An independent report by Victoria’s municipal watchdog into the use of ward funds by 32 of Victoria’s 79 councils has found that some councillors risk breaching the law.
Minister for Local Government Jeanette Powell today released the report of the Local Government Investigations and Compliance Inspectorate’s year-long Review of Councillor Discretionary Funds.
“The Inspectorate’s investigation has found that some ward funds expose councils and councillors to unnecessary risks including potential breaches of the Local Government Act,” Mrs Powell said.
“Council expenditure should be properly authorised by decisions of the full council or special council committees, or by officers exercising clearly documented delegations in accordance with council policies.
“I will now consider the inspectorate’s recommendations including the proposal to amend legislation to abolish or place tighter controls on councillor discretionary funds.
“Council funds are for the benefit of the whole community and it is not the role of individual councillors to hand out public money to community groups at their sole discretion.”
The Inspectorate’s review found:
· 32 of Victoria’s 79 councils reported a Councillor Discretionary Fund (CDF);
· 27 Councils reported they had fixed annual CDF budgets;
· Fixed annual CDF schemes are worth a combined total of more than $9 million per year across Victoria;
· Grants offered through CDF schemes range from $3,000 to $500,000 (excluding the City of Greater Geelong’s $7.2 million Community Priority Scheme);
· 12 councils reported that councillors authorise CDF payments at their own discretion;
· In 22 councils, individual councillors recommend how CDF grants are allocated; and
· Councils that do not require councillors to seek formal approval via a council resolution, or do not have stringent approval guidelines, are exposed to unnecessary risks. Some of the risks include potentially fraudulent or corrupt practices, reputational damage and possible breaches of section 76D of the Act as it pertains to misuse of position.
The Inspectorate has also advised that a council will be investigated for offences under the Act as a result of the year-long Review and complaints about another council are also being investigated.
The City of Greater Geelong did not initially disclose its $7.2 million Community Priority Scheme to the Inspectorate in the course of the review.
“The Inspectorate is undertaking a further, separate investigation into the City of Greater Geelong’s Community Priority Scheme and I will be asking the Inspectorate to look forensically at actual expenditure under this program, since its inception, for compliance with the Act,” Mrs Powell said. “As a result of the investigation, three councils have scrapped their CDF schemes, one council has suspended its scheme pending review, 16 councils have committed to reviewing their CDF policies and seven councils have amended their CDF processes.
“Given the risks involved with discretionary funds, all councillors, Council chief executive officers and senior finance officers are strongly recommended to read and act on the issues contained in the Inspectorate’s report.”
