Under the Local Government Act 1989, councillors must register their interests, and disclose and declare any conflicts of interest.
Interests can be direct, indirect or personal.
Councillors are expected to discuss and vote on all matters unless they've declared a conflict of interest.
Register of interests
Details of all registrable interests need to be given to the chief executive officer (CEO). This must occur within 30 days of the election or within seven days of making the oath of office of a councillor, whichever date is later.
Each year after being elected, councillors must update and resubmit their registrable interests between 30 June and 9 August, and 31 December and 9 February.
If registrable interests aren't submitted, councillors will be penalised 60 penalty units, which is about $9,100.
Conflict of interest
A conflict of interest occurs when a councillor has a direct, indirect or personal interest that's in conflict with his or her duty as a councillor. A conflict will prevent that councillor debating and voting on the matter.
Councillors are responsible for determining if they have a conflict of interest. The CEO, governance officer, MAV and Local Government Victoria can offer advice as to whether there is a conflict.
There are some exceptions to conflicts of interest, refer to section 79C of the Local Government Act.
Attending council meetings
If a councillor with a conflict of interest attends a council meeting, he or she must disclose and describe the interest, including whether it's a direct, indirect or personal type.
Alternatively, the councillor can describe the conflict – including the type – to the CEO in writing before the meeting. The councillor then only needs to disclose the type of interest in the council meeting immediately before the matter's considered. He or she must leave the council chamber before a discussion and vote on the matter is held.
The CEO must record in the meeting minutes any conflicts of interest, including the type and description if the councillor didn't inform the CEO in writing.
If the conflict was disclosed to the CEO in writing, he or she must keep it in a secure place for three years after the councillor stops holding office. The disclosure must be destroyed after these three years.
Failure to disclose
Councillors who don't disclose a conflict of interest are guilty of an offence and may have to pay a fine of up to 120 penalty units, which is the equivalent to $18,200.
The Local Government Act distinguishes between direct and indirect interests. It is wholly the responsibility of the individual councillor to decide if he or she has an interest.
Direct conflict of interest
If a councillor's financial benefits, obligations and circumstances would directly change for better or worse as the result of a matter being decided in a particular way, the councillor will have a direct conflict of interest.
This also includes instances where the councillor, or his or her family, has a controlling interest in a company or other entity with a direct interest in the matter before council.
Indirect conflict of interest
Indirect conflicts of interests can happen when a matter comes before council for a number of reasons.
A close association exists when a councillor's family member, relative or household member has a direct or indirect interest in a matter.
Indirect financial interest
If a councillor is likely to gain or lose financially as a result of a financial gain or loss to someone else with a direct or indirect interest in a matter, then the councillor has an indirect financial interest.
Conflicting duties exists if a councillor is a:
- manager or member of a company or company's governing body that has a direct interest in a matter
- partner, consultant, contractor, agent or employee of a person, company or body with a direct interest in a matter
- trustee for someone with a direct interest in a matter.
If a councillor receives a gift or gifts worth $500 or more from people who have benefited from a decision the councillor supported and voted on during the last five years, then an indirect conflict of interest exists.
If a councillor receives reasonable hospitality at an event or function attended in an official capacity, then this isn't considered an applicable gift.
Gifts, other than election campaign donations, given to the councillor more than 12 months before he or she became a councillor also aren't considered as applicable gifts.
If a councillor initiates, or is a party to, civil proceedings related to a matter that comes before council, he or she will have a conflict of interest as an interested party.
An indirect interest can also occur when the residential amenity of a councillor may be altered if a matter is decided in a particular way.
Personal conflict of interest
A councillor can have a personal conflict of interest that isn't direct or indirect. When this happens, the councillor can ask to be excused from voting on the matter.
In these instances, the councillor must ask to be excused by the council before the matter is considered at the meeting. He or she must give reasons why he or she should be excused.
Council can consent and mustn't unreasonably withhold its consent. If consent is given, the personal interest is treated in the same way as a conflict of interest.