Local Government Bill 2019 - Second Reading

November 27, 2019

T SMITH (Kew) (10:11:04): I rise to speak on the Local Government Bill 2019. This is a significant piece of legislation. I have received some last-minute amendments from the government that I have not seen. I will obviously process them after my contribution. I understand from the minister that they are clerical, but I still need to have a read of them, and I will advise subsequent speakers, when I am outside of the house, what they mean. This is a very confusing piece of legislation. The government’s intent, which I support, is to simplify and essentially update the Local Government Act 1989 and bring it into the 21st century.

This bill repeals most of the 1989 act. However, it does not repeal all the provisions of the 1989 act, and it has been somewhat of a task to work out what is being repealed and what is not. I can assure members on all sides of this place that there are many councils who were greatly confused with regard to what this bill does. We have only seen its current iteration for some two weeks, and frankly it would have been best had we had the summer to properly look over these provisions and come back in February so we could assess the extent of the changes. Essentially, you have got 528 pages in the Local Government Act 1989 and you have got 359 pages in the current bill. The 800 or so pages of legislation are sort of being mashed together. So to simplify it for members—

A member interjected.

Mr T SMITH: It is now. If we go through the various provisions of the 1989 act, part 1 largely remains intact but part 1A goes. Part 2 stays. Part 3 goes—division 2 goes, division 3 goes, divisions 4, 6, 7, 8, and 9 go. In part 4, division 1 goes, division 1A goes, division 1AB goes, division 1B goes, along with divisions 1C and 1D. It goes on until you get to part 8. Now part 8 remains because, I understand, the government is undertaking a rate review and the government decided to bring in a new local government bill before that rate rise has been undertaken.

I can understand the reasoning for that, although I do not understand why they possibly would not have waited until the rate review was undertaken and replaced, I presume, the provisions of the 1989 act at the same time, but that has clearly been the decision of the cabinet. Now we keep a number of provisions in part 9, particularly division 2, and then division 3 all goes. Then it gets quite confusing. In part 11 there are number of provisions that stay and some that go.

For example, section 224 with regard to authorised officers has created quite a bit of confusion for local authorities; that provision is not being repealed. Section 229 stays, 230 stays and 231 stays, but, for example, sections 233, 234, 235 and 236 go. I am just using that as an example because there are number of small councils who have very few ratepayers, who lack resources and who do not have the legal advice that many metropolitan councils have.

I suspect they are going to require some assistance from this government to understand the provisions of this bill and how it interrelates with the 1989 act, and I think that is something that the government probably ought to take on board. We have some quite serious concerns with a number of the provisions in the 2019 bill, and I am moving a reasoned amendment.

I move: That all the words after 'That’ be omitted and replaced with the words 'this house refuses to read this bill a second time until the government has addressed concerns about: (1) the use of ratepayers money by councils to advocate on political issues for which they have no jurisdiction; (2) the voting rights for all ratepayers; (3) the requirement for deputy mayors and single-member wards in regional councils; (4) the indemnity provisions for members of community asset committees and audit and risk committees; and (5) the continuity of important powers and processes which are provided for in the current legislation’.

I might start with the use of ratepayers money by councils to run various different political campaigns. I think we are all aware that there are various inner-urban councils who spend quite a degree of ratepayer money on campaigns for which they have absolutely no delegation from this Parliament, absolutely no jurisdiction and no responsibility, self-appointed or otherwise. They are spending the public’s money on their own, often weird and wonderful, particular political ideologies. I think that is wrong. It should not happen. I think both sides of politics in this place and in the federal Parliament are often absolutely frustrated—that would be the most polite way I could describe it—with particularly left-wing councils, particularly of a Greens disposition, using ratepayers money to mount their own political causes. Now it is not just the Greens, though.

There is a Labor council at the City of Melbourne, for example, who spent quite a degree of ratepayers money to attend a Australian Republican Movement gala dinner. Nick Reece described it as the biggest gathering of republicans since the Eureka Stockade. I quote from the Herald Sun of 15 December 2018: Ratepayer-funded tickets to a republican movement gala dinner were among tens of thousands of dollars spent by Melbourne councillors from a special Town Hall fund. The council sets aside up to $250,000 every year for discretionary funding for events such as table sponsorships at dinners. … But councillors approved a $1718 table sponsorship … That is $1718— for the Australian Republican Movement’s lavish dinner held at the Royal Exhibition Building in July last year— 2017— when Opposition Leader Bill Shorten was guest speaker.

City councillor Nick Reece sat at the city’s table at the event, declaring it the 'biggest gathering of republicans since the Eureka Stockade.’ Mr Reece … former ALP state secretary and former adviser to Julia Gillard, said he was 'pleased and proud’ to attend the dinner on behalf of the city. I am sure the ratepayers were delighted to have paid for Mr Reece’s attendance at said republican gathering. 'The decision to support was unanimously supported by councillors,’ Mr Reece said. Unanimously supported by councillors. I do not think it was unanimously supported by the ratepayers. Many, I am sure, voted 'yes’ in 1999, but I do not think they expect their rates to be spent on an overt political cause like the Australian Republic Movement.

Mr Reece goes on to say it is a question of what sort of country he wants it to be and what we see as our future and all the rest of it. That is not the point. Mr Reece is totally entitled to his views about our future constitutional arrangements—absolutely entitled to them. I disagree with him, but he is entitled to them.

Mr Pakula interjected.

Mr T SMITH: I note the interjection from the minister at the table. What he is not entitled to do is to spend ratepayers money on that cause. The City of Melbourne does have form at the moment. They seem to be very supportive of every woke cause that seems to be a fad at the moment, whether it is pill testing, declaring climate emergencies or banning whips and horse racing. They have been actively—

Mr Pakula interjected.

Mr T SMITH: Yes, well, congratulations to the Minister for Tourism, Sport and Major Events for what he did there to stop the Lord Mayor and some of the nutters at the City of Melbourne. Ms Britnell interjected.

Mr T SMITH: But this is the point, and I note the contribution from my friend the member for South-West Coast: these are not debating societies. These are important local authorities that are in many respects dealing with hundreds of millions of dollars of taxpayers’ money, and it is not their job to spend money on campaigns against nuclear disarmament or declaring climate emergencies. Worthy causes they may be, but it is not their job. It is not this place’s job to argue about immigration policy or foreign affairs, neither is it a council’s job to get involved in the date of Australia Day or the various different rules and regulations and laws that the commonwealth Parliament has enacted—might I say in a bipartisan fashion with regards to border protection over recent years. It is simply not their job, and I think ratepayers are utterly sick of hearing, for example, the Lord Mayor go on radio and talk about a climate emergency and have absolutely no idea what she is talking about.

The same with pill testing—what on earth is the Lord Mayor talking about pill testing for? It has got nothing to do with her. That is a matter for this place. Now, I am a former mayor and a councillor, and I have great regard for local government. I very much enjoyed my time on the Stonnington council, and I very much enjoyed the campaign I ran against the then Brumby Labor government on the extension of clearways.

Why do I draw the distinction between that campaign and the campaign that, for example, the City of Melbourne has been running or Moreland council about the climate emergency or the Yarra City Council spending $15 000 of ratepayers money on paying for students to get involved in climate change campaigns and events put on by the Australian Youth Climate Coalition, including the School Strike 4 Climate rally in September—$15 000? What is the difference between that and the campaign I ran a decade ago, you might ask. Because councils, under the 1989 act—and this will continue under the 2019 bill, if it passes through both chambers—obviously have a role in road management.

I do question why, when there is an opportunity that has been presented with the amendment of the 1989 act, which is what this bill actually does, those provisions with regards to road management are not being moved into the Road Management Act 2004. I question why those provisions that particularly apply to local government have not been repealed in the 1989 act and put into the Road Management Act, which is where they belong, I think. They may well be repealed—and that is the advice I have had from the sector—and put in that act, and I think that would be a very wise move for clarity and simplicity in this matter. Now, if I could move to some of the more technical aspects of this bill—

Mr Richardson interjected.

Mr T SMITH: I am delighted that the member for Mordialloc is here, and I hope he is taking notes. Community asset committees are a new provision in the 2019 bill. They, presumably, will manage a number of local assets on behalf of the councils. The indemnity provisions in clause 43 read as such: A Council must indemnify and keep indemnified each Councillor and member of a delegated committee against all actions or claims whether arising during or after their term of office in respect of anything necessarily done or reasonably done or omitted to be done in good faith … However, these community asset committees are not delegated committees, so they are not indemnified.

The composition of a community asset committee, which is stipulated in clause 63, must include at least two councillors and may include any other persons appointed to the delegated committee by the council who are entitled to vote. But it must include two councillors. A council may establish a community asset committee and appoint as many members to the community asset committee as the council considers necessary to enable the community asset committee to achieve the purpose specified in clause 65(2): A council may only establish a Community Asset Committee for the purpose of managing a community asset in the municipal district. Clause 43 is entirely silent on this.

Under the 1989 act, under section 76, the indemnity provision: A Council must indemnify and keep indemnified each Councillor, member of a Council committee, member of Council staff and any person exercising any function or power on behalf of a Council against all actions or claims (whether arising during or after the term of office or employment of that Councillor or member) … This is a very serious issue. The indemnity of delegated committees envisaged by this bill in clause 43 replaces the definition under section 86 of the current act.

It appears that the new indemnity provisions will only cover councillors and delegated members unless community asset management committees, responsible for managing sporting clubs, halls and other council-owned property, fit the description of 'delegated committee’ in clause 3(1) by including two councillors. The bill appears to distinguish between delegated committees and community asset committees, as I have said. This is a really important issue that I hope the government can take heed of. I make this contribution in the spirit that we would like to see a new Local Government Act. We would like to see this provision tightened up. I think it is a drafting error.

I think that clause 43 was intended to cover community asset committees, and for whatever reason it does not. If you envisage various sporting facilities and whatnot being managed by volunteers and someone is injured— Mr Pearson interjected. Mr T SMITH: Could you perhaps counsel the member for Essendon, Acting Speaker?

The ACTING SPEAKER (Mr McGuire): Order! Member for Essendon, the member for Kew will be heard in silence.

Mr T SMITH: Thank you, Acting Speaker. If you think about the important role that volunteers play in the regulation of council assets and whatnot, it is an important issue that they be indemnified against being potentially sued if someone is injured on their watch. I move on to the audit and risk committee issue. Clause 53 says that a council must establish an audit and risk committee. It also says that the audit and risk committee is not a delegated committee. Clause 43 says that the only committees that are indemnified are delegated committees. Again, I think this is a drafting error.

The bill makes it very clear that audit and risk committees are not exercising delegated powers; they are exercising the powers and performing the functions set out in the legislation itself in clauses 53 and 54. So they do not come within the 'delegated committee’ definition and therefore fall outside the clause 43 indemnity provision. Therefore no protection is afforded to members of the audit and risk committees. That is very serious, because audit and risk committees are comprised obviously of councillors, but the act provides for experts to be appointed to these committees to oversee the council’s finances. Now, they must be indemnified. This is a very serious point. If they are undertaking that role to sign off on the council’s books every year, which is then provided to the state government, there has to be that protection for those individuals.

I move on to confidential information. Section 77 of the 1989 act is very prescriptive with regard to the way confidential information is treated, but under section 77(2)(c), the only way that information can be deemed confidential, under the 1989 act, is by, literally, the CEO declaring that piece of information presented to the council as confidential. It must be designated in writing as confidential information by the chief executive officer. Section 77 is an important provision. It is relied upon for confidential briefings to councillors for a whole manner of very sensitive matters like procurement, planning and advice from various other entities that may not be appropriate for immediate public disclosure.

The bill has a number of provisions that talk about what sort of information is considered confidential—for example, council business information being information that would prejudice the council’s position in commercial negotiations, security information, land use planning information, law enforcement information, legal privilege information. But—

Members interjecting.

Mr Rowswell: On a point of order, Acting Speaker, I rise to make my first point of order in this place. I am trying to listen to the member for Kew, who is going through detailed information and 359 pages of the bill here. All I can hear is Statler and Waldorf up the back there—the member for Essendon and the member for Mordialloc—having conversations amongst themselves. All I want to do is hear the member for Kew outline in detail, as he has been doing, the very detailed and complex nature of this legislation that is proposed. Can I simply do that?

Mr Pakula: On the point of order, Acting Speaker, and we will give the member for Sandringham some allowance given that it is his first point of order, I just wonder whether he realises that, in terms of the point of order that he has raised during his own lead speaker’s contribution, he is just eating into his time.

The ACTING SPEAKER (Mr McGuire): The member for Kew has the call and is entitled to be heard in silence.

Mr T SMITH: Thank you, Acting Speaker, and I thank the member for Sandringham. It gave me an opportunity to have a glass of water, which is important because it is a bit warm in here today. If I could continue, these matters are important because this bill does not allow a CEO to declare a piece of information as confidential. I think that power should be given back to a CEO, and I would again implore the government to bring that provision back. I think that there is great scope through this bill for some debate within councils as to what constitutes confidential information, or what should or should not be confidential information, for the purposes of council briefings.

That will be a very important mechanical departure from the last 30 years of council practice, and that again needs to be seriously looked at. The 1989 act has a provision in section 85 headed 'Call of the Council’: (1) If a quorum of a Council cannot be formed or maintained due to the absence of Councillors, the Minister or the Chief Executive Officer may require all Councillors to attend a call of the Council meeting. (2) A call of the Council meeting is to be treated as a special meeting. (3) … a person appointed by the Minister is entitled to attend and speak at a call of the Council meeting which the Minister required Councillors to attend. This is an important provision where if councillors are refusing for whatever reason to vote on a provision, a decision can be made. There is no equivalent provision in this bill, rather there is a clunky procedure for standing down councillors who refuse to undertake their duties in an appropriate fashion in clauses 224–229, which will not necessarily lead to a council having enough councillors to make a decision. Members interjecting.

Mr T SMITH: I would not have thought this was particularly controversial, Acting Speaker, but clearly it is getting a rise from a few. There is a provision in clause 67 to ultimately establish a delegated committee to make any decision that cannot be made due to inability to achieve quorum due to a conflict of interest, but not due to councillors deliberately not taking their seats at the council to undertake their duties, which some unfortunately do not do. The conflict-of-interest provisions appear to have been broadened in this bill. The second-reading speech by the minister talks about a less prescriptive approach to the regulation of local government.

The 1989 act contains the specific definition of conflict of interest. Section 77A, headed 'Direct and indirect interests’, states: (1) A relevant person has a conflict of interest in respect of a matter if the relevant person has a direct interest or indirect interest in the matter. (2) A relevant person has a direct interest in a matter if the relevant person has an interest of a kind described in section 77B. The reason why I raise this is that in clause 127 of the new bill there is a definition of 'general conflict of interest’ which reads: (1) Subject to section 129, a relevant person has a general conflict of interest in a matter if an impartial, fair-minded person would consider that the person’s private interests could result in that person acting in a manner that is contrary to their public duty.

There is broad scope there for misuse. The current act talks about: (3) A relevant person has an indirect interest in a matter if the relevant person has— (a) a close association as specified in section 78; or (b) an indirect financial interest as specified in section 78A; or (c) a conflicting duty … (d) received an applicable gift … (e) become an interested party as specified in section 78D … These are very prescriptive elements of the current legislation. It also talks about where a person does not have a conflict of interest. I think that, particularly with regard to conflict-of-interest provisions, more prescriptive is better than less. Councils need a very direct set of rules provided by this Parliament, not under regulation—a very direct set of rules provided by this place, not by regulation—for those important matters with regard to conflict of interest.

We have seen some absolutely shocking examples of councillor misbehaviour in recent weeks, unfortunately. In the time that I have left I wish to talk about single-member wards and deputy mayors. Single‑member wards I completely support in metro Melbourne. I was on a council with multimember wards that were elected by proportional representation. I did not think that was a very good way of holding councillors to account for their behaviour and indeed for their decision-making. I do not think the idea of proportional representation at a council level, where you often have no parties running at all, makes any sense, because you have proportional representation when you offer to have a party list.

Preferential voting in single-member wards is the fairest and most accountable way for councillors to be elected and then held to account by their local community, so I completely support that in metropolitan Melbourne. I have grave concerns though about single-member wards being imposed on small regional councils. I equally have concerns about no wards at all for those regional councils. There are a number of very small local authorities—like Buloke, for example—that have very small population centres. These smaller councils ought to be able to work out for themselves the appropriate ward structures. I will make that very clear; we think that small local authorities ought to have the power to decide for themselves what ward structures they have, obviously in consultation with the Victorian Electoral Commission and the government.

I equally have concerns about the changes to the franchise. The idea that now you have to opt in if you are a non‑resident ratepayer is equally concerning. I think that anyone that pays rates ought to have the right to vote in a council election, and they have had that right for many, many decades in Victoria. I equally have concerns, again, particularly for small regional councils about the imposition of a deputy mayor. Now not every council has a deputy mayor, but under these new rules a deputy mayor would be compelled to be elected in every council, and equally that deputy mayor would have to be paid a specific allowance. There are a lot of smaller councils that simply do not have the resources to fund a separate office of deputy mayor.

I do not think it is necessary. We never had a deputy mayor when I was on the council at Stonnington. But I say again: single‑member wards are a great idea in Melbourne. I do not know why the Labor Party changed that under the previous Bracks government. The City of Boroondara has single‑member wards. That works very well. It should be applied across metropolitan Melbourne in the same way that the lower houses of the state and federal parliaments are elected and are held to account. I raised the concerns about the technical aspects of this bill because they are of grave concern to us and the sector, and I hope the government can reflect upon them in the time over summer before this bill moves to the upper house.