Document ID: chunk:federal_register_of_legislation:F2025C00172:body:0:p70
Version: federal_register_of_legislation:F2025C00172
Segment Type: other
Provision Reference: 
Character Range: 181356–184308

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 to be of primary importance, even though its objectives also include financial aspects, such as the efficient use of resources and equitable rates and charges.  The objectives do not include the raising of revenue per se.

All of the Council's activities and functions contribute (whether positively or negatively) to the Council achieving or furthering its objectives.  Thus they are activities that affect the financial and non-financial returns of the Council.  But which activities significantly affect the Council's returns?  Given the significance of non-financial returns for the Council, it is considered that the provision of services and facilities for the community and regulating other parties' activities in the community (eg property development, health services and shopping centres) are the activities that most significantly affect the Council's returns.  Consequently, these are likely to be the relevant activities of the Council.

Power

Paragraph B10 states that whether an investor has power over an investee depends on, for example, the rights the investor and other parties have in relation to the investee.  When two or more parties each have existing rights that give them the unilateral ability to direct different relevant activities, the party that has the current ability to direct the activities that most significantly affect the investee's returns has power over the investee (paragraph 13 of the Standard).  Does the State Government have the power, the current ability, to direct the relevant activities of the Council?

The substantive rights of the State Government do give it the current ability to direct some of the activities of the Council, such as amending or replacing planning schemes.  However, the State Government is unable to direct the major part of the activities that significantly affect the Council's returns.  Therefore, the State Government does not hold power over the Council as described in the Standard.

The power to direct the relevant activities is held by the councillors of the Council, who direct, within the framework established by the State Government, the vast majority of the Council's activities that affect the returns from its operations.

The State Government's right to give directions to limit the rate of change in the Council's general income (rates and charges) is in the nature of price regulation rather than directing relevant 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