The challenge for Council leaders is unique in driving financial performance; balancing the demand for new infrastructure, asset renewal and increased community services with revenue streams that lack the pricing flexibility of the private sector.
An inaugural report into the financial health of Australia’s Local Governments conducted by NAB Government Business, a division of the National Australia Bank, takes an independent look at the financial health of councils around Australia.
The report, ‘Financial Management Insights for Australian Councils’, includes information about the financial ratios that financiers such as NAB use to analyse the debt capacity of councils. These ratios will allow councils to compare their performance with each other and better understand how financiers assess them. They can also track changes in their own ratio over time, providing useful information to aid decision making and assessment of the council’s financial health.
“Councils are clearly facing more and more costs and are finding it increasingly challenging to manage the demands on councils budgets and their operating cashflow positions due to various factors beyond their control,” said David Brown, Managing Partner Local Government at NAB Government Business.
“The predominance of financial assets on some council’s balance sheet, as opposed to tangible assets – such as land and plant, has produced a heightened need for prudent management of council financial investments and a need for council Chief Financial Officers to recognise the risk/reward tradeoffs.
“Overall the financial ratios indicate that despite the cashflow constraints, the sector has sufficient reserves to satisfy both maturing and short term debt. The sector’s capability for debt funding and its ability to meet interest expense is strong.”
For your complimentary copy of this inaugural report, contact David Brown, Managing Partner Local Government, at
david.brown@nab.com.au
*Copy supplied by NAB
