Progress in Improving Efficiency and Effectiveness of Local Government

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Effective and efficient Local Government

Effective and efficient Local Government is important because Local Governments deliver key economic, social and environmental services to their communities.

This section of the report incorporates reports from States - both State departments and Local Government Associations - on activities in 2001-02 towards meeting these aims. It includes progress reports on developing performance indicators, reforming legislation, implementing National Competition Policy and other microeconomic reforms.

New South Wales

Department of Local Government

Progress in developing performance indicators for Local Government

New South Wales released the 2000-01 Comparative Performance Information publication in September 2002. The department has continued to collect information from councils in addition to the material needed for the publication. The other data collections have been used to calculate financial assistance grants, analyse councils' financial health and check compliance of rates collected. In order for the public and councils to make better use of the publication, the department brought the timetable forward. Councils were emailed the data to be published for confirmation and to provide an opportunity to make corrections to the most recent year.

No new indicators were introduced for 2000-01 publication. However, the 'Water' and 'Sewerage' indicators were revised to reflect the concerns of residential customer and whole-of-system usage. Due to changes to accounting standards a number of financial-related indicators changed names. 'Number of equivalent full-time staff' is now disclosed and audited in councils' financial reports.

The 2000-01 publication will continue to produce time series data for each indicator. New South Wales will continue to review and develop appropriate performance measures.

To promote use and transparency/accountability, the department continues to make the publication and the raw data freely accessible via the Internet.

National Competition Policy

The State is required to review its legislation in accordance with the Competition Principles Agreement signed in 1995. The review of the Local Government Act 1993 has been an exhaustive process resulting in a comprehensive analysis of the provisions of the Act in light of competition policy. An issues paper in 2000 was widely advertised and a reference group established. The Review Committee, comprising senior officers from the Department of Local Government, the Cabinet Office and NSW Treasury, guided the recommendations for reform contained in the National Competition Policy - Review of the Local Government Act 1993.

The report was submitted to the Government in July 2001 and was publicly released in April 2002. It can be obtained from the department's website at http://www.dlg.nsw.gov.au/

The report's primary recommendations are amendment of the Local Government Act with respect to certain matters, including:

• removing the requirement for business approvals for undertaker and mortuary businesses, as these businesses are sufficiently regulated under public health legislation and the Local Government (Orders) Regulation 1999
• allowing greater market entry by allowing councils to access bulk purchasing arrangements of certain organisations, subject to appropriate probity and transparency requirements applying to such organisations
• introducing greater flexibility for councils to set fees for business and 'contestable' activities, while still maintaining accountability to the community
• removing the current restrictions on income raised from rent of community land
• defining the ways in which monies received through business activities and required to be held in a restricted use fund can be transferred to general funds for the transfer of dividends and community service obligations.

The costs and benefits of these provisions have been examined and it is considered that having regard to competition policy, they cannot be justified. Accordingly, amendments to the Local Government Act are proposed to remove these anti-competitive provisions from the Act.

Lgov New South Wales

Industrial Reform

New South Wales Local Government has been pursuing a comprehensive program of award restructuring. This has established a single, facilitative, skills-based award, with a flexible framework to allow councils and their staff to introduce changes in work practices and work design to suit their needs and those of the communities they serve.

The Local Government (State) Award 2001 and its predecessors encourage multi-skilling, training, the establishment of credible consultative mechanisms and the formalisation of enterprise arrangements with the object of enhancing workplace efficiency and providing employees with access to skills and better-paid jobs. The award objectives also include the elimination of discrimination and the establishment of rates of pay and conditions that are fair and equitable. The most recent variations to the award demonstrate the industry parties' commitment to promoting these objectives and include amongst other thing, the introduction of paid maternity leave (9 weeks of full pay or 18 weeks on half pay) and access to long service leave after 5 years service.

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Victoria

Department of Infrastructure

Implementation of Best Value

Best Value Victoria, introduced in December 1999, requires all Local Governments to apply the Best Value principles to their services by December 2005. The Best Value principles include establishing quality and cost standards, responsiveness, accessibility, consultation, continuous improvement and community reporting.

Best Value is characterised by a partnership approach focused on shared learning. The Local Government Division of the Department of Infrastructure delivers a range of sector support initiatives in cooperation with peak bodies. In the first two years the emphasis has been upon service reviews, benchmarking and community consultation. Workshops have been conducted around the State on these themes.

Best Value also has a strong emphasis on community reporting. Guidelines have recently been developed, in consultation with the sector, to improve the quality and consistency of annual reporting. Regional networks of Best Value council contact officers are being established to operate as interactive information exchanges, addressing issues and opportunities as implementation occurs.

Good governance and community consultation and engagement are emerging as two key areas of interest within best value. The Good Governance Advisory Group, comprising representatives of the peak bodies and the Local Government Division, recently commissioned a comprehensive study into governance practice throughout the sector. The report is expected to be finalised by September 2002.

A Community Consultation Resource Guide has also been published in cooperation with the Victorian Local Governance Association. A website specifically dedicated to community consultation and engagement methodology and case study examples is being developed.

A Best Value Commission was established in 2000 to advise the Minister for Local Government on the implementation of Best Value across the State. The Commission published its first annual report in December 2001. The Commission's report and a broad range of other supporting documentation and support tools are available on the Department of Infrastructure website at http://www.dvc.vic.gov.au

Legislative review

In addition to Best Value, the Local Government Division undertook an extensive consultation process in the second half of 2001 as part of its review and update of the Local Government Act 1989. In excess of 170 submissions were received during the consultation process, in response to the release of a comprehensive consultation paper.

The Local Government (Update) Bill will amend the Local Government Act 1989 and the Constitution Act 1975 to reflect contemporary thinking about the role of Local Government. It includes notable enhancements to the way Local Governments operate to provide effective local democracy, transparency and accountability to the community. It also formalises the place of Local Government in the Victorian Constitution and recognises the breadth of purpose of councils.

The Bill was introduced into the Legislative Council in May 2002, and is scheduled for debate in the Spring 2002 Parliamentary session. The proposed legislative changes address:

• council codes of conduct
• disclosure of conflicts of interest
• transparent decision-making
• sound financial management
• accountable public reporting
• democratic electoral systems
• the role and charter of Local Government.

Infrastructure

Management of local infrastructure assets remains a key focus for the Local Government sector. The Department of Infrastructure assisted Local Government to improve their capability in this area by providing grants to a number of rural councils to help develop asset management plans, provided one-on-one support to a number of pilot councils to establish sound asset management planning, and organised a workshop for councillors on strategic asset management.

Progress in developing performance indicators for Local Government

In the 2001-02 year, Victoria continued its strong focus on developing a performance culture amongst Local Governments. This entailed reporting on a suite of indicators that measure council performance with respect to rates, operating and capital expenditure, debt and community satisfaction.

Each Local Government published seven Victorian Local Government Indicators in the report of operations section of their annual reports for 2000-01. The Local Government Division compiled these indicators in the first Local Government in Victoria report, which was released in May 2002. Councils in their 2002 annual reports will report against four additional indicators. These additional indicators cover councils' infrastructure and governance functions.

Victoria facilitated the fifth Annual Community Satisfaction Survey, with 75 Local Governments participating on a voluntary basis. The overall results remained stable in comparison to 2001, with 48 per cent of respondents rating their council's performance as 'excellent or good'. This was a marginal increase (although statistically significant) to the 2000 result of 47 per cent and quite a dramatic improvement on the 1998 result of only 38 per cent. There has been a marginal increase in the proportion of respondents (an increase to 22 per cent from 21 per cent in 2001) who were seeking improvement in their council's overall performance but in comparison to the initial 1998 figure of 31, it is a very positive change.

It is also very pleasing to report that in terms of the overall performance indicator, 75 per cent of individual councils have maintained their high standard achieved in 2001, while 13 per cent have actually improved on this measure.

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Queensland

Department of Local Government and Planning

National Competition Policy

Under the Local Government Act 1993, the largest 18 councils in Queensland were required to consider some form of National Competition Policy (NCP) reform for their significant business activities. The remaining 107 councils were encouraged to consider the reforms on the basis of good management.

NCP Local Government Financial Incentive Package

The NCP Local Government Financial Incentive Package (FIP) is a pool of funds, totalling $150 million in 1994-95 dollars, which the Queensland Government has allocated as a significant incentive for Local Government to implement National Competition and related Council of Australian Governments (COAG) water reforms.

The funds also recognise costs to Local Government of reviewing their business activities and local laws and implementing such reforms.

Given the importance of Local Government infrastructure and facilities to overall State development, implementation of NCP reforms by councils (where the benefits outweigh the costs) also contribute to economic and social development at State and regional levels.

The largest 18 Local Governments were originally selected for the primary focus of reform on the basis that their significant business activities (Type 1 and Type 2 activities) accounted for around 80 per cent of the Local Government business expenditure in Queensland. Only these councils were required to undertake public benefit assessments before deciding which competitive neutrality reforms should be applied. Additionally, all Local Governments were invited to identify their Type 3 business activities (that is, non-significant) and determine whether to apply the reforms (that is, full cost pricing, code of competitive conduct, commercialisation or corporatisation). Although the nomination of Type 3 business activities was not mandatory, 40 councils nominated Type 3 activities for reform at the outset of the reform programme.

Nominations for new business activities for NCP under the FIP closed on 30 March 2002, by which time a total of 736 nominations had been received.

Councils must first nominate a business for reform and resolve to apply the specific reforms. Once a council's business nominations have been accepted, they must undertake a series of reforms to be eligible for payments out of the FIP.

The original date for the completion of NCP reforms was 30 June 2002. However, the guidelines have now been amended to provide an extension of time for all councils (with the exception of Brisbane City Council which has already been granted a year's extension) to gain the greatest benefit from the Business Management Assistance Programme (BMAP), discussed below.

For those councils that met the new requirements of the guidelines, the deadline for the implementation of reforms to be eligible for FIP payments has now been extended to 30 June 2003. Of the eligible 124 councils, 117 have requested and been granted the extension of time. In addition, 223 new business activities have been nominated across 85 councils in this last round, with 15 of these business being nominated by the 'big 18' group.

In compiling its assessments against the Implementation Pool of the NCP FIP for the year ending 31 July 2001, the Queensland Competition Authority commented that good progress continues to be made by the larger councils, who have now completed 80 per cent of their recommended reforms. Many smaller councils have also substantially increased their implementation of competition reforms, with double the outcomes in this group of the previous two years, and 41 per cent of the recommended reforms are now completed.

The Queensland Government's position on applying the NCP reforms to Local Government has always been that they are a set of management tools to choose from if they are going to benefit a council and there is a positive public outcome.

Apart from the provision of funds under the FIP, there have been a number of initiatives to support Local Governments implementing NCP reforms in recent times, for example training and the development of guidelines for dealing with competitive neutrality complaints in Local Governments.

Components of the NCP Financial Incentive Package

The $150 million allocation of the FIP has three components, namely:

• $1 million in a training pool to provide NCP training and assistance to Local Governments by the Local Government Association of Queensland (LGAQ) and the department. With indexation, this is now $1.101 million.
• $7.5 million in a review pool to assist Local Governments in meeting the cost of reviews of local laws, to conduct public benefit assessments of the impacts of introducing competitive neutrality reforms and assessments of the cost effectiveness of introducing two-part tariffs under the COAG water reforms. With indexation, this is now $8.255 million.
• $141.5 million in an implementation pool to be paid to Local Governments for implementing NCP reforms. With indexation, this pool is now approximately $163.15 million.

Of the $150 million, $45 million (in 1994-95 dollars) has been set aside for Brisbane City Council, made up of $2.25 million from the Review Pool (which has been fully expended) and $42.75 million from the Implementation Pool. This allocation was based on a variety of characteristics, such as recurrent expenditure, revenue and population, all of which suggested that an amount in the vicinity of 30 per cent of the funding pools would be appropriate.

Payments to Local Governments under the NCP Financial Incentive Package

Payments have been made to Local Governments over a five-year period commencing in 1997-98, with the total amount under the FIP subject to Queensland receiving the full amount of its competition payments from the Federal Government. The figures below indicate the funds distributed to-date and funds remaining (including indexation).

In each of the five years of distributions to date, unspent funds were carried forward, increasing the potential funds for distribution in the subsequent financial years.

The payments to Local Governments in 2001-02 comprised $23.7 million from the Implementation Pool to 117 Local Governments recognising their progress in implementing NCP and COAG water reforms and $258 900 from the Review Pool to 52 Local Governments for completing two-part tariff assessments.

The remaining funds in each of the three pools of the FIP are as follows:

• Training Pool - of the available $1.101 million, all funds have been expended or committed for ongoing projects benefiting Local Governments.
• Review Pool - of the available $8.255 million, only $635 100 remains undistributed.
• Implementation Pool - of the available $163.15 million, an estimated amount of $48.7 million remains available over the remaining life of the FIP (there is one further round of payments to the Brisbane City Council and two further annual rounds of payment to other Local Governments).

* Indexation is determined by the Federal Government based on population changes and CPI.

## The actual funds available to Local Government for the remainder of the FIP are subject to Queensland receiving the full amount of its competition payments from the Federal Government.

Business Management Assistance Programme

In August 2001, a new scheme known as the Business Management Assistance Programme (BMAP) was established to improve the financial management capability of councils and hence enhance their general capacity to provide services to their communities, while maximising their potential for payments through the FIP. The initiative has been funded by the State Government and implemented by the Local Government Association of Queensland (in consultation with the Queensland Department of Local Government and Planning and Queensland Treasury). A total of $0.6 million from the indexation component of competition payments allocated to the NCP FIP was used to fund the initiative.

As part of BMAP, consultants worked with each of the 107 participating councils to develop action plans outlining a programme for implementing the remaining NCP reforms in the required time. Support has been provided in implementing the NCP requirements that also result in improved financial management practices for the councils, and improved outcomes for their communities. This support is also enabling them to maximise their potential payments from the State Government under the FIP.

The BMAP consultants will provide ongoing technical advice and support until June 2003, for councils continuing to implement reforms. Staff of the Queensland Department of Local Government and Planning are also providing ongoing support.

Progress in developing comparable performance indicators

In 1996 the Queensland Department of Local Government and Planning established a performance management programme for the purpose of producing an annual publication of comparative performance information, which would assist Local Governments in their efforts towards the achievement of performance improvement and best practice in the services they provide to their communities.

The Queensland Local Government Comparative Information 00/01 is the fourth report to be produced under this programme. This report is produced in partnership with Local Governments and provides a comprehensive collection of efficiency, effectiveness and quality of service indicators for key Local Government functions, as well as detailing contextual information to assist in the comparisons of councils across Queensland. In addition, the report contains four consecutive years worth of data for the first time, enabling trend analysis to be undertaken from 1997-98 to 2000-01. Also, for the first time, the report is available on the department's website at www1.dlgp.qld.gov.au/estore/local_govt/

The report is considered to be a work in progress with issues relating to data definitions and the breadth and variability of Local Government functions and circumstances being reviewed on an annual basis.

To further assist councils in their performance improvement efforts, the department conducted State-wide training workshops in 2002. The workshops provided Local Government practitioners with a realistic approach to integrated performance measurement. Workshop participants were also presented with a detailed case study that included an examination of the development, application and integration of performance measurement processes in a large regional Queensland council.

The department intends to continue to focus on the promotion of best practice initiatives and the fostering of a continuous improvement culture with Queensland councils during 2002-03.

Local Government Association of Queensland

The BMAP Programme

Under the Local Government Act 1993, the largest 18 Local Governments in Queensland were required to consider some form of NCP reform for their significant business activities. The remaining 107 Local Governments were encouraged to consider the reforms on the basis of good management.

The Queensland Competition Authority (QCA) assesses reform progress and recommends payments to Local Government from the $141.5 million (unindexed) Local Government NCP Financial Incentive Package (FIP) implementation pool.

A significant number of Local Governments are missing out on their bonus payment entitlements. On current trends, Queensland councils may not access $50-70 million of the FIP payments.

Consequently, the Association has created the BMAP programme, designed to assist Local Government to progress the implementation of NCP reforms and other business and financial management reforms. The aim is to improve the capacity of councils and enhance their effectiveness in providing services to their community through an improved understanding of financial management tools and information.

With an extension of the timetable for the FIP from 30 June 2002 to 30 June 2003, the Association has been successful in securing up to $600 000 from the FIP Implementation pool to fund BMAP to provide a regional support strategy for councils.

All councils will be invited to participate in council briefings, attend regional technical workshops, receive guidelines and checklist material, and access technical assistance by telephone and email from regional consultants/mentors. It is anticipated, however, that the real benefit of this programme will be to the medium and smaller councils as the larger councils are generally well advanced and better resourced to complete any reforms.

Finance Reference Group

Councils and the LGAQ have continually raised the issue of the appropriate framework for financial reporting for Local Government entities in Queensland. As Local Governments continue to implement competition reforms and their businesses begin to operate in a more competitive environment it is essential that councillors (as the Board of Management) and community members (as the shareholders) be presented with information that is both useful and informative. Effective management and resource allocation decision-making can only be achieved if relevant and reliable information is presented in a timely manner.

In addition to AAS27 requirements, Queensland Local Governments prepare extra financial statements that many believe are onerous and of little value. Similarly, little attention is given to the preparation of appropriate/ complementary financial management reporting. This does not mean that councils are not focused on prudent financial management. The problem appears to be that there is no mechanism that allows this information to be prepared independently of public sector general-purpose financial statements.

Water reform

With the introduction of the new Water Act 2000, the Association has directed considerable efforts toward issues of implementation of the requirements of the Act. The Act provides for water use planning, management and allocation; a regulatory framework for water asset management, customer service standards and dam safety; and governance of water supply statutory authorities of the State Government.
With Local Government concerns on the directions of implementation in mind, expert Local Government consultants have been commissioned to examine the likely impacts on councils of new water allocation processes arising from the Act. The review will also look at how councils and ratepayers may be affected as a result of pricing polices accompanying the corporatisation of State Water Projects. The Association has engaged a consultant to examine council concerns on the potential for substantial increases in bulk water charges associated with new contracts.

The review will be of particular interest to the 30 or more Queensland councils that source all or part of their bulk water supplies from SunWater, formerly known as State Water Projects. Case studies will be used to illustrate the likely effects of current policies upon councils and ratepayers. The final report will provide background on issues and concerns raised by councils as well as providing a basis for the Association to develop responses to government on behalf of members.

As regards the Act's provision for regulation of service provision (asset management plans, customer service standards etc), and subject to the State Government finalising implementation guidelines, the Association will this financial year commence a series of council seminars to promote understanding of, and provide advice on, implementing these particular requirements.

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Western Australia

Department of Local Government and Regional Development

Performance measurement

Despite the requirements of the Western Australian Local Government Act 1995, most Local Governments have not achieved a satisfactory level of performance measurement and disclosure. Consequently, the development of any comparative indicators has been limited to that capable of being calculated from data available in annual financial statements or through information returns to other agencies.

From the data that are available, the original range of 30 comparative indicators is being expanded and, where possible, designed to achieve a degree of comparability with those used in other States. Complete comparability is not possible due to legislative differences, data availability and data quality. It is proposed that the indicators will be published in time series format on the department's web site commencing in December 2002 and be ongoing as data become available.

On 1 July 2001 the Western Australian Government created the Department of Local Government and Regional Development from the previous Department of Local Government, Office of Regional Development and the Westlink satellite services.

Work on processing the 2000-01 data was interrupted for a short period but has recommenced and will continue as an ongoing project.

Western Australian Local Government Association

Structural reform

Chapter 4 of the National Report 2000-01 identifies that the number of Local Governments in mainland Western Australia has remained relatively unchanged, falling from 147 in 1910 to 142 in 2001.

Political and structural issues have, since the early 1990s, prevailed in States such as Victoria, Tasmania and South Australia to facilitate substantial reductions in the number of Local Governments. These circumstances did not necessarily translate to Western Australia.

The Western Australian approach has been for government and the Local Government sector to avoid any forced amalgamations which, accordingly, would not engender widespread elected body and community support.

The geographic, economic and social landscape of Western Australia is such that many rural/ remote Local Governments in particular lack the structural attributes and financial and physical resources necessary to provide an opportunity or incentive for amalgamation with adjoining areas. The State Government, supported by the Association, has relied instead on pursuing cooperative, constructive engagement between Local Governments, including initiatives such as resource and information sharing in the pursuit of effectiveness and efficiency outcomes.

The Association's work in encouraging effectiveness and efficiency can be seen in its promotion of benchmarking and best practice initiatives among member Local Governments. Examples of these efforts can be seen in the Association's annual Best Practice in Local Government Awards framework and ongoing work undertaken in collaboration with key stakeholders, notably the Department of Local Government and Regional Development and Local Government Managers Australia.

The Western Australian State-Local Government Partnership Framework

Ongoing negotiations have been undertaken involving the State Government and the Association and other Local Government stakeholder bodies with a view to establishing a partnership framework that enhances communication and more clearly defines the intergovernmental relationship between both spheres. In the process, this proposed framework is aimed at fostering efficiency of service delivery and achieving certainty in financial resourcing in the context of State to Local Government partnership agreements. A submission seeking endorsement of the partnership framework has recently been presented to Cabinet.

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South Australia

Department for Transport, Urban Planning and the Arts

Local Government reform

A change of government in South Australia during the year saw the Local Government Reform Programme change direction. Between 1995 and 2002 the programme involved three phases, beginning with a strong emphasis on boundary restructuring and moving through legislative reform to clarification of roles and responsibilities between State and Local Government.

The phases were closely interrelated and overlapping.

The third phase of functional and related financial reform proceeded under the general title of the State/Local Government Partnerships Programme. It followed the voluntary amalgamations of councils under the Local Government Boundary Reform Board - reducing the number of South Australian councils from 118 to 68 - and the re-write of the Local Government Act that brought to the Local Government system a modern, comprehensively updated set of constitutional and operational legislative provisions. The programme aimed to coordinate development of new and better ways for State and Local Government to work together to improve service delivery to the community.

Preliminary reviews by both sectors and a joint scoping study were designed to develop a shared understanding of the objectives of the Partnerships Programme and to identify practical opportunities and priorities for advancing the reform agenda.

The incoming Government redirected the reform programme with a view to achieving more concrete outcomes.

Building from the previous work, six principles inform the Government's reform priorities. These are:

• honest and accountable government
• mutual respective State-Local Government relationships
• enhanced capacity of Local Government to provide community leadership
• fairer and more equitable arrangements for funding Local Government
• best practice industrial relations
• consistent and coordinated government, strategically aligned.

The redirected reform programme has seen the establishing of a Minister's Local Government Forum, with a broad ranging membership of State and Local Government elected members and officers including Ministers, the President of the Local Government Association, and Mayors and Chief Executive Officers of councils and Chief Executives of State agencies. Initial issues proposed for the Agenda for the forthcoming year were:

• drainage and stormwater management
• development planning
• regional passenger transport
• integrated natural resource management
• waste management
• small scale minerals extraction

Operation of new Local Government legislation

The framework now provided by the Local Government Act 1999 specifies the role of Local Government elected members, as members of the governing body of the council, in reviewing the effectiveness of council's objectives and policies, and reviewing the efficiency and effectiveness of council's service delivery, resource allocation, expenditure and activities.

All councils were required to develop and adopt strategic management plans for the management of their areas by 1 July 2002.

The strategic management plans must identify the council's objectives for the area and provide a clear indication of matters such as:

• the extent to which the council intends to coordinate with State and national government in the planning and delivery of services in which there is a common interest
• the measures (financial and non-financial) that are to be used to monitor and assess the performance of the council over the relevant period
• the relationship between the council's objectives and activities, and its rating policy
• the means by which its activities are to be carried out, with particular reference to its policies on contracts and tenders (which include policies on the contracting out of services and competitive tendering and the use of other measures to ensure that services are delivered cost-effectively)
• issues associated with arranging its affairs so as to separate its regulatory activities from its other activities.

Moreover, councils must adopt a process or processes to ensure that members of the public are given a reasonable opportunity to be involved in the development and review (at least every three years) of their strategic management plans.

These plans form part of a clear accountability cycle and management framework which requires councils to link strategic plans with operational plans and policies designed to achieve the objectives which have been identified, to set out ways of monitoring whether their activities are achieving their objectives, and to report on these in their annual reports.

The Office of Local Government, together with the Local Government Association of South Australia (LGASA), is supporting councils' development of their strategic management plans and associated policies in a variety of ways, ranging from the provision of training and advice to targeted financial and practical assistance for smaller rural councils under the 'Supporting rural councils' programme.

Under the new Government, increased emphasis is being placed on strengthening the authority and relevance of the State-wide Planning Strategy and related documents to support more efficient and effective linking of resource use by both State and Local Governments.

Progress in developing performance indicators

In South Australia work on the development of performance measures continued to be led by the LGASA through its 'Comparative performance measurement' project. It was agreed at the outset of the project that leadership by Local Government in this area is the most likely strategy to achieve ownership and commitment of the process and its outcomes by councils. The Office of Local Government is represented on the project's steering committee.

Early work on the project confirmed that, generally speaking, Local Government in this State is supportive of a sector-wide comparative performance measurement system.

The four key outcomes of the project are:

• development of performance measures that can be used for comparative purposes
• collection of performance information on a uniform basis
• a measurement system that will enable councils to compare their performance with others, and ultimately
• implementation of benchmarking between councils.

LGASA has completed the development of 18 sector-wide comparative corporate performance measures in a project funded by the Local Government Research and Development Scheme. Five pilot councils and a larger network of 18 councils were involved in the development and testing phase.

Data for the measures have been collected from various sources, including a community survey of 12 500 residents undertaken by Roy Morgan Research early in 2002. Individual results for all 68 councils will be distributed in September to be followed by a round of regional presentations and ongoing support services.

LGASA will collect and distribute performance information annually.

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Tasmania

Department of Premier and Cabinet

National Competition Policy

In June 1996, as required under the Competition Principles Agreement, the former Tasmanian Government submitted to the National Competition Council a policy statement called 'Application of National Competition Policy to Local Government (Application Statement)'. This statement was prepared by the then State Government, in consultation with Local Government, and provided a broad policy statement on how it intended the key principles, where appropriate, be applied to Local Government.

A review of the Application Statement is under way. The purpose of the review is to assist Local Government in the continued application of competition principles to its activities by ensuring that its obligations are expressed clearly in the policy statement.

Progress to date on applying competitive neutrality, prices oversight and legislation review to Local Government is outlined below.

Competitive neutrality

Under the Application Statement, when applying competitive neutrality principles, councils are required to:

• identify relevant business activities considered to be significant business activities
• undertake public benefit assessments of the corporatisation of those business activities classified as public trading enterprises under the Australian Bureau of Statistics' Government Financial Statistics Classification, as outlined in the Application Statement (generally water and sewerage)
• corporatise those public trading enterprises where a public benefit assessment indicates that the benefits outweigh the costs of doing so or apply full cost attribution to all other significant business activities.

Accordingly, councils undertook public benefit assessments of the corporatisation of their public trading enterprises during 1999.

All councils found that corporatisation of their public trading enterprises would not be in the public benefit, mainly due to the small size of Tasmanian councils and therefore of their business activities. These results were submitted to a peer review group consisting of the Local Government Association of Tasmania and council representatives. The peer review group endorsed the results of the public benefit assessments and provided a recommendation to the Treasurer to this effect in November 1999. The Treasurer endorsed the public benefit assessment and the outcome of the peer review assessment on 3 December 1999.

The joint bulk water authorities - Hobart Water, Esk Water and Cradle Coast Water - have been corporatised under the Local Government Act, independent of this process.

Councils are continuing to apply full cost attribution to their business activities in a form appropriate to their size. Importantly, the Local Government Act was amended in 1999 to require councils to disclose the full cost of operating their significant business activities in their annual reports.

To comply with the competitive neutrality principles, the Local Government Division of the Department of Premier and Cabinet has developed a community service obligation policy and guidelines framework for councils. This policy is consistent with the policy applying to the State Government's government business enterprises.

The main objectives of the community service obligation policy are to:

• ensure that a council's social and other objectives are achieved without impacting on the commercial performance of its significant business activities
• improve the transparency, equity and efficiency of Community Service Obligation service delivery
• be consistent with National Competition Principle requirements.

The policy was implemented in early 2001, in accordance with Tasmania's National Competition Principle obligations.

The Application Statement also requires a competitive neutrality complaints mechanism to be established. This mechanism was established under the Government Prices Oversight Regulations. Under the regulations, a person who believes that he or she has been adversely affected by a contravention of the competitive neutrality principles may lodge a complaint with the Government Prices Oversight Commission, which has responsibility for investigating all alleged breaches of the competitive neutrality principles in the State.

Overseeing prices

The Application Statement provided that Local Government monopoly or near monopoly providers were to be brought under the prices oversight jurisdiction of the Commission. The Government Prices Oversight Amendment Act 1997 extended the coverage of the Government Prices Oversight Act 1995 to include Local Government monopoly or near-monopoly services.

In addition, in accordance with the Agreement to Implement the National Competition Policy and Related Reforms, Tasmania is required to implement the Council of Australian Governments' Strategic Framework for the Efficient and Sustainable Reform of the Australian Water Industry (Strategic Framework). The Strategic Framework requires metropolitan bulk water suppliers to charge on a volumetric basis to recover all costs. Metropolitan bulk water suppliers are to also earn a positive real rate of return on the written-down replacement costs of their assets.

The Local Government Regulations 2000 were amended in late 2000 to require councils to incorporate in their annual reports a statement of plans for the supply of domestic water and sufficient financial information to demonstrate that the Urban Water Pricing Guidelines for Local Government in Tasmania are being applied in relation to the supply of domestic water. The previous requirement was for a statement to appear in council's operating plans for the forthcoming year.

Against this background, the Commission was required to undertake an investigation into the pricing policies associated with provision of bulk water by the Hobart Regional Water Authority, the Esk Water Authority and the North West Regional Water Authority in 1998. As a result, the Commission recommended maximum prices (in the form of maximum revenues and pricing principles) to be charged by each of the State's three bulk water authorities for a three-year period commencing 1 July 1999. The Government endorsed the Commission's pricing principles for bulk water.

Treatment of Local Government by-laws

The Local Government Division of the Department of Premier and Cabinet has ongoing responsibility for the Local Government by-laws component of the Legislation Review Programme, which is part of the Tasmanian Government's commitment to implementation of National Competition Policy. This responsibility involves the review of both existing and proposed by-laws for compliance with NCP principles.

In 1997, the division first prepared and distributed the By-law making procedures manual to all councils to explain the review process and the requirements expected in the adoption of a proposed new by-law which could have an impact on competition or the conduct of business. By 1999, the review had resulted in the expiry of the remaining 500+ by-laws made by councils under the former Local Government Act 1962 (since repealed) and the progressive rationalisation of the matters dealt with in by-laws.

All the current 140 by-laws in force since the commencement in early 1994 of the Local Government Act 1993 have been the subject of the review regime. Each by-law has a maximum life of 8 years, which ensures that the justification for the by-law has to be re-examined by the council if a replacement is contemplated.

The requirement in the manual for the preparation of a Regulatory Impact Statement (RIS) outlining the effects of a proposed by-law as part of public consultation by the council before its adoption was made a statutory obligation in 1999. Rigour is applied in the identification and detail of community impacts of an economic, social or environmental nature and provision of opportunity for comment.

This level of examination of the proposed by-law and the associated RIS has been a requirement of the Director of Local Government when issuing the necessary certificate before a council can commence the consultation process on the new by-law.

A new version of the manual is being prepared to reflect the greater emphasis since 1999 on justification of the by-law, the role of the Regulatory Impact Statement and the outcomes from public consultation.

Progress in developing performance indicators

The aim of the Tasmanian Measuring Council Performance Project is to provide a comprehensive framework of key performance indicators (KPIs) for Tasmanian Local Government.

The KPIs provide an industry-wide framework for measuring and comparing the performance of councils. The KPIs promote:

• enhanced performance measurement by councils
• benchmarking and identification of best practice
• improved accountability to the community
• establishing performance trends over time.

The framework provides councils, individually and collectively, with:

• practical tools to measure and compare results against agreed performance outcomes and best practice standards
• targets and strategies for councils to continuously innovate and improve the performance of their functions, including efficient and effective service provision and operations
• synergies to expand councils' capacities to produce better economic, social and environmental outcomes for residents and the community.

The Federal Government provided a grant of $55 000 under the Local Government Incentive Programme to help implement the performance measurement system. This funding finishes on 30 June 2003. A project steering committee (the KPI Committee) comprising State and Local Government officers and the Chairperson of the Local Government Board, was established to oversee introduction of the performance measurement system for Tasmanian councils.

The KPI Committee has refined the performance indicators developed by the KPI Steering Committee in 1999. Council performance was measured by 51 KPIs in the 2000-01 report. All 29 Tasmanian councils provided their data on a voluntary basis for the 1999-2000 and 2000-01 Reports.

The project has been, and will continue to be, a joint effort of both State and Local Government. There is strong support for the measurement system from Local Government.

The State Government, through its initiative funding, has allocated sufficient resources to ensure successful ongoing operation of the KPI framework. The data collection form developed for the project includes not only the data for the KPI project but also existing data requirements of the Australian Bureau of Statistics, the State Grants Commission and the Department of Treasury and Finance. This consolidated data collection process was used successfully for the 2000-01 report.

Customer satisfaction with council services is an important indicator. To satisfy this need the Local Government Association of Tasmania (LGAT) developed a community opinion survey that can be used by all councils and adapted for their particular requirements. The survey was run in 2001 and is due to run again in 2002. The survey was developed and carried out with funding from the Local Government Incentive Programme.

The first report, Measuring Council Performance In Tasmania 1999-2000, was released on 1 October 2001. The report for 2000-01 was released on 4 April 2002. The report for 2001-02 is due for release by April 2003.

The reports have proved useful for councils both for internal monitoring and in relation to their performance compared with similar councils. Both council staff and elected members have welcomed the reports.

The KPI Committee is to undertake a series of workshops around Tasmania to discuss aspects of data collection and analyses. These workshops will be held before the data collection sheets are sent to councils for the 2001/2002 data. Feedback from the workshops will also be used by the KPI Committee to review some of the definitions to ensure that comparisons are valid over time and between jurisdictions.

With two years data it has not been possible to undertake time series analysis or even to present the information graphically. As more data becomes available the KPI Committee will be looking at revising its dissemination strategy and presentation of the performance measures.

Local Government Board

The Local Government Board provides another method of assessing council performance. It was initially established in 1987 under the Local Government Act 1962, and was continued under the Local Government Act 1993. Its main role has been to carry out reviews of councils on matters such as boundaries, amalgamations, electoral districts, council names and the numbers of elected councillors.

The role of the Board changed when it was reconstituted in December 1998. The board has broadened the scope of general reviews to include governance and operational matters, and developed guidelines for general reviews to ensure that the process is meaningful and of particular assistance to the council being reviewed.

The Board consists of:

• Mr David Lovell, Chairperson, who has experience in Local Government and was appointed by the Minister
• Mr Brian Dowse, nominated by the Local Government Association of Tasmania
• Mr Paul Arnold, nominated by the Local Government Managers Australia
• Mr Trevor Cordwell, who has experience in Local Government and was appointed by the previous Minister
• Ms Marguerite Scott, Director of Local Government - a statutory appointment.

The Local Government Board is required by the Act to undertake a general review of each council at least every eight years.

The Board addresses the following issues in each general review:

• municipal boundary or name changes
• governance
• regulatory functions
• community development, communication and consultation
• equity, access and human resource management
• asset management
• financial matters
• external relations.

The Board has substantially completed five general reviews during the 2001-02 financial year: Glamorgan/Spring Bay Council, Kentish Council, Kingborough Council, Hobart City Council and Northern Midlands Council.

Board reports can be found at www.dpac.tas.gov.au/divisions/lgo/

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Northern Territory

Department of Community Development, Sport and Cultural Affairs

Progress in developing performance indicators

The aim of the Northern Territory performance indicators programme is to introduce performance management tools to all councils in the Territory in such a way as to ensure that they become an integrated and valuable part of community management practices. In support of this aim, the Department of Local Government has linked the development and implementation of performance indicators for local governing bodies to the introduction of its best practice programme.

While reporting of performance information is well within the capacity of the municipal and larger councils, it is recognised that the capacity to provide this information is more difficult for the smaller and remote councils. Consequently, the performance indicators programme consists of two streams.

The municipal and larger councils, which comprised the first stream, collected a full set of quantitative performance information on the three identified core services - roads, waste management and community management. The second stream, consisting of the smaller and remote councils, is less advanced.

During 1999-00, 42 councils in the Northern Territory councils were invited to participate in the Local Government performance programme and returned comparative data. This year, as in the previous year, all councils were invited to participate. However, 45 councils failed to return their surveys. This failure rate compares with 30 in the previous year. Of the 45 councils, most have identified a number of reasons for not providing the required data. A review of the performance indicators and the method of collecting relevant data are under way.

The fourth annual report is being prepared for publication. Performance indicators highlight differences between councils for specific activities but do not explain why these differences may have occurred. For this reason contextual and descriptive information for each of the participating councils was collected and include explanations of the circumstances and results provided by the councils themselves.

The report will not provide benchmarks against which to assess 'satisfactory' performance. Instead, contextual information is being provided that will assist councils in identifying similar councils against which their performance may be assessed.

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Australian Capital Territory

Department of Urban Services

No waste by 2010

A new Resource Management Centre opened in April 2002, replacing the general waste acceptance operations in Belconnen. The focus of the new facility is on resource recovery and reuse, rather than disposal to landfill. Incentive payments are available to the operators if they recover more than the targeted quantities of recyclable materials.

Improvements to service

There are currently four contracts for collection and processing of domestic waste and recyclable materials in the ACT. To improve the overall service delivery with the establishment of the new contracts, the collection contracts are being combined into one contract and the processing of recyclable materials will be established as a separate contract. The benefits of this initiative are economies of a larger scale, reduced management requirements and reduced vehicle fleet requirements.

Recyclables will be collected in a single chamber bin rather than the current divided bins to improve the ease of use by residents, increase the bins' capacity to recover a wider range of materials, reduce the incidence of street littering and lower the collection costs as the same trucks, depot and management can be used for garbage and recycling collections.

Roads ACT - contracts

In 2001-02, Roads ACT developed new performance-based stormwater maintenance contracts with ActewAGL based on specifications similar to AUSSPEC. The contract is for the maintenance of the stormwater pipe network, engineered lined and unlined channels, cut-off drains, retarding basins, gross pollutant traps and the dam embankments that provide storage of the water quality ponds.

In October 2001 the streetlight maintenance contract was benchmarked and commenced with ActewAGL. The contract is a performance-based contract based on specifications similar to AUSSPEC and covers the maintenance of streetlight assets on the arterial and urban road network, including high use areas such as shopping precincts, footpath and cyclepath networks.

Expressions of interest have been sought for the development of software for a new integrated asset management system. The system will allow more effective and efficient prioritising and management of Local Government asset maintenance. The system will commence data population and implementation in the 2002-03 financial year.

Canberra Urban Parks and Places

In 2001-02, Canberra Urban Parks and Places, as the purchaser of park and public place maintenance services, continued to focus on improving the efficiency and effectiveness of delivery of services by:

• developing asset management plans, including 20-year predictive financial modelling
• developing a new customer satisfaction survey which measures customers' interactions with Canberra urban parks and places
• piloting a recreation programme to encourage better interaction with targeted community groups resulting in better informed decision-making
• initiating a sustainable parks management strategy to address long-term environmental sustainability benefits to the community.

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