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 $3.6 billion in 2015-16.
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.
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.
As of 30 June 2017, more than $219 million in loans to local councils have been approved across the State, investing in projects that are delivering benefits for local communities. These include an aged care facility, airport upgrade, art gallery redevelopment, roads, bridges, footpaths, sporting ovals, pools, and water and sewerage infrastructure.
In late 2017 a further 18 regional and rural councils and 10 metropolitan councils were granted access to TCorp because they already meet the financial benchmarks of sustainability, effective infrastructure and service management, and efficiency.
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 is currently in the process of completing the audit of councils’ 2016-17 financial statements.
The Auditor-General is undertaking performance audits on:
- Council reporting on service delivery
- Fraud control in local government
- Shared services.
The Council Reporting on Service Delivery performance audit report was tabled in Parliament on 1 February 2018.
The Office of Local Government will continue to work with the Audit Office in relation to the next steps of the performance audits, which will be focused on identifying best practice and making recommendations on how to improve performance across the sector and implementing those recommendations.
The NSW Government covers the costs of the Audit Office to conduct performance audits.