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Seeing the opportunities in the challenges

Seeing the opportunities in the challenges - Featured Image - LG Mag Jan 2018

Local authorities need to do more to gather information on their most important assets. Andrea Reeves, assistant auditor-general, Local Government, Office of the Auditor-General.

Before Christmas each year, I reflect on the year that has been. And I’ve realised that every year I come to the same conclusion – it was a challenging year for local government. Do I expect 2018 to be any different? No. But for most of us, that’s why we work in the job that we do – because we believe we can make a difference to those challenges. With every challenge there is opportunity.
Local authorities are in the privileged position of being stewards of significant community assets, such as the infrastructure that delivers drinking water and that takes our wastewater away. In preparing for the 2018-28 long-term plans, local authorities have been thinking and talking about the level of service they will provide to their community.
I’ve heard many examples of local authorities taking the opportunity to have conversations throughout 2017 with ratepayers, local businesses and others to ensure that the 2018-28 long-term plan will reflect the desire of their community now and for the future.
Investment in infrastructure information – an ongoing priority
In 2017, as in previous years, we continued to share our concerns that local authorities might not be investing enough to maintain their existing infrastructure. This is based on our analysis of the accountability documents that we audit. However, we recognise that you can’t make any firm conclusions using financial numbers alone, and each local authority’s circumstances are unique.
We have been encouraging each local authority to consider whether it is underinvesting in its assets and, if so, the likely effect of that underinvestment on service levels. To do this, local authorities need to have a comprehensive understanding of their critical assets and the cost of adequately maintaining them.
In 2017, we published a report that looked at how five local authorities approached identifying and gathering information on their critical assets.
We found that those five local authorities were improving their ability to gather, record and retain asset information and making this available to those who need it. But more needed to be done to gather information about their most important assets. This is an issue that needs to be addressed, I suspect by most, if not all, local authorities as a priority.
Elected members need this information to make deliberate decisions about how to manage the assets they govern. Only then do they have the opportunity to have meaningful conversations with their communities about how to fund the reinvestment in assets or the consequences of not doing so.
Being plain about the realities is essential to create the right debate with stakeholders. Minimising issues and deferring decisions or difficult conversations serves no-one well in the long run. It can result in a decline in services, spikes in cost or assets failing.
Our work programme – water management
The past year has included many water management issues, including the Havelock North drinking-water contamination and the flooding of Edgecumbe. And there is a lot of work under way on water management. For example, reports about the state of the marine environment and freshwater under the Environmental Reporting Act 2015 have been released, and a review of three waters services – drinking water, stormwater and wastewater – is underway.
We’ve also decided to focus a significant portion of our resources on water management, starting in 2017/18. We are focusing on water management because of its vital importance to New Zealand’s economy and lifestyle, and New Zealanders’ growing concerns about the quality of our water resources and how they are managed.
We are planning to look at water management activity in several organisations, focusing on drinking water, freshwater, stormwater, and the marine environment.
We won’t duplicate any of the work that is currently under way. We have the opportunity to bring an independent view by looking across central and local government at the water management system as a whole. As with our previous work programme focus areas, we will produce a report at the end that pulls together our observations and recommendations.
Engaging effectively with your community
During 2017, we published our report on all our work under the theme of investment and asset management. The report reinforced what is needed to make good decisions about investing in assets, and what needs to be done to manage assets well:

  • engage more effectively with people receiving the services;
  • take into account the whole life of assets;
  • work cooperatively with other entities; and
  • get better information about the condition of assets.

Although the upcoming 2018-28 long-term plans present a challenge in the time and resources they take to prepare, we hope all local authorities are taking the opportunity to use the long-term planning process to engage with their communities about the level of service that the local authority is intending to provide and how much ratepayers are prepared to pay for those services.
The investment and asset management report poses questions for decision-makers to think about when considering whether to invest in assets (both new and existing assets) and how to manage assets. Some of these questions seem simple and obvious – but our work has shown that sometimes we need to point out the obvious.
Every day I meet smart and talented people who are passionate about what they do for their local authority and they are doing great work. They are willing to share their knowledge, experience and any lessons learned from making mistakes along the way. There is a significant opportunity for all of us to connect and learn from each other.
My team and I enjoy sharing what we see as good practice throughout the sector. We look forward to working with you and sharing more of those experiences in the next 12 months.

This article was first published in the Perspectives 2018 issue of NZ Local Government Magazine.

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