Glen Eira Debates

The agenda items for Tuesday night’s council meeting contain Newton’s response to Penhalluriack’s questions regarding the potential dangers of the Glen Huntly Park mulch facility. We offer our analysis of the response and are seeking readers’ comments. Mr. Newton is also free to respond. We guarantee that we will publish his reply intact.

Right from the opening sentence we have some concerns as to the connotations that the wording might have for readers not in the know. It begins: “Purpose: To respond to questions without notice at the ordinary Council meeting of 15 March 2011”. Notice does not have to be given when addressing a question to a council officer. Councillors are free to ask as many questions as they like. Readers should therefore ask themselves what is the motivation and purpose in including such phrases when it has no legal or material relevance to the issue? 

Only after an irrelevant one page waffle about the mulch heap itself do we come close to the nitty gritty of the issues. We’ve categorised these into broad topics. 

Questions about dates 

On the 19^th November 2010, Penhalluriack ‘tabled’ a request at the Audit Committee meeting. The attached Penhalluraick document makes it clear that he had concerns well before the 19^th November – ie. “I have raised this matter with council officers on two occasions”. Thus management knew of the concerns well before the Audit Committee meeting of the 19^th November. This document also reveals that the opinions gleaned from the Dept. of Health do not completely allay Penhalluriack’s fears as to the potential risks. Given that a scientific report was subsequently called for, indicates that the Department’s advice wasn’t all that conclusive or fully convincing. Newton does not directly address these additional concerns. Further, and most importantly, Penhalluriack’s attached document is incomplete  – it ends in mid sentence! So, how many pages are missing? Why aren’t these pages included? What did they contain? If correspondence between councillors and/or committees is suddenly (and conveniently) made public then surely it behoves Newton to ensure that the entire document is available – not just selected sections?  Again we ask: what is the motivation and purpose behind this action? 

Newton then tells us that “The consultant, Noel Arnold and Associates, conducted an assessment and their report was submitted to the next meeting of the Audit Committee on 25 February 2011.”  There is much confusion here. In response to the question ‘when was the first draft of this Opinion received?’, Newton responds that it was the 2^nd February. But we also have the sentence “The report was received by Council on 14^th February”. [Note the crafty, and some might say, devious use of language! COUNCIL did not receive anything – otherwise they would have known about the report! It was received by management and possibly the Mayor only! ] That leaves us with two distinct dates and a time lag of twelve days. So, are we meant to assume that there was some careful editing between the reception of the first draft (Feb 2^nd) and the final draft on Feb 14^th? If so, why the need for ‘redrafting’? Who determined this need? What changes were possibly made between the first and final draft? And the 64 dollar question – if changes were made, then WHY WERE THEY MADE? What was the motive behind such changes?

Why did the Audit Committee even have to REQUEST information? Why wasn’t it simply handed over to them (regardless of official meeting dates)? The report was distributed to the Audit committee on the 18^th Feb, one week prior to the formal Audit Committee meeting. In the end it’s taken at least 5 months, since Newton confirms that Penhalluriack first raised the issue in September. One must therefore ask whether the issues that Penhalluriack raised were expedited in the most timely manner. 

Playing with words 

“The minutes of the Audit Committee’s meeting of 25 February 2011 are included at Item 8 on the agenda for this Meeting. They state: “The Chairman noted the report the report (sic) on the mulch bin at Glen Huntly Park and concluded that no action was required by the Audit Committee. If Councillors had any issues, they could raise them with the Council.” No one raised any issues with any officers at the Audit Committee’s meeting of 25 February.” 

Two essential points need to be noticed here. The chair of the audit committee (Gibbs) announced that no further action is required. The Audit Committee had therefore washed its hands of the matter and tossed the ball over to ‘THE COUNCIL’ – meaning the full council as constituted at an Ordinary Council Meeting. Newton, ever so subtly, then attempts to downgrade the significance of the report by inferring that since ‘no one raised any issues with officers’ it does not warrant attention. Wrong! The matter as expressed by Gibbs was to go to COUNCIL if anything was to happen. There was therefore no point in ‘raising’ the issue with officers. Besides, Penhalluriack had already raised the issue twice with officers! Would a third time have made any difference? Hence, Newton’s claim that no-one said anything is simply irrelevant to the issue since there was no longer any point in raising the matter with this group. Newton’s ‘excuse’ that no councillor spoke up at this meeting is spurious. If the matter was to proceed to full council, then there is no need for any councillor to say anything at such a meeting!!!!! 

The other point that needs to be made relates to the question of the Audit Committee’s role, function and purpose. According to the Minister’s gazetted Guidelines, it is the responsibility of the Audit committee to provide information to councillors and THE COUNCIL. It is for THE COUNCIL to determine the direction that it wishes to go – not the Audit committee. In this, the audit committee has not fulfilled its function in warning THE COUNCIL and hence has placed THE COUNCIL and councillors in peril. Councillors are bound to fulfil their fiduciary duties based on the information that is presented to them. It is inconceivable that (1) the audit committee has to first ask for information from management and (2) that this information (the scientific report) is then not passed on to ALL COUNCILLORS and THE COUNCIL. This is a failure of governance and contrary to best practice of audit committee and management principles. Page 13 of the Minister’s recently released guidelines makes this absolutely clear. We quote: 

“Role of the LGE (Local Government – ie. THE COUNCIL)

The role of the audit committee, as an advisory committee to the LGE, is to assist the LGE to discharge its oversight and corporate governance responsibilities, whereas the role of the LGE is that of a constituting and governing body.

Responsibilities of the LGE

The LGE:
􀁏 Establishes the audit committee with an appropriate charter, membership and level of resources (including the provision of a secretariat) to enable it to effectively carry out its activities having regard to this Guide.
􀁏 Ensures that there are appropriate reporting mechanisms in place between the LGE and the audit committee.
􀁏 Periodically reviews the performance of the audit committee as a whole, and of the independent members of the audit committee. The audit committee performance review can be (and often is) by self-assessment.
It is important for the members of the audit committee and the LGE to recognise that the advisory activities of the audit committee do not absolve the LGE members of their responsibilities. Individual LGE members are obliged to reach their own decisions based on a proper assessment of the information, which includes, but is not limited to, audit committee advice and report”. 

So, how are councillors meant to fulfil their ‘responsibilities’ if they are not in possession of the full facts? How can the audit committee function if it has to ‘request’ information from management? And when was the last time that COUNCIL actually ‘reviewed’ the performance of both audit committee members, and external members? 

In the interests of brevity, we will conclude our analysis at another time. However the points that readers should bear in mind are: 

• Has management acted in a timely manner in regards to the potential risks
• Has management fulfilled its duty of keeping councillors, as well as the audit committee fully informed in a most timely fashion
• Have both the audit committee and management lived up to the standards required and acted in accordance with best practice guidelines?
• Is Newton’s response an adequate and acceptable reply to Penhalluriack’s questions?
• What does this episode tell us about management in Glen Eira?

The Glen Eira Audit Committee Charter (Council Minutes: 22^nd July, 2008) states:

Term of Membership
Independent members of the Committee are not officers or employees of Council and have no executive powers. Independent members shall be appointed for an initial term of three (3) years after which time they will be eligible for reappointment. No independent member is to be appointed for more than two consecutive three year terms unless Council resolves otherwise. Terms will be scheduled to facilitate continuity of the Committee such that no more than one Councillor and one independent member’s terms cease within the one year”

The current independent members of the Audit Committee (Gibbs and McLean) have been on the committee since at least 1997 in Gibbs case, and McLean possibly soon after. That makes it roughly 14 years straight – and now it looks like they may have been granted another 3 year ‘extension’ bringing the grand total of consecutive service to close on 17 years! Even more disquieting is the way in which these reappointments have been handled – all executed via single, camouflaged one liners in Council agenda items.

The in camera items of February 22^nd,  2011 read: “under s89 (2)(a) “personnel” which relates to Audit Committee Membership”. Identical items are noted in the minutes of: 22^nd May, 2006; 8^th April, 2008; 24^th February, 2009 and the 17^th March, 2009. So it appears that each time either Gibbs or Mclean’s term of service is close to finishing, there appears this single innocuous and buried item that is voted on in camera. Yes, this fulfils the legal requirements of a ‘council decision’, but we have to ask:

1. Why is this done in secret? Why is there no public announcement of reappointment? Why is there no recommendation from the audit committee that is minuted? Why on earth does such an item deserve the classification of ‘confidential’ unless the intention is to keep this from the public?
2. Why does every other council we have looked up include such items in their Audit Committee minutes (ie. recommendation to reappoint or advertise) and some even issue a media release on the subject. Yet, Glen Eira is always silent, always secretive.
3. Why does Newton insist on this practice – since he alone declares an item to be ‘confidential’ and determines that it be listed for in camera discussions?
4. What of all the other councillors? Do they question? Do they want to know why the reappointment is so ‘secret’? Does anyone even think that 17 years of the same independent members of an Audit Committee is not according to current best practice and especially the recently released Minister’s Guidelines? Or is the simple fact that amidst the mountain of papers landed in councillors’ laps, this one single sentence is somehow engineered to escape notice?
5. What does Newton have to gain by such secrecy? And what does this do to the public’s perception of the governance practices within Glen Eira?

Perhaps a few interesting examples from the minutes of Glen Eira’s Audit Committee meetings require reflection by residents –

Feb 5^th, 2008 – “Mr McLean suggested that for future audit reports the internal auditor’s comments could be more positively stated. For example, under item 1 “Total purchase from vendors” on page 2 of the report, the wording “all the above appeared to be reasonably justified” be changed to “all the above were justified”. 

14^th December, 2010 – “The Chairman stated that he and Mr McLean would meet separately with Management to discuss further enhancement of the BCP (Business Continuity Plan) documents.” 

Secrecy is the hallmark of Glen Eira and as we’ve said, the modus operandi of its administration. But it relies on complicit and compliant councillors in order to succeed. The result is to the detriment of the community and to the principles of accountability, transparency and good governance.

We have long maintained that the modus operandi of Glen Eira Council is secrecy and more secrecy.  In particular, there appears to be a distinct lack of ‘openness and transparency’ between administration and councillors. At last council meeting, our suspicions were verified.

In response to Cr. Penhalluriack’s question to Newton regarding the potential risk associated with the Glen Huntly mulch facility, Newton responded:

“The report that Cr Penhalluriack is referring to went to the Audit Committee at the Audit Committee’s request on the 24 February which is three weeks ago. All recommendations are being implemented. Had I been given notice of these questions I would have answered them tonight but I was not given any notice. I’ll have to take them on notice for later reply.” 

Now why on earth should the audit committee have to ‘request’ anything? If the organisation is at risk, then it is absolutely incumbent on Newton to table that information asap. This was obviously not done, and it appears that ‘action’ was initiated only as a consequence of Penhalluriack’s urging. 

This is not the first time that we have had to query exactly what information is disseminated to committees and councillors by the administration. There was the recent instance where Glen Eira faced over 40 criminal charges over the Clayton tip and a potential fine of millions. Nothing was published, and we suspect, that perhaps none, or very few councillors knew this was happening. Then there is also the MRC and Newton ‘negotiations’ where another ‘request for a report’ had to be turned into a formal Council resolution before any information was forthcoming. 

To make matters worse, the audit committee’s charter omits practically all reference to administration. Port Phillip on the other hand, makes it abundantly clear what it considers to be the role of administrators and their duty to keep committee members informed and cognisant of any potential risks. We quote:

“The Committee is to be kept informed by Council management regarding financial reporting, risk management and risk exposures of the organisation”.

Nothing like this appears in the Glen Eira charter, leaving councillors, committees and others, literally with their pants down! 

Newton must be accountable to council and he must explain:

1.    Why the report was not provided to the audit committee without being ‘requested’

2.    How long did it take for councillors to be made aware of the potential risk?

3.    Which delegated authority allows Officers to deal with such risk matters without reference to the Audit Committee and/or Council?

4.    Who are the Policy Officers who  administer risk matters of such nature?

6.    When will the charter be tightened up so that administrators are mandated to fulfil their obligations and cannot escape scrutiny because of poorly worded policies and documents? 

It is important that we first establish the credentials of the extract we are about to cite. It comes from Page 19 of a document entitled “Best Practice Guidelines Local Government Entity Audit Committees & Internal Audit” (June 2000). These guidelines were prepared by “the Auditing & Assurance Standards Board of the Australian Accounting Research Foundation, with the support of The Institute of Internal Auditors – Australia and the Australian Institute of Company Directors for the Department of Infrastructure (DoI) and endorsed by the Municipal Association of Victoria (MAV) and Local Government Professionals (LGPro).” 

The extract which primarily concerns us, is: 

“Appointments of external persons shall be made by Council by way of a public advertisement and be for a maximum term of three years. The terms of the appointment should be arranged to ensure an orderly rotation and continuity of membership despite changes to Council’s elected representatives.” (page 19) 

Of the 8 authors listed one name stands out – MR. DAVID GIBBS – the Chair of Glen Eira’s Audit Committee!

What we have here is a highly respected ‘authority’ producing guidelines for local government, yet NOT ADHERING TO HIS OWN GUIDELINES. Mr Gibbs and Mr. MacLean have both been with Glen Eira since at least 1998. Both their names are continually mentioned in the 2005 Whelan Report, as well as in the 1998 Walsh Report.  That means that for at least the past 13 years the external members of the Glen Eira audit committee have NOT CHANGED.

The ratepayers of Glen Eira need and demand answers to the following questions:

1. Why have both Gibbs and McLean been given such lengthy and uninterrupted tenure on Council’s Audit Committee?
2. Why has Mr. Gibbs failed to adhere to his own guidelines and not resigned from the Council Audit Committee?
3. Why is Mr. Gibbs said to be consulting with Andrew Newton on a ‘staffing’ matter as outlined in the Whelan Report, when officer staffing is the exclusive domain of the administration?
4. How does Council respond to the growing perception, and hence alarm, within the community that all is, and has not been, 100% “kosher” with its Audit Committee?

A previous post concentrated on the fact that numerous other Councils appear to have no qualms in making public their Staff Code of Conduct. In Glen Eira everything is under wraps. Why? What is there to be gained by such practices? Perhaps a better question is: What is there to hide? What could be so ‘private’ that ratepayers have no idea as to the protocols, values, and mechanisms that they are paying for. We’ve continually harped on the fact that in terms of transparency and accountability Glen Eira appears to fall well below the mark of its neighbouring and benchmark councils. Is this ‘ethical’; is this the kind of behaviour that residents are willing to put up with?

Here are some examples to illustrate our point. Please note how ETHICS is highlighted in the following councils’ Codes of Conduct.  We’ve linked some of these documents so that residents may read them for themselves.

KINGSTON

“Kingston is a major metropolitan Council for whom ethics and business conduct is a key requirement. We care about obtaining good results for our community and care equally about how those results are achieved. The CEO must also exercise delegated powers in ways consistent with previously established guidance or direction from the Council.  

The Guide recognises Council’s duties, responsibilities and community aims and values. It describes what is needed from us all to keep the good faith and trust of Council and its many stakeholders, and is based on what we value most:

Honesty and Integrity – Doing what we say we will do. 

The spirit and letter of the law and all relevant legislation will be obeyed. 

Unless you are authorised to do so, do not use Council resources or staff services for private purposes. 

BAYSIDE 

“The purpose of this guideline is to assist all Bayside staff in the maintenance of ethical standards of professional integrity and conduct….

Accountability at Bayside means we are mutually accountable and take responsibility for our actions, behaviours and results. It is: meeting promises/commitments; managing expectations; admitting mistakes; providing leadership.” 

Achievement at Bayside means that we are motivated to succeed through service by making a contribution to our community using our unique skills and abilities, and being recognised for what we achieved.” 

The way we work is to: always welcome the opinions of the community. Accept the differences in members of the team and the community and welcome their contributions 

No council materials should be used for non council purposes.”

______________________________________

So we ask – how similar or different is the Glen Eira policy? Does it highlight ethics? Community? Service? Overall values? If the Councillors’ Code of Conduct is freely available, then we maintain that the Staff Code of Conduct should be equally transparent and visible. How else can the community judge officers’ performance if they have no ratified gauge against which to evaluate such performance? 

Below are some extracts taken from a presentation by the NSW Ombudsman, Bruce Barbour on 9^th September, 2010

 “….if standards of ethical conduct are so clear and well established – why do we need to continually raise and discuss them? Surely once they are set down that is enough? Well no, it is not enough. If they are not modelled by those in authority, not regularly discussed, if they are not re-enforced, if they are not made part of the day to day operational landscape, they can and will slip from the public sector consciousness.

When we are focussed only on the outcome, there is often less concern about the process. People find short cuts, and the ends are too often considered to justify the means.

This of course is not the only reason for ethical breaches. There are those in public service who, when given the opportunity, will choose to act unethically. Unfortunately, human nature means we will never be completely rid of all unethical conduct.

Firstly, there needs to be genuine and strong leadership. A clear and consistent message from the top. Prime Ministers, Premiers, Ministers, Chief Executive Officers, Directors General and senior managers need to commit to core principles. This involves not only saying the right thing – which is easy to do – but also doing the right thing, and leading by example.

This commitment is key, yet as several of the examples I gave earlier show it is not always present, indeed the initial source of resistance when my office has dealt with agencies has sometimes been at the Chief Executive or senior manager level. Once staff see this response, this example being set, it sets the tone for all our dealings with that organisation.”

We’ve published these selected highlights for several reasons:

• Their relevance to the question of ‘legality’ versus ‘ethics’ at Glen Eira
• The simple fact that Glen Eira has only a ‘Councillor Code of Conduct’ as opposed to a ‘Code of Governance’ as other councils have implemented
• Other Councils have their Officer Code of Conduct, or their Business Code of Conduct freely available. Glen Eira’s requisite document is kept secret and locked away. This only makes us wonder what it contains that it should be regarded as ‘off limits’ to resident ratepayers. It also raises questions as to how different this document might be to the Councillor Code of Conduct?
• After three Municipal Investigations we believe that ‘ethics’ and ethical conduct by councillors and administrators is far more important to ratepayers than mumbo jumbo legalese and whether or not there has been a ‘technical breach’ of the Local Government Act.

PS: As an afterthought, we’ve uploaded the Bayside Staff Conduct Guidelines (here). Please note the consistent use of the following terms in their policy – ‘community’; ‘trust’; ‘admitting mistakes’; ‘values’ and plenty more. Whilst these may also been seen as ‘motherhood statements’, they clearly indicate a philosophy which is geared to service to the community and collaboration with the community. We would be most surprised (but would welcome it) if this kind of emphasis exists in any Glen Eira policy. But of course, since this is not out in the public domain, we can only speculate and guess!!!!!