Annual Plan 2016-17 - Approved by Council 27 June 2016
Kingborough Council 2016-17 Annual Plan
Kingborough Council 2016-17 Annual Plan
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7.5 Asset Sustainability Ratio<br />
The asset sustainability ratio indicates whether a <strong>Council</strong> has been maintaining existing assets at a<br />
consistent rate. The ratio is calculated as the total capital renewal expenditure divided <strong>by</strong><br />
depreciation expense. A result of greater than 100% indicates that spending on existing assets is<br />
greater than the rate of depreciation base. The benchmark result is 100%.<br />
The above graph shows that <strong>Council</strong> is struggling to meet the 100% benchmark for capital<br />
expenditure on asset renewal. While this shortfall is sustainable in the short term, it would be of a<br />
concern if the trend continued over an extended period.<br />
The improved results for <strong>2016</strong> and 20<strong>17</strong> relate to additional roads to recovery funding that has<br />
allowed increased investment in renewal of infrastructure assets.<br />
This ratio highlights the need for <strong>Council</strong> to continue to build cash reserves, through the generation<br />
of an operating surplus, to allow increased expenditure on asset infrastructure. Once this is achieved,<br />
an asset sustainability ratio above 100% can be delivered.<br />
Kingborough <strong>Council</strong> <strong>Annual</strong> <strong>Plan</strong> <strong>2016</strong>/<strong>17</strong> Page | 51<br />
<strong>Approved</strong> <strong>by</strong> <strong>Council</strong> on <strong>27</strong> <strong>June</strong> <strong>2016</strong>
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