In Victoria, councillors, members of delegated committees and nominated council staff must submit a record of their personal interests, which can be viewed by the public.5
The Local Government Act requires that the record – which includes personal interests such as property owned, shares held or positions in companies – be completed soon after election and updated every six months.6
The declaration of personal interests (in the form of a personal interests return) is a vital mechanism to ensure that people in decision-making positions at councils disclose the personal interests that may impact on their ability to perform their duty in an impartial manner.
Councillors’ personal interests must not conflict with their public duties. Where councillors have a conflict of interest in a matter considered at a council meeting, they must disclose it and exclude themselves from the decision-making process.7 This is essential to counter any bias or perception of bias in council decision making or ability to gain advantage through their position.
Interests disclosed in a personal interests return may give rise to a conflict of interest. It is therefore important, in the pursuance of integrity, that councillors accurately disclose all their interests in their personal interests returns. When council decision makers adequately and regularly disclose their personal interests, it gives the public confidence in the integrity and impartiality of the decision-making process.
The personal interest disclosure scheme was introduced with the 1989 Act. Last year, the 2020 Act was enacted, and the number and type of interests which are to be disclosed was increased. The new 2020 Act brought increased accountability and transparency because it covers a broader range of personal interests and requires that a summary of personal interests be published on a council’s website.
Although personal interest disclosures have been required by law for more than three decades, the Inspectorate and other integrity agencies have identified that incomplete and inadequate personal interest disclosures are a historical and ongoing issue affecting the local government sector.
In 2018, we prosecuted former Wyndham City councillor Intaj Khan for failing to disclose companies in which he held office positions and financial interests, and for failing to submit two ordinary returns, in breach of the interest provisions of the 1989 Act. Mr Khan was convicted and fined $26,000.8
In 2019–20, the Independent Broad-based Anti-corruption Commission’s Operation Sandon hearings revealed multiple former Casey City councillors had received payments or donations from property developers and then failed to declare conflicts of interest when matters involving the developers came before council.9
The City of Casey Municipal Monitor Report released in February 2020 identified a culture of a low-level of understanding and regard for the importance of effectively and transparently managing councillor conflicts of interest.10 The council was dismissed in February 2020.
In late 2019 to early 2020, we investigated numerous complaints relating to the behaviour of Whittlesea councillors. A Municipal Monitor was appointed in December 2019, and in March 2020, the council was dismissed.11
During the investigation of Whittlesea, many inconsistent and missing disclosures were identified in the councillors’ interests returns. This same issue had also been identified in numerous Inspectorate investigations of other councils.
The Local Government Inspectorate is the lead integrity agency for Victorian councils. We are an independent agency that ensures Victoria’s councils follow the Local Government Act. Our responsibilities include:
- accept and investigate complaints about council operations, including councillors and council staff
- monitor governance and compliance with the Act
- provide guidance and education for councils
- encourage transparency and accountability across the sector.
Our role is to ensure compliance by investigating and prosecuting breaches of the provisions in the 2020 Act and prior to it coming into force, the 1989 Act. The two main offences in relation to interests returns are failure to submit within the prescribed timeframe and lodging returns that contain false or incomplete information.
We also provide guidance and education by undertaking reviews and audits and providing suggestions and recommendations to improve procedures and potential amendments to legislation.
Scope of the review under the 1989 Act
Against the background of identified issues with interests return disclosures and conflicts of interest, we initiated a sector-wide review of all councillor interests returns for the 2016–20 council term.
We conducted our review in mid–2020 under the 1989 Act, which was in force at the time. The review measured levels of councillor compliance with the requirements of section 81 of the Act and addressed any offences under the Act. Our aim was to determine the level of compliance across the state, make recommendations to increase compliance with the Act and to bring about sustained improvement across the sector.
The review also helped us make recommendations for the content of the new personal interests returns provisions
in the 2020 Act and Local Government (Governance and Integrity) Regulations 2020 (Regulations).
The 1989 provisions required councillors submit a ‘primary’ return within 30 days of election, or 7 days of making the oath or affirmation of office of a councillor, and an ‘ordinary’ return biannually.12 Councillors were required to disclose:
- office positions
- beneficial interests in companies
- land interests
- gifts equal to or exceeding $50013; and
- any other substantial interest they consider might appear to raise a material conflict between their private interest and public duty as a councillor.
Whittlesea councillors’ personal interests returns
The personal interests returns of Whittlesea councillors were not included in the data in this report as they were reviewed as part of a separate investigation. Whittlesea City Council was dismissed on 21 March 2020 and the Inspectorate reviewed the personal interests returns of the 11 councillors from October 2016 until their dismissal.
We contacted seven councillors who had at least one potential breach each. We issued warnings to four former councillors for breaches of section 81 of the 1989 Act.
Scope of review of summaries under the 2020 Act
While preparing this report, we undertook an assessment of compliance with the publication of summaries of personal interests returns in August 2021. This assessment was done when the 2020 Act was in force which requires the CEO of a council to publish a summary of personal interests on the council’s website.
We searched for the publicly available summaries on the websites of all 79 councils. Our review of the summaries was done just prior to the September interests returns declaration period.
5 Under section 81(10) of the 1989 Act, council CEOs were required to allow any person to inspect the register of interests of councillors following a written application made in accordance with the Regulations. Under section 135(3) of the 2020 Act, council Chief Executive Officers must publish a summary of councillor personal interests on the council’s website.
6 Section 81 of the 1989 Act and sections 132-136 of the 2020 Act, together with the Local Government (Governance and Integrity) Regulations 2020, regulate councillor interests returns.
7 Per section 79 of the 1989 Act and section 130 of the 2020 Act.
8 See case study in Replacing some prosecutions with infringements.
9 As of 15 July 2021, the Operation Sandon investigation was still ongoing.
12 For more detail, see The 1989 Act and scheme.
13 Only required to be disclosed in ordinary returns, per section 81(7) of the 1989 Act, not in a primary return.
Reviewed 27 October 2021