Case studies: Local government compliance

Case studies about common breaches of the Local Government Act.

Candidate eligibility review

In the lead up to the 2016 council election period, we conducted an audit of candidates to ensure they met eligibility requirements under the Act.

Our team assessed a sample of candidates, against the disqualification clauses in the Act. From the assessment, 2 candidates were found to have breached disqualifying provisions. The candidates were removed from the ballot before the election. 

The assessment was an effective way to make sure:

  • ineligible candidates were identified before the votes were cast
  • councils were not exposed to risk and costs associated with the election of these candidates - for more details on the audit, see our November 2016 newsletter

Reviews were also conducted during the Geelong council election in 2017 and Melbourne mayoral by-election in 2018. We received information about several candidates in both elections and conducted assessments of all candidates, but no breaches were found.

Code of conduct compliance failures

Councils are required to review and implement a councillor code of conduct in accordance with section 76C(1) of the Act. Councillors required to make a separate declaration to comply with the code.

During a review of all Victorian councils’ codes of conduct in 2016, we found that 13 councils, and 9 councillors from other councils, were not compliant and faced disqualification on 1 September. This was less than 2 months before the upcoming general elections.

Our review generated public interest and the State Government responded by introducing a bill to repeal section 76C(1) for the current council term.

As councillors who did not comply would have been disqualified, the Inspectorate informed councils of the review to ensure they were not exposed to risks from decisions made by those elected members

The review also uncovered potentially fraudulent activity in the code of conduct compliance process at Central Goldfields Shire Council, which was detailed in our investigation report.  

Campaign donation returns

The lodgement of campaign donation returns by all candidates is a key factor in the transparency and integrity of Victorian council elections. Campaign funding may be a potential source of conflicts of interest once a councillor takes office.

Following the 2016 council elections, we assessed a sample of donation returns for what candidates did or did not disclose and the accuracy of information submitted. We reviewed the donation returns of 31 candidates (1.4% of total) from a mix of regional and metropolitan councils. 

The findings included: 

  • about half of the selected candidates declared no disclosable donations (above the $500 threshold)
  • donations ranged in value from $500 to $16,500
  • on average, those candidates received about $5120 to support their campaigns

From the review, an anomaly was detected which is the subject of a current investigation with potentially serious criminal offences. Further information will be available on this matter when the investigation has concluded.

The proposed legislative reforms for the Local Government Act, if passed, will give us greater oversight of the notification and publication of campaign funding for candidates. 

Regional council audit

Our compliance audits can cover a range of topics and themes, from assessing the effectiveness of a council’s governance arrangements to targeting specific issues with land management or audit committees. 

In a 2018 audit of a western regional council, our investigative and compliance teams conducted a joint examination of several areas and made 42 recommendations, which broadly included:

  • process improvements where advice should be sought from sector representative bodies, other councils and/or integrity agencies, across areas such as governance, and management of assets, finances and human resources
  • training and guidance for councillors and council staff to ensure policies and processes are understood and implemented

While no formal action was required to be taken against the council, we delivered the report to the council and requested a written response within two months, which the council complied with. Examinations such as this form a part of our guidance and education work by influencing future council operations and the service delivery to their community.