Councils are responsible for driving their improvement and are generally best placed to do so. Where councils are dysfunctional or failing to meet their legal obligations, the Minister for Local Government and the Office of Local Government encourage and support councils to act voluntarily to fix the problem. Where this fails, powers to issue performance improvement and suspension orders may be used.

What is the purpose of these powers?

These powers fill the large gap between voluntary action and dismissing a council, are designed to improve the performance of councils in NSW by balancing measures to encourage councils to drive their own improvement with sanctions for failing to take action.

What are the powers?

The powers in the Local Government Act 1993 include:

• a power to gather information from councils to identify dysfunction (section 429)
• a power to issue a performance improvement order (section 438A)
• a power to set the quorum for a council meeting (section 438A(6))
• a power to suspend a council for up to three months, with possible extension of a further three months if required (sections 438I and 438O)
• a power to suspend a council for the duration of a public inquiry (section 438W)
• a power to enforce a performance improvement order against a councillor (section 438HA)
• a power to appoint temporary advisers, financial controllers and interim administrators (sections 438G, 438HB and 438M).

Under what circumstances may the powers be used?

The criteria that must be considered when determining whether to issue an order are regulated under the Local Government (General) Regulation 2021. The powers will be used, but not limited to, the following circumstances, where:

• a council is not complying with its legislative responsibilities, relevant standards or guidelines
• there are significant risks facing the council that are not being addressed
• council business is being disrupted and the council is failing to exercise its functions
• a pattern of poor or inappropriate behaviour, either by one or more councillors or council staff
• previous intervention attempts have failed.

Some examples of where the powers may be used are:

• the council has consistently failed to implement required legislation, such as Integrated Planning and Reporting, or guidelines, such as section 252 policy guidelines, has ignored letters from the Office of Local Government and refused offers of help;
• where a council is continually unable to function because of inability to maintain a quorum, resulting in delays to important decisions, such as development applications;
• a council decision, where proper process has not been followed (e.g. capital expenditure), is at risk of placing a significant and unacceptable financial cost on the community;
• the appointment of an interim administrator is necessary because the relationship between members of the elected body has broken down and the council is showing signs of dysfunction;
• the council is not following the required processes to manage the general manager’s performance. For example, not entering into a performance agreement with its general manager or not undertaking a performance review process as required by the Office of Local Government’s guidelines.

How does the process work?

The process for requesting and issuing orders is outlined in the Performance and Suspension Orders – Procedural Framework. This document details who can request an order, the criteria for issuing orders, actions the Minister must take to ensure procedural fairness (e.g. notice requirements) and procedures for implementation, including actions required by councils.

What safeguards are in place to protect councils’ autonomy?

The legislation includes a number of safeguards that ensure transparency and accountability in using these powers. These include:

• Protections against self-incrimination in the gathering of evidence
• Notice requirements (7 days for performance improvement orders and 14 days for suspensions, 7 days in urgent cases), giving councils the chance to respond to the proposed use of the powers
• Requirements on both the council and the Office of Local Government to publish the evidence supporting a decision and the reasons for taking action.

Councils are responsible for driving their improvement and are generally best placed to do so. Where councils are dysfunctional or failing to meet their legal obligations, the Minister for Local Government and the Office of Local Government encourage and support councils to act voluntarily to fix the problem. Where this fails, a performance improvement order may be used.

How does the Process Work?

• Notice of intention to issue a performance improvement order will be given.
• Councils will be given no less than 7 days to respond.
• Notices of intention and orders will outline what is required.
• Council should consider and table the notice of intention at an open council meeting.
• Council should provide its response to the notice of intention by resolution.
• The Minister is required to consider council’s submission when making a decision.
• Council should table a performance improvement order at the next available council meeting.
• Council is required to publish the order on its website.
• Council will be required to complete a compliance report on the implementation of the performance improvement order.
• If a temporary adviser is appointed, the council, councillors and members of staff are required to co-operate with the temporary adviser. This includes providing any information or assistance that the adviser reasonably requires to exercise his or her functions.
• If a temporary adviser is appointed, the council is required to provide the temporary adviser with an opportunity to review any proposed compliance report at least 14 days before it is given to the Minister. A copy of the reviewer’s comments (if any) is to be provided to the Minister. Failure to comply with this is a contravention of the legislation.
• The Office of Local Government will monitor the implementation of performance improvement orders.
• Council will be advised in writing of the outcome of the Minister’s consideration of its compliance report.
• The Office will publish orders, compliance reports and monitoring assessments on its website

This is a quick guide to how the process of issuing a performance improvement order will work. Further detail is contained in the Performance and Suspension Orders – Procedural Framework. This document provides more detail about who can request an order, the criteria for issuing orders, actions the Minister must take to ensure procedural fairness (e.g. notice requirements) and procedures

Role

• The interim administrator’s role is to perform the functions of the governing body of the council under the Local Government Act 1993 and any other Act. (section 438M)
• This includes undertaking the roles identified in sections 232(1) and 226 of the Local Government Act 1993 relating to councillors and the Mayor.
• The interim administrator is responsible for oversight of the implementation of the suspension order and any performance improvement order and reporting on progress to the Minister for Local Government or the Chief Executive, Office of Local Government at the identified reporting milestones.
• Other functions may be specified in the order by which the interim administrator is appointed.

Place of Work

• The interim administrator is expected to attend the council administration centre when undertaking the administrative functions of the role.
• Council is to provide office space and other necessary support.

Term of Appointment

• An interim administrator’s term of appointment will be specified in the relevant suspension order, but will not exceed the period during which the council is suspended.
• The term of appointment may be extended if the duration of the council suspension is extended.
• The interim administrator’s appointment can be terminated prior to the completion of the appointment term where the Minister considers this necessary. (section 438M)

Obligations

• The interim administrator is subject to the Model Code of Conduct for Local Councils in NSW. Complaints about the conduct of an interim administrator are made to the Chief Executive of the Office of Local Government.
• The interim administrator’s ongoing appointment is subject to satisfactory performance.

Time Commitment

• The interim administrator is expected to commit the necessary time to effectively:
  • conduct the relevant council meetings
  • undertake the civic and ceremonial functions of the governing body
  • undertake the administrative functions of the role, such as oversight of the general manager and implementation of any performance improvement orders.
• The average time commitment is expected to be between one to three days per week.

Payment

• The interim administrator’s remuneration will be set out in the suspension order. The level of remuneration will be generally based on the current cost of councillor and Mayoral fees for the relevant council as set by the Local Government Remuneration Tribunal.
• The council will provide facilities sufficient for the interim administrator to perform their duties. Reasonable out of pocket expenses will be reimbursed in accordance with an interim administrator’s expenses and facilities policy.

Reporting Requirements

• The interim administrator is required to report to the Minister or Office of Local Government on a regular basis.
• The interim administrator may be required to prepare an improvement plan and report progress on its implementation in accordance with the suspension order and performance improvement order (if one is issued).
• The interim administrator is to give the Minister  a written report about their administration of the council no less than 14 days before the end of the initial suspension period. (section 438N)
• If the initial suspension period is extended, the interim administrator is to prepare a further report no less than 14 days before the end of the extended suspension period.

Role

• Temporary advisers are suitably qualified persons who have relevant expertise in the area of the matter the subject of the performance improvement order.
• The functions of a temporary adviser are generally:
  • To provide advice and assistance to the council for the purpose of ensuring that it complies with the performance improvement order, and
  • To monitor the council’s compliance with the performance improvement order.
• Other functions may be specified in the order by which the temporary adviser is appointed.

Term of appointment

• A temporary adviser’s term of appointment will be specified in the relevant performance improvement order, or by subsequent order, but will not exceed the period for compliance with the performance improvement order.
• The Minister for Local Government may terminate a temporary adviser’s appointment at any time.

Time Commitment

• The temporary adviser is expected to commit the necessary time to effectively assist and advise the council on the implementation of the performance improvement order.

Obligations

• The temporary adviser is expected to act in accordance with the standards of conduct provided in the Model Code of Conduct for Local Councils in NSW. Complaints about the conduct of a temporary adviser are made to the Office of Local Government.
• The temporary adviser’s ongoing appointment is subject to satisfactory performance.

Payment

• Temporary advisers are appointed at the council’s cost. The council is responsible for determining the payments to an adviser/members of an advisory panel where an adviser is appointed on the recommendation of the council. Where there is a dispute, the Chief Executive will determine the payment to be made to the adviser/s.
• Where the temporary adviser is appointed on the Minister’s own initiative, the payment is determined by the Minister and paid from the council’s funds.

Council Support and Co-operation

• The council will provide facilities sufficient for the temporary adviser to perform their duties.
• The council, councillors and members of the staff of the council are required to co-operate with the temporary adviser and to provide any information or assistance the temporary adviser reasonably requires to exercise their functions. (section 438H)

Reporting Requirements

• The temporary adviser will be provided with an opportunity to review any proposed compliance report at least 14 days before it is given to the Minister. (section 438H)
• The council is to provide the Minister with a copy of any comments on the compliance report made by the temporary adviser.

Councils are responsible for driving their improvement and are generally best placed to do so. Where councils are dysfunctional or failing to meet their legal obligations, the Minister for Local Government and the Office of Local Government encourage and support councils to act voluntarily to fix the problem. Where this fails, new powers to issue suspension orders may be used.

This is a quick guide to how the process of issuing a suspension order will work.

How does the Process Work?

• Notice of intention to issue a suspension order will be given.
• The council will be given no less than 14 days to respond (in urgent circumstances, the response time will be 7 days).
• Notices of intention will outline what is required.
• The council should consider and table the notice of intention at an open council meeting.
• The council should provide its response to the notice of intention by resolution.
• The Minister or their delegate is required to consider the council’s submission when making a decision.
• If a suspension order is to be made it will be published in the Gazette and an interim administrator will be appointed.
• The interim administrator will be asked to table the suspension order at an open meeting and publish the order on the council’s website.
• Suspension orders, amendments or extensions to suspension orders and orders appointing interim administrators are published in the Gazette.
• During the suspension period, councillors are suspended from office and as such are not entitled to exercise the functions of civic office or receive any fee or other remuneration.
• The Office of Local Government will monitor the implementation of suspension orders.
• The interim administrator will complete a compliance report on the implementation of any performance improvement order, if one is issued, and/or progress report on the suspension period, if one is required.
• Interim administrators are required to prepare a final written report no less than 14 days before the end of a suspension period.
• Each councillor and the general manager will be advised by the Minister when the suspension period has ended.
• The Office of Local Government will publish orders, interim administrator reports and monitoring assessments on its website.

This is a quick guide to how the process of issuing a suspension order will work. Further detail is contained in the Performance and Suspension Orders – Procedural Framework. This document provides more detail about who can request an order, the criteria for issuing orders, actions the Minister must take to ensure procedural fairness (e.g. notice requirements) and procedures for implementation, including actions required by councils.

Role

• If the Minister issues a council with a performance improvement order they may also appoint a financial controller to the council
• Financial controllers will be suitably qualified persons with relevant financial expertise
• A person can be appointed as both a financial controller and a temporary adviser
• The functions of a financial controller are generally:
• To implement financial controls, and other functions relating to council finances, as specified by a performance improvement order; and
• Any other related or ancillary functions specified in the order.

Term of Appointment

• A financial controller’s term of appointment will be specified in the relevant performance improvement order, or by subsequent order, but will not exceed the period for compliance with the performance improvement order
• The Minister for Local Government may terminate a financial controller’s appointment at any time

Time Committment

• The financial controller is expected to commit the time necessary to effectively assist and advise the council on the implementation of the performance improvement order

Obligations

• The financial controller is expected to act in accordance with the Model Code of Conduct for Local Councils in NSW
• The financial controller’s ongoing appointment is subject to satisfactory performance

Payment

• Financial controllers are appointed at the council’s cost
• The payment is determined by the Minister and paid from the council’s funds.

Council support and cooperation

• The council will provide facilities sufficient for the financial controller to perform their duties.
• Councillors and council staff are required to co-operate with the financial controller and provide any information or assistance the financial controller reasonably requires to exercise their functions.
• The Council can only make a payment from its funds if the payment is authorised by the financial controller.
• A financial controller may refuse to authorise a payment from council funds if they reasonably believe the payment:
• May cause the council to become insolvent; or

Is unlawful, or

• Is related to activities not identified in the council’s integrated planning and reporting framework; or
• Is from grant moneys and is not for a purpose for which the grant was given.

Reporting requirements

• The council must provide the financial controller with an opportunity to review any proposed compliance report at least 14 days before it is given to the Minister.
• The council is to provide the Minister with a copy of any comments on the compliance report made by the financial controller.
• If the council fails to give the financial controller an opportunity to review a proposed compliance report, the financial controller is to report to the Minister directly on the council’s compliance with the performance improvement order.

PDF Version of Information Sheet:                                                         Financial controllers information sheet – PDF