Part 3: Amendments to Long-Term Council Community Plans

Local government: Results of the 2006/07 audits.

In this Part, we describe the legislative and operational processes for amending Long-Term Council Community Plans (LTCCPs). We also provide an overview of the amendments that have been carried out by local authorities since the adoption of 2006-16 LTCCPs.


The Local Government Act 2002 (the Act) requires local authorities to have an LTCCP “at all times”.1 The LTCCP must be audited2 and the plan remains in force for three years.3

The LTCCP does not a commit a local authority to act. However, there are certain decisions that can only be made and acted on if they are provided for in the LTCCP. If these decisions are not already included in the LTCCP, an amendment is necessary. Decisions that require an amendment are:

  • significant new activities proposed by regional councils (section 16);
  • significant alterations to an intended level of service provision for any major activity; the transfer of ownership or control of a strategic asset; the construction, replacement, or abandonment of a strategic asset; and decisions about an activity in the LTCCP affecting the capacity of, or cost to, the local authority (section 97);
  • amendments to funding and financial policies (section 102(6)); and
  • sale or exchange of endowment property (section 141).

Section 93(4) allows the LTCCP to be amended at any time. Section 84(4) requires every proposal to amend the LTCCP to be audited.

The LTCCP retains its adopted form unless it is amended. A local authority can seek an amendment only when it follows the special consultative procedure set out in section 93(5) of the Act.

A local authority may decide to amend an LTCCP at any time, although most amendments are likely to be considered with the annual planning process.

Each year a local authority is required to adopt an annual plan.4 The primary purpose of the annual plan is to support the adopted LTCCP (in enabling integrated decision-making). It outlines the proposed budget for the financial year to which it relates. Its purpose includes “identify[ing] any variation from the financial statements and funding impact statement included in the LTCCP”.5

However, the annual plan, containing the LTCCP variations, does not replace the LTCCP. This means that the annual plan:

  • does not replace the existing LTCCP “numbers” or other forecast information;
  • is adopted through the special consultative procedure,6 but it is not subject to audit; and
  • does not “amend” the LTCCP. Although a local authority will adopt an annual plan, it has no direct effect on the LTCCP. The existing LTCCP remains “in force” without change.

The annual plan sits alongside the LTCCP as a record of annual variations rather than being integrated with the existing LTCCP. We discuss the difference between a variation in an annual plan and an amendment to an LTCCP in paragraphs 3.22- 3.24.

Overview of amendments by the sector

During the period from 1 July 2006 to 31 December 2007, 11 city councils, six regional councils, and 27 district councils completed 51 LTCCP amendment processes. These amendments addressed 155 issues that resulted in changes to their 2006-16 LTCCPs.

Three local authorities each proposed one amendment for consultation within four months of the adoption of the 2006-16 LTCCPs. Each of these local authorities has since carried out another amendment process (in the period to 31 December 2007). Four other local authorities also completed two amendment processes during the 2007 calendar year.

Forty-two local authorities carried out an LTCCP amendment process in conjunction with the 2007/08 annual planning process.

An LTCCP amendment process usually addresses between one to four major changes to the adopted 2006-16 LTCCP. However, a small number of amendments covered a greater number of issues. The largest number of issues within one amendment was 11.

After the consultation process and the assessment of public submissions, it was rare for the original amendment proposal to change. In the vast majority of cases, the amendment was adopted without any changes.

Nature of amendments

The most common and significant amendment issue related to changes to the revenue and financing policies of a local authority. Twenty-three local authorities made changes of this kind. This was closely followed by 19 local authorities who made changes to their development contribution policies.

The requirements of section 102(6) of the Act force any change to a funding or financial policy to be an amendment. The 42 amendments noted in paragraph 3.12 ranged from very small changes to wording within these policies (with minimal effect on ratepayers) to much more substantial and complex changes reflecting fundamental changes to the previous policy. Usually the more complex changes were made only for a specified or limited sphere of activities rather than for all activities.

Interestingly, 12 amendments related to new capital projects or the start of new activities where the 2006-16 LTCCP had not included the operational or capital costs associated with the projects. Some indication of the project, as yet unspecified and uncertain, was often included in narrative to the 2006-16 LTCCP. In addition, four amendments related to significant cost increases for projects that had previously been included in the LTCCP. Another four amendments related to significant changes to the timing of large capital projects.

Other main areas where amendments were made were:

  • changes to rating policies;
  • changes to underlying assumptions;
  • changes to levels of service;
  • changes to the structure of the performance management framework;
  • a proposal to sell endowment property;
  • a proposal to sell a strategic asset; and
  • the creation of a new council-controlled organisation.

There were a large number of other proposals that were unique to a particular local authority.

We and our appointed auditors have made a considerable effort to look for issues that may give rise to an LTCCP amendment. On the whole, there has been a high level of communication between the sector and auditors about these issues. In most instances, it is reasonably clear when an amendment process is triggered. However, particularly when issues arise that reflect a change in the intended level of service provision7 or a change to the cost of an activity,8 judgement is required to assess whether the change is significant enough to trigger the amendment process.

Good communication between the sector and auditors is important to help promote consistency in the approach to issues where “significance” must be assessed.9 This will help to determine whether the issue should be processed through the annual plan or as an amendment.

Audit requirements for amendments

The audit requirement for an amendment reflects the distinction between a local authority adopting variations from the existing LTCCP (essentially for annual rating purposes) compared to making a change of such scale that it requires specific public consultation on the proposed changes and their impact and auditor’s assurance in the manner intended by section 84(4) of the Act. Under section 97 of the Act, the distinction is based on the “significance” of the matter proposed. If a change is deemed “significant”, then it must be treated as an amendment rather than a variation. Sections 16, 102, and 141 do not directly relate to “significance” but are specific events deemed to be significant by the Act.

The primary annual planning requirement for a local authority is to identify variations from existing plans (with the consequential effect on rating levels and levels of service). Where local authorities wish to change their previously expressed intent in a “significant” manner, they must pursue a separate amendment. While an amendment is subject to a separate consultation process, the Act recognises that it may be efficient for this to be carried out with an annual plan process. It needs to be clear to the community that it is being consulted on two counts – one on setting the annual plan for the year, and the other on a change to the 10-year plan.10

The main issue for a local authority is assessing what constitutes an amendment, in contrast to the normal and expected annual variations from the 10-year plan. We have noted since the adoption of the 2006-16 LTCCPs that this assessment often requires a significant amount of professional judgement. The difference between variations and amendments is not always clear cut.

Reporting on the amended Long-Term Council Community Plan

The audit report

In contrast to the requirement to issue an audit opinion on the LTCCP Statement of Proposal and at the point when the LTCCP is adopted, there is no statutory responsibility for the auditor to report on the adopted amendment. However, section 84(4) of the Act requires that every proposal to amend the LTCCP is to be audited.

This position is unsatisfactory from both an auditor’s and, more particularly, a reader’s perspective. It does not make clear what has been audited during the LTCCP amendment process.

Without the specific legislative requirement for the auditor to issue an opinion, we felt there was a need to inform the reader about the amended LTCCP and the extent of the auditor’s involvement. To achieve this, we established a process where a local authority is asked to add a statement or “alert” to the amended LTCCP document. This ensures that the reader is aware of the extent of audit review that the amended LTCCP has been subject to. The original opinion issued on the adopted LTCCP still remains part of the LTCCP and the “alert” is published alongside the original opinion.

In the longer term, we would prefer to see the Act clarified to resolve this reporting anomaly.

Format of reporting on the amended Long-Term Council Community Plan

The intent of the Act is that, once an amendment is adopted, the existing LTCCP is updated with that amendment, and the two documents merge.

Very few local authorities have produced a new “hard copy” of their amended LTCCP. In addition, we note that most local authorities that have completed amendments have not actually updated their LTCCP after adopting the amendment. For efficiency reasons, they have chosen to publish the amendment (on their website) as a separate document associated with the original LTCCP. Although this is not strictly consistent with the intent of the Act, we have accepted it as a practical and cost-effective approach. There needs to be a clear link between the two documents, and the amendment needs to be easily related to the original LTCCP.

We are satisfied that local authorities have been appropriately sensitive about the nature of the amendment when they have decided to attach the amendment to the original plan. They have also done so when publishing a new LTCCP document with the amendment fully merged into the original LTCCP. This decision has largely been based on the extent to which the amendment generates consequential amendments to other parts of the original LTCCP.

1: Section 93(1) of the Act.

2: Section 94 of the Act.

3: Section 93(3) of the Act.

4: Section 95(1) of the Act. Note that, by virtue of section 95(4), the LTCCP constitutes the annual plan for the first year to which it relates.

5: Section 95(5)(b) of the Act.

6: Section 95(2) of the Act.

7: Section 97(1)(a) of the Act.

8: Section 97(1)(d) of the Act.

9: In relation to section 97 of the Act.

10: Section 83A of the Act (the result of amendment in 2006) clarifies that the two consultations (annual plan and any amendment) can be pursued concurrently. It should also be noted that “amendments” are not limited to being concurrent with an annual plan process. A local authority can carry them out at any time during a year.

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