New and Gifted Assets
Explanatory notes for new and expanded assets cost table
Council has done some significant and detailed work to fully understand the operating, maintenance and renewal costs of the assets gifted by the State Government to Council following the 2009 bushfires.
Some of these assets were new assets such as the Kinglake Rebuilding Advisory Centre and Toolangi Tall Trees Trail. These are easy to calculate as they represent a completely new and visible cost to Council.
Other facilities were rebuilt or expanded after the fires such as the Marysville Community Centre and Strath Creek Pioneer Reserve and Hall, and this delivered larger, improved assets. An improved or expanded asset also results in increased operating, maintenance and renewal costs. We have determined the additional costs of these assets by subtracting the amount they cost Council before the fires from what they cost Council now.
The costs in the table have been calculated based on a standard considered necessary to ensure that the asset is maintained in good operating condition and is available for the community to use. Council is responsible for setting service standards for all of its assets to determine how often and to what standard we maintain them.
The standard we have currently set to determine the costs is at the minimum level; that is, the level we consider provides the minimum acceptable standard of service. The service standard is consistent with management of all other assets for which Council is responsible. This level of service has been verified by an independent professional asset management company to ensure it is appropriate for Council-managed assets.
Council can choose to lower the current standard however the downside of this is that we might reduce the community’s enjoyment or use of a particular asset. This might also speed up the deterioration of the asset which could in turn increase maintenance costs into the future.
It is important to note that the costs outlined in the table are the costs borne by Council and do not include any costs that are the responsibility of the users of the facilities. Many of these assets are managed by the community through committees of management, incorporated associations or not-for-profit groups. The costs provided in the table do not consider any income generated by these groups.
The notes below explain the terms used in the new and gifted assets cost table.
Operating Expenditure - Recurrent expenditure or the day-to-day expenses associated with providing a minimum level of service during a year of operations. This expenditure includes power, fuel, cleaning, labour costs to carry out works, minor equipment, utilities, insurance, routine inspections.
Maintenance Expenditure - Recurrent expenditure which is required to ensure that the asset achieves its useful life and continues to provide the required level of service to the community. Well planned maintenance slows down deterioration and can delay the time by which renewal of the asset becomes necessary.
Capital Renewal Expenditure - Expenditure which Council has to plan for annually so when an asset reaches a point of deterioration where it can no longer be economically maintained, Council has the funding to renew the asset to extend its life so it can continue to provide the same standard of service to the community.
Additional cost to Council of new and expanded gifted assets
As the cost table shows, before the bushfires these assets cost Council $1,040,878 per annum. After the fires these costs increased to $2,803,819. This leaves a $1,762,940 funding shortfall.
Breakdown of our new costs
The $2,803,800 per annum figure can be broken down into the following categories:
- Operating expenditure p.a. - $1,204,476
- Maintenance expenditure p.a. - $552,545
- Renewal expenditure p.a. - $1,046,798
It might be difficult to understand how the money is spent on some of these assets. This is due to the variety, number and type of assets located at each site. For example the following list shows cost items which fall within just one facility (the Buxton Recreation Reserve):
- Insurance including condition inspection and valuation
- Graffiti removal
- Public toilet cleaning including labour and consumables
- BBQ cleaning and maintenance
- Electricity and water
- Landscape maintenance (garden beds etc)
- Walking track maintenance and upkeep
- Litter bin collection
- Playground maintenance and repairs
- Fencing maintenance
- Bridge inspections and maintenance
The bigger picture
The increased costs to Council set out in the accompanying table and the resulting funding shortfall have been the subject of much advocacy by Council to the State Government. It is our view that while the new assets are a welcome contribution to the community, it is unfair to expect a small rural Council to meet these additional costs without funding support. Council does not want to pass these costs on to the community but it will have no choice unless funding assistance is provided.
If you want to learn more about what we have been saying and find out how you can add your voice to Council’s in helping to find a solution, visit our main Funding Advocacy webpage.