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Changes to the Local Government Act

As most of our local government clients would be aware, there have been recent changes to the Local Government Act 1993 (NSW) (“LG Act”).  In particular, there are changes to way Councils must deal with variations to their organisational structure.  In the past, the Councillors determined the organisational structure within 12 months of their election and could make changes from time to time.  In practice, General Managers would make submissions as to the structure and Councillors would approve them.  The amended s.332 of the LG Act makes the process more prescriptive.  The section now states:

332       Determination of structure

(1)        A council must, after consulting the general manager, determine the following:

(a)        the senior staff positions within the organisation structure of the council,

(b)        the roles and reporting lines (for other senior staff) of holders of senior staff positions,

(c)        the resources to be allocated towards the employment of staff.

(1A)      The general manager must, after consulting the council, determine the positions (other than the senior staff positions) within the organisation structure of the council.

(1B)      The positions within the organisation structure of the council are to be determined so as to give effect to the priorities set out in the strategic plans (including the community strategic plan) and delivery program of the council.

[Emphasis added]

In other words, under the new subsection (1)(a), the Councillors can decide which positions are senior staff roles and, under subsection (1)(b) the roles and reporting lines of those senior staff. This is a more granular level of involvement in structure than has previously existed.  Councillors, under subsection (1)(c) can now also determine the resources to be allocated towards the employment of staff.  In effect, this could amount to a dilution of the General Manager’s ability to determine staffing needs and the allocation of resources.  For example under:

  • subsection (1)(b), the Councillors might decide that the senior staff role of Chief Financial Officer should be created, what the role will entail and that the CFO role will report to the Councillors and not the General Manager;
  • subsection (1)(c), the Councillors may wish to decide how staff will be hired (by using external head-hunters) or the size of the Human Resources Department.

General Managers technically have a lesser input into these key decisions. Under the new arrangements, the Councillors must “consult” with the General Manager before making decisions.  However, this does not mean that the Councillors must agree with the General Manager’s views.

In those instances where Councillors do not agree with their General Managers as to which positions are senior staff roles and what the reporting lines will be, General Managers may be stuck with a structure and reporting lines they do not want. This leaves General Managers with an excuse if their performance is challenged by the Councillors.  The excuse will be: “I didn’t want the organisational structure we have. You presented it to me.  The CFO doesn’t report to me.  Don’t blame me if the finances are a mess.”

However, under subsection (1A), the determination of the roles that report to senior staff is now ostensibly placed in the hands of the General Manager. All the General Manager has to do to comply with the section is consult with the Councillors.  Given that the Councillors have, under subsection (1)(c), power over the resources to be allocated towards the employment of staff, the General Manager’s ability to make staffing decisions may be less than what it appears to be.

In future, all staffing needs must also be seen through the prism of subsection (1B). This provision requires that all Council positions are to be determined so as to give effect to the priorities set out in the strategic plans (including the community strategic plan) and delivery program of the council. Clearly, there is an emphasis on strategy and planning.

What can we draw from these new statutory provisions?

In the writer’s opinion, for the new legislative requirements to work effectively, General Managers should take a leadership role with their Councillors in determining the Council’s organisation structure and present cogent reasons as to why particular positions are required and why one form of reporting line is more effective than another. In addition, General Managers should address resourcing issues in their submissions to Councillors.  This will allow for General Managers to get the organisation structure they want, but for the Councillors to be fully engaged in the decision making.