The New Local Government Act being rushed through the Victorian Parliament perpetrates an expensive fraud on ratepayers and taxpayers by denying any powers to Council Audit Committees while dictating paid consultants must be hired to sit on them.
Furthermore, all the clauses in the Bill relating to Council Plans, Workforce Plans, Financial Plans, Budgets, Financial Year Statements and Financial Management contain no references to Councils’ Audit Committee and vice versa.
So what the hell is an Audit Committee? And what does it do? This page has the clause by clause interpretation but here's the paraphrasing and an example from my local Council.
The Audit Committee is an illusory inclusion to make ratepayers think that there’s a body of financial experts keeping an eye on Council spending.
It’s an illusion because that’s not what the Audit Committee does. In fact the Audit Committee has no power to do anything that ratepayers would consider useful.
It has no power to interrogate Council financial documents and query spending activity, over-costs, over-reliance on consultants or contractors. It has no power to challenge or change Council spending priorities. It has no power to make any assessments regarding ‘value for money’ for ratepayers, or research benchmark costs for services such as rubbish removal, insurance payments etc.
All it does is check Council policies and procedures against the Act. So, comparing Council paperwork with Government paperwork essentially.
Public servants get paid to sit on this Committee. And the majority of members have to be non-Council with expertise in Financial Risk Management and the public sector. (The Legislators should have put the little crying-laughing emoji face next to those clauses.)
And the Act also ensures the Audit Committee has to Audit itself.
And of course, audit committee meetings are closed to the public. Theoretically, this is because they’re dealing with ‘confidential’ information.
Here’s a few lines from the minutes of my local council audit committee meeting, to demonstrate how important their work is. (the full minutes are here.)
Audit Committee Chair Questions.
4.1 The chairperson asked the Chief Executive Officer and Internal Auditor if there are “any matters such as breaches of legislation or practices that need to be brought to the attention of the Committee?”
- Not any reported
- It was discussed that the questions from the Chairperson to the Chief Executive Officer be reworded for future agenda’s (sic) to meet the requirements of the Audit and Risk Committee Charter, particularly items 7.4.1 and 7.9.5
4.2 The Chairperson asked the Internal Auditors if the work of the Internal Auditor had been obstructed in anyway? (sic)
- Internal Auditors reported no obstruction experienced
7.1.1 Payroll Internal Audit Report 2019-2020.
7.1.2 INTERNAL AUDIT PROGRAM STATUS REPORT 2019-2020
-Internal auditors to provide additional information in the Status Report to include budget versus actual hours.
So the only tiny snippet of usefulness are the items referencing a payroll audit of budgeted vs actual hours of staff. What does this mean? Does Maribyrnong City Council have phantom staff? Or are there too few hours being paid for the number of staff actually on the payroll?
Given that staff costs comprise 37% per cent of all Council revenue, (or 56% of rate revenue alone) this could be a significant problem. Why are residents not allowed to know about it?
And all the rest is simply ‘report noted.’ Why do we need to pay four consultants to ‘note’ reports.
It all looks terribly busy and important, but in reality it costs a lot, to do not much, and certainly doesn’t do what ratepayers need to ensure Councils are honest and efficient.
MPs can no longer fob off voters by saying ‘there’s an audit committee.’
Ratepayers and voters know ‘audit committees’ are simply fake financial watchdogs that snooze in the sun while being well-fed and pampered with our money.
Legislation needs to introduce a new, effective audit role that includes residents and has powers to inspect financials and make changes.