Integrating Long Term Financial Planning and Asset Management: A CEO’s Perspective

1. Integrating Long Term Financial Planning and Asset Management: A CEO’s Perspective International Local Government Infrastructure and Asset Management Conference Melbourne, Victoria 2nd – 3rd of May 2012 Ray Burton CEO, Townsville City Council Queensland Australia

2. Presentation Overview • CEO Perspective • Financial management journey since 2008 • Asset management journey since 2008 • Community survey results • Capex prioritisation • Council roles • Integrating Financial and Asset Management • Next Financial and Asset management journey • CEO’s challenges • Key Messages

3. CEO’s Perspective • Reporting to Council – Clarity • Reporting to the Community • Accuracy, Simplicity, Compliance • Outcome important rather than process

4. Townsville City Council (TCC) Queensland • Population: 191,119 • 13th Largest City in Australia • Households: 74,132 • Area: 3,736 Sq. km • Staff: 1700 • Services include: • Water Supply • Sewerage • Roads • Stormwater • Waste • Recreational & Community Townsville

5. Leadership >> Who is Ray Burton? Ask Ray and staff forums are your chance to ask questions of the CEO and your fellow employees, or just have your say.

6. Financial Management Journey Since March 2008 2012 Consolidate revenue and finance systems Revise regulatory pricing of water, sewerage and waste Align rating policy Enhance modelling of general rates Enhance budget reporting and presentation to council (business-as-usual v projects, risks; opportunities; level of service impacts) Align accounting policies Clarify roles and responsibilities: compliance V management accounting; asset accounting V asset management Capex prioritisation – Integrated with asset management Develop long term financial management plan LTFMP link to asset base Expenditure Review Committee – 130+ initiatives, > 10M actioned Implement budget target – top down Reconciliation of Financial Asset Register with Equipment Register Develop Strategies to deliver LTFMP; efficiencies targets

7. Financial & Asset Management Results Long Term Financial Forecast

8. Asset Management Journey Since March 2008 Asset Management Strategy Plan 2011 - 2015 Asset Management Organisational Structure | Roles & Responsibilities Summary Asset Management Plan Asset Management Strategy Plan 2008 - 2011 Long Term CapEx Prioritisation System Asset Management Policy | Leadership | Communication Structure Community Attitude Survey (Engagement) 2011 10 Year Capex Consolidation (AiCE) System | Prioritisation Optimise Asset Management Systems Operation & Maintenance Management Strategy Plan 2011 – 2015 • Asset Management Plans: • >ROADS > STORMWATER > WATER > WASTEWATER • > PARKS > FLEET > BULIDINGS > ICT Asset Management Performance Management Plan 2011 - 2015 Asset Owner (Custodianship)| Service Provider Profiling All Assets Portfolios Renewal Modelling: My-Predictor Current Level of Services Consolidation for Review

9. Financial & Asset Management Results Asset and Population Growth

10. Townsville City Council (TCC) Queensland • Total Assets Repl. Cost: • $ 5.1B • Annual average CapEx: $187M • Annual average OpEx: $360M Replacement Cost: $459M Pipes: 574km Replacement Cost: $1.5B Pipes: 2646km Dams: 2 Replacement Cost: $1B Pipes: 1377km Replacement Cost: $200M Replacement Cost: $1.2B Length : 1614km Replacement Cost: $80M Replacement Cost: $ 270M Area : ha Replacement Cost: $20M

11. Financial & Asset Management Results Operating Result

12. Financial & Asset Management Results Debt and Capex

13. Financial & Asset Management Results Community Engagement | Capex Prioritisation TOWNSVILLE CITY HAS THE ASSET INFRASTRUCTURE IN PLACE TO DELIVER THE SERVICES AT PRESENT AND IN THE FUTURE SUSTAINABLY … Community Attitude Survey Service Level 3 Years Long term Capital Investment Prioritisation

14. Financial & Asset Management Results Community Engagement • Over half (55.3%) of all Townsville residents were either satisfied or very satisfied with Council’s delivery of services and facilities in the past 12 months. • Total of 1003 interviews were conducted • 52 services and facilities measured in this survey Further analysis of the survey data was conducted

15. Community Attitude Survey 2011 Resultse.g.: Public Toilets Service Levels Index • Importance Scale: Importance • Crucial – Must Have • Importance – Certainly Expect • Nice to have – but not important • Not Very Important • Unnecessary Suburbs within 15 km from Flinders Square

16. Community Attitude Survey 2011 Results e.g.: Public Toilets Service Levels Index • Importance Scale: • Crucial – Must Have • Importance – Certainly Expect • Nice to have – but not important • Not Very Important • Unnecessary Suburbs > 15km and < 30km from Flinders Square

17. Community Attitude Survey 2011 Results e.g.: Public Toilets Service Levels Index • Importance Scale: • Crucial – Must Have • Importance – Certainly Expect • Nice to have – but not important • Not Very Important • Unnecessary Suburbs > 30km from Flinders Square

18. Capital Investment Prioritisation Results Quadruple Bottom Line (QBL) Risk Appraisal

19. Capital Investment Prioritisation Results Quadruple Bottom Line (QBL) Risk Appraisal High Scores Projects CapEx Cost Running Total Financial Services Budgeting Councillors Workshop High Priority Projects CapEx Performance > Performance Indicators >Services distribution % > O&M Impact EMT Approved Draft CapEX Medium Scores Projects Medium Priority Projects Executive Management Team Review Low Scores Projects Council Affordability (LTFMP) Low Priority Projects Re-distribution of non-approved projects

20. Councils’ Roles Integrated Financial & Asset Management COUNCIL to provide the level of services, the current and future community want and agreed to pay for… TO ENSURE TOWNSVILLE HAS THE INFRASTRUCTURE IN PLACE TO DELIVER THE SERVICES AT PRESENT AND IN THE FUTURE, SUSTAINABLY … TO OPERATE AND MAINTAIN ASSETS AND SERVICES AT LOWEST LIFECYCLE COST TO MAKE DECISIONS REGARDING LEVEL OF RATES, COST EFFECTIVENESS, LEVEL OF DEBT, TIMING AND LONG TERM SUSTAINABILITY Integrating Financial & Asset Management

21. Integrating Financial & Asset Management FM FM FM AM AM AM Next Practice Financial & Asset Management

22. Integrating Financial & Asset Management

23. What Next? Financial & Asset Management Journey AM FM Upgraded Systems Agree Level of Services Review Operation & Maintenance Management Strategy 2011 – 2015 Standardise charts of accounts and costing for work orders and projects WBS Asset Management Performance Management Plan 2011 - 2015 Develop Business Intelligence to enhance reporting Councillors Asset Management Workshop Use of alerts and exception reporting; KPIs and lead indicators Asset Management Systems Review Consolidate Fixed Asset Register (FAR) and Equipment Register (ER) Critical Assets Management Plan Develop enhanced workflow and process automation ISO 55000 Awareness Plan Enhance LTFMP for Commercialised business units, target return on capital Financially | Carbon Tax Informed Asset Management Plans

24. CEO’s Roles & Challenges Integrating Financial & Asset Management

25. Townsville City Council Integrating Financial & Asset Management Key Messages Engage Community Get the foundations right – Structure, Systems, Process, Policy Integrate Key Planning Process

27. Integrating Long Term Financial Planning and Asset Management: a CEO’s Perspective Questions… Ray Burton CEO , Townsville City Council