City of Brisbane Amendment Regulation (No. 2) 1997 (Qld)

Queensland Subordinate Legislation 1997 No. 405 City of Brisbane Act 1924 CITY OF BRISBANE AMENDMENT REGULATION (No. 2) 1997 TABLE OF PROVISIONS Section Page 1 Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 Regulation amended . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 Insertion of pt heading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PART 1—PRELIMINARY 4 Insertion of pt heading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PART 2—GENERAL 5 Omission of s 3 (Vacancy not to be filled) . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Renumbering of s 2 (Names and boundaries of electoral wards) . . . . . . . . 5 7 Insertion of new s 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 8 Insertion of new pts 3 to 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 PART 3—FULL COST PRICING Division 1—Preliminary 7 Object of pt 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Application of pt 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Division 2—Full cost pricing Subdivision 1—Matters affecting full cost pricing 9 Matters affecting full cost pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Subdivision 2—Full cost pricing 10 Application of full cost pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2 City of Brisbane Amendment (No. 2) No. 405, 1997 11 Different charges for commercial reasons . . . . . . . . . . . . . . . . . . . . . 8 12 Total costs of carrying on activity . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 13 Administrative and overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 14 Cost of resources used in carrying on activity . . . . . . . . . . . . . . . . . . 9 15 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 16 Equivalents for taxes not otherwise liable to be paid . . . . . . . . . . . . 9 17 Return on capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Subdivision 3—Treatment of community service obligations 18 Extra cost for community service obligations to be treated as revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Subdivision 4—reporting 19 Statement in budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 20 Statement in annual report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PART 4—CODE OF COMPETITIVE CONDUCT Division 1—Preliminary 21 Object of pt 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 22 Application of code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Division 2—The code Subdivision 1—Elements of the code 23 Elements of the code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Subdivision 2—Full cost pricing 24 Application of full cost pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 25 Different charges for commercial reasons . . . . . . . . . . . . . . . . . . . . . 14 26 Total costs of carrying on activity . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 27 Administrative and overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 28 Cost of resources used in carrying on activity . . . . . . . . . . . . . . . . . . 15 29 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 30 Equivalents for taxes not otherwise liable to be paid . . . . . . . . . . . . 16 31 Equivalents for State guarantees on borrowings . . . . . . . . . . . . . . . . 16 32 Return on capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Subdivision 3—Treatment of community service obligations 33 Extra cost for community service obligations to be treated as revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3 City of Brisbane Amendment (No. 2) No. 405, 1997 34 Community service obligations not to be part of roads business activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Subdivision 4—Elimination of, or taking into account, advantages and disadvantages of public ownership 35 Effect of advantages or disadvantages of public ownership . . . . . . . 18 Subdivision 5—Financial reporting 36 Statement in budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 37 Omission of certain matters from statement in budget . . . . . . . . . . . 19 38 Statement in annual report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 39 Omission of certain matters from statement in annual report . . . . . 20 PART 5—REFORM OF CERTAIN WATER AND SEWERAGE SERVICES Division 1—Preliminary 40 Object of pt 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Division 2—Matters to be complied with Subdivision 1—Matters to be complied with for relevant business activities 41 Matters to be complied with for relevant business activities . . . . . . 21 Subdivision 2—Consumption as the basis for utility charges for water services 42 Application of sdiv 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 43 Consumption as the basis for utility charges . . . . . . . . . . . . . . . . . . . 22 44 When charges are based on quantity of water supplied . . . . . . . . . . 22 Subdivision 3—Full cost recovery 45 Application of sdiv 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 46 Application of full cost recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 47 Total costs of carrying on relevant business activity . . . . . . . . . . . . 23 48 Administrative and overhead costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 49 Cost of resources used in carrying on relevant business activity . . . 24 50 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 51 Return on capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Subdivision 4—Treatment of community service obligations 52 Extra cost for community service obligations to be treated as revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

4 City of Brisbane Amendment (No. 2) No. 405, 1997 Subdivision 5—Identification and disclosure of cross-subsidies between classes of consumers 53 Disclosure of cross-subsidies in annual report . . . . . . . . . . . . . . . . . . 25 Subdivision 6—Disclosure of community service obligations 54 Disclosure of community service obligations . . . . . . . . . . . . . . . . . . 25 Division 3—Two-part tariffs 55 Utility charges if two-part tariffs applied . . . . . . . . . . . . . . . . . . . . . . 26

s1 5 s7 City of Brisbane Amendment (No. 2) No. 405, 1997 ˙ Short title 1. This regulation may be cited as the City of Brisbane Amendment Regulation (No. 2) 1997 . ˙ Regulation amended 2. This regulation amends the City of Brisbane Regulation 1993 . ˙ Insertion of part heading 3. Before section 1— insert — ‘ PART 1—PRELIMINARY ’. ˙ Insertion of part heading 4. After section 1— insert — ‘ PART 2—GENERAL ’. ˙ Omission of s 3 (Vacancy not to be filled) 5. Section 3— omit . ˙ Renumbering of s 2 (Names and boundaries of electoral wards) 6. Section 2— renumber as section 3. ˙ Insertion of new s 2 7. After section 1— insert —

s7 6 s7 City of Brisbane Amendment (No. 2) No. 405, 1997 ˙ ‘ Definitions ‘ 2. In this regulation— “Commonwealth tax” means tax imposed under a Commonwealth Act. “community service obligations” means— (a) for an activity carried on by a corporatised corporation under chapter 7A, part 6 of the Local Government Act—see section 458I 1 of the Local Government Act; or (b) for an activity carried on by a commercial business unit of the council—see section 458CJ 2 of the Local Government Act; or (c) for another activity carried on by the council—the obligations to do anything the council is satisfied— (i) if the activity were to be carried on by an entity with the primary object of making a profit—would not be in the entity’s commercial interests to perform; and (ii) arise because of a direction by the council. “entity” , for part 5, see section 41. 3 “full cost pricing” , for part 3, see section 458CA 4 of the Local Government Act. “relevant business activity” , for part 5, see section 458NB 5 of the Local Government Act. “roads business activity” , for part 4, see section 458MC 6 of the Local Government Act. “State tax” means tax imposed under an Act, including the Local Government Act. “tax” includes a charge, duty, fee, levy or rate.’. 1 Section 458I (Meaning of “community service obligations”) 2 Section 458CJ (Definitions for pt 5) 3 Section 41 (Matters to be complied with for relevant business activities) 4 Section 458CA (Meaning of “full cost pricing”) 5 Section 458NB (Meaning of relevant business activity) 6 Section 458MC (Definitions for ch 7B)

s8 7 s8 City of Brisbane Amendment (No. 2) No. 405, 1997 ˙ Insertion of new pts 3–5 8. After section 6— insert — ‘ PART 3—FULL COST PRICING ‘ Division 1—Preliminary ˙ ‘ Object of pt 3 ‘ 7. The object of this part is to make standards about requirements for full cost pricing for chapter 7A, part 4 of the Local Government Act. ˙ ‘ Application of pt 3 ‘ 8. This part applies to the council’s implementation of full cost pricing for its significant business activities under chapter 7A, part 4 of the Local Government Act. ‘ Division 2—Full cost pricing ‘ Subdivision 1—Matters affecting full cost pricing ˙ ‘ Matters affecting full cost pricing ‘ 9. The matters affecting full cost pricing are— (a) full cost pricing; and (b) treatment of community service obligations; and (c) elimination, or taking account, of advantages and disadvantages of public ownership; and (d) financial reporting.

s8 8 s8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ Subdivision 2—Full cost pricing ˙ ‘ Application of full cost pricing ‘ 10. In deciding charges to clients for goods and services provided in carrying on an activity, the council must ensure the projected total revenue from carrying on the activity is enough to cover the projected total costs of carrying on the activity for the council’s financial year. ˙ ‘ Different charges for commercial reasons ‘ 11.(1) A charge may be decided for the provision of specific goods or services in carrying on an activity that is, for commercial reasons, an appropriate charge for the goods or services provided. ‘ (2) For subsection (1), a charge is, for commercial reasons, an appropriate charge if it is a charge that could reasonably be charged if the goods or services had been provided by an entity carrying on the activity with the primary object of making a profit from carrying on the activity. ˙ ‘ Total costs of carrying on activity ‘ 12.(1) For this subdivision, the total costs of carrying on an activity include the following— (a) operational costs incurred in carrying on the activity; (b) administrative and overhead costs; (c) cost of resources used in carrying on the activity; (d) depreciation; (e) equivalents for Commonwealth or State taxes the council is not liable to pay because it is a local government; (f) equivalents for the cost of funds advantage the council obtains over commercial interest rates because of State guarantees on borrowings; 7 (g) return on capital. 7 See section 458CB of the Local Government Act (Guarantees by State).

s8 9 s8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ (2) The total costs must be adjusted for other advantages and disadvantages of public ownership that are not eliminated. 8 ˙ ‘ Administrative and overhead costs ‘ 13. The council must make a reasonable allocation of its administrative and overhead costs to each activity to which full cost pricing is applied. ˙ ‘ Cost of resources used in carrying on activity ‘ 14.(1) If resources are provided by or to the council for carrying on an activity, the cost of resources used in carrying on the activity includes an equivalent cost. ‘ (2) If the resources have an identifiable cost, the cost of the resources may be taken to be the equivalent cost. ‘ (3) If subsection (2) does not apply and the resources are readily available on the open market, the price at which they can be obtained in the market may be taken to be the equivalent cost. ‘ (4) If subsection (3) is applied, the council must ensure the terms on which the cost is based are similar to the terms on which they are made available in carrying on the activity. ˙ ‘ Depreciation ‘ 15. Depreciation of each asset used in carrying on an activity must be based on the deprival value of the asset allocated over its useful life. ˙ ‘ Equivalents for taxes not otherwise liable to be paid ‘ 16.(1) If, in carrying on an activity, the council would be liable for a Commonwealth or State tax if the council were not a local government, the amount equivalent to the tax must be included in the total costs of the activity. ‘ (2) In working out the equivalent amounts, the council must, if 8 See section 458CA(2) of the Local Government Act (Meaning of “full cost pricing”).

s 8 10 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 appropriate, apply the general principles of the tax equivalents manual issued under section 458CO 9 of the Local Government Act that apply to activities carried on by commercial business units. ‘ (3) Subsection (2) does not, of itself, require compliance with any processes or other requirements under the manual but the council must keep details of calculations done in working out the equivalent amounts for 7 years. ‘ (4) For a tax not dealt with in the manual, estimates of amounts that a private sector entity carrying on the business would calculate to be its liability to the tax must be included. ˙ ‘ Return on capital ‘ 17.(1) The amount for the return on the capital used in carrying on an activity must be decided using the rate at which, in the opinion of the council, a comparable private sector entity carrying on the activity would be able to obtain the capital in the market, having regard to the split the council considers appropriate, for the type of business, between equity and loan capital and the return appropriate to each. ‘ (2) Despite subsection (1), the amount for the return on the capital used in carrying on an activity for the first year in which full cost pricing applies to the activity may be the amount the council decides. ‘ (3) In this section— “capital used in carrying on an activity” means the total value (using an accepted accountancy method) of the assets used for the activity less the liabilities attributable to the activity. ‘ Subdivision 3—Treatment of community service obligations ˙ ‘ Extra cost for community service obligations to be treated as revenue ‘ 18. If community service obligations are carried out as part of an activity, for deciding charges for goods and services provided through the 9 Section 458CO (Commonwealth and State tax equivalents)

s 8 11 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 activity, there must be treated as revenue for the activity an amount equivalent to— (a) the cost of carrying out the obligations; less (b) any revenue arising from carrying out the obligations. ‘ Subdivision 4—reporting ˙ ‘ Statement in budget ‘ 19.(1) Each budget of the council must include a statement about its activities to which full cost pricing applies. ‘ (2) The statement must, for each activity— (a) show the estimated revenues; and (b) show the estimated expenses including any items required to be taken into account for full cost pricing other than return on capital; and (c) include the estimated surplus or deficit for the financial year; and (d) include a description of the nature of community service obligations to be provided. ‘ (3) The statement must disclose, for each activity, as estimated revenues, the following items separately— (a) estimated revenue for services to be provided by the activity to clients other than the council; (b) estimated revenue for services to be provided by the activity to the council; (c) the estimated cost of, less any estimated revenue arising from, carrying out community service obligations provided under the activity. ‘ (4) The statement must disclose, for each activity, as estimated expenses, the following items separately— (a) operational costs including— (i) administrative and overhead costs; and

s 8 12 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 (ii) cost of resources to be used in carrying on the activity; (b) depreciation; (c) competitive neutrality adjustments including— (i) equivalents for taxes other than income tax; and (ii) equivalents for the cost of funds advantage the council obtains over commercial interest rates because of State guarantees on borrowings; and (iii) adjustments for advantages and disadvantages of public ownership of the activity. ˙ ‘ Statement in annual report ‘ 20.(1) The council must include in the financial statements in its annual report a statement about its activities to which full cost pricing applies. ‘ (2) The statement must, for each activity— (a) show the revenues; and (b) show the expenses including any items required to be taken into account for full cost pricing other than return on capital; and (c) include the surplus or deficit for the financial year; and (d) include a description of the nature of community service obligations provided. ‘ (3) The statement must disclose, for each activity, as revenues, the following items separately— (a) revenue for goods and services provided to clients other than the council in carrying on the activity; (b) revenue for goods and services provided to the council in carrying on the activity; (c) the cost of, less any revenue arising from, carrying out community service obligations provided under the activity. ‘ (4) The statement must disclose, for each activity, as expenses, the following items separately— (a) operational costs including—

s 8 13 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 (i) administrative and overhead costs; and (ii) cost of resources used in carrying on the activity; (b) depreciation; (c) competitive neutrality adjustments including— (i) equivalents for taxes other than income tax; and (ii) equivalents for the cost of funds advantage the council obtains over commercial interest rates because of State guarantees on borrowings; and (iii) adjustments for advantages and disadvantages of public ownership of the activity. ‘ PART 4—CODE OF COMPETITIVE CONDUCT ‘ Division 1—Preliminary ˙ ‘ Object of pt 4 ‘ 21. The object of this part is to make standards about a code of competitive conduct for chapter 7B of the Local Government Act. ˙ ‘ Application of code ‘ 22. This code applies to an activity of the council— (a) if it is a roads business activity—from when it is to apply under section 458ME 10 of the Local Government Act; or (b) if it is a business activity to which the council has resolved to apply the code—while the resolution is effective under section 458MH 11 of the Local Government Act; or 10 Section 458ME (Code must be applied to roads business activities) 11 Section 458MH (Local government to resolve whether to apply code of competitive conduct to business activities)

s 8 14 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 (c) if it is another activity to which the council applies the code 12 —in accordance with the council’s decision to apply the code. ‘ Division 2—The code ‘ Subdivision 1—Elements of the code ˙ ‘ Elements of the code ‘ 23. The elements of the code are— (a) full cost pricing; and (b) treatment of community service obligations; and (c) elimination, or taking account, of advantages and disadvantages of public ownership; and (d) financial reporting. ‘ Subdivision 2—Full cost pricing ˙ ‘ Application of full cost pricing ‘ 24. In deciding charges to clients for goods and services provided in carrying on an activity, the council must ensure the projected total revenue from carrying on the activity is enough to cover the projected total costs of carrying on the activity for the council’s financial year or a longer period (not more than 5 years) decided by the council. ˙ ‘ Different charges for commercial reasons ‘ 25.(1) A charge may be decided for the provision of specific goods or services in carrying on an activity that is, for commercial reasons, an appropriate charge for the goods or services provided. 12 Under section 458MI of the Local Government Act, the council is not prevented from applying the code to other activities.

s 8 15 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ (2) For subsection (1), a charge is, for commercial reasons, an appropriate charge if it is a charge that could reasonably be charged if the goods or services had been provided by an entity carrying on the activity with the primary object of making a profit from carrying on the activity. ˙ ‘ Total costs of carrying on activity ‘ 26.(1) For this subdivision, the total costs of carrying on an activity include the following— (a) operational costs incurred in carrying on the activity; (b) administrative and overhead costs; (c) cost of resources used in carrying on the activity; (d) depreciation; (e) equivalents for Commonwealth or State taxes the council is not liable to pay because it is a local government; (f) equivalents for the cost of funds advantage the council obtains over commercial interest rates because of State guarantees on borrowings; (g) return on capital. ‘ (2) The total costs must be adjusted for other advantages and disadvantages of public ownership that are not eliminated. ˙ ‘ Administrative and overhead costs ‘ 27. The council must make a reasonable allocation of its administrative and overhead costs to each activity to which the code applies. ˙ ‘ Cost of resources used in carrying on activity ‘ 28.(1) If resources are provided by or to the council for carrying on an activity, the cost of resources used in carrying on the activity includes an equivalent cost. ‘ (2) If the resources have an identifiable cost, the cost of the resources may be taken to be the equivalent cost.

s 8 16 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ (3) If subsection (2) does not apply and the resources are readily available on the open market, the price at which they can be obtained in the market may be taken to be the equivalent cost. ‘ (4) If subsection (3) is applied, the council must ensure that the terms on which the cost is based are similar to the terms on which they are made available in carrying on the activity. ˙ ‘ Depreciation ‘ 29. Depreciation of each asset used in carrying on an activity must be based on the deprival value of the asset allocated over its useful life. ˙ ‘ Equivalents for taxes not otherwise liable to be paid ‘ 30.(1) If, in carrying on an activity, the council would be liable for a Commonwealth or State tax if the council were not a local government, the amount equivalent to the tax must be included in the total costs of the activity. ‘ (2) In working out the equivalent amounts, the council must, if appropriate, apply the general principles of the tax equivalents manual issued under section 458CO 13 of the Local Government Act that apply to activities carried on by commercial business units. ‘ (3) Subsection (2) does not, of itself, require compliance with any processes or other requirements under the manual but the council must keep details of calculations done in working out the equivalent amounts for 7 years. ‘ (4) For a tax not dealt with in the manual, estimates of amounts that a private sector entity carrying on the business would calculate to be its liability to the tax must be included. ˙ ‘ Equivalents for State guarantees on borrowings ‘ 31. If the State guarantees repayment of a debt of the council attributed to an activity, the council must in carrying on the activity take account of 13 Section 458CO (Commonwealth and State tax equivalents)

s 8 17 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 amounts equivalent to the cost of funds advantage the council obtains over commercial interest rates because of the guarantee. ˙ ‘ Return on capital ‘ 32.(1) The amount for the return on the capital used in carrying on an activity must be decided using the rate at which, in the opinion of the council, a comparable private sector entity carrying on the activity would be able to obtain the capital in the market, having regard to the split the council considers appropriate for the type of business between equity and loan capital and the return appropriate to each. ‘ (2) Despite subsection (1), the amount for the return on the capital used in carrying on an activity for the first year in which the code applies to the activity may be the amount the council decides. ‘ (3) In this section— “capital used in carrying on an activity” means the total value (using an accepted accounting method) of the assets used for the activity less the liabilities attributable to the activity. ‘ Subdivision 3—Treatment of community service obligations ˙ ‘ Extra cost for community service obligations to be treated as revenue ‘ 33. If community service obligations are carried out as part of an activity, for deciding charges for goods and services provided through the activity, there must be treated as revenue for the activity an amount equivalent to— (a) the cost of carrying out the obligations; less (b) any revenue arising from carrying out the obligations. ˙ ‘ Community service obligations not to be part of roads business activities ‘ 34. Community service obligations must not be included in offers or competitive tenders submitted for roads business activities carrying out work on State-controlled roads.

s 8 18 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ Subdivision 4—Elimination of, or taking into account, advantages and disadvantages of public ownership ˙ ‘ Effect of advantages or disadvantages of public ownership ‘ 35. The council must ensure— (a) if possible and appropriate, any advantages or disadvantages arising because an activity is publicly owned are eliminated; and (b) if the advantages or disadvantages are not eliminated—they are taken into account in deciding full cost pricing for the activity. ‘ Subdivision 5—Financial reporting ˙ ‘ Statement in budget ‘ 36.(1) Each budget of the council must include a statement about its activities to which the code applies. ‘ (2) The statement must, for each activity— (a) show the estimated revenues; and (b) show the estimated expenses including any items required to be taken into account for full cost pricing other than return on capital; and (c) include the estimated surplus or deficit for the financial year; and (d) include a description of the nature of community service obligations to be provided. ‘ (3) The statement must disclose, for each activity, as estimated revenues, the following items separately— (a) estimated revenue for services to be provided by the activity to clients other than the council; (b) estimated revenue for services to be provided by the activity to the council; (c) the estimated cost of, less any estimated revenue arising from,

s 8 19 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 carrying out community service obligations provided under the activity. ˙ ‘ Omission of certain matters from statement in budget ‘ 37. A statement in a budget of the council under section 36 may include a summary of a matter required to be included in the budget, rather than a full statement of the matter, if— (a) the summary indicates— (i) it is a summary only; and (ii) a full statement of the matter is available for inspection and purchase at the council’s office; and (b) a full statement of the matter is available for inspection and purchase at the council’s office. ˙ ‘ Statement in annual report ‘ 38.(1) The council must include in the financial statements in its annual report a statement about its activities to which the code applies. ‘ (2) The statement must, for each activity— (a) show the revenues; and (b) show the expenses including any items required to be taken into account for full cost pricing other than return on capital; and (c) include the surplus or deficit for the financial year; and (d) include a description of the nature of community service obligations provided. ‘ (3) The statement must disclose, for each activity, as revenues, the following items separately— (a) revenue for goods and services provided to clients other than the council in carrying on the activity; (b) revenue for goods and services provided to the council in carrying on the activity;

s 8 20 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 (c) the cost of, less any revenue arising from, carrying out community service obligations provided under the activity. ˙ ‘ Omission of certain matters from statement in annual report ‘ 39. A statement in an annual report of the council under section 38 may include a summary of a matter required to be included in the annual report, rather than a full statement of the matter, if— (a) the summary indicates— (i) it is a summary only; and (ii) a full statement of the matter is available for inspection and purchase at the council’s office; and (b) a full statement of the matter is available for inspection and purchase at the council’s office. ‘ PART 5—REFORM OF CERTAIN WATER AND SEWERAGE SERVICES ‘ Division 1—Preliminary ˙ ‘ Object of pt 5 ‘ 40. The object of this part is to make standards about requirements for the reform of certain water and sewerage services under chapter 7C of the Local Government Act for relevant business activities of the council and its corporatised corporations.

s 8 21 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ Division 2—Matters to be complied with ‘ Subdivision 1—Matters to be complied with for relevant business activities ˙ ‘ Matters to be complied with for relevant business activities ‘ 41. In complying with section 458NN 14 of the Local Government Act in relation to its relevant business activities, the council or its corporatised corporation (in each case, the “entity” ) must comply with the following matters in this division— (a) if the local government has resolved that a two-part tariff is to be applied for an activity—a two-part tariff; (b) consumption as the basis for utility charges for water services; (c) full cost recovery for water and sewerage services; (d) identification and disclosure of cross-subsidies between classes of consumers; (e) identification and disclosure of community service obligations; (f) disclosure of the classes of consumers provided with water and sewerage services at an amount below full cost and the amount. ‘ Subdivision 2—Consumption as the basis for utility charges for water services ˙ ‘ Application of sdiv 2 ‘ 42. This subdivision applies to the extent that an entity’s relevant business activity provides water services. 14 Section 458NN (Local governments to implement charging and operational arrangements for relevant business activities)

s 8 22 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ˙ ‘ Consumption as the basis for utility charges ‘ 43. In deciding the utility charges to be made for the supply of water services provided by a relevant business activity, an entity must ensure the charges are based on the quantity of water supplied. ˙ ‘ When charges are based on quantity of water supplied ‘ 44.(1) A utility charge for water services is based on the quantity of water supplied by the entity if it is worked out on a basis stated in subsection (2), (3) or (4). ‘ (2) If utility charges are worked out based on meter readings of water consumed, the utility charges for consumers or groups of consumers must be based on either— (a) a fixed amount and a further amount or further amounts for each unit or part of a unit of the quantity of water supplied greater than a stated unit or units; or (b) an amount or amounts for units or part of a unit of the quantity of water supplied. ‘ (3) The utility charge for consumers in a group must be based on the estimated average consumption by all consumers in the group if— (a) utility charges are not based on a meter reading of water consumed; and (b) the consumers are divided by the entity into groups based on the estimated average quantity of water expected to be supplied to consumers in each group. Example for subsection (3) — The council could, by sampling or other ways, work out the average usage of domestic consumers was 300 kL a year and the average of commercial consumers was 2 000 kL a year. The utility charge could then be based on a notional access charge of say, for domestic consumers—$100 and, for commercial consumers—$600 and a notional usage charge of $1 for each kL. The charges would be $400 for domestic consumers and $2 600 for commercial consumers. Given the considerable variability of consumption across commercial consumers, it would be preferable to further divide them by type and carry out separate assessments for each. Some of the commercial users may be metered and charged on the basis of actual consumption in which case subsection (3) would not apply to them.

s 8 23 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ (4) If a utility charge for water services is not made under subsection (2) or (3), the charge must be worked out on a basis the entity considers appropriate to determine the reasonably likely consumption by the consumer. ‘ (5) Subsections (2) to (4) do not prevent a utility charge for supply of water services also including an access amount. ‘ Subdivision 3—Full cost recovery ˙ ‘ Application of sdiv 3 ‘ 45. This subdivision does not apply to an entity deciding the charges for water and sewerage services provided to clients in carrying on a relevant business activity if the entity applies full cost pricing under part 3 in deciding the charges. ˙ ‘ Application of full cost recovery ‘ 46. In deciding the charges for water and sewerage services provided to clients in carrying on a relevant business activity, an entity must ensure the projected total revenue from carrying on the activity is enough to cover the projected total costs of carrying on the activity for a financial year. ˙ ‘ Total costs of carrying on relevant business activity ‘ 47. For this subdivision, the total costs of carrying on a relevant business activity include the following— (a) operational costs incurred in carrying on the activity; (b) administrative and overhead costs; (c) cost of resources used in carrying on the activity; (d) depreciation; (e) return on capital employed.

s 8 24 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ˙ ‘ Administrative and overhead costs ‘ 48. The entity must make a reasonable allocation of its administrative and overhead costs to each relevant business activity to which full cost recovery is applied. ˙ ‘ Cost of resources used in carrying on relevant business activity ‘ 49.(1) If resources are provided by or to an entity for carrying on a relevant business activity, the cost of resources used in carrying on the activity includes an equivalent cost. ‘ (2) If the resources have an identifiable cost, the cost of the resources may be taken to be the equivalent cost. ‘ (3) If subsection (2) does not apply and the resources are readily available on the open market, the price at which they can be obtained in the market may be taken to be the equivalent cost. ‘ (4) If subsection (3) is applied, the entity must ensure the terms on which the cost is based are similar to the terms on which they are made available in carrying on the activity. ˙ ‘ Depreciation ‘ 50. Depreciation of each asset used in carrying on an activity must be based on the deprival value of the asset allocated over its useful life. ˙ ‘ Return on capital ‘ 51.(1) The amount for the return on the capital used in carrying on a relevant business activity must be a positive real rate decided by the entity. ‘ (2) In this section— “capital used in carrying on a relevant business activity” means the total value (using an accepted accounting method) of the assets used for the activity less the liabilities attributable to the activity.

s 8 25 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 ‘ Subdivision 4—Treatment of community service obligations ˙ ‘ Extra cost for community service obligations to be treated as revenue ‘ 52. If community service obligations are carried out as part of a relevant business activity, for deciding charges for goods and services provided through the activity, there must be treated as revenue for the activity an amount equivalent to— (a) the cost of carrying out the obligations; less (b) any revenue arising from carrying out the obligations. ‘ Subdivision 5—Identification and disclosure of cross-subsidies between classes of consumers ˙ ‘ Disclosure of cross-subsidies in annual report ‘ 53. In its annual report, an entity must state the amount of any cross-subsidies between the following classes of consumers, for water or sewerage services provided for the financial year— (a) domestic consumers; (b) commercial consumers; (c) industrial consumers; (d) another class decided by the entity; (e) other consumers. ‘ Subdivision 6—Disclosure of community service obligations ˙ ‘ Disclosure of community service obligations ‘ 54. An entity must disclose in its annual report— (a) community service obligations carried out during the financial year as part of a relevant business activity; and

s 8 26 s 8 City of Brisbane Amendment (No. 2) No. 405, 1997 (b) the cost of, less any revenue arising from, carrying out the obligations. ‘ Division 3—Two-part tariffs ˙ ‘ Utility charges if two-part tariffs applied ‘ 55. If the council decides under chapter 7C, part 4 of the Local Government Act to apply a two-part tariff for a relevant business activity that provides water services, the utility charges for water services must be worked out under section 44(2)(b) and (5). 15 ’. ENDNOTES 1. Made by the Governor in Council on 27 November 1997. 2. Notified in the gazette on 28 November 1997. 3. Laid before the Legislative Assembly on . . . 4. The administering agency is the Department of Local Government and Planning. © State of Queensland 1997 15 Section 44 (When charges are based on quantity of water supplied)