ESCOSA content iconLocal government advice – framework and approach

  • Project Released: 31 Mar 2022
  • Project Closes: 1 Aug 2022
  • Contact: Sean McComish

Overview

On 30 April 2022, amendments to the Local Government Act 1999 (the LG Act) came into operation (the amendments). They introduced an advisory scheme that aims to give ratepayers confidence that the rates they pay are set at the level necessary for their council to provide the services they value. The Essential Services Commission (Commission) is the advisory body. The State’s 68 councils are subject to the scheme. 

The amendments gave the Commission discretion in relation to scheme design and implementation. The Commission consulted on a proposed framework and approach, and, after taking into account comments received, has resolved a final Framework and Approach, available below.

The Framework and Approach builds on documents that councils are already required to have under the LG Act: their long-term financial plans (LTFP) and their infrastructure and asset management plans (IAMP). The focus of the scheme is that the Commission must advise on material changes made or proposed to be made to councils’ LTFPs and IAMPs (and a council's reasons for those changes), if any, and revenue sources outlined in the LTFPs. These are referred to in the LG Act as ‘Relevant Matters’. The Commission also has discretion to advise on other issues concerning LTFPs or IAMPs.

The legislation provides for two methods for the Commission to receive the information on which its advice will be based. The first method is by way of a schedule determined and published by the Commission under which councils are required to provide information on Relevant Matters. The other is a power to require a council to provide information that the Commission reasonably requires to provide the advice.

It is an advisory scheme, rather than a compulsive one. The scheme provides advice only, with decision making in the hands of the councils. This means that the Commission cannot require councils to follow the advice. However, the scheme requires both the Commission and councils to publish the advice and, if a council wishes to respond to the advice, that council must publish that response in its annual business plan. The advice to be provided under the scheme will provide independent and transparent information on matters which will be key to those discussions and decisions. The advice will also provide to ratepayers and other interested stakeholders an independent consideration of a council’s plans, thereby adding value across local communities. 

Status

Current status is Final

  • Final

Final

The Framework and Approach details the methodology that the Commission will adopt for the preparation of advice under section 122 of the LG Act. After consideration of the responses to the consultation, the Framework and Approach in its final form broadly aligns with the Draft Framework and Approach, with the main changes being:

  • The evidence base to be used in the preparation of advice for each council will be developed by the Commission accessing readily available material on the public record, such as via websites, rather than by requiring councils to submit that information (albeit it may ask individual councils for historical information where there are ‘gaps’ in the public record).
  • The Commission will utilise historical information from 2011-12, rather than 2006-07, in that evidence base.
  • The Commission will distribute the annual costs of the scheme amongst councils based on the LGA Membership Fee split, rather than equally distributed across councils, with the Commission annually billing each council separately.

The Commission acknowledges all arguments and submissions made through the consultation process. While it has not adopted all positions put, all submissions have assisted the Commission to consider each of the relevant issues under consideration and to understand the competing viewpoints held.

The Framework and Approach outlines the information requirements which the Commission considers reasonably necessary for the performance of its functions under the scheme, as follows:

  • For the purposes of section 122(1e) of the LG Act, the Commission will issue a guideline explaining relevant information that must be provided by a council, in respect of the Relevant Matters, on or before 30 September in the year in which the council goes through the scheme.
  • By no later than 15 August in the year in which a council is to go through the scheme, unless otherwise advised in writing by the Commission, the council must provide to the Commission a copy of its current long-term financial plan, infrastructure and asset management plan, CEO financial sustainability report and audit committee report.

The Commission’s focus now moves to practical implementation of the scheme. Since the commencement of the relevant section of the LG Act on 30 April 2022, the Commission has collected much, but not all, of the historical quantitative information it needs from councils’ websites and other public sources, collating those for use in analysis for the preparation of advice. 

It has also commenced discussions with individual councils, focusing on those for whom 2022-23 is the Relevant Financial Year, and it will continue to do so. The Commission thanks councils for the practical and pragmatic approach demonstrated in those discussions to date. Having obtained much relevant data and information already, the Commission will now work with individual councils on scheme implementation issues, including identifying any data or information gaps and verifying the data already obtained.

For further information on the implementation of the scheme, please refer to Advice to Local Government.

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