Local Government Advice

28 Feb 2023


Under the new Local Government Advice Scheme established through the Local Government Act 1999, the Essential Services Commission has released advice for the first 15 of the State’s 68 councils. Under the Scheme, the Commission is an advisory body, providing advice to all councils across a four-year cycle.

The advice provides to communities, elected members and council officers independent and transparent information relating to councils’ annual business plans and budgets - in the context of their long-term financial plans and infrastructure and asset management plans. The scheme provides advice only and is expected to add value across communities.

Councils are long-term businesses with ongoing service provision obligations and long-lived assets. From an overall community perspective, it is important that council rates are set at levels as low as sustainably possible while:

  • providing the standard and breadth of services that ratepayers value, and
  • ensuring that councils have robust, long-term asset management, financing and operational plans which allow them to manage their assets efficiently and effectively over the long term, so as to sustain the delivery of those services and minimise their lifetime cost.

In that context, 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. It is an advisory scheme, identifying both risks and areas of good practice for councils to consider in their planning processes, with decision making remaining the hands of the councils. 

Having reviewed, in accordance with the statutory scheme, available material in relation to first tranche of 15 councils, the Commission has several initial observations.

First, it is positive to see that several councils have taken the approach of aligning their annual business plans and budgets with their long-term financial plans. This alignment allows the impacts of decisions taken through annual planning and budget processes to be understood in a long-term financial context. 

Second, given the number of significant unexpected events in recent years, including COVID, floods, bushfires and the impacts of inflation, it is prudent for councils to have processes to annually reassess the forecasts adopted in planning and operational documents. A further key consideration in reviewing plans should include the alignment of asset renewal requirements in the various asset management plans and the timely inclusion of new assets into those asset management plans.

Third, growth in the number of ratepayers and services is a key planning issue for councils.  Councils need to constantly monitor demand in their areas to ensure services are not stretched when the population or nature of the area changes. At the same time, councils need to consider the risk of spending ahead of development and potentially placing a burden on the existing ratepayers: a balance is required between the costs of infrastructure necessary to meet community expectations and potential increases in costs.

Finally, future rate expectations need to take into account affordability for ratepayers and minimise the impact on the community where possible.  It is prudent for councils to constantly review their internal costs with a view to finding efficiencies and savings to keep rates as low and affordable as possible over the long term, while demonstrating a commitment and ability to meet community needs and value.

The Commission thanks the councils involved to date for providing relevant information to assist it in preparing the advice.

The advice is generally based on information available to the Commission as at 15 February 2023.

For further information on the advice, including the advice provided to each council, please refer to the Commission’s advice to Local Government.