New changes for councillor conflict of interest disclosures and obligations
The long awaited next suite of amendments to the Local Government Act 2009 (Qld) (LGA), originally promised before the 2020 Local Government Quadrennial Elections, was assented to on 30 June 2020. The Electoral and Other Legislation (Accountability, Integrity and Other Matters) Amendment Act 2020 (Qld) (Amending Act).
In the local government sphere, the Amending Act modifies the:
(a) City of Brisbane Act 2010 (Qld);
(b) LGA; and
(c) Local Government Electoral Act 2011 (Qld).
This article will focus on the amendments to the LGA.
What changes for local governments?
A number of smaller amendments to the LGA commenced on assent, but the key changes relating to councillor conduct will start on 12 October 2020. The (hopefully) final set of changes which started with the implementation of the Crime and Corruption Commission’s Belcarra report, replaces the current rules around dealing with councillor’s personal interests in local government matters (currently in Chapter 6, Part 2, Division 5A) with a new Chapter 5B of the LGA.
We look at the key changes to the councillor conduct rules below.
MPI and COI are gone
It’s time to update your acronyms again. ‘Material personal interest’ (MPI) (the high level conflict) and ‘conflict of interest’ (the lower level conflict) will be replaced with ‘prescribed conflict of interest’ (PCOI) and ‘declarable conflict of interest’ (DCOI).
Categories of prescribed conflict of interest
From October 2020, we will have categories of PCOIs:
(a) prescribed conflicts of interest – gifts and loans;
(b) prescribed conflicts of interest – sponsored travel or accommodation benefit; and
(c) prescribed conflict of interest – other.
For the first category, if a councillor (or ‘close associate’ of the councillor) received gifts or loans worth more than $2,000 in the current or previous local government term, the source of the gift or loan becomes a PCOI.
A sponsored travel or accommodation benefit is travel or accommodation undertaken by a person (other than employment related or upgraded accommodation), if another entity contributes whether financially or non-financially to the travel or accommodation. The $2,000 limit also applies to sponsored travel accommodation, but notably it only applies to the current local government term (not the current and previous term).
An ‘other’ PCOI includes if:
(a) the matter relates to a contract between a councillor or close associate, and the local government itself;
(b) a person being considered for appointment as CEO is a close associate of the councillor, and the matter relates to the appointment;
(c) a CEO is a close associate of the councillor and it relates to the appointment, discipline, termination, remuneration or other employment conditions of the CEO; and
(d) the matter relates to an application made by the councillor or a close associate of the councillor to the local government or a written submission made by the councillor or close associate of the councillor in respect of a third party’s application.
‘Close associate’ is wider
The current MPI test includes a list of parties connected to a councillor for the purpose of establishing a conflict. The Amending Act will widen the list and formally define that group of parties – calling them ‘close associates’.
A close associate will include:
(a) a spouse;
(b) a parent, child or sibling;
(c) a partner in a partnership;
(d) an employer, other than a government entity;
(e) an entity, other than a government entity, for which the councillor is an executive officer or board member; and
(f) an entity in which the councillor, or any of the above other people, has an interest, other than an interest of less than 5% in a listed corporation.
So a close associate of a councillor could include a company that a sibling of the councillor has an interest in, or a subsidiary of a company on which the councillor is a board member. However, a parent, child or sibling is a close associate of the councillor in relation to a matter only if the councillor knows, or ought reasonably to know, about the parent’s, child’s or sibling’s involvement in the matter.
Monetary limit is now divided for donations given to a group of candidates or a political party
For determining whether a gift, loan or sponsored hospitality benefit reaches the threshold of a PCOI, the value of the gifts, loans or sponsored hospitality benefits must reach $2,000.
The Amended Act introduces a ‘sharing rule’, where if a gift, loan or sponsored hospitality benefit is given to a group of candidates or a political party, it is deemed to be shared between the candidates evenly for the purpose of calculating the threshold. So for example, if an electoral donation of $5,000 was given to a group of five candidates, for the purpose of establishing whether PCOI exists, each candidate is taken to have received a gift of $1,000. In those circumstances, the financial threshold for a PCOI has not been reached.
Notably, the amount is divided between ‘candidates’, not successful candidates. If, in the above example, four of the five candidates lose, the winning candidate, (now councillor), is still only taken to have received $1,000 in gifts.
Councillors will need to check who has made submissions
A PCOI can also arise if a matter relates to an application made to the local government for the grant of a licence, permit, registration or approval or consideration of another matter under a local government act, if the councillor, or a close associate of the councillor, makes or has made a written submission to the local government in relation to the application before it is or was decided.
This means, if a councillor or say, a spouse, child or partner of the councillor, makes a written submission in relation to a development application, the councillor will be taken to have a PCOI relating to the development application.
Based on this reform, a councillor may need to prudently check a list of submitters provided by Council officers for a development application before it is decided by Council to ensure that no close associates of the councillor have made a submission.
Declarable conflict of interest is wider, and clearer
The current LGA contains no monetary limit for a conflict of interest, instead deeming one to exist simply where there is a conflict between a councillor’s personal interest and the public interest, and that the conflict may lead to a decision that is contrary to the public interest.
A DCOI (the lower level conflict) will exist for a councillor if the councillor:
‘has, or could reasonably be presumed to have, a conflict between the councillor’s personal interest, or the personal interests of a related party of the councillor, and the public interest.’
The underlined parts above represent a clear expansion of the test. ‘Related party’ includes close associates, and:
(a) a parent, child or sibling of the councillor’s spouse (in-laws are not counted for the purpose of ‘close associate’ for determining PCOIs, but are counted as related parties for the purpose of a DCOI);
(b) a person who has a ‘close personal relationship’ with the councillor (which is not defined); and
(c) an entity in which the councillor, or one of the other relates parties, has an interest.
As with close associates, an entity is only a related party if the councillor knows, or ought reasonably to have known, about the relationship.
Helpfully, if a conflict of interest arises from a gift or loan, the Amending Act clarifies that for the purpose of the DCOI, the gift or loan must total above $500. The ‘sharing rule’ noted above also applies to a DCOI in calculating the monetary threshold.
Conflicts don’t last forever
There is currently no time limit on when conflicts continue to restrict the actions of a councillor. Under the changes, a PCOI or DCOI from a gift or loan or sponsored travel or accommodation benefits only arises from a conflict in the ‘relevant term’. A relevant term for a councillor means the current term of office and the period starting on the day after the conclusion of the election held before the most recent election and ending on the day before the councillor’s current term began.
In other words, when looking at gifts and loans, councillors need only look to the gifts or loans received during the current and previous term of the councillor.
Participating in a decision is more than just voting
The PCOI and DCOI regimes relate to participating in decisions. The Amending Act expands when a person ‘participates’ in a decision to include:
(a) if the councillor or other person is wholly or partly responsible for making the decision – considering or discussing the matter to which the decision relates before the decision is made; and
(b) considering, discussing or voting on the decision in a local government meeting; and
(c) considering or making the decision under –
(i) an Act; or
(ii) a delegation; or
(iii) another authority.
Giving a heads up
If a councillor becomes aware of either a PCOI or a DCOI, they must give notice of it. For a PCOI:
(a) written notice must be given to the CEO; and
(b) notice must be given at the next meeting of the local government, or committee, if that is where it is next being considered.
The notice must include the particulars prescribed in the legislation.
Similarly for a DCOI, notice must be given to the CEO and the next meeting (although interestingly, there is no obligation to provide written notice to the CEO for a DCOI – only notice). The notice must include the prescribed particulars.
Consequences of a councillor having a PCOI or DCOI
If a councillor has a PCOI, like with a current MPI, the councillor must not participate in a decision relating to the matter. The councillor must leave the place at which a meeting is being held to decide the matter, including any area set aside for the public.
(a) it is an offence not to leave a place at which a meeting is being held to decide a matter for which a PCOI exists if the councillor has informed the meeting of the conflict – punishable by two years imprisonment or a 200 penalty unit fine; but
(b) it is only misconduct to participate in a decision for which a councillor has a PCOI, and only misconduct to fail to give notice to a meeting of a conflict.
However, while keeping a PCOI or DCOI quiet may not be an offence directly, it is a ‘relevant integrity provision’. It will be an offence for a councillor (or a councillor’s adviser) to contravene a relevant integrity provision with intent to:
(a) dishonestly obtain a benefit for the person or someone else; or
(b) dishonestly cause a detriment to someone else,
again punishable by two years imprisonment or a fine of 200 penalty units.
If a Council meeting is informed that a councillor has a DCOI, the other eligible councillors must by resolution decide whether the councillor must leave the meeting or may participate in the meeting, including by voting on the matter. This only applies if the councillor with the DCOI does not voluntarily leave the meeting.
The eligible councillors may also impose conditions upon the conflicted councillor’s engagement, for example, being able to discuss and debate, but not vote, on the matter.
If a councillor fails to comply with the decision of the other councillors (including the conditions), it amounts to an offence punishable by one year imprisonment or a fine of 100 penalty units.
If a meeting is informed of the personal interests of a councillor from a source other than the councillor involved, the other councillors must decide whether the conflict amounts to a DCOI for that councillor. A councillor has a duty to report another councillor’s DCOI or PCOI if they have a reasonable belief or reasonable suspicion in this regard and a failure to do so is misconduct.
As with a PCOI, it can amount to misconduct and is an integrity provision if a councillor fails to give notice of a DCOI.
Where there are potential quorum issues to decide the substantive matter after the process of conflicted councillors leaving the meeting, voluntarily or otherwise, the matter must be delegated, deferred or a ruling made that no action be taken on the matter. The Minister may grant approval for a conflicted councillor to participate in the decision but the scope for doing so is limited.
The restrictions on a councillor ‘influencing’ another councillor or council officer is also wider in scope under the Amending Act. This is because of the wide definition of ‘participating in a decision’ and the provision itself which includes ‘direct, influence, attempt to influence, or discuss the matter with’ another person who is participating in a decision of the local government in relation to the matter.
As the changes do not commence until 12 October, councillor and senior council officers will have some time to study the new rules and work out what the changes mean for them. If you have any questions in relation to these changes and how it applies to you or your Council, please don’t hesitate to contact one of our team members.
Many thanks to Patrick O’Brien, Lawyer, for his assistance in putting together this article.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.