Posted on February 3, 2014 by Lindsay Taylor

Reports Recommending Local Government Reform in NSW

Recent reports prepared by the Local Government Acts Taskforce (‘Taskforce‘) and the Independent Local Government Review Panel (‘Panel‘), which set out recommendations for local government reform in NSW, have been finalised and given to the Minister for Local Government, the Hon. Don Page MP. This post summarises the key recommendations of both reports.

The Taskforce’s report titled ‘Report to the Minister for Local Government the Hon Don Page MP – A New Local Government Act for New South Wales and Review of the City of Sydney Act 1988’ (‘Taskforce Report‘) and the Panel’s report titled ‘Revitalising Local Government’ (‘Panel Report‘) are both available on the Division of Local Government’s website.

The DLG is inviting submissions on both reports until 7 March 2014 4 April 2014 (as at 12 February 2014). The Minister’s media release on 8 January 2014 states that the submissions ‘would help the NSW Government develop its response and give a final opportunity for councils and their communities to provide input on the way forward.’

Taskforce Report

The Taskforce was appointed to review the Local Government Act 1993 (‘LG Act‘) and make recommendations for legislative changes considered necessary and appropriate for a new LG Act.

The majority of the Taskforce’s recommendations in its discussion paper earlier this year (see this earlier post) have been adopted as  recommendations in the Taskforce Report. The key recommendations are set out below.

Integrated planning and reporting (‘IPR‘)

The Taskforce remains of the view that IPR ‘should be given much greater prominence in the new Act’ and recommends that one of the guiding principles for a new LG Act is for IPR to ‘ form the central framework for the new Act providing local government with a robust strategic planning mechanism that is based on community engagement expectations and aspirations, and financial responsibilities.’

Charter, roles and principles of local government

The Taskforce confirms its recommendation to include a new ‘Role of Local Government’ and a set of ‘Guiding Principles of Local Government’ to replace the charter for councils in s8 of the LG Act.

Use of technology

The Taskforce recommends that the new Act should enable optimal, flexible and innovative use of technology and should allow each Council to determine the most appropriate use of technology.

Council operations – Elections

Recommendations include:

• options for using universal postal voting or other technology assisted voting,
• mechanisms for reducing need for by-elections,
• consolidating all State and local government elections provision to a single new Elections Act, and
• increase terms of mayors elected by councillors from 1 year to 2 years.

Meetings

The recommendations in the discussion paper in relation to council meetings are adopted in the Taskforce Report with an additional recommendation for increased use of technology in some circumstances.

Appointment and management of staff

The recommendations include that council be responsible, on the advice of the general manager, for determining the organisation structure to the level that directly reports to the general manager, and the general manager be responsible for determining the balance of the organisational structure.

Regional strategic organisations of council and formation and involvement in corporations

The Taskforce recommends that the Act include a mechanism enabling councils to form statutory entities to undertake regional strategic collaboration activities for example a model of ‘Council of Mayors’.

Pecuniary Interest

The Taskforce recommends that the pecuniary interest provisions be reviewed to ensure they are written in plain language, easily understood and with unnecessary red tape removed. It also recommends using technology to assist with submission and maintenance of pecuniary interest disclosures.

Delegations

The Taskforce recommends that some of the exceptions to delegations of an operational nature not be carried forward to the new Act, for example,  for acceptance of tenders, provision of minor financial assistance to community groups and delegation of regulatory functions to another council or shared services body.

Financial governance

The Taskforce recommends that:

• there should be a realignment of the regulatory focus towards systems and risk management rather than process prescription,
• the new LG Act should articulate a set of financial or corporate governance principles that align with the principles and objectives of IPR and that complement the Guiding Principles of local government,
• minimum standards should be prescribed in the legislative framework,
• financial statement requirement should be included under IPR annual reporting requirements.

Procurement

The Taskforce recommends that:

• central principles of procurement be adopted,
• regulation or code be adopted as a default procurement framework,
• council be allowed to adopt strategic approach to procurement through ‘earned autonomy’ where a council may be exempt from complying the adopted regulation or code if the Council’s procurement framework is consistent with the procurement principles,
• the council’s procurement framework be consistent with the IPR framework,
• abolishing the $150,000 threshold and instead adopt a more flexible principles-based approach so councils can determine their thresholds based on risk assessment.

Capital expenditure framework

The Taskforce recommends that a capital expenditure and monitoring guideline be developed that integrates the IPR framework and enables appropriate management of risk by councils.

Acquisition of land

The Taskforce recommends that council plans for the compulsory acquisition of land be linked with the IPR process.

Public land

The Taskforce  recommends that:

• the classification of land regime be retained,
• dealings with community land could be addressed through council’s Asset Management Planning and Delivery Program,
• there is no need for a separate plans of management for community land to be prepared outside of the Asset Management Planning and Delivery Program of the IPR process.

Approvals, orders and enforcement

The Taskforce recommends:

• regulatory provisions be reviewed to ensure that it provides guidance on regulatory principles and contains flexibility and less prescription in regulation implementation and allowing council to have discretion ‘on-the ground’,
• to streamline the process of approvals and orders and removing as many approvals and orders as possible,
• the principles for dealing with approvals and orders be incorporated into the IPR framework,
• to increase penalties for offences and increase opportunity for penalty notices.

Panel Report

The Review Panel was appointed in April 2012 with the task of formulating options for governance models, structures and boundary changes to promote a ‘stronger, more effective system of local government in NSW’.

The Panel Report made 65 recommendations grouped under 12 key themes. The following is a summary of some of the principal recommendations made, listed under the key themes.

Recommendations for Fiscal Responsibility

• Establish an integrated ‘Fiscal Responsibility Program’, coordinated by the DLG and also involving TCorp, IPART and LGNSW involving the adoption of an agreed set of ‘sustainability benchmarks’, as well as a requirement that all councils be required to employ an appropriately qualified Chief Financial Officer.
• Place local government audits under the aegis of the Auditor General.

Strengthening the Revenue Base

• Commission IPART to undertake a further review of the rating system.
• Either replace rate-pegging with a new system of ‘rate benchmarking’ or streamline current arrangements to remove unwarranted complexity, costs and constraints to sound financial management.
• Seek to redistribute federal grants and some State grants in order to channel additional support to councils and communities with the greatest needs.
• Establish a State-borrowing facility to encourage local government to make increase use of debt where appropriate.

Meeting Infrastructure Needs

• Maintain the ‘Local Infrastructure Renewal Scheme’ for at least 5 years, with a focus on councils facing the most severe infrastructure problems.
• Pool a proportion of funds from the roads component of federal grants and, if possible, the ‘Roads to Recovery’ program in order to establish a strategic projects fund for roads and bridges.

Improvement, Productivity and Accountability

• Commission IPART to undertake a whole-of-government review of the regulatory, compliance and reporting burden on councils.
• Amend IPR guidelines to require councils to incorporate regular service reviews in their delivery programs.

Political Leadership and Good Governance

Under this theme the Panel Report recommended amending the LG Act to strengthen political leadership including by:

• Requiring all potential candidates for election to local government to attend an   information session covering the roles and responsibilities of councillors and mayors.
• Amending the legislated role of councillors and mayors including by introducing mandatory professional development programs – in respect of the role of mayor, the stated focus of the Panel was on better defining the ‘responsibilities which will add stature and authority to the role of mayors, but not increased powers’.
• Providing for full-time mayors, and in some cases deputy mayors, in larger councils and major regional centres.
• Amending the legislated role and standard contract provisions of General Managers.

The Panel Report further recommended:

• Increasing remuneration for councillors and mayors who successfully complete recognised professional development programs.
• Provide guidance on building effective working relationships between the governing body, councillors, mayors and General Managers.

Advance Structural Reform

• Introduce additional options for local government structures, including regional Joint Organisations (‘JO‘), ‘Rural Councils’ and Community Boards.
• Legislate a revised process for considering potential amalgamations and boundary changes through a re-constituted and more independent Boundaries Commission.
• Encourage voluntary mergers of councils through measures to lower barriers and provide professional and financial support.

Regional Joint Organisations

• Establish new JO’s for various regions under new provisions of the LG Act.

‘Rural Councils’ and Community Boards

• Establish a working party to further develop the concept of ‘Rural Councils’.
• Include provisions for optional Community Boards.

Metropolitan Sydney, Hunter and Central Coast

• Strengthen arrangements within State government for coordinated metropolitan planning and governance, and to ensure more effective collaboration with local government.
• Seek evidence-based responses from councils to the Panel’s proposals for mergers and major boundary changes.
• establish JO of councils for the purposes of strategic and sub-regional planning.

Non-Metropolitan Regions

• For some non-metropolitan councils, explore options to establish the Western Region Authority.
• Progressively refer other non-metropolitan councils to the Boundaries Commission.

The Far West

• Agree in principle to the establishment of a Far West Regional Authority.

State-Local Government Relations

• Introduce new arrangements for collaborative, whole-of-government strategic planning at a regional level.
• Amend the State Constitution to strengthen recognition of elected local government.