Financial

Finance
Local government in SA manages its finances conservatively under extreme constraints. It has access to one tax, Council Rates, has very low debt and receives an unfair share of State and Federal government funding.

Independent Inquiry into Financial Sustainability of Local Government
In general terms the Inquiry found that Councils were putting community needs and demands for services ahead of their own financial sustainability and that this could not continue. The Inquiry also found that Councils had 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.

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 Inquiry and support 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)
  • A Long-term Financial Plan is required as part of a Council's Strategic Management Plans
  • An Infrastructure and Asset Management Plan also is required as part of a Council's Strategic Management Plans
  • Each Council must have an Audit Committee (previously this was an option)
  • A Council auditor must be changed every five years

Financial Management
There is a continuing evolvement and reform of financial management practices occuring, both directly and indirectly, in Local Government. Recent and current changes and issues include:

  • increased scrutiny by the community
  • an expectation to do more with less
  • accural accounting
  • National Competition Policy
  • performance measurement and benchmarking
  • infrastructure asset management
  • internal controls, and
  • Governance
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