The concept of planning and budgeting is a concept that creates one of two extreme reactions. Some people start frothing at the mouth with the excitement of opening up their multi-sheet spreadsheet featuring pivot-tables Bill Gates wouldn’t understand, and they start brewing the coffee in readiness for a long session at the budget table. These people are normally called accountants. For the rest of society, planning and budgeting does not generate quite the same level of excitement. In business, you sometimes see small businesses that are successful without writing a business plan but in those instances, often unbeknownst to the owner, the business owner typically has a well-formed business plan in their heads. But once a business starts to grow to a reasonable size, it is essential to have a business plan.
Councils across NSW are large businesses – some of them are very large businesses. Dubbo City Council has approximately $1.8 billion worth of assets and an operational budget that usually sits around $90 million. If you took the simplistic approach of the market capitalisation of an ASX listed company equalling the assets, then Dubbo City Council would feature in the ASX200 at number 92.
Councils have statutory requirements in relation to the planning and budgeting process. All Councils are required to prepare budgets and put them on display for 28 days prior to final adoption by Council. In addition to the process that has been in place for many years, new laws introduced by the State Government in 2009 require Councils to prepare a long-term plan and resourcing strategy as part of the new integrated planning framework. It seems somewhat strange to me that laws needed to be introduced to enforce this as businesses the size of Council should already have been doing planning and budgeting, but with 152 Councils across NSW it was obviously felt that consistency was required.
Through good management over many years, Dubbo City Council does, however, have a proud history of planning for the future. While the new laws have made the planning process slightly more complicated, I believe it is important for the community to understand exactly what the process now is.
I am sure you have heard of the Dubbo 2036 project. This is step one in a three-part process. All Councils must now create a Community Strategic Plan (CSP) which, as the name suggests, has to be created in partnership with the community. I believe Dubbo did a particularly good job with this and was helped significantly by our Dubbo 2036 Champions (one of whom is the esteemed editor of the Weekender). Dubbo has actually created a 25-year plan, well beyond the minimum 10 years required by the new legislation. The Dubbo 2036 Community Strategic Plan takes into consideration the community’s vision for our City and addresses mandatory issues such as social, environmental and economic sustainability, and civic leadership. But our Plan goes further to include infrastructure as a very important priority for our community. It is important to note that whilst Council is the custodian of Dubbo 2036, it is actually the community’s Plan. And the community will get to review this Plan in detail every four years so that actions and priorities can be refined to reflect the progress made.
The second – and very important – step in the integrated planning process is a Council’s responses to its community’s strategic plan.
Councils are now required to develop rolling four-year Delivery Programs that are underscored by a Resourcing Strategy. Putting it simply, these strategies capture what Councils plan to do by when, as well as how they plan to do it. The Delivery Program sets out the projects and services that Councils will deliver over a four-year period; it’s essentially an action plan for achieving the outcomes identified in the community strategic plan. The Resourcing Strategy must demonstrate how Councils will ensure they have the staff with the skills to deliver the agreed outcomes, a detailed plan for maintenance and renewal of Council’s assets, and a long-term financial plan.
The third and final step in the budgeting process is the development of one-year Operational Plans (directly connected to the Delivery Program) which details Council budgets, actions and projects for the coming financial year.
Dubbo City Council’s budgeting process starts in August each year, with subsequent Councillor workshops and community engagement a key part of this process.
As you can imagine, with an annual budget of some $90 million, Council’s complex budgeting process must consider important factors such as the IPART recommendations in respect of rates, CPI increases, revenue sources (rates, charges, fees, grants, interest on investments for example), expenditure and the provision of service levels. Whilst developing annual and four-year budgets, Council must also consider the ongoing issue of financial sustainability – identified as a major problem being faced by Local Government in general as it struggles with cost-shifting, significant increases in inflation for major expenditure items such as electricity and insurance, and the annual shortfall in infrastructure renewals expenditure.
The great thing about the new integrated planning legislation is that communities across the State get to have much more of a say in what their community will look like in the future, as well as being able to take more ownership of how that future will be realised.
So whilst budgeting may not be the most exciting subject, understanding and appreciating the complexity of the new budgeting process that is being undertaken by Local Government organisations such as Dubbo City Council can be the catalyst for the community to play a more active role in that process if they so desire.
Let me know if you like budgeting at firstname.lastname@example.org
Clr Mathew Dickerson
Mayor of the City of Dubbo