Councillors to be charged for leasing tax-exempt cars

18/12/96

Ten of the 11 councillors at the Shire of Augusta-Margaret River could face prosecution over their controversial decision to lease tax-exempt cars for themselves for personal and council use.

Local Government Minister Paul Omodei said he had written to each of the councillors asking them to provide written reasons why they should not be prosecuted for breaching the pecuniary interests provisions of the Local Government Act. They had been given one month to respond.

The apparent breach affects all councillors except newly-elected Cr Sue Prater.

Mr Omodei said advice from the Crown Solicitor's Office had confirmed that use of the cars provided monetary savings for councillors, so each councillor should have been subject to pecuniary interest disclosure requirements when they voted to provide themselves with the cars.

An investigation by the Department of Local Government had confirmed that none of the councillors declared a pecuniary interest.

Mr Omodei said the council had behaved badly throughout the whole car-leasing saga.

"I said from the outset that I believed councillors should not be leasing luxury cars for themselves," he said.

"That advice has been proved correct on all counts yet the council has remained defiant. It was an ill-considered decision which has tarnished the council's reputation."

In addition to the pecuniary interest problems, Mr Omodei said the Department of Local Government investigation also found the council had shown contempt for local government procedures by acting without proper approval.

He said the council had been advised by the Department on November 30 last year that the lease agreement would require Ministerial approval under section 529(e) of the Local Government Act.

However, the council had proceeded to ratify the arrangement without gaining that approval.

Mr Omodei said the Acting Shire Clerk wrote seeking the necessary approval on December 13, 1995, but this was after the lease had been signed. The council further confirmed the arrangement at its February 22 meeting, still without receiving approval.

The Minister said he had been in constant contact with the Australian Tax Office over the matter and the ATO had confirmed that the tax-exempt cars for the councillors should never have been allowed.

"The one saving grace for the council is that the ATO admits it was partly at fault in its original advice on the matter," he said.

"That advice contributed to the council embarking on the move to gain cars for individual councillors."

In a letter to Mr Omodei last month, the ATO had confirmed that it would not be taking action against the council because it accepted that its original advice on the matter could have been interpreted as saying that a tax-exemption could apply to the cars.

The ATO has since amended its advice to clarify that vehicles must be used substantially for council purposes to qualify for the local government sales tax exemption.

The ATO letter said: "It would be difficult for the councils to be able to claim that the vehicles are used substantially for council purposes where they are required (under the lease agreement for each car) to travel 40,000 kms in two years or sometimes in 12 months."

The ATO advised it would also not be taking further action in relation to the City of Bunbury and the Shire of Greenough which had also erred in regard to cars for staff and family members.

Media contact: Amanda O'Brien on (09) 222 9595