1

Context Keith Suter Federal Government dollars Role of LG LG wants more money…..in return for? What will we do with more money? IGA Funding gap….how do we manage the gap?

2

Policy Strategy Plans Operations

Range F - B F – B D – C D - A

Target 2003 D D D D

Target 2004 C C C C

Victorian Local Government Performance

Target 2003 & 2004 are ‘minimum’ targets: every Council is to be above these & most will be aiming higher

3

MAV Renewal Gap Program – Key Objectives

Size of renewal “liability” for all asset classes for 20-50

yrs

Under & over funding by asset class

Growth & decline of gap by class

% asset class outside desired intervention – service

sustainability

What to do about it? Management options

4

MAV Renewal Gap Program – Key Objectives

Assist aligning financials and asset management; is

your current depreciation funding adequate?

Develop Asset Management plans for all asset

classes

Demonstrate to stakeholders LG capability re AM

LG becomes source of knowledge for LG AM

5

MAV RENEWAL - STATEWIDE RESULTS

Capital Funding Gap By Asset Class - 73 Councils

-50,000,000

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

Roads Bridges Storm Water Buildings Recreation All Assets

Ann

ual F

undi

ng G

ap in

$

Annual Gap Funding 06 - 11 Annual Funding Gap 11 - 16 Annual Funding Gap 16 - 21

6

MAV AVERAGE RESULTSPresent Annual Funding Gap Expressed as % of Total Rate Revenue

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

22.00

24.00

26.00

13 Inner MetroCouncils

12 Outer MetroCouncils

All 11 RegionalCities

All 15 LargeShires

All 22 SmallShires

All 73 Councils

Pe

rce

nta

ge

7

MAV Renewal Gap Program – Size of renewal “liability” for all asset classes for 20-50 yrs

50-YEAR AGGREGATED CAPITAL FUNDING GAP in $ Separated by asset type

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2006 2011 2016 2021 2026 2031 2036 2041 2046 2051

First Year Ahead of each 5-Year Averaged Group

Sporting Ovals

Playground Equipment

Building Fit Out

Build Mechanical Services

Building Roof

Build Struc- Short life

Build Struc- Long life

Storm Water Pipes

Storm Water Pits

Bridges + Maj Culverts Short Life

Bridges + Maj Culverts Long Life

All Kerbs

Other Footpaths

Concrete Footpaths

All Spray Seals

All Asphalt Surfaces

All Gravel Resheets

Pavement (Sealed Access Rds)

Pavement (Sealed Collector Rds)

Pavement (Sealed Link Rds)

8

MAV Renewal Gap Program – % asset class outside desired intervention

9

% of Asset Base Presently at and Above Intervention Level

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

All SealedRoads

All UnsealedRoads

All Bridges Storm Water Building Recreation

Inner Metro Outer Metro Regional City Large Shire Small Shire

10

% of Asset Base at and above Intervention Level All 73 Councils

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Build Struc-Long life

Build Struc-Short life

Building Roof BuildM echanical

Services

Building FitOut

PlaygroundEquipment

Sporting Ovals

% of

Ass

et Ba

se P

rese

ntly A

bove

Inter

venti

on

Highest Value Mean + 1 St Dev (Suggested Upper Limit)

Mean Mean - 1 St Dev (Suggested Lower Limit)

Lowest Value

11

Average Retreatment Intervention Condition Level

6.0

6.5

7.0

7.5

8.0

8.5

Pavement(Sealed Link Rds)

Pavement(Sealed Collector

Rds)

Pavement(Sealed Access

Rds)

All GravelResheets

All AsphaltSurfaces

All Spray Seals

Inner Metro Outer Metro Regional City Large Shire Small Shire

12

Unit Rehabilitation Cost All 73 Councils

0.00

20.00

40.00

60.00

80.00

100.00

120.00

GravelResheets

AsphaltSurfaces

Spray Seals ConcreteFootpaths

OtherFootpaths

All Kerbs

Uni

t Reh

abili

tatio

n C

ost i

n $

Highest Value Mean + 1 St Dev (Suggested Upper Limit)Mean Mean - 1 St Dev (Suggested Lower Limit)

Lowest Value

13

Present Annual Funding Gap Expresses as % of Asset Group Replacement Value

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Roads Bridges Storm Water Buildings Recreation All Assets

Per

cent

age

All 73 Councils 13 Inner Metro Councils 12 Outer Metro Councils All 11 Regional Cities All 15 Large Shires All 22 Small Shires

14

MAV RENEWAL OUTCOMES-Variations in Asset Life

Adopted Asset Life Graph All 73 Councils

0.00

20.00

40.00

60.00

80.00

100.00

120.00

Gravel Resheets Asphalt Surfaces Spray Seals ConcreteFootpaths

Other Footpaths All Kerbs

Ass

et C

on

dit

ion

0 G

oo

d 1

0 P

oo

r

Highest Value Mean + 1 St Dev (Suggested Upper Limit)Mean Mean - 1 St Dev (Suggested Lower Limit)Lowest Value

15

The Advanced Step Asset Management improvement ProgramManaging Our Assets towards Sustainability in Service Delivery & meeting community expectations

16

Progressing the Step program

Stage 1(3 years)

Awareness

Stage 2(4 - 6 years)

Application

Stage 3(6+ years)

Refinement

2003 - 2006

17

Key Themes We make good quality decisions

We know who is involved in the management of the assets

We plan well for our current and future community needs

Our community drives the levels of service

We know what we own and what is needed to deliver the

required service to our community

We know and provide the level of funding for our assets to

meet the community needs

18

Ararat Council

Road funding gap: $1.8m pa What to do? Options: rates up 18%pa or ? Reclassify roads & change levels of service What does this mean? Community support Funding gap now $300,000pa

19

Glenelg Shire Council

Population : ~20,000 people

Number of Buildings : 211

Estimated replacement value : $69M

20

Acts & RegulationsActs & Regulations

Council Plan & Strategic Resource PlanCouncil Plan & Strategic Resource Plan

Asset Management PolicyAsset Management Policy

Asset Management StrategyAsset Management Strategy

Transport AM PlanTransport AM Plan

Buildings & Properties AM

Plan

Buildings & Properties AM

Plan

Drainage AM Plan

Drainage AM Plan

Parks & Gardens AM

Plan

Parks & Gardens AM

Plan

Plant, Equipment& Furniture

Plant, Equipment& Furniture

Arts & Heritage AM

Plan

Arts & Heritage AM

Plan

Structures AM PlanStructures AM Plan

StructureAsset Management Program

21

2004 Inspection of Council Buildings

45% rated fair to poor condition41% required repaintingHigh proportion with leaking roofs, walls,

spouting and downpipes30% had structural defects40% required exterior maintenance

(eg windows, doors, exterior fittings)20% needed new floors

22

Strategies (continued)

Assets that are in a poor condition and/or are unsafe will be demolished and not replaced if there is no demonstrated ongoing need.

23

Risk Assessment Process

Risk now assessed in accordance with Australian Standard 4360 criteria formulated likelihood & consequences defined treatments identified with responsibilities

& timeframes assigned

24

Value of Buildings - $69M (211 Assets)Total Replacement Values - Building Asset Groups

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

Sport & R

ecre

atio

n

Office

sHal

ls

Aquatic

& L

eisu

re

Tourism

Childre

n's S

ervi

ces

Public T

oilets

Senio

r Citi

zen S

ervi

ces

Muse

ums

& Arts

Depots

Carav

an P

arks

Airport

Facili

ties

Comm

erci

al

Libra

ry S

ervi

ces

Saley

ards

Shelte

rs

Parks

& G

arden

s

Was

te D

isposa

l

25

Building Condition: 56% good or better (goal 80%!)Comparative Condition Status of All Council Buildings 2004

As New

Good

Fair

Poor

Completely Failed

53%

36.5%

3.3%6.6% 0.5%

26

Total CostsTOTAL EXPENDITURE

0

250000

500000

750000

1000000

1250000

1500000

1750000

2000000

2250000

2500000

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

TOTAL EXPENDITURE

27

Summary of Recommended Outcomes

20 transferred to sport and recreation clubs 3 transferred to State Government 5 demolished 14 put on a long term commercial lease to transfer

responsibility to the lessee 7 to be sold 16 core assets with low usage be reviewed to

establish if usage can be improved Net result 50 assets removed from the register

and avoidance of at least $2M in additional costs over 20 years

28

Benefits of Building AM Plan

Informed decision making Develop customer service culture Focus on core business Better financial planning Better risk management Process and structural improvements Appearance & community pride