‘It didn’t need to be this way’: Crown observer critical of Wellington council

Wednesday, 29 January 2025

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The U-turn on asset sales that up-ended Wellington City Council’s budget last year was unnecessary, the Government’s observer has said.

In a pre-Christmas letter to councillors, obtained by The Post, Lindsay McKenzie criticised a decision to hold an extraordinary meeting in October that saw councillors vote to stop the controversial sale of the capital’s 34% stake in Wellington airport.

That move, borne out of strong opposition to the sale from Labour councillors, forced the council’s 10-year plan to be amended.

But McKenzie said the decision could have been taken at a scheduled meeting in December where a final vote of the long-term plan would have been passed.

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

McKenzie said a council resolution to adopt the long-term plan in June did “not constitute a decision to act on a specific matter covered by the plan nor can a council be required to implement the contents of any long-term plan”.

He went on: “Any sale of the airport shares could have turned on the planned December decision point …There are a number of legitimate reasons why a decision not to sell could have been taken at that time.”

Councillors could have made an amendment to year three of the plan, which would have given the governing body more time to consider, he said.

Councillor Nureddin Abdurahman proposed the make-or-break vote after much legal back-and forth with council officials.

They argued the decision to include the airport sale in the long-term plan was made by the long-term planning committee. The council couldn’t undo that decision ‒ only accept or reject that.

But because the long-term plan was approved in June, the only way to change it was to by a formal amendment process which would involve opening it up to public feedback.

Abdurahman reworded the notice to propose council start the process to amend the long term plan “with Council’s objective being No Sale”.

McKenzie suggested councillors put politics before the council.

“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.

“This may have been due to how some councillors prioritised matters and gave weight to them relative to their oral declarations, duties as a good employer, the governance principles that councils must follow as well as the requirements in relation to decisions.”

Then-local government minster Simeon Brown appointed McKenzie after the council re-opened its long-term plan.

Without the airport sale, the council need to find as much as $600 million in savings.

The process to reverse the airport decision, the exclusion of mana whenua representatives from the decision-making, and the departure of chief executive Barbara McKerrow had been “massively disruptive”, McKenzie wrote.

This, combined with central government’s repeal and replacement of water reforms, was “the perfect storm”.

McKenzie made a series of recommendations to councillors about the plan, which finally passed on December 17.

His letter was dated four days earlier. The Post understands it was sent to the office of mayor Tory Whanau but was not delivered to councillors until Monday.

McKenzie noted some councillors were concerned “at the amount, quality and timeliness of the information they get to enable decision making ‒ typically too much too late. A few are concerned about biases in officers’ reports and advice.”

His letter appears to side with officials.

He said the current processes are as “thorough as one could expect”, and the practice of developing proposals ahead of more detailed decisions “is also best practice”.

He added: “The officers’ approach to supporting decision making is thorough and enabling. While mistakes will occur from time to time there is nothing to suggest that these are in any way deliberate or designed to constrain elected member’s roles and responsibilities.”

McKenzie also hinted at more trouble ahead as the council grapples with the enormous cost of replacing ageing water infrastructure.

“There are some process and timeline risks especially aligning with the LTP amendment,” he wrote.

“I’m sure officers are aware of the challenges.”

A balance sheet review carried out by consultants KPMG last year “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.

Further advice from KPMG was on the way, he noted.

McKenzie’s term ends in July.