Summer 2023 - Local government integrity matters

Should councillors express a final opinion about a matter which will be considered by the council?

This is an issue which continues to trouble the public, councils, and councillors, particularly in relation to planning matters.

We are often approached by people with concerns that a councillor has strongly expressed their opinion or made known how they intend to vote on a matter before it has come to council for a decision.

Robust debate is an essential element of council deliberations. However, good governance requires councillors not to publicly express final views about a matter to be considered by the full council.

Our democratic process means that councillors come from diverse sections of the community and hold a wide range of views. However, once elected, councillors must act in the interests of the community as a whole.

In short, councillors have a duty to act fairly and with a genuinely open mind when making administrative decisions. These are decisions that affect the rights and interests of a person, group, or business more significantly than the general community. For example, a decision to grant or refuse a planning permit for a specific project.

This duty stems from the principle of natural justice (also known as procedural fairness). This principle requires a decision maker to be free from bias and to hear a person out before making a decision that affects their interests. This principle was applied in the case study below.

What is an open mind?

Councillors can express a preliminary view of a matter but must be prepared to reconsider their position if new evidence or arguments are put to them. This is known as having an ‘open mind’.

A councillor with an open mind will:

• genuinely listen to all arguments
• listen to the merits of the issue as a whole, despite a personal preference
• consider all options and views presented
• weigh up the merits and objections in relation to a matter.

Councillors must not express a final opinion on a matter prior to taking part in the decision-making process. In doing so, the councillor is showing they are not bringing an open mind to the situation.

Consequences of not having an open mind

If a councillor does not demonstrate an open mind, they can undermine public confidence in the fairness of the council’s administrative decision-making process.

It may also amount to a breach of the council’s councillor code of conduct or of the councillor conduct standards in the Local Government (Governance and Integrity) Regulations 2020. Most codes of conduct contain clauses about council decision making and the requirement to participate in this process impartially.

The councillor conduct standards require councillors to do everything reasonably necessary to ensure they perform the role of councillor effectively and responsibly. This includes representing the interests of the community and being responsive to the diversity of interests and needs of the community. A breach of the conduct standards may result in a finding of misconduct under the Local Government Act 2020.

In addition, the council’s decision could be subject to a legal challenge like in the case study below. A legal challenge will expose the council to the associated uncertainty and costs.

More information can be found in Ensuring Unbiased Democratic Council Decision Making, which can be found in the governance resources of the Local Government Victoria website.

Historic case study - Winky Pop v Hobsons Bay City Council

In Winky Pop v Hobsons Bay City Council, Councillor A, lodged a submission with the council on a proposed planning scheme amendment relating to a strategic redevelopment area.

Councillor A declared a conflict of interest and did not take part when the council deliberated and voted to send the submissions to a panel. Councillor A then appeared before the panel and made further submissions.

When the council met to consider the panel’s report, Councillor A participated in a series of votes, including to exclude the parcel of land from the strategic redevelopment area.

The owner of the affected land brought legal proceedings against the council on the basis that Councillor A had prejudged the issue and that they had been denied procedural fairness.

The Supreme Court of Victoria’s decision, handed down in November 2007, found that Councillor A’s involvement was sufficient to invalidate the council’s decision.

By making an individual submission, Councillor A demonstrated that he had made up his mind prior to the formal consideration processes and therefore had not been open to persuasion during the formal consideration of the matter.

Councillor A was found to have prejudged the matter.

Councils were largely compliant with legislation which required documents to be created or updated, the Inspectorate found.

During 2022, we reviewed more than 1,000 individual policies and documents in a project to measure how well councils had complied with requirements placed on them by the Local Government Act 2020.

The report on the review Checking compliance: A review of council policies, was released in January.

The 2020 Act was the most significant reform of Victoria’s local government law in decades and required councils to create or update policies to comply with the new legislation over an 18-month period.

We found the average compliance rate for the adoption of each of the policies and documents by the 79 councils was 93%.

Chief Municipal Inspector Michael Stefanovic AM said: “We were pleased to see that councils had acted quickly in creating and adopting the new and updated policies required by the new Act – despite the challenging circumstances at the time.”

We asked councils to provide documents, including:

• Councillor Code of Conduct
• Council Expense Policy
• Councillor Gift Policy
• Audit and Risk Committee Charter
• Complaints Policy
• Procurement Policy
• CEO Employment and Remuneration Policy.

The level of compliance across the sector was extremely high, with nine of the 11 topics recording compliance rates of over 90%. Another topic had a compliance rate of 87%.

We also selected a random sample of policies from a range of councils for a closer look.

“This deep-dive revealed some minor issues but overall, the quality of policies was pleasing,” Mr Stefanovic said.

We made eight recommendations to help councils improve their documentation and to alert them to a small number of common errors. We also made a recommendation to Local Government Victoria to provide clarification on an area of the Act.

More policies to cover councillor relationships needed

We receive a lot of complaints about councillor-staff interactions, such as councillors inappropriately involving themselves in operational matters.

Councillors are entitled to request information from the chief executive officer and other officers that is legitimately required to make an informed decision. For example, if a matter is very complex a councillor may seek further documents or a briefing.

However, such requests must be made through the appropriate channel – such as the CEO – rather than approaching staff directly.

Our review found that half of Victoria’s councils did not have a specific policy to guide the relationships between councillors and council staff.

While there is no legislative requirement for councils to have such a policy, it is an area which has raised concerns between councillors and across local communities.

Councils are strongly encouraged to develop a policy to guide the relationships and interactions between councillors and council staff.

Sample policies available online

One of the recommendations of the report is for councils to compare their policies to a new resource published by the Inspectorate.

This project allowed us curate and publish a suite of policies to our website. We strongly suggest that councils take the opportunity to benchmark their own council policies against those on our website.

The sample policies we have selected meet legislative requirements and are from a broad cross section of councils.

The sample policies are part of a broader collection of information for councils under our ’resources for councils’ section on our website. Councils will also find fact sheets, case studies on investigations, case studies on compliance examinations and summaries of our recent reports.

Mildura Councillor Jason Modica has been suspended for 2 months and is ineligible to chair a delegated committee until July after engaging in serious misconduct, a conduct panel has found.

The councillor conduct panel reprimanded Cr Modica and ordered him to make an apology to the council, alongside the suspension.

The Chief Municipal Inspector applied on 5 August 2022 for a finding of serious misconduct against Cr Modica under sections 154(2) and (4) of the Local Government Act 2020.

During his one-year term as mayor, Cr Modica failed to declare a conflict of interest on three occasions in 2021 relating to a planning application for the use of land for rural industry in the municipality.

The alleged material and general conflicts arose due to Cr Modica’s sister living opposite the property and operating, without a permit, a similar business to the subject of the planning application.

A hearing took place on 6 November and the decision announced by the panel on 14 February.

Chief Municipal Inspector Michael Stefanovic said: “Councillors need to disclose conflicts of interest and remove themselves from making decisions where conflicts may arise. This demonstrates that councillors, as well as senior staff and committee members, are not using their role to gain benefits for themselves or others.”

“It improves transparency and helps people trust their council in making fair and impartial decisions.”

Local Government Victoria has published the decision on its website.

The Inspectorate recently published a fact sheet to help councillors recognise and disclose conflicts of interest.

The Inspectorate has found that Yarriambiack Shire Council’s governance and culture has significantly improved since the publication of a 2019 report on the council.

We visited the council in 2022 and found that the council had addressed all of the recommendations made in a report on a 2019 investigation.

The 2019 investigation focused on allegations that community assets and resources had either not been properly managed or were used to the benefit of individuals, not the community as a whole. In its report, the Inspectorate identified significant issues including a lack of accountability, a lack of responsible uses of resources and general poor governance.

A number of issues previously identified at the council were in relation to the management of resources at the Hopetoun depot. Staff focused on “getting the job done” rather than following rules or procedures. In addition, the inspectorate found that a void in leadership at the council had trickled down and negatively impacted indoor and outdoor staff.

In 2022, the Inspectorate visited the council to collect documentation and interview staff as part of the latest governance examination. It was clear that there had been substantial change at the council leading to better governance and that staff were more invested in their jobs.

In the interim period between the 2019 investigation and our 2022 examination, council provided the Inspectorate with updates about what actions that had been taken or were to be taken, and our visit confirmed that almost all of these had either been started or completed.

We visited Yarriambiack in early February to present the findings of our governance examination to the councillors, chief executive officer (CEO) and executive team.

Chief Municipal Inspector Michael Stefanovic AM said “Congratulations is to be given to previous CEO Jessie Holmes, and current CEO Tammy Smith for delivering on a commitment to address the significant number of recommendations included in the 2019 report."

“The council executive is to be commended for directing resources into important governance areas, that have delivered positive outcomes."

“In discussions with staff, we were met with a completely different attitude and culture from that witnessed previously. There was an enthusiasm from staff as they variously described the improvement in leadership values and the gains made through the implementation of various automated governance systems and processes."

“This was backed up by staff surveys, where there was an 80% satisfaction level, a marked improvement from previous surveys.”

Yarriambiack Shire Council had introduced an automated compliance management tool which improved efficiency and accountability. A new human resources and Finance system also allowed staff to better manage their responsibilities.

The Inspectorate also identified that significant resources had been channeled into regulating staff training across the entire organisation. All staff were now required to undertake training that is specific to their roles, as well as being familiar with the requirements of the staff code of conduct.

The training is managed centrally through an online training portal which ensures that all staff are suitably held to account.

Mr Stefanovic said: “We found that where poor behaviours were identified at the council, they were called out without the fear of repercussion. The culture within the council now provides a clear pathway to deal with these issues, which wasn’t evident previously.”

“The Inspectorate is confident that the issues experienced at the depot, which led to the investigation, and delivered financial and reputational risk to the council, have fundamentally been mitigated through a raft of improvement strategies highlighted above.”

The Inspectorate completed 203 investigations in the 2021–22 financial year, as revealed in our annual report published earlier this month.

The Inspectorate has seen a rise in its workload as it investigated an increased number of allegations about councils and councillors in Victoria.

The Inspectorate is responsible for investigating offences and breaches under the Local Government Act 2020. We also examine matters relating to council or council operations, including electoral offences and activities.During 2021–22, we handled 158 enquiries and completed 203 investigations.

During the financial year from 1 July 2021 to 30 June 2022, our office:

• issued 132 warnings, including
• 128 warnings for election matters
• 4 warnings for non-election matters
• used coercive powers on 5 occasions to obtain documents or information
• interviewed 24 individuals – with all being done voluntarily.

One in three allegations (34%) we investigated during 2021–22 were about conflict of interest; 17% of allegations we investigated were about misuse of position and 6% were about the release of confidential information.

Chief Municipal Inspector Michael Stefanovic AM said: “An accountable and trustworthy local government sector relies on transparency from our elected officials and those employed by councils to deliver services to the public."

“Our oversight and the support of the public in reporting allegations of wrongdoing helps keep our councils and councillors working in the best interests of the communities they serve.”

Mr Stefanovic said that Inspectorate investigators had seen a steady increase in their workload year-on-year which showed that the public expected more from their councils and elected councillors.

“In a tighter fiscal environment, we have looked at methods for reducing enforcement costs, such as fines for non-compliance with the Act. We are working with Local Government Victoria to find cost-effective options to address breaches and offences against the Act,” Mr Stefanovic said.

We also continued our education and guidance work during 2021–22, delivering 17 presentations to councils.

The Inspectorate is one of three integrity agencies to handle complaints about Victorian councils. Complaints are also handled by the Victorian Ombudsman and the Independent Broad-based Anti-corruption Commission.

Read the report.

The Inspectorate has published 2 new fact sheets for the public. The new fact sheets aim to help the public understand the legal rules behind 2 complex processes.

Standing down a councillor

We are often asked if we will stand a councillor down while we are investigating a particular matter. However, we cannot stand a councillor down simply due to allegations that may or may not be proven.

A councillor is elected to represent their community so they can only be stood down in very serious circumstances. It is not done lightly.

The Local Government Act 2020 sets out 2 different pathways to stand down a Victorian councillor. It can be done through Ministerial intervention or through an application to the Victorian Civil and Administrative Tribunal.

The 2 pathways are explained in our fact sheet – Standing down a councillor.

Public interest complaints

When you submit a complaint with us, we will ask you if you want your complaint assessed as a ‘public interest complaint’.

The Public Interest Disclosures Act 2012 ensures that if you report improper conduct and corruption in the local government sector, you can do so knowing that you will be protected.

We have published a fact sheet with more information about what a public interest disclosure is and how your compliant is treated if you choose to have it assessed as a public interest complaint.

The fact sheet on public interest disclosures is available on our website.

More resources for the public

These 2 fact sheets are some of the resources for the public we now have available on our website. You can also find fact sheets on our powers and responsibilities, local council complaints and more.

CMI Michael Stefanovic said: “The fact sheets and information on our website aim to give the public more information about our work and to help demystify the legal framework we operate in. We hope this information in plain English helps potential complainants understand our work and the laws we must work under.”

The Inspectorate has also published 2 new fact sheets to let people know what to expect when we interview them. It is part of our plan to improve the way we deal with witnesses or persons of interest.

In the first half of 2022, we formalised our practices in relation to welfare in a public available Witness Welfare Policy and internal guidelines. The guidelines and policy set out how we will support the welfare, including physical health, mental health, wellbeing, and safety, of all people we deal with in the course of our work.

The new fact sheets aim to give more information to people who volunteer or are compelled to appear before us in an interview.

Interviews – Information for witnesses and Interviews – Information for persons of interest set out:

• what to expect
• who to bring with you
• what to bring with you
• where the interview will take place
• where you can get further support.

The new fact sheets and Witness Welfare Policy can be found on our website.

What’s on – training, events and reminders

23 February and 7 March 2023

Dealing with complex behaviour - Victorian Ombudsman (in-person and online)

31 March 2023

VLGA FastTrack Program 2023 - Leading In Times of Chaos

17-20 May 2023

ALGWA 2023 National conference, Cape Schanck, Morning Peninsula

By-election

17 March 2023

Mornington Peninsula Shire Council (Watson Ward)