Local government finances

The Office of Local Government monitors the financial performance and position of local government, and identifies trends in its finances over time.

Including by accessing the wealth of information provided by the South Australian Local Government Grants Commission, financial data from all councils has been drawn together, providing a summary and analysis of the Financial Performance and Position of the Local Government Sector (PDF, 615 KB).

Financial relationships

Australian Government

The Australian Government provides both general and specific purpose payments to local government.

General purpose payments are made to the state and passed on to councils through recommendations by the South Australian Local Government Grants Commission.

The financial assistance is provided in two parts:

general purpose grants
untied local roads grants.

Details of commonwealth payments for specific purposes are available in Federal Budget Paper No. 3 - Australia's Federal Relations.

State Government

The Local Government Act 1999 and local government regulations outline the requirements for councils. These include:

preparing and adopting long-term financial plans
preparing and adopting long-term infrastructure and asset management plans
establishing audit committees
adopting several measures to strengthen the independence of external auditors
adopting a consistent and improved reporting format for annual financial statements.

Details of state government grants and subsidies to councils can be found in the state government Budget papers.

Financial planning and reporting

Councils must use three specific financial indicators in their financial planning and reporting.

Detailed explanatory information about each financial indicator is provided in an updated draft of the LGA's Financial Sustainability Information Paper No. 9 (PDF, 175 KB).

Model financial statements

The South Australian Model Financial Statements help councils comply with Australian Accounting Standards and provide a better understanding of council finances available to the public.

Model Financial Statements 2023 (PDF, 4948 KB)

Financial reporting framework

Summaries of financial information must be offered using a standard format (uniform presentation). This includes for:

council budgets
long-term financial plans
annual financial statements
mid-year budget reviews.

Consistent summaries on both operating and capital investment activities allows for meaningful comparisons of council's finances. This format focuses on operating surpluses or deficits as key measures of financial performance. An explanation of the framework is included in the Uniform Presentation of Finances (PDF, 80 KB).

Financial institutions and initiatives

Financial institutions have been created to manage a range of commercial arrangements on behalf of councils, including:

Local Government Finance Authority
LGA Mutual Liability Scheme
LGA Workers Compensation Scheme

Councils are custodians of infrastructure and other assets valued at approximately $28 billion at 30 June 2022. As the result of an independent inquiry in 2005, the Local Government Association, with the support of councils and the state government, embarked on a financial sustainability program to improve councils' long-term financial and asset management planning.

An important outcome of the program was a state-wide project to help councils develop strategies, policies and tools for sustainable asset management. The LGA allied with the Institute of Public Works Engineering Australia to adopt an internationally recognised approach for preparing asset management policies and plans.

Associated projects included developing rigorous long-term financial plans, improving external financial reporting and strengthening internal and external audit regimes.