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Local councils need stronger auditing system

Back in 2006, State Parliament’s public accounts committee looked at the risk of corruption and graft in the vast number of local governments across WA.

Raising the alarm that councils were not subject to a similar accountability framework as the rest of the public sector, it urged stronger oversight.

The committee recommended that local governments be brought under the authority of the Auditor-General’s office and that recommendation was yesterday repeated by the Corruption and Crime Commission.

The CCC’s report on misconduct risk in local government procurement, tabled yesterday in Parliament, demonstrates how easy it has been for ratepayers and taxpayers to be ripped off by greedy opportunists willing to defraud.

In 2013-14, the CCC held investigations into 13 allegations of serious misconduct at councils and eight of those revealed flaws in the supervision of the purchase of goods and services.

The cases ranged from a building co-ordinator receiving benefits of more than $600,000 through collusion with contractors to council staff accepting gifts and cash in exchange for ordering unnecessary or inappropriate goods.

“The financial stakes can be extraordinarily high,” the CCC reported.

A review of metropolitan councils found that collectively, the 30 local governments in Perth raised $1.9 billion in operating revenues and incurred operating expenditures of $1.7 billion in 2010-11. An estimated 32 per cent of operating expenditures were in the area of procurement.

Local governments are in the difficult position of engaging with companies that are simultaneously applicants seeking co-operation and approval and are also good corporate citizens looking to invest in community facilities and infrastructure.

There is a risk that the lines between these roles can become blurred, the CCC noted.

The CCC concluded there was systemic weakness across the local government sector in regards to procurement.

International research has shown that of all government activities, public procurement is one of the most vulnerable to fraud and corruption.

The problem can be worse in regional areas, where there can be difficulties in attracting suitable staff and an increased potential for unprofessional relationships.

Local Government Minister Tony Simpson yesterday described the report as a wake-up call and promised the Government would carefully consider its findings.

Mr Simpson lent his support to the recommendation that the jurisdiction of the Auditor-General be extended to include that tier of government.

He noted that such a move would bring WA into line with Queensland, South Australia and Victoria, where their respective auditors-general have the power to conduct audits of local councils and their staff.

While this may require extra funding for the Auditor-General’s office, it appears to be a move that is both necessary and overdue.