Expenditure on asset maintenance is essential to ensuring assets continue to meet their service delivery requirements. Councils are required to have asset management plans that set out annual maintenance requirements to keep assets at their existing condition. If actual maintenance expenditure is less than the estimated required annual maintenance a council may not be investing enough funds within the year to stop its infrastructure backlog from growing.
48 Councils reported shortfalls in maintenance expenditure in 2023-24 ranging from $18,000 to $64 millon. 9.4% of the 127 councils reporting a shortfall of greater than $5 million, compared to 6.3% in 2022-23. 56.7% of councils reported more expenditure on maintenance than required as indicated in their asset management plans. The total amount of shortfall reported was $245.8 million, while greater expenditure totalled $203.9 million.
Infrastructure Results
Estimated cost to bring assets to a satisfactory standard
The improved information and greater focus on asset management has been reflected in a more accurate indication of the estimated cost to bring assets to a satisfactory standard (referred to as the ‘infrastructure backlog’).
Councils reported a backlog for 2023-24 estimated at $7.5 billion. This represents a substantial increase compared with $6.5 billion in 2022-23. Backlog amounts ranged from $603,000 to $828.5 million.
Councils are encouraged to continue to undertake community consultation in setting the level of service required for each class of assets when determining budgets and setting priorities.
Infrastructure Backlog Ratio
The infrastructure backlog ratio shows the infrastructure backlog in proportion to the total written down value (the value of an asset after accounting for depreciation, reflecting the asset’s present worth) of a council’s infrastructure. A ratio of less than 2% is considered the benchmark. The number of councils that have reported a backlog ratio greater than 2% is 89. Across the State, infrastructure backlog ratios ranged from 0 to 40.5%, with the state average being 5.0%.
Regional Town/City councils have the largest infrastructure backlogs in total dollar terms, with an average backlog of $117 million, with Metropolitan councils having an average backlog of $46.3 million.
The ratio is calculated by the estimated cost to bring assets to a satisfactory condition divided by the total value written down value of roads, water, sewer, buildings and other infrastructure assets.
Asset Maintenance Ratio
The asset maintenance ratio compares a council’s actual asset maintenance expenditure against its estimated required annual asset maintenance expenditure. It indicates if a council is investing enough funds within the year to stop the infrastructure backlog from growing. A measure of 100% indicates council is investing sufficient funds to ensure the backlog does not increase.
The average asset maintenance ratio in 2023-24 was 106% compared to 105% in 2022-23. Results for individual councils ranged from 0% to 198.2%.
The ratio is calculated by actual asset maintenance expenditure divided by required asset maintenance expenditure.
Building and Infrastructure Renewal Ratio
The building and infrastructure renewal ratio assesses the rate at which assets are being renewed against the rate at which they are depreciating. Renewal is defined as the replacement of existing assets to equivalent capacity or performance capability, as opposed to the acquisition of new assets. A council’s renewal ratio may fluctuate based on council priorities. A result of greater than 100% is considered satisfactory.
A Councils’ infrastructure renewal ratios ranged from 0% to 1,002% for 2023-24, with 72 (57%) councils reporting a result of greater than 100%. This is an increase on 2022-23 which reported 59 councils (46%). The average for 23-24 was 129%. The ratio is calculated by asset renewals (infrastructure assets) divided by depreciation, amortisation and impairment (infrastructure assets).
