Following a 2005 PricewaterhouseCoopers study conducted for the
Australian Local Government Association, a backlog of $14.5 billion
in infrastructure renewals was identified. The Commonwealth
Government and a number of state governments, including Queensland,
have taken that study on board. The Queensland Government also
undertook its own assessment of the financial sustainability of
local governments. It found the focus was largely short-term and
that greater emphasis was required in order to plan for the
sustained management of infrastructure over its useful life. As a
result, Queensland's Local Government Act (the Act)
was amended earlier this year to emphasise the importance of
Under the revised Act, councils in Queensland must now
demonstrate long-term financial sustainability by meeting a set of
developed criteria in financial forecasts and asset management
plans. While some may see this as adding further pressure on
already strained resources, if managed at an organisational level,
there are a number of opportunities for councils to improve their
The changes from the legislation will be almost immediate.
Councils should introduce a more robust forward planning exercise
and will need to ensure long-term planning is in place. The
sustainability and reporting process for Queensland local
governments incorporates an emphasis on sustainable communities and
sustainable councils. The process requires councils to provide
information periodically on specific areas associated with
governance and accountability, planning, asset management and
financial performance management. The existence of asset management
plans for key assets is a necessary predecessor to councils having
a complete long-term financial model that supports planning and
decision making processes.
The Commonwealth Government has set a target to have all
infrastructure asset classes managed by councils covered by asset
management plans by December 2010. To help achieve this, the
Queensland Department of Infrastructure and Planning has
established the 'Asset Management Advancement Program
2009–10'. While some councils are in a position to
adopt these changes, the majority do not have any formal asset
management plans. Local governments will need to commit time to
achieve these deadlines and, with already strained resources, this
can be a challenging task.
Many of the issues faced here in Australia were encountered when
similar legislation was introduced in New Zealand in 2002. In the
lead up to the implementation of the New Zealand legislation, MWH
assisted a significant number of the local government authorities
and developed an approach that has since been adopted by more than
75 local authorities in New Zealand, as well as several other
organisations worldwide. As learned through that process, the
important element to remember is that councils remain service or
activity-focused. Whether an individual or department is
responsible for maintaining water infrastructure, roads or other
assets, they must also strive to provide continuous and exemplary
service to the customers.
By working in conjunction with external providers and developing
a clear link between a community plan and the more detailed service
delivery plan, councils are able to best manage their limited
resources (see Figure 1). This helps councils identify the current
state of affairs and provides them with a sound improvement plan to
best manage their assets and services.
While it will require additional work, the Act is an undeniably
excellent opportunity for councils. Far from being a 'tick and
flick' situation, councils should instead consider how to use
this requirement to ensure financial sustainability for local
communities. Through its introduction, senior council members will
be in a much stronger position to plan for the long-term by
determining how much they are in a position to spend and where they
will source this funding from. By establishing early on which areas
require greatest attention, and where the opportunities for
improving efficiencies lie, councils will find that they will
likely be in an even stronger position than they are today.
Figure 1: By developing a clear link between a
community plan and the more detailed service delivery plan,
councils are able to best manage their limited resources and ensure
that work carried out supports the overall strategy and service
Kevin Atkins has more than 30 years of experience and is
MWH's Queensland-based Team Leader, Strategic Investment
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This White Paper refers to some of the projects that may now require careful consideration and adaptation to the ATO's views.
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