Long Term Financial Planning for Councils
Long Term Financial Planning for Councils
Thursday, 1 October 2026
Key takeaways
- A long term financial plan (LTFP) is a projection of a council’s revenue, expenditure, cash flows, assets and liabilities over a minimum of ten years
- In NSW, the LTFP is a mandatory component of the Resourcing Strategy under the Integrated Planning and Reporting (IP&R) framework
- The LTFP tests whether a council can afford to deliver its Community Strategic Plan. Without it, the plan is aspiration without financial evidence
- Australian local governments collectively manage infrastructure assets valued at over $643 billion, making financial sustainability a question with real consequences for communities
- Building an LTFP requires public finance capability: revenue forecasting, expenditure modelling, asset renewal funding analysis and the ability to present financial trade offs to elected councillors
A long term financial plan (LTFP) is a forward looking projection of a council’s revenue, expenditure, cash flows, assets and liabilities over a minimum planning horizon of ten years. For example, in NSW, the LTFP is a mandatory component of the Resourcing Strategy under the Integrated Planning and Reporting (IP&R) framework. It sits alongside the workforce management plan and the asset management plan to form the three part test of whether the council has the capacity to deliver what its Community Strategic Plan (CSP) promises. A CSP that commits to maintaining road networks, building new community facilities and expanding services is only credible if the LTFP shows how those commitments will be funded over the next decade.
What does an LTFP contain?
An LTFP typically includes projected income statements, balance sheets and cash flow statements for each year of the planning period. It models revenue from rates, fees, grants and other sources. It projects operating expenditure by function (roads, waste, community services, governance). It estimates capital expenditure requirements for new assets and the renewal of existing ones. It calculates the funding gap: the difference between what the council needs to spend to maintain service levels and what its projected revenue can fund.
The OLG IP&R Guidelines require the LTFP to include projected income and expenditure, a balance sheet, a cash flow statement, a capital works program and a statement of the assumptions underlying the projections. The assumptions are as important as the numbers because they determine whether the projections are credible: what rate peg has been assumed? What grant indexation rate? What inflation factor for materials and labour?
Why is the LTFP the most important document in the Resourcing Strategy?
The asset management plan identifies the infrastructure renewal requirements. The workforce plan identifies the people needed. The LTFP is the document that tests whether the council can afford both. If the asset management plan says $200 million in renewal is needed over ten years but the LTFP shows only $140 million in available funding, there is a $60 million gap. That gap must be addressed through rate increases, service level reductions, debt funding, grant applications or a combination of all four. The LTFP makes the trade off visible.
In one example, the NSW Audit Office Local Government 2025 report assessed council financial sustainability against several indicators including the operating performance ratio, own source operating revenue ratio and infrastructure renewal ratio. Councils that maintain credible LTFPs perform better on these indicators because the planning process itself forces the financial discipline that the ratios measure.
What are the common challenges?
The first challenge is assumption quality. An LTFP built on optimistic assumptions (higher than likely rate increases, higher than likely grant funding, lower than likely cost inflation) produces a plan that looks affordable but is not. The second is political pressure. Councillors may resist the implications of a realistic LTFP because it reveals that current service levels are not sustainable without rate increases or service reductions. The third is integration. An LTFP that is not connected to the asset management plan and the capital works program will underestimate the funding required for infrastructure renewal.
The AASB standards framework provides the accounting standards that govern how council financial statements are prepared. The LTFP must be consistent with these standards, particularly in how assets are valued, how depreciation is calculated and how employee entitlements are recognised. A disconnect between the LTFP assumptions and the accounting standards creates a gap between what the plan promises and what the financial statements will show.
How can professionals build this capability?
AcademyGlobal (AG), the Chartered Institute of Procurement & Supply (CIPS) Centre of Excellence for Australia, New Zealand and Southeast Asia, is also the exclusive Australian partner for the Chartered Institute of Public Finance and Accountancy (CIPFA). AG’s CIPFA programs deliver public finance qualifications that build the analytical skills LTFPs demand: revenue forecasting, expenditure modelling, asset renewal funding analysis, financial reporting and accountability. For council finance professionals, the CIPFA qualifications provide the specialist public finance capability that makes the difference between an LTFP that satisfies compliance and one that genuinely informs council decisions. AG’s CIPFA Study Centre provides information on the full range of qualifications available.
A credible LTFP is the document that protects a community from financial surprises. It shows what can be afforded, what cannot and what trade offs must be made. The professionals who build them well are the ones whose councils make better decisions.
Frequently asked questions
What is a long term financial plan?
A projection of a council’s revenue, expenditure, cash flows, assets and liabilities over a minimum of ten years. It tests whether the council can afford to deliver its Community Strategic Plan.
Is an LTFP mandatory for NSW councils?
Yes. It is a mandatory component of the Resourcing Strategy under the IP&R framework. The IP&R Guidelines require projected financial statements, a capital works program and a statement of assumptions.
What is the most common mistake in LTFP preparation?
Optimistic assumptions. An LTFP built on higher than likely revenue or lower than likely costs produces a plan that looks affordable but is not. Sensitivity testing is essential.
How does the LTFP connect to the asset management plan?
The asset management plan identifies what needs to be renewed. The LTFP tests whether the council can afford the renewal program. The gap between the two is the central planning challenge.
Where can I build public finance capability for local government?
AcademyGlobal’s CIPFA programs build the specialist public finance skills that council LTFP preparation requires.