Councillors and mayors behaving badly will face a year's suspension under a shake-up of Victoria's local government laws.
Minister Marlene Kairouz introduced the Local Government Bill 2018 into parliament on Wednesday after three years of public consultation.
"It makes councillors and councils more accountable to their community," Ms Kairouz told reporters at parliament.
The reforms would empower the minister to suspend individual councillors for up to a year, instead of sacking entire councils.
"Sometimes it takes one rotten apple to rot the whole box," Ms Kairouz said.
But such action will only take place on the advice of an integrity body like the Chief Municipal Inspector, municipal monitor or Independent Broad-based Anti-corruption Commission.
If a council is to be put into administration, such as Geelong in 2016 and Central Goldfields in 2017, that will follow the existing processes.
The bill also clearly defines sexual harassment in the councillor code of conduct, introduces the power to remove councillors for serious sexual harassment and will allow mayors serving two-year terms to be booted following a motion moved by at least three-quarters of all councillors.
The current rules to prevent sexual harassment in councils were criticised during the investigation into former Melbourne Lord Mayor Robert Doyle, who stood down amid allegations by two fellow councillors and another woman.
Councils will not be allowed to charge ratepayers more for services than it costs to provide them and local governments will have to develop four-year budgets to meet higher standards in strategic planning.
That change comes after Ombudsman Deborah Glass found Wodonga City Council collected at least $18 million extra from its waste levy over a decade and used the extra cash to pay for other council services.
Opposition Leader Matthew Guy called the government hypocritical, accusing it of setting a higher standard for local government than for its own MPs.
"I think the concept is fine but I find it astounding coming from this state government, which has got so much to answer for in way of conduct," he said.
Victorian Greens local government spokesperson, Samantha Dunn, said the bill will be scrutinised before the party offers its support, but was happy to see action on sexual harassment.
