Tuesday, 18 November 2025

 Michael GALEA (South-Eastern Metropolitan) (13:20): Pursuant to section 35 of the Parliamentary Committees Act 2003, I table a report on fraud and corruption control in local government, a follow-up of two Auditor-General reports, including appendices and extracts of proceedings, from the Public Accounts and Estimates Committee, and I present the transcripts of evidence. I move:

That the transcripts of evidence be tabled and the report be published.

Motion agreed to.

Michael GALEA: I move:

That the Council take note of the report.

This was a very worthwhile inquiry for PAEC to be involved in. It does cover two separate Auditor-General reports: audit report 40, Fraud and Corruption Control – Local Government, published in 2019, and audit report 316, Fraud Control Over Local Government Grants, published in 2022. These two separate but obviously similar reports both look at different areas of local government spending and fraud controls as they relate to grant processes and to internal staffing processes as well, everything from salaries to fuel cards. It was a worthwhile review for PAEC to undertake. Of course one of PAEC’s many roles is to fulfil that oversight function of the Victorian Auditor-General’s Office, but also we have the capacity to do these follow-up reports and inquiries into matters which VAGO has previously done reports into. It was deemed by the committee appropriate to do this self-referral into this matter.

Noting that whilst, as of now, all of the audited councils have acquitted all of those recommendations that were put to them in the 2019 and 2022 reports, we do note that some of them only acquitted some of those final actions as late as earlier this year. It does make it all worthwhile, noting that the audits identified serious weaknesses in oversight, transparency and prevention. The committee found genuine processes in place and genuine progress but also a very significant deviation and different interpretation of those processes and how they actually apply in practice as well as the capability across the sector, noting of course the great variance between the sizes of different local governments as well, ranging from small rural local governments such as in Western Victoria Region through to larger councils in the metropolitan region.

We have recommended some practical measures to strengthen the supports for councils to ensure that they are all meeting a consistent set of statewide minimum quality standards. These measures will give the community and should give the community greater confidence in the capacity for all local councils in Victoria to meet and achieve these very important goals. To quote from the chair:

A recurring theme throughout the Inquiry was the need for stronger coordination, leadership and legislative compliance. Local Government Victoria, integrity agencies and peak bodies all have roles in supporting Councils, but the support must be coherent and accessible to all Councils. Strengthening these agencies is essential if prevention and oversight are to be more than aspirational.

Ultimately, integrity in local government depends as much on culture as on compliance. Systems can be designed, but they must also be lived. Leadership, transparency and accountability are not optional features …

and should not be seen as optional features in our local government sector, but they must be absolutely central and they must be at the foundation so that elected officials can have confidence in their councils but more importantly so that local communities can have confidence in their council administrations and in their council elected officials as well.

Acknowledging the considerable amount of work that has gone into this inquiry, I would like to particularly thank the secretariat for all their hard work, including our new head of the secretariat Igor Dosen, and acknowledge all the members of the committee, including our chair the member for Laverton in the other place, and our former members of PAEC, who contributed very much to this report, Mr Welch and Mr McGowan. I am sure all new and existing members of PAEC are very much looking forward to being back in this building on Monday next week.

 Aiv PUGLIELLI (North-Eastern Metropolitan) (13:25): I also rise to contribute, and I concur largely with the sentiments that Mr Galea has expressed. The secretariat and all of the committee staff have worked incredibly hard, as they always do, in preparing this report. It is an important function of the Public Accounts and Estimates Committee to following up Auditor-General reports, in this case two of them into fraud and corruption controls in local government. A key excerpt or moment from the inquiry process was the examination of the effectiveness of municipal monitors in resolving council governance issues. In fact looking at chapter 7, we see finding 56 noting that:

The effectiveness of municipal monitors in resolving Council governance issues is unknown.

It highlighted the need for clearer criteria in the appointment of municipal monitors, noting in finding 58 that:

There has been an increase in appointment of municipal monitors –

across Victoria. So following on from that I am somewhat disappointed to look at extracts of proceedings that I moved as a consequence of the recommendation in chapter 7 that the Victorian government commission an independent evaluation of the impact of municipal monitors on governance and culture in the local government sector, it was the non-government members who supported that motion and it was opposed by government members. But nonetheless there is space to proceed into the future. I again thank the secretariat for their work and commend the report to the house.

 Richard WELCH (North-Eastern Metropolitan) (13:26): By leave, I would like to echo both Mr Puglielli’s and Mr Galea’s contributions. This is an important inquiry because it is something of a vexed concern for the community about how our councils run and how they manage their governance. We found there was a very wide disparity between best practice and worst practice across the state. I think unfortunately the largest part of that is cultural, that we have a large cultural variation. But that means that the rules themselves are loose, because if culture can play such a role in performance, then you are very vulnerable to it. I think we did not quite get to the real nub of matters. I think there is further to go on this subject. A lot of the hearings we had were simply councils making their own representations to it. Therefore the evidence base is contestable, challengeable and a little bit subjective. I think there is somewhere further to go on this topic, which is not to downplay the worthwhileness of what did take place. We did identify some structural weaknesses that we can address, but I still feel there are things left to be examined. I would like to explore after this where we can take it from here, because tightening up a few rules is fine – I think that is great – but I think there are some more systemic problems that we did not quite untie the knot on and get to the core of.

Motion agreed to.