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‘Higher-tier government stakeholders’ will be the state or federal government ministries and agencies who can affect local governments through their policy-making, oversight, monitoring and funding powers. These groups are considered as parties that directly participate in the operations of a government department and are in a position to demand certain accountability information (Taylor & Rosair 2000). In the current study, the parties considered as the main direct participants in LGAs are the state government department responsible for local government authority, state auditor general, and Infrastructure Australia. A brief explanation of each of these stakeholder groups is given below.

4.3.2.1 State Government Department Responsible for Local Government Authority

The State and Northern Territory government departments of local government are the legislative bodies responsible for monitoring all LGAs for their financial capability and

sustainability (Pilcher & Dean 2009). Their main purpose is to strengthen the local

government sector, resulting in successful LGAs that in turn will engage and support their communities by delivering improved capabilities (DLGNSW 2012). To achieve these objectives the relevant State/Territory departments develop and maintain policies and

legislative frameworks in matters ranging from local government finance, infrastructure,

policies and frameworks are designed to ensure transparency and openness on financial arrangements and accountability of elected councillors and senior management in the LGAs (PWC 2006). The relevant Local Government Acts in all States and Territories require the LGAs to present annual reports along with financial statements and performance indicators to their relevant State and Territory government department of local government. Accordingly, the department can determine whether or not a LGA will have continued existence, leading to a greater accountability to the State or Territory Government (Kloot 2000).

According to Bryson (1995) a stakeholder who can influence the organisation’s resources is considered to be a significant stakeholder. The relevant Government Department certainly fits

this criterion. Local government revenue sources can be defined as own-source revenue and

grants and subsidies from other levels of government (as discussed in Chapter Two). State and Northern Territory government departments of local government have the power to impose legislative and regulatory constraints on raising of own-source revenue by LGAs. The other method of revenue raising source is grants and subsidies distributed by the Australian and State Governments. The State or Territory government departments allocate the financial assistance grants to local governments in their respective jurisdictions according to the recommendations of the State grants commissions in each State and the Northern Territory. In determining grant allocations, the State grants commissions are required to make their recommendations in line with National Principles under the Local Government (Financial Assistance) Act 1995 (Productivity Commission 2008). Furthermore, LGAs are required to obtain approval from State and Territory departments of local government prior to committing to major financial initiatives such as a new debt or public-private partnership (PWC 2006).

4.3.2.2 State Auditor General’s Office

Under the Westminster system of government, State audit is a vital element to ensure executive government accountability to parliament and the public (English 2003). By conducting financial and performance audits the state auditor-general’s office provides not only annotations on what has happened, but also the administrative malfunctions that have resulted in drawbacks in economic, efficient, effective and transparent policy implementation and reporting (English 2003). All LGAs across Australia are subject to frameworks of financial governance, audit and other controls (PWC 2006). These frameworks are generally specified in state and territory based local government Acts.

Table 4.1 details the role of the Auditor-General with respect to LGAs of jurisdictions in Australia.

Table 4.1: Role of the Auditor-General Regarding LGAs in Australia Juris-

diction

State Legislation Details of the Auditor General NSW Local Government Act 1993

No. 30

A council’s auditor may be:

(a) an individual who is a registered company auditor, or (b) a partnership whose members or employees include a registered company auditor, or

(c) a corporation whose employees include a registered company auditor

The Auditor -General is authorised to audit a council’s financial reports if the council fails to appoint an auditor or during any vacancy in the office of auditor.

VIC Local Government Act 1989 Auditor- means the Auditor-General

The LGA is required to submit the standard statements in the annual report and the financial statements (prepared in the manner and form

prescribed by the regulations) to the

auditor for auditing as soon as possible after the end of the financial year

The auditor must prepare a report on the standard statement, financial statement and the performance statement of the LGA and submit a copy of the report to the Minister.

QLD Local Government Act 2009 The Auditor-General prepares a report based on the financial statements prepared by the LGA

City of Brisbane Act 2010 The Auditor-General prepares a report based on the financial statements prepared by the Brisbane City Council

WA Local Government Act 1995 The local government’s auditor is to be a person who is: (a) a registered company auditor; or

(b) an approved auditor.

SA Local Government Act 1999 The auditor will be appointed by the council on the recommendation of the council's audit committee. The auditor must be:

(a) a registered company auditor; or

(b) a firm comprising at least one registered company auditor.

The Minister may, on the basis of a report on misconduct or an unauthorised action under section 129 (6)-require the Auditor-General to carry out an investigation.

TAS Local Government Act 1993 The accounts and financial statements of the council may be audited by private auditors with the approval of, and subject to any terms and conditions determined by, the Auditor-General.

NT Local Government Act The auditor must be: (a) the Auditor-General; or

(b) a registered company auditor or an authorised audit company; or

(c) a firm whose members include a registered company auditor.

4.3.2.3 Infrastructure Australia

Under the New Public Management era since the 1980s and in many contexts within the public sector, the practices of accountability, performance monitoring and measurement systems have been carried out with the intention of appraising efficiency, effectiveness and economy as value for money considerations (Johnston & Kouzmin 2010). After its electoral success in late 2007, the Federal government proclaimed that it was establishing Infrastructure Australia, an independent statutory advisory body, with the intention of providing economic, social and environmental advantages to the nation by way of improving the national productivity through quality and efficient infrastructure. Infrastructure Australia came into effect on 9th April 2008 and was established under the Infrastructure Australia Act 2008. It has 11 members, appointed by the Federal Minister for Infrastructure and Transport. Infrastructure Australia has the primary function of providing advice to the Minister, Commonwealth, State, Territory and local governments, investors in infrastructure and owners of infrastructure. Their advice covers matters relating to infrastructure, including the following scope of matters (IA 2012):

1. Australia's current and future needs and priorities relating to nationally significant infrastructure (transport, energy, communications and water infrastructure);

2. Policy, pricing and regulatory issues that may impact on the utilisation of infrastructure;

3. Impediments to the efficient utilisation of national infrastructure networks;

4. Options and reforms, including regulatory reforms, to make the utilisation of national infrastructure networks more efficient;

5. The needs of users of infrastructure;

6. Mechanisms for financing investment in infrastructure. (IA 2012)

In addition to the above stated main functions, the body is also responsible for conducting audits to determine the adequacy, capacity and condition of nationally significant infrastructure, taking into account forecast growth and developing the lists (to be known as Infrastructure Priority Lists) that prioritise Australia's infrastructure needs (IA 2012).