Chapter ASSET MANAGEMENT...2. Chapter FINANCIAL MATTERS Chapter DEVELOPING LOCAL GOVERNMENT...86

Transcription

1 Chapter ASSET MANAGEMENT...2 Chapter FINANCIAL MATTERS...43 Chapter DEVELOPING LOCAL GOVERNMENT...86 Chapter INFORMATION MANAGEMENT SYSTEMS...100

2 Chapter 7 Asset Management The Board Guidelines below were provided to the Council to assist it in preparation of its submission to the Review: Board Guidelines to the Council The Board is looking for evidence of (a) Asset Management Policy; (b) Asset Replacement Policies and Predicted Asset Failure Modelling; (c) Asset Revaluation Policies; (d) Asset Depreciation Policies. Items for consideration include:- Roads, Streets, Bridges, Footpaths, Cycleways etc Sewerage Services Stormwater Drainage Waste Management Water Supplies Buildings Fleet and Plant Management Land Development Public Amenities Recreation Facilities and Parks Works Depots and Store 2

3 Council Submission Council s Community Plan identifies four major areas that are the heart of all the issues the community has raised and the things Council needs to do. Three of them, the Social, Economic and Environment areas identified in that plan all assist Council with the fourth major area of Building an even stronger Community. Building an even stronger Community is to be achieved through Community Leadership and Participation, and by Building and Maintaining the Assets of the Community. By planning, maintaining and improving our high standard infrastructure, Council recognises that our high quality of life in the City will be sustained or improved, and that we all will be able to communicate, have access to one another, to services, shops, schools and business. It is recognised in the plan that our infrastructure provides the very support we need to live in our homes, to operate our businesses and enjoy the lifestyle we choose. Our health and environment is also protected. The Community visualised a future that included amongst other things: Traffic flowing freely, signs directing people to where they want to go and there is always ample parking; Roads, footpaths and cycleways are safe and in good condition; Rubbish is disposed of quickly and cleanly; and The water is fit to drink and wastewater is promptly treated. Board Response The Board acknowledges that Council s Community Plan drives its need to build a stronger community, and thereby improve existing infrastructure or create even further infrastructure assets. It is also aware that Council has infrastructure assets with a current replacement value of almost $500 million. The Board is also aware that the level of resources required to both plan and implement asset management plans for existing assets is a growing demand on responsible Council management. Standards of replacement modelling are lifting on a continuous basis, and one of the significant challenges for Council will be the funding of asset replacement over the next 20 years. It is for this reason that the Board recommends in this chapter a high level reassessment of the resources that Council applies to this growing concern. The Board also suggests that the Community Plan be reviewed with particular emphasis on Council s plans to manage its almost $500 million in existing assets. 3

4 7.0 Strategic Direction Background To achieve the future articulated in the Community Plan, Council s strategic plan lists actions that will help the Community, through Council, to achieve that future. The infrastructure asset management information, practices, policies and procedures put in place are fundamental to the eventual success of Building an even stronger Community. A formalised approach to asset management commenced in Prior to this, information on asset details was either non-existent or spread over a number of differing areas, such as databases or paper base sources. A permanent Asset Committee made up of Council staff has been continually in existence since The composition of that committee has been dependant on the stage the implementation process has been at. The approach from 1993 to now was to progress asset management across the Council by undertaking a number of staged tasks. These were as follows: 1. The preparation of Asset Accounting Policies and procedures and their adoption by Council; 2. The collection of asset details for all the major asset types of Roads, Sewer, Water, Stormwater, Parks and Buildings, plant, vehicles, furniture and equipment. 3. The loading of assets into Council s Macrosoft, and then Hansen, Asset Register / Management Systems, and then into Council s Easy Maps GIS; 4. The compilation of asset valuation records for individual assets in accordance with Australian Accounting Standards and Council s policies; and 5. The full or part integration of systems such as the asset registers, asset valuation, pavement management, works orders, customer service, financial, and GIS Current Situation At present, an Asset Group has been implementing the July 2000 asset accounting policies mentioned in below. 4

5 In terms of the 5 staged tasks listed above, the following is the current status: - The collection of asset details has been a time consuming process. The asset details for all the major asset classes have now been collected and stored in the Hansen Infrastructure Assets Software systems; The majority of Council s assets have been transferred on to Council s GIS and a link enabled to the details in the Hansen asset registers; Asset valuation records have been developed for all the significant assets in accordance with Council s asset accounting policies; and A full integration of the asset register, asset valuation, pavement management system, works orders and GIS has been established. A link with a customer service module has not yet been established at this stage. Other links are being looked at for the future, for instance a manual link does exist with the financial system, but it is not cost effective to establish an automatic link at present Asset Management The management of Council s assets is delegated to officers in the specific departments whose responsibility it is to maintain the asset class. These officers, a representative from finance and also information technology form an Asset Management Group who meet regularly to discuss issues, formulate policies and action plans and share information. This group reports regularly to CMT on current issues and matters requiring management input. Within each department the responsible officers utilise internal resources to undertake the asset management functions required. These include asset database maintenance and update, valuation and depreciation, capitalisation of new works, field data collection and GIS mapping Asset Register In February 2001 Council approved the staged purchase of all asset modules of an Asset Management System supplied by Hansen Information Technologies (HANSEN). Council already had in use a module for Roads assets. Since that time data relevant to all asset classes maintained by Council has been reviewed, updated, revalued and loaded into HANSEN. In addition to the HANSEN register Council operates a Local Government Application of MapInfo GIS entitled EasiMaps which provides access to spatial data of any asset class mapped. 5

6 Asset valuation, depreciation and written down valuation for all assets are provided from the HANSEN system for entry to the Council s financial system. Crystal Reports are used to provide information from the asset registers, which when combined with field experience and performance are used for asset replacement decision making. In July 2003 a Works Order module of HANSEN was introduced to link maintenance activities to particular assets, thereby enabling detailed records to be kept on asset performance. A staged introduction to specific assets is necessary as GIS mapping of asset classes is completed and linked to HANSEN. Board Response The Board has found in other general reviews that the recognition of asset management responsibilities and the implementation of effective and comprehensive policies and processes by Tasmanian councils has generally been slow. The Board finds that the situation at Glenorchy has been consistent with most other councils and that Council has spent most of its efforts to date in establishing asset recognition and linkages within asset management systems. The Board s view is that the strategic direction for asset management can only be determined when Council has developed an appropriate level of understanding of its infrastructure assets. The Board acknowledges that the collection of asset details is a time consuming process for all councils but has been a particular challenge for Glenorchy. This is because many of Glenorchy s infrastructure assets are aged and had been less well documented than in many other Councils, contributing to a lengthy recognition process. The Board is encouraged by the considerable effort that has been made by Council in establishing the asset register. It examined evidence that Glenorchy is reaching a point where all of its existing infrastructure assets are now recognised, with stormwater, water and sewerage assets recognised for the first time over the last three years. However, it is the Board s view that Council still has a long way to go before it has an acceptable strategic direction and appropriate resources for an effective asset management system. The Board makes the following observations of what Council should develop to assist it to strategically manage its infrastructure assets in a complex asset management system: establish condition assessment of all infrastructure assets to compare with written down values and theoretical life expectancy; testing of the accuracy and validity of the existing asset valuation and depreciation data; establish and record detailed asset maintenance costs for all classes of assets; establish life cycle costings for existing assets that are incurring significant levels of maintenance, to demonstrate optimum replacement strategies; identify a costed 20 year asset replacement program based on lifecycle costing and optimum replacement cycles; 6

7 establish the affordability of retaining the existing level of infrastructure assets; and establish criteria for the creation of new assets. In the Board s view, Council should consider taking asset management planning to a much higher level, with associated allocation of resources. The Board is of the view that considerable resources will be required to bring together and implement the required long term (20 year) Asset Management Plan. The Board is aware that other city councils have devoted considerable resources in developing sound asset management plans and systems. In the Board s view, Hobart and Devonport City Councils provide leading examples of asset management planning and the Board encourages Glenorchy to consider pursuing sharing of resource, plans and techniques with those councils. The Board is of the view that the Asset Management Plan will not be able to provide all the necessary strategic direction. In noting the disaggregation of responsibility for asset management to each department at Glenorchy, the Board is concerned that this distributed focus may be contributing to a less than acceptable outcome in overall asset planning. It therefore recommends that Council revisit its organisational structure and assign the key responsibility of Asset Management to a Senior Manager. It is the Board s view that such focus will require significant accountability for the officer and provide a better understanding of Council s requirements for the future and its associated financial position. In later discussion in this chapter, the Board comments further on the significant level of resourcing resulting from asset management plans, policies, depreciation calculation and treatment, asset expenditure practices and techniques. Recommendation The Board recommends that: Council develop an Asset Management Plan for at least the next 20 years responsibility for Asset Management be assigned to a key senior manager in Council s departmental structure. Council Submission 7.1 Asset Management Policies Asset Policies Asset Accounting Policy The main asset policies that form the basis for Council s financial reporting were adopted by Council on the 30 th July 2001, effective from the 1 st July The policy statements are as follows: - 1. Glenorchy City Council will adopt all applicable accounting standards and generally accepted accounting principles for the 7

8 preparation of its general-purpose financial statements for each financial year ending 30 June. 2. All material items will be considered and an assessment made to determine if such items are assets. 3. If expenditure on an asset improves its service potential or future economic benefits (i.e. the useful life is extended) then this expenditure will be capitalised (added to the value of the asset). If not, the expenditure will be charged to the operating statement as repairs / maintenance. 4. Asset classes of the Glenorchy City Council are specified in the asset matrix. 5. Asset classes will be consolidated into the following broad categories of nature or type to be disclosed in the Statement of Financial Position: Land; Buildings and other land improvements; Equipment and furniture; Roads, streets and bridges; Sewage treatment and reticulation; Stormwater and drainage; Water reticulation; Plant and vehicles; Investments; and Capital work in Progress. 6. All assets that have a cost or other value that can be reliably measured will be recorded in the statement of financial position at the end of the reporting period. 7. The Glenorchy City Council will adopt the deprival method of valuation for all assets. Assets identified, as surplus/non-core must be revalued at the end of the reporting period. 8. Assets will be recorded by identifying separately their gross carrying value and any accumulated depreciation. 9. The minimum threshold for recognising an item as an asset within a class should consider the materiality of the individual item. 10. Where a number of like items exist with individual values below the Recognition threshold for future transactions, then these items will be recognised as a group provided their total value is in excess of the group threshold for that class. 11. All non-current assets that have a limited useful life are systematically depreciated over their useful life in a manner that reflects the consumption of the service potential or future 8

9 economic benefits of those assets. Land generally is not a depreciable asset. 12. Non-current assets are those that provide a benefit to the Glenorchy City Council extending beyond twelve (12) months. 13. All non-current assets are to be revalued to their current cost less accumulated depreciation in accordance with the asset matrix. Revaluations will be conducted at least once every five years. 14. All revaluation increments are credited directly to the asset revaluation reserve account. Net revaluation decrements will be debited to any previous revaluation increments for that class of assets, with any deficiency being charged to the Statement of Financial Performance. 15. The cost method of accounting is to be used for the initial recording of all assets acquired after a revaluation. Cost is to be determined as the fair value of the asset given as consideration plus costs incidental to the acquisition (e.g. architects fees, engineering design fees, administration charges, direct and indirect salary costs, overheads and all other costs incurred) in getting the asset ready for use. 16. All non-current assets that are replaced or retired are to be removed from the asset register. This will include the gross replacement cost of the asset and the related accumulated depreciation. Where the policy statement conflicts with a subsequent amendment to an accounting standard, the standard is followed and the policy will be amended at the earliest opportunity. The implementation of these policies since their adoption has had a significant impact on Council s financial statements. Further information follows under Issue 7.3. Asset Revaluation Policies. Board Response The Board notes that the first point in Council s asset accounting policy is the agreement to adopt all applicable accounting standards and generally accepted accounting principles for the preparation of its general-purpose financial statements for each financial year ending 30 June. The Board believes many of the policy statements that follow are in fact a repeat of the current accounting standards. It therefore suggests that the policy be reviewed to highlight point 1 above. It is suggested that the policy also include the interpretation and selection of the options that Council will use in its treatment of the various expenditure categories. 9

10 Council Submission Furniture Plant and Equipment Policy On the 21 st January 2003, Council adopted a specific Furniture Plant and Equipment Policy to cover assets not covered by the main asset accounting policies listed above. The policy statements were as follows: - 1. Custodianship rests with the Department having substantial control over the asset. The Custodian is the Manager or Supervisor of that Department with primary access to the asset except in the instance of computer equipment where the Custodian is the Information Technology Co-ordinator. Custodianship may be delegated by the Manager to another officer if considered appropriate. The Custodian is responsible for the maintenance and security of the assets. 2. Non-current assets will be recorded in the asset register of the financial accounting system. 3. Leased items will be recorded separately on a Lease Register. 4. An Attractive Assets Register will be maintained consisting of items that have individual values of between $200 and $1,500 and could be subject to pilferage or easily converted to cash. Items less than $200 may also be recorded in the attractive assets register if the Custodian considers the item to be of an attractive nature. 5. The attractive items register will include non-current grouped assets of an attractive nature. 6. Furniture, Plant and Equipment assets and attractive items entered in the registers will be identified with an asset number by Finance as soon as they are received. 7. All attractive items will be appropriately secured. 8. A stocktake of the financial asset registers, but only a sample stocktake of the attractive asset registers, will be undertaken at least on an annual basis. Board Response Noted Council Submission Asset Funding Policy As a part of a suite of Financial Management policies, Council approved the Asset Funding Policy in March The policy statements are as follows: - Council will fund infrastructure asset replacement and renewal to ensure that the current levels of community equity 10

11 are maintained. This will require the funding of depreciation from current levels to 100% in the medium term. Any expansion of the existing infrastructure asset base will be funded by additional loan borrowings, rate increases or other sources. This policy is discussed further as part of Issue Funding of Depreciation. Board Response Noted. The Board makes a detailed comment on this matter in section in Chapter 8. Council Submission Plant Replacement Policy This policy and associated procedures provide general guidelines, processes and basic economic parameters which, if followed, will allow decisions to be made for the purchase, lease or hire of all Council plant and equipment used for construction and maintenance functions. The end result of the application of these policy and procedure documents is that, over time, Council should own all plant and equipment where it can be demonstrated, through financial analysis, it is more economical to own rather than lease, hire or contract. The financial analysis is based on whole of life costs. Plant availability is a secondary factor that must be taken into consideration. The policy statements are as follows: - A new position of Plant Coordinator has been created and that officer will be responsible for the application of this policy and the economic, efficient and effective management of Council's new or replacement major plant, light plant or minor plant and works equipment assets. The position will be funded by an administration charge included in the internal hire rates for both leased and Council owned plant and equipment. A buy, lease or hire analysis must be undertaken for all assets under the control of the Plant Coordinator. The analysis must form part of the business case to be prepared on an asset-by-asset basis. The decision of whether to buy, lease or hire will be primarily based on economic considerations, but factors such as the lack of availability of an asset on a hire or contract basis, or the commercial hire charge, would influence the final decision. Major risks in leasing or owning plant and equipment must be identified and controlled. These risks include security, storage, responsible use and operator training. 11

12 Funds for the purchase, lease or hire of these assets must have been made available in the annual budget process (or during budget reviews) before the asset can be purchased, leased or hired. Funds for the replacement of an existing asset owned by Council should be made available at the end of the assets service life, to minimize the possibility that assets could be kept beyond their economically calculated replacement date. The purchase, lease or hire of an asset must be made in accordance with the relevant Council purchasing policies, procedures and guidelines. The service life of each asset must be reviewed annually, and steps taken to dispose of those assets at the end of their service life in accordance with the relevant Council policies, procedures and guidelines. If circumstances change (such as utilization) disposal may be recommended by the Plant Coordinator at an earlier date. An internal and external plant hire charge rate must be developed annually at budget time for those assets the Manager - Works Center & Hydraulics wants charged out. The cost of internal plant hire is included in the budget amounts for Capital Works and Maintenance programs. Internal plant hire charge rates will vary, depending on whether the asset was leased or purchased. The internal hire charge on leased assets will be the annual lease payment plus any other direct or indirect (eg. administration) costs, divided by the expected annual utilization of the asset. Assets that were bought by Council and will be used internally will have a plant hire charge rate calculated to cover all estimated direct costs (materials, fuel, depreciation, registration etc) associated with the asset for the next 12 month period, administration costs plus an additional margin for under utilization, other unforeseen costs and unexpected changes in the assets residual value. External plant charge rates will be internal plant charge rates, with indirect costs and a profit margin added. Lease charges, annual asset expenses and plant income (internal hire charge revenue) will be recorded separately in the accounts of Council for leased and purchased assets. A full copy of the above policies and any relevant procedure documentation are provided as the main reference document for general and specific details on all individual asset classes. Evidence/Documentation Asset Policy Furniture Plant and Equipment Policy Reference number S S

13 Furniture Plant and Equipment Procedures Plant and Equipment Management and Replacement Policy Plant and Equipment Management and Replacement Procedures S S S Board Response The Board notes the policy statements on plant replacement. In the Board s view, however, the above policy exemplifies the Board s comments in section 2.14 that many of Council s policies include fine detail of processes rather than concentrating on the high level policy statements. Earlier, the Board has suggested a revision of such policies and it would include the plant replacement policy as one where the separation of high order policy from detailed procedure should occur. This comment also refers to Council s other asset policies. Council Submission 7.2 Asset Replacement Policies and predicted asset failure modelling Replacement Modelling Council has the information within its infrastructure asset registers to indicate exactly which infrastructure assets are expected to need to be replaced and when, based on the information at hand at the time the assets were revalued. A 20 year program for new assets and the replacement / renewal of existing assets was developed in 2002 and provides guidance on short and long term financial decisions. The program was used to form the basis of the capital works program for 2003/04 and will be continually updated as performance and augmentation data is gathered. Council produces a list of assets that are falling due for replacement each year. Based on a combination of inspections, asset replacement requirements, or a review of performance history through the works order system, the Asset Managers either list the asset on the capital works program for that year for replacement, or delay the replacement for a while longer if the asset physically does not yet need replacement. There are also assets that fail before their expiry date as recorded on the register. Those are brought forward onto the capital works program and an accounting loss is recorded for their early retirement. Other assets can also be replaced for reasons other than asset life, for 13

14 instance asset works conducted for public amenity and business promotion reasons. Section discusses in more detail Council s policy to fund infrastructure asset replacement and renewal to ensure that current levels of community equity are maintained. The asset replacement practices commented on in this section ensure that the replacement and renewal funds are spent in the most appropriate areas. Board Response The Board notes that Council has been assessing the likely replacement/renewal of its major assets. The Board is satisfied that Council s Asset Management System provides effective predictive modelling for the next 5 10 years, and that assessments are done each year on the programmed renewal of assets. As the Board has found in other general reviews, one of the challenges facing councils is to test the theoretical asset replacement from the modelling with the asset condition over a range of asset classes. While this can be a lengthy and expensive quality assurance process, the Board is aware that other councils have effectively reviewed their asset replacement modelling. The Board is also aware that the level of asset replacement modelling and the quality of such information has been improving significantly with other larger councils. The Board would like to see Council access the benefit of some excellent research of councils such as Hobart and Devonport. The Board believes that Council must be able to predict effectively and communicate its asset replacement requirements over the coming years. It is the Board s view that Council needs to plan now how it will face the challenge of significant amounts of asset infrastructure predicted failure in the coming 15 years. The Board has earlier in this chapter, section 7.0, recommended that a 20 year Asset Management Plan be developed. This should include detail on the likely asset replacement needs, creation of new assets and how the Council intends to program and fund replacements and additional assets. Council Submission 7.3 Asset Revaluation Policies Policy statements 1. All non-current assets are to be revalued to their deprival value less accumulated depreciation in accordance with the asset matrix. Revaluations will be conducted every five years. 2. All revaluation increments are credited directly to the asset revaluation reserve account. Net revaluation decrements will be debited to any previous revaluation increments for that class of 14

15 assets, with any deficiency being charged to the operating statement. Council has adopted the deprival method of valuation for all assets. Assets identified as surplus/non-core, are revalued at the end of the reporting period. In applying the deprival value methodology, assets that are considered core, or integral, to Council s operations, are identified from those that are non-core, or surplus, to Council s operations. Where Council considers that an asset is a core asset, that is where the asset would be replaced if Council were deprived of it, the asset should be valued at its written down current cost. Council considers two methods that are appropriate to determine deprival value: ( i ) Current market buying price Reference is made to the market-buying price of an identical or similar item. This method is suitable for use with items of plant and equipment, furniture and fittings etc. ( ii ) Current replacement cost Reference is made to the cost per unit of service potential of the most appropriate modern facility that would be used to replace the asset. If the replacement item is of different capacity or constructed of more advanced materials, the value can be adjusted accordingly. Where the asset is considered non-core or surplus, which is an asset that Council would not replace it if deprived of its service potential, then that asset is valued at its recoverable amount. Only two options are considered: ( i ) Net present value of future cash flows This value represents the present value in today s dollars of the future cash flows which would be received through the assets continued use and eventual sale. ( ii ) Current net market selling price This equates to the amount that could be recovered through the sale of the asset on the open market less any costs incurred in the sale. Revaluations of all non-current assets are dealt with in accordance with Australian Accounting Standards and Urgent Issues Group pronouncements. Assets are recorded at fair value in Council s annual General Purpose Financial Report. Assets are recorded by identifying separately their gross carrying value and any accumulated depreciation. The revaluation program for each class is on a rolling basis to minimise the impact of revaluing assets on the workforce. The frequency of the revaluations depend on a number of factors, including, the cost benefit 15

16 of obtaining relevant up to date information. The reality has been that even though Council does not have to conduct revaluations for less than 5 years, revaluations of some asset groups have been conducted on a much more regular basis since the introduction of AAS 27 in The following table demonstrates the history of, and results of, revaluations on assets fair value since then: - 1 st July Reval 1996 ($ml) 1997 ($ml) 1998 ($ml) 1999 ($ml) 2000 ($ml) 2001 ($ml) 2002 ($ml) Roads $117.3 $120.9 $149.5 $160.0 Water $39.5 $71.0 Sewer $89.5 $74.3 $126.9 Stormwater $58.6 $75.6 $135.3 Building etc. $31.9 $42.9 $48.3 Land $19.5 Plant & Veh. $0.9 Furn & Equip $6.3 It is important to note the following when referring to this table: - The main motivation behind all the revaluations since the 1 July 2001 has been the implementation of the new asset accounting policies; A large proportion of the increase in fair value in all asset groups since the 1 July 2001 has been the recognition for the first time in the accounts of Council, assets owned but not yet formally recognised at the time of the revaluation in the asset register; and Only a small number of property assets are considered by Council to be considered non-core or surplus. Council has been very active in improving the information held in the asset registers since 1996 and now has a very solid base on which to base financial modelling and asset management into the future. Board Response The Board acknowledges that considerable effort has been required to bring the Asset Registers to an appropriate current status. The revaluations already adopted in Water, Sewerage and Drainage highlight the growing importance and significance of asset management. The associated depreciation changes from significantly higher asset recognition and values will continue to create challenges for Council in funding its asset replacement requirements. Council Submission 7.4 Asset Depreciation Policies Policy Statements 1. All non-current assets that have a limited useful life are systematically depreciated over their useful life in a manner that 16

17 reflects the consumption of the service potential or future economic benefits of those assets. Land generally is not a depreciable asset. 2. Non-current assets are those that provide a benefit to the Council extending beyond twelve (12) months. Council complies with the Australian Accounting Standards (AAS 4) and Urgent Issues Group (UIG) pronouncements on accounting for depreciation. All assets are depreciated on a straight-line basis; with the depreciation expense being calculated for the majority of assets by taking the replacement value and dividing it by the useful life of the asset. No retirement/disposal value is recognised in the calculation. The useful life of Council s assets falls within the following range: - Nature/Type of Asset Class of Asset Useful Life (Years) Roads, Streets & Bridges Road Pavement Surface 10 to 50 Road Pavement Base 5 to 50 Road Pavement Earthwork 200 Kerb & Channel 50 to 70 Footpaths & Cycle ways 5 to 70 Signalised or Roundabout Intersections 15 to 50 Islands 35 to 50 Car Parks 5 to 60 Bridges 40 to 80 Sewerage Treatment & Reticulation Reticulation Pipes 60 to 80 Reticulation Manholes 80 to 120 Reticulation - Mechanical Plant & Equipment 25 to 80 Reticulation - Electrical 10 to 25 Reticulation - Buildings & Other Land Improvements 10 to 80 Treatment Plants Pipes 50 to 80 Treatment Plant - Nodes 20 to 120 Treatment Plant - Mechanical Plant & Equipment 15 to 50 Treatment Plant Electrical 10 to 40 Treatment Plant - Treatment Structures 60 to 100 Stormwater & Drainage Pipes 60 to 80 Nodes 80 Natural Water Course Improvements 80 Silt Basins 30 to 80 Concrete Culverts & Spoon Drains 50 to 80 Water Reticulation Pipes 40 to 80 Nodes 5 to 80 Property Connections 20 to 50 Reservoirs 50 to 80 17

18 Mechanical Plant & Equipment 25 to 80 Electrical 10 to 25 Building & Other Land Improvements 10 to 80 Building and Land Improvements Freehold Buildings 10 to 95 Other Land Improvements 5 to 50 Plant & Vehicles Infrastructure Plant 5 to 20 Fleet 3 to 5 Mobile Plant 5 to 20 Minor Plant 3 to 5 Equipment & Furniture Furniture Fittings & Office Equipment 3 to 20 Computer Systems & Technical Equipment 3 to 5 These lives are very similar to the economic lives recommended in the Tasmanian Audit Office report titled Accounting for Road Assets and Associated Depreciation Practices issued in April A lack of adequate records makes it difficult to determine exactly when many infrastructure assets were taken over by Council. A fair estimation can and has been made though, by looking at Records relating to when the subdivision containing the infrastructure asset was first taken over by Council, or when the area was first developed. The Accumulated Depreciation was then derived from that information. It can be seen from the following table that most of Council s infrastructure assets are currently less than half way through their lives. Please refer to the next page for table: 18

19 Asset Group Date of Reval Fair Value $ millions Accum. Deprec. $ millions W.D.V. $ millions Accum. Deprec as % of Fair Value. Roads 1/7/96 $117.3 $60.5 $ % 1/7/98 $120.9 $58.6 $ % 1/7/00 $149.5 $67.4 $ % 1/7/02 $160.0 $71.9 $ % Water 1/7/96 $39.5 $20.6 $ % 1/7/00 $71.0 $31.9 $ % Sewer 1/7/96 $89.5 $33.7 $ % 1/7/98 $74.3 $27.1 $ % 1/7/01 $126.9 $43.1 $ % Stormwater 1/7/96 $58.6 $19.3 $ % 1/7/98 $75.6 $27.2 $ % 1/7/02 $135.3 $51.5 $ % Building & Land Imp s 1/7/96 $31.9 $15.9 $ % 1/7/97 $42.9 $15.8 $ % 1/7/01 $48.3 $20.7 $ % Land 1/7/00 $19.5 n/a $19.5 Plant & 1/7/01 $0.9 $0.5 $0.4 55% Vehicles. Furniture & Equipment 1/7/01 $6.3 $4.1 $2.2 65% Board Response The Board has compared the State of the Assets of Council with other similar Tasmanian councils. The State of the Roads and Footpaths asset for Glenorchy of 54.2% at 30 June 2002 compares with Clarence 60.8%, Hobart 68.9%, and Launceston 46.4%. The Board notes that with each successive revaluation of Roads, Water and Sewer Assets, the State of the Asset has increased, with predicted longer lives than previously registered. The Board, therefore, believes that this area of assessment needs to be further examined as the State of the Asset may be much better than currently thought. The Board has previously recommended a review of the Asset Accounting Plan and Policies so that they are more reflective of the lives and valuation of the assets. Such a review is likely to result in extending the lives of assets, which would reduce depreciation charges and thereby reduce the current decreases in operating capability to more accurate levels. If, as a result of the review of asset lives and values, the State of the Asset is found to be in a better overall condition than currently recorded, the impact on operating losses is likely to be significantly favourable. Council Submission 19

20 7.5 Roads, streets, bridges, footpaths, cycleways, etc Goals, Strategies, and Action Plans Council s Strategic Plan supports a goal of A City where roads, footpaths and cycleways are safe and in good condition. From the strategy Manage traffic flow to ensure a balance between resident amenity, business, growth and safety comes the following Action Plans associated with transportation assets. Maintain a rolling five year capital works program that balances infrastructure development and maintenance needs Continue the development of comprehensive Precinct road maintenance and traffic management plans that include footpaths, lighting and signage Asset Details Council is responsible for an extensive and diverse road infrastructure network that includes the following major assets: 280 kilometres of sealed road 17 kilometres of unsealed road 28 bridges including pedestrian bridges and those in parks 413 kilometres of footways 452 kilometres of kerb and channel 6 kilometres of cycleway 23 car parks to supplement on-street parking (this does not include car parks situated within Council reserves, playgrounds etc) 23 roundabouts 14 sets of traffic lights including 2 sets of pedestrian lights Various miscellaneous roadside furniture items such as road islands, guide posts, guard rail, litter bins, street signs, bus shelters and street lights Asset Management Planning Asset Management Plan for Road Infrastructure In 2001 Council developed an asset management plan for the road infrastructure that briefly covered the following areas: System and asset overview Financial details Levels of service Maintenance management Risk management The plan was undertaken as a first attempt of addressing, to varying levels of detail, many of the key issues involved with the management 20

21 of the transportation assets. This plan is due for review in 2003, however a copy of the current document is attached for reference Condition Assessments All road infrastructure assets are visually inspected on an ongoing basis throughout each year as part of development of maintenance and future capital works programs. More formalised inspections of the roads, bridges, footpaths and kerb and channel are undertaken on a regular basis as follows: Roads are visually assessed on a regular basis, the last two being in 1998 and The assessment process involves collecting data on individual defects for every road segment and an overall rating for each footpath and kerb and channel, a sample sheet is attached. Roughness surveys were undertaken in 1998 and 2002 on the high trafficked roads of the network, a sample sheet is attached. Bridges are assessed twice per year by Tas Span, refer to attachment for a sample of the type of information collected. The information from these condition assessments is used as a primary input into developing long term replacement programmes and for determining trends in network deterioration. As an added value process to the above condition assessments, Council recently commissioned an independent report on the condition of some of the recently constructed footpaths in the City. This project has allowed Council to recognise and work towards overcoming some deficiencies in our current management practices for footpaths. The outcome will be an improvement in our service delivery for this asset type Maintenance Management Council s maintenance tasks on the road network can be broadly classified into two areas as follows: Scheduled Tasks that have been clearly identified and programmed fit into this category eg road and footpath resealing. Undertaking these tasks, at regular intervals, throughout the life of the asset are critical to ensure the design life of the asset is reached Unscheduled Tasks that have not been individually identified but have been budgeted for as a group eg pothole repair. These tasks are not undertaken on the entire asset, however, failure to perform them in a 21

22 timely fashion can lead to a gradual erosion of the useability of the asset and may create safety concerns. Unscheduled tasks are managed via a computerised work order system; this system is linked with an asset register and the GIS. Scheduled tasks are managed as appropriate on a case by case basis, for example: Annual Road and Footpath resealing program This program is developed and prioritised by considering the following inputs: Asset condition data Community input Knowledge of various Council Officers Road Sweeping This program is developed based on the most efficient use of the road sweeper to achieve a set of agreed upon sweeping cycles. Evidence/Documentation Sample sheet of road condition data Sample sheet showing roughness data Reference number S S Board Response See Board comment following section 7.9. Council Submission 7.6 Footpath and Street lighting policies Council has recently developed two policies that complement the management of the road assets. Both policies were developed after consultation with the community and all other relevant stakeholders Footpath policy This policy was developed due to the lack of suitable guidelines on footpath maintenance and construction. The main elements of the policy include: Recommendations on the types of footpath construction to be used for different locations A set of prioritisation guidelines for the provision of new footpaths and for the replacement of existing footpaths 22

23 Adoption of this policy will ensure a more equitable and sustainable service provision Lighting Policy A number of factors prompted the development of a lighting policy including the following: Changing lighting standards Changing Council strategic directions The need to provide a safer and more aesthetically pleasing night time environment for the community The process involved in developing the policy provided Council with an improved understanding of the lighting asset stock and how best to manage and improve it. It is expected that the adoption of this policy will provide a number of long term benefit including consistent lighting patterns, lighting that caters for high night time use areas and for areas used by vulnerable members of the community, lighting that encourages night time use and safer night time use areas. Board Response See Board comment following section 7.9. Council Submission 7.7 Transportation Services Background The Transportation Services unit of the Roads and Recreation Department is responsible for parking management and providing efficient, effective, safe and equitable movement of people and goods through and within the City of Glenorchy. The ongoing investigation and implementation of Local Area Traffic Management is a key activity for this unit to improve road safety, amenity and aesthetic character of Glenorchy s urban roads. The unit is also responsible for managing the safe and efficient use of the arterial roads that link to highways connecting Tasmania s regional centres. The unit manages the provision and regulation of on-street and offstreet car parking in the central business districts and suburban areas. The unit is responsible for the daily management of parking operations, including the daily reconciliation of infringement notices, management 23

24 of car parks, public enquiries, written correspondence, management of legal services such as the issuing of summonses and prosecutions. A total of four Parking and Information Officers work in the field, undertaking patrols of city and suburban areas five days a week between the hours of 8:15 am and 5:25 pm. All enforcement is carried out under the Australian Road Rules (Regulations) Commercial Precincts Parking Strategy (Stage 1 Glenorchy) Council adopted this Strategy on 23 March The major aims of the Strategy were to: Stimulate Commercial Activity Ensure competition with other centres Encourage development and/or redevelopment within the boundaries of the commercial precinct Provide a service to the community Ensure a safe and secure environment Most of the recommendations of the Strategy have been adopted and the management of parking in Glenorchy has followed the strategies from the document. Stages 2 and 3 of the Commercial Precincts Parking Strategies are yet to be developed and will cover the areas of Moonah and Claremont City of Glenorchy Traffic Study 1999 In 1999/ 2000 Council undertook a major traffic study providing an assessment of actions needed to improve the safety, efficiency and amenity of the road and traffic system in the City of Glenorchy. The report reviewed previous traffic studies and involved extensive consultation with the Community. The report made many traffic engineering recommendations that have largely been implemented Integrated Land Use Transportation Study The need for an Integrated Land Use Transport plan was identified in Council s Strategic Plan. This report is in the process of being completed and aims to integrate the transportation requirements for the City of Glenorchy with the associated land uses and the Planning Scheme Brooker Highway Operational Review This report was prepared under the Partnership Agreement with the State Government to provide guidelines for the future management of 24

25 the Highway within the City of Glenorchy and to identify any deficiencies that exist in its operation. The report examined the conflicting through and cross Highway movements and made recommendations on how best to manage these. Council is working with State Government to adopt the report and prioritise the recommendations from the report Local Area Traffic Management Plans The development of local area traffic management plans for each of the twelve precincts is in various stages of completion. The plans include the modification of residential roads to improve road safety and residential amenity. Consultation for the eight precincts that border onto the Brooker Highway was carried out in conjunction with the Operational Review of the Highway. Projects from these precincts are in the process of being prioritised and implemented. The remaining four precincts are currently being developed. Board Response See Board comment following section 7.9. Council Submission 7.8 Sewerage services Goals, Strategies and Action Plans Council s Strategic Plan supports a goal of A City where water is fit to drink and waste water is promptly treated. From the strategies Ensure the equitable provision of clean water and innovative use of waste water and Ensure the provision of a sewerage system that meets community expectations comes the following Action Plans associated with sewerage services. Investigate effluent reuse as a means of water conservation. Monitor the sewerage piped system and replace as required to ensure safe, efficient and effective disposal of sewage and compliance with relevant standards. Monitor the sewage treatment plants and pump stations and maintain and replace as required to ensure safe, efficient and effective disposal of sewage and compliance with relevant standards. 25

26 Investigate options for the reuse of bio-solids from the sewage treatment plants. Investigate opportunities to commercialise wastewater treatment. Progressively investigate, evaluate and remove instances where stormwater is being directed in to the sewer system. Investigate and correct reported instances of sewage being directed into the Stormwater system. Investigate, program and up grade under sized pipe systems to prevent sewer over flows into our creeks and waterways Asset Details Council s sewer infrastructure assets comprise: 384 km of sewer reticulation pipes 8 km of sewer pressure mains 8844 manholes 29 sewer pump stations 2 Sewage treatment Plants with a combined capacity of 15 Ml per day Asset Management Planning The review and subsequent loading of Council s sewer asset register into Hansen IMS in June 2002, completion of the sewer infrastructure mapping on Council s MapInfo-GIS, the linking of these two information systems and the introduction of the Hansen work order module in July 2003 has now provided a means to progress maintenance initiatives formulated in a report done in The scanning of 10,000 reticulation system field sketches and linking these to the asset data on the GIS will also enhance the availability of sewer system information across Council. In regard to extension of the sewer system, a series of reports were commissioned between 1999 and 2001 on the options available to address serious pollution of ground water and local creeks from failing septic tank systems in Collinsvale. Public meetings were held through this period with Council deciding on a package treatment plant and reticulation system. To augment Council s budget allocation in 2002 Federal Government NHT funding was granted and 85% of the reticulation pipe work installed will see completion of this treated effluent pumping line and storage lagoon and site preparation for the package treatment plant. 26