Former Tasmanian Auditor-General Mike Blake says although there’s been big improvements to the way councils plan their infrastructure spending, time will tell if those plans are sustainable.

Blake spoke to intouch ahead of his keynote presentation at IPWEA’s Asset Management Congress, Canberra 13-16 August, where he’ll deliver an auditor’s perspective on infrastructure planning and assess where there are gaps in financial sustainability.

In his almost 12 years as Tasmania’s Auditor-General, Blake probed the financial viability of Tasmanian state agencies, local government and government business enterprises.  

As part of his remit, Blake turned his focus to local government’s infrastructure spending.

“When we first started off and we started engaging with IPWEA, we identified some ratios that might be useful to try and assess the status of council infrastructure,” Blake says.

“When we started to apply those ratios in 2006, we found some gaps in terms of how well councils were investing in their infrastructure.

“We can maintain roads now, but what are they going to be looking like in 10, 15, 20 years’ time?”

Blake says out of 29 Tasmanian councils, at least half were not meeting the benchmarks for managing their budgets and infrastructure at the time.

“I consulted with most councils in Tasmania, consulted with many general managers and we agreed on the ratios to be used to assess financial sustainability. That resulted in far more attention to the development of long-term asset plans, which got us to where we are today,” Blake says.

“Starting that process resulted in much more attention being given to it, and therefore better planning, and better management and long-term planning in particular.”  

Although long-term infrastructure planning has earned a seat at the table and long-term financial plans have become a regulatory requirement in Tasmania, Blake says there’s still more work to be done.

“One of the ratios we developed was linking the cash plan to the infrastructure plan. It’s all very well to have a plan, but can you fund it?” he asks.

“Evidence of that will come up over the next four or five or ten years, and things like the floods we’ve just had [in Tasmania] will put a spike in that, because all of a sudden they’re going to have to divert the resource somewhere else.

“In my mind, it’s a journey we’ve started and it’s going to take a while to become commonplace.”  

Recognising that rates are councils’ primary source of revenue, Blake says it’s vital that local governments engage in meaningful discussions with communities about how to fund infrastructure.

“It’s a communication with the community to understand we need to increase our available funding or our available resources to plan better and address the long-term infrastructure needs,” he says.

“Some of those will be evident – when you write an asset management plan you can see where the ‘spikes’ are going to be, you know when the road’s going to need attention. And when those spikes are coming along, talk to the community; “We’re going to have to increase rates this year, and maybe reduce them next year.”

“If we have that discussion we’ll be in a better position in the long-term to manage these assets.” 

Accounting for natural disasters

While Blake doesn’t advocate “putting money aside for a rainy day”, he says governments need to adjust their planning laws to protect communities from the effects of natural disasters.

In a review of the 2016 Tasmanian floods, Blake found planning arrangements need to be more contemporary.

“Whether you’re a climate change sceptic or not, it seems to me that these events will happen more frequently, and when they happen they’ll be with greater effect. Does that mean you put money aside? The economic theorists say you don’t put a pot of money aside available for a rainy day, but that doesn’t mean you haven’t got to be ready for when these things happen,” he says.

“I think it’s more a case of do you improve your laws around where people can build, do you have better planning around what farmers can do next to rivers?”

Blake will join an outstanding line-up of industry thought leaders for IPWEA’s Asset Management Congress in Canberra, 13-16 August. Register now.