Posted on January 18, 2016 by Lindsay Taylor

Local Government Act Amendments – Phase 1 Consultation

The Office of Local Government has issued the ‘Explanatory Paper: proposed Phase 1 amendments’ (Explanatory Paper) to the Local Government Act 1993 (LG Act).

The Explanatory Paper provides an overview of proposed changes to the LG Act for the purpose of engaging in public consultation on reforms of the Act.

This post discusses a number of the more significant reforms proposed.

Governing body

There are a number of significant changes proposed concerning the roles of the governing body of a council, councillors and the mayor.

Role of governing body

It is proposed to expand the description of the governing body’s role to include that the governing body directs and control the affairs of the Council in consultation with the general manager (GM) and in accordance with the Act. This is one of a number of changes which attempt to more clearly define the relationship between the governing body and the GM which we think would give the GM a more significant role in the affairs of the council.

Number of councillors and vacancies in civic office

It is proposed that councils have an odd number members in order to reduce the risk of decisions being made on the casting vote of the mayor. Curiously, however, it is proposed that a vacancy will occur in the civic office of a councillor where they are elected to the civic office as a popularly elected mayor. It is not clear how this provision would operate as the Explanatory Paper does not elaborate on whether an election would then need to be held to fill the councillor vacancy. If that occurred, there would no longer be an odd number of members.

Role of councillors

Under the proposed changes, councillors would be required to be active and contributing members of the governing body and to make considered and well informed decisions.  It is not entirely clear what standard ‘active and contributing‘ would require, but at present there is no requirement that councillors do so and making this change may be directed at targeting councillors who simply vote along party lines.

Role of mayor and term of office

The mayor’s role is to be described more expansively and importantly would include a responsibility to ‘advance community cohesion’.  Further, a mayor that is elected by councillors would hold office for a minimum of 2 and up to 4 years and it would be compulsory for councillors to vote in a mayoral election. The mayor would also have a responsibility to advise, manage and provide strategic direction to the GM in accordance with the council’s strategic plans and policies and to lead the performance appraisal of the GM.

These are significant changes in relation to the office of mayor. It may be that the requirement to promote cohesion is intended to be facilitated by longer mayoral terms which will reduce the extent to which political considerations may tend to interfere with that objective.

The requirement to vote in mayoral elections seems to be directed at situations where quorums have not been able to be achieved on the occasions of mayoral elections.

Professional development

Under the proposed changes, councils would be required to develop induction programs and ongoing professional development programs for councillors and mayors.  Many council already do this, and the proposal to make it mandatory is clearly aimed at improving performance at councils where it does not.

Council Meetings

It is proposed that a Model Code of Meeting Practice will be prescribed and that councils would be required to adopt a Code of Meeting Practice. The provisions in the Model Meeting Code would largely incorporate the existing meeting provisions in the legislation but this will still promote greater consistency.

Ethical standards

It is proposed that the provisions in the Act and Regulations dealing with the disclosure and management of pecuniary conflicts of interests will be replicated in the Code of Conduct so that ethical standards are consolidated in one document. Given that the Explanatory Paper describes the changes as a replication, it appears that the existing pecuniary interest provisions will remain in the Act.

However, breaches of pecuniary interest provisions would be dealt with under the misconduct provisions in the Act, rather than the separate existing procedure under ss460-470. It appears that the effect of this is the Chief Executive of the OLG would still be able to refer matters to the NSW Civil and Administrative Tribunal, but would now also be able to take disciplinary action in less serious cases.

Organisational structure

As stated earlier, a number of the changes seek to more clearly define the relationship between the GM and the governing body. Of particular significance is the proposal that the organisational structure of a council would be determined by the council on the advice of the GM, which would specify the roles and relationships of the GM, senior staff and other staff reporting directly to the GM. The GM would then determine the balance of the structure in consultation with the governing body.

At present, the council determines the organisational structure so the proposed change would clearly give the GM a greater role in that regard. The Explanatory Paper suggests that the Act lacks clarity as to the roles of the GM and council and it has been a source of conflict in our experience.

Reporting to council on senior staff contracts

It is proposed that the GM would not be required to report annually to council on the contractual conditions of senior staff. Given that senior staff are now required to be employed under a standard contract, the reporting requirement is unnecessary.

Delegation of functions

It is proposed to allow councils to delegate the acceptance of tenders. This is significant as it would give GMs or other delegates a greater role in the running and operation of the council.

It is also proposed that councils would be able to delegate a regulatory function to another council or a joint organisation of councils. At present, regulatory functions (at least under Chapter 7 of the Act) can only be delegated to a council employee or committee comprised of councillors or councillors and staff. This would enable greater council collaboration and resource sharing.

Financial controllers

It is proposed to allow the Minister for Local Government to appoint a financial controller in conjunction with the issuing of a performance improvement order where it is shown that a council is performing poorly with respect to its financial responsibilities. This is significant because where a financial controller is appointed, it is proposed that a council may only make payments that are authorised or countersigned by the financial controller.

Audits – Internal and external

At present Internal Audit Guidelines exist under s23A of the Act but they are not mandatory but merely matters for ‘consideration’. Under the changes, it would be mandatory for councils to have an internal audit function and councils would be required to comply with guidelines issued by the Chief Executive of the OLG. This would involve the appointment of an audit, risk and improvement committee that would report to council at least biannually.

External audits would be brought under the office of the NSW Auditor-General, rather than the council appointing an auditor.

Period for consultation

Consultation on the proposed phase 1 amendments closes on 15 March 2016.

This post was prepared  also with the assistance of  Stuart Simington, Chris Campbell and Frances Tse.