ABSTRACT: Recent reviews of those sections of local government Acts in NSW and Victoria that regulate public-private partnerships and entrepreneurial activities, respectively, have been carried out largely in response to the failure of some projects that have cost their local communities dearly. While such reviews could be said to be overdue considering the State’s ongoing encouragement of entrepreneurial activity that include the private sector, any legislation that adds to regulatory requirements is a double edged sword.

The aim of the legislation is to regulate to some degree local government’s engagement with the private sector to ensure they remain fully accountable and exercise good governance on behalf of their constituency and this is underpinned by the need to minimise risk. On the other hand, any legislation that requires added stages of reporting, accountability or possible intervention by the state could be perceived as increasing the risk to a major project thus undermining its good intent.

This paper starts with a review of the political environment that encouraged councils to exercise a more entrepreneurial outlook but to do so from a business-like approach with the aim of utilising the private sector wherever possible to supply and/or finance a majority of services, utilities and infrastructure. Taking Victoria as the exemplar in attracting private sector involvement it then briefly covers the changes to Section 193 of the Act that governs key aspects of these activities. The remainder of the paper then discusses the risk implications of the legislation.