Victorian councils manage around $73 billion of physical infrastructure assets and spend over $2 billion annually to maintain, renew or replace them. Poor asset management can lead to deteriorating or failing assets, reduced levels of service, higher council rates and an increased financial burden on future ratepayer generations.
Council spending on renewing or replacing existing assets is not keeping pace with their rate of deterioration, resulting in cumulative renewal gaps that grow each year.
While councils have in recent years improved their asset management practices, they need to accelerate their progress in areas such as:
- asset renewal planning and practice
- the quality of asset management plans
- linking of service levels and standards to these plans
- development of asset management information systems
- recruitment and development of appropriate staff
- monitoring, evaluation and reporting on asset management
- asset management governance.
More can also be done by Local Government Victoria in association with other sector organisations, such as the Municipal Association of Victoria, to support councils to improve their asset management capabilities and practices, including through improvements to asset management guidance and the National Asset Management and Assessment Framework self-assessment framework.
There is a pressing need for councils to carefully balance asset renewal spending against a sustainable level of service delivery.