Part 9: Performance frameworks -grouping of activities

Matters arising from the 2009-19 long-term council community plans.

In this Part, we discuss:

Summary of our findings

In the 2009-19 LTCCPs, there was a lot of variation between how local authorities chose to group their activities. This is to be expected, because different activities are important to different local authorities and any performance framework should be tailored accordingly.

A sound performance framework will present information in such a way that the reader will be able to readily identify the links between the local authority's function, strategy, and performance goals. It will specifically identify the links between activities and the outcomes they contribute to, making clear the rationale for a local authority doing activities and producing services.

To get the performance framework right, local authorities need to present and aggregate their performance information in a clear and logical manner. There is still scope for local authorities to further improve how they group their activities.

Performance frameworks and accountability to communities

The Act promotes the accountability of local authorities to their communities, and the LTCCP is specifically intended to enable this accountability. The Act requires local authorities to decide what activities they will carry out to achieve community outcomes and well-beings, and how they will carry out those activities.

In its LTCCP, a local authority's performance information for each group of activities sets out the rationale for the local authority's involvement in each activity, the planned levels of service for the next three years, and outline information for the subsequent seven years. The information on levels of service includes performance targets against which actual levels of service can be meaningfully assessed (as reported at the end of each financial year in an annual report). An LTCCP contains activity information about assets and finances, and provides an aggregated view of the local authority's activities.

Improvements in the performance frameworks

During our audits of the 2006-16 LTCCPs, we noted that many local authorities needed to significantly improve their performance framework.

The attributes of effective performance reporting, which we had anticipated would be present in the 2006-16 LTCCPs, were often not reflected in the LTCCP or in the underlying information and assumptions. We reported that, in the 2006-16 LTCCPs, 65% of local authorities had shortcomings in their performance measures to varying extents. This meant that often there were no identifiable measures to assess how certain aspects of an activity were achieved. The performance framework should reflect the local authority's intended direction overall and for its intended direction each of its groups of activities.

In our audits of the 2009-19 LTCCPs, we found that local authorities have significantly improved their performance frameworks since the 2006-16 LTCCPs. However, there is still scope for further improvement. In our view, local authorities still need to substantially improve how they group their activities.67

Weaknesses in the grouping of activities

Appropriately grouped activities will help local authorities produce more efficient, easy to read performance frameworks.

For each group of activities, a local authority must make certain disclosures, including but not limited to:

  • the activities within the group of activities; and
  • the rationale for delivering the group of activities (including the community outcomes to which the group of activities primarily contributes).68

The aggregation, or grouping, of activities and associated performance information is important in presenting:

  • a clear and logical alignment between a local authority's objectives and priorities, and the services it delivers; and
  • concise performance information that focuses on the critical aspects of a local authority's activities, levels of service, and performance but does not swamp the reader with information.

In the 2009-19 LTCCPs, the approach to grouping of activities varied greatly between local authorities. This is to be expected, as different activities are important to different local authorities and for different reasons. Any comparison of the approaches taken by local authorities to the disclosure of groups of activities need to recognise this.

About a quarter of local authorities chose not to group their activities in the LTCCP, or did not group their activities to any significant extent. That is, the activities disclosed did not have any subcategories.

Some local authorities chose to disclose an activity statement for each significantly identifiable community asset, such as their community swimming pool, library, and community centre. Other local authorities grouped these activities under "community facilities" and established one single cost of service statement and one set of performance measures and targets for the group of activities. In this case, the information presented was often more concise, which the reader of the LTCCP is likely to prefer.

We acknowledge that there are varying levels of expenditure and different levels of perceived interest from community groups that may, in some cases, have influenced the separate treatment of some of these activities. We emphasise that providing a large amount of detailed information may reduce the clarity of performance reporting and could distract the reader from matters of strategic focus.

A small number of local authorities had identified as few as three groups of activities. However, within those groups of activities, there were a number of activities/subcategories (between 11 and 27) for which these local authorities had disclosed substantial financial information (such as cost of service statements) and non-financial information (including performance measures and targets) at the activity level.

The legislation permits performance information to be prepared at a group of activities level. Disclosing the information at an activity level, specifically in situations where an appropriate activity group structure has been identified, increases the size and complexity of the LTCCP document as a whole. Often, as a result, information gets disclosed repeatedly for similar activities.

Disclosing activities to greater levels of detail than may be necessary can mean that local authorities are creating, and subsequently monitoring and reporting against, unnecessary performance measures and targets. We observed that, in some situations, local authorities had separately identified activities that were not significant to the local authority. As a result, they needed to develop performance measures and targets for the activity statement that were by definition of lesser relevance to the reader.

This is a potential barrier to efficient and meaningful reporting, because the local authority needs to establish systems to measure progress against performance measures when often those performance measures are not meaningful to an assessment of the operations of the local authority.

This increases the risk that performance information is being disclosed for the sake of it. This is an inefficient use of a local authority's resources and mostly a distraction to the people who prepare, audit, and read the information.

There is no specified length for an LTCCP. In fact, the Act states that a local authority must include in the plan "such detail as the local authority considers on reasonable grounds to be appropriate".69

Every LTCCP produced so far has been a large document. This has implications for the overall readability and effectiveness of the document. The LTCCP is a key document for integrated decision-making and consultation with the community. Therefore, the fact that some local authorities provide too much and/or unnecessary information is a cause for concern.

Preparing for 2012

The LTCCP should provide enough information on what is important to the local authority and its community, but this must be balanced so that readers are not burdened with too much detail (and the related cost of preparing it).

We suggest that related activities should be aggregated, particularly where they have similar objectives and service provision. Aggregating the activities will also reduce the amount of repetitive information and performance reporting for related activities included in the LTCCP, annual plan, and annual report.

We expect local authorities to give further consideration to the aggregation of activities in preparing the 2012-22 LTCCPs to reduce repetitive information and ensure that meaningful performance frameworks are developed.

67: Section 5 of the Act.

68: Clause 2 of Schedule 10 of the Act. We note that the current legislative reform process is proposing some changes to performance reporting, particularly the nature of community outcomes. In our view, the proposed changes will not affect the core concepts of the performance framework, and activities will remain. See paragraphs 1.56-1.57 of this report for more information on the legislative reforms.

69: Section 93(8) of the Act.

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