1.1
In this Part, we look at:

• the statutory purpose of consultation documents;
• our audit work; and
• our audit reports.

The purpose of a consultation document

1.2
In August 2014, the Local Government Act 2002 (the Act) was amended to require councils to prepare consultation documents. Councils produced these documents for the first time in 2015. The consultation document replaced the draft long-term plan and its summary as the legally required means for councils to consult their communities on their long-term plans. We reported our findings on the 2015-25 consultation documents in August 2015.¹

1.3
The Act states that the purpose of a consultation document is to provide an effective basis for public participation in local authority decision-making processes about the content of a long-term plan.²

1.4
The Act requires a consultation document to achieve this by:

(a) providing a fair representation of the matters that are proposed for inclusion in the long-term plan, and presenting these in a way that—
   (i) explains the overall objectives of the proposals, and how rates, debt, and levels of service might be affected; and
   (ii) can be readily understood by interested or affected people; and

(b) identifying and explaining to the people of the district or region, significant and other important issues and choices facing the local authority and district or region, and the consequences of those choices; and

(c) informing discussions between the local authority and its communities about the matters in paragraphs (a) and (b).

1.5
Although councils are free to decide what to put in their consultation documents to meet the Act's requirements, there are some mandatory requirements.

1.6
A council must also ensure that it presents the contents of its consultation document in a form and manner that provides an effective basis for public participation in local authority decision-making.³

1.7
The overall legislative requirements are clear. A consultation document should provide members of the public with an explanation of the important issues the council faces during the next 10 years, the council's options for addressing those issues, and how those options might affect the financial position of both the council and members of the public.

1.8
The consultation document should be presented in a way that the public can readily understand and that enables them to provide informed comments and submissions to the council if they wish to.

1.9
The consultation document must be presented in a concise and simple manner. It is intended to be short and accessible. It should present only the most important issues for the community to consider.

1.10
The consultation document is not intended to summarise the full content of the long-term plan. However, it must set out the main matters that a council proposes to include in its long-term plan. A consultation document must not contain, or have attached, a draft long-term plan or a full draft of any policy or strategy.

1.11
Before adopting a consultation document, a council must prepare and adopt the underlying information that the content of the consultation document relies on.⁴ The consultation document must state where members of the public can access this information.

Our audit work

1.12
The Act requires each consultation document to contain an audit report from the Auditor-General providing an opinion on:

• whether the consultation document gives effect to its purpose; and
• the quality of the information and assumptions underlying the information provided in the consultation document.⁵

1.13
We therefore audited each council's consultation document to determine whether it provided an effective basis for consultation (with a particular emphasis on whether it fairly represented the matters a council proposed to include in its long-term plan). We determined whether the consultation document identified and explained the main issues and choices facing a council and the consequences of those choices.

1.14
We also audited councils' underlying supporting information, to determine its reasonableness.

1.15
Our role is to assess whether the consultation document is fit for purpose. We assess whether the consultation document covers what it needs to and whether it "does the job". We are not required to give a view on whether a council has met all the requirements of the Act from a legal perspective.

1.16
However, there is an element of legislative compliance to our role, including considering the mandatory content requirements for consultation documents. We consider whether those important components are present. This does not involve checking that every last detail lines up with the Act, regulations, or prescribed forms.

Our audit reports

1.17
We issued unmodified audit opinions for all consultation documents audited.⁶ This means that we considered all of the consultation documents to be fit for purpose. In 2015, we also issued unmodified audit opinions for all of the 2015-25 consultation documents.

1.18
We drew attention in our audit reports to important disclosures made in seven consultation documents. (In 2015, we issued eight non-standard audit reports.) We did this because, in our view, the disclosures we drew attention to needed to be considered by the community when submitting their responses to the consultation documents.

1.19
The Appendix contains summaries of the disclosures included in these seven audit reports. The disclosures ranged from highlighting the uncertainties related to some councils' funding assumptions to drawing attention to the uncertainties related to some of the proposed programmes of work.

1.20
The disclosures we highlighted for four of the seven consultation documents were about central government funding. When councils were ready to consult on their long-term plans, there was uncertainty about the funding that central government would contribute to the projects or initiatives. Local and central government have different planning cycles and make funding decisions at different times.

1.21
We were satisfied that, for these four consultation documents, the councils reasonably forecast funding amounts from central government based on the information they had when they adopted the consultation document.

1.22
Councils facing this scenario need to carefully consider how it will affect their consultation with their communities. There is an increased risk that, if funding from central government is different from what the council forecast, the council might need to do more consultation with the community.

Timeliness for adopting consultation documents

1.23
The adoption of the consultation document is an important stage for councils as they prepare their long-term plans. Councils are required to adopt a long-term plan before the start of the first financial year to which it relates.⁷ Therefore, the consultation document needs to be adopted early enough so a council can complete its consultation requirements and make any changes necessary to its long-term plan by 30 June.

1.24
Eighteen councils adopted the consultation document before March 2018. Only 10 councils did so in 2015. Forty councils adopted their consultation document in March 2018, compared with 42 councils in March 2015. We are satisfied that these councils gave themselves enough time to adopt the long-term plan by 30 June.

1.25
Three councils adopted consultation documents in May 2018, which was later than planned.⁸ These councils did not give themselves much time before 30 June to complete the necessary steps to adopt their long-term plans. Councils that do not adopt their long-term plans by 30 June are exposed to risk, because they are unable to set the rates for 2018/19 until the plan is adopted.⁹

1.26
Of the three councils, two did not adopt their long-term plan by 30 June. We will comment on this further in another report, which will set out our findings on long-term plans.

1: Office of the Auditor-General (2015), Consulting the community about local authorities' 10-year plans, Wellington.

2: Section 93B of the Local Government Act 2002.

3: Section 93F of the Local Government Act 2002.

4: Section 93G of the Local Government Act 2002.

5: Section 93D(4) of the Local Government Act 2002.

6: We did not audit the consultation document prepared by Kaikōura District Council. An Order-in-Council in March 2018 allowed the Council to prepare a customised three-year plan in place of the standard 10-year long-term plan. There was no audit requirement for the three-year plan. This approach was agreed by the Government because the Council was facing exceptional circumstances after the Hurunui/Kaikōura earthquake. A similar approach was taken to support Christchurch City Council after the Canterbury earthquakes.

7: Section 93(3) of the Local Government Act 2002.

8: The three councils were Wairoa District Council, West Coast Regional Council, and Westland District Council.

9: Section 23 of the Local Government (Rating) Act 2002.