Business Plans and Budgets
Many councils will be in the throes of preparing their annual business plan (ABP) and budgets for the 2022-2023 financial year. We consider it timely to provide an update on some key changes to the Local Government Act 1999 (Act) and Local Government (Financial Management) Regulations 2011 (Financial Management Regulations) which commenced on 6 January of this year and impact the ABP and budget preparation process.
Previously, the deadline for councils to adopt their ABP and budget was 30 August in the relevant financial year. An amendment to Section 123(8) of the Act has bought that date forward to 15 August.
Section 123(1)(g) of the Act requires a council to address or include in its ABP any other matter prescribed by regulations. Regulation 6 of the Financial Management Regulations now requires the following new information be included in an ABP (including a draft for public consultation):
- A statement on total expected revenue from general rates for the financial year, compared to the total expected revenue from general rates for the previous financial year, excluding non-discretionary rebates and remissions on rates (regulation 6(ea)); and
- A statement on the percentage change in total expected revenue from general rates for the financial year, compared to the total expected revenue from general rates for the previous financial year, excluding non-discretionary rebates and remissions on rates (regulation 6(eb)); and
- If relevant, a statement on the average change in the expected rates for the financial year (in whole dollars) for each land use category declared as a permissible differentiating factor compared to the previous financial year’s expected rates for each (regulation 6(ec)).
We note that in some cases the information required by this regulation will initially be forecasts or estimates that are subject to change, for example once final valuations are received.
A further requirement in Regulation 6 is that, where an ABP sets out a growth component in relation to general rates, that component must not relate to the growth in value of rateable properties, but rather may only relate to growth in the number of rateable properties.
ABPs are sometimes adopted with amendments following the conclusion of public consultation. In such cases, Section 123(6a) of the Act now prescribes that a statement must be included in the adopted ABP that sets out significant amendments from the draft ABP and provides reasons for those amendments.
Finally, Section 123(7a) provides that the budget of a council may authorise entry into borrowings and other forms of financial accommodation for a financial year, up to an amount specified in the budget. Borrowings may also be authorised by separate resolution of the council. It remains the case that a rate cannot be challenged on a ground based on either non-compliance with, or on the contents of a document prepared or adopted by a council for the purposes of, Section 123 of the Act.
For more specific information on any of the material contained in this article please contact Felice D’Agostino on +61 8 8210 1202 or email@example.com or Dale Mazzachi on +61 8 8210 1221 or firstname.lastname@example.org