We did not have the resources to review and give feedback on each policy. However, when we randomly selected councils and reviewed policies and documents in more details, we found a small number of anomalies.
CEO Employment and Remuneration Policy
A number of policies we reviewed included the statement:
“Council must appoint a CEO employment and remuneration matters advisory committee in accordance with section s45 (2)”.
Section 45(1) of the Act requires councils to adopt a CEO Employment and Remuneration Policy. Section 45(2) of the Act states:
A Chief Executive Officer Employment and Remuneration Policy must – (a) provide for the Council to obtain independent professional advice in relation to the matters dealt with in the Chief Executive Officer Employment and Remuneration Policy; and (b) provide for the following - (1) the recruitment and appointment process; (2) provisions to be included in the contract of employment; (3) performance monitoring; (4) an annual review; and (c) include any other matters prescribed by the regulations.
There is no specific reference that mandates that councils ‘must’ appoint a CEO employment and remuneration matters advisory committee. For clarity, we sought advice from Local Government Victoria (LGV) which said that “…section 45(2) of the Act does not explicitly require councils to establish a CEO employment and remuneration advisory committee”.
However, LGV added that “it is good practice for councils to do so, and for the committee to be constituted by all councillors and chaired by an independent person who provides professional advice in relation to the matters contained in the CEO employment and remuneration policy”.
It was also noted that some councils have differently interpreted Section 45(2)(a) of the Act, in regard to obtaining independent professional advice. We sought further clarity from LGV about whether it was mandatory for an independent person to be appointed to a committee or if the committee and council policy allowed independent advice to be provided instead. LGV said:
“It is at councils’ discretion how they go about obtaining independent professional advice under section 45(2).
While it is not mandatory for councils to establish a CEO employment and remuneration advisory committee or appoint an independent person to that committee, LGV believes it is good practice for councils to do so.
“Further, an advisory committee of this nature would not have the power to make decisions on behalf of the council. Any voting rights of committee members would only be in an advisory capacity and relate to the making for recommendations to the council for decision.”
The Inspectorate believes it would benefit councils to have this confusion clarified with formal guidance from LGV or a change to the legislation.
Recommendation
2. LGV should provide formal guidance about whether councils should appoint a CEO employment and remuneration matters advisory committee, what its powers should be and how independent professional advice should be obtained.
Governance Rules and Election Period Policy
Section 60 of the Act requires the development of Governance Rules, including an Election Period Policy in accordance with section 69. We commend the sector in its effort in meeting the timelines and statutory requirements.
However, when we randomly selected a number of examples of Governance Rules to review in depth, we identified some discrepancies in the interpretation and requirements of the Act.
Firstly, we saw examples of Governance Rules where clauses had been inserted relating to the use of the common seal.
Section 14(2) (c)says the common seal of a council must be used in accordance with any applicable local law.
Meanwhile, Section 60(1) requires councils to ‘develop adopt and keep in force Governance Rules’ which are outlined in Section 60 and in the Local Government (Governance and Integrity) Regulations 2020. However, neither s 60(1) nor the Regulations state that the common seal should be included in the Governance Rules.
Secondly, a number of councils’ Election Period Policies included a requirement for the CEO to certify council publications. However, this was a requirement under Section 55D of the Local Government Act 1989 (1989 Act).
It is no longer a requirement. Councils should remove any references to certification by the CEO and references to Section 290 of 1989 Act.
Recommendations
3. Councils should note that the common seal must be used in accordance with any applicable local law rather than being incorporated in the Governance Rules.
4. Councils should note there is no current requirement in their Election Period Policy for the CEO to certify council publications, which was required under the 1989 Act.
Format of policies
During our review, we noticed there was no consistency in the way councils formatted their policies. This is due to the fact that there is no model policy structure or legislative requirement to follow a model structure.
The main purpose of our review was to record the date each policy was adopted to allow us to measure compliance.
While some councils provided a separate record of the adopted dates, in most cases, we had to obtain the adoption date from the policy itself.
In several cases, the adoption date was not detailed on the policy, nor was there any form of document history, or version control. Most also did not include the date of the ‘next review’. In those instances, we searched through council minutes to identify the adoption date.
We cannot mandate the format councils use for their policies, however we see advantages in councils formatting all policies, similarly, containing standard information. Standard information could include the adoption date, date of next review as well as version control where any changes made to the document can be recorded.
In addition, councils may consider recording where a delegated senior staff member and/or the Mayor where appropriate have signed off on new and updated policies to confirm their endorsement of the policy before it goes to the council for approval. There are benefits to each policy having a suitable audit trail.
Appendix A has a small selection of policies where the information above was included and set out in a manner which was easily identified. See Appendix A for more detail.
Recommendation
5. Councils may consider including the following on all council policies:
- the date adopted
- the date of next review
- a summary of changes made to the policy.
Audit and Risk Committee
When reviewing Audit and Risk Committee Charters, it was also apparent that there were inconsistencies across the sector, particularly in terms of sign off. Councils variously had a combination of the CEO, Committee chair, Committee members, the Mayor sign off on the document, and many did not have it signed off at all.
While the Charter must go before the Council for adoption, to increase accountability, and ensure currency, the Inspectorate would like to see each charter signed off accordingly, particularly where there has been a change to the membership.
Recommendation
6. Councils should consider having the Audit and Risk Committee Charter signed off at each renewal by the:
- CEO
- Committee chair
- Mayor/Committee members (at the council’s discretion).
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