The new local governments of Douglas, Livingstone, Noosa
and Mareeba (and their respective "new local government
areas") will come into existence on 1 January
De-amalgamation will affect a number of contracts currently in
place for the supply of services across the current local
government area. Waste collection and the maintenance of parks and
recreational facilities are just a few examples.
WHAT HAPPENS TO THESE CONTRACTS WHEN A LOCAL GOVERNMENT AREA IS
The Local Government (De-amalgamation Implementation)
Regulation 2013 sets out processes and provisions for dealing
with existing contracts affected by a de-amalgamation.
In general, if a contract relates to a new local government
area, a reference to the continuing local government may, if
"the context permits", be taken to mean:
the new local government; or
both the continuing local government and the new local
government (in this case, the contract continues in force for both
For each contract in question, Local Governments should first
consider which part of the local government area the contract
For example, in a construction contract for a new building which
is entirely within the new local government area, references to the
continuing local government will be deemed to be a reference to its
related new local government.
On the other hand, if the contract relates to the delivery of
waste collection services across the entire local government area
(prior to de-amalgamation occurring), references in the contract to
the continuing local government are deemed to be a reference to
both the new local government and its related continuing local
NEW "MAJOR CONTRACTS" NOT YET ENTERED INTO
"Major contracts" that continuing local governments
have not yet entered into, but would bind a new local government
after 1 January 2014 (if entered into) require the written approval
of the transfer manager.
A major contract is a contract with a total value of more than
the greater of:
1% of the continuing local government's net rate and
From the changeover day of 1 January 2014, the new local
government can (subject to compliance with any arrangements
relating to the de-amalgamation) enter into its own contracts
independently of the continuing local government.
AS BETWEEN THE LOCAL GOVERNMENTS, WHO IS LIABLE?
For contracts that will apply to both the continuing local
government and its related new local government, the transfer
committee determines liability as between those local governments.
In making decisions to apportion liability, the transfer committee
is bound by the Transfer Methodology.
This alleviates the need to renegotiate existing contracts with
relevant service providers.
For example, the transfer committee may determine that a
WH&S claim by a contractor arising from an event which occurred
within the new local government area is the responsibility of the
new local government, and not its related continuing local
From the contractor's perspective, the terms of the contract
remain unchanged, with the exception that (on and from 1 January
2014) the terms of the contract will apply to both local
WHAT SHOULD AFFECTED LOCAL GOVERNMENTS DO NOW?
The continuing local governments of Cairns, Rockhampton,
Sunshine Coast and Tablelands should review existing contracts to
determine how they might be affected by de-amalgamation. This will
involve the relevant local governments and transfer committee
how the contract applies across the current local government
what arrangements should be put in place to determine
responsibilities and liability between the continuing local
government and the new local government following the changeover
Depending on the nature of the contract, this process could be
In relation to proposed contracts which have not yet been
entered into by the continuing local governments, the local
governments should also consider including specific provisions
dealing with de-amalgamation.
This is the second of a five part series on matters relevant
to Queensland's de-amalgamated councils and the new local
governments that will emerge from the process. The next part will
refer to the management of the transition of people to the new
1 As stated in the continuing local
government's audited financial statements included in its most
recently adopted annual report.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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