Solving the Democratic Deficit Problem for Insolvent Local Government Authorities

The administration of financially distressed Central Darling Shire Council and Central Coast Council raises concerns regarding the effective management of insolvent local government authorities (‘LGAs’) in New South Wales and Australia generally. When administrators are appointed to manage LGAs (sometimes for extended periods of time), local communities are democratically underrepresented and adversely impacted in the absence of local voice. There is a lack of uniform regulation and a lack of timely and clear insolvency and restructuring processes embedded in the statutory frameworks which govern local government insolvency across the Australian states and the Northern Territory. These insolvency processes require reconsideration and reform. It is recommended that clearly articulated provisions replace some of the broad discretions of the local government legislation to prescribe clear specifications for the timely return of insolvent LGAs to solvency and to democratic elections.