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The People’s Budget Two years ago Council was handed an enormous task – to cut waste, fix the mess, and create a new plan to get the Gold Coast working again.

We acted decisively. We dismantled Allconnex. We scrapped the new Council HQ. We dealt with the IT blowouts. We fixed the beaches. And we bargained hard to deliver an affordable Gold Coast 2018 Commonwealth Games™.

Despite these pressures, hundreds of millions of dollars has been saved and we successfully delivered the lowest rates increases in over a decade. We also returned the cranes to the sky with a wildly successful Construction Kickstart program.

Over the last twelve months we have developed a new City Vision to protect our lifestyle and create more opportunity, especially for the next generation of Gold Coast locals.

Our new Corporate Plan and strategies for the economy and transport along with the draft City Plan present a compelling new case for the Gold Coast - for residents, visitors and international investors.

I am also proud that we have worked hard to strengthen our community by making it more accessible and inclusive. And new Culture Strategy will deliver a world class precinct to celebrate our quintessential Gold Coast art and culture.

This is an open and transparent Council. These plans would not have been possible without the input of the community.

This year, every Gold Coast family, business and community group was invited to help councillors shape the City Budget.

Thousands of residents from 74 suburbs right across the Gold Coast made their voices heard – making this the most successful consultation of its kind.

This budget respects ratepayers; it reflects their views, priorities and aspirations. It delivers the services residents expect at a price the city can afford.

The People’s budget is about local action and future prosperity.

Cr Tom Tate MAYOR City of Gold Coast

Table of Contents 1. CEO Foreword ................................................................................................................................................ 2. Annual Plan 2014-15 ...................................................................................................................................... 3. City Vision, Gold Coast 2020, City Plan 2015 and Long-term Strategies ................................................ 4. Our Liveable City .......................................................................................................................................... 5. The Gold Coast 2018 Commonwealth Games™ ...................................................................................... 16. Budget 2014-15 ............................................................................................................................................ 1

6.1 Overview ........................................................................................................................................... 1 6.2 Expenditure Programs 2014-15 ........................................................................................................ 1

6.2.1 Source of Funds for 2014-15 Budget ..................................................................................... 1 6.3 Rates & Charges 2014-15 ................................................................................................................ 1

7. Long Term Financial Forecast ................................................................................................................... 1 7.1 Financial Goals and Strategies ......................................................................................................... 1 7.2 Long Term Financial Outlook............................................................................................................ 1 7.3 Financial Performance ...................................................................................................................... 1

7.3.1 Competitive Rating Levels and User Pay Charges ................................................................ 1 7.3.2 Debt Levels and Capacity to Service Debt ............................................................................. 1 7.3.3 The condition of Council’s infrastructure assets ..................................................................... 1 7.3.4 The scope and standard of services ......................................................................................

7.4 2013 Credit Review .......................................................................................................................... 7.5 Financial Sustainability Indicators .................................................................................................... 7.6 Operating Ratio ................................................................................................................................. 7.7 Asset Sustainability Ratio ................................................................................................................. 7.8 Net Financial Liabilities Ratio............................................................................................................ 7.9 Debt Service Ratio ............................................................................................................................

8. Operational Plan .......................................................................................................................................... 8.1 Purpose ............................................................................................................................................. 8.2 How to read the Operational Plan .................................................................................................... 8.3 Performance Evaluation ................................................................................................................... 2

8.3.1 Internal Performance .............................................................................................................. 2 8.3.2 Community Satisfaction (on services provided directly to the community) ............................ 2

8.4 Estimated Activity Statement for Activities to which the Code of Competitive Conduct applies ...... 2 8.4.1 Activities to which the Code of Competitive Conduct applies ................................................ 2 8.4.2 Community Service Obligations (CSOs) ................................................................................ 2

8.5 Performance Plans – Commercial Business Units ........................................................................... 2 8.6 Technical Notes ................................................................................................................................ 2 8.7 Program Summaries ......................................................................................................................... 8.8 Service Summaries ...........................................................................................................................

9. Appendices ................................................................................................................................................. Appendix 1 - Statement of Estimated Financial Position 2013-14 .............................................................Appendix 2 - Detailed Rates and Charges ................................................................................................Appendix 3 - Accrual Budget and Income Statement ................................................................................ Appendix 4 - Budgeted Statement of Financial Position ........................................................................... Appendix 5 - Budgeted Statement of Cash-Flow ....................................................................................... Appendix 6 - Statement of Changes in Equity ........................................................................................... Appendix 7 - Statement of Reserves 2014-15 ........................................................................................... Appendix 8 - Revenue Policy .....................................................................................................................Appendix 9 - Debt Policy ............................................................................................................................

Appendix 10 - Glossary ............................................................................................................................. Appendix 11 - Gold Coast Waste Management – Annual Performance Plan 2014-15 .............................. Appendix 12 - Gold Coast Water Network Services Performance Plan 2014-15 .......................................

1. CEO Foreword This Annual Plan sets out our City’s priority investments for the year ahead. It is based on our medium and longer term planning priorities, most of which have been outlined in our newly adopted Gold Coast 2020 (Corporate Plan) and suite of new strategies.

In recent years the City has invested considerable effort in working with the Gold Coast community to set a new ‘strategic’ roadmap for the city. Our plans respond to ongoing global economic challenges, build on opportunities like the Gold Coast 2018 Commonwealth Games™ and emerging technologies, and establish actions to secure our position as one of the most liveable cities in the world.

This year’s Annual Plan is the first since the adoption of many of our new planning documents and I’m excited to see the start of our journey towards the Gold Coast 2018 Commonwealth Games™ and beyond.

Some of the projects that will become a reality this financial year include the redevelopment of the Gold Coast Aquatic Centre at Southport which will be complete for the August 2014 Pan Pacific Swimming Championships.

We will see the Gold Coast light rail start operating with new connections to our wider public transport system. It will provide a major boost towards our plans for an integrated and more effective city transport system.

We will continue to progress our plans for a new CBD for the city in Southport by finalising the Development Scheme for Southport’s Priority Development Area (PDA). It will help attract investment through a streamlined approach to development.

We will also celebrate the opening of Chinatown, one of the first developments to shape our new CBD and reflect our relationship with the Asia-Pacific region.

Another of our major long-term planning documents - the City Plan 2015 (Planning Scheme) - will be finalised this year to outline our city’s future from a land use, natural and built environment perspective. The City Plan will shape how we live, work and move around the city.

Some of our new priorities are also reflected in this Annual Plan, including improving our city’s cultural capacity and strengthening the local cultural economy, as outlined in the recently adopted Culture Strategy 2023.

Our initial focus will be supporting the Gold Coast 2018 Commonwealth Games™ by developing a city cultural and festival program and creative community partnerships and working to deliver the first stage of the Gold Coast Cultural Precinct in time for Gold Coast 2018 Commonwealth Games™.

Many other actions are also focused on supporting the Gold Coast 2018 Commonwealth Games™ including early works on the development of venues and public domain improvements.

I invite you to review our other actions and investments for the year ahead and share in our city’s journey – What a city it is!

Dale Dickson Chief Executive Officer

2. Annual Plan 2014-15 The Annual Plan provides a holistic view of the challenges and opportunities facing the city; the organisation's longer-term financial position and the initiatives and investments prioritised for the financial year ahead.

It is our plan of action to deliver the long-term goals for the city and its people.

Key considerations in developing this plan include:

Maintaining high quality services to the community

Implementing the City Vision though Gold Coast 2020 (new Corporate Plan) which will drive city priorities over the coming years

The development of a new City Plan 2015 (Planning Scheme) to guide the way that land is used across the city

The implementation of corporate strategies such as Economic Development, Culture, Ocean Beaches Gold Coast Transport and 2020 Vision on Waste to support city development

The hosting of the Gold Coast 2018 Commonwealth Games™(GC2018) and plans for supporting social and community infrastructure

The development of key city building projects, such as the Cultural Precinct at Evandale Parklands, the Carrara Sports Precinct and Chinatown at Southport

Investing in infrastructure renewal to ensure that city assets are well maintained

The City of Gold Coast manages this challenging city agenda through good planning and prudent management.

Reports are provided to Council on a quarterly basis outlining progress against each action/initiative as outlined in our Operational Plan (refer to section 8).

Our natural attractions

3. City Vision, Gold Coast 2020, City Plan 2015 and Long-term Strategies Our City Vision is:

Inspired by Lifestyle. Driven by Opportunity.

This vision captures the essence of the Gold Coast and the opportunities the city has to offer.

The City Vision has been translated into a long- term plan, Gold Coast 2020 and long term strategies, which support city development and inform annual planning and budget decisions (refer figure 1).

Gold Coast 2020 was endorsed by Council in March 2014 and is the transformational plan for the city up to and beyond GC2018. It recognises that our wellbeing depends on a combination of economic, social and environmental factors.

The three themes in Gold Coast 2020 are:

The best place to live and visit – which describes the city and how it will look

Prosperity built on a strong diverse economy – which describes the type of jobs and opportunities people will have

People contribute to a strong community spirit – which describes the city, its culture and its people coming together

The new City Plan 2015 will be finalised in 2014-15 and will provide a fresh and innovative approach to how the City will manage and support long-term growth. It will support key city initiatives such as revitalising Southport CBD; supporting the development of the Rapid Transit Corridor; maintaining and enhancing the City’s iconic skyline; encouraging specialist centres for economic clusters; recognising Commonwealth Games opportunities and supporting the development of the Gold Coast Cultural Precinct.

The City Plan 2015 will provide a strong economic foundation for the city by working with the Economic Development and Transport Strategies to create certainty for growth and investment.

Gold Coast 2020 – creating our liveable city

Figure 1

4. Our Liveable City The desire to experience the Gold Coast lifestyle has seen the city evolve from a string of seaside villages to an international city in only 50 years. The Gold Coast is known for its lifestyle, boasting an enviable climate and a pristine natural environment.

The city has a multi-cultural resident population of 535,000 with 28% born overseas. On top of this, we welcome a further 11 million visitors a year to the city to enjoy our parks, beaches and hinterland.

Council of the City of Gold Coast (Council) is Australia’s second-largest local authority with over 3500 staff and a budget of $1.17 billion in 2014-15.

Council is responsible for a 1,333.7 km² area within South East Queensland, extending east to South Stradbroke Island and part of Moreton Bay, west to the hinterland near Tamborine Mountain and from south of Beenleigh to Coolangatta.

The city has a range of natural amenities and infrastructure including:

52km of sandy beaches 5 major rivers 242 km of creeks 7665 hectares of wetlands 12,494 hectares of conservation estate 6 major sports complexes 227 sporting fields 38 skate park and BMX tracks 42 km of Ocean-ways 17 fishing platforms 105 boat ramps 29 jetties 8 enclosed swimming areas 7 swimming pool complexes 34 swimming pools 1 botanic garden More than 100 dog off leash exercise areas 3221 km of roads 800 km bikeways 2269 km paths and walkways 3,108 km of water mains 62 water supply reservoirs 13 libraries 41 community centres 3 art galleries 234 public toilets 2241 parks 26 patrolled beaches (year-round)

Council of the City of Gold Coast is responsible for strategic leadership, the delivery of infrastructure and day-to-day services for the Local Government Area.

Under the Local Government Act 2009, Council is empowered to form and enforce local laws, regulations and policies necessary to manage and govern the local area.

5. The Gold Coast 2018 Commonwealth Games™ Since 1930, Australia has been proudly represented at every Commonwealth Games.

From 4 to 15 April 2018, Queensland’s Gold Coast will host the 21st Commonwealth Games. It will be the fifth time Australia has staged the Commonwealth Games, and the very first time it will be held here in a regional city.

The Gold Coast will welcome athletes, officials and visitors from all over the world, with open arms and warm hearts. The focus will be on the athletes, with the world's best showcased in the pursuit of international sporting excellence. The competition will be passionate and fiercely competitive, but conducted in a fun and friendly environment.

Over the next three and a half years, the City of the Gold Coast will continue to work closely with the Gold Coast 2018 Commonwealth Games Corporation and the Queensland Government to stage what will be the largest event in Australia for a decade.

New or upgraded sporting facilities and infrastructure that will be used for the Commonwealth Games will deliver significant benefits for the people of the Gold Coast long after the event.

These benefits are already being realised, with the redevelopment of the Gold Coast Aquatic Centre at Southport brought forward two years ahead of schedule to host the 2014 Pan Pacific Swimming Championships.

During 2014-15, detailed legacy planning will continue to ensure the city maximises the unique opportunity presented by the Commonwealth Games to secure positive community benefits in areas such as sport, health, arts and culture, business, tourism and the environment.

Gold Coast Aquatic Centre

6. Budget 2014-15

6.1 Overview Council’s 2014-15 budget delivers on both current and future priorities for the city.

The total budget of $1.166 billion is made up of:

Capital Expenditure $222.9m

Services & Operating costs $886.8m

Debt Repayments (Principal) $56.6m

Key considerations in developing the 2014-15 budget include:

Implementing the City Vision through Gold Coast 2020 (new Corporate Plan) which will drive the city priorities over the coming years

Delivering on current priorities but also planning the delivery of priorities for the future.

Meeting Council’s commitment to the Gold Coast 2018 Commonwealth Games™

Implementing key corporate strategies such as Economic Development, Culture, Ocean Beaches and City Transport

Continued implementation of Council’s Waste Management Three-Point Plan

Investing in infrastructure renewal to ensure that city assets are well maintained

Maintaining high quality services to the community

Continued focus on achieving value for money

Key Points Relating to Debt include: Debt has been kept to a minimum with new

borrowings of $45.8m for 2014-15 representing only 20% of the total capital works program of $222.9m.

Borrowings required partially as a result of reduced State Government subsidies and reduced infrastructure charges revenue.

A debt service ratio (principal & interest payments on debt divided by total operating revenue) of 9%, which is well below the internal benchmark of 20%.

Total debt will reduce by $10m in 2014-15, taking into account principal repayments of $56m.

Key initiatives included in the budget include:

An allocation of $36m, out of a total Council commitment of $208m (in 2013 dollar value) over a 5 year period for the Commonwealth Games

The commencement of planning and development of the first stage of the Cultural Precinct at the Evandale Parklands, with an initial allocation of $5.6m in 2014-15 and a further $31.4m to 2017-18.

Continued development of Chinatown with an allocation of $1.3m and a further $585,000 for streetscaping within the precinct

A focus on asset management planning to ensure the City’s infrastructure remains in good condition, thus enabling service levels to be maintained with an allocation of $80.65m for infrastructure asset renewal.

Allocation of $1.71m for implementation of Culture Strategy

Finalisation of City Plan 2015 with an allocation of $1.5m

Focus on a number of “Safer Suburbs” initiatives, including CCTV network ($1.8m), citywide mobile CCTV trial ($168,000) and Community safety program ($400,000)

Funding for Southport CBD Implementation Plan, including $300,000 for events activity, CBD building projects, CBD retail strategy and marketing and promotions.

Allocation of $3.7m for major events, including an additional $1m for events attraction and events infrastructure

Allocation of $2.8m for Industry Incentive and Business Programs with the aim of creating more jobs

Allocation of $12.6m to Gold Coast Tourism to attract more tourism to the city

Contributions totalling $6.1m towards Surfers Paradise Alliance, Broadbeach Alliance and Connecting Southern Gold Coast for promotion of the precincts

Continued commitment to an integrated and more effective city transport system with allocations including public transport ($6.5m), major roadworks & reconstruction ($19.5m), footpath & cycleways ($4.8m) and an integrated parking management system ($7.5m)

Continuation of public seawall construction with an allocation of $1.2m

There are a number of financial challenges faced by Council in forming the budget, including:

The freezing of the Federal Assistance Grant as announced in the Federal budget

Increase of $4m or 17% in the cost of electricity (from $23m to $27m)

Additional costs of $2.03m associated with the legislative requirement to introduce quarterly billing for water and sewerage charges

Additional costs of $1.05m for landscape, station precinct, traffic signal and CCTV maintenance in relation to Gold Coast Rapid Transit

Additional major costs outside of Council’s control include:

Increase of 9.7% in the bulk water price set by the State Government

Carbon Tax increase resulting in a total carbon tax commitment of $6.74m on waste, electricity and fuel

Significant Value for Money budget adjustments achieved during the past 2 years will continue in 2014-15 and beyond. These include savings in areas such as procurement, light vehicle fleet, ICT equipment, fringe benefit tax, energy efficiencies, the establishment of a number of online services, and sensibly opting out of specific discretionary activities or programs.

The 2014-15 includes:

Procurement savings target of $6.5m Favourable budget adjustments of $9.9m

In addition to the above, there a number of other budget savings initiatives to potentially be reflected in future budget reviews or budgets, including:

ICT Roadmap which will deliver improved services and potentially deliver significant future savings

Ending of Varsity Lakes staff accommodation leases

Review of further service delivery model options

Paid parking options at Evandale Re-examination of the operational allocation

of light vehicles across the organisation

Despite the financial challenges, Council has managed to deliver a budget with only a 3.19% increase (excluding major costs outside of Council’s control) for a residential non-CTP dwelling being a principal place of residence.

6.2 Expenditure Programs 2014-15 The following table provides a breakdown of the major expenditure programs to be undertaken by Council as part of the 2014-15 budget (excluding internal transfers to reserves). Council's expenditure programs are guided by the priorities identified in the Gold Coast 2020. The city’s population growth is accompanied by demands for roads and drainage, park and recreational facilities and social infrastructure such as libraries, community centres and aquatic facilities etc.

Compared to 2013-14, Council’s total budget indicates an increase of $50.5 million including an increase of $16.3 million in capital works for projects such as the Cultural Precinct, Chinatown development and the GC2018. Other increases include bulk water costs ($20.6m), electricity costs ($4.0m) and other growth related costs ($7.9m).

Expenditure by Program 2013-14 $ Million

2014-15 $ Million

City Planning 42.5 45.1 City Transport 172.2 175.8 Community Health & Safety 61.7 63.6 Conservation & Environment 28.3 25.7 Economic Development 62.3 69.6 Internal Services 75.9 78.4 Organisational Capability 137.1 141.5 Parks, Recreation & Culture 150.7 167.4 Waste Management 90.6 91.5 Water & Sewerage 294.5 307.5 Total 1,115.8 1,166.3

6.2.1 Source of Funds for 2014-15 Budget Council’s total budget of $1.166 billion is funded from various revenue sources. The following table provides a breakdown of the major sources of funding used to underpin Council's 2014-15 budget:

Sources of Funds 2013-14 $ Million

2014-15 $ Million

Brought Forward Surplus 24.4 17.7 Rate Revenue (Net) 907.1 956.9 Loans 56.1 45.8 Developers Contributions 35.5 30.7 Fees and Charges 71.6 78.0 Grants and Subsidies 25.2 28.6 Other 53.2 54.2

Net increase / (Decrease) in Reserves (57.3) (45.6)

Total 1,115.8 1,166.3 Council’s borrowing program for 2014-15 is for the provision of long term infrastructure assets as follows: The 2014-15 Loan Program is as follows:

Loan Type Loan Amount Funding of Repayments General Borrowings ($19.8m)

Stormwater Network Road Construction &

Reconstruction

9,395,000 General Revenue

10,405,000 General Revenue

Major Roadworks Program 8,290,000 City Transport Charge & Differential rate

Centre Improvement Program 693,333 Special Charge Tourist Parks 1,888,500 Tourist Parks Revenue Waste Management 15,170,051 Waste Management Charge Total Loans $45,841,884

6.3 Rates & Charges 2014-15 Appendix 2 provides further details of the Rates and Charges for 2014-15.

Figure 4 shows the total rate bill split for a property that is non-strata titled principal place of residence paying the average general rate:

2013-14

Council Rates and ChargesTotal Rates &

Charges$

Total Rates & Charges

$

Total Increase%

General Rate $1,276.69 $1,317.80 3.22%Early Payment Discount @ 10.0% ($127.67) ($131.78) 3.22%City Transport Improvement Separate Charge $111.00 $117.00 5.41%Recreational Space Separate Charge $24.00 $29.00 20.83%Open Space Preservation Separate Charge $38.00 $38.00 0.00%Waste Management Utility Charge (Excl. carbon tax) $236.60 $245.70 3.85%Net Rate and Charges (Excl. Water & Sewerage, Major Costs Outside of Council Control and Federal & State Charges) $1,558.62 $1,615.72 3.66%

Sewerage $703.35 $720.59 2.45%

Water Service $205.73 $210.85 2.49%Water Consumption - Council component $1.06/kl to $1.09/kl (Based on 180kl per annum) $190.80 $196.20 2.83%

Net Total Rate and Charges (Excl. Major Costs Outside of Council Control and Federal & State Charges) $2,658.50 $2,743.35 3.19%

Major Costs Outside of Council ControlQuarterly Water Bills - Impact on General Rate $0.00 $2.91 0.23%Early Payment Discount @ 10% ($0.29) 0.23%Quarterly Water Bills - Sewerage $0.00 $4.56 0.65%Quarterly Water Bills - Water Service $0.00 $1.25 0.61%Transitional Volunteer Fire Brigade Separate Charge $0.00 $2.00 NewNet Total Rate and Charges (Excl. Federal & State Charges) $2,658.50 $2,753.79 3.58%

State & Federal Charges

Carbon Tax (Federal Govt.) - to be added to Waste Management Utility Charge $12.40 $14.60 17.74%

Water Consumption - (State Gov't.) Bulk Water component $2.47/kl to $2.71 (Based on 180kl per annum) $444.60 $487.80 9.72%

Net Total Rate and Charges $3,115.50 $3,256.19 4.52%

Note 8: CTP stands for Community Title Property

Total Rate Increase After Discount

Excluding Costs Outside of Council Control & State & Federal Charges

Including Costs Outside of Council Control & State & Federal Charges

Annual Increase $84.85 $140.69Weekly Increase $1.63 $2.71

Note 3: The water consumption charge includes the State Government bulk water charge. The bulk water charge is $2.715/kl which represents 71% of the total consumption charge. This is a 10% increase on 2013-14 prices.

Average General Rate (residential non-CTP dwelling being principal place of residence only)

Note 4: While not shown separately on the rates notice, some additional significant external cost pressures are being faced by Council. These include:- The total electricity budget for Council is projected to increase by $4.0m to $27.0m, or over 17% in 2014-15 (incl. GCW by $1.9m or 21.8%, Other Council by $2.1m or 14.5%)- Ongoing net costs of $1.5m related to the decision to withdraw from Allconnex Water.- Additional maintenance and operational costs surrounding the Gold Coast Rapid Transit route, including an additional 54 signalised intersections being handed over from the State Government.

Note 5: The Recreation Space Separate Charge includes a $5 increase to contribute toward the design and construction of Artscape areas of the Gold Coast Cultural Precinct.Note 6: The Waste Management Utility Charge in 2013-14 included a carbon tax component of $12.40. This rates notice assumes that there will be no change in legislation and that Council will need to collect an amount of $14.60 in carbon tax for 2014-15.Note 7: A transitionary separate charge of $2 has been introduced to fund the Volunteer Rural Fire Brigade within the City of Gold Coast for 2014-15

2014-15 Summary of Total Rates and Charges @ 10.0% Discount

2014-15

Note 1: The above rate bill separately displays major costs outside of Council control, including costs associated with State legislation requiring quarterly water & sewerage billing, Transitional Volunteer Fire Brigade Separate Charge, Federal carbon tax applicable to the Waste Management utility charge (assuming carbon tax will continue in 2014-15) and State bulk water costs.

Note 2: The total for General Rates and Water & Sewerage Service Charges is calculated by adding together the rates shown and the quarterly billing imposed costs (e.g. water = $210.85 + $1.25 = $212.10 with a total increase of 3.1%)

Figure 4

7. Long Term Financial Forecast

7.1 Financial Goals and Strategies Detailed Ten-Year Service Financial Forecasts (ten year financial plans) are maintained for ten key functional areas and incorporated into the Long Term Financial Forecast.

In preparing the long-term financial forecast Council has sought to:

Ease the burden on ratepayers by minimising rate increases

Keep borrowings to a minimum Continue to invest in infrastructure asset

renewal and new infrastructure, particularly those associated with the Commonwealth Games

Maintain current high levels of service to the community

Financial decisions are guided by corporate policies, strategies and principles of effective financial management. Council regularly models financial performance, financial position and cash flow forecasts to monitor the long term sustainability of decisions. A comprehensive analysis of the long term financial outlook is undertaken between July and December each year, and this sets the context for the development of the annual budget. Projected financial statements are included in Appendices 3, 4, 5 and 6.

7.2 Long Term Financial Outlook Council’s long-term financial model includes the following key assumptions (which do not reflect final Council policy):

General rate increase of 3.5% per annum, which will be subject to annual review.

Limited new social and community infrastructure with the exception of those venues and facilities being delivered within the city for the 2018 Commonwealth Games

Targeted annual savings of $11m to be achieved, with $10m of these savings allocated to the Commonwealth Games

$100m cash contribution relating to the Commonwealth Games to be paid to the State Government (of which $40m will be paid by 30 June 2015), plus an estimated $120 million

(future dollars) for essential Games related works and services

Infrastructure asset renewal funding included generally as reflected in Asset Management Plans

Continuation of a general rate discount of 10%. Continued funding generally at existing levels for

key strategies In summary, the key points in relation to Council’s financial forecast are:

In the period to 2017-18, Council will need to source approximately $45m to fully fund its commitment to the Commonwealth Games

Limited financial capacity to increase service levels for the next 4 years, with additional community infrastructure being through the introduction of new and upgraded venues and facilities as part of the 2018 Commonwealth Games Program

Beyond 2017-18, small budget surpluses are forecast which can be allocated to priorities such as the Cultural Precinct, and associated operational expenditure, increased funding to deliver key strategy outcomes and increased operational costs associated with new and upgraded Commonwealth Games community facilities and venues

Reduced returns in real terms from Council’s commercial business units

Debt balance projected to significantly reduce due to projected prudent forecast loan borrowings

Moving forward Council will need to take the following into account: Reduced infrastructure charges revenue as a

result of the impacts of the State Government reform to Queensland’s infrastructure funding and charging framework

Annual review of concessions (revenue foregone) provided by Council

Continue to minimise discretionary expenditure and continue its value for money agenda

Potential new revenue sources

7.3 Financial Performance Council’s financial performance can be evaluated against four key pillars.

1. Competitive rating levels and user pays charges.

2. Debt levels and capacity to service debt. 3. The condition of Council’s infrastructure

assets. 4. The scope and standard of services.

7.3.1 Competitive Rating Levels and User Pay Charges

Council’s rates and charges increases are kept to a minimum and remain competitive with other South East Queensland Councils, particularly taking into account comparative levels of service and the significant impact of external costs such as bulk water, electricity and compulsory quarterly billing for water and sewerage services.

Council applies the principles of equity, effectiveness and efficiency, simplicity and sustainability in setting rates and charges as set out in the Revenue Policy.

Council’s Revenue Policy is included in Appendix 8.

7.3.2 Debt Levels and Capacity to Service Debt

Council is focussed on responsibly managing debt in the short and long term.

Total debt is forecast to reduce from $784m in 2013-14 to below $700m in 2018-19, with significant reductions throughout the remainder of the forecast period.

This is partly as a result of Gold Coast Water setting aside funds for major capital works, particularly the long-term seaway release project, which will result in minimal, if any, borrowings for the project. Council is also well within its capacity to service the debt.

The debt service ratio (debt and interest payments divided by operating revenue) for 2014-15 is estimated at 9% and reduce to 6% during the forecast period (well below the policy limit of 20%).

The level of borrowings drawn each financial year is carefully monitored through long-term financial modelling to ensure affordability. In addition to internal assessments, Council is required to submit an annual application to the State Government, which includes the long-term financial forecast, to gain approval for all planned borrowings. QTC periodically undertakes a detailed credit assessment of Council and makes recommendations to the State government regarding sustainable borrowing levels.

Council seeks to minimise general rates as a funding source to repay debt, preferring to rely on specific revenue sources that are matched to the infrastructure being constructed.

Debt is only used for capital purposes. The term of the debt is matched, as best as possible, to the life of the asset up to the maximum term imposed by QTC. Borrowings usually have terms of between 9 and 15 years. Occasionally, for major capital projects, debt will be borrowed over the maximum allowable term of 20 years.

Council’s Debt Policy is included in Appendix 9.

7.3.3 The condition of Council’s infrastructure assets The Council’s infrastructure asset base has a replacement value of $13.8 billion with our Asset Management Plans highlighting that these assets are mostly in good condition (only 1% of the assets are in poor condition). This is due to many of the infrastructure assets being reasonably young, the infrastructure base being well maintained and Council generally investing in infrastructure renewal when required.

While legislative requirements of the Local Government Act 2009 have been one driver for having Asset Management Plans, the Council recognises that it is good management practice to utilise Asset Management Plans to sustainably manage infrastructure assets, which is an essential component of financial sustainability.

The Asset Management Plans are updated annually in order to inform the budget process and are integrated with the Long-Term Financial Forecast. The outputs of the Asset Management Plans are summarised into the overarching Total Asset Management Plan, which Council adopts annually in conjunction with adoption of the budget.

The 2014-15 to 2023-24 Total Asset Management Plan states that the infrastructure renewal requirement (i.e. the renewal investment required to maintain current levels of service for existing infrastructure assets) for 2014-15 is $81.1m increasing to $88.5m (today’s dollars) at the conclusion of the forecast period. The following graph illustrates the 10 year infrastructure renewal forecast.

7.3.4 The scope and standard of services Over the last decade significant community infrastructure (including libraries, aquatic centres and community and youth centres) has been provided within the city. The standards of service in terms of both infrastructure and other services continue to be of a high standard and are projected to remain so into the future. The facilities and venues delivered as part of the Commonwealth Games will further enhance this standard of service.

7.4 2013 Credit Review Queensland Treasury Corporation (QTC) conducted a credit review of Council in 2013 as part of the annual debt application. The rating was maintained as ‘moderate’ but the outlook was upgraded from ‘negative’ to ‘neutral’. A moderate rating is defined as:

“A local government with an adequate capacity to meet its financial commitments in the short to medium-term and an acceptable capacity in the long-term. While it has some record of reporting minor to moderate operating deficits, the local government may also have recently reported a significant operating deficit. It is likely able to address its operating deficits, manage unforeseen financial shocks and any adverse changes in its business, with moderate revenue and/or expense adjustments. The expense adjustments are likely to result in a number of changes to the range of and/or quality of services offered. lts capacity to manage core business risks is moderate.”

A neutral outlook is defined as:

“There are no known foreseeable events that would have a direct impact on the local government's capacity to meet its financial commitments. It may be possible for a rating upgrade or downgrade to occur from a neutral outlook, if such an event or circumstance warranted as such.”

The upgrade of Council’s financial outlook from negative to neutral is a significant achievement and

evidence that Council is responsibly managing the financial complexities of hosting the Commonwealth Games.

In accordance with the rating definition, Council has during the past 2 years in particular made “moderate revenue and expenditure adjustments” and will continue to do so.

7.5 Financial Sustainability Indicators The following financial sustainability ratios are prescribed under the Local Government Regulation 2012:

operating surplus ratio asset sustainability ratio net financial liabilities ratio

In relation to the first 2 ratios, two sets of figures have been used in the calculation. As required, each is calculated using straight line depreciation as the relevant measure for the decline in value of assets and also used is the required renewals expenditure determined through detailed Asset Management Plans.

Depreciation, a technical accounting concept, does not represent an accurate measure of what Council needs to spend to maintain the City’s infrastructure assets, but Council is required to use it in its financial statements and financial sustainability ratios.

Instead of using straight line depreciation as a guide to what Council actually needs to spend to renew its assets, Council relies on its detailed assessment contained in its Asset Management Plans which more accurately reflect condition of assets and required renewals expenditure.

7.6 Operating Ratio Ratio 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

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Operating Surplus (straight line depreciation)

0% 10% -6% -6% -5% -6% -6% -5% -4% -4% -3% -2%Operating Surplus (Asset Management Plan renewals) 0% 10% 11% 11% 11% 11% 11% 11% 11% 11% 12% 12%

Calculation

Analysis

Net operating result (including straight line depreciation) divided by operating revenueorNet operating result (including asset management plan renewals) divided by operating revenue

Benchmark

There is a significant difference between the two results using the different measures for the decline in the value of assets. Using straight line depreciation, the forecast shows that operating deficits will continue through the entire forecasting period, although deficits will be smaller than what has been achieved over the last few years. Using the AMP required renewal figure, Council is forecasting a large operating surplus.

7.7 Asset Sustainability Ratio Ratio 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

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Asset Sustainability (straight line depreciation)

90% 33% 34% 34% 33% 33% 35% 36% 37% 36% 36%Asset Sustainability (Asset Management Plan renewals) 90% 90% 90% 90% 90% 90% 95% 95% 95% 95% 95%

Calculation

Analysis

Capital expenditure on the replacement of assets (renewals) divided by straight line depreciation expenseorCapital expenditure on the replacement of assets (renewals) divided by asset management plan required renewals

The results of this ratio are poor if straight line depreciation is used as the appropriate measure for the decline in value of assets, with Council only spending about a third of the depreciation cost on renewals annually. However, Council provides funding for the renewal of assets in accordance with the Total Asset Management Plan. Using this as the measure for the decline in assets, the ratio meets the required benchmark. Council believes this is the most appropriate measure as significant resources have been allocated to improve asset management planning in recent years and to determine the required renewals funding.

Benchmark

7.8 Net Financial Liabilities Ratio Ratio 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

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Net Financial Liabilities60% 35% 33% 34% 33% 26% 20% 13% 8% 2% -2%

Calculation

AnalysisThe forecast result for this ratio shows that Council sits comfortably within the benchmark. There is a relatively low reliance on borrowings in the forecast.

Total liabilities less current assets divided by total operating revenue

Benchmark

7.9 Debt Service Ratio Ratio 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24

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Debt Service Ratio20% 9% 9% 9% 9% 9% 8% 8% 7% 6% 6%

Calculation

Analysis

Principal and interest payments on debt divided by total operating revenue

For the forecast period, the debt ratio remains comfortably under the internally set benchmark. This ratio indicates that Council will comfortably afford forecast debt service payments.

Benchmark

8. Operational Plan

8.1 Purpose The Operational Plan explains the activity and priorities of Council’s programs and services during 2014-15; supports the implementation of the Gold Coast 2020; manages risk and includes the plans for Council's commercial business units.

The Local Government Act 2009 requires Council to prepare and adopt an annual Operational Plan for each financial year which is consistent with the annual budget. Council may, by resolution, amend its annual Operational Plan at any time before the end of the financial year.

8.2 How to read the Operational Plan The Operational Plan includes:

A summary of Council’s programs of work A high level view of services, which

includes details about the service and levels of service delivery articulating quality, quantity, reliability and responsiveness. A financial overview of each service is provided which includes the previous year’s net budget for providing that service and the current year’s revenue, expense and net position

Within each service, details of initiatives planned for 2014-15, with a focus on high priority activities such as those supporting longer term planning and key infrastructure

Identification of initiatives which support the Gold Coast 2020, the GC2018 or the mitigation of corporate risks

The performance measures to be used to monitor progress during the year

The Performance Plans for Council’s two commercialised business units – Gold Coast Waste Management and Gold Coast Water (see Appendices 11 and 12)

An overview of Council’s program and service structure is shown here.

Program Service

Land Management and Development Streetscape Land Use and Urban Planning

Road Network Transport Improvement Traffic Management and Safety Parking Facilities & Regulation

Beaches and Waterways Natural Environment Conservation Catchment Management

Economic Development Tourism Management and Marketing

Internal Support Services Property & Facilities Management Council Support Fleet & Plant Marketing & Promotions Design Services Nursery Operations

Information Management Risk Management Financial Management Human Resources Corporate Planning and

Performance

Parks, Natural Areas and Recreation Library Services Tourist Parks & Campgrounds Major Sporting and Aquatic Centres Community Centres Community Support Culture and Heritage

Flooding and Drainage Public and Environment Health Lifeguard Service Animal Management Local Law Enforcement Public Safety Social Development Cemeteries Emergency/Disaster Management

Water Sewerage Recycled Water

Waste Disposal Waste Collection City Cleaning Recycling

City Planning

City Transport

Conservation and Environment

Economic Development

Internal Services

Organisational Capability

Parks, Recreation and Culture

Community Health and Safety

Water and Sewerage

Waste Management

8.3 Performance Evaluation The performance of the Operational Plan will be monitored through review of the following:

Progress of initiatives (quarterly) Progress of services (6 monthly) Progress against internal performance outcomes (annually) Review of community satisfaction with external services (annually via a community survey).

While a comprehensive view of performance will be available, the final report will be exception based, with a focus on areas of significant or unexpected variation from the plan. Details of the internal performance measures and external services that will be included in the community satisfaction survey can be found below.

8.3.1 Internal Performance Organisational Management Corporate Reputation Percentage positive media coverage

Complaints

Internal Audit – Implementation of Recommendations

Finance Management QTC Credit review rating

Investment Return

Operating Expenditure – Budget vs Actual

Capital Expenditure – Budget vs Actual

Grants and Subsidies Received from Federal and State Governments

Asset Management Asset Renewal Funding Ratio (Infrastructure)

Risk Management Reported Work Health and Safety Incidents

Workers Compensation Cost of Claims

People Management Workforce Composition Profile

Excess Accrued Leave

Whole of Organisation Staff Turnover

Additional Employee Hours Expenditure

Operational Management Customer Contact Channel Split by Volume

Enquiries by Type and Timings

Energy Efficiency Council’s Net Greenhouse Gas Emissions

IT Services Percentage of Time Business Critical Applications Unavailable

Incident Response Time Not Meeting Target

Percentage Downtime of Council Internet

Procurement Services Requisition to Purchase Order in 2 Days

Creditors Paid on Time

Procurement Savings

Revenue Services Unpaid Rates and Charges

Property Services Operating Cost per m²

8.3.2 Community Satisfaction (on services provided directly to the community) Program Services City Planning 1.1 Land Management and Development 1.3 Streetscape

1.2 Land Use and Urban Planning

City Transport 2.1 Parking Facilities and Regulation 2.3 Traffic Management and Safety

2.2 Road Network 2.4 Transport Improvement

Community Health and Safety

3.1 Animal Management 3.6 Lifeguard Service

3.2 Cemeteries 3.7 Local Law Enforcement

3.3 Emergency/Disaster Management 3.8 Public and Environment Health

3.4 Flooding and Drainage

3.5 Social Development

3.9 Public Safety

Conservation and Environment

4.1 Catchment Management 4.3 Natural Environment Conservation

4.2 Beaches and Waterways

Economic Development

5.1 Economic Development 5.2 Tourism Management and Marketing

Parks, Recreation and Culture

6.1 Community Centres 6.5 Parks, Natural Areas and Recreation

6.2 Community Support 6.6 Tourist Parks and Campgrounds

6.3 Culture and Heritage 6.7 Major Sporting and Aquatic Centres

6.4 Library Services

Waste Management

7.1 City Cleaning 7.3 Waste Collection

7.2 Recycling 7.4 Waste Disposal

Water and Sewerage

8.1 Recycled Water 8.3 Water

8.2 Sewerage

8.4 Estimated Activity Statement for Activities to which the Code of Competitive Conduct applies A local government's budget must, for each business activity, contain an estimated activity statement for the activities subject to the Code of Competitive Conduct. Business activities covered within the statement include Waste Management, Tourist Parks, Building Certification Group and Gold Coast Water.

8.4.1 Activities to which the Code of Competitive Conduct applies The following activity statements are for the activities subject to the Code of Competitive Conduct:

Waste Management Tourist Parks Gold Coast Water Building Certification Group

Budget $000

Budget $000

Budget $000

Budget $000

Revenue

Revenue provided for services to the Council (10,268) 0 (6,130) 0

Revenue provided for services provided to external clients (79,135) (16,695) (496,622) (133)

Community Service Obligations (1,445) 0 0 (249)

Total Revenue (90,848) (16,695) (502,752) (383)

Less: Expenditure 76,016 13,325 412,885 321

Net Result (14,832) (3,460) (89,867) (62)

8.4.2 Community Service Obligations (CSOs) The CSO value is determined by Council and represents an activity's costs which would not be incurred if the activity's primary objective was to make a profit. The Council provides funding from general revenue to the business activity to cover the cost of providing non-commercial community services or costs deemed to be CSOs by the Council. Details of CSOs relevant to activities subject to the Code of Competitive Conduct are presented below:

Activity CSO Description Amount $’000 Waste Management Building Certification Group

Dead animal collections, street and park bin collections and eligible rate donations pertaining to charitable organisations Non chargeable employee costs for time allocated to general public enquires.

1,445

249

8.5 Performance Plans – Commercial Business Units The 2014-15 Performance Plans for Gold Coast Waste Management and Gold Coast Water are attached to the Annual Plan as Appendix 11 and Appendix 12 respectively.

8.6 Technical Notes These technical notes are to assist the reader in understanding the elements included in the program and service summaries.

Op - this refers to Operational Revenues or Expenses

Cap - this refers to Capital Revenues or Expenses

2013-14 Nett ($’s) - this is a calculation field which is the 2013-14 "Revised Revenue Budget" less the 2013-14 "Revised Expense Budget" and is the cost that was included in the annual budget for this service or program for the 2013-14 financial year.

2014-15 Revenue ($’s) - this amount is the income that is expected to be generated by this service or program during the 2014-15 financial year.

2014-15 Expense ($’s) - this amount is the expense that has been budgeted for this service or program during the 2014-15 financial year.

2014-15 Nett ($’s) - this is a calculation field which is the 2014-15 "Revenue Budget" less the 2014-15 "Expense Budget" and is the cost/income included in the annual budget for this service or program for the 2014-15 financial year.

Recurrent Base (Incl Inflation) - this is the amount proposed as the Operating Recurrent Expense Base for the 2014-15 year and includes an estimate for inflation. This figure excludes allowances for National Competition Policy (NCP) and Service Level Agreement (SLA) costs.

Driven by End of Life Renewal - this is a cost incurred by the proposed replacement or renewal of an asset at the end of its useful life and is included in the Capital Renewal Budget for the 2014-15 year. This figure excludes allowances for NCP and SLA costs.

Total Base Budget - this is a calculation field which is the sum of the “Recurrent Base (Incl. Inflation)” amount and the “Driven by End of Life Renewal” amount.

Recurrent Proposals - these are amounts which are included in the proposed Operating New Recurrent Budget for the 2014-15 year. This figure excludes allowances for NCP and SLA costs.

Growth (Recurrent) Proposals - these are amounts which are included in the proposed Operating Growth Budget for the 2014-15 year. This figure excludes allowances for NCP and SLA costs.

Non-Recurrent Proposals - these are amounts proposed for the Operating New Non-Recurrent Budget for the 2014-15 year. This figure excludes allowances for NCP and SLA costs.

New/Upgrade Proposals - these are amounts proposed for the Capital New/Upgrade Expense Budget for the 2014-15 year. This figure excludes allowances for NCP and SLA costs.

Total New Proposals - this is a calculation field which is the sum of the “Recurrent Proposals”, “Growth (Recurrent) Proposals”, “Non-Recurrent Proposals” and the “New/Upgrade Proposals” amounts.

Service Total - this is a calculation field which is the sum of the "Total Base Budget" and the "Total New Proposals" to give a Service Total.

Risk Mitigation - if an initiative has been tagged as mitigating a corporate risk, this field details the number of the corporate risk that the initiative is mitigating.

Key Initiatives - projects listed within this area have been tagged based on an alignment with one of the following criteria:

- mitigating a corporate risk - a key action for strategy implementation - significant municipal infrastructure - improvements in service delivery - contributes to the Gold Coast 2020 and

GC2018

2014-15 Proposal ($’s) - this is the proposed expense budget estimate for the 2014-15 financial year.

GC2018 - Gold Coast 2018 Commonwealth Games™

Int Lab – stands for Internal Labour and represents initiatives that are resourced as part of the current service funding

Comm Games (Column in the Service pages) identifies projects and initiatives that have been tagged as GC2018 Heads of Agreement projects or are Highly Desirable for progressing towards GC2018 (As approved by Commonwealth Games Unit)

Corp Plan (Column in the Service pages) identifies projects or initiatives that are also Signature Actions in the Gold Coast 2020 (Corporate Plan)

8.7 Program Summaries The following pages provide a summary of each of the programs which include a description of the program, key information that was considered in forming the budget, a financial summary of the program budget and key initiatives and activities being undertaken during the 2014-15 financial year. The figures included this section may differ slightly from the summary budget figures due to the inclusion of internal transactions and transfers to reserve etc.

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What City Planning Achieves:

Key Considerations Informing the Budget:Population growth and how to manage it is one of the City of Gold Coast’s (City) major challenges with pressure on the need for housing,

during 2014-15 to coordinate, plan and manage the city’s cultural and heritage investment over the coming years. Work will also continue

Base Budget

New Proposals

Note 1. The above New/Upgrade Proposals incur annual O&M costs of:

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What City Transport Achieves:

Key Considerations Informing the Budget:

Base Budget

Note 1.

New Proposals

The above New/Upgrade Proposals incur annual O&M costs of:

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What Community Health and Safety Achieves:

Key Considerations Informing the Budget:The Gold Coast is still considered one of Australia’s most rapidly growing cities. The population has grown from 35,000 in the 1960s to

protection to city residents. The Lifeguard service will also continue to provide front-line services along the City’s beaches, ensuring the

Base Budget

New Proposals

The above New/Upgrade Proposals incur annual O&M costs of:Note 1.

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What Conservation and Environment Achieves:


environment. The City’s ocean beaches act as protection for the city and provide a habitat for unique flora and fauna.

Base Budget

Note 1.

New Proposals


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What Economic Development Achieves:


The city’s employment mix and dispersed geography has resulted in productivity levels that are below the State average.

Base Budget

New Proposals


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What Internal Services Achieves:


New Proposals


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What Organisational Capability Achieves:


Base Budget

New Proposals


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What Parks, Recreation and Culture Achieves:

through a comprehensive greening and street planting program. It oversees extensive natural areas protecting the city’s conservation


improvements to international and local sporting facilities; upgrade of amenities in the City’s major parks and improvements to tourist

and Festival Program for the city and the development of creative community partnerships to increase the city’s cultural capacity and

Base Budget

New Proposals


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Strengthening the city’s culture and heritage and providing opportunities through the development of community cultural and professional

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Network. Gold Coast City’s current network consists of 14 waste and recycling centres and two active landfills. In 2012-13, 586,820

What Waste Management Achieves:


Base Budget

New Proposals


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What Water and Sewerage Achieves:


Base Budget


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8.8 Service Summaries The following pages provide a summary of each of the services, categorised by program. These include a description of the service, levels of service and a financial summary of the service budget and key initiatives and activities being undertaken during the 2014-15 financial year. The figures included this section may differ slightly from the summary budget figures due to the inclusion of internal transactions and transfers to reserve etc.

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Service Description:

Level of Service:

New Proposals

Base Budget

Int Lab: Denotes initiatives funded by Internal Labour

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New Proposals

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Level of Service:

Meet the current and future transport needs of the City by effectively planning, designing, constructing and maintaining the city’s transport

New Proposals

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Base Budget

New Proposals


Level of Service:
