Local Government Act Review

The Office of Local Government (OLG) is reviewing the Local Government Act 1993 in several phases.

Phase 1

Phase 1 amendments were developed over the course of 2016 and passed through parliament on 30 August 2016.
LGNSW made a submission and discussed the issues in a working group with:
  • the OLG
  • the United Services Union
  • the Local Government Professionals Association.
The legislated amendments are being commenced in stages.

Commenced 30 August 2016

The first set of amendments commenced on 30 August 2016 and include:

  • Council-elected mayors elected for two years rather than one
  • Oath and affirmation required for councillors before the first meeting of council
  • Councillor-elected mayors to cease to hold office if they cease to hold office as a councillor
  • Clarification of how the Council structure should be determined
  • Countbacks cannot be used instead of by-elections until a Regulation is made and a date prescribed
  • Expenses and facilities policies to be reviewed once each term of a council rather than annually, and no longer need to be forwarded to OLG
  • Remuneration Tribunal to apply the same policies on increases in remuneration as the IRC, except in certain cases
  • Savings and transitional provisions, including transitional arrangements for auditors of amalgamated councils and others, etc, as they become relevant. This means that some of the Act amendments that have been commenced are actually deferred for amalgamating councils that have not yet gone to election. For example, the change to the term of the mayor from one year to two years applies from 30 August for un-amalgamated councils but does not apply until after the next election for amalgamated councils.

Commenced 23 September 2016

The second set of amendments commenced on 23 September 2016 and include:
  • New purposes of the Act
  • New guiding principles for councils (in place of the Council Charter), sound financial management and IP&R 
  • New role statements for the governing body, mayor, and councillors
  • New functions of a general manager
  • Functions of administrators and interim administrators clarified, including which administrator should exercise the functions of the mayor
  • Annual reporting on contracts of senior staff to council no longer required
  • Changes to council delegations for tendering and the granting of financial assistance
  • New regulation-making powers (for financial management and auditing, and induction courses and professional development for mayors and councillors – although the regulations themselves have not yet been made).

Commenced 1 October 2016

The third set of amendments commenced on 1 October 2016 and relate to the new council auditing regime, with the NSW Auditor-General appointed as the auditor of councils for the 2016/17 financial year onwards. The Auditor-General will also have the power to undertake performance audits of one or more councils and will be required to provide an annual sector-wide report on local government to the NSW Parliament. 
LGNSW has already commenced regular consultation with the Auditor-General to ensure the new audit regime (especially the performance audit function) is implemented in a way that is meaningful and beneficial to the sector. 
LGNSW has requested the Auditor-General:
  • Engage with councils to ensure the 'new' audit functions are well understood
  • Consult with LGNSW and the sector on topics for performance audits.
The remainder of the provisions are not expected to commence until late 2016/early 2017 after the OLG has developed the regulations and codes required to support them. The OLG has committed to consulting in developing these regulations and codes. These provisions relate to:
  • Changes to the process for reducing the number of councillors
  • Changes to the circumstances in which a holder of civic office can be dismissed
  • Changes to the way in which pecuniary interests are managed (including the Minister’s role), the model code of conduct and the model code of meeting practice
  • Ability for council to apply to the Minister for a reduction in the number of council meetings per year
  • Requirement to establish an Audit, Risk and Improvement Committee, the way in which it should operate, and an associated regulation-making power
  • Streamlining of IP&R requirements in the Act and inclusion of details into the Regulation and/or IP&R Guidelines
  • Financial controller provisions and changes to temporary adviser provisions
  • New disciplinary options for the Civil and Administrative Tribunal re complaints against a delegate of a council.

Commenced 25 November 2016

Provisions of the Local Government Act 1993 allowing for the appointment of financial controllers to councils commenced on 25 November 2016. An accompanying Regulation also commenced on the same day.
The provisions allow for the appointment of a financial controller to a council as part of a performance improvement order issued by the Minister. The functions of the financial controller are to implement financial controls with the aim of improving the council’s financial position.
Before the Minister can decide to appoint a financial controller, he must consider any criteria which are specified by Regulation. The same also applies to the appointment of a temporary adviser. The relevant Regulation is the Local Government (General) Amendment (Performance Management) Regulation 2016, which also commenced on 25 November 2016. 
LGNSW is taking action in response to its serious concerns about the criteria.

Review of the Model Code of Conduct

The phase 1 amendments to the Local Government Act 1993 included new provisions relating to Model Code of Conduct. The existing provisions of the Act relating to the management of pecuniary interests will be incorporated into a new Code.

OLG sought input from the sector in order to review the Code, and  LGNSW prepared a sector response. A copy of the LGNSW submission can be found below. 

Review of the Model Code of Meeting Practice

The phase 1 amendments to the Local Government Act 1993 included new provisions relating to a Model Code of Meeting Practice that will be compulsory. The Code will contain mandatory and non-mandatory provisions and will be based upon the existing meeting rules prescribed in Part 10 of the Local Government (General) Regulation 2005.
OLG is currently developing the code and sought input from the sector in late 2016 on:
  • How the current meeting rules prescribed in the Regulation can be improved
  • Any areas of meeting practice that are not currently prescribed that should be prescribed
  • Any examples of better practice that may be incorporated in the non-mandatory provisions of the model meeting code.
LGNSW prepared a sector response based on input from councils. A copy of the LGNSW submission can be found below.

Induction and Professional Development for Councillors and Mayors

The phase 1 amendments to the Local Government Act 1993 included a new provision relating to professional development for mayors and councillors (section 232), as well as a power for regulations to be made concerning induction and professional development.
OLG is developing a regulation to guide the provision of induction and professional development. In late December 2016 OLG sought input to the regulation and advice from councils about impediments they might face and the support required by councils.
LGNSW prepared a sector response based on input from councils. A copy of the LGNSW submission can be found below.

Submissions and Presentations

LGNSW ran workshops for councillors and general managers at its annual conference in October 2016, outlining the phase 1 changes and requesting input from the sector on the issues to be included in phase 2. Copies of these presentations, as well as LGNSW's submission, are included below.

Joint Organisations legislation 

A bill implementing Joint Organisations (JOs) is expected to be introduced into Parliament soon. It is understood that the bill will seek to establish the governance structures required to implement JOs, as outlined in the June 2016 discussion paper released by OLG for consultation. 
LGNSW has made submissions in response to all consultations held on JOs, and participated in various workshops held around the state.
Key LGNSW staff were given time-limited access to a draft bill on a strictly confidential basis and made a strong written submission in response.
The submission focused on ensuring that the Bill accurately reflected the commitments that had been made to the sector throughout the development of the model. 

Phase 2

The OLG is currently considering the issues to be included in phase 2 of the Act amendments. LGNSW has proactively contributed some early thinking on this and will follow up with the feedback provided at its annual conference. 
LGNSW seeks to influence OLG in the topics chosen for the phase 2 bill, and to proactively contribute advice on the sector’s position on the issues chosen.
The goal is to influence OLG while it is preparing its public consultation paper, so that the paper reflects the sector’s views as much as possible.
LGNSW will be seeking feedback from:
  • Its board working committee on the Act review
  • The sector in general - look out for announcements in LGNSW's Weekly newsletter
  • Two reference groups formed for the purposes of seeking specific council feedback.
The reference groups are for councillors and for general managers. Please email Jill Gallagher if you would like to join the groups.