LGA Financial Sustainability Program
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The LGA established its Financial Sustainability Program in late 2005 in response to the findings and recommendations of its award winning independent inquiry into the financial sustainability of Local Government. It adopted a program plan in February, 2006 and reports progress to its AGM in October each year. This page has been created as an index for Councils and others to key information developed as a part of the program. The inquiry's own website has now been discontinued and the LGA has transferred all of its contents into an area on this website and it can be found here: http://www.lga.sa.gov.au/customdata/inquiry/ The LGA:
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SEE NEW INFORMATION PAPERS BELOW LGA Financial Sustainability Program Plan The inquiry website, Terms of Reference, Board and its Final Report Information about the Commonwealth inquiry into Cost Shifting onto Local Government Local Government Financial Audits Discussion Paper - LGA August 2007 Implementation Framework for Shared Services in Local Government Technical Information Paper - Depreciation of Infrastructure Assets Technical Information Paper - Costing for Assets Technical Information Paper - Infrastructure Asset Useful Lives |
National leadership
The commissioning of the inquiry was the first time in Australia's history that Local Government has used an independent inquiry at the State-level to provide leadership. Subsequently the NSW Association commissioned a similar inquiry (NSW inquiry website) and the WA LGA has commissioned an inquiry of a similar nature (WA inquiry website). The Australian Local Government Association has commissioned an national overview to highlight national issues (ALGA website).
National Award Win
The LGA has won the Efficiency category in the 2006 National Local Government Awards for commissioning the Financial Sustainability Inquiry - see the Federal Minister's media release and linked listing of winners: Federal Minister's Release and 2006 National Local Government Awards Winners.
Progress
The LGA reports annually on Councils' progress against achieving the intent of the recommendations resulting from the Inquiry. The 2006, 2007 and 2008 Financial Sustainability Council Survey reports can be accessed here:
Financial Sustainability Survey 2006 - Final Report - March 2007 
(751 kb)
Financial Sustainability Survey 2007 - Final Report (911 kb)
Financial Sustainability Survey 2008 - Final Report (1026 kb)
In line with the Inquiry's recommendations the LGA reports to each AGM on the latest values, history, projections and comparisons for the key financial sustainability indicators for the sector as a whole. Following are the reports for 2007, 2008 and 2009:
SA Local Government Sector Financial Indicators Report 2007 (25 kb)
SA Local Government Sector Financial Indicators Report 2008 (28 kb)
SA Local Government Sector Financial Indicators Report 2009 (27 kb)
Summaries of Councils' Finances
Both the Local Government Association and the Office for State/Local Government Relations are keen to ensure that there is an understanding of the financial performance and position of Local Government in South Australia and trends in its finances over time.
As a contribution to improved understanding of local government finances, the LGA now assembles, for each Annual General Meeting, an update report providing the latest values, history, projections and comparisons of key financial indicators for the Local Government sector as a whole. In addition, State Budget papers in recent years have drawn together financial data from all Councils and provided an analysis of the sector's overall financial performance and position.
In the past, there has been a lack of consistent and comparable financial reporting by individual Councils. Financial reporting by Councils has been considerably improved since the introduction and mandating in 2007 of the South Australian Model Financial Statements. Apart from assisting Councils to comply with Australian Accounting Standards, the Model Financial Statements have resulted in material improvements in the reliability, consistency and comparability of information made publicly available on Council finances in their annual financial statements.
A recommendation of the LGA's Financial Sustainability Inquiry was that the LGA develop and publish a uniform financial reporting framework broadly equivalent to the uniform and consistent approach implemented Australia-wide at the state government level. With the assistance of OSLGR, a simplified framework was developed and sector-wide agreement reached on its use. Regulations also require that Council budgets, long-term financial plans and annual financial statements must include summary financial information using the uniform approach.
The LGA and OSLGR recently have initiated arrangements whereby any Council can choose to publish high-level summary information about its financial performance and position in a central and publicly accessible location on the LGA's website (with OSLGR's website linked to that site).
Initially, 33 Councils were approached to participate and each one agreed to do so. All other Councils will be approached by the end of 2008. Thereafter, it is planned that key financial information on all participating Councils would be updated every 6 months. Up-to-date factual information about the financial performance and position of the initial "batch" of 33 Councils can be found on this website: Click here: Summaries of Councils Finances 
(158 kb).
Policy
Policy is effectively setting broad targets. It is therefore the logical starting point for our work in this area to ensure we are all aiming for the same general target. The LGA's 2006 General Meeting adopted a range of new policies including a lead commitment:
A key objective for Local Government is the achievement and maintenance of the financial sustainability of SA Councils, both collectively and individually.
and a definition of financial sustainability:
A council's long-term financial performance and position is sustainable where planned long-term service and infrastructure levels and standards are met without unplanned increases in rates or disruptive cuts to services.
A copy of the amended Finance and Intergovernmental Relations Policies are attached:
Finance Policy - March 2006
(33 kb)
Intergovernment Relations Policy - March 2006
(26 kb)
Information Papers
The LGA has issued the following information papers:
Financial Sustainability Info Paper 1 - Financial Sustainability - June 2007 Re-issued (70 kb)
Financial Sustainability Info Paper 2 - An Overview of Audit Mechanisms - July 2006 (69 kb)
Financial Sustainability Info Paper 3 - Audit Committees - July 2006 (88 kb)
Financial Sustainability Info Paper 5 - Efficiency and Economy Audits - August 2006 (76 kb)
Financial Sustainability Info Paper 6 - Infrastructure and Asset Management - August 2006 (96 kb)
Financial Sustainability Info Paper 8 - Long Term Financial Plans - September 2006 (96 kb)
Financial Sustainability Info Paper 10 - Debt Management - February 2007 (93 kb)
Financial Sustainability Info Paper 11 - Governance in Local Government - October 2006 (120 kb)
Financial Sustainability Info Paper 12 - Targets for Local Government Financial Indicators - March 2007 (82 kb)
Financial Sustainability Info Paper 13 - Model Framework for Council Annual Business Plans - February 2007 (111 kb)
Financial Sustainability Info Paper 15 - Treasury Management - June 2008 (138 kb)
Financial Sustainability Info Paper 18 - Financial Policies - August 2008 (245 kb)
Financial Sustainability Info Paper 19 - Audit Committee Reporting - September 2008 (60 kb)
Financial Sustainability Info Paper 20 - Funding Policies and Strategies - April 2009 (199 kb)
Financial Sustainability Info Paper 21 - Internal Financial Controls - April 2009 (126 kb)
Financial Sustainability Info Paper 23 - Financial Governance - February 2009 (143 kb)
Financial Sustainability Info Paper 24 - Audit Management Letter - June 2009 (77 kb)
Proposed Papers
The following information papers are proposed or in preparation:
- A new approach to State-Local Resourcing
- Risk Management Framework
Local Government Financial Audits Discussion Paper
The LGA Local Government Financial Audits Discussion Paper has now been finalised and is designed to assist the LGA and Councils to assess the adequacy of current audit provisions in the Local Government Act 1999. The paper includes:
- Analysis of the provisions included in the Public Finance & Audit Act against those in the Local Government Act. This includes an assessment of how the LGA's new Audit Specification meets the requirements of both the Public Finance and Local Government Act audit provisions;
- Costs and benefits that would be incurred by Councils (sample of small, medium and large - country and metropolitan) using the LGA's new Audit Specification; and
- Experiences, including costs and benefits, by those interstate Councils that have their audits undertaken by the State Auditor-General.
Local Government Financial Audits Discussion Paper - LGA August 2007 (158 kb)
Infrastructure Accounting
The LGA in collaboration with the SA Local Government Financial Management Group commissioned the preparation of Technical Information Papers on the following topics:
- Depreciation of Infrastructure Assets
- Costing for Assets (including overheads)
- Valuation
- Infrastructure Asset Useful Lives
The purpose of these papers is to stimulate discussion on these topics among finance and engineering professionals and to supplement the content of the Australian Infrastructure Financial Management Guidelines being prepared by the Institute of Public Works Engineering Australia and due for release in the first half of 2009. The papers on Depreciation of Infrastructure Assets, Costing for Assets and Infrastructure Asset Useful Lives are available here:
Technical Information Paper - Depreciation of Infrastructure Assets (1267 kb)
Technical Information Paper - Costing for Assets (1233 kb)
Technical Information Paper - Infrastructure Asset Useful Lives (392 kb)
The paper on Valuation will be available on this web page soon.
Council Audit Committee Chairperson Forum - 29 August 2007
On 29 August 2007 the LGA facilitated a Council Audit Committee Chairperson Forum which included briefings on legal and financial sustainability matters relevant to Audit Committees' roles as well as an outline of a discussion paper prepared on Local Government Financial Audits (see separate item on this web page).
The presentations relating to relating to Audit Committees covered issues such as:
- Audit Committee obligations;
- reporting requirements;
- use of Council staff and resources; and
- examples of the processes Audit Committees have undertaken following establishment.
The presentations were followed by questions and discussion on topics raised by attendants.
Please click on the links below to view the presentations made at the Forum and the questions and answers that followed.
Council Audit Committee Chairperson Forum - Full PowerPoint (929 kb)
Council Audit Committee Chairperson Forum - Questions and Answers (23 kb)
Council & CEO Checklist
The LGA has prepared a checklist to assist Councils and their CEOs to:
- assess progress against achieving the intent of the recommendations resulting from Local Government's Independent Inquiry into the Financial Sustainability of SA Local Government that were endorsed at the LGA's October 2005 AGM; and
- determine the areas where further work is required to achieve the intent of the endorsed recommendations of the Inquiry.
Financial Sustainability Inquiry Council and CEO Checklist 
(194 kb)
The Checklist also formed the basis of a Financial Sustainability Survey conducted during 2006 and 2007 to monitor sector-wide progress against the Inquiry's recommendations.
SA Model Financial Statements and Notes 2009
The LGA, jointly with the Office for State/Local Government Relations and the South Australian Local Government Financial Management Group (SALGFMG), has been working with Coalface Software Solutions to develop a set of Model Financial Statements and notes for South Australian Councils for 2009. The Model Financial Statements are now available.
A copy of the Model Financial Statements and Notes 2009 can be found at the top of this page and here: 2009 Model Financial Statements (1541 kb)
Model Budget Template 2007
With the support of the LG Research & Development Scheme, a good practice budget template for Local Government has been developed by a group of rural Councils led by the District Council of Streaky Bay.
A copy of the Model Budget Template 2007 can be found here : https://www.lga.sa.gov.au/goto/finance
Joint Service Delivery
In November 2006 the LGA, in consultation with Local Government Corporate Services (LGCS), commissioned a comprehensive sector-wide survey to capture examples of joint service delivery arrangements between Councils, the nature of savings being achieved and opportunities to enhance collaborative service delivery.
A read-only copy of the survey report can be found here: Review of SA Local Government Joint Service Delivery Opportunities (145 kb)
On 6 June 2007 the LGA conducted a forum involving Council Members and senior staff to consider key priority areas for service collaboration documented in the study and to identify areas that warrant further development of business cases for their implementation.
A copy of the speaker presentation slides from the forum can be accessed by the following link: Shared Service Delivery Forum 6 June 2007 - Speaker Presentations (1693 kb)
The information gathered through the forum has been distilled into an Implementation Framework for Shared Services in Local government which sets out a program for examination and implementation of the various service opportunities identified. The Framework can be accessed by the following link:
Implementation Framework for Shared Services in Local Government (70 kb)
Legislation
Following the inquiry, and with LGA support, the SA Parliament made changes to the financial management provisions of the Local Government Act 1999. The changes were in accord with key recommendations of the enquiry and through statutory minimum requirements reinforce the LGA's work in this area. Key changes to the Act mean that in the near future:
- Councils will be required to update their Strategic Management Plans every 4 years (to coincide with elections);
- Long-term Financial Plans (at least 10 years) will be required as part of a Strategic Management Plan;
- Infrastructure and Asset Management Plans (at least 10 years) will be required as part of a Strategic Management Plan;
- All Councils will be required to appoint audit committees (previously this was an option); and,
- Council auditors must be changed every five years.
For more information about the changes to the Act LGA Circular 48.4 of 2005 which includes an overview of the changes prepared by our lawyers.
Other Resources
Existing information which may be updated as a result of the inquiry - for the assistance of Councils can be found here: https://www.lga.sa.gov.au/goto/finance.
Information aimed at the public regarding funding and rates can be found here: https://www.lga.sa.gov.au/goto/rates.
LGA Education and Training programs can be located on the following page: https://www.lga.sa.gov.au/goto/training.
Forums
The LGA has conducted a series of forums on financial sustainability for Councils.
Summaries of comments recorded at each of the forums can be found below:
Whyalla 6 February, 2006 Whyalla Forum
(51 kb)
Jamestown 13 February, 2006 Jamestown Forum
(55 kb)
Marion 15 February, 2006 Marion Forum
(53 kb)
Naracoorte 16 February, 2006 Naracoorte Forum
(63 kb)
Salisbury 20 February, 2006 Salisbury Forum
(55 kb)
Swan Reach 24 February, 2006 Swan Reach Forum
(54 kb)
Stirling 28 February, 2006 Stirling Forum
(57 kb)
Clare 9 March, 2006 Clare Forum
(52 kb)
The feeback provided at the forums has contributed to the issues being put to the LGA General Meeting being held on 31 March, 2006. Click here for an agenda for that meeting.
Financial Sustainability Program Plan
The LGA has endorsed a program plan to provide a framework for 2006 and 2007. Aspects of the plan remain flexible and in some areas details are yet to be developed, however it provides a strategic overview of the LGA's response to the inquiry recommendations. A copy of the plan can be downloaded here: draft Financial Sustainability Program plan
(99 kb)
The Independent Inquiry into the Financial Sustainability of Local Government
The inquiry established its own website which has now been copied into the LGA site. It contains the final report of the inquiry and other relevant information regarding its processes and publication. It can be accessed here: inquiry site.
What did the inquiry find?
In general terms the inquiry found that Councils have, in recent years, put community needs and demands for services ahead of their own financial sustainability and that this cannot continue. The inquiry also found that Councils have very low net debts but extraordinarily large amounts of community infrastructure (almost $10Bn in total) which is slowly decaying without the level of maintenance and renewal funding it deserves. It also found that SA Councils are not getting a fair share of Commonwealth funding for Local Government and that the SA Government provides the lowest per capita funding to Councils of any mainland State or Territory government. It made 62 recommendations to address these issues.
How has the LGA tackled responding to the recommendations?
The independent board believes Local Government is capable of, and should, address its own challenges. All of the recommendations are directed to Councils individually, or collectively, or to Local Government's peak body in SA, the Local Government Association. The LGA has committed to respond to each of the 62 recommendations.
The LGA State Executive Committee resolved to support all 62 recommendations in full or in principle. A table outlining responses in detail can be downloaded here. It also resolved invite Mr Bill Cossey, the chair of the inquiry, to join a task force to oversee finalisation of the program. A media release summarising responses can be found here. The meeting followed a President's Forum (1 September, 2005) attended by more than 160 Council delegates.
To assist it in forming responses to the recommendations, the LGA held a forum of Councils on 1 September, 2005. The following papers/presentations were made at the forum:
President's introduction - presented by then Vice President, Mayor John Rich: President's address
Presentation by Inquiry Chairperson, Mr Bill Cossey: Mr Bill Cossey's address
What the LGA said to the inquiry
Formal LGA input to the inquiry:
LGA Initial Submission Independent Inquiry into the Financial Sustainability of Local Government April 2005
LGA Response to the Board's Interim Report.
