Part 1: How long-term plans have evolved

Matters arising from our audits of the 2018-28 long-term plans

The 2018-28 long-term plans (LTPs) are the fifth set that we have audited. In this report, we discuss how councils met the main content requirements in their 2018-28 LTPs and the audit reports we issued. We also describe what we heard from two councils about their approaches to preparing an LTP.

The requirement for councils to prepare LTPs, and for the Auditor-General to audit them, was put into the Local Government Act 2002 (the Act) as part of significant local government law reform to replace the previous Local Government Act 1974.

LTPs are an important mechanism to strengthen long-term planning, community consultation and participation, and accountability in local government.

Numerous changes have been made to the Act since 2002. These have included changes to the purpose of local government; the process, purpose, and content of LTPs; and our audit role. We outline the changes in more detail in Appendix 1.

The most substantive changes affecting LTPs were a result of Government reviews between 2010 and 2014.

The main changes affecting the content of LTPs have been for the documents to contain the council's:

  • financial strategy (since the 2012-22 LTPs); and
  • infrastructure strategy (since the 2015-25 LTPs).

We continue to express our support for these two strategies.

Other changes affecting the content of LTPs include:

  • financial prudence:
    • additional disclosures in the forecast financial statements, financial prudence benchmark disclosures, and funding impact statements, in the form prescribed by regulations;1 and
  • standardised activities and measures:
    • standard groups of activities for infrastructure services (water supply, sewage treatment and disposal, stormwater drainage, road and footpaths, and flood protection and control works); and
    • some prescribed non-financial performance measures for those groups of activities, as specified in rules made by central government.2

These changes were intended to provide greater consistency between councils in their planning and reporting, and to improve the ability to assess their financial health and compare their performance. There were related changes to council annual reporting and our audit requirements.3

Despite changes to make LTPs more strategic and streamlined, the documents remain long and complex. There is a risk that they contain material that does not help them achieve their purpose.

In our view, it would be timely for the Department of Internal Affairs and the local government sector to discuss and review the content required for LTPs to ensure that they remain fit for purpose.

Particularly, we recommend that any review consider whether all the content required for LTPs is actually needed, such as some of the mandatory disclosures in the financial strategies and the duplication in the Act in the area of assumptions.

1: Local Government Act 2002, Part 1, Schedule 10, and the Local Government (Financial Reporting and Prudence) Regulations 2014.

2: Local Government Act 2002, section 261B and clause 4 of Schedule 10.

3: Local Government Act 2002, section 259C.