LGA Financial Sustainability Program

The inquiry established its own website which has now been discontinued and the LGA has transferred all of its contents into an area on this website. It contains the final report of the inquiry and other relevant information regarding its processes and publication. It can be accessed here.

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 debt but extraordinarily large amounts of community infrastructure (almost $10 billion in total at the time of the Inquiry) which was slowly decaying without the level of maintenance and renewal funding it deserved. It also found that SA Councils were not getting a fair share of Commonwealth funding for Local Government and that the SA Government provided 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 expressed the view that 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 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. A media release summarising responses can be found here.

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

Presentation by Inquiry Chairperson, Mr Bill Cossey

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

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 commissioned an inquiry of a similar nature (WA inquiry website). The Australian Local Government Association later commissioned an national overview to highlight national issues (ALGA website).

National Award Win

The LGA 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.

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

Intergovernment Relations Policy - March 2006

For several years after the Inquiry, the LGA reported on Councils' progress against achieving the intent of the recommendations resulting from the Inquiry. The final, 2008 Financial Sustainability Council Survey report can be accessed here:  Financial Sustainability Survey 2008 - Final Report.

In line with the Inquiry's recommendations the LGA reports to each AGM on the latest values, history  and comparisons for the key financial sustainability indicators for the sector as a whole. The report for 2011 is available via the following link:   SA Local Government Sector Financial Indicators Report 2011

Summaries of Councils' Finances

Both the Local Government Association and the Office for State/Local Government Relations (OSLGR) 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.

There is a large amount of financial information made available publicly by individual Councils.  In recent years, the LGA has worked collaboratively with OSLGR and the Local Government Grants Commission to draw together financial data from all Councils and publish summary information for the Local Government sector as a whole.  The Financial Indiactors Report mentioned above is an example of such work. 

OSLGR has a separate webpage on Local Government finances. That page includes a section providing a high-level summary and analysis of the financial performance and position of the Local Government sector over recent years.  

During 2008, the LGA and OSLGR undertook a pilot project, enabling 33 Councils to publish high-level summary information about their finances on the LGA and OSLGR websites.  While the project attracted very little interest at the time, the LGA remains prepared to provide a central facility on this webpage, if Councils wish to publish such information in the future.  The summary information published in 2008, less than one page for each Council, can be found at: http://www.lga.sa.gov.au/webdata/resources/files/Uniform_Presentation_of_Finances_Table_(select_council)_(Master)v2.xls  (Spreadsheet software such as Microsoft Excel, or Open Office Calc is required to open this page.)

From 2006 to 2011 the LGA issued a number of Financial Sustainability Information Papers.  These Papers have been updated (and the range of Papers broadened) in 2012 to take account of legislative changes, emerging improvements in good financial governance and other developments.  

2012 editions of Information Papers:

LG FS Info Paper 1 - Financial Sustainability - 2012 (394 kb)

LG FS Info Paper 2 - Overview of Audit Mechanisms - 2012 (421 kb) 

LG FS Info Paper 3 - Audit Committees - 2012 (586 kb)

LG FS Info Paper 4 - Specifications for External Audit - 2012 (491 kb)

LG FS Info Paper 5 - Efficiency and Economy Audits - 2012 (328 kb)

LG FS Info Paper 6 - Infrastructure and Asset Management - 2012 (122 kb)

LG FS Info Paper 7 - Service Delivery Framework and the Role of Shared Services - 2012 (128 kb)

LG FS Info Paper 8 - Long-term Financial Plans - 2012 (135 kb)

LG FS Info Paper 13 - Annual Business Plan - 2012 (127 kb)

LG FS Info Paper 18 - Financial Policies and Procedures - 2012 (176 kb)

LG FS Info Paper 23 - Financial Governance - 2012 (141 kb)

LG FS Info Paper 25 - Monitoring Council Budget Performance - 2012 (196 kb)

LG FS Info Paper 26 - Service Range and Levels - 2012 (208 kb)

Draft 2012 papers (awaiting comment from Councils as per LGA Circular 48.5 and LGA Circular 1.5)

DRAFT LG FS Info Paper 9 - Financial Indicators - 2012 (177 kb)  (comment sought by 9 February 2012)

DRAFT LG FS Info Paper 10 - Debt - 2012 (180 kb)  (comment sought by 9 February 2012)

Draft LG FS Info Paper 15 - Treasury Management - 2012 (234 kb) (comment sought by 9 February 2012)

LG FS Info Paper 17 - Depreciation and Related Issues - 2012 (222 kb)   (comment sought by 31 December 2011)

Draft LG FS Info Paper 21 - Internal Financial Controls - 2012 (462 kb)  (comment sought by 9 February 2012)

In addition, a new Information Paper has been published, also in Draft form:

Draft Information Paper 27: Prudential Management  (comment sought by 31 December 2011)

Remaining OLD versions of Information Papers (to be replaced in early 2012)

Financial Sustainability Paper 20 - Funding Policies and Strategies - April 2009

Financial Sustainability Paper 22 - Establishing a Risk Management Plan - December 2009

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)
• 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 prepared by the Institute of Public Works Engineering Australia and released in 2009. The papers on Depreciation of Infrastructure Assets, Costing for Assets and Infrastructure Asset Useful Lives are available below:

Technical Information Paper - Depreciation of Infrastructure Assets

Technical Information Paper - Costing for Assets

Technical Information Paper - Infrastructure Asset Useful Lives

2011 Model Financial Statements for SA

Since 2006, the LGA, jointly with the Office for State/Local Government Relations and the South Australian Local Government Financial Management Group (SALGFMG), has worked with Coalface Software Solutions to develop a set of Model Financial Statements for South Australian Councils.

A copy of the Model Financial Statements 2011 is available here.

Model Budget Template 2007

With the support of the LG Research & Development Scheme, a good practice budget template aimed at rural Councils was developed by a small group led by the District Council of Streaky Bay.

A copy of the Model Budget Template 2007 can be found here.

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

Council Audit Committee Chairperson Forum - Questions and Answers

Workshop for Audit Committee Chairpersons - 25 May 2010

On 25 May 2010 the LGA conducted a Workshop for Audit Committee Chairpersons as a follow-up to the 2007 Forum (see above). The Workshop provided an opportunity for participants to review the roles and responsibilities of Audit Committees and to report on the operation of their Committees to date.

The Workshop also provided the opportunity for participants to receive a briefing on the Review of Audit Committee Operations undertaken by Starr Solutions and to provide comment on the recommendations contained in the draft final report of that project.

To view the presentations made at the workshop please click on the following link:

Role and Purpose of Council Audit Committees

To view the final report of the Review of Audit Committee Operations please go to the following link:  The Operation of Council Audit Committees Final Report - June 2010

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.

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 found here.

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 found here.

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 now:

• Councils are required to update their Strategic Management Plans every 4 years (within two years after each periodic election);
• Long-term Financial Plans (at least 10 years) are required as part of a Council's Strategic Management Plans;
• Infrastructure and Asset Management Plans (at least 10 years) are also required as part of a Council's Strategic Management Plans;
• Each Council must have an Audit Committees (previously this was an option); and,
• Council auditors must be changed every five years.

An Act, amending the Local Government Act 1999 was passed by State Parliament in 2005.  LGA Circular 48.4 of 2005 includes an overview of the 2005 changes prepared by our lawyers.

Complementary regulations to amend the Local Government (Financial Management) Regulations 1999 came into effect on 29 January 2007.  For more information see LGA Circular 5.3 of 2007 here.

Further changes to the Regulations came into effect on 1 May 2011 as part of a complete re-make of the Regulations.  Information on the Local Government (Financial Management) Regulations 2011 are available from LGA Circular 18.1 of 2011 via this link.

A glossary of terms and abbreviations relevant to financial and asset management and other financial sustainability topics can be found here. 

A range of related financial information for the assistance of Councils can be found here.

Information to assist dealing with the public regarding Council rates can be found here.

LGA Education and Training programs can be located here.

The South Australian Local Government Auditors' Group (SALGAG) provides a forum to facilitate the discussion of any matters relating to Local Government finance and auditing. More information on SALGAG can be obtained here.

In February 2010 the LGA, working collaboratively with the Department of Planning and Local Government, received funding approval from the Australian Government's Local Government Reform Fund towards a comprehensive  "Improving SA Councils' Asset and Financial Management Practices" project. The LGA has underpinned this initiative with organisational changes to showcase an ongoing Local Government Reform agenda.

More information about the LGA's Local Government Reform Program and the "Improving SA Councils' Asset and Financial Management Practices" project can be obtained via the following link: www.lga.sa.gov.au/goto/reform.