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Controlled public sector entities of local governments

Purpose

This bulletin is to remind local governments that the Minister for Local Government and Special Minister of State is required to advise both the State Treasurer and the Auditor-General of Queensland when a new controlled entity is established.

In order for the Minister to fulfil this obligation, local governments are required to advise the Minister whenever they become associated with a controlled entity.

Background

In July 2009 the Financial Administration and Audit Act 1977 was repealed, and the Auditor-General Act 2009 (A-G Act) came into force to provide for the audit of the state’s public finances and all public sector entities.

The definition of public sector entity has been revised to include a controlled entity. An entity is a controlled entity if it is subject to the control of one of more of the following (the controlling entity):

• department
• a local government
• a statutory body
• a government owned corporation
• another entity subject to the control of one or more of the entities mentioned in paragraphs (a) to (d).

The definition of control has also been revised and now means the capacity of an entity to dominate decision making, directly or indirectly, in relation to the financial and operating polices of another entity so as to enable the other entity to operate with it in pursuing the objectives of the controlling entity.

Control over an entity is presumed to exist when the parent entity has direct or indirect ownership of more than half of the voting power of an entity. However control can be gained in a variety of ways, including acquiring the assets of another entity or controlling the management of the entity.

Whether or not control exists can be subjective. Determination of the existence of control may require professional judgement.

Section 33 of the A-G Act requires the Minister to advise the Treasurer and the Auditor-General of any local government public sector entities that have been established or abolished.

Relationship with the Statutory Bodies Financial Arrangements Act

Please note that before a local government creates a controlled entity it is required under the Statutory Bodies Financial Arrangements Act 1982 to have the Queensland Treasurer’s approval.

Approval can be obtained by writing to the Department of Local Government and Planning. The department will assess the request and seek the Queensland Treasurer’s approval on behalf of the local government.

Current register

The two attached lists show the local government controlled entities and jointly controlled entities that have been advised to the department as at 31 December 2010.

Attachment A ( 13 KB) lists the entities which are each controlled by only one local government. Attachment B ( 12 KB) lists the entities which are each controlled by two or more local governments, or by a local government(s) and another public sector entity or entities.

Request

Local governments are requested to review Attachments A ( 13 KB) and B ( 12 KB), and to advise the Minister of:

• any entity they are associated with that satisfies the definition of public sector entity that is not shown on either Attachment, or
• entities that are listed on the attachments that have ceased to exist and the applicable date.

Local governments are requested to provide this information by completing Attachment C ( 88 KB) - Notification of local government controlled entities form and returning by 31 March 2011.

Last updated on Tuesday, 07 August 2012