Renewal gap for councils estimated at $225 million
Auditor-General highlights asset management by Victoria’s 79 local councils
VICTORIA’S 79 local councils manage more than $73 billion in physical assets annually.
These buildings, parks and gardens, roads, bridges and drainage networks need to be maintained so that councils can continue to provide services and support community activities.
The Victorian Auditor-General’s report tabled last week, ‘Asset Management and Maintenance by Councils’, highlights issues with councils’ asset renewal planning and practices, and with their asset management policies, plans, strate- gies and information systems.
The biggest issue is the growing asset ‘renewal gap’, which is the difference between the funding that councils need to renew their assets, and the money they actually allocate to this purpose.
The renewal gap for Victorian councils was estimated to be $225.3 million in 2012–13 with the cumulative asset renewal gap predicted to grow to almost $2.3 billion by 2026–27.
If the renewal gap is not effectively managed it could lead to reduced services, poorer quality of community life, lower economic activity, the accelerated deterioration of assets and the possibility of having to spend more on maintenance and renewal in the long run.
There are also potential safety risks to the public if assets deteriorate to the point of failure.
The Victorian Auditor-General, John Doyle, noted that “a number of previous reports from my office have identified persistent issues with council asset management practices and recommended that councils improve their asset management frameworks and their re- lated policies, strategies and plans”.
Councils have i mproved i n some of these areas in recent years, however, ‘significant deficiencies remain’.
The report made six recommendations to Local Government Victoria which have all been accepted, and seven recommendations to councils which have all generally been accepted.
Fo r the full report, visit: http://www.audit.vic.gov.au/ reports_and_publications/latest_ reports/2013-14/20140219-AssetManagement.aspx.