South Australian Current Acts South Australian Current Acts48—Prudential requirements for certain activities
(aa1) A council must
develop and maintain prudential management policies, practices and procedures
for the assessment of projects to ensure that the council—
(a) acts
with due care, diligence and foresight; and
(b)
identifies and manages risks associated with a project; and
(c)
makes informed decisions; and
(d) is
accountable for the use of council and other public resources.
(a1) The prudential
management policies, practices and procedures developed by the council for the
purposes of subsection (aa1) must be consistent with any regulations made
for the purposes of this section.
(1) Without limiting
subsection (aa1), a council must obtain and consider a report that
addresses the prudential issues set out in subsection (2) before the
council—
(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 operating expenses calculated on an
accrual basis 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 (indexed); or
(iii)
where the council considers that it is necessary or
appropriate.
(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);
(i)
the most appropriate mechanisms or arrangements for
carrying out the project;
(j) if
the project involves the sale or disposition of land, the valuation of the
land by a qualified valuer under the Land Valuers Act 1994 .
(2a) The fact that a
project is to be undertaken in stages does not limit the operation of
subsection (1)(b) in relation to the project as a whole.
(3) A report is not
required under subsection (1) in relation to—
(a) road
construction or maintenance; or
(b)
drainage works.
(4) A report under
subsection (1) must be prepared by a person whom the council reasonably
believes to be qualified to address the prudential issues set out in
subsection (2).
(4a) A report under
subsection (1) must not be prepared by a person who has an interest in
the relevant project (but may be prepared by a person who is an employee of
the council).
(4b) A council must
give reasonable consideration to a report under subsection (1) (and must
not delegate the requirement to do so under this subsection).
(6) A council may take
steps to prevent the disclosure of specific information in a report under
subsection (1) in order to protect its commercial value or to avoid
disclosing the financial affairs of a person (other than the council).
(6a) For the purposes
of subsection (4a), a person has an interest in a project if the person,
or a person with whom the person is closely associated, would receive or have
a reasonable expectation of receiving a direct or indirect pecuniary benefit
or a non-pecuniary benefit or suffer or have a reasonable expectation of
suffering a direct or indirect detriment or a non-pecuniary detriment if the
project were to proceed.
(6b) A person is
closely associated with another person (the
"relevant person")—
(a) if
that person is a body corporate of which the relevant person is a director or
a member of the governing body; or
(b) if
that person is a proprietary company in which the relevant person is a
shareholder; or
(c) if
that person is a beneficiary under a trust or an object of a discretionary
trust of which the relevant person is a trustee; or
(d) if
that person is a partner of the relevant person; or
(e) if
that person is the employer or an employee of the relevant person; or
(f) if
that person is a person from whom the relevant person has received or might
reasonably be expected to receive a fee, commission or other reward for
providing professional or other services; or
(g) if
that person is a relative of the relevant person.
(6c) However, a
person, or a person closely associated with another person, will not be
regarded as having an interest in a matter—
(a) by
virtue only of the fact that the person—
(i)
is a ratepayer, elector or resident in the area of the
council; or
(ii)
is a member of a non-profit association, other than where
the person is a member of the governing body of the association or
organisation; or
(b) in a
prescribed circumstance.
(6d) In this section,
$4 000 000 (indexed) means that that amount is to be adjusted for
the purposes of this section on 1 January of each year, starting on
1 January 2011, by multiplying the amount by a proportion obtained
by dividing the CPI for the September quarter of the immediately preceding
year by the CPI for the September quarter, 2009.
(6e) In this
section—
"employee" of a council includes a person working for the council on a
temporary basis;
"non-profit association" means a body (whether corporate or
unincorporate)—
(a) that
does not have as its principal object or 1 of its principal objects the
carrying on of a trade or the making of a profit; and
(b) that
is so constituted that its profits (if any) must be applied towards the
purposes for which it is established and may not be distributed to its
members.
(7) The provisions of
this section extend to subsidiaries as if a subsidiary were a council subject
to any modifications, exclusions or additions prescribed by the regulations.