Another Vic council has 'lost its right to govern' over administrative failures

By Stephen Easton

August 25, 2017

Earlier this week, the Victorian Parliament passed legislation effectively sacking Central Goldfields Shire Council for serious mismanagement and governance failures, including a “disregard” for the law that cost ratepayers over $730,000 according to Minister for Local Government Natalie Hutchins.

“We have not taken this decision lightly. Dismissing a council is a significant step, and is the result of extensive and disturbing mismanagement by Council over many years,” Hutchins said in a statement.

“The Central Goldfields Shire Council has let down local residents and businesses, and lost its right to govern on their behalf.”

The independent Local Government Investigations and Compliance Inspectorate homed in on the council and its chief executive Mark Johnston after receiving serious allegations last year, appointing a municipal inspector to watch its governance processes in action.

A “thorough investigation” followed, according to chief municipal inspector David Wolf (pictured), and led to a criminal prosecution that is currently before the courts. The inspectorate’s report does not contain much detail of these allegations — that Johnston used a corporate credit card for personal expenses — to avoid subverting the judicial process.

“What this report does highlight are the many areas where council has failed the community and disturbingly, did not take advice or act on recommendations when these failings had been identified,” Wolf writes in his foreword.

Problems included “alleged conflict of interest relating to the CEO, alleged false claiming of expenses and numerous allegations of poor governance and noncompliance with legislative requirements” while “frontline defences against poor governance, fraud or corruption” such as strong oversight, policies and fraud controls were missing.

“The report focuses on issues within council related to the management and sale of public assets, the management and expenditure of public funds, and an apparent apathy for laws and governance requirements at a senior leadership level,” said Wolf.

“One of the fundamental issues uncovered in this investigation was the lack of transparency in decision making and management practices. This has affected the local community and the shire, which is one of the most disadvantaged local government areas in the state.”

In just one example of extremely poor administration, the inspectors found “more than $120,000 was acquitted to a capital project when it was not spent on that project” and the only explanation offered was that it contributed to “the bottom line” in some way.

The inspectorate found so many problems that its report breaks them down into four areas: asset mismanagement, financial mismanagement, human resources mismanagement and governance failures. Simply looking down the table of contents is enough to leave one wondering if there were any areas where the council was run properly.

Needless to say, the state government should only throw out a local government in the most serious circumstances but, as this case highlights, Victoria’s local government integrity agency takes these probes seriously and councillors are somewhat responsible for the actions of their administrators.

“To sack the democratic elected council on a report that was based solely on operational matters, I find incomprehensible,” said the shocked mayor, Geoff Lovett. The Municipal Association of Victoria president also questioned whether the drastic move was warranted, as the Maryborough District Advertiser reports.

An interim administrator will be appointed followed by a more permanent team of administrators who will run the council in a holding pattern until elections in October, 2020.

“The Government will provide $150,000 over three years to fund a program that will target future leaders in Central Goldfields,” according to the minister’s statement. “It has also asked the Loddon Campaspe Regional Partnership to hold a mini regional assembly over the next few months in the area, to help build a more resilient community.”

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