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 PolicyStrategy PlansOperations 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 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

6 MAV AVERAGE RESULTS

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

8 MAV Renewal Gap Program – % asset class outside desired intervention

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14 MAV RENEWAL OUTCOMES- Variations in Asset Life

15 The Advanced Step Asset Management improvement Program Managing 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

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 & Regulations Council Plan & Strategic Resource Plan Asset Management Policy Asset Management Strategy Transport AM Plan Buildings & Properties AM Plan Drainage AM Plan Parks & Gardens AM Plan Plant, Equipment & Furniture Arts & Heritage AM Plan Structures AM Plan Structure Asset Management Program

Inspection of Council Buildings  45% rated fair to poor condition  41% required repainting  High proportion with leaking roofs, walls, spouting and downpipes  30% had structural defects  40% 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)

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 Costs

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