South Gippsland Shire Council has been sacked by the Victorian Government after six resignations, conflict and dysfunction plagued the council for more than a year.

Key points: Following multiple issues of dysfunction within the South Gippsland Shire Council over the past year, the Victorian Government has dismissed the entire council

Following multiple issues of dysfunction within the South Gippsland Shire Council over the past year, the Victorian Government has dismissed the entire council The sacking comes as the Victorian Auditor-General's Office found multiple failings in a report into fraud and corruption-control in local governments

The sacking comes as the Victorian Auditor-General's Office found multiple failings in a report into fraud and corruption-control in local governments One South Gippsland councillor resigned to defend drugs charges and six have quit since September 2018

A report by the Victorian Auditor-General's Office (VAGO) was released on Wednesday, into fraud and corruption-control in local governments.

One South Gippsland councillor resigned to vigorously defend drugs charges and another has been accused of misusing his position.

Six councillors in the shire have quit since September 2018.

Four alleged they were bullied to the point of leaving and the most recent said he was concerned about council's financial responsibility and the culture.

The council also refused to renew the contract of its former chief executive officer before his contract expired about a month ago.

A current councillor is also facing a charge of misusing his position after he allegedly gave information to a local resident while they were involved in a Supreme Court proceeding against South Gippsland Shire Council.

Wednesday's sacking comes exactly one year since a Municipal Monitor was appointed by the Victorian Government to assess council's performance, due to serious concerns about the council's governance.

Former councillor and resident of Fish Creek, Meg Edwards, resigned in October last year and said she had installed security cameras at her home after ongoing harassment.

"I brought this to the attention of the first mayor in the first few months and he chose not to act," she said.

That mayor denied those allegations.

'This circus has been going on for far too long'

The council dismissal will be made formal by a vote in the Upper House of the Victorian Parliament.

Liberal MP Tim Smith told Parliament the sacking is supported by the Opposition.

"This council has been dysfunctional for quite some time," he said.

"A commission of inquiry commenced on 21 May, 2019 and in this report, Mr Vincent and his fellow commissioners observed there has been a high level of tension, discord and conflict between the councillors elected in 2016.

Gippsland South Nationals MP, Danny O'Brien told Parliament, "this circus has been going on for far too long".

"The fact that we've had six councillors resign out of nine does bring into question the democratically elected nature of this council.

Timeline: Ongoing problems at South Gippsland Council September 2018 — Maxine Kiel announces resignation

September 2018 — Maxine Kiel announces resignation October 2018 — Meg Edwards resigns

October 2018 — Meg Edwards resigns February 2019 — James Fawcett announces resignation

February 2019 — James Fawcett announces resignation March 2019 — Lorraine Brunt announces resignation

March 2019 — Lorraine Brunt announces resignation April 2019 — Jeremy Rich quits after being charged with drug and firearms offences

April 2019 — Jeremy Rich quits after being charged with drug and firearms offences May 2019 — Council dumps CEO Tim Tamlin

May 2019 — Council dumps CEO Tim Tamlin June 2019 — Aaron Brown resigns

June 2019 — Aaron Brown resigns June 19, 2019 — South Gippsland Shire Council is dismissed

"Particularly when a number of those are not the second choice of the people, but the third or fourth and that's the case, where to fill casual vacancies on countback, a number of those declined to take up the opportunity."

The Municipal Monitor report tabled in Parliament also found individual councillors had repeatedly tried to revisit and overturn council decisions without the authority of council and "in the pursuit of individual agendas and pet interests".

The report also stated that "intimidating or disrespectful behaviours were commonplace as were long email threads with tit-for-tat accusatorial messages".

The Local Government Minister Adem Somyurek said the council was given every opportunity to improve but lost its democratic mandate to govern.

"There was a toxic intractable culture that developed on that particular council mainly driven by interpersonal disputes and that affected the governance of that council and its ability to govern in the interests of the people."

Council staff spat on

The Municipal Monitor Peter Stephenson reported that nearly all individuals involved have been 'heavily impacted emotionally' by their experiences on and with the council.

"The tension which often results from inappropriate councillor-to-councillor interactions in briefing sessions which staff attend, has a visible effect on some staff who appear anxious in the presence of councillors," Mr Stephenson reported.

"Council frontline staff are reporting increased abuse from members of the public.

"Outdoor staff [are] being spat on and customer service staff [are] being verbally abused and accused of being corrupt."

The Commission of Inquiry said a range of behavioural problems were raised including shouting and overt aggression during meetings, the shutting down of alternative points of view, intimidation of those seeking different outcomes — by bombarding them with emails and telephone calls, and inadequate flow of information between councillors leading to feelings of exclusion.

"Individual councillors were changing their minds from week to week," Mr Stephenson said.

Mayor claims 'victim of witch hunt'

The former Mayor, Don Hill has accused a local group of business leaders of orchestrating a witch-hunt to destabilise the council.

"There's been an orchestrated campaign against this council led on the basis of bullying allegations, unfounded allegations that were made over a period of time to damage this council's reputation," Mr Hill said.

"This campaigning to damage this council came on the back of bullying allegations that have never been substantiated and the Monitor did not have one instance that he could describe.

"The ratepayers have lost a democratically-elected council."

Ratepayers support council sacking

400 people attended a Town Hall meeting in Leongatha in March and in a majority vote, called on the Minister for Local Government to dismiss the council.

Shirleyanne Wright from the Leongatha Business Association said it has been a long, drawn-out affair.

"It's the only way out of this and the way forward is sack the council, put an administrator in and start afresh," she said.

"It's just laughable really."

High tension, no respect

A Commission of Inquiry recommended the council be dismissed and that a general election be held in October 2021.

The Victorian Government said ongoing conflict between councillors had reduced the respect for, and standing of, the council in the community.

The Government said the conflict had also had a detrimental impact on the council's ability to make decisions and that the resignations of six councillors had weakened the council's legitimacy.

Minister for Local Government, Mr Somyurek, said the Government has accepted the recommendations of the Commission of Inquiry to dismiss the council until October 2021.

"The dismissal of the shire will ensure that residents, ratepayers and business of South Gippsland get a council that functions in their best interest," he said.

Victorian investigation into local governments

The Victorian Auditor-General's Office (VAGO) Wednesday released the findings of an investigation into fraud and corruption-control in local governments.

The VAGO examined senior staff and councillors at four local councils — Greater Shepparton City Council, Strathbogie Shire Council, Wellington Shire Council and Wyndham City Council — to see whether the fraud and corruption controls were well-planned and working.

No fraud or corruption was found, but the investigation, into spending between 2015 to June 2018, did uncover failings.

It found spending which did not clearly benefit residents and ratepayers, practices that failed to need public expectations and non-compliance when it came to laws aimed at ensuring council transparency.

"Some individuals in positions of authority need to take a broader view of their obligations," the VAGO reported.

"They must appreciate that they are accountable to ratepayers and residents and consider how their communities may perceive their actions."

The audit brought into question staff reimbursements, including a payment of $21,000 Strathbogie Shire Council in a practice it stopped in 2017.

The council advised it was "based on a 'loose agreement' between council and the staff member to reduce the executive's gross income" as part of a salary-packaging arrangement.

It made 12 recommendations relating to improved controls over the use of council credit and fuel cards, better transparency and oversight of expense claims and better fraud and corruption training.

One of the recommendations related specifically to Strathbogie Shire Council over concerns about staff vehicles.

"Cease all sales and the provision of vehicles to council staff as part of exit packages," the report said.

Editor's note 20/06/2019: This article has been updated since its original publication date of 19/06/2019 with comments from Municipal Monitor Peter Stephenson.