Future Directions is a regular feature. This month we interviewed Michael Shave, Manager Financial Services at Noosa Council in Queensland.
I have been employed in Local Government for the last eight years in various management and financial accounting positions in three South East Queensland Councils. Prior to that I was employed in the private sector, also in an accounting role.
As Manager Financial Services my role involves managing the operation of the Financial Services section of Noosa Council. This section includes the payroll, accounts payable, purchasing and stores, and accounting services teams. They provide services for over 430 internal customers. As Noosa Council is not a large Council, all of the treasury, financial and management accounting functions rest with Financial Services.
I believe the following factors to be essential in ensuring responsible ongoing financial management:
- timely and accurate financial reporting in a format easily understood by Councillors and management
- effective communication with Council and management regarding financial issues. By identifying financial issues early and communicating these issues allows informed and prompt decision making at a Council level
- undertaking forward financial modelling. This allows trends to be identified and provides information relating to financial decisions being made by Council now that impact on future financial periods and ongoing financial sustainability.
- transparency in decision making and information dissemination. Noosa is fortunate to have an open and transparent decision making process, which is a credit to the current CEO, Senior Executive Team and Councillors. This process instils confidence in the wider community and Council staff that the Council’s finances are being managed responsibly.
For Local Government the immediate challenge facing Council finances, which is of no surprise, relates to redirecting Council’s focus towards asset management, as Councils and in particular Noosa are just beginning to develop plans to effectively manage and identify the funding issues surrounding the depreciation, replacement and maintenance of infrastructure and other assets. This will result in engineers and finance staff working more closely in the future on asset management planning. The ongoing challenge is ensuring the responsible financial management of Council in a dynamic political environment. This includes on an annual basis Councils determining number and levels of services undertaken, as well as funding options for infrastructure and required rates of return from business units.
In Queensland at the moment this is evidenced by the Size, Shape and Sustainability reviews being undertaken by the State Government in conjunction with the Local Government Association of Queensland (LGAQ). Additional challenges facing smaller Councils such as Noosa include the demand on Councils to provide services previously undertaken by State and Federal Government agencies, and the ability to fund these services, as well as the pressure on Council’s to identify other sources of revenue and reduce the reliance on the general rate to fund Council activities.
A unique financial challenge that will impact on Noosa in the near future will be the impact of a population cap in the Shire and the shift from asset growth to asset maintenance and Council’s ability to fund its ongoing operations in a zero growth environment. For issues such as cost shifting, which is a common theme among Local Governments, it is important for peak bodies such as the LGAQ to take a strong lead role on behalf of the smaller Councils to voice the concerns. Noosa Council is, however, very proactive in identifying and securing as many State and Federal grants and subsidies as possible to mitigate the cost of providing new services. As for alternative revenue streams, Noosa is constantly identifying investment opportunities such as property development to secure ongoing revenue streams, which in turn reduces the reliance on the general rate. Noosa Council is aware that there is a degree of uncertainty relating to the population cap, and has secured community involvement via Council’s economic sector board to assist in identifying the financial impacts on Council and the local economy once the population cap takes effect.
I believe that into the future Local Government financial management will continue to become more commercially focused, as pressure on financial sustainability will require more robust financial evaluation of spending (in particular infrastructure) to ensure that cost effective financial decisions are made by Councils. We are also seeing a trend towards the introduction of more user friendly financial reporting tools that provide managers with the ability to access real time financial information on a daily basis rather than the traditional monthly budget report produced by the Finance department.
Another trend that I believe will emerge will be the importance of using forward financial modelling as a way to provide Councils with information relating to ongoing financial sustainability and critical investment decisions being made now that impact on future financial periods.
