Local Government Inquiry - LGI (Percy Allan Report)
The Independent Inquiry into the Financial Sustainability of Local Government in NSW (Local Government Inquiry) was undertaken by a panel chaired by Professor Percy Allan. It was commissioned by the Local Government and Shires Associations of NSW (LGSA) in September 2005 in response to the widespread concerns about Local Government's financial capacity to meet the growing demand for infrastructure and services. The inquiry was conducted from 21 September 2005 to 30 April 2006.

6.2 INFRASTRUCTURE PORTFOLIO AND CONDITION

Infrastructure renewal gap
The extent to which annual capital expenditure on renewing councils’ existing assets falls short of the annual amount by which those assets depreciate is referred to as the ‘renewal gap’.
The gap is calculated on replacing existing assets only – a ‘like with like’ replacement. The gap does not reflect additional costs of extension or substantial expansion of assets, which may be required or demanded by the community.
The renewal gap estimated by reports to this Inquiry shows that council’s renewals expenditure falls short of requirements by between $400 - $600 million each year
(Access 2006, p.iv and Roorda 2006, p5).

This means that there is a constant under funding of asset renewal over the long term by up to 50 to 60 per cent, which is the equivalent of seven to nine per cent of councils’ total revenues or 11 to12 per cent of their total rates and charges revenue (Roorda 2006, p8).