The LGA today sent councils an overarching five-point plan for reform after the board agreed to the wide-ranging review of its governance and affairs, including the fees paid by councils to join the representative body.
LGA CEO Matt Pinnegar told InDaily the review was triggered by the Auditor General’s scathing report last year into the management of its indemnity schemes.
“It was a wake-up call for the sector,” Pinnegar said.
The board will:
- Establish an LGA audit committee
- Review the mutual liability and workers’ compensation schemes
- Review the governance of the LGA
- Review LGA subscription fees
- Create a new strategic plan
Pinnegar said the scale of the review was unprecedented: “Everything is up for grabs.”
Auditor-General Andrew Richardson last September handed down a scathing report into the LGA’s management of its indemnity schemes, highlighting potential overpayments and “unauthorised” variations of contract arrangements.
The 32-page report had examined the accounts, management and cost-effectiveness of two local government indemnity schemes and their manager – Local Government Risk Services, an entity of Jardine Lloyd Thompson.
The AG’s review of the the LGA Mutual Liability Scheme (MLS) and the Workers’ Compensation Self-Insurance Scheme (WCS) was tabled in state parliament in September.
Among the “key shortcomings” identified in the report were:
- A lack of a contract management policy framework.
- Informal monitoring and evaluation of contract performance.
- Uncertainty and potential overpayment of the schemes’ manager’s remuneration fees.
- Unauthorised variations of contractual arrangements.
- A lack of documented delegations of authority.
In a message to all SA mayors and chief administrative staff, LGA president David Burgess called for involvement to improve the systems of governance.
“It is important that we all contribute to the renewal of the LGA so we can all own the outcomes and I encourage you to participate in these processes where possible,” he wrote.
The audit committee will be led by three independent members – Alan Tregilgas, Yvonne Sneddon and chairman Rosina Hislop.
City of Burnside mayor David Parkin will serve as the board’s representative.
Its scope includes oversight of the association’s activities, including “effective and efficient delivery” of commercial and non-commercial services to members and the ongoing contribution and return on investments of LGA related entities.
Following the AG’s report into its indemnity scheme, the LGA will review its current arrangements with its mutual liability and workers compensation schemes.
The audit committee is expected to guide this review, provide input, oversight and report to the board.
A sub-committee made up of regional and metropolitan CEOs will also contribute.
A review into the LGA’s overarching governance has also been called for after “a number of matters” were raised during the past six months.
Association subscription fees and a draft strategic plan for 2016-20 will also be reviewed.
Pinnegar said the board was keen to undergo the scrutiny to achieve transparency and “control over its destiny” when facing challenges such as boundary reform and rate capping.
“We need to have the best practice possible,” he said.
“We need to set up to control our own destiny.
“We need to be squeaky clean.”
The outcome of the governance review will be tabled at the board’s AGM in October.
“We can meet that timeline,” Pinnegar said.
“As incoming CEO I want to see how they [the board] can do things more efficiently and I will be looking to do that as well … it’s a continual path of improvement.”
Pinnegar said the review would not be an impost on ratepayers.
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