Guidance on Local Government Advice

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On 30 April 2022, amendments to the Local Government Act 1999  came into operation. 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. 

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. 

In implementing the scheme, the Commission has published a Framework and Approach, Schedule of Councils and Information Provision Guideline. Please refer to the documents below, for further information.

Local government advice - framework and approach

Through amendments to the Local Government Act 1999, the South Australian Government has introduced a role for the Commission to provide advice to each of the State’s 68 local councils (under a Schedule on a four-yearly rotational basis). The advice relates to the appropriateness of council’s long-term financial plans, infrastructure and asset management plans, and revenue sources as outlined in the council’s funding plan.

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.

For further information on the Framework and Approach consultation, refer to the project page below.

 

Local government advice - schedule of councils

The schedule of councils for the local government advice scheme, starting in 2022-23 and ending in 2025-26, is available below.

All councils have been allocated into a relevant scheme year over a four-year prescribed period. The allocation has been set based on existing local government classifications.  For information on the methodology used to arrive at the schedule of councils, refer to Schedule for the scheme (2022-23 to 2025-26)

Local government advice – information provision 2023-24

The Commission has released additional material regarding the information requirements for the Local Government Advice Scheme under the Local Government Act 1999 (LG Act). As the advisory body for the Scheme, the Commission has determined the information requirements which it considers reasonably necessary for the performance of its functions.

Guideline for information provision under the Local Government Advice Scheme 2023-24

  • This document provides further detail on information requirements for councils participating in the scheme in 2023-24.  
  • It contains guidelines for the purposes of section 122(1e) to the LG Act, specifying information to be provided by 30 September 2023. 
  • It contains information on the written notices under section 122(1j) of the LG Act, specifying information to be provided by 15 August 2023.
  • It also indicates the general nature of information that the Commission might seek from individual councils through a formal written notice.

A sample Financial Reporting Template (unpopulated version for information – note that the Commission will pre-populate each council’s Template in practice) for 2023-24 is also provided below, for reference.

 

Local government advice – information provision 2022-23

The Commission has released additional material regarding the information requirements for the Local Government Advice Scheme under the Local Government Act 1999 (LG Act). As the advisory body for the Scheme, the Commission has determined the information requirements which it considers reasonably necessary for the performance of its functions.

Guideline for information provision under the Local Government Advice Scheme 2022-23

  • This document provides further detail on information requirements for councils participating in the scheme in 2022-23.  
  • It contains guidelines for the purposes of section 122(1e) to the LG Act, specifying information to be provided by 30 September 2022. 
  • It also indicates the general nature of information that the Commission might seek from individual councils through a formal written notice.

A sample Financial Reporting Template (unpopulated version for information – note that the Commission will pre-populate each council’s Template in practice) for 2022-23 is also provided below, for reference.

 

LGAB1/1 Bulletin no 1 - Material amendments

Summary

  • Councils subject to the Local Government Advice Scheme (Advice Scheme) must submit to the Commission by 30 September an explanation of material amendments made or proposed to be made to the council's long-term financial plan (LTFP) and infrastructure and asset management plan (IAMP) and the council’s reasons for those amendments. 
  • The Financial Reporting Template (template) provides an option for councils to explain the LTFP material amendments and impacts to the Commission. Should a council provide reasonable explanation of amendments in the template, this will be considered meeting these information requirements for the LTFP.
  • Where this section of the template is not completed by a council, it must still provide a statement explaining the material amendments in its LTFP to the Commission by 30 September. Regardless of whether explanation on the LTFP is provided in the template, councils must also provide a separate statement to the Commission if it has made other material amendments to its IAMP(s). 
  • These requirements are in accordance with Section 2.2 and Table 1 in the Guideline for information provision under the Local Government Advice Scheme 2023-24.

In general, councils should consider ‘material amendments’ to their LTFP and IAMP in the context of the changes and relevant circumstances. When comparing the current LTFP to the previous LTFP the Commission will consider material amendments in the context of the 9-year overlapping period of both LTFPs. This will help the Commission to focus on the long-term impacts of changes in the LTFP, rather than on short term or one-off changes only. For this reason, the template provides the opportunity for councils to submit the changes to selected financial item forecasts in their LTFPs over the overlapping nine-year period to the Commission and explain the reasons for the changes (for example, whether they are related to inflation, cost or service-related impacts).

Examples of ‘material amendments’ would include adjusted or new spending, revenue sources or savings introduced into the council’s budget and forecasts. It would also include any influential changes in the assumptions underpinning the forecasts (e.g., for asset depreciation, inflation, or growth).

The Commission generally considers ‘material amendments’ to be any difference to a forecast variable (for example, capital expenditure) for a single year of at least 10 percent from the previous forecast, and possibly between 5 and 10 percent, depending on the overall trend in the variable and reason for the variation.  In some cases, lower differences which are repeated over consecutive years might also be considered ‘material’.

Pursuant to section 122(1e) of the Local Government Act 1999, a council must submit to the Commission an explanation of material amendments made or proposed to be made to the council's LTFP and IAMP and the council's reasons for those amendments. The explanation is to be submitted by 30 September in the relevant financial year for the council subject to the Advice Scheme and should be in the form of a written statement that explains any material amendments (or providing reference in plans to these amendments). The statement must be provided by the Council with appropriate supporting evidence (e.g., from council reports, briefing notes, minutes, letters or media releases).