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

That this bill be now read a second time.

Speech as follows incorporated into Hansard under standing orders:

This bill will dismiss the Central Goldfields Shire Council in response to the Local Government Investigations and Compliance Inspectorate’s report Protecting Integrity: Central Goldfields Shire Council Investigation released in August 2017.

In September 2016 the inspectorate commenced a formal investigation into council matters including allegations of conflict of interest relating to the chief executive officer. On 17 July 2017 prosecution commenced against the CEO with 41 charges currently before the courts. This complex investigation uncovered information that led to a lengthier investigation and the release of a report on the governance and management of key areas of responsibility within the organisation.

The inspectorate’s report found clear evidence that that Central Goldfields Shire Council has failed to provide good government to the municipality.

Specifically, it identifies:

a.     the council demonstrated a lack of transparency and a disregard for compliance with legislative requirements in the sale of council land, resulting in a significant loss of public funds;

b.     the council has mismanaged government grant funding to the extent that significant amounts acquitted against projects cannot be accounted for;

c.     the council does not have in place adequate controls, policies or procedures for the management of public finances and public information, and does not have in place a structured freedom of information (FOI) system nor capability for an FOI application to be made;

d.     a range of organisational failures have resulted in a failure to adequately follow processes and policies or comply with a range of legislative requirements in the employment of contractors or the review of staff performance, at the expense of transparency and ethical management;

e.     the council’s mismanagement of the councillor code of conduct, delegations and authorisations expose the council to legal, financial and reputational risks;

f.      the council does not have in place an effective policy framework to ensure good governance.

The numerous issues investigated in the report raise serious concerns about the effectiveness of the council to govern the municipality.

The bill will dismiss the council and appoint administrators to perform the powers, functions and duties of the council until a new council is elected.

The bill provides for the next general election for the Central Goldfields Shire Council to be held in 2020 ensures there is sufficient time to address the issues raised in the Inspectorate’s report while balancing the strong community interest in having democratically elected representatives.

Dismissing a council by Parliament is the most extreme intervention by the state and is only undertaken in the most serious cases of governance failure.

The evidence identified in the inspectorate’s report and the failure of councillors to act in accordance with their statutory obligations demonstrate extremely serious governance failures warranting the dismissal of the council.

Without this bill there is a risk of further deterioration of the governance at the council and the probity, integrity and accountability expected of local government.

The community and Parliament expect the highest standards of governance, probity and representation from their councillors and council staff. This bill will ensure good governance in Central Goldfields is restored.

I commend the bill to the house.

Ms HUTCHINS (Minister for Local Government) tabled following statement in accordance with Charter of Human Rights and Responsibilities Act 2006:

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006, (the ‘charter act’), I make this statement of compatibility with respect to the Local Government (Central Goldfields Shire Council) Bill 2017.

In my opinion, the Local Government (Central Goldfields Shire Council) Bill 2017, as introduced to the Legislative Assembly, is compatible with human rights as set out in the charter act. I base my opinion on the reasons outlined in this statement.

Overview

The proposed Local Government (Central Goldfields Shire Council) Bill 2017 (bill) proposes to dismiss the council and provide for the appointment of administrators for the council. This follows a report of the Local Government Investigations and Compliance Inspectorate (inspectorate) Protecting Integrity: Central Goldfields Shire Council Investigation.

The inspectorate provided the Minister for Local Government with the report on Thursday, 17 August 2017. The report describes a number of instances of administrative mismanagement and governance failures by the council. As such, the minister seeks the dismissal of elected councillors for a significant period of time to enable the restoration of proper governance processes and administrative functions.

The proposed bill dismisses the council until the first council meeting following a general election to be held on the fourth Saturday in October 2020.

Human rights issues

Human rights protected by the charter act that are relevant to the bill

The proposed bill engages human rights provided for in the charter act, as follows:

Taking part in public life

Section 18 establishes a right for an individual to, without discrimination, participate in the conduct of public affairs, to vote and be elected at state and municipal elections, and to have access to the Victorian public service and public office.

Clause 5 of the bill clearly engages and purports to restrict the right under section 18 of the charter.

The limitation appears to be reasonable and demonstrably justified in a free and democratic society under section 7(2) of the charter act.

The right to participate in public affairs is a broad concept, which embraces the exercise of governmental power by all arms of government at all levels. The right to be elected ensures that eligible voters have a free choice of candidates in an election, and as with the right to vote, the right to occupy public office is not conferred on all Victorians; it is limited to eligible persons where the criteria and processes for appointment, promotion, suspension and dismissal are objective, reasonable and non-discriminatory.

The purpose of the limitation is to enable the restoration of good government to the council.

In September 2016 the inspectorate commenced a formal investigation into the Central Goldfields Shire Council (council), following allegations of conflict of interest, alleged false claiming of expenses and numerous allegations of poor governance and non-compliance.

At the conclusion of the investigation, the inspectorate published a report which highlighted a range of issues, including a lack of council internal controls, inadequate policies and procedures, and an overall lack of respect for compliance.

The report describes instances of the council breaching the legislative requirements relating to the sale of land protecting the community, resulting in a significant loss of public funds; misuse of government grants, which could not be accounted for; not adequately following processes or policies, nor legislative requirements, in the employment of contractors, at the expense of transparency and ethical management; and failing to carry out performance reviews of staff, negatively impacting on the council’s work culture.

The inspectorate’s investigation also identified numerous issues relating to the council’s governance arrangements, which raised serious concerns about the effectiveness of the council to govern the municipality. These included the mismanagement of public information and record-keeping; no structured freedom of information (FOI) system nor capability for an FOI application to be made; failure to review and update council’s instrument of delegations, and confusion of the role of certain council committees; failure by councillors and nominated officers to properly complete and submit interest returns in accordance with the Local Government Act 1989 (act); impartiality of the management of the community grant scheme, breaches of procurement process; and mismanagement of the councillor code of conduct.

The serious nature of the inspectorate’s findings and the failure of councillors to act in accordance with their statutory obligations, clearly warrant removal of the council as soon as possible. This action ensures and recognises the right of electors to be represented with probity, integrity and accountability, and in the interests of the community.

Removal of an elected council is a last resort, and undertaken only in exceptional circumstances. While this is regrettable, the government has a responsibility to protect communities from governance failings by their local representatives.

The Local Government Act provides a less restrictive and more immediate measure, namely suspension pursuant to section 219(1). However, section 219 is not appropriate in this case because it provides for suspension for a maximum period of 12 months, indicating the provision is intended for circumstances in which a short interruption to elected representation will be sufficient to overcome the failures identified.

However, as the inspectorate’s report clearly demonstrates, the council has demonstrated serious and systemic poor governance practices, characterised by the continuation of entrenched failures. It is considered that the serious deficiencies at the council will require a significantly longer period than 12 months so that good government can be restored.

Privacy and reputation

Section 13 of the charter provides that a person has the right not to have his or her privacy unlawfully or arbitrarily interfered with, and not to have his or her reputation unlawfully attacked.

Clause 5 of the bill provides for the dismissal of the elected councillors, and therefore purports to restrict the right under section 13 of the charter.

An interference with a person’s privacy and reputation is lawful and not arbitrary in this case. A decision to remove the councillors from office follows an extensive investigation into the council by the inspectorate. The inspectorate, in its report, identified significant instances of administrative failures, including failure of councillors to comply with their statutory obligations, and to implement and adhere to effective governance practices. The serious nature of the inspectorate’s findings clearly warrant the immediate removal of the councillors.

Conclusion

I consider that the bill is compatible with the charter act because, although it does limit rights under the charter act, the limitations are reasonable and proportionate. The limitations strikes the correct balance by providing persons the right to take part in public life and ensuring the council perform to appropriate standards of probity, integrity and in the public interest.

Natalie Hutchins, MP
Minister for Local Government

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

That this bill be read a second time immediately.

I can advise the house that in accordance with standing order 61(2) the other parties and Independent members have been provided with a copy of the bill and a briefing.

Motion agreed to.

Ms HUTCHINS (Minister for Local Government) introduced a bill for an act to dismiss the Central Goldfields Shire Council and provide for a general election for that council and for other purposes.

Read first time.