King Island Council has come to the attention of the Tasmanian Audit Office due to its significant revenue from private works and the council’s challenges in adherence to established policies and processes.
The Tasmanian Audit Office released its review of councils’ processes for managing around $3.5 million of private works revenue in the 2021-22 financial year last week.
The report provides detailed analyses of how different councils handle private works, highlighting best practices and areas needing improvement.
Private works are services that some councils provide to individuals, community organizations and government entities at their request on a fee-for-service basis.
“I expected councils to have defined policies and processes, including for managing conflicts of interest, disputes, compliance, and competitive neutrality,” Tasmanian Auditor General Martin Thompson said at the review’s release.
Mr Thompson noted mixed results in managing conflicts of interest and disputes, and overall noncompliance with the requirements of the Local Government Act 1993 and the Competitive Neutrality Policy.
“The review found councils were not effectively managing private works because they had not established transparent and consistent processes or complied fully with relevant legislative requirements,” he said.
The review said that in the 2021-22 financial year, King Island Council engaged in various private works, recording significant revenue, about $1,500,000 – the highest among the councils reviewed.
This revenue included $910,000 from other government entities and $597,000 from private entities.
The review identified that:
- The King Island Council lacked an established decision- making process for deciding on private works.
- The council’s debt recovery policy, which required a 100 per cent deposit for works over $50,000, a 50 per cent deposit for works between $10,000 and $49,999, and no deposit for works under $10,000, was not adhered to for a project estimated at over $140,000, resulting in a financial loss of over $60,000.
- The council’s Customer Service Charter mandates that complaints be registered, reported monthly, and complainants be kept informed if resolution takes longer than 10 days.
- In a 2021-22 dispute related to private works, these requirements were not met: the complaint was not recorded, not reported, and the complainant was not kept informed beyond the initial 10 days.
- The King Island council was not fully compliant with their conflict-of-interest processes.
The review found that the council disclosed related party transactions in its financial statements, but most transactions were not covered by the fee schedule, raising issues about how related parties were charged and the council’s conflict of interest management.
Council’s then-acting general manager Brian Barrett responded to the Audit office on behalf of the KIC and addressed these issues.
“It is noted that we are referenced at several locations in your report and that the scale of our private works activities gives us some prominence in your report,” Mr Barrett said.
“It is the particular circumstances of King Island that give rise to the council’s need to be involved in private works at the level referenced in your report.”
KIC’s interim general manager Dr Catherine Dale responded to the review’s report on its release.
“The Council has a positive working relationship with the Department of State Growth, who is the principal organisation to contract Council to undertake private works, namely on their own State Growth-owned road arteries,” Dr Dale said.
“We will continue to progress this cooperative approach when undertaking infrastructure projects for our community.
“As the report indicates, King Island Council received the highest revenue in private works in 2021-22. This is due to the fact that we are an isolated community and the engagement of our workforce is currently the most cost effective and efficient way for the Department of State Growth to deliver road works and other projects.
“While the report highlights recommendations for a number of councils, the disproportionate focus on King Island is largely due to the scale of our private works.
“Staff will continue to review the recommendations in the report and will work towards their progressive implementation.”
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PHOTO: Scott Graham