The Moloney Asset Management System (MAMS)

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1 The Moloney Asset Management System (MAMS) Software specialising in the management and condition assessment of Local Government Infrastructure Assets 20 February 2013 Prepared By Jason Strawbridge Spiire New Zealand Ltd Prepared For:

Local Government Infrastructure Assets 20 February 2013

2 Australian LG Attributes of the Sector Over 550 local government municipalities nationally Elected governance representation model Operate within state boundaries & legislation Highly dependent on state & federal funding Community service driven organisations Caretakers of many $B in infrastructure assets Not quite like herding cats, but politically driven and grant funding sources at whim of governments

state & federal funding Community service driven organisations Caretakers of many $B in

3 Victorian History Sustaining Local Assets, Local Government Asset Management Policy Statement (Department for Victorian Communities, Dec 2003) The strategy of increasing local revenues by itself will not resolve the underlying problem of sustaining the infrastructure. Councils will need financial strategies that are backed by strong leadership and supported by well researched and targeted asset management Candy Broad, Minister for Local Government Asset management must be integrated with broader council planning, and assets considered with other key resources used in achieving council objectives

Councils will need financial strategies that are backed by strong leadership and supported by well researched and targeted asset management Candy

4 Victorian History (3 years) Awareness 4 Key Pillars (2 years) Application Renewal Gap Program Advanced Step Framework (2 years) Broaden Steps Levels of Service Community Consultation Key Outcomes Council decisions based on adopted policy for asset management Levels of service are an appropriate response to community expectations Asset management plans (should) exist for all major asset classes Sustainable long term financial plans are linked to asset management plans A whole of organisation approach to asset management

asset management Levels of service are an appropriate response to community expectations Asset management plans (should) exist for all

5 Results

6 Results

7 Overview The Moloney Asset Management System is a simple, user friendly software package which can give Councils both numerical and graphical asset/funding information with minimal data input time invested. It is currently used by over 142 Councils across Australia to great success. The Moloney Asset Management System delivers a prediction of the on-going annual renewal demand to maintain an existing set of infrastructure assets in perpetuity. Any asset that is built, decays with time and requires rehabilitation at some future point is suitable for running through the model. The model has two distinct modelling paths. Predicting future asset condition based upon a proposed renewal expenditure profile Predicting future renewal demand based upon a desired condition outcome The renewal gap is not really one of the primary modelling outputs, but is calculated as the difference between the predicted renewal demand and the actual renewal expenditure. The renewal gap is one of the more useful tools for councils as it can quickly show where assets are being over or under funded.

The Moloney Asset Management System delivers a prediction of the on-going annual renewal demand to maintain an existing set of infrastructure assets in perpetuity.

8 Inputs Groups and sets to assist with separating or grouping asset data Data from RAMM Value to replace all assets Allocated budget from Annual Plan Data is indicative only

9 Inputs Continued Condition Distribution of Assets - Inputs Data is indicative only Above Average Standard Distribution Curve

10 Inputs Continued Data is indicative only Asset Groups Standard Degradation Curve

11 How calculations work

12 Data is indicative only Outputs

13 Data is indicative only Outputs

14 Data is indicative only Outputs

15 Governance Change The 78 local authorities make up 4 percent of GDP, spend $7.5 billion per year of public money, and manage around $120 billion worth of public assets. putting in place a framework that means rates do not continue to increase, on average, by 7 percent per annum, as they have over the last decade It amends the Local Government Act 2002 to refocus the purpose of local government, introduce financial prudence requirements, strengthen council governance The Bill provides a new regulation-making power to authorises the Governor- General to make regulations that prescribe parameters or benchmarks for assessing whether a local authority is prudently managing its revenues, expenses, assets, liabilities, investments, and general financial dealings (Part 1, Clause 22, inserting new paragraph (dc) into Section 259(1); cf Section 101 of the Act).

purpose of local government, introduce financial prudence requirements, strengthen council governance The Bill provides a new regulation-making power to authorises the Governor- General to make

16 Governance Change Report of the Department of Internal Affairs to the Local Government and Environment Committee Submitters identified three particular perverse consequences they considered regulations could promote. The first was the creation of an infrastructure deficit. This would arise through constraints on rates and debt leading to local authorities deferring necessary capital expenditure. We consider that this risk can be mitigated in a number of ways. Firstly, the benchmarks will be a soft cap. Local authorities with well prepared asset management plans will be able to provide suitable evidence of the foundations of their capital expenditure and funding plans in the face of any inquiry. Secondly, a balanced suite of indicators would take account of account of the need to maintain infrastructure investment for the future needs of communities.

This would arise through constraints on rates and debt leading to local authorities deferring necessary capital expenditure. We consider that this risk can be mitigated in a number of ways.

Sustaining Local Assets. Local government asset management policy statement

Sustaining Local Assets. Local government asset management policy statement Sustaining Local Assets Local government asset management policy statement December 2003 ISBN 0 646 42106 9 Authorised by the Victorian Government Address: Local Government Victoria Department for Victorian