Document ID: chunk:federal_register_of_legislation:F2025C00172:body:0:p71
Version: federal_register_of_legislation:F2025C00172
Segment Type: other
Provision Reference: 
Character Range: 184057–186982

activities.  The raising of revenue itself is not a relevant activity, as identified above, because revenue by itself is not one of the Council's returns or objectives.

Returns

The State Government is exposed, or has rights, to variable returns from its involvement with the Council since the activities of the Council contribute to the achievement or furtherance of the State Government's objectives for the good government and appropriate development of the municipal district.

Ability to use power to affect returns

Since it was concluded above that in the circumstances presented the State Government does not have power (as described in the Standard) over the Council, then the third control criterion linking power and returns is also not satisfied.  The State Government is able to affect the Council's returns, and thus its own indirect returns, through exercising its substantive rights.  However, the State Government is unable to direct the activities that most significantly affect the Council's returns.

Control conclusion

The conclusion from the above assessment is that the State Government does not have power over the Council and therefore does not control the Council.

In this case, the Council would not be consolidated by any other entity.  The councillors of the Council as a group are not investors as contemplated by the Standard.  They are akin to the board of directors of a company, that is, the councillors are a part of the Council itself.

Alternative Outcome

The distinction between protective and substantive rights and the significance of the substantive rights to the Council's returns are matters for judgement in view of all the facts and circumstances in any particular situation.  A different list or classification of relevant activities, protective rights and substantive rights from that presented in this example might change the conclusion on control of the Council.

Implementation examples

Example IG4

XYZ University was established under an Act of the State Government.  The University receives approximately 40% of its total revenue in the form of grants for various purposes, comprising 30% from the Australian Government and 10% from the State Government.  The University is required by the Act to submit an annual report to the State Minister for Education.

Objectives of the University

The Act specifies that the University's objects include:

    * to provide higher education at an international standard;

    * to undertake scholarship and research for the advancement of knowledge and the benefit of the well-being of the State, Australian and international communities;

    * to equip graduates to excel in their careers and contribute to the life of the community; and

    * to serve the State, Australian and international communities and the public interest by enriching cultural and community life and promoting critical and free inquiry and public