Case for Crown intervention ‘finely balanced’ despite Wellington City Council issues

Monday, 18 November 2024

Wellington Mayor Tory Whanau reacts to plan to have a Crown observer

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Over-spending, over-charging, miscounting and bickering.

Newly released official advice has revealed a swathe of issues with the Wellington City Council, but said the call for government intervention was “finely balanced”.

The intel Local Government Minister Simeon Brown received from the Department of Internal Affairs (DIA), as he considered then eventually decided to appoint a Crown observer to oversee the council, has Wellington Central MP Tamatha Paul saying the case for intervention was “weaker than the paper it's written on”.

“It's clear that this is politically motivated by a right wing government punching down on the most progressive council in the country,” Paul, a Green Party MP and former Wellington councillor herself, said.

“They have started with an outcome that the minister wants and worked backwards to try and make a weak case for intervention. A lot of the behaviour they have described is simply politicians doing politics.”

Local Government Minister Simeon Brown has had his call to appoint an observer to the Wellington City Council called political by Wellington Central MP Tamatha Paul, centre, and councillor Iona Pannett, right.

The advice from DIA deputy chief executive Michael Lovett said the case for any intervention was “finely balanced”.

DIA on Monday said this line in the advice was an explanation of criteria, not a claim an observer would not be sufficient: “The nature or extent of the problem is such that the local authority is unlikely to effectively address the problem without the appointment of a Crown manager.” A Crown manager is someone who can direct a council, while an observer can only monitor and recommend.

Challenging behaviour by councillors was causing “significant public concern”, Lovett’s advice said.

Lindsay McKenzie has been appointed the Crown observer to the Wellington City Council.

“The council is currently under intense media scrutiny due to councillor governance and decision-making behaviour.

“This is being evidenced both in meetings and subsequent media statements, but also in the criticism councillors are directing both towards each other and council staff.”

Brown said DIA advice was that a Crown observer was the “appropriate intervention to assist Wellington City Council in addressing governance and financial challenges and to monitor progress effectively”.

Wellington City councillor Iona Pannett said the advice showed an observer was not necessary and the council already had a plan to solve its issues. She backed Paul’s claims.

Tensions were high when the Wellington City Council voted to retain is 34% stake in Wellington Airport. Wellington City Councillors Nīkau Wi Neera, Ben McNulty, and Nureddin Abdurahman led the charge to keep them.

“If you applied the same standards to Parliament you would have to put in a commissioner.”

Council numbers, cited in the DIA documents, had shown it was under-insured by about $2.6b, but The Post on Friday revealed the council had revised its under-insurance modelling down by $800m to $1.8b.

The council is going line-by-line through its spending for the next 10 years to find $450m in savings, but the DIA advice said it had failed to look at cutting “non-essential spending”.

Lovett highlighted other ways the council could find money to plug a funding gap. New rules meant it could up its borrowing to 280% of annual revenue, but the council had a self-imposed limit of 225%. Under the Government’s Local Water Done Well reforms – which did not pass into legislation until after the council did its long term plan – that limit can go to 500% for water infrastructure.

The council planned to increase borrowing for water services by $66m over 10 years, but spend $1.44b on replacing ageing water infrastructure. The rest – 94% of spending – was coming from rates.

This was an “inefficient and expensive way to fund infrastructure investment” as borrowing would spread the cost over future generations, who would also use the new pipes, DIA said.

“It is the department’s view that it is finely balanced whether on reasonable grounds, a problem relating to the council exists that is beyond being able to be addressed via non-statutory intervention.”

It said the reversal of a plan to sell the council’s 34% stake in Wellington Airport had “no impact on the borrowing headroom”. The council was looking to sell its airport shares to set up a fund to help after a major disaster.

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