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22 Nov 11
Major policy decisions during the local government caretaker period

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With local government elections set to occur on the last Saturday in March 2012, Councils need to be aware of the provisions and restrictions during the caretaker period in the weeks leading up to the election. Local Government lawyers Troy Webb (Partner), Matt Bradbury (Partner) and Sarah Wheatley (Lawyer) provide some timely advice on managing major policy decisions leading up to, and during the caretaker period.

During the ‘caretaker’ period, there is a restriction on a local government’s power to make certain decisions, including decisions to enter into contracts over certain monetary values and other major issues. The caretaker period could start as early as 28 January 2012 or as late as 29 February 2012, depending on when the Electoral Commission publishes notice of the election. 

In late 2010 and early 2011, a number of disaster events caused significant destruction throughout Queensland, and many local governments are working hard to rebuild community infrastructure and implement flood mitigation strategies for the protection of communities from future events.

There could be difficulties for local governments seeking to progress these projects during the caretaker period, if adequate planning has not occurred.

Now is the time to start preparing for major policy decisions that might need to occur early next year.

Caretaker provisions under the Local Government Act 2009

The Local Government Act 2009 (Qld) (LGA) regulates the responsibilities and powers of local governments in Queensland. The LGA provides for a caretaker period to take place during the lead up to local elections, during which the powers of local governments are constrained. Under the LGA, a caretaker period begins on the day that notice of the relevant election is published in a local newspaper, and ends at the conclusion of the relevant election.

Under the LGA, a local government is prohibited from making a ‘major policy decision’ during the caretaker period. Other than the limited exceptions  outlined below, a major policy decision made during this period will be invalid and any contract that relates to it will be void under the LGA.

Importantly, a ‘major policy decision’ is defined by the LGA to mean a decision:

  • about the appointment, remuneration or termination of the chief executive officer (CEO) of the local government, or
  • to enter into a contract, the total value of which is more than the greater of:
    • $150,000, or
    • 1% of the local government’s net rate and utility charges as stated in the local government’s audited financial statements in its most recently adopted annual report.

In our opinion, it is not possible to delegate the authority to make a ‘major policy decision’ to enable the delegate to make the decision (e.g. to enter into the contract) during the caretaker period. This is because the prohibition on making a major policy decision in the caretaker period applies to the ‘local government’ and not just to the CEO or the Councillors.

As mentioned above, a limited exception operates to allow local governments to make major policy decisions during the caretaker period in circumstances where Ministerial approval is obtained by the local government. Ministerial approval may be granted when the Minister is satisfied that:

  • exceptional circumstances apply
  • the decision is necessary, and
  • the decision is in the public interest.

It is reasonable in our view to suspect that the decision to enter into a contract for works associated with rebuilding infrastructure damaged or destroyed by natural disasters would meet such criteria. 

What this means

A local government which anticipates the need to engage contractors to carry out reconstruction works during the caretaker period should exercise caution to ensure that its contracts either do not constitute major policy decisions for the purposes of the LGA or, if they do, take steps to obtain Ministerial approval in respect of them. 

In the event that Ministerial approval has not been obtained, a major policy decision made during the caretaker period will be invalid and the contract to which it relates will be void. This may have significant financial consequences for both local governments and the contractors they engage.  From the perspective of a local government, it is important to note that the LGA entitles persons who have relied on an invalid major policy decision, in good faith, to obtain compensation from the local government for any loss or damage that they sustain.

Contractors should also exercise caution when tendering for reconstruction projects during or close to the start of a caretaker period. 

While local government elections are held on a ‘fixed date’, as opposed to State and Federal Government elections, the actual date has not yet been announced by the Electoral Commission. The Local Government Electoral Act 2011 (Qld) requires that the local government elections be held on Saturday, 31 March 2012, or another date specified by regulation. In any case, it’s best to plan ahead, and anticipate as much as practicable, the progress of reconstruction works in the New Year.

 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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