A local government's responsibilities in relation to corporate and operational planning are set out in the Local Government Act 1993 (LGA) and the Local Government Finance Standard 2005 (LGFS).

This section of the Guidelines provides a brief summary of the key legislative requirements. Each of the provisions is described in more detail in Section 4.3 - How to implement the planning cycle.

• 2.1 Local Government Act 1993 (LGA) - at a glance
  
  
• 2.1.1 The corporate plan
• 2.1.2 The operational plan
• 2.1.3 The budget
• 2.1.4 The revenue policy
• 2.1.5 The revenue statement
• 2.1.6 The annual report
• 2.2 Local Government Finance Standard 2005 (LGFS) - at a glance
  
  
• Summary of amendments in LGFS 2005
• S 12 Requirements for revenue policy
• S 23 General matters that must be contained in annual report
• S 24 Additional matters for annual report for financial year starting on or after 1 July 2006
• S 25 Annual report must contain note about reserves and controlled roads
• S 29 Requirements for corporate plan - Act, s 507
• S 30 Matters to be considered for identifying local and regional issues
• S 31 Requirements for operational plans - Act, s 510
• S 48 Financial statements must be given to auditor-general for auditing
• S 49 Financial statements must be presented to meeting
• S 54 General requirements for budget
• S 55 Other requirements for budget
• S 56 Requirements for revenue statement - Act, s 520A
• S 57 Requirements for document presented to budget meeting - Act, s 521
• S 96 1994 Standard continues to apply to particular policies and plans
• 2.3 Roles and responsibilities
  
  
• 2.3.1 Councillors - Strategic focus
• 2.3.2 Chief Executive Officer - day to day operations

2.1 Local Government Act 1993 (LGA) - at a glance

2.1.1 The corporate plan

In brief, the LGA provisions require a corporate plan to:

• be adopted by council resolution ^{[S 504 (1)]}
• be available in time to allow for preparation and adoption of a budget ^{[S 504 (2)]}
• cover a period of at least four years ^{[S 505 (2)]}
• comply with the Local Government Finance Standard (LGFS) ^{[S 507 (a)]}
• be open for inspection for at least 30 days prior to adoption ^{[S 507 (b)]}
• be within the local government's jurisdiction ^{[S 511]}
• be assessed on its progress towards implementation with reports atquarterly intervals, and in council's annual report ^{[S 512 and S 533]}
• be available for inspection and purchase. ^{[S 513]}

In addition, a local government may, by resolution, amend its corporate plan at any time ^{[S 506]}.

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2.1.2 The operational plan

Within the provisions of the LGA, an operational plan is required to:

• be adopted by council resolution ^{[S 508 (1)]}
• be prepared for each financial year before the start of that financial year ^{[S 508 (2)]}
• comply with the LGFS and the corporate plan ^{[S 510]}
• be within the local government's jurisdiction ^{[S 511]}
• be assessed on its progress towards implementation with reports at quarterly intervals, and in council's annual report ^{[S 512] and [S 533]}
• be available for inspection and purchase. ^{[S 513]}

In addition, a local government may, by resolution, amend its operational plan at any time before the end of the financial year for which it is prepared ^{[S 509]}.

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2.1.3 The budget

Within the provisions of the LGA, a budget is required to:

• be adopted by council resolution for its operating fund for each financial year, after 31 May before the financial year and before September in the financial year; or at a later date fixed by the Minister ^{[S 518]}
• be developed consistently with its corporate plan, operational plan and revenue policy ^{[S 519 (2) (a)]}
• be clearly linked with matters specified in the plans ^{[S 519 (2) (b)]}
• comply with the LGFS ^{[S 524]}
• be accompanied by its revenue statement ^{[S 519 (2) (c)]}
• provide for spending in the appropriate budget for the year ^{[S 519 (2) (d)]}
• be available for inspection and purchase. ^{[S 522]}

In addition;

• a local government may, by resolution, amend its budget for a financial year at any time before the year ends, and ^{[S 519 (3)]}
• a local government may incur, for a purpose of genuine emergencyor hardship, spending that is not authorised by its budget. ^{[S 519 (4)]}

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2.1.4 The revenue policy

Within the provisions of the LGA, a revenue policy is required to:

• be prepared for each financial year and adopted by council resolution ^{[S 513A (1)]}
• be prepared and adopted in enough time, before the start of the financial year for which it is prepared, to allow preparation and adoption of a budget for the financial year consistent with the policy ^{[S 513A (2)]}
• become the local government's revenue policy for the financial year for which it is prepared, once adopted by the local government ^{[S 513A (3)]}
• comply with the LGFS ^{[S 513B (1)]}
• state the purpose of any remittance or deferral where the local government intends to grant concessions to classes of landowners under LGA s 1035A ^{[S 513B (2)]}
• be available for inspection and purchase. ^{[S 513C]}

In addition, a local government may, by resolution, amend its revenue policy for a financial year at any time before the year ends. ^{[S 513B (3)]}

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2.1.5 The revenue statement

Within the provisions of the LGA, a revenue statement is required to:

• be adopted by council resolution for each financial year, after 31 May before the financial year and before September in the financial year; or at a later date fixed by the Minister ^{[S 518 (2)]}
• accompany each budget of a local government ^{[S 519 (2) (d)]}
• comply with the LGFS ^{[S 520A (1)]}
• be available for inspection and purchase. ^{[S 524]}

In addition, a local government may, by resolution, amend its revenue statement for a financial year at any time before the year ends. ^{[S 520A (3)]}

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2.1.6 The annual report

Within the provisions of the LGA, a council's annual report is required to:

• be adopted before 30 November by council resolution for each financial year or at a later date fixed by the Minister ^{[S 531]}
• contain the audited financial statements and audit report for the year ^{[S 532]}
• contain an assessment of it performance in implementing council's corporate and operational plans ^{[S 533]}
• include details about other issues of public interest as specified in the LGA ^{[S 534]}
• be available for public inspection and purchase. ^{[S 535]}

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2.2 Local Government Finance Standard 2005 (LGFS) - at a glance

The following extracts from this standard, read in conjunction with the LGA, provide specific direction for councils in the way they implement their corporate and operational plans, budgets, revenue provisions and annual reporting. They are presented in this section of the Guidelines as they appear in the LGFS.

Each of the provisions is described in more detail in Section 4.3 How to implement the planning cycle.

A summary of the relevant changes incorporated in the LGFS 2005 are contained in Local Government Bulletin 04/05¹. In addition to those listed above, the bulletin explains the rationale behind the changes and information about borrowings, assets, financial management policies and transitional requirements.

Summary of amendments in LGFS 2005

While most new provisions in the LGFS 2005 have been introduced without change to the original policy intent, many amendments may clearly affect councils in terms of their corporate and operational planning and related processes.

These are summarised in the following table:

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S 12 Requirements for revenue policy

A local government's revenue policy for a financial year must include details of the principles applied by it for the year for each of the following -

• making and levying rates and charges;
• exercising its powers to grant rebates and concessions;
• recovery of unpaid amounts of rates and charges.

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S 23 General matters that must be contained in annual report

1. This section states particular matters that a local government's annual report for a financial year must contain.
2. The matters are-
   
   
• a summary of its policy about borrowings; and
• a community financial report that is -
  
  
• consistent with, but not part of, the local government's financial statements; and
• in a form that is readily understood by the community.
3. In this section -

   Community financial report means a report containing a summary and analysis of the local government's financial performance and position for the financial year.

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S 24 Additional matters for annual report for financial year starting on or after 1 July 2006

1. A local government's annual report for a financial year starting on or after 1 July 2006 must contain -
   
   
• the following details for overseas travel undertaken during the financial year by a councillor or employee of the local government -
  
  
• the name of the councillor or employee who undertook the overseas travel;
• if an employee undertook the overseas travel - the position held by the employee;
• the destination of the overseas travel;
• the purpose and cost of the overseas travel;
• any other detail about the overseas travel the local government considers relevant, having regard to the relevant recording or reporting procedures; and
• a summary of its expenditure, for the financial year, for each of the following -
  
  
• services rendered by a consultant, summarised by reference to categories of services;
• entertainment or hospitality services;
• advertising;
• grants to community organisations.
  
  Examples of categories of services -
  advertising, engineering, environmental, information technology, managerial
2. In this section -

Consultant, for a local government, means an entity, other than an employee of local government, that is engaged by the local government -

• to give advice and make recommendations to the local government about a new concept, process or other matter the local government intends to implement; and
• for a fixed period at an agreed rate of payment.
  
  Examples of entities who are not consultants -
  
  
• a person providing statistical data or legal advice to the local government without providing a recommendation about the data or advice or its effect on the local government
• a valuer providing a valuation of the local government's assets

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S 25 Annual report must contain note about reserves and controlled roads

1. A local government's annual report must contain a note about each of the following controlled by it at any time during the financial year to which the report relates -
   
   
• land that is a reserve under the Land Act 1994;
• roads not owned by the local government.
2. A note about a reserve must state the area of the reserve controlled by the local government, including land that has been leased by it to someone else.
3. A note about roads must state the total length of roads controlled by the local government.

Example of a note for this section -

The Council of the Shire of the Tropical State has control of -

• 100 ha of parks (including 10 ha leased to sporting clubs) on land that is a reserve under the Land Act 1994; and
• 700 km of roads that are not owned by the council.
  
  This land does not have a value for the council's financial statements.

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S 29 Requirements for corporate plan - Act, s 507

1. A corporate plan prepared and adopted by a local government must state the following -
   
   
• its jurisdiction;²
• the local and regional issues the local government has identified, having regard to the matters mentioned in section 30, as affecting its area; and
• if the local government has decided to exercise its jurisdiction, whether or not with cooperation from other local governments, to address an issue mentioned in paragraph (b) -
  
  
• the outcomes it proposes to seek to address the issue; and
• the strategies it proposes to implement to achieve the outcomes mentioned in subparagraph (i);
• its strategic direction.
2. Also, the corporate plan must include the description of the consultation process the local government used to prepare the plan.

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S 30 Matters to be considered for identifying local and regional issues

1. A local government must, when identifying the local and regional issues affecting its area, have regard to its role in relation to the following -
   
   
• the development of art or culture;
• disaster management;
• economic development;
• environmental management;
• the provision, maintenance, restoration or replacement of infrastructure in its area;
• public health management;
• dealing with the issues relating to the following:
  
  
• community development;
• human services;
• housing for people living in its area;
• population change.
2. Also, a local government must, when identifying the local and regional issues affecting its area, have regard to any foreseeable future issues that may affect its area.
3. In this section -
   
   

community development means the process by which the community is involved in -

• planning the services and facilities that are to be provided for the benefit of the community; and
• working out how the services and facilities are to be provided.

human services means services enabling individuals to improve, maintain or restore their welfare or wellbeing.

public health management means arrangements directed at the following -

• protection and promotion of public health;
• prevention of disability, illness or injury.

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S 31 Requirements for operational plans - Act, s 510

1. An operational plan prepared and adopted by a local government for a financial year starting on or after 1 July 2006 must state the following -
   
   
• the outcomes mentioned in its corporate plan under section 29 (1) (c);
• the proposed strategies, mentioned in its corporate plan, for achieving the outcomes;
• the proposed outputs of the local government for the financial year to which the plan relates;
• the proposed activities to be carried out by the local government to deliver the proposed outputs;
• the performance measures adopted by the local government about the delivery of the proposed outputs.³
2. In this section -

   output, of a local government, means a discrete service or other product, including policy advice, that the local government delivers to its external clients.

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S 48 Financial statements must be given to auditor-general for auditing

1. A local government's financial statements for a financial year must be given to the auditor-general for auditing as soon as practicable after the end of the financial year and no later than 15 September of the next financial year.
2. The financial statements must be accompanied by an official certificate of the local government stating the local government considers the relevant recording and reporting procedures have been complied with in the preparation of financial statements.
3. The Minister may extend the time by which the financial statements must be given to the auditor-general under subsection (1) by giving written notice to the local government.

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S 49 Financial statements must be presented to meeting

A local government's financial statements for a financial year must be presented to a meeting of the local government as soon as practicable after the statements are given to the auditor-general under section 48.

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S 54 General requirements for budget

A local government's budget must -

• be prepared on an accrual basis; and
• for a budget for a financial year starting on or after 1 July 2006, include for the following year -
  
  
• a balance sheet;
• a statement of cash flow;
• a statement of income and expenditure;
• a statement of changes in equity.

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S 55 Other requirements for budget

1. A local government's budget for a financial year must show that, for the financial year and the prescribed period for the financial year -
   
   
• the local government is able to satisfy its liabilities; and
• the local government's capital base is not being consumed at a rate that will adversely affect the local government's service potential; and
• sufficient funding is available for the local government's planned asset replacement; and
• the local government's planned borrowing is only for -
  
  
• capital expenditure; or
• short-term working capital; or
• a genuine emergency or hardship; or
• establishing a commercial business unit or corporatised corporation; and
• an amount borrowed for short-term working capital is to be repaid within the financial year in which it is borrowed or the following financial year.
2. In this section -
   
   

Prescribed period means -

• for the financial year starting on 1 July 2005 - the following 2 financial years; or
• for a financial year starting on 1 July 2006 or later - the following 4 financial years.

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S 56 Requirements for revenue statement - Act, s 520A

A local government's revenue statement for a financial year must include the following information for the financial year-

• an outline and explanation of the revenue raising measures adopted, including, for example, an outline and explanation of-
  
  
• the rates and charges to be made and levied in the financial year; and
• the rebates and concessions to be granted in the financial year
• whether the local government has made a resolution limiting the increases in rates and charges;
• the extent to which physical and social infrastructure costs for new development are to be funded by charges for the development;
• whether the operating capability of local government is to be maintained, increased or decreased and, if it is to be increased or decreased, the extent to which it is to be increased or decreased;
• whether depreciation and other non-cash expenses are to be fully funded.⁴

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S 57 Requirements for document presented to budget meeting - Act, s 521

1. This section states requirements for a document for a financial year presented to a local government's budget meeting under section 521⁵ of the Act
2. The document must -
   
   
• be prepared on an accrual basis; and
• state the following -
  
  
• the estimated revenue and expenses stated in the adopted budget for the financial year;
• the actual revenue and expenses for the financial year or, if the budget meeting is held before the end of the financial year, the anticipated actual revenue and expenses for the financial year worked out in the way required under section 521 (2) of the Act;
• if there is a significant difference between the revenue or expenses mentioned in subparagraph (i) and the revenue or expenses mentioned in subparagraph (ii) - an explanation of the difference and a statement about whether the nature or effect of the difference will affect the local government's budget for a later financial year.

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S 96 1994 Standard continues to apply to particular policies and plans

1. The provisions of the 1994 Standard about the requirements for a local government's audit policy or corporate plan continue to apply to an audit policy or corporate plan of a local government until a replacement audit policy or corporate plan is prepared by the local government after 1 July 2005.
2. The provisions of the 1994 Standard about the requirements for a local government's operational plan continue to apply to an operational plan of a local government for the financial year beginning on 1 July 2005.
3. In this section -
   
   

1994 Standard means the repealed Local Government Finance Standard 1994 as in force immediately before its repeal.

audit policy, of a local government, means each of the following -

• its policy about internal audit;
• its policy about an audit committee.

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2.3 Roles and responsibilities

The legislation provides a clear link between the corporate plan and the jurisdiction of a council. Under Section 511 of the LGA, a council's exercise of its power must be consistent with the jurisdiction it has specified in the corporate plan. In other words, a council should only be engaged in services and activities that are covered by its current corporate plan.

This provision is interpreted as a general direction to local governments that council's performance will be primarily assessed by the public and State government (in political rather than legal terms) against the expectations raised in their corporate and operational plans.⁶

In practice, the functions (jurisdiction) of local governments fall into five categories:

• Service
• Regulatory
• Representation
• Community planning and coordination, and
• Participation

2.3.1 Councillors - Strategic focus

Section 229 of the LGA is quite specific about the strategic role of councillors as representatives of the community. Councillors set the strategic direction for their local government as well as the policies and decisions to help achieve them. Preparation of the corporate plan is a significant responsibility of councillors.

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2.3.2 Chief Executive Officer - day to day operations

Section 1131 of the LGA provides that the Chief Executive Officer (CEO) alone is responsible for managing and overseeing the administration of the local government and its corporate plan. In practice, the CEO also has a primary role in preparing the corporate plan and, together with other senior officers, provides information and advice about the feasibility and likely cost of the options being considered by council.

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Footnotes

¹Local Government Finance Standard 2005( PDF 232 kB)

² See section 25 (Jurisdiction of local government) of the Act

³ See also section 96 (1994 Standard continues to apply to particular policies and plans).

⁴ See sections 518 (Adoption of budget and revenue statement) and 520A (Requirements and content of revenue statement) of the LGA

⁵ Section 521 (Financial information to be presented to budget meeting) of the Act.

⁶ LGA Commentary

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