Part 4: Our observations on the infrastructure strategies

Consulting the community about local authorities' 10-year plans.

In this Part, we look at:

These observations are preliminary and based on a high-level review of a sample of infrastructure strategies. We intend to report in more detail in later reporting on the 2015-25 LTPs.

The intention for infrastructure strategies

The 2014 amendments to the Act introduced the requirement for local authorities to prepare an infrastructure strategy as part of their LTP. Infrastructure strategies are the result of several initiatives in the Government's reform programme for local government. The intended benefits of infrastructure strategies include reinforcing the importance of asset management planning by local authorities and aiding transparency. The value of a 30-year view comes with the challenge of balancing a snapshot at a point in time with the dynamic local government environment.

Proposed content of infrastructure strategies are included in local authorities' consultation documents. They are finalised when LTPs are prepared and adopted.

Perhaps the most significant new development in the new LTP regime is that infrastructure strategies must look at least 30 years into the future. This better reflects the long-life nature of local infrastructure assets, 23 such as pipe networks and water supply infrastructure.

Infrastructure strategies complement financial strategies, which were introduced as an LTP requirement by the 2010 amendment to the Act. It was expected that financial strategy information in consultation documents – including local authorities' approaches to funding, rates, and debt – could align to the infrastructure strategy in a way that would usefully explain priorities, spending intentions, and risks in a more integrated way.

Detailed asset management plans and performance measures for specific classes of assets are expected to flow from and support infrastructure strategies. We consider it important that infrastructure strategies also include information and disclosures about the reliability of data on the asset's condition, its performance, and details on approaches and trade-offs taken to manage assets.

Our expectations for infrastructure strategies

Before auditing the first generation of consultation documents, we worked with local authorities and audit service providers to give our views on principles that might be considered when preparing and auditing infrastructure strategies:

  • They should be visionary – Infrastructure strategies should tell the story of where a local authority is, where it expects to be in 30 years, and how it intends to get there.
  • They should be realistic – Assumptions and disclosures on funding, data, and risk should be relevant, visible, and doable.
  • They should be relational – To create the right debate and to be believable, infrastructure strategies should connect to financial strategies and to specific or wider influences affecting the city, district, or region, such as regional demographics and economic influences.

How local authorities responded to the requirement to prepare an infrastructure strategy

Including infrastructure strategy discussions in consultation documents is a valuable contribution to the way local authorities engage with communities. Infrastructure strategies should provide a dedicated, clear, long-term picture of the direction a local authority intends to take and where it expects to be in 2045 and beyond.

Because spending on local infrastructure typically makes up the bulk of a local authority's spending, it is pleasing that LTPs now have dedicated infrastructure strategies underpinning them. Shorter and more focused consultation documents that include clear intentions for long-term infrastructure provision and long-term spending are a significant advance.

Most local authorities used the infrastructure discussions in their consultation documents and infrastructure strategies to bring focus to their significant issues.

We assessed that, in general, local authorities responded positively to the requirement to prepare infrastructure strategies. Infrastructure strategies generally improved the transparency of the sustainability of asset-based services.

One main theme was the generally increasing challenge of renewing existing asset bases and the related funding requirement. Because the quality and transparency of information about how local authorities are addressing this challenge is not yet at a consistent standard throughout the sector, it is an area the sector should place particular emphasis on for the next planning cycle in 2018.

Our observations about infrastructure strategies in consultation documents

We have some observations about local authorities' proposed infrastructure strategies and how they were presented in consultation documents. Figure 5 provides a summary of our observations about the infrastructure strategies of five councils in the main centres.

Figure 5
Summary of our observations on selected infrastructure strategies

Auckland Council – Big steps towards its vision
Auckland Council's infrastructure strategy addressed the steps the Council expects to take to respond to significant growth. The Council's infrastructure strategy addresses all the major asset groups that will be influenced by a significantly increased level of demand, including community facilities and open space. In doing so, the Council identified a $12 billion funding gap between its LTP proposals and its desired Auckland Plan outcomes. Its strategic discussion identifies the risks to existing levels of service that this funding gap presents. The discussion also sets out the steps and trade-offs the Council expects to make to manage new demand and to renew existing assets within constrained funding.
Hamilton City Council – Linking its vision to the wider region
Hamilton City Council is also expecting to see considerable growth by 2045. The Council's infrastructure strategy focuses on the requirements of Hamilton City, its growth areas, and also its inter-district and regional connectivity. The Council's infrastructure strategy also includes wider infrastructure proposals, including community and event facilities and parks and green spaces.
Wellington City Council – Data-driven lifecycle management
Wellington City Council does not expect significant growth. It focused its infrastructure strategy on carefully managing its existing infrastructure portfolio. The infrastructure strategy covers all asset classes and uses highly developed data modelling to focus on the whole-of-life costs of the Council's infrastructure. By using data in this way, the Council hopes to optimise spending and minimise risk to its networks. At 59 pages, this is the shortest infrastructure strategy of councils in the main centres.
Christchurch City Council – Strategy in practice
Christchurch City Council is planning to significantly invest in infrastructure investment because of its re-build, new-build, and renewals programmes. The focus of the first 10 years of the strategy is on recovery, after which the focus moves to significant renewals. The Council anticipates that a return to pre-earthquake levels of service will take up to 30 years to complete. The strategy acknowledges that the Council does not completely know what asset-based service challenges it faces.
Dunedin City Council – Transparency about priorities
The main theme of Dunedin City Council's strategy is renewal. The strategy illustrates the priorities of the Council in renewing its ageing infrastructure and addresses the connections between the Council's vision and the challenges of backlogs, demographic change, improving resilience, and adapting to climate change. The strategy makes good use of performance measures, connecting these to how the Council plans to maintain levels of service to its community.

If done well, infrastructure discussions in consultation documents benefit the reader by clarifying gaps or risks to the level of service that communities enjoy or aspire to. These discussions provide readers with a fuller picture of the age, condition, and performance of the infrastructure assets. This picture also provides the reader with a better understanding of sometimes complex information and a long-term view of where their rates are being spent.

All consultation documents were required to give a general outline of infrastructure strategies. However, despite meeting this requirement, several did not discuss the vision or relational information we expected.

There was often minimal discussion in consultation documents about impacts of strategies on other asset groups. Longer-term strategies anticipating the changing needs of communities for assets, including other assets such as recreational facilities, were often not included. Although other assets are not required to be covered in infrastructure strategies, the impacts on these assets and links to strategies should be given increasing focus as infrastructure strategies evolve.

Discussion of potential reduction or reviews of levels of service was often weak, even where local authorities had identified material changes to their demographics.

Infrastructure strategies usually assumed that wider long-term macroeconomic and regulatory conditions would remain stable. Uncertainties about such matters were usually disclosed, but assumptions about business continuity, supply-chain access, or natural hazard risk were not often explored. These are important matters that could affect long-term strategies for infrastructure.

Specific observations about infrastructure strategies

Many infrastructure strategies and discussions about infrastructure strategies in consultation documents had one or more of the following weaknesses:

  • They had no clear link to the significant issues raised in consultation documents.
  • They often read like summaries of asset management plans rather than of strategic direction.
  • They had little discussion of the optimal balance between maintenance and renewal of assets or about the life-cycle management of assets.
  • They had little discussion and/or disclosure of the condition and performance of assets – some appeared to have no assessment about the reliability of asset data.
  • They had little discussion and/or disclosure of uncertainties about data on asset condition and performance, and the potential risks and costs of assets failing.
  • They did not respond enough to issues of affordability, which was an important objective in many consultation documents.
  • They could not be read as standalone documents – for example, many discussed changes to levels of service but did not say what the current level of service was.

We intend to look more closely at the changes and trends arising from infrastructure strategies in the 2015-25 LTPs. However, we consider that the new focus that infrastructure strategies bring to the debate is a move in the right direction.

23: Section 101B(6) defines infrastructure assets as water supply, sewerage and the treatment and disposal of sewage, stormwater drainage, flood protection and control works, and the provision of roads and footpaths. These assets must be included in infrastructure strategies. Section 101B(6)(b) allows a local authority to include other assets in its infrastructure strategy in its discretion.