This study evolved out of events in the Water Resources Commission (Queensland) which are leading to many changes to the traditional financing, management and reporting mechanisms. A strategic planning exercise is currently underway in order to determine optimum policies and procedures for the future.
The objective of this study is to provide an overview of infrastructura1 issues in overseas countries before concentrating on the Australian experience in the provision and management of infrastructure. Government involvement is discussed in relation to such issues as long lead times for project development, long lived assets and the use of cross-subsidies to achieve government objectives. The Water Resources Commission is used to highlight the problems encountered in the management of public organisations, which are the largest providers of infrastructure.
At the organisational level the study outlines the problems of asset management and how these may be addressed. The use of computers to provide comprehensive management information for improved efficiency is discussed. The role of traditional accounting systems is examined, with discussion on how these systems can be changed to provide better information to management.
Historically, the returns earned by organisations providing public infrastructure have not been a major consideration. However, tighter funding policies have caused governments to look at the returns from public assets. Issues such as the optimum level of return and how the returns should be measured (historical or current costing) are discussed.
The relationship of the Water Resources Commission to the Queensland Government and to Treasury is outlined before examination of the Commission's financial position and methods of financing capital works. The Commission's financial position and level of management information are found to be symptomatic of the general problems of public organisations.
Computer modelling of the Commission's asset base shows the current replacement value to be twice that of the historical cost. This has implications for replacement financing. A number of scenarios have been developed to show how the return on assets may be improved. However, it is obvious that the Commission will require a continuing high level of financial support from governments.
It is concluded that governments will always have some involvement in the provisions of infrastructure in order to achieve social objectives, but public organisations should provide reporting along commercial lines and separately identify the subsidies involved in providing a service. This would allow governments to better assess financial performance of public organisations, while giving greater freedom to management to provide the flexibility required for enhanced performance in these changing times.