1.1 Review of the 2003-04 year

Local government: Results of the 2003-04 audits.

The effects of legislative change again dominated the 2003-04 financial year for local authorities:

  • the Local Government (Rating) Act 2002 had its full effect on the rating processes and setting of rates in 2003-04; and
  • the Local Government Act 2002 (the 2002 Act) became largely operational, with Part 6 dealing with planning, decision-making, and accountability increasing its effect.

Nine local authorities had elected to “go early” and plan for the 2003-04 year, using as a basis the newly introduced (transitional) Long-Term Council Community Plan (LTCCP). This required their reporting to be in line with the full requirements of the “new” Act. In contrast, the other 77 local authorities completed their accountability obligations under the previous regime set out in the “old” Act (the Local Government Act 1974).

Despite all local authorities being well aware of their reporting deadlines, the timeliness of reporting to communities with their audited annual report was mixed (see paragraphs 1.301-1.318 for the results of our monitoring of the timeliness of local authority reporting to communities). Regrettably, there was no overall improvement over previous years.

Matters affecting 2003-04 included:

  • Some local authorities reset their rates to accommodate issues identified in their original setting of rates (see paragraphs 1.503-1.514).
  • Associated with the reform of the sector was the creation of new entities known as “council controlled organisations” (CCOs). The 2002 Act’s definition was broader than the similar requirements in the 1974 Act, and attracted some attention from within the sector to seek exemption from the planning and accountability regime associated with being a CCO (see paragraphs 1.601-1.623).

During the 2004 calendar year, a number of issues arose which are worthy of note:

  • For 7 local authorities, their triennial elections were affected by a process failure in counting the STV-based votes cast for their councils. The Office of the Auditor-General was requested to provide independent assurance to 6 of those 7 authorities before their Electoral Officers were able to declare the successful candidates (see paragraphs 2.201-2.229).
  • We dealt with a number of inquiries. This included a number of issues related to decision-making – particularly involving consultation – initiated by ratepayer inquiries associated with land transactions. One particular transaction is noted (see paragraphs 2.101-2.109).
  • The sector also raised issues with us about complying with the water and sanitary assessment requirements of Part 7 of the 2002 Act.

As well as dealing with the new requirements of the 2002 Act as they applied in 2003-04, local authorities also maintained focus on how the 2002 Act is affecting their planning processes now and through to 2006-07. The Auditor-General is required for the first time to meet a statutory duty of reporting on all local authorities’ LTCCPs for the period commencing 2006-07.

We reflect on a number of observations from our review of those authorities that did prepare LTCCPs in 2003-04 (see paragraphs 3.219-3.229).

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