A rural council in central western Victoria has been sacked after a damming report found it squandered at least $730,000 in public funds through flawed land sales and suffered from dreadful financial mismanagement.

Legislation to dismiss the Central Goldfields Shire Council and appoint three administrators has passed through both houses of the Victorian State Parliament.

The moves follow a damning report into the Council’s affairs by the Local Government Investigations and Compliance Inspectorate, which found that the Council had inadequate governance and suffered from mismanagement in critical areas of responsibility.

In one case, a 1.65 hectare parcel of land located on a former primary school site at 71 Inkerman Road in Maryborough was sold to a private developer for the purposes of residential subdivision for just $485,000 in September 2011.

This was despite the Council having received an offer of $1 million from a reputable and well-known business person only months earlier (albeit with that offer having subsequently been withdrawn) and the Council itself having paid $780,000 for the site in 2008.

Another land parcel nearby acquired in the same purchase in November 2008 at 65 Inkerman Street was sold at just $85,000 in December 2009 despite having been acquired at a cost of $275,000 one year earlier and having been valued at $125,000 in May 2007.

A third contract saw a former abattoir site at 7 Madmans Lane in Flagstaff sold to a private developer for just $262,500 under a contract signed by the Council on July 10 despite having been independently valued at $310,000 just eight days earlier on July 2.

Contrary to requirements of the Local Government Act 1989, In none of the above cases had there been a current public notice of intention to sell the land.

Nor was the community given any opportunity to make submissions or even be aware that the sale was taking place.

Further, in contravention of section 189 of the Act, there had been no current (less than six months old) valuation of the land in the case of the sales of either 71 Inkerman Road or 65 Inkerman Road.

All this, the report found, resulted in a net loss to an economically disadvantaged community of $732,500.

The Inspectorate also found evidence of mismanagement relating to grants and human resources as well as serious governance failures.

In one case, it found that grant funding for construction of a bicycle path could not be accounted for.

In other cases, Council employees were providing contracting services to the Council on weekends.

Local Government Minister Natasha Hutchins said the sacking of any council is a last resort and that the decision in respect of Central Goldfields had not been made lightly.

“The Central Goldfields Shire Council has let down local residents and businesses,” Hutchins said.

“The passing of this Bill means they finally get the representation they deserve.”

The three administrators will act as the Council until the next Council election in October 2020.