Audit Objective
The objective of this audit was to examine whether councils set and administer rates and charges appropriately to support long-term financial sustainability.
Overview
Queensland’s 77 councils provide services to nearly five million people. In 2016–17, these councils generated more than $6.2 billion revenue in rates and levies. For many councils, rates, levies, fees and charges are their main source of revenue other than Queensland and Australian Government grant funding.
We assessed whether a selection of councils:
- have robust and transparent processes for setting rates and charges
- have revenue policies and statements that meet legislative requirements
- effectively administer rates and charges according to legislation and better practice.
This report is the second in a series of performance audits on the financial sustainability of the local government sector. Future audits will assess other aspects of financial sustainability, including costs and expenses and asset management.
Recommendations
Department of Local Government, Racing and Multicultural Affairs
We recommend that the Department of Local Government, Racing and Multicultural Affairs:
1. amends the Local Government Regulation 2012* to:
- require councils to include in their revenue policies a long-term rates strategy (Chapter 2)
- require councils to include in their revenue statements how annual decisions on rates and charges support financial sustainability(Chapter 3)
- require a council's chief executive officer to certify to the mayor (in a prescribed form) that their council's final adopted budget complies with all legislative requirements (Chapter 4)
2. continues to develop best practice tools and templates for councils on the budget and rates provisions of the Local Government Act 2009* and the Local Government Regulation 2012* (Chapter 4)
3. develops resources and tools for councils on:
- best practice community engagement approaches to strengthen community understanding of, and input into, the rates decisions required to ensure continuation of services (Chapter 3)
- the budget documents and overdue rates and charges provisions of the Local Government Act 2009* and the Local Government Regulation 2012* (Chapter 4)
- chapter 4 part 12 of the Local Government Regulation 2012* (Chapter 4).
All Queensland councils
We recommend that all Queensland councils:
4. document the actions they are taking to support their financial forecast that are required to achieve or maintain sustainability:
- the actions should be specific, measurable, achievable, realistic, and time-bound, and be allocated to responsible officers (Chapter 3)
- the document should have a long-term focus (10 years) and include the assumptions on which the forecast is based, the risks that may impact on achieving the forecast, and the factors driving the forecast (including links to strategic asset management plans) (Chapter 3)
5. implement an appropriate costing model to gain a clear understanding of the full cost of delivering utilities and use this information to annually review pricing (Chapter 3)
6. implement appropriate community engagement approaches to strengthen community understanding of, and input into, the rates decisions required to ensure continuation of services (Chapter 3)
7. publish a hardship policy to assist ratepayers to seek a concession for hardship as allowed by section 120(1)(c) of the Local Government Regulation 2012* (Chapter 4)
8. ensure that all future budget documents and resolutions and rates and charges resolutions comply with all requirements in the Local Government Act 2009* and the Local Government Regulation 2012*
9. train staff on all relevant requirements in the Local Government Regulation 2012*, and on better practice debt collection techniques (Chapter 4).
*all recommendations about the Local Government Act 2009 and the Local Government Regulation 2012 apply to the equivalent provisions in the City of Brisbane Act 2010 and the City of Brisbane Regulation 2012 as relevant.
