The initial observations of Wellington’s Crown observer

Thursday, 30 January 2025

Crown observer Lindsay McKenzie has criticised Wellington City councillors for forcing an extraordinary vote on the sale of airport shares in October.

In a letter seen by Stuff, McKenzie said the matter could have been dealt with at a scheduled meeting in December.

McKenzie wrote he is “surprised that the organisation hasn’t totally wilted” under the pressure, but it “didn’t need to be this way”.

A major upset that drove a wedge between Wellington City councillors and left the capital needing to find hundreds of millions of dollars in savings was unnecessary, according to Crown observer Lindsay McKenzie.

The Government appointee penned a letter of initial observations last month, seen by Stuff, which was sent to the mayor’s office at the time and passed on to councillors this week.

It stated that the October vote to prevent the sale of airport shares was a needless complication which, combined with the council’s chief executive stepping down, was “massively disruptive”.

“Any sale of the airport shares could have turned on the planned December decision point,” McKenzie wrote, referring to a scheduled meeting where a final vote on the share sale was taken.

Instead, a majority of councillors backed a motion to vote at an extraordinary meeting in October. They overturned the decision to sell airport shares, kicking off a months-long amendment process that will go to the community for consultation early this year.

The vote fractured the council and resulted in then-Local Government Minister Simeon Brown appointing McKenzie as Crown observer.

“Recent council meetings have seen councillors walk out, refusing to participate in votes, and confusion regarding decisions, amendments, and voting,” Brown said at the time. “This environment is not conducive to the council effectively managing the long-term plan amendment and adoption process.”

McKenzie now says it would have been prudent for the council to wait for the scheduled December meeting and vote then on an amendment to year three of the plan.

That would have allowed “more time for the process, more time to consider debt and balance sheet issues and would have decoupled the [long-term plan] amendment decisions from water reform decisions,” he wrote.

“But I observe that the alternative path doesn’t appear to have been considered by the proponents, nor does it appear that the impact on the organisation was a factor in the majority decision.”

McKenzie’s letter made several other observations about the council’s operations, albeit noting that it was too early in his term to provide advice on them.

He acknowledged that the council was grappling all the common challenges facing local government - including tough economic conditions and central government policy shifts - as well as additional factors further complicating the situation.

The matters listed include the personalities and political ideologies of councillors, the seismic and climate change induced risk facing the city, media spotlight, and more.

“My initial observation is that it is surprising that the organisation hasn’t totally wilted under the pressure,” he wrote, adding, “it didn’t need to be this way.”

Many other observations in McKenzie’s letter concerned the procedural aspects of council meetings. However, he did single out water services as a source of upcoming trouble for the council.

“The spotlight is on council’s decision making on future water services delivery … officers are aware of the challenges.

“My reading of the KPMG balance sheet advice is that it doesn’t deal with the challenges and opportunities the potential transfer of assets, debt and revenues present for future borrowing capacity, unfunded potential liabilities arising from natural disasters and the like,” he wrote, adding that more advice is coming on those matters.

In a statement, Mayor Tory Whanau said she welcomed McKenzie’s observations.

“I acknowledge that our council still has some work to do. We are committed to improving our governance practices and public behaviour,” she said.

“I recognise that vigorous debates are an essential part of the decision-making process in any local government body such as [Wellington City Council]. However, I also recognise that as a council, we have a duty to serve our community with integrity, respect, and a focus on collaboration.”

Speaking to Stuff before the letter was seen, Whanau said her key focus for this year was ensuring Wellington has financing tools in place to cover the cost of water infrastructure.

“'It is going to cost the region well over $15 billion to really get on top of this issue over the next couple of decades,” she said. “But it’s a new year, and I am energised. We have a great relationship with our observer, and we’re going to do the best we can for Wellington City.”

CORRECTION: This article has been updated to say a December vote by the council related to airport shares, not the long term plan.