Part 16: Performance audits in the local government sector

Local government: Results of the 2006/07 audits.

Each year, we carry out a number of performance audits, special studies, and inquiries and report our findings to Parliament. In this Part, we discuss two reports relating to the local government sector that we published in the past year, and our proposed performance audit for 2008/09. They are:

  • our good practice guide for local authority decision-making and consultation;1
  • our performance audit report on liquor licensing by territorial authorities;2 and
  • our proposed performance audit on how local authorities meet demand for water.

Guide for local authorities on decision-making and consultation

In 2007, we produced a report – Turning principles into action: A guide for local authorities on decision-making and consultation. It updated our previous guidance published in 1998, and supplemented the recent guidance material prepared by others in the sector, such as the Society of Local Government Managers and the Department of Internal Affairs.

The Local Government Act 2002 Act (the Act) sets out principles and obligations for local authorities to use in decision-making and consultation. Local authorities are working to embed these principles in their management processes to give best effect to their purpose of promoting long-term sustainable well-being and democratic decision-making and actions. Local authorities also face risks if their decisions can be shown to be unreasonable, or if due process has not been observed.

The Act has also reinforced the public's expectation of greater levels of participation in decision-making and consultation. We have dealt with a number of ratepayer enquiries about local authorities' decision-making and consultation obligations.

So far, the courts have had few opportunities to provide judicial guidance about how to interpret these principles. However, good practice is evolving.

Our updated guide is the combined view of our Office and a working party within the sector that we convened to advise us. The working party identified some areas of the Act that are difficult to implement, and the guide provides examples of good practice by local authorities in these areas. It does not attempt to define legislative compliance – rather, it presents a combined view and discussion on principles and current practice.

Our expectation is that the guide will be of value to professional staff in local authorities and politicians in the local government sector, as well as to their communities.

Liquor licensing by territorial authorities

In November 2007, we published the results of a performance audit that looked at liquor licensing by territorial authorities.

Under the Sale of Liquor Act 1989 (the Act), territorial authorities have the status of District Licensing Agencies. They are responsible for considering applications and issuing licences for the sale and supply of liquor to the public. Our performance audit examined how territorial authorities were carrying out their liquor licensing responsibilities under the Act. They are, by and large, doing a good job.

However, we identified some important areas for improvement. In particular, not all District Licensing Agencies were sufficiently committed to monitoring and enforcing compliance with licence conditions and the Act. It is important that all District Licensing Agencies consider whether they have enough resources allocated to this compliance work, and follow active and systematic monitoring strategies.

While drawing on the results of our audits of selected authorities, the report also takes a broader perspective. For example, we set out principles for good practice, note better practice examples, and draw lessons for the sector. We have urged each local authority to consider our comments and review its own practices.

The audit team will discuss the results of the audit at local government and other appropriate forums.

Proposed performance audit on how local authorities meet demand for water

In 2008/09, we propose to carry out one performance audit in the local government sector. The proposed audit will look at strategies used by local authorities to meet the demand for water in their communities.

The decision to carry out a single performance audit in the sector in 2008/09, in part, recognises the substantial resources that we will allocate to auditing the 2009-19 Long-Term Council Community Plans of every local authority. The LTCCP audit work will be carried out throughout 2008/09.

Many territorial authorities play a significant role in supplying water to residents and communities in their district or region.

A local authority's ability to supply water of adequate quality and quantity is an essential service for the health and well-being of those residents and communities. To provide this service, local authorities need a sufficient and reliable water source and the necessary infrastructure to store, treat, and supply the water.

It is important for a local authority to consider and plan for the future demand for water so that it has adequate infrastructure and/or arrangements in place to meet the needs of its residents and communities.

The scope of our proposed performance audit has yet to be finalised. However, its purpose will be to provide assurance that selected territorial authorities have adequately assessed the future water demand of residents and communities in their district and have strategies in place to meet this demand. Our proposed audit is also likely to consider the strategies and approaches for managing demand for water as a factor in meeting water supply needs.

1: Turning principles into action: A guide for local authorities on decision-making and consultation, September 2007.

2: Liquor licensing by territorial authorities, November 2007.

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