Document ID: chunk:federal_register_of_legislation:F2025C00172:body:0:p69
Version: federal_register_of_legislation:F2025C00172
Segment Type: other
Provision Reference: 
Character Range: 178696–181646

satisfied that there has been a serious failure to provide good government or serious unlawful acts by the Council – in which case an administrator is appointed to act as the Council and to perform its functions, powers and duties;

    * appoint inspectors of municipal administration to examine any particular Council matter and make recommendations to the Council, and enforce those recommendations if the Council does not adopt them;

    * revoke local laws passed by the Council where, in the Minister's opinion, the laws substantially restrict competition without appropriate justification;

    * approve (or veto) Council entering into an entrepreneurial endeavour that exceeds 5% of the Council's revenue from rates and charges;

    * approve (or veto) investment by the Council in types of financial instruments not already approved under the Act; and

    * make guidelines concerning the Council's procurement policy or the provision of services by the Council so as to best meet the needs of the local community.

Substantive rights of the State Government

The State Government also has a range of rights that do not fall into the category of protective rights.  For example, Ministers have the following rights that, for the purpose of this example, are classified as substantive rights:

    * give directions concerning rates and charges to limit the rate of change in the Council's general income for a financial year;

    * review the allowance category annually for the Council, including the limits and ranges of councillor allowances; and

    * prepare a planning scheme for the district or authorise an amendment subject to any conditions that the Minister wishes to impose.

Control of the Council

Based on the facts and circumstances outlined above, does the State Government control the Council in accordance with the definition of control in the Standard?  If not, who controls the Council?

Relevant activities

The State Government has numerous rights in relation to the Council.  Whereas the State Government's protective rights cannot give power over the Council, the substantive rights do give the State Government the current ability to direct some activities of the Council.

However, paragraph 10 of the Standard states that an investor has power over an investee when the investor has the current ability to direct the relevant activities, ie the activities that significantly affect the investee's returns.  Therefore, it is necessary to identify the relevant activities of the Council, and then assess the State Government's substantive rights in respect of those activities relative to the rights of other parties.

Judgement is required in identifying the relevant activities, as this requires identifying both the Council's returns and the activities of the Council that significantly affect those returns.  As a not-for-profit entity, the Council's non-financial returns for the community are considered