Nelson councillor risks dismissal, prosecution for business conflict, mayor calls the law an ‘ass’

Wednesday, 6 May 2026

The Audit Office is threatening to dismiss and prosecute a first-term Nelson city councillor over a conflict of interest.

But central ward councillor Lisa Austin insists she has done nothing wrong, and mayor Nick Smith is backing her up, labelling the law an “ass”, and saying Austin is a victim of a “daft” interpretation.

At a media conference on Wednesday morning, Smith said the office had concerns about Austin’s business with her husband, Austin Transport Tippers Ltd, in relation to the Local Authorities (Member’s Interests) Act 1968. The act sets rules around the financial interests of elected members with contracts with a local authority amounting to more than $25,000 in a financial year.

The act said such elected members could seek approval for their non-disqualification from the auditor-general. The council had applied for an approval for Austin.

But Austin said she was advised on Monday by the chief executive that the Office of the Auditor-General had declined the council’s application for an approval, and that it was making a decision on whether to prosecute, and that she could be dismissed from the council.

“This situation is very distressing. I do not feel able to participate in council meetings today and tomorrow with this hanging over me. I do not wish to resign and believe I have done nothing wrong.”

Smith said Austin Transport Tippers did not contract directly to the council, but supplied trucks for two council contractors, Fulton Hogan and Isaac Construction, on set hourly or tonnage rates when required for work carting gravel, sand, topsoil and other materials.

Council staff had no role in the hiring or rates paid for the truck hire, Smith said.

“It is wrong that Cr Austin is being threatened with prosecution and dismissal when there is no evidence of harm or any wrongdoing,” the mayor said.

“She was democratically elected last October, and it is neither fair to her, nor – more importantly – to the people of Nelson who voted for Cr Austin, for her to be excluded from council.

“The combination of the law being an ass and daft interpretations is undermining our local democracy.”

The issue first came to the council’s attention after the October election, when a staff member noticed an Austin Transport Tippers truck at the Bridge to Better worksite, Smith said.

The council established there were no direct contracts with Austin’s company, but decided to be cautious and apply for an approval, assuming it would be straightforward, he said.

They had now been informed the application would not be considered, because it had to consider 12 months of accounts, but it could not take into account contracts from before Austin was elected.

“That is where that is a daft ruling,” Smith said.

“I find it just plain unfair and unjust that the Auditor-General's interpretation says that if you are a new councillor they will not give approval for activities that occurred before you became a councillor when you had absolutely no influence.”

The process had already cost the council thousands in legal fees, and if Austin was dismissed it would cost ratepayers about $200,000 to hold a by-election, he said.

Austin had been left in an “impossible catch-22 position”, Smith said.

“This is Wellington bureaucracy at its worst.”

Since becoming a councillor, all Austin’s business interests had been fully disclosed, and she was not appointed to the Tenders and Delivery Oversight committees due to a possible perceived conflict of interest.

He had written to the Audit Office urging it to make a swift decision, and asking that “common sense” prevail.

Austin said any work her company carried out for the council was indirect.

“I’ve declared all my business obligations. I’ve been open and honest about my business interests throughout my campaign … there’s just been no harm to ratepayers.”

She had put her “heart and soul” into being a councillor, and believed her business experience was part of why voters elected her, she said.

“I will work hard and fight to stay on, because the voters voted for me to be a voice for them.”

An Audit Office spokesperson said in a statement that the council applied to it in November 2025 for retrospective approval of Austin’s existing subcontracts.

However, the Auditor-General had no power to approve contracts between a council and a candidate when the candidate was standing for election, or after the candidate became a councillor.

“The Act does not allow us to do that. We only have the power to approve contracts entered into after the person is elected.”

The spokesperson said contracts with the council could make candidates ineligible for election, or, if they were elected, disqualify them from office.

“This is the effect of the Act, not a decision of the Auditor-General. We have previously written to DIA (Department of Internal Affairs) and the Minister of Internal Affairs about shortcomings of this 1968 legislation and intend to do so again.”

Last month the office confirmed with the council that it had no power to retrospectively approve Austin’s subcontracts.

The spokesperson said the office had no power to dismiss a councillor or remove a councillor from office.

“While prosecutions under the Act are very rare, we are required to consider whether to prosecute individuals when breaches of the Act come to our attention. We intend to advise the council of our decision very shortly.”

The office provided guidance for candidates to help them determine whether the contracting rule might prevent them from standing for election. The guidance for was provided to the Nelson City Council prior to last October’s election.