In late January this year, the Minister for Local Government, Jeanette Powell, gazetted a comprehensive 42 page blueprint for Audit Committee reform and accountability. Whilst only ‘guidelines’ the Minister also stated that Local Governments are “strongly encouraged to adopt and use the Guide when establishing their audit committees”. Much of what the 42 page document entails has a direct bearing on the Audit Committee as constituted in Glen Eira. It is timely to consider this issue now since the agenda items listed for discussion next Tuesday night clearly fly in the face of the Minister’s recommendations in several key areas.
We discuss the central issues under several headings –
- Composition and tenure of Audit Committee Membership
The recommendation from the Minister is:
“Periodic rotation of the members of the audit committee is encouraged as this will enhance the perception and reality of audit committee independence… To ensure continuity, ideally no more than one member should leave the audit committee pursuant to rotation in any one year. …..LGE members will be subject to council elections every four years and accordingly the tenure of LGE members on the audit committee needs to be set to allow for their rotation among the nominated LGE members….The period of tenure for independent members could be two to three years, again with options for reappointment after periodic performance reviews. The LGE might also consider setting a maximum number of terms of reappointment for independent members.”
COMMENT: The latest agenda items contain committee nominations for 2010/11. Lipshutz and Tang again feature prominently. In fact, their tenure on the Audit Committee, as well as other important committees within Glen Eira (such as Local Laws; Racecourse Issues and previously Finance) has been extraordinary. The table below illustrates clearly how this council and its councillors have allowed two individuals to dominate the most important committees and which we argue is now in complete opposition to the position expressed by the Minister.
| Year | Lipshutz | Tang |
| 2005/6 | Audit; Finance; Local Laws | Environment; Finance; Local Laws; racecourse |
| 2006/7 | Audit; Finance; Local Laws; Pools; | Finance; Local Laws |
| 2007/8 | Audit; finance; Local Laws; Pools | Environment; Financé; Local Laws; Roads; Caulfield Reserve |
| 2008/9 | Audit; Finance; Local Laws; Pools; Racecourse Reserve | Racecourse Reserve; Trustee; Audit; Local Laws; |
| 2009/10 | Racecourse; Audit; Local Laws; Pools; Finance | Racecourse; Audit; Local Laws;Recreation |
| PROPOSED 2010/11 | Audit; Community Consultation; Local Laws; Pools; Racecourse | Arts & Culture; Citizen of the Year; Environment; Local Laws; Racecourse; Sport & Recreation |
2. Further Recommendations from the Minister
Some more extracts from the guidelines –
“To be effective, the audit committee must be independent from management and free from any undue influence”.
COMMENT: In Glen Eira the ‘Finance Committee’ has suddenly become defunct – no meetings of this committee were recorded in the Annual Report for the previous two years and it has now vanished from the upcoming committee delegations. Yet the table above reveals that Lipshutz was a member of this committee whilst he was also on the Audit Committee! A great example of ‘independence’ and perhaps ‘conflict of interest’ we ask?
“Review internal audit’s mission, charter, and resources such that this charter maintains internal audit’s independence from management. This is achieved through its reporting structures and rights of access to all levels of management and relevant information…..Ensure that all work is reported through to the audit committee and is not censored or held up by management”.
COMMENT: Not only Lipshutz but Gibbs and McLean have also been sitting on the audit committee for eons and have been extremely well reimbursed for their time and effort. We ask again why the Minister’s guidelines recommending rotation should not apply in the case of the latter two members? As the Minister states, it is important to ‘also to provide a fresh perspective through succession planning and the selection process.”
Finally, there are many comments throughout the document related to ethics, governance, and of particular emphases is the development of a charter that clearly enunciates all mechanisms, roles, expectations, and evaluations of the committee itself, and its individual members. The facts that readers should keep in mind are:
- These guidelines were published on January 31st 2011 and gazetted on 8th February 2011
- Council has thus had ample time to read, absorb, and plan for their implementation. This has not been done!
- Instead, we have basically the same old members; the same old accounting firms; the same old protocols, and hence the same old questions about independence, good governance and perceptions of all too cosy relationships with external and internal members
- Are Lipshutz and Tang in particular, so extraordinary in their skills, acumen, and vast accounting and/or expansive legal experience that they are indispensible on all these major committees? And is it mere coincidence, or the councillors’ own wishes, that Penhalluriack and Forge only manage to get on three committees, and Oscar Lobo is only on one? Should ratepayers conclude that no other councillor can fill the shoes of Lipshutz and Tang – that these individuals have the time to do a job properly when they are sitting on 6 committees each? Or is there another agenda being played out here which has been ongoing for years?
Glen Eira Debates 
March 14, 2011 at 10:34 AM
My god! Lipshits on the consultation committee? The demigod who gagged everyone, who instigated the no surprises policy, who rants and raves against people in council meetings and who thinks that he speaks for people. This person on the consultation committee? What a joke! What a bloody indictment on all councillors! What a slap in the face to ratepayers!
March 14, 2011 at 2:06 PM
Not the first time that guidelines are ignored by Newton and his yes men. The only way that this council will change is if such guidelines become mandatory law and even then they will look for ways to diminish their impact so that only the letter of the law applies rather than the spirit.
March 14, 2011 at 5:25 PM
Ignorance is no excuse in the selection of Lipshutz on both Audit and Finance committees simulataneously. Councillors knew exactly what they were doing and hence opened themselves up to perceptions of impropriety and potential ‘conflict of interest’ concerns.
The minutes of Feb 6, 2007 record the following at item 8.11 –
It is a convention that the Mayor (and CEO) are not members of the Audit Committee as the Audit Committee may review decisions by the Mayor or CEO. It is also a convention that membership of the Finance Committee and Audit Committee are mutually exclusive as the Audit Committee may review decisions or recommendations of the Finance Committee.”
March 14, 2011 at 5:33 PM
We can thus assume that the way out of this embarrassing impasse is to let the Finance Committee simply wither on the vine (no meetings for two years) and then completely disappear. Problem solved. Funnily enough just before the 2005 sacking, there was the vote to also do away with the then Finance Committee. Glen Eira Council is certainly unique and one day will be forced to explain all of these goings on and how they can insist that they are working in the public interest when we have such blatant examples of perverting sound governance principles.
March 14, 2011 at 6:41 PM
Two points – Gibbs and McLean should stand down and let some new fresh blood in. The other point is how can Tang be on the Racecourse Committee when he can never take part in any discussions due to conflicts?
March 14, 2011 at 6:51 PM
The Racecourse Committee is something different. The real issue is that he’s on the MRC Trustees and every opportunity he gets he declares ‘conflict of interest’. What’s really fascinating is that Magee at the last council meeting did not declare a similar interest as a trustee. Is Tang just being a moron, looking out for his future career as a lawyer perhaps, or do his true loyalties lie with all those hobnibbing MRC members and trustees, rather than the people who so stupidly elected him? He either has to resign, or fulfill his obligations to the community – simple as that! This fence sitting and side stepping of any discussion on the MRC is useless and to use good ‘ol Lipshits phrase ‘narcissistic’.
March 15, 2011 at 12:13 AM
I too find Tang’s claim of conflict of interest re being a trustee of the Caulfield Racecourse Reserve somewhat confusing. This is a position he holds because he is a Councillor and as such he is appointed to represent the people of Glen Eira at Trustee meetings. Where is the conflict of interest. Since the trustees meet once a year and he has not attended the past two meetings the conflict is even harder to see.
I also hear that his legal practice has recently been working for Maddox. Maddox is the firm that Glen Eira, when Tang was Mayor, hired to represent them at the C60 Planning Panel hearings. Here I can see a question of conflict of interest.
March 15, 2011 at 9:58 AM
Maddox was also involved in the special tutorials to show councillors how to enact good governance following the inspectors report. One of the pupils was Tang and he’s working for them. Not only is there then a question of conflict of interest for Tang, but what about Maddox itself? Is there a conflict of interest for them when one of their employees is the mayor/councillor and they’re working for council. It’s not as if this legal company is the only one that council employs. So why on these occasions. Did Tang ‘urge’ in any way for their employment? Did Maddox play any role via Tang in getting these jobs? Plenty of issues and plenty of questions that should be looked at and investigated. My suggestion to Tang is quit while you’re ahead.
March 15, 2011 at 12:08 AM
When I popped my head up from the lake the other day I noted there was a Caulfield Racecourse Trustees meeting being held. Cr Tang was unable to go as he was busy working as an articled clerk. He therefore could not carry our concerns of not enough play space to the Caulfield Racecourse Trustees. By the way the Caulfield Racecourse Trustees’ organisation was first formed to manage the 85C hectare area reserverd for the three purposes of a “racecourse, recreation reserve and park” way back in 1848. Trustees are appointed by the government of the time. There are fifteen trustees three government apppointees, (including a former racing minister),three “representing” us as Glen Eira City representatives… we currently have two delegates Crs. James Magee and Stephen Tang,the latter who did not find his position important in March 2010 and 2011 and he absented himself on both occasions, and our third delegate is to be Cr Cheryl Forge who is awaiting government appointment. The Melbourne Racing Club has the remaining delegates and from indications many other high powered employees of the Melbourne Racing Club seem to be admitted to the room for the twice annual meeting to administer this asset on behalf of all Australians. The residents of Glen Eira are denied entry!!!!! How serious is all that? This asset equals Hyde Park London and Central Park in New York where groups actively challenge the commercialisation of these parks and try to cherish the peace and quiet of simple parklands. The situation which has come about has been through careless government administration by handing control of this wonderful asset to a committee which is dominated by thoroughbred racing interests and some flathead interests as when the MRC needed more water storage for me and the racecourse it simply took over another acre or two for another dam and put up signs warning of soft edges.. I don’d swim too close to the mud! Well I suppose you cannot blame the Melbourne Racing Club for pushing the chariot of racing and everything else if they get it all cheap and if our council just sits outside the fence, agrees to and poses with ridiculous signs including the rule “no ball games” and very restricted hours of entry in the area 122 acres. THIS IS LIKE EUREKA AND THE SITUATION MUST CHANGE NOW!!!! wE ALL SUBSIDISE THE MRC WITH CHEAP RATES, FREQUENT BLOCKED ROADS AND GLASS STREWN FOOTPATHS NOT TO MENTION THE LOCKED GATES111
March 15, 2011 at 11:06 PM
Lipshutz is a liability on the Audit Committee. I’ve looked up the minutes for this current council and of the 8 audit committee minutes since 2008, Lipshutz was absent 3 times. Makes me feel real good to know how well this busy, busy, man can represent me. And he’s got the gall to stand again for this committee and those other dumb councillors will probably vote him in.