2. RecipientPurpose Value (GST Exclusive) Australian Capital TerritoryDevelopment of an asset and financial management planning framework $437,000 New South Wales GovernmentLocal 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 AuthorityIndependent 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 GovernmentIntegrated strategic planning, financial management and asset management in local government $2,351,000

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

5.  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)

8. RegionAverage Asset Management Improvement North East22.52% North West24.32% South West17.54% Gippsland10.37% Central19.80% Overall Average19.57%

11.  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.  Strategic Analysis ◦ Council visits ◦ Self Assessment ◦ Assessment Report  Strategic Review ◦ Financial Analysis - Historical ◦ Strategic Report ◦ Long Term Financial Plan assistance

15.  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. ◦ (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.  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.  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.  Employee Costs /Total Adjusted Expenditure ◦ Small Rural:36 percent ◦ Large Rural37 percent ◦ Regional Cities40 percent ◦ Inner Metro45 percent ◦ Outer Metro40 percent

20.  Working Capital Ratio (Current Assets/Current Liabilities) ◦ Small Rural280 percent ◦ Large rural240 percent ◦ Regional Cities245 percent ◦ Inner Metro180 percent ◦ Outer Metro255 percent

22. 1. Underlying Operating Position a) In many Councils the underlying operating position is in decline with growing deficits or minimal change. b) Operating deficits are creating the need to defer and under spend on renewal of infrastructure creating additional renewal backlog 2. Working Capital a) High correlation between Councils with high working capital levels and low delivery of the annual capital works program

23. 1. Renewal Funding a) The projected renewal demand in the next 15 years, in most of the Councils in Victoria is increasing. b) The renewal gap in most instances, is also increasing due to deferral of renewal investment. c) 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. Ian Mann Director CT Management Group Mob: 0429 941 435 Email:ianm@ctman.com.auianm@ctman.com.au CT Management Group 152 Lt Malop Street PO Box 1374 Geelong 3220 Ph: (03) 5221 2566