A tier 6 council with an ageing bridge network · Long Term Financial Planning
Closing a $14.6m funding gap before it arrived
The existing long term forecast was a spreadsheet rolled forward each year. It showed healthy cash, but nobody could say what it assumed about the bridge renewals the engineers were warning about.
$14.6m of bridge renewals fall due within the decade. The previous plan had spread them thinly across twenty years, hiding a cash shortfall from year six.
Insight
Once the asset management plan was linked to the forecast, unrestricted cash fell below the council's minimum in year six, driven by $14.6m of bridge renewals over the decade that the old plan had spread thinly across twenty years.
Advice
Fund the renewals with a mix of $6m of borrowing over twenty years and rate increases of 1% above CPI for four years, rather than either lever alone, and set a minimum cash policy the plan is tested against every year.
Opportunity
The council keeps its cash above policy for all ten years while renewing the bridges on the engineers' timetable, and can show the Department and the audit office how.
Results
Council adopted the plan with the recommended scenario. The model now sits with the finance team, who run the scenarios themselves at each budget.