Rate capping: implications for local government (strategic asset management) Keith Baillie, CEO, Surf Coast Shire Council 8 June 2016

Fair Go Rates System Objectives To promote the long-term interests of ratepayers and the community in relation to sustainable outcomes in the delivery of services and critical infrastructure. To ensure that a council has the financial capacity to perform its duties and functions and exercise its powers. Nearly all Councils’ asset management policy and strategies will include terms like: long-term Sustainable outcomes Service delivery Infrastructure Financial capacity But they are framed around the affordability to Councils in the first instance and ratepayers in the second instance (or not at all?) The Fair Go Rates System bring the affordability to ratepayers to the forefront of Council’s attention Sounds quite like the objectives of a strategic approach to asset management

Year 1 Outcome 79 councils prepared first budget under FGRS: 70 Councils did not apply for a variation (a strong response) 9 sought a variation: 3 not approved 6 were approved (full, qualified or in part) Year 1 – not saying it was all easy but we did okay Future years might be harder - but councils and communities together have a lot of control over their future

ESC Assessment - Guidance

Clear reliance on asset and financial planning ESC Assessment - Application Clear reliance on asset and financial planning

Other Outcomes Implications largely not yet visible – within 3 years? However has brought on important discussions: With communities: Better awareness of affordability issues Within local government: Kick started next wave of reform With other government: Working through some long standing issues

Benefits for Asset Management Is there possibly an upside to this … Prudent Councils will invest in SAM Help address the “too many assets” Asset Management skills in demand Promotes open discussions Provides “burning platform” required for action

But we have come so far to risk it now …. Risks to Asset Management But we have come so far to risk it now …. Renewal sacrificed for New/Upgrade Short term or political decisions Reliance on debt to fund renewal Lower maintenance impact on asset life Resources for strategic work may be cut back

Relationship well understood and always been essential Integrated Planning Fundamental to reform and any rate cap variations Direct conversations with community about choices Service Planning must factor in asset requirements Service-check prior to approving any infrastructure Be careful about Master Plans setting expectations Service Assets Relationship well understood and always been essential

Essential to integrate Long Term Financial Plan Integrated Planning (cont.) Include explicit funding strategies and allocations Factor in whole of life cost for new proposals ESC want Councils to consider debt utilisation Asset rationalising and funds re-use will be important Link between supplementary rates & growth infrastructure Service Finances Assets Essential to integrate Long Term Financial Plan

Progressive and constructive reputation is essential Working in Partnerships Progressive and constructive reputation is essential

Digital Transformation MAV has established Local Government Digital Transformation Task Force: First multi-stakeholder group in Australia Seeking business transformation enabled through digital means Not about websites or transactions, it’s about reinventing Councils around needs of citizens How might Digital Transformation assist efficiencies, engagement and planning?

Our Future Its here - we know the rules We need to apply our trade: Strategic Asset Management is more important than ever We have great SAM credentials Talk to our community Build partnerships Drive innovation and reform