FOR several months earlier this year, Tasmania's director of local government conducted a confidential inquiry into the Derwent Valley Council at the request of Local Government Minister Peter Gutwein MHA.
Releasing his report last week, the director (Mr Alex Tay) issued reprimands to the council's mayor and general manager, and to the council as a whole, in relation to various issues. These related primarily to loans issued without council approval, and the council's several decisions not to replace its existing councillor code of conduct with the Model Code of Conduct imposed by the Tasmanian Parliament.
While I have been advised by the director that I am not the subject of any proposed actions by him, I have raised a number of questions about errors in the report as well as the appropriateness of reprimanding the whole council for actions that were carried out without its knowledge. I will await the director's promised written responses before commenting further.
The report is published in its entirety below, without alteration, and
can also be downloaded from the Department of Premier and Cabinet
website.
Director of Local Government Report to the Derwent Valley Council August 2017
Table of Contents
1. Introduction
2. Overview
3. Management of Council funds
4. Implementation of and adherences to Council policies
5. Failure to adopt the Model Code of Conduct
6. Optimal Organisational Structure
7. Management of relationships
8. Pecuniary Interest complaints
9. Summary of Recommendations
Appendix A. Summary of Sanctions Imposed / Recommendations
1. Introduction
In the period October to December 2016 I received, in my capacity as the
Director of Local Government (the Director), complaints regarding the
governance and operational performance of the Derwent Valley Council
(the Council) as well as an issue regarding the failure by the Council
to adopt the Model Code of Conduct before 13 July 2016 as required by
the Local Government Act 1993 (the Act).
Given the nature of the complaints I have undertaken an investigation
into the Council pursuant to the provisions of section 339E(4) of the
Act. The investigation involved interviews with the elected members and
senior staff of the Council as well as the examination of a variety of
Council documents.
All investigations conducted by the Director under the Act are conducted
on a confidential basis. This approach was undertaken in this
investigation to reassure councillors and council staff that were
interviewed that matters would be treated confidentially and would not
be attributed to any particular individual.
This report provides findings and recommendations on the governance and operational issues considered during the investigation.
I have consulted with all councillors and the General Manager on a draft
of the report. Fourteen days was allowed for responses to be submitted
to me, and three responses were received. I have considered the
responses prior to finalising the report.
2. Overview
The role of the Director of Local Government is to administer the Local
Government Act 1993. The role supports Tasmanians to receive high
quality and cost effective access to local government services, and also
performs statutory responsibilities that include regulatory activities
to support good governance by elected members within this important tier
of government. Ensuring and maintaining community confidence is
crucial.
The statutory responsibilities of the Director impose obligations to
investigate complaints into alleged non-compliance with, or offences
under, the Act. It is these obligations that have resulted in the
investigation into the Derwent Valley Council.
Officers of the Local Government Division undertook the investigations
under the Director’s authority. The officers were sensitive to the need
to conduct the investigation in a manner so as to have as little adverse
impact to the ongoing operations of the Council as possible.
It is pleasing that all members of Council and Council staff
participated in the investigation in the interests of dealing with the
matters raised and with the intention of improving governance and
operations to ensure that the Derwent Valley community receives a high
standard of local government service.
While this report finds there have been instances of non-compliance by
Council and some individuals with the Act and with some Council
policies, the more important outcome is how Council receives and acts on
the findings and recommendations that are presented. Council has a duty
to make improvements to governance and operations, for the benefit of
its ratepayers and community. Efforts to make improvements now will not
only support current councillors, but should produce a supportive
environment for any new councillors who are elected in the future to
understand and perform their roles successfully.
It is worth noting here the difference between a finding against the
Council as a body and a finding against an individual councillor. The
Act contains many provisions which prescribe specific actions or
outcomes which must be undertaken by the Council. In any Council
resolution, councillors have the opportunity to vote either for, against
or alternatively abstain from voting in relation to the matter
resolved. Irrespective, the Council as a body will still be subject to
the finding and recommendations where the resolution or action is not in accordance with the legislative provisions of the Act. Where Council has
taken a decision that has been found to be non-compliant with the Act,
the voting record of individual councillor’s is on the public record
(unless the relevant matter was resolved in a closed meeting).
Broadly speaking, there are four key areas that the Council needs to
address in terms of governance and operational performance, namely:
- the management of Council funds;
- Implementation of and adherence to Council policies;
- Optimal organisational structure; and
- The management of relationships.
Additionally, the other area of note to which I must specifically refer is:
- failure to comply with Local Government Act 1993 section 28T, which
is the failure to adopt the Model Code of Conduct by 13 July 2016.
Of particular importance in my view is that the General Manager and
councillors collectively have a clear understanding of the Act with
respect to the roles and responsibilities established under the Act. The
findings from this investigation reveal that a clear understanding has
been lacking at the Derwent Valley Council in some instances and that
there has been some ‘creep’ in terms of exercising functions or powers
outside of the Act or Council policies.
Elected members and Council staff should be aware of the significant
responsibility placed upon them in terms of control and expenditure of
ratepayer and grant funds. Dealings must always be within legislative
parameters, subject to good governance and commercial practice
principles and able to withstand public scrutiny. Of particular note,
the investigation has found poor and non-compliant practices with
respect to the making of loans. This follows earlier findings by the
Auditor-General with respect to poor controls over credit card
expenditure at the Council.
My investigation also noted that the Council regime in relation to
policies was a catalyst to a number of the issues that have been raised.
Ensuring that clear, concise policies are in place is essential for any
well governed council. Policies should be reviewed on a regular basis,
indeed with the Act requiring that major council policies be reviewed
every 4 years.
The investigation noted that there has been a significant program of
policy review undertaken by the Council in the past 15 months, however
it noted that there was still a significant amount of work to do to have
in place an appropriate policy framework under which staff can make
consistent and appropriate decisions. Additionally, even where policies
are in place, the investigation noted that the lack of adherence,
certainly historically, has been a catalyst to the issues and
non-compliance identified in this report.
I accept that these failures are as a result of some historical
practices, however it is incumbent upon the current Council and General
Manager to act rapidly to address deficiencies to support effective and
sustainable governance. Whilst there is some evidence of attempts being
made, the program should be accelerated.
It was heartening to note that all councillors agreed that generally the
Council operated with the best interests of the community in mind.
Indeed, most councillors believed that the Council was an effective
working unit that was now focussing on many of the strategic priorities
the Council needs to confront into the future. However, information
provided during the investigation appeared to indicate that there are
some relationships within the Council that are preventing the focus of
Council remaining on strategic issues. It is likely that the causal
factors for those issues is likely to be ineffective and insufficient
communication between parties combined with a failure by some
councillors to fully understand the role that they have been elected to
perform.
The Act is clearly framed to restrict the interference of councillors in
the operational sphere of council business. This is to ensure the
integrity of the authority of the General Manager to conduct day-to-day
business effectively, whilst carrying out the strategic decisions made
by Council. All councillors need to clearly understand their role to
avoid undermining this relationship.
The Derwent Valley community will expect to know what action their
Council takes with respect to the recommendations in this Report.
Consequently, I will require quarterly reporting on progress on the
recommendations. The quarterly reports will be published on the Local
Government Division website and it would be beneficial for the Council
to make the progress reports available as well. A review for the ongoing
need for quarterly progress reporting will be conducted following the
fourth quarter report, and will be based on progress against the
recommendations and evidence of improvements.
3. Management of Council funds
The investigation focussed on the circumstances surrounding the issue of
a loan to the Derwent Valley PCYC for the amount of $100,000 and also
of a loan by the General Manager to the Mayor in relation to the payment
of an invoice for the repair of his vehicle (this matter is further
discussed at 4.1).
3.1 Loan to the PCYC
The investigation determined that the Mayor, Deputy Mayor, General
Manager and Council accountant were all party to negotiations and
discussions with the Tasmanian Association of PCYC (TAPCYC), in order to
secure the commencement of a Derwent Valley PCYC. Further, I find that
the Council had supported the idea off having the PCYC operating out of
the Council owned sports centre.
On 29 June 2016, a meeting was held at the Derwent Valley Council
Chambers between Mayor Evans, Deputy Mayor Shaw, General Manager Winton,
the Minister for Police, the then CEO of the TAPCYC and a senior police
officer. During that meeting the establishment of the Derwent Valley
PCYC was discussed including an understanding on the behalf of the
Mayor, Deputy Mayor and General Manager that a grant of $100,000 would
be provided by the Tasmanian Association of PCYC.
The investigation noted that as the venture neared fruition, a
representation was made by the Chief Executive Officer of the TAPCYC,
for the Derwent Valley Council to provide a loan of $100,000 of Council
funds in order to commence operations, on the understanding that the
loan would be repaid to the Derwent Valley Council upon receipt of the
grant from the TAPCYC.
The loan was made by the General Manager, without appropriate approval
by the Council, notwithstanding that the Mayor and Deputy Mayor were
aware of the loan. I note that the General Manager identified that he
believed that the general powers provided to the General Manager
pursuant to section 62 provided adequate authorisation to issue the
loan.
The power for a Council to make loans is not explicitly provided for
under the Act. In my opinion, the power for a Council to make a loan is
implicit within certain sections of the Act (but not section 62 alone)
and are qualified by conditions which require a significant level of
control and scrutiny. There is no evidence that the specific loan made
to the TAPCYC was made in accordance with any provisions of the Act and,
in any event, the General Manager has relied on section 62. In the
absence of a specific delegation by Council (and other conditions being
met), I find that the loan was not legally made in accordance with Part 8
of the Act.
I do note that the majority of councillors stated when questioned that
they would have supported the issue of the loan should it have been
brought to Council in accordance with section 82(4) of the Act.
Leaving aside the legality of the loan, of concern is the failure to
follow good commercial practice with respect to having in place a loan
or deed type documentation for a transaction of this type – particularly
with consideration to the value – and this concern was exacerbated upon
reviewing correspondence from the TAPCYC following the departure of the
previous CEO. The loan should have been supported by appropriate
documentation that gave some protection to ratepayers in terms of
security for the loan. While there is an argument that the loan was
effectively an ‘advance’ whilst a grant from the TAPCYC was awaited, the
fact that the grant was yet to be provided and that detailed terms of
the grant were yet to be agreed or documented, exposed ratepayers to
some risk.
On a related matter, the position of the Mayor sitting as the chair on
the DVPCYC Board was examined. There was a potential conflict of
interest with respect to the Mayor’s role as chair of the Board and his
position of Mayor of Council. It is noted that the Mayor stated that his
undertaking the chairpersonship of the DVPCYC Board was only
transitional, and that he had declared conflicts of interest and removed
himself from meetings when he considered he had a conflict. The Mayor
has since resigned from the Board effective 19 June 2017.
Recommendations
In order to avoid similar non-compliance in the future, I recommend that:
- the Council ensures it complies with Section 82 (Estimates) and more broadly Part 8 of the Local Government Act 1993;
- the Council’s audit panel review all loans made by Council over the
past 3 years and provides advice in relation to whether policies and
practices require change to ensure compliance; and
- the Council ensures that where such loans are approved by Council,
that adequate contractual provisions are in place with regards to
securing the repayment of the loan.
Action by the Director
- that the General Manager receive a reprimand in relation to the
failure to comply with the Act – specifically by issuing a loan to the
Tasmanian Association of PCYC outside of the powers of Part 8.
- that the Council receive a reprimand relation to the failure to
comply with the Act – specifically by issuing a loan to the Tasmanian
Association of PCYC outside of the powers of Part 8.
4. Implementation of and adherence to Council policies
Policies are critical to the effective and efficient operation of a
council and therefore the Council needs to ensure that it has
appropriate up-to-date policies. This is particularly the case with
respect to the expenditure of council funds where policies can define
appropriately approved expenditures in addition to the express detail
contained within the estimates process pursuant to section 82 of the
Act. Where there is a deficiency in this area, there is the risk that
the separation of the strategic and operational components of Council
are insufficiently defined – and thus Council officers or elected
members can be subject to criticism for decisions made on an ad hoc
basis.
As a part of the investigation, the General Manager produced a schedule
of the current Council policies. This revealed a total of 36 Council
policies that were in place as at 4 April 2017. As a part of his
interview and the information provided, the General Manager indicated
that he had been implementing a significant program of policy
implementation and review since he commenced in July 2015, in total
progressing more than 17 policies in the past 15 months. The General
Manager further indicated that there was much work to do, but that he
had been asked by Council to restrict the policy program to three
policies per month.
A search of the Council’s website reveals that a number of policies need
updating. There were16 policies found to be more than 7 years since the
last review, with a number being more than 10 years old.
The complaint relating to a loan issued to the Mayor centres around adherence to Council policy.
4.1 Loan to Mayor Evans
The investigation found that the loan, originally reported as being to
an employee or a member of Council was to the Mayor. Upon examining this
matter, a number of issues are concerning. Firstly, the loan was non
compliant with the provisions of Part 8 of the Act in that it was not
made lawfully by Council under the specific conditions upon which a
Council may make a loan (as discussed in section 3.1 above).
Secondly, and more concerning, are the circumstances that led to the loan being issued.
The loan resulted from a situation where the engine in the Mayor’s
vehicle ceased to operate and the invoice for repair was presented to
Council for payment.
The investigation found that the catalyst for the issue of the non
compliant loan was as a result of a failure to adhere to Council policy.
As a part of the investigation, the General Manager provided a copy of
the Derwent Valley Council “Councillor Allowances, Entitlements and
Expenses Policy” dated 16 June 2016. Additionally, he provided the
superseded policy dated 19 April 2012 – of the same name. The policy
essentially provides for the reimbursement of kilometreage for a
councillors/mayor’s private vehicle when used for Council business. The
provision of reimbursement for kilometreage allows for depreciation and
hence, any repair costs resulting from a mechanical failure should be
borne by the individual.
Whilst this policy had been in place since 2012, there was a historical
practice of the Mayor using the Council issued credit card for payment
of vehicle related expenses for his privately owned vehicle. As a result
of the failure to adhere to the policy and claim mileage, when the
Mayor’s vehicle failed, an expectation was upon Council to pay for the
repair of the vehicle.
I acknowledge that the General Manager, in recognising the payment of
such an invoice was inappropriate, acted to resolve the situation by
paying the invoice, but then issuing a loan for the Mayor to recoup the
invoice amount. The General Manager and the Mayor submit that the loan
was made in circumstances that are contested as to whether the Council
has an obligation to re-imburse the Mayor for mileage not claimed in
accordance with the policy.
The circumstance was one where the General Manager used a solution which
was non compliant with legislation to deal with a situation which was
also non-compliant with a long held Council policy. Compliance with
Council policy from the outset should have prevented this matter from
occurring.
This matter has caused a significant amount of discontent within the
Council and likely in the community generally (given it has been a focus
of media attention). My investigation finds that another significant
factor in this was as a result of the lack of transparency. The failure
by the General Manager to put this matter before the Council in the
first instance to seek appropriate approval of the expenditure, and then
by not providing information when the matter was raised by councillors
has significantly contributed to the longevity and the perceived
severity of the matter.
As a final note in relation to this matter, it was noted that the
financial treatment of the Mayor’s invoice with respect to GST and the
application of the loan are incongruous. On the basis of the information
provided during the investigation, it would appear that the Mayor has
benefited from the loan issued by the Council being minus the GST amount
of $685.27. The Council accountant confirms that GST credits were
claimed on the basis of the invoice. This would appear to be at odds
with the usual application of GST rules.
My investigation noted that the Council is considering the
implementation of a policy to allow the Council’s General Manager to
advance short-term interest free assistance of not more than $5,000 in
cases of extreme hardship affecting a Council staff member.
The assumption I make is that such loans would be made from ratepayer
provided Council funds. Without having the final considered policy, it
is impossible to determine the exact merits or otherwise of such a
policy, although I would caution Council to carefully consider the
ramifications of a policy allowing such loans because it would leave
itself open to the same criticisms that have dogged the Council in
relation to this matter. Council should also consider how such a policy
would be perceived by the community, where staff are able to access
loans from the Council but ratepayers facing financial hardship cannot.
Councils should not act in general as a financial lending institution
and particularly not one of last resort. If an employee cannot secure up
to $5,000 in finances in the private finance market, they are likely to
be a high risk client. It is not reasonable for ratepayers to bear this
risk. In my view there are other options available for the Council to
offer staff suffering financial hardship including financial
counselling.
Actions by the Director
- that the Mayor receive a reprimand in relation to failing to comply
with the policies and decisions of the Council in performing the
functions of Mayor (Local Government Act 1993 section 27(1A)).
- that the General Manager receive a reprimand in relation to a
failure to comply with the Act – specifically by issuing a loan to the
Mayor outside of the powers of Part 8.
- that the Council receive a reprimand relation to the failure to
comply with the Act – specifically by issuing a loan to the Mayor
outside of the powers of Part 8.
4.2 Councillor Allowances and Expenses
The new Councillor Allowances, Entitlements and Expenses Policy of 2016
has an addition which provided an allocation of $2,500 for the Mayor to
use in relation to Council related expenses. This clause would appear on
the face of it, to be oustide the powers provided within Schedule 5 of
the Act. Section 1(2)(b) of Schedule 5 provides that a councillor is
entitled to be reimbursed for reasonable expenses in accordance with the
policy adopted by Council. The wording of clause 7 of the Derwent
Valley Council ‘Councillor Allowances, Entitlements and Expenses Policy”
dated 16 June 2016, appears to allow for an amount of $2,500 to be paid
in advance to the Mayor.
Council should be clear about the distinction between allowances and
expenses. Allowances are prescribed by regulation to be paid to
councillors, with additional amounts to Mayors and Deputy Mayor’s in
recognition of their additional responsibilities. Allowances must be
paid in arrears under the Act. A Council cannot agree to increase
allowances for any councillor, Deputy Mayor or Mayor above the
prescribed amount.
Councillors are entitled to the reimbursement of legitimate expenses
they incur in the conduct of Council business. Section 43 of the Local
Government (General) Regulations 2015 provides for certain expenses
councillors are entitled to claim for. Councils then have discretion to
put in place policies to provide for other expenses to be reimbursed in
addition to the expenses councillors are entitled to under the
Regulations. A claim for reimbursement of expenses should be supported
by appropriate proof, such as the provision of tax receipts.
The current policy to provide the Mayor with a set allowance, in advance, is not compliant with the Act or Regulations.
Recommendations
I recommend that:
- that the Councillor Allowances, Entitlements and Expenses Policy be
reviewed by Council legal counsel and the Council audit panel to ensure
compliance with the provisions of the Local Government Act 1993 (and
Regulations). A priority is to review and amend the policy in relation
to the $2,500 allowance provided to the Mayor;
- following the review, the General Manager ensures that the
councillors are aware of the provisions of the Councillors Allowances
and Expenses Policy and are provided with a copy of that document;
- a schedule of Council policies, processes and delegations to be
reviewed by the Council should be developed and implemented by September
2017; and
- the Council refer to its audit panel for investigation and
determination if there is a GST credit which has been improperly
accounted for in Council finances; and if this is the case, determine if
there is an additional amount payable by the Mayor and an alteration
made with the Australian Taxation Office.
4.3 Use of Council Credit Cards
It was noted during the investigation that the Council did not have a
policy in place regulating the use of Council credit cards prior to
December 2015. The General Manager reported in his interview that in
2015, the Tasmanian Audit Office has reported to Parliament that there
were concerns in relation to the use of credit cards at the Derwent
Valley Council. Specifically, these concerns were in relation to the
consistent failure to submit receipts related to the purchases. (Report
of the Auditor-General No 6 of 2015-16 p20).
During interviews, a councillor made allegations in relation to the
Mayor’s use of his Council issued credit card. Specifically, the
councillor provided information which suggested that the Mayor’s credit
card was being used for private expenses and that some charges to the
card were improper. Purchases questioned by the councillor were –
- a series of fuel purchases in 2014 where significant amounts of fuel were allegedly purchased on ‘consecutive’ days;
- purchases at BWS and at Woolworths; and
- a Tasmanian Collection Services bill which was alleged to be the Mayor’s personal bill.
The investigation sought explanations from the Mayor in relation to the
series of fuel purchases and the explanations provided indicate that the
purchases are likely to have been Councilrelated expenditure. The Mayor
provided corroborating evidence to substantiate his explanations.
The alleged purchases at Woolworths and BWS were subject of a
preliminary assessment and on the basis of the information gleaned,
these matters were not further examined by the investigation.
It should be noted that the lack of records and receipts relating to
council credit cards prevents a definitive conclusion being made.
During the finalisation of the report, the allegations regarding the
Tasmanian Collection Services bill were withdrawn. The evidence
available indicates the expenditure was Council related.
Issued identified in relation to these investigations are as follows:
- The Mayor’s use of his private vessel to tow a pontoon from New Town
to New Norfolk for the autumn festival is an activity which should have
been better controlled, authorised and planned by the previous General
Manager. The use of contractors for this type of activity would be a far
more appropriate arrangement due to a wide range of risks associated
with what actually occurred; and
- As noted in the Report of the Auditor-General No 6 of 2015-16, the
consistent failure of the Mayor to provide receipts related to the
Council issued credit card was of concern. It is noted that the Mayor
chose to no longer be issued with a council credit card from November
2015;
Recommendations
It is recommended that the Council:
- asks the Audit Panel to conduct a review of the Council’s credit
card and/or expenses policies – and with regard to the actual practice -
to ensure that it complies with best practice and refer it to the
Council for approval and implementation;
- that the General Manager seek advice from Worksafe Tasmania, Marine
and Safety Tasmania and the Council insurer in relation to risk
management and compliance with respect to councillors performing tasks
related to their functions.
5. Failure to adopt the Model Code of Conduct
All Tasmanian councils were required to adopt the Model Code of Conduct
as per the Local Government (Model Code of Conduct) Order 2016 before 13
July 2016 as passed by Parliament. (noting that the Bill when
introduced to Parliament proposed that the Code would simply apply and
councils would not be required to take any action to adopt it).
The investigation finds that the Council failed to do so and accordingly
failed to comply with Section 28T of the Local Government Act 1993. The
Council remained non-compliant with the provision for 233 days until it
finally became compliant, when it adopted the code at a Council meeting
on 2 March 2017.
I also find that the General Manager has provided sound and timely
advice to the Council in relation to the requirement to adopt the Model
Code of Conduct and, along with the provision of legal advice at
appropriate junctures in the process, adequately outlined the Council’s
legal obligations.
I am concerned with the situation where the Council actively chose to
undertake a course of action to leave a Council in breach of a
legislative provision. While some argument was put by some Councillors
that the Act should simply have imposed the Code, rather than require a
Council to adopt it by decision, it is notable that all other councils
in the State complied with the requirement to adopt the Code before 13
July 2016.
Furthermore, regardless of individual councillor concerns regarding the
process upon which the Code was required to become effective, Council
and councillors have a responsibility to lead by example in their
communities. Knowingly being non-compliant with the law sets a poor
example to ratepayers and community members regarding their own legal
responsibilities. If Council expects, for example, persons to abide by
its By-Laws, it has to demonstrate a high degree of integrity in
relation to its own practices and decisions.
Actions by the Director
- that Council receive a reprimand in relation to the failure to
comply with the provisions of section 28T of the Local Government Act
1993.
6. Optimal Organisational Structure
The investigation has raised questions in regard to the adequacy of the
Council’s organisational structure, and whether some of the issues that
have been experienced are partly a result of sufficient resourcing to
support good governance. It was noted that the previous General Manager
‘flattened’ the organisational structure to a situation where all
divisional areas now report to the General Manager.
The 2005 Local Government Board review reported the Derwent Valley Council as having the following ‘Senior’ positions:
- General Manager
- Deputy General Manager
- Environmental Services
- Works Manager
- Accountant
Twelve years later, the Council only has two senior managers – the
General Manager and the accountant. It is understandable for smaller,
regional councils such as Derwent Valley to have a ‘lean’ organisational
structure, given the limited financial resources available.
Nonetheless, the consequences of this can be a lack of resources to
support good governance practices and resultant risks, such as those
identified in this report. If there is a lack of management support for a
General Manager between the operational levels of Council that General
Manager will likely be challenged in meeting the expectations of his or
her Council.
Perversely, some of the more strategic management positions that are
considered ‘core’ in larger, more well-resourced councils, are arguably
more important in smaller, less resourced councils who struggle to be
able to fund them. The sustainability of such councils in the longer
term may rely on more flexible approaches to ensure appropriate skills
and services can be accessed, such as increased resource sharing. It is
notable that some councils surrounding Derwent Valley face similar
issues, and there may be cost effective opportunities that could be
pursued through joint approaches. It is understood that some work is
already under way at a regional level with respect to workforce
planning.
There is a ‘balancing act’ between the additional expense incurred by having such positions and the value that they can provide.
It is noted that the Council has provided funding for the appointment of
additional management staff in the 2016-2017 budget although for a
variety of reasons, at the time of the investigation, this has not
resulted in personnel being appointed to those positions.
The issue of General Manager relief and acting arrangements is also a
concern. The investigation noted that when the General Manager took
leave, that the Council’s only other senior manager acted as the General
Manager. It is crucial that the senior management hierarchy is
addressed to ensure that sufficient and suitable personnel occupy vital
positionsduring periods of absence of the substantive staff members, and
that the appointment of an Acting General Manager is done in accordance
with the Act, which provides that the Mayor may appoint an Acting
General Manager. It is likely that the recruitment of staff will solve
this
issue.
Recommendations
It is recommended that the Council:
- complete the recruitment of the allocated two additional management staff as soon as possible;
- conduct a review of operational staffing requirements to determine a
strategy to achieve optimal structure for best practice administration;
- in accordance with the Mayor’s powers to appoint the Acting General
Manager, ensure that appropriate relief arrangements and appointment
processes are in place for periods of leave and other absence by the
General Manager; and
- engage with other councils to explore cost effective, joint opportunities to improve the capacity in the management structure.
7. Management of relationships
As a part of the investigation, elected members and councillors were
questioned in relation to the relationships within the Council and that
co-existed with the Council staff. These discussions were pleasing from
the perspective that all members of Council believed that the group
worked well together and generally had a healthy respect for each other.
More pleasing was the unanimous feeling that all councillors were
working in the best interests of the community.
The general feeling was the Mayor was effective in the role of chair of meetings.
It also became evident that there was a number of councillors who have taken on the role of the council ‘check and balance’.
One councillor provided statements that indicated that he considered
part of his role to ensure that action ensued from the various ratepayer
complaints that he fielded on a ‘24/7’ basis. The councillor was of the
view that the ability to gain information from staff was necessary for
him to be able to do his job. It is clear that from this statement that
the councillor does not have clarity regarding the role of councillor
and the role of General Manager and staff.
There is evidence that there are a number of personal relationships
between elected members and staff where inappropriate information flow
is causing unnecessary disturbance to the strategic agenda of the
Council. It is likely that the desire to maintain these relationships is
a causal factor for the failure to adopt the Code of Conduct, and in
particular the part of the Code which stipulates that councillors must
not talk to staff without the permission of the General Manager.
A contributing factor to this situation is likely to be the lack of
management structure under the General Manager, as discussed above. The
principle behind the need to have permission from the General Manager to
talk to staff is so that the General Manager has some control and
confidence over the priorities of his or her staff, and that staff who
councillors are permitted to speak to have sufficient seniority to
discuss a matter with authority. It would be rare to find a Council
where the General Manager does not provide authority for councillors to
speak to certain staff, and ordinarily there would be some form of
‘standing authority’ for councillors to speak to certain staff members
on specific matters (ie planning).
It is imperitive that the correct separation in the relationship between
staff and elected members be maintained and that the focus of elected
members is on their role as outlined in the functions contained within
section 28 and 28A of the Act. It was noted by a number of councillors
that they considered that there would be value in the Council audio
recording meetings. One councillor noted that it was crucial from a
governance perspective to ensure that the wording of motions was
accurate because interpretation of a
motion has caused a number of issues at the Council – and the councillor
added that some members appeared to take advantage of using the broad
nature of some motions in what could be considered, or at least
interpretted, as mischevious behaviour.
Recommendations
- that all members of the Derwent Valley Council undertake specific
training in relation to: the role of a councillor; the role of Council;
and the relationship between Council and the General Manager.
- that the General Manager seek advice from other General Managers in
relation to how they manage approvals in relation to councillors
consulting with staff, and report back to Council a summary of how this
works in other councils.
- that the Council implement the audio recording of Council meetings
(pursuant to the Local Government (Meeting Procedures) Regulations 2015 –
regulation 33, subject to a business case that the capital and current
expenditure required is not excessive relative to Council resources. The
business case should include efficiency savings that can be attributed
to processes that would otherwise be required to clarify minutes and
motions, as well as non tangible benefits such as increased transparency
through making audio recordings publicly available.
8. Pecuniary Interest complaints
During the investigation, a number of matters were submitted as
additional complaints. All four complaints related to allegations of
elected members holding pecuniary interests in matters discussed and
deliberated upon.
Three of the complaints have been dismissed and one matter had been
retained by my office for further investigation. The outcome of that
investigation will only become known if there is sufficient evidence for
the Director of Public Prosecutions to take an alleged offence to the
Magistrates Court.
9. Summary of Recommendations
- the Council ensures it complies with Section 82 (Estimates) and more broadly Part 8 of the Local Government Act 1993;
- the Council’s audit panel review all loans made by Council over the
past 3 years and provides advice in relation to whether policies and
practices require change to ensure compliance;
- the Council ensures that where such loans are approved by Council,
that adequate contractual provisions are in place with regards to
securing the repayment of the loan;
- that the Councillor Allowances, Entitlements and Expenses Policy be
reviewed by Council legal counsel and the Council audit panel to ensure
compliance with the provisions of the Local Government Act 1993 (and
Regulations). A priority is to review and amend the policy in relation
to the $2,500 allowance provided to the Mayor;
- following the review, the General Manager ensures that the
councillors are aware of the provisions of the Councillors Allowances
and Expenses Policy and are provided with a copy of that document;
- a schedule of Council policies, processes and delegations to be
reviewed by the Council should be developed and implemented by September
2017;
- the Council refer to its audit panel for investigation and
determination if there is a GST credit which has been improperly
accounted for in Council finances; and if this is the case, determine if
there is an additional amount payable by the Mayor and an alteration
made with the Australian Taxation Office;
- that the Council asks the Audit Panel to conduct a review of the
Council’s credit card and/or expenses policies – and with regard to the
actual practice - to ensure that it complies with best practice and
refer it to the Council for approval and implementation;
- that the General Manager seek advice from Worksafe Tasmania, Marine
and Safety Tasmania and the Council insurer in relation to risk
management and compliance with respect to councillors performing tasks
related to their functions;
- that the Council complete the recruitment of the allocated two additional management staff as soon as possible;
- that the Council conduct a review of operational staffing
requirements to determine a strategy to achieve optimal structure for
best practice administration;
- in accordance with the Mayor’s powers to appoint the Acting General
Manager, ensure that appropriate relief arrangements and appointment
processes are in place for periods of leave and other absence by the
General Manager; engage with other councils to explore cost effective,
joint opportunities to improve the capacity in the management structure;
- that all members of the Derwent Valley Council undertake specific
training in relation to: a. the role of a councillor; b. the role of
Council; and c. the relationship between Council and the General
Manager.
- that the General Manager seek advice from other General Managers in
relation to how they manage approvals in relation to councillors
consulting with staff, and report back to Council a summary of how this
works in other councils; and
- that the Council implement the audio recording of Council meetings
(pursuant to the Local Government (Meeting Procedures) Regulations 2015 –
regulation 33, subject to a business case that the capital and current
expenditure required is not excessive relative to Council resources. The
business case should include efficiency savings that can be attributed
to processes that would otherwise be required to clarify minutes and
motions, as well as non-tangible benefits such as increased transparency
through making audio recordings publicly available.
Appendix A: Summary of Sanctions Imposed / Recommendations
Caution: A formal written caution is issued in circumstances
where the Director of Local Government finds that the is sufficient
evidence of a breach of an offence provision of the Local Government Act
1993 but where it is deemed that it is not in the interests of the
community to proceed with a prosecution of the matter. The recipient of a
caution has the option of having the matter heard in the Court of Petty
Sessions if he of
she disagrees with the finding.
Reprimand: A written sanction in relation to a finding by the
Director of Local Government of a failure to comply with a non offence
provision of the Local Government Act 1993
Prosecution: The Director of Local Government refers a breach of
an offence provision of the Local Government Act 1993 to the Director of
Public Prosecutions for the matter to be proceeded against by summons
to the Court of Petty Sessions.
Recommendation: A recommendation may be made by the Director of
Local Government in relation to a finding from an investigation. When a
recommendation is made it is expected that a Council will give careful
consideration in relation to the acquitting of any aspects. The Director
will require regular reporting provisions in relation to recommendation
in this format. Failure to satisfactorily address recommendations may
result in further actions by the Director.
