1. Municipal Association of Victoria Local Government Reform Projects International Local Government and Asset Management Conference Ian Mann CT Management Group

2. Local Government Reform Projects
Recipient
Purpose
Value (GST Exclusive)
Australian Capital Territory
Development of an asset and financial management planning framework
$437,000
New South Wales Government
Local government asset management and financial management project
$3,250,000
Northern Territory Government and the Local Government Association of the NT
Local government capacity building project
$1,350,000
Queensland Government and Local Government Association of Qld
Advancing asset management in local government
$2,695,000
South Australian Government and Local Government Association of SA
Improving SA councils’ asset and financial management practices
Adelaide integrated design strategy
$1,650,000
$1,000,000
Local Government Association of Tasmania
Long term asset and financial management planning for all Tasmanian councils
$870,000
Southern Tasmanian Councils Authority
Independent review of structures for local governance and service delivery in southern Tasmania
$150,000
Tasmanian Government and Southern Tasmanian Councils Authority
Future-proofing Tasmania’s councils: a regional and land use based approach to climate change adaptation
$400,000
Victorian Government and the Municipal Association of Victoria
Local government sustainability project
Local government regional asset management services project
$964,000
$1,404,000
Western Australian Government
Integrated strategic planning, financial management and asset management in local government
$2,351,000

3. Regional Asset Management Services Program
Objectives
maximise the financial sustainability of Victoria’s regional councils to support continued provision of services to their communities over the long term by increasing collaboration between them; and
increase councils’ ability to effectively manage their assets using more collaborative and efficient delivery models and improved asset management practices.

4. Program Delivery Council visits Regional workshops Web site
Support each Council
Develop solutions – tools and templates
Web site
Collect and disseminate information
4,900 hours of program delivery

5. Tools & Templates Asset Management Policy Asset Management Strategy
Terms of Reference for an Asset Management Steering Committee
Asset Management Roles and Responsibilities Matrix
Asset Management Skills Matrix
Capitalisation and Valuation Policies (Work in progress)
Asset Management Plan Templates
Long Term Financial Plan asset forecasting criteria
Capital Works Evaluation Framework
Asset Categorisation Hierarchy
Asset Handover Process
Levels of Service Framework (Work in progress)
Community Consultation Guidelines (Work in progress)

6. Council Improvement

7. Benchmark Improvement

8. Asset Management Improvement
Region
Average Asset Management Improvement
North East
22.52%
North West
24.32%
South West
17.54%
Gippsland
10.37%
Central
19.80%
Overall Average
19.57%

9. Renewal Gap – All Councils

10. Cumulative Renewal Gap – All Councils

11. Local Government Sustainability
Objectives
maximise councils’ financial sustainability to support continued provision of services to their communities over the long term; and
increase councils’ ability to effectively manage their current and future performance using a consistent ‘whole of council’ perspective which brings together their financial and asset management operations for reporting and management purposes.

12. LGS - Program Delivery Strategic Analysis Strategic Review
Council visits
Self Assessment
Assessment Report
Strategic Review
Financial Analysis - Historical
Strategic Report
Long Term Financial Plan assistance

13. Analysis - Self Assessment

14. Benchmarking – All Councils

15. Review - Underlying Operating Result
If a Council consistently achieves a modest positive operating surplus, and has soundly based projections showing that it can continue to do so in future, having regard to asset management and its community’s service level needs, then it is financially sustainable.

16. Review - Underlying Operating Ratio
(Underlying Operating Position/Underlying Revenue)
51 of the 76 Councils (67%) have averaged negative ratios with respect to their underlying operating position over the last 4 years.
10 of these Councils averaging below - 10 percent.
Taking account of their projections a high proportion of Councils’ positions are worsening over the 10 year forecast period.

17. Review - Depreciation
Councils are the custodians of over $28.2 billion of infrastructure and other assets.
Accounting Standards
define depreciation as ‘the systematic allocation of the depreciable amount of an asset over its useful life’-(AASB 116).
require that depreciation methods reflect “the pattern in which the asset’s future economic benefits are expected to be consumed.”
For most Councils, depreciation is amongst the largest expenditure item.

18. Review - Depreciation Average Depreciation Rate
3 Councils less than 1.5 percent
11 Councils less than 2 percent
45 Councils between 2 and 3 percent
20 Councils greater than 3 percent
2 Councils above 4.2 percent

19. Review – Employee Costs
Employee Costs /Total Adjusted Expenditure
Small Rural: 36 percent
Large Rural 37 percent
Regional Cities 40 percent
Inner Metro 45 percent
Outer Metro 40 percent

20. Review – Working Capital Ratio
Working Capital Ratio (Current Assets/Current Liabilities)
Small Rural 280 percent
Large rural 240 percent
Regional Cities 245 percent
Inner Metro 180 percent
Outer Metro 255 percent

21. SRP & Long Term Financial Plan

22. LGS - Findings Underlying Operating Position Working Capital
In many Councils the underlying operating position is in decline with growing deficits or minimal change.
Operating deficits are creating the need to defer and under spend on renewal of infrastructure creating additional renewal backlog
Working Capital
High correlation between Councils with high working capital levels and low delivery of the annual capital works program

23. LGS - Findings Renewal Funding
The projected renewal demand in the next 15 years, in most of the Councils in Victoria is increasing.
The renewal gap in most instances, is also increasing due to deferral of renewal investment.
With the estimated renewal gap at $2.3 billion over the next 15 years and a lowering of Councils capacity to fund in the same period the sector is heading for real decline in service levels.

24. End Ian Mann Director CT Management Group Mob: 0429 941 435
152 Lt Malop Street
PO Box 1374
Geelong
Ph: (03)