2002 – 03 annual report - mav.asn.au  · Web viewAnnual Report 2003. Achieving more for our communities. Editors. Costigan&Murphy. Professional Writing Services. Editorial assistance.

Annual Report 2003

Achieving more for our communities

EditorsCostigan&MurphyProfessional Writing ServicesEditorial assistanceJohn RyanRod MummeryIndex compiled bySimon MorganDesignFr@nk Design Pty LtdPhotographySteven Diffey PhotographyPublished byMunicipal Association of VictoriaLevel 12, 60 Collins StreetMelbourne 3000Telephone: 03 9667 5555Facsimile: 03 9667 5550GPO Box 4326PPMelbourne 3001DX 492 MelbourneE-mail: [email protected]: www.mav.asn.au

This report has been producedto worlds best practice ISO 14001Environment Standards byFinsbury Green Printing.

Purpose >To promote the efficient carrying out ofmunicipal government throughout the State of Victoria andto watch over and protect the interests, rights andprivileges of municipal corporations

Aim >To be a world class peak body for worldclass local government

Objective >To be the representative andinfluential collective voice of local government

20022003Contents

2468

MAV HistoryYear in ReviewPresident’s ReportBoard

26 Social Policy28 Economic and Finance31 Infrastructure and Asset

Management

MAV Annual Report 2003

10 CEO’s Report12 Corporate Governance14 Staff15 Organisation Chart16 Environment19 Sector Development21 General Projects24 Professional

Development

33 Planning36 Financial Overview38 Information and

Communications39 Human Resources40 Committees42 Plain English Guide to

the Financials44 Glossary45 Financial Report

2004 marks the 125th anniversary of the Municipal Association of

MAV HistoryIn the beginning…In July 1879, the shires and boroughs in the western district of Victoria met to consider a possibleinauguration of a municipal association in the colony of Victoria.To watch over and protect the interests, rights and privileges of municipal corporations, to take action inrelation to any subject affecting municipal bodies or municipal legislation, and to promote the efficientcarrying out of municipal government throughout the colony.The meeting proposed an annual membership subscription fee of £2.2s and deemed that every memberwould have the right to one vote at all group meetings.At the conclusion of the meeting, the proposal was documented and circulated to the municipalitiesthroughout the colony. Then, during a meeting at the Melbourne Town Hall at the end of July, the originaladvocate for establishing the Association, Mr John Mackiehan from the Shire of Mount Rouse, wasappointed as the first President of the Municipal Association of Victoria.

Victoria. In the lead up to this significant year, it is timely to look backover our history and reflect on what we are and where we have been.

The MAV today – what goes around comes aroundAfter many moves – from its first registered address at 369 Collins Street in 1904, and from there to asuccession of offices at Queens Street, St Kilda Road, Queens Road and Milton Parade in suburban Malvern– in 1999 the Association moved back to a Collins Street address in the heart of Melbourne’s business andgovernment precinct.Over the past 124 years, the Association has not only come full circle in terms of location, but also in termsof the issues it continues to face – from differential rating in the 1870s, councillor remuneration in the 1920sand the recurring issue of an adequate share of funding for roads, to issues with the valuation system in the1950s and codes of conduct for local government in the 1970s. The one thing history tells us is that theseand other issues will continue to challenge the sector, and therefore the MAV, well into the future. Throughoutits long and eventful history, the Association has advocated for and on behalf of the local government sector,scored many successes and faced many challenges…we look forward to continuing the journey.

1879Cr John Mackiehan of the Shire of Mount Rouse,MAV’s first president – from July 1879 until

18901890 excerpt from the original minute book of the MAV’s Western Group.

1920The MAV Executive Committee of 1927.

1950Women councillors in consultation witha shire secretary (right).

1970MAV executive committee members from theearly 1970s.

September 1885.

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The first issuesfor action1879(first formal meeting in September)

> Payment to municipal bodies of feesfrom Woodcutters’ and Carters’ licenses

> Proposed Width of Tires Act – requiringmunicipalities to adopt regulationsdetermining the width of tires in relationto the load of vehicles (deemedunworkable by the membership)

> Differential rating and the minimumrate – the membership indicatedsupport for the legislation and agreedthat one shilling should be set as theminimum rate

> Borrowing powers> Road surveys – membership proposed

that municipalities should have inputinto the position of new roads andobtain necessary alteration in surveysproposed by the government1892

> The timing of the annual municipalelections, the date of which conflictedwith the Grand National Show,impacted particularly on the ability ofcountry residents to vote

> Concern that there was too muchpower in the hands of the rabbitinspectors to demand that rabbit-prooffencing be erected

> Subdivision of land – a proposal thatno person cut up or subdivide land forsale without first obtaining municipalcouncil approval (a concept that wasnot supported by councils at the time)1904By 1904 a major issue confrontingmunicipalities was the high cost offidelity insurance – over the previous 10years councils had paid over £10,000to guarantee societies and during thattime had only received £1,621 back.A meeting of the Association held inOctober 1904 resolved that thegovernment be asked to introduce a Billwhich would incorporate the MunicipalAssociation of Victoria and empower itto establish a fidelity guarantee fund.The legal advisers for the Associationproceeded to draft legislation for itsincorporation and presented it to thegovernment for consideration.

Our legislative débutOn 14 August 1906 the MunicipalAssociation Incorporation Bill was firstread in the Legislative Assembly.Its second reading on 13 September1906 outlined the primary purposeof the legislation – to establish aMunicipal Officers FidelityGuarantee Fund.Strong opposition to the proposal wasfuelled by concerns that the Bill would

‘bring into existence an organisationwhich would be a menace to thepower of Parliament…Today theMunicipal Association is a voluntarybody. It may be looked upon by someas a self-constituted body of busy-bodies – but by this bill it will becreated a permanent body, and it willhave conferred upon it power not onlyfor insurance but for other purposes’.The overriding concern expressedduring the debate was that Parliamentwould not have the power toadequately control the Association,and that the Association wouldconsequently make demands on thegovernment. The Bill was thereforeamended to incorporate provision forGovernor in Council consent to berequired for any changes to the rulesof the Association. This would give theMinister the ‘power to say that hewould not consent to rules which werenot in the best interests of everybodyconcerned in the fund’.On 14 August 1907, exactly12 months after it was firstintroduced, the Municipal AssociationIncorporation Bill was passed bythe Legislative Council.

Snapshot of issuesover time1920s

> Councils lobby for the Police – notlocal government – to regulate shoptrading on Sundays

> Speed limits for motor cars – thegovernment urged to amend the MotorCar Act to enable councils to fix aspeed limit for drivers of motor vehicles

> Councillors sought to be electedby a system of proportionalrepresentation and direct electionof mayors and presidents

> All municipal taxes to be assessed onthe unimproved value of land and theLocal Government Act be amended tomake such rating compulsory

> All meetings of municipal council andcommittees to be open to the publicand held at night

> Adequate remuneration to be paid tomunicipal councillors

> State government urged to allocate anequitable proportion of motor feescollected to metropolitan municipalitiesfor use in the construction and‘re-construction’ of metropolitanarterial roads

1950s> Following a resolution by the 1948

Annual Conference of the MunicipalAssociation, and at the suggestion ofthe Association, the State Governmentproposed the establishment of avaluer-general’s department todetermine valuations for state andlocal authority taxing purposes

> Revision of tax funds allocation,particularly in relation to petrol tax, toensure a reasonable road program

> Rating of forests and crown land –seeking payments in lieu of rates onsuch land1970s

> Proposal by councils to enable localgovernment to discount rates paidin advance

> 1976 State budget delivered benefitsto local government including anincrease from $2 to $2.50 per headas the subsidy for municipal libraryservices, doubling of the maximumcapital subsidy towards the cost ofbuilding a kindergarten (from $15,000to $30,000), raising the amount ofrebate available to eligible pensionerstowards rates (from 25% to 50%),reducing the worker’s compensationsurcharge (from 20% to 10%)

> A survey commissioned by the MAV,at the request of the government,demonstrated the need for the

maximum councillor allowance to beset at $1,000 and for compensation tobe made for out-of-pocket expenses

> Debate concerning the establishmentof a national code of conduct for localgovernment, similar to that adopted inGreat Britain1990s

> 210 councils amalgamated into 78councils and required to overseethe implementation of massivereform agenda

> Elected councillors replaced by Stategovernment-appointed commissionersand state-appointed acting CEOs

> Rate capping introduced along witha compulsory 20% reduction incouncil rates, severely impacting onthe capacity of councils to spend oninfrastructure maintenance and renewal

> Compulsory Competitive Tendering(CCT) introduced, requiring councils tomarket test significant proportions oftheir budgets

> Significant reduction in the number ofpeople directly employed by the sector

> Councillors on the Management Boardof the MAV replaced byCommissioners, MAV financialmembership base reduced from 210to 78, and reductions in service areassuch as training and industrial relationsas well as policy staff

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History MAV Annual Report 2003 History MAV Annual Report 2003

The focus this year was squarely on financials. And despite toughtimes, the MAV won through for local government – in achieving a full

Year in ReviewWell deserved pay increases for childcare workers >In June 2003, the fullbench of the Australian Industrial Relations Commission heard a claim from local government childcareworkers seeking a wage increase of 120% (later revised to 66%) plus allowances.A negotiated outcome recognised the importance of work done by carers while maintaining the viabilityof council childcare services by delivering wage increases of between 5% and 15%.

PERIN in the spotlight >Research conducted in August 2002 uncovered a shortfall ofmore than $120 million in outstanding local government fines and penalties lodged with PERIN (PenaltyEnforcement by Registration of Infringement Notice).While negotiations with the State Government are continuing, the MAV is pursuing intervention measures,including the option to engage a third-party collections agency.

Addressing the superannuation shortfall >Following an actuarial review inDecember 2002, councils were required to fund a $114 million shortfall in the Local AuthoritiesSuperannuation (LAS) defined benefits scheme.The MAV negotiated with LAS on the methodology for apportioning councils’ contributions, paymentoptions, and measures for dealing with an investment market recovery.A highly successful media campaign informed ratepayers of the impact on 2003/04 council budgets andprepared communities for rate rises of between 5% and 10%.MAV Chief Executive Officer, Rob Spence, was appointed to the Board of LAS to improve communicationand consultation.

New milestones for council elections >Fifty-four councils faced election on15 March 2003, with a 39% increase in nominations. Of the 306 sitting councillors, two-thirds werereturned, while new councillors accounted for just over half (208 of 412) of the total elected.For the first time ever, women stood for election in each of the 54 councils, with the number of womencouncillors increasing from 98 to 113 in 2003.

New act provides nonfeasance certainty >As a result of representation by theMAV, the State Government enacted the Transport (Highway Rule) Act 2002 which effectivelyreinstated – until 1 January 2005 – the common law immunity of nonfeasance abolished by the HighCourt in May 2001.New road management legislation, scheduled to take effect on 1 January 2005, will offer roadauthorities protection from civil liability if reasonable road management arrangements are in place,effectively providing greater certainty for councils and the community.

A coordinated approach to implementing Melbourne 2030 >In October2002, the Victorian Government released Melbourne 2030, a planning framework to guide growth overthe next three decades.MAV representations during the State election secured the government’s commitment to a cooperativepartnership approach with local government, and $5.6 million in funding over three years to assistcouncils to implement the strategy.Minister Delahunty also appointed an implementation reference group to provide independent advice onthe strategy’s progress. MAV President, Cr Brad Matheson, and MAV Chief Executive Officer, Rob Spence,represent the local government sector on the reference group.

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Year in Review MAV Annual Report 2003

five-year reinsurance arrangement, in securing a nonfeasance protectionperiod, and in successfully lobbying for funding increases for crucialprograms and services.

Increased funding for health and community care programs >As a resultof MAV lobbying, the State Government announced Home and Community Care (HACC) planning andfunding reforms in April 2003.The reforms delivered increased HACC funding to councils in 2002/03 and 2003/04, including anadditional $69 million over four years in the State budget handed down on 6 May.The reforms also recognised the planning and funding role of councils in HACC, providing for theestablishment of a HACC program partnership between the State and local government to jointly designpolicy directions and address funding issues.

Full reinsurance achieved for local governmentWith the previous five-year reinsurance arrangement due to end in June 2003, MAV’s scheme managersscoured the market – both within Australia and internationally – for potential underwriters willing to providereinsurance for another five-year term. Our success, against all odds and in a totally inauspicious andcompetitive environment, not only meant that local government could avoid the undesirable necessity ofself-insurance during a period where actual claims would undoubtedly far exceed projected claims, butgenerated cash surpluses for the MAV insurance scheme of approximately $20.4 million over thefive-year period.

Fast response saves community groups’ insurance status >In May 2003,insurance companies informed the MAV that, unless tort reform was introduced in Victoria, securingreinsurance for the MAV community groups’ public liability insurance scheme was unlikely.The MAV called on the State Government to urgently introduce a general damages threshold to limit claims.Swift action to introduce tort reform convinced insurers to continue backing the scheme for another threeyears, holding premiums at current levels for the next 12 months.

Timelines for new waste management guidelines extended >WorkSafeVictoria launched new occupational health and safety guidelines for the waste management industry. Theseguidelines, announced in June 2003, prohibit workers from riding on the rear of trucks and from manuallyhandling rubbish and recyclable material.Because immediate compliance threatened to impact on some councils’ capacity to continue providingrecycling services, the MAV negotiated with the State Government and Work Cover Authority to extend theimplementation timelines.

Foundations laid for ongoing relationship with State Government >During the lead up to the 2002 State election, the MAV prepared a comprehensive log of claims whichdetailed specific commitments and actions sought by the sector.The ALP’s response provided the MAV with a sound foundation to adance negotiations with the re-electedBracks Government on a range of important sector-wide issues, including specific commitments to:

> promote and support constitutional recognition of local government, respect the autonomy of the sector,and oppose the implementation of rate capping

> consult the MAV on important policy issues> work with the MAV on a joint strategic action plan, including development of an agreed statement of

understanding> align all council election cycles to a single date> allocate an additional $69 million in recurrent funding for HACC services over the next four years> jointly lobby the Federal Government for aged care budget increases for HACC services, and the creation

of a consolidated national community care system> provide $44 million for early childhood and pre-school services> negotiate with the MAV on resourcing native vegetation management and enforcement.

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Year in Review MAV Annual Report 2003

“Success inevitably brings responsibilities…and ours is to take the

President’s Report renewed strength and influence we now enjoy into the heat andheart of the national arena.”

Full membership backs MAV >This year, for the first time in many years, the MAV hasachieved what has proven to be frustratingly elusive. We now enjoy full membership, with all 79metropolitan, regional, rural and interface councils being financial members of the MAV. We are undeniablyproud of this achievement, and recognise it as a clear endorsement of our work.

Productive work practices >Internally, the organisational structure of the MAV continues towork well. Our highly talented staff and consultants have once again achieved a great year’s work. Specificareas of policy development and implementation are well documented in this report, and testify to the visionand hard work of both our leadership and team performance across all areas of the organisation.The new Board structure of 13 members is now truly democratic, with each local government region beingrepresented for the first time. The restructured Board is to be congratulated for its big picture vision, its spiritof cooperation and altruism, and the insightful and assured leadership position it takes to the developmentof creative, workable policies for local government in Victoria.

Performing well against key indicators >As a peak political body, the MAV canconfidently claim to achieve outstanding performance levels against all key criteria. In terms of lobbyingand advocacy, the MAV has demonstrable pulling power and influence with key political decision makers.We are the first point of call for councillors, for training and development in all areas of local government.The MAV is the primary facilitator for networking across the sector, clearly the preferred source forinformation and research, and the natural choice to appoint representatives to state and commonwealthcommittees. We are proud to assist in setting the standards by which local government operates and

It’s immensely satisfying to look back over the year and heartened by the efforts of our membership to maintain these unquestionably high benchmarks.

know that all our hard work, determination and attention Secured long-term lease >The move to Collins Street has been an unqualified success.to detail has paid off so successfully.The MAV we see today – a vibrant and energeticorganisation driven by a fierce determination to not onlyanswer all challenges, but to set the agenda for local

In terms of position and status, our accommodation at the top end of town, close to both Treasury andParliament, has been both strategically and practically important in our resurgence as a credible, stable,and influential peak body for local government.We are pleased to confirm that during the year we were successful in securing a long-term lease of ourpremises in the Reserve Bank building and look forward to many more years of successful operations there.

government process and reform – is the result of a clearly Victoria takes leadership position in the national arena >As the peak bodyarticulated vision, many years of careful planning, andsheer hard work.The first six months of this year presented challenges thatwould have thrown even the strongest organisation offcourse. Virtually without warning we were suddenlyfacing a $114 million superannuation shortfall, thepotential for massive increases in council public liabilityinsurance, and the ASU childcare workers wage claim. Itis testament to the essential integrity of the MAV that wenot only overcame the difficulties posed, but used them tocome up with practical solutions in the short term, and as

representing local government interests within and on behalf of Victoria, the MAV is now recognised by keyindustry and community organisations, by state and federal governments, and by the wider community, as aforce to be reckoned with. As such, our views are welcomed and sought after, and our influence continuesto grow within both the state and national arenas.Our sustained efforts to ensure that our voice is not only heard, but heeded in the national arena, hasmeant Victoria has a clear, pre-eminent and decisive influence on the local government reform agendaacross Australia. Our focus in the coming year will be to ensure the continuation of funding for Roads toRecovery, better outcomes for local government in community care, and the protection and continuation ofthe family day care system. My recent appointment as Senior Vice President of the Australian LocalGovernment Association is a significant move towards achieving these and other important goals for localgovernment in Victoria.

Combined efforts lead to outstanding results >I would like to thank the MAVBoard, and MAV staff and consultants for their outstanding contributions and support over the past 12months. Our CEO, Rob Spence, and his team have once again performed their challenging roles with

6 a stimulus to long-term improvements. consummate skill and professionalism. Congratulations to all. I would also like to acknowledge thecontribution of our members and reiterate our determination to respond to their vote of confidence withundiminished energy and dedication. 7

Cr Brad Matheson President

President’s Report MAV Annual Report 2003 President’s Report MAV Annual Report 2003

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Made up of councillors from all twelve regions across the state,the MAV Board is truly representative of local government in Victoria

Board and provides a strong, direct and effective interface between individualcommunities and the MAV.

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9 10Cr Brad Matheson BA, LLB, AFAIM 8HOBSONS BAY CITY COUNCIL > MAV PRESIDENTCouncillor, Hobsons Bay City Council 1996 to current > Mayor of Hobsons Bay 1998–99and 2001–02 President, Environment Protection Board; Senior Vice President, Australian LocalGovernment Association (ALGA); Member, Victorian Reconciliation Council; local governmentrepresentative on the Victorian Economic, Environment and Social Advisory Council; Member,Dry Seasonal Taskforce; Member, Building Appeals BoardCr Jenny DaleINDIGO SHIRE COUNCIL > MAV DEPUTY PRESIDENTMAV Board representative of Rural North East Region > Councillor, Indigo Shire Council 1997 tocurrent > Mayor of Indigo 1997–99 and 2003 to current > Deputy Mayor of Indigo 1999–2000> Councillor, Shire of Yackandandah 1992–94 Chair, MAV Human Services Committee; Member,Yackandandah Bush Nursing Hospital Committee; Chair, Indigo Shire Community Services AdvisoryCommittee; Treasurer, Yackandandah Lions Club; Member, La Trobe University Advisory Committee;Coordinator, Yackandandah Adult Day Centre and Beechworth Health Service; Member, Roads CorporationAdvisory Board; Rural Vice President, Australian Local Government Women’s Association Victorian Branch;

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Cr Rae Perry RNDAREBIN CITY COUNCILMAV Board representative of Metro Central Region > Councillor, Darebin City Council 1998 tocurrent Chair, Community Power Group Electricity Purchasing Working Group; Member, National ExecutiveAustralian Local Government Association Board; Chair, Friends of Baucau; Member, Aboriginal & TorresStrait Islanders Community Council; Member, Darebin Community Health Services Inc Board ofManagement (liaison position); Member, MAV Human Services Portfolio Committee; Chair, NationalAssembly ALGA Review CommitteeCr Jim Ryan BA, LLBCOLAC-OTWAY SHIRE COUNCILMAV Board representative of Rural South West Region > Councillor, Colac-Otway Shire Council 1996to current > Mayor of Colac-Otway 1996–97, 2003 to current > Councillor, City of Colac 1985–94 >Mayor of Colac 1990–91, 1993–94 Chairman, South West Municipalities Group; Chairman, Colac OtwayPerforming Arts and Cultural Centre Trustees; Life member, Law Institute of Victoria; Member, Colac Do CareCommittee; President, Colac and District Cricket Association; Chairman, Colac Turf ClubCr Geoff Davey BA, LLB

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Member, Victorian Association of Health and Extended Care BAW BAW SHIRE COUNCIL3

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Cr Sam Alessi BA, BED, GDIP (COMP), DIP TEACHWHITTLESEA CITY COUNCILMAV Board representative of Interface Region > Councillor, Whittlesea City Council 1997 tocurrent > Mayor of Whittlesea 1997–98, 2000–01 > Councillor, City of Whittlesea 1987–88Member, MAV Library Working Party; Chair City of Whittlesea Responsible Gaming Forum;Representative, Community Information Whittlesea Committee of Management; Chairperson, Yarra PlentyRegional Library Service Board of Directors; Representative, Whittlesea YMCA Board of Directors; Boardmember, Victorian State Council of YMCAs; Director, Victorian YMCA’s Community Programming Pty LtdCr Darryl ArgallHINDMARSH SHIRE COUNCILMAV Board representative of Rural North West Region > Councillor, Hindmarsh Shire Council1997 to current > Mayor of Hindmarsh 1997–99 > Councillor, Shire of Dimboola 1985–95 >President, Shire of Dimboola 1992–93 Chair, MAV Strategic Environment Advisory Group; Member,North West Municipalities Association; Member, Wimmera Catchment Management Authority (WCMA)Board; Member, WCMA Communication Committee; Treasurer, Grampians Marketing Inc; MemberGerang Landcare Group; Member, Hindmarsh Landcare Network; Member, Gerang Fire BrigadeCr John ChandlerSTONNINGTON CITY COUNCILMAV Board representative of metro south east region >Councillor, Stonnington City Council1996 to current > Mayor of Stonnington 1996–97 > Councillor, City of Prahran 1982–94> Mayor of Prahran 1988–89 Member, Australian Building Codes Board (ABCB); Member, ABCBBuilding Access Policy Committee; Member, ABCB Energy Efficiency Steering Committee

MAV Board representative of Rural Gippsland Region (elected April 2003) > Councillor Baw BawShire Council 1997 to current > Mayor of Baw Baw Shire Council 1997–98, 1998–99, 2003 tocurrent Member, Baw Baw Shire Tourism Advisory Board; Member, West Gippsland Regional LibraryService; Member, Arts and Cultural Advisory Committee; Member, Australia Day Committee; Member,Gippsland Local Government Network

10 Cr Rod FyffeGREATER BENDIGO CITY COUNCIL BA, BEC, DIP ED, FSA SCOTMAV Board representative of Rural North Central Region > Councillor, Greater Bendigo City Council1996 to current > Mayor of Greater Bendigo 2003 to current > Councillor, City of Bendigo 1983–1994Chair, MAV Library Working Party; Member, State Library Public Libraries Advisory Committee; Chair, Bendigo IceStadium; Chair Central Vic Greenhouse Alliance; Chair, Environment Committee; Member, Bendigo Easter Festival

11 Cr Geoff LakeMONASH CITY COUNCILMAV Board representative of Metro Southern Region > Councillor Monash City Council 2000 tocurrent > Mayor of Monash 2002–03, 2003 to current

12 Cr Chris PapasMELTON SHIRE COUNCILMAV Board representative of Metro West Region > Councillor, Melton Shire Council 2001 tocurrent > Deputy Mayor of Melton 2002–03 Director, Western Region Waste Management Group;Member, Boral Western Land Fill Community Advisory Committee; Life member, Cyprian Greek OrthodoxCommunity ‘Apostolos Andreas’ Sunshine; Chair Melton Community Waste Management Committee;Member, Staughton College School Council; Member, Melton Reconciliation Committee

86 Cr Max O’Shea TPTC

HEPBURN SHIRE COUNCILMAV Board representative of Rural South Central Region > Councillor, Hepburn Shire Council1997 to current > Mayor of Hepburn 1998–99, 2000–01 > Councillor, Shire of Daylesford &Glenlyon 1991–95 Chair, MAV Right to Farm Advisory Committee; Chair MAV ProfessionalDevelopment Reference Group; Member, MAV/Vic Roads Liaison Group; Member, RegionalConnectivity Steering Committee; Member, Hepburn Health Service Board; Member, DaylesfordSecondary College School Council; Member, Daylesford Community Enterprise Centre; Chair, CentralHighlands Library Corporation

13 Cr Julie Eisenbise GDIP ED, DIP MED LAB TECHMANNINGHAM CITY COUNCILMAV Board representative of Metro East Region > Councillor, Manningham City Council1997 to current > Mayor at Manningham 2001-02 Member, MAV Human Services Committee;Member, MAV Library Working Party; Chair, Whitehorse/Manningham Regional Library Corporation;Deputy Chair, Migrant Information Centre for the Eastern Region of Melbourne; Member, Businessand Professional Women’s Association; Fellow of the Australian Institute of Company Directors

14 Former Cr Donald Cameron JP, FAICD (Not pictured)BASS COAST SHIRE COUNCILFormer MAV Board representative of rural Gippsland Region (July 2002–March 2003)

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> Councillor, Bass Coast Shire Council 1997–2003 > Mayor of Bass Coast 1997–98> Councillor, Shire of Phillip Island, 1980–83

Board MAV Annual Report 2003 Board MAV Annual Report 2003

“In 1997, the MAV had very little punch. Today we are recognised as oneof the most influential peak bodies in Victoria. We don’t shy away from

CEO’s Report

2002/03 has been a watershed year – the culmination offive years’ work building an organisation with thepolitical clout and influence to tackle the major issues inlocal government. We now have everything in place –highly qualified staff, a strong membership base, solidfinances, and important strategic alliances – to broadenour sphere of influence and affect positive change for thesector at the highest levels.Taking on the big issues without fear or favour >This year the MAV led thecharge on a range of complex issues. These included dealing with the fallout from the $114 millionsuperannuation liability shortfall, negotiating the insurance minefield to cut a good deal for the sector,competing for funding in a tough first budget after the State election, defending the sector in the childcareworkers’ wage claim case, and managing the rate increases ‘we had to have’.

Proactively managing the superannuation crisis >Finding a solution to themassive superannuation liability shortfall was, to say the least, a huge challenge for us all. And yet, bylinking up with experts in the sector, we negotiated a range of payment options, kept the channels ofcommunication open between Local Authorities Superannuation (LAS) and local government, and activelyensured that our members were up to speed on developments. While a number of issues still remainunresolved, we believe that everything is in place to manage this situation in the fairest and most effectiveway possible.

the big issues. We look forward to the challenges. And we know that wecan have a positive bearing where it counts.”

Positive budget outcomes for the sector >During the lead up to the StateGovernment election we sought specific commitments from each of the political parties on major issues facingthe sector. While favourable responses at this point in the electoral cycle were to be expected, it wasnevertheless a major achievement that the first – and often toughest – budget delivered such significant fundingoutcomes, particularly in the areas of Home and Community Care and the Maternal and Child Health Service.

A win for childcare workers >This year the Australian Services Union sought a 60% wageincrease for local government childcare workers. While recognising the importance of work done by carers,the claim threatened the viability of council childcare services.In partnership with the Victorian Employers’ Chamber of Commerce and Industry, and with strong localgovernment support, we brokered an agreement that delivered wage increases of between 5% and 15%.This was a significant achievement, and one that could have implications for childcare workers nationally.

Media relations at an all time high >As the MAV’s profile has grown, our need tostrategically manage media coverage has become increasingly important. So, this year we established anin-house PR and communications unit to ensure we have the best media advice and expertise on hand. Wenow have the resources to build even better working relationships with print and electronic journalists, andare able to take the lead position on virtually every issue that affects local government. Our management ofthe potentially damaging stories about rate rises and the discovery of the superannuation shortfall stand outas some of the year’s most successful media campaigns.

Building intellectual capital for the future >Attracting high calibre people to localgovernment – and keeping them there – continues to be a focus for the MAV. Throughout the year weexpanded our councillor training and professional development to include state-wide information sessionsfor prospective candidates, induction courses for newly elected councillors, and a series of programs whichallow councillors and staff to enhance or upgrade their skills in key areas.In line with our ongoing commitment to boost graduate recruitment throughout the sector, the MAVemployed three graduates during the year and offered work placements to a number of students. We alsoestablished direct links with universities to raise the profile of the sector as a good career option, andproduced a series of promotional materials and resources outlining the types of jobs that are available.

Sound finances underpin MAV position >Notwithstanding the fact that the budgetbottom line was inevitably affected by the unfunded superannuation liability, our financial performance thisyear was right on target. With a small surplus of $12,685 after dealing with unfunded superannuationliability, our financial situation will be tight, at least in the short to medium term.I am pleased to say that once again this year there has been no increase in membership subscription fees.That said, while our objective is to hold fees at the same level, the reality is we may need to reconsider ourstance in the near future.

Credit where credit’s due >Our greatest asset is undoubtedly our people whose energy,creativity and professionalism have made the organisation what it is today. My sincere thanks go to the MAVboard, staff and consultants for their unflagging commitment. It is a great pleasure to work with such atalented group of people.As I look to the future, I realise how far we’ve come – from relative obscurity in the eastern suburbs to aposition of influence and power at the top end of town. I can’t be sure where we will be in a year from now,but one thing I do know is that we will continue to exert our influence where it counts, and in a way thatbenefits the sector – now and in the future.

10Long-term planning for Civic Mutual Plus >This year we negotiated long andhard with the reinsurers, locking in a good deal for local government in the medium term. Civic MutualPlus is now in a strong position with a surplus of $5.82 million. But despite this, we can’t afford to becomplacent. If the scheme is to remain viable well into the future, we have to ensure that it continues toperform well. Finding ways to minimise public risk while at the same time improving local government risk

Rob Spence Chief Executive Officer

11management, is critical.

CEO’s Report MAV Annual Report 2003 CEO’s Report MAV Annual Report 2003

The MAV is the peak body for Victorian Local Government. Incorporatedunder the Municipal Association Act 1907 its purpose is to promote the

Corporate GovernanceThe Municipal Association Act empowers the Association to establish an insurance scheme for localgovernment and determine rules that govern the way the Association operates. These rules provide thedetail of the organisation’s structure including the establishment of the State Council, the appointment of

efficient carrying out of local government throughout Victoria, and towatch over and protect the interests, rights and privileges of councils.

Board meeting attendance >The newly structured MAV Board was elected in July2002. It met formally for the first time on 2 August 2002. Detailed below is the meeting attendance ofboard members from that first meeting to June 2003.

MAV representatives and the election of the MAV Board. MEETING DATE 02/08/02 06/09/02 04/10/02 30/10/02 13/12/02 07/02/03 07/03/03 04/04/03 02/05/03 06/06/03 TOTAL

Integrated representation where it counts >Every council that pays its annualsubscription to the MAV has the right to appoint a councillor as its representative on the MAV. Thisrepresentative holds the voting rights at MAV State Council meetings and also for board elections.

Cr Brad MathesonCr Jenny DaleCr Sam Alessi

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ATTENDED10910

The MAV Rules require two state council meetings be convened each year – an annual meeting in Mayand a second meeting in November. Additional meetings can also be convened.

Cr Darryl Argall YCr Donald Cameron* YCr John Chandler Y

YYY

YYN

YYY

YYN

YYY

YNN

Y·Y

Y·Y

Y·Y

106*7

The State Council is a formal meeting of MAV representatives. Its role is to:> Identify and determine the issues, objectives and strategic direction of the MAV>Communicate councils’ views about issues impacting on the sector> Deal with matters the MAV considers critical to achieve an effective and efficient local government sector.

MAV Board changes lead to wider representation >In February 2002, theMAV Rules were amended to change the structure of the MAV Board to one of regional representation.This saw the number of board members increase from nine to 13. The Board identified 12 regions, in

Cr Geoff DaveyCr Julie EisenbiseCr Rod FyffeCr Geoff LakeCr Max O’SheaCr Chris PapasCr Rae PerryCr Jim Ryan

·YYYYYYY

·YYYYYYY

·YNYNYYY

·YYNYYYY

·YNYNYYY

·YYNYYYY

·YYYYYYY

·YYYYNYN

YYYYYYYY

YYYYYYYY

2*108889109

consultation with the membership, (six rural, five metropolitan and one urban fringe). Each of theseregions elected a Board member in July 2002 for a term of two years, with the MAV President beingelected directly by the membership.The MAV Board is responsible for ensuring the Association operates in accordance with the MunicipalAssociation Act 1907 and its rules.The key responsibilities of the MAV Board as outlined in the rules, include:

> Defining the detail of the broad policies, objectives and strategies determined by the State Council> Setting and defining directions, priorities and performance standards for the organisation> Appointing and then monitoring the performance of the CEO> Liaising with MAV representatives.

Once elected, the new MAV Board (in consultation with representatives from each of the regions)established a series of protocols to further define the respective roles and responsibilities of the President,Deputy President, board members and MAV representatives. These protocols also outline how boardmembers communicate and consult with their representatives in each region.A key outcome of this process is the establishment of From the Board Table, a summary document ofissues discussed and decisions taken at board meetings. This document is produced after each meetingand emailed to board members, who in turn forward it with additional commentary and information tothe MAV representatives in their region.

Hands-on approach to annual planning >In addition to establishing newprotocols detailing how the Board interacts with representatives, in February 2003 the MAV Board agreedto continue its practice of convening annual roadshows. These events are designed to engage with the

* Note: Cr Donald Cameron was defeated in his council election in March 2003. As a consequence, he ceased to be a board member. A by-election for the Gippsland region wasconducted in April 2003. On 17 April Cr Geoff Davey from Baw Baw Shire Council was declared elected to the Board.

New meeting structure implemented >In late 2002, the Board reviewed itsmeeting structure and implemented a cycle of regular briefing meetings. This allows more detailed briefingfrom MAV officers and consultants on key projects and issues impacting the sector, and allows for greaterinput and discussion on these issues at board level. Briefing meetings are held every second month.

Board allowances >The expense policy and remuneration level for board members was setin March 2000. Board members receive an annual allowance plus reimbursement of travel andaccommodation expenses incurred when undertaking approved MAV business.The President is also provided with full private use of a motor vehicle, a mobile phone and office facilitiesat the MAV.The MAV President and board members received the following annual allowance in 2002/03:President $36,000 | Deputy President $7,500 | Board members $5,000 | TOTAL PAID $98,500The expense reimbursement policy established by the MAV Board in March 2000 only provided forreimbursement of rural board members. Following its election, the Board considered this issue andagreed that this policy needed to be amended to encompass metropolitan board members as well asrural members. The decision was made on equity grounds given the MAV Board’s new regionalrepresentation role, the amount of travel required for some, and the fact that the MAV is now based inMelbourne which means that board members incur parking expenses to attend meetings.Amounts claimed by board members in 2002/03 are as follows:

MAV membership, receive feedback on the MAV’s performance over the past 12 months, and provideinput into the workplan for the next 12 months. The outcomes of these roadshows were presented to theState Council meeting in May 2003.

Cr Sam Alessi $465.50Cr John Chandler -Cr Julie Eisenbise -

Cr Darryl Argall $9,833.97Cr Jenny Dale $2,166.80Cr Rod Fyffe $4,555.20

Cr Don Cameron# -Cr Geoff Davey# -Cr Geoff Lake -

The Board will continue to monitor the effectiveness of this process and, where necessary, makeadjustments to ensure that MAV planning continues to be representative and consultative.

Minimising risk with responsible management >The MAV has continued tostrengthen its approach to risk management for both the MAV’s operations and MAV Insurance.The MAV Board has delegated to the MAV Insurance Committee the responsibility for overseeing theinsurance business. This independently chaired committee comprises local government and industry

Cr Brad Matheson* $10,548.77 Cr Max O’Shea $4,652.92 Cr Chris Papas $1,379.80Cr Rae Perry $2,545.06 Cr Jim Ryan -# Note: Cr Cameron term on the MAV Board was from July 2002 to March 2003. Cr Davey ’s term commenced in April 2003.The above expenses relate to Board members over the 2002/03 financial year. The total amount paid does not correlate to the allowance and expense payments figure in the financialstatements as this includes some payments made to former Board members who lodged expense claims after 30 June 2002, and some expenses are charged to other areas within theMAV accounts. Payments were either made direct to Board members, to their council in terms of travel, or directly to the hotel in relation to accommodation. It should also be notedthat some Board members have lodged claims after 30 June 2003 details of which will be reflected in the 2003/04 financials.* Cr Matheson’s expenses include mobile phone costs but not motor vehicle.

12 experts as well as MAV Board representatives. It meets every two months under clearly defined rules anddelegations. The minutes of these meetings are tabled at Board meetings, and contain recommendationsfor Board approval where appropriate.The MAV rules require that the State Council, at its annual meeting, appoint an external auditor for boththe MAV and MAV Insurance. At present PKF Chartered Accountants and Business Advisers have beenappointed to this role. At its meeting in March 2003, the Board considered the appointment of anindependent audit committee for the MAV, and decided to put this issue to State Council fordetermination. At the May 2003 meeting of the State Council, the proposition was supported. The Boardhas since agreed to the terms of reference for the committee which is to be established in 2003/04.

Corporate Governance MAV Annual Report 2003

MAV awaits FOI test case ruling >The MAV received legal advice that it is not an‘agency’ within the definitions listed in section 5 of the Freedom of Information Act 1982. Consequently,the MAV maintains it is not subject to the requirements of this legislation. In May 2003, this position wastested in the Supreme Court. The MAV is awaiting the outcome with respect to this case.

Taking privacy of information seriously >The MAV worked extensively with councilsto assist them in implementing the requirements of the Information Privacy Act 2000. The MAV supports thekey principles outlined in the information privacy legislation, and has established a policy position toimplement these principles within the organisation. The MAV has adopted an information privacy policyand procedure which detail how the MAV will manage documents that contain personal information.

Corporate Governance MAV Annual Report 2003

13

MAV People Organisation Structure > As at June 2003

MAV STATECOUNCIL

MAVMANAGEMENT

Emily Seymour Viv Shepherdson Debbie Smith Simon Halloway Clare Hargreaves

Kerry YuBA Hons, M Public Policyand Management

Debbie SmithCorporateCommunications

BOARD

Rob SpenceGDip Accountingand Finance

Gavin MahoneyCert RetailSenior Adviser

Christine JonesExecutive Assistantto CEO

Senior Policy Adviser Chief Executive Officer to CEO

Troy Edwards Clare Hargreaves Peter Lyon Matthew Evans Trevor Koops Alison Standish Sarah JonesBAppSci (Urban Planning) BA, Dip Social Studies BSc, B Social Sciences BAppSci(Planning) BA (Economics and Dip Teach, GDip ESL, BBus (Local Government)

Naree Atkinson Kerry Yu Simon Morgan Jodie Delaney May Yin Posarnig Rosemary Hancock MASenior Adviser –

Senior Adviser -Social Policy

Senior Adviser -Environment

Senior Adviser -Planning

Politics)Senior Economist

GDip Bus MgtProject Manager

Manager - Corporateand Secretariat

Public Policy

Simon HollowayBCom, GDip Env SciPolicy Officer andExec Officer -Timber Towns

Heath Downie casBSocSci(Env), BAppSci(Planning)Planning Officer

Lyn Clark p/tBBSc, GDip Appl PsychProfessionalDevelopmentSupport Officer

Penny Wilson p/tBA Hons, Dip Bus(Hosp Mgt)Strategic Policy Adviser

John Ryan Tania Struzina Christine Jones Matthew Evans Trevor Koops Rosemary Hancockp/t

Vicky Mavros p/tProject Officer

May Yin PosarnigAccounting Support

BA, MBAPolicy Officer

FUNDEDPOSITIONS

CONTRACTORS/CONSULTANTS

Officer

VacantDisability ProjectOfficer

John HennessyBCom, GDip Reg DevBusiness DevelopmentConsultant

Rod MummeryBScDatabaseAdministrator

Adrienne Stephens Allan Holmes Heath Downie Gavin Mahoney Jacquie White Peter Lyon Nina RogersBAppSci (Env Mgt)

Allan HolmesBCom, GDip Bus, ACA,

Pina SotiropoulosMember Services

BEnvMan HonsEnvironmentResource Officer

FAICDFinance and InsuranceConsultant

Officer

Adrienne Stephens Socom John RyanDip Ed, GDip HRMExecutive Officer -LG Buy RecycledAlliance

Communicationsand Media Support

CorporateSupport

Troy Edwards John Hennessy Alison Standish Sarah Jones Nina RogersTania StruzinaBALG Buy RecycledAlliance Resource

p/t Simon MorganBBusSenior Admin Officer

Officer

Jacquie WhiteBAppSci (Env Mgt)Project ManagerStormwater

Part time p/tCasual cas

Imogen Baghurst

14Rod Mummery Pina Sotiropoulos Vicky Mavros Project

Emily SeymourBappSci(Env Mgt)BSci(Hons)

15Project OfficerStormwater Project

Naree AtkinsonB SciEnvironment

Staff missing: Lyn Clark and Penny WilsonStaff who joined the MAV after 30 June 2003:

Jodie Delany, Imogen Baghurst andViv Shepherdson

MAV People MAV Annual Report 2003 Organisational Structure MAV Annual Report 2003

Environment

Leading the way on the environment At the end of the day,it’s in everyone’s interests to ensure we look after our environment and manageour resources in the best way possible. Sustainable development, waste andwater management, recycling and natural resource management…all fall intothe realm of local government and therefore, the MAV.

16

Environment MAV Annual Report 2003 Environment MAV Annual Report 2003

17

19

Environment Sector DevelopmentFutureDirections

> The MAV will workwith the AustralianLocal GovernmentAssociation (ALGA)to review localgovernment activitiesunder the NationalPackaging Covenant(NPC).

> The MAV is indiscussions with theState Governmentwith relation to asustainability accordproposal betweenState and localgovernments.

> The MAV will providea local governmentresponse to the StateGovernment’s GreenPaper on water reform.

> Green purchasingwill be promotedfurther with theestablishment of theNational Eco-Buyalliance, a network ofstate local governmentassociations.

> The MAV has beenfunded to develop aguide for councillorsand training programson native vegetationmanagement.

> In partnership with theSustainable EnergyAuthority of Victoria,the MAV will developa public lightingaction plan.

New waste management guidelines >During the year, the MAV advocated toachieve realistic timeframes to introduce new WorkCover guidelines for the manual handling of kerbside wasteand recycling. The MAV also made a submission to the State Government’s Towards Zero Waste Strategy.

Networking for sustainability >This year the MAV Local Sustainability Partnership,which represents 22 Victorian councils, hosted a report-back forum from the World Summit onSustainable Development (WSS). Over 120 councillors and local government representatives discussedthe implications for local government and set an agenda that integrates social and ecologicalsustainability. Following this event, the MAV began work on a sustainability accord proposal betweenthe State Government and councils.

Communicating on the environment >The MAV continues to maintain effectivecommunication with member councils on a range of important environment programs and sustainabilityinitiatives through monthly E-bulletins, a quarterly newsletter and the MAV website.Following sustained advocacy by the MAV and local government associations across Australia, theFederal Government agreed to provide continued funding for the position of an Environment ResourceOfficer (ERO) in Victoria.

Integrating catchment planning >In March 2003, the MAV released a CD entitledIntegrating Local Land Use Planning and Regional Catchment Planning. This was the culmination of a two-halfyear project led by the MAV, the Victorian Catchment Management Council, and 10 CMAs to promoteconsistent interpretation of regional catchment strategies in municipal planning schemes.

Focus on native vegetation management >The MAV received funding from theFederal Government’s National Action Plan (NAP) for Salinity and Water Quality to study the capacity of localgovernment to deliver key elements of the sustainable Natural Resources Management (NRM) project. Thisstudy will particularly focus on native vegetation management on private land and roadsides.

Identifying weed management priorities >In October 2002, the MAVconducted a local government weed management survey. The subsequent report identified activities andpriorities, as well as issues affecting councils’ capacity to undertake weed management.

Stormwater initiatives >A grant from the Environment Protection Authority’s VictoriaStormwater Action Program allowed the MAV and the Stormwater Industry Association of Victoria todevelop a tailored capacity-building program for local government and industry professionals. During theyear, the Clearwater Program conducted market research, oversaw the delivery of resources, educationand training to councils across Victoria, facilitated information exchange, and fostered communicationand partnerships in urban stormwater management.One of the program’s significant achievements was the launch of the Clearwater Information Exchange.This web-based resource for local government and industry professionals (www.clearwater.asn.au)centralises current research, resources, case studies, and stormwater management news and events.

Boost for buying green >In 2002, the MAV secured additional funding from theDepartment of Sustainability and the Environment (DSE) Greenhouse Strategy to expand the LocalGovernment Buy Recycled Alliance (LGBRA) into the MAV/ECO Recycle ECO-Buy program. In addition toits executive officer, ECO-Buy now has a resource officer to support councils in purchasing recycled,greenhouse-friendly, water-saving and non-toxic products. Local government expenditure on recycledproducts almost tripled from $5.9 million in 2001 to $15.3 million in 2002.In May 2003, MAV and ECO-Buy hosted Australia’s first national Buying Green conference. This two-day

18

event attracted over 200 national delegates from all tiers of government, industry and the community sector.

Supporting wise water management >In partnership with the EPA, municipalcouncils and other stakeholders, the MAV developed a CD resource entitled Domestic WastewaterManagement – A Planning Guide for Local Government. This resource will assist councils to prepare andimplement strategic domestic wastewater management plans.In July 2003, the MAV and Melbourne Water launched the Sustainable Water Use Plan program to assistcouncils in metropolitan Melbourne improve water conservation. Already leaders in efficient water management,local government will receive funding from Melbourne Water to develop sustainable water use plans.

Other activities> 2002 saw the release of the MAV Environment Management Survey report which looks at the major

environmental management priorities, issues, and activities in local government.> MAV continued to provide secretariat support to both the Association of Bayside Municipalities (ABM)

and Timber Towns Victoria (TTV).Environment MAV Annual Report 2003

Strength through cooperation The MAV fosters a sector-wide culture of continuous improvement through cooperation, supportand recognition. The result is a vibrant, dynamic sector whose combinedstrength and energy work to the benefit of all.

Sector Development MAV Annual Report 2003

Sector Development General ProjectsFutureDirections

> During the comingyear, the MAV willwork towards theestablishment of alocal governmentgraduate program by2004, with placementsto commence in 2005.

> The MAV is nowembarking on thedevelopment ofLGOS2, a 10 yearIT/online strategy forthe sector.

MAV conference attracts unprecedented interest >October 2002’sconference was conducted as a two-day forum with a dual focus on national and local issues. Mayors,councillors, CEOs and directors from the local government sector joined representatives from all the majorpolitical parties, including senior ministers and party leaders, to hear and partake in discussions led by animpressive range of speakers from the business and corporate sector. The conference culminated withanother hugely successful annual dinner, this year attended by over 385 people.

MAV recognises excellence in annual reporting >Again sponsored by theInstitute of Chartered Accountants in Australia (ICAA), this year’s MAV Annual Report Awards wereannounced at the May meeting of State Council. Now in their third year, the awards recognise excellencein the content, clarity and presentation of information in local government annual reports.The judging panel for the 2001/02 awards included representatives from accounting firms Deloitte ToucheTohmatsu and Day Neilson, the Victorian Auditor General's Office, Mau Design, the Local Governmentand Regional Services Division, Australasian Reporting Awards Inc, and various council administrations.

> Best Annual Report 2001/2002 Knox City Council> Best Annual Report (Under 20,000 Population) Towong Shire Council> Best Reporting On Performance Glen Eira City Council and Knox City Council> Best Reporting On Corporate Governance Knox City Council> Best Financial Overview Knox City Council> Best Reporting On Best Value Stonnington City Council

Premier awards councils for continuous improvement >The Premier’sAward for Continuous Improvement in Local Government was announced at the MAV Annual Conferencein October 2002.

>Category A (Whole-of-Council) Wodonga Rural City Council | Campaspe Shire Council>Category B (Part-of-Council) Brimbank City Council | Wyndham City Council

Local Government Online Service Project pays dividends >Steady progresswas achieved during the year on the Local Government Online Service Project. With the planning phasecomplete, and implementation expected to be finalised by mid-2003, significant strides have been made ineach of the individual project areas.

TelecommunicationGIS

a contribution. Of equal importance is the progress made across theeJourney

Planning of Victorian Sharedonline Local services

Government

Working to improve indigenous policy and projects >The MAV supportsreconciliation with Australia's traditional owners and recognises that local government is ideally placed –through its strong community links and local representation – to provide leadership in strengtheningrelationships between non-Indigenous and Indigenous Australians.Throughout 2002/03 the MAV provided a range of resources to assist councils in developing structures,planning processes and services that are relevant and accessible to Indigenous people.This included the continued resourcing and coordination of two important committees, the IndigenousInteragency Coordination Committee and the MAV Local Government Indigenous Network.Another key project during 2003 was the development of a database to assist councils with policydevelopment ideas.

Promoting good governance principles and practice >The MAV continued toprovide advice and support to a number of councils on meeting procedures, pecuniary interest,performance appraisals for CEOs, and other issues central to good governance.As a founding member of the Good Governance Advisory Group (GGAG), the MAV is committed toimproving the standard of democratic governance in Victoria. A recent focus of the GGAG is thedevelopment of the Good Governance Guide for senior council officers and councillors. To be published inthe second half of 2003, the guide includes a comprehensive overview of good governance concepts, andprovides case studies illustrating good governance practices in the local government sector.

Women represented in every council election for the first time >As anactive and committed member of the Women’s Participation in Local Government Coalition (WPILGC), theMAV encourages and supports women from a wide range of backgrounds to participate in localgovernment and take up community leadership positions.Important achievements for the year included an update of the Victorian Local Government Women’sCharter, the production of Women Get Elected kits, the delivery of Women Get Elected training workshops,and coordination of a research project into attrition rates among women councillors following the March2003 elections.This year, the hard work of the Strengthening Communities through Women’s Participation (SCWP) – aproject jointly managed by the MAV and the Victorian Local Governance Association (VLGA) – was richlyrewarded. In comparison with elections in 2000, the elections held in March 2003 recorded a 60% increasein women candidates and a 28.5% increase in women elected. Also, for the first time ever, women stood forelection in each of the 54 councils holding elections in the state.The pilot project which targeted women in Cardinia and Shepparton resulted in an increase in womencandidates, women represented in each ward, and women elected across each of the two councils.

Bringing a national focus to local government >The MAV was again heavilyinvolved in a range of national policy issues through the Australian Local Government Association (ALGA).

Challenges> On behalf of its

membership, the MAVfaces the challengeof convincing theState Governmentto undertake theconsultative processesnecessary for reassesingthe elements to beincluded in theLocal Government(Update) Bill.

FutureDirections

>The MAV will beplacing increasedfocus on providingadvice and supportto the ALGA incampaigns addressingfinance andtransport funding.

eProcurement Paymentsonline

InterconnectedLocal Government

agreements, and importantly, recognition and acceptance of Victorianlocal government as an innovator in eGovernment development at bothstate and federal levels.

As the official ALGA representative, the MAV participated in the Development Assessment Forum, the Roadsto Recovery program review, the national Auslink working group, and the Federal Government’s childcarebroadband review.

The Local Government Online Service (LGOS) project is currently showing a benefit/cost ratio of 5:1.By project end, $25 million of value will have been delivered to the local government sector for aninvestment of $5.77 million by the Federal Government.

MAV promotes career opportunities in local government >The MAV iscommitted to ensuring the future survival and vitality of local government. With many councils reportingdifficulties in attracting and retaining staff, the MAV concentrated its efforts on promoting the localgovernment sector as a rewarding career and a potential employer of young people.With this in mind, the MAV contacted careers counsellors at Victorian universities to bring them up to date

Lobbying continues on Local Government (Update) Bill >As a result of thestate election in 2002, the passage of the Local Government (Update) Bill has been deferred until the 2003spring session of parliament.The MAV State Council passed a resolution at its May 2003 meeting calling on the government to addressa range of other crucial elements within the legislation, including an update of the processes for council andbudget planning. At that time, a discussion paper was also prepared by the MAV which sought commentsfrom the sector on these important issues.While the MAV’s position on special council rates and charges has received overwhelming support

20on the range of employment opportunities within the local government sector. In return, we gained a clearunderstanding of the initiatives being offered by the universities and were then able to pass thisinformation on to councils to encourage their involvement.A new employment section was created on the MAV website featuring an introduction to local governmentand detailing the employment opportunities available throughout the sector.Promotional materials and resources have been developed for councils to use and distribute locally,

from councils, opinion on a preferred date for concurrent elections has been varied, with no definiteconsensus reached.The MAV Management Board, however, opted for March as the preferred month, with 2006 its choice forthe first aligned election. Since that decision was established by the board, the government announced itsintention to include a provision in the Bill for four-year council terms, nominating November as the monthfor concurrent elections.

21

providing information on the range of jobs available. This information is now available on LGNet,providing councils with easily accessible employment and contact information.

Take up by councils in the key rural and regional areas, as well as theWeb & interface group, has been particularly strong, with all 79 councils making

intranet

sector in harnessing skills, software development, savings from aggregatedpurchasing, development of whole-of-sector specifications and legal

Sector Development MAV Annual Report 2003

General Projects MAV Annual Report 2003

General Projects

Representation across the board Flexibility, professionalismand a coordinated approach are the hallmarks of MAV’s work within the localgovernment sector and across state and federal boundaries. Whatever theissue, regardless of the difficulties, we are ready and able to put the planning,the policies and the processes in place to achieve sensible, successful solutions.

22

General Projects MAV Annual Report 2003 General Projects MAV Annual Report 2003

23

Professional DevelopmentKeeping council election candidates informed >In preparation for the March2003 council elections, the MAV held 19 candidate information sessions around the state. These sessions,which were very well attended, provided an excellent introduction to local government, the electoralprocesses, and the role of the councillor. Specific information presented by a range of speakers, not onlyoffered different perspectives on local government but ultimately ensured prospective candidates couldmake informed decisions about pursuing candidature for local government.Guest speakers – including experienced councillors, CEOs, MAV staff and board members, as wellas representatives from the Victorian Electoral Commission – provided a range of perspectives onlocal government.

Supporting councillor induction programs >Following the council elections inMarch 2003, the MAV expanded its induction programs for newly elected and re-elected councillors fromtwo to six. Held in metropolitan and rural locations across the state, these programs complemented thoserun by individual councils. Sessions covered governance responsibilities, councillor relationships with eachother and with the CEO, risk management, financial management, the corporate planning process, andmeeting procedures.Prior to the March elections, the MAV also facilitated a workshop to encourage and assist council officers toorganise their own induction programs. This workshop provided opportunities to share ideas about theprocedures and strategies used to support councillors after elections.

Councillor Development Weekend a great success >In July 2003 electedrepresentatives from 58 councils across Victoria came together at the Cumberland Resort in Lorne for thestate’s foremost professional development weekend. This year, 163 newly elected and re-elected councillorsand their families attended. This represents an increase of 55% on last year, making the 2003 MAVCouncillor Development Weekend the biggest since it began in 2000.Designed to stimulate and challenge councillors as community leaders, this weekend also provided opportunitiesto network in a focussed but relaxed environment, away from the pressure of council responsibilities.International guest, Gerry Stoker, Professor of Local Government from Manchester University (UK), addressedcouncillors on the role of local government in fostering community spirit and civic culture. Other speakersincluded the Hon John Button, the Hon Candy Broad MP (Local Government Minister), Dr Rob Moodie(Chief Executive Officer of VicHealth) and Dr Sharon Goldfeld (Centre for Community Child Health).A series of workshops provided further learning opportunities in presentation skills, financial management,creating healthier communities, political lobbying and public policy development.

FutureDirections

> Over the next 12months, the MAV willexpand the professionaldevelopment programto cater for newlyelected and re-electedcouncillors.

> The MAV will furtherdevelop programsdesigned to assist newcouncillors in their first12 months.

> Programs designedspecifically to supportyoung councillorswill also be a focusnext year.

Everyone’s a winner Ensuring that councillors have the skills andknowledge to make informed and effective decisions on a wide range of issuesdrives the MAV’s professional development program. Whether newly elected,re-elected or considering candidature, all councillors now have access to highquality programs that enhance their abilities to govern.

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Professional Development MAV Annual Report 2003

Flexible training courses developed >As

part of the

MAV’s

ongoing

efforts to

providerelevant and flexible training for councillors, we developed a number of

courses that can either be deliveredin-house at individual councils or externally with a cluster of councils.This year, the MAV also provided assistance to councils with the planning and delivery of a coordinated12-month program of professional development for their councillors.

MAV fellowship awarded to Port Phillip councillor >The Telstra/MAV LocalGovernment Fellowship gives a councillor the opportunity to undertake international research on an issue ofsignificance to the local government sector. Recipients of the fellowship receive a $10,000 study grant forshort-term overseas travel, accommodation, and associated expenses.The 2002 winner, Cr Liz Johnstone from Port Phillip City Council, travelled to England to research bestpractice examples of how councils can proactively turn around negative public perceptions of government.Councillor Johnstone visited the City of Camden (voted UK Council of the Year) to see how its complaintshandling process is used to improve community relations.

Professional Development MAV Annual Report 2003

25

Social PolicyNew partnership protocol closes gap >Signed in October 2002, the partnershipprotocol agreement marks a significant change in the MAV’s relationship with the Department of HumanServices (DHS). This agreement recognises the complementary roles played by DHS and local government inhealth, housing, aged care and community services. It also provides the vehicle for negotiating commonapproaches to planning, policy development and resource allocation in specific areas.

High-level input on aged care and positive ageing >This year, the

MAVcontributed to aged care forums at a national level. In March 2003, we made a presentation to the Houseof Representatives Ageing Inquiry on future demand management, and funding for home-based communitycare services. We also participated in the Community Care Review’s national summit.

More funding for Home and Community Care programs >As a directresult of MAV lobbying, the State Government announced Home and Community Care (HACC) planningand funding reforms in April 2003. These reforms not only delivered increased funding to councils butalso recognised their crucial role in the HACC area. The establishment of a HACC program partnership willalso allow councils and the State Government to work together to address funding issues and designpolicy directions.

Frontline advocacy for public libraries >Local government’s role in

operatingand funding public libraries has been an important focus for the MAV. In 2002, we contributed to theestablishment of the Ministerial Advisory Council (MAC) on public libraries, and made submissions to both

Challenges> Public library reforms

foreshadowed in2001/02 have hadlimited impact todate. While MAVnegotiations werehampered by thecomplex structuralarrangements forpublic libraries, we willcontinue to lobby atsenior governmentlevels to advance theposition of councilsand develop apartnership agreement.

Future

Looking after our most important resource As the frontlineprovider of fundamental community services – from infancy to old age – localgovernment plays a crucial role in the day-to-day running of our society. Inrecognition of this, the MAV ensures councils have a strong voice in social policydevelopment, service planning, and funding allocation.

26

Social Policy MAV Annual Report 2003

the Federal Government’s online inquiry and the State Government’s review of funding and serviceagreements. The MAV has also been invited to nominate a representative for the proposed State LibraryBoard’s Advisory Committee on Public Libraries.

Improved planning for health >Throughout the year,

the MAV continued to work

withthe DHS Public Health Division to facilitate council involvement in municipal public health planning. We alsoworked closely with VicHealth to gain strategic support for local government, and ensure that investment inthe sector continues to grow.A large number of councils participated in VicHealth training programs based on a resource package

developed by MAV and VicHealth.

Increased funding for children’s services >MAV’s continued efforts to promoteearly childhood service delivery resulted in State Government support to develop the Municipal Early YearsPlans (MEYPs).As a result of sustained MAV lobbying, the State Government also allocated an additional $17 million overthe next four years to the Maternal and Child Health Service (M&CHS). The Government allocated a further$16 million capital funding for the development of integrated children’s service hubs and preschools.

Childcare workers win wage increase >The MAV, along with Victorian EmployersChamber of Commerce and Industry (VECCI), was involved in defending a wage claim commenced by theAustralian Services Union (ASU) on behalf of municipal childcare workers. The full bench of the AustralianIndustrial Relations Commission finally settled the case through conciliation in June 2003. The result was theinclusion of childcare workers into the mainstream band of the Local Authorities Award, with workersreceiving wage increases of up to 15%.

Funding for study into immunisation costs >The MAV successfully securedagreement from the DHS to fund a detailed study into the costs incurred by councils providing immunisationservices to the community.As the cost for providing these services far outweighs State Government subsidies, this study will help localgovernment mount a strong case to gain more equitable funding for immunisation.Other activities

> The MAV received three-year funding from DHS to continue working with local government to developpolicies, planning and practices which promote access and inclusion for people with disabilities.

> MAV membership of the Ministerial Housing Council provided further opportunities to advance the role oflocal government, particularly in relation to the issue of affordable housing.

Social Policy MAV Annual Report 2003

Directions> Increased funding for

libraries will be thefocus of a majorcampaign in thecoming year.

> The Home andCommunity Care(HACC) programpartnership agreementwill be signed off withthe State Governmentand Victorian councils.

> The MAV will preparea framework fordeveloping MunicipalEarly Years Plans(MEYPs) that formalisethe role and mandateof local government inthis area.

> The MAV will considerdeveloping municipalpositive ageing plansin conjunction withlocal and StateGovernment.

> The MCH ServiceImprovement projectwill be completed androlled out in 2003/04.

27

Economic & Finance

The stakes have never been higher At no time have theefforts of the MAV been more important for the financial security and economicsustainability of all Victorians. We remain alert to our pivotal role in ensuringlocal government receives the funds needed to deliver vital services, whileprotecting rate payers from the cost burden.

28

Economic & Finance MAV Annual Report 2003 Economic & Finance MAV Annual Report 2003

29

Economic & Finance Infrastructure & Asset Management

Challenges> The ongoing challenge

for the MAV will be topush for a growingand sustainablerevenue stream forlocal government, andto close the gapbetween the level of

Sector awaits final report of the national Cost Shifting Inquiry >During the past year, a major focus for the MAV was its contribution to the Federal Government’s costshifting inquiry.After a period of extensive consultation, the MAV produced two submissions to the inquiry. Thesesubmissions effectively exposed the structural and policy impediments faced by local government indeveloping a stable and growing revenue base, relative to its roles and responsibilities. They alsohighlighted the problems inherent in a property tax system which has delivered only limited revenuegrowth – a system which has proven to be inadequate in covering the cost of high expenditure items likeroad and infrastrucutre funding and the ever-increasing people-based services.

public taxation raisedby councils, and thelevel of publicspending by councils.

> Despite successfulnegotiations forsuperannuation liabilitypayment options, anumber of issuesconcerning WorkCoverand contributions taxremain unresolved.

FutureDirections

> The MAV has engagedPricewaterhouseCoopers to conducta feasibility study intoestablishing anaggregated andcentral borrowingfacility for Victorianlocal government.The study is due tobe completed inlate 2003.

> We will continueto lobby the StateGovernment forreform of thecurrent system oflocal governmentinfringement collection.

The MAV endorses the current process of revenue sharing – the Financial Assistants Grants System (FAGS)– as the appropriate method to transfer tax from Federal to local government. The MAV believes theproblem lies not with the process itself, but with the inadequate quantum of funds available. The obviousway of redressing this is to link the national quantum of FAGS to an appropriate growth mechanism, andto develop a new inter-governmental agreement which addresses the issue of tax transfer.The MAV is confident that its submissions will be considered in the inquiry’s forthcoming report, and looksforward to working further with other levels of government to achieve mutually acceptable outcomes.

Improved state budget outcomes for local government >The strong andproactive relationship the MAV has developed with the State Government and Department of Human Services(DHS) in the areas of home and community care (HACC) and maternal and child health services (M&CHS)has led to positive state budget outcomes this financial year. These include an additional $69 million over fouryears for HACC (with $12 million to be allocated in 2003/04) and an additional $17 million over four yearsfor M&CHS (with $2.3 million in 2003/04). Importantly, the additional M&CHS funding acknowledges anincrease in the unit cost of M&CHS provision – a direct result of MAV representation.Other key state budget outcomes include $5.6 million in specific funding for the implementation ofMelbourne 2030, and $5.1 million over four years to improve local library book stocks.

Working to reduce superannuation liability >In late 2002, an actuarial reviewof funds in the Local Authorities Superannuation (LAS) Defined Benefits Scheme uncovered a shortfall andliability of $114 million. Following this revelation, the MAV successfully negotiated three different paymentoptions for councils with LAS. Communication has of course been vital, and the MAV has continued tokeep councils up to date with developments and options. We are confident that the appointment of MAVCEO, Rob Spence, to the LAS Board will further strengthen communication between LAS, the MAV andlocal government.

MAV highlights inefficiencies of PERIN fee recovery system >InSeptember 2002, an MAV survey of councils found that the current system for collecting outstandinginfringements, in particular the PERIN Court System, is ineffective. Low rates of recovery, and therequirement for local government to pay up-front lodgement fees to the PERIN Court, are having anegative impact on the finances of a number of councils.The MAV has continued to lobby the government to take urgent action to improve the system. Despite adisappointing response from the Attorney General, the MAV will continue to press for reform. In theinterim, we have called for expressions of interest for third party collection, with a view to improving thelevel of recovery for councils and reducing the number of infringements referred to PERIN.Other activities

> The MAV presented a submission to the Senate inquiry on the effects of the Australian taxation system.> We took on management of a feasibility study into the establishment of a centralised borrowing authority.> A cost analysis into meals on wheels services was carried out.> The MAV provided input into discussions around the funding system for Victoria’s fire-fighting services and

made a submission to the inquiry renewing the fire services levy.

Making the most of our community assets The MAV’srole in helping local government improve the way it manages communityassets is crucial. Because as custodians of these precious assets – from thepools we swim in, to the roads we travel on, and the halls we gather in –councils must ensure that facilities are maintained at the highest levels.

30 Economic & Finance MAV Annual Report 2003

Infrastructure & Asset Management MAV Annual Report 2003 31

Infrastructure & Asset Management PlanningFutureDirections

> In partnership withAustralian LocalGovernmentAssociation (ALGA),the MAV will lobby theFederal Governmentfor a commitment toaddress funding levelsfor local roads.

> The MAV will work forthe adoption andpromotion of thereform agenda of theAuslink proposal.

> The MAV endorses theRoads to Recoveryprogram directionsand will also work toensure a healthy futurefor the programbeyond 2004/05.

32

Road and transport funding remains a top priority >In late 2002, theFederal Government announced a review into Australia’s national land transport, AusLink. Following therelease of the Green Paper, the MAV engaged in extensive consultation with its members and formulateda sector-wide position on AusLink.While the MAV strongly supports the need for an integrated approach to land transport planning andfunding, we believe the success of AusLink depends on the Federal Government’s ongoing commitmentto provide increased funding. We also believe the maintenance and renewal of existing landinfrastructure should remain a priority, and that local government must be treated as an equal partnerin transport planning.The MAV was represented on a national AusLink working group, involving all states and the AustralianLocal Government Association (ALGA). An AusLink White Paper is expected in late 2003, as is a newinter-governmental agreement which is more than likely to include local government as a signatory.As part of a national evaluation of the Roads to Recovery program, the MAV worked with the ALGA andthe Department of Transport and Regional Services (DOTARS) to prepare a sector-wide response. TheMAV believes the Federal Government must protect existing funding levels for roads under this program,and identify funding to address the significant backlog for our local road network.

Input into new Road Management Bill >Following the abolition of nonfeasanceimmunity by the 2001 High Court decision, the MAV has worked cooperatively with the State Governmenton a range of strategies and programs which assists local government to meet its responsibilities asroad managers.In the past year, the MAV worked closely with VicRoads to ensure the interests of local government arerecognised in the development of the new Road Management Bill. This Bill requires councils to haveeffective road management processes and plans in place by 1 July 2004.Also in conjunction with VicRoads, the MAV facilitated seven regional workshops to discuss the Bill, andits links to the Step Asset Management Improvement program. These workshops were extremelysuccessful, with over 350 people attending.The MAV was heavily involved in the Road Openings by Utilities aspect of the Bill, and has established aworking group to develop a draft code of practice.

Stepping up asset management >In late 2002, the MAV launched the Step AssetManagement Mentoring program. This program provides councils with a framework of best practicewhich not only ensures ongoing improvement of asset management, but is also expected to produceacceptable sector-wide outcomes over the next three years.This program allows local governments to assess their current asset management performance in a rangeof areas and then compare it to the best practice framework.Seventy-five councils are currently involved in the Step program making it an excellent example of awhole-of-sector strategy that accelerates local government’s ability to demonstrate high levels ofcompetence as asset managers.

Other activities> MAV facilitation has led to the involvement of several councils in the Heavy Vehicles on Local Roads pilot

project. Run by the National Road Transport Commission (NRTC), this project aims to develop a set ofguidelines for local government to assess road access applications by transport operators.

> The National Road Transport Commission’s (NRTC) recently formed a working group to plan andimplement performance-based standards (PBS). This represents another opportunity for local governmentinput. Sixteen safety performance-based standards have already been identified, with six being linked todifferent road classes and road networks. Four classes of PBS vehicles will now be developed to meet thecorresponding performance levels of each of the PBS measures. Draft guidelines have also been drawn upto classify roads into four types to match the proposed four classes of PBS vehicles.

MAV secures support for implementation of Melbourne 2030 >In October2002, the State Government released Melbourne 2030, a framework to guide the city’s growth over thenext three decades. The MAV was successful in securing the government’s commitment to a cooperativepartnership with the local government sector and importantly, $5.6 million in funding over three years toassist councils to implement the strategy.The MAV convened forums for senior planning officers in December 2002, and for mayors and councillorsin January 2003. Using feedback from the forums, the MAV lodged a successful submission to theDepartment of Sustainability and Environment (DSE) to assist councils with implementation.

New planning guide publications launched >Now in its third year, the ContinuousImprovement Program again delivered on a number of fronts. In addition to forums and workshops, publicationsand guidelines produced during the year include:

> Planning Pre-Lodgement Certification> Writing Planning Permits> Planning in Victoria: A Councillors’ Guide> Model Planning Delegation Guidelines

Electronic lodgement streamlines application processes >This year, theMAV has been actively involved in the Streamlined Planning through Electronic Applications and Referrals(SPEAR) pilot project, designed to improve and streamline access, management and delivery of land-relatedinformation and transactions in the planning approval process.

Reaching out to rural councils >In June 2003, the MAV contributed to a review of ruralzones. In addition to hosting a number of forums, we successfully lobbied the State Government for an extraround of consultation.The Gippsland Planning Scheme Audits pilot project was jointly commissioned by the MAV, the DSE, andfour Gippsland shire councils. The methodology is now being used as the model for planning scheme‘health checks’ in other municipalities.

Broadband delivered to outer Melbourne >In August 2003, the municipalities ofMelton, Wyndham, Whittlesea, Cardinia and Casey – together with the MAV – collaborated on the WiredDevelopment Project. This cooperative venture will deliver coordinated, early provision of broadbandinfrastructure and services to new housing estates in Melbourne's fringe suburbs.

Planning system reform initiatives >Over the past year, the MAV has been active inimplementing planning system reforms. These included establishing more effective controls for live music,domestic satellite dishes, and providing for bicycle facilities in new developments.After extensive consultation, the MAV made submissions to both the panel reviewing the environmentalimpact assessment system and the Minister’s review of Planning Panels Victoria. In association with thePlanning Decisions Reference Group, the MAV lobbied the State Government for legislative change to thePlanning and Environment Act. The MAV was also active in the Sustainability for the Built Environment Projectwhich examined the inclusion of sustainability principles in the planning approval system.

Sharing our experience and expertise >In collaboration with DSE, the

MAV hasdeveloped training programs providing local government planners with ongoing professional development.The MAV is a member of the Minister for Planning’s Education and Training Roundtable, and convenes twoworking groups reporting on planning competencies and the planning work environment.Together with the Royal Australian Institute of Architects (RAIA), the MAV participated in the Architects ExpertPanels pilot project. This involved two architects working on planning applications with officers in theBallarat, Boroondara, Hobsons Bay and Moonee Valley councils. This resulted in improved communicationbetween applicants, council planning staff and architects.The MAV also built a strong alliance with RMIT University’s Planning course, conducting lectures throughoutthe year, and participating in the RMIT Planning Work Placement program.

Forging links with key industry associations >Throughout the year, the MAV hasmet regularly with the Property Council of Australia, the Housing Industry Association and the Urban

FutureDirections

> The Model PlanningDelegation guidelinesdeveloped by the MAVwill continue to berefined and promotedin the coming year.

> Through representationon the Land ExchangeSteering Committee,the InterdepartmentalCommittee and theSPEAR SteeringCommittee, the MAVwill continue to workwith stakeholders toensure the first stage ofthe SPEAR pilot projectdelivers benefits in theplanning, building andsubdivision process,while supportingcurrent systems.

33

Development Institute of Australia. We also represent local government on the national DevelopmentAssessment Forum (DAF).

New planning bulletin distributed to councils >A new initiative has been thecreation of the quarterly MAV Planning Bulletin, circulated to council planners, councillors and others with astake in the Victorian planning system.

Infrastructure & Asset Management MAV Annual Report 2003 Planning MAV Annual Report 2003

Planning

Planning for tomorrow’s world today Challenging timescall for brave and decisive action – something the MAV not only promises, butdelivers. As planning becomes increasingly complex, the role of the MAV becomeseven more crucial in assisting local government to stay ahead of the game.

34

Planning MAV Annual Report 2003 Planning MAV Annual Report 2003

35

Financial OverviewIn accordance with the requirements of the Municipal Association Act 1907 and applicable accountingstandards, the economic activity of the Municipal Association of Victoria, the Municipal Officers FidelityGuarantee Fund and the Local Government Mutual Liability Insurance Scheme (Civic Mutual Plus) isreported to the members as an economic entity within the annual accounts. The combined activities areshown as the consolidated accounts and the Municipal Association of Victoria, being the parent entity, isshown separately as the MAV General Fund.The MAV represents local government in Victoria. One of the activities of the Association is to seek out,apply for, and administer grant funds for and on behalf of its members for the benefit of both localgovernment and the Victorian community. This activity of the Association has been accounted for as a

Although MAV Insurance and its insurance businesses are not subject to Australian Prudential RegulatoryAuthority (APRA) regulation, the MAV Insurance Committee of Management is committed to complying withthe ‘spirit’ of the APRA regulations and guidelines. One of the guidelines relates to capital adequacy andsolvency. The Committee has considered these matters and has sought actuarial advice regarding theminimum capital requirement for a mutual fund of this type. In addition, CMP is a mutual fund guaranteed byits members and as such the calculation of its capital adequacy is different from that of commercial insurers. Itis the view of the Committee that both Civic Mutual Plus and the Municipal Officers Fidelity Guarantee Fundhave adequate capital to secure their future operations and meet the solvency requirements for insurancebusinesses of this type.

segment and included at Note 20 in the financial statements. Civic Mutual Plus (CMP) Despite experiencing difficult times again in 2003, prudent management andThe MAV financial statements also include the activities of its insurance business, MAV Insurance, whichoperates the Municipal Officers Fidelity Guarantee Fund and the Local Government Mutual LiabilityInsurance Scheme (Civic Mutual Plus) for the benefit of councils and other local authorities. Bothinsurance activities are overseen by the Association’s Board of Management which acts through acommittee of management constituted by the Board (The MAV Insurance Committee of Management).The MAV Insurance Committee of Management provides strategic direction to the insurance business andoversees the contract management of the operational activities of both the Municipal Officers FidelityGuarantee Fund and Civic Mutual Plus. Jardine Lloyd Thompson Pty Ltd provides the claims and riskmanagement services under contract to the MAV.

MAV >The financial result for the MAV in 2003 has again been solid, achieving a small surplusfor the year of $12,685 (2002 $272,617) after the extraordinary expenditure incurred of $253,851(2002 nil) being the MAV’s share of the Local Authorities Superannuation (LAS) unfunded superannuationliability. The result, inclusive of grants received and expended for the 2003 year, was a $2.86 milliondeficit (2002 $2.82 million surplus) with net assets falling to $3.94 million (2002 $6.8 million).During the 2003 year the MAV received a further $3.1 million (2002 $7.9 million) in grants from bothfederal and state governments. It was also a year in which the MAV delivered on several significantprojects that had been funded by government grants. These grants are managed by the MAV for the local

improved performance by the fund’s members has seen an improvement in the year’s result.The fund is still dealing with:

> The failure of two insurance companies that directly impacted this year’s result> The abolition of the non-feasance defence for road authorities.

The Board of the Municipal Association of Victoria has considered these matters carefully, decided to take aconservative approach and fully provide for the potential losses from both these situations.After reducing the provision for potential losses attributable to the failure of the two insurance companiesand the abolition of the nonfeasance defence from $7.6 million in 2002 to $7.2 million as at 2003, theoperating surplus of Civic Mutual Plus for 2003 was $8.2 million (2002 deficit $1.64 million).The surplus of assets against liabilities at 30 June 2003 was $5.8 million (2002 deficit $2.4 million).Municipal Officers Fidelity Guarantee Fund During the 2003 year the Municipal Officers FidelityGuarantee Fund again experienced higher reinsurance premium payments (up 20%). The year also sawreduced claims and a lower level of payments for claims made.The operating surplus for the 2003 year was $95,581 (2002 deficit $98,481). The net asset position of thefund increased to $473,369 (2002 $377,790) with cash assets amounting to $520,681 (2002 $529,910).

government sector and Victorian communities. The deficit relating to grant activities was $2.62 million forthe year ended 30 June 2003, compared to a surplus in 2002 of $2.77 million.

Table of five-year financial performance >Consequently, as at 30 June 2003 the MAV had a commitment to expend $2.22 million (2002 $4.80 CONSOLIDATED MAV (INC. GRANTS) MAV (EXCL. GRANTS)

million) of grant funds on projects for the benefit of local government and Victorian communities.2003 was a year of project delivery, firm cost control and improved returns from the general insurance

Surplus(Deficit)

$‘000

NetAssets$‘000

Surplus(Deficit)

$‘000

NetAssets$‘000

Surplus(Deficit)

$‘000

NetAssets$‘000

arrangements. FINANCIAL YEARThe operating surplus of the consolidated entity was $5.45 million (2002 $1.08 million) after providing$253,851 for the MAV’s share of the LAS unfunded superannuation liability. This had the effect ofincreasing the net assets of the Association from $4.8 million in 2002 to $10.2 million this year.

MAV Insurance >The MAV Insurance business consists of Civic Mutual Plus and TheMunicipal Officers Fidelity Guarantee Fund. Under the Municipal Association Act 1907 the Association is

200320022001200019991998

5.451.08

(1.31)2.88

(1.24)(1.13)

10.234.783.695.002.123.34

(2.61)2.832.440.02

(0.50)(0.46)

3.946.803.971.54

1.52*2.02*

0.010.050.210.02

(0.50)(0.46)

1.561.751.831.54

1.52*2.02*

required to provide both public liability and fidelity insurance to local government and other statutoryauthorities.2003 was another difficult year for the insurance industry. With prudent financial management, MAVInsurance has navigated these difficult times to achieve a significantly improved outcome for the year.During the year, the MAV lobbied the State Government to provide a period of protection against the

*In 1998 and 1999 grants were included with MAV.

Grant monies received by the MAV to be applied for the benefitof local government >

abolition of the nonfeasance defence for road authorities. This will enable road authorities to implementstrategies which meet the new insurance conditions. This, together with the MAV’s lobbying for tort reform

AMOUNT OF GRANTSRECEIVED

GRANTS RECEIVED ASA PERCENTAGE OF TOTALMAV - GENERAL FUND REVENUE

in the area of public liability, has allowed Civic Mutual Plus to consolidate its position this year, andprovide a sound base for the future.The combined surplus for the insurance business for 2003 was $8.3 million (2002 deficit $1.7 million).

199819992000

570,441384,009

1,203,366

18.112.329.2

36 The net asset position at the end of 2003 was $6.3 million (2002 deficit $2.0 million). 200120022003

3,853,2337,914,8633,266,268

53.769.143.2 37

Financial Overview MAV Annual Report 2003 Financial Overview MAV Annual Report 2003

Information and CommunicationInformation and communications >The MAV regularly communicates with itscouncils and the wider public through a range of communication channels.

Human ResourcesThe success of the MAV hinges on the calibre of itspeople – both the staff we employ, and the contractors

The MAV Communications Unit works with all policy areas of the organisation to increase the profile oflocal government, lobby for a fairer deal for councils, and improve the media and public’s understandingof the roles and responsibilities of the sector.The role of the MAV Communications Unit

and consultants who work with us.Staff numbers as at 30 June each year

1997 1998 1999 2000 2001 2002STAFF NUMBERS

2003 Over the past five years, the MAV hasactively recruited staff with the skills

> Communicating and distributing information to councils in an effective, efficient and timely manner on allissues of importance to local government

> Improving and increasing the flow of information between the MAV and other stakeholders, statutoryauthorities and levels of government to ensure improved working relationships

> Liaising with the media in an open, transparent, responsive and timely manner to ensure more informedand balanced media coverage on significant issues affecting the sector.

Improving the way we communicate >A member survey carried out during2001/02 identified three main areas for improved communication. The review’s findings became a focusfor MAV activities. This year we concentrated on gaining a higher profile in the metropolitan, regionaland rural media, extending the range of internet-based communications, and significantly improving thequality of our print communications.

Raising local government’s media profile >Throughout the year, the MAVsuccessfully strengthened its relationships with key media commentators, including talkback radio hostsand journalists from suburban and metropolitan newspapers.These relationships, particularly with metropolitan daily newspaper journalists, have resulted in a morecooperative sharing of information, greater contribution to story ideas, and increased comment by theMAV in published articles.This has enabled the MAV to work more proactively with journalists to ensure requests to councils forinformation are specific and within reasonable timeframes, and that the information collected isconsistent, comparable and reported in a more informative context.

Full time 24 13 15 16 16 26 23Part time 2 1 1 1 0 4 4Temporary/Casual 2Vacant 1Total staff 26 14 16 17 16 30 30GENDERMale 7 6 5 4 6 11 11Female 19 8 11 13 10 19 18Vacant 1Total staff 26 14 16 17 16 30 30EFT* POSITIONSMAV - Filled 24.1 11.5 14.5 15.5 14 19.7 20.8MAV – Vacant 0 3 1 1 3 0 0MAV – Temp/Cas 0.6Total MAV Funded 24.1 14.5 15.5 16.5 17 19.7 21.4Grant Funded 1 2 1 2 2 8 4.3Grant - vacant 1Grant - casual 1Total EFT 25.1 16.5 16.5 18.5 19 27.7 27.7CATEGORIESManagement 1 1 1 1 1 1 1Policy 6 5 6 8 6 6.9 8Trainingand Operations 3 1 1 0 2 3.8 5.4Corporate 14.1 7.5 7.5 7.5 8 8 7Grant 1 2 1 2 2 8 6.3TOTAL EFTS 25.1 16.5 16.5 18.5 19 27.7 27.7These numbers include employees on funded grants *EFT – Equivalent full time

and experience to manage a diverseand complex range of policy issuesand projects. We have also continuedour practice of employing a numberof specialist consultants. This ensuresthat we have the most qualified andexperienced people working toachieve the best outcomes for theMAV and councils.Consolidatingstaff expertise >Although overall staff numbers haveremained stable from 2001/02 to2002/03, there have been a numberof staffing movements. A total of 1.7equivalent full-time employees,previously funded through grants, arenow working on policy and projectsfunded by the MAV. The MAV alsoadjusted consultancy arrangementsto bring communications and mediaexpertise in-house. Initially, one staff

The Communications Unit produces monthly media reports for the MAV Board that provide a snapshot oflocal government issues covered by media and an analysis of the balance of reporting. The reportsrecord the issues covered, the tone of the coverage, the outlet that reported the issue, and the MAVspokesperson quoted.

New media strategy achieves high exposure >Media strategies resulted inhigh-level coverage and more balanced reporting of local government issues. This included the CostShifting Inquiry, public liability and community insurance, the superannuation defined benefits schemeshortfall, council rate increases and the fire services levy.Increased exposure of local government issues and initiatives was also achieved through MAVcontributions to industry publications such as LG Focus, Government News, Local Government Manager,PROfile and Local Government News.The MAV will continue to pursue our long-term strategy of ensuring media commentators and journalistsare informed and up to date about local government issues.

Keeping pace with communication technology >Efforts to improve the MAVwebsite and electronic communications have been significant during 2002/03.

member was recruited to undertake this work, with a second recruited after 30 June 2003. To supplement thework of this team, the MAV also continues to receive strategic communications advice from a specialistconsultant. This year, the MAV’s planning consultant also moved to full time employment in the position ofSenior Adviser – Planning. Three staff members departed the organisation.

Value adding through training and development >In 2001/02 the MAVidentified the need for enhanced staff training and development programs. This year we developed aprogram to work on team cohesiveness, internal communications and staff support. A series of half-dayworkshops looked at the way the MAV currently operates, the information needs of staff, and structuralissues that could potentially be improved. These workshops also provided opportunities for staff to get toknow each other better. This highly successful program will continue next year.Because the MAV values the high level expertise of our staff, we offer interested members the opportunity of takingstudy leave and relevant work-based experience to assist them in advancing their skills and qualifications. In2002/03, skills-based training for particular staff, primarily in the area of computers and IT, was also provided.This year, the MAV spent a total of $15,253.54 on staff training and development, and conference attendance.Raising the bar on sector recruitment The MAV has an ongoing commitment to attract graduates fromrelevant disciplines into the local government sector. In 2002/03 we not only developed a vacation program butlaid the foundations for a sector-wide graduate recruitment program (refer Sector Development section). As

38

The new, easy-to-navigate MAV website provides a more informative site for councils, stakeholders andthe general public.The MAV’s local government extranet, LGNet, has also been redesigned with enhanced site capabilitiesand increased flexibility for the 1,752 registered users currently accessing the site.MAV representatives are now emailed a weekly President’s Update outlining the latest information onemerging issues, MAV activities and work. It provides a snapshot of the week’s events including the MAVBulletin, media releases, relevant reports and other documents that can be tabled at council meetings.

evidence of our commitment in this area, the MAV employed three graduates over the past year. We alsoorganised work placements throughout the year for a number of students from various universities includingMelbourne, RMIT, Deakin and La Trobe.

MAV compliance >Occupational Health and Safety a priority At the MAV, we takeoccupational health and safety very seriously. We believe it is one of our most fundamental responsibilities toensure that all our employees and contractors have a safe and healthy workplace. The MAV OccupationalHealth and Safety (OHS) Policy, which complies with the Occupational Health and Safety Act 1995, wasreviewed last year to ensure it was not only up to date but reflected the current practices and needs of the

39workplace. In 2002/03, no workplace claims were reported.Implementing whistleblower protection across the sector As with the information privacy legislation(refer to Corporate Governance section), the MAV worked closely with the local government sector during theyear to provide assistance with implementing the Whistleblowers Protection Act 2001. In the process, weestablished a policy position to comply with the requirements of the Act. We developed policy and procedures toalign with both the Victorian Ombudsman’s guidelines, and those developed – with our assistance – by councils.

Information and Communication MAV Annual Report 2003 Human Resources MAV Annual Report 2003

In its role as peak body for the local government sector, the MAV isregularly asked by both state and federal governments, and related

Committees agencies, to provide nominations or make appointments to variousexternal committees.

The MAV has proceduresin place governing themanner in which it makesthese appointments.The current external committees on whichthe MAV is represented, either by councillors,former councillors, council officers, MAVBoard members or MAV staff, are as follows:Accessible Built Environment Working GroupAlpine Advisory CommitteeAnimal Welfare Advisory committeeAssociation of Bayside MunicipalitiesAssociation of Providers for Inclusive Recreation,Sport, Arts and TourismAustralian Environmental Labelling AssociationAdvisory CommitteeBroiler Code CommitteeBuilding Regulation Advisory CommitteeCommonwealth Aged Care PlanningAdvisory CommitteeCommonwealth Children’s Services PlanningAdvisory CommitteeCommunity Health Policy Reference GroupCommunity Safety Month Reference GroupCommunity Services and Health IndustryTraining BoardCoordination Committee for Local GovernmentCountry Fire AuthorityDHS Funded Agency Partnership Working PartyEPA On-site Wastewater Advisory GroupFlood Warning Consultative Committee VictoriaForest Health Advisory CommitteeGoulburn North East Water for Growth InitiativeCommitteeHospital Admission Risk Program (HARP)Reference GroupInter-Governmental Coastal Reference GroupLandcare Coordinators NetworkLibrary Network CommitteeLocal Authorities Super Pty LtdLocal Government Buy Recycled Alliance NetworkMAV/DHS Disability Services Working Party

Neighbourhood Environment Improvement Plans(Local Government Steering Group)North Central Landcare NetworkPlace Names CommitteePort Phillip and Westernport CatchmentManagement AuthorityPublic Administration and Emergency ServicesPublic Records Advisory CommitteeRural Disputes Settlement Centre Working GroupRural Workforce Agency VictoriaState Bushcare Reference GroupState Flood Policy CommitteeState Weed Policy CommitteeTelecommunications Working GroupTimber Towns VictoriaTrust for Nature Bush Practices NetworksVicRoads Board (Roads CorporationAdvisory Board)VicRoads Road Freight Advisory CouncilVictorian Advisory Committee for GeneralPractice Sub-committeeVicHealth Local Government Advisory PanelVictorian Agricultural ChemicalsAdvisory CommitteeVictorian Catchment ManagementStakeholders ForumVictorian Childcare Industry Liaison GroupVictorian Coastal CouncilVictorian Disability Advisory CouncilVictorian Emergency Management CouncilVictorian Feedlot CommitteeVictorian Litter Action AllianceVictorian Local Government Disability NetworkVictorian Ministerial Housing CouncilVictorian Settlement Planning CommitteeVictorian Stormwater Advisory CommitteeVictorian Universities Rural Health ConsortiumWater Watch Coordinators NetworkWomen’s Participation in LocalGovernment Coalition

The MAV also has a number of advisorycommittees and networks it has established toassist in policy development and provideopportunities for information exchange andcommunication across the sector. Details ofthese, including a brief description of the roleof each, is as follows:Clearwater (formerly Stormwater CapacityBuilding) Steering CommitteeThe committee directs the development and deliveryof a statewide education and training program forlocal government and industry professionals in thesustainable management of urban stormwater.Represented by EPA, Melbourne Water, StormwaterIndustry Association of Victoria and LGPro.Human Services Portfolio CommitteeProvides strategic advice to MAV on advocacyregarding social policy and human services issues,particularly in intergovernmental relations. TheCommittee also facilitates consultation with regionalgroupings of councils on current statewide issues.Indigenous Interagency CoordinationCommitteeComprises representatives from state governmentagencies involved in service delivery to Indigenouspeople, and representatives from local government.Its terms of reference include assisting localgovernment and other agencies to maintain andimprove their governance responsibilities forIndigenous communities, and taking a whole-of-government approach to furthering reconciliationbetween non-Indigenous communities andIndigenous Victorians.Library Working PartySupports the MAV on campaigning for improvedoutcomes for councils in public library funding,policy input and planning.Local Government Indigenous NetworkNetwork of councillors and council officersinterested in promoting Indigenous issues withinVictorian local government.Local Government Environment Networks –Corangamite, North East and North WestRegionsThrough the Environment Resource Officer, theMAV facilitates a number of local governmentenvironment networks, the purpose of which is tocommunicate and provide resource support onenvironmental policy issues relevant to the sector.

MAV Domestic Wastewater ManagementSteering CommitteeThe committee is responsible for providing projectmanagement oversight for all domestic wastewaterrelated projects. The committee comprisesrepresentatives from local government, EPA,Melbourne Water, VicWater, DSE and the AustralianInstitute of Environmental Health.MAV/EcoRecycle Local Government BuyRecycled Alliance Steering CommitteeRepresentatives from funding partners providesdirection for the ECO-Buy program.MAV Insurance CommitteeManagement committee established under deed bythe MAV Board to oversee the arrangements for CivicMutual Plus (CMP) and the Municipal Officers FidelityGuarantee Fund, and to provide recommendation,where required, to the MAV Board.MAV Integrated Catchment Planning SteeringCommitteeThe MAV and the Victorian Catchment ManagementCouncil (VCMC) initiated the Integrating Local LandUse Planning & Regional Catchment Planning Projectfor the 10 catchment management and landprotection regions of Victoria. The project wascommenced as a joint initiative in 2000, with asteering committee established with representativesfrom local government, state agencies and catchmentmanagement authorities, the VCMC and the MAV.MAV Local Government Capacity Building forNatural Resource Management SteeringCommitteeThe MAV initiated the Local Government CapacityBuilding for NRM project in January 2003. Theproject is National Action Plan funded. It seeks toidentify the resource and human capital needs ofVictorian local government to deliver and enforceplanning permit conditions for natural resourcemanagement, with a focus on native vegetationmanagement and roadsides conservation. Asteering committee was established withrepresentatives from local government, stateagencies and catchment management authorities,the VCMC and the MAV.MAV Strategic Environment Advisory GroupProvides strategic advice to the MAV onenvironmental issues of importance to localgovernment and the needs and issues of membersin relation to delivery of environmental outcomes.

40Metropolitan Fire and Emergency Service BoardMinisterial Advisory Council on Public LibrariesNational Action Plan on Salinity and WaterQuality Stakeholders ForumNational Kerbside Recycling GroupNational Packaging Covenant CouncilNational Parks Advisory Council

Local Sustainability PartnershipA group of about 20 councils actively pursuing localsustainability approaches such as Local Agenda/Action21 plans. The meeting offers a networking opportunityfor exchange of ideas on sustainability.MAV/DHS Working PartysIn the areas of Primary Care, Community CarePartnership and Disabiltiy Services.

Public Lighting Reference GroupA group of council officers actively involved inadvancing public lighting issues. Issues includeenergy efficiency of public lighting, pricing systemsand market regulation.Right to Farm Advisory GroupComprises mainly councillor representatives fromacross Victoria to provide advice to the MAV on rightto farm matters, primarily relating to tensions

41

between farm practices and residential development.

Committees MAV Annual Report 2003 Committees MAV Annual Report 2003

The financial report is a key part of the Municipal Association ofVictoria’s annual report. It shows how the MAV performed financially

Plain English Guide to the Financial Report

The financial report is presented in accordance with the Australian Accounting Standards and therecommendations of the Urgent Issues Group.The MAV is a not-for-profit association that represents all of Victorian local government. The MAV hasstatutory responsibility for local government insurances called MAV Insurance. This enterprise consists oftwo entities, Civic Mutual Plus (public liability and professional indemnity insurer) and the MunicipalOfficers Fidelity Guarantee Fund. The MAV also manages grants received from Federal and Stategovernments, for and on behalf of the community and local government.All these different interests are accounted for separately and then consolidated into the MAV financial report.The MAV is committed to accountability in all respects of its operations. It is with this in mind that the plainEnglish guide has been developed to assist readers in understanding and analysing the financial report.

What is contained in the annual financial report? >The financial report contains three main sections:

> The financial statements | These consist of three main sections – the statement of financialperformance, the statement of financial position, and the statement of cash flows.

> The notes to the financial statements | These detail the Association’s accounting policies and set outthe detailed values that are carried into the financial statements.

> The statements by the directors and auditors | The statements by directors and auditors provide theviews of the directors of the MAV and the independent auditors with regard to the financial report. Thestatement by directors confirms the view of the directors that the financial report provides a true and fairview of the financial performance, financial position and solvency of the Association. The audit report bythe independent auditor expresses the auditor’s opinion as to whether the financial statements presentfairly, and in accordance with accounting standards and other mandatory professional reportrequirements: the financial position of the Association as at 30 June 2003, and the results of the variousbusiness operations and cash flows for the year ended 30 June 2003.

Financial statements >1 Statement of financial performance

The statement of financial performance shows:> The MAV’s revenue from its various activities> The expenses incurred in running the MAV and its business activities.

These expenses relate only to the business operations and do not include costs associated with the purchaseof assets. The expense item ‘depreciation’ spreads the cost of the assets over the estimated life of the assets.The most important figure is the surplus for the year. This means that revenues were greater than expenses.

2 Statement of financial positionThe statement of financial position shows the assets the Association owns, and the liabilities it owes, at the30 June 2003.The statement separates the assets and liabilities into current and non-current.Current | means those assets or liabilities that will be either collected, or fall due, within thenext 12 months.The components of the statement of financial position are:2.1 Current and non-current assetsCash assets | includes cash held in the bank, petty cash, cash deposits and cash investments.Receivables | are monies owed to the Association.Prepayments | are payments made in the current financial year which relate to the next financial year,for example, annual subscriptions etc.

during the 2002/03 financial year, and its position at the end of theyear (30 June 2003).

2.2 Current and non-current liabilitiesBank overdraft | indicates the amount the Association owes its bankers on its daily operating account.Payables | are monies owed by the Association to its suppliers as at 30 June.Premiums in advance | are insurance premiums relating to the next financial year billed to members ofthe insurance fund before 30 June.Provision for employee entitlements | is the accounting term for annual leave, long service leave andretirement gratuities owed to staff.Provision for claims outstanding | represents insurance claims reported by members together with anestimate of claims incurred but not yet reported including an estimate of the costs of settlement for these claims.Other liabilities | represents fees received in advance for seminars and conferences to be held in the 2004financial year.LAS unfunded superannuation | is the MAV’s share of the unfunded superannuation liability in the LASdefined benefits fund in accordance with an independent actuarial calculation.2.3 Net assets | This term describes the difference between total assets and total liabilities. It represents thenet worth of the Association as at 30 June.2.4 Total equity | This describes the components making up net assets. The only component thatcomprises ‘total equity’ is ‘accumulated surplus’ which is the value of all net assets accumulated over time.

3 Statement of cash flowsThe statement of cash flows summarises cash payments and cash receipts for the year. The values may differfrom those shown in the statement of financial performance because the statement of financial performanceis prepared on an accrual basis.Cash is derived from, and is used in two main areas:3.1 Cash flows from operating activitiesReceipts | relate to all cash received into the Association’s bank account from members and others whoowed money to the Association in the form of fees or premiums. Receipts also include interest earned fromthe Association’s cash investments. It does not include receipts from the sale of assets.Payments | relate to all cash paid out of the Association’s bank account to staff, creditors and others. Itdoes not include cash paid for the purchase of assets.3.2 Cash flows from investing activitiesThis relates to cash receipts and cash payments resulting from either the sale or purchase of property, plantand equipment.The statement of cash flows concludes with ‘cash at end of year’ which indicates the cash the Associationhas at 30 June to meets its debts and liabilities.

Notes to the financial statements >To enable the reader to understand the basis onwhich the values shown in the statements are established, it is necessary to provide details of theAssociation’s accounting policies. These are described in Note 1.Apart from the accounting policies, the notes also give details behind many of the summary figurescontained in the statements. The note numbers are shown beside the relevant items in the statement offinancial performance, statement of financial position and the statement of cash flows.Where the Association wishes to disclose other information which cannot be incorporated into thestatements, then this is shown in the notes.The notes should be read at the same time as reading the financial statements in order to get a full andclear picture of the financial statements.

Statement by directors and auditors >Statement by directors

42 Property, plant and equipment | represents the value of the equipment, furniture and fittings,computers, website and intranet, trademarks, intellectual property and motor vehicles owned by theAssociation.Other financial assets | represent the value of shares held by the Association in the Co-operativePurchasing Scheme.

The statement by directors is made by two directors on behalf of the Board of the MAV. It states that, in theopinion of the Board, the financial statements present a true and fair view of the operations of theAssociation and that the Association can pay its debts, as and when they fall due.Independent audit reportThis report is the independent auditor’s opinion on the financial statements. It provides the reader of the

43financial statements with a completely independent opinion of the financial statements of the Association.The opinion covers all statutory and accounting standards compliance requirements, as well as providing aview on the truth and fairness of the financial statements

Plain English Guide to the Financial Report MAV Annual

Report 2003

Plain English Guide to the Financial Report MAV Annual Report 2003

GlossaryALGA | Australian Local Government AssociationAPRA | Australian Prudential Regulatory AuthorityDHS | Department of Human ServicesDSE | Department of Sustainability and EnvironmentDAF | National Development Assessment ForumDOTARS | Department of Transport and Regional ServicesEPA | Environment Protection AuthorityFAGS | Financial Assistants Grants SchemeGGAG | Good Governance Advisory GroupHACC | Home and Community CareICAA | Institute of Chartered Accountants in AustraliaLAS | Local Authorities SuperannuationLGBRA | Local Government Buy Recycled AllianceLGOS | Local Government Online ServiceMCH | Maternal and Child HealthM&CHS | Maternal and Child Health ServicesMYEPs | Municipal Early Years PlansNAP | National Action PlanNFPS | New Format Planning SchemesNRM | Natural Resource ManagementNTN | Networking the NationNRTC | National Road Transport CommissionOHS | Occupational Health and SafetyPBS | Performance-based StandardsPERIN | Penalty Enforcement by Registration of Infringement NoticeRAIA | Royal Australian Institute of ArchitectsSCWP | Strengthening Communities through Women’s ParticipationSPEAR | Streamlined Planning through Electronic Applications and ReferralsVCMC | Victorian Catchment Management CouncilVECCI | Victorian Employers Chamber of Commerce and IndustryVLGA | Victorian Local Governance AssociationWPILGC | Women’s Participation in Local Government Coalition

44

Glossary MAV Annual Report 2003

20022003Financial Report

Financial Report MAV Annual Report 2003

45

Statement of Financial Performancefor the year ended 30 June 2003

Statement of Financial Positionas at 30 June 2003

CONSOLIDATED MAV - GENERAL FUND CONSOLIDATED MAV - GENERAL FUND

NOTE2003

$2002

$2003

$2002

$ NOTE2003

$2002

$2003

$2002

$REVENUE FROM CURRENT ASSETSORDINARY ACTIVITIES 2, 3 47,163,661 58,828,961 7,205,114 11,315,350 Cash Assets 16,472,782 9,695,741 4,331,058 6,591,771EXPENSES FROM Receivables 9 48,249,912 42,421,392 673,849 454,279ORDINARY ACTIVITIES 4(b) 41,454,454 57,745,770 9,813,509 8,489,599 Prepayments 73,569 63,184 73,569 63,184LAS UNFUNDED TOTAL CURRENT ASSETS 64,796,263 52,180,317 5,078,476 7,109,234SUPERANNUATION 17 253,851 - 253,851 -SURPLUS(DEFICIT) FROM NON-CURRENT ASSETSORDINARY ACTIVITIESTOTAL CHANGES IN EQUITY

216

5,455,3565,455,356

1,083,1911,083,191

(2,862,246)(2,862,246)

2,825,7512,825,751

ReceivablesProperty, Plant and Equipment

91(d),11

45,086,770549,290

42,034,690801,357

-549,290

-801,357

Intangibles 1(d),12 3,928 - 3,928 -The accompanying notes form an integral part of these statements Other Financial Assets

TOTAL NON-CURRENT ASSETSTOTAL ASSETS

1045,639,998

110,436,261

1042,836,05795,016,374

10553,228

5,631,704

10801,367

7,910,601

CURRENT LIABILITIESPayables 3,582,387 3,061,849 945,771 840,475Premiums in AdvanceProvision for Employee EntitlementsProvision for Claims OutstandingOther Current LiabilitiesTOTAL CURRENT LIABILITIES

101513

28,703,707219,261

15,611,232203,566

48,320,153

22,152,054222,585

17,164,806-

42,601,294

-219,261

-203,566

1,368,598

-222,585

--

1,063,060

NON-CURRENT LIABILITIESLAS Unfunded SuperannuationProvision for Employee EntitlementsProvision for Claims OutstandingTOTAL NON-CURRENT LIABILITIESTOTAL LIABILITIESNET ASSETS

EQUITY

171513

16

253,85172,119

51,558,16251,884,132

100,204,28510,231,976

10,231,976

-48,159

47,590,30147,638,46090,239,7544,776,620

4,776,620

253,85172,119

-325,970

1,694,5683,937,136

3,937,136

-48,159

-48,159

1,111,2196,799,382

6,799,382

The accompanying notes form an integral part of these statements.

46

Financial Report MAV Annual Report 2003 Financial Report MAV Annual Report 2003

47

Consolidated Statement of Cash Flowsfor the year ended 30 June 2003

Notes to and forming part of thefinancial statements for the year ended 30 June 2003

CONSOLIDATED MAV - GENERAL FUND 1 SUMMARY OF ACCOUNTING POLICIES

NOTE2003

$2002

$2003

$2002

$ The financial report is a general purpose financial report which has been drawn up in accordance withCASH FLOW FROMOPERATING ACTIVITIESRECEIPTS

Accounting Standards, Mandatory Professional Reporting Requirements (Urgent Issues Group ConsensusViews) and other relevant requirements.The principal accounting policies adopted in preparing the financial report are stated to assist in ageneral understanding of the financial report. Accounting policies have been consistently applied unless

Subscriptions, Grants and Fees 36,396,177 28,132,639 8,262,229 12,261,116 otherwise indicated.Investment IncomeExcesses and Recoveries

909,35712,482,804

604,5365,370,006

234,609-

186,506- a Principles of Consolidation

The economic entity comprises the financial report of Municipal Association of Victoria and of its 100percent controlled entities the Local Government Mutual Liability Insurance Scheme (trading as Civic

PAYMENTS Mutual Plus – CMP), and Municipal Officers’ Fidelity Guarantee Fund.Suppliers (28,041,487) (24,978,600) (10,749,323) (9,154,821) A controlled entity is any entity controlled by Municipal Association of Victoria (Incorporated under theClaim PaymentsNET CASH PROVIDED BY/(USED IN)OPERATING ACTIVITIES 8(b)

(14,961,582) (12,513,481)

6,785,269 (3,384,900)

-

(2,252,485)

-

3,292,801

Municipal Association Act 1907). Control exists where Municipal Association of Victoria has the capacityto dominate the decision-making in relation to the financial and operating policies of another entity sothat the other entity operates with Municipal Association of Victoria to achieve the objectives of MunicipalAssociation of Victoria.The affects of all transactions between entities in the consolidated entity have been eliminated.

CASH FLOW FROMINVESTING ACTIVITIES b Change in Accounting Policy – Insurance ActivitiesProceeds from sale of Fixed AssetsPayments for Fixed AssetsNET CASH USED ININVESTING ACTIVITIES

245,681(253,909)

(8,228)

11,818(533,154)

(521,336)

245,681(253,909)

(8,228)

11,818(533,154)

(521,336)

The MAV Insurance Committee requested the independent actuary to provide an estimate of the provisionrequired to cover claims settlement administrative expenses that would be incurred in managing alloutstanding claims in the event that Civic Mutual Plus winds down. This practice is consistent withinsurance industry standards. In accordance with the recommendation of the independent actuary theCommittee has decided to provide 5% of the gross outstanding claims estimates (includes gross IBNR andDevelopment) as the provision for claims settlement administration costs. This provision is to be

NET INCREASE/(DECREASE)IN CASH HELD 6,777,041 (3,906,236) (2,260,713) 2,771,465

established over a two-year period. As a result of the change in accounting policy the surplus for the2003 financial was reduced by $1,684,243 (2002 nil).

Cash at Beginning of Year 9,695,741 13,601,977 6,591,771 3,820,306 c Income TaxCASH AT END OF YEAR 8(a) 16,472,782 9,695,741 4,331,058 6,591,771 The Association is exempt from income tax, in accordance with sections 50-10 and 50-25 of the Income

Tax Assessment Act 1997The accompanying notes form an integral part of these statements. d Property, plant, equipment, trademarks and intellectual property

Property, plant, equipment, trademarks and intellectual property are carried at cost, less where applicable,any accumulated depreciation or amortisation. The carrying amount of property, plant, equipment,trademarks and intellectual property is reviewed annually by directors to ensure it is not in excess of therecoverable amount from those assets. The recoverable amount is assessed on the basis of the expectednet cash flows that will be received from the assets employment and subsequent disposal. The expected netcash flows have not been discounted to present values in determining recoverable amounts.On disposal of an item of property, plant, equipment, trademarks and intellectual property the differencebetween the sales proceeds and the carrying amount of the asset is recognised as a gain or loss.The depreciable amount of all fixed assets including buildings and capitalised leased assets aredepreciated/amortised on a straight line basis over their estimated useful lives to the entity commencingfrom the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter ofeither the unexpired period of the lease or the estimated useful lives of the improvements.THE FOLLOWING DEPRECIATION RATES ARE IN USE:

ANNUAL RATELeasehold Improvements at cost

20%Furniture and Equipment at cost

20 – 33%

48Financial Report MAV Annual Report 2003

Motor Vehicles at costInteractive Communications System at costWeb Site and Intranet at costTrademarks and Intellectual Property at cost

Financial Report MAV Annual Report 2003

20%33%33%

10 – 20%

49

Notes to and forming part of the financialstatements for the year ended 30 June 2003 Notes to and forming part of the financial

statementsfor the year ended 30 June 2003

e

f

·

··

·

g

LeasesA distinction is made between finance leases which, effectively transfer from the lessor to the lesseesubstantially all the risks and benefits incidental to ownership of the leased property, without transferringthe legal ownership, and operating leases under which the lessor effectively retains substantially all therisks and benefits.Where assets are acquired by means of finance leases, the present value of minimum lease payments isestablished as an asset at the beginning of the lease term and amortised on a straight line basis over theexpected economic life. A corresponding liability is also established and each lease payment is allocatedbetween such liability and interest expense.Operating lease payments are charged to expense on a basis which is representative of the pattern ofbenefits derived from the leased property.Lease incentives received under operating leases are recognised as a liability.

Employee EntitlementsThe following liabilities arising in respect of employee entitlements are measured at theirnominal amounts:wages and salaries, annual leave and sick leave regardless of whether they are expected to be settledwithin twelve months of balance date.other employee entitlements that are expected to be settled within twelve months of balance date.all other employee entitlements, including long service leave, are measured at the present value of theestimated future cash outflows in respect of services provided up to balance date. Liabilities aredetermined after taking into consideration estimated future increase in wages and salaries and pastexperience regarding staff departures. Related on-costs are included.contributions made to an employee superannuation fund are charged as expenses when incurred.

Revenue RecognitionINTEREST REVENUE – Interest revenue is recognised on a time proportionate basis that takes into accountthe effective yield on the financial asset.GRANT REVENUE – Grants are recognised as revenue when the Association obtains control over the

j

k

l

iii

ClaimsClaims incurred expense and liability for outstanding claims are recognised in respect of direct business.The liability covers claims incurred but not yet paid, incurred but not yet reported claims, and theanticipated direct and indirect costs of settling those claims. Claims outstanding are assessed by reviewingindividual claim files and estimating claims not notified and settlement costs using statistical and actuarialtechniques. The liability for outstanding claims is measured as the present value of the expected futurepayments, reflecting the fact that all the claims do not have to be paid out in the immediate future. Theexpected future payments are estimated on the basis of the ultimate cost of settling claims, which isaffected by factors arising during the period to settlement such as normal inflation and ‘superimposedinflation’. Advice from the MAV’s actuary has estimated normal and superimposed inflation to be 6%(2002 – 5%)and the discount rate at 4.5% (2002 – 5.7%)Superimposed inflation refers to factors such as trends in court awards, for example increases in the leveland period of compensation for injury. The expected future payments are then discounted to a presentvalue at the reporting date using discount rates based on the investment opportunities available to theorganisation on the amounts of funds sufficient to meet claims as they became payable.Details of rates applied are disclosed in note 13.

Excesses and RecoveriesExcesses and other recoveries are brought to account when established at the time of consideration of theclaims details and only where a definite set of circumstances exist which will support the credibility of thejustification of obtaining either a recovery of excess from scheme member or recovery of claim cost froma third party.

Revenue RecognitionRevenue is recognised to the extent that it is probable that the economic benefit will flow to the entity andthe revenue can be reliably measured. The following specific recognition criteria must also be met beforerevenue is recognised.Premiums – recognised in the period the fund is at risk.Excesses and Recoveries – on an accruals basis.

assets comprising the contribution. Control over the grants is normally obtained upon their receipt orupon prior notification that a grant has been secured.SUBSCRIPTIONS AND SPONSORSHIPS – Subscriptions and Sponsorships are recognised onan accrual basis.Summary of Accounting Policies Relating to Insurance Activities

iii Investment Income – on an accruals basis including adjustments to bring values of cash backed unit truststo account as investment income.

m Comparative FiguresWhere necessary, comparative figures have been adjusted to conform with changes in presentation in thecurrent year.

h

i

PremiumsPremiums comprise amounts charged to members of the Schemes for policy cover, net of amountsreturned to members as bonuses. The earned portion of premiums received is recognised as revenue.Premiums are treated as earned from date of attachment of risk. The pattern of recognition over thepolicy is based on time, which is considered to closely approximate the pattern of risks undertaken.

Premiums ReceivableDuring the month of June each year, the Schemes issue premium notices to Scheme Members. The riskattaches to the premiums in the next accounting period and accordingly the revenue is recognised eachfollowing year commencing 1 July.

n Provision for Reinsurance RecoveriesDuring the 2001 financial year, two of the participants in the Scheme’s reinsurance program were placedinto the hands of liquidators. These companies were part of the reinsurance programs in fund years from1994 to 1998. The Directors have determined that sufficient information to reasonably estimate the extentand timing of the return to the Scheme from the liquidators of these companies is not currently available.The Directors therefore determined in the 2001 year that the most prudent course of action was toprovide against 100% of the estimated future recoveries due from these insurers. The Directors continueto constantly monitor the position with a view to ensuring that the Scheme takes all reasonable steps toprotect its position and to maximise potential recoveries.The provision made during the 2001 year is being monitored and when information is made available bythe liquidators, regarding returns to unsecured creditors the impact upon the provision will be assessedand any appropriate adjustment made.As at the date of this report the Directors are of the view that the potential for any recovery is still

50

Financial Report MAV Annual Report 2003

uncertain and the policy of providing against 100% of the estimated future recoveries due from theseinsurers is continuing.

Financial Report MAV Annual Report 2003

51

Notes to and forming part of the financialstatements for the year ended 30 June 2003 Notes to and forming part of the financial

statementsfor the year ended 30 June 2003

CONSOLIDATED CONSOLIDATED MAV - GENERAL FUND2003

$2002

$2003

$2002

$2003

$2002

$2 CONTRIBUTION TO OPERATING SURPLUS

CONTRIBUTION FROM INSURANCE ACTIVITIESPremium income 23,028,078 17,337,634

4b Operating ExpensesThe following items have been recognisedin the operating surplus (deficit):

Catastrophe insurance (11,171,940) (10,532,264) Claims expense 18,479,170 34,894,682 - -NET INCOME BEFORE CLAIMS 11,856,138 6,805,370 Catastrophe Insurance 11,171,940 10,532,264 - -Claims expense (Note 4(a)) (18,479,170) (34,894,682) Doubtful Reinsurance Recovery (426,474) 1,499,298 - -Excesses and RecoveriesNET CLAIMS EXPENSEUNDERWRITING RESULTInvestment incomeDoubtful Reinsurance RecoveryAdministration and general expensesINSURANCE ACTIVITY OPERATINGSURPLUS / (DEFICIT)PARENT ENTITY SURPLUS / (DEFICIT)OPERATING SURPLUS

16,551,875(1,927,295)

9,928,843680,595426,474

(2,718,310)

8,317,602(2,862,246)

5,455,356

30,015,298(4,879,384)1,925,986

413,180(1,499,298)(2,582,428)

(1,742,560)2,825,7511,083,191

Stamp DutyGeneral Scheme ExpensesSalary and Payroll CostsGrants, Projects and LegalAdministrationOperating lease rental expenseSuperannuation ContributionsScheme Management FeeMeetings and SeminarsWritten down value of Non- current

1,008,467189,351

1,374,6624,592,7382,321,623

18,766159,362

1,220,935439,322

939,917275,922

1,598,9764,585,5871,230,537

48,253131,472

1,092,914307,193

--

1,374,6624,592,7382,339,568

18,766159,362

-423,821

--

1,598,9764,585,5871,222,999

48,253131,472

-293,557

CONSOLIDATED2003 2002

$ $

MAV - GENERAL FUND2003 2002

$ $

assets disposed ofDepreciation Leasehold ImprovementsDepreciation Furniture and Equipment

251,44577,00285,298

4,05966,73263,177

251,44577,00285,298

4,05966,73263,177

3 REVENUE FROM ORDINARY ACTIVITIESREVENUES FROM OPERATING ACTIVITIES

Depreciation Motor VehiclesDepreciation Interactive Communications System

69,2333,120

88,3206,756

69,2333,120

88,3206,756

Subscriptions/premiumsInsurance excesses and recoveriesBrokerage and Management Fees IncomeSeminars & sale of publications

25,006,01616,551,875

937,537250,859

19,296,44730,015,298

731,366142,871

1,977,938-

937,537250,859

1,958,813-

731,366142,871

AmortisationBoard of Management ExpensesALGA MembershipTOTAL EXPENDITURE

16,910116,860284,724

41,454,454

-99,540

280,17157,745,770

16,910116,860284,724

9,813,509

-99,540

280,1718,489,599

Project, sponsorship and management income 144,953 139,669 446,953 392,170Grant incomeTOTAL REVENUE FROMOPERATING ACTIVITIES

3,088,888

45,980,128

7,896,469

58,222,120

3,088,889

6,702,176

7,896,469

11,121,689

5 LEASING COMMITMENTSOperating lease commitments, being forlease of computer and other equipment:

REVENUES FROM NON-OPERATING ACTIVITIES Not later than one year 14,000 23,532 14,000 23,532Investment IncomeProceeds from Sale of Non Current Assets

937,852245,681

595,02311,818

257,257245,681

181,84311,818

Later than one year but not later than five yearsTOTAL LEASE COMMITMENT

35,00049,000

52,94776,479

35,00049,000

52,94776,479

TOTAL REVENUE FROM OUTSIDE THEOPERATING ACTIVITIES 1,183,533 606,841 502,938 193,661

Operating lease commitments, being for leaseof leasehold premises:

TOTAL REVENUE FROMORDINARY ACTIVITIES 47,163,661 58,828,961 7,205,114 11,315,350

Not later than one year 112,472Later than one year but not later than five years 1,091,536

170,621102,373

112,4721,091,536

170,621102,373

52 4a Claims ExpensesPaid

CONSOLIDATED2003 2002

$ $

16,064,883 13,576,5876

Later than five yearsTOTAL LEASE COMMITMENT

AUDITORS REMUNERATIONAmounts received or due and receivable for

1,598,4192,802,427

-272,994

1,598,4192,802,427

-272,994

53Outstanding claims at end of audit services:financial year (refer note 13)Outstanding claims at beginning of

67,169,394 64,755,107 Audit ServicesOther Services

37,9709,504

37,350-

14,8709,504

13,350-

financial year (64,755,107) (43,437,012)TOTAL CLAIMS EXPENSES 18,479,170 34,894,682

Financial Report MAV Annual Report 2003 Financial Report MAV Annual Report 2003

Notes to and forming part of the financialstatements for the year ended 30 June 2003 Notes to and forming part of the financial

statementsfor the year ended 30 June 2003

CONSOLIDATED MAV - GENERAL FUND CONSOLIDATED MAV - GENERAL FUND2003

$2002

$2003

$2002

$2003

$2002

$2003

$2002

$7 SCHEME MANAGEMENT FEES

Scheme management fees are paid to9 RECEIVABLES

Reinsurance and other recoveries receivablethe Scheme Manager for: 1(k) 76,140,461 70,911,699Risk Management and Discount to Present Value (10,492,281) (10,102,247)Administrative ServicesClaims management

1,220,9351,102,858

1,092,914998,110 Provision for Doubtful

65,648,180 60,809,452

TOTAL SCHEME MANAGEMENT FEES 2,323,793 2,091,024 Reinsurance Recoveries (7,224,986) (7,651,460)Net Reinsurance and other Recoveries

8 NOTES TO STATEMENT OF CASH FLOWSFor the purposes of the Statement of Cash Flows, the Association considers cash to include cash in hand,cash at bank, certificates of deposit with short terms to maturity, bank bills and other financial assets.

ReceivableExcesses RecoverablePremiums receivable 1(i)

58,423,1945,719,273

28,705,916

53,157,9926,649,126

24,367,259All of the surplus funds of the Civic Mutual Plus Scheme are invested at market rates with UBS AssetManagement (Aust) Ltd in their Cash Enhanced Cash Fund and their Australian Bond Fund. Investments arebrought to account at net market value at balance date.

Other ReceivablesTOTAL RECEIVABLESREPRESENTED BY:

488,29993,336,682

281,70584,456,082

673,849673,849

454,279454,279

a Cash at balance date as shown in the Statement of Cash Flows is reconciled to the related items CURRENT 48,249,912 42,421,392 673,849 454,279in the Financial Position as follows:

CONSOLIDATED MAV - GENERAL FUNDNON-CURRENT 45,086,770 42,034,690 - -

2003$

2002$

2003$

2002$

TOTAL 93,336,682 84,456,082 673,849 454,279

Cash 7,172,433 6,846,950 4,331,058 6,591,771 10 PREMIUMS IN ADVANCEOther financial assets 9,300,349 2,848,791 - - Contributions billed in advance 1(h) 28,703,707 22,152,054 - -TOTAL CASH 16,472,782 9,695,741 4,331,058 6,591,771

11 PROPERTY, PLANT AND EQUIPMENTb Reconciliation of Net Cash Leasehold Improvements - at cost 385,008 385,008 385,008 385,008

54

Used In Operating Activitiesto Operating Surplus/(Deficit)Surplus (Deficit) for yearDepreciationGAINS ON SALE OF:(Surplus)/deficit on disposal of assetsCHANGES IN ASSETS AND LIABILITIES(Increase)/decrease in accounts receivable(Increase)/decrease in plant & equipment(Increase)/decrease in intangible assets(Increase)/decrease in prepaymentsIncrease/(decrease) in accounts payableIncrease/(decrease) in provision foremployee entitlementsIncrease/(decrease) in outstanding claimsIncrease/(decrease) in accrued revenueIncrease/(decrease) in LAS LiabilityCASH FLOWS FROM OPERATIONS

5,455,356 1,083,191251,562 224,985

5,764 (7,759)

(8,880,600) (32,057,693)3,103 -

(4,063) -(10,385) (1,311)520,538 974,049

20,637 91,1602,414,287 21,318,0956,755,219 4,990,383

253,851 -6,785,269 (3,384,900)

(2,862,246)251,562

5,764

(219,570)3,103

(4,063)(10,385)105,296

20,637-

203,566253,851

(2,252,485)

2,825,749224,985

(7,759)

(239,118)--

(1,311)399,095

91,160---

3,292,801

Less accumulated depreciation

Furniture and Equipment -- at costLess accumulated depreciation

Motor vehicles - -at costLess accumulated depreciation

Web site and IntranetLess accumulated depreciation

Interactive Communications System- at costLess accumulated depreciation

TOTAL PROPERTY, PLANT ANDEQUIPMENT

282,966102,042346,986216,018130,968362,054

86,649275,405

57,65016,77540,875

287,913287,913

-

549,290

205,964179,044356,373134,368222,005469,64897,460

372,18825,000

-25,000

287,913284,793

3,120

801,357

282,966102,042346,986216,018130,968362,054

86,649275,405

57,65016,77540,875

287,913287,913

-

549,290

205,964179,044356,373134,368222,005469,64897,460

372,18825,000

-25,000

287,913284,793

3,120

801,357 55

Financial Report MAV Annual Report 2003 Financial Report MAV Annual Report 2003

Notes to and forming part of the financialstatements for the year ended 30 June 2003 Notes to and forming part of the financial

statementsfor the year ended 30 June 2003

CONSOLIDATED MAV - GENERAL FUND CONSOLIDATED2003

$2002

$2003

$2002

$2003

$2002

$(a) Reconciliations 13 OUTSTANDING CLAIMS

Leasehold ImprovementsMovements during the year

Reported claims outstandingProvision for incurred but not reported

32,689,154 35,771,640

Beginning of yearAdditionsDepreciationEnd of yearFurniture and EquipmentMovements during the yearBeginning of yearAdditions

179,044-

77,002102,042

222,00515,833

168,75677,02066,732

179,044

91,532193,650

179,044-

77,002102,042

222,00515,833

168,75677,02066,732

179,044

91,532193,650

claims, claims development andsettlement costsDiscount to present valueTOTAL OUTSTANDING CLAIMSComprising:CurrentNon-CurrentTOTAL CLAIMS PROVISION

43,900,324 39,903,409(9,420,084) (10,919,942)67,169,394 64,755,107

15,611,232 17,164,80651,558,162 47,590,30167,169,394 64,755,107

Write OffsDepreciationEnd of yearMotor VehiclesMovements during the year

21,57285,298

130,968

-63,177

222,005

21,57285,298

130,968

-63,177

222,005

Actuarial advice indicates that:(a) The average term to settlement of outstanding claims is 4.9 years (2002: 4.3 years).(b) The following average inflation rates and discount rates were used in measuring the liability

for outstanding claims.Inflation factor (refer note 1(j))

6.0%5.0%

Beginning of year 372,189 227,083 372,189 227,083 Discount rate 4.5% 5.7%Additions 201,363 237,485 201,363 237,485Disposals 229,873 4,059 229,873 4,059 CONSOLIDATED

DepreciationEnd of year

68,274275,405

88,320372,189

68,274275,405

88,320372,189

2003$

2002$

Interactive Communications System 14 NET CLAIMS INCURREDMovements during the year Allowance for claims settlement costs 1,684,243 -Beginning of year 3,119 9,875 3,119 9,875 Net claims incurred: current financialDepreciationEnd of year

3,119-

6,7563,119

3,119-

6,7563,119

year incidentsNet Claims Settlement Costs

391,1961,102,858

173,116998,110

Web site and IntranetMovement during the year

Reassessment for prior years claimsNet claims incurred

(1,251,002)1,927,295

3,708,1584,879,384

Beginning of year 25,000 - 25,000 -AdditionsDepreciationEnd of year

32,65016,77540,875

25,000-

25,000

32,65016,77540,875

25,000-

25,000

CONSOLIDATED2003 2002

$ $

MAV - GENERAL FUND2003 2002

$ $15 PROVISIONS FOR EMPLOYEE ENTITLEMENTS

12 INTANGIBLE ASSETS The aggregate amount of employeeTrademarks and Intellectual Property 4,063 - 4,063 - entitlement liability is comprised of:Less accumulated amortisation 135

3,928--

1353,928

--

Provisions (Current)Provisions (Non Current)

219,26172,119

222,58548,159

219,26172,119

222,58548,159

Total Employee Entitlements 291,380 270,744 291,380 270,744

56 16 EQUITYBalance at beginning of YearSurplus (Deficit) from ordinary activitiesBalance at end of Year

4,776,6205,455,356

10,231,976

3,693,4291,083,1914,776,620

6,799,382(2,862,246)3,937,136

3,973,6312,825,7516,799,382

57

Financial Report MAV Annual Report 2003

Financial Report MAV Annual Report 2003

Notes to and forming part of the financialstatements for the year ended 30 June 2003 Notes to and forming part of the financial

statementsfor the year ended 30 June 2003

17 SUPERANNUATION CONTRIBUTIONThe Municipal Association of Victoria contributes in respect of its employees to both the Local AuthoritiesSuperannuation Fund’s LASPLAN and the Defined Benefits Fund.

CONSOLIDATEDNon- Floating

Interest InterestEarning Rate

2002 MAV - GENERAL FUNDNon- Floating

Interest InterestEarning Rate

The amount of superannuation contributions paid by the Municipal Association of Victoria to the Local $ $ $ $Authorities Superannuation Fund’s LASPLAN (or Accumulation Fund) and the Defined Benefits Fund during thereporting period was, $159,362 (2002 $131,472). The Municipal Association of Victoria contributes toLASPLAN based on a fixed percentage of employee earnings in accordance with the SuperannuationGuarantee Legislation 9% in 2003 and 8% in 2002. No further liability accrues to the employer as thesuperannuation benefits accruing to employees are represented by their share of the net assets of the Fund.Contributions to the Defined Benefits Fund are determined by the Scheme’s actuary. The Funds liability foraccrued benefits for defined benefit and defined contribution members was determined in the 31 December2002 actuarial investigation carried out by Local Authorities Super pursuant to the requirements of

FINANCIAL ASSETSBankCash InvestmentsReceivablesTOTAL FINANCIAL ASSETSWeighted Average Interest Rate

289,788-

84,456,08284,745,870

255,1799,150,774

-9,405,953

5.1%

289,788-

454,279744,067

-6,301,983

-6,301,983

4.7%

Australian Accounting Standard AAS 25. The actuarial investigation calculated the UnfundedSuperannuation Fund Liability in the Defined Benefits to be $127 million. The Municipal Association of FINANCIAL LIABILITIESVictoria’s portion of this unfunded superannuation liability, including contributions tax, was calculated to be$253,851 (2002 $nil)The Municipal Association of Victoria has decided to take the interest only option offered by LocalAuthorities Super. This means that interest will be due and payable to Local Authorities Super quarterly inarrears at the same rate as the earning rate of the fund and that the principal amount owing be paid at the

Outstanding claimsUnearned premiums/subscriptionsAccounts payableTOTAL FINANCIAL LIABILITIES

64,755,10722,152,0543,061,849

89,969,010

----

--

840,476840,476

----

end of a ten-year term.18 COMMITMENTS – UNEXPENDED GRANT MONIES

The Association receives grant monies from various Federal and State Government Departments on behalfof Local Government. Grant monies received have been accounted for as income in accordance withAustralian Accounting Standard 15 (AAS 15). At the end of the financial year the Association hadcommitments to expend grants totalling approximately $2,218,090 (2002 $4,798,964) after deducting anestimate of costs of administering the grants.

19 FINANCIAL INSTRUMENTS INTEREST RATE RISK EXPOSURE

The carrying amounts of financial assets and financial liabilities represent their approximate net fair value.

Credit Risk ExposureThe maximum credit risk exposure on financial assets is represented by the carrying amounts of assetsrecognised in the Financial Position.

Concentrations of Credit RiskReceivables due from Debtors in specific industry segments expressed as a percentage of the total balance

The Group’s exposure to interest rate risk and the effective average interest rate for the classes of financialassets is set out below:

CONSOLIDATED 2003 MAV - GENERAL FUND

receivable:INSURANCE

2003 2002MAV - GENERAL

2003 2002Non-

InterestEarning

$

FloatingInterest

Rate$

Non-InterestEarning

$

FloatingInterest

Rate$

State GovernmentLocal GovernmentReinsurers

-37%63%

-37%63%

11%53%

-

54%26%

-

FINANCIAL ASSETSBankCash InvestmentsReceivablesTOTAL FINANCIAL ASSETS

424,929-

93,531,78293,956,711

2,841,37513,206,479

-16,047,854

424,929-

673,8491,098,778

-3,906,130

-3,906,130

Apart from the foregoing, the entity had no significant concentrations of credit risk with any single ‘counter-party or group of counter-parties’.

WEIGHTED AVERAGE INTEREST RATE

FINANCIAL LIABILITIES

5.0% 4.4%

Outstanding claimsUnearned premiums/subscriptionsAccounts payable

67,169,39428,907,272

3,777,487

---

-203,565945,764

---

58TOTAL FINANCIAL LIABILITIES 99,854,153 1,149,329 -

59

Financial Report MAV Annual Report 2003 Financial Report MAV Annual Report 2003

$2002

1,083,191

1,083,191

58,828,961

95,016,374

58,828,961

90,239,754

90,239,754

95,016,374

CONSOLIDATE

$2003

224,985

533,155

251,562

253,909

5,455,356

5,455,356

47,163,661

47,163,661

100,204,285

110,436,261

LOCAL GOVERNMENT

ELIMINATIONS

ASSOCIATION

GRANT

3,147,986

3,636,845

7,914,863

3,266,268

2002

2003

$2002

$2003

2002

2003

$2002

(425,690)

(710,553)

391,416

662,163

34,274

(218,225)

(253,610)

272,617

12,685

2,771,359

(1,742,560) (2,621,321)

47,766,112

(425,690)

(710,553)

3,539,402

4,299,008

7,914,863

3,266,268

47,800,386

(180,169) 110,436,261

(241,342)

2,394,111

2,523,341

5,516,495

3,154,605

87,285,937

(180,169) 100,204,285

(241,342)

646,266

966,827

464,953

773,977

89,308,704

INSURANCE

- -

- -

224,985

533,155

241,636

219,928

- -

9,926

33,981

- -

- - $2003

48,390

8,317,602

40,260,548

40,308,938

98,704,823

104,999,657

TYPES OF PRODUCTS AND SERVI

Insurance including Public Liability, Professional Liability, Product Liability and Fide

Obtains Federal and State Government grants and expends these grants on projects for the betterment of both local government and the co

Local Government Industry group and represents and provides support to Local Government and its comm

OPERATING REV

Sales to Customers outside the

Inter-segment

TOTAL SEGMENT RE

TOTAL CONSOLIDATED R

SEGMENT R

CONSOLIDATED ENTITY S

FROM ORDINARY ACTI

ASS

Segment Asse

TOTAL ASS

LIABILITI

Segment Liabilit

TOTAL LIABILI

equipment and other non current

Acquisition of property, plan

OTHER SEGMENT INFOR

Depreciatio

SEGMENT

Insurance

Grants

Association

BUSINESS SEGMENT

20 SEGMENT INFORMATION – PRIMARY SEGMENT

Notes to and forming part of thefinancial statements for the year ended 30 June 2003 Notes to and forming part of the financial

statementsfor the year ended 30 June 2003

21 RELATED PARTIESThe Municipal Association of Victoria is a body corporate established under the Municipal Association Actof 1907 to provide services for and the representation of Local Government authorities in Victoria. TheAssociation and its wholly-owned controlled entities trade with its members in the normal course ofbusiness and on an arm’s length basis. The discreet nature of these transactions is not material. Therewere no material related party transactions during the year.DirectorsMEMBERS DURING THE YEARB A MathesonP H Watts (Ceased 5 July 2002)R J FyffeE Johnstone (Ceased 5 July 2002)J V ChandlerJ DaleM O’SheaG Hayes (Ceased 5 July 2002)G. Davey (Elected April 2003)

D. Cameron (Elected 5 July 2002 ceased March 2003)J. Ryan (Elected 5 July 2002)J. Eisenbise (Elected 5 July 2002)R. Perry (Elected 5 July 2002)G. Lake (Elected 5 July 2002)C. Papas (Elected 5 July 2002)S. Alessi (Elected 5 July 2002)D. Argall (Elected 5 July 2002)

CONSOLIDATED MAV - GENERAL FUND2003

$2002

$2003

$2002

$Remuneration of DirectorsTotal Income received or receivable by Directors 116,860 99,540 116,860 99,540

MAV - GENERAL FUND

Number of Directors of parent entity whose total income fallswithin the following bands:

2003$

2002$

$0 - $9,999$10,000 - $19,999$40,000 - $49,999

Loans to DirectorsNo loans were made to or are payable by Directors.

Other TransactionsThere were no other material transactions with Directors.

1511

1511

60

Financial Report MAV Annual Report 2003 Financial Report MAV Annual Report 2003

61

Statement by DirectorsIn the opinion of directors of The Municipal Association of Victoria:

(a) the accompanying Statement of Financial Performance is drawn up so as to give a true and fair view of thesurplus of the association for the year ended 30 June 2003;

(b) the accompanying Statement of Financial Position is drawn up so as to give a true and fair view of the stateof affairs of the association as at that date;

(c) at the date of this statement there are reasonable grounds to believe that the association will be able to payits debts as and when they fall due; and

(d) the accompanying Consolidated Financial Statements give a true and fair view of the matters with whichthey deal.The financial statements and consolidated financial statements have been made out in accordance withapplicable Accounting Standards and Urgent Issues Group Consensus Views.

Signed in accordance with the resolution of directors.

Consolidated Financial ReportsIndependent Audit ReportINDEPENDENT AUDIT REPORTTo the members of the Municipal Association of VictoriaSCOPEWe have audited the financial report of the Municipal Association of Victoria for the financial year endedJune 30 2003 as set out on pages 46 to 62. The financial report includes the consolidated entitycomprising the Municipal Association of Victoria and the entities it controlled at the year’s end or from timeto time during the financial year. The Municipal Association of Victoria’s directors are responsible for thefinancial report. We have conducted an independent audit of this financial report in order to express anopinion on it to the members of the Municipal Association of Victoria.Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonableassurance whether the financial report is free of material misstatement. Our procedures includedexamination, on a test basis, of evidence supporting the amounts and other disclosures in the financialreport, and the evaluation of accounting policies and significant accounting estimates. These procedureshave been undertaken to form an opinion whether, in all material respects, the financial report is presentedfairly in accordance with Accounting Standards and other mandatory professional reporting requirementsand statutory requirements so as to present a view which is consistent with our understanding of theMunicipal Association of Victoria’s and the consolidated entity’s financial position, and performance asrepresented by the results of their operations and their cash flows.The audit opinion expressed in this report has been formed on the above basis.AUDIT OPINION

Brad A. Matheson President

MELBOURNE5 December 2003

Julie Eisenbise Director In our opinion, the financial statements present fairly in accordance with Accounting Standards and othermandatory professional reporting requirements the financial position of the Association and the EconomicEntity as at 30 June 2003 the results of their operations and their cash flows for the year then ended.

PKFR. A. Dean Partner

Chartered AccountantsA Victorian Partnership

MELBOURNE5 December 2003

62

Financial Report MAV Annual Report 2003 Financial Report MAV Annual Report 2003

63

Other informationLEGAL FORMThe Municipal Association of Victoria is an Association Incorporated by the Municipal Association Act 1907

DOMICILEMelbourne, Australia

ADDRESS OF REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS:Level 12, 60 Collins Street, Melbourne, 3000, Australia

NATURE OF THE OPERATION AND PRINCIPAL ACTIVITIES:The Municipal Association of Victoria represents, promotes and supports the interest of Victorian localgovernments and their communities.

EMPLOYEESAverage number of equivalent full time employees during the year is 27.7EFT

64

Financial Report MAV Annual Report 2003

Aged Care and Positive Ageingsocial policy, 27

Annual Report Awardsoverview, 20winners, 20

Australian Local Government AssociationMAV representation, 21

Budget, Victorian GovernmentCEO’s report, 11economic & finance, 30

Catchment Planningcd release, 18

CEO’s Reportbudget, Victorian Government, 11childcare, wage increases, 11CMP, re-insurance of, 10financial performance, 11graduates, 11MAV influence, 10media relations, 11professional development, 11superannuation, 10

Children’s servicesSee Family and Children’s Services

CMPCEO’s report, 10financial overview, 37risk management, 12See also Insurance

Committeeslist of, 40 - 41

CommunicationsSee Information and CommunicationContinuous Improvement Programoverview, 33

Corporate Governanceannual roadshows, 12Freedom of Information, 13Information Privacy Act 2000 (Vic), 13integrated representation, 12risk management, 12

Cost shiftingMAV submissions, 30

Council Electionsyear in review, 4

Councillor Development Weekendoverview, 25

Economic and Financebudget, Victorian Government, 30challenges, 30future directions, 30

Environmentcommunication, 18future directions, 18sustainability, networking forum, 18waste management, 18

Family and Children’s Serviceschildcare, wage increases, 4, 11early childhood service delivery, 27

Fidelity Insurance Fundfinancial review, 37history of, 2See also Insurance

Financialfinancial performance, five years, 37grant monies, 37overview, 36 –37

Financial Reportaudit report, independent, 63financial statements, 46 – 61plain English guide to, 42 – 43

Freedom of Informationruling on, 13

Good Governanceadvisory group, 21council support, 21guide, 21

GraduatesCEO’s report, 11

HACC (Home andCommunity Care)

funding reforms, 5, 27program partnership, 27

Healthimproved planning, 27

Human Resourcesoccupational health andsafety, compliance with, 39recruitment, 39staff expertise, 39training & development, 39

Immunisationstudy funding, 27

Indigenousoverview, 21

Information and Communicationmedia profile / relationship, 38media strategies, 38overview, 38role, 38website development, 38

Infrastructure & Asset Managementfuture directions, 32

InsuranceMAV Insurance, 36reinsurance, 5, 10risk management, 12

Libraries, Publicadvocacy, 27

Local Government Buy Recycled Allianceconference, 18funding, additional, 18

Local Government Fellowshipoverview, 25

Local Government Online Projectoverview, 20

Local Government Update Billlobbying, 21

Management Board, MAVallowances, 13meetings, and attendance of, 13meetings structure, 13profile of, 8 –9structure of, 12

MAV Community Groups InsuranceScheme

saver of, 5Melbourne 2030

planning, 33year in review, 4

Municipal Association of Victoriaannual conference, 20history of, 2 – 3influence, 7, 10long-term lease, 7management board profile, 8 –9media relations, 11organisation structure, 15purpose, aim, objective, 1staff, 14year in review, 4 – 5native vegetation managementstudy, 18

NonfeasanceRoad Management Bill, 32Transport (Highway Rule) Act2002, 4

PERINeconomic & finance, 30year in review, 4

Planningcommunication, 33future directions, 33Melbourne 2030, 4, 33professional development, 33relationships, establishing, 33streamlined planning, 33system reforms, 33

Premier’s Award for ContinuousImprovement

winners, 20President’s Report

acknowledgment, 7full membership, 7long-term lease, 7MAV Board structure, 7MAV influence, 7organisational structure, 7

Professional Developmentcandidate information session, 25CEO’s report, 11councillor induction programs, 25courses, 25local government planners, 33

Risk Managementcorporate governance, 12

Roadsfunding priority, 32Road Management Bill, 32

Rural Zones Reviewcontribution to, 33

Sector Developmentcareer opportunities, 20future directions, 20

Social Policychallenges, 27future directions, 27partnership protocol, 27

State Governmentrelationship with, 5

Step Asset Management MentoringProgram

description of, 32Stormwater

clearwater program, 18Superannuation

economic & finance, 30shortfall in LAS, 4, 10

Sustainable Developmentforum, report back from WSS, 18MAV Local Sustainability Partnership, 18

Waste Managementenvironment, 18guidelines, timelines extended, 5

Water Managementcd release, 18Sustainable Water Use Plan program, 18

Weed Managementsurvey, 18

Wired Developmentbroadband, 33

Women’s ParticipationStrengthening Communities throughWomen’s Participation, 21Women’s Participation in LocalGovernment Coalition, 21

Municipal Association of Victoria Annual Report