The NSW government has been too soft on local government fraud, corruption and bad behaviour, says a researcher specialising in governance and political structures.
Nicole Campbell, Associate at the University Technology of Sydney’s (UTS) Centre for Local Government, has spent years researching governance– including examining the scale of fraud and corruption in councils – and said processes need to be tightened up, dodgy councillors brought to book and councillors made more aware of unacceptable behaviour.
She said it was difficult to ascertain the extent of fraud and corruption in NSW local government.
“The short answer is, we don’t know,” Ms Campbell said. “I think there is a lot of corruption that’s occurring that is not being reported and I don’t say that lightly because I’m passionate about local government.”
It’s an area that has attracted a great deal of scrutiny in the midst of some recent high profile cases of local government chicanery.
The biggest circus has been that surrounding Auburn Council. It was the story that had it all: limos, helicopters, ambitious developers, flamboyant councillors, dubious planning decisions and a few whistleblowing councillors risking their necks to speak out.
NSW Local Government Minister Paul Toole suspended every Auburn councillor in February and has appointed an administrator while a public inquiry investigates allegations that some councillors made planning and development decisions for their own benefit.
The news isn’t much better at Hurstville or North Sydney Councils.
The Office of Local Government (OLG) is currently pursuing property developer and former Hurstville Mayor Con Hindi for alleged misconduct.
Mr Toole ordered a public inquiry into allegations of conflict and dysfunction North Sydney in January after infighting paralysed decision making in the council chamber, while over at Rockdale Council, Liberal councillors have stage numerous walkouts to stymie a vote on selling a car park to fund a new aquatic centre and library.
The fault lines
Director of the Australian Centre of Excellence for Local Government at the University of Technology Sydney, Associate Professor Roberta Ryan, said procurement and decision making, particularly around planning and development, offered the greatest opportunity for duplicitousness and self interest.
A/Prof Ryan said another fault line in local government could be the relationship between council general managers and the mayor or CEO.
“The mayor holds the key to the general manager/CEO’s job and pressure can be put on general managers to do things that they shouldn’t,” she said.
“All jurisdictions, through the state government local government departments and the professional associations, have systems in place to support senior officials when they face this situation but it can get tricky.
“The more worrying aspect is probably corruption – if it is systematic across organisations – [it] means there are a number of people involved and there is a lack of process and systems for proper transparency.”
She added, “I would say there is not any evidence that fraud and corruption is widespread in NSW – [no] worse than in other jurisdictions or in other levels of government. We have seen isolated examples across the public sector in Australia.
Tightening the system
Ms Campbell said current local council processes were not capturing corruption effectively and action was not taken where it was identified.
She said one of the biggest mistakes in recent years was passing the Local Government Amendment Act 2011, which allowed councillors who were also property developers to vote on decisions where they had a vested interest, providing they declared it.
“I really think it’s an example of state-sanctioned corruption; where the state government has a law that allows property developers or those with a pecuniary interest to vote on a decision and that gives them a clear benefit. This is a massive problem,” Ms Campbell said.
“Evidence of councillor misconduct by councillors with pecuniary interests will have increased because they can say they were acting within the law but not ethically or morally. It’s extraordinary that the government felt the need pass that in the first place.”
She said it was also important to examine how many complaints about councillor conduct were made to the OLG and how many were substantiated.
“I’m dismayed that the government has not taken the opportunity to pursue many of these.”
Few cases of councillor misconduct appeared to have reached the Pecuniary Interest and Disciplinary Tribunal or the Administrative Affairs Tribunal.
“I think it’s because the process is so unwieldy, people give up.”
A former councillor herself, Ms Campbell has lived through some of “the trouble” at Ryde Council between 2011 and 2014.
Former Ryde Mayor Ivan Petch is currently being prosecuted for misconduct in public office, blackmail and giving false or misleading evidence to a corruption inquiry. The Director of Public Prosecutions (DPP) and the Independent Commission Against Corruption (ICAC) have also recommended that several former Ryde councillors face charges for breaching electoral funding laws after accepting free advertising from a local newspaper.
She said the councillors got off scot-free because the Electoral Funding Authority said it was not worth taking it any further because of cost but also lack of evidence, despite the recommendations of the DPP and ICAC.
“There was no follow up action and that sends a message to councillors they can get away with it.”
She pointed to a “clunky” code of conduct, where complaints against councillors are investigated internally by the General Manager. Even where complaints are upheld, councillors can still vote to take no action.
“If the numbers sit with the person that has done the wrong thing [or they have the casting vote] the report has to go back to council for investigation. Council staff see the note which says “no further action”.”
It would be better to have an independent inquiry which made recommendations to the OLG.
“I don’t think it’s appropriate for councillors to be sitting in judgement on one of their own.”
Another major improvement would be to make it harder councillors to remove general managers. At the moment, councillors can sack general managers without even having to give a reason and the process is not transparent.
“There are so many examples of general managers being sacked on a whim by councillors because a particular decision hasn’t gone their way. Paying out GMs is also very expensive. The OLG should have acted many years ago.”
But Ms Campbell said Mr Toole had been too blunt in suspending every Auburn councillor when some had spoken out against poor planning and development decisions.
She said it punished all of the councillors and deprived ratepayers of their elected representatives. It was likely that the appointed administrator would hand straight over to the new council – Auburn is slated to merge with Holroyd and parts of Parramatta – and suspended councillors may never return.
“You should remove those councillors whose conduct is unworthy of holding public office but those councillors that are doing the right thing should be able carry on their roles as elected representatives,” she said.
An amendment to the Councillor Misconduct Bill, which went through in December 2015, gave Mr Toole the power to suspend individual councillors, not just the whole council.
Ms Campbell said: “The vast majority of elected representatives work very, very hard for their local communities. It’s a few rotten apples that spoil the barrel and that’s a shame because local government is an important sector.”
Will fraud and corruption grow under larger, merged councils?
Both women take the view that there is no reason that larger councils with more power and bigger budgets should equate to an increase in fraud or corruption.
A/Prof Ryan said: “[It’s] not likely to be worse – bigger councils can have more complex systems of accountability – it goes to the legislative frameworks and the codes of conduct – they will either stay the same or it will be strengthened.
“Regarding councillors – their role is strategic leadership – not operational management. There are checks and balances in the system to ensure accountability – and a focus on training to ensure councillors understand not just the codes of conduct but how to behave ethically.
“Public sector rules for officers are very clear on how to make transparent decisions and there are layers of sign offs – delegations etc.”
Ms Campbell agreed that good governance was critical to running a tight ship.
“If you’ve got an executive management team and a group of councillors that are aware of the rules and their responsibilities and which work together within a strong governance framework, I don’t think it matters how big the council is.”
Possible solutions
Both agreed that compulsory training on the code of conduct and ethics was the best way to guard against wrongdoing. Mentoring using alliances between several councils could help too.
Ms Campbell said: “Councillors are responsible for multi-million dollar budgets. It’s critical to get councillors and people who want to be councillors aware of the rules and responsibilities of their positions and ethical decision making processes before they get elected. [At the moment] they learn as they go along.”
The most common misunderstandings, she said, were around donations towards election campaigns – including in-kind donations – and more education was needed from the Electoral Commission and the OLG to counter these.
Bullying, hectoring and noisy behaviour should be clamped down on too, Ms Campbell said.
“Behaviour in chambers is appalling and the bullying that goes on has no place in any level of government I think councillors take their cues from noisy Question Time. They think this is how to behave. Well, it most certainly is not.”
She said the government needed to take a much stronger role in addressing rude and hectoring behaviour, including sanctioning councillors that rendered meetings inquorate to delay decisions.
“Ministers can regulate that behaviour and it’s a shame there hasn’t been more focus on improving the governance of councils,” Ms Campbell said.
ACELG runs an elected members program which looks at ethics, governance and the theory behind administrative processes.
A/Prof Ryan said: “You can only regulate people’s behaviour up to a point. People have to be constantly engaged in process to help them understand what corrupt behaviour looks like and what they can do to guard against it. There should also be strong enforceable protections for whistle blowers.”
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