Councillor Liu’s Questions on Notice, Kangaroo Island Council, 2011-05-04

Re: Elected Member Legal Expenses

Following the public announcement by Mayor Bates (The Islander 6/4/2011) on the engagement of an external investigator and legal advisors to assist in the investigations on Code of Conduct breaches by Elected Members, I have been inundated with enquiries in relation to the costs incurred by the Council and the reasons for wasting ratepayers resources on such non-productive activities.

At the April meeting, Council was verbally informed that the expenditure incurred to February 2011 was in the order of $25,000 with a sizable account arising from the recent code of conduct enquiry which is yet to come (Item 9.1.5 of the meeting agenda). Given the alarming increase in Council’s legal expenditure on Elected Members and concerns raised by the community, I seek response to the following questions:

1. What is the current budget available for the ‘Elected Member Legal Expenses’ and has the budget amount been revised due to over-expenditure reported on Item 9.1.5 of April agenda?

2. What has Council spent on the ‘Elected Member Legal Expenses’ account to date? (Please itemize each expenditure including a brief statement on the service received, name of service provider, the cost associated with the services and by whom the service was sought or authorized).

3. What was the expenditure incurred by Council from the recent code of conduct investigations by an external investigator as announced by the Mayor on the front page of The Islander (6/4/2011)?

4. What was the cost of additional services of two lawyers, Lincoln Smith & George Karis from Norman Waterhouse to assist in the investigations and their attendance at the special Council meeting held on 8/3/2011 (documented in Minutes 3.1 of the meeting)?

5. What is the estimated amount of over-expenditure on this account for the 30 of June 2011 seeing that the current code of conduct enquiry continues?

6. In light of Mayor Bates’ public statement on The Islander (6/4/2011), when will the results of the code of conduct investigations be released to the public by the Council as expected by the community?

7. How will Council find extra money to meet the over-expenditure?

8. What services to the community will suffer as a result of over-expenditure on the ‘Elected Member Legal Expenses’ account? Please list the services which may be affected?

9. Who is responsible for the monitoring of the spending on ‘Elected Member Legal Expenses’ account and why was the alarming over-expenditure situation on this account not brought to the attention of the Council earlier?

10. What is Council’s policy and practice on administration, management and control of expenditure on ‘Elected Member Legal Expenses’ account?

11. Who has the delegated authority under Council’s policy (if any) to spend funds set aside for this account?

12. What is Council’s policy for compensating or reimbursing expenses incurred by Elected Members who are forced to seek their own legal advice to defend allegations against them and where later are found to be wrongly accused or have no case to answer?

Answers from Council:

Answer 1
The table below represents the current picture of the Elected Member Legal Expenses Budget.

Description: legal expenses ………………. Cost incl. GST …….. Budget
70075 – Elected Members Operating Expenses ….. $ 29,334.97 ………. $ 7,500.00
… Legal Invoice Received but Yet to ………. $ 13,228.30
…… be Processed within Accounts

The outstanding invoice is yet to be processed within the accounting system as there are some outstanding queries of some charges included in the invoice.
As indicated in the question, the extent of the budget overrun was presented to the Finance Committee meeting of the 25th of March 2011, under Item 9.1.5.
The actual size of the budget allocation has not been altered as yet, as any change to the Annual Budget 2011/2012 requires a Council resolution, with preferably, the Finance Committee making such a recommendation to General Council.
In terms of the budget process for the 2011/2012 financial year, a larger figure will be allocated to Elected Member Legal Expenses.

Answer 2
Response provided under in camera meeting and not available to the public.

Answer 3
The cost incurred by Council in the independent investigation referred to in the Islander Newspaper “Council to probe Code Breaches”, Thursday 7th of April, was $10,732.87

Answer 4
The additional services of two lawyers are contained within the unprocessed invoice detailed in the table above.

Answer 5
As presented in the table above under Question 1, the current cost to Elected Member Legal Expenses is $42,563.27.
The total cost for the full financial year will depend upon whether any further legal costs are incurred, additionally to the above, between now and the 30th of June 2011.

Answer 6
The decision to release code of conduct investigations is made by Council, taking into account any confidentially issues relating to the code of conduct investigation itself.

Answer 7
Council will not find ‘extra money’ to meet this budget overrun on Elected Member Legal Expenses.
A Council resolution will be required to reduce other parts of the current budget to cover this overrun above. This is similar to the recent request relating to unsealed road maintenance.
An agenda item will be created for the May 30th Finance Committee meeting to consider what options are available.

Answer 8
As mentioned in Question 7 above, Council will not find ‘extra money’ to meet this budget overrun on Elected Member Legal Expenses.
A Council resolution will be required to reduce other parts of the current budget to cover this overrun above. This is similar to the recent request relating to unsealed road maintenance.
An agenda item will be created for the May 30th Finance Committee meeting to consider what options are available.

Answer 9
In terms of the management of the Elected Member Legal Expenses Budget, the Local Government Act 1999, Section 123 (13), requires that a Council must, and may at any time, reconsider its annual business plan or its budget during the course of a financial year and, if necessary or appropriate, make any revisions.
Under the Local Government (Financial Management) Regulations 1999, Section 7 – Reconsideration of Budgets, a Council must:
1. reconsider its budget at least three times, at intervals of not less than three months, between 30 September and 31 May (both dates inclusive) in the relevant financial year.
2. The first reconsideration of a budget under subregulation (1) in a particular financial year must include a review which takes account of the financial outcomes of the council, council subsidiary or regional subsidiary (as the case may be) for the previous financial year.
3. A reconsideration of a budget under this regulation must examine and, if necessary, revise, the relevant entity’s budgeted income statement, balance sheet, statement of changes in equity and statement of cash flows.
The Finance Committee is Council’s body tasked with reviewing the performance of the Council budget.
The following is an extract from the Finance Committee’s Terms of reference.
Role
1. To ensure compliance with legislative requirements.
2. To consider reports on Council’s performance against budget.
3. To consider reports on the immediate and long term financial plans of Council.
4. To consider Council’s priorities in line with the Strategic and other plans.

Terms of Reference
To assist Council’s senior staff review the budget including, but not limited to budget carry-overs, infrastructure needs, budget appropriations recommended by other Committees such as CWMS and asset replacement and construction.

Answer 10
Council’s policy and practice on administration, management and control on the Elected Members Legal Expenses is to encourage Elected Members to adhere to Council’s Elected Member Code of Conduct.
It is a legislative requirement under s. 63 of the Local Government Act 1999. A Code of Conduct Policy is not a “nice to have”.
Where complaints are made against Elected Members under the Elected Member Code of Conduct policy, Council is obligated to conduct investigations into any written complaints, to ensure that natural justice and procedural fairness is observed. This process may incur legal expenses to ensure that natural justice and procedural fairness is carried out in practice.

Answer 11
The Chief Executive Officer and the Presiding Member of Council are the normal roles conferred with the authority to request legal advice, whether related to specific Elected Member issues or other wise.
Under 58 (1) (b) of the Local Government Act 1999, the Presiding Member of Council may be requested to provide advice to the Chief Executive Officer between council meetings on the implementation of a decision of the council, which may involve legal consultation.
The Chief Executive Officer, under s. 99 of the Local Government Act 1999, is authorised with the following functions:
-to ensure that the policies and lawful decisions of the council are implemented in a timely and efficient manner (s. 99(1)(a));
-to provide advice and reports to the council on the exercise and performance of its powers and functions under this or any other Act (s. 99(1)(c));
Under Section 101(1) of the Local Government Act 1999, the Chief Executive Officer may delegate (or subdelegate) a power or function vested or conferred in or on the Chief Executive Officer to another Staff Member under the Act.

Answer 12
There is no current policy allowing for the reimbursement of personal legal expenses incurred by Elected Members, other than for such situations to be considered by Council. Any decision over reimbursement would be at the discretion of Council to make, taking into account the specific circumstances of the case, as well as any budgetary implications.