What s new at QTC a LG update

Transcription

1 What s new at QTC a LG update Jodi Campbell and Jan Xanthopoulo 26 November 2015

2 Agenda About QTC Products and Services Debt and Investments Economics Services Education Services What s new? 2

3 Overview of QTC QTC continues to be the central financing authority and corporate treasury services provider for the Queensland Government. Queensland s AA credit rating means lower cost of funds Services include: cost-effective debt funding and management; short-to-medium term cash management facilities; financial risk management advisory and specialist public finance training facilities to Queensland s public sector 3

4 Overview of QTC QTC has the knowledge and resources to provide LG with solutions Trusted Government advisor Value-for-money QTC acts in the interests of the Queensland public sector our fees are charged on a cost recovery basis. QTC is a trusted and independent service provider. We understand the political environment and policy context. Client Focus QTC builds strong partnerships with our clients to deliver simple and well designed solutions that maximise value for our clients and the State. Why QTC? Whole-of-state focus QTC is committed to delivering the best possible financial outcomes for the State and our public sector clients. Strong and Stable reputation QTC has a strong reputation in the global markets for consistency, stability and transparency, which provides the State with sustainable access to cost-effective funding to secure the growth of Queensland. Experienced people QTC values our staff and draw on our range of specialist skills, expertise and experience to deliver high quality outcomes to our clients. 4

5 Overview of QTC What is QTC and what do we do Queensland s central financing authority Raise and manage funds for public sector entities Operate on a cost-recovery basis Provide the following key services to our clients: Cash management and investment Financial risk management and advisory services Education, training and information services Policy maker Commercial bank Profit generator Government owned corporation Public service department What QTC is not 5

6 Overview of QTC Client Services Division CLIENT SERVICES Rupert Haywood Executive General Manager STRATEGIC PARTNERS Diana Lollato General Manager TREASURY & DEPARTMENTS Peter Dann General Manager LOCAL GOVERNMENT & STATUTORY BODIES Michelle McMullan General Manager CENTRAL AGENCIES Seamus Parker Director TREASURY DEPARTMENT David Johnston Director URBAN LOCAL GOVERNMENT & UNIVERSITIES John Clifton Director UTILITIES Catherine Black Director (A/g) DEPARTMENTS Stuart Crockett Director STATUTORY BODIES & REMOTE LOCAL GOVERNMENT Lidia Zazzera Director TRANSPORT Elise Williams Director EDUCATION SERVICES REGIONAL LOCAL GOVERNMENT Anthony Coates Director 6

7 Overview of QTC QTC s Local Government Group LEGEND South-East Qld Local Govts Regional Local Govts Remote Local Govts Indigenous & Islander Local Govts 7

8 Overview of services to local governments QTC s objective is to support the State s financial success with a focus on whole-of-state outcomes. Within QTC s Client Services team, QTC delivers on its objectives through 3 keys areas 1 Debt and investment 2 Advisory 3 Education and training 1.1 Debt funding and liquidity management 2.1 Credit reviews 3.1 Corporate Financial Management 1.2 Cash management 2.2 Strategic and Financial Sustainability Reviews 3.2 Business Case analysis and project evaluation 2.3 Project Evaluation and Business Case Assessments 3.3 Understanding financial statements 2.4 Financial modelling for decision making 3.4 Governance for new Councilors General financial Tailored Courses guidance and advice 8

9 Products and services debt and investment Investment Ensures surplus cash not idle until needed with good rates of return on a risk-adjusted basis. Investment Products include; Capital Guaranteed Cash Fund, Working Capital Facility and Fixed Rate Deposits 9

10 Capital Guaranteed Cash Fund - Overview QTC s Capital Guaranteed Cash Fund provides strong relative returns and investment security. The key benefits: Size and liquidity: One of the largest Cash Funds in Australia, with approximately $9.4 billion in AUD. It also provides daily liquidity. Whole of Government Investment (October 2015)* 15% 1% 13% 28% Whole of Government Investment Departments Government Owned Corporations Local Government Universities 43% Other Features include: *excluding internal investments Security: Guaranteed 100% return on capital invested (monthly). Assets are composed of high quality credit (A- minimum). Diversity: Investments include money market securities, floating rate notes, RMBS and derivatives. Low fees: Just 0.103% p.a. with no establishment or transaction fees. 10

11 Capital Guaranteed Cash Fund - Performance Competitive returns: Returns are consistently higher than Bloomberg Aus Bond Bank Bill Index and its peers. Strong focus on adding value. The Cash Fund outperformed the Bloomberg AusBond Bank Bill Index by 0.66 per cent during the month of October

12 Local government and QTC debt funding Whole of government debt $93 billion of which around 8% is local government debt (July 2015) 12

13 Products and services Economics Services Tailored monthly economic chart packs and publications provided on a weekly and monthly basis. Presentations and access to additional forecast data or research provided as and when required. 13

14 Products and services Education Services Courses and workshops include: Business Cases in Practice course Central Treasury Management course Corporate Financial Management course Cost of Capital workshop Credit Analysis course Financial Management for Decision Makers course Procurement workshop Project Evaluation workshop Project Management workshop Understanding Derivatives workshop, and Understanding Financial Statements course Over 850 clients attended courses in (from 103 organisations, including 17 LG) - participants rated services 8.8/10 Tailored for the public sector and offers a unique whole-of-state overlay 14

15 What s new? Product simplification Asset Management Planning and long term forecasting LGFM v3 Project Decision Framework Property forum WISDOM Strategic Financial Reviews 15

16 Product simplification looking ahead Approach from 1 July Industry standard products 2. New system 3. Streamlining QTC processes 16

17 Product simplification An overview QTC is simplifying its products and processes: To align with industry standards and remove complexity To allow QTC to be more responsive to clients needs and economic and market conditions In direct response to client feedback 17

18 Product simplification An overview Benefits include: Increased cost certainty Loans that are more transparent and easy to understand Removal of annual loan agreements and varying terms and conditions QTC s fees and cost of funds remain the lowest available to clients for comparable products Launch of new products aligning with commencement of the 2016/17 State Borrowing Program More information coming soon 18

19 Asset Management Planning and Long Term Financial Forecasting Improving the link integrated planning 19

20 Asset Management Planning and Long Term Financial Forecasting Improving the link financial statements and NCAAP Financial statements linked to AMPs through non-current asset accounting policies Consideration of current replacement cost, planned maintenance, estimated useful lives (and potential obsolescence), segmentation and componentisation required LTFFs supported by AMPs will be more relevant and reflect true cost of capex, maintenance and depreciation QTC assisting with understanding : issues and challenges extent and quality of linkages AMP and financials and NCAAP impact of AM decisions on sustainability 20

21 What s new - LGFM V3 A key component in supporting financial sustainability is a robust forecast model and process significant rollout to LGs to date Timelines and progress to date: a a a a Sep-14 Nov-12 to Jun-13 Jan-15 Jun-13 to Aug-13 Aug-13 to Nov-13 June -15 Nov-13 to Feb-14 Coming soon LGFM v3.0 external roll-out Business requirements + scope LGFM v3.0.1 release, roll-out and on-going support and training Model specification Draft model LGFM v3.0.1 release Independent review + finalise model LGFM v3.1 release and roll-out Feb-14 to Aug-14 Client beta testing + model fixes 21

22 What s new - LGFM V3.0.2 Past and present LGFM v2.5 LGFM v3.0 Setting the standard 3-way financial forecast 10 years horizon Op. revenue and expenses Loan calculator PP&E inc. depreciation Calculated interest revenue on cash Standardised financial ratios Keeping the best of v2.5 - adding Business units Additional debt types More accurate interest Drivers for revenues and expenses Revaluations for assets Dashboards Latest metrics and ratios Scenarios More efficient formulas 22

23 What s new - LGFM V3 Present and future LGFM v3.1 Building on v3.0 Suggested enhancements have included: More business units More line items for revenues, expenses and capital expenditures Improved internal transactions which more accurately reflect practise User comments The Future Adapting to future needs This will be guided by the needs of our clients What features would help improve financial sustainability? What features would make it easier to use? What extra internal and external analysis would you like to use it for? 23

24 What s new -LGFM V3 Recent updates The Import LGFM Data function copies across user inputs as formulas instead of values, preserving links to external files that may be in place Export charts from the output worksheets of the Model to a new Excel workbook 24

25 Project Proposals $ $ $ $ $ $ What is the Project Decision Framework? Concept selection It s a decision-making process for selecting the most viable projects against available budget using a funnel effect Prefeasibility Mapped across a typical project life cycle Feasibility Planning: Are we doing the right project? Delivery: Are we doing the project right? In scope Approval $$ 25

26 Tools & templates Policy and process Policy Process Policy Process Tools & templates Governance 1. Draft whole-of- Council policy 2. Draft Terms of Reference for Decision Making Group 3. Guiding principles for evaluation of proposals 1. Concept Approval template 1. Options Analysis template 2. Project Risk Assessment Tool (Initial) 3. Whole-of-life Costing Tool 1. Business Case template 2. Project Risk Assessment Tool (Comprehensive) 1. Project Plan template Tools & templates Project Portfolio Tool 26

27 What s in the PDF kit? QTC Connect Outline for Local Government Leaders User Guide for practitioners 1. Council policy 2. Terms of Reference 3. Guiding Principles 4. Concept Approval template 5. Options Analysis template 6. Business Case template 7. Project Plan template Templates (Microsoft Word) 8. WOLC Tool & User Guide 9. Project Risk Assessment Tool & User Guide 10. Project Portfolio Tool & User Guide 11. Quick Reference Guide (A5 card) 27

28 What s new - Insights with QTC Property forum Oct 2015 The focus was on Qld and matters relevant to public sector portfolios Over 40 attendees from across state government agencies, GOCs and Councils QTC arranged economists and analysts from Citigroup and Urbis to give their views on: the macro environment, and emerging trends in the sector 28

29 Integrated Strategic Water Demand Options Model.WISDOM Optimise Demand management initiatives Water Demand Trunk Water Network Capacity Cost and Revenue A B C A B C Better decisions 29

30 What s new WISDOM How does WISDOM work? Demand management campaigns Demand Initiative 1 Demand Initiative 2 Demand initiatives drive changes in consumption patterns, which lead to changes in demand End user demand End Use1 End Use 2 Demand Segment 1 Demand Segment 2 Demand Segment 3 Demand is balanced against supply in each water service area Water Service Area 1 Water Service Area 2 Pipeline 1 Pipeline 2 Pipeline 3 Network supply Each network element is optimised to deliver the right capacity at the right time and at the lowest cost Reservoir 1 Pipeline 4 Dam 1 New Asset Project A New Asset Project B New Asset Project C New Asset Project D CAPEX & OP&M costs 30

31 WISDOM key outputs (continued) Highlights from WISDOM dashboards DM initiative mappings summary Demand initiatitiming Scenario Demand segment Water end use Profile Initiative description Base case Scenario A Scenario B Scenario C Scenario D Scenario E DSeg 1 DSeg 2 DSeg 3 DSeg 4 DSeg 5 DSeg 6 Start year end End year end Sprinkler Jun-17 Jun Sprinkler trade-in program Showerhead Jun-18 Jun Showerhead retrofit program DSeg 7 DSeg 8 DSeg 9 DSeg 10 EndUse 1 EndUse 2 EndUse 3 EndUse 4 EndUse 5 EndUse 6 EndUse 7 EndUse 8 EndUse 9 [EndUse] 10 Ave. Day Pk. Day 31

32 Strategic Financial Review What is it? Council health check Comprehensive analysis of key risks and issues Focus on 4 main areas: Regional, economic & strategic factors Governance and planning processes Financial management Infrastructure management Available to all Councils, including non-borrowers 32

33 Strategic Financial Review What s in it for Council? Considers alignment of financial strategy with broader corporate strategy & external environment Assessment of risk & mitigation Practical recommendations to address any issues identified Traffic light system to evaluate Council s approaches in mitigating key risks and issues Approach Assessment Description Appropriate approach Approach may require some further consideration to enhance outcomes Approach requires considerable review to achieve outcomes Approach requires substantial review to achieve outcomes 33

34 Strategic Financial Review Approach Discussions with Council s key financial, technical, engineering & senior management staff Considerations: Council s long term financial forecast, performance metrics and budgetary analysis Council s strategic, community & asset management plans Internal financial reporting processes Capital project decision-making processes Management of commercial business units Sensitivity/scenario analysis to test key risks and issues 34

35 Questions? Jodi Campbell Telephone: Jan Xanthopoulo Telephone:

36 Disclaimer QTC has prepared this presentation for use solely for the Local Government Finance Professionals Association of Queensland for general information purposes only. The recipient shall not use the presentation for any purpose other than the purpose for which the presentation was expressly provided. The presentation contains confidential information. None of its contents may be provided or disclosed to any other party without QTC s express written consent. The information in this presentation is provided by QTC in good faith in relation to the information available at the time of its preparation and on the basis of information supplied to QTC by third parties. QTC has not independently verified the information supplied to it and accordingly does not represent that the information provided to QTC is accurate or complete and it should not be relied upon as such. QTC is under no obligation or duty to notify anyone if there is any change in any information or any new information or if it forms a different opinion at any time after the date of this presentation. Neither QTC nor any of its employees or agents accepts any liability for any loss or damage suffered by any person as a result of that person or any other person placing any reliance on, or acting on the basis of, the contents of this presentation. To the extent permitted by law, QTC expressly excludes any representation or warranty in relation to the accuracy, currency and completeness of the presentation. To the extent permitted by law, QTC limits its liability to the amount of any fees paid to QTC for this presentation. The recipient acknowledges that QTC is not a legal, tax or accounting advisor and that independent expert advice from practitioners in the relevant disciplines should be obtained on those matters before acting upon the information contained in this presentation. Queensland Treasury Corporation