27 June 2019

Our winter newsletter discusses some recent investigations, prosecution outcomes and upcoming work that all aim at improving the transparency, integrity and accountability of local government in Victoria.

A concerning trend has been the increase in allegations of councillors leaking confidential information, which, if proven, can have wide-ranging negative impacts on councils. While there are recent well-publicised instances on a national scale of whistleblowers exposing poor public sector conduct through leaks of classified material, many of the cases we have investigated appear to involve councillors misusing their position to benefit themselves, friends or business associates.

As the demand for the Inspectorate’s services increases, I want to acknowledge the Victorian Government for providing additional resourcing in the recent State Budget, noting the broader jurisdiction the Inspectorate now works under through recent changes to the Integrity Act and anticipated updates to the Local Government Act. The new resources will allow us to deal with complaints and respond to complainants more swiftly, while concurrently undertaking more investigations and audits across the state.

We have recently been sharing our learnings across a wide range of stakeholder groups and all of these have been valuable opportunities to provide guidance and education to audiences such as incoming MPs, regional councils and the LGPro Emerging Leaders group.

Finally, we anticipate a website refresh to be completed before the next newsletter is published. Web developers and content writers from the Department of Premier and Cabinet have been working with us to improve the layout and navigation of our site, which should help new and returning visitors find information more easily. I’ll keep you in touch with any further updates on our work through my Twitter account @CMI_Vic.

David Wolf, Chief Municipal Inspector

Spotlight on campaign donation disclosures

New reforms to the Local Government Act will introduce tighter restrictions around donation returns and capping on the value of electoral campaign donations and gifts. Currently returns are submitted to the CEO, who after the deadline must submit a report to the Minister for Local Government highlighting any failures. The report then makes its way to the Inspectorate via Local Government Victoria.

Planned legislative reforms will expedite this process and see returns submitted directly to the Inspectorate. Notifications of donations for each candidate will then be made available within two business days on the Inspectorate website.

These reforms are expected to vastly improve the immediacy and transparency of campaign funding disclosures, while also allowing the Inspectorate to more swiftly check the veracity of returns during the election period. Importantly, they will provide access to real-time information about outstanding returns, which will assist in actively promoting submission by the 40 day deadline and hopefully reduce resource-intensive compliance action.

The Inspectorate recently completed a lengthy investigation into candidates in the 2016 general elections, after media coverage of successful prosecutions led to the Inspectorate receiving information about alleged non-disclosures.

David Nunns, a candidate in the 2016 Moreland Council elections, received a six month good behaviour bond for non-disclosure of campaign funding at Broadmeadows Magistrates Court on Wednesday 15 May. Following a lengthy investigation into campaign funding anomalies, the Local Government Inspectorate alleged that Nunns failed to declare, on his campaign donation return, a $3000 gift from the Municipal Employees Union Fund, which is associated with his employer, the Australian Services Union (ASU).

Nunns did not receive a conviction and was placed on a six month good behaviour bond and ordered to pay $1500 towards prosecution legal costs. Under the current legislation, all Victorian council candidates are required to submit returns listing donations towards their campaigns above the $500 threshold within 40 days of a general election.

Resource boost for Inspectorate

Stock image showing new staff for Inspectorate

The Local Government Inspectorate has been allocated increased funding to boost resources and provide greater assurance to the community that their council is operating within the law.

Announced in the Victorian State Budget, the additional funding will provide four new municipal inspectors to support the Inspectorate’s work with 79 Victorian councils.

Chief Municipal Inspector David Wolf said: “The increasing demand and scope of our work has put pressure on our existing capacity which was recognised by the sector, community and local government representative bodies.”

“The funding will help the Inspectorate deliver on its commitment to address complaints in a timely manner, which allows us to deliver better outcomes for the sector and complainants,” he said.

“We will also be able to focus more effort on looking at the systemic and thematic issues in the sector to improve efficiency and accountability.”

Rise in complaints about confidential or sensitive information

Confidential information handed to another person

Recent complaints data has shown disturbing cases of councillors leaking information for personal or political reasons and ignoring the serious impact that it has on the business of council and the confidence of the community.

Complaints related to the release of confidential information have increased in 2018/19 and recent Inspectorate investigations have revealed some troubling cases of repeat disclosures of confidential information by councillors to members of the public or the media. The effect of this behaviour is serious and unauthorised disclosures have the potential to harm the council’s reputation and its business of providing community services.

Over the past two years, the Inspectorate has completed complex investigations and commenced proceedings against councillors, including East Gippsland Shire’s Ben Buckley, who was suspended by a Councillor Conduct Panel for four months for serious misconduct related to leaking confidential information, and former Murrindindi Shire councillor Chris Healy, who was convicted on five counts of misuse of position for making improper use of information.

The Inspectorate recently charged a South Gippsland Shire Councillor with misuse of information and further details will be provided once allegations have been aired in court. The Municipal Monitor at South Gippsland identified confidential information leaks as, at worst, reflecting a "blatant disregard for the law and the damaging consequences for those provided it". Many other alleged releases have not reached the prosecution threshold, with a common obstacle being the ability to conclusively prove the identity of the person releasing the information.

Councillors have access to sensitive or commercial-in-confidence documents that should not, for legal, financial or other reasons, be made public at that time. Councillors are expected to abide by the requirements of the Local Government Act 1989 and their council's policies and code of conduct. The Inspectorate has responsibility under current legislation to accept complaints about a councillor or member of a special committee disclosing confidential information or misusing their position by making improper use of information.

Councillors and the administration need to be clear on when information is confidential under the Act. Councillors must be aware of their responsibilities under section 77 of the Act and the penalties for unauthorised disclosure. Items that have been designated confidential by a council CEO are generally labelled as such to protect contractual, personal, legal or other prejudicial information.

A previous article discussed access to and designation of confidential information and provided a case study on what can occur when that information is publicly released. As mentioned in the article, council codes of conduct often contain strict rules around confidentiality and are largely sufficient in maintaining good behaviour. More information on the legislative requirements and best practices is available on pages 49 and 59 of the Good Governance Guide, created by Local Government Victoria in collaboration with MAV, VLGA and LGPro.

Looking at councillor support

All councils across Victoria provide support to councillors to assist with the responsibilities of their role.

While many councils deal with councillor work-related expenses differently, all provide support for items such as information technology, travel costs, training and childcare. The Inspectorate has commenced a project to request information from all councils on the level of support they provide. The project will also aim to assess whether that support is providing the best outcome for councillors and the community.

Operations Manager Ross Millard said the project would firstly look at what support is provided across the state and then evaluate whether it is administered with efficiency, consistency and transparency. Information will be sought from councils, relevant council staff, councillors and some stakeholders.

“We are wanting to ensure councillors have adequate support to do their job but we also want to make sure that there are robust procedures in place,” he said. “We will consult with councils and councillors and discuss findings where appropriate.”

Mr Millard said a final report on the findings would identify best practice in the sector and be a guide for future improvements to the councillor support framework.

Putting the right detail in interest returns

A brief explainer by Michelle Dewberry, Investigations and Compliance Analyst.

Over time the Inspectorate has dealt with a number of non-compliant interest returns. What we’ve found is that sometimes, submitters only include the interests they hold at the date that they submit their return, instead of the interests they held during the return period – which stretches back to the date of their last return. To us, this means that there may be some confusion about the "return period" and what it means.

With mid-year returns due in the coming weeks (on or within 40 days of 30 June), we’d like to remind submitters of the requirement to declare interests held during the return period, even if the interest has expired by the time they submit a new return.

As an example, if you submitted your last return in January, sold your home in March and then submitted a new return in July – you are still required to include the property because you held an interest in it during part of the return period. The same rules apply for other declarable interests such as property holdings and company directorships - irrespective of whether any remuneration, income or other financial benefit was drawn from the interest during the return period.

Anyone who is required to submit a return can generally contact council governance staff for further information and guidance on declarations. Section 81 of the Local Government Act* contains the relevant information on interest return requirements.

*This was superseded by Part 6, Division 3 of the Local Government Act 2020 on 1 May 2020