Local Government (Administration of Councils) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 14 November 2019.)

The Hon. C.M. SCRIVEN (12:34): I rise to support this bill. Following troubling reports from both the Ombudsman and the Auditor-General last year, Labor was quick to demand that the minister act and place the District Council of Coober Pedy in administration. Belatedly, the minister did invoke section 173 of the Local Government Act 1999, declaring the council to be a defaulting council on 24 January 2019.

Since this period, I am advised that the administrator, Mr Tim Jackson—a respected long-service local government executive officer—has worked diligently to rectify the financial standing of the council. However, under the act, a council may only be placed in administration for a maximum period of 12 months, which will end for the District Council of Coober Pedy in January next year.

Appropriately, this bill makes specific provision for the period of administration for the District Council of Coober Pedy to be extended until the end of the current council electoral term in November 2022.Given the significant financial mismanagement and debt identified by the Auditor-General, as well as the complexities involved in the council providing electricity and water utility services, this provision appears eminently sensible. The 70 per cent community support for this extension, as captured by an Electoral Commission poll, lends further weight to this clause.

This bill also eliminates an anomaly of the act whereby councillors retain their allowances in spite of a council having been declared defaulting and placed into administration. Labor supports this measure to eliminate that anomaly. On the bill's general extension of the maximum period a council can be placed in administration from 12 to 24 months, I intend to move a series of amendments. While Labor appreciates that the serious matters for which a council can be declared defaulting may require a two-year period to rectify, we also believe that democratic governance should be restored to councils as soon as responsibly possible.

In accordance with this principle, the amendments I will move have been designed to require the minister for local government to actively recommend to the Governor an extension of the original maximum 12-month period. This provision will allow for a defaulting council to be in administration for a maximum period of 24 months, but only upon the recommendation of the minister for local government and only if the reasons for a council being declared defaulting have not yet been resolved.

These amendments will ensure the minister for local government keeps a close eye on any council under administration, which is important to ensure the restoration of democratic governance to defaulting councils as soon as is responsibly possible. With those comments, I commend the bill to the council.

The Hon. D.W. RIDGWAY (Minister for Trade, Tourism and Investment) (12:37): I thank the honourable members for their contributions on this bill and now move that it be read a second time.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 3 passed.

Clause 4.

The Hon. C.M. SCRIVEN: I move:

Amendment No 1 [Scriven–1]—

Page 2, after line 16——After subclause (1) insert:

(1a) Section 273—after subsection (15) insert:

(15a) The Governor may, on the recommendation of the Minister made not earlier than 9 months from the date on which the council was declared to be a defaulting council, by proclamation, declare that the proclamation by which the council was declared to be a defaulting council continues in effect until the date that falls 24 months from the date on which the council was declared to be a defaulting council.

(15b) The Minister must not make a recommendation under subsection (15a) unless the Minister is satisfied that the matter that was the basis of the Minister's recommendation under subsection (2)(c) has not been rectified, or measures to prevent a recurrence of the act, failure or irregularity have not been implemented.

As mentioned in my opening remarks, the opposition believes that, whilst 24 months may be the appropriate time for a council to be in administration, that should be reviewed so that should the conditions that have placed that council into administration have been rectified and resolved they can immediately return to democratic governance.

With that in mind, this series of amendments seeks to ensure that the matter is reviewed between the ninth month and the 12th month, so that an extension, if necessary, can be made for a further 12 months from that first 12-month period or, if not, there is suitable time to then return the council to democratic governance at the end of that first 12-month period.

The Hon. D.W. RIDGWAY: I will speak to the three amendments. I think the Hon. Clare Scriven is moving them as a block. These proposed amendments create an administrative burden that could require the minister to make a premature decision to recommend that an administration is extended. Declaring a council to be a defaulting council and appointing an administrator can only occur in serious circumstances, such as serious breaches of the law, serious failures to discharge the council's responsibilities or serious irregularities in the conduct of the affairs of the council.

These serious circumstances must be identified following a report or some information from one or more of three integrity agencies: the Ombudsman, the Auditor-General or the Independent Commissioner against Corruption. The declaration of the District Council of Coober Pedy as a defaulting council was the first time in almost 30 years and the first time under the Local Government Act 1999.

The government's proposed amendment is for a maximum period of 24 months. This is only a maximum period. The Governor may at any time before this maximum period, under section 273(16), make another proclamation to, firstly:

revoke the proclamation by which the council was declared to be a defaulting council—thus, resulting in suspended council members being reinstated (s 273(16)(a)); or

declare the offices of all members of the defaulting council to be vacant—and elections are held to elect a new council (s 273(16(b)) (noting that three months of administration must pass before this can be the case).

These provisions are unaffected by the bill. Under the act—section 273(13)—the administrator is required to report to the minister every quarter on the administration of the affairs of the defaulting council. This means the minister would be considering the situation at the council every three months and whether the administrator had made enough progress on the issues that caused the administration for that council to be returned, or for a general election to be held.

The amendment would not allow a proclamation to extend an administration to be made before nine months of the administration had passed. This recognises that it is not desirable for this decision to be made too early in the period of administration. However, the effect of this amendment could cause the opposite. The process to recommend to the Governor that the proclamation is made on a council's administration is, by necessity, a long one. Requiring a proclamation to be made to extend the administration beyond an initial 12-month maximum means that the minister would have to make a decision well before the 12 months had passed on whether to recommend this.

Rather than making a decision following a quarterly report from the administrator after nine or 12 months had passed, the minister would need to make this call at around the six-month mark. This could put unnecessary pressure on the administrator and on the community to make a difficult decision in a shorter amount of time than is ideal. There would be a risk that there would not be sufficient time to undertake proper community consultation, such as the poll undertaken recently in Coober Pedy by the Coober Pedy administrator.

The state government would not seek to keep a council in administration for longer than necessary. The act already envisages, through the requirement for quarterly reports, that as soon as the minister is confident that the serious issues that caused the administration have been addressed the administration would come to an end. For those reasons, the government will not be supporting the amendments.

The ACTING CHAIR (Hon. D.G.E. Hood): The Hon. Ms Scriven, could I just clarify: did you move all of your amendments? Would you formally move all of your amendments, if that is your intention?

The Hon. C.M. SCRIVEN: Yes. Amendment No. 2 [Scriven-1] and amendment No. 3 [Scriven-1] are consequential. They are related to amendment No. 1, so if No. 1 does not pass, I will not be moving Nos 2 and 3.

The ACTING CHAIR (Hon. D.G.E. Hood): Okay, thank you.

The Hon. M.C. PARNELL: I have a question of the mover of the amendment. I am interested in a response to what the minister said. As I understand it, his main concern is that at a premature period of time, being six months after the council has been declared to be a defaulting council, a decision will need to be made. He used the word 'premature'.

I can see that could be a problem, but if that premature decision is only to create the maximum opportunity of the 24-month administration, it is not such a deal. What I would like the mover to clarify is that at that six months does the decision need to be made that it is 24 months or nothing, or is the decision only that it can be up to 24 months? I am just trying to work out whether at six months there is an obligation to lock in a full two years' administration.

The Hon. C.M. SCRIVEN: First of all, the recommendation cannot be made earlier than nine months from the date that the council was declared to be defaulting. That is the first point to make. My understanding is that it then means that it will be to the 24 months. I would potentially have some other advice on that, but my understanding is that that is where a decision would be made that it would extend until 24 months. But I am happy, while the debate continues, just to have some clarification of that.

The Hon. M.C. PARNELL: Now that the minister has the benefit of some advice, I might ask a similar question, if the minister could clarify his concern. My understanding is that, as the minister has said, these are not matters that are entered into lightly. A decision has been made to declare a council a defaulting council, so the elected members are off and we have the administrator in. I guess there is the question: at what time can that decision be reviewed? And what is the maximum amount that the administration can go for? The minister said he thought the six months was premature. Is it the minister's concern that at the six-month mark they would be effectively locking in a two-year administration, when in fact only 12 months might be necessary? Is that the nature of the minister's concern?

The Hon. D.W. RIDGWAY: I am advised that if it was to be extended beyond the 12 months, you have to make another proclamation, and that is quite a long process. Effectively, my advice is, you would have to make the call at about the six-month mark to actually get the proclamation in place to be able to extend it beyond 12 months. So it is the view of the government that if you have quarterly meetings, obviously with the minister and administrator, there are opportunities all the way along. Once the minister is satisfied that the administrator has done their job and the issues have been rectified, then clearly the council can come out of administration. But to extend it beyond 12 months, as the mover of the amendment has moved, will probably mean you will have to make a call at the six-month mark, which in most cases would be way too early to make that call.

The Hon. C.M. SCRIVEN: Just a clarification on that: is the minister saying that it will take six months for the process to occur?

The Hon. D.W. RIDGWAY: I am advised that it could take that long. It depends on the issues that are involved and the complexity of it all. If you look at the situation in the bill as it is proposed, the administrator would provide quarterly reports to the minister, so effectively we have an update happening every quarter. At that point, when the minister is comfortable, the administration can cease, so we can go back to an election or the council will be reinstated. It seems to be, as I think I said in my opening remarks, almost an administrative burden that could lead to premature decisions being recommended. So the government does not support the honourable member's amendments.

The Hon. M.C. PARNELL: It is complicated, but I am just trying to get my head around what harm might be done. If, as the minister says, a decision is forced upon the minister prematurely at, say, the six-month mark as to whether or not the administration will need to go beyond 12 months, and if the minister says, 'Yes, I think we might need two years for this one,' and if a year and a quarter into the two-year administration period it is decided, 'No, it's all fixed; it's now resolved,' is it possible to end the administration early?

The Hon. D.W. RIDGWAY: Acting on advice, yes, it can be ended at any time. As I said in my comments, the 24 months is a maximum period. It allows the minister flexibility: if things have been rectified or a pathway to recovery has been identified and the minister is comfortable with that, then the administration can end.

The Hon. C.M. SCRIVEN: The intention of the amendment is to ensure that there is active consideration of whether the council continues to be in the circumstances which led to its administration. Notwithstanding that quarterly reports will be provided, there is currently nothing that would ensure that the minister would indeed follow the principle of returning the council to democratic governance as soon as possible. That is the purpose of the amendment. I am interested in the minister's view as to why that amendment would not serve the purpose of ensuring that there is that active consideration and the active return to democratic governance as soon as possible.

The Hon. D.W. RIDGWAY: One of the points I made in my contribution was that the declaration of the Coober Pedy council as a defaulting council was the first time in 30 years that this had been used and the first time under the Local Government Act 1999. It is not something that any minister has ever done lightly. The fact is that you have quarterly reporting. Once a minister is happy that the council's issues have been resolved, then every minister of whatever political persuasion would be absolutely focused on making sure that local democracy was returned to the local community. So we have that quarterly reporting.

It is quite a process to force a council into administration. As you can see, it is almost the first time in 30 years. I think the chamber can have the highest level of confidence that it is not something that is entered into lightly at all, and the quarterly reporting will give the minister an opportunity to restore democracy to the local community at the earliest possible convenience.

The Hon. C.M. SCRIVEN: Just a final remark on my amendment: I think we are in agreement that the goal is to return to democratic governance as soon as possible. The opposition's view is that this amendment would ensure that that happens and not leave it up to the discretion of the minister.

The Hon. D.W. RIDGWAY: The government believes that it has all the necessary powers and opportunities at the hands of the minister, with the quarterly reporting, to return democratic local government to the local community as soon as possible. That is one of the main reasons why we do not support the opposition's amendment.

The Hon. M.C. PARNELL: I thank both the mover and the minister for the clarification. It seems to me the main difference between the two positions is that the opposition's amendment provides a firm administrative step that is required before the 24-month period can kick in, whereas in the original bill, as I understand it, the 24 months is there and there is that active review every three months. So the question is whether the three-month active review is a sufficient check on the abrogation of the democratic rights or whether something more formal needs to happen—not before nine months, which the minister has said effectively means six months.

I think in the context of this debate, and having heard both sides of it, a combination of two things has us leading towards not accepting the amendment: the first is the rarity of the situation and the second is the quarterly meetings. I think when you put those two things together, whilst I do not disagree with what the Leader of the Opposition is saying—that abrogation of democratic rights is a significant matter and you need more checks and balances—I think the checks and balances are basically there in the bill so the Greens will not be supporting the opposition's amendment.

The ACTING CHAIR (Hon. D.G.E. Hood): Before I put the question, I am looking for an indication from the rest of the crossbench as to their position. The Hon. Mr Pangallo.

The Hon. F. PANGALLO: We will not be supporting the amendment.

The Hon. J.A. DARLEY: I will not be supporting the opposition amendment.

Amendment negatived; clause passed.

Remaining clause (5) and title passed.

Bill reported without amendment.

Third Reading

The Hon. D.W. RIDGWAY (Minister for Trade, Tourism and Investment) (12:56): I move:

That this bill be now read a third time.

Bill read a third time and passed.

Sitting suspended from 12:56 to 14:15.