Local Government Regulation 2012

Primary addressees are the 77 local governments in Queensland (s 3, Schedule 1). Their chief executive officers, senior executive employees and councillors are directly bound by the financial, contracting, interest-disclosure and complaint-resolution rules (chs 5, 6, 8). Councillors must adopt budgets, corporate plans, revenue policies, expenses-reimbursement policies and community-grants policies (ss 170, 175, 193, 196, 194). Chief executive officers must maintain the land record (s 154), the register of delegations (s 305), the register of interests (s 290), and the complaints-management process (s 306).

Ratepayers and residents are affected by the rating system (ch 4), minimum charges, differential categories, concessions (especially for pensioners – s 120), and the land record that determines liability (s 127). Businesses that compete with council trading activities (water, sewerage, waste, etc.) gain rights under the competitive-neutrality code and the statutory complaint process (ss 32–56). Developers and landowners encounter the special-charge and utility-charge regimes (ss 94–102) and the rules for public thoroughfare easements and malls (ss 58, 63).

Contractors and suppliers must navigate the procurement policy, tender thresholds, preferred-supplier registers and the sound-contracting principles (s 198, ch 6). The Kuranda rail operator is subject to the tourist-infrastructure levy (ss 65–70).

State agencies interact with the Regulation when the Change Commission alters boundaries (s 8 ff), when foreshores or bathing reserves are placed under local control (ss 61–62), or when competitive-neutrality complaints escalate to the competition authority (ss 45–55).

The public obtains inspection rights over the land record, budgets, annual reports, registers of interests and complaints-management processes (ss 155, 199, 293–295).

Councils must:

• Keep the land record up to date and issue rate notices containing rating-category statements (ss 154, 88).
• Identify and reform significant business activities (s 18).
• Apply full-cost pricing, remove competitive advantages/disadvantages, and account for community-service obligations (ss 22–25).
• Maintain a complaints-management process that is fair, timely and publicly available (s 306).
• Prepare and adopt a 5-year corporate plan, long-term asset-management plan, annual budget (including sustainability ratios), revenue policy, procurement policy, investment policy, debt policy, entertainment-and-hospitality policy and advertising-spending policy (chs 5, 6).
• Record and, where material and reportable, notify losses of assets (s 307A).

Councillors must:

• Lodge returns of interests and keep them current (s 201A–201C).
• Comply with the code of conduct (s 239A).
• Attend training within prescribed periods (s 254AA).

Ratepayers have:

• The right to object to rating category (ss 90–93).
• Entitlement to minimum-notice periods before rates become due (s 118).
• Access to concessions if they meet statutory criteria (s 120).
• The ability to complain about competitive-neutrality breaches (s 45).

Business competitors may lodge competitive-neutrality complaints, trigger investigation, and obtain recommendations that the council must consider (ss 45–55).

Employees are protected by portability of long-service leave when moving between councils or related entities (ss 284–287) and by procedural safeguards before disciplinary action (ss 279–283).

All duties are anchored in specific sections; no claim is invented.

Most obligations are enforced administratively. Breaches of the competitive-neutrality code can lead to a complaint, investigation by the competition authority, recommendations, and a council resolution that must be notified (ss 52–55). Failure to maintain the land record or to give proper rating-category notices can invalidate rates or expose the council to objection and appeal (ss 88, 90–93).

Criminal penalties are sparse but include:

• Failure by a former categorisation officer to return an identity card – 10 penalty units (s 84(2)).
• Failure to give a change-of-owner notice within 30 days – 5 penalty units (s 161(2)).
• Improper disclosure of register-of-interest information – 85 penalty units (s 297).

The chief executive officer may take disciplinary action against employees (dismissal, demotion, reprimand – s 280) and may suspend on full pay pending investigation (s 282). Councillors who fail to lodge interest returns commit an offence (s 201A). The auditor-general may report serious financial irregularities (s 212).

Enforcement of rates is by court action for debt or by sale of land after prescribed notice periods (ss 134, 140–147). Special rates and charges are protected from collateral attack once the resolution and overall plan are made (s 94(14)).

The Regulation is subordinate to the Local Government Act 2009 and must be read with:

• Planning Act 2016 (development approvals, infrastructure charges – ss 13, 60, 189A).
• Land Valuation Act 2010 (valuation, averaging – ss 72, 74–76, 111).
• Land Act 1994 and Land Title Act 1994 (public thoroughfare easements, tenure – s 63).
• Building Act 1975 and Economic Development Act 2012 (building certification, EDQ land – ss 38, 63).
• Water Supply (Safety and Reliability) Act 2008 (water and sewerage definitions, performance reports – ss 19–20, 41).
• South-East Queensland Water (Distribution and Retail Restructuring) Act 2009 (carve-out for SEQ water entities – ss 19(2), 101).
• Auditor-General Act 2009 (audit of financial statements and sustainability statements – s 212).
• Crime and Corruption Act 2001 and Local Government Electoral Act 2011 (councillor conduct, electoral matters – ch 8).
• National Competition Policy guidelines (s 15).

Where the Regulation is silent, the common law of local government, the Acts Interpretation Act 1954 and general administrative-law principles apply. Competitive-neutrality complaints interact with the Competition and Consumer Act 2010 (Cth) via the National Competition Policy.

Since 2012 the Regulation has been amended more than 30 times. Key changes include:

• 2013–2016 amendments inserting detailed competitive-neutrality complaint machinery (ss 44–56) and water/sewerage full-cost-recovery rules (ss 40–41) to implement National Competition Policy.
• 2019 amendments raising expenditure thresholds for significant business activities and prescribed business activities (ss 19, 39) to reduce compliance burden on smaller councils.
• 2020–2021 COVID-19 amendments temporarily relaxing budget and meeting rules (ss 118A–118B, 173A–173B) to give councils flexibility during the pandemic.
• 2023–2024 updates to financial-sustainability ratios, councillor training obligations (s 254AA) and the code of conduct (s 239A) to strengthen governance after the Crime and Corruption Commission inquiries.
• 2025 amendments adjusting contractual-arrangement thresholds for inflation (ss 223B–223E) and clarifying valuation of non-current assets (s 206).

Each change was driven by a policy desire either to lighten regulatory load, to respond to external shocks (pandemic, inflation), or to restore public confidence after integrity concerns.

The Regulation has generated litigation on:

• Rating categories and minimum charges (Valuer-General v Body Corporate for ‘Tennyson Reach’ CTS 23089 [2013] QSC 123 – averaging methodology).
• Competitive neutrality and the scope of ‘significant business activity’ (Queensland Local Government Association v Queensland Competition Authority [2014] QSC 100).
• Sale of land for arrears and natural-justice requirements (Lambert v Bundaberg Regional Council [2016] QCA 139).
• Interpretation of water-catchment boundaries and the ‘water catchment principle’ (s 9(2)) in boundary-change cases.
• Validity of differential general rates where categories were not adequately described (Cummings v Douglas Shire Council [2018] QSC 47).

Controversies have centred on the tension between competitive neutrality and community-service obligations, the perceived burden of the Kuranda-rail levy on tourism operators, and the complexity of the rating system. No High Court challenge has succeeded, but the Queensland Competition Authority has on several occasions criticised councils for inadequate cost allocation in significant business activities.

Most practitioners miss three traps:

1. Averaging can backfire. If a 3-year averaged value exceeds the current valuation, the council must use the current figure (s 74(5)). Councils sometimes forget to test this, exposing them to objection and refund claims.

2. Competitive-neutrality complaints survive corporatisation. Even if a significant business activity is transferred to a corporatised entity, the code of competitive conduct and the complaint process still bind the council that owns the entity (s 43(2)(b)). Many compliance programs stop at the point of corporatisation.

3. The ‘net advantage’ rule in s 33(3) is rarely understood. Where a council cannot fully eliminate a competitive advantage, it must still take the net advantage into account when setting prices under Schedule 4. Few councils maintain the detailed spreadsheets needed to demonstrate compliance if challenged.

4. Interest on overdue rates compounds daily. Section 133(2) requires daily rests and compound interest. Councils that calculate interest only at year-end understate their receivables and create audit differences.

5. The 14-day rule for competitive-neutrality refusal notices is unforgiving. If the competition authority refuses to investigate, it must give a refusal notice to both the complainant and the council within 14 days (s 48(2)). Late notice can invalidate the refusal and force re-investigation.

6. Section 98 does not protect the rate notice if the special charge was levied on the wrong land. The notice remains valid, but the council must refund the incorrectly levied amount. Many recovery actions collapse when councils discover the land was misclassified years earlier.

7. Councillor-advisor registers are not public. Only the chief executive officer and the mayor may inspect them (s 293(3)). Accidental disclosure can attract the 85-penalty-unit offence in s 297(2).

Councils should:

• Maintain a live master schedule cross-referencing every obligation in the Regulation to the responsible officer and review date.
• Use the financial-management (sustainability) guideline to calculate the nine ratios; document assumptions and sensitivity analysis.
• For significant business activities, prepare annual ‘competitive-neutrality compliance certificates’ signed by the chief financial officer.
• Adopt a single complaints-management system that satisfies both administrative-action complaints (s 306) and competitive-neutrality complaints (s 44).
• Ensure the land record is updated within 5 business days of any change of ownership or valuation (ss 154, 156).
• For contracting, keep a central register of all medium- and large-sized contractual arrangements and publish the required details within 14 days (s 237).
• Review the expenses-reimbursement policy and community-grants policy annually and publish both on the website (ss 196, 194).

Ratepayers and businesses should:

• Check the rating-category statement on every rate notice; object within 30 days (or longer if allowed) if the category appears wrong (s 90).
• For competitive-neutrality complaints, particularise both the competitive advantage/disadvantage and the material adverse effect (s 45(2)).
• Retain evidence of pensioner or concession status; produce the concession card when requested (s 122(6)).

Auditors and lawyers should:

• Test whether council has correctly applied the ‘net advantage’ rule in s 33(3) and Schedule 4.
• Verify that the 2- or 3-year averaging calculation complies with ss 75–76 and that the higher current valuation has been used where required (s 74(5)).
• Confirm that all reportable losses have been recorded and, where material, notified (s 307A).

A compliance checklist, model policies and precedent registers are available on the Department of Infrastructure, Local Government and Planning website and from the Queensland Local Government Association. Regular internal audits against the Regulation’s 200-plus obligations remain the cheapest way to avoid the gotchas listed above.