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Department of Premier and Cabinet

Pecuniary interests

Section 49 of the Local Government Act provides ‘A councillor or member has an interest in a matter if the councillor or member or a close associate would, if the matter were decided in a particular manner, receive, have an expectation of receiving, or be likely to receive, a pecuniary benefit or pecuniary detriment.’

Close associates can include members of your immediate family, as well as organisations of which you are an office-bearer of the governing body, a company in which you are a shareholder, your employer or your employees.

Examples of pecuniary interest are:

  • A councillor chairs a committee of council which has been asked to make a decision on a tender process for council catering. One of the tender bids is submitted by the councillor’s sister-in-law’s catering firm.
  • A councillor participates in a council decision on a planning application for a brick and paver factory that, if established in it proposed location, is likely to significantly reduce the value of his property.

Examples of pecuniary benefits or detriments include:

  • increased or decreased sales or profits from a business;
  • increased or decreased property values;
  • offers of employment or related benefits such as salary increases or promotions;
  • provision of labour or services; and
  • loan of a vehicle.

If you have a pecuniary interest, you need to follow the five-step process for managing pecuniary interests, as set out in Part 5 of the Act 5:

  1. Declare an interest in the matter before discussion begins.
  2. Do not participate in any discussion or vote on the relevant matter.
  3. Leave the room where the meeting is being held when discussion turns to the relevant matter.
  4. Advise the general manager in writing of the details of the interest within seven days of the meeting.
  5. The general manager records the declaration in the meeting minutes, and the details in the register of interests.

Pecuniary interests that are not appropriately managed are offences under section 48 of the Local Government Act and section 48A of the Local Government Act. Complaints are investigated by the Local Government Division. If there is sufficient evidence of an offence, complaints are referred to Director of Public Prosecutions for prosecution in the Magistrates Court.

The penalties set out in sections 48 and 48A of the Local Government Act can include:

  • a fine of up to 50 penalty units ($7 000) on conviction;
  • dismissal from office; and
  • being barred as a candidate for up to seven years.

No pecuniary interest is too small to be covered by the offence provisions. However, section 52 of the Local Government Act sets out a number of express exemptions to the pecuniary interest provisions.

It is important to note that you are in breach of the pecuniary interest requirements if you participated in a discussion and vote on a subject, even if you vote against your own interest. This rule protects the process of council decision making and ensures that councillors’ decisions are not influenced by people with interests who are participating in the discussion.

Useful resources

The Local Government Act 1993 outlines obligations for councillors in relation to pecuniary interests.

Refer to the training video In whose interest? to watch a video scenario that deals with conflict of interest.

The Local Government Division has developed an information sheet and checklist to assist you to assess your potential pecuniary interest conflicts.

SCENARIO

A councillor owned land which shared a boundary with council land. The council was asked to make a decision on the construction of a fence on this shared boundary.

The councillor registered his interest in the council’s interest register and declared his interest in the matter. He sought advice from the General Manager regarding his participation.

Acting on the General Manager’s advice, the councillor did not participate in the vote on the matter, but remained in the meeting to make a personal statement prior to the vote.

The Director of Local Government received a complaint that the councillor had breached the pecuniary interest provisions in section 48 of the Local Government Act.

Upon investigation, the complaint was referred to the Director of Public Prosecutions and legal action was pursued against the councillor. The evidence in the case was not disputed; he argued in his defence, that the General Manager had advised him he could speak on the subject.  The councillor was found guilty but no conviction was recorded.

The councillor had a pecuniary interest in the matter, and needed to follow the five-step process for managing pecuniary interest set out under section 48 of the Act. The councillor should have applied the principle ‘If in doubt …step out’.  The councillor received advice from the General Manager, which he may have relied upon in good faith. However, error of law is not a defence. It is an individual councillor’s responsibility to ensure that he complies with the requirements of the legislation.