Dubbo Regional Council has hit back at claims from Local Government Minister Shelley Hancock that the organisation is not functioning effectively.
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Ms Hancock announced earlier in the month she was intending to issue a Performance Improvement Order to council.
It requires each councillor to improve their behaviour and could lead to the appointment of an independent temporary advisor to ensure compliance.
If the PIO was instilled, and council was found to be non-compliant, the council could be put into administration.
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But in the response to the proposed order, written by interim chief executive officer Murray Wood, council has outlined how interference isn't needed.
"Council has continued to effectively function in delivering services to the community and the elected body has continued to consider matters bought before it by council staff and fellow councillors," Mr Wood said.
"As a result, council is of the view that the matters identified in the notice of intent do not meet the legal threshold at this time."
Ms Hancock said the proposed PIO was because of accusations of bullying and harassment within the organisation.
To alleviate her concerns, for a month, emails between councillors and senior council staff will go through Mr Wood. He will inform the councillor if any of their correspondence could be seen as unpleasant or intimidating.
The councillors will also sign a statement to say they will not make public allegations of wrongdoing by other council officials.
"Given the resignation of former mayor Ben Shields, the unusual and difficult circumstances that gave rise to the concerns you held when you issued the proposed notice have ceased to exist," Mr Wood has written to Ms Hancock.
"Because the powers to issue a performance improvement order are not punitive and can only be exercised for the proper remedial purpose, it is council's view that... there is no longer a basis to issue the performance improvement order."
Mayor Stephen Lawrence has also stated his objections to the PIO. He said it was unnecessary "because all councillors intend to comply with their obligations".
Ms Hancock will consider the response from council before a decision is made on the PIO.