LG Reform Series — Proposed changes that affect the CEO — desirable or not?

23 July  2020

Unilateral power given to a Chief Executive Officer to make decisions that affect Council Members means we will be entering a new era for CEO responsibility if even some of the proposed changes under the Statutes Amendment (Local Government Review) Bill 2020 (the Bill) become law.

Other proposed changes will see CEO remuneration determined by the Remuneration Tribunal and annual performance reviews mandated.

The main areas of proposed change that impact the CEO are:

1.   the suspension or disqualification of Council Members;

2.  Council Member work, health and safety breaches; and

3.  recruitment, remuneration, performance review and termination.

1.   The suspension or disqualification of Council Members

The proposal is that a CEO will have the power to take action regarding a Council Member’s position of public office in accordance with new Schedule 9. This will arise in three situations.

1.1   It remains the CEO’s responsibility to write to a Council Member to notify that there has been a failure to submit their return within the time allowed and to advise of the consequences if it is not submitted.

If a Council Member does not return their register of interest within the prescribed time period (being one month after the six-week period for a primary return, and one month after the 60 days for an ordinary return) the Member will be automatically suspended from office (section 68(1a)).

If a suspended Council Member submits their return and the CEO is satisfied that it complies with the legislative requirements, there are mandatory publication requirements. However, if a Council Member does not submit their return and remains suspended for more than the prescribed period (yet to be defined), the CEO may apply to the South Australian Civil and Administrative Tribunal (SACAT) for an order disqualifying the member from office. Whilst this is a discretion for the CEO, it is a step that warrants serious consideration and one that the CEO may wish to consult upon, at least with the principal member. It places a CEO in the invidious position of making a call on the continued tenure of the Member and could be detrimental to the wider relationship that a CEO must strive to maintain with the elected body.

1.2   If, without good reason, a Council Member does not comply with the prescribed mandatory requirements for training and development, the CEO is required (i.e. a statutory obligation) to suspend the Member from office (section 80A(2b)) and to give public notice of that suspension (80A(2c)). If the CEO is, subsequently, satisfied that the mandatory requirements have been met by the Member, the CEO must revoke the suspension and give public notice of the revocation.

However, if the requirements remain outstanding for a continuous period that is more than the prescribed period (yet to be defined), the CEO may apply to SACAT for an order disqualifying the member from office. Currently, the ‘LGA Training Standards for Council Members’, set out the time frame in which the training must be completed, being 12 months.

1.3   If a Council Member is subject to a ‘relevant’ interim intervention order under section 3(1) of the Intervention Orders (Prevention of Abuse) Act 2009 the CEO may suspend the member from office (section 80B(1)). It is to be noted that ‘relevant’ in this context means an intervention order that protects another Member or an employee of the Council. A suspension is revoked if an Intervention Order is revoked or if the CEO considers it appropriate to do so.

This provision must be considered to be a rather extreme and reactive response to the unique action that existed involving former Cr Lance Bagster from the City of Burnside. Given this Burnside matter is, to our understanding, the only one that has existed in SA local government history, the merits and need for this provision must be seriously questioned.

Whether it is a mandatory requirement upon or a discretion of the CEO, these proposed changes will confuse the traditional separation of roles and powers by causing the traditional role of the CEO, as the leader of administration, to be eroded given the direct impact upon individual Council Members and the risks to the broader relationship considerations.

2.   Council Member work, health and safety breaches

New powers to protect the health and safety of both Council Members and employees are proposed under a new section 75G. The CEO is one person that is armed with responsibility as the responsible person, (note that these powers, depending upon the circumstances, also extend to the principal member or the deputy or another Member) to give directions to a Council Member for the purpose of ensuring that acts or omissions of that Member do not adversely affect the health and safety of any Council Member or employee of the council.

Again, however, it places a responsibility upon the CEO to issue a (reasonable) direction or directions to a Council Member, where there is risk to health and safety arising from the actions, real or threatened of that Council Member.

Where the health and safety of the CEO may be adversely affected, the responsible person will be the principal member of the Council, unless the act or omission are those of the principal member, in which case, it will be the deputy or another member chosen by the council.

3.   Recruitment, remuneration, performance review and termination

Whilst it might seem a minor change, Councils will not be required to advertise a vacancy in the office of the CEO in a newspaper circulating throughout the State. Instead, this will occur on a website determined by the council (section 98(3)).  One would think that this will result in the advertisement coming to the attention of a much smaller audience and, hence, a reduced candidate pool!

It is also a proposal that ‘either one or both’ of the following will apply to a recruitment process (section 98(4a)):

• the Council appoints at least 1 person who is not a member or employee of the Council to the selection panel; and/or
• before making an appointment, the Council obtains and considers independent advice on the assessment of applications and recommendations on the appointment

As this requirement is in both the concurrent and the alternative, it is unclear how having someone appointed to the selection panel who is not a Member or employee of the Council could mean that there is not then any need to obtain independent advice, unless, of course, the independent person appointed is skilled in human resources.

The Remuneration Tribunal will be tasked with determining a minimum and maximum scale of remuneration for CEOs. Whilst we are yet to see the regulations that will guide the prescribed matters to be considered, we know that geographical location will be a determining factor (section 99A(4)).  Insufficient detail is currently available in relation to the operation of this proposal in terms of whether the Remuneration Tribunal will be addressing just base salary or the entire salary package.

Further, under the proposed amendments, to the extent that it is not already occurring, it will be a requirement that the CEO be subject to an annual performance review and, otherwise, before a contract renewal (section 102A). Councils will be required to obtain and consider the advice of a qualified independent person with respect to the annual performance review, a person who is not a Member or an employee of the Council and to have appropriate qualifications or experience in human resource management. Similarly, if termination of the CEO (section 97(3a)) is being considered, the Council is required to have regard to advice from a qualified independent person, but such person includes a legal practitioner for these purposes.

There are also some proposed minor changes to the role of the CEO under section 99 and a change whereby the CEO can be consulted to provide comment to the relevant authority under the Planning, Development and Infrastructure Act 2016 in relation to an authorisation issued under section 221 of the Local Government Act 1999.

Whilst the minor changes are not revolutionary, there are some important and much needed changes, particularly in relation to health and safety protections. However, it will be the policing of Council Member conduct that, in our view, is likely to cause the greatest angst for CEO’s. What can already sometimes be a tenuous position, may be further impacted, as the CEO will be able to direct or even suspend members; powers that arguably should be reserved for the principal member or the elected body to exercise.

For further information contact Natasha Jones on 08 8113 7102 or at njones@kelledyjones.com.au.