Part 4: Common issues arising during preparation of the 2006-16 LTCCPs

Matters arising from the 2006-16 Long-Term Council Community Plans.

In this Part, we discuss the common issues about the preparation of the 2006-16 LTCCPs that emerged during our audits.

What is the LTCCP intended to provide?

The LTCCP is intended to provide the basis for an integrated long-term focus for a local authority to make decisions, select activities, and co-ordinate the use of its resources.1

The three main individual content areas of the LTCCP – the performance framework, asset management planning, and the financial management framework – are integrated to form the Group of Activities Statements2 within the LTCCP. We discuss the three content areas in detail separately in Parts 5, 6, and 7.

Clause 2 of Schedule 10 of the Act requires an LTCCP to include information about:

  • the activities within the group of activities, the rationale for carrying out these activities, and any significant negative effects that the activities may have on the well-being of the community; and
  • the assets required by the group of activities, including:
    • how a local authority will assess and manage the asset management implications of changes to demand for, or consumption of, relevant services, and service provision levels and standards;
    • what additional asset capacity is estimated to be required as a result;
    • how additional asset capacity will be provided, including the estimated costs and how these costs will be met; and
    • how the maintenance, renewal, and replacement of assets will be carried out and the associated costs met.

Clause 2 of Schedule 10 of the Act also requires the LTCCP to include a Group of Activities Statement (in detail for each of the first three years of the plan and in outline for each subsequent year of the plan) of:

  • the intended levels of service provision for the group of activities, including the performance targets and other measures by which actual levels of service provision may meaningfully be assessed;
  • the estimated expenses of achieving and maintaining the identified levels of service provision, including the estimated expenses associated with maintaining the service capacity and integrity of assets; and
  • how the expenses are to be met, the estimated revenue levels, the other sources of funds, and the rationale for their selection.

Overall, our observations of the quality and reliability of the information in the three individual content areas suggest that there is a need for better understanding of the levels of service currently delivered and those intended to be delivered during the 10 years of the LTCCP.

Two common problems in preparing the LTCCP

We observed two common problems in the LTCCP preparation process where improvements could be made:

  • poor project management and poor management of the sequence for preparing and developing information; and
  • poor identification of the issues that must be communicated in the LTCCP Statement of Proposal (including in the LTCCP Summary) and in the final LTCCP.

Project management and the sequence for developing information

Preparing an LTCCP involves reconciling past service information with future expectations and intentions:

  • Past service information relates to matters such as existing strategies and policies, actual services provided, actual condition and performance of assets, and actual financial revenue and expenditure.
  • Future expectations and intentions are formed by the process of identifying public issues and needs, and assessing the likely demand and opportunities for a local authority to respond to these issues. These expectations and intentions are informed by public feedback over time, as well as through specific consultation. This could occur through processes such as the community outcomes development process and through modelling the effect of likely demographic, environmental, and economic change on services and local authority operations.

At times there will be gaps between expectations and a local authority’s current ability to deliver to those expectations. These gaps should also be understood as a result of reconciling past service information with future expectations and intentions.

Our LTCCP audit methodology was built on the assumption that local authorities would be preparing information to allow this reconciliation through a sequential project management process, as shown in Figure 15.

Figure 15
Example of sequential project management process to prepare LTCCPs

Figure 15.

In mid-2005, our auditors began asking local authorities about their project management intentions for preparing the LTCCP, expecting that local authorities would:

  • understand their current achieved levels of service and their asset performance and financial position; and
  • have sought to understand the effects of issues and needs and, as a result, the likely demand and opportunities for their response to these issues and needs.

We expected that, in mid-2005, local authorities would be in a position to consider and confirm their strategies and policies, and their intended levels of service. What we found was that many local authorities were updating asset management information while simultaneously seeking to understand the current achieved levels of service and asset performance. However, this work had often started before community outcomes development and/or confirmation of relevant strategies, policies, and levels of service had been completed. Therefore, many local authorities were preparing asset management and financial forecasts without having formed deliberate objectives in terms of the nature and condition of assets required to deliver the intended services.

This meant that it was not easy to address our audit enquiries about how the LTCCP was contributing to an integrated long-term focus for decision-making, selection of activities, and co-ordination of the use of resources. In many instances, this could be assessed only when the LTCCP Statement of Proposal was close to being adopted for consultation, putting significant pressure on local authorities and auditors from March to May 2006.

To successfully reconcile past service information and future expectations and intentions, local authorities must improve their understanding of the sequence for information development and the relationship between sets of information. They must also be able to effectively integrate this information by applying project management disciplines.

LTCCPs contain a large amount of information. Changes in strategies, levels of service, and assumptions can appear minor but can have a significant effect within a group of activities and, on occasions, for a local authority as a whole. If information is not managed sequentially, it is difficult for local authorities and auditors to be sure that all such matters have been resolved and addressed during preparation of the LTCCP.

Identification of the issues that must be communicated in the LTCCP and the LTCCP Summary

The other significant aspect of the LTCCP preparation process where we observed common themes was the way that local authorities used the information being gathered for the LTCCP to form an overview to identify the main issues. This involves two types of consideration:

  • a "What is this LTCCP saying overall and does it make sense?" test; and
  • a "What do we need to emphasise and explain to the community or consult the community about?" test.

What is this LTCCP saying overall, and does it make sense?

As financial estimates were aggregated from Group of Activities Statements to the financial statements as a whole, we observed that local authorities often failed to stand back and consider what the financial statements were depicting. For example, many local authorities projected significant surpluses by the tenth year of their LTCCP but, when asked to elaborate, responded that they did not really expect these surpluses to eventuate.

We recognise that projecting expenditure 10 years ahead is complex and that it will not be possible to anticipate every expenditure need that is likely to arise. However, the LTCCP should set out the reasonably probable situation anticipated by the local authority.

Similarly, some local authorities forecast increasing cash levels and increasing debt. When asked to elaborate, they responded that this would also be unlikely to occur, as debt would be managed through internal borrowing.

What do we need to emphasise and explain to the community or consult the community about?

Local authorities need to carefully identify what should be communicated in the LTCCP Statement of Proposal and in the LTCCP Summary. Again, this would require a local authority to stand back and take an overview of the issues emerging, and consider what should be said about them in both the LTCCP Statement of Proposal and in the LTCCP Summary.

In many instances, we suggested that (in both the LTCCP Statement of Proposal and in the LTCCP Summary) a local authority refer to any matters that should be raised for public feedback and to significant trends that could be expected during the 10 years covered by the LTCCP. For example, for the overall financial position represented in an LTCCP, we asked local authorities to include an explanation and comments in their LTCCP in some instances where surpluses or other financial changes were very significant.

We also often noted that significant changes (such as changes in policies that in other circumstances would have required the use of a special consultative procedure) were not mentioned, and the effects on the community or others directly affected were not discussed.

As a result of a failure to take this overview of the LTCCP, many LTCCP Statements of Proposal did not appear to encapsulate the "right debate" on the main issues facing a local authority or to set out the strategic choices that were being made. More importantly, this also meant that the LTCCP Summary did not set out these issues and, therefore, was less useful than it might have been as a basis for general consultation.3 This failure was exacerbated by the time pressures faced by local authorities because of poor project management and poor management of the sequence for developing information.

Our audit experience was that LTCCPs tended to be more usable where local authorities embedded a process for preparing the plan. In our view, good sequential development and project management, including internal quality review processes, are necessary for preparing integrated LTCCPs. This approach can enhance a local authority’s own decision-making processes and the quality of the planning process for their communities and other stakeholders.

1: Section 93(6) of the Act.

2: Group of activities, as defined in the Act, means one or more related activities provided by, or on behalf of, a local authority or council-controlled organisation.

3: Section 89(c) of the Act.

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