Second Reading Debate

Debate resumed from 25 September 2024.

Dr AMANDA COHN (20:17): As The Greens spokesperson for local government, I indicate that The Greens will be supporting the Local Government Amendment (Pecuniary Interests) Bill 2024 on the proviso that the amendment that has been lodged and circulated by the mover is passed this evening. Local government, as the most important level of government, needs transparency and accountability standards so that communities can trust in their local council and be assured that decisions are being made in the best interests of local residents and not for vested interests. The Greens have concerns regarding the bill as initially drafted, which may have the unintended consequence of overriding the current provisions that exempt remote or insignificant interests unlikely to affect decision-making.

The bill, as likely amended, explicitly requires the Model Code of Conduct for Local Councils in NSW to include provisions for the disclosure of pecuniary interest in real overseas property. This issue was examined by the State Development Committee inquiry into allegations of impropriety against agents of the City of Canterbury Bankstown Council that found failures to disclose some financial interests. The inquiry recommended a review of guidelines for expenses and facilities for mayors and councillors to ensure that they align with community expectations, and an update of the model code of conduct to include the obligation to disclose overseas and interstate property interests. The Government accepted the inquiry's recommendations and tasked the Office of Local Government with reviewing and updating the relevant guidelines and model policies. In its response to the inquiry, the Government said:

The Office of Local Government will review and update the Guidelines for the payment of expenses and provision of facilities to Mayors and Councillors in New South Wales in consultation with the local government sector; and review and update the appropriate model policies governing conduct and interests declaration is to ensure that the obligation to disclose pecuniary interests extends to overseas property interests. Council officials are already required to disclose interstate property interests in their returns of interest.

The member introducing the bill has cited the Government's slow response in implementing this. Last month the Government updated the House that:

The Government is aware of the recommendations of the Parliamentary inquiry relating to the disclosure of overseas property interests and has included proposals to address the issue in the discussion paper on councillor conduct reforms, along with other changes to the Councillor Conduct Framework.

I understand that consultation is now open, and that it closes at the end of this week. The Greens support the review of the Councillor Conduct Framework that is currently underway, which intends to and should address a significant number of other issues, but that is no reason to oppose the simple change being proposed today from being implemented in the meantime. The passage of this bill would ensure that, regardless of the other outcomes of the review or its time frame, this additional disclosure will be required in the resulting model code. That is a helpful certainty, both for the community and for councillors, including the class of 2024 elected in September.

The bill does not address a number of additional issues that are worth considering. Many councils allow the addresses of properties owned by councillors to be redacted on the grounds of privacy. That is reasonable for a councillor's private residence, but it should not extend to investment properties. I note the good work of former City of Parramatta councillor Phil Bradley in drawing attention to this issue. I look forward to further discussion regarding the proposed reforms and consultation findings of the Councillor Conduct Framework discussion paper. I share Local Government NSW's cautious optimism that the reviewed framework can provide councils with clearer expectations, streamlined and safeguarded complaints handling, and fairer sanctions. That and so much more is needed for this important sector.

The Hon. AILEEN MacDONALD (20:21): I speak in support of the Local Government Amendment (Pecuniary Interests) Bill 2024. The bill aims to close loopholes surrounding pecuniary interests, be they local, within New South Wales, within Australia, or overseas. I speak with a level of authority on this matter as the former chair of the Standing Committee on State Development, which investigated specific allegations of impropriety against agents of the City of Canterbury Bankstown Council. The findings of the inquiry were clear and troubling. We discovered that some councillors were able to exploit gaps in the current system and were failing to disclose significant financial interests that could easily influence their decisions.

It is a no-brainer that local councillors, who are entrusted with decisions that shape our communities, should be required to fully disclose those interests, particularly those held interstate or overseas. Take the example of former Canterbury Bankstown mayor Khal Asfour, who failed to disclose property interests in Melbourne and the Philippines, citing the lack of a requirement to report overseas interests. He was also found to have used ratepayers' money to pay for Armani, Hugo Boss and Zegna suits, spa treatments while on a trip to Tokyo, and his Master of Business Administration degree. That is unacceptable.

As we found in the inquiry, that fell outside community expectations. In other words, it did not pass the pub test. Those kinds of omissions shake public confidence in local government and undermine the trust ratepayers place in their elected officials. In the chair's foreword in the committee report, I wrote:

Evidence to the inquiry also uncovered that property developers may be using shell companies to obfuscate their political donations to candidates for local government elections in order to sidestep the ban on political donations from property developers.

In plain English, it is shonky. The loopholes that allow such significant conflicts of interest to go undeclared must be closed—and this bill does exactly that. I support the bill because the proposed changes will ensure that all pecuniary interests, no matter where they are located, must be disclosed. This is not just a technical fix; this is about ensuring transparency and rebuilding integrity and trust in local government. We need to know that council decisions are being made in the public interest, rather than personal gain.

The inquiry found that the current Model Code of Conduct for local councils is insufficient. Surely, it is obvious that overseas interests are not somehow too remote to matter. Geography does not limit conflicts of interest. Clearly, the influence of property developers, financial interests and external pressures can and does reach across borders, and we need laws that reflect that it is just not on. By passing this bill, we ensure that councillors are held to the high standard of transparency and accountability the public rightly expects. The inclusion of all pecuniary interests, be they local or global, will prevent the kinds of ethical breaches we uncovered in the inquiry. I urge the House to support this bill to restore integrity and trust in the local government system.

The Hon. TANIA MIHAILUK (20:24): In reply: I thank the Hon. Tara Moriarty, the Hon. Natasha Maclaren-Jones, Dr Amanda Cohn and the Hon. Aileen MacDonald for their contributions to debate on the Local Government Amendment (Pecuniary Interests) Bill 2024. I will be moving an amendment that cleans up the bill. I acknowledge the Hon. Ron Hoenig's staff, who provided me with a briefing note of some of the Government's concerns with the bill. I appreciate that the Government is not opposed to the bill as such but has found some legal issues that may be a concern for the broader Model Code of Conduct issue we are trying to deal with here. I thank Dr Amanda Cohn and her office for their assistance in providing me with some advice on how to better present this bit of legislation. I thank the Coalition for its full support of the bill, particularly through the Hon. Natasha Maclaren-Jones, for supporting me in this and for its work in the inquiry.

The Hon. Aileen MacDonald was the chair of the Standing Committee on State Development inquiry into allegations of impropriety against agents of the City of Canterbury Bankstown Council. It started in 2022 and finalised its report in February 2023. I acknowledge the work that the Hon. Aileen MacDonald and the original standing committee did, because it was a difficult inquiry to undertake. It was clear that Councillor Khal Asfour, then the Mayor of Canterbury Bankstown, who came with two lawyers to the hearing, was reluctant to provide certain information to the standing committee.

His response about not declaring his properties in the Philippines and his property in Melbourne was concerning for the committee, which is why it recommended that the Government ensure that the Model Code of Conduct be amended to deal with this particular loophole. The Government came back in June and made clear that council officers are obliged already to declare in their returns any interstate properties. In this case, Councillor Asfour hid behind his self-managed superannuation fund, suggesting that the fund, rather than him, owned the property, even though he and his wife were the sole directors of the fund.

The Government's response to the report was in June 2023, and we are now in November 2024. We have been more than patient, and I have been waiting for a long time for the Government to come forward with its amendments. I appreciate that it has now come out with a consultation paper and is seeking suggestions or advice or consultation amongst the respective councils. But, in the meantime, a council election was held less than eight weeks ago. This particular inquiry showcased the type of abuse that can happen from councillors and councils when they are left to manage their own affairs. As the Hon. Aileen MacDonald quite rightly said, there were many expenses that really outraged the broader community. People in New South Wales often speak about what transpired at Canterbury-Bankstown council, but we have to take any opportunity send a message to all councillors and, indeed, all public officials on the need to declare their properties, to be transparent and to not argue that it is geographically such a long distance away.

I think that part of his argument was "What has an overseas property got to do with Canterbury-Bankstown council?" Looking more closely at how he got those properties in the Philippines, there are people in Bankstown associated with Councillor Khal Asfour who would have directed him to buy properties there or who certainly supported him in buying those properties. He did not find a couple of properties in the Philippines by accident. There are people I am aware of who are associated with development in Bankstown who also own properties in that particular complex and whose companies are involved in properties in the Philippines. So to me it is not a surprise that he did not want to declare it.

I foreshadow that I will move an amendment that should be agreeable. I do not want to make this hard for the Government. I do not blame the Minister or anyone in the department for what has transpired at Canterbury‑Bankstown council, but it is important that every loophole is closed. It is important, not just for the ratepayers in that particular council but across councils in general, that people can be confident that their councillors and chief officials are following the Model Code of Conduct and are declaring all of their properties so people can understand how and why they vote on matters the way they do.

I do not want to make life difficult if somebody has to vote on rates, for example. One issue the Government raised about voting on rates was whether every councillor has to declare a conflict because they own a property within their council and if they would therefore have to exclude themselves from a meeting. I had different advice on how my original bill would be interpreted, but I understand and appreciate the concerns that have been raised by some of my colleagues in this House. As a result of that, I foreshadow that I will move an amendment.

Nevertheless, it is a timely and important part of what we are trying to do in New South Wales, which is to really encourage that level of good governance. As someone who has been a councillor and a mayor, I say that there is more ability to have influence as a councillor and a mayor than as a member of Parliament. I appreciate that might be different for members of Cabinet, but for those of us who are members of Parliament, we are not going to be presiding over or voting on tenders. We do not preside over or vote on rezoning, for example. We do not make such significant decisions that can really make a difference. There are people who will have huge wins in a rezoning application, for example. There is such a huge difference in the level of influence a councillor has compared to that of a member of Parliament. For that reason, we need to be as strong and, to some extent, stronger with councillors and local government to remind them of their sense of duty and responsibility and how important it is to have a proper governance structure.

This Model Code of Conduct must be updated to reflect all of these properties. People would be surprised at how often councillors travel. They travel around the world. It will not surprise me to see a number of councillors across New South Wales councils making declarations once the bill is passed. It is important that ratepayers know what properties their councillors own and that they maybe do their own investigations into how councillors obtained those properties in the first place. I am not suggesting that there is any impropriety across our councils, but I can certainly say that the way this particular individual, Councillor Khal Asfour, obtained his property certainly warrants a closer look. I leave it at that.

The ASSISTANT PRESIDENT (The Hon. Peter Primrose): The question is that this bill be now read a second time.

Motion agreed to.

In Committee

The CHAIR (The Hon. Rod Roberts): There being no objection, the Committee will deal with the bill as a whole. I have one set of amendments, being Pauline Hanson's One Nation amendments Nos 1 and 2 on sheet c2024-188A.

The Hon. TANIA MIHAILUK (20:34): By leave: I move Pauline Hanson's One Nation amendments Nos 1 and 2 on sheet c2024-188A in globo:

No. 1Disclosure of pecuniary interests

Page 3, Schedule 1[2]–[5], lines 5–16. Omit all words on the lines.

No. 2Disclosure of pecuniary interests

Page 3, Schedule 1. Insert after line 16—

[1A]Section 440AAA Content of model code

Insert after section 440AAA(3)—

(3A)The model code must contain provisions requiring disclosure of pecuniary interests comprising real property located outside of Australia.

I again thank all members who contributed to debate on the bill. Essentially, my interest in this issue has always been to make sure there are proper disclosures. These amendments will clean up the bill and make it much easier for the Minister and the department to ensure the change is made for model codes of conduct across New South Wales. The idea is to make it clear that councillors must make this declaration. Since the recent election, councillors will be in the process of making declarations and submitting returns. I imagine that since their initial meetings they would have submitted their initial returns. It is important that when this change is made, councillors do make further amendments should they need to.

As I said, transparency is key if we want good governance across the State. In my view, councillors and councils have equal if not more influence than members of Parliament. It is important that there is as much transparency around local government as possible. We expect that in time—and more and more in the future, I imagine—councils will deal with rezoning applications. They are dealing with tenders and major upgrades to infrastructure and so forth. There is always a need to declare different pecuniary interests. It is important that we encourage and support as much transparency as possible. As I mentioned earlier, this change has been a long time coming.

The standing committee submitted its final report in February 2023. The Government responded in a timely way—very quickly—in June 2023. It indicated that it would make this change. I have been a little bit frustrated by how long it has taken. I am not suggesting that it is the Minister's fault; it may be bureaucracy. I am not sure what caused the delay. Ultimately, it is very important that these amendments go through. I ask the Committee to support the amendments.

The Hon. TARA MORIARTY (Minister for Agriculture, Minister for Regional New South Wales, and Minister for Western New South Wales) (20:37): I indicate that the Government will not oppose these amendments. The stated purpose of the original bill was to mandate the declaration by councillors of overseas property interests in their returns of interest. We are pleased to acknowledge that the honourable member has taken on board the Government's feedback on the negative consequences of the original version of the bill that was introduced. We are pleased these amendments address deficiencies in the bill as originally moved. The amendments omit the bulk of the content of the original bill and introduce a further amendment that is better targeted to address the issue that is being pursued by the Hon. Tania Mihailuk. We support the amendments because, if they are agreed to, the bill will retain the amendment to the definition of "pecuniary interest" in section 439AA of the Local Government Act 1993 to provide:

pecuniary interest means an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person, including an interest outside of New South Wales.

Instead of what we said was a flawed version of the original bill, amendment No. 2 will amend clause 440AAA to insert subclause (3A), which mandates:

The model code must contain provisions requiring disclosure of pecuniary interests comprising real property located outside of Australia.

As noted in the speech in response to the bill, the Government has no argument with that outcome. Councillors should be required to disclose overseas property interests in their returns of interests, and the Government is working to make that happen through the recently released Councillor Conduct Framework and the discussion paper which has been referred to. The Government had previously committed to requiring councillors to disclose overseas interests in their returns of interests in its response to the Standing Committee on State Development inquiry into allegations of impropriety against agents of the City of Bankstown Council, which has also been referred to in this debate.

The framework for regulating councillor conduct is currently under review and is likely to change significantly. The Minister has made it clear that he wants to see the Model Code of Conduct shortened from a 60-page document, which applies to every part of a councillor's work, to a short, aspirational document of two or three pages. That is a commonsense approach. Matters relating to the mismanagement of pecuniary interests are proposed to be handled through the Act. Contraventions would attract penalties, including fines, that can be actioned through a court of law. A bill that provides that the outcome be delivered through the Model Code of Conduct is contrary to the Government's agenda in this space. It would need to be amended again later if it is passed. The Government has recently extended the submission date for its discussion paper on this topic to the end of the month, and I encourage members of the upper House to submit their views. It is not good governance to shortcut a genuine consultation process by accepting legislation contrary to what has already been proposed.

The other measures proposed in the discussion paper include aligning the requirement to disclose interests in returns of interests with those required for members of the New South Wales Parliament; extending the requirement for interests to be disclosed in returns of interests to interests held by a councillor's spouse or de facto partner, relative or employer; an absolute prohibition on councillors being involved in any matter before a council where they have a pecuniary conflict of interest, unless otherwise provided for under the regulations; and increasing the investigation powers of the Office of Local Government to allow it to gather information on corporate structures, such as trusts or companies, and to determine underlying beneficial ownership and interests. I put those comments on record on behalf of the Minister and the Government. We support the amendment and, for want of a better way of putting it, appreciate that the member has taken advice on board.

The Hon. NATASHA MACLAREN-JONES (20:42): The Opposition supports the amendment. I note the discussions that have occurred between the mover of the bill and the Government. Our position has been that we support the original bill. Our main interest is in ensuring that there is confidence in the community. These amendments still ensure that full disclosures regarding overseas properties are made, and we therefore support the bill as amended.

Dr AMANDA COHN (20:42): As previously indicated, The Greens support the amendments. We shared the concerns of the Government that the bill as introduced may have had some unintended consequences. This amendment resolves those issues.

The Hon. TANIA MIHAILUK (20:43): In reply: I thank the Government, the Opposition and The Greens for their support for these amendments. As I have indicated, I am trying to work through what is a relatively complex situation, so I am pleased that the amendments will be accepted. I understand that the Government is undertaking its review and that there may be further changes down the track, but there is nothing wrong with making changes as we go given the fact that an election was held very recently. At this stage, I do not think there is a clear timeline as to when the final changes might be made to the Model Code of Conduct. I can only hope that the legislation will be brought by Minister Hoenig early next year. I am looking forward to seeing the final changes that the Government will make. I do not know how I would cut down a 60-page model code of conduct document to three pages, but good luck. It might be in very small font, but I wish Minister Hoenig all the best. I appreciate that he is doing what he can to work through this. Again, I thank members for their support.

The CHAIR (The Hon. Rod Roberts): The Hon. Tania Mihailuk has moved Pauline Hanson's One Nation amendments Nos 1 and 2 on sheet c2024-188A. The question is that the amendments be agreed to.

Amendments agreed to.

The CHAIR (The Hon. Rod Roberts): The question is that the bill as amended be agreed to.

Motion agreed to.

The Hon. TANIA MIHAILUK: I move:

That the Chair do now leave the chair and report the bill to the House with amendments.

Motion agreed to.

Adoption of Report

The Hon. TANIA MIHAILUK: I move:

That the report be adopted.

Motion agreed to.

Third Reading

The Hon. TANIA MIHAILUK: I move:

That this bill be now read a third time.

Motion agreed to.