Why the Government will (and should) send in an observer

Thursday, 17 October 2024

ANALYSIS: The battle lines have been drawn and Wellington mayor Tory Whanau will head to the Beehive today to plead her council’s case with Local Government Minister Simeon Brown.

The failure of the council to sell a non-controlling stake in Wellington Airport to underpin its long-term plan was both self-defeating and inexplicable. It was the ultimate triumph of an almost theological belief in public ownership at the expense of the public good.

Nevertheless, councillors are elected, there was a vote and it is now done. That’s democracy. But it was never clear during the process that a number of Wellington’s councillors really understood the trade-offs that would be required if the sale didn’t go ahead. There is no free lunch.

So now the council will have to somehow, from somewhere, find $600 million to plug the gap. Whanau said in a statement that bottom lines for her were no further rate rises, but also that, “I do not intend to cut projects that are critical for our city’s growth and sustainability. For me, that means protecting our social housing, and continuing funding for water and key climate initiatives”.

Clearly, something will have to give.

Enter the Government. Ministers did not just wake up on Monday and decide to start whacking the council for jollies or because they are Tories and view the council as being led by annoying Greens and left-wingers.

Instead, the Government has finally gotten to a point where senior ministers view Wellington as having a basic governance problem. This view pre-dates the current elected council, and reflects a broader concern with the standing council bureaucracy that seems to treat elected councillors – the only real point of public accountability in the system – as an annoyance.

Its not a party political thing and the Government has no particular desire to insert a commissioner into Wellington a year out from an election. This is what Wellingtonians voted for, they reason. The election will see just how big the backlash against the current council is.

A Crown observer, however, is another matter.

The role, introduced in changes to the Local Government Act in 2012, simply reads that one can be appointed if “the Minister believes, on reasonable grounds, that a significant problem relating to the local authority exists”.

The Act also says that its purpose is to better enable the council to “address the problem” or to enable the minister “to monitor the local authority’s progress in addressing the problem”.

It is difficult to see how the advice being sought by Simeon Brown will not have putting an observer in place as an option. And, given furnishing the advice should not be complicated, doubled by the fact that this isn’t a Government that likes to let things drift, there is a very good chance the Wellington City Council will get an observer in the next couple of weeks.

Under the Act, the Crown observer would be furnished with terms of reference and would be required to report back to the Government on what they are up to and make recommendations for further action if required.

If an observer is sent in, the council must cooperate and comply.

It would be a good middle option for the Government. The duly elected council remains in place – but the Government would be basically sending in a supercharged auditor, likely a real hard head who can come to grips with what is going on.

And depending on what the terms of reference are that could mean a tough look at the council’s financial commitments, spending decisions, revenue options and perhaps most importantly pretty seriously test the assumptions behind all of them.

Who knows what it would turn up.

This appears to be the most likely option at this stage. Wellingtonians are sick of high rates, crumbling infrastructure and a city that seems to have lost its commercial mojo and been poorly governed for a long period now.

The politics demands it, the Government looks ready to move and it all might happen quite quickly.