The South Australian Governor has made a proclamation declaring the District Council of Coober Pedy (the Council) to be a defaulting council and appointing an administrator.
Minister for Local Government Stephan Knoll told elected members today, “I made this recommendation on the basis of the Ombudsman’s 2018 Final Report on the negotiation and execution of the Power Purchasing Agreement (PPA) with Energy Generation Pty Ltd.”
Having carefully considered this Report, the submissions provided to me by the Council, and other relevant matters, I am of the view that there have been serious irregularities in the conduct of the affairs of the Council, and serious contraventions and failures to comply with legislative requirements, and that this action is therefore necessary.
Mr Tim Jackson who has enjoyed a long and experienced career in local government and has worked as the Chief Executive Officer for the City of Playford has been appointed as the Coober Pedy Administrator.
“I am confident that, with his extensive skills and experience in local government, Mr Jackson will place the Council on a secure footing to provide the Coober Pedy community with the high standard of administration and service that it needs,” said Minister Knoll.
“You may be aware that Governor’s proclamation has effectively suspended all Council members, until a further decision is made to either re-instate the Council, or to hold another election. I expect that this decision will be made once the Administrator has been in place for sufficient time to address the issues at the Council”, Minister Knoll has told the current councillors.
“While the above action is necessary, I would like to acknowledge the commitment you have shown to Coober Pedy following your election to the Council in 2018. I know that you have the best interests of Coober Pedy at heart, and will continue to support the Council over this difficult period,” he said.
Administrator – District Council of Coober Pedy – potential questions and answers
1. Why has the Council been put into administration?
This is a very serious step to take, which reflects the seriousness of the issues at the Council.
The decision has been based on an extensive Ombudsman’s Report released in 2018 that found serious failings and irregularities at the Council in regard to its negotiation and execution of a $198 million Power Purchasing Agreement. In fact, the Ombudsman stated in this Report that the Council’s failings ‘remains one of the most serious examples of maladministration in public administration’ he had observed ‘since the relevant provisions of the ICAC Act were enacted’.
In December 2018, the Auditor-General released his examination of the Council. This report supported the findings of the Ombudsman’s Final Report, as it also found many significant failings and deficiencies at the Council, particularly in regard to its financial management and position.
2. Was the Council consulted before this decision was made?
Yes. The Minister gave the Council two opportunities to make submissions to him. The first of these followed the Minister’s consideration of the Ombudsman’s Final Report. The Minister provided the Council with an opportunity to comment on the Report, and also flagged his view that, due to the seriousness of the failings and irregularities in this Report, he was considering recommending to the Governor that the Council be declared defaulting.
As local government elections were held in November 2018, the Minister also gave the council elected at this point a further opportunity to make submissions to him. This was received in December 2018.
The Minister has given the submissions from the Council very careful consideration. However, due to the seriousness of the Council’s many failings, he has decided to recommend to the Governor that the Council be declared defaulting.
3. How can this Council be put into administration, when it was the previous Council that made the decision to execute the Power Purchasing Agreement?
While council members may change at each election, councils continue to exist as ‘body corporates’ – that is, the Coober Pedy Council continues as a body through all election cycles.
However, the Minister did give very serious consideration to the potential impact of the 2018 election. That is why he provided the Council elected at this time an additional opportunity to provide him with a further submission on the Ombudsman’s Report. It is his view, though, that a period of administration is the best way to put the Council back on a stable footing, given the very serious nature of the issues at the Council that were revealed by the Ombudsman, and supported by the Auditor-General.
4. Has the Council been sacked?
No. Effectively, the Governor’s proclamation has suspended the Council. The Council will not be sacked unless a further proclamation is made to declare all of the members’ positions vacant; and to hold an election to replace them.
While it is possible that this may occur, it is not a foregone conclusion. A second proclamation could, alternatively, end the period of default, and re-instate the current council.
Which future action is appropriate will become clearer once the Administrator has been in place for some time.
5. How long will the Council be in administration?
Under the Local Government Act, the period of administration will end when another proclamation is made that either re-instates the Council, or a general election is held to replace it.
A decision to call a general election cannot be made until at least three months after the Council has been declared defaulting.
If a second proclamation is not made, the Act requires that the period of administration ends twelve months after it started.
6. Will the current Council members continue to receive their allowances over this period?
Yes. As the members are suspended, not sacked, they will continue to receive their annual allowances.
Currently, the Council’s Mayor receives an allowance of $26,000 per annum. Council members receive $6,500.
7. Does the Administrator replace the Council’s Chief Executive Officer?
No. Essentially, the Administrator replaces the elected member body. He administers the affairs of the Council, and has the powers, functions and duties of the Council and Council members that are necessary to do this.
8. How much is the Administrator being paid?
The Administrator’s remuneration reflects the fact that it is a full time, professional task. Given that the Administrator is senior to the Chief Executive Officer, it is also appropriate that his remuneration exceeds that of the CEO by a reasonable amount.
9. Who pays for the Administrator?
The Local Government Act requires the Council to pay for the Administrator’s remuneration.
10. Can the Minister tell the administrator what to do?
No. As the Administrator replaces the Council, he has the same responsibilities to make decisions as all Councils do. The Minister can only direct councils (or in this case, the Administrator) on the basis of a report from the Ombudsman or the Auditor-General, or on the basis of information from the Independent Commissioner Against Corruption. The same will hold true of the Administrator.
11. How will the Administrator be held accountable for his actions and decisions?
The Administrator must comply with all of the requirements of the Local Government Act that apply to councils.
The Administrator is also subject to the same oversight as councils. As is currently the case with Councils, the Administrator would be required to undertake a review of decisions under s 270 of the Local Government Act. If necessary, complaints can also be lodged with the Ombudsman or the Office of Public Integrity if there are concerns that the Administrator has not complied with the legislation.
Additionally, the Act requires the Administrator to provide reports to the Minister at least every three months. Given the seriousness of the issues at the Council, however, it would be expected that the Administrator would report to the Minister on a more regular basis.
12. Can the Administrator be removed or changed?
Yes, it is possible that the Governor could make another proclamation that varies or revokes the first proclamation that appointed the Administrator. Although this would not be expected to happen, it may be necessary if the Administrator resigns, or there is some other reason to change the person in this position.
13. Is it expected that the Administrator will get rid of the Council’s current power scheme?
This will be a matter for the Administrator to consider. However, he will be aware of the Auditor-General’s recently released examination of the Council that clearly identified the problems that the Council has had in appropriately managing the power scheme, and take these into consideration.
14. Will the State Government need to ‘bail out’ the Council?
It is not expected that the State Government will need to provide funding to the Council to address the issues that have been identified; rather, the Administrator will work to place the Council on a better managed and more sustainable footing. Of course, further discussions with the Administrator will be ongoing on these matters.
15. What was the last Council put into administration?
It is very unusual for Councils to be put into administration in South Australia.
The last time a Council in South Australia was put into administration was in 1990. This was the then District Council of Stirling. The reason for this was that this Council had incurred a significant liability in relation to the Ash Wednesday bushfires; however the Council was incapable of making a decision to make the necessary contribution towards resolving their debt.
Prior to this, the District Council of Victor Harbor (now the City of Victor Harbor) was placed into administration in 1981. This was as the relationships between the council members and the council administration had broken down to the point that preventing the council’s proper functioning.