Posted on June 29, 2016 by Frances Tse

Local Government Amendment (Governance and Planning) Bill 2016

The Local Government Amendment (Governance and Planning) Bill 2016 (‘Governance and Planning Bill‘) was introduced into Parliament on 22 June 2016.  The Governance and Planning Bill is the first phase of the Government’s  broader reform of the Local Government Act 1993 (‘LG Act‘) which aims to provide ‘an updated legislative framework that will meet the needs of councils and their communities in 2016 and for many years to come.’

History of the reforms

The reforms proposed in the Governance and Planning Bill are the result of a 5 year process of consultation with councils across NSW and their constituents.

During this period the Government established the Independent Local Government Review Panel (‘Panel‘) and the Local Government Act Taskforce (‘Taskforce‘).

Both the Panel and Taskforce reported to the Government on improvements which could be made in the NSW Local Government sector. These reports recommended legislative change to support the work of councils and to ensure they could be fit for the future. We had previously blogged on these reports in this post.

The Government supported the recommendations in the reports and in January 2016 released an explanatory paper that outlined specific amendments to be included in this Governance and Planning Bill.

An overview of some of the proposed amendments in this Bill are provided below.

Purpose of LG Act and principles for councils

• Proposed section 8A replaces the council’s charter with guiding principles for councils in the exercise of their functions generally, decision-making and community participation.
• Proposed section 8B sets out principles of sound financial management that focuses on systems and risk management.
• Proposed section 8C sets out integrated planning and reporting as one of the guiding principles of the LG Act.

Council governance, wards, councillors and election matters

• The role of the governing body is expanded to include matters such as to provide effective civic leadership to the local community, to ensure as far as possible the financial sustainability of the Council and to develop and endorse the strategic plans, programs, strategies and policies of the council.
• The role of the mayor is expanded to include matters such as to be the leader of the council and a leader in the local community, to advance community cohesion and promote civic awareness.
• The role of a councillor is revised to include matters such as to uphold and represent accurately the policies and decisions of the governing body and to make all reasonable efforts to acquire and maintain the skills necessary to perform the role of councillor.
• The role of the general manager is expanded to include matters such as the implementation of lawful council decisions and giving advice and administrative professional support to the mayor and other councillors necessary for them to effectively discharge their functions.
• Clarification is made that a vacancy occurs in civic office of a councillor if a councillor is elected as mayor by the electors. Conversely, the office of a mayor elected by councillors becomes vacant if the mayor ceases to hold office as a councillor.
• The term of mayors elected by councillors is increased from 1 year to 2 years.
• The provisions in relation to appointment and management of staff are amended so the council is to determine senior staff positions and reporting lines and the general manager is to determine the balance of the organisation structure of the council.
• The regulation will be able to prescribe a model code of meeting practice and  councils will be required to adopt a code of meeting practice that incorporates the mandatory provisions in the model code within 12 months of an ordinary election of councillors.
• Councils will able to apply to the Minister to reduce the number of council meetings per year.
• Changes are made to the power of the council to delegate functions. Delegation will now be allowed in relation to the acceptance of tenders other than tenders to provide services currently provided by members of staff of the council. Also the power to grant financial assistance can be delegated in certain circumstances.

Auditing

• Provisions in relation to appointment of auditors will be replaced with provisions making the Auditor-General the auditor of a council. Consequential provisions relating to the power of the Auditor-General in performing its functions as auditor of a council are also proposed.
• A council will be required to establish an Audit, Risk and Improvement Committee to review various aspects of the council’s operation such as compliance, risk management, fraud control, financial management and governance and implementation of the council’s strategic plans and policies.
• A council’s auditor will be required to also audit the financial reports of any entity that the council has formed or participated in forming or in which it has a controlling interest.

Disciplinary matters and disclosure of pecuniary interests

• New provisions are proposed to enable the Minister to appoint a person as a financial controller to a council if the Minister issues a performance improvement order for the council. The Minister will need to have regard to certain criteria specified in the regulations in deciding whether to appoint a financial controller.
• The financial controller may be appointed in the performance improvement order or by a subsequent order.
• If a financial controller is appointed, then a council cannot make any payment from any funds unless authorised by the financial controller.
• Amendments are proposed to make clear that an administrator appointed for a council after a public inquiry has been held or after the council has been suspended has the functions of all the councillors and the mayor, as well as the functions of the council.
• Amendments are proposed to extend the operation of provisions of the Model Code of Conduct relating to the disclosure of pecuniary interests. The Model Code will now specify which pecuniary interests are to be disclosed and which are excluded. The regulations can prescribe their application to members of council committees and council advisers.
• Amendments are proposed to remove the provision (s440F(2)) which currently provides that a breach of pecuniary interest disclosure provisions in the LG Act is not misconduct. This means that the general disciplinary provisions that apply to councillors for misconduct will apply to breaches relating to the disclosure of pecuniary interests.
• A defence is to be provided that for the purposes of determining whether a person has engaged in misconduct, the person does not breach a provision of a code of conduct that requires the disclosure of a pecuniary interest if the person did not know and could not reasonably be expected to have known that the matter under consideration at a meeting was a matter in which the person had a pecuniary interest.

You can follow the passage of the Governance and Planning Bill and download a copy of it from the NSW Parliament’s webpage linked here.