The people of Queensland have voted to retain public assets in public hands. What does this mean for the new government, and how can they demonstrate that they have fulfilled the people’s will? Sound financial management of our public sector would be expected by all Members of the Legislative Assembly.

In April 2013 the “Queensland Commission of Audit Complete Final Report” reported that assets are held by the General Government (departments) and the Government Owned Corporations. It noted that Queensland has a large stock of public assets. This stock must be maintained and managed, and this costs public money. What we don’t yet know is the condition of these public assets.

Time is ripe for a thorough analysis of the Balance Sheet of the State of Queensland, identifying:

i) which assets are included and which are not, and why;

ii) the condition of public assets;

iii) the services to which the assets are being applied; and

iv) the ongoing cost of those services, including the cost of maintaining all assets to the standard required.

Such an analysis starts with a balance sheet data for each year from the first Balance Sheet in 1998[1].

Each person has an interest in public assets. This interest includes our local government assets, our state government’s and the assets of the federal government. I did a rough estimate for the residents of Brisbane as at 30 June 2012 using 30 September 2012 population figures and arrived at the following:

Jurisdiction Assets Liabilities Net Worth Population Per Capita
Commonwealth $390.6b $646.8b $-256.2b 22,785,500 $(11,243.99)
State of Queensland $299.748b $137.79b $161.958b  4,584,600 $35,326.53
City of Brisbane $   21.2b $   2.296b $18.904b  1,079,392 $17,513.56
TOTAL $711.548b $786.886 $41,596.10

Figure 1: Balance Sheets of Public Sector as at 30 June 2012 (for residents of Brisbane City).

What has happened since then? And how has the State of Queensland’s Balance Sheet changed since it was first prepared in 1998? And is the balance sheet a reliable record of our stock of public sector assets and the liabilities accruing for their acquisition, management and maintenance and an indicator of the standard of services the assets support?

The Queensland Auditor-General, in his report on the results of his audit of the Queensland State Government financial statements 2013-14 considered “private sector funding arrangements into which the state has entered to pay for infrastructure that are not included in the balance sheet”.

This means that, were the above table for Brisbane residents updated for 2014 figures it would  under-estimate the liabilities for net cash outflows by $12.88 billion. Accounting for public-private-partnerships is complex.

Services may rely on assets from three levels of Government. For example, the health of the Great Barrier Reef is affected by many governments as well as private sector entities.

Suffice to say, the incoming government will not know its full liabilities, nor its full stock of assets, from the current balance sheet. And it will not know how to manage the trend moving forward without good data since 1998.

The Government needs to improve the standard of the Balance Sheet to report on its management of public assets to the people of Queensland. This will be on-going and will extend beyond the term of this government.

Endnote:

[1] “Prior to 1997, governments in Australia prepared both budgets and financial reports on a cash basis and there was no composite record of assets held by government. As a result of public demand for increased transparency and accountability, governments in Australia agreed to report their annual financial results in accordance with the same GAAP standards as applied to the private sector, but with additional public sector specific standards to cater for those transactions unique to government.

…(Queensland) Departments prepared their first accrual financial statements in 1996-97 and the first whole of Government accrual financial statements were prepared in 1998-99.

(https://www.treasury.qld.gov.au/publications-resources/overview-qld-financial-accountability-framework/overview-qld-financial-accountability-framework.pdf p 17)”

 

Associate Lani Morris explains that using the Map of Meaning “is a new language because we have not traditionally expressed notions of meaningfulness even to ourselves.”

She is quoted in this weekend’s QWeekend Magazine’s article by Kristina Olsson.

Lani has been bringing the Map of Meaning to Australia for over five years. She has been teaching us how to use the Map of Meaning and this coming weekend, five of us will submit our work for certification by a panel consisting of Lani herself, Marjolein Lips-Wiersma and Patricia Greenhough.

Patricia is offering Brisbane counsellors, coaches and therapists an opportunity to learn how to apply the Map of Meaning in their work with a one day workshop on Wednesday 26 November, 2015.

See www.mapofmeaning.com.au for details.

Meaningful work is a conversation away.

Infrastructure: Its full cost and benefits

Posted September 30, 2014 kmcgovern

Infrastructure is very expensive. And it brings to us and to the next generations enormous benefits. What are we prepared to pay for it? The Productivity Commission has released two volumes of a draft report recommending a “comprehensive overhaul of processes in the assessment and development of public infrastructure projects”.

Overhauls are vulnerable moments in a polity. Vested interest groups will be sharpening their pencils and saving their drafts to ensure they continue to earn a good living from providing more infrastructure.

The good people of Australia pay for infrastructure in more ways than one. Let us examine these.

Firstly, there are the design costs. These used to be incurred by the Dept of Public Works, or Main Roads, or Natural Resources considering the long-term needs of the growing population over larger areas of the state. The permanent public servants who specialised in infrastructure planning undertook this work. And for their efforts they received a salary and ongoing professional development.

Now “infrastructure planning specialists” work with marketing staff of large engineering firms to lobby for more work for the firm. These firms are led by people with interests in industry, construction and sales across a range of corporations, in Australia and elsewhere. The price of the design is factored into the overall price in jobs that the firm wins, regardless of whether the design costs were incurred for only that project.

Secondly, there are planning and financing costs. These used to be the role of public servants on a salary. Now they are funded by banks and firms looking to gain projects in the private and public sectors.

Thirdly, there are construction costs. These, again, used to be incurred by the public sector from its capital budget. The funds were frequently raised from bond issues, or straight out of revenue. The Commonwealth would fund part of the state project, with the state funding the remainder. Local governments sought funding from both Commonwealth and State governments.  Now these are paid for from funds allocated by banks and, with recent changes, superannuation companies’ investments of our funds.

Fourthly, the operating costs. These used to be paid out of consolidated revenue. Now they are funded from fees and charges to private firms.

Fifthly, the maintenance costs. These used to be paid out of consolidated revenue, with departments provided an annual budget to cover maintenance, and to fund their maintenance crews. Frequently small country towns thrived on the back of salaries earned by maintenance crews working on the local council. Now these costs are form part of the contract price and are paid by shareholders, users and maintenance levies.

Lastly there are disposal costs. These used to be borne by the State department upgrading the infrastructure or resuming the land under it for other purposes. Examples include old railway lines diverted to other uses, and scrap metal and other disposals. Now these are generally still born by the state or local government and include the resumption of sites and the reclamation of the sites.

The rapid change in technology has meant the old ways were not sustainable, as governments could not afford the risks of new technologies for their staff. So now governments pay private sector firms to develop the new technologies and the contractors learn to use them on the job.

Examples of the public sector developing new technologies include: underwater electrics for the freeway that becomes a drain in metropolitan Kuala Lumpur, Malaysia the SMART tunnel. http://smarttunnel.com.my/smart/unique-features/

McKinsey has estimated that over $1 trillion a year can be saved worldwide from the way infrastructure is managed. See: http://www.mckinsey.com/insights/engineering_construction/infrastructure_productivity

Infrastructure costs a lot, and it is worth monitoring that cost to ensure the citizens of Australia get value-for-money from the contracts entered into and the investments made on our behalf.

Waste Management – a key city infrastructure

Posted August 16, 2014 kmcgovern

Waste is generated by the residents of cities in a manner that continues to change. The last fifty years have brought widespread use of plastics, vast numbers of manufactured chemicals and hazardous waste that extend across land, throughout our oceans and into outer space.

Cities’ response to this challenge is on-going and requires an ability to monitor the types of waste generated by residents, visitors, businesses and industry as well as to treat all such wastes in a manner that protects the health of humans, animals and the environment.

Kerry McGovern was invited to the 24th EAROPH World Congress to speak on “Governance and Financing Your Cities”. She presented a paper on the governance arrangements that apply to the management of waste. She discussed the funding and financing arrangements applied to ensure the management of waste at each stage of the waste stream. The paper also identified capabilities required by a city to ensure these arrangements result in the mitigation and safe management of waste so that the health of humans and the environment are protected and sustainable development goals can be achieved.

If you would like a full copy of the paper, please send a request through the contacts page.

 

 

 

Sustainable Development Goals to replace the MDGs

Posted July 20, 2014 kmcgovern

The wording of the sustainable development goals to replace the Millennium Development Goals (MDGs) was agreed last night. The draft will be presented to the General Assembly at its 68th session for its consideration and appropriate action.
To read the agreed draft, see: http://sustainabledevelopment.un.org/content/documents/4044SDGsfina_approved_19_July_1320pm.pdf

Submission to Productivity Commission

Posted April 22, 2014 kmcgovern

There are three areas to which I draw your attention. These are:

1. The call for the Auditors-General to independently review effectiveness is sound, particularly as they are supported by an international professional framework for undertaking effectiveness audits, and are focused on improving public administration, taking the longer-term view. This recommendation could be strengthened by the recognition that Parliament will get value for money from investing in this capability among all Auditors-General in states, territories as well as the commonwealth.

2. Funding and financing up-front construction is easy. What is difficult is ensuring the infrastructure currently in operation and the added projects can be operated and maintained to optimize the services for which they were designed. The lack of attention in the report to maintenance and the funding and financing of maintenance that will be required to ensure infrastructure services continue to be provided to the standard required is a weakness that I ask the panel to address

3. When service is the focus of infrastructure planning, it becomes obvious that waste management is an infrastructure that requires investment. Cost shifting occurs when infrastructure at one level, especially at the local level, is assumed to be a cost and impediment to the delivery of infrastructure centrally. We must move from viewing waste as a disposal problem and move forward to treating it as something to minimize, recover, use as well as dispose. Whole of life impacts are to be considered at the design state. Not just factoring in the user charge for disposal but the whole of government cost of managing the materials and environmental degradation.

For more details: email me via the contact form.

Six things that will demoralize staff

Posted April 09, 2014 kmcgovern

K McGovern & Associates’ Lani Morris, in this morning’s Sydney Morning Herald article “Six things that will demoralise staff“, identifies the ways managers can demoralize staff. She uses the research supporting the “Map of Meaning” to identify areas which commonly add meaning and hence, if ignored, destroy meaning and, with it, productivity.

The Map is best used so we can identify how to make the workplace meaningful. We are bringing Lani Morris to Australia in June. She will be introducing the Map of Meaning to you on 14th and 15th June in Brisbane. Register at here.

You can find a brochure here.

The Map of Meaning is also a brilliant way to integrate your team.

Waste Management – the Foundation of a Nation

Posted March 05, 2014 kmcgovern

Waste management forms the foundation of a nation – quite literally. Where there is rubbish in the streets, plastic bags flying through the air and polluting fences, and ground water contaminated by refuse the potential for joy among the population is limited. Nothing cheers us up like a clean environment that is loved and cared for.

Nations that address the need to manage waste demonstrate that the lives of ordinary people are a priority. Look at the waste management of Kirkuk in Northern Iraq.  Ashraf Yahya Alnajjar has written about Iraq’s solid waste management. His article can be found at: www.ecomena.org. There are many examples of good waste management.

The Heads of Supreme Audit Institutions of Pacific Island Countries (PICs) worked together to prepare a report on solid waste management in PICs. It can be found here: PASAI.

The Republic of South Korea has discovered that waste can be an asset. The city of Daegu has a waste treatment plant that has returned the city’s investment in eight years and now is a source of fuel for heating the city. The World Energy Congress held in Daegu last year has identified waste as a resource. See: WEC.

Our challenge is to turn waste management from a dirty, corrupt and invisible service to one that is trendy and sexy for politicians to be associated with. How do we do that?

International Year for Small Island Developing States

Posted February 25, 2014 kmcgovern

Ban Ki-Moon, Secretary General of the United Nations, yesterday launched the ‘International Year for Small Island Developing States”. SIDS are already experiencing the on-going impact of climate disruption caused by unwise resource use. Last week, Ramos-Horta (Timor-Leste) and Nasheed (Maldives) urged Asian countries to ensure a more stable climate, by “(strengthening our) natural defences, embracing clean growth, and leading the push for a global climate deal” South China Morning Post. SIDS have to manage all that large nations manage: waste management, water, air quality, defence, employment, foreign relations, economic activity, social cohesion, cultural expression and more. And they do it with fewer people, fewer resources, and the strength of their character in a world that honours the strong and those who use resources unwisely. This is the last year that we, as a species, can respond to the challenge to reverse the degeneration of our planet. Let us work closely with Small Island States to implement what actually works, and what adds value to us as humans.

K McGovern & Associates’ Lani Morris has found a tool that enables us to identify what is meaningful for us as humans. Using the Map of Meaning(TM), we can help you identify what is meaningful to you personally and to your organisations, so that you can pursue that which you value and reduce your demand for unsustainable resources and contribute to the overall sustainability of your country. Call us to discuss how we can help. Phone: +61 7 3844 4687.

What infrastructure do we value?

Posted February 10, 2014 kmcgovern

There has been much discussion about how to fund infrastructure development. At the same time, approvals to mine for coal seam gas may lead to a degradation of our water sources.

Over the last twenty years we have learnt to cost the services provided by government. We have left the value of what government does to be determined by the political process.

If funding infrastructure is the only problem governments face, then the solution is as readily available today as it has been over the last century.

But funding the capital construction alone is no longer the main challenge facing governments. In Australia infrastructure is spread among all three levels of government: federal, state and local. While the federal government oversees the priorities for infrastructure development, the state and local governments have the responsibility to maintain and operate the infrastructure.

Local governments are now, more than ever, able to cost the services they provide to residents and visitors. And local governments know what they value. But is it the same as what the federal government thinks can be funded?

While we can cost services, how can we determine exactly what we value?

EAROPH Australia, at the “Practical Skills in Sustainability” Forum will address this, and other questions, in Canberra on 15th March, 2014.

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