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Local government infrastructure

Infrastructure comprises the assets needed to provide people with access to economic and social facilities and services. In general, infrastructure facilities have high capital costs, are time consuming to plan and build, are durable and have low operating costs, and are often networks. They often have environmental and social benefits that are not fully recovered by user charges.

Local government infrastructure responsibilities

Local government plans, develops and maintains key infrastructure for its communities. It provides and maintains infrastructure such as local roads, bridges, footpaths, regional aerodromes, water and sewerage (in Queensland, regional New South Wales and Tasmania), drainage, waste disposal and public buildings, parks and recreational facilities. Local government also has planning responsibilities that affect provision

of infrastructure, whether by government or by business. These responsibilities include rezoning of land, subdivision approval, town and environmental planning, development assessment and building regulation.

Through traffic management, local government seeks to maximise transport benefits while minimising the safety and environmental impacts of transportation. Local government also provides a range of social infrastructure such as recreational and cultural facilities and in smaller communities, through its leadership, it makes a major contribution to human capital infrastructure.

In recent years a number of studies have examined expenditure on local roads and assessed the adequacy of funding to preserving this asset. The studies include:

  • reports on local government infrastructure in Victoria, South Australia, Western Australia and New South Wales which were discussed in detail in the 200102 National Report
  • two Bureau of Transport and Regional Economics studies, one on Spending on Local Roads (Working Paper 44) and the other on State Spending on Roads (Working paper 56)
  • presentations to the annual Rural Roads Congress
  • the February 2003 Report on the Roads to Recovery Program.

In the last two years the Australian Government has developed a knowledge base which can, at least for local roads, answer key questions such as:

  • Why are local roads important to the community?
  • Who is responsible for maintaining them?
  • How much are our local roads worth?
  • How much is spent on local roads?
  • How much should be spent to keep them in fit-for-purpose condition?
  • What structures do we need to put in place to better manage our local roads?

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Road funding responsibilities of each level of government

Australia has about 810 000 kilometres of public roads: about 326 000 kilometres are sealed and 484 000 kilometres are unsealed (unformed, formed or gravel). About 645 000 kilometres (80%) are local roads for which councils have responsibility (see Table 4.1). Under the 1991 Premiers' Conference Agreement, the Australian Government is responsible for funding national highways; State governments are responsible for funding arterial roads; and local governments are responsible for funding local roads. In practice, the Australian Government and State governments also contribute towards local road funding.

Table 4.1 Local road statistics based on council data at June 2003

State Total local road lengths (kms) Total sealed local road lengths (kms) Total unsealed local road lengths (kms) $ sealed Total population (million) Length of sealed roads per 1000 people (kms) Length pf unsealed road per 1000 people (kms)

NSW 143 084 60 620 82 463 42.4% 6.643 9.13 12.41
Vic 128 327 53 086 75 241 41.4% 4 854 10.94 15.50
Qld 147 714 41 247* 73 729* 35.9% 3.670 n/a n/a
WA 121 205 32 271 88 934 26.6% 1.919 16.82 46.35
SA 75 212 16 015 59 197 21.3% 1.519 10.54 38.97
Tas 14 022 6 773 7 249 48.3% 0.473 14.31 15.32
NT 12 978 1 973 11 002 15.2% 0.200 9.87 55.06

Total 642 542 211 985 397 818 34.5% 19.278 10.94 20.76

Note: * Data for sealed and unsealed road length in Queensland is only for 74 per cent of mainstream councils.
Source: State Local Government Grants Commissions - unpublished data.

Table 4.1 provides comparative data on local roads showing, for each State, the length of sealed and unsealed roads. The data is open to a variety of interpretations. Does, for example, the fact that only 21.3 per cent of the local road length in South Australia is sealed mean it has a lower level of service compared to other States (and hence a higher need)? Or does it mean South Australia has too many kilometres of unsealed road compared to, say, Tasmania or Victoria? Is there a common definition of 'local roads' across jurisdictions?

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What our local government infrastructure is worth

The ABS estimates that, at June 2002, local government owned land and fixed assets worth $153 billion. Land was worth about $42 billion. Buildings, other construction infrastructure, and plant and equipment are worth about $110 billion (see Table 4.2). Other construction infrastructure, which includes local roads, was worth $94 billion. So in 2001-02, local roads were worth something less than $94 billion. This figure is net of depreciation, that is, the infrastructure is valued in the condition it is now.

Table 4.2 Value of selected local government infrastructure, June 2002 (fixed assets, $m, net of depreciation)

Type of infrastructure NSW Vic Qld WA SA Tas NT Total

8162
Buildings
4 059 3 871 2 019 1 548 1 070 388 79 13 035
8163
Other construction infrastructure1
34 157 15 631 27 071 8 332 4 933 3 383 455 93 962
8164
Plant and equipment
1 028 461 834 398 215 182 231 3 349

Total infrastructure 39 244 19 963 29 924 10 278 6 218 3 953 765 110 346

Note: 1 Includes railways, roads, bridges, tunnels, airports, harbours, pipelines, dams and the like.
Source: ABS cat. no. 5512 table 30 disaggregated by ABS.

Using State sources, it is possible to make an alternative estimate of the value of the local roads at about $75 billion in current replacement costs as shown in Table 4.3. These sources also enable an estimate to be made of the annual gap between local road renewal needs and expenditure. Extrapolating by road length, the annual gap for the next five years for Australia is approximately $640 million. Beyond that period, both the Victorian and South Australian studies suggest that it will increase due to network ageing.

Table 4.3 Estimated value of local roads (replacement cost) and annual road renewal gap

State Local road length for which councils are responsible (km)7 % road length Estimated value of local roads ($ billion) Estimated annual local road renewal shortfall ($m)

NSW1 143 084 22.18 30.8 156
Vic2 128 327 19.89 14.4 176
Qld3 147 714 22.90 10.0 n/a
WA4 121 205 18.79 10.9 61
SA5 75 212 11.66 4.8 74
Tas6 14 022 2.17 2.0 n/a
NT 12 978 2.01 n/a n/a
ACT 2 575 0.40 n/a n/a

Total 645 110 100 72.9 467

Australia (est) 75 644

Notes:
1 According to the New South Wales Department of Local Government, the 2001-02 council annual reports disclose a transport infrastructure renewal gap for local government of $156 million.
2 According to the June 2002 Victorian Auditor General's report Management of roads by local government, Victoria's local road system is valued at $14 billion (p. 3-4). That report puts the infrastructure renewal gap at least $1.4 billion over the five years to 2002, (p. 3) equivalent to an average annual gap of about $280 million. According to Victoria's Facing the Renewal Challenge report, 63 per cent of annual asset consumption is on local roads, so the local roads gap would be about $176 million (p. 56).
3 Local Government Association of Queensland: Road and Transport Inquiry Final Report p. 11. A more robust national estimate of the gap between local road renewal and expenditure needs could be made if data for Queensland was available.
4 WA Local Government Association 2000-01 Assets and Expenditure Report pp. 1-2.
5 According to South Australia's A Wealth of Opportunities report the annual infrastructure renewal gap for local government in South Australia over the five years to 2004-05 will be about $105 million per annum (pp. ii & 19). About 70 per cent of annual asset consumption is on local roads and bridges, implying an annual gap of about
$74 million.
6 Tasmanian Auditor-General, Special Report No. 26 Capitalisation and Reporting of Road Assets in Tasmania, p. 6
7 Road length data is unpublished data from State and Territory local government grants commissions and the Australian Capital Territory Department of Urban Services at June 2003. These figures differ from those included in the Bureau of Transport and Regional Economics' Working Paper No. 56 State Spending on Roads, which puts the length of council managed roads at 679 000 kilometres. That figure includes State-funded main roads in Victoria that are managed by councils and New South Wales regional roads that are arterial roads managed by councils both with significant State funding assistance.

How much local government spends on local roads

According to the ABS, local government expenditure on transport and communications continues to shrink as a proportion of overall local government expenditure. In 2001-02, transport and communications accounted for 28 per cent of local government expenditure, down from 28.8 per cent in 2000-01 and 29.5 per cent in 1999-2000. In 2001-02, councils in New South Wales and Western Australia spent nearly a third of their funds on transport and communications, while those in Victoria, South Australia and Queensland spent about a quarter of their funds on this function (see Table 4.4 and Figure 4.1).

Table: 4.4 Transport and communication expenditure, by State, 2001-02 ($m)

State NSW Vic Qld SA WA Tas NT Total

Transport and communications 1 793 871 1 081 250 484 120 38 4 637
Total expenditure 5 482 3 562 4 252 1 010 1 486 491 267 16 551
T&C share of expenditure (%) 32.7 24.5 25.4 24.8 32.6 24.4 14.2 28.0

Source: ABS cat. 5512.0 table 32.

Figure 4.1 Transport and communications share of expenditure

As Table 4.5 shows, transport and communications expenditure is growing more slowly (18.3% in the last four years) than local government expenditure generally (20.8% in the last four years). This trend was also observed by the CGC review of the operation of the Local Government (Financial Assistance) Act 1995. The Commission found that local government is increasingly providing human services (social welfare type services) at the expense of traditional property-based services (particularly roads). Although road expenditure remains the largest function, the Commission found its importance has declined from about half of total expenditure in the 1960s to a little more than a quarter in the 1990s.

Table 4.5 Local government expenditure on transport and communications, 1998-99 to 2001-02

1998-99 1999-2000 2000-01 2001-02 1998-99 to 2001-02

Transport and communication ($m) 3 919 4 378 4 530 4 637 17 464
Increase over previous year (%) n/a 11.2 3.5 2.4 18.3
Total expenditure ($m) 13 700 14 838 15 726 16 551 60 815
Increase over previous year (%) n/a 8.3 6.0 5.2 20.8

Note: Transport and communications expenditure includes spending on local roads, but may also include council spending on some State roads and spending on transport services such as bus and ferry services in Brisbane City Council.
Source: ABS cat. 5512.0 table 32.

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Australian Government developments

Roads to Recovery

Local government, in managing its local road system, balances two competing demands:

  • extend the existing sealed road network to meet increasing community expectations
  • maintain and renew the existing road network.

In November 2000, the Australian Government announced a $1.2 billion boost in its funding for local roads through the Roads to Recovery program (see Table 4.6). In May 2001, it decided to provide an extra $8 million for roads in unincorporated areas which were not covered by the original program.

The program began in January 2001 and will expire on 30 June 2005. The grants are paid directly to councils and are additional to the Australian Government's local government financial assistance grants. Some $850 million of the Roads to Recovery funding will be spent in rural and regional Australia.

Table 4.6 Roads to Recovery funding ($m)

State Initial four year allocation Additional amounts for unincorporated areas Total

NSW 340 3.8 343.8
Vic 250 0.2 250.2
Qld 250 - 250.0
WA 180 - 180.0
SA 100 4.0 104.0
Tas 40 - 40.0
NT 20 - 20.0
ACT 20 - 20.0

Total 1 200 8.0 1 208.0

Source: Department of Transport and Regional Services.

The Roads to Recovery program was intended to help councils repair roads that were nearing the end of their economic life. In the period to 30 June 2003, $650 million was provided to councils. Of the projects lodged for funding:

  • 47 per cent was for reconstruction, rehabilitation and widening of existing roads
  • 30 per cent was for re-gravelling, sealing and resealing work
  • 12 per cent was for bridges and drainage work
  • 11 per cent was for other work.

Main findings of review of Roads to Recovery program

The Department of Transport and Regional Services and the Australian Local Government Association jointly reviewed the Roads to Recovery program in February 2003 as part of consideration of its possible continuation beyond June 2005.

The key finding of the review was that Roads to Recovery funds have generally been well used in ways consistent with the intention of the program, namely to address the backlog of maintenance and renewal on local roads.

The review also found that works undertaken had a strong safety emphasis with transport efficiency and economic development the next most common objectives. Most of the expenditure was on existing roads. The review team calculated an average benefit cost ratio for a selection of projects at about 1.8. The program provided economic stimulation to local economies across Australia and generated employment, particularly in rural and regional areas. Also important to application of the funding was widespread and growing recognition by councils of the value of good asset management.

The program has gone a good way toward addressing the local roads problem but many deficiencies remain, both in terms of maintenance of the existing road system and the need to upgrade and, in some cases, to extend it. Councils saw the three main strengths of the program as:

  • local decision making, which has enabled them to implement their own priorities
  • simple reporting requirements and other administrative arrangements
  • direct funding to councils without State government involvement.

A survey of 39 councils participating in the Roads to Recovery program was conducted to assess the extent to which the program had helped councils fill the gap between local road renewal needs and local road expenditure. The survey showed that the annual decline in written down current replacement cost[1] of the councils' roads and bridges was estimated at $71.4 million for 200001. Roads to Recovery reduced this yearly rate of decline to $40.9 million by the end of 200102 (that is, the first full year of Roads to Recovery funding). This showed that the Roads to Recovery program had not overcome the local road backlog, but had almost halved the rate of decline in the condition of the local road system. This finding was consistent with the data in Table 4.2 which shows that the $300 million available under Roads to Recovery funding in 2003-04 would almost halve the local road deficit of around $640 million per annum.[2]

Impact of Roads to Recovery on local communities

The Australian Local Government Association said:

Roads to Recovery is an outstanding example of an effective Commonwealthlocal government partnership. It is producing very real and tangible results for Australian communities. It is replacing dangerous bridges and upgrading intersections. It is repairing roads and improving traffic flows. It is boosting economic development, creating employment and improving the lives of countless Australians through 10 000 projects from our city centres to remote communities.

 

Guidelines for a local government infrastructure financing manual

The former Local Government Ministers' Conference, a forum that brought together State and Federal Local Government Ministers and the President of the Australian Local Government Association, commissioned a report on alternative infrastructure financing mechanisms for local government. In response, a report providing guidelines for a local government infrastructure financing manual was prepared.

Private sector involvement in provision of local government infrastructure can lower the cost and improve the quality of infrastructure service delivery. It can bring forward investment opportunities and accelerate economic development. It can provide access to private sector skills, minimise council risk and broaden the scope of services.

The report included a survey of council use of private sector infrastructure financing. The survey found that the private sector had been involved for decades in delivering local government infrastructure, but mainly through outsourcing and leasing rather than more innovative risk-sharing approaches to the financing of infrastructure. More intensive styles of private sector financing such as Build Own Operate Transfer schemes, franchise-concession agreements and full privatisation were very rare in Australian local government circles.

The survey showed that, in the vast majority of local government experiences with the private sector, the private sector had performed better than or equal to expectations. These perceptions were based on a broad history of private sector contact, not just a once-off transaction.

The major difficulties local government faced in involving the private sector in infrastructure provision were in the definition of contracts and the lack of private sector competition. Contract problems usually arose when attempting to accurately define the service/s to be provided or preparing a performance-based specification.

In regional areas, the need to move and house skilled workers and the high transaction costs relative to the small and medium scale of infrastructure opportunities diminished the desire of the private sector to become involved. Lack of technical capacity by local government councillors and officers and the lack of critical mass in investment opportunities within individual council areas also impeded private sector investment.

Private investment is also inhibited by section 51A and by Division D of the Income Tax Assessment Act 1936, which cause uncertainty about the assessability of income streams and the deductability of expenses in infrastructure projects.


1 Written down current replacement cost (WDCRC)measures the current condition of the asset.Where the increase in the value of part of a road network due to renewal exceeds the loss in value from the deterioration (or consumption) of the rest of the network due to traffic,the WDCRC will increase.Otherwise the WDCRC will fall each year resulting in a decline in the level of service of the road network.
2 See Table 4.2.This figure is an update of $630 million estimate used on page 7 of the Report on the Roads to Recovery Program.

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AusLink

AusLink is the Australian Government's proposed new policy direction on planning and funding national land transport infrastructure. The Australian Government released the AusLink Green Paper in November 2002. Some 550 written submissions were received on the Green Paper and have been considered as part of development of the AusLink White Paper.

The Australian Government will release the AusLink White Paper once it has considered a range of important policy and planning issues. The White Paper will outline the governments land transport policy position, including the processes involved in calling for project proposals to meet the governments national transport objectives.

AusLink aims to develop transport corridors of strategic national importance such as rail and road links between cities and to improve connections to production and distribution centres and major ports and airports. AusLinks key elements include:

  • an identified National Land Transport Network comprising both road and rail infrastructure links and their intermodal connections
  • development and implementation of a rolling five-year multi-modal National Land Transport Plan with a 20-year planning horizon
  • greater collaboration and cooperation with other levels of government and the private sector
  • support for regional growth and development
  • future development towards a National Transport Policy.

AusLink will fund projects that best contribute to national objectives on the national land transport network. Joint public and private sector development of projects will be encouraged to increase the pool of funding and the focus will be on incorporating the best solutions embracing, wherever possible, new technology and better management systems.

Under AusLink, the Australian Government proposes to amalgamate its land transport funding programs into a single program. It will bring together funding for the National Highway System, Roads of National Importance and rail after outstanding firm project commitments are met. Current funding commitments for key transport programs affecting local government the identified local roads component of the financial assistance grants, the Roads to Recovery grants to 2005 and the Black Spot program to 200506 will be retained.

AusLinks national objectives recognise the importance of land transport infrastructure in regional Australia and offer significant opportunities for local government. Through strategic investment in land transport infrastructure, AusLink aims to promote sustainable regional economic growth, development and connectivity.

Under AusLinks proposed regional approach, the Australian Government will encourage strategic planning and decision-making on transport priorities at the regional level, for example, through regional groupings of local councils. Regions that have strategic planning processes, cooperative relationships and structures in place will be well positioned to take advantage of the new approach under AusLink.

Following release of the AusLink White Paper, a new intergovernmental agreement will be negotiated between the Commonwealth, State, Territory and local governments to underpin new planning and funding arrangements for AusLink. A national advisory body will also be established to advise transport ministers on priorities for national infrastructure investment and reforms to support inter-modal integration and infrastructure pricing.

Representatives of the Commonwealth, States and the Australian Local Government Association have been jointly developing proposed National Transport Assessment Guidelines, and a new approach to planning, developing and managing data to support decision-making for Australias national land transport infrastructure.

The guidelines will aim to provide, for the first time, a recommended national approach to assessing projects across modes (road, rail and non-infrastructure solutions). They will cover processes and analytical techniques for planning at the strategic level and for specific projects. Individual projects will be assessed on how they contribute to objectives identified for the network. The guidelines will also include a framework for assessing smaller-scale regional projects.

The National Transport Data Framework will also have broad national application within jurisdictions and for AusLink. It will be established to provide a system that will promote consistency in land transport project assessment based on comparable, though not necessarily consistent, data collection requirements.

Over time, the Australian Government intends AusLink to evolve into a broader national transport policy agenda, supported by a range of complementary policies and programs. These policies and programs need to be directed towards ensuring Australia has a long-term transport system operating in a way that is:

  • safe and secure
  • efficiently regulated
  • appropriately priced
  • environmentally sustainable
  • technologically advanced.

State spending on roads

The Bureau of Transport and Regional Economics has released Working Paper 56 called State Spending on Roads. The paper shows that States make a significant contribution to funding of council-managed roads. Direct State expenditure on roads managed by councils was $234 million in 2000-01 and an additional $336 million was spent in grants to councils for local roads (see Table 4.7). The Federal Financial Assistance Grants for local roads, paid through the States, are not included in this data.

Table 4.7 State spending on roads by purpose, 199697 to 2000-01 ($m)

Purpose 1996-97 1997-98 1998-99 1999-2000 2000-01 Total

State direct spending on council managed roads 251 252 323 292 234 1 352
State grants to councils 313 309 362 347 336 1 668

Total 564 561 685 639 570 3 019

Note: Figures may not add to totals due to rounding.
Source: Bureau of Transport and Regional Economics, Survey of State Government Spending on Roads, table 2.5.

Analysis of the data for 2000-01, shows that of $336 million provided in State grants for roads managed by councils, almost half was spent on State roads. However, at least $178 million of the State funding was spent on local roads (New South Wales $29 million, Victoria $22 million, Queensland $63 million, Western Australia
$62 million, South Australia $1 million, Tasmania $1 million).

In 2000-01, $234 million was also spent directly by the State on roads managed by councils. The bulk of it was spent on State main roads and regional roads. However, at least $14 million was spent exclusively on local roads (New South Wales $2 million, Victoria $4 million, South Australia $8 million).

These figures together show that in 2000-01 the States provided at least $192 million in grants to councils for local roads and direct spending on local roads.

State governments in Queensland ($63 million) and Western Australia ($62 million) make a major contribution to funding of council-managed local roads. In 2001-02, the Queensland Government also spent an additional $290 million on its 14 000 kilometres of district roads which are roads that would in other States ordinarily be managed by councils.

Table 4.8 State spending on council roads by jurisdiction 2000-01 ($m)

Jursidiction Direct spending on council roads Grants to councils

NSW 19 187
Vic 1301 22
Qld 0 63
SA 8 1
WA 78 62
Tas 0 1
NT 0 neg
ACT 0 0

Total 234 336

Notes:
neg = less than $0.5 million.
1 Most State government spending on council-managed roads occurs on declared Main Roads that are generally managed by councils but funded by the State government. In 2000-01, VicRoads incurred direct expenditure of $56 million on Main Roads and $4 million on Unclassified (local) roads. A further $70 million was paid by VicRoads as reimbursements to councils for spending on declared Main Roads that are managed by councils. Figures may not add to totals due to rounding.

Source: Bureau of Transport and Regional Economics, Survey of State Government Spending on Roads.

State Spending on Roads also quantified the spending that occurs on local roads in unincorporated areas. The report found that:

In 2000-01, Governments in New South Wales and South Australia together spent a total of $28 million on the 16 thousand kilometres of roads in their unincorporated areas. At least part of this expenditure, however, would still remain a State responsibility even if local government authorities were established. For example, of the $13 million spent by New South Wales, about $8 million went on State Roads for which the State is responsible in all areas (p. 32).

Unincorporated areas account for 84 per cent of South Australias area (p. 61). There are 12 270 kilometres of roads in these unincorporated areas, including 10 207 kilometres of local roads.

The Working Paper is available at www.btre.gov.au/wp_index.aspx.

Table 4.9 Spending on roads in unincorporated areas, 2000-01

State Location Population Road Length (km) Road spending ($m)

NSW Far West 1 078 3 563 13.1
Vic French Island 70 60 0.1
Qld
SA Outback areas 13 000 12 270 14.9
WA Rottnest Island and Kings Park, Perth n/a n/a n/a
Tas
NT Most of NT n/a n/a n/a
ACT

Note: There are no unincorporated areas in Queensland, Tasmania or the ACT.
Source: Bureau of Transport and Regional Economics, State Spending on Roads, table I.19 p. 32.

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State developments

Victoria, New South Wales, Western Australia and South Australia have undertaken studies into various aspects of local government infrastructure. Councils in Queensland, Western Australia and South Australia are working on a regional basis to address local road needs. More detail on these issues is provided in previous National Reports.

Victoria and Queensland are making progress in implementing measures to improve council management of their assets. All States are developing strategies to deal with local government liability for negligence in accidents due to the condition of pavements and bridges under their control. In New South Wales, there are new initiatives to improve funding and maintenance of timber bridges. These initiatives are described below.

State responses to nonfeasance immunity for highway authorities

The 2000-01 National Report provided information on the High Courts decision concerning the liability of Australian road authorities for negligence in accidents allegedly arising from road and footpath surfaces under their control. The High Court abolished the highway rule that protected road authorities from liability in negligence cases where it has simply allowed roads and footpaths to deteriorate (nonfeasance). Councils were concerned they would face increased litigation and insurance costs as a result.

The States are considering a number of responses to the decision including:

  • improving asset managers training by providing guidelines and seminars
  • improving road authorities asset management and risk management through more transparent decision making about road maintenance and road funding, and through improved inspection frequencies and maintenance standards
  • proposing legislative changes at the State level.

For example, the Victorian Government has enacted the Roads Transport (Highway Rule) Act 2002 that has temporarily reinstated nonfeasance protection for councils until 1 January 2005. This will also allow time for the government to introduce a new Road Management Bill and time for councils and VicRoads to develop new road management plans and processes, which will need to be in place by 1 July 2004. The Bill, to take effect from 1 July 2004, provides a framework for managing roads, including:

  • a process for developing appropriate standards, that will vary according to the needs of local communities in each council area, for inspection, maintenance and repair of roads and road infrastructure (including public utilities and other infrastructure on roads) to ensure a safe and efficient road network
  • simplification of road classifications and VicRoads being responsible for all main roads
  • demarcation of functions between VicRoads and municipal councils
  • definition of the powers and responsibilities of road authorities, utilities and other bodies that carry out road works.

The Municipal Association of Victoria has worked in conjunction with VicRoads to facilitate regional workshops to discuss the Road Management Bill and its links to the Step Asset Management Improvement Program (see below). VicRoads has also released a discussion paper in relation to the Bill.

Asset management

Municipal Association of Victoria Step Asset Management Program

In 2002, the Municipal Association of Victoria launched the Step Asset Management Program to provide councils in Victoria with a whole-of-organisation perspective and a best practice framework to enable continuous improvement in councils asset management practices. Seventy-five councils are now involved in the program, including some from Tasmania and South Australia. The program covers:

  • effective whole-of life-management of community assets
  • infrastructure development (including Roads to Recovery and AusLink)
  • the Department of Victorian Communities Asset Management Performances Measures Project (an independent evaluation of the sectors asset management performance for a report to the Minister)
  • competition payments to councils under the Local Government Improvement Incentive Program
  • nonfeasance immunity
  • public liability insurance premiums.

The Victorian Government has assisted local government by providing grants to a number of rural councils to help them develop asset management plans. It has also provided one-on-one support to a number of pilot councils to establish sound asset management planning, and organised a workshop for councillors on strategic asset management.

Western Australia asset management

Western Australia has well-established local road planning arrangements, that enable councils to identify, prioritise and fund their strategic local road network and to monitor the adequacy of their road preservation expenditure.

Under the State Road Funds to Local Government Agreement, which commenced in 2000-01, one-quarter of the States road-related revenue (for example, vehicle registration charges) is available to councils for local roads, with a guaranteed minimum allocation of $90 million per year for each of the five years. Ten regional road groups have been established with a membership of elected local government representatives. These make recommendations to the State Road Funds to Local Government Advisory Committee, a body comprising representatives of Main Roads WA and the Western Australian Local Government Association which determines the distribution of State to Local Road Funds. Regional Road Groups enable elected members to consider the strategic transport needs of their region rather than just the localised road needs of their council area. The groups use multi-criteria analysis, incorporating transport, social, economic, financial, road safety and environmental factors to rank road projects.

In 2002-03 about $100 million was provided under the Agreement. The Western Australian Government has advised it is committed to development of a new local roads funding agreement when the present agreement reaches its scheduled expiry date of 1 July 2005.

Queensland Local Roads Management and Investment Alliance

In August 2002 the State Government and the Local Government Association of Queensland signed a memorandum of agreement to establish a Local Roads Management and Investment Alliance. The Roads Alliance will strengthen cooperation between the State and local government in managing Queenslands road network. It provides a platform for making better decisions on road infrastructure investments, on the use of road funds, on project scheduling and resource sharing across agencies. The Roads Alliance will also provide a uniform system for collecting, analysing and reporting data on the States roads. The Alliance will be funded through a five-year road funding program.

Milestones achieved include:

  • signing of the Memorandum of Agreement (August 2002)
  • active involvement of 124 of the States local governments in the Alliance
  • establishment of 14 Regional Road Groups and their associated Technical Committees
  • release of the Roads Alliance Operational Guidelines (August 2002)
  • release of the Road and Bridge Asset Management Kit (January 2003)
  • establishment of a panel of pre-qualified suppliers for Asset Management Software (April 2003)
  • development of the Regional Investment Strategy (for release in August 2003)
  • development of the Joint Purchasing and Resource Sharing Framework (for release
    in September 2003).

Roads ACT

The ACT Government is developing an Integrated Asset Management System to enable better prioritising and management of local government asset maintenance through the collection of location, asset type and asset condition data.

Tasmania asset management

The Local Government Board of Tasmania conducts routine reviews of each council in Tasmania every eight years. The Boards review of Kentish Council highlighted the effect that neglect of maintenance of council assets can have on a council's viability (see box).

Kentish Council, Tasmania

In May 2001, the Board issued its Interim Report into the findings of a general review of Kentish Council. The Board found that the council undervalued its infrastructure, was only funding about a third of its asset depreciation (p. 158) and that viability of the council was put at risk by poor asset management. Specifically, the report stated:

Asset management is crucial in the Boards review of this Council and the problems identified seem insurmountable. The Board found evidence of this in the poor record of asset rehabilitation, of deficiencies in the road and bridge maintenance program with resealing schedules falling behind requirements, of lowered standards of road resealing, and of water and sewerage maintenance at breakdown rather than preventative maintenance levels

The failure to provide for maintenance of assets arises not only from ignorance of the extent of the problem but also from avoidance of the revenue issue. For years Kentish has been collecting a rate well below that required for its responsibilities and below that of similar Councils. In 1999 the KPMG study, even on the limited data available, warned Council that large and sustained rate increases were required. This advice was resisted by Council and only small and inadequate rises have been forthcoming. Instead Council has used Financial Assistance Grants as a subsidy to ratepayers and has relied heavily on other government grants for infrastructure, some of this to create new assets when it could not adequately maintain those it already had (p. 7).

An additional $591 000 annually is required merely to maintain roads and bridges at the current level of service. This is equivalent to a rate increase of 51 per cent for the general municipal rate. This calculation does not take account of the backlog, which in reseals alone over the last four years, is in the order of $600 000 (p. 135).

It is the Boards view that Council does not have the capacity to address the shortcomings identified to be a viable authority (p. 149).

In August 2002, the Minister Assisting the Premier on Local Government, Mr Jim Cox, MHA, dismissed the Kentish Councillors.

A plebiscite held in February 2003 saw Kentish voters overwhelmingly (78%) vote to retain the council as a separate entity and a new Kentish Council was elected in June 2003.

Local roads and bridges Other developments

The Australian Local Government Association has signed a partnership agreement with Austroads and the Institute of Public Works Engineering Australia. It aims to improve the management of local roads and the resolution of strategic local road issues with the benefit of the knowledge, technology, best practice and research outputs from Austroads activities management of Australias roads.

A more sophisticated approach by councils to asset management could involve:

  • a better understanding of community expectations of the local road system and the implications that has for maintenance of local roads and rating
  • actual condition-based assessment of the local road network so funding decisions can be based on empirical data rather than on observation and judgement
  • asset management systems that have consistent data and enable predictions to be made of the consequences of individual maintenance decisions
  • sharing of productivity improvements across the local road network.

In regard to the second point, one project of particular interest is the work ARRB Transport Research is doing in collaboration with councils to measure and monitor changes in local road conditions at up to 500 sites around Australia, over five years.

Reforms introduced in New Zealand may also have potential in Australia. New Zealands Local Government Amendment Act (No. 3) of 1996 required councils to fund asset depreciation (defined as loss of service potential) and required all councils to develop detailed asset management plans for councils assets (Rosson 2000, p. 10). Council asset management plans are audited, and improvement plans are developed and published.

Maintenance of timber bridges

The trend towards increased vehicle load limits is placing pressure on local governments to replace timber bridges. Weight limits on old timber bridges impede the growth of local economies. The condition of timber bridges also has safety implications. It was the collapse of a timber bridge in Singleton Shire, New South Wales resulting in injury to the driver and damage to the heavy vehicle that led the High Court to overturn the Highway Rule in 2001. Timber bridges are expensive to maintain. Concrete bridges are the favoured replacement.

Australian local governments are responsible for about 29 000 timber bridges. A third of these are over 50 years old and beyond their useful life.

Of the 29 000 timber bridges, about half (14 152) in use on heavy vehicle routes are rated as not being in good condition. An Australian Local Government Association bridge survey showed 63 per cent of bridges are in New South Wales and 19 per cent are in Victoria (Queensland 6%, Tasmania 5%, Western Australia 4%, South Australia 3%).

Assessing the load capacity of timber bridges

Given the scale of the problem facing councils in maintaining or replacing timber bridges, there is great value in technologies that enable councils to test timber bridge strength more cheaply.

The Institute of Public Works Engineering Australia has worked with the University of Technology Sydney and 14 New South Wales councils to find cheaper ways to test bridge strength based on the dynamic response of the bridge to a small impact load. This information allows councils to better prioritise bridge maintenance and rehabilitation and to place appropriate load limits on bridges. Councils can monitor deterioration rates and predict intervention timeframes at a cost of 1520 per cent of traditional load testing. This project was funded under the Australian Governments Local Government Incentive Program.

New South Wales Regional Timber Bridge Program

In June 2003, the New South Wales Government announced a $210 million Regional Roads Timber Bridge Program over seven years to replace or restore 369 of the States timber bridges on regional roads. Local councils will contribute half the funding. The aim is to replace all the timber bridges on these roads with steel or concrete bridges by the end of the decade.

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Other infrastructure issues

Local roads and bridges are not the only infrastructure for which councils are responsible. Stormwater and waste management and water supply are major issues for councils.

Water, sewerage and waste management infrastructure

Local government is responsible for water supply in Queensland, Tasmania and regional New South Wales. Elsewhere this is a responsibility of the State or of regional utilities. Local governments are responsible for management of solid waste in every State. Last years National Report provided information on local governments environmental revenue and expenditure (ABS cat. no. 4611.0) no new information was released in 2002-03.

Benefits of flood mitigation

Victorias Facing the Renewal Challenge study showed that local government has a significant investment in drainage infrastructure, comprising about 15 per cent of its local government assets. Average annual asset consumption was just over 1 per cent a year. Maintaining this infrastructure in good condition is important to the community.

A Bureau of Transport and Regional Economics study on the Benefits of Flood Mitigation (Report 106) shows how important flood mitigation measures are. The Report found that, on average, flood cost the Australian community over $300 million each year (p. 1). The report shows that flood modification measures (such as levees, dams and bitumen sealing of roads) and property modification measures (such as zoning, land use planning and building regulation) are successful in reducing the annual cost of floods.

COAG has been examining the impact of natural disasters in Australia and considering measures to reform disaster mitigation, relief and recovery arrangements. Natural disasters such as floods, bushfires and tropical cyclones occur regularly in Australia, causing more than $1.14 billion in damage each year to homes, businesses and infrastructure and causing personal suffering. Scientific research predicts an increase in extreme weather events in the future.

In May 2003, the Australian Government offered to contribute $68.5 million over five years towards a new Disaster Mitigation Australia Package, subject to COAG agreement and matching funding from the States. The package will help fund a new approach to disaster mitigation that goes beyond the traditional approach of relief and recovery.

It will involve more effective land use planning and development and building controls as well as better risk assessment and data collection and research. Other measures could include building disaster-resilient infrastructure and warning systems. Infrastructure that has been repeatedly damaged by natural disasters could be rebuilt to a more resilient standard, delivering long-term savings to government. Local government is expected to participate in the strategy.

The Australian Government continues to fund disaster mitigation through the Regional Flood Mitigation Program ($9.6 million per annum) and the Natural Disaster Risk Management Studies Program ($3 million per annum). It also provides disaster relief and recovery assistance to the States through the National Disaster Relief Arrangements. The Natural Disaster Risk Mitigation Studies Program is expected to be absorbed into the new Disasters Mitigation Australia Package.

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