Victoria’s Auditor-General has issued a report assessing the effectiveness of councils in business planning and budgeting for major capital works and recurrent services of four major councils.

 

The report has found that three of the four councils audited will need to significantly improve planning and budgetary controls.

 

The audit assessed Glen Eira, Whittlesea, South Gippsland and Hepburn councils as a representative selection to determine whether they had effectively integrated their planning and budgeting, considered the long-term sustainability of selected investments and produced accurate and reliable budgets and forecasts.

 

“While all councils had long-term financial plans going out 10–15 years, there was little assurance they were soundly based because they were not adequately supported by equivalent strategic and/or service and asset management plans. Further, none of the councils examined could demonstrate they adequately consulted their communities on the financial and other consequences of their aspirations when initially developing their council plans,” the report found

 

The Auditor-General has found that Vctoria’s 79 councils spend a collective $1.6 billion on capital works each year and maintain over $60 billion in assets and infrastructure.

 

The Auditor-General’s office made the following recommendations in the report:

 

Councils should:

  • consult with, and engage, their communities on their ability and willingness to pay for desired services and assets when developing their initial council plans
  • better integrate their planning and budgeting practices to support sound decision-making
  • develop strategic and supporting divisional business plans for all major services, with measurable objectives clearly aligned to their council plan
  • review their asset management frameworks to assure their asset policies, strategies and plans are up-to-date, cover all major asset classes, and adequately inform future investment decisions.

Local Government Victoria should:

  • systematically review the adequacy of council planning and budgeting and, in consultation with stakeholders, provide better targeted support and assistance to councils to address identified weaknesses
  • monitor the impact of these support initiatives to inform its future continuous development efforts.

Councils should:

  • develop business cases for proposed investments in major capital works to demonstrate they are soundly based and that they support the achievement of the council’s service delivery objectives
  • rigorously analyse service need, value-for-money, cost, and financial sustainability against defined standards consistent with the Best Value Principles to inform investments in recurrent services.

 

The full report can be accessed here.