Councillor expenses

Overview

Councils must report on councillor expenses publicly in their annual reports.

The Inspectorate examined how expenses were being reported to assess compliance with the 2014 Regulations. We also looked at whether councils should report councillor expenses on their websites.

Variation in council reporting

Our review of annual reports for 2018–19 found significant variation in reporting on councillor expenses, due in part to different interpretations of the five expenses categories in the 2014 Regulations.³

Annual reporting guidance was given to councils but there was no guidance on what the five expenses categories mean, and some expenses did not fit into any category.

Some suggested methods for improving transparency of reporting are:

• reporting on councillor expenses and allowances separately
• reporting on expense categories separately, not combined
• reporting subtotals of expenses for each councillor and each expense category
• providing definitions for any additional categories used, such as ‘other’ expenses.

It is not a requirement but including expenses data on a council website can improve transparency. Our review of council websites in early 2020 found that less than half of councils published expenses data on their websites.

However, some councils, such as Melbourne City Council, report expenses regularly.

Encouraging expense claims reviews

To improve transparency and follow best practice in the assessing and processing of expenses claims, councils should regularly provide their councillors with expenses information for review. This allows any anomalies to be identified and encourages councillors to be more conscious of their expenses.

Council expenses policy

A comprehensive expenses policy should provide for a rigorous process, value for money and efficiency to ensure councils function in line with community expectations. The policy should be reviewed at least once a year.

Council expenses policies and procedures must provide transparency and accountability, and help mitigate corruption risks. Council policies should specify:

• the types of councillor expenses council will reimburse
• the form that must be used to make a claim and what information is needed to support the claim
• what documentary evidence is needed (such as receipts or logbook entries)
• which council staff are involved in the claims process and what their roles and responsibilities are
• the date reimbursement claims must be lodged by
• how reimbursements will be given to councillors (such as electronic funds transfer).

In June 2020, LGV published a draft Council Expenses Policy which sets out:

• the criteria for the reimbursement of out-of-pocket expenses
• the requirement to reimburse carer and dependent- related expenses
• the requirement to provide the details of expenses
• reimbursements to council’s Audit and Risk Committee
• the procedures to be followed in applying for and making reimbursements of expenses.

The draft policy mainly provides broad advice on reimbursement procedures and requires councils to apply their own judgment on what should be included in their policy.

However, councils told us through surveys and discussions that they want guidance on:

• what kinds of expenses are and are not reimbursable
• whether caps should apply to certain expenses
• whether there should be a time limit for submitting claims for reimbursement
• who should approve reimbursement claims.

A ‘better practice’ template policy for councillor expenses and facilities was developed by the NSW Government. Victorian councils would be helped by a similarly detailed model template for an expenses policy, which could be modified to meet their individual needs.

In addition, a model expense reimbursement procedure and claim form would help councils and encourage standardisation.

There is no requirement for a standalone procedural document but having one is best practice. Strathbogie Shire Council developed an expense reimbursement procedure to accompany their councillor expenses policy. The procedure has improved compliance with and understanding of the expenses policy.

Council expense reimbursement claim audit – issues and risk ratings

The Inspectorate conducted an audit of seven councils and checked a sample of expense reimbursement claims for compliance with the councils’ expenses policies.

During the audit, we looked at the claim forms, the policy, procedure and oversight of the reimbursement process. We found that:

• councillor expenses policies and procedures varied greatly
• the level of evidence required to support claims varied greatly

Our audit found various risks, ranging from issues that could lead to fraudulent activity or the wrong amount being reimbursed to claims being submitted outside of the required time period. Examples of issues we found in the audit included:

• CEO’s corporate credit card used for purchases by the mayor
• incorrect rate for kilometre reimbursement for private vehicle use applied
• claim not clear on how the expenses were incurred while performing duties as a councillor
• claims not applied for in writing but petty cash form used instead.

Best practices we observed which may help reduce the risk of fraudulent claims, included:

• expense claims were authorised by more than one senior council employee with the appropriate financial delegation, providing additional oversight
• monetary ranges or caps for food/beverage and accommodation costs were specified
• claims for private vehicle use had to be supported by logbook entries at the start and end of the journey
• councillors were required to submit a written report after training and professional development courses to justify their attendance and to share their learnings with council
• councillors were not permitted to cover the costs of meals or refreshments for anyone other than themselves.

Case studies

Claims not detailed in accordance with policy

An expenses policy for a regional council required details of the ‘purpose of the event/function associated with the expenditure’ for the reimbursement of expenses. We found many claims were supported by invoices but with no explanation of the council-related event or function attended. This was in breach of the expenses policy.

Improving expense claim transparency

The expenses policy for an inner metropolitan council did not require a reason in support of travel reimbursement claims to be included with the claim. A claim form submitted by a councillor stated ‘cabcharge’ with no further explanation of the purpose of travel included. Council staff assessed the claim as legitimate based on the origin, destination and time of travel, from which they deduced the councillor was attending a council meeting. Requiring the reason for travel to be included with the claim would make it easier to confirm if the claim was legitimate and improve transparency.

Information and communications technology

Information and Communications Technology (ICT) is a key area in which value for money can be achieved. We recommend councils regularly review their phone and data plans and seek better-value plans and more cost-effective technology solutions. Councillors’ use can be monitored to ensure their plans meet their usage needs and are value for money.

Councillor ICT expenses for 2017–18 showed great variation in the amount spent by councils.

The difference in spend can be attributed to the variation in the ICT hardware and plans provided to councillors, together with the variation in how ICT expenses are reported. For example, we found that some councillors included councillor ICT expenses in their council ICT budget instead of counting it as a councillor expense.

Case study

Phone and data usage analysis leads to cost savings

A large shire council analysed their councillors’ mobile phone and device bills for 12 months. All councillors were on the same phone/data plan but their call and data use varied greatly. The plans were changed and tailored to each councillor’s usage patterns. The switch resulted in a 20 per cent saving on mobile phone and device costs.

Footnote

³ The Local Government (Planning and Reporting) Regulations 2014 required reporting of five expense categories: travel, car mileage, childcare, information and communication technology, and conference and training expenses.