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LGA ‘Infrastructure and Asset Management (Policy and Planning) Information Paper

  • -

    July 2006

Attachment 1: Local Government Act Provisions Relating to Asset Management

Section 48 (1) – (3) provides that:

  • (1)

    A Council must obtain and consider a report that addresses the prudential issues set out in subsection (2) before the Council—

    • (a)

      engages in a commercial project (including through a subsidiary or participation in a joint venture, trust, partnership or other similar body) where the expected recurrent or capital expenditure of the project exceeds an amount set by the Council for the purposes of this section; or

    • (b)

      engages in any project (whether commercial or otherwise and including through a subsidiary or participation in a joint venture, trust, partnership or other similar body)—

      • (i)

        where the expected expenditure of the Council over the ensuing five years is likely to exceed 20 per cent of the Council's average annual operating expenses over the previous five financial years (as shown in the Council's financial statements); or

      • (ii)

        where the expected capital cost of the project over the ensuing five years is likely to exceed $4,000,000.

  • (2)

    The following are prudential issues for the purposes of subsection (1):

    • (a)

      the relationship between the project and relevant strategic management plans;

    • (b)

      the objectives of the Development Plan in the area where the project is to occur;

    • (c)

      the expected contribution of the project to the economic development of the local area, the impact that the project may have on businesses carried on in the proximity and, if appropriate, how the project should be established in a way that ensures fair competition in the market place;

    • (d)

      the level of consultation with the local community, including contact with persons who may be affected by the project and the representations that have been made by them, and the means by which the community can influence or contribute to the project or its outcomes;

    • (e)

      if the project is intended to produce revenue, revenue projections and potential financial risks;

    • (f)

      the recurrent and whole-of-life costs associated with the project including any costs arising out of proposed financial arrangements;

    • (g)

      the financial viability of the project, and the short and longer term estimated net effect of the project on the financial position of the Council;

    • (h)

      any risks associated with the project, and the steps that can be taken to manage, reduce or eliminate those risks (including by the provision of periodic reports to the chief executive officer and to the Council); and

    • (i)

      the most appropriate mechanisms or arrangements for carrying out the project.

  • (3)

    A report is not required under subsection (1) in relation to—

    • (a)

      road construction or maintenance; or

    • (b)

      drainage works.

DME 25101

7 LGA Financial Sustainability Program – www.lga.sa.gov.au/goto/fsp

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