Local Government Assets: Asset Management and Compliance

Tabled: 23 May 2019

Audit summary

One way in which local councils deliver services to the community is through effective use of their assets. Council assets include roads, bridges, footpaths, drains, libraries, town halls, parks, recreational centres, and other community facilities. The 79 Victorian councils control more than $102.1 billion in assets and infrastructure, including more than $26.5 billion in roads and bridges and $8.7 billion in drains.

To ensure they realise full value from these assets, councils need to effectively plan for, manage, and utilise them. Effective management of these assets requires the collection of appropriate information, including their value, cost to maintain and operate, condition, performance, risk and utilisation. Councils should then use this information to make decisions about their assets. These asset management decisions include how and when to invest in new assets, as well as decisions about maintenance, replacement, upgrades, and disposals.

This audit assessed whether local councils accurately document infrastructure assets in their information systems and use this information in their asset management and planning.

The audit focused on five local councils:

  • Colac Otway Shire Council (Colac Otway)
  • Darebin City Council (Darebin)
  • Hindmarsh Shire Council (Hindmarsh)
  • Mildura Rural City Council (Mildura)
  • Nillumbik Shire Council (Nillumbik).


The audited councils do not have enough comprehensive and accurate information to support asset planning, and they do not make enough use of the information that they have. Although they maintain basic data about their assets—such as location and description—councils do not always supplement this with asset maintenance and failure data. This reduces their ability to identify poor performing assets and to justify new asset investments.

Councils use some asset information to support asset planning and decision-making, however, this is not consistent across all asset classes and councils. For example, all audited councils have and use better information about their roads than other asset classes, largely due to their obligations under the Road Management Act 2004 (RM Act).

Complex and unintegrated asset information management systems (AIMS) compound the information gaps, which make it difficult for staff to find the asset information they need to support decision-making. This means asset decisions depend heavily on the experience and judgement of individual staff without the benefit of objective data.


Managing asset information

Asset management policy, governance, and roles

All audited councils have governance arrangements for asset information management within their asset management policies, although Darebin and Colac Otway could improve this by clarifying roles and responsibilities. In an example of better practice, Nillumbik has a data framework that outlines the information the council will collect against each type of asset. Mildura is developing similar guidelines.

Identifying asset information needs

None of the audited councils have comprehensively documented their asset information needs. However, all audited councils have asset management plans (AMP)—either final or draft—that identify and prioritise asset information needs for roads and related infrastructure—such as traffic control signs and street lights.

Essential safety measures are the features of public buildings that ensure the safety of occupants, such as fire doors, alarm systems, fire extinguishers and emergency lighting.

Councils need to identify and document their legal obligations about asset information to ensure that they collect the right type of information. Colac Otway, Mildura and Nillumbik have done this—their AMPs refer to relevant regulatory and statutory requirements. In contrast, Hindmarsh has not fully documented its obligations and Darebin has only noted its legal obligations about roads information.

Except Nillumbik, the audited councils keep information about essential safety measures and asbestos registers separate from their standard AIMS. Not keeping this information in a central and accessible location makes it difficult for council staff to find and update the information when they need to.

None of the audited councils have identified the asset information they need to support claims for funding under the Disaster Recovery Funding Arrangements (DRFA). As a result, councils risk not having the right information to satisfy claims for funding in the event of a natural disaster.

Under the Disaster Recovery Funding Arrangements, the Australian Government can give funding to state and local governments after a natural disaster to repair assets. To satisfy claims for this funding, councils need information about the pre-disaster function and condition of assets.

Information management processes
Documenting new assets

Nillumbik, Hindmarsh and Mildura have documented processes for recording new asset information. In contrast, Colac Otway and Darebin advise that they sometimes record information about new assets as they find them, for example during condition inspections.

Asset handover occurs when teams within a council transfer responsibility for an asset, such as when a new asset transfers from the construction team to the team responsible for operating the asset. Ineffective asset handover processes can affect data quality. For example, Colac Otway advised that during fire and flood recovery work, its asset handover process failed—the council acquired new assets but did not record them in its AIMS. This means the council's asset information was not complete and up-to-date at that time.

Asset maintenance and failure information

The maintenance and failure history of an asset helps councils to predict the likelihood of future failures or performance issues. None of the audited councils have documented processes to capture this information and, as a result, have missed opportunities to use maintenance data to inform decisions about operational and capital planning. For example, councils do not record the cost of maintenance works against specific road assets. This means they can only access the overall cost of their road maintenance program and cannot analyse the cost of maintaining each road.

Similarly, except for Darebin, the audited councils link maintenance data to buildings, rather than to component assets—such as air conditioner units or generators. This means councils must use an overall average of a building's condition to predict future maintenance and renewal costs. This is ineffective, as component assets may require renewal or replacement at different times.

Accuracy and completeness of asset information

We asked councils to self-assess the completeness of their asset information as well as their confidence in it. We then tested the assessments by reviewing a sample of asset records from roads, stormwater and building asset classes.

Based on this process, Nillumbik has the highest completeness across all asset classes, with an average completeness of 89 per cent, compared with an average of 41 per cent across the remaining audited councils. The audited councils have a greater proportion of complete data on their road and related assets—an average of 67 per cent across the councils—than other asset classes.

Councils need to be confident that their asset information is accurate and complete, so that they can use it to make evidence-based decisions. Except Nillumbik, the audited councils had low confidence that their asset information was accurate and complete. The audited councils had more confidence in their roads data than in their other asset classes—they had high confidence in the information for 45 per cent of their road assets. In contrast, the audited councils had high confidence in only 25 per cent of building assets, 20 per cent of drains, bridges and culverts and 18 per cent of recreation assets—such as sporting fields, playgrounds, and trees.

Nillumbik had higher confidence in its recreational asset information because it had identified and documented these assets in its Reserves Asset Management Plan.

Asset information management systems

AIMS are software applications for capturing, managing and analysing asset information. Ideally, a council's AIMS should comprise a small number of integrated core software products.

Except Mildura, the audited councils have complex AIMS and use multiple software applications to manage their asset information, which are not well integrated. In addition, Hindmarsh and Colac Otway have limited documentation on how to use or manage their applications. This can lead to council staff manually transferring data from one application to another, resulting in inefficiencies and potential errors.

In 2014, Mildura purchased and began implementing a new AIMS. The system represents better practice in that it links to the council's customer relationship management system, geographic information systems and, through a manual export process, its finance system. Although it requires further effort to fully implement and transfer information into the system, the council has established a project control group to oversee implementation and progressively improve the system.

Using asset information

Capital and operational planning

Relying on staff judgement to make decisions about assets—rather than asset information and documented processes—creates a risk that councils will not make evidence-based decisions. Darebin, Hindmarsh and Mildura rely heavily on council staff experience when making asset management decisions, and do not always document these decisions.

None of the audited councils have sufficient documentation on capital planning processes to adequately support evidence-based asset management for all asset classes, and over the asset lifecycle. Nillumbik, Mildura and Darebin are applying some processes to use asset data and information to inform capital plans, especially relating to roads and related infrastructure and drainage.

Similarly, none of the audited councils have sufficiently documented their operational planning processes, although Colac Otway and Hindmarsh use some maintenance and operational cost data to inform operational plans and budgets. The other three councils—Nillumbik, Mildura, and Darebin—only use previous historical maintenance costs for developing their annual maintenance budgets. These councils have recognised a gap in their processes and advise they are working on projects to rectify the issue.

Using asset risk

None of the audited councils consistently use risk information in their decision-making across all asset classes, though all use more risk information when planning for road and drainage assets.

Audited councils do not have formal processes for assessing which assets are critical or important to service delivery, which would help them prioritise investment and works activities. Despite a lack of processes, all audited councils except Colac Otway use risk assessment to identify critical drains.

Asset management capability and resources

None of the audited councils' resource capability plans identify a need for skills in analysing asset information. In addition, none have established clear roles and responsibilities for the use of asset information in asset planning and decision-making. Without this, councils cannot be sure they have the skills available to use asset information to support decision-making about assets.


We recommend that Victorian councils:

1. revise their governance and policy guidance for asset investment decision-making to ensure that it is evidence-based (see Section 3.2)

2. clearly determine and document the information that they need for effective asset reporting and decision-making, including ensuring Disaster Recovery Funding Arrangements needs are met (see Section 2.3)

3. establish more consistent and systematic processes for data collection on all asset classes to a level commensurate to the criticality of the asset and implement them to collect the information (see Section 2.4)

4. integrate asset management information systems so staff can easily record and access data to enable analysis for planning and decision-making (see Section 2.6)

5. identify their critical assets, and the potential risks of their failure, to inform investment priorities (see Section 3.4)

6. integrate asset management planning into financial planning cycles and processes to ensure councils balance asset investment needs against their objectives and funding constraints (see Section 3.3)

7. evaluate their capability, including resource, skills and training to meet their identified asset management needs, potentially using the National Asset Management Assessment Framework (see Section 3.2 and Section 3.5).

Responses to recommendations

We have consulted with the audited councils and we considered their views when reaching our audit conclusions. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report to the councils and asked for their submissions or comments. We also provided a copy of the report to the Department of Premier and Cabinet.

All audited councils have accepted the recommendations from this audit. Councils' full responses are included in Appendix A.

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