‘We need assistance, not punching down’: Whanau responds to Crown observer appointment

Tuesday, 22 October 2024

Local Government Minister Simeon Brown has intervened in Wellington City Council, after advice that its financial approach would “overcharge” Wellingtonians more than $700 million over a decade.

Mayor Tory Whanau says she will accept the decision.

“It is my view that we accept this and work constructively with whoever is appointed,” she said.

“I wasn’t overly surprised at the decision to bring in an observer, based on sentiments expressed. And I wasn’t fighting this decision.

“I welcome his intention to bring in an observer.”

Whanau acknowledged that the council needed help but disputed that the council has mismanaged funding for water infrastructure.

She said that the council as well as many across the country are facing big issues such as water infrastructure and insurance. “What I'd like to see from central government is more assistance and more collaboration.'

'We need assistance, not punching down.'

She says that the council could and would “continue to deliver the best outcomes for the city”.

She said that the council - and the Government - want a long term plan for the best interests of Wellington.

She rejected any notion that she should resign. “Not even close.”

“It's been a tough couple of years but there is a commitment from all of us to move forward.”

Brown said on Tuesday afternoon that a Crown observer would be appointed to the council , after a week of feverish speculation about whether the Government would intervene.

Brown told reporters an observer was being appointed due to a “significant problem” at the council.

Among problems were the council’s “re-litigating” of its long-term plan, its financial management of its water infrastructure, and a lack of confidence these issues could be resolved “based on the behaviour of the council”.

The observer would monitor and assist the council, but Brown said he had “no intention for this Government to be making decisions on behalf of Wellington”.

Brown said he had a “pleasant conversation” with Wellington mayor Tory Whanau about an hour before making the decision public. The council will now have 10 days to respond to the Government’s decision, before an observer is formally appointed.

Council sources have confirmed that councillors agreed not to appeal the minister's decision.

The city council is grappling with a possible need for up to $600 million in budget cuts after voting to cancel the planned sale of its 34% stake in Wellington Airport, which was built into its long-term plan.

The fraught issue is being hard fought across the council table, and the Government last week began making public its concern about the redrawing of Wellington’s budget. On Monday, The Post reported that Whanau had laid down 11 “principles” for where cuts could and could not be made.

Brown said, in an earlier statement, that Department of Internal Affairs advice highlighted that the council was not utilising its balance sheet appropriately in order to maintain critical infrastructure like water, and it was failing to manage its insurance risk appropriately.

Brown said the recent decision to amend the long term plan after the airport share sale vote had worsened this risk. He also said the council was not handling its funding of needed water infrastructure well, as the council was only borrowing $66m for this, while putting $1.1 billion in capital investment cost directly onto ratepayers.

“This is an inefficient and expensive way to fund infrastructure investment,” Brown said.

“The council is front-loading costs on current ratepayers rather than utilising debt financing to spread the cost over current and future users of the assets.”

The Department of Internal Affairs had advised Brown this approach to financing would “overcharge” Wellingtonians by more than $700m over 10 years.

Brown also directly criticised the city’s councillors.

“Recent council meetings have also seen councillors walk out, refusing to participate in votes, and confusion regarding decisions, amendments, and voting. Councillors have also made repeated public criticism of one another and council staff,” he said.

“This environment is not conducive to the council effectively managing the long-term plan amendment and adoption process. Not resolving these challenges would likely have adverse consequences for Wellington residents and ratepayers.”

Finance Minister Nicola Willis said appointing a Crown observer was a good step, as there were challenges at the council.

“It is a democratically elected council and remains accountable for its own decisions. The Crown observer ensures that we can monitor its progress in resolving its long term plan and addressing financial challenges it faces to provide support and advice.”

Willis stood by her comments that the council was a shambles. “That was my view at the time, and I note that a Crown observer has been appointed. That is not a step that the Government takes lightly, that the minister … takes lightly.”

In a statement, Whanau said she would shortly consider the draft terms of reference and discuss this decision with councillors.

“It is my view that we accept this and work constructively with whoever is appointed.

“Ultimately, we all want a long-term plan amendment that delivers the best outcomes for Wellingtonians.”

The council decision not to sell its minority shares in the airport meant it had some tough decisions to make, she said.

Whanau called councillors in for a meeting at midday on Monday and handed out her principles for the needed budget cuts, which were leaked to The Post.

These included no cuts for water infrastructure, projects under contract or construction, maintenance or renewal budgets, social housing, or projects such as pool de-gasification where cancellation would increase rates.

Also understood to be off the table for the mayor was the contentious $139m Golden Mile revamp, co-funded by the Government.

‘Tense and unpleasant’

Former Internal Affairs Minister Peter Dunne believed the decision was inevitable and became a certainty after Whanau's meeting with Brown last week.

“The mayor didn't read the signals coming out of that meeting … and then yesterday coming out with her bottom lines [including] completing the Golden Mile project, it just reinforced the dysfunction.”

He said she had failed to not only appreciate the public's patience but also the Government's. “It's wake-up time. The council has to stop living in dream land.”

Deputy prime minister Winston Peters told Stuff: 'I support Simeon Brown. I'm concerned that a city, that was once alive, is being destroyed. It's the worst I've ever seen.'

Councillor Nicola Young was relieved by the decision to appoint an observer and said everyone would now be on their best behaviour.

“The atmosphere has been pretty tense and unpleasant at council.”

Councillor Diane Calvert said it was a positive move for the council, the city and for Wellingtonians.

“I've been calling for the council to get some support for quite some time, and for the mayor to get support in helping lead the council. And I think what we've seen in the minister's information is that exactly is what's going to happen.

“The observer is going to help the mayor to be able to provide the leadership this council wants. It's going to help council members have the information and advice to make decisions effectively and in a timely manner, and that's what we've been calling on for some time.”

“We’ve got to put the city first. We've got to put Wellingtonians first. And for me, this is what this is doing.”

ACT leader David Seymour said it was about time the Government intervened “in a light touch way initially”, showing it may take further steps if necessary.

“Parliament makes the Local Government Act that says they can hold an election and take rates off people, if they're not doing a good job then Parliament and the Government can also have the legal ability to take steps to get a fair deal for ratepayers,” Seymour said.

Green Party co-leader Chlöe Swarbrick said within WCC, 'very evidently, there are challenges, but WCC had its members … locally elected, and the Government likes to talk a lot about localism, so let's see that play out in practice'.

'As I understand that WCC also has a plan,' Swarbrick said.

Labour leader Chris Hipkins said there was 'clearly a lot of disquiet amongst Wellingtonians about how their local government is currently performing'.

'My argument is that there's an election coming up next year, and they can do something about that.'

He said the Government should release any evidence of a problem with the council's handling of its water infrastructure.

'What's that observer going to do? What difference is that going to actually make? I think the real question really is, ultimately, why aren't the voters being given the choice here?'

Councillor Tony Randle said the observer would help the council come up with a financial sustainable plan.

“The council has struggled to recognize its financial pressures, and that’s that's why we've ended up with this huge fight over the airport share sale and the reversal position,

“It is hard work for a council that has focused on transforming the city and to then run out of money and hit the wall of the water infrastructure.

“A Crown Observer will help us focus on the main thing and the main thing is the financial have a financially sustainable plan. Irrespective of what cuts are made, or what insurance has put aside, it's got to be sustainable, and we've also got to bring up the confidence that public have in us.”

Former mayor Kerry Prendergast, who just this week compared Wellington’s current issues with those it also faced in 80s, said it was a big step, but “clearly he has had a lot of advice that supports his decision”.

On the other hand she said it was tough on those at the sharp end, including the mayor, councillors and management.

'Curious' was how another former mayor, Justin Lester, described today's move, saying there were other councils in a similar situation to Wellington with a high debt to revenue ratio. They included Auckland, Hamilton, Tauranga and Queenstown Lakes.

“I just hope [the decision] hasn't been made for political reasons,” Lester said.

While it was not a great day for Wellington, and the mayor would likely be disappointed in some of the advice she had received from officers that had been criticised by the Minister, it was an opportunity for councillors to start behaving and working together, he said.

Councillor Nureddin Abdurahman, who proposed the plan to manage the long-term plan amendment, said the mayor had acknowledged its merit but was not planning to run with it.

He hoped the Crown observer would take his idea on board.

“You cannot find a solution by looking at the community projects you should be cutting without knowing what your insurance risk appetite is, what your insurance roadmap and the amount of capex cuts are required.”

On X, councillor Rebecca Matthews said: “As LTP chair, I intend to work constructively with a Crown Observer & colleagues to deliver an LTP amendment quickly & cleanly. Councillor behaviour including public criticism of staff has been called out. I have not indulged in these behaviours and call on others to stop, now.”

– With reporting by Harriet Laughton, Julie Jacobson, Kevin Norquay, Anna Whyte and Tom Hunt