A Government MP is pushing for a $30 million taxpayer bailout if a report finds auditors failed to spot a troubled council's spiralling debt problem.

Northland MP Mike Sabin is urging his Government colleagues to let Kaipara ratepayers off the hook for a large chunk of the council's $80 million debt, which was incurred without ratepayers' knowledge on an expanded sewerage scheme beside Mangawhai Harbour.

The secret 2006 decision to double the size of the scheme and increase the loan required from $31 million to $53 million led to the mass resignation of the former council, which was replaced by commissioners last year.

On Tuesday, Auditor-General Lynn Provost will release a long-delayed report on the council's management of the sewerage scheme. It is expected to examine the role of senior councillors and management, arrangements with contractors and other agencies and possibly other related issues, as the commissioners have described the sewerage scheme problems as "the tip of the iceberg".


A separate investigation by Auditing and Assurance Standards Board chairman Neil Cherry will examine the role played by the Auditor-General's business division, Audit New Zealand, which approved the council's accounts.

Mr Sabin told Parliament earlier this month that if the auditors had failed to monitor the project properly, they should literally pay the price.

"If that failure is proven, I will ask that the Auditor-General seeks to meet with the commissioners to ensure that the cost of that failure is met. It is not a cost that should be borne by the ratepayers of the district."

He said this week he stood by his commitment and was lobbying his National colleagues for support on the issue.

A spokeswoman for Local Government Minister Chris Tremain said he could not make any comment until he had read the report.

Mangawhai Ratepayers and Residents Association chairman Bruce Rogan said he would be delighted if Mr Sabin's bid succeeded but did not hold out much hope that the report would make it possible.

"I'm expecting to be blinded by whitewash. I'm expecting there to be no identification of anyone having done anything wrong, a whole lot of flannel and talk about systemic problems from which lessons need to be learned in the future. It's all very regrettable - and the people have to pay the money."

At the height of the crisis last year, Kaipara District Council had the country's highest debt per head of population at more than $4000 per person.


Commissioners say its finances have since improved but the association says the latest annual plan relies on development contributions from new properties of $600,000 a year for the next 10 years to pay off the debt - which is highly unlikely as development contributions this year were about $100,000.

A rates strike is costing the council $3.8 million a year.

The commissioners, led by former National MP John Robertson, responded by asking Mr Sabin to sponsor a rates validation bill, which would legalise $17 million of rates set illegally by the council.

It was passed against the protests of the association, which said the legislation overrode its High Court challenge to the rates' legality and pre-empted the Auditor-General's findings.