New asset management framework needed for NSW councils

A recently released NSW Department of Local Government position paper entitled Asset Management Planning for NSW Local Government, proposes a new asset management framework for NSW councils.

The position paper draws on an Independent Inquiry into the Financial Sustainability of NSW Local Government (Allan Report) that found only 20 per cent of councils have sufficient asset management systems and practices in place.

The Allan report also found that 25 per cent of councils are not financially sustainable, that 50 per cent are at financial risk and that without an asset management program many councils will not be able to sustain their assets.

Among the recommendations of the position paper are that all councils – with financial and technical assistance from the NSW Government – adopt total asset management systems with consistent asset accounting practices.

The Department of Local Government developed the position paper in consultation with the NSW Infrastructure Task Force which includes the Local Government and Shires Associations (LGSA), the Institute of Public Works Engineering Australia (IPWEA), the Local Government Managers Australia (LGMA) and the Local Government Auditors Association.

Major features of the proposed framework include:

• Strategic long term asset management and financial planning become essential components of an integrated strategic planning framework across NSW Local Government;

• Legislative amendments requiring long term asset management and 10-year strategic and financial planning be introduced in a broad manner into the Local Government Act 1993 (NSW);

• Councils to adopt asset management systems and practices which are broadly consistent with the national framework for financial sustainability and asset management, and where applicable and practical, the IPWEA’s International Infrastructure Management Manual;

• Establishment of a financial reporting framework for asset management that is embedded in the strategic planning process. This framework would significantly improve current reporting requirement, particularly Special Schedule 7;

• An initial basic (core) approach to asset management be suggested as an agreed minimum level for all NSW councils; and

• An improvement and capacity building program to progressively raise asset management including a range of training, tools, templates and guidelines be introduced.

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