Council watchdog reveals funding cuts hinder Victorian fraud and corruption investigations

Victoria's council watchdog has revealed it cannot properly investigate fraud and corruption after its budget was slashed by nearly $1m.

Victoria’s council watchdog is dealing with more complaints than ever but has had its budget slashed in the past financial year.. Picture: Tony Gough

Victoria’s council watchdog has admitted that severe funding cuts have compromised its ability to police local government fraud and corruption.

Chief Municipal Inspector Michael Stefanovic has told a state government inquiry that many problems at councils across the state go unchecked.

The Local Government Inspectorate is dealing with more complaints than ever but has had its budget slashed from $2.6m in 2021-22 to $1.7m in the past financial year.

“Our ability to undertake detailed audits of fraud and corruption markers such as personal interest returns or election campaign donations is negatively impacted by the resourcing constraints,’’ Mr Stefanovic said.

His submission to the state parliament’s Public Accounts and Estimates Committee follows a Herald Sun report that the inspectorate had not published an investigation report in six years or had produced an annual report since 2022.

Local Government Inspectorate head and chief municipal inspector Michael Stefanovic. Picture: Supplied

Mr Stefanovic’s submission also said:

• The inspectorate was not able to issue penalty notices and was working with Fines Victoria to remedy the problem,

• Half of all Victorian councillors’ personal interest returns were non-compliant in 2020.

• Councils were not required to have a fraud and corruption strategy in place,

• 213 warning notices had been issued last financial, mainly for breaches of electoral provisions after last October’s local council elections.

Mr Stefanovic also said that resource constraints meant the inspectorate was unable to conduct an in-depth compliance of donation returns.

“Our plan is to choose one council from each category – one metropolitan, an interface, regional city and small rural council for a detailed audit,’’ he said.

Election complaints increased the inspectorate’s workload.

Further, eight councils had failed to publish a summary of campaign donation returns by the required due date.

And more than 110 candidates failed to lodge their donation return with the council CEO at more 30 municipalities.

The inspectorate had received 1732 election-related complaints up to the end of February.

In a further blow to the inspectorate, its manager of strategy, governance and operations Dawn Bray has left and joined the Victorian Local Governance Association.

Originally published as Council watchdog reveals funding cuts hinder Victorian fraud and corruption investigations