PART 3: THE “OPERATIONAL POLICY” ULTRA VIRES DEFECT, SECTION 5.41(2)(c) NON-COMPLIANCE, AND AUDIT REALITY
3.1 The Statutory Divide: Section 2.7(2)(b) vs. Section 5.41(2)(c)
A central pillar of the Melville Shadow Council’s legal research is exposing how local government administrations exploit legislative ambiguities to construct “pseudolaw” frameworks—internal administrative instruments dressed up with the terminology and binding force of statutory policy, yet divorced from the enabling provisions of the Local Government Act 1995 (WA).
In the City of Melville, this defect is codified directly inside the City of Melville Policy Framework (reviewed across June–July 2026, including the 21 July 2026 OMC Agenda). The Policy Framework bifurcates municipal policy instruments into two categories:
- Council Policies (CP-): Strategic policies determined by Council resolution; and
- Operational Policies (OP-): Instruments explicitly stated in Council agenda papers to be “approved by the Chief Executive Officer.”
A rigorous reading of the Local Government Act 1995 (WA) confirms that the category of “CEO-approved Operational Policy” has zero legislative standing and is legally ultra vires:
- Exclusive Policy-Making Power of Council (Section 2.7(2)(b)): Section 2.7 defines the role of the Council. Subsection 2.7(2)(b) states in clear, unambiguous mandatory terms that without limiting subsection (1), the council is to — “determine the local government’s policies.” The Act contains no provision empowering a council to delegate general policy-making power to the CEO, nor does it recognise any subordinate tier of “Operational Policy.”
- Strict Statutory Limitation on the CEO (Section 5.41(2)(c)): While Section 5.4 empowers a local government to employ a CEO and staff, Section 5.41 exhaustively prescribes the functions of the CEO. Specifically, Section 5.41(2)(c) restricts the CEO’s operational governance role to:
“determining procedures and systems for — (i) implementing the local government’s policies as determined by the council; and (ii) otherwise managing the local government’s administration and operations.”
The statutory architecture could not be clearer: Council determines policies (Section 2.7(2)(b)); the CEO determines procedures and systems to implement Council’s policies (Section 5.41(2)(c)). By inventing a hybrid category of “Operational Policies” approved unilaterally by the CEO, the administration blurs the statutory line between legislative/policy determination and administrative execution—enabling the CEO to create, amend, and repeal binding rules affecting ratepayers without Council debate, community consultation, or public vote.
3.2 Line-by-Line Audit of Unauthorised Operational Policies (OP- Register)
Unlike Council Policies (CP-), the City of Melville does not publish a complete, unified master register of all OP- documents on its public website (acknowledging them only as an internal document class in its Freedom of Information Statement). Forensic cross-referencing of Council agendas, minutes, and municipal web portals reveals that while a small fraction of OP- documents address purely internal staff matters (such as OP-003 Prevention of Workplace Bullying, Discrimination & Harassment, which is legitimately an internal management procedure under Section 5.41(2)(c)(ii)), the administration routinely uses CEO-approved OP- instruments to regulate external citizen rights, public spaces, and community assets:
| Instrument | Title & Administrative Owner | External / Public-Facing Regulatory Effect | Statutory & Governance Defect |
|---|---|---|---|
| OP-004 (Historical) | Risk Management Policy | Governed enterprise-wide risk appetite and Council assurance thresholds. | Originally created as a CEO Operational Policy until Council forced its elevation to a Council Policy in May 2016—establishing clear precedent that governance rules cannot remain CEO-owned. |
| OP-006 | Community, Sport & Recreation Group Use of Community Facilities & Reserves (Community Development) | Dictates access conditions, tenure rules, obligations, and operational restrictions for local sporting clubs and community groups using public reserves. | Ultra Vires Policy: Directly regulates ratepayer and community organisation access to municipal property; must be determined by Council under Section 2.7(2)(b). |
| OP-011 | Closed Circuit Television (CCTV) (Community Safety) | Governs public surveillance cameras, recording retention, privacy safeguards, and footage release across public spaces. | Ultra Vires Policy: Regulates citizen privacy and public surveillance. In the 10 March 2026 Agenda Briefing Forum Notes, officers implicitly conceded this defect by acknowledging the need to elevate OP-011 from an “operational Policy, to a Council Policy” incorporating community feedback. |
| OP-015 | Records Management (ICT / Information Management) | Governs retention, archiving, and disposal of municipal records under the State Records Act 2000 (and is applied via the City’s Terms of Use to external ratepayer website/social media submissions). | Controls how public correspondence, Council records, and community submissions are preserved or destroyed; requires Council policy oversight rather than unilateral CEO alteration. |
| OP-022 & OP-039 | Customer Feedback Management Policy & Customer Complaints Handling Policy (Community Development) | Establishes external criteria for how ratepayer complaints against the City, contractors, and officers are assessed, investigated, or closed. | Ultra Vires Policy: Governs external administrative justice and procedural fairness for ratepayers; overlaps with Council Policy CP-101 while insulating executive complaints from transparent audit. |
| OP-040 | Busking & Street Entertainers Policy (Community Development) | Regulates permits, performance locations, noise limits, and conditions for entertainers in public thoroughfares and malls. | Ultra Vires Policy: Regulates public conduct in thoroughfares—a domain governed by Council local laws and Section 2.7(2)(b) Council policy. |
| OP-042 | Managing Unreasonable Customer Behaviour Policy (Community Development) | Authorises executive staff to restrict communication channels, refuse correspondence, or terminate complaint investigations for residents labelled “unreasonable.” | Severe Statutory & Democratic Risk: Empowers unelected officers to curtail a ratepayer’s statutory right to communicate with their local government under a CEO-signed document rather than a Council-adopted policy (CP-107). |
Further compounding this defect, numerous OP- instruments (across the OP-001 to OP-032 series) originated historically as Council-adopted policies before being administratively reclassified into the CEO’s “Operational Policy” domain, stripping Elected Members of formal oversight over subsequent amendments.
3.3 Volunteer Management: Rule by Unpublished Administrative Manual
The administration’s tendency to govern external citizens through unlegislated administrative instruments is starkly illustrated in volunteer management. Despite mobilising hundreds of community volunteers across libraries, community transport buses, EcoHub repair workshops, museums, and environmental friends groups, Council has never adopted a Volunteer Management Policy under Section 2.7(2)(b), nor does any standalone OP- document on volunteer management appear on the City’s public portals.
Instead, as documented across the City’s Volunteering Tools and Resources and Volunteer Handbook web portals, the administration regulates external volunteers and community organisations through five non-statutory instruments:
- Volunteer Handbook & Volunteer WHS Induction: Staff-authored manuals imposing mandatory operational rules and behavioural obligations.
- Volunteer Customer First Charter and Standards: An administrative charter binding unpaid volunteers to corporate customer-service metrics.
- Code of Conduct: Applies corporate behavioural rules to volunteers, despite Section 5.51A of the Act restricting the CEO’s Employee Code of Conduct strictly to employees, and Section 5.104 restricting the Model Code to council members, committee members, and candidates.
- Volunteer Melville! Membership Rules: Unilaterally mandates that external community organisations hold public liability and personal accident insurance and adopt the National Standards for Volunteer Involvement to access City support.
- Child Safety and Wellbeing Policy: The sole Council-adopted policy referenced in volunteer onboarding.
Crucially, audit of the City’s dedicated Volunteer Handbook and OHS Handbook webpage reveals that while the page warns volunteers that “it is vital that you read and understand” both handbooks before participating in any City activity, the underlying PDF documents are missing and unlinked on the public website. External citizens are thus subjected to binding rules and statutory Code of Conduct extensions determined without Council vote under Section 2.7(2)(b), while being denied public access to the rules themselves.
3.4 Absence of Section 5.41(2)(c) Compliance Procedures and the May 2026 Audit Breakdown
While unlawfully exercising policy-making powers under Section 2.7(2)(b), the administration has simultaneously failed to fulfill its mandatory statutory duty under Section 5.41(2)(c)(i) to establish documented procedures and systems ensuring that Council-determined policies and legislative obligations are actually complied with.
Four converging streams of evidence confirm this systemic compliance void:
- No Publicly Auditable Index of Compliance Procedures: The City maintains no accessible register linking individual Council Policies (CP-) to documented operational procedures, internal controls, or compliance verification workflows.
- Unchecked Breaches of Council Policy: As established in Part 2, the administration breached Policy CP-021 by failing to conduct its mandatory four-year committee review and by procuring the abolition of community-inclusive advisory committees in April 2026 without amending or repealing the policy—proving no procedural gatekeeping system existed to flag policy non-compliance before agenda publication.
- Office of the Auditor General (OAG) Finding: Financial Statements “Not Audit Ready” (May 2026): Under Section 5.41(2)(c)(ii) and Local Government (Financial Management) Regulation 5, the CEO is legally responsible for maintaining effective financial management systems and internal controls. Yet at the 11 May 2026 ARIC meeting (Item M26/82, page 13), officers disclosed that the Office of the Auditor General (OAG) and contract auditors KPMG formally determined that the City’s 2024/25 financial statements were not considered “audit ready” by the statutory 30 September deadline. This failure resulted from:
- Multiple late revisions required to fix prior-year asset classification restatements;
- Delayed and incomplete financial accounting from the Resource Recovery Group (RRG) (which ceased trading on 30 November 2025 prior to winding up in June 2026); and
- Operational paralysis caused by “unforeseen emergency leave taken by key staff members”—exposing a severe single-point-of-failure vulnerability inside Corporate Services’ 25.40 FTE Finance division despite the City spending $16.11 million on ICT and $51.01 million overall on Outcome 5.
- Confidential Regulation 17 Self-Certification and Parliamentary Local Law Defects: Under Regulation 17 of the Local Government (Audit) Regulations 1996, the CEO must triennially review the appropriateness and effectiveness of systems and procedures covering risk management, internal control, and legislative compliance (including Section 5.41(2)(c)). In Melville, the CEO’s Regulation 17 review (combined with Financial Management Reg. 5(2)(c)) was adopted at a Special Council Meeting on 25 June 2025 as Confidential Report C25/289—shielding the assessment from public scrutiny behind closed doors. Just three months later, the City failed the 30 September OAG financial audit readiness deadline, and in 2026 required emergency local law amendments to rectify drafting defects flagged by Parliament’s Joint Standing Committee on Delegated Legislation. Meanwhile, in the 31 August 2026 ARIC Minutes (page 49), follow-up tracking on Regulation 17 actions remained controlled internally by Legal, Governance & Risk (with only 1.35 FTE in Risk and 0.30 FTE in Internal Audit), perpetuating a closed loop in which the administration grades its own compliance.