Department of Internal Affairs officials felt the behaviour of Wellington City councillors had caused “significant public concern” and they questioned the council’s ability to find a path to financial sustainability.
“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.”
Challenging behaviour was not uncommon in councils but in Wellington City Council’s case, it was causing significant public concern, the Department of Internal Affairs (DIA) said.
Local Government Minister Simeon Brown has appointed Lindsay McKenzie (inset) as Wellington City Council's Crown observer.
In recent meetings, councillors had walked out, refused to participate in votes and there was general confusion regarding decisions.
“It is unclear in this case whether council members can effectively work together, and with council staff, to identify a path to financial sustainability that does not have material impacts on ratepayers.”
DIA officials had fundamental concerns with the characterisation of the council’s response to the failed airport sale.
“It demonstrates an inability to use the financing mechanisms available to the council to manage both the under-insurance issue as well as how to finance long-term infrastructure without relying on rates rises for ratepayers.”
It was also “extremely uncommon” for a council to reverse such a critical financial decision that required an amendment to the LTP only four months into the cycle.
The department identified water services as being one of the council’s key problems.
It said net borrowings for water were set to increase by just $66 million, with the remaining $1.10 billion of capital investment proposed to be funded by rates.
“This is an inefficient and expensive way to fund infrastructure investment, as it requires ratepayers to pay for investment in intergenerational long-lived infrastructure assets upfront through their rates bills, rather than utilising debt financing and spreading the cost over all current and future users of the assets,” DIA said.
Wellingtonians could be overcharged for water services by more than $760m over the next decade as a result.
DIA noted a council meeting on October 16 was the first example it had seen where the council appeared to be united and committed to working together on the LTP amendment.
But with only one positive meeting, the potential remained for the situation to be a significant problem, DIA said.
“The Department is also of the view that this problem, or potential problem, is significant, in that the above problem will have actual or probable adverse consequences for residents and ratepayers within the district, either significantly higher rates increases or reductions in the capital programme.”
The Local Government Act says the Government can intervene with the likes of a Crown observer if it’s believed there is a “significant problem”.
On the basis a significant problem existed at the council, DIA’s advice was that a Crown observer should be appointed to help.
Brown announced this week that Lindsay McKenzie, former chief executive of the Tasman and Gisborne district councils, will be Wellington City Council’s Crown observer.
McKenzie started in his role on Wednesday. The council will foot the bill for his remuneration of $1000 per day.
He told the Herald the role would be part-time and he planned to work two to three days a week.
McKenzie expected to work more as he gets set up but believed things should settle after the holiday break, when he will start working an average of two days a week.
He will fly from Nelson for the job, with travel expenses also to be paid by the council.
McKenzie’s term will finish at the end of July 2025, or earlier if appropriate.
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
