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The Department of Local Government, Sport and Cultural Industries (DLGSC) has been working collaboratively with stakeholders and industry experts since 2019 to design a new Local Government Financial Index (LGFI). 

The LGFI will provide at-a-glance insights about local government financial positions, based on annual financial year reporting. It will replace the previous Financial Health Indicator (FHI) used on the MyCouncil website.

Local Government Financial Index ratios

The new LFGI consists of four ratios: 

• Debt Services Cover Ratio 
• Current Ratio
• Operating Surplus Ratio
• Net Financial Liability Ratio.

The updated point-in-time reporting of liquidity, solvency and financial flexibility for the LGFI is now ready to share with the sector, and a 2-year trial of the LGFI has been endorsed by the Minister for Local Government. 

To commence this trial, the Western Australian Treasury Corporation (WATC) and DLGSC have compiled 5 years of financial reporting data to create LGFI workbooks for each local government, with an LGFI result for each financial year from 2018/19 to 2022/23. 

Reviewing data for LGFI scores

Local governments will receive an email from DLGSC with more information, their LGFI workbooks and instructions on how to review, amend and verify the data for their LGFI scores.

Once the workbook data has been verified, local governments will return their LGFI workbooks to DLGSC by 29 November 2024 to enable publication on the MyCouncil website. 

Thank you to working group members from DLGSC, WATC, the Western Australian Local Government Association, Local Government Professionals WA, and Ron Back and Associates, for their collective efforts in developing this valuable and insightful tool for local governments, ratepayers and residents.