Fraser Coast Regional Council’s Mayor and CEO are the “single biggest issue the council continues to face”.

That is the finding of  a report tabled in Queensland Parliament following a three-month intervention period.

The Department of Local Government sent in Deputy-Director General of Local, Government and Regional Services, Stephen Johnston as an advisor to Fraser Coast Regional Council after complaints of internal squabbling.

Mr Johnston started in the advisory role on July 4, before being replaced by former Cassowary Coast CEO Terry Brennan just six weeks later.

Deputy Premier and Minister for Local Government Jackie Trad tabled the report on that period in parliament this week.

She noted that the Fraser Coast Regional Council is “functioning in a way that is allowing it to perform its responsibilities under the Local Government Act”, but not much more.

“Should the situation deteriorate to the point where further intervention is required under the Local Government Act 2009, either in the form of removal of a councillor or councillors, or the dissolution of the council, my message to the Fraser Coast Council is simple: this government is prepared to act,” Ms Trad said.

“If it proves necessary, this government will remove the council and ensure that the community has an opportunity to elect local government representatives who put the community interests ahead of childish squabbling and indulgent, egotistical behaviour.”

Local Government Association of Queensland CEO Greg Hallam said Fraser Coast is in about as bad a state as it can get.

“The concerning fact is that this has happened so early in the term,” Mr Hallam said.

“We're only just a bit over six months into the term and the worrying issue is, as reported, that the matters have not been resolved and in some cases some elements have gotten worse.”

The report focuses heavily on the communication between Mayor Chris Loft and CEO Lisa Desmond, who had no face-to-face meetings for the four months after local elections in March.

It states that the tension is partly caused by misunderstandings between the two as to their respective roles and responsibilities, and would “benefit from mentoring or coaching by someone with relevant experience”.

It found that independent mediation conducted between the pair was ineffective, and they now communicate only by email exchanges or in the presence of other councillors or staff members.

The broken relationship between the Mayor and the CEO is “being felt more at a strategic than an operational level”, advisor Terry Brennan said.

“If the current situation continues then in my opinion it will start to impact on the day to day operations of council due to the ongoing strain it will place on staff, particularly those in senior positions,” he said.

Mayor Chris Loft partly acknowledged the problem.

“We are not, and both advisors have said, we are not a dysfunctional council we are actually performing and performing extremely well,” he said.

He said CEO Lisa Desmond should come up with a plan to better communicate.

“There is a toxic culture, which is in the report, amongst the staff which really disappoints me,” Cr Loft said.

“We are the councillors, but it's the head of staff that needs to look at the culture that is there.

“I'm the boss of the region, let me state that.

“The CEO is the chief of staff, she's in charge of all the staff and that's where the culture gets established.”

The state has not had to intervene in a council dispute to this degree since 2007, which led to the entire Johnstone Shire Council being dismissed.

The State Government may soon be forced to issue a show cause notice.

“The council has a chance to respond, ultimately then, once that time expires, if the government is so minded of the view that they haven't had the appropriate responses, then they would take the legal proceedings to terminate the council,” Mr Hallam said.