Compliance actions

The Inspectorate conducts both council-specific governance examinations and broad reviews of systemic or thematic issues identified during council visits, investigations or feedback from the sector or the general community.

Examinations and audits of council governance arrangements are a key proactive function of the Inspectorate in assessing the effectiveness of councils’ risk management and governance processes. The objective of this function is to ensure council operating procedures are compliant with relevant legislation and avoid breaches of the Act.

The Inspectorate has a proactive function to encourage better governance in councils, and a reactive role in reviewing governance procedures.

During investigations into Wyndham City Council in 2016–17, the Inspectorate detected many issues with councillors’ interest returns, and subsequently undertook a comprehensive review of councillors’ personal interest returns across Victoria to determine the overall level of compliance. The review also allowed the Inspectorate to provide more informed input into the Local Government Act 2020.

During 2020–21, we completed a major review into councillor compliance with personal interest returns requirements. We did a high-level review of councillors from 61 councils and a detailed review of councillors from 17 councils. In total, we checked 4,600 returns for 650 councillors from 78 councils from October 2016 to February 2020.

While transgressions of the Act varied in severity, from failing to disclose an obvious personal interest, to submitting a return less than a week late, we found that half of all councillors did not strictly comply with the Local Government Act 1989 as required on at least one occasion.

We also surveyed selected councillors and council staff to better understand what the issues were, and to assist in the identification of ways to improve compliance. The report was published in October 2021.
In September 2020, we published a report on our review of councillor expenses and allowances.

Our review of councillor expenses and allowances was based on surveys of councillors and governance staff and an audit of several councils to assess compliance with legislation. We were also able to identify best practice to benefit the whole sector.

The report found large variation between councils in the content of their expenses policies, and what and how much would be reimbursed. We urged councils to improve transparency by making expenses information publicly available on a regular basis.

The audit exercise revealed some deviations from policy in practice, such as claims being submitted outside stipulated periods and incorrect claims forms being used. Some risks such as a CEO’s corporate credit card being used for councillor expenses and claiming expenses by way of petty cash were also identified. Overall, significant deviation from policy and public expectation was not identified.

The survey results showed that councillors are largely content with the resources and facilities provided to them but there were comparatively greater levels of discontent with the allowance they receive.

Updated 30 November 2021