Part 4: Consulting on annual plans

Local government: Results of the 2015/16 audits.

In this Part, we discuss how local authorities responded to changes to the Act about consulting on annual plans.

Changes to consultation and community engagement processes were made in August 2014 and first took effect for the 2016/17 annual plans.10 The changes were part of broader reforms from the Government's Better Local Government program.

The changes to the Act in 2014 included:

  • making consultation requirements more flexible by repealing most requirements to use the special consultative procedure when consulting under the Act, and amending the procedure to accommodate new ways of communicating and consulting;
  • providing for a new significance and engagement policy to make it clear how and when communities can expect to be engaged in decisions about different matters; and
  • enabling more efficient and focused consultation on long-term and annual plans.

The Act now provides for a concise and focused consultation document for long-term plans and, when required, for annual plans. When consulting with their communities, local authorities now use these documents instead of detailed draft plans that have a lot of technical material.

We have reported on the changes to consultation on long-term plans in previous reports.11 Here, we focus on changes to consultation requirements for annual plans.

In the rest of this Part, we set out the changed consultation requirements and then discuss how local authorities responded.

Annual plans

Every three years, a local authority must prepare and adopt a long-term plan that covers at least the next 10 years. For the first year of the plan, the funding impact statement and financial statement in the long-term plan is regarded as that year's annual plan.12 For the second and third years of the long-term plan, the local authority must prepare an annual plan.

The purposes of the annual plan include:

  • showing the proposed annual budget and funding impact statement for the financial year to which the plan relates;
  • showing any variation from the financial statements and funding impact statement for that year included in the local authority's long-term plan; and
  • helping the local authority be accountable to the community.13

A local authority must adopt an annual plan before the start of the financial year covered by the plan. This is a necessary step in the process of setting rates for that financial year.14

Consultation process for annual plan

Before the changes to the Act in 2014, local authorities had to use a special consultative procedure for their annual plans. This required local authorities to prepare a draft annual plan for consultation and then adopt a final annual plan after considering submissions.

After the changes to the Act in 2014, a local authority:

  • no longer has to use the special consultative procedure to adopt the annual plan but must adopt the plan in a way that gives effect to the principles of consultation in the Act;15
  • does not need to consult if there are no significant or material differences from the content of the long-term plan for the financial year to which the annual plan relates;16 but
  • must prepare a consultation document when proposing significant or material differences from the long-term plan for the financial year covered by the proposed annual plan.17

The Act gives guidance about the type of differences and variations that will require consultation.18 These include:

  • significant or material variations or departures from the financial statements or funding impact statement;
  • significant new spending proposals; and
  • a decision to delay or not proceed with a significant project.

Local authorities now need to consult only on significant departures from their long-term plans. They now do this in a more focused way by preparing a concise consultation document rather than a full draft annual plan.

Combined consultation documents

The process and requirements for a consultation document for the annual plan are similar to those for adopting or amending the long-term plan. The main differences are that the consultation document does not have to be audited and that the special consultative procedure does not need to be used.

However, when consulting on a proposed amendment to its long-term plan at the same time as consulting on an annual plan, a local authority must prepare a combined consultation document that covers both matters. It must also use the special consultative procedure.

The content of the combined consultation document relating to the long-term plan amendment needs to be audited. A small number of local authorities did a combined consultation document for 2016/17.

How local authorities responded to the changes

We looked at the approaches local authorities took to the changes to the Act. In particular, we looked at local authorities that prepared a consultation document for their annual plan.

Of the 78 local authorities, 21 decided not to formally consult with their communities because they were not proposing any significant or material change from their long-term plan. Of the 21 that did not formally consult, six local authorities chose to engage with their community before adopting their 2016/17 annual plan. For example, one local authority considered public feedback, minor differences from the long-term plan, and funding requests at a public workshop. Others provided material about the content of their proposed annual plan and gave the public opportunities to provide feedback.

Although it is ultimately a decision for the elected members, in keeping with the local authority's significance and engagement policy, we commend those local authorities that took advantage of the new provisions in the Act but used new and different ways to discuss their plans for the year ahead with their communities.

Some local authorities were reluctant to depart from their established approach of consulting with communities on their annual plan. A few local authorities formally consulted on their annual plan even though the Act did not require them to.

To be confident in deciding whether to consult, elected members need to be able to rely on the advice from their officials about the process and requirements for engaging with their communities. This advice should:

  • set out the legislative requirements;
  • give a clear rationale as to whether the local authority should consult, linking to the significance and engagement policy; and
  • recommend the form and approach to such consultation based on the nature of the issues being consulted on and the audiences in the community.

We encourage local authority staff to consider whether they are providing clear advice on these matters to elected members.

10: Local Government Act 2002 Amendment Act 2014.

11: Office of the Auditor-General (2015), Matters arising from the 2015 local authority long-term plans and Consulting the community about local authorities' 10-year plans.

12: Local Government Act 2002, section 95(4).

13: Local Government Act 2002, section 95(5).

14: Local Government Act 2002, section 95(3), and Local Government (Rating) Act 2002, section 23.

15: Local Government Act 2002, section 95(2), and see also sections 82, 82A(3), and 95A.

16: Local Government Act 2002, section 95(2A).

17: Local Government Act 2002, sections 95(2), 82A(3), and 95A.

18: Local Government Act 2002, sections 95A(2) and (5).