Lei Parker - 3 December 2019

Lei Parker presented to Council regarding Pecuniary and Non-pecuniary conflicts of interest at the Public Access Session on 3 December 2019.

Presentation by Lei Parker: Public Access December 3rd, 2019

On declaring Conflicts of Interest.

Councillors,

In your role as councillors the Local Government Act makes it clear that councillors are individually accountable to the local community for the performance of the council.

Under the Local Government Act 1993, councillors are obliged to take an oath or affirmation of office. In doing so, councillors are required to swear or affirm that they will undertake the duties of the office of councillor in the best interests of the local community and the council and that they will faithfully and impartially carry out the functions to the best of their abilities.

Councillors are the representatives of the community. Therefore, they are accountable to the community.

Ultimately, councillors are accountable to the community every four years on election day. However, at all times, council decision making should be transparent.

Councils must regularly provide information to the public, which demonstrates the council is being administered in accordance with the Local Government Act 1993 and that each councillor is acting with integrity.

The role of a councillor is a public one. Local communities rightly expect the highest standards of conduct of those they elect to hold office in a council. Failure to comply with these standards can undermine community confidence in individual councils and the local

government sector as a whole. It also erodes the trust the community confers on their elected representatives.

For this reason, councillors—like other council officials such as staff and delegates of councils— are obliged to comply with prescribed ethical and behavioural standards in the performance of their role.

These standards are prescribed under the Model Code of Conduct for Local Councils in NSW (Model Code)

Councillors may face disciplinary action by the Office of Local Government or the NSW Civil and Administrative Tribunal for serious or repeated breaches of these standards under the misconduct provisions of the Local Government Act 1993.

Key questions that councillors should ask themselves to ensure that their decisions are ethical and sound are:

• » Is the decision or conduct lawful?
• » Is the decision or conduct consistent with council’s policy and with council’s objectives and the Model Code of Conduct?
• » What will the outcome be for the councillor, work colleagues, the council, persons with whom they are associated and any other parties?
• » Do these outcomes raise a conflict of interest or lead to private gain or loss at public expense?
• » Can the decision or conduct be justified in terms of the public interest and would it withstand public scrutiny?

An example might be a conflict of interest exists where a reasonable and informed person would perceive that a councillor could be influenced by a private interest when carrying out their public duty.

Pecuniary conflicts of interest arise where councillors, or certain persons or entities that are associated with a councillor, are reasonably likely to make or lose money because of a decision the council might make. In such a case the Act requires the councillor to declare the

interest and withdraw from the meeting while the matter is being debated and voted on.

To ensure transparency and accountability Councillors need to submit an annual written return of interests to the council including information on real property (meaning land and anything attached to it, including buildings), gifts, interests and positions in corporations, sources of income, and debts.

These may give rise to a pecuniary interest at a meeting and are made publicly available to make sure councillors are seen to be acting openly and honestly in the decisions they make.

Non-pecuniary conflicts of interest commonly arise out of family or personal relationships, through an association with a councillor, or someone close to them.

Councillors, as you recognise, each and every word of the above is directly quoted from your Councillors Handbook.

On your Council website under Ethical decision making and conflicts of interest it offers:

The test for conflict of interest:

• Is it likely I could be influenced by personal interest in carrying out my public duty?
• Would a fair and reasonable person believe I could be so influenced?
• Conflict of interest is closely tied to the layperson's definition of "corruption" – using public office for private gain.
• Important to consider public perceptions of whether you have a conflict of interest.

ICAC’s detailed guidance in relation to conflicts of interest is as follows:

A conflict of interest exists when a reasonable person might perceive that a public official’s personal interest(s) could be favoured over their public duties.

There are four elements to consider when determining whether a conflict of interest exists.

• Does the official have a personal interest?
• Does the official have a public duty?
• Is there a connection between the personal interest and the public duty?
• Could a reasonable person perceive that the personal interest might be favoured?

Conflicts of interest do not, in themselves, usually constitute corrupt conduct. Corrupt conduct can, however, arise when a conflict of interest is concealed, understated, mismanaged or abused.

Experience also shows that many, if not most, forms of corrupt conduct involve a conflict of interest. Examples of conduct that could be corrupt include:

• concealing or failing to disclose a conflict of interest
• making false or understated declarations about a conflict of interest
• favouring a personal interest over public duty
• improperly influencing others to favour a personal interest

Councillors, fortunately under the old Local Government Act and the more recently adopted Model Code of Conduct there is a requirement that YOU MUST submit an annual written return of interests to the council including information on real property (meaning land and anything attached to it, including buildings), gifts, interests and positions in corporations, sources of income, and debts.

These returns are known as Schedule 3. You are all familiar with them as you would now have completed one.

What disclosures MUST be made by a councillor?

Under the Local Government Act 1993 that was in force during the time of the Draft LEP section 444 states that a councillor:

• (a) must prepare and submit written returns of interests in accordance with section 449
• (b) MUST disclose pecuniary interests in accordance with section 451.

Section 451. states that a councillor or a member of a council committee who has a pecuniary interest in any matter with which the council is concerned and who is, present at a meeting of the council or committee at which the matter is being considered MUST disclose the interest to the meeting as soon as practicable.

The councillor or member must not take part in the consideration or discussion of the matter and the councillor or member must not vote on any question relating to the matter.

However, under Section 448 of the Local Government Act, the following interests do not have to be disclosed:

an interest in a proposal relating to the making, amending, altering or repeal of an environmental planning instrument, OTHER THAN an instrument that effects a change of the permissible uses of:

• (a) land in which the person has a pecuniary interest; or
• (b) land adjoining, or adjacent to, land referred to in paragraph (a);or
• (c) other land in proximity to land referred to in paragraph (a), if the change in uses would affect the value of the land referred to in paragraph (a).

An example of the above need for declaration might arise in situation such as the recent debate and voting on the Draft Eurobodalla Rural Lands Planning Proposal (RLPP) amendments to the Eurobodalla Local Environment Plan

Remembering that, according to Section 448, a councillor would not need to disclose an interest OTHER THAN when the instrument effects a change of the permissible uses of:

• (a) land in which the Councillor has a pecuniary interest; if the change in uses would affect the value of the land.

IF the Councillor DOES have a pecuniary interest they MUST not take part in the consideration or discussion of the matter and the councillor or member must not vote on any question relating to the matter.

To take part and not declare a pecuniary interest WOULD be in breach of the Local Government Act.

As Councillors are fully aware, in regards to the Draft Eurobodalla Rural Lands Planning Proposal (RLPP) amendments to the Eurobodalla Local Environment Plan, there was a possibility of the adoption by councillors of the OEH recommendation to remove grazing as exempt development from E2 zoned land.

The OEH recommendation was: Allowing ‘grazing of livestock’ as exempt development in the E2 Environmental Conservation zone is not the Department’s preferred option.

The Department considers the proposal SHOULD be revised to permit extensive agriculture with consent in the E2 Environmental Conservation zone.

This would provide an opportunity for new agricultural activities (including grazing of livestock) that may be consistent with the E2 zone objectives to be considered by Council through a development application process.

Councillors, as you can see a NSW State Agency recommended, and continues to recommend an amendment, that alters or repeals the conditions of use on E2 land.

Might I remind you now of the ICAC advice that there are four elements to consider when determining whether a conflict of interest exists.

Does the official have a personal interest?

(In this EXAMPLE, one might ask “does any Councillor have E2 affected land where cattle could be grazed?”)

Does the official have a public duty?

Is there a connection between the personal interest and the public duty?

Could a reasonable person perceive that the personal interest might be favoured?

Is there the opportunity for a person to improperly influence others to favour a personal interest

In the above hypothetical EXAMPLE, if a councillor owned land that was affected by the OEH and DPI recommendations and if that councillor was aware that the adoption of those recommendations WOULD affect the value of the land or constrain it with a

requirement for consent then you WOULD expect that councillor to publicly declare a pecuniary conflict of interest as they MUST disclose the interest to the meeting as soon as practicable.

If that Councillor was also aware that family members, for example, also owned adjacent E2 land then you WOULD also expect that they would need to PUBLICLY declare a non-pecuniary conflict of interest as well.

The issue of Cattle Grazing on E2 land caused considerable conflict around the draft Eurobodalla Rural Lands Planning Proposal (RLPP) amendments to the Eurobodalla Local Environment Plan with the Department of Primary Industry, Nature Coast Alliance and local oyster farmers all raising their concerns to NSW Planning Department saying that uncontrolled grazing of cattle on E2 land without consent had, and will continue to have, a significant environmental impact on sensitive riparian habitat and water quality in adjoining waterways which will put under threat the local oyster industry.

Also, by association with cattle grazing on E2, was the issue of existing or continuing use rights.

Should existing or continuing use rights be claimed to legitimize current grazing on these E2 lands, then the onus lies with the landowners to provide evidence for the history and/or currency of this use on these lands and to demonstrate that they are continuing to undertake this use lawfully, since grazing was prohibited on E2 lands in the previous LEP.

The DPI were also quite insistent in their objection to the addition of grazing of livestock as exempt development in the E2 zone saying “This is likely to lead to a degradation of the biodiversity values of these areas.”

These collective informed, expert objections and recommendations were dismissed by councillors, choosing instead to endorse the recommendations of their own Director of Planning.

For the many Council meetings where the Draft Eurobodalla Rural Lands Planning Proposal (RLPP) was discussed it WOULD be expected that any Councillor with E2 land that would be affected by the proposed change SHOULD have declared a pecuniary conflict of interest.

NO pecuniary or non-pecuniary conflict of interests have been declared by any councillor during the sessions around the Draft LEP nor during the committee meetings of the Rural Lands Advisory committee.

Another public concern around the Eurobodalla LEP that could also raise concern regarding any failure to declare a pecuniary interest MIGHT be if a councillor, by hypothetical EXAMPLE, owned rural land (bordering on an urban area) that would benefit from reduced minimum lot sizes and the many additional permissible uses under the amended LEP.

As we are now aware it was at the Minister’s discretion, under advice from the RFS as to whether a rural parcel of land would be granted a reduction in minimum lot size.

There is little doubt that the community WOULD expect a councillor who owned such a parcel of land, that might allow further subdivision and considerable additional uses under the amended LEP, WOULD declare a pecuniary interest knowing the financial windfall that would come from such a determination, especially if there was a Development Application sitting in the wings at the ready, waiting for the final signoff.

Surely such an example WOULD require a declaration of Pecuniary Interest and, if the Development Application was to be submitted to Council with another family member, for example, it is expected that this WOULD require a declaration of non-pecuniary interest, if such a situation was to arise.

Without any such declarations it would be possible for a councillor, in a position of influence, to participate in closed door briefings and discussions and possibly ‘improperly’ persuade fellow councillors one way or another without them being aware that the outcomes of their decision may well favour that councillor.

Without any such declarations it WOULD be contrary to Section 448. Where a Councillor, with a pecuniary interest MUST not take part in the consideration or discussion of the matter and the councillor or member must not vote on any question relating to the matter.

I remind Councillors that, by the Examples above, during any LEP amendment process it would be beyond the scope of their duties for agencies such as the OEH, the DPI and the RFS to determine the ownership of properties as they were focused on the land alone and not

the ownership. Meanwhile the public remain reliant on the requirements of the Local Government Act and ICAC to see all matters of pecuniary interests declared.

I thank the councillors for their time to day to allow me to refresh them on their duties, their oaths and the continued need for ethical and legal compliance in carrying out their roles as community representatives while selflessly serving the ratepayers and residents of Eurobodalla.