THE STRATEGIC RESOURCE PLAN
The Strategic Resource Plan is a key part of good financial management. It ensures that the council plan is properly resourced and that the council remains financially viable.
The Strategic Resource Plan and the council plan are clearly interdependent. This is because the goals in the council plan must be influenced by what is financially possible. The SRP must take into account services and initiatives contained in any plan adopted by council.
SETTING UP AND UPDATING THE STRATEGIC RESOURCE PLAN
Section 126 of the Local Government Act 1989 states that the Strategic Resource Plan (SRP) must be set for a period of four years. The SRP must also be updated each year to ensure that it includes the annual budget year and the following three years. In practice, the council should prepare a five-to-ten year financial plan, for both the operating and capital budgets, to assist with internal planning and augment the SRP.
What should the Strategic Resource Plan contain?
The SRP should normally include:
- analysis of council’s current financial position
- consideration of various assumptions (population growth, CPI trends and economic development) and strategies that underpin an overall financial plan (rating and grants), and expenditure (labour, capital works, asset management, borrowings and debt management, service levels and so on)
- sensitivity analyses on these assumptions and strategies
- development of options
- determination and assessment of preferred model
- supporting documentation.
COUNCILLORS’ ROLE IN DEVELOPING THE STRATEGIC RESOURCE PLAN
Because councillors (sitting as council) are responsible for the SRP, they must:
- ensure there is a good process for developing the SRP – this process should involve councillors at an early stage to ensure their visions and views are taken into account prior to being endorsed (they are less likely to ‘own’ a draft plan which has been fully developed by the administration)
- understand the assumptions and strategies underpinning the SRP – it’s particularly important that council understand the key factors contributing to costs and income
- determine the extent of, oversee and be involved with, community input into the SRP – the development of key strategic and policy positions should incorporate a community consultation plan
- ensure that the SRP is reviewed annually.
Key issues for councillors
Councillors should focus on the important strategic and policy issues encompassed by the SRP. Some of the questions they need to ask include:
- Is the council financially viable into the future?
- Does council have a rating strategy and is it encompassed in the SRP?
- Are our rating levels and rating mix acceptable and appropriate for our municipality? Do they reflect how our community is developing?
- If there are proposed differential rates in the SRP, do they meet legislative requirements?
- Is our community satisfied with current service levels?
- Do we have appropriate user charges?
- Are we recovering costs appropriately?
- Are we complying with government policy?
- Have we exhausted all avenues of grant and other non-rate funding?
- Should we borrow for capital works and/or fund them from revenue? What are the implications of our decision for the level of capital works and infrastructure maintenance?
- Can the current level of debt management be sustained?
- Do we meet legislative and financial reporting requirements?