The Crown land accounting dilemma in New South Wales local government

Purpose The paper addresses the question of whether Crown land managed by local authorities in the New South Wales (NSW) local government system should be recognised as assets on municipal balance sheets. Design/methodology/approach The paper provides a synoptic review of the literature on accounting for public goods assets followed by a critical analysis of the official requirements of the NSW government on the recognition of Crown land. Findings The NSW government holds that Crown land managed by local councils should be recognised as an asset on council books. However, following an assessment of the problem through the analytical prism of financial accounting, it is argued that councils do not possess control over Crown land and that such land should thus not be recognised by councils. Research limitations/implications The paper covers the legal and accounting framework applicable to NSW local government. However, it has broader implications for other local government systems with similar institutional and legislative foundations, such as other Australian states, New Zealand and South Africa, and these implications are highlighted in the paper. Practical implications It is argued that NSW government policymakers should re-consider the requirement for Crown land to be recognised on councils' books. Local authorities would then be able to save money and time on external auditing, management of land asset registers and the mandatory valuation of land. Originality/value Although Crown land shares some of the characteristics of other public good assets, unique accounting challenges arise due to the existence of a market in which such land could be traded not by councils, but by its legal owner (the Crown). In financial accounting, legal ownership is not considered as the main criterion over assets. However, the authors argue that for Crown land vested with councils, it becomes a critical factor in decision making.