodeKym MillerSenior General Manager Council Director Sta ofCorporate &CommunityServicesJuly – Dec 2011Zoe BehrendtManager ofCorporateServicesApr - June 2012Anthony FanningActing Director Works &Engineering ServicesJuly 2011 -Jan 2012Arthur JohnstoneManager Works &Engineering ServicesJan-June 2012King Island Council – Annual Report 2011-2012Page 14

Organisational StructureKing Island CouncilElected MembersMayorGENERAL MANAGERExecutive AssistantDevelopment Services CoordinatorMANAGERCORPORATESERVICES• Payroll & Creditors• Rates Officer• Customer ServiceOfficer•EconomicDevelopment Officer•Phoenix CommunityHouse Coordinator•Arts & CulturalCentre Coordinator• Youth OfficerMANAGEROF WORKS• Technical ServicesOfficer• Works Foreman• Airport Supervisor &Town Foreman• Environment &Projects Coordinator• Cradle MountainWater WorksSupervisor• Depot Officer• Roads & TownCrewsKing Island Council – Annual Report 2011-2012Page 15

King Island Strategic Plan 2011-2020Economic ViabilityStrategic ObjectivesIncreased population.Existing businesses remain viable and/or grow.Encourage new business including investment and major development.Encourage new residential development and services.Tourism and Brand (coordinated marketing) promote & protect King IslandBrand.Transport – shipping & air services meet Island expectations.Marketing – support the marketing of all King Island goods and services.Costs (power, freight) – keep costs equitable for economic activity.Improved telecommunicationsProgress⊗→√⊗→→→→↔Natural EnvironmentStrategic ObjectivesWork in partnership with other organisations to control weeds.Support natural resource management organisations.Ensure existing and new development is consistent with environmental goals.Progress√→→LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 16

Community WellbeingStrategic ObjectivesAll King Island residents and visitors have access to affordable and excellenthealth and aged care services.King Island residents have access to excellent educational opportunities.Support and enhance opportunities for cultural activities and awareness onKing Island.King Island offers sufficient facilities and programs to meet communityrecreation needs.King Island Offers support to all local community groups and organisations.Focus on youth career pathways and recreation opportunities.Progress→→→→→→Infrastructure and FacilitiesStrategic ObjectivesMaintain Council assets in accordance with relevant asset plans.Encourage improvements in existing and new infrastructure provided by otherentities such as telecommunications, electricity and shipping.Progress→→Council Financial SustainabilityStrategic ObjectivesOn balance avoid deficit budget.Actively pursue new income for Council.Progress⊗√Only develop new assets that meet Council’s agreed priorities includingCouncil’s capacity to maintain them.Balance asset management with Council’s capacity to fund.→↔LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 17

Community DevelopmentCultural Centre ReportImages from Wickham Lighthouse 150th Anniversary CelebrationsIn the first half of this financial year the CulturalCentre was very active and busy with preparationsfor the highly successful community event, WickhamLighthouse 150th Anniversary Celebrations. TwentyKing Island artists prepared works for sale in the artmarket at Cape Wickham, with many spendingdedicated hours supporting each other inpreparation of works and the Wickham Lighthousebuilding for the art market. Artists were also fullyinvolved in providing imagery for the highlysuccessful Light and Sound show as the grandfinale for the event. Exhibitions relating to this eventwere held at the Cultural Centre and drew capacitycrowds and further interest in our programming andvolunteering. Volunteer and artist participation hassteadily increased. This project highlights thesignificance of the Cultural Centre developing strongworking partnerships with King Island communityand cultural organisations to achieve common goalsthat enrich the cultural life within our community andcultural tourism.This event was put forward by Council for the LocalGovernment Community Arts Events Awards andreceived a commendation.Tasmanian artists applying for the Residency program with ArtsTasmania were successful and both held exhibitions at the CulturalCentre on conclusion of their residencies and were fully supported by thevolunteers, artists and community. Residencies continue to contribute toinspiring our arts community and residents in regard to contemporary artmaking. Touring exhibitions with Tasmanian Regional Arts continued inpartnership with key stakeholders. King Island artists have received highprofile exposure throughout Tasmania in exhibitions and touring shows.This has been a new initiative which has increased our exposurethroughout the state and also drawing further attention to the highstandard of art production on King Island.The Cultural Centre continues to respond to initiatives brought forwardfrom the community such as the request for a regional food book whichhas commenced. This project addresses food as part of our culturerelating to cultural tourism and the arts.King Island Council – Annual Report 2011-2012Page 18

LEFT: Prime MinisterJulia Gillard visitedKing Island on23 July 2011.LEFT: CommunitySmall GrantsAward recipients2011-2012.RIGHT: The GovernorGeneral Quentin Bryceofficially opened theCape WickhamLighthouse on5 November 2011- 150 years after itcommenced operation.King Island Council – Annual Report 2011-2012Page 19

Youth Development OfficerPrincipal Achievements:Girls Club program- Established a girls club program with the aim to encourage healthy attitudes andlifestyles that will enable early adolescent girls to develop their full potential in a supportive and positiveenvironment.Cape Wickham Lighthouse celebration youth events- Youth involved in lantern making workshops aswell as participating in the Lantern parade at the event. Youth activities and games provided at theevent lead by the Youth Development Officer (YDO) as part of the family fun day.Working Bees- A series of youth working Bees at the KingIsland Youth centre were held to re-establish it as an afterschool drop in centre and social place for youth to hangout. 30 youth were involved hand on in designing andrefurbishing the centre.Social Media- A King Island youth centre blog sight andKing Island youth centre face book page were createdand managed by the YDO. This social media network isdesigned to communicate with and advertise events andactivities to youth and capsulate a large youth audience that is relevant to this age group.Australia Day Activities- Events held on Australia day foryouth included kite making and face painting as well ashands on involvement with sand sculpture Jim McCauley.Two successive sand sculpting workshops were held afterthis event with 33 participants attending.Official Opening King Island Youth Centre- The newlyrefurbished Youth centre was opened on Friday 17February 2012, with 60 community members attending.The centre provides a space for youth to participate instructured and unstructured activities and socialise in apositive, safe and supervised environment out of school hours.King Island Show- Youth were involved withbaking goods at King Island District Highschool and operating a cake and face paintingstall at the show as a fundraiser for the centre.King Island Imperial 20 Race- 7 youth teams offour participants per team competed in the crossisland race over the long weekend.School Holiday Program- Holiday programs runover the Easter and June holiday breaks.Activities included surfing lessons, movie andpizza nights, extended opening hours at theYouth Centre and extended activities at thecentre.King Island Council – Annual Report 2011-2012Page 20

Youth Week 2012- InvolvedStreetwise visiting King Island to therun skateboarding coaching sessionduring our festival in the skate park.The festival was a weekendcelebration of youth in thecommunity and collaborated skateboarding, music and performances,food, youth mental health promotionand giveaways. 40 youthparticipants registered for theskateboarding sessions as well asover 60 community membersattending the event.Socialisation project- In efforts to enable local youth to extend social opportunities a social was heldwith Ballarat Clarendon College at the King Island Youth Centre with 70 youth in attendance.Anglicare- In conjunction with Anglicare and the King Island District High School a workshop to addressconflict resolution and respectful communication held with youth from grades 9 and 10.Youth Advisory Committee- This committee has been formed in response to giving youth a voice withinthe community. Two representatives from grades 7-10 meet monthly to discuss issues and have inputinto future program design. This information is then forwarded to the Youth Advisory Council whoinclude representatives from King Island District High School, Tasmanian Police, King Island Counciland Rural Health services.Pathway Planning- Career development with students from grade 8-10 at the King Island District HighSchool, including career interviews and apprenticeship placements.King Island Council – Annual Report 2011-2012Page 21

Community & Economic DevelopmentCOMMUNITY &ECONOMICDEVELOPMENTOBJECTIVEPERFORMANCE ASSESSMENTTo provide community services for the Island and promote economic development.PLANNEDOUTCOMESProvide activities and a safe space for youth on King Island.Promote arts and culture on King Island by the continued support of the CulturalCentre.PERFORMANCE MEASURES – COMMUNITY & ECONOMICDEVELOPMENTContinue involvement with local tourism organisation by having delegates on King IslandTourism Inc CommitteeProvide financial assistance and in-kind support in the annual budget to assist touristorganisations in the promotion of the Island, and seek government funding for this purposeProvide financial assistance and in-kind support in the annual budget to the King IslandNatural Resource Management Group IncCoordinate celebrations for the Cape Wickham Lighthouse 150 year celebrationsAssist Phoenix Community House with incorporationEstablish Youth Centre and programs for the youth of King island, with grant funding andin partnership with the King Island District High SchoolIdentify community needs and investigate the availability of government funding to providemaximum benefit for community organisationsSeek future funding for Stage Two of the Currie Recreation Multi Purpose CentreTo supply a replica trophy, as a sponsor of the annual Queenscliff to Grassy Yacht Race inaccordance with Policy C138 and the King Island Imperial 20 Inc. in accordance withPolicy C181.PROGRESS→↔√√→√→→√LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 22

Corporate ServicesCORPORATESERVICESOBJECTIVEPERFORMANCE ASSESSMENTTo manage effectively the affairs and resources of the Council in a responsible andaccountable manner for the betterment of the community in accordance with thestatutory responsibilities of the Local Government Act 1993 and other legislation.Maintain and enhance systems that ensure that Councillors are informed and areproperly equipped to achieve the decision-making process on all issues affecting theisland.PLANNEDOUTCOMESMaintain a Corporate Structure that provides timely, consistent and professionalsupport to the Council.Develop, maintain and review policies and procedures of Council.Provide appropriate support for all activities of the Council by ensuring the integrity ofinformation and recordsPERFORMANCE MEASURES – CORPORATE SERVICESPrepare a monthly operating report, which focuses on Council’s performance inrelation to its operational plan.Provide efficient systems to accurately record and manage the Council’s assetsPromote the user pays principle for all activities of Council.Maintain a separate investment account specifically to administer donations for theKing Island Multi Purpose Centre in accordance with Policy C108.Address issues contained in the National Competition Policy with emphasis onidentifying the significant business activities of Council.Ensure that Council is adequately resourced to undertake its activities and obligationsConduct annual reviews of staff performance in relation to support services and themaintenance of accurate records.Review accounting and reporting systems to ensure that they are efficient and effectivein supporting the activities of Council.Commit to the development of skilled, knowledgeable and dedicated staff, recognisingthe importance of training in accordance with Policy C120.Continue to provide financial and in-kind assistance to community organisationsthrough the Community Small Grants Scheme in accordance with Policy C162.Develop and implement the requirements of the Freedom of Information Act.To provide and regulate the reimbursement of travel and accommodation andsustenance expenses of Councillors and other authorised person in accordance withPolicy C102.PROGRESS→→→√√→→→→√↔√LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 23

Regulatory ServicesREGULATORYSERVICESOBJECTIVEPERFORMANCE ASSESSMENTUndertake Council’s regulatory assessments in a consistent, timely and costeffective manner ensuring that all outcomes meet legal requirements whileacknowledging the expectations of the community.Develop information guidelines for clients explaining the process involved inobtaining approvals for planning, development and building controlPLANNEDOUTCOMESMeet and liaise with the State Government on a regular basis on mattersaffecting the provision of regulatory services to the Island community.Monitor activities within the municipality and work with community members onoccasions when there is conflict with regulations.Work with applicants in meeting regulatory requirements.Process applications in a timely and effective manner.PERFORMANCE MEASURES – REGULATORY SERVICESPROGRESSEnsure that all development applications comply with relevant regulations,legislation and conditions of approval.Ensure that the built environment meets all statutory requirements and communitystandards.Prepare guidelines and information for the benefit of residents and customers ondevelopment and building application requirements.Establish an application processing system that provides fast tracking forappropriate development proposals and building applications.→→→√Investigate and workshop a strategic sustainable policy framework thatencompasses Council’s operations including planning and development.√Consider the recommendations in the Currie Harbour Structure Plan.√Consider the recommendations in the King Island Strategy Plan and undertake areview of the King Island Planning Scheme 1995.Implement an appropriate strategy for the management and control of straying stockand all aspects of the Dog control Act 2000, with emphasis on the collection ofrevenue due to Council.→→LEGEND: √ Achieved → Continuous ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 24

Public HealthCOMMUNITYSERVICEOBJECTIVEPERFORMANCE ASSESSMENTMaintain a high standard of public health by working with the community to develop arange of community services and facilities aimed at improving the quality of life on KingIsland.Maintain environmental and community health programs that meet legislativerequirements and community expectations.PLANNEDOUTCOMESProvide an immunisation service to the community in consultation with other levels ofgovernment.Undertake a regular food surveillance program to ensure that food premises meet therequired standards.PERFORMANCE MEASURES – COMMUNITY SERVICESPROGRESSMonitor the provision of an effective and efficient immunisation service.→Respond to health issues as they arise.√Enforce environmental health legislation and Council policies.√Consult with the Health Promotions Officer and Council delegates on a regularbasis on issues affecting the health and wellbeing of the community.→Continuation of the food surveillance program.√Provide for the operations of the State Emergency Service on King Island inaccordance with Policy C170.√Provide effective and efficient maintenance program for the King Island Cemetery.→LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council allocates a one third Full Time Equivalent (FTE) staff member to advise, regulate andmonitor its’ functions under the Public Health 1977, and the Food Act 2003King Island Council – Annual Report 2011-2012Page 25

Infrastructure ServicesINFRASTRUCTURESERVICESOBJECTIVEPERFORMANCE ASSESSMENTProvide cost-effective management and development of Council’s physical assets.Provide and maintain a high and affordable standard of essential public works andfacilities for the King Island community.Maintain and upgrade a local road network that provides a level of service that isaffordable to the community and developed in a well planned and structured manner.PLANNEDOUTCOMESProvide a cost effective and sustainable solid waste management service toresidents while pursuing a waste minimisation strategy and giving due regard toenvironmental issues, community expectation and needs.Maintain efficient and effective stormwater systems to the urban areas.Be responsive to the community’s infrastructure needs.PERFORMANCE MEASURES – WASTE MANAGEMENTContinue with the implementation of Council’s Waste Minimisation andManagement Strategy.Expand educational programs in the community on waste segregation in orderto minimise the putrescibles waste going to landfill.Maintain the Parenna Landfill site in accordance with the operating procedures.Continue investigations and options in conjunction with the school and otherlocal organisations on implementation of recycling initiatives.Satisfy the legislative requirements for waste collection and disposal.Continue to support the Lions Club of King Island with the recycling program foraluminium cans and batteries.PROGRESS→↔→↔→√LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 26

Commercial UndertakingsPERFORMANCE MEASURES – COMMERCIAL UNDERTAKINGSPROGRESSPRIVATE WORKSUndertake private works to utilise excess plant capacity and undertake works tosupplement revenue.Provide services, on a commercial basis, to the Department of Infrastructure Energyand Resources to maintain the State road network.Provide services, on a commercial basis, to Cradle Mountain Water to maintain theirwater and sewerage infrastructure on King Island.√√√AIRPORTProvide an annual Safety Inspection and Approach Survey (document)√Respond to issues identified in safety inspection reports and CASA audits.Meet with airline operators on an annual basis or as the need arises.Daily inspection of runway and perimeter fencing.Maintain airside and landside facilities at acceptable standards.Investigate and implement other commercial operations at the airport.Maintain acceptable safety standards to comply with Commonwealth Aviation SafetyAuthority requirements.Train additional staff to provide relief and support for aerodrome administration.Conduct an aerodrome emergency exercise annually, utilising all emergencyservices on the Island.To review the agreement with the King Island Aero Club.→√√√↔√⊗√↔LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 27

EngineeringPERFORMANCE MEASURES - ENGINEERINGMaintain the road register and long-term program for the reconstruction and maintenance ofCouncil’s assets.Carry out the gravel re-sheeting program on a programmed priority basis. Provide programsfor works in annual budgets.Contribute to the maintenance of kelp access tracks in accordance with Policy C105.PROGRESS↔⊗⊗Program the construction and sealing of rural roads in line with budgetary allocations.Maintain bitumen sealed roads and streets to a high standard and in line with budgetaryallocations.Carry out programs for grading, potholing, drainage, and slashing and general roadmaintenance within budgetary allocations.Ensure that road works under the Roads to Recovery Program meet the prescribedguidelines.Provide guidelines for the administration of Council stores and materials in accordance withPolicy C112.Undertake general maintenance of parks, reserves, sporting complexes, street cleaning,moving, buildings, cemetery maintenance, general cleaning, signage etc, to current standardsand in line with budget allocations.Continue to implement initiatives to provide coastal access in accordance with Policy E715.√√⊗⊗↔√↔Maintain Council’s assets to acceptable standards.Complete bridge replacement/construction works in accordance with the bridge replacementprogram for King Island.Repair, maintain and construct footpaths within the Currie and Grassy townships inaccordance with budget allocations.→⊗↔LEGEND: √ Achieved → Ongoing ↔ Deferred ⊗ Not AchievedKing Island Council – Annual Report 2011-2012Page 28

CAPITAL WORKS/ ACQUISITION OF ASSETS 2011-2012WASTE MANAGEMENTROAD RESEALINGParenna Cell Construction $8,560 Naracoopa Esplanade $71,170ROAD RESHEETING Don Kendall Drive $8,826Robbins Road $18,383 Grassy Harbour Road $15,295South Road $38,344 AIRPORT CAPITAL WORKSNorth Pegarah Road $29,975 Reseal apron extension $15,554Fraser Road $11,155 Extend long term car park $9,712Heddles Road $6,236 ENGINEERINGROAD SEALING Bitumen Facility $13,123Wood Street $21,283 Plant Replacement Program $221,511Old Grassy Road $52,496 Bridge approach and reconstruction $49,844King Island Council – Annual Report 2011-2012Page 29

Statutory Reporting RequirementsGrants and BenefitsIn accordance with Section 77 of the Local Government Act 1993 and its Small Grants Scheme policy,Council made the following grants and benefits during the year:GRANTS AND BENEFITS2007/20082008/20092009/20102010/20112011/2012$15,092$20,153$22,573$15,000$19,012Organisations Funded in 2011/2012King Island Auskick Centre $2,000King Island Boat Club Inc. $1,452King Island Child Care & Early Learning Centre $2,500King Island CWA $2,500King Island Dramatic Society and Regional Arts $1,000King Island Historical Society $560King Island Lions Club $1,000King Island Netball Association $1,500King Island Regional Development Organisation $2,500King Island Youth Fruit & Vegetable Centre $1,500North Football Club $2,500Council’s Small Grants Scheme Policy indicates $20,000 will be made available subject to budgetaryconstraints with a maximum grant of $2,500. Council determines its allocations during its budgetdeliberations and calls for applications in September each year. An amount of $20,000 was set asidein 2011/2012 and a total of $19,012 was made available by Council to community organisations to helpfund their operations and special projects during the year.Schedule of Tenders exceeding $100,000SUPPLIERITEMJet Air Pty LtdDiesel FuelKing Island Council – Annual Report 2011-2012Page 30

Local Government Act 1993 Section 72ACouncil reports no disputes with the Australian Taxation Office during the financial year relating to compliancewith GST law.Local Government Act, 1993 Sections 72(1) (cd), 72(4) and 72 (5)Council is to include within its Annual Report a statement relating to the total remuneration paid to employeesof the Council who hold positions designated by it as being senior positions. Total remuneration includes thesalary paid, contributions to superannuation, fringe benefits and any other allowances.ANNUAL RENUMERATIONNO. OF EMPLOYEES80,000 – 120,000 2120,000 – 160,000 1MiscellaneousNo land was donated by Council pursuant to Section 177 of the Local Government Act 1993.No activities were undertaken pursuant to Section 21 of the Local Government Act 1993.King Island Council – Annual Report 2011-2012Page 31

Appendix – Financial ReportsKing Island Council – Annual Report 2011-2012Page 32

King Island CouncilFinancial ReportTable of ContentsFINANCIAL REPORTPageFinancial StatementsStatement of Comprehensive IncomeStatement of Financial PositionStatement of Changes in EquityStatement of Cash FlowsNotes to Financial StatementsIntroduction6Note 1 Significant accounting policies 6Note 2 Functions/Activities of the Council 15Note 3 Rates and charges 17Note 4 Statutory fees and fines 17Note 5 User fees 17Note 6 Grants 17Note 7 Reimbursements 20Note 8 Interest 20Note 9 Other income 20Note 10 Net gain/(loss) on disposal of property, infrastructure, plant and equipment 20Note 11 Investment revenue from water corporation 21Note 12 Employee benefits 21Note 13 Materials and services 21Note 14 Impairment of receivables 21Note 15 Depreciation and amortisation 22Note 16 Finance costs 22Note 17 Other expenses 22Note 18 Investment in water corporation 23Note 19 Cash and cash equivalents 23Note 20 Investments 23Note 21 Trade and other receivables 23Note 22 Inventories 23Note 23 Other assets 23Note 24 Property, infrastructure, plant and equipment 24Note 25 Trade and other payables 28Note 26 Trust funds and deposits 28Note 27 Other liabilities 28Note 28 Provisions 28Note 29 Interest-bearing loans and borrowings 30Note 30 Reserves 31Note 31 Reconciliation of cash flows from operating activities to surplus (deficit) 33Note 32 Reconciliation of cash and cash equivalents 33Note 33 Financing arrangements 33Note 34 Superannuation 34Note 35 Commitments 35Note 36 Operating leases 36Note 37 Contingent liabilities and contingent assets 36Note 38 Financial Instruments 37Note 39 Events occurring after balance date 44Note 40 Related party transactions 44Note 41 Special committees and other activities 45Note 42 Significant Business Activities 46Certification of the Financial ReportAuditor's Report2345

King Island CouncilStatement of Comprehensive IncomeFor the Year Ended 30 June 2012Budget Actual ActualNote 2012 2012 2011$ $ $Continuing operationsIncomeRates and charges 3 1,637,887 1,748,649 1,657,775Statutory fees and fines 4 105,724 68,870 96,620User fees 5 363,526 324,108 324,946Grants 6 1,464,323 2,414,865 2,186,105Reimbursements 7 1,018,504 1,292,123 1,152,336Interest 8 167,000 186,976 197,926Other income 9 9,000 152,985 44,890Investment revenue from water corporation 11, 18 43,000 43,940 50,880Total income 4,808,964 6,232,516 5,711,478ExpensesEmployee benefits 12 (2,310,869) (2,395,591) (2,116,756)Materials and services 13 (734,382) (1,817,296) (1,547,930)Impairment of debts 14 - (21,517) (16,075)Depreciation and amortisation 15 (1,279,561) (1,758,485) (1,268,696)Finance costs 16 (50,771) (51,770) (57,773)Other expenses 17 (652,274) (842,814) (769,466)Total expenses (5,027,857) (6,887,473) (5,776,696)Surplus / (deficit) from continuing operations (218,893) (654,957) (65,218)Capital grants received specifically for new or upgraded assets 6 224,000 - 269,335Capital grants repaid 6 - (170,000)Net gain/(loss) on disposal of property, infrastructure, plant and equipment 10 - (100,649) (4,051)Surplus / (deficit) 5,107 (755,606) 30,066Other comprehensive incomeFair value adjustments for financial assets at fair value─ Fair Value initial adjustment on Final Treasurer's Allocation Order 18 - - 163,176─ Fair Value adjustment on Available for Sale Assets 18 - 4,900 20,533Net asset revaluation increment(decrement) reversals 30(a) - 1,412,237 8,420,701Actuarial gain/loss on defined benefits plans - - -Comprehensive result 5,107 661,531 8,634,476The above statement should be read in conjunction with the accompanying notes.2

King Island CouncilStatement of Financial PositionAs at 30 June 2012AssetsCurrent assetsNote 2012 2011$ $Cash and cash equivalents 19 1,565,523 419,246Investments 20 2,795,277 2,506,713Trade and other receivables 21 488,394 507,917Inventories 22 143,374 157,050Other assets 23 35,286 -Total current assets 5,027,854 3,590,926Non-current assetsInvestment in water corporation 18 4,573,646 4,568,746Property, infrastructure, plant and equipment 24 62,003,380 62,421,053Total non-current assets 66,577,026 66,989,799Total assets 71,604,880 70,580,725LiabilitiesCurrent liabilitiesTrade and other payables 25 237,212 223,178Trust funds and deposits 26 279,685 300,866Other liabilities 27 37,273 -Provisions 28 399,318 345,252Interest-bearing loans and borrowings 29 156,867 138,081Total current liabilities 1,110,355 1,007,377Non-current liabilitiesOther liabilities 27 6,481 -Provisions 28 78,195 24,018Interest-bearing loans and borrowings 29 754,023 555,035Total non-current liabilities 838,699 579,053Total liabilities 1,949,054 1,586,430Net Assets 69,655,826 68,994,295EquityAccumulated surplus 23,604,105 25,075,707Reserves 30 46,051,721 43,918,588Total Equity 69,655,826 68,994,295The above statement should be read in conjunction with the accompanying notes.3

King Island CouncilStatement of Changes in EquityFor the Year Ended 30 June 2012Asset FairAccumulated Revaluation Value OtherNote Total Surplus Reserve Reserve Reserves2012 2012 2012 2012 20122012 $ $ $ $ $Balance at beginning of the financial year 68,994,295 25,075,707 41,234,708 20,533 2,663,347Surplus / (deficit) for the year (755,606) (755,606) - - -Other Comprehensive Income:Financial assets available for sale reserve─ Fair Value adjustment on Available for Sale Assets 30 4,900 - - 4,900 -Net asset revaluation increment(decrement) 30 1,412,237 1,412,237 - -Transfers between reserves - (715,996) - - 715,996Balance at end of the financial year 69,655,826 23,604,105 42,646,945 25,433 3,379,343Asset FairAccumulated Revaluation Value OtherTotal Surplus Reserve Reserve Reserves2011 2011 2011 2011 20112011 $ $ $ $ $Balance at beginning of the financial year 60,359,819 24,161,982 32,814,007 - 3,383,830Surplus / (deficit) for the year 30,066 30,066 - - -Other Comprehensive Income:Financial assets available for sale reserve─ Fair Value initial adjustment on Final Treasurer'sAllocation Order 18 183,709 163,176 - 20,533 -Net asset revaluation increment(decrement) 30 8,420,701 - 8,420,701 - -Transfers between reserves - 720,483 - (720,483)Balance at end of the financial year 68,994,295 25,075,707 41,234,708 20,533 2,663,347The above statement should be read with the accompanying notes.4

King Island CouncilStatement of Cash FlowsFor the Year Ended 30 June 2012Cash flows from operating activities2012 2011Inflows/Inflows/(Outflows) (Outflows)Note $ $Rates 1,758,757 1,729,098Statutory fees and fines 68,870 96,620User charges and other fines (inclusive of GST) 247,640 203,023Grants (inclusive of GST) 2,594,865 2,286,105Reimbursements (inclusive of GST) 1,332,123 1,202,336Interest received 186,976 188,067Rents (inclusive of GST) 37,191 -Dividends - -Other receipts (inclusive of GST) 115,794 50,149Net GST refund/payment - -Payments to suppliers (inclusive of GST) (1,976,144) (1,651,773)Payments to employees (including redundancies) (2,247,764) (2,241,705)Other payments (843,006) (789,759)Net cash provided by (used in) operating activities 31 1,275,302 1,072,161Cash flows from investing activitiesPayments for property, infrastructure, plant and equipment (634,225) (1,788,622)Proceeds from sale of property, infrastructure, plant and equipment 605,000 95,571Investments in / (drawdowns from) term deposits (288,564) 94,405Investment revenue from water corporation 43,940 50,880Capital grants (inclusive of GST) - 269,335Capital grants repaid (inclusive of GST) - (170,000)Net cash provided by (used in) investing activities (273,849) (1,448,431)Cash flows from financing activitiesFinance costs (51,770) (57,773)Trust funds and deposits (21,181) (5,817)Proceeds from interest bearing loans and borrowings 217,774 (108,143)Repayment of interest bearing loans and borrowings - -Net cash provided by (used in) financing activities 144,823 (171,733)Net increase (decrease) in cash and cash equivalents 1,146,276 (548,003)Cash and cash equivalents at the beginning of the financial year 419,246 967,249Cash and cash equivalents at the end of the financial year 32 1,565,522 419,246Financing arrangements 33Restrictions on cash assets 35The above statement should be read with the accompanying notes.5

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Introduction(a)(b)The King Island Council was established on 1907 and is a body corporate with perpetual succession and a common seal.Council's main office is located at 10 George Street, Currie.The purpose of the Council is to provide delivery of local government services and affordable infrastructure to support thecommunity in its endeavours and be an advocate for the Island with Governments and other organisations.This financial report is a general purpose financial report that consists of the Statements of Comprehensive Income,Financial Position, Changes in Equity, Cash Flows, and notes accompanying these financial statements. The generalpurpose financial report complies with Australian Accounting Standards, other authoritative pronouncements of theAustralian Accounting Standards Board (AASB), and the Local Government Act 1993 (LGA1993) (as amended). Councilhas determined that it does not have profit generation as a prime objective. Consequently, where appropriate, Council haselected to apply options and exemptions within accounting standards that are applicable to not-for-profit entities. As aresult this financial report does not comply with International Financial Reporting Standards.Note 1Significant accounting policies(a) Basis of accountingThis financial report has been prepared on the accrual and going concern bases.This financial report has been prepared under the historical cost convention, except where specifically stated in notes1(e), 1(i), 1(k), 1(n), 1(o), 1(p), and 1(u).Unless otherwise stated, all accounting policies are consistent with those applied in the prior year. Where appropriate,comparative figures have been amended to accord with current presentation, and disclosure has been made of anymaterial changes to comparatives.All entities controlled by Council that have material assets or liabilities, such as Special Committees of Management, andmaterial subsidiaries or joint ventures, have been included in this financial report. All transactions between these entitiesand Council have been eliminated in full. Details of entities not included in this financial report based on their materialityare detailed in note 41.Judgements and AssumptionsIn the application of Australian Accounting Standards, Council is required to make judgements, estimates andassumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimatesand associated assumptions are based on historical experience and various other factors that are believed to bereasonable under the circumstances, the results of which form the basis of making the judgements. Actual results maydiffer from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised if the revision affects only that period or in the period of therevision and future periods if the revision affects both current and future periods.Council has made no assumptions concerning the future that may cause a material adjustment to the carrying amounts ofassets and liabilities within the next reporting period. Judgements made by Council that have significant effects on thefinancial report are disclosed in the relevant notes as follows:Employee entitlementsAssumptions are utilised in the determination of Council’s employee entitlement provisions. These assumptions arediscussed in note 1(n).Defined benefit superannuation fund obligationsActuarial assumptions are utilised in the determination of Council’s defined benefit superannuation fund obligations.These assumptions are discussed in note 33.6

Fair value of property, infrastructure, plant & equipmentKing Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Assumptions and judgements are utilised in determining the fair value of Council’s property, infrastructure, plant andequipment including useful lives and depreciation rates. These assumptions are discussed in notes 1(d) and in note 23.Investment in water corporationAssumptions utilised in the determination of Council’s valuation of its investment in Cradle Mountain Water are discussedin note 1(k) and in note 18.(b)Change in accounting policiesThere have been no change in Accounting Policies.(c)Revenue recognitionRates, grants and contributionsRates, grants and contributions (including developer contributions) are recognised as revenues when Council obtainscontrol over the assets comprising these receipts.Control over assets acquired from rates is obtained at the commencement of the rating year as it is an enforceable debtlinked to the rateable property or, where earlier, upon receipt of the rates. A provision for impairment on rates has notbeen established as unpaid rates represents a charge against the rateable property that will be recovered when theproperty is next sold.Revenue is recognised when Council obtains control of the contribution or the right to receive the contribution, it isprobable that the economic benefits comprising the contribution will flow to Council and the amount of the contribution canbe measured reliably. Control over granted assets is normally obtained upon their receipt (or acquittal) or upon earliernotification that a grant has been secured, and are valued at their fair value at the date of transfer.Where grants or contributions recognised as revenues during the financial year were obtained on condition that they beexpended in a particular manner or used over a particular period and those conditions were undischarged at balancedate, the unused grant or contribution is disclosed in note 6. The note also discloses the amount of unused grant orcontribution from prior years that was expended on Council’s operations during the current year.A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has notbeen provided at balance date and conditions include a requirement to refund unused contributions. Revenue is thenrecognised as the various performance obligations under an agreement are fulfilled. Council does not currently have anyreciprocal grants.Non-monetary contributionsNon-monetary contributions (including developer contributions) with a value in excess of the recognition thresholds, arerecognised as revenue and as non-current assets. Non-monetary contributions below the thresholds are recorded asrevenue and expenses.User fees and Statutory fees and finesFees and fines are recognised as revenue when the service has been provided, the payment is received, or when thepenalty has been applied, whichever first occurs. A provision for impairment is recognised when collection in full is nolonger probable.Sale of Property, infrastructure, plant and equipmentThe profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer.RentRents are recognised as revenue when the payment is due or the payment is received, whichever first occurs. Rentalpayments received in advance are recognised as a prepayment until they are due.InterestInterest is recognised progressively as it is earned.7

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012DividendsDividend revenue is recognised when Council's right to receive payment is established.(d)Expense recognitionExpenses are recognised in the Statement of Comprehensive Income when a decrease in future economic benefitsrelated to a decrease in asset or an increase of a liability has arisen that can be measured reliably.Employee benefitsEmployee benefits include, where applicable, entitlements to wages and salaries, annual leave, sick leave, long serviceleave, superannuation and any other post-employment benefits.Depreciation and amortisation of Property, infrastructure, plant and equipmentBuildings, land improvements, plant and equipment, infrastructure and other assets having limited useful lives aresystematically depreciated over their useful lives to the Council in a manner which reflects consumption of the servicepotential embodied in those assets. Estimates of remaining useful lives and residual values are made on a regular basiswith major asset classes reassessed annually. Depreciation rates and methods are reviewed annually.Where assets have separate identifiable components that are subject to regular replacement, these components areassigned distinct useful lives and residual values and a separate depreciation rate is determined for each component.Road earthworks are not depreciated on the basis that they are assessed as not having a limited useful life.Land is not depreciated.Straight line depreciation is charged based on the residual useful life as determined each year.Major depreciation periods used are listed below and are consistent with the prior year unless otherwise stated:LandBuildingsbuildingsbuilding improvementsPlant and Equipmentplant, machinery and equipmentfixtures, fittings and furniturecomputers and telecommunicationsRoadsroad pavements and sealsroad substructureroad formation and earthworksroad kerb, channel and minor culvertsBridgesbridges deckbridges substructureOther Infrastructurefootpaths and cyclewaysdrainagerecreation and community facilitieswaste managementparks, open space and streetscapesaerodrome infrastructurePeriodInfinite20-100 years20-100 years5-20 years5-20 years3-5 years60-80 years12-15 years12-15 years50-80 years30-60 years20-80 years60-80 years20-80 years20-60 years15-40 years60-80 years15-40 yearsRepairs and maintenanceRoutine maintenance, repair costs, and minor renewal costs are expensed as incurred. Where the repair relates to thereplacement of a component of an asset and the cost exceeds the capitalisation threshold the cost is capitalised anddepreciated. The carrying value of the replaced asset is expensed.8

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Finance costsFinance costs are recognised as an expense in the period in which they are incurred, except where they are capitalisedas part of a qualifying asset constructed by Council. Where specific borrowings are obtained for the purpose of specificasset acquisition, the weighted average interest rate applicable to borrowings at balance date, excluding borrowingsassociated with superannuation, is used to determine the borrowing costs to be capitalised. No borrowing costs werecapitalised during the period.Finance costs include interest on bank overdrafts, interest on borrowings, unwinding of discounts, and finance leasecharges.(e)Recognition and measurement of assetsAcquisitionThe purchase method of accounting is used for all acquisitions of assets, being the fair value of assets provided asconsideration at the date of acquisition plus any incidental costs attributable to the acquisition. Fair value is the amount forwhich the asset could be exchange between knowledgeable willing parties in an arm's length transaction.The asset capitalisation threshold adopted by Council is $2,000. Assets valued at less than $2,000 are charged to theStatement of Comprehensive Income in the year of purchase (other than where they form part of a group of similar itemswhich are material in total).Where assets are constructed by Council, cost includes all materials used in construction, direct labour, borrowing costsincurred during construction, and an appropriate share of directly attributable variable and fixed overheads.The following classes of assets have been recognised in note 24. In accordance with Council's policy, the threshold limitsdetailed below have applied when recognising assets within an applicable asset class and unless otherwise stated areconsistent with the prior year:LandThresholdland 10,000Buildingsbuildings 10,000building improvements 10,000heritage buildings 10,000Plant and Equipmentplant, machinery and equipment 2,000fixtures, fittings and furniture 2,000computers and telecommunications 2,000Roadsroad pavements and seals 10,000road substructure 10,000road formation and earthworks 10,000road kerb, channel and minor culverts 10,000Bridgesbridges deck 10,000bridges substructure 10,000Other Infrastructurefootpaths and cycleways 10,000drainage 10,000recreation and community facilities 10,000waste management 10,000$9

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012(f)Recognition and measurement of assetsRevaluationSubsequent to the initial recognition of assets, non-current physical assets, other than plant and equipment, includingfixtures, fittings and furniture and computers and telecommunications, are measured at their fair value. Fair value isrepresented by the deprival value of the asset approximated by its written down replacement cost. At balance date,Council reviewed the carrying value of the individual classes of assets measured at fair value to ensure that each assetclass materially approximated its fair value. Where the carrying value materially differed from the fair value at balancedate the class of asset was revalued.In addition, Council undertakes a formal revaluation of land, buildings, and infrastructure assets on a regular basis toensure valuations represent fair value. The valuation is performed either by experienced Council officers or independentexperts.Where the assets are revalued, the revaluation increments are credited directly to the asset revaluation reserve except tothe extent that an increment reverses a prior year decrement for that class of asset that had been recognised as anexpense in which case the increment is recognised as revenue up to the amount of the expense. Revaluation decrementsare recognised as an expense except where prior increments are included in the asset revaluation surplus for that class ofasset in which case the decrement is taken to the reserve to the extent of the remaining increments. Within the sameclass of assets, revaluation increments and decrements within the year are offset.(g)Cash and cash equivalentsFor the purposes of the statement of cash flows, cash and cash equivalents include cash on hand, deposits at call, andother highly liquid investments with original maturities of three months or less, net of outstanding bank overdrafts.(h) Trade and other receivablesReceivables are carried at amortised cost using the effective interest rate method. A provision for impairment isrecognised when there is objective evidence that an impairment loss has occurred.(i)(j)Financial assetsManaged funds are valued at fair value, being market value, at balance date. Any unrealised gains and losses onholdings at balance date are recognised as either a revenue or expense.InventoriesInventories held for distribution are measured at cost adjusted when applicable for any loss of service potential.Other inventories are measured at the lower of cost and net realisable value.(k)Investments in water corporationCouncil's investment in Cradle Mountain Water is valued at its fair value at balance date. Fair value was determined byusing Council's ownership interest in the water corporation's net assets at balance date based on the Final Treasurer'sAllocation Order in 2011. Council has an ownership interest of 1.4% in the corporation. Any unrealised gains and loseson holdings at balance date are recognised through the Statement of Comprehensive Income to a Financial assetsavailable for sale Reserve each year. (refer note 30)Council has derived returns from the corporation as disclosed at note 11.(l)(m)InvestmentsInvestments, other than investments in associates and property, are measured at cost.Tender depositsAmounts received as tender deposits and retention amounts controlled by Council are recognised as Trust funds untilthey are returned or forfeited (refer to note 30).10

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012(n)Employee benefitsWages and salariesLiabilities for wages and salaries and rostered days off are recognised and measured as the amount unpaid at balancedate and include appropriate oncosts such as workers compensation and payroll costs.Annual leaveAnnual leave entitlements are accrued on a pro-rata basis in respect of services provided by employees up to balancedate. Annual leave expected to be paid within 12 months is measured at nominal value based on the amount, includingappropriate oncosts, expected to be paid when settled.Annual leave expected to be paid later than one year has been measured at the present value of the estimated futurecash outflows to be made for these accrued entitlements. Commonwealth bond rates are used for discounting future cashflows.Long service leaveLong service leave entitlements payable are assessed at balance date having regard to expected employee remunerationrates on settlement, employment related oncosts and other factors including accumulated years of employment, onsettlement, and experience of employee departure per year of service.Long service leave expected to be paid within 12 months is measured at nominal value based on the amount expected tobe paid when settled. Long service leave expected to be paid later than one year has been measured at the presentvalue of the estimated future cash outflows to be made for these accrued entitlements. Commonwealth bond rates areused for discounting future cash flows.Long service leave expected to be paid later than one year has been measured at the present value of the estimatedfuture cash outflows to be made for these accrued entitlements. Commonwealth bond rates are used for discountingfuture cash flows.Sick LeaveAn accrual is made for sick leave in accordance with Council's policy to partially pay out unused sick leave upon ceasingemployment with Council.Classification of employee benefitsAn employee benefit liability is classified as a current liability if the Council does not have an unconditional right to defersettlement of the liability for at least 12 months after the end of the period. This includes all annual leave and unconditionallong service leave entitlements.(o)Interest bearing liabilitiesThe borrowing capacity of Council is limited by the Local Government Act 1993 . Interest bearing liabilities are initiallyrecognised at fair value, net of transaction costs incurred. Subsequent to initial recognition these liabilities are measuredat amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount isrecognised in the Statement of Comprehensive Income over the period of the liability using the effective interest method.(p)LeasesFinance leasesLeases of assets where substantially all the risks and rewards incidental to ownership of the asset, are transferred to theCouncil are classified as finance leases. Finance leases are capitalised, recording an asset and a liability at the lower ofthe fair value of the asset and the present value of the minimum lease payments, including any guaranteed residual value.Lease payments are allocated between the reduction of the lease liability and the interest expense. Leased assets aredepreciated on a straight line basis over their estimated useful lives to Council where it is likely that Council will obtainownership of the asset or over the term of the lease, whichever is the shorter. Council does not currently have anyfinance leases.Operating leasesLease payments for operating leases are required by the australian accounting standard to be recognised on a straightline basis, rather than expensed in the years in which they are incurred.11

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012(q)(r)Allocation between current and non-currentIn the determination of whether an asset or liability is current or non-current, consideration is given to the time when eachasset or liability is expected to be settled. The asset or liability is classified as current if it is expected to be settled withinthe next twelve months, being Council's operational cycle, or if Council does not have an unconditional right to defersettlement of a liability for at least 12 months after the reporting date.TaxationCouncil is exempt from all forms of taxation except Fringe Benefits Tax, Payroll Tax and the Goods and Services Tax.Goods and Services Tax (GST)Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred isnot recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost ofacquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are showninclusive of GST.Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investingand financing activities, which are disclosed as operating cash flows.(s)(t)Impairment of assetsAt each reporting date, Council reviews the carrying value of its assets to determine whether there is any indication thatthese assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of theasset's fair value less costs to sell and value in use, is compared to the assets carrying value. Any excess of the assetscarrying value over its recoverable amount is expensed to the Statement of Comprehensive Income, unless the asset iscarried at the revalued amount in which case, the impairment loss is recognised directly against the revaluation reserve inrespect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluationsurplus for that same class of asset. For non-cash generating assets of Council such as roads, drains, public buildingsand the like, value in use is represented by the deprival value of the asset approximated by its written down replacementcost.RoundingUnless otherwise stated, amounts in the financial report have been rounded to the whole dollar.(u)Significant Business ActivitiesCouncil is required to report the operating capital and competitive neutrality costs in respect of each significant businessactivity undertaken by the council. Council's disclosure is reconciled in note 40. Council has determined, based uponmateriality that King Island Aerodrome and its Road Making Unit as defined in note 40 are considered significant businessactivities. Competitive neutrality costs include notional costs i.e. income tax equivalent, rates and loan guarantees inpreparing the information disclosed in relation to significant business activities.12

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012(v)Pending Accounting StandardsThe following Australian Accounting Standards have been issued or amended and are applicable to Council but are not yet effective.They have not been adopted in preparation of the financial report at reporting date.Standard / Interpretation Summary Applicable for annualreporting periodsbeginning or ending onImpact on LocalGovernmentfinancial statementsAASB 9: Financial InstrumentsAASB 13: Fair Value MeasurementAASB 119: Employee BenefitsThese standards are applicable retrospectively and amend theclassification and measurement of financial assets. Council has notyet determined the potential impact on the financial statements.Specific changes include:* simplifying the classifications of financial assets into those carried atamortised cost and those carried at fair value;* removing the tainting rules associated with held-to-maturity assets;* simplifying the requirements for embedded derivatives;* removing the requirements to separate and fair value embeddedderivatives for financial assets carried at amortised cost;* allowing an irrevocable election on initial recognition to present gainsand losses on investments in equity instruments that are not held fortrading in other comprehensive income. Dividends in respect of theseinvestments that are a return on investment can be recognised in profitor loss and there is no impairment or recycling on disposal of theinstrument; and* reclassifying financial assets where there is a change in an entity'sbusiness model as they are initially classified based on:a. the objective of the entity's business model for managing thefinancial assets; andb. the characteristics of the contractual cash flows.This Standard defines fair value, sets out a framework for measuringfair value and requires disclosures about fair value measurements.There is no financial impact.This Standard supersedes AASB 119 Employee Benefits, introducinga number of changes to accounting treatments. This Standard wasissued in September 2011.Applicable for annualreporting periodscommencing on or after1 January 2013.Applicable for annualreporting periodscommencing on or after1 January 2013.Applicable for annualreporting periodscommencing on or after1 January 2013.These changes areexpected to provide somesimplification in theaccounting for anddisclosure of financialinstruments.No financial impact.Council has not yetdetermined the applicationor the potential impact ofthe Standard.AASB 2009-11: Amendments toAustralian Accounting Standardsarising from AASB 9 [AASB 1, 3, 4, 5,7, 101, 102, 112, 118, 121, 127, 128,131, 132, 136, 139, 1023 & 1038 andint 10 & 12]AASB 2010-7: Amendments toAustralian Accounting Standardsarising from AASB 9 (December 2010)[AASB 1, 3, 4, 5, 7, 101, 102, 112, 118,121, 127, 128, 131, 132, 136, 139,1023 & 1038 and int 2, 5, 10, 12, 19 &127][Modified by AASB 2010-7]This Standard makes consequential amendments to other AustralianAccounting Standards and interpretations as a result of issuing AASB9 in December 2010.Applicable for annual Council has not yetreporting periodsdetermined the applicationcommencing on or after 1 July or the potential impact of2013.the Standard.Applicable for annualreporting periodscommencing on or after1 January 2013.Council has not yetdetermined the applicationor the potential impact ofthe Standard.13

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Standard / Interpretation Summary Applicable for annualreporting periodsbeginning or ending onImpact on LocalGovernmentfinancial statementsAASB 2011-8: Amendments toAustralian Accounting Standardsarising from AASB 13 [AASB 1, 2, 3, 4,5, 7, 9, 2009-11, 2010-7, 101, 102, 108,110, 116, 117, 118, 119, 120, 121, 128,131, 132, 133, 134, 136, 138, 139, 140,141, 1004, 1023 & 1038 and int 2, 4, 12, 13, 14, 17, 19, 131, 132]This Standard replaces the existing definition and fair value guidancein other Australian Accounting Standards and Interpretations as theresult of issuing AASB 13 in September 2011. There is no financialimpact.Applicable for annualreporting periodscommencing on or after1 January 2013.No financial impact.AASB 2011-9: Amendments toAustralian Accounting Standards -Presentation of Items of OtherComprehensive Income [AASB 1, 5, 7,101, 112, 120, 121, 132, 133, 134,1039 & 1049]This Standard requires to group items presented in othercomprehensive income on the basis of whether they are potentiallyreclassifiable to profit or loss subsequently (reclassificationadjustments).Applicable for annual Council has not yetreporting periodsdetermined the applicationcommencing on or after 1 July or the potential impact of2013.the Standard.AASB 2011-10: Amendments toAustralian Accounting Standardsarising from AASB 119 (September2011) [AASB 1, 8, 101, 124, 134, 1049& 2011-8 and int 14]The Standard makes amendments to other Australian AccountingStandards and interpretations as a result of issuing AASB 119Employee Benefits in September 2011.Applicable for annualreporting periodscommencing on or after1 January 2013.Council has not yetdetermined the applicationor the potential impact ofthe Standard.AASB 2011-11: Amendments to AASB119 (September 2011) arising fromReduced Disclosure RequirementsAASB 2012-1: Amendments toAustralian Accounting Standards - Fairvalue measurement - arising fromReduced Disclosure Requirements[AASB 3,7,13 & 140]This Standard gives effect to Australian Accounting Standards -Reduced Disclosure Requirements for AASB 119 (September 2011).There is no financial impact.This Standard amends Reduced Disclosure Requirements arising fromAASB13 Fair Value Measurement and consequential amendmentsimplemented through AASB 2011-8 Amendments to AustralianAccounting Standards arising from AASB13.Applicable for annualreporting periodscommencing on or after1 January 2013.Applicable for annualreporting periodscommencing on or after1 January 2013.No financial impact.Council has not yetdetermined the applicationor the potential impact ofthe Standard.(w)Contingent assets, contingent liabilities and commitmentsContingent assets and contingent liabilities are not recognised in the Statement of Financial Position, but are disclosed by way of anote and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable orpayable respectively.Commitments are not recognised in the Statement of Financial Position. Commitments are disclosed at their nominal value andinclusive of the GST payable.(x)BudgetThe estimated revenue and expense amounts in the Statement of Comprehensive Income represent revised budget amounts and arenot audited.14

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 2(a)Functions/Activities of the CouncilRevenue, expenditure and assets attributable to each function as categorised in (c) below:GrantsOtherTotalRevenueTotalExpenditureSurplus/(Deficit)AssetsGovernment and administration2011 - 2012 759,282 324,161 1,083,443 1,540,251 (456,808) 7,408,4752010 - 2011 391,808 1,328,695 1,720,503 1,137,310 583,193 8,548,387Roads, streets and bridges2011 - 2012 1,197,959 - 1,197,959 1,517,716 (319,757) 40,119,7802010 - 2011 1,052,251 30,937 1,083,188 1,684,944 (601,756) 43,657,761Drainage2011 - 2012 - - - 37,223 (37,223) 434,8952010 - 2011 - - - 41,297 (41,297) -Waste management2011 - 2012 - 220,073 220,073 440,505 (220,432) 857,0632010 - 2011 - 507,240 507,240 399,271 107,969 825,106Environmental health2011 - 2012 - 5,755 5,755 41,452 (35,697) -2010 - 2011 - 13,129 13,129 71,217 (58,088) -Planning services2011 - 2012 - 26,572 26,572 101,297 (74,725) -2010 - 2011 - 33,861 33,861 116,271 (82,410) -Building control2011 - 2012 - 10,366 10,366 77,130 (66,764) -2010 - 2011 - 48,283 48,283 109,533 (61,250) -Community amenities2011 - 2012 19,500 14,372 33,872 222,549 (188,677) 1,707,6982010 - 2011 (119,882) 173,763 53,881 227,778 (173,897) 985,710Community services2011 - 2012 438,124 167,329 605,453 750,738 (145,285) 601,5632010 - 2011 404,699 282,982 687,681 375,252 312,429 1,091,706Recreation facilities2011 - 2012 - - - 72,967 (72,967) 891,8252010 - 2011 - - - 79,782 (79,782) 1,328,575Other - not attributable2011 - 2012 - 3,049,023 3,049,023 2,186,294 862,729 19,583,5812010 - 2011 556,564 1,106,484 1,663,048 1,538,093 124,955 14,143,480Total2011 - 2012 2,414,865 3,817,651 6,232,516 6,988,122 (755,606) 71,604,8802010 - 2011 2,285,440 3,525,374 5,810,814 5,780,748 30,066 70,580,72515

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012(b)Reconciliation of Assets from note 2 with the Statement of Financial Position at 30 June:2012 2011Current assets 5,027,854 3,590,926Non-current assets 66,577,026 66,989,79971,604,880 70,580,725(c)Governance and administrationOperation and maintenance of council chambers, administration offices, and councillors.Roads, streets and bridgesConstruction, maintenance and cleaning of road, streets, footpaths, bridges, parking facilities and street lighting.DrainageOperation and maintenance of open or deep drainage systems in urban areas, including the lining of piping of creeks butexcludes drainage associated with road works, flood mitigation and agriculture.Waste ManagementCollection, handling, processing and disposal of all waste materials.Environmental Health/Environmental ManagementEnvironmental Health includes disease control, food surveillance, public-use building standards, health education andpromotion, water quality, workplace safety and cemeteries.Environmental management includes strategies and programs for the protection of the environment and regulations ofactivities affecting the environment.Planning ServicesAdministration of the town planning scheme, subdivisions and urban and rural renewal programs.Building controlThe development and maintenance of building constructions standards.Community amenitiesOperation and maintenance of housing for aged persons and persons of limited means, Civic Centre, Council halls(excluding indoor sports complexes).Community servicesAdministration and operation of dog registration, operation of pounds, control of straying stock, and noxious weeds. Supportof the performing arts, museum and the presentation of festivals. Community Development which provides for theimplementation of a process by which strategies and plans can be developed so that the Council can fulfil their generalresponsibility for enhancing the quality of life of the whole community.Recreation facilitiesOperation and maintenance of sporting facilities (includes swimming pools, active and passive recreation and recreationcentres).Other - not attributableRates and charges and work not attributed elsewhere.16

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 3Rates and chargesCouncil uses Adjusted Annual Assessed Value as the basis of valuation of all properties within the municipality. The AdjustedAnnual Assessed Value of a property is its assessed adjusted annual rental value.The valuation base used to calculate general rates for 2011/2012 was $23.207 million (2010-2011 $21.548 million). The 2011/2012rate in the Adjusted Annual Assessed Value dollar was 6.295 cents (2010-2011, 6.325 cents).General Rate 1,459,268 1,371,240Waste Collection Charge 189,492 197,205Fire Levy 99,889 89,330Total rates and charges 1,748,649 1,657,775The date of the latest general revaluation of land for rating purposes within the municipality was June 2010, and the valuation wasfirst applied in the rating year commencing 1 July 2011.Note 4Statutory fees and finesBuilding Fees 13,656 40,465Planning & Development Fees 26,572 31,963Rates & Land Information Certificates 17,545 8,547Animal Control Registrations & Fees 8,539 9,991Licence & Permit Fees 2,558 3,343Other Fees - 2,311Total statutory fees and fines 68,870 96,620Note 5User feesAirport Landing Charges 267,191 249,115Refuse Disposal Fees 29,583 41,255Cemetery 12,158 7,900Airport Parking Fees 4,186 10,119Hall Hire 4,665 2,985Other fees and charges 6,325 13,572Total user fees 324,108 324,946Note 6GrantsGrants were received in respect of the following :Summary of grantsFederally funded grants 2,033,250 1,974,905State funded grants 380,687 439,765Others 928 40,770Total 2,414,865 2,455,44017

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 6Grants (cont.)Grants - OperatingFinancial Assistance Grants 1,609,340 1,221,322Motor Tax Refund 323,468 371,227Fuel Tax Credit 20,433 -Regional Health Services 214,811 264,348Recreational Trail Strategy - 96,000Community Investment Program 70,578 69,262Regional Infrastructure Program - 30,000National Binge Drinking Strategy - 6,080Phoenix House Small Grants - 15,463Local Answers Program 18,408 19,800National Volunteer Support Fund - 2,728Cradle Coast Weeds Program 928 5,000Cradel Coast Community Group - 20,000National Youth Week - 900Business Excellence Awards-various - 10,870Ten Days on the Island-In Between Project - 5,000Australia Council-In Between - 15,475Tas Regional Arts-In Between - 10,000Department of Premier and Cabinet-Flip Side - 1,100Department of Premier and Cabinet-Flavours - 1,700Department Health and Ageing-Living on King Island 16,680 16,680Australia Day Grant 818 3,150Attorney General - Youth Officer 58,000 -Natural Disaster Resiliance Program 20,000 -Parks & Wildlife 5,500 -Tasmania Community Fund - Museum 14,000 -Tasmania Community Fund - Cultural Centre 8,901 -Tasmanian Regional Event Development Grant 4,000 -Community Heritage Grant 25,000 -DIER - Solar Heating Program 4,000 -Total operating grants 2,414,865 2,186,10518

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 6Grants (cont.)The Australian Commonwealth Government provides Financial Assistance Grants to Council for general purpose use and theprovision of local roads. On 11 May 2012 the Government announced in the Commonwealth Budget following the downturn in theeconomy that, “to assist local councils with planning for the recovery and to ensure local government has maximum certainty tobegin planning their 2012-13 works programs”, it would bring forward for payment to all councils in June 2012, the first twoinstalments of the 2012-13 grant pool. Since 2009-10 the Commonwealth has been making early payment of the first quarterlyinstalment for the following year. However, the above General Purpose and Roads Financial Assistance Grants for 2011-12 thusinclude an additional instalment over that received in 2010-11. In accordance with AASB1004 Contributions, Council recognisesthese grants as revenue when it receives the funds and obtains control. The effects of the early receipt of instalments each yearhas resulted in Commonwealth Government Financial Assistance Grants being above that originally budgeted in 2011-12 by$687,000 and 2010-11 by $309,000. This has impacted the Statement of Comprehensive Income resulting in the Net deficit fromcontinuing operations being higher in both years by these amounts. With fewer instalments due to be received in 2012-13, thereverse effect is expected to occur.Capital grants received specifically for new or upgraded assetsCommonwealth Government - roads to recovery - 16,510Affordable Housing Program - 45,218KI Council of the Aging - 4,900Regional Air Safety Program - 202,707Total capital grants - 269,335Conditions on grantsNon-reciprocal grants recognised as revenue during the year that were obtained oncondition that they be expended in a specified manner that had not occurred at balancedate were:Preventative Health Initative 6,855 -Community Investment Program - 2010/11 carry over 16,323 -Community Investment Program 22,054 17,080Attorney General - Youth Officer 3,536Regional Infrastructure Program(part) - 25,000Phoenix House Small Grants - 8,000RPHS (part) 28,413 52,711Natural Disaster Resiliance Program 16,244 -Tasmania Community Fund - Museum 7,900Community Heritage Grant 25,000Tasmania Community Fund - Cultural Centre 8,901Total 135,226 102,79119

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 6Grants (cont.)Non-reciprocal grants which were recognised as revenue in prior years and wereexpended during the current year in the manner specified by the grantor were:Preventative Health Initative and CPI-Phoenix Community House 17,080 84,106Solar Heating Program - 25,000Regional Infrastructure Program(part) 25,000 -Phoenix House Small Grants 8,000RPHS (part) 52,711Total 102,791 109,106Net increase (decrease) in non-reciprocal grant revenues for the year: 32,435 (6,315)Grants repaidAffordable Housing Program - 170,000Total grants repaid - 170,000Note 7ReimbursementsRoad Works performed for State 504,666 539,653Works undertaken for Water Authority 289,800 286,685Works undertaken for other entities 497,657 325,998Total 1,292,123 1,152,336Note 8InterestInterest on rates 5,234 9,859Interest on cash and cash equivalents 181,742 188,067Total 186,976 197,926Note 9Other incomeRental/Lease Income 37,191 4,600Commision 11,661 8,813Part 5 Agreement - Contribution 45,455 -Part 5 Agreement - Royalties 28,072 -Fuel Tax Credit - 19,569Other 30,606 11,908Total other income 152,985 44,890Note 10Net gain/(loss) on disposal of property, infrastructure, plant and equipmentProceeds of sale 605,000 95,571Write down value of assets disposed (705,649) (99,622)Total (100,649) (4,051)20

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 11Investment revenue from water corporationDividend revenue received - 15,792Tax equivalent received 27,897 21,882Guarantee fee received 16,043 13,206Total investment revenue from water corporation 43,940 50,880Note 12Note 13Note 14Employee benefitsWages and salaries 1,720,651 1,587,477Workers compensation 64,076 31,082Annual leave and long service leave (Note 26) 270,263 147,231Sick Leave (Note 26) 65,426 52,344Superannuation 222,138 210,647Fringe benefits tax 7,935 11,891Payroll Tax 109,005 76,084Other employee costs 31,899 -2,491,393 2,116,756Less amounts capitalised (95,802) -Total employee benefits 2,395,591 2,116,756Materials and servicesContractors 683,034 851,548Materials purchased 361,375 132,384Inventory issued from store 79,632 213,685Consultants 220,495 178,769Utilities 79,815 77,135Freight 39,177 27,308Printing , postage & stationery 43,166 57,559Minor plant & equipment purchases 5,255 8,025Plant & equipment maintenance 305,347 -Other - 1,517Total materials and services 1,817,296 1,547,930Impairment of receivablesOther debtors 21,517 16,075Total impairment of receivables 21,517 16,07521

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 15Note 16Note 17Depreciation and amortisationPropertyBuildingsBuildings 60,964 58,791Jetties 14,756 14,031Heritage buildings 565 -Plant and EquipmentPlant, machinery and equipment 487,324 325,554Fixtures, fittings and furniture 10,020 38,436Computers and telecommunications 37,285 19,359InfrastructureRoads 541,584 541,584Bridges 120,566 119,535Aerodrome 413,791 88,812Drainage 27,782 27,792Recreational, leisure and community facilities 18,766 13,138Waste Management 25,083 21,664Total depreciation and amortisation 1,758,485 1,268,696Finance costsBank overdraft charges - 858Interest - Borrowings 51,770 56,915Total finance costs 51,770 57,773Other expensesExternal auditors' remuneration (Tasmanian Audit Office) 18,329 38,197Councillors' allowances 104,772 105,786Advertising 25,994 60,960Travel & Accommodation 65,865 46,651Bank Fees 6,000 4,831Community Grants & Sponsorships 62,665 58,351Conferences & Training 15,670 6,178Fire Service Levy 89,039 86,329Food & Catering Costs 12,398 15,091Insurance & registration 144,831 135,193Telecommunications & Internet Charges 39,146 37,433Land Tax 41,097 29,377Licences & Permits 35,764 19,031Subscriptions & Memberships 45,835 41,743Operating lease 14,280 -Other 121,129 84,315Total other expenses 842,814 769,46622

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 18Investment in water corporationOpening Balance 4,568,746 4,385,037Change in fair value of investmentFair Value initial adjustment on Final Treasurer's Allocation Order - 163,176Fair Value adjustments on Available-for-Sale Assets 4,900 20,533Total investment in water corporation 4,573,646 4,568,746Council has derived returns from the water corporation as disclosed at note 11.Note 19Note 20Note 21Note 22Note 23Cash and cash equivalentsCash on hand 800 700Cash at bank 1,460,964 -Cash invested at Call 103,759 418,546Total cash and cash equivalents 1,565,523 419,246InvestmentsTerm Deposits 2,795,277 2,506,713Total investments 2,795,277 2,506,713Trade and other receivablesCurrentRates debtors 77,592 87,700Other debtors 448,202 388,419Net GST receivable - 47,873Provision for impairment - other debtors (37,400) (16,075)Total trade and other receivables 488,394 507,917InventoriesInventories held for distribution 143,374 157,050Total inventories 143,374 157,050Other assetsCurrentPrepayments 2,703 -Accrued income 32,583 -Total 35,286 -* Accrued income only includes items that are reciprocal in nature. This does not include Rates in Advance.23

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 24 Property, infrastructure, plant and equipment 2012 2011$ $Summaryat cost 6,872,174 7,065,586Less accumulated depreciation (2,685,806) (2,474,167)4,186,368 4,591,419at fair value as at 30 June 95,824,972 83,037,777Less accumulated depreciation (38,007,960) (25,208,143)57,817,012 57,829,634Total 62,003,380 62,421,053PropertyLandat fair value as at 30 June 3,661,755 3,086,1163,661,755 3,086,116Buildingsat fair value as at 30 June 3,023,583 2,819,420Less accumulated depreciation (933,925) (545,654)2,089,658 2,273,766Jettiesat cost 560,728 560,728Less accumulated depreciation (42,553) (27,797)518,175 532,931Heritage buildingsat fair value as at 30 June 56,500 56,500Less accumulated depreciation (27,565) (27,000)28,935 29,500Total Property 6,298,523 5,922,313Valuation of land (excluding land under roads) and buildings were undertaken the Valuer General as at1 July 2010. The valuation of buildings is at fair value based on current replacement cost lessaccumulated depreciation at the date of valuation. The valuation of land is at fair value, being marketvalue based on highest and best use permitted by relevant land planning provisions.Plant and EquipmentPlant, machinery and equipmentat cost 4,954,053 4,922,469Less accumulated depreciation (2,337,051) (1,966,666)2,617,002 2,955,803Fixtures, fittings and furnitureat cost 162,069 344,686Less accumulated depreciation (65,509) (219,183)96,560 125,503Computers and telecommunicationsat cost 199,934 257,543Less accumulated depreciation (131,150) (176,061)68,784 81,482Total Plant and Equipment 2,782,346 3,162,78824

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 24 Property, infrastructure, plant and equipment (cont.) 2012 2011$ $InfrastructureRoadsat fair value as at 30 June 64,027,971 54,695,441Less accumulated depreciation (27,924,112) (18,455,150)36,103,859 36,240,291Bridgesat fair value as at 30 June 7,093,628 6,945,295Less accumulated depreciation (3,154,970) (3,951,858)3,938,658 2,993,437Aerodromeat fair value as at 30 June 15,729,438 13,109,478Less accumulated depreciation (4,719,584) (1,170,277)11,009,854 11,939,201Drainageat fair value as at 30 June 1,380,171 1,380,171Less accumulated depreciation (945,276) (917,494)434,895 462,677Recreation and community facilitiesat fair value as at 30 June 851,926 945,356Less accumulated depreciation (302,528) (140,710)549,398 804,646Waste Managementat cost 918,126 909,566Less accumulated depreciation (109,543) (84,460)808,583 825,106Total Infrastructure 52,845,247 53,265,358Valuation of the Aerodrome was undertaken by Moloney Field Services in June 2011. The valuation isat fair value based on replacement cost less accumulated depreciation as at the date of the valuation.Roads have been revalued as at 30 June 2012 by Johnstone, McGee & Gandy Pty Ltd, Engineers &PlannersBridges have been valued by AusSpan for the year ended 30 June 2012. They are valued at fair valuebeased on current replacement cost less accumulated depreciation at the date of valuation.Works in progressBuildings at cost 26,979 12,942Roads at cost 50,285 -Bridges at cost - 57,652Total Works in progress 77,264 70,594Total property, infrastructure, plant and equipment 62,003,380 62,421,05325

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 24Property, infrastructure, plant and equipment (cont.)Reconciliation of property, infrastructure, plant and equipment2012Balance atbeginning offinancial yearAcquisitionof assetsRevaluationincrements(decrements)DepreciationandamortisationWrittendown valueofdisposalsImpairmentlossesrecognised inprofit or loss(note 30) (note 15) (a)TransfersBalance at endof financialyear$ $ $ $ $ $ $ $ $Propertyland 3,086,116 - 1,150,639 - (575,000) - - 3,661,755Total land 3,086,116 - 1,150,639 - (575,000) - - 3,661,755buildings 2,273,766 - (97,281) (60,964) (25,863) - - 2,089,658jetties 532,931 - - (14,756) - - - 518,175heritage buildings 29,500 - - (565) - - - 28,935Total buildings 2,836,197 - (97,281) (76,285) (25,863) - - 2,636,768Total property 5,922,313 - 1,053,358 (76,285) (600,863) - - 6,298,523Plant and Equipmentplant, machinery and equipment 2,955,803 229,235 - (487,324) (80,711) - - 2,617,003fixtures, fittings and furniture 125,503 24,346 - (10,020) (23,224) - (20,045) 96,561computers and telecommunications 81,482 5,394 - (37,285) (851) - 20,045 68,785Total plant and equipment 3,162,788 258,975 - (534,628) (104,786) - - 2,782,349Infrastructureroads 36,240,291 225,800 179,351 (541,584) - - - 36,103,858bridges 2,993,437 106,521 959,266 (120,566) - - - 3,938,658aerodrome 11,939,201 27,700 (543,256) (413,791) - - - 11,009,854drainage 462,677 - - (27,782) - - - 434,895recreation and community facilities 804,646 - (236,482) (18,766) - - - 549,398waste management 825,106 8,560 - (25,083) - - - 808,583Total infrastructure 53,265,358 368,581 358,879 (1,147,572) - - - 52,845,246Works in progressbuildings 12,942 14,037 - - - - - 26,979roads - 50,285 - - - - - 50,285bridges 57,652 - - - - - (57,652) -Total works in progress 70,594 64,322 - - - - (57,652) 77,264Total property, infrastructure, plant andequipment62,421,053 691,879 1,412,237 (1,758,485) (705,649) - (57,652) 62,003,382(a) Impairment lossesImpairment losses are recognised in the statement of comprehensive income under other expenses.Reversals of impairment losses are recognised in the statement of comprehensive income under other revenue.There were no impairment losses in 2012/2013.26

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 24 Property, infrastructure, plant and equipment (cont.)Reconciliation of property, plant and equipment and infrastructure2011Balance atbeginning offinancial yearAcquisition ofassetsRevaluationincrements(decrements)DepreciationandamortisationWritten downvalue ofdisposalsImpairmentlossesrecognised inprofit or loss(note 30) (note 15) (a)TransfersBalance at endof financial year$ $ $ $ $ $ $ $Propertyland 3,086,116 - - - - - - 3,086,116Total land 3,086,116 - - - - - - 3,086,116buildings 1,960,641 255,422 - (58,791) - - 116,495 2,273,766Jetties 536,890 10,072 - (14,031) - - - 532,931heritage buildings 29,500 - - - - - - 29,500Total buildings 2,527,031 265,494 - (72,822) - - 116,495 2,836,197Total property 5,613,147 265,494 - (72,822) - - 116,495 5,922,313Plant and Equipmentplant, machinery and equipment 2,776,925 604,052 - (325,554) (99,622) - - 2,955,803fixtures, fittings and furniture 109,601 9,937 - (38,436) - - 44,399 125,503computers and telecommunications 136,187 9,052 - (19,359) - - (44,399) 81,482Total plant and equipment 3,022,713 623,041 - (383,349) (99,622) - - 3,162,788Infrastructureroads 36,321,570 436,032 - (541,584) - - 24,274 36,240,291bridges 3,090,771 7,844 - (119,535) - - 14,356 2,993,437drainage 490,469 - - (27,792) - - - 462,677recreation and community facilities 817,784 - - (13,138) - - - 804,646aerodromes 3,255,050 352,261 8,420,701 (88,812) - - - 11,939,201waste management 813,420 33,350 - (21,664) - - - 825,106Total infrastructure 44,789,064 829,487 8,420,701 (812,525) - - 38,630 53,265,358Works in progressbuildings 116,495 12,942 - - - - (116,495) 12,942roads 24,274 - - - - - (24,274) -bridges 14,356 57,652 - - - - (14,356) 57,652Total works in progress 155,125 70,594 - - - - (155,125) 70,594Total Property, infrastructure, plant andequipment53,580,049 1,788,616 8,420,701 (1,268,696) (99,622) - - 62,421,053(a) Impairment lossesImpairment losses are recognised in the statement of comprehensive income under other expenses.Reversals of impairment losses are recognised in the statement of comprehensive income under other revenue.27

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 25Trade and other payables2012 2011$ $Trade payables 151,985 164,435Net GST payable 8,025 -Accrued expenses 77,202 58,743Total trade and other payables 237,212 223,178Note 26Trust funds and depositsRefundable building deposits 2,000 408Refundable contract deposits 8,000 84,500Trust Funds for Community Groups 223,810 168,206Trust Funds for Bursaries 31,894 31,596Other Trust Funds 13,981 16,156Other refundable deposits - -Total trust funds and deposits 279,685 300,866Note 27Other liabilitiesCurrentRevenue received in advance 4,170 -Other liabilities 33,103 -37,273 -Non-currentOther liabilities 6,481 -Total other liabilities 43,754 -Note 28ProvisionsAnnual leave Long service Sick Leave Rostered TotalleaveDays Off2012 $ $ $ $ $Balance at beginning of the financial year 144,949 122,790 100,405 1,126 369,270Movement in provisions 37,219 52,166 18,923 (65) 108,243Balance at the end of the financial year 182,168 174,956 119,328 1,061 477,5132011Balance at beginning of the financial year 209,106 150,460 125,903 1,008 486,477Movement in provisions (64,157) (27,670) (25,498) 118 (117,207)Balance at the end of the financial year 144,949 122,790 100,405 1,126 369,27028

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 28Provisions (cont.)2012 2011$ $(a) Employee benefitsCurrent (i)Annual leave 182,168 144,949Long service leave 96,761 98,772Sick Leave 119,328 100,405Rostered Days Off 1,061 1,126399,318 345,252Non-current (ii)Long service leave 78,195 24,01878,195 24,018Aggregate carrying amount of employee benefits:Current 399,318 345,252Non-current 78,195 24,018477,513 369,270The following assumptions were adopted in measuringthe present value of employee benefits:Weighted average increase in employee costs 3.50% 4.50%Weighted average discount rates 2.62% 5.23%Weighted average settlement period 12 12(i) CurrentAll annual leave and the long service leave entitlements representing 10 or moreyearsof - Short-term continuous employee service benefits, that fall due within 12 months after the end of the periodmeasured at nominal value- Other long-term employee benefits that do not fall due within 12 months after theendof the period measured at present value(ii) Non-currentLong service leave representing less than 10 years of continuous service measured at net presentvalue302,557 144,94996,761 98,772399,318 243,72178,195 24,018(iii) Employee Numbers 41 3829

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 29Interest-bearing loans and borrowingsCurrentBank overdraft - 34,115Borrowings - secured 156,867 103,966156,867 138,081Non-currentBorrowings - secured 754,023 555,035Total 910,890 693,116The maturity profile for Council's borrowings is:Not later than one year 156,867 138,081Later than one year and not later than five years 616,133 228,177Later than five years 137,890 326,858Total 910,890 693,116Aggregate carrying amount of interest-bearing loans and borrowings:Current 156,867 138,081Non-current 754,023 555,035Total interest-bearing loans and borrowings 910,890 693,11630

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 30ReservesBalance atbeginning ofreporting year Increment (decrement)Balance at end ofreporting year(a) Asset revaluation reserve $ $ $ $2012PropertyLand 2,036,616 1,150,639 - 3,187,255Buildings 767,755 244,316 (578,079) 433,9922,804,371 1,394,955 (578,079) 3,621,247InfrastructureRoads and Bridges 29,898,537 10,065,996 (8,927,379) 31,037,154Storm Water 111,099 - - 111,099Aerodrome 8,420,701 2,592,260 (3,135,516) 7,877,44538,430,337 12,658,256 (12,062,895) 39,025,698Total asset revaluation reserve 41,234,708 14,053,211 (12,640,974) 42,646,9452011PropertyLand 2,036,616 - - 2,036,616Buildings 767,755 - - 767,7552,804,371 - - 2,804,371InfrastructureRoads and Bridges 29,898,537 - - 29,898,537Stromwater 111,099 - - 111,099Aerodrome - 8,420,701 - 8,420,70130,009,636 8,420,701 - 38,430,337Total asset revaluation reserve 32,814,007 8,420,701 - 41,234,708The asset revaluation reserve was established to capture the movements in asset valuations upon the periodic revaluation of Council's assets.(b) Fair value reserve2012Balance atbeginning ofreporting year Increment (decrement)Balance at end ofreporting year$ $ $ $Available-for-sale assetsInvestment in water corporation 20,533 4,900 - 25,433Total fair value reserve 20,533 4,900 - 25,4332011Available-for-sale assetsInvestment in water corporation - 20,533 - 20,533Total fair value reserve - 20,533 - 20,533The available-for-sale financial asset reserve was established to capture the fair value movements in Council's water corporation investment.31

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 30Reserves (cont)Balance atbeginning ofreporting yearTransfer fromaccumulatedsurplusTransfer toaccumulatedsurplusBalance at end ofreporting year(c) Other reserves $ $ $ $2012Discretionary ReservesLighthouse Reserve 164,094 13,888 (5,000) 172,982Airport Reserve 524,952 71,429 - 596,381Community Reserve 1,365,640 159,519 (48,869) 1,476,290Naracoopa Jetty Reserve 239,390 63,260 (5,500) 297,150Grassy Mine Infrastructure Reserve - 49,302 - 49,302Roads & Bridges Reserve - 174,500 - 174,5002,294,076 531,898 (59,369) 2,766,605Other reservesEmployee Entitlements Reserve 369,271 108,241 - 477,512Restricted Funds - 135,226 - 135,226369,271 243,467 - 612,738Total Other reserves 2,663,347 775,365 (59,369) 3,379,3432011Discretionary ReservesWaste Management Reserve 114,698 3,471 (118,169) -Lighthouse Reserve 152,350 11,744 - 164,094Airport Reserve 652,815 37,571 (165,434) 524,952Community Reserve 1,277,899 97,741 (10,000) 1,365,640Naracoopa Jetty Reserve 209,795 29,595 - 239,3902,407,557 180,122 (293,603) 2,294,076Statutory reservesEmployee Entitlements Reserve 486,477 - (117,206) 369,271Restricted Funds 489,796 - (489,796) -976,273 - (607,002) 369,271Total Other reserves 3,383,830 180,122 (900,605) 2,663,347Discretionary reserves are reserves that provide capital for the expansion of Council's infrastructure or capital base.Statutory reserves are maintained for employee entitlements and restricted funds for unexpended grant revenue.2012 2011$ $Total Reserves 46,051,721 43,918,58832

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $Note 31 Reconciliation of cash flows from operating activities to surplus (deficit) AASB1054.1(Surplus)/Deficit (755,606) 30,066Depreciation/amortisation 1,758,485 1,268,696(Profit)/loss on disposal of Property, infrastructure, plant and equipment 100,649 4,051Investing activity revenue from Water Corporation (43,940) (50,880)Finance costs 51,770 57,773Capital grants repaid - 170,000Capital grants received specifically for new or upgraded assets - (269,335)Change in assets and liabilities:Decrease/(increase) in trade and other receivables 19,523 (130,529)Decrease/(increase) in other assets (35,286) 91,032Decrease/(increase) in inventories 13,676 1,483Increase/(decrease) in trade and other payables 14,034 17,011Increase/(decrease) in other liabilities 43,754 -Increase/(decrease) in provisions 108,243 (117,207)Net cash provided by/(used in) operating activities 1,275,302 1,072,161Note 32Reconciliation of cash and cash equivalentsCash and Cash Equivalents 1,565,523 419,246Less bank overdraft - (34,114)Total reconciliation of cash and cash equivalents 1,565,523 419,246Note 33Financing arrangementsBank overdraft 220,000 185,886Credit Cards 24,000 23,085Unused facilities 244,000 208,97133

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 34SuperannuationCouncil makes superannuation contributions for a number of its employees to the Quadrant Defined Benefits Fund, which is a sub fund of theQuadrant Superannuation Scheme. The Quadrant Defined Benefits Fund has been classified as a multi-employer sponsored plan. As theFund’s assets and liabilities are pooled and are not allocated by employer, the Actuary is unable to allocate benefit liabilities, assets and costsbetween employers. As provided under paragraph 32(b) of AASB 119 Employee Benefits, Council does not use defined benefit accounting forthese contributions.At the present time Council contributes various percentages of employees’ gross income to the Fund. Assets accumulate in the fund to meetmember benefits as they accrue, and if assets within the fund are insufficient to satisfy benefits payable, the Council is required to meet itsshare of the deficiency.Bendzulla Actuarial Pty Ltd undertook the last actuarial review of the Fund at 30 June 2011. The review disclosed that at that time the netmarket value of assets available for funding member benefits was $57,588,247, the value of vested benefits was $52,794,839, the surplusover vested benefits was $4,793,408 and the value of total accrued benefits was $57,330,437. These amounts relate to all members of thefund at the date of valuation and no asset or liability is recorded in the Quadrant Superannuation Scheme’s financial statements for Councilemployees.The financial assumptions used to calculate the Accrued Benefits for the Fund were:Net Investment Return 0% p.a. for 2011/12 and 7.0% p.a. thereafterSalary Inflation 4.0% paPrice Inflation n/aThe actuarial review concluded that:1. The value of assets of the Quadrant Defined Benefit Fund was adequate to meet the liabilities of the Fund in respect of vestedbenefits as at 30 June 2011.2. The value of assets of the Fund was adequate to meet the value of the liabilities of the Fund in respect of accrued benefits as at 30June 2011.3. Based on the assumptions used, and assuming the Employer contributes at the levels described below, the value of the assets isexpected to continue to be adequate to meet the value of the liabilities of the Fund in respect of vested benefits at all times duringthe period up to 30 June 2014.The Actuary recommended that in future the Council contribute 9.5% of salaries in 2012/13, 10.5% of salaries in 2013/14, and 11% of salariesin 2014/15.The Actuary will continue to undertake a brief review of the financial position the Fund at the end of each financial year to confirm that thecontribution rates remain appropriate. The next full triennial actuarial review of the Fund will have an effective date of 30 June 2014 and isexpected to be completed late in 2014 or early in 2015.Council also contributes to other accumulation schemes on behalf of a number of employees, however the Council has no ongoingresponsibility to make good any deficiencies that may occur in those schemes.During the year Council made the required superannuation contributions for all eligible employees to an appropriate complying superannuationfund as required by the Superannuation Guarantee (Administration) Act 1992.During the reporting period the amount of contributions paid to defined benefits scheme was $15,165 (2010-11, $14,784)2012 2011Fund $ $Defined benefits fundEmployer contributions to Quadrant 15,165 14,78415,165 14,784Accumulation fundsEmployer contributions to Tasplan 35,651 24,115Employer contributions to other 171,322 182,343206,973 206,45834

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 35CommitmentsThe Council has entered into the following commitmentsNot later than 1yearLater than 1year and notlater than 2yearsLater than 2years and notlater than 5yearsLater than 5years2012Total$ $ $ $ $OperatingRural and Primary Health Delivery 216,980 - - - 216,980Total 216,980 - - - 216,9802011OperatingRural and Primary Health Delivery 160,506 216,980 - - 377,486Total 160,506 216,980 - - 377,4862012 2011$ $Capital Expenditure CommitmentsOffice Equipment - 35,000Plant and equipment - 235,000New Loan - 66,111Total Capital expenditure commitments - 336,111Unrestricted fundsCouncil's cash, cash equivalents and investments are subject to a number of internal and externalrestrictions that limit amounts available for discretionary or future use. These include:Cash, cash equivalents and investmentsCash and cash equivalents (note 19) 1,565,523 419,246Investments (note 20) 2,795,277 2,506,713Total cash, cash equivalents and investments 4,360,800 2,925,959Restricted fundsGrant monies received for which matching outgoings have not occurred (note 6)135,226 102,791Trust funds and deposits (note 26) 279,685 300,867Leave provisions (note 28) 477,513 369,270Reserve funds allocated for specific future purposes (note 30)2,766,605 2,294,076Restricted funds 3,659,029 3,067,004Total unrestricted cash and cash equivalents 701,771 (141,045)35

Note 36Operating leasesKing Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 20122012 2011$ $At the reporting date, Council had the following obligations under non-cancellableoperating leases for the lease of equipment and land and buildings for use withinCouncil's activities (these obligations are not recognised as liabilities):Not later than one year 13,689 14,500Later than one year and not later than five years - 12,083Later than five years - -13,689 26,583Note 37Contingent liabilities and contingent assetsContingent liabilitiesCouncil is unaware of any contingent liabilities. There are no legal matters which havedamages claims attached.Guarantees for loans to other entitiesCouncil does not act as a guarantor for the borrowings of any other entity.Contingent assetsThere are no contingent assets at balance date.Land Fill RestorationCouncil has two operating landfill sites, one of which is for inert waste only. Licenceconditions require that they be remediated as product is received. No contingentliability exists.36

Note 38Financial Instruments(a) Accounting Policy, terms and conditionsRecognisedfinancialinstruments Note Accounting Policy Terms and ConditionsFinancial assetsKing Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Cash and cashequivalents19 Cash on hand and at bank and money market callaccount are valued at face value.On call deposits returned a floating interest rate of3.5% (4.75% in 2010/2011).Interest is recognised as it accrues. Funds returned fixed interest rate of between 4.85%(5.5%), and 6.1% (6.1% ) net of fees.Investments 20 Investments and bills are valued at cost.Investments are held to maximise interest returnsof surplus cash.Interest revenues are recognised as they accrue.Trade and other receivablesOther debtors 21 Receivables are carried at amortised cost usingthe effective interest method. A provision forimpairment is recognised when there is objectiveevidence that an impairment loss has occurred.Collectability of overdue accounts is assessed onan ongoing basis.General debtors are unsecured. Credit terms arebased on 30 days.Financial LiabilitiesTrade and otherpayablesInterest-bearingloans andborrowings25 Liabilities are recognised for amounts to be paidin the future for goods and services provided toCouncil as at balance date whether or notinvoices have been received.29 Loans are carried at their principal amounts,which represent the present value of future cashflows associated with servicing the debt. Interestis accrued over the period it becomes due andrecognised as part of payables.General Creditors are unsecured, not subject tointerest charges and are normally settled within 30days of invoice receipt.Borrowings are secured by way of mortgages overthe general rates of the Council.The weighted average interest rate on borrowings is6.3% (5.91% in 2010/2011).Bank overdraft 19 Overdrafts are recognised at the principal amount.Interest is charged as an expense as it accrues.The overdraft is subject to annual review.It is secured by a mortgage over Council's generalrates and is repayable on demand.Interest rates on utilised overdraft were 9.61% (9.1%in 2010/2011) .The interest rate as at balance date was 9.61% (9.1%in 2010/2011).37

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 38 Financial Instruments (cont.)(b) Interest Rate RiskThe exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised, atbalance date are as follows:2012WeightedaverageinterestrateFloatinginterestrateFixed interest maturing in:Over 1 to 5years1 year orlessMore than 5yearsNon-interestbearing$ $ $ $ $ $Financial assetsCash and cash equivalents 5.64% 1,564,723 - - 800 1,565,523Investments 5.64% - 2,795,277 - - - 2,795,277Trade and other receivables 0.00% 77,592 - - - 410,802 488,394Investment in water corporation - - - - 4,573,646 4,573,646Total financial assets 1,642,315 2,795,277 - - 4,985,248 9,422,840Financial liabilitiesTrade and other payables - - - - 237,212 237,212Trust funds and deposits - - - - 279,685 279,685Interest-bearing loans and borrowings 6.14% - 156,867 616,133 137,890 - 910,890Total financial liabilities - 156,867 616,133 137,890 516,897 1,427,787TotalNet financial assets (liabilities) 1,642,315 2,638,410 (616,133) (137,890) 4,468,351 7,995,0532011WeightedaverageinterestrateFloatinginterestrateFixed interest maturing in:Over 1 to 5years1 year orlessMore than 5yearsNon-interestbearing$ $ $ $ $ $Financial assetsCash and cash equivalents 5.93% 418,546 - - 700 419,246Investments 5.93% 2,506,713 2,506,713Trade and other receivables 412,475 - - - - 412,475Investment in water corporation 419,246 - - - - 419,246Total financial assets 1,250,267 2,506,713 - - 700 3,757,680Financial liabilitiesTrade and other payables - - - - 223,178 223,178Trust funds and deposits - - - - 300,866 300,866Interest-bearing loans and borrowings 6.41% - 138,081 429,886 - 125,149 693,116Total financial liabilities - 138,081 429,886 - 649,193 1,217,160Net financial assets (liabilities) 1,250,267 2,368,632 (429,886) - (648,493) 2,540,520Total38

Note 38 Financial Instruments (cont.)(c) Net Fair ValuesKing Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012The aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised, at balancedate are as follows:Financial InstrumentsTotal carrying amount as per Aggregate net fair value2012 Balance Sheet 2011 2012 2011$ $ $ $Financial assetsCash and cash equivalents 1,565,523 419,246 1,565,523 419,246Investments 2,795,277 2,506,713 2,795,277 2,506,713Rates 77,592 87,700 77,592 87,700Trade and other receivables 410,802 420,217 410,802 420,217Other assets 32,583 - 32,583 -Available for sale financial assets 4,573,646 4,577,146 4,573,646 4,577,146Total financial assets 9,455,423 8,011,022 9,455,423 8,011,022Financial liabilitiesTrade and other payables 237,212 203,178 237,212 203,178Trust funds and deposits 279,685 300,866 279,685 300,866Interest-bearing loans and borrowings 910,890 693,116 910,890 693,116Total financial liabilities 1,427,787 1,197,160 1,427,787 1,197,160(d) Credit RiskThe maximum exposure to credit risk at balance date in relation to each class of recognised financial asset isrepresented by the carrying amount of those assets as indicated in the Statement of Financial Position.(e) Risks and mitigationThe risks associated with our main financial instruments and our policies for minimising these risks are detailed below.Market riskMarket risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate because ofchanges in market prices. Council's exposures to market risk are primarily through interest rate risk with onlyinsignificant exposure to other price risks and no exposure to foreign currency risk. Components of market risk towhich we are exposed are discussed below.Interest rate riskInterest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrumentwill fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets andliabilities that we use. Non derivative interest bearing assets are predominantly short term liquid assets. Our interestrate liability risk arises primarily from long term loans and borrowings at fixed rates which exposes us to fair valueinterest rate risk.39

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 38 Financial Instruments (cont.)Our loan borrowings are sourced from major Australian banks by a tender process. Finance leases are sourced frommajor Australian financial institutions. Overdrafts are arranged with major Australian banks. We manage interest raterisk on our net debt portfolio by:- ensuring access to diverse sources of funding;- reducing risks of refinancing by managing in accordance with target maturity profiles; and- setting prudential limits on interest repayments as a percentage of rate revenue.We manage the interest rate exposure on our debt portfolio by appropriate budgeting strategies and obtainingapproval for borrowings from the Department of Treasury and Finance each year.Investment of surplus funds is made with approved financial institutions under the Local Government Act 1993 . Wemanage - conformity interest with rate State risk and by Federal adopting regulations an investment and standards, policy that ensures:- capital protection,- appropriate liquidity,- diversification by credit rating, financial institution and investment product,- monitoring of return on investment,- benchmarking of returns and comparison with budget.Maturity will be staggered to provide for interest rate variations and to minimise interest rate risk.Credit riskCredit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and causeCouncil to make a financial loss. Council have exposure to credit risk on some financial assets included in ourStatement of Financial Position. To help manage this risk:- we have a policy for establishing credit limits for the entities we deal with;- we may require collateral where appropriate; and- we only invest surplus funds with financial institutions which have a recognised credit rating specified in ourInvestment policy.Credit risk arises from Council's financial assets, which comprise cash and cash equivalents, and trade and otherreceivables. Council's exposure to credit risk arises from potential default of the counterparty, with a maximumexposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicablepolicy note. Council generally trades with recognised, creditworthy third parties, and as such collateral is generally notrequested, nor is it Council's policy to securitise its trade and other receivables.It is Council's policy that some customers who wish to trade on credit terms are subject to credit verification proceduresincluding an assessment of their credit rating, financial position, past experience and industry reputation.In addition, receivable balance are monitored on an ongoing basis with the result that Council's exposure to bad debtsis not significant.We may also be subject to credit risk for transactions which are not included in the Statement of Financial Position,such as when we provide a guarantee for another party. Details of our contingent liabilities are disclosed in note 42.40

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 38 Financial Instruments (cont.)Credit quality of contractual financial assets that are neither past due nor impairedOtherFinancialInstitutionsGovernmentagencies2012(AAA credit (BBB credit (min BBB creditrating) rating) rating)Cash and cash equivalents1,564,723 - - 1,564,723Investments 2,795,277 - - 2,795,277Total contractual financial assets 4,360,000 - - 4,360,000Total2011Cash and cash equivalents418,546 - - 418,546Investments 2,506,713 - - 2,506,713Total contractual financial assets 2,925,259 - - 2,925,259Movement in Provisions for Impairment of Trade and Other Receivables 2012 2011$ $Balance at the beginning of the year (16,075) -New Provisions recognised during the year (21,325) (16,075)Amounts already provided for and written off as uncollectible- -Amounts provided for but recovered during the year- -Balance at end of year (37,400) (16,075)Ageing of Trade and Other ReceivablesAt balance date other debtors representing financial assets were past due but not impaired. These amounts relate to anumber of independent customers for whom there is no recent history of default. The ageing of the Council's Tradeand Other Receivables was:2012 2011$ $Current (not yet due) 291,055 416,341Past due by up to 30 days 17,774 36,953Past due between 31 and 180 days 136,110 25,411Past due between 181 and 365 days 21,355 4,741Past due by more than 1 year 22,100 24,471Total Trade & Other Receivables 488,394 507,917Ageing of individually impaired Trade and Other ReceivablesAt balance date, other debtors representing financial assets with a nominal value of $37,400 (2011: $16,075) wereimpaired. The amount of the provision raised against these debtors was $37,400 (2011: $16,075). The individuallyimpaired debtors relate to general and sundry debtor and have been impaired as a result of their doubtful collection.Many of the long outstanding past due amounts have been lodged with Council's debt collectors or are on paymentarrangements.41

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 38 Financial Instruments (cont.)The ageing of Trade and Other Receivables that have been individually determined as impaired at reporting date was:2012 2011$ $Current (not yet due) - -Past due by up to 30 days - -Past due between 31 and 180 days 14,382 -Past due between 181 and 365 days 6,944 2,970Past due by more than 1 year 16,075 13,105Total Trade & Other Receivables 37,400 16,075Liquidity riskLiquidity risk includes the risk that, as a result of our operational liquidity requirements:- we will not have sufficient funds to settle a transaction on the date;- we will be forced to sell financial assets at a value which is less than what they are worth; or- we may be unable to settle or recover a financial assets at all.To help reduce these risks we:- have a liquidity policy which targets a minimum and average level of cash and cash equivalents to be maintained;- have readily accessible standby facilities and other funding arrangements in place;- have a liquidity portfolio structure that requires surplus funds to be invested within various bands of liquidinstruments; - monitor budget to actual performance on a regular basis; and- set limits on borrowings relating to the percentage of loans to rate revenue and percentage of loan principalrepayments to rate revenue.The Council's exposure to liquidity risk is deemed insignificant based on prior periods' data and current assessment ofrisk.(f) Sensitivity disclosure analysisTaking into account past performance, future expectations, economic forecasts, and management's knowledge andexperience - A parallel of shift the of financial + 1% and markets, -2% in the market Council interest believes rates the (AUD) following from year-end movements rates are of 'reasonably 4.4%. possible' over theThe table below discloses the impact on net operating result and equity for each category of financial instruments heldby Council at year-end, if the above movements were to occur.Interest rate risk-2%1%-200 basis points +100 basis pointsProfit Equity Profit Equity2012 $ $ $ $ $Financial assets:Cash and cash equivalents 1,564,723 (31,294) (31,294) 15,647 15,647Investments 2,795,277 (55,906) (55,906) 27,953 27,953Trade and other receivables488,394 (9,768) (9,768) 4,884 4,884Financial liabilities:Interest-bearing loans andborrowings910,890 (18,218) (18,218) 9,109 9,10942

Note 38 Financial Instruments (cont.)King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Interest rate risk-2 %(Note: Use relevant interest rate risk foryour council).-200 basis points +100 basis pointsProfit Equity Profit Equity2011 $ $ $ $ $Financial assets:Cash and cash equivalents418,546 (8,371) (8,371) 4,185 4,185Investments 2,506,713 (50,134) (50,134) 25,067 25,067Trade and other receivables507,917 (10,158) (10,158) 5,079 5,079Financial liabilities:Interest-bearing loans and693,116 (13,862) (13,862) 6,931 6,931borrowings0(g) Fair Value HierarchyThe table below analyses financial instruments carried at fair value by valuation method.The different levels have been defined as follows:Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilitiesLevel 2 inputs other than quoted prices included within level one that are observablefor the asset or liability, either directly (ie prices) or indirectly (ie derived from prices)Level 3 inputs for the asset or liability that are not based on observable market data.Level 1 Level 2 Level 3 Total30 June 2012Available for sale financial assets - - 4,573,646 4,573,646There were no transfers between Level 1 and Level 2 in the period.Level 1 Level 2 Level 3 Total30 June 2011Available for sale financial assets - - 4,568,746 4,568,746There were no transfers between Level 1 and Level 2 in the period.Reconciliation of Level 3 Fair Value Movements 2012 2011Opening balance 4,568,746 4,385,037Change in fair value movement in Cradle Mountain Water 4,900 183,709Closing balance 4,573,646 4,568,74643

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 39Events occurring after balance dateNo matters have occurred after balance date that warrant disclosure in this report.Note(i)(iii)40 Related party transactionsResponsible PersonsNames of persons holding the position of a Responsible Person at the Council at any time during the year are:Councillors Greg Barratt (Mayor 28/10/2011 to current)Charles Arnold (Mayor 01/07/2011 to 28/10/2011)Royce Conley (Deputy Mayor )Joris Weitjens (Councillor 01/07/2011 to 13/12/2011)Peter Youd (Councillor 01/07/2011 to 28/10/2011)Councillor Royce ConleyCouncillor Vernon PhilbeyCouncillor David BrewsterCouncillor Duncan McFieCouncillor Jacqueline BeckmanCouncillor Sally Haneveer (Elected 28/10/2011)Councillor Sue Fisher (Elected 13/12/2011)General ManagerMark GoodeTotal Remuneration for the reporting year for Councillors' Emolumentsand reimbursements included above amounted to:Total Remuneration for the reporting year for senior managementpositions included above amounted to:2012 2011$ $104,772 105,786247,000 500,000In accordance with s84(2)(b) of the Local Government Act 1993 , no interests have been notified to the GeneralManager in respect of any body or organisation with which the Council has major financial dealings.44

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 41 Special committees and other activities 2012 2011$ $King Island Youth Centre Management CommitteeOpening Balance 2,508 2,439Cash Receipts 2,388 2,426Cash Payments (1,839) (2,357)Tranfer to Cash Reserve (2,000) -Closing Balance 1,057 2,508King Island Recreation Complex CommitteeOpening Balance 1,511 2,124Cash Receipts 2,673 2,071Cash Payments (2,415) (2,684)Closing Balance 1,770 1,511King Island Historical SocietyOpening Balance 19,867 24,225Cash Receipts 30,551 25,733Cash Payments (22,727) (30,091)Closing Balance 27,691 19,867Phoenix Community HouseOpening Balance 38,407 7,484Cash Receipts 11,359 35,292Cash Payments (10,411) (4,369)Closing Balance 39,355 38,40745

King Island CouncilNotes to the Financial ReportFor the Year Ended 30 June 2012Note 42Significant Business ActivitiesThe operating capital and competitive neutrality costs of the Council's significant business activities:Roads Streets and Bridges Aerodrome2012 2011 2012 2011$ $ $ $RevenueRates 0 0 0 0User Changes 0 0 272,461 266,506Grants 1,197,959 1,052,251 0 0Other 0 30,937 37,848 34,066Total Revenue 1,197,959 1,083,188 310,309 300,572ExpenditureDirectEmployee Costs 242,950 266,280 97,275 65,404Materials and Contacts 437,836 585,735 89,455 147,934Interest 0 0 0 0Other 10,129 0 92,309 0IndirectEngineering & Administration 164,652 171,540 33,060 31,356Total Expenses 855,567 1,023,555 312,099 244,694Notional cost of free services receivedCapital CostsDepreciation and amortisation 662,150 601,756 415,146 90,521Opportunity cost of capital 2,391,849 2,400,000 655,218 220,000Total Capital Costs 3,053,999 3,001,756 1,070,364 310,521Competitive neutrality adjustmentsRates and land tax 0 0 0 0Loan guarantee fees 0 0 0 00 0 0 0Calculated Surplus/(Deficit) 342,392 59,633 -1,790 55,878Tax Equivalent rate 30% 30% 30% 30%Taxation equivalent 102,718 17,890 -537 16,763Competitive neutrality costs 102,718 17,890 -537 16,76346

King Island CouncilFinancial ReportFor the Year Ended 30 June 2012Certification of the Financial ReportThe financial report presents fairly the financial position of the King Island Council as at 30 June 2012, theresults of its operations for the year then ended and the cash flows of the Council, in accordance with theLocal Government Act 1993 (as amended), Australian Accounting Standards (including interpretations) andother authoritative pronouncements issued by the Australian Accounting Standards Board.Mark GoodeGeneral ManagerDate : 29/11/2012

King Island CouncilMeech StreetCurrie TAS 7256 AustraliaPhone: (03) 6462 9000 Fax: (03) 64621313www.kingisland.tas.gov.au