Working for a Sustainable Future

Overview

National Financial Sustainability Study of Local Government

Commissioned by the Australian

Local Government Association

November2006

48317

Photos credits

All photos from relevant local council websites.

Coverpage–Blacktownlibrary(NSW),BrisbaneBotanicGardens(QLD),Redfern

CommunityCentre(NSW)AliceSpringsSwimmingCentre(NT)

Page 2–Mosmancommunitytransport(NSW), Mandurah Performing Arts Centre

(WA)

Page 3–MonashCouncilMealsonWheels(VIC)

Page 6–CairnsForeshorePromenade(QLD)

Page 8–KyaliteHall(NSW),MemorialGardensProspect (NSW)

Page 11–PortAugustaChildCareCentre(SA)DubboAirport(NSW)

Page12–MoeNewboroughSportsCentre(VIC)QueenVictoriaLibrary(TAS)

PricewaterhouseCoopers 28November2006

Contents

1Introduction 1

1.1Strongermorevibrantcommunitieswherelocalgovernmentis

financiallysustainable2

1.1.1Growingbackloginbuildingrenewals2

1.1.2Local government is big business3

1.1.3Many councils have already greatly improved efficiency4

1.1.4Caughtinacostsqueeze5

1.1.5Evidence of financial stress6

1.1.6PwC’sfinancialratioanalysisof100councils6

1.1.7Synthesisingthe state-basedreportsandthePwC

analysis 7

1.1.8Portraitofcouncilsfeelingthepinch8

2Recommendations 9

2.1Steps to further efficiency gains9

2.2Reforms to inter-government transfers10

2.3HowtheLCIRFwouldenhancelocalcommunities10

3Better Funding, BetterCommunities12

PricewaterhouseCoopers 28November2006

Introduction

1 Introduction

TheAustralianLocalGovernmentAssociation(ALGA) commissioned PricewaterhouseCoopers(PwC)tocomplete this national study on the financial sustainability of local government. This Overview provides a summary level outline of the full study which is available at

The study identifies that local governmentisrespondingtorisingcommunity expectationsby providinga growingrange of essential services and infrastructure that underpinlocalcommunities. Thisexpansionin roles and service quality, together with growth in input prices generally exceeding the average rate of revenue growth, has seenasignificantnumberofcouncilsdevelopfinancial operatingdeficits. To moderate the size of these deficits, some councils have deferred or reduced expenditure on infrastructure renewals. Manylocalcouncilsacrossthecountrynow havesizablefinancialsustainabilitychallenges,whichrequiremajorreformsinthe

waycouncilsarefundedandthewaytheyoperate.Intheabsenceofreforms, councils may have no option but to cut backontheleveloflocalcommunityservices and infrastructure.

This NationalFinancial Sustainability of Local Government report has drawn upon studiesby AccessEconomics forstatelocal government associations in Western Australia,SouthAustraliaandNewSouthWales,aswellasdetailedanalysisby the MunicipalAssociationofVictoria(MAV). Thisresearchhasbeencomplementedby PwCfinancialanalysisof100Australiancouncils.ThefindingofthePwCanalysisis that, without reforms, up to 30% oflocalgovernment councils might not be sustainable. Thisisbroadlyconsistentwiththeresultsofthestate-basedreports that between 25% and 40% of councils in those states could be financially unsustainable.

ThePwCreportcallsforarangeofreformstodealwiththenationaltotalbacklog in local government infrastructure renewal work, estimated at $14.5billion. This backloghasresultedfromthegrowinggapbetweencouncils’revenuebaseand the funding required to both deliver a broaderrangeofservices,aswellas maintainandrenewtheinfrastructurewhichsupportstheseservices.

PwChasbaseditsreformrecommendationsona‘twintrack’approachfor improvingfinancialsustainabilitythroughthe pursuit of further internal efficiency reformsandchangestointer-governmentfunding.

Thereport’smajorrecommendationsincludetheestablishmentby theAustralian GovernmentofaLocalCommunityInfrastructureRenewalsFund(LCIRF)andgreater support fromstate/territory governments to help local councilswith sustainability challengestobettermeettheneedsoftheircommunities.

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Introduction

1.1Stronger more vibrant communities where local government is financially sustainable

1.1.1Growingbacklogin building renewals

Most community centres, agedcare facilities, healthclinics and sport and recreation facilitieswereestablishedinthe1950s(orearlier). This infrastructure is not being sufficiently upgraded because of a lack of funds.

Detailedanalysisof441councilscompleted over 2005/06 across four states by AccessEconomics(forNSW,South AustraliaandWesternAustralia)andin Victoria (by the MAV) found that the averageinfrastructurerenewalbacklogper council is $20.8 million. If this averageresultappliesacrossall700councilsthe aggregate national renewals backlog isapproximately $14.5 billion. The estimatedfundinggaptoclearboththisbacklogandtocovertheannual underspendonrenewalsisestimatedat$3.1millionpercouncilperannumor

$2.16billionnationally.Thepiechartsbelowcomparetheactual2004-05local government revenue base with the revenue base required for financial sustainability.

2004/05localgovtrevenue, $21.4Bnsources

Other

21%

Requiredrevenue pa $23.56Bnsourcesincludingthe fundinggap(midcase gap: $2.16Bnpa),

Fundinggap

Taxation revenue

(rates)

38%

Other

19%

Taxation revenue(rates)

35%

Salesof goodsand services

31%

Current grantsand subsidies

10%

Salesofgoods andservices

28%

Currentgrants andsubsidies

This 9% funding gap must be covered. This will bebest achievedthrough a combinationofinitiativesincludingfurtherincreasesinefficiency,higherusercharges andrates,aswellasfurthergrantssupportfromotherspheresofgovernment.

The sustainability problem around Australia is typically more acute in smaller councils, mostlyinruralorremoteareas,butinsomecasesmetropolitanareas.Thesesmaller councilsoftenhaveconstrainedown-sourcerevenuestreamsandlackeconomiesof scale,compoundedbylessdepthinfinancialandassetmanagementcapabilities.

Somelargercouncils,however,alsohavefinancialsustainabilityproblemsarising fromfactorssuchassignificantexpansionintonewservices,suppressionofrates risestoimprovevoterappeal,andlesseffective costmanagement whereby the level of expenditure controls and budgetingprocessesmaynothavebeenadequate.

PricewaterhouseCoopers 28November2006

Introduction

The study notes that the need to improvethe sustainability of local government is not limited to Australia. Local government sectorsincomparablecountriessuffer fromsimilarissuesassociatedwithfrequent operating deficits, backlogs of infrastructurerenewalprojectsandexpandingscopeofservices. Those countriesarealsotakingactiontoaddresstheirproblems.

Purpose of the PwC study

ThestudyhasbeenundertakentohelpALGAdrawupaplantoputlocalcouncils onasoundfinancialfootingwithtargetedsupportfrom otherspheresof government. ALGA commissioned the study to:

•Assess current and long-term viability oflocalgovernmentnationallyandby council types

•Identify the key financial issues affecting financial sustainability

•Developrecommendations forimprovedfinancialsustainability(e.g.financial skillsandpotentialsourcesofadditional revenue)

•Investigate the merit of reforming inter-government funding to develop a new model to improve sustainability.

The study assesseskey characteristics that contribute to the low level of financial sustainabilityofcouncils,andidentifies arangeofinternalandfundingreformoptions thatwouldimprovethelong-termsustainability of the sector as a whole.

1.1.2Localgovernmentisbigbusiness

Local government in Australia is adynamicandextremelydiversesector consistingofmorethan700councils.TheserangefromtheBrisbaneCityCouncil

(population950,000andannualexpenditure of approximately $1.7 billion) to councilslikeJerilderieShire(population1,908andannualexpenditure$6.8 million).

Local government has an annual expenditureofaround$20billion, whichrepresents around2%ofGDP,andemploysaround1.3% of the Australian labour force. Local government provides essential services andinfrastructure that underpin local and regional communities. For the numerous regional and moreremote communities, local government is oftenthe only institutionalpresenceandoneofthekeydriversof economic activity.

The key benefits of local government, as outlined by the AustralianGovernment, include:

•Wideandestablishednationalnetworkofpublicadministration,includinga significantpresenceinruralandregionalAustralia

•Stronglinksandaccountabilitytothecommunitiesitrepresents

•Practicalserviceorientationandgoodorganisational skillswhichmakeitcapable of innovative, speedy and flexible responses

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Introduction

•Linksbetweenlocalgovernmentandlocalbusinessandindustrywhichput councilsinagoodpositiontofostera‘bottomup’approachtoregional development

•Information provider to support Commonwealth regional policy development and implementation

•Ideal entry point to get informationonothergovernments’servicesand programs.

1.1.3Manycouncilshavealreadygreatlyimprovedefficiency

A sizeable proportion of councils, including the vast majority of the larger ones, have madesignificantprogressinrecentyears in making themselves more efficient.

Efficiencyreformshavebeenachieved throughthefollowingapproaches:

•Outsourcingnon-coreoperations,whichwasformalisedinVictoriabythe compulsory competitive tending(CCT)policyduringthe1990s

•Structuralreformsthathaveincluded mandatory andvoluntary amalgamations inNSW,Victoria,SouthAustraliaand Tasmania to consolidate the local governmentsector

•Corporatisation of commercial servicesto increase the returns to local government,forexampletherecentLocal Government Infrastructure Services initiative in Queensland

•Regionaldeliveryofservicessuchaswasteremoval,purchasingand procurement, road and infrastructure maintenance and recruitment

•Sharedserviceswhereeitheracouncilorthestateassociationbecomesthe leadserviceprovider,particularlyforcorporateservices such as finance and HR.

ThirtyyearsagotherewereamuchhighernumberofcouncilsinAustralia;morethan

100councilshavebeenconsolidatedoverthe past 20 years. The local government sectorinVictoria,forinstance,undertookaseriesofamalgamationsbetween1992 and1995whichreducedthenumberofcouncilsfrom 210to78.

Overrecentyearsthelocalgovernmentsectorhasachievedarangeofsignificant efficiency initiatives, examples of which are provided below.

PricewaterhouseCoopers 28November2006

Introduction

Examples of Local government efficiency initiatives

Over recentyears the local government sectorhas achieved a range ofsignificant efficiency

initiatives, which include:

ƒTwelve Councils in the Hunterregion of NSW haveformed HunterCouncils Ltd to

provide a powerful platform for the councils to drive efficiencies and cost savings via joint

purchasing programs (eg traffic signage and advertising), regional planning processes, a

common humanresources teamand a joint staff training team.

ƒThe Roads Alliance between theLocal Government Association of Queensland (LGAQ),

Queensland Main Roads and 124 councilsis responsible for $150 million in road

construction and maintenance annually.Thealliance has formed 14Regional Road

Groupswhich provides a platform for better decisions on road infrastructure investments,

the use of road funds, project scheduling and resource-sharing across agencies.

ƒIn South Australia, 67 of the 68 councils collaborated in a joint purchasing contract for

electricity and thereby achievedsignificant costsavings over prices previously obtained

under individual contracts.

ƒLGAQ provides a large range of shared corporateservices for councilsincluding IT (eg

hostedweb applications, communityportals, online information) , joint procurement of a

range of software packages, insurance andworkers compensation as well as IR and HR

expertise.

ƒThe MAV has developed a Step Program to improve the asset management capacity

and management of communityassets of councils. The programprovides councils with

a framework to support them in seeking toreach best practice in asset management and

then facilitate continuous improvement into the future.

1.1.4Caughtinacostsqueeze

Whilemorecanbedonetoachievegreatercostefficiencies,thiswillnotbeenoughto balancethebooksofmanycouncilscaughtinacostsversusrevenuesqueeze,often not of their own making.

Overthepast30years,therangeoffunctionsundertakenbylocalgovernmentin Australiahasexpandedbeyondthephysical infrastructure of roads and waste to includeavarietyofimportantsocialandhumanservices.Thishascomeabout throughacombinationofcommunitypressure,stateandAustralianGovernment inducementsandthewithdrawalofservices by other levels of government.

A key finding of this study is that somecouncilsoftenspendscarceresources attempting to address service and infrastructure gaps that are actually regional or stateissues.Bothstateandlocalgovernmentneedtobetterrecognisewhensuch issuesarebeyondthecapacityorresponsibility of an individual council. Such issues arebettersolvedwithresourcesandinputfromotherregionalcouncils,local governmentassociations,andstateand Australian levels of government.

Costshiftingisanotherphenomenonmakinglifedifficultforlocalgovernment. Thisoccursintwoforms.Thefirstiswhenlocalgovernmentagreestoprovidea serviceonbehalfofanothersphereofgovernment,butfundingislaterreducedor stopped.Thesecondiswhenanothersphere of government ceases to provide a serviceandlocalgovernmentstepsinasaresponsetocommunitydemands.

The Inter-Governmental Agreement onCost Shifting, coupled withgreater caution by councils prior to expanding services, may moderate recent levels of serviceexpansion.

Arecenttrendobservedby thelocalgovernment sector is the increasing cost of providingservices.Forexample,theLocal Government Association of Queensland commissioned an independent economist to developa local government cost index. For2005,theindexwas5.7%-aboutdoubletheBrisbaneCPI.

PricewaterhouseCoopers 28November2006

Introduction

Thiswasdrivenbythegrowthofcostsinconstruction,whichrepresents40%of local governmentexpenditureinQueensland.

Managingthesedemandsisparticularlychallengingforcouncilswitharestricted revenuebase.Forthe60%ofcouncilsthatareruralandremote,staticordeclining populations have tended to translate into static or declining revenue.

1.1.5Evidenceoffinancialstress

Theresultsofrecentlycompletedsustainability studies commissioned and funded by state local government associations in South Australia, New SouthWales and WesternAustraliaprovidedsomeoftheimpetus for the national level study by PwC. Eachofthesestatestudies wasmanagedbyanindependentboard, withtheanalysis undertakenby AccessEconomics(Access). SouthAustraliawasthefirststateto completeitsstudy,withtheresultspublishedinAugust2005.Thiswasfollowedby NSW in May2006 and interim report inWA in August 2006.

The MAV has also led theefficiency reform process,undertakingconsiderable analysis of long-term sustainability of local government in Victoria. Based on 2004/05 data, MAV concluded that10% of the 79 councils inVictoriawere unsustainable.

PwC collatedthe results ofthe MAV studyandthethreeseparateAccessstudies, producingtheoverallfindingthataround35% of councils in thesestates were not financiallysustainable.Accessfoundthat theproportionofunsustainablecouncils variedbetween25%inNewSouthWalesand58%inWesternAustralia.

Theaggregatebacklogforall700localcouncilsacrossthecountrycouldbe

$14.5billionwithanannualunderspendonrenewalsof$1.1billion. Thiscreates afundinggapof$2.16billionperannumtoclearthebacklogandcorrectthe underspend.

This deferral tendency by some councilsarisesbecausetheothertwobroad categoriesofinfrastructure–water/sewerageandroads–havespecificusercharges to fund renewals or Australian Government grants, for example Roads to Recovery

(R2R), to support periodicupgrading. Buteven with R2R, many rural councils still faceongoingchallengesfundingtheadequaterenewaloflocalroads.

1.1.6 PwC’s financial ratioanalysisof100councils

PwCgathereddataon100councilsacrossAustralia and stratified this to match boththeproportionofcouncilsperstate/territoryandtheproportionofcouncilsin each of the seven classification size categoriesdevelopedbytheDepartmentof TransportandRegionalServices(DOTARS). The PwC results are slightly more positivethantheAccessresultsasdataconstraintsmeantthatPwCanalysis includedallgrantswhereastheAccessresultsexcludedcapitalgrants.Whilst capitalgrantsfluctuateandarearguably not a certain revenuestream, many councilshavecometodependonthemandtheirusebygovernmentsisgrowing. Thereforeretainingcapitalgrants within the analysispotentially provides a more realisticpictureof sustainability.

ThePwCresultsindicatethat:

•Approximately 36% of councils have aninterestcoverageratio(EBIT/interest) oflessthan3. Theinterestcoveragelevel of 3 generally represents a threshold wherecreditriskbeginstobemoresignificantandalargeunexpectedevent with adversecash flow implications canplace pressure on the ability to meet interestpayments.

PricewaterhouseCoopers 28November2006

Introduction

•Councilshaveamedianoperatingsurplus of 10% of total revenue, but some

16% of councils have an operating deficit of over 10% of revenue.Such councils have a tendency to defer renewalsexpenditurewhichcreatesariskof developingmaintenance backlogs.

•The median sustainability ratio (capex/depreciation) in this sample was 1.8:1. Some 8% of councils have a sustainabilityratiooflessthan1.Aratioofless than1indicatesthatthecapitalbeingconsumedinanaccountingsense exceeds thecapital beingreplaced into the asset base.

•Councils have a mediancurrent ratio (current assets/current liabilities) of 2.6, however21%arelessthan1.Theratioof1isakeythresholdfortesting liquidity issues. In particular the urbanfringe, urban development, rural remote andruralagriculturalcategoriesallhave potential liquidity problems, with 12-

50% of councils less than 1.

•Councilsacrossthenationhavea medianof48%ofcostscoveredby rates, ranging from 25–66%. Of concern

is the fact that 87% and 54% respectively

ofruralremoteandruralagricultural councilshaveratescoveringlessthan

40%ofcosts,creatingadependenceon

government grants.

1.1.7Synthesisingthestate-basedreportsandthePwCanalysis TheresultsoftheAccessandMAVstate-basedsustainabilitystudiesandthePwC analysis confirm that a significant part of thelocalgovernmentsectorhasfinancial sustainability problems.

ThePwCanalysisof100councilsestimates that 10–30% of Australia’scouncils have sustainability issues. This result broadlyreflectsthestate-basedreportsthatbetween

25%and40%ofcouncilsonthosestatescouldbeunsustainable.

Thecombinedstudiesindicatethatlocalgovernmentneedstogeneratemorecash flowtoadequatelymaintainandrenewinfrastructure.

Therecentsustainabilityinquirieshavesignificantly improved the understanding of this problem by local government andlent impetusto the process of efficiency reform.However, despitemaking sizeable improvements in efficiency, many councils(moreoftenrural,remoteandurbanfringe)willneedtoeithercutback onservicesordownsizetheirassetbasetobesustainable,unlessadditional revenuecanbesecured.

Common findings across these studiesare that councilswith sustainability issues are likely to be developing infrastructure backlogs, and unlikely to be able to clear them unlessthefundinggapisclosed.

Furtherbroadconclusionscanbedrawn from the PwC analysis, when the survey resultsaresegmentedintothesevenDOTARScouncilcategories:

•The majority of larger metropolitancouncils are generally viable or have the abilitytoimprovetheirownfinancialsustainability.Somemetropolitancouncils have often become over-stretched due to serviceexpansionsandrisingcosts. Furtheruseof communityconsultationsanduseofflexibleuser-payssystems

PricewaterhouseCoopers 28November2006

Introduction

may assist ineffectiveprioritisation of local government services and infrastructure.

•Urban fringecouncils are mixed as some have large viability issueswhile others areinastrongposition.Hence,onlysome of thesecouncils appear to need additional government funding to restore sustainability.

•Ruralremoteandruralagriculturalhavemorepronouncedviabilityproblems. Thesecouncilstypicallyappeartohaverelativelylargerscopeforinternal reforms; but they often battle against lack of scale, somost require extra fundingfortherenewalofcommunityinfrastructure.

1.1.8Portraitofcouncilsfeelingthepinch

The characteristics of councilswith financialsustainability problems include:

•Minimal (or negative) revenue growth

•Costgrowthwhichhasexceededrevenuegrowth.Expenditureshavebeen risingbyanaverageofCPIplus2–3%per annum. This cost growth is mainly dueacombinationoffactorsincludingtherisingskilllevelrequiredformost seniorrolesandhencethehigherlevelof remuneration(awardwagerisesof typically4%paformostmidtolowerlevelroles);strongercostescalationsin themaintenanceandconstructionsectors;andservicediversification

•Increasinginvolvementinnon-coreserviceprovisionduetorisingcommunity demands, coupledwith a related tendency by somecouncils to step in to provide a non-traditional service

•A tendency by some councils to run operating deficits creating a need to defer orunderspendonrenewalofinfrastructure,particularlycommunity infrastructure

•Limitedaccessforsomecouncilstothestrongfinancial andassetmanagement skills which are critical to identifying sustainability problems, optimising

renewalsexpenditureandimprovingrevenuestreams

•Limitedaccess,forasmallproportionofcouncils,toraterevenuedueto relatively small populations reducingthesizeoftheratesincomestream coupledwithconstraintsonthesizeofannualratesincreases.

PricewaterhouseCoopers 28November2006

Recommendations

2 Recommendations

2.1Steps to further efficiency gains

Thankstoefficiencyimprovementsinrecent years, many councilsneed only focus on continued improvement through productivitygains.Butothersstillhavescopefor improving their efficiency and effectiveness.

Thereport’srecommendationstoimproveinternalperformancepracticesaretargeted at four key objectives: improving efficiency,effectivenessandscale; expandingown- sourcerevenue;settingclearandappropriatepriorities;anddeepeningasset management and financialcapacity.

Therecommendationsare:

•Furtherrealisethegainsfromgreatereconomiesofscaleandreduceunitcosts viaapproachessuchasregionalorsharedserviceprovision,outsourcing,use of state-widepurchasingagreementsetc.

•Workwithstategovernmenttoremoveorrelaxlegislativeimpedimentsand improve thecapacity of local governmenttoraiserevenuefromitsownsources

•Establish a robust long-term service plan which defines whatcouncil will provide andhowserviceswillbeundertaken

•Exercisecautionpriortosteppingintoattempttoresolveregional,stateor nationalissueswithoutasoundfundingplan

•Securelong-termfunding(notjustcapitalgrants)priortonewservicesand infrastructure

•Workwith other spheres of government to facilitate improved asset managementandfinancialskillsthroughgovernment-fundedprograms(e.g.the Size, Shapeand Sustainability Review in Queensland and the MAV Step Program), to lift the skills in allcouncils to a reasonable base level

•Use total asset management plans andsystems to better manage asset renewalsandreplacement,andintegrateintobroaderlong-termcouncil objectives

•Undertakemoreregularassetconditionreportingforkeyinfrastructure

•Develop nationally consistent Local Government Body financial and asset managementdata.Thereisaneedforanewnationalprogramtoimprovethe consistency and quality of local government data to enable more robust and accurate analysis and planning and to produce a uniform national approach to measuringviabilityandfinancialsustainability. Ideally this would be led by the AustralianGovernment.

PricewaterhouseCoopers 28November2006

Recommendations

2.2Reforms to inter-government transfers

Theseneedtobeprimarilytargetedtoassist councils with sustainability challenges.

Therecommendationsare:

•Establish anewLocal Community Infrastructure Renewals Fund: this fund wouldsupportcouncilsinthemoretimelyfundingofrenewalsworkacrossa rangeofcommunityinfrastructureassetsincludingcommunitycentres,aged care facilities, libraries, health clinics and sport and recreation facilities. The fundcouldbedistributedbasedonrelativeneedandusetheR2RorFinancial Assistance Grants(FAGs)General Purposedistributionmethods,orperhaps throughaneworhybridapproach. ThesizeofLCIRFcouldbesetsoasto provideasimilarlevelofrenewalssupport as provided by R2R, which is around

$200–$250millionpa.

•RevisetheescalationmethodologyforFAGs from a mix of population growth andCPI to a new escalation formula tailoredto local government cost movements (e.g. a combination of the Australian Bureau of Statistics(ABS) WageCostIndexandConstructionCostIndexcoupledwithpopulationgrowth).

•Make funding for R2R permanent:thisprogramhasdeliveredsubstantial benefitsandtherewouldbesignificantmeritinextendingitsdurationand furtheraugmentingthefundinglevels(includingescalatingtheprogramsizeby the ABS Construction Cost Index).

•Stategovernmentstoprovidefundingsupporttoencouragethelocal council efficiency and asset management reforms:asignificantproportion of councils have inadequate in-house skills to improve efficiency and to establish robust asset management and financial plans. There would be significant benefit in state governmentsprovidingpartialfundingtoaidthe developmentoftailoredstate-basedreformprograms. Thisprogrammightbe along the lines of the support provided by the Queensland Government ($25m over five years) in theSize, Shape and SustainabilityProgram, and the Step Program developed by MAV.

2.3How the LCIRF would enhance local communities Establishment of the LCIRF would allow individual councils to more quickly rectify a rangeofcommunityinfrastructuredeficiencies.

Thefundwouldfocusontherenewalandreplacementofexistingassetsratherthan thedevelopmentofnewfacilities.Theabilitytoaccesssuchafundwouldalsoenable somecouncilstoavoiddevelopingbacklogs,andinsomecasesbringforwardsome projectstoreducewhole-of-lifecosts.

As part of the study a number of councillorsandlocalgovernmentmanagersidentified alistofthetypesofprojectswhichcouldbecompletedwiththesupportofanLCIRF, including:

•Renewalandrefurbishmentofcommunity centresandpublichalls

•Refurbishment of base depots for home and community care activities

•Upgradingofseniorcitizencentres

PricewaterhouseCoopers 28November2006

Recommendations

•Renewalandrefurbishmentoftheatres,galleriesandmuseums

•Enhancement ofmainstreetsandpublicsquares

•Upgradingofboatramps,jettiesandwharves

•Upgradingofrecreationalfacilities,includingswimmingpoolsandplayingfields

•Improvementofparkequipment,suchasplaygrounds,benchesandBBQs

•Renewal of foreshore paths, seawalls,walkingtrails,boardwalks

•Upgradingandmajormaintenanceofairports,aerodromesandairstrips

•Refurbishmentoftourisminformationcentres

•Upgradingoflibrariesandinformationcentres

•Refurbishment of kitchenand council facilitieswhichprovideMealsonWheels. The LCIRF would in general not be used to support the development of new facilities. However, under somecircumstances, new facilitiesmay be warranted - for example it may be financially more appropriate to establishanewmulti-purposesocialhub providingchildcare,maternalandchildhealthaswellasakindergartentoreplacea seriesofoldersingle-purpose facilities.

PricewaterhouseCoopers 28November2006

Better Funding,Better Communities

3Better Funding, Better Communities

Additionalfundingwouldassistlocalgovernment to meets its obligations to flexibly gaugeandrespondtochangingcommunitydemands.Thiswould:

•Strengthenlocalcommunitiesbyensuringanadequatestandardoffacilitiesfor theongoingprovisionofarangeofsignificantsocialandrecreationalservices

•Encouragemoreparticipationincommunityactivitiesthroughgreaterchoice and consultation, thus promoting increasedcommunity cohesion and safety, particularly inruralareas

•Enable the implementation of local programs to accommodatecultural diversity, accessandequityandequalopportunity, and involve minority groups

•Supportasustainableenvironmental strategy for each community

•Enhancebusinessandcommunitylinkswithregionalareastopromoteregional equity and development

•Promotefurthereconomicdevelopment and the generation of employment benefits through links with the business community

•Improvethequalityoflifeoflocalresidentsthroughthesupportandalignment ofhealthandwelfareagencieswithinthearea

•Support localrecreation, arts and cultureandanappreciationofheritagein ordertopromotevibrantandactivecommunities.

PricewaterhouseCoopers 28November2006