In the time that Patrick Marshall delivered his presentation at the IPWC 2024 conference in May, the $1 billion in assets he manages for the Glenorchy City Council in Tasmania depleted at a rate equivalent to two bays of footpath, or by a value of $1100.
Those $1 billion worth of assets, said Marshall, were depleting at a rate of $19 million each year, with depreciation making up around 25% of his council’s operational budget and comprising 43% of council’s rate revenue.
In Marshall’s three years as the Manager of Assets, Engineer and Design, Glenorchy has embarked on a journey to meet this challenge through embracing principles of strategic asset management, putting a priority on renewal.
Marshall’s presentation, titled From Underfunding to Alignment and detailing Glenorchy’s approach was the winner of the EJ (Ted) Hooper medal for the Best Overall Paper at IPWC 2024, and showed how the council had improved the conditions of its assets over two budgetary cycles.
The positive news is that while the national average of poor or very poor public assets under local government management was 10% in 2022, the average for Glenorchy had improved to 7.8% by 2024.
This had required increased funding allocation for renewals, but was clear evidence that the community was getting better outcomes.
“I aimed to create a picture of where we have come from to where we are now in embracing strategic asset management, and the improvements it has delivered,” said Marshall.
“When I assumed the role the first budget we presented was not fully funding our asset renewal, so we had a gap between what our asset management plan was saying we needed and what we were funding, which is not a good position to be in.”
One of the keys to implementing change was to win the endorsement of the elected members of the Glenorchy Council, which has around 50,000 ratepayers in the northern suburbs of Hobart, and get them to support budget increases for renewals.
“The backbone of my presentation was about how important it is to get the support and buy in from elected members, and how you take them on that journey to focus on 30, 40 or 50 years out rather than just the short three or four year election cycle,” said Marshall.
“When I presented the first budget I made a really clear point of outlining what that gap was. I put it in bold and in red, saying ‘this is what we are not funding.’”
Understanding that real life examples were the best way of making his point, Marshall provided videos and photographs, showing councillors some of the assets which were not being renewed. This year, he’s planning to take them on a bus tour to visit the sites.
Feedback was also sought from the community on the levels of service they expected for the rates they paid, and Marshall and his team modelled scenarios based on proposed levels of service and the impact of funding decisions over 30 years.
Three options were modelled: one predicting levels of service under the current plan, a second modelling the funding necessary to maintain service levels at the current four star rating, and a third option with the level of funding needed to improve to five star.
Improving road infrastructure to a five star level of service under option three would cost a total of $304 million over thirty years, while the current plan of spending $196 million over thirty years would see assets deteriorate in service levels to three stars.
In annual terms the difference between the two most divergent options was $3.57 million each year.
Marshall says that while rates needed to be increased, it was done on an informed basis and after community consultation.
On the elected members, he said they had bought into the importance of asset renewals with the result that renewal funding has increased, resulting in an improvement in asset condition even in a short period.
Strategic asset management was key to delivering sustainable services over the long term, while deferring renewals led to community dissatisfaction, damaged the council’s reputation and also risked blowing out the operational and maintenance costs.
“We all like big shiny new facilities, but we’ve been caught out in the past with some big grants from the Federal Government because there are costs in accepting those grants, in terms of depreciation and maintenance,” said Marshall.
“You need to do the ‘must do’s,’ and they are the renewals and fully funding them is the first priority.
“And then you can get into the really discretionary stuff which you don’t necessarily have to have but which might meet a need in the community, but you need to do renewals first and then look at funding new projects.”
