Probity Blues Revisited

Probity Blues Revisited

Bill Cebula and James Plumridge

           

If the DLGC doesn’t understand its own Act and Financial Regulations, how can it train York’s councillors in the way things should be done?

 ‘Probity’ is an important word nowadays.  It has all sorts of connotations—integrity, honesty, being able to withstand moral scrutiny.  People with probity are people you can trust not to overcharge you, seduce your partner, steal your car or misuse their corporate credit cards. 

It’s a word politicians and public servants love.  The Department of Local Government and Communities has its own probity guru, Brad Jolly, and uses a device called a ‘probity audit’ to bring errant councils into line.

An earlier posting on this site noted that the Department doesn’t always conform to the high standards of probity it seeks to enforce on others.  Naively, some of us have ascribed that failure to incompetence, self-interest, ministerial arrogance or a combination of all three.  In short, lack of probity.

But perhaps it’s really ignorance of its own legislation that lets the Department down.

Missing shire policies

Last year, following the departure of CEO Hooper, York Shire President Matthew Reid and the Acting CEO Michael Keeble asked Bill Cebula to draft policies for the shire because copies of existing shire policies were nowhere to be found.

The Council was suspended before it got round to approving Bill’s honorary appointment, but he continued with the work, undertaking a study of the Local Government Act of 1995 (‘the Act’) and the Local Government (Financial Management) Regulations 1996 (‘the Regulations’). 

Credit card disclosures

Use, and possible misuse, of corporate credit cards is a matter of interest and concern to ratepayers.  It was a contentious issue in York for many years.  It is hard to see why.  One might have expected the Shire Council to take pleasure in telling ratepayers how their money was being spent.  Instead, requests for information were fiercely resisted.

In a letter dated 29 January 2009, Mr Quentin Harrington, the Department’s Director of Governance and Statutory Support, on behalf of the Minister, told the Shire of York that neither the Act nor the Regulations ‘require copies of bank statements to be included with the monthly financial reports…it has been the practice of the Shire to provide copies of credit card statements as supplementary information to Councillors’.

Mr Harrington went on: ‘The Shire sought advice from the Department and now intends to cease the practice of including copies of credit card statements in the financial report.  Instead it will now provide a summary of purchases made on credit cards…’

Mr Harrington’s advice was wrong.

What the Regulations say

Regulation 11(1)(a) says a local government must develop secure procedures for authorizing payment of accounts.  The intention is that cheques, credit cards or other methods of paying for goods and services, or obtaining money or other benefits, are rendered safe from fraud, theft and improper use generally.

Regulation 13(1) says that if a local government has delegated to the CEO its power to make payments from its funds, a list of accounts paid by the CEO must be prepared for each month.  The list must include for each such account the payee’s name, the amount paid, the date of payment and ‘sufficient information to identify the transaction.’

Regulation 13(2) says that each month a list must be made of accounts requiring council authorization for payment.  The list must show the payee’s name, the amount paid, and, again, sufficient information to identify the transaction, as well as the date of the council meeting to which the list will be submitted.

Regulation 13(3) says that lists prepared in accordance with Regulations 13(1) and 13(2) must be presented to Council (and thereby made available to ratepayers) at the next ordinary meeting after the list is prepared and subsequently recorded in the minutes of the meeting. 

What is meant by ‘sufficient information to identify the transaction’?  In the case of payments made via credit card, it means both the relevant invoice or account and the matching credit card statement.  This was confirmed by the FOI Commissioner’s ruling last year that sufficient details of credit card transactions—bank statements as well as invoices—must be made available to ratepayers.

A mere summary of credit card purchases is not enough.  It isn’t now, and it wasn’t in 2009 when Mr Harrington led the Council to believe it was.

Mr Harrington’s advice had far-reaching consequences.  It encouraged Council to deny ratepayers access to other information, on a broad range of topics, that they were entitled to obtain.  This led to an unprecedented volume of FOI applications, placing an unnecessary burden on Council’s staff and resources.

Secrecy in government is sometimes justified—usually, where matters of national security and diplomatic negotiations are involved—but in general it is a very bad thing, antithetical to democracy.  There is no excuse for it in local government. So far as we know, neither the fate of our nation nor our standing in the world has ever hung on a decision of the York Shire Council.

Financial management

The Act and the Regulations are very specific about what constitutes proper financial management.  Their objective is to minimize the risk of misappropriation of public funds.  In the case of credit card purchases, presenting to council a ‘summary’ that contains only a number of headings and a dollar figure means councillors have no idea what they are ‘noting’ or ‘approving’.  What happened in York from 2009 to 2014 was equivalent to signing a series of blank cheques. Such a procedure is contrary to Australian Accounting Standards, with which councils are bound by Regulation 4 to comply.

The role of the CEO

According to Section 5.41 of the Act, the job of a local government CEO is twofold:  (a) ‘to advise the council in relation to the functions of local government under this Act and other written laws’, and (b) ‘to ensure that advice and information are available to the council so that informed decisions can be made’.  Power and authority are vested in elected councillors, not in the CEO and other administrative staff.

We can only speculate as to why Council sought advice from the Department about suppressing transaction details relating to corporate credit cards. 

Mr Harrington’s advice resulted in Council persistently flouting the law every month for several years—perhaps on as many as 60 separate occasions.  When ratepayers requested information about corporate credit card transactions, as they had every right to do, Council said no.  It got to the point that Council wanted one such ratepayer ruled ‘vexatious’ because he wouldn’t stop asking embarrassing questions. 

It seems likely, though hard to believe, that Shire administrative staff denied some councillors access to details of credit card transactions.  If true, that was a stark breach of Section 5.92(1) of the Act, which clearly states: ‘…a council member or committee member can have access to any information held by the local government that is relevant to the performance by the person of any of his or her functions under the Act or under any other written law’.

So who will train the trainers?

Mr Harrington, the Department and the responsible minister of the day effectively gave Council carte blanche to deny York’s ratepayers information to which the law clearly says they were entitled.

If one of its most senior officers can show such catastrophic ignorance of the Act and Regulations, why should we trust anybody from the Department to train our councillors in the way things should be done?

And what assurance can the Minister give us that his Department will not at some future time advise the Shire Council to flout the Act and Regulations again?

Probity rules, OK?