Australia: Belcarra legislation aims to make major changes to conflict of interest rules for Queensland local councillors

Proposed legislation implementing recommendations of the Crime and Corruption Commission's 'Operation Belcarra' report would result in major changes to the conflict of interest rules governing Queensland's local government councillors.

On 12 October 2017, the Queensland Government introduced the Local Government (Implementing Belcarra) and Other Legislation Amendment Bill 2017 (Qld) (Bill) into Parliament.

The Bill seeks to implement recommendations of the Crime and Corruption Commission (CCC), arising from the CCC's recent 'Operation Belcarra' inquiry into local government corruption and integrity issues.

While it is the Bill's proposed ban on developer donations that has drawn the most media attention, the Bill also proposes major changes to the conflict of interest rules governing Queensland's local councillors.

Local government councillors and officers need to be aware of these changes, as they will have important consequences for how local governments manage councillor conflicts of interest.

PROBLEMS WITH THE CURRENT FRAMEWORK

The CCC's Operation Belcarra inquiry identified inconsistent views and widespread confusion among councillors regarding how to appropriately manage conflicts of interest.¹ In part, the CCC considered that this was due to the open-ended (and often unclear) requirements of the current legal framework.²

The current framework under the Local Government Act 2009 (Qld) (LGA) (and the equivalent City of Brisbane Act 2010 (Qld)) distinguishes between 'material personal interests' and other 'conflicts of interest'.

For material personal interests, the rules are reasonably clear. A councillor will have a material personal interest in a matter to be discussed at a local government meeting if the councillor or certain related persons (eg a spouse or employer) will gain a benefit or suffer a loss, directly or indirectly, from the matter.³ If a councillor has a material personal interest, they must "inform the meeting of" the interest and, generally, leave the room while the matter is discussed and voted on.⁴

The rules for other conflicts of interest, however, are far more open-ended.

A councillor will have a conflict of interest in a matter if there is a conflict between their personal interests and the public interest that might lead to a decision that is contrary to the public interest.5

If a councillor has, or could reasonably be taken to have, a conflict of interest in a matter to be discussed at a local government meeting, the LGA's key requirement is merely a broad obligation to deal with the conflict in "a transparent and accountable way".⁶ The councillor is required to "inform the meeting of" the councillor's relevant interests, and how they intend to deal with the conflict, but dealing with the conflict is otherwise left to the councillor's individual discretion⁷.

The LGA also expressly allows a councillor with a conflict of interest to participate in a meeting, including by voting, if their attendance is necessary to form quorum.⁸ This has proved particularly problematic in circumstances where multiple councillors are affected by the same conflict. An example of this would be if multiple councillors campaigned as a group, and received a campaign contribution from a person whose interests then arose at a local government meeting. In such circumstances, if necessary to make quorum, the group of councillors could vote on the matter despite the potential conflict, potentially even constituting a majority of votes.

Given these weaknesses in the current framework, it is perhaps unsurprising that the CCC concluded that the "key problem underlying the failure of some councillors" to appropriately manage conflicts of interest is that the LGA provides a broad discretion for managing conflicts, but little guidance as to the exercise of that discretion.⁹

WHAT REFORMS DOES THE BILL PROPOSE?

In media and political commentary around councillors conflicts, it is often suggested that councillors affected by conflict issues should simply be prohibited from any involvement in decision-making relating to the conflict.

While this may have some initial appeal, a blanket prohibition would be an overly simplistic response. As the CCC has recognised,¹⁰ such an approach could undermine the responsibility of councillors to act as political representatives by participating in local government decision-making.

This highlights the tension in providing a legal framework that maintains the integrity of local government decision-making, while also allowing councillors to continue in their roles as elected representatives.

The CCC's recommendations, and the Bill, seek to overcome this tension through a balanced approach – not imposing a blanket prohibition on involvement in decision-making, but still providing for a more rigorous framework.

5 KEY CHANGES PROPOSED BY THE BILL

Outlined below are 5 key elements of the Bill's proposed amendments to the conflicts regime.

1. More detailed disclosure. The Bill would expand the LGA's disclosure obligations by requiring more detailed disclosure about material personal interests and other conflicts of interest. For a material personal interest, this would include details about the nature of the benefit or loss and, where the interest relates to a person other than the councillor, the councillor's relationship to the person.¹¹ For other conflicts of interest (i.e. other than material personal interests), the disclosure would need to include particulars about the nature of the interest and, if the conflict relates to a gift from or relationship with another person, the name of the person and details about the gift or relationship.¹²
2. Consideration of conflicts by other councillors. The Bill would remove the LGA's broad discretion for councillors to decide how to manage their own conflicts of interest. Instead, the Bill proposes a new process whereby if an affected councillor decides not to leave a meeting after disclosing a conflict of interest, the other councillors would need to decide whether the councillor must leave, and not participate in, the meeting.¹³
3. Delegation in cases of majority conflicts. As noted above, the LGA allows councillors to participate in decision-making, despite a conflict of interest, where necessary for quorum, even if a majority of councillors are affected by the conflict. The Bill would address this by requiring that, if a majority of councillors are affected by a conflict (or a material personal interest), the decision must be delegated to the local government's chief executive officer.¹⁴
4. Obligations to report on other councillors. In its Operation Belcarra report, the CCC identified that public confidence is undermined where one councillor remains silent about another's conflict of interest.¹⁵ To address this, the Bill would require a councillor to inform the chair of a meeting if they suspect, on reasonable grounds, that another councillor has an undisclosed material personal interest or conflict of interest.¹⁶ In turn, the Bill would make it an offence for the conflicted councillor to take any retaliatory action against the other councillor.¹⁷
5. Prohibition on improper influencing. The Bill would also introduce new offences prohibiting a councillor who has a material personal interest or conflict of interest in a matter from influencing (or attempting to influence):
6. • other councillors at local government meetings (including of committees); and
   • local government employees or contractors authorised to decide or deal with the matter.¹⁸

LOOKING FORWARD

If enacted, the changes proposed in the Bill would strengthen Queensland's framework for managing local government councillor conflicts of interest.

While this reform is welcome, Queensland's local governments will need to ensure that their councillors understand their new obligations and responsibilities, and this may require clarification of some aspects of the Bill.

The proposed new influencing offences are likely to prove particularly challenging, as the Bill does not define 'influence', and there may be disagreement as to what constitutes influencing or attempting to influence a councillor or employee/contractor. If interpreted too broadly, or approached in an overly-cautious way, there is a risk that the offences may have an unintended 'chilling effect' that causes councillors to be less active in their roles as elected representatives.

On the other hand, the anti-influencing offence relating to other councillors may be too narrow in some respects. The offence for local government employees and contractors applies broadly where the employee or contractor "is authorised to decide or otherwise deal with the matter".¹⁹ In contrast, the offence relating to other councillors only applies to influencing "at a meeting of the local government or any of its committees".²⁰ This means that it would not apply in many other circumstances where one councillor may seek to influence others.

Accordingly, while the Bill's more transparent and clearer regime would generally be a positive outcome, some clarification may be necessary. Local governments will need to carefully consider how they go about ensuring that their councillors understand, and are able to comply with, the new requirements.

Footnotes

¹ CCC, "Operation Belcarra: A Blueprint for integrity and addressing corruption risk in local government", October 2017, available at http://www.ccc.qld.gov.au/corruption/operation-belcarra-public-hearing/report/operation-belcarra-a-blueprint-for-integrity-and-addressing-corruption-risk-in-local-government.pdf (Belcarra Report), pages 81-2.

² Belcarra Report, page 82.

³ LGA, section 172(2).

⁴ LGA, section 172(5).

⁵ LGA, section 173(2).

⁶ LGA, section 173(4).

⁷ LGA, section 173(5).

⁸ LGA, sections 173(6) and (7).

⁹ Belcarra Report, pages 82-3.

¹⁰ Belcarra Report, page 83.

¹¹ Bill, clause 24 (section 175C(2)).

¹² Bill, clause 24 (section 175E(2)).

¹³ Bill, clause 24 (sections 175E(3) and (4).

¹⁴ Bill, clause 24 (sections 175C(3) and 175E(6))

¹⁵ Belcarra Report, page 84.

¹⁶ Bill, clause 24 (section 175G(2)).

¹⁷ Bill, clause 24 (section 175H).

¹⁸ Bill, clause 24 (sections 175I(1) and (2)).

¹⁹ Bill, clause 24 (section 175I(2)).

²⁰ Bill, clause 24 (section 175I(1)).

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