Foreword

In 2001 most local authorities will be adopting reviewed versions of their Long-term Financial Strategy and Funding Policy in the first round of the three-yearly review cycle required for these important documents.

This report looks at the experience of "the early nine" local authorities in undertaking the first three-yearly review of their Long-term Financial Strategy and Funding Policy. Our intention in examining their experience was to share it, along with our suggestions and advice, with the majority of local authorities that are reviewing their Long-term Financial Strategy and Funding Policy now.

I know that many of the authorities approaching their review are expecting that the process will allow more opportunity to focus on the principles of Part VIIA of the Local Government Act 1974. Based on the experience of "the early nine", we offer some suggestions about where that focus should be directed and identify the four key areas emerging:

• decision-making processes that engage elected representatives and encourage a longer-term view;
• integrating information for the Long-term Financial Strategy and Funding Policy with other council policies and plans;
• ensuring that information achieves legislative compliance and that the underlying data required to support the Long-term Financial Strategy and Funding Policy is complete; and
• dealing with transparency requirements, and communicating with and engaging residents and ratepayers in strategic decision-making.

In many ways, this report is complementary to our recently published report: Auditing a Long-term Financial Strategy – Opotiki District Council Pilot Project. While that report focuses on preparing the estimates for the Long-term Financial Strategy, this report looks at the qualitative aspects of reviewing the Long-term Financial Strategy and Funding Policy.

Since the Opotiki pilot project, to support the information in this report we have:

• completed an audit of the Western Bay of Plenty District Council’s Long-term Financial Strategy; and
• interviewed councillors, chief executives, and staff of six of "the early nine".

I express my thanks to the early nine local authorities that helped us in our examination to prepare for this report. We are grateful for their time, their frankness about the problems they dealt with, and their willingness to share their experiences in order to benefit the rest of the local government sector.

Kevin Brady
Deputy Controller and Auditor-General

27 October 2000

The full text of this report is available in PDF format (159kB).