corporate governance committee - sutherland shire€¦ · corporate governance committee 2 december...

Business Paper

Corporate Governance Committee

Monday, 2 December 2019

6:30pm

Council Chambers,

Level 2, Administration Building,

4-20 Eton Street, Sutherland

Corporate Governance Committee 2 December 2019

ORDER OF BUSINESS

1. ACKNOWLEDGEMENT OF COUNTRY

2. APOLOGIES

3. DISCLOSURES OF INTEREST

4. CONFIRMATION OF MINUTES OF THE PREVIOUS MEETINGS

5. PRESENTATIONS

6. REPORTS FROM OFFICERS

GOV035-19 Revenue Management Policies (pg 3)

GOV036-19 Rescission of "Councillor Voting at Local Government NSW Conferences

Policy" (pg 23)

GOV037-19 Council Submission to the Office of Local Government: New Risk Management

and Internal Audit Framework for Local Councils (pg 35)

7. QUESTIONS

8. CONSIDERATION OF BUSINESS IN CLOSED SESSION

9. CONFIDENTIAL REPORTS FROM OFFICERS


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GOV035-19 REVENUE MANAGEMENT POLICIES

Attachments: Appendix A⇩ and Appendix B⇩

EXECUTIVE SUMMARY

Council’s revenue management policies have been reviewed in conjunction with new State

Government Guidelines.

A new Debt Recovery and Hardship Policy and a Pensioner Rates Policy have been developed

taking into consideration the new guidelines, and also Council’s current practices.

The new policies have been taken to the community for feedback.

The draft policies are being recommended for adoption.

REPORT RECOMMENDATION

THAT:

1. The report on Revenue Management Policies be received and noted.

2. The results of the community engagement associated with the draft Debt Recovery & Hardship

Policy and the draft Pensioner Rates Policy be noted.

3. The draft Debt Recovery & Hardship Policy and the draft Pensioner Rates Policy be adopted

by Council.


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PURPOSE

This report seeks Council's formal adoption of the Debt Recovery & Hardship Policy and the

Pensioner Rates Policy (‘the policies”).

BACKGROUND

In November 2018, the NSW Office of Local Government (OLG) issued Debt Management and

Hardship Guidelines. Councils were encouraged by the OLG to review their revenue management

policies and procedures, and give consideration to the best practice measures outlined in the

Guidelines. As a result the Sutherland Shire Council policies were reviewed.

At the September 2019 Council Meeting Council resolved (Councillor Provan/Councillor Plibersek)

that:

1. The report on Revenue Management Policies be received and noted

2. The draft Debt Recovery & Hardship Policy and the draft Pensioner Rates Policy be endorsed

for placement on public exhibition for a minimum 28 days.

3. Following public exhibition, the draft Debt Recovery & Hardship Policy and the draft Pensioner

Rates Policy be returned to Council for consideration of adoption

DISCUSSION

To better support the implementation of Council policy, and create a better experience for the

customer, the Rates Recovery & Hardship Policy has been divided into two separate revenue

management policies:

1. Debt Recovery & Hardship Policy (Appendix A); and

2. Pensioner Rates Policy (Appendix B).

Debt Recovery & Hardship Policy

This policy is to ensure effective controls, policies and procedures are in place with respect to the

collection of outstanding debts owed to Council.

The existing Rates Recovery & Hardship Policy only considers debts that relate to rates and annual

charges and does not consider any other types of debt owed to Council. The scope of the new Debt

Recovery & Hardship Policy will cover all debts owed to Council.

The new policy has been developed and has considered the objectives and guiding principles set out

in the OLG Guidelines. All content relating to eligible pensioners and concessions will be contained in

the Pensioner Rates Policy.

The new policy will not impose a higher standard or allow for a lower standard than what is currently

required under the existing policy.


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Pensioner Rates Policy

The scope of the new Pensioner Rates Policy will cover all aspects of an eligible pensioner’s Council

Rates and Charges. This newly created policy attempts to clearly set out Council’s position to eligible

pensioners in the community and also provide guidance to staff when applying policy principles.

Relevant sections of the OLG Guidelines have been taken into consideration when developing the

new policy. The new policy will not impose a higher standard or allow a lower standard than what is

currently required under the existing policy. The new policy does create the mechanism which will

allow for the acceptance of Pensioner Concession Applications online and over the phone.

RESOURCING STRATEGY IMPLICATIONS

There are no immediate budget implications associated with the adoption of either the Debt Recovery

& Hardship Policy or the Pensioner Rates Policy. A continual and prudent approach to the

management of Council debtors mitigates the risk of cash flow and liquidity issues.

COMMUNITY ENGAGEMENT

The policies were placed on public exhibition from 24 September 2019 to 22 October 2019.

As part of Council’s community engagement a Join the Conversation page was created in relation to

the review of the Revenue Management policies. The engagement was advertised in The Leader on

02 October 2019, where the community was guided to Council’s website and also provided with a

telephone number to call. There were 39 visits to the ‘Join the Conversation’ page with 9 downloads of

the documentation during the 28 day period with only 1 submission being received at the close of the

engagement.

Submission Submission Response

1 It is grossly unfair that Pensioners get relief from our high rates whereas

self-funded retirees get nothing.

Response: Council is required under section 576 of the Local Government Act 1993 to grant a

rebate on the rates and charges of an eligible pensioner upon application. The ‘eligible pensioner’

definition in clause 134 of the Local Government (General) Regulation 2005 does not include self-

funded retirees. The definition stated in clause 134 facilitates a rigid verification process.

No changes have been made to the draft policies as a result of the community engagement.

STRATEGIC ALIGNMENT

Community Strategic Plan Strategy Delivery Program (2017-2021) Deliverables

1.4 Ensure community confidence in Sutherland Shire council.

1E Implement the Finance Strategy including the

Long Term Financial Plan.


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POLICY AND LEGISLATIVE REQUIREMENTS

The new policies comply with all legislative requirements under the Local Government Act 1993.

CONCLUSION

The draft Debt Recovery & Hardship Policy and Pensioner Rates Policy have both been publicly

exhibited, with only one submission being made through the community engagement. As a result there

have been no changes made to the draft policies and they are now recommended for adoption by

Council.

RESPONSIBLE OFFICER

The officer responsible for the preparation of this report is the Chief Financial Officer, Mitch Woods,

who can be contacted on 02 9710 0151.

File Number: 2017/278520


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GOV036-19 RESCISSION OF "COUNCILLOR VOTING AT LOCAL GOVERNMENT

NSW CONFERENCES POLICY"

Attachments: Appendix A⇩ and Appendix B⇩

EXECUTIVE SUMMARY

At its meeting on 19 November 2001, Council resolved “That Councillors be required to support

Council resolutions as delegates except where they did not support the resolutions adopted by

Council” (FIN134-02).

Following this Resolution, a Council Policy ‘Councillor Voting at Local Government NSW

Conferences Policy’ was implemented, consisting only of the aforementioned Resolution.

This reports recommends that Council resolve to rescind the ‘Councillor Voting at Local

Government NSW Conferences Policy’ on the basis that the directive contained within the

Policy is incorporated into the annual Resolution of Council when determining voting delegates

for the annual Local Government NSW Conference.


THAT:

The ‘Councillor Voting at Local Government NSW Conferences Policy’ be rescinded.


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PURPOSE

This reports recommends that Council resolve to rescind the ‘Councillor Voting at Local Government

NSW Conferences Policy’ and to incorporate the directive in that policy into the annual Council

Resolution when determining voting delegates for the annual Local Government NSW Conference.

BACKGROUND

At its meeting on 19 November 2001, Council resolved that “Councillors be required to support

Council resolutions as delegates except where they did not support the resolutions adopted by

Council” (FIN134-02) – see Appendix A.

Following this Resolution, the policy ‘Councillor Voting at Local Government NSW Conferences Policy’

(see Appendix B) was created and published, consisting only of the aforementioned Resolution. The

policy document has been reviewed by Council officers but has not been submitted to Council for

review in the intervening years.

DISCUSSION

The Councillor Voting at Local Government NSW Conferences Policy, consists of one sentence of text

as follows:

“When voting on motions at the Annual LGNSW Conference, Councillors who have been

appointed as Delegates of Council are required to support Council resolutions, except where

they did not support the resolutions when adopted by Council.”

The ‘Councillor Voting at Local Government NSW Conferences Policy’ was first created in 2001 and

although it was not formally adopted by Council at that time as a policy document, it has subsequently

been adopted as one of the policies of Council (most recently at the 14 December 2015 Council

meeting - FAS026-16). Further it has been referenced in reports to Council concerning the Local

Government Conference on an intermittent basis since then.

The directive contained in the policy is better placed through incorporation into the annual report to

Council when determining voting delegates for the Local Government NSW Conference, should the

Council of the day choose to do so.


The Councillor Voting at Local Government NSW Conferences Policy is the responsibility of the

Governance, Risk and Compliance Unit utilising existing resources.

STRATEGIC ALIGNMENT



1L Review and implement the Governance Framework.


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CONCLUSION

The Councillor Voting at Local Government NSW Conferences Policy consists of one sentence of text,

which can be incorporated into future annual resolutions of Council when determining voting delegates

for the annual Local Government NSW Conference, should the Council of the day choose to do so.

RESPONSIBLE OFFICER

The officer responsible for the preparation of this report is the Manager Governance, Risk and

Compliance, Anton Usher, who can be contacted on 02 9710 0713.



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GOV037-19 COUNCIL SUBMISSION TO THE OFFICE OF LOCAL GOVERNMENT:

NEW RISK MANAGEMENT AND INTERNAL AUDIT FRAMEWORK FOR

LOCAL COUNCILS

Attachments: Appendix A⇩

EXECUTIVE SUMMARY

In 2016, the NSW Government made it a requirement under the Local Government Act 1993

(LGA) that each council have an Audit, Risk and Improvement Committee (ARIC). As part of

this reform, councils were also required to proactively manage any risks they face under new

guiding principles in the LGA. Although the ARIC requirement comes into effect after the 2020

local government elections, Council has elected to be early implementers and its ARIC

commenced operation in May 2017.

Since the 2016 reforms, the NSW Government has worked to develop the regulatory framework

that will support operation of the ARIC and establishment of risk management and internal audit

in each council.

The Office of Local Government (OLG) have released a Discussion Paper “A New Risk

Management and Internal Audit Framework for Local Councils in NSW” that details the

regulatory requirements and operational framework being proposed. Councils have been invited

to provide their feedback on the proposed framework which is due to the OLG by 31 December

2019.

A draft submission has been prepared for Council’s consideration and endorsement. This draft

submission supports the fundamentals underpinning each of the nine Core Requirements in the

proposed framework but raises concerns with some of the elements in three of the Core

Requirements.


THAT:

1. The Report “Council Submission to the Office of Local Government: New Risk management

and Internal Audit Framework for Local Councils” be received and noted.

2. The draft submission to the Office of Local Government (attached at Appendix A) be

endorsed.

https://www.olg.nsw.gov.au/sites/default/files/A%20new%20risk%20management%20and%20internal%20audit%20framework%20for%20local%20councils%20in%20NSW%20-%20discussion%20paper.pdf



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PURPOSE

This report seeks Council’s endorsement of the draft submission to the Office of Local Government on

the Discussion Paper: A New Risk Management and Internal Audit Framework for Local Government.

BACKGROUND

Amendments made to the Local Government Act 1993 (LGA) in 2016 required each council to be

financially sustainable, continuously review its performance, properly exercise its regulatory functions,

operate honestly, efficiently and appropriately, and have sound decision-making and risk management

practices (sections 8A-8C and 223).

These LGA amendments also required each council to establish an Audit, Risk and Improvement

Committee (ARIC) to continuously review and provide independent advice and assurance on council’s

risk management and internal controls (section 428A). The amendments also envisaged the

establishment of a risk management framework and internal audit function in each council to support

the work of the ARIC.

Since the 2016 reforms, the NSW Government has worked to develop the regulatory framework that

will support operation of the ARIC and establishment of risk management and internal audit in each

council. The Office of Local Government (OLG) have released a Discussion Paper “A New Risk

Management and Internal Audit Framework for Local Councils in NSW” that details the regulatory

requirements and operational framework being proposed (the OLG have also released a Snapshot

Guide to this Discussion Paper). Councils have been invited to provide their feedback on the proposed

framework. That feedback is due to the OLG by 31 December 2019.

The OLG Discussion Paper proposes nine Core Requirements for councils to implement over a six

year time period. The Core Requirements are:

1. Appoint an independent Audit, Risk and Improvement Committee

2. Establish a risk management framework consistent with the current Australian risk management

standards

3. Establish an internal audit function mandated by an Internal Audit Charter

4. Appoint internal audit personnel and establish reporting lines

5. Develop an agreed internal audit work program

6. How to perform and report internal audits (in accordance with International Professional

Practices Framework (IPPF) and current Australian risk management standards)

7. Undertake ongoing monitoring and reporting (of internal audit activity)

8. Establish a quality assurance and improvement program

9. Councils can establish shared internal audit arrangements




https://www.olg.nsw.gov.au/sites/default/files/A%20new%20risk%20management%20and%20internal%20audit%20framework%20for%20local%20councils%20in%20NSW%20-%20snapshot%20guide.pdf

https://www.olg.nsw.gov.au/sites/default/files/A%20new%20risk%20management%20and%20internal%20audit%20framework%20for%20local%20councils%20in%20NSW%20-%20snapshot%20guide.pdf


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DISCUSSION

Current Position

In 2017, Council elected to adopt the 2016 LGA risk and internal audit amendments by commencing

implementation of:

an ARIC with three independent and two Councillor members that operates with a Charter

covering all requirements outlined in section 428A(2) of the LGA.

a co-sourced internal audit function, reporting through the Manager of Governance, Risk and

Compliance to the Director of Corporate Support that is working towards full compliance with

the IPPF standards, and

an enterprise risk management framework that is being implemented to fully align with the AS /

ISO 31000 risk management standard.

Outline of Proposed Council Submission

In summary, having regard to the strength of Council’s existing risk management and internal audit

structure, approach and oversight, the draft submission states the fundamentals underpinning each of

the nine Core Requirements in the proposed Framework are generally supported, with the following

exceptions, where elements in the proposed Framework are considered unnecessarily restrictive and

unbalanced:

1. Removal of Councillors as members of ARIC

Removal of Councillors from ARIC membership deprives it of community representation in

Council’s risk management and internal audit processes.

2. Increased remuneration of independent ARIC members in line with NSW State

Government Agency ARIC member remuneration

The State Government Agency ARIC member remuneration model does not take into

consideration the restricted budget under which Council operates.

3. Mandating the appointment of an additional C-Suite level Chief Audit Executive, with

equal footing to the Chief Executive Officer

The proposed requirements for the Chief Audit Executive place the role as an additional C-

suite level officer, and present an additional cost burden to Council for a negligible benefit

when compared with the option of internal reporting lines through established governance

and/or risk management functions within Council.

4. Removal of functional responsibility for the internal assurance/audit program and

internal audit staff from the Chief Executive Officer’s contract and assignment of this

functional responsibility to the ARIC

The ARIC not the Chief Executive Officer retains functional responsibility for the internal audit

function but the Chief Executive Officer remains responsible to attest compliance with the

internal audit requirements.


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5. Mandating of an annual attestation from the Chief Executive Officer on the degree to which

Council’s risk management and internal audit processes meet the regulatory requirements

The annual compliance attestation process creates an additional compliance burden for Council

with limited if any value.

The full draft submission for Council’s approval is attached at Appendix A.


Implementation of Council’s risk management framework and internal assurance program is currently

resourced within the Governance, Risk and Compliance budget.

Share service arrangements are contemplated in the proposed Framework and this may mitigate

some of the implementation costs associated with the proposed Framework. It is expected that

consideration of the viability and capacity of such arrangements must have regard to the:

size of the council (staff and budget)

geographical and functional distribution of the council’s operations

complexity of the council’s core business

risk profile of the council’s operations

expectations of stakeholders, and

likely demands placed on the ARIC, Chief Audit Executive (and internal audit function) by

other councils in a shared arrangement.

Taking into account these considerations, and assuming a part-time Chief Audit Executive would be

required at 50% of a full time equivalent (FTE), should the proposed Framework be implemented

without the changes proposed in the draft submission, Council would incur an additional cost of

approximately $125,349 p.a. or $1,253,490 over the ten year Long Term Financial Plan – comprising:

the addition of a C-Suite level Chief Audit Executive to the current Executive team (circa

$200,000 p.a. FTE), and

a $25,349 p.a. increase in the current fees paid to independent ARIC members (from $16,800

p.a. to $42,149 p.a.), assuming a five person ARIC with all independent members is required.

STRATEGIC ALIGNMENT



1L Review and implement the Governance Framework.

POLICY AND LEGISLATIVE REQUIREMENTS

Local Government Act 1993

AS/ISO 31000 Risk Management Standard

International Professional Practices Framework


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CONCLUSION

The OLG Discussion Paper, A New Risk Management and Internal Audit Framework: for local councils

in NSW, has been released for feedback, required by 31 December 2019.

The draft submission on behalf of Council supports the fundamentals underpinning each of the nine

Core Requirements in the proposed Framework but does not support certain elements of three Core

Requirements on the basis they are unnecessarily restrictive and unbalanced.

RESPONSIBLE OFFICER

The officer responsible for the preparation of this report is the Manager Governance, Risk &

Compliance, Anton Usher, who can be contacted on 02 9710 0713.





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