A National Financial Management and Asset Management Framework for Local Government

1. A National Financial Management and Asset Management Framework for Local Government Ian Mann Jeff Roorda Representing the Project Development Team

2. Prime Minister’s address to ACLG • “Councils that plan & manage their assets effectively are councils that can deliver value for money to communities“ • “We need to know what we’ve got, what condition it is in, whether it needs to be repaired and how much it costs to maintain. This is the most basic level of information”. • “The Commonwealth will also consider making its future infrastructure investments linked to the implementation of nationally consistent asset management systems”

3. National Sustainability Frameworks

4. National Sustainability Framework Genesis May 2006 – LGPMC meeting determined the a series of nationally consistent Frameworks on financial sustainability measures for Local Government would be developed Three Frameworks were subsequently developed • Assessing local government financial sustainability; • Asset Planning and Management • Financial Planning and Reporting. October 2006 – Consultation with Local Government and other relevant bodies March 2007 – LGPMC endorsed the national consistent frameworks May 2009 – LGPMC agreed to enhance the nationally consistent framework on Local Government asset and financial management frameworks and committed to an accelerated implementation. • Refer: www.lgpmc.gov.au

5. Enhanced National Sustainability Frameworks • Enhanced Asset Planning and Management • Enhanced Financial Planning and Reporting. • Criteria for assessing financial sustainability of local councils • Refer: www.lgpmc.gov.au

6. National Approach to AM – 1. Enhanced Asset Planning & Management The 7 elements of the Enhanced National Framework on Asset Planning and Management are: • Development of an asset management policy • Strategy and planning • Governance and management arrangements • Defining levels of service • Data and systems • Skills and processes • Evaluation

7. National Approach to Financial Management 2. Enhanced Financial Planning & Reporting • Strategic longer term plan • Annual budget, and • Annual report

8. How it might work

9. General Principles • One common set of assessment criteria • Each State may adjust criteria to suit their needs however should be able to apply consistency to core criteria • Councils could use assessment criteria to help prepare Asset Management Improvement Plans • Councils would determine priority of improvements • Recognise that different Councils be at different stages of development

10. Federal Government Local Government Planning Ministers Council State Government 3 National Frameworks $ Funding (AM Dependent) State Legislation Report State Assoc & IPWEA National Assessment Framework State Association Councils

11. National Assessment Framework

12. Working Group MAV CT Management Group AECOM IPWEA Jeff Roorda & Associates MAV John Hennessy CT Management Group Ian Mann Bruce Lorimer AECOM Gary Rykers IPWEA Peter Way Chris Champion Jeff Roorda & Associates Jeff Roorda John Howard

13. Maturity Assessment of a Council • Built around the asset management journey of a Council • Assesses where Council is on the Asset Management maturity curve • Two benchmark levels of Maturity – Core and Advanced • (Advanced is not Best Practice)

14. National Asset Management and Financial Planning Assessment Framework Financial Sustainability Asset Management Sustainability • National Assessment based on Detailed Assessment Criteria • Built around a set of common questions • Focused on best appropriate practice • Each State may add additional questions to align with their own “good practice” guidelines • Must be linked to and based upon the National Sustainability Framework • Core and Advanced maturity grading Step 1 – Assessment of Maturity • Assessor/Auditor Opinion • One of three possible statements for each framework element plus an overall assessment • Unqualified ; • Qualified – reflects good practice except for ……….. (qualifications); or • Adverse Step 2 – Audit or Assessment • State based Local Government Asset Management Capacity Building Programs • Each State and/or Local Government Association develops their own Local Government asset management capacity building program linked to the elements of the National Sustainability Framework (to suite each State’s circumstances) • In Victoria this is the MAV STEP program Industry Support

15. Step 1 – Assessment of Maturity • Two part questionnaire linked to National Framework • Undertaken as a self assessment by the organisation • Possible answer to each question • “Compete”, “Partially Complete” and “Not Started” • Independently overviewed

16. Core Maturity Assessment Questions

17. Core Maturity Assessment Results

18. Part 2 – Assessment/Audit Opinion National Frameworks Assessment and Reporting • To be based on the audit opinion concept of a ‘true and fair’ view of the financial report. • An audit opinion is expressed on audited statements. “When reporting, the auditor is required to express an opinion as to whether the financial report ‘gives a true and fair view’ or ‘presents fairly’, in all material respects, in accordance with an applicable financial reporting framework.” • For the National Frameworks Assessment, a similar audit/assessment approach would entail an internal or external auditor/assessor forming an opinion that each LGPMC Sustainability Framework Element had been followed

19. Assessment/Audit Opinion

20. Core Maturity Assessment Opinion

21. Council Core Maturity Assessment

22. Council Results – Core Maturity

23. National Results

24. National Results

25. National Improvement Measures

26. National Improvement Measures

27. Questions