Local Government Authorities in Queensland are responsible for the management of millions of dollars of assets in water, sewerage, drainage, roads, equipment, bridge and building infrastructure. Management of these assets to ensure that replacement and renewal occurs in such a manner so as not to unduly burden future generations is a major challenge. Current asset management practices in local government are rudimentary, with funding for replacement and maintenance being based on short term budget considerations rather than the optimisation of the life cycle costs of the assets. For most local authorities, municipal services and infrastructure have been traditionally managed on a basis of unplanned and corrective responses, supported by incremental budget allocations determined by projection of historical levels of expenditure adjusted for inflationary and arbitrary factors.
Many authorities lack a basic register of what assets they own. A new Australian Accounting Standard AAS27, to become effective in 1993, will require public authorities to adopt accrual accounting in lieu of the current cash accounting. Inclusion of the depreciation of assets will be required for the first time in local government accounts. Failure to adopt accrual accounting, including depreciation, may have lead to under recovery of the true operating and replacement costs of assets placing a burden on future generations when replacement is necessary.
This project examines the concept of asset management, the current asset management practices in local 90vernment and how such systems may be introduced to benefit local government.
A structured interview survey of local authorities in south east Queensland, undertaken by the author, found that asset management implementation is at a very early stage and, without a major committment of resources, it will be many years before viable systems are operational.
Because of the limited financial and staff resources of most local government authorities in Queensland, an asset management system must be capable of being implemented incrementally within the capacity of the local authority. It is better for systems to evolve from simple to more complex and from broad to detailed.