Effectiveness of Support for Local Government

Tabled: 26 February 2015

5 Coordination and collaboration to support local government

At a glance

Background

The Municipal Association of Victoria (MAV) and Local Government Victoria (LGV) share a common interest in supporting councils to carry out their duties and obligations to the community, despite having different roles and functions. LGV responsibilities also include providing advice to the Minister for Local Government about both the Municipal Association Act 1907 (MA Act) and the Local Government Act 1989 (LG Act).

Conclusion

LGV and MAV have worked together on numerous support initiatives, although collaboration is not always appropriate. There is scope for them to work more closely together to identify council needs, and decide who is best placed to provide support, and how. There has been a lack of accountability and monitoring of the activities of MAV for many years, including with regard to compliance with the MA Act.

Findings

  • LGV and MAV have worked collaboratively in the delivery of support programs in areas including procurement, planning and reporting, and asset management.
  • There are no established mechanisms or protocols for coordinating planning and identifying opportunities for collaboration
  • LGV does not actively monitor MAV's compliance with the MA Act, or with approvals granted under the LG Act.

Recommendations

That LGV and the MAV:

  • review and document how and when they should work together
  • undertake regular joint strategic planning relating to council support activities.

That LGV routinely monitors the performance of MAV, including its compliance with the MA Act, and advises the Minister for Local Government accordingly.

5.1 Introduction

The Municipal Association of Victoria (MAV) and Local Government Victoria (LGV) spend large amounts of public funds in support of local government in Victoria. While both organisations have different roles and functions they share a common interest in supporting councils to carry out their duties and obligations to the community, and to facilitate more efficient and effective council operations.

Both the Municipal Association Act 1907 (MA Act) and the Local Government Act 1989 (LG Act) include objectives relating to efficient and effective local government. Where appropriate, MAV and LGV should effectively coordinate the development and delivery of support programs and activities to prevent duplication and optimise the effectiveness of their support activities and to ensure the economical use of public funds. In some situations collaboration may not be appropriate—for example, where MAV's advocacy role means it has a different position to the government.

LGV is responsible for providing advice to the Minister for Local Government, who is responsible for administering the MA Act and other legislation, including the LG Act. This advice should include monitoring compliance with relevant Acts.

5.2 Conclusion

LGV and MAV's different roles and functions mean collaboration is not always appropriate, although they have worked together on the delivery of multiple council support initiatives. While some interactions are evident, the effectiveness of this relationship and the extent to which it informs coordination and the efficiency of support activities is not clear.

There is scope for LGV and MAV to work more closely together to identify council needs, and decide who and how they are best placed to provide support to councils. The new State‑Local Government Agreement between state and local government, and local government peak bodies, provides an opportunity to document and formalise, through its forthcoming work plan, how LGV and MAV will work together in the future.

There has been a lack of monitoring of the activities of MAV for many years. LGV does not actively monitor MAV's compliance with the MA Act. There is limited evidence of LGV briefing the minister on issues related to the MA Act, except when requested to do so. LGV has also not monitored MAV's compliance with requirements associated with ministerial exemptions granted under the LG Act with regard to its group procurement activities.

5.3 Existing collaboration

There have been numerous instances where LGV and MAV have worked collaboratively in the delivery of support programs, including across areas such as procurement, planning and reporting, and asset management. Examples of collaborations include the:

  • joint development of guidance material—including relating to asset management, procurement, governance and rates
  • Councils Reforming Business initiative
  • Asset Management Performance Measures Project and MAV STEP Asset Management Program
  • Local Government Sustainability Project
  • Regional Asset Management Services Program
  • MAV participation on LGV reference groups and consultation mechanisms.

However, there are no established mechanisms or protocols for identifying where collaboration would be mutually beneficial or suitable for efficiently and effectively delivering council support.

MAV and LGV meet regularly, but the content of these discussions is not documented, although, according to both entities the meetings provide the opportunity to consider joint issues and initiatives that are being undertaken separately. While some interactions are evident, the effectiveness of this relationship and the extent to which it informs coordination and efficiency is difficult to assess. The only evidence of where formal consultation on communications occurs is through formal quarterly briefings with the minister. For these briefings, MAV leads the agenda and LGV provides the minister with discussion points about what MAV wants to discuss.

LGV's guidance also recommends and provides reference to MAV material—for example, Local Government Planning and Reporting Guide and Procurement Best Practice Guidelines. This indicates that this work was not duplicated and existing resources were used efficiently. In a broader context, LGV produced the Good Governance Guide website in partnership with MAV, the Victorian Local Governance Association (VLGA) and Local Government Professionals (LGPro) to assist councillors, mayors and council officers with governance and conduct issues. Both LGV and MAV collaborate with organisations including LGPro, VLGA and the Australian Centre for Excellence in Local Government on a range of initiatives.

Past VAGO audits have had some coverage of overlap in LGV and MAV support for councils. For example, our February 2014 report Asset Management and Maintenance by Councils found that MAV's STEP program had been useful in helping councils to improve their asset management frameworks and practices. However, the report noted there are limits to the program and more could be done to support councils to improve their asset management and maintenance capabilities. It found that LGV and MAV could improve their joint work in asset management—for example, by collaboratively reviewing the need for a central asset management website and issues councils raised around the duplication in asset data reporting requirements for LGV and MAV. The report also recommended that LGV review the use and application of the National Asset Management Assessment Framework in conjunction with MAV and councils.

Our survey of councils found a significant number of them (23 of 70) believed LGV and MAV duplicated each other's work to support councils. Only eight councils agreed that the two organisations effectively coordinated their delivery of support. These results suggest there is potential for more effective delivery of support from a more collaborative or coordinated approach.

Figure 5A

Survey results

Relevant quotes from the survey point to opportunities for greater collaboration, jointly ensuring needs are met across both organisations, and perceptions on the differing roles of LGV and MAV:

'The new MAV and LGV agreement may assist in further refining the communication gaps to ensure a more collaborative approach is achieved in legislative reform, advocacy, shared procurement, innovation and direction setting for the sector.'

'MAV support appears to have a greater metropolitan council focus and the needs of rural councils appear to be less important. An increased level of LGV support would be appreciated.'

'We view the role of LGV as a regulator of the sector. We believe MAV represents and advocates on the sectors behalf. These are different roles and require different delivery mechanisms.'

Source: Victorian Auditor-General's Office.

MAV also advised it has partnership agreements with a number of state government departments, statutory authorities and other organisations associated with local government—for example, with the Department of Education and Training, in relation to council provision of the Victorian Maternal and Child Health Service. As well as direct collaboration, MAV provides extensive referral through its Bulletins to other state and federal government initiatives and has participated on steering committees and reference groups for LGV initiatives, including the Local Government Reform Strategy Reference Group.

5.4 Opportunities for collaboration

In September 2014, the minister signed the Victorian State-Local Government Agreement, MAV signed on behalf of councils, and other signatories were the VLGA and LGPro. The agreement commits 'state and local government, and local government peak bodies [plural] to continue to work in partnership to deliver an agreed annual work plan'. LGV has advised that it is unclear what form this will take, however, it provides an opportunity to document and formalise how and on what initiatives LGV and MAV will work together in the future.

Part 2 of this report includes a recommendation that the Department of Environment, Land, Water and Planning reviews and determines MAV's functions, roles, responsibilities, powers and obligations through an analysis of its existing legal framework and applies this to the management of MAV. This review would be an opportunity to consider which support activities should be within MAV's remit, and which LGV should be responsible for, as well as those areas where both organisations may have some involvement. Following this review, it would be appropriate for MAV and LGV to undertake regular joint strategic planning activities to not only consider where they might collaborate to support councils, but to share knowledge and intelligence on council needs, the effectiveness of approaches to support and so forth.

5.5 Monitoring of the Municipal Association of Victoria

The Minister for Local Government is responsible for the administration of the MA Act. Where an Act or part of an Act falls within a minister's portfolio, that minister is responsible for the purposes of both administration of the Act in question, such as the exercise of ministerial powers, and for the administration of the Act to Parliament. The department, through LGV, has a role in supporting the minister with administrative oversight for the MA Act, as it does for other Acts in the minister's portfolio including the LG Act. This includes overseeing the performance and compliance with the MA Act but does not include directing or controlling MAV.

5.5.1 Municipal Association Act 1907

LGV has briefed the minister in relation to changes to the MAV Rules. Its advice indicated that the minister should support Rule changes because MAV has the power to make Rules under the MA Act and the changes would improve the operation and governance of the association. The most recent changes to MAV's Rules occurred in 2013, 2008 and 2006. LGV has also provided advice to the minister about the MA Act when requested, and briefed the minister in relation to meetings with MAV.

Except for these activities, LGV does not proactively monitor MAV's compliance with the MA Act, or advise its minister in relation to their accountability for the administration of the MA Act to Parliament. LGV has advised it would only do so at the request of the minister, or in relation to a program delivered by MAV which has been funded by the state.

LGV has not effectively performed its function in supporting the minister with regard to the administration and accountability of the MA Act. The lack of proactive monitoring of MAV and the MA Act means that MAV has had little or no government scrutiny of its activities. This is likely to have at least partly contributed to MAV taking on functions which are not explicit in its Act and which may be outside its mandate and intended purpose, as discussed in Part 2.

5.5.2 Local Government Act 1989

Section 186 of the LG Act provides that 'before a council enters into a contract for the purchase of goods or services, or for the carrying out of works, to the value of $100 000 (or such higher amount as may be fixed by Order in Council) or more, it must give public notice of the purpose of the contract and invite tenders from any person wishing to undertake the contract; or give public notice of the purpose of the contract or the project to which the contract relates and invite expressions of interest from any person interested in undertaking the contract or all, or any part of, the project', among other things.

This section of the LG Act also allows the minister to grant an exemption to permit councils to enter into a contract for goods, services or works in specific circumstances without first undertaking a public tender. Five exemptions have been granted since October 2012, including the granting of an approval under section 186(5)(c,) exempting councils from undertaking a tender or expression of interest process for the procurement of goods, services or works where the contract is entered into through MAV Procurement. MAV Procurement aims to leverage the combined purchasing power of councils through undertaking tenders on behalf of Victorian councils for a range of goods and services—discussed further in Part 3. This exempts councils from having to comply with the public tender requirements if they participate in any group procurement activities undertaken by MAV. However, councils are required to consider whether the tenders or a panel of tenderers would obtain value for money and must exercise discretion not merely rely on the work undertaken by an agent.

LGV recommended approval to the minister on the basis that contracts entered into through MAV Procurement will provide councils access to suppliers selected through a competitive process, and leveraging the combined purchasing power of councils will result in economies of scale and savings to them.

LGV has advised that it does not monitor MAV's procurement activities. It cannot, therefore, be assured that MAV is selecting suppliers through a competitive process or achieving cost savings for Victorian councils. Issues observed during this audit, including around probity and conflict of interest, also underscore the importance of effective monitoring.

Recommendations

That Local Government Victoria and the Municipal Association of Victoria:

  1. review and document how and when they should work together to ensure the efficient, effective and economic delivery of support to councils, including clarifying roles and responsibilities for support activities, and communicate this to councils
  2. undertake regular joint strategic planning to:
  • share knowledge and intelligence on council needs
  • agree on council support priorities and areas of collaboration
  • agree on a program of work to be reflected in the agreed annual work plan between state and local government, and local government peak bodies.

That Local Government Victoria:

  1. routinely monitors the performance of Municipal Association of Victoria including its compliance with the Municipal Association Act 1907, and advises the Minister of Local Government accordingly
  2. actively monitors entities that have been granted approvals under section 186 of the Local Government Act 1994, to ensure they comply with any requirements specified in the approval, and advises the Minister of Local Government accordingly.

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