Under the terms of funding from AUSLINK - Roads to Recovery, the Commonwealth is failing to permit legitimate expenditure to be accounted to projects being done under this scheme. Depreciation costs of plant and equipment utilised in projects under the scheme are not permitted to have the depreciation component of the plant and equipment charged to the project.This is contrary to all accounting principles, the net effect of which is forcing Local Government to meet this cost from its own resources! There has been some comment from the Commonwealth that as this is additional work to that already being done under Council own resources, therefore depreciation does not impact on R2R projects (I cannot locate anything in writing from the Commonwealth)!!
This is an absolute fallacy, depreciation occurs for each and every hour the plant and equipment operates. For example if Council hired a Contractor to work on a R2R project, not only does the Contractor have a margin for profit but also there would be margins for all the other indirect costs including depreciation. The same would apply if a local government leased its major plant, the leasing cost would be applied to the project to the extent the plant was involved on the project. The condition is designed to give the impression the Federal Government is getting more for its dollar, it certainly is at the great disadvantage and on the back of Local Government.
There is current studies on the sustainability of Local Government and the blatant cost shifting onto Local Government from the other two spheres of Government.One report from the Australian Local Government Association (as a result of a intensive study) indicated that up to 60% of local governments are not viable in the long term. A conclusion also drawn by an independent study by the WA Local Government Association. Is there any wonder when Governments can get away with shoddy and underhand tactics that are being exhibited in this exercise.

 
 
Regards,
 
Barrye Thompson
CEO 
Shire of Laverton