DRAFT 17 AUG 2006

COMMUNITY WASTEWATER MANAGEMENT SYSTEMS (CWMS)

(formerly STEDS)

Management Options

Background

This paper is part of the final stage of the CWMS Reform program which commenced in October 2004 and has included awareness, information and implementation phases.

Over the last 2 years Councils have become much more aware of the public health and environmental risks and the lack of financial sustainability of most schemes and many have now commenced addressing those issues.

The LGA General Meeting in March 2006 endorsed further investigation into two management options for CWMS namely:

  • A statewide Management Service Authority or
  • A regional / statewide Entity.

This paper sets out the elements and discusses the issues associated with the establishment and operation of a LGA statewide CWMS Management Service Authority and a LGA statewide CWMS Entity.

1. LGA Statewide CWMS Management Service Authority

a) Function

The key functions of the Management Service Authority would be:

a)To provide advice and assistance to Councils on a range of management, administrative and project coordination activities required for the effective and efficient operation of CWMS.

The activities could include the following:

  • The provision of Generic Management Plans to Councils;
  • Assist Councils to develop Management Plans for their particular circumstances;
  • Assist Councils to prepare annual budgets and future capital works programs;
  • Provide Councils with sustainable pricing advice;
  • Co-ordinate/manage some of the more significant maintenance or service contracts;
  • Provide training workshops for CWMS operators;
  • Provide technical advice to Council staff;
  • Provide management, policy and regulatory advice to CEO’s /Elected Members and
  • Assist Councils in their dealings with the Department of Health and the Environment Protection Agency.

b) To establish and maintain a statewide CWMS data base in order to:

  • Provide comparative data to Councils and
  • Aid discussion with State Government agencies.

c) To maintain regular contact (quarterly) with member Councils via a newsletter in order to:

  • Keep Councils informed of the activities of the Service Authority;
  • Advise on industry developments and other Council initiatives;
  • Report on any CWMS activities by the EPA;
  • Be a conduit for information dissemination and
  • Provide an opportunity for the exchange of information amongst Councils.

The Management Services Authority would provide an Annual Report and Financial Statement to the Local Government Association Annual General Meeting.

Councils would continue to own, operate and maintain their CWMS.

b) Structure

a)Current LGA CWMS Program structure

The LGA currently manages the CWMS Construction Program and State Government subsidy funding (approximately $3 M per annum) through its Director of Legislation, Infrastructure and Environment.

The program funds a full time program manager with key responsibilities as follows:

  • Develop and maintain the priority list of required new schemes;
  • Project co-ordinate the construction of new schemes by,

- Liaison with Councils to initiate the process

- Engage design consultants (tender process)

- Engage contractors (tender process)

- Overview the construction phase

- Manage the subsidy funding;

  • Provide technical advice to Council staff and
  • Provide executive support to the Construction Program Advisory Committee.

This role is a required one whilst the LGA continues to manage the State Governments subsidy arrangements for new schemes.

Additionally, two part time casual staff are currently engaged to manage specific projects, namely:

  • The CWMS Reform Program and
  • The application to the Federal Governments Water Smart Australia Program.

These two programs are funded from a combination of the CWMS Program, Council contributions and State Government agency contributions and are likely to conclude by the end of 2006.

The current structural arrangements for the current structure are shown in figure 1.


b) Proposed LGA Management Service Authority

The proposed Authority could be an expansion of the current services already provided by the LGA for new CWMS construction.

The LGA constitution gives the LGA the authority to employ staff and to raise revenue through subscriptions and/or levies from member Councils. Fees may therefore be properly charged to Councils who make use of the proposed CWMS services provided that those Councils are members of the LGA.

Liability for the provision of these services would remain with the LGA as the employer of the advisory staff.

In addition to the current construction management service the LGA will need to give consideration to 2 additional CWMS activities in the near future:

  • Management services advice to Councils (as outlined in this paper) and
  • The $100 M application to the Federal Governments Water Smart Australia program on behalf of all CWMS Councils and how that program will be co-ordinated.

The resources required to deliver the existing construction program, a management advisory service and to co-ordinate the WSA program are likely to be:

i) CWMS Program Manager

The role to be similar to that of the existing position set out above and to include a management role for the CWMS Unit:

  • Leadership (and management) role for the CWMS unit;
  • Liaison with State Government agencies;
  • Liaison with Councils/Consultants through the design phase;
  • Financial management;
  • Servicing Advisory Committees, SAROC and State Executive Committee and
  • A reduced role in on-site matters for the construction program.

ii) Management Services Officer

An FTE position established to provide management services advice to Councils and reporting to the CWMS Program Manager.

iii) Project Officer

An FTE position established to co-ordinate the construction program following the awarding of works contracts for new schemes and the WSA program.

Note: This position is based on the LGA’s application the Federal Governments WSA program being successful and the LGA having a role in the co-ordination of the program. The possible position is mentioned for information only and the details are not explored in this paper.

A comprehensive review of the management and structural arrangements will be necessary should the WSA program application be successful.

iv) Administrative support

Administrative support of about 0.5 FTE would be desirable to enable effective and efficient operation of the proposed CWMS Unit.

Staff would be engaged by the Local Government Association under their standard employment contract arrangements. Contracts would be linked to ongoing State and Local Government support for the CWMS program for new schemes and upgrading existing schemes and the LGA having a role in co-ordinating the program.

v) Management Committee

The two current Advisory Committees (Reform Advisory Committee and the Construction Advisory Committee) would be disbanded and a new Management Committee established for governance of the CWMS Unit.

Members of the Management Committee to be drawn from Councils, LGA, OLGR, State regulatory agencies (EPA, DH) and an industry representative.

The Management Committee would report to the LGA state Executive Committee.

The structural arrangements for the proposed structure are shown in figure 2

c) Establishment

i) Management Advisory Services

A pre service delivery period of 6 - 12 months would be required to enable the officer to establish the position and undertake the following activities:

  • Establish a state wide data base of CWMS;
  • Familiarise with the 2004/05 audits of all schemes;
  • Prepare an information sheet describing each of the activities/services to be offered;
  • Develop a business plan for the service;
  • Visit the CEO/CWMS Manager in each of the 42 CWMS Councils outlining the proposed services and encouraging the Council to participate;
  • Undertake preliminary work on the preparation of templates for management plans, asset registers and forward works plans;
  • Undertake work on the development of specifications for major maintenance work such as septic tank pump outs, pump maintenance and water quality monitoring and
  • Develop service contracts with Councils for the undertaking on their behalf some of the major maintenance activities.

Skills and knowledge will be required in:

  • Operation and Maintenance of CWMS;
  • Asset management;
  • Local Government management;
  • Interpersonal skills;
  • Excel spreadsheet analysis and
  • Financial modelling.

Initially a 12 month contract would be offered to a suitable person to enable the set up activities to be undertaken. The work undertaken during the first 12 months would still be of value to all CWMS Councils should the Advisory Service not materialise because of limited support from Councils.

ii) Project Co-ordination (NWI project)

The role is not explored in this paper – the position requirement is for information only

d) Detailed activities

It is proposed that The Management Services Authority would provide the following services.

a)Membership Services

Services to be covered by membership fees include the following:

  • Phone advice for Council staff on any aspect in relation to CWMS;
  • The provision of generic management plans provided for:

- Operational and maintenance plans

- Water quality monitoring plans

- Irrigation management plans

- Emergency response plans;

  • A quarterly newsletter providing an update on the activities of the Management Authority, new technologies in CWMS, activities within the EPA and DH relating to CWMS, the ‘average’ data on a range of scheme components, ‘what’s happening’ in other Councils and any other interesting or relevant information;
  • Conduct discussion with DH and EPA on behalf of a Council (at its request) over any issues those authorities may have with the Council;
  • Prepare and maintain a CWMS Asset Register for Councils. Councils will need to provide relevant plans and records of the scheme and any subsequent upgrades and replacements. An initial field inspection would be undertaken to verify the records and
  • Provide presentations for Council staff and/or Elected Members on legislative, management, operational and financial requirements for an effectively operated CWMS.

b) Fee for Service activities

Services to be offered on a fee for service basis include the following:

  • Establish management plans and update annually:

- Operational and maintenance plans

- Water quality monitoring plans

- Irrigation management plans

- Emergency response plans

  • Prepare annual budgets and forward works programs (capital replacements and major maintenance works);
  • Develop specifications and project manage (tender call and let, contract supervision) major maintenance work including, annual pump maintenance, septic tank pump out, mains flushing and water quality monitoring either on an individual Council basis, a regional basis or a state wide basis depending on economies and
  • Conduct (annually) an Operation and Maintenance workshop to provide appropriate training for CWMS operators.

The range of services to be provided by the Authority would be flexible and could be varied to suit particular circumstances or demand.

e) Membership

Sufficient interest (and membership) by Councils, in the order of 50% (20 Councils, 70 schemes) will need to be shown to justify the establishment of the role following the initial 12 months pre delivery period.

Council membership of the Management Advisory Service Authority would be voluntary.

Membership would be on an annual basis governed by a service contract with 12months notice to be given for withdrawal from the Authority in order to give the LGA sufficient time to make any necessary staff rearrangements.

The proposed financial arrangements for the Management Service Advisory Service are as follows:

a) Expenses (annual)

Salaries$90,000

Direct overheads (20%)$18,000

External assistance$27,000

Office accommodation/costs$15,000

Total$150,000

b) Income

i) First 12 months operation – set up phase

For the fist 12 months, whilst the authority establishes the position and seeks out willing Councils for membership, the position is proposed to be funded from the CWMS Program. The State Government has previously advised that costs for developing and delivering the CWMS Reform program can be met from the Program funding.

ii) Ongoing operational phase

When the Management Services Advisory Authority commences operation, funding for the Authority is proposed from the following areas.

CWMS Program 50.0% $75,000 subject to State Government confirmation Local Government Association 10.0% $15,000 office accommodation/costs

Council Membership Fee 10.7% $16,000 based on 20 Councils participating

Council Fee for Service 29.3% $44,000

iii) Membership Fees

Modest membership fees are proposed in order to encourage Council support and a commitment for the service and are proposed to be derived by:

Council with one CWMS$500 per annum

second CWMS$250 “ additional

three or more$100 “ additional for each scheme

Membership fees would entitle Councils to the following services at no extra cost:

  • A phone advisory service on any CWMS matter;
  • The provision of generic management plans;
  • A quarterly newsletter;
  • Liaison on behalf of Council with DH and EPA;
  • The establishment and updating of Councils CWMS asset register and
  • Verbal advice/presentations to CEO’s or Elected Members.

vi)Fee for Service

Fees may be levied (an hourly rate, an agreed fixed fee or a %age of a contract sum) for particular services which could include:

  • Preparation of Management Plans;
  • Preparation of annual budgets and forward works plans;
  • Project management (tender preparation/calling/managing) of a range of maintenance contracts;
  • Project management of upgrading works;
  • Project management of water quality monitoring programs;
  • Water quality reporting to the EPA and
  • Conduct training workshops for CWMS operators.

The Authority would need to recover $44,000 per annum in fees from Councils (an average of $2200 per Council – based on 20 Councils) to sustain the service.

The cost of the service to Councils will represent good value and should enable Councils to reduce their reliance (and therefore cost) on external consultancy assistance for management, technical and operational advice.

vi)Excess income

At the conclusion of each year’s operation any excess income over operating costs would be returned to Councils in same proportion as their annual contribution.

vii)Financial Statement

An audited financial statement is to be provided to the Local Government Association Annual General Meeting.

f) Summary

A Management Service Authority for CWMS could be established by the LGA as a simple expansion of the current Project Co-ordination role that it currently undertakes for the construction of new schemes.

Contract positions within the Service Authority would be conditional on ongoing funding support from Federal, State and Local Government authorities.

The Authority could provide specialist managerial, technical and operational advice to Councils to assist them to manage and operate their CWMS in an effective and efficient manner.

Consistency across the participating Councils with management plans, monitoring and recurrent maintenance activities will result in sector wide benefits for staff, benchmarking and information exchange and will reduce the duplication of management and administrative effort that currently exists.

Project co-ordination of maintenance contracts such as pump maintenance, septic tank pump outs, mains flushing and water quality monitoring on a regional basis rather than by individual Councils will lead to reduced costs.

The Service Authority will provide strong advocacy for Councils in dealings with other levels of Government and their agencies.

Council membership of the Service Authority will be voluntary however at least 20 Councils (70 schemes) are needed to justify its establishment.

The cost to Councils is modest with 50% of the cost being met by the CWMS Program. On average Councils could expect to pay approximately $3000 per annum for management services.

2. LGA Statewide CWMS Entity

a) Function

The Entity would manage, operate and maintain CWMS on behalf of member Councils in an aggregated manner and would provide:

  • Management services using skilled staff employed by the Entity;
  • Operational services using,

- Its own employees

- Contractual arrangements with individual Councils

- Engagement of private contractors

- longer term service contracts;

  • Maintenance services primarily using private contractors engaged via service contracts;
  • Capital upgrading works using private contractors engaged through a tender process on a project by project basis;
  • Bi - monthly reporting to SAROC/Councils via its Board of Directors and
  • An annual report to the LGA Annual General Meeting.

Desirably the Entity should be statewide however 2 or possibly 3 Entities geographically placed across the state could be sustainable.

b) Structure

Actual resources required within the Entity have not been determined at this stage and are dependant on the number of Councils (and schemes) participating in the Entity.

The structural arrangements for the proposed entity are outlined in figure 3.


c) Establishment

The CWMS Entity would be a public incorporated body owned by the member Councils and governed by a Board of Directors with representatives from Councils and the wastewater industry.

Some general issues which apply to Entities which will impact upon the operation include:

  • Contracting with a Third Party

The current provisions of the Local Government Act 1999 will allow an Entity to contract out to a third party any of its services as it sees fit.

  • Profit to Members

Profit from an Entity (regional subsidiary established under the Local Government Act 1999) may be retuned to member Councils however if the Entity is established under the Associations Incorporations Act 1985 any profit cannot be retuned to member Councils.

  • Insurance Considerations

An LGA Entity is automatically eligible for admission as a member of the LGA Mutual Liability Scheme whilst an Entity established under the Associations Incorporations Act would require a special resolution of the LGA to allow membership.

  • Competitive Neutrality

The Entity will be conducting a significant business within the terms of the National Competition Policy and consideration may need to be given to the application of principles of competitive neutrality and taxation arrangements.

  • Revenue Raising

No provisions exist in the Local Government Act 1999 to provide an Entity with revenue raising powers. Revenue raising power for CWMS remains with individual Councils which can then pass onto the Entity to enable it to carryout the functions on behalf of Council.