Ms HUTCHINS (Minister for Local Government) — I move:

That this bill be now read a second time.

Speech as follows incorporated into Hansard under sessional orders:

This bill will improve standards of governance and the conduct of councillors in local governments across Victoria.

In particular it will ensure councillors know and understand what is required of them and accordingly adopt appropriate standards of behaviour from the outset of their terms of office. It will do so by requiring all persons newly elected to be councillors, including those who have previously been councillors, to read the council’s councillor code of conduct and declare that he or she will abide by that code. Failure to do so, or failure to take the oath of office within three months of being elected, will result in the person not being capable of becoming a councillor. All councillors must repeat this declaration process each time a new councillor code of conduct is adopted.

The bill also encourages councils to take responsibility for resolving conduct issues internally so far as possible by strengthening internal councillor codes of conduct. It does this in three ways. First, councils will be required to review and adopt their codes within four months of the election at a special meeting set aside for this purpose. Second, the bill requires councils to have an internal resolution procedure within codes that makes it clear to all councillors how allegations of breaches of the code are to be handled. Third, the bill provides that councils may impose sanctions where a finding of breach of the code has been made following an internal resolution procedure. These must be voted on by council and include requiring an apology and excluding a councillor from attending or chairing meetings and removing them from any role representing council on an external body. This is aimed at ensuring councillors know the consequences of their actions in breaching the standards of behaviour that they as councillors have adopted. It is also aimed at ensuring councils accept responsibility for resolving behavioural and conduct issues occurring in their councils.

In a further measure to encourage better understanding of what is expected of them in terms of their behaviour and their role as councillors, the bill defines the roles of a councillor and mayor for the first time. The role of a councillor is set out in the bill as participating in decision making of the council, representing the local community in that decision making, and contributing to the strategic direction of the council. The role of the mayor includes providing guidance to councillors about what is expected of them as councillors and supporting good working relations between councillors. It also includes acting as the principal spokesperson for the council and carrying out civic and ceremonial duties.

The CEO’s responsibility for the organisational structure and day-to-day management decisions of council is also expanded in the bill. The bill provides that the CEO must also ensure council receives timely and reliable advice about its legal obligations under this act and any other legislation. This means there is an obligation on CEOs to inform councillors about the legal implications of all decisions or actions council is considering. Such advice must be given without fear or favour. In addition a CEO is also required to provide support to the mayor and to manage interactions between councillors and staff. This includes putting in place appropriate policies, practices and protocols for how that interaction should take place.

The bill enables regulatory authorities to more effectively enforce the appropriate behaviour of councillors through strengthened councillor conduct panel processes and a broader jurisdiction for panels. It also puts the chief municipal inspector on a more modern footing providing the inspector a role in serious conduct matters.

Councillor conduct panels processes

In respect of panels, the bill provides that the minister will appoint suitably qualified people to a central list of panel members. This replaces the current arrangement whereby the Municipal Association of Victoria is responsible for this process. Legal practitioners and any other persons whom the minister considers suitably qualified to the position will be appointed to the list. A new position of principal councillor conduct registrar will be established to then manage the establishment of panels when applications against councillors for misconduct and serious misconduct are made. The registrar will be appointed by the Secretary of the Department of Environment, Land, Water and Planning, and will be employed under the Public Administration Act 2004. The registrar will importantly have an important new function. This is to vet applications to ensure they are properly supported by evidence and are not made for frivolous or vexatious reasons. The registrar will be able to refuse to establish a panel if there is no clear evidentiary basis for the claim of misconduct or serious misconduct. However, where the application is made by the chief municipal inspector for a serious misconduct, the registrar must establish a panel. The registrar will also be empowered to refer an application back to a council if he or she determined the matter has not properly been dealt with through the council’s own processes.

Expanded councillor conduct panel jurisdiction

Panels will now be able to hear applications against councillors for both misconduct and serious misconduct. Misconduct is defined to mean failure by a councillor to comply with the internal resolution procedures in the councillor code of conduct or repeated contraventions of the councillor conduct principles in the act.

Serious misconduct is defined as failure to comply with a panel direction which includes attending, providing information to or otherwise cooperating with the panel. It also includes continued misconduct after a panel direction, bullying another councillor or a member of staff, attempting to direct council staff or releasing confidential council information. Bullying is defined in the bill in the same way it is defined in the commonwealth Fair Work Act 2009, which is the definition used by WorkSafe Victoria. This is repeated, unreasonable behaviour that creates a risk to health and safety.

Panels will be able to direct councillors to make an apology, undertake counselling or, if found to have engaged in serious misconduct, take leave for up to two months or be suspended for up to six months. The Victorian Civil and Administrative Tribunal will continue to be the only forum in which allegations of gross misconduct will be heard with applications now to be made by the chief municipal inspector rather than the secretary of the department. The definition of gross misconduct has been amended to mean behaviour that demonstrates a person is not of good character or is not a fit and proper person. Appeals to the Victorian Civil and Administrative Tribunal may be made from all panel determinations.

These changes have been made to create a clearer hierarchy of dealing with misconduct allegations against councillors to ensure allegations of misbehaviour are escalated to the appropriate forum at the appropriate time.

Chief municipal inspector

The chief municipal inspector plays an important role investigating and prosecuting offences against the Local Government Act 1989. The bill provides a statutory basis for the chief municipal inspector to reflect this primary role.

The chief municipal inspector will also be given a role in investigating and prosecuting serious and gross misconduct matters. This reinforces that breaches of the conduct provisions are as important as other offences under the act.

The bill will introduce two new offences for breach of confidentiality and directing staff. An offence under these provisions will now invoke a penalty of up to 120 penalty units (over $18 000) which is on a par with breach of the conflict of interest provision of the act. The chief municipal inspector will now be able to investigate and prosecute these two matters either as offences under the act or as serious misconduct. A councillor, however, cannot be both prosecuted and taken to a councillor conduct panel for the same behaviour.

The chief municipal inspector is also recognised in the bill for the first time to put the chief municipal inspector on a modern statutory footing. This position will be a statutory appointment made by the Special Minister of State, and the chief municipal inspector will be employed under the Public Administration Act 2004. He or she will retain the current powers of investigation and be able to delegate these powers to employees of the chief municipal inspector, who will be known as inspectors of municipal administration. This replaces the current appointment of individual inspectors by the minister.

Monitors

The role of municipal monitor is set out separately in the bill for the first time so that the minister will continue to have the capacity to appoint persons to monitor the activities of councils where governance issues have been identified. Municipal monitors will have the same investigatory powers they hold at present, which are now described as the powers of the chief municipal inspector.

Municipal monitors will also provide advice to the minister when a complaint is made that conduct by a councillor represents a threat to health and safety, or is completely obstructing council business, or is not acting in accordance with the role expected of a councillor. In these circumstances, if the municipal monitor confirms that the conduct is occurring, the minister can stand the councillor down while a claim of serious or gross misconduct is being heard by either a panel or at the Victorian Civil and Administrative Tribunal. This will be through an order in council on the recommendation of the minister. Such an order will lead to a councillor being stood down and not permitted to attend council meetings or to attend council premises while awaiting the panel or the Victorian Civil and Administrative Tribunal hearing of the substantive matter. A councillor’s allowance will be set aside during this period and either withheld if the claim of serious or gross misconduct is upheld, or paid to the councillor if no such finding is made. This is an important new power for the minister and one that has not been embarked on lightly. However, as we have seen in recent times in extremely serious cases of serious or gross misconduct, the removal of a councillor may prevent a complete failure by the council to provide good government.

In addition to being able to appoint monitors, the minister is empowered by the bill to issue directions about governance matters to councils where the minister considers governance processes and policies require improvement. The minister can only exercise this power following advice from the chief municipal inspector or municipal monitor. How a council responds to such a direction will be taken into account when the minister exercises the power under the act to recommend suspension of the council. This provides a minister with power to direct a council to take specific actions or discontinue current practices.

A range of other governance reforms are included in the bill. These include lowering the threshold for disqualifying a councillor where convicted of a criminal offence punishable with a term of imprisonment of five years to two years. It also increases the period for which a councillor is disqualified if convicted, from seven to eight years.

Prohibition of councillor discretionary funds

The bill expressly prohibits councillor discretionary funds where a councillor is allocated funds for their discretion. This includes funds allocated to particular council wards. It is expected that allocation of council resources should all be dealt with in a transparent and accountable way and consistently with the strategic directions set by council in its key strategic plans and statements. Further, allocation of resources should follow expert advice from council officers on the appropriateness of the expenditure in the light of those strategic directions agreed to by council.

Audit committees

The bill provides for increased independence for audit committees by specifying that the chair of an audit committee has a right to have a report placed on the agenda of any council meeting. Whilst it is recognised that most councils have strong working relationships between audit committee chairs and CEOs, this provision will give audit committees the capacity to bring things to the attention of councillors without requiring CEO agreement if they feel that is needed.

Electoral reforms

A number of electoral reforms are also being introduced, for implementation in time for the 2016 Victorian council general elections. A key reform includes making the Victorian Electoral Commission the statutory provider for all council elections, a role it has provided for all councils since at least 2003. Other reforms include removing the requirement for an exhibition voters roll which does not occur in state elections, preventing a person who is banned from being a company director from being a candidate at an election or continuing as a councillor, and requiring councils to have an election period (or ‘caretaker’) policy and clarifying limitations on publication of council documents during the election period.

The highest standards of behaviour and conduct are rightly expected of elected councillors as they exercise their right to participate in public life. This right is not absolute, and the government is confident that this bill strikes the right balance in supporting the independence of the local government sector as a third tier of government while providing appropriate oversight by the state government.

I commend the bill to the house.

Debate adjourned on motion of Mr CLARK (Box Hill).

Debate adjourned until Thursday, 17 September.