Monitoring local government

26 Sep 2012

The audit examined the NSW Division of Local Government and assessed how well it monitors the performance of councils, and intervenes to address the performance issues it identifies. 

The 152 local councils in New South Wales spend more than $9.3 billion annually, manage over $117 billion in public assets and employ over 50,000 people. They provide a wide range of services and infrastructure, and encourage development and community wellbeing. Councils also regulate planning, environmental protection, traffic, public health and other activities under more than 120 NSW Acts.

In Australia, state and territory law governs the operation of councils. This means that the roles and responsibilities of councils and how they are monitored varies from state to state.

In New South Wales, the Local Government Act 1993 (the Act) provides councils with their major powers and defines their functions and responsibilities. The Act requires councils to provide information about their finances and activities to the Division of Local Government (DLG), which is part of the Department of Premier and Cabinet. The Act does not require DLG to review or act on most of the information it receives from councils.

The Act gives the Minister for Local Government a supervisory role in relation to councils. However, the Act provides the government with few options to intervene in a council, other than dismissing all the elected councillors. These arrangements may not provide effective oversight of council operations and timely warning of performance issues.

Some communities have expressed concerns about their local councils. Between July 2008 and June 2012, 30 per cent of investigations by the Independent Commission Against Corruption concerned councils, as did nine per cent of the complaints received by the NSW Ombudsman in 2008-09 and 2009-10. Fifteen per cent of councils received qualified audit opinions in 2010-11. In comparison, only five per cent of NSW Government agency opinions were qualified.

The Government has several initiatives underway to improve the support and oversight of councils. In 2011, DLG and all councils agreed on an Action Plan for the sector called Destination 2036. The goal is to improve the ability of councils to represent, build and serve their local communities. The NSW Independent Local Government Review Panel is to identify how councils can best govern and be structured by July 2013. The Government has also announced a review of the Local Government Act 1993 to be completed in late 2013.

This report is intended to contribute to those initiatives.

The audit focused on DLG and assessed how well it monitors the performance of councils, and intervenes to address the performance issues it identifies.

The report answered the following questions: • Does DLG have adequate information to monitor councils and identify performance issues? • Does DLG respond appropriately to identified potential performance issues?

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