The Christchuch City Council's chief executive Tony Marryatt has announced he has turned down a controversial $68,000 pay rise, while an independent government representative has been appointed to help get the dysfunctional council back on track.
Problems in the council have been apparent for several months, and in the last week there have been calls for the councillors to be sacked and replaced by commissioners.
Mr Marryatt said his decision today was based on what was best for the council.
"The negative publicity and public opinion has been tough for staff at the organisation and has the potential to distract this Council from the very important task at hand of rebuilding our city,'' Mr Marryatt said.
Mr Parker said he thought the move was a "tremendous gesture of faith and belief in the council and our desire to work together''.
Local Government Minister Nick Smith met the council this afternoon to discuss the ongoing problems, and announced afterwards that a Crown observer would be appointed to help get the organisation working together properly.
"The role of the Crown observer will be to rebuild good professional relationships between the Mayor, councillors and staff and to provide guidance on how they can effectively govern at this challenging time.''
Dr Smith told media the observer's key role would be to "uncouple the destructive process in council over the last six months'' and to "nip the distrust in the bud''.
Kerry Marshall, the former Local Government New Zealand president, and former Mayor of both Nelson City and Tasman District, has been appointed to the position, and will begin working with the council on Monday.
At this stage, Mr Marshall will stay on until March, at which time the minister will meet with council again to review the progress.
Asked why he would not replace the councillors with commissioners, Dr Smith said "I am saying ... that appointing commissioners is the last resort, but the importance of the rebuild in Christchurch is such that it is not an option I can rule out''.
The council had weeks, not months, to get things back on track, Dr Smith said.
Mayor Bob Parker said the council had embraced the concept of a Crown observer as a means to rebuild a trust between councillors.
"We all have to shoulder some blame for the situation we find ourselves in,'' he said.
"I think we are under extraordinary pressure. Some issues grow like a cancer and they get to the point where they take over the entire beast. I have always been confident we can get things back on track.''