Personal interests returns: Encouraging disclosure and increasing transparency

In preparation for the new Local Government Act 2020, we embarked on a wide-ranging review of personal interest declarations of Victorian councillors. The review covered 650 councillors at 78 councils between October 2016 and February 2020.¹

Our aim was to see if councillors were complying with the rules under the Local Government Act 1989 and identify ways to improve compliance. During the review, we also advised Local Government Victoria about our findings in a bid to improve the legislation.

We also embarked on the review because the Inspectorate and other integrity agencies have identified incomplete and inadequate personal interest disclosures are a historical and ongoing issue affecting the local government sector.

Half of the 650 councillors had failed to submit accurate records of their personal interests. While some of these failures were due to minor issues, 2 out of every 5 councillors failed to disclose interests in one or more of their returns – or failed to submit a return at all.

We surveyed councillors who were non-compliant and found that many did not understand why declaring their personal interests was important and did not know how to do it. We also identified a lack in guidance on how to complete returns as the guidance material was too legalistic and difficult to understand.

Clearly, more work needs to be done to improve compliance and build public trust that councillors are acting in an impartial way and in the community’s best interests. There is also a role for peak bodies to help coordinate councils and share best practice.

The 2020 Act introduced changes to increase both the transparency and oversight and councils are now required to publish a summary of personal interests on their website However, in late August 2021, we found that 16 councils had not published the first biannual personal interest summary. We also found a wide variation in the presentation of the summaries, leading to difficulties in comparing councils.

Compliance also needs to be improved through better oversight and enforcement. There is currently a lack of oversight and difficulties in enforcing the legislation. This will have to change if we are to raise the level of compliance and public trust in their local representatives.

Councillors and nominated officers not adhering to personal interest declaration legislation can be a key indicator of poor governance and lax council practices. More must be done to raise the bar and improve compliance with personal interest declarations, which in turn improves transparency and public trust in local government.

This report contains 14 recommendations to improve compliance through education and guidance, legislative change and oversight. While our review and recommendations focus on councillors, the disclosure requirements also apply to nominated staff and they will also benefit from our recommendations.

I am pleased to deliver this report into the challenges and issues relating to personal interests returns at Victorian councils. As I began my role as Chief Municipal Inspector in April 2021, I would like to acknowledge the contribution of Dr John Lynch as acting CMI and the team at the Inspectorate for their work on this project. Finally, I would like to thank the council staff and councillors who provided extensive feedback on a draft of this report.

Michael Stefanovic AM

Chief Municipal Inspector

October 2021

Footnote

¹ A review of Whittlesea councillors' personal interests returns was conducted as part of a separate investigation and is not covered in this report.