A proper legislative scheme ensures that an appropriate standard of disclosure for councillors and senior local government officials is established, sanctioned by law, and applied consistently across the sector.14
Victoria’s personal interests disclosure scheme was introduced in 1989 and remained unchanged until 2020. When we undertook our review, personal interests returns were regulated by s 81 of the 1989 Act. On 24 October 2020, the 1989 scheme was replaced with a new personal interests return scheme contained in Division 3 of Part 6 of the 2020 Act (ss 132-136).
Although the 2020 scheme was a significant improvement on the 1989 scheme, it contains some of the same structural weaknesses and may not address all the issues we identified.15
As a result, it may be necessary to amend Division 3 if the local government sector is to have a ‘best practice’ model to declare personal interests which addresses integrity risks for councillors and senior local government officials. This is discussed in greater detail in the compliance section on legislative change and oversight.16
The 1989 Act and scheme
The 1989 scheme created a system for the declaration of personal interests for local government councillors, members of special committees, senior officers and nominated officers. The basic structure of the scheme remained unchanged for 31 years until it was replaced by the 2020 scheme.
The 1989 scheme required councillors, members of special committees, senior officers and nominated officers (senior council officers nominated by the CEO) to submit:
- primary returns within 30 days of election, appointment or nomination, or within 7 days of making the oath or affirmation of office of a councillor
- ordinary returns biannually – within 40 days of 30 June and 31 December each year.
Failure to do so was an offence and punishable by up to 60 penalty units.17
It was also an offence to fail to disclose specific information prescribed in the 1989 Act, including interests in companies, land and trusts, and “any other substantial interest … [which] might appear to raise a material conflict” between private interests and public duty.
Councils were required to maintain a register of the interests which were open to the public by written application. Anyone who inspected the register could publish register information, provided it was ‘a fair and accurate summary or a copy’. Council officers could be prosecuted for copying or divulging information from the register or the returns, or for making use of information for non-official purposes.
When a person ceased to be a councillor, a member of a special committee or the holder of a nominated office, their register entries were retained for three years and then securely destroyed.
The 2020 Act and scheme
The 2020 personal interests return scheme applies to councillors, members of delegated committees, CEOs and nominated officers. These are known as ‘specified persons’. The scheme is part of a broader council integrity scheme and is strongly linked to ensuring public confidence in council decision-making.
The 2020 scheme is set out in Division 3 Part 6 of the 2020 Act (sections 132-136). Part 6 of the Act also includes detailed provisions related to the management of conflicts of interest, gifts, codes of conduct and councillor conduct panels.
The 2020 scheme’s stated intention is to “ensure people in decision making positions at a council provide reasonable disclosure of personal interests that may impact on their ability to exercise their roles impartially”.18 That is, the scheme recognises that adequate disclosure of the personal interests of council decision-makers helps boost the integrity of, and consequently public confidence in, the decision-making process.
The system of ‘reasonable disclosure’ for specified persons in the 2020 scheme has 2 main components:
- specified persons are required to lodge initial and biannual personal interests returns
- CEOs are required to prepare and publish summaries of those returns.
Specified persons are required to lodge an initial personal interests return with their CEO on election or appointment, and to lodge biannual returns with the CEO while they continue to hold office. It is an offence to fail to do so, or to lodge inaccurate or incomplete returns intentionally or recklessly. Returns need to be lodged during the prescribed periods, which are between 1 March to 31 March and 1 September to 30 September each year.
A key difference between the 1989 and 2020 schemes is that the 2020 Act does not attempt to exhaustively prescribe each item to be disclosed in the returns. Instead, the Regulations prescribe the matters to be included in the initial and biannual returns and specify the dates when biannual returns must be lodged. As subordinate legislation, the Regulations are arguably easier to amend so the prescribed list may be potentially adjusted as circumstances require.
Under the new Regulations, disclosure requirements have been expanded. Where previously interests in 5 categories had to be disclosed, there are now 11 categories including interests like employment, consultancies and personal debts.19
A second key difference is that under the 2020 scheme, the public is no longer required to specifically request to inspect the register of interests. Instead, each CEO is required to prepare a summary of each specified person’s latest personal interests return and ensure it is available for inspection on the council’s website and at the council office.
The 2020 Act specifically states that the summary must include the town or suburb but exclude the street and house number of any residential property. This addresses the privacy concerns councillors had under the 1989 legislation. The Regulations list the other matters to be included and excluded in CEO summaries. They require the summary to contain ‘sufficient information to identify the type and nature of interests disclosed in the return’. The level of detail of the interests captured in the summary is at the discretion of the CEO.
The 2020 scheme enhances confidentiality arrangements. CEOs are required to ensure that record-keeping complies with the Public Records Act 1973. Access to individual returns is restricted to key council personnel, the disclosers themselves and to municipal monitors, the Chief Municipal Inspector and commissions of inquiry. It is an offence to divulge the contents of a return to any other party unless that information is included in the published summary.
All Australian state and territory jurisdictions have schemes for the disclosure of personal interests by councillors and senior local government personnel. These schemes have the following key elements:
- all Australian jurisdictions:
- have local government personal interests disclosure schemes for councillors and senior council staff apart from Tasmania
- require local government CEOs or general managers to keep a register of disclosed or declared interests, although both the information required to be registered and inspection and publication rights vary between jurisdictions
- legislative models range from a requirement to declare
- interests before a matter is discussed (Tasmania) through to prescription of disclosure requirements via mandatory model codes (NSW)
- the most common legislative model includes a list of disclosable interests in either Acts of Parliament or subordinate legislation.
Most jurisdictions use the threat of criminal prosecution and/or misconduct proceedings to ensure compliance with the disclosure requirements.
Although most jurisdictions prescribe time limits for the submission of returns, the schemes do not contain mechanisms for:
- reporting breaches of reporting requirements
- external scrutiny of the schemes’ operations to ensure the timeliness and accuracy of returns (such as an external audit of the registers).
The Victorian scheme is broadly in line with the interstate schemes; however, the NSW scheme makes provision for non-monetary sanctions. This will be discussed in Chapter 6 of this report.
14 A legislative scheme is the Acts and regulations which govern the disclosure of personal interests by councillors and senior government officials.
15 See the chapter Personal interests summaries.
16 See the chapter Increasing compliance through legislative change and oversight.
17 A penalty unit is an amount of money set by parliament each year. For the period 1 July 2021 to 30 June 2022, the value of a penalty unit is set at $181.74.
18 Victoria Parliamentary Documents Local Government Bill 2019 Explanatory Memorandum Local Government Bill 2019 (legislation.vic.gov.au).
19 The categories that had to be disclosed in the 1989 scheme were: leadership roles in companies, beneficiary of companies, land owned in municipality, trusts and any other substantial interest. The categories in the 2020 scheme are: leadership roles in corporations or unincorporated associations, partnerships, trusts, paid employment, consultancies, land owned in municipality, shares, companies owned with family, personal debt or any other matter.