Part 1: Introduction

Water and roads: Funding and management challenges.

Purpose and objectives of this report

Local authorities have reported on their major infrastructure assets since the early 1990s. This reporting has also coincided with the development of the discipline of asset management planning and a cycle of substantial reinvestment in assets.

Because these assets are an essential element of local government services, we wanted to analyse and provide an overview of the state of local government assets, where and when major reinvestments are required, and whether asset management practice is giving local authorities the information they need to continue providing services into the future.

This report sets out an overview of the approach that local authorities are taking to managing their infrastructure assets. We focused on assets used to deliver four networked infrastructure services operated by local authorities. The services are roading and the "three waters": water supply, wastewater, and storm water services.

The assets we focused on have particular features in common:

  • They are often found in a network that serves a defined community.
  • The system as a whole is intended to be maintained indefinitely, even if individual assets or components within it are replaced or upgraded.
  • They deliver a service to a particular level.1

How we did our work

To inform our work, we analysed the financial results and forecasts of all local authorities that are relevant to the management of their roading and three waters assets. This data does not include Christchurch City Council because, after the Canterbury earthquakes, it was exempted from preparing a long-term plan in 2012. All references in this report to forecasts in the 2012 long-term plans exclude forecasts by Christchurch City Council.

We also collected and analysed specific information about how 31 local authorities (listed in the Appendix) manage their assets. The 31 local authorities provided information about asset condition, performance information, financial forecasts, asset valuations, and their asset management information systems. These 31 local authorities own property, plant, and equipment worth $77.5 billion (which was 74% of all local authorities' property, plant, and equipment assets at 30 June 2013).

To understand local government investment cycles, we commissioned a report from the New Zealand Institute of Economic Research (NZIER). The NZIER report provides a historical perspective of local government investment trends, the forecast investment outlook, and observations on differences in investment between the regions.

NZIER held a workshop on a draft version of its report. The workshop was attended by asset and financial management practitioners and advisers, staff from the National Infrastructure Unit of the Treasury, and staff from the Department of Internal Affairs.

The rest of this report presents the results of this work:

  • Part 2 sets out our analysis of how infrastructure assets are currently managed and the implications for their future management.
  • Part 3 contains NZIER's report – Local government finances – A historical perspective.

What infrastructure assets did we focus on?

Roading services

The roading network provided by local authorities comprises sealed and unsealed roads. It also includes bridges, retaining structures, footpaths, kerb and channel systems, street lighting, signs, and street furniture (such as cycle stands and seats). Many local authorities also have a network development programme of building new roads and related assets, which is included in their asset management programmes.

The primary aim is to provide a safe and efficient roading network that facilitates the movement of people and goods.

The three waters services

Water supply

Local authorities own, provide, and maintain the assets and services that supply our water. Water supply assets include buildings, land structures (such as reservoirs), pipes, and mechanical and electrical equipment.

Water is predominantly sourced from rivers, lakes, and bores. Other water sources include private community schemes, private wells, and rainwater collection.

The water supply network needs to be reliable, available, and of a high quality. It must meet the needs of domestic, commercial, and industrial consumers. Local authorities are also responsible for providing water supplies for fire fighting in urban areas.


Most domestic wastewater is disposed of through reticulated systems.

Wastewater assets comprise pipe reticulation and fittings, pump stations, manholes, and wastewater treatment plants and equipment.

The primary purpose is to minimise health risks (such as diseases) from waste and waste by-products. The secondary purpose is environmental protection.

Storm water

Local authorities provide storm water assets and services to protect properties from flood damage (for example, by managing overflows through storm water collection and disposal).

Storm water is often collected through road storm water pipes and channels, and then dispersed to natural waterways.

1: Audit New Zealand (2010), Asset management for public entities: Learning from local government examples, page

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