Local council financial management: assessing the impact of policy change and proposed amalgamations

Local council financial management: assessing the impact of policy change and proposed amalgamations

New South Wales (NSW) councils are tasked with providing a wide range of resources and services to their communities. However, the conditions and rules under which councils are allowed to operate are not constant. Changes in state government policies and political affiliation have the capacity to alter the focus and rules under which councils function. Political and economic events result in new and sometimes radically different requirements with which councils are required to conform. As policies change, reforms are introduced and the political landscape alters, councils are expected to alter their actions to coincide with expectations of the state government, while still meeting the needs and expectations of their respective communities. This paper evaluates the way that councils have reacted to changes in investment policy prior, and subsequent to, the Global Financial Crisis (GFC) and compares those actions to those currently being undertaken by councils in response to the state government review of local councils with a particular focus on measures of financial viability. The purpose is to demonstrate how council’s actions are influenced by changes to policy and requirements of the state government and to consider the role that accounting plays in facilitating council’s actions. One purpose of financial reports is to provide information to assist users to make valid and informed decisions, to aid planning and inform strategic decision making. Financial reports which are affected by changing requirements due to the political environment, future financial and governance decisions will also be impacted.

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