Regulation and monitoring of local government
Undertaking in 2022


Audit background

The Local Government Act 1993 (the Act) provides the legal framework for the system of local government in New South Wales. The Act sets out the responsibilities and powers of councils, councillors and other persons and bodies. These include regulatory powers for the Minister for Local Government and the NSW Government in relation to the local government sector (councils, county councils and joint organisations).

The Department of Planning and Environment (DPE) is the primary department with responsibility for policy, legislative and program functions for local government matters, including activities to monitor and regulate the local government sector. These activities are primarily undertaken by the Office of Local Government (OLG) within DPE.

Audit objective

The objective of this audit is to assess whether DPE (OLG) is effectively monitoring and regulating the NSW local government sector under the Local Government Act 1993.

The audit will focus on the effectiveness of arrangements in place for DPE (OLG) to undertake its regulatory functions, and whether DPE (OLG) has effective mechanisms to respond to risks and issues relating to council compliance and performance.

Audit Scope

The audit will consider governance arrangements, strategic planning and performance monitoring to support DPE (OLG)’s regulatory approach and activities. It will also consider the policies, procedures and sector engagement activities used to monitor and respond to risks and issues relating to council compliance and performance. This will include consideration of the legislative powers available to DPE (OLG) under the Local Government Act 1993.

The audit will not examine:

  • the councillor misconduct framework under Chapter 14 of the Local Government Act 1993 (NSW) – noting this is under separate review commissioned by the Minister for Local Government
  • the merits or impact of DPE (OLG) decisions to exercise regulatory powers or not in particular cases
  • regulatory functions of other parts of DPE or other parts of the NSW Government which are relevant to local government entities
  • the OLG’s non-regulatory functions (such as in relation to grants administration) and the administration of legislation other than the Local Government Act 1993, including the Companion Animals Act 1998 and Impounding Act 1993
  • the performance or compliance of individual councils.

Although these topics are not under examination, we may comment on them where they are contextually relevant to our audit findings and recommendations.

Under section 27B(6) of the Government Sector Act 1983, the Auditor-General cannot question the merits of government policy objectives.

Estimated tabling period

May 2023

Agencies audited

Department of Planning and Environment

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