Information Session for Stakeholders The impact of the potential secession of Sunbury from Hume City Council For Local Government Victoria 6 June 2013

Agenda 1.Stage 1: Hume City Council service provision in Sunbury Background and scope of Stage 1 report Defining the potential Sunbury municipality Process Results 2.Stage 2: Estimate of the financial impact of secession Attributes of hypothetical municipalities – Sunbury and Hume without Sunbury (HWS) Scope of current work One-off costs of establishing two separate councils Methodology for forecast revenue and expenditure Methodology for balance sheet allocation of assets and liabilities Estimates of additional ongoing costs Testing estimates with comparator councils

Stage 1: Hume City Council service provision in Sunbury

The overarching premise of the report was that residents with similar characteristics should, as far as possible, receive access to similar levels of services irrespective of their location within the municipality The report: compared the level of local government services currently delivered to the Sunbury community to the rest of the municipality; focused on those services where Hume City Council determines service levels (ie not Commonwealth/State specified services); and was indicative and based on best available data Stage 1: Hume City Council service provision in Sunbury Background and scope of Stage 1 report

Defining ‘Sunbury’ Compared the three ABS Statistical Local Areas (SLAs) in Hume City Council Sunbury SLA was used as the proxy for the Sunbury municipality (Sunbury) Remaining areas are referred to as ‘Hume Without Sunbury’ (HWS) The Deep Creek boundary reflects a recognised geographical feature and a ‘natural’/accepted boundary Stage 1: Hume City Council service provision in Sunbury Defining the potential Sunbury municipality

Step 1 Identify possible infrastructure and services to be included 88 separate areas divided into six categories Step 2 Develop and apply criteria for inclusion or exclusion of infrastructure and services Level of government? Importance in budget? Resident views on relative importance of service? Step 3 Review data availability Step 4 Develop and test draft indicators Step 5 Analyse data (collect and prepare draft indicators) Information available (Hume City Council, ID Consultants, KPMG Demographics, ABS and the Department) Infrastructure Family and Community Services Customer service Analysis limited by data currently available at the SLA level Parks and Open Space Recreation Planning Stage 1: Hume City Council service provision in Sunbury Process

Service Area Number of indicators Level of service provision in Sunbury compared to the rest of Hume Infrastructure 8 Sunbury residents receive a similar or higher level of service Highlighted by expenditure in Sunbury in traffic engineering and footpath rehabilitation, and better condition of local roads in Sunbury Family and community services 9 All nine indicators provided evidence that Sunbury residents receive a similar or higher share of council services In Sunbury there is a relatively high number of places at child care centres, before and after school care venues and vacation care venues Parks and open spaces2 The indicators suggest that Sunbury residents have relatively more active open space and passive open space Stage 1: Hume City Council service provision in Sunbury Results

Service Area Number of indicators Level of service provision in Sunbury compared to the rest of Hume Recreation5 Relatively more leisure centres in Sunbury Two of the four library indicators provide evidence that Sunbury residents receive a smaller share of council library services Customer service1 Sunbury residents receive a similar level of customer service Planning2 There is evidence to indicate that Hume City Council has actively participated in the State Government’s planning process and seeks to take into account the preferences of Sunbury residents Approximately 57 per cent of applications in Sunbury were completed within the statutory time limit of 60 days, compared to 61 per cent in HWS The full report can be found on the on the website of the Department of Transport, Planning and Local Infrastructure (the Department) under News and Events, Hume Council sets high level of Sunbury services (21 February 2013) ( Stage 1: Hume City Council service provision in Sunbury Results (continued)

Stage 2: Estimate of the financial impact of secession

Stage 2: Estimate of the financial impact of secession Attributes of hypothetical municipalities – Sunbury and HWS Hume City Council currently has the scale of a large metropolitan municipality (5th largest in Victoria) HWS would still have the scale of a large metropolitan municipality (~13th) Sunbury would be a relatively small (~ 43rd out of 79) municipality Population Location Sunbury36,25836,86537,46638,01838,688 HWS142,166144,939148,011151,341154,738 Hume178,424181,804185,477189,359193,426 Roads Hume City Council currently has 77 per cent urban and 23 per cent rural roads Sunbury would have 51 per cent urban and 49 per cent rural roads Stage 2: Estimate of the financial impact of secession Attributes of hypothetical municipalities – Sunbury and HWS

One-off costs Estimates of one-off cost of separation, such as establishment costs and transition costs Ongoing income and expenditure These estimates will give an indication of the ‘order of magnitude’ of the net cost impacts of separation in order to inform the poll High-level cost estimates for two hypothetical entities over a four-year period from 1 July 2012 to 30 June 2016 These ongoing estimates of income and expenditure are based on overarching assumptions that: the hypothetical municipalities will continue to deliver the same levels and standards of service; the hypothetical municipalities will not be significantly more or less efficient than Hume City Council or other similar municipalities; and the reserves will remain at a level sufficient to maintain the capital works program It is not designed to provide: a detailed implementation plan or roadmap to effect a separation; a feasibility study into setting up an actual Sunbury municipality; or a study into running a sustainable Sunbury municipality or different methods of service provision Stage 2: Estimate of the financial impact of secession Scope of current work

Includes – management; legal and accounting advice; corporate identity and communications; information systems; and human resources costs CouncilStudy estimated costExisting council estimate Proponent’s estimate Sunbury (2000 study)$3.02n/a Delatite Shire (VIC)$1.35n/a Tablelands (QLD)$6.13$10.36$3.21 Sunshine Coast (QLD)$3.68$2.22$1.78 Rockhampton (QLD)$3.98$2.48$0.87 Cairns (QLD)$2.38$2.53$1.94 Total estimated one-off costs adjusted to 2013 figures ($million) Stage 2: Estimate of the financial impact of secession Estimates of additional ongoing costs

Extract income and expenditure from audited accounts Identify the main drivers of cost (such as population growth, FTE numbers and salary inflation) and revenue Where operating costs or revenues are clearly related to location based on infrastructure or service (e.g. running costs of a library) they have been allocated according to location Other costs were allocated between Sunbury and HWS on the basis of the main drivers of cost. This is mainly population – resulting in a 20:80 split With the exception of the Victoria Grants Commission grants, it has been assumed that there will be no change in revenue from the separation An indicative general purpose grant for the hypothetical entities will be provided by the Victoria Grants Commission for inclusion in the model Stage 2: Estimate of the financial impact of secession Methodology for forecast revenue and expenditure

Utilising HCC’s audited balance sheet as at 30 June 2012 to create an indicative opening balance sheet for each entity Operating assets will be allocated to the hypothetical municipality in which they are geographically located Other assets and liabilities, including fixed assets which are not held for the purposes of service delivery, have been apportioned (based on net book value) between the entities in line with their comparative size Stage 2: Estimate of the financial impact of secession Methodology for balance sheet allocation of assets and liabilities

Creating two entities out of one will result in additional on-going costs. These consist of: Fixed costs, including: a management structure for each municipality (e.g. additional councillors, CEO, management structure); infrastructure (e.g. IT systems, municipal offices); and sufficient operating assets to deliver services within each geographic location (e.g. additional waste collection trucks); Increase in unit cost of delivery (or cost per head of population) caused by the hypothetical municipalities change in attributes Additional costsUnit cost of delivery Total cost of delivery for Sunbury, and some major service delivery areas, will be compared to those of other municipalities with similar attributes, to ensure the indicative estimates are reasonable and realistic Six councils have been selected for comparison with the potential Sunbury municipality Detailed accounts have been received from the Victorian Grants Commission to facilitate comparison Warnambool and Wodonga have been identified as the closest comparators Stage 2: Estimate of the financial impact of secession Estimates of additional ongoing costs

Stage 2: Estimate of the financial impact of secession Testing estimates with comparator councils CouncilPopulationArea (km2) Cost per head of service delivery per Grants Commission data as at 30 June 2012 Hypothetical Sunbury36,258237[To be calculated] Campaspe38,9814,519$1,796 Macedon Ranges43,2411,747$1,329 Mitchell35,9952,862$1,386 Moorabool29,4092,110$1,463 Warnambool34,193121$1,777 Wodonga37,131433$1,382 Hume City Council178,424504$960