Demands on Councils’ finances will continue to grow. Councils will need to think ‘outside the square’ – The Chairman, The Hon. Jeff Kennett AC
I recently had the pleasure of addressing the IPWEA (Australasia) Asset Management Conference in Canberra.
During my address I referred the meeting to the two Auditors Reports into the administration of municipal councils in Queensland and New South Wales.
They do not make good reading in terms of the number of Councils that are failing to address some of the fundamental issues that indicate good governance and show a declining trend with respect to the sustainability of their operations.
For instance, in NSW 18 Councils have operating expenses exceeding operating revenue. 13 Councils do not have Asset Management Strategies. 70 Councils are reported as not renewing infrastructure assets at their depreciation rate.
In Queensland, 35 Councils reported operating deficits, 24 forecasting deficits for the next 10 years! 43 Councils cannot afford to maintain assets. 45 Councils do not trust their own condition data.
In Victoria, from our own analysis for the 2016/17 year, 26% or $562m of the capital works program state-wide was not delivered.
CT Management Group’s analysis shows a general decline in asset renewal and maintenance indicators. Overall the sector forecasts spending less on asset renewal and maintenance.
These are only some of the findings of the relevant Auditor Reports. Of course, there are many Councils that have high levels of governance and are renewing and maintaining their infrastructure assets.
The other issue many provincial and rural councils around Australia face is that with so much infrastructure spending occurring in our larger cities, Melbourne, Sydney and Brisbane, it is difficult to get contractors to deliver infrastructure work in their regions. If such contractors quote for such work the prices quoted are at a premium making them unaffordable.
Of course, this then creates a shortage of qualified staff for many municipalities outside of the capital cities.
My concern is that many municipalities are facing a catch 22 situation, where the cost of maintaining and providing infrastructure is becoming prohibitive, access to qualified staff is declining, and the risk of more and more councils becoming unsustainable is increasing.
Of course, shared services are assisting in some areas, but legislative impediments make these arrangements difficult.
“A great deal of collaboration is required between Federal, State and Local Governments to maximise the opportunities in meeting the infrastructure needs of Australia.”
I was heartened to hear the Secretary of the Federal Department of Infrastructure, Regional Development and Cities address the conference, where he was focusing on investing in corridors of infrastructure rather than piece meal, individual provision.
While I am an optimist, I am worried that the number of municipalities that are falling short of the tests set by State Auditor Generals is growing. Those Councils should, must reach out, for help.