Service Delivery & Infrastructure
Background Paper
This Paper has been prepared in response to the Independent Review’s Terms of Reference, based on available research and government information.
The purpose of this Paper is to present background information for further review. It should not be interpreted as a statement of the Panel’s views or an indication of likely recommendations
Table of contents
1. Purpose of this paper
3
2. Links with other background papers
3
3. Service and infrastructure delivery in NSW
local government
4 - 10
►The current landscape
►
The legislative framework for local government
ser-vice and infrastructure delivery
►
Integrated Planning and Reporting Framework
(IPR)
►
Service and infrastructure delivery
4. Service delivery issues and options
11-14
►Local government service delivery performance
►
Local government service costs
►Regulatory functions
►
Remote communities in Western NSW
►
The expanding role of local government in service
delivery
►
The role of ROCS and collaborative governance
5. Appendices
15 - 23
►
Appendix 1. Legislation Impacting on Local
Govern-ment Service Delivery
►
Appendix 2. Mechanisms for the delivery of services
and infrastructure
►
Appendix 3. Services provided by Regional
Organisa-tions of Councils (ROCS)
Background to Service Delivery
1. Purpose of this paper
The terms of reference for the Independent Local Gov-ernment Review Panel require it to consider the ability of local government to deliver services and infrastruc-ture efficiently, effectively and in a timely manner. This Briefing Paper seeks to describe and identify a range of issues including:
► The current landscape of service and infrastructure delivery across NSW local government including:
- The legislative framework
- Integrated Planning and Reporting
- The role of local government in the delivery of services and infrastructure
► Issues and options for strengthening local govern-ment service and infrastructure delivery.
2. Links with other briefing papers
The emphasis of this Paper is on the services and infra-structure councils currently provide for their local com-munities. Other Briefing Papers, which explore a range of local government issues, also need to be considered in the context of local government’s ability to deliver services and infrastructure. These papers include: ► Ability of local government to support current and
future local community Needs
► Local representation and decision making ► Financial Sustainability
Service and Infrastructure Delivery
3. Service and infrastructure delivery
in NSW local government
The current landscape
“Local government service provision has transformed significantly over recent decades, with councils now moving beyond a narrow emphasis on ‘roads, rates and rubbish’ towards broader objectives to promote the social, economic, environmental, and cultural wellbeing of communities.
At the same time community expectations of local gov-ernment have increased while other levels of govern-ment have devolved various functions. The overall ef-fect is that councils must provide a greater range of services while endeavouring to meet higher stan-dards.”1
Councils plan for and deliver services under the NSW Integrated Planning and Reporting Framework, which is specified by the NSW Local Government Act 1993. Al-though the actual services that each council provides under the framework can vary from council to council, depending on local area priorities, they generally fall within three main categories: Core services; services that are delivered within a competitive market, and gap services provided as a result of unmet need. Councils also provide a range of infrastructure development and maintenance services.
The diagram below identifies each of the key compo-nents of local government service and infrastructure delivery. These components are further explored on the following pages.
Services Categories:
Planning for economic and community development Planning for sustainable land use
Protecting the environment Safeguarding public health and safety
Providing community services
Competition
Core Market Gap
Infrastructure Examples: Roads and bridges Kerb and guttering Sporting facilities
Libraries Public swimming pools Legislative Framework
Integrated Planning and Reporting Framework
Infrastructure Maintenance Infrastructure
Development
1. Service Delivery Reviews in Australian Local Government, Australian Centre of Excellence for Local Government July 2012: http://www.acelg.org.au/upload/Service%20Delivery%20Reviews_Vol1.pdf
Legislative frameworks
The Local Government Act 1993 (the Act)and the Local Government (General) Regulation 2005 (the Regulation) provide the legal framework and principles which un-derpin the delivery of services and infrastructure by NSW local government. Under this legislative frame-work, councils are required / enabled to:
► Consult with and facilitate effective participation of local communities
► Raise and be accountable for revenue ► Provide goods, services and facilities
► Carry out activities appropriate to the current and future needs of local communities and of the wider public
► Provide a service on behalf of another sphere of gov-ernment
► Properly manage the environment of the area Although regulatory functions are prescribed within this framework, core services to be provided by a council are not defined. Rather, the framework enables coun-cils to provide a range of services and infrastructure within the following legislative parameters:
► The Council’s Charter (Section 8 of the Act)
► Integrated Planning and Reporting Framework (IPR) - which includes the Community Strategic Plan, Deliv-ery Program, and Operational Plan (Chapter 13 Part 2 of the Act)
► Specific planning and regulatory functions as con-ferred by other legislation.
Councils have specific regulatory functions and respon-sibilities under other Commonwealth and NSW legisla-tion (over 120 Acts) which include:
► Companion Animals Act 1998 - companion animal registration and control
► Swimming Pools Act 1992 - restriction of access to swimming pools, and provision of community educa-tion
► Environmental Planning and Assessment Act 1979 - Local Environmental Plans (LEP) /development / building control and regulation.
Appendix 1 provides information regarding Acts and Regulations relevant to local government.
Note: The NSW Government is currently undertaking a number of initiatives which impact on the legislative framework for local government. These include: ► The formation of the Local Government Act Review
Taskforce
► Review of the Environmental Planning and Assess-ment Act
► Consideration of the delegation of functions to coun-cils under the Plumbing and Drainage Act 2011 ► A review of recycled water legislation
Integrated Planning and Reporting (IPR)
IPR requires that the decisions a council makes about service delivery are driven by a Community Strategic Plan (CSP) which is developed by council in consultation with the community. The CSP sets the directions and priorities of the community, and is used to develop council's Delivery Program (what will be achieved) and Operational Plan (how this will be achieved). In imple-menting the IPR Framework, each council needs to: ► Balance the competing needs and interests ofstake-holders
► Align decision making with State Government’s stra-tegic directions - NSW 2021
► Develop a Resourcing Strategy2 that articulates how the services are to be costed and delivered.
Service and Infrastructure Delivery
The role of local government in the delivery of
services and infrastructure
NSW communities expect quality services and infra-structure delivered when and where they are needed and at a price they can afford. They expect seamless delivery of those services by three spheres of connected and collaborative government.
There are often competing views by the community in terms of the role that local government should play in the delivery of local services, but many agree on the role that council's should play in the provision of local infrastructure.
Ask most people what it is they expect from their local council and the list is bound to include:
► Well maintained roads, free from potholes ► Streetlights
► Tips and recycling centres ► Libraries
► Kerb and gutters ► Rubbish removal ► Parks and gardens ► Sporting facilities
Ask them what services they want, and this is where many people's views differ. For some people, the provi-sion of child care, aged care or community transport services by their local council is critical. For others, their view is that these types of services are not core busi-ness for local government and should be provided by community groups, private providers or other agencies. Service and infrastructure needs, priorities and expecta-tions of a particular community will be influenced by a range of factors including:
► Whether there are other agencies available to pro-vide a particular service, or whether council is the only option
► The demographics of the community - e.g. in areas where there is a high proportion of people over 65, service needs will differ to areas with a high propor-tion of families with young children
► The geography of the area - e.g. coastal towns may prioritise land care activities, inland communities may prioritise irrigation programs
► The community’s willingness to pay higher rates to get more services from their council
► The presence of a strong local business lobby - e.g. council operated tourism services may be a priority for areas with a high number of retail businesses, road infrastructure may be more of a priority for ar-eas with a high presence of transport-reliant indus-tries
► Proximity to major towns - if major services can be easily accessed elsewhere, there will be less pressure on the local councils to provide such services.
It is the role of each council to:
► Identify local service and infrastructure priorities through consultation with the community
► Balance community expectations with available re-sources
► Perform specific regulatory functions
► Work closely with other Commonwealth and State agencies to deliver services to the community ► Lobby for services to address unmet needs.
Categories of services delivered by council
The services that councils currently provide can be clas-sified within the five key categories shown below:
Category
Examples
Planning for economic and community development
► Development of social/ community and economic plans
► Employment of community and economic development staff
► Operation of tourist centres and facilities
► Provision of grants to local groups to provide services
Planning for sustain-able land use
► Development of Local Envi-ronment Plans (LEPs) ► Development approvals ► Building approval and
certi-fication
► Management of public land
Protecting the environ-ment
► Assessing and responding to the state of local envi-ronments
► Providing environmental programs
► Regulatory powers to pre-vent pollution or restore degraded environments
Safeguarding public health and safety
► Waste collection and man-agement
► Water and sewerage ser-vices
► Preparedness and response to natural disaster
► Regulatory responsibilities regarding a range of com-munity amenity, health and safety issues Providing community services ► library services ► sporting programs ► youth programs ► cultural activities ► community events ► child care centres
► services supporting vulner-able groups
Core, Competition and Market Gap Services
A council’s Delivery Program translates its community’s strategic goals into the services it will provide over the 4 year council term. Within this context there are three factors that influence service delivery decisions that need to be better understood.
Core Local Government Services
Unlike some other Australian jurisdictions the NSW Local Government Act does not define 'core' services and does not require that core services are provided to a minimum standard before other service activities are considered.
All councils in NSW provide some level of service to communities in each of the five service categories iden-tified on the previous page. What varies is each coun-cil’s capacity and the community’s desire to deliver a suite of activities within each of these categories. Larger councils have access to a greater resource base, as they have a higher number of ratepayers, often benefit from competition within the marketplace, and can have greater economies of scale. Also, larger coun-cils generally have better access to professional exper-tise as a result of their ability to recruit from a larger human resource pool. This often results in larger coun-cils being better equipped to provide a broader range of services that fall within the core service categories. For smaller councils, the ability to provide even core services can be limited by their ability to generate fi-nancial resources, the result of a smaller ratepayer base, and their ability to attract and engage staff with the desired qualifications and skills to deliver the ser-vices. This can have an impact on smaller councils' abil-ity to fulfill their legislative obligations, deliver the quantity and quality of service that they would like to achieve and meet the community's expectations and priorities. The other important aspect is that these councils are likely to have a larger market gap due to the absence of or limited private sector providers.
Local Government Services Delivered in Competition with Other Service Providers
Many metropolitan and regional rural councils choose to deliver services and infrastructure in competition with other providers. Councils choose to provide these services for historical or strategic reasons, or for poten-tial revenue raising opportunities. Examples of com-petitive services include:
► Childcare ► Golf courses ► Tourist attractions
► Nurseries
► Aged care facilities
► Land development / marinas ► Caravan Parks
► IT networks (eg Southern Phone) ► Health and fitness centres ► Commercial car parks ► Quarries
Local Government “Market Gap” Services
Councils, particularly rural and regional councils, are commonly under pressure to provide 'market gap' ser-vices. These are services and related infrastructure that councils offer in the absence of alternate providers. These tend to be services that communities need but may not be economically viable for alternate providers. Council may or may not receive additional funding for these services. Such services include:
► Medical clinics ► Social services
► Multi-purpose service outlets ► Aged care services and programs ► Entertainment infrastructure ► Airports
► Saleyards ► Cemeteries
These services tend to run at a loss and are generally subsidised by the council. Although this impacts on the capacity of the council to provide core services, these councils, as well as their communities, would argue that without this support the community would be-come more and more unviable.
Infrastructure provision and maintenance
Councils provide infrastructure such as local roads and bridges, water and sewerage infrastructure, waste fa-cilities, public car parks, footpaths, sporting fields, parks, libraries, art galleries and other public buildings. Infrastructure development cannot be seen as a stand-alone activity. Once a road has been laid or a building has been constructed there is a need for ongoing main-tenance to ensure that the infrastructure, or asset, is effectively maintained to an acceptable and safe stan-dard.
The provision of infrastructure is seen by some councils and communities as a service delivery category in its own right. The building of roads, footpaths, swimming pools, parks and community buildings not only enables the community to fulfill its basic needs, but also to achieve its aspirations.
As a result of competing demands on limited infrastruc-ture funds and maintenance budgets, councils often have to:
► Deal with infrastructure 'wish lists' that continue to grow over time
► Defer critical infrastructure maintenance due to shortage of funds - often avoiding important deci-sions about infrastructure write-offs, sale or asset rationalisation programs as such decisions may be unpopular
► Borrow additional resources or seek special rate variations to assist with the costs of infrastructure development or address asset maintenance back-logs.
The cumulative effect is often an increasing gap be-tween the level of infrastructure required to deliver services to the community, and the current level of in-frastructure available.
In recognition of this issue the NSW Government has developed the Local Infrastructure Renewal Scheme
(LIRS) to provide councils with a subsidy in interest costs, on major bank loans to fund infrastructure pro-jects.
Note: A council by council infrastructure audit is cur-rently being undertaken to compile reliable data on the infrastructure backlog and to identify trends and issues across the State. This involves the review of existing council documentation including asset management plans, community strategic plans, long term financial plans, and past financial statements, supplemented by on-site visits for certain councils and a request for spe-cific information from all councils.
Models of service and infrastructure delivery
The table below identifies some of the ways councils deliver services and infrastructure to their communi-ties. See Appendix 2 for further information on these models.
Service provision models
Model
Key Principals
Benefits
Challenges
Council as provider of a service
(the most common way in which councils deliver services)
Council:
► Plans, resources and deliv-ers the service using its own staff
► Accepts full responsibility for the quality of the service ► Accepts all the risks
► Increases accountability ► Design and quality of the
service is within the di-rect control of the com-munity through elected councillors.
► Exposes service deliv-ery to variations in the political cycle.
Council as a provider of a service on behalf of an-other sphere of Govern-ment
Council delivers a service in partnership with another sphere of government. Examples include:
► Regulatory services pro-vided by council staff where State government legisla-tion requires or enables. ► Management of the road
network.
► Water and sewerage ser-vices.
► Reduces duplication of services
► Provides local employ-ment opportunities ► May reduce
administra-tive overheads by utilizing council systems and ex-pertise
► State agencies may have concerns about the type and quality of services delivered by councils.3
► Councils express con-cerns about cost shift-ing, the adequacy of funding and unneces-sary restrictions on recovering costs.
Continued next page
3. The National Inter-Governmental Agreement Establishing Principles Guiding Inter-Governmental Relations on Local Government Matters (IGA), signed in 2006, established principles about how such issues should be resolved.
Service provision models (cont)
Model
Key Principals
Benefits
Challenges
Council as a commissioner of services through tender
Increasingly councils are seeking to deliver services by tender to private sector pro-viders.
Examples include: ► Waste collection and
processing
► Management of caravan parks and sporting, leisure and other community fa-cilities
► Improved risk manage-ment
► Improved access to con-temporary skills and tech-nologies
► Increased opportunity for economies of scale and scope through multi-council tendering
► Requires advanced skills in tender prepa-ration and contract management within councils
► Services may become cost driven, resulting in loss of quality ► Current legislative constraints on multi-council tendering Council as a funder of services
Councils often provide fund-ing and in-kind resources to non government organisa-tions to support the collabo-rative provision of commu-nity services and projects to the local community.
► Supports service provid-ers who are best placed to deliver services and projects.
► Can set up unrealistic expectations of ongo-ing fundongo-ing or sup-port.
County councils There are currently 14 county councils in NSW, 8 provide weeds management, 4 pro-vide water supply, 1 propro-vides water and sewerage and 1 provides floodplain manage-ment.
No new county councils have been established since 1999.
► Some councils and ROCs have suggested that county councils are the preferred model for de-livering collaborative services.
► The option is some-times viewed unfa-vourably by councils due to the high level of governance pre-scription in the Act.
Collaborative arrange-ments and Regional Or-ganisations of Councils (ROCs)
See Appendix 3 for further information about services provided by ROCs
ROCs have emerged as the principle mechanism through which councils collaborate with the following functions: ► Advocacy
► Information sharing and problem solving
► Regional strategic plan-ning
► Service provision (either to the public or to mem-ber councils).
► A number of ROCs now provide regional weed services.
Examples of collaborative arrangements include: ► Provision of regional
li-brary services
► Regional waste programs
► Potential savings through economies of scope and scale
► Increased strategic capac-ity for councils
► Currently ROCs are structured as section 355 committees hosted by a member council, companies limited by guarantee or incorporated asso-ciations. Some have suggested that what is needed is a modified form of a county coun-cil, without the cur-rent onerous degree of governance obliga-tion and restricobliga-tion.
Service provision models (cont)
Model
Key Principals
Benefits
Challenges
Commercial entities under the Corporations Act 2001 (Cth)
(Require the approval of the Minister, with some exemp-tions subject to certain con-ditions)
Some councils have sought to establish separate corpo-rate entities to deliver ser-vices.
Councils may own all or some of the shares in the entity. Directors of the entity may be councillors or other peo-ple with appropriate exper-tise.
Entities include airports, equine and livestock centres, sporting and leisure facilities, waste services, tourist attrac-tions and festival promoattrac-tions.
► Separates service delivery from the political cycle. ► Allows the entity to
em-ploy staff in its own right. ► Allows management deci-sions to be undertaken as in a corporate market place.
► Directors are obliged to act in the interests of the entity not neces-sarily the interests of councils which formed the entity.
► The entity is account-able to its sharehold-ers, not the local com-munity.
Public private partner-ships (PPPs)
PPPs are a mechanism to at-tract private investment in the delivery of public infra-structure.
Example projects include: ► Sale yards
► Car parking ► Supermarkets ► Airport upgrades ► Waste facilities
► Public swimming pools ► Sporting facilities ► Commercial centres
► PPPs have the potential to attract significant private investment into profitable local infrastructure and services.
► Approximately 33 projects have been undertaken under the PPP legislation since its commencements.
► Reduced political ac-countability
► Risk of cost “blow outs” if not well planned and managed ► Services may be driven
by profit, rather than quality
Local government owned statutory corporation
The Central Coast Water Cor-poration Act 2006 was passed to formalise a collaborative arrangement which is in place between Gosford and Wyong councils for the provision of water.
► This is the only example of this type of service deliv-ery.
► The Act was passed in 2006 but councils encountered a range of implementation issues. Full implementation is not expected until 2013.
4. Service delivery issues and options
Local government service delivery
performance
There is currently no definition of the responsibilities of councils in relation to service delivery obligations or expectations. This makes measurement or understand-ing of council service delivery performance complex. The main measures of the quality of council service de-livery are:
► Annual Reports which report on performance meas-ures identified in the delivery program.
► Comparative Information on NSW Local
Govern-ment Councils which provides information about the annual financial performance of councils, in-cluding specific information on costs per capita in the areas of environment and health, recreation and leisure, and community services. Although this information is limited in its ability to measure ser-vice delivery it does allow for some financial and quantitative data comparisons across councils. ► No comparative data on council or council service
delivery satisfaction across councils.
► NSW Ombudsman Reports and complainant data. ► Promoting Better Practice Reviews (conducted by
the Division of Local Government). ► Complaints data (held by the Division).
These measures do not provide comprehensive data about the quality of services delivered by councils. More active performance measurement and manage-ment has seen improvemanage-ments in local governmanage-ment ser-vice delivery in other jurisdictions (e.g. UK), however this needs to be balanced with the potential costs to councils and the regulator of implementing and comply-ing with any system.
Should the Act set minimum standards for (core) ser-vices? Should there be a differential framework to allow for regional variations? Is a more comprehensive per-formance measurement framework necessary to create stronger local government and support an ‘earned autonomy’ approach?
Local government service costs
Council service delivery costs vary considerably and are driven by such factors as a council’s location, the size of the local government area, capacity to access econo-mies of scale and the costs of attracting and retaining suitably skilled staff.
A major component of service delivery costs is corpo-rate overheads, which are estimated by some councils to be as high as 50%. While this may seem excessive, no work has yet been done to define what constitutes ac-ceptable corporate overheads for local government, nor to set realistic industry efficiency benchmarks. Should further work be undertaken to define corporate overheads and identify industry efficiency benchmarks? Councils provide a range of services in competition with other providers. These services should be declared as businesses in accordance with the National Competi-tion Policy Guidelines, and priced to achieve cost recov-ery. Available data suggests that many of these services currently operate in deficit, which means that the coun-cil is effectively subsidising their operation.
If a council is running a business operation at a loss, in competition with private sector providers, the question should arise as to why is it operating in that environ-ment. Sometimes there is a community need that has been established but often these businesses are legacy assets or operations.
There are also challenges because historically there has been minimal cooperation between councils in the for-mulation of these businesses. This has led to some councils in effect operating businesses in competition with each other, eg airports.
For example, water and sewer businesses are automati-cally declared business activities, so would be expected to offer a return on investment. However, some rural councils are unable to achieve full cost recovery due to limited community capacity to pay and disproportion-ate infrastructure costs, let alone generdisproportion-ate a profit from these businesses.
This issue may warrant further investigation.
Should there be any restriction on the type of services a council can provide? If so what should these restrictions be?
Some, mainly regional and rural councils, have sought to reduce costs through collaborative arrangements and have experienced some success, particularly in re-gard to bulk procurement.
A number of national and international jurisdictions have emphasised the importance of developing cost-effective service delivery models and strategies. For example, the United Kingdom (UK) Operational Effi-ciency Program4 focuses on building business efficiency through:
► Back office operations and IT ► Collaborative procurement
► Improved asset management (including property) and sales
► Local incentives and empowerment which includes: - local strategic partnerships
- alignment of performance frameworks with value for money targets
- avoiding “ring-fencing” with increased local flexi-bility and coordination
- development of continuous improvement / ca-pability tools.
The UK emphasis is on building efficiency through col-laborative partnerships between central and local gov-ernments with a high degree of accountability. A number of actions in the NSW Destination 2036 Ac-tion Plan are aimed at cost effective service delivery, including action relating to:
► Shared staff (1d)
► Councils taking advantage of the NBN (2c)
► Developing alternate service delivery business mod-els (2e)
► Developing options for state-wide procurement and technology, including potential amendments to ten-dering regulations (2f).
Is there sufficient emphasis on support and incentives for council efficiency in the current local government system?
Regulatory functions
Local Government regulation falls into six key areas of” ► Building and construction
► Parking and road transport ► Food safety
► Public health and safety ► environmental regulation
► Planning, zoning and development assessment.
Councils employ significant numbers of staff to enforce these regulations.
There are growing pressures on local government to increase the levels of compliance and enforcement ser-vices it provides. Reasons for this may include:
► Increased community expectations that councils will manage compliance matters more efficiently ► Increased use of parking metres and parking
restric-tions, resulting in the need for more parking officers ► Changes in legislation such as swimming pool
regu-lations, resulting in more demand for pool inspec-tions
► Greater demand for building inspections due to housing growth and development in some areas ► Increased large scale industrial developments
re-sulting in more noise and pollution complaints ► Pressure from State agencies for councils to
admin-ister more regulation, based on an assumption that councils have more “on the ground” resources in local communities and are better placed to adminis-ter the required regulation.
The community, and in particular the business commu-nity, is often concerned about the cost of regulation enforcement. However, this needs to be balanced against the tendency of communities to call for strengthened legislation whenever something goes wrong in a local community, for example, drowning in a backyard pool, a dog attack, public consumption of al-cohol etc.
Note: A recent Productivity Commission report, Business Regulation Benchmarking: Role of Local Government as Regulator, identified a number of areas of local govern-ment regulation that place unnecessary regulatory bur-dens on Australian businesses. It also identified a range of leading practices in Australia and the United King-dom which, if implemented more widely, have the po-tential to lower the costs imposed on business while maintaining the outcomes sought. IPART is currently conducting a ‘red tape’ review of how local councils in NSW implement and enforce regulations, in order to reduce unnecessary regulatory costs (red tape) on busi-ness and the community.
Where it is determined that councils are best placed to exercise a regulatory function on behalf of the State Government, how should these functions be funded by the State and how can consistency in implementation be assured?
Remote communities in Western NSW
Small communities in western NSW face major chal-lenges including:► Declining and aging populations
► Growing Aboriginal communities with increasing needs
► Economies based on agriculture which are suscepti-ble to market variations
► Susceptibility to natural disasters resulting in eco-nomic and social pressures
► Remoteness from the major population centres upon which the communities are dependent for all or most of their service needs
► High levels of unemployment, limited employment and educational opportunities
► Socially disadvantaged communities with high de-pendency needs.
Councils in remote NSW are expected by their commu-nities to provide the same services as other NSW coun-cils but face the following specific challenges:
► They are often the only door into government in the region, with expectations that they fill the gaps cre-ated when other spheres of government do not have a presence
► Long-term financial sustainability driven by low rates-income, high dependence on grants, high maintenance costs and unmet local infrastructure needs
► Limited ability to attract and retain skilled and ex-perienced staff with the capacity to resolve complex service delivery issues
► Limited structural and strategic connections with other councils and with NSW and Australian govern-ment agencies
What types of governance and service delivery frame-works would better suit the service delivery needs of rural and remote communities?
The expanding role of local government in
service delivery
The scope of local government service delivery has ex-panded considerably over recent decades driven by:
► Increasing community expectations
► The need for local service delivery mechanisms for other spheres of government service delivery priori-ties.
The IPR Framework now provides a mechanism for councils to determine what services they will provide, taking into account community and State Government expectations. However, the 2012-16 term of council will be the first full implementation cycle for the IPR Frame-work and some councils still struggle to understand its requirements. Some communities continue to have false expectations about what a council can achieve and there continues to be issues about the roles of State and local government.
The NZ Better Local Government Initiative5 has identi-fied the need to refocus the purpose of local govern-ment as part of an eight point reform plan. This initia-tive argues that communities are better served “by gov-ernment providing a clearer purpose statement on the role of councils… (with) councils’ role being defined as the provision of good quality local infrastructure, public services and regulatory functions at the least possible cost to households and business.”
Similarly, NSW now has the opportunity to consider: ► Defining core services to be provided by local
gov-ernment, within a differential structure that consid-ers the needs of local communities. This should in-clude detailed consideration of the ‘subsidiarity’ concept, that is, services delivered by the most local level that has sufficient scale to reasonably deliver them.
► Improved funder/provider arrangements with State and Commonwealth Governments.
► The development of standards for core services that should be met before other secondary or ‘non-core’ services are considered.
► Whether councils should be primarily providers of services (as is currently the case) or whether coun-cils should be a commissioner of services which are provided by separate entities which may or may not be council owned.
► Guidance for councils about the delivery of ’non-core’ services.
What types of local government services should remain under the direct control of a council, with delivery by council staff and why?
The role of ROCS and collaborative
governance
Future models of council collaboration in service deliv-ery should be considered in the context of other issues being considered by the Panel, and potentially include: ► Identification of local government services that are
best provided through collaboration ► Legislative recognition of ROCs
► The role of county councils including governance and functions
► Legislation that facilitates collaborative tendering ► Ability for councils to form corporate entities ► Development of a suite of collaborative governance
models, including contractual (legally binding) ar-rangements and shared administration
► State and local government collaborative service provision arrangements
► Overlaps with other forms of regional service deliv-ery, including Catchment Management Authorities ► Consistent governance models and entities.
What types of local government services may be more effectively provided by collaborative partnerships or ROCs and why?
Acts
In addition to the Local Government Act 1993, Environ-mental Planning and Assessment Act, 1979, Companion Animals Act 1998 and the Swimming Pools Act 1992 there are over 120 others Acts, with associated Regula-tions, which enable a council to provide a service or regulatory function. The main Acts are:
► Contaminated Land Management 1997 - identifica-tion and management of contaminated land ► Food Act 2003 - inspection of food premises ► Impounding Act 1993 - powers to impound animals
and articles
► Library Act 1939 - library services provided by councils, including through collaborative arrange-ments
► Noise Control Act 1975
► Noxious Weeds Act 1993
► Protection of the Environment Operations Act 1997 ► Public Health Act 2010 – inspection of certain
premises and systems for purposes of microbial control
► Roads Act 1993 - responsibilities and powers re-garding roads, including parking
► Rural Fires Act 1997
► State Emergency and Rescue Management Act
1989 - council responsibilities regarding natural disaster preparedness and response
► Coastal Protection Act 1979 - limitation on coastal development by councils
► Threatened Species Conservation Act 1995
Regulations administered by the Division of
Local Government
► Local Government (General) Regulation 2005. This is the principal Regulation providing local govern-ment with powers that cover:
- water supply - sewerage
- stormwater drainage work - management of waste - community land - public roads - public car parks
- domestic oil or solid fuel heating appliances - amusement devices
- domestic greywater diversion - bathing control
- shared accommodation - hairdressers shops - beauty salons - mortuaries
- keeping birds or animals
► Companion Animals Regulation 2008. This Regula-tion provides councils with regulatory powers to ensure responsible care and management of com-panion animals.
► Swimming Pools Regulation 2008. This Regulation provides for all private swimming to have a four-sided child proof barrier and provides councils with regulatory powers.
► Local Government (Manufactured Home Estates,
Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation 2005. The Division of Local Government has delegated administration of this Regulation to the Department of Planning and In-frastructure. The Regulation sets standards for the design of manufactured homes estates, caravan parks and camping grounds, and provides councils with powers to enforce these standards. This regu-lation is scheduled for review.
Appendix 1.
Legislation Impacting on Local
Government Service Delivery
Councils deliver services to their communities in the following ways:
Council as provider of a service
This has been the most common way a council delivers services. Council plans, resources and delivers the ser-vice using its own staff. Council accepts full responsibil-ity for the qualresponsibil-ity of the service and accepts all the risks. The design and quality of the service is within the direct control of a community through elected council-lors. While this increases accountability, it exposes ser-vice delivery to variations in the political cycle.
Council as a provider of a service on behalf of
another sphere of Government
Councils deliver some services in partnership with an-other sphere of government. Examples include: ► State Government legislation which requires or
enables councils to deliver regulatory services. Regulatory services are provided by council staff. Relevant regulations usually allow councils to re-cover costs, with maximum costs being prescribed in some cases. Some regulations allow a council to delegate a regulatory function to another council (e.g. food premises inspection) while other regula-tions prevent this.
► The management of the road network in NSW. While Roads and Maritime Services is responsible for managing state roads, councils are responsible for managing regional and local roads. The State Government provides funding to councils for man-aging regional roads and, in some cases, for the maintenance of state roads in the local govern-ment area. Councils are responsible for funding the management of local roads (for further infor-mation, see Appendix 4).
► Water and sewerage services are provided to Greater Sydney and Hunter areas by Sydney Water and Hunter Water Corporations respectively with the minimal involvement of metropolitan councils. Services to the Central Coast are currently pro-vided by a partnership between Gosford and Wyong Councils. From 2013 they will be provided by the council owned Central Coast Water Corpo-ration.
► Regional and rural councils are the Local Water Utilities (LWUs) for the remainder of NSW (with minor exceptions) and receive some grant funding to assist in this. LWUs operate under the Local Government Act and within guidelines issued by the NSW Office of Water (NOW).
In December 2008 the Minister for Water released the Report of the Independent Inquiry into Secure and Sustainable Urban Water Supply and Sewer-age Services for Non-Metropolitan NSW. Public comment was sought on its recommendations re-lating to LWU service delivery structure, including the formation of binding strategic alliances or wa-ter corporations. NOW has not finalised a re-sponse to the recommendations.
► Council environmental programs are supple-mented with significant grant funding provided by State and Federal Government. There is some sig-nificant overlap between the environmental ser-vices provided by general purpose councils and services provided by other statutory organisations, including the Livestock Health and Pest Authorities (LHPA), Catchment Management Authorities (CMA) and Weeds County Councils. A review of these overlapping organisations has commenced. ► Many councils provide state and federally funded
community services including child care, aged care, home and community care and community transport. Funding is provided under a service de-livery contract. Councils compete for this funding with non-government organisations and often with private providers. However, some councils argue that the funding is inadequate and that they need to provide supplementary funding. They con-sider this to be cost shifting.
► Councils have responsibilities for natural disaster preparedness and response under the State Emer-gency and Rescue Management Act 1989.
Council service delivery on behalf of other spheres of government can be contentious. State agencies may have concerns about the type and quality of services delivered by councils. Conversely councils express concern about cost shifting, the adequacy of funding and unnecessary restrictions on recov-ering costs.
Appendix 2.
Mechanisms for the Delivery of Services
and Infrastructure
The National Inter-Governmental Agreement Estab-lishing Principles Guiding Inter-Governmental Rela-tions on Local Government Matters (IGA), signed in 2006, was intended to establish clear principles about how such issues should be resolved. A NSW IGA was subsequently signed. The national IGA has been extended pending completion of a review. A new NSW IGA is currently being negotiated.
Council as a commissioner of services through
tender
Increasingly councils are seeking to deliver services by tender to private sector providers. Examples include: ► Waste collection and processing, generally in
col-laboration with other councils.
► Management of caravan parks and sporting, leisure and other community facilities.
► Environmental solutions.
There is a trend towards increased provision of services through contracts which specify the quantity and qual-ity of the service. However, some councils resist con-tracting out, as once a contract is in place the delivery and quality of the service is removed from the direct control and responsibility of the council.
Council as a funder of services
Councils often provide funding and in-kind resources to community organisations to provide services and pro-jects for the local community.
County councils
The Local Government Act provides for the establish-ment of county councils which provide services on a regional basis. There are currently 14 county councils, eight providing weeds management, four providing wa-ter supply, one providing wawa-ter and sewerage services and one providing floodplain management. No addi-tional county councils have been established since 1999.
Generally this option is not perceived favourably by councils due to the high level of governance prescribed within the Act.
Some councils and ROCs have suggested that county councils are the preferred model for delivering collabo-rative services. However, they suggest that the current provisions of the Local Government Act relating to gov-ernance and reporting of county councils needs to be rationalised and streamlined because they are costly and inefficient.
Collaborative arrangements and ROCs
In January 2010, the Division of Local Government sur-veyed all councils and council managed collaborative arrangements. The survey report documents over 600 collaborative arrangements and includes over 150 pro-ject descriptions including strategic alliances, sister cit-ies and specific function arrangements. This is in addi-tion to the services provided by ROCs.
Collaborative arrangements are a way of building ca-pacity in the Sector. The arrangements provide services to the community in areas as diverse as companion ani-mals, community services, economic development, emergency services, environment, health, land use planning, roads, Aboriginal heritage, tourism, waste, water and sewerage.
The most common example is the provision of regional library services. The majority of non-metropolitan and some Sydney councils are members of such partner-ships. These partnerships are now formally recognised under the Library Act 1939.
Waste programs are also increasingly delivered through collaborative arrangements.
Collaborative arrangements are being used to a small extent in relation to internal business functions, such as payroll, HR administration, accounts, records manage-ment and customer service. In the main these business functions are provided through partnerships of smaller councils in regional and rural areas.
Legal and Governance Models for Shared Services in Local Government (Interim Report), Australian Centre of Excellence for Local Government, May 2012 examines available legal options and collaborative service delivery models used in Australia.
ROCs have emerged as the principal mechanism through which councils collaborate with the following functions:
► Advocacy
► Information sharing and problem solving ► Regional strategic planning
► Service provision (either to the public or to member councils).
A number of Regional Organisations of Councils now provide regional weed services.
Researchers have suggested that the future role of ROCS should include:
► Building member councils’ strategic planning capac-ity
► Delivering council services on a regional basis ► Delivering shared corporate services on a regional
basis
► Providing a regional voice for member councils and their communities
► Procurement of shared assets and resources for pro-ductivity and efficiency gains
► Regional training and the regional development of employee skills
► Being a reference point for both State and Federal Government
Commercial entities under the Corporations Act
2001 (Commonwealth)
Some councils have sought to establish separate corpo-rate entities to deliver services. Councils may own all or some of the shares in the entity. Directors of the entity may be councillors or other people with particular ex-pertise.
The advantages of the formation of commercial entities include:
► Better application of business principles to service delivery
► Separating service delivery from the political cycle ► Improved risk management
► Allows the entity to employ staff in its own right ► Allows management decisions to be undertaken as
in a corporate market place
► Corporations are more efficient than county councils The disadvantages include:
► Directors of entities are obliged to act in the inter-ests of the entity not necessarily the interinter-ests of the councils which formed the entity
► The entity is accountable to its shareholders, not the local community
► Entities formed for one purpose may change pur-poses which may not be a community priority ► Weakened local government employment
opportu-nities and conditions
► Services that are not cost-effective will diminish or cease
Section 358 of the Local Government Act requires the approval of the Minister to form a separate entity, with some exemptions, subject to certain conditions.
Entities include airports, equine and livestock centres, sporting and leisure facilities, waste services, tourist attractions and festival promotions.
The Kimbriki facility at Ingleside is an example of this type of service delivery. Kimbriki was originally
estab-lished as a landfill in 1974. At that time the site was op-erated by an unincorporated business of SHOROC - originally Manly, Mosman and Warringah Councils with Pittwater Council joining in 1992. A joint services com-mittee comprising representatives from each of the Councils managed the operations.
In 1989-90 Kimbriki became a Recycling and Waste Dis-posal Centre. This significant shift from waste disDis-posal to resource recovery shaped the future of the facility and has allowed the remaining life of the Kimbriki land-fill, within approved capacity limits, to exceed 60 years based on land fill at the present rate.
In 2009 Kimbriki Environmental Enterprises Pty Ltd (KEE), was created to own and operate the Kimbriki site with Warringah, Manly, Mosman and Pittwater Coun-cils as shareholders. The business is now overseen by an independent non-executive Board of Directors and an experienced management team appointed by SHOROC.
Public private partnerships (PPPs)
PPPs are a mechanism to attract private investment in the delivery of public infrastructure. They are subject to the requirements of the Local Government Amendment (Public Private Partnerships) Act 2004 which defines a PPP as an “arrangement between a council and a pri-vate person for the purposes of: (a) providing public infrastructure or facilities (being infrastructure or facities in respect of which the council has an interest, li-ability or responsibility under the arrangement), or (b) delivering services in accordance with the arrangement, or both”.
PPPs have the potential to attract significant private investment into profitable local infrastructure and ser-vices. Approximately 33 projects have been undertaken under the PPP legislation since its commencement. Projects include: ► Saleyards ► Car parking ► Supermarkets ► Airport upgrades ► Waste facilities
► Public swimming pools ► Sports facilities
Local government owned statutory corporation
The Central Coast Water Corporation Act 2006 was passed to formalise a collaborative arrangement which is in place between Gosford and Wyong councils for the provision of water.
The Act was passed in 2006 but councils encountered a range of implementation issues. Full implementation is not expected until 2013.
Appendix 3.
Services Provided by Regional
Organisations of Councils (ROCs)
There are currently 17 ROCs in NSW plus the special purpose Sydney Coastal Councils Group which focuses on coastal environmental issues and Border ROC which is a partnership of three northern NSW and adjacent Queensland councils. Only 11 NSW councils are not members of a ROC. Two of these are rural remote councils, three are members of Border ROC (which is not officially recognised as a ROC), three are former members of the New England Strategic Alliance of Councils, one is seeking membership (yet to be re-solved) and only two question the benefits.
The evidence is that ROCs are playing increasing roles in the following functions that support council service delivery:
► Information exchange and professional develop-ment
► Staff training and responding to skills shortages ► Shared/temporary staff
► Aspects of HR management ► OHS and risk management ► Records management ► Policy development ► Internal audit
► Standardised document development ► Regional funding applications
► Compliance cost savings ► GIS/mapping projects ► Joint procurement
Joint procurement is undergoing expansion, with a number of ROCs indicating that they were looking to increase their involvement in regional purchasing ac-tivities. This is competition with Local Government Pro-curement which has been established as a separate LGSA sponsored business.
ROCs have developed strategies and programs to strengthen services to communities in the following areas:
► Environmental sustainability and management ► Catchment management
► Environmental awareness and community engage-ment
► Coastal and estuarine management ► Economic development
► Regional land-use and transport
► ‘Health of the region’ indicators ► Regional promotion
► Film production facilitation ► Small business development
► Regional tourism and visitor services ► Agriculture development and protection ► Regional cultural plans
► Specialist education
► Health and exercise promotion ► Waste management
► Land management services ► Weeds
► Stormwater management ► Composting
► Tourism
► Community care services ► Street lighting improvement ► Weight of loads
► Road information
ROCs frequently apply for and manage grant funds on behalf of member councils to deliver some of the above services.
The most recent research completed by the Australian centre for Excellence in Local Government regarding the role of ROCs can be accessed at Comparative Analysis of Regional Organisations of Councils in NSW and Western Australia, Australian Centre of Excellence
for Local Government, 2012.
The report outlines the structure, business models and organisational planning and review of ROCs or council alliances in NSW and WA. It reveals some future direc-tions, including the greater use of ROCs by State and Federal Governments as an important channel for re-gional funding and consultation, and as a mechanism to enhance local government performance. It includes conclusions about appropriate legal and business struc-tures for ROCs that allow for more efficient business operations and how ROCs could provide a greater re-gional consultation function.
The report draws a range of conclusions about the op-eration of ROCs in NSW including:
► The main ‘success’ factors for ROCs being the size, number and comparative wealth of each organisa-tion’s council membership base
► Virtually all ROCs undertake both shared services and regional capacity activities, and while there is some desire to increase engagement in the former this is not necessarily at the expense of the latter ► For some ROCs greater engagement in shared
ser-vices and in particular joint procurement is the next logical step in their development with a number of these ROCs questioning the limitations of the cur-rent range of incorporation options.
The report raises a number of issues relating to struc-ture and business models including:
► The current limit on incorporation and suggests that further consideration be given to tendering legisla-tion, adoption of a regional subsidiary model (as in South Australia) and/or a revamp of the county council/regional local government model
► The development of appropriate business models, including funding. The Report notes on page 56: “ROCs need a basic level of funding and other sup-port from their member councils. While regional structures without financial support can achieve a modest level of outcomes, it is clear that having enough resources to employ a minimum of one dedicated staff member, even part-time, can make a significant difference to the organisation’s out-put… ROCs benefit from having a range of income sources in addition to membership fees.
There is a range of views however on the extent to which ROCs should seek external funding, espe-cially from the auspicing of government services or from commercial sources. While some see these external sources as having the potential to signifi-cantly reduce the contribution made by their mem-ber councils, others are concerned that this could reduce the sense of ‘ownership’ that their members have regarding the organisation.”
► The risk to ROCs of co-option by the government and a loss of council ownership of ROCs. Councils have had concerns in the past about ROCs forming the basis for a ‘fourth tier’ or even for future amal-gamations.
Appendix 4.
NSW Road Management Arrangements
Road management arrangements6 in NSW provide for three categories of road: State, Regional and Local.
State Roads
► Comprise over 18,000 km of major arterial links throughout the State and within major urban ar-eas.
► Are the responsibility of the RMS to fund and de-termine priorities and are capitalised as an RMS asset.
► Include roads classified under the Roads Act 1993 as Freeways, Highways and important Main Roads. ► The Federal Government provides some funding
for a sub set of State Roads designated as part of the Federal National network.
► State Roads are maintained under contractual ar-rangements. The RTA (now RMS) introduced con-tractual arrangements for State Road maintenance by councils and RTA Road Services in July 2000. ► RMS Road Services maintains about 50% of State
Roads, Councils about 45% and private contractors about 5%.
► Under the Roads Act 1993, councils are the owners and roads authority for State Roads other than Freeways. However, the Act allows the RMS to exercises roads authority functions to the extent necessary for the functioning of a road as a State Road. Councils generally retain responsibility for the road reserve and footpaths.
Regional Roads
► Comprise about 18,500 km of routes of secondary importance between State Roads and Local Roads. ► Are owned by councils and are the responsibility of
councils to fund, determine priorities and carry out works, and capitalised as a council asset.
► Include roads classified under the Roads Act 1993 as Secondary Roads and the less significant Main Roads plus many roads not classified under the Roads Act.
► Are eligible for funding assistance from the State Government in recognition of their relative impor-tance. This funding assistance comprises an identi-fied funding pool including a Block Grant Program and a Repair Program.
► Each council receives a formula based Block Grant for use according to their priorities. The formula takes into account road length and traffic usage, and, in the country, timber bridges. The grant also includes a formula determined component towards the cost of traffic facilities on both Regional and Local Roads.
► The Block Grant payment includes a supplementary component which provides an equivalent level of funding to that which each council received under the former 3X3 Council Determined Program. Councils apply these funds to Regional Roads ac-cording to their priorities.
► Councils can access a 50% contribution for specific works under the REPAIR Program. Projects are pri-oritised by consultative committees of local coun-cils.
► The Timber Bridge Partnership provides a 50% con-tribution towards the cost of replacing or upgrad-ing council managed timber bridges on Regional Roads.
Local Roads
► Comprise the remaining 145,000 km of council con-trolled roads which provide for local circulation and access.
► Are owned by councils and are the responsibility of councils to fund, determine priorities and carry out works.
► The State Government provides only limited assis-tance under special programs eg Urban Bus Routes. Local roads are capitalised as council assets.
► The Federal Government has a long standing role in providing road funds to councils. It provides annual financial assistance grants to councils that include a significant identified roads component. In 2000, the Federal Government introduced the Roads to Re-covery Program to provide additional funding to
councils. Councils have discretion to use their Fed-eral funds for works on any category of road. The State Government provides additional funding to councils including:
► Road Safety and Traffic Management – specific grants for safety and traffic works on Regional and Local Roads. Where projects are initiated by coun-cils, including development and implementation of council bicycle plans, funding is available on a dol-lar for doldol-lar basis. Projects initiated by the State are funded 100%.
► Traffic Route Lighting Subsidy Scheme – subsidises councils for providing street lighting to a higher than normal level on important traffic routes. ► Natural Disasters – restoration funding for
Re-gional and Local Roads damaged in declared natu-ral disasters.
The RMS is also responsible for:
► 188 State Asset Bridges and Ferries on Regional and Local Roads. These assets historically have been managed by the State in view of their signifi-cance
► About 2,900 km of Regional and Local Roads in the unincorporated area of NSW where there is no council
► There are other roads in NSW which are the re-sponsibility of agencies other than councils and the RMS. These include crown roads (responsibility of the Minister for Lands), and roads managed by State Forests, National Parks and Wildlife Service and Sydney Harbour Foreshore Authority.
