Report Date
: 20 April 2016
To
: Mayor and Councillors
Tararua District Council
From
: Malcolm Thomas
Strategy and Policy Adviser
Subject
:
Section 17A Service Review Process and Criteria
Item No :
10.3
1.
Reason for Report
1.1
The Local Government Act 2002 (LGA) now requires that a service delivery
review should periodically assess:
“the cost-effectiveness of current arrangements for meeting the needs of communities
within its district or region for good quality local infrastructure, local public services, and
performance of regulatory functions”.
1.2
A review of services is a mandatory requirement when there is:
1) Significant change to levels of service
2) A contract or agreement that is within 2 years of expiration and that
contract is deemed significant by the Council
1.3
Regardless of the above, the LGA (
Clause 2, schedule 1AA) requires that all services
are reviewed by 8 August 2017. After this first review, there is a six-year cycle of
mandatory reviews, or whenever a review is triggered by the above two triggers.
1.4
Staff are now progressing the service reviews. The Council is being asked to
approve the proposed process, criteria and indicative timetable so that the service
reviews can start to be delivered through to the Council for discussion and
decisions.
2.
Introduction
2.1
The Local Government Act 2002 (LGA) now puts a requirement on the Council
to consider more efficient and effective structures in the delivery of services.
2.2
The LGA in Section 17A sets out a requirement to review, on a regular basis, al
Council services. The initial date that all services must comply with Section
17A is 8 August 2017.
2.3
Not all services will require a ‘full’ review looking at costing and analysing the
current service delivery against mandatory options. At Council’s discretion service
reviews are not required where:
• Council is legally obliged to deliver the service
• Council has a binding contract that has more than 2 years to run (from
August 2017)
• Council has recently carried out a review that considers the mandatory
choices
• Council considers that the costs of a review outweigh the benefits
o Smal service area
o Contract value below a determined threshold
2.4
For those services not exempt for any of the above reasons, the Council is
required to carry out a detailed review. The review must consider the mandatory
options (but other options should be considered if sensible):
a) in-house governance, funding and delivery
b) in-house governance and funding, but
a. delivery by a CCO, whether wholly owned by the local authority, or a CCO
where the local authority is a part owner
b. another local authority
c. another person or agency (for example central government, a private sector
organisation or a community group)
c) responsibility for governance and funding is delegated to a joint committee or other
shared governance arrangement, with delivery options as set out in b).
2.5
The Council has discretion on a number of key criteria that will shape the
review process. Council needs to set:
• the grouping of the services to be reviewed
• the dollar value of contracts that are deemed significant
• any other factors that wil result in a service being reviewed.
2.6
The LGA does not define the services or what is deemed significant. The
Significance and Engagement Policy gives the Council guidance on this matter.
Essentially, there are a few services such as Civil Defence, which are
‘significant’ but have a relatively low cost.
2.7
An initial project plan was formed in June 2015 and the overal project
confirmed as part of the TDC work programme over 2015/16 and 2016/17.
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Report on Section 17A Service Review Process and Criteria
27 April 2016
The Council received a briefing based on the project plan in August 2015 and
expressed a desire to minimise the scale of the work where possible.
2.8
Since then the Society of Local Government Managers (SOLGM) has issued
good practice guidance, and considerable discussion on the reviews has taken
place in and between councils. Most councils have yet to make substantial
progress on the service reviews.
2.9
SOLGM guidance has emphasised that the term cost-effectiveness is not the same
thing as ‘least cost’. The Council still has a value judgement decision to make in
each review.
2.10
During the 2015 - 25 Long Term Plan (LTP) process the Council resolved to carry
out a funding review for each activity. It was further resolved that this funding
review would be carried out as part of the service reviews.
2.11
An important distinction is that these service reviews do not include a review
of service levels. That wil take place as part of the 2018 – 28 LTP process
during 2017. Expected changes to levels of service wil need to be considered
though as these may change the timing of the service reviews. The service
review process wil be a useful background for Council ors and may lead to
specific levels of service discussions with the community.
3.
Issues
3.1
Criteria
3.1.1
Not all contracts will trigger a review. The LGA allows councils to not carry out
a review if the costs outweigh the benefits – that is if the contract is not large
enough to be significant.
3.1.2
The proposed trigger level for contracts and services to be significant is
$250,000 a year. This is relatively high for the Council and means that few
contracts expiring will cause a service review trigger. This will lower the
number of service reviews and concentrate resources on the most significant
services.
3.1.3
Contracts and / or services less than this may trigger a review if they generate
large political or public interest. The Significance and Engagement Policy is the
guidance policy on this.
3.2
Services to be Reviewed and Timing
3.2.1
Officers have assessed the current services delivered by the Council against the
LGA Section 17A requirements. Following SOLGM guidance, services have been
based on the existing activities of the Council. This will enable existing budgets
and information from the 2015 LTP to be used as the base for the service reviews.
3.2.2
In some cases, it makes sense to combine activities or groups of activities to be
reviewed as a single service. This is where management and operations are
closely aligned, or where one activity has a major impact on another.
Report on Section 17A Service Review Process and Criteria
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27 April 2016
3.2.3
This is the reason for combining the three waters into one group, and reviewing all
Regulatory Services together. This also reduces the overall costs and time of the
service reviews.
3.2.4
The following is an indicative timeline for the service reviews process leading up to
August 2017.
Service Review area Likely to be
Op Rev
Contract
Work to date
Timing of
Exempt (This LTP budget
Trigger
Council
round)
2015/16
Workshop
Pensioner Housing
Yes
$0.4 m
No
Rationale work
May 2016
done September
2015
Libraries / Service
Yes
$1.7 m
No
Background
May 2016
Centres
information done
Regulatory (Animal
No
$1.6 m
No
Background
May 2016
Control, Health and
information done
Safety, District
Planning)
Solid Waste
Yes
$2.1 m
No
Background
May 2016
information done
Community Support
Yes
$0.4 m
No
None
June 2016
Commercial Property Yes
$0.4 m
No
LTP resolved to
June 2016
(and Forestry)
sell.
Emergency
Yes
$0.4 m
No
None
July 2016
Management
Economic
No
$0.7 m
No
None
July 2016
Development
(including i-SITE)
Representation
Yes
$1.0 m
No
None
July 2016
Pools
Yes
$0.5 m
No - Grant None
July 2016
IT
No
$0.6 m
Yes (June
IT Strategic Plan
August 2016
2018)
Parks, Property,
No
$2.9 m
Kathy,
None
August 2016
cemeteries, toilets,
Colin
Domain Boards
Water, Wastewater
No
$5.1 m
Partly
None
Feb 2017
and Stormwater
(Alliance
Some committed
and Fulton contracts
Hogan)
LGA changes
Finance
No
No
None
Feb 2017
Roading and
Yes
$11.2 m
Yes – Oct
None
March 2017
Footpaths
2019
Committed
contract -review
2018
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Report on Section 17A Service Review Process and Criteria
27 April 2016
3.2.5
Some major reviews will be required prior to the expiry of the Alliance contract in
October 2019. There are other small parts of the Council corporate overhead not
included in the timetable above. These are small, or form part of the
management structure.
3.2.6
Decision Making Process
3.2.7
The Council is required to consider the situation and arrangements for the
governance, funding and delivery of all services. The SOLGM template leads
Council through an understanding of each service, including background
information on financials, rationale for involvement and the decision on whether
to carry out a review or not.
3.2.8
The proposed process is the fol owing:
• Officers prepare background information and complete an initial
assessment as to whether a review should be carried out (using
SOLGM template as a base),
• Material is considered by the Council at a workshop, and any
additional information is provided,
• The Council gives direction as to whether the officer view is
supported,
• Project teams are formed to carry out service reviews identified,
• Formal reports are brought to the Council to confirm those services
that do not require a review,
• Draft service reviews considered by the Council workshop before
being reported to the Council.
3.2.9
The Council is under no compulsion to decide to make any changes regardless of
the outcomes of the service reviews. The Council can decide to remain with
current arrangements even if other arrangements are seen to be more efficient
and effective. The Council would need to detail the reasons for its decision, and in
particular, how the preferred arrangements meet the purpose of the Local
Government Act.
3.2.10 The Council should note that future decisions to significantly change levels of
service, or when a contract or agreement is within two years of expiration and the
Council deems that contract significant, will require a service review as part of the
decision-making process.
3.2.11 These decisions are not audited or reviewed by any government agency, but are
subject to judicial review the same as any other decision of the Council. While the
likelihood of a judicial review is considered low, the logic and information that
leads the Council to decisions needs to be well documented and formally received
by the Council. This means that some background work and reports will be
required even for the services that no reviews are undertaken.
Report on Section 17A Service Review Process and Criteria
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27 April 2016
3.3
Cost of Reviews
3.3.1
In general, the Strategy and Policy Advisor (consultant) and in-house staff within
existing budgets will carry out the reviews. If the Council decides to engage
external consultants to carry out a significant review then additional budgets wil
need to be identified.
3.3.2
For most services, an in-depth full review will not be required. These will still need
to go through the initial process and the reasons for being excluded from a full
review need to be detailed. There are a few services (covering one or more
activities of the Council) that are likely to require a detailed review in this round of
service reviews.
3.4
Regional Col aboration
3.4.1
A move to share information where possible is underway at a regional level
through the Regional Chief Executives Forum. This may grow into a more focused
process that wil input into Tararua service reviews, otherwise approaches will be
made to share information and knowledge with individual councils for each review
where appropriate.
3.4.2
The aim is to ‘share the load’ and limit the time and costs of the reviews for the
Council.
4.
Consultation
4.1
There is no consultation required within the Section 17A requirements.
4.2
If the reviews result in any significant recommendations to change the
governance, funding or delivery of services, then these wil become issues for
consultation as part of the 2018 – 28 Long Term Plan process. The Council may
decide as part of this process not to implement the recommended changes.
5.
Recommendations
That the report from the Strategy and Policy Adviser dated 20 April 2016
concerning Section 17A Service Review Process and Criteria (as circulated) be
received, and
That the Council note the new requirements to review services contained in the
Local Government Act 2002, and
That the Council approve the financial threshold of $250,000 a year for
operational costs as a guideline for services and contracts to be considered
significant, and
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Report on Section 17A Service Review Process and Criteria
27 April 2016
That the proposed process to meet the Local Government Act 2002 Section 17A
requirements and the indicative timetable set out in section 3.2 of this report be
approved.
Attachments
Nil.
Report on Section 17A Service Review Process and Criteria
Page 7
27 April 2016
Document Outline
