Improving council performance
The NSW Government is committed to improved performance and better governance by councils across the State, with a particular emphasis on improving financial sustainability and councils’ capacity to deliver key services and infrastructure for local communities.
The number of general purpose councils reporting a surplus financial result increased from 39 in 2010-11 to 115 in 2015-16.
Councils are also placing greater focus on the management and renewal of their assets and as a result the infrastructure backlog has been reduced from $7.5 billion in 2010-11 to $3.7 billion in 2016-17.
The NSW Government has introduced a number of initiatives to improve performance of councils including:
- Receiving councils’ improvement proposals and actions to improve their position and outlook
- Expanding access to the NSW Treasury Corporation (TCorp) borrowing facility, securing low interest loans for councils that met key financial benchmarks to fund new and upgraded infrastructure
- New powers to intervene in financially unsustainable councils, including the power to appoint a financial controller
- Appointing the Auditor-General to oversee the auditing of councils’ annual financial statements and to conduct performance audits of a council, or the sector.
The Office of Local Government is also developing and rolling out programs to improve council capability including a new Performance Measurement Framework to provide consistent performance indicators covering leadership, governance and service delivery as well as finances and assets.
Improvement proposal reassessments
The NSW Government remains committed to strengthening the financial sustainability of local councils across the State.
The Office of Local Government (OLG) actively works with councils to ensure they meet key financial benchmarks as part of their improvement plans so they are able to deliver the quality services and infrastructure that communities need and deserve.
The Government appointed the Independent Pricing and Regulatory Tribunal (IPART) to undertake an assessment of council improvement plans. In its October 2015 report, IPART assessed 87 of the 130 proposals it received as not meeting the Government’s key financial criteria.
Since that time, OLG has provided those councils that did not satisfy the financial criteria in the original IPART assessment, with the opportunity to submit their improvement proposals to OLG for reassessment.
Councils are assessed against the Government’s key financial criteria of sustainability, effective infrastructure and service management, and efficiency.
Councils assessed as meeting the financial sustainability criteria have access to the NSW Treasury Corporation (TCorp) borrowing facilities, subject to TCorp’s credit criteria.
The majority of councils in NSW now meet the Government’s key financial benchmarks and OLG continues to work with each of the councils that have not yet met the benchmarks or had the opportunity to be assessed to strengthen their financial sustainability.
NSW Treasury Corporation (TCorp) was established in July 2015 to encourage local councils to fund new and upgraded infrastructure through responsible and lower cost borrowings.
More than $350 million in loans have either been approved or are currently being assessed for approval. More than 30 councils have taken advantage of the facility and it has been used to fund projects including an aged care facility, airport upgrades, water and sewerage infrastructure, sporting grounds, pools, roads, bridges and footpaths.
The majority of councils in NSW now have access to TCorp. A small number of councils still need to demonstrate that they have a plan to meet key financial benchmarks before they can have access to TCorp and the NSW Government is working with each of these councils towards this outcome.
The Local Government Amendment (Governance and Planning) Act 2016 includes provisions for the Auditor-General to oversee the audit of councils’ annual financial statements and to conduct performance audits of a council, or the sector.
This provision provides an added way of improving the consistency, reliability and quality of financial reporting and public accountability in the local government sector.
The new audit arrangements give effect to the recommendations of the Independent Local Government Review Panel report.
The Audit Office has completed the audit of councils’ 2016-17 financial statements.
The Auditor-General has also undertaken performance audits on:
- Council reporting on service delivery
- Fraud control in local government
- Shared services.
These performance audit reports can be found on the Audit Office of NSW website.
The Office of Local Government will continue to work with the Audit Office and local councils to implement the recommendations on how to improve performance across the sector.
The NSW Government covers the costs of the Audit Office to conduct performance audits.