ASSET MANAGEMENT GROUP MEETING No. 28

MINUTES

Friday 13 November 2015 at 10am Kingsford Meeting Room, Cairns Regional Council, Spence Street, Cairns

1. Opening Remarks and Welcome – 10 am

1. Attendance and apologies:

Attendance: Steven Cosatto FNQROC Steve Albrecht Cairns Regional Council Ian Pearl Cairns Regional Council Justin Fischer Cassowary Coast Regional Council Darlene Irvine FNQROC Jacqui Perkowicz Mareeba Shire Council Tony Hughes Tablelands Regional Council Perry Clunn Mareeba Shire Council Colin Gray Hinchinbrook Shire Council Teresa Schmidt FNQROC Margery Jones Cairns Regional Council

Apologies: Simon Michie Douglas Shire Council Michael Mathews Douglas Shire Council Martin Cookson Cook Shire Council Michael Czarnecki Cook Shire Council Michael Ringer Cairns Regional Council Daniel Snelgrove Tablelands Regional Council William Wong Cairns Regional Council Helius Visser Cairns Regional Council Anthony Archie Mareeba Shire Council Amanda Coleman Tablelands Regional Council

2. Confirmation of Minutes of previous Technical Committee Meeting: Meeting No. 27 held on Friday 4 September at Cairns.

3. Review of Actions from - Meeting No. 27.

Action Pers Comment on/ Orga nisat ion resp onsi ble #1: Councils to review/discuss within own organisations - All √ Regional Asset Management group strategic direction. Coun cils #2: Steve Cosatto to draft Issues Paper for consideration FNQ √ ROC

4. General Business

Page | 1 Draft RAMG Issues Paper 2015 5.1 Implications of AASB’s Residual Value Decision - APV depreciation seminar – David Edgerton (refer attached power point) – Ian Pearl provided feedback from seminar The Australian Accounting Standards Board (AASB) adjudicated in May 2015 that the residual value for infrastructure assets "reflects consideration receivable for an asset at the end of its useful life to the entity and accordingly would not include cost savings from the re-use of in-situ materials" The AASB noted there are two views in relation to the definition of residual value: Refer : AASB Agenda Decision View 1: residual value reflects consideration receivable for an asset that is at the end of its useful life and, accordingly, does not include cost savings from the re- use of parts of an asset by the entity; and View 2: the ordinary meaning of the words included in the definition of residual value could be read to include cost savings from the re-use of parts of an asset by the entity.

Refer to pages 3 and 4 (Residual values and Asset Valuations) QAO Insights: If a literal interpretation of View One is adopted most entities will need to significantly expand their asset registers to include a short-life and a long-life component for most existing components. This in turn will create significant complexities and associated costs and risks in trying to reconcile the asset management systems to the financial accounting systems. The approach of estimating the value remaining in an asset at the expected time of renewal in order to better estimate the pattern of consumption has gained strong acceptance over the past twenty years. The key benefit of this approach is that by substituting this figure for the ‘Residual Value’ in accounting systems the entity is able to achieve the same outcome as View One without needing to invest significant resources, increase risk or implement significant changes to their financial systems. There is a strong belief that provides a more accurate measure of the depreciation expense as it provides closer alignment to the real pattern of consumption. QAO have indicated that in 2015-16 they will be undertaking a much greater detailed review of valuation and depreciation methodologies. Critical to this will be the need for councils to support all assumptions with appropriate evidence.

The AASB's decision is not a new requirement but rather clarifies an existing requirement. Therefore transitional provisions do not apply. Margery Jones provided additional commentary regarding her interpretation of the AASB decision:  Market Value/Fair Value  Asset Life is an average  Question Valuers their assumptions, methodologies and values as the QAO will advise that councils are ultimately responsible. ACTION: Steve Cosatto to facilitate a Briefing from QAO regarding their interpretation of componentisation and residual values. (Patrick Fleming)

5.2 Correspondence re mobility apps – Steve Cosatto General discussion, regarding the various stages of member’s data collection, the uploading of data into Councils Asset Management systems and what to do with the data upon collection. ACTION: Steve Cosatto to facilitate with Tony Hughes (TRC) an information meeting in TRC to review TRC’s current mobility app and process.

5.3 QTC Project Decision Framework (PDF) Workshop Steve Cosatto advised that there were sufficient numbers to facilitate the PDF workshop and a calendar invite would be sent out for a February workshop.

5.4 IPWEA Practice Note 9 – Visual Inspection of Roads Workshop Steve also advised that EOI’s would soon be sent to members regarding an IPWEA Practice Note 9 Visual Inspection of Roads Workshop. Anticipate a workshop to be held in February. Cost would depend on numbers and that an application for 50% funding assistance would be made to the Statewide Capability and Development Fund.

5.5 Correspondence from CT Management offer to present Service Levels – (refer attached) General discussion regarding levels of Service and the variances between councils. Agreed that at this stage councils were not in a position to review individual councils Levels of Service. Darlene advised that whilst councils are not in a position to focus on Levels of Service there was a need to start with something and start refining it – whether this was 2 line items of 30, if you don’t start with something you never will. She advised that a number of years ago the committee developed regional templates for levels of service with associated technical and community measurements. While this was done a while ago it could be used as a start for councils. ACTION: Steve Cosatto to distribute FNQROC levels of service templates to members for consideration ACTION: Colin Gray to provide HSC levels of service templates to FNQROC for distribution.

5. Review of strategic direction of Regional Asset Management group. (refer Issue’s Paper – Appendix B)

Steve Cosatto and Darlene Irvine provided background to the Regional Asset Management Strategy (RAMS), the strategy objectives and the areas of focus for the RAMG. refer - http://www.fnqroc.qld.gov.au/files/media/original/003/d29/7e5/388/Regional-Asset-Management- Strategy.pdf

Darlene advised the RAMG that the actions for the RAMG which had been adopted in the Strategic Directions document – 2012 still stood http://www.fnqroc.qld.gov.au/files/media/original/003/d10/be3/fd9/FNQROC_Strategic_Directions.pdf

Action 2.1.1

A regional document which clearly articulates our funding renewal gap in the next five, 10 and 20 years and can be used as a technical document to substantiate advocacy efforts of the FNQROC Board and Councils individually. (FNQROC lead = Regional Infrastructure Project Coordinator with support from the FNQROC Executive Officer). Action 2.1.2 A regional document which clearly articulates our capacity to raise revenue which can be used as a technical document to support advocacy efforts (ie. asset renewal gap, devolved responsibilities etc) of the FNQROC Board and Councils individually. This is also a document that can be utilised by our peak regional bodies for their advocacy efforts. (FNQROC lead = FNQROC Executive Officer)

http://www.fnqroc.qld.gov.au/files/media/original/003/d10/be3/fd9/FNQROC_Strategic_Directions.pdf Infrastructure funding gap page 4)

An issues paper was developed identifying some of the concerns raised by councils as to why we could not identify our infrastructure funding gap. In reviewing these issues it was identified that councils could do this based on their 10 year asset renewal plans vs annual renewal budget. There does however need to be some commentary attached to this assessment which includes but is not limited to:

 Managing the risk, review remaining life and levels of Service;  Confidence levels of data informing the plans  Grants and funding accessibility  NDRRA impact  Maintenance costs (trending up or down)

ACTION: Members to forward council’s ten year renewal plans and annual reports and prepare commentary regarding current Infrastructure renewal gap (noting some councils are a couple of months away from providing their ten year asset renewal plans.

ACTION: Jacqui Perkowicz to provide MSC documentation regarding community capacity to pay.

6. Next Meeting – Tablelands Regional Council Monday 22 February. Venue tba 7. Meeting Close – 2 pm

Action Item Organisation Responsible

Steve Cosatto to facilitate a Briefing FNQROC from QAO regarding their interpretation of componentisation and residual values. (Patrick Flemming)

Steve Cosatto to facilitate with Tony FNQROC Hughes (TRC) an information meeting in TRC to review TRC’s current mobility app and process.

Steve Cosatto to distribute FNQROC FNQROC levels of service templates to members for consideration

Colin Gray to provide HSC levels of Hinchinbrook service templates to FNQROC for distribution.

Members to review council’s ten year All Members renewal plans and annual reports and prepare commentary regarding current Infrastructure renewal gap.

Jacqui Perkowicz to provide MSC Mareeba documentation regarding community capacity to pay.