Submission to Infrastructure Australia

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2 Submission to Infrastructure Australia by Institute of Public Works Engi neering Australia AUSTRALIA S FUTURE INFRASTRUCTURE REQUIREMENT S Introduction The Institute of Public Works Engineering Australia (IPWEA) and its National Asset Management Strategy (NAMS.AU) Committee, have pleasure in responding to the invitation from Infrastructure Australia to make a submission in relation to the Discussion Paper Australia s Future Infrastructure Requirements. Our interest arises from our Members many years involvement in the design, construction, maintenance and management of community infrastructure assets across the local government and public works sectors in Australia. Submission Our submission has been structured to respond to the Questions posed in the Discussion Paper. What is infrastructure? The Institute of Public Works Engineering Australia (IPWEA) represents a significant number of stakeholders responsible for the management of infrastructure assets across the public works and local government sector - essential infrastructure on which our communities rely. Hence, in our context, we are dealing with the local road network, stormwater drainage systems, water and sewerage systems and community buildings that comprise the essential foundation of the fabric of our community. This local community infrastructure underpins the nation s economy and provides significant support for State and National infrastructure. It is noteworthy that local government owns and manages some 85% of the total road network in Australia - and accordingly is a vital player in the management of infrastructure and the overall economy. Too little regard is given to the importance of existing local community infrastructure. Why is it important? Australia s continuing prosperity is contingent upon appropriate investment in essential community infrastructure. This includes not just the building of new infrastructure to meet the nation s growth needs, but importantly, the maintenance and renewal of existing infrastructure to ensure it continues to provide optimum service delivery at minimal life cycle cost. An example of the critical importance of community infrastructure is the City of New Orleans in the USA. This clearly demonstrated that without this infrastructure the city was Page 2

3 virtually abandoned after Hurricane Katrina. Even now the population of New Orleans is only slowly returning as infrastructure is re-established. What are the proble ms? Significant studies in each of the States and by the Australian Local Government Association (ALGA) 1 over recent years have highlighted the growing problem of financial stress facing infrastructure service providers and indeed the financial sustainability of local government and many communities. A significant number have been deemed to be not financially sustainable in the long term when the declining condition of our infrastructure is brought to account. This is made worse due to increasing demand for services, rising costs, cost shifting and restricted revenue raising capability. What are the i mpacts of these problems? In the local government sector, around 30% to 40% of all Councils have been deemed to be not financially sustainable in the long term, due to a variety of reasons, if circumstances continue as present. The implications of this parlous situation are that either services will need to be curtailed or significantly higher costs inflicted on the community if the existing level of service is to be maintained. Many rural and remote communities are at risk of having, or already have, an unsustainable future. They require assistance to manage existing infrastructure. This issue also impacts urban communities. These scenarios have potentially detrimental impacts on the national economy and the level of service enjoyed by our communities. How did these problems co me about? A number of infrastructure service providers have a poor understanding of their long term financial future, due to a lack of strategic planning about how they should best manage the long term funding required to provide and maintain the infrastructure and services expected by the community. This infrastructure is typically long lived but is expensive to build. Unless managed and maintained, appropriately renewed, replaced and enhanced, it fails to deliver expected levels of service and economic benefit. It is now widely recognised that appropriate strategic asset management is fundamental to meeting community expectations for the delivery of services at an optimal life cycle cost. How might these problems be addressed? Over a number of years, IPWEA has embarked on a number of initiatives to provide the practical tools and guidelines that seek to address infrastructure management concerns across a wide range of asset classes. Details of these initiatives are summarised in Appendix A and the attached Information Sheet. Also see the IPWEA website Despite all these excellent tools, implementation of good asset management practice is however often hampered by a lack of commitment (at top management or elected levels) 1 See ALGA website PriceWaterhouseCoopers Report, Nov 2006 Page 3

4 and limited resources and skills shortages, to provide the necessary impetus to achieve sustainable outcomes. This has been recognised, in part, by the Local Government and Planning Ministers Council (LGPMC) in 2006 and 2007 where agreement was reached for a nationally consistent framework to address asset planning and management, financial planning and reporting and assessing financial sustainability. IPWEA and NAMS.AU fully supports the LGPMC position but believes this requires implementation strategies through a desirable mix of legislation and capacity building through training and education. This would assist to ensure that appropriate strategic asset management practices are embraced by all who have responsibility for the provision of infrastructure based services. It is essential however that any introduced legislation not encourage a compliance approach but be carefully framed to encourage a situation where long term financial and asset management planning becomes an essential part of managing the business of an organisation. There is discussion that PPP s will assist to optimise investment in public infrastructure. However the smaller scale and nature of local government infrastructure is such that PPP s will in the main be of little assistance. IPWEA NAMS.AU provides a range of tools and guidelines to assist practitioners implement strategic asset management. However this needs support from government. These IPWEA tools and guidelines are recognised internationally as leading practice. (IPWEA is in discussion with organizations including Infrastructure Canada, and the Province of British Columbia in Canada, about the use of asset management tools provided by IPWEA. Infrastructure Canada is considering providing financial support to conduct a pilot program using IPWEA s tools and guidelines for local government in Canada. IPWEA also jointly publishes the International Infrastructure Management Manual which is a world reference for asset management.) Given the situation, what sho uld be done first? Infrastructure Australia has a unique opportunity to foster harmonisation across all the States by encouraging uniform regulation that addresses the concerns about long term sustainability of our infrastructure assets. South Australia has legislation in place for local government; NSW has foreshadowed legislation; some other States are giving it consideration. IPWEA advocates that this could be achieved through appropriate uniform legislation in each State and nationally, that requires all infrastructure based service providers to demonstrate to their communities and stakeholders:- 1. That they are adequately managing the balance between the maintenance of existing infrastructure to ensure sustainable outcomes as well as the building of new infrastructure needed to continue growing Australia s economic prosperity. This should be through the development of long term financial plans based on sound infrastructure asset management plans that cover a forward planning horizon of at least ten years. Page 4

5 2. That they are financially sustainable in the long term, through appropriate annual reporting on key performance indicators. It is important that long term asset and financial plans are not produced for mere compliance, but to form an essential part of management of an organisation. Further measures that are required are: 3. That local government is provided with assistance and support to implement sustainable management of community infrastructure by development of asset management plans and long term financial plans that consider service levels, life cycle cost and risk. 4. That adequate funding levels are assured for local government to sustainably manage essential community infrastructure on behalf of the nation. IPWEA seeks an opportunity to discuss these issues with Infrastructure Australia directly. Further information: Chris Champion Chief Executive Officer Institute of Public Works Engineering Australia Ph Peter Way Chairman, NAMS.AU Institute of Public Works Engineering Australia Attachment A The Institute of Public Works Engineering Australia (IPWEA) is the peak national body for public works and local government engineering professionals in Australia. IPWEA has embarked on a number of initiatives that seek to address infrastructure management across a wide range of asset classes. Through its National Asset Management Strategy Group (NAMS.AU), it has been pro-active in developing the necessary tools and training to assist asset managers in delivering good asset management practice. These initiatives include the world-wide acclaimed International Inf rastructure Management Manual and NAMS.PLUS, a recently developed on-line guided pathway for asset management planning and the sustainable management of infrastructure. There are some 190 Councils now on the NAMS.PLUS program guiding the development of asset management plans within these organizations. NAMS.AU is also about to publish Australian Infrastructure Financial Manage ment Guidelines which will prove invaluable in the sustainable management of community and other infrastructure. IPWEA has also produced a DVD on asset management targeted at Elected Officials and Senior Management. The DVD is titled Sustainable Co mmunities: Critical Insights. It provides a layman s view of infrastructure asset management. See attached information sheet on the initiatives of IPWEA and NAMS.AU. Page 5

6 Institute of Public Works Engineering Australia NAMS.AU National Asset Management Strategy Australia NAMS.AU provides national leadership and advocacy in the sustainable management of public works infrastructure, community assets and services. NAMS.AU NAMS.AU has its own website at with useful links to many great resources and associated information. These include guidelines, discussion forums, sample plans and case studies, study tour opportunities, training in asset management (AM), conference papers, reports and regular newsletters and updates. Visit the site to see the full scope of what is on offer. Sustainable Communit ies: Critical Insights The asset manag ement story now on DVD Another great resource is this DVD package that focuses on the stewardship role that must be exercised by responsible organisations to sustainably manage the infrastructure our communities rely upon. The package includes two versions (8 minutes and 20 minutes) of a presentation featuring key messages about taking responsibility to manage assets and embracing long term asset and copy handouts can also be printed from the DVD. Asset Mates Discussion Forum As a key feature of the website, Asset Mates provides a fantastic discussion forum for practitioners to pose that topics to have your say. The collective knowledge shared is a powerful resource. Joining the forum is free! NAMS.AU Consultant Supporters Group A big thank you to our group of ten leading AM Consultants who have put their hands up to support the valuable work of NAMS.AU. Their support and research to best cater for industry needs. enewsletter which will include interesting AM case studies from our Consultant Supporters Group.

7 NAMS.AU National Asset Management Strategy Australia NAMS.NEWS - Keep up to d ate As part of the NAMS.PLUS package or through the NAMS.AU website, the enews Quarterly Newsletters keep all practitioners up to date with the latest happenings in the available through the NAMS.PLUS Training Program. Our thanks go to our consultants supporter group for providing interesting case studies that are featured in each edition. For more visit Asset Managem ent Resources IPWEA and NAMS.AU are proud to be able to offer valuable resources and tools such as the International Infrastructure Management Manual (IIMM) 2006 recognised as the international The IPWEA Plant and Vehicle Management Manual is another great resource tool. We also have access to our sister organisation, NAMS.NZ publications on Creating Customer Value from Community Assets and Optimised Decision Making Guidelines. NAMS.PLUS - Tools and Templates to write your Asset Man agement Plans One of the prime activities for IPWEA and NAMS.AU is the provision of targeted relevant training for AM practitioners to enhance their skills towards best practice in AM. IPWEA has developed a new training resource that will also provide templates for the easy workshops in the use of these templates are provided. NAMS.AU welcomes registration of interest for the training packages offered and membership of NAMS.PLUS. All enquiries to Lita Somogyi or NAMS.PLUS Asset Management workshops Guided Pathway to AM Planning templates & guidelines On-line templates and modelling tools help desk support service pooling resources of NAMS.PLUS users e-news Major NAMS. AU Projects Australian Infrastructure Financial Management Guidelines These new guidelines will provide the next quantum leap forward for Asset Management practitioners. The guidelines will bring together the accounting, engineering and audit professions to adopt a common language with Full detail of the position papers and the scope of the guidelines can be found on the NAMS.AU website at National AM Award - The NAMie The National Asset Management Award (NAMie) is presented at the IPWEA biannual International Public Works Conference in August each 2nd year. Criteria are AM in an organisation and scope to be applied in other organisations. Judging is on both content and presentation. All the details are on the NAMS.AU website at

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