MINISTER'S REVIEW TEAM
LETTER TO THE MINISTER 4 JULY 2012
Thank you for your response of 2 July 2012 to my concerns.
It appears to me that your Office is stepping well outside the law in appointing the review team. I acknowledge the fiction that you are simply assisting Council at Council’s request and are not therefore using your statutory powers. However it is absolutely clear that this is a solution that has been foisted on Council by yourself in dealing with the Chief Executive, the Mayor and the Deputy Mayor.
Under the LGA it is the elected members who form the governing body and make decisions in respect of Council, not the Mayor and the Deputy Mayor or the Chief Executive. None of them had delegated power for this matter and therefore had no power to negotiate with you or reach any agreement with you. The Councillors had no idea that Mayor, the Deputy Mayor and the Chief Executive had visited Wellington to talk with you, and furthermore the Councillors played no part in deciding on the appointment of the review team or any matters relating to it. They were even denied access to the terms of reference until just before they were made public.
One of the fundamental problems in respect of local government, and this particularly applies to Kaipara, is that, with the blessing of your Office, the LGA has been subverted and much of the power of Council has been placed in the hands of the Chief Executive. Councillors have become mere rubber stamps to endorse decisions already made. Your actions in this matter have confirmed that situation and you have shown that the principles underlying the LGA are in practice a complete sham.
Your failure to uphold the provisions and principles of the LGA and to step outside the law is of concern to the ratepayers of Kaipara. We are also concerned that you are allowing Council to ignore many of the obligatory requirements of the LGA, whilst you are insisting that ratepayers must continue to comply with their obligations under the Act and pay rates, even though the rates have been declared to be illegal and Council has acknowledged a debt to ratepayers in excess of $17 million for illegal rates that it has collected.
I have said time and time again that this is one of the biggest financial and legal shambles ever created in local government history in New Zealand and appointing a review team with no powers and no understanding or knowledge of the situation is ignoring the real issues. You need to put independent forensic people in there and do it quickly and discover the real issues rather than trying to paper over the cracks.
On of the major issues that you are continuing to ignore is that ratepayers are not legally responsible for the debt that was fraudulently incurred by Council. That is central to this whole matter and must be resolved before this matter can progress.
As I have mentioned to you in a previous letter, ratepayers representative are happy to work with your Office to try and resolve the issues.
Below I am including a couple of post from my website.
The posts referred to can be seen in Legal Eagle's posts here
REVIEW TEAM NAMED
Hon David Carter
Minister of Local Government
14 June 2012
Kaipara District Council review team appointed
Local Government Minister David Carter has today announced the members of a review team to assist the Kaipara District Council.
The team is to be chaired by Northland businessman and farmer Greg Gent, and he is joined by two people with considerable local government experience, Leigh Auton and Peter Tennent.
“Kaipara District Council is dealing with a number of serious issues. It sought help from the Government and the wider local government sector which has led to the appointment of this review team,” says Mr Carter.
“The team will assist the Council with its consideration of critical issues, including setting appropriate rating levels for Kaipara ratepayers. It will review the Council’s governance and financial management processes and systems and make recommendations for a way forward.
“I am confident the combined expertise of the team members will greatly assist the Council in working through its issues.”
Mr Carter says that under the current Local Government Act, there are limited options for the Government to intervene to assist councils.
“The situation in Kaipara illustrates why the Government has embarked on its Better Local Government programme of reforms,” he says.
The review team will report to the Minister at the end of October.
Media contact: Vanessa Rawson, 021 245 9773
Members of Kaipara Review Team
Greg Gent (Chair)
Greg Gent, of Ruawai, has considerable knowledge of the Kaipara area as a long-time resident, farmer and business owner. He is an experienced director and chair and is currently a director of the Southern Cross Healthcare Group and Chair of the Farmers Mutual Group. He is also a member of the Northland District Health Board. In 2012 Greg Gent was made an Officer of the New Zealand Order of Merit for his services to the dairy industry and corporate governance.
Leigh Auton has 35 years’ local government experience and was Chief Executive of Manukau City Council from 2006 to 2010. He is an inaugural Fellow, and former President, of the New Zealand Planning Institute. Leigh Auton is currently Director of leadership consultancy business, Auton & Associates Ltd.
Peter Tennent was Mayor of New Plymouth from 2001 to 2010 and a former Deputy Mayor and councillor. In 2010 he was shortlisted for the World Mayor Prize. Peter Tennent currently serves on several boards, including the Venture Taranaki Trust. Last year he was made a Companion of The Queen's Service Order for services to local body affairs.
KAIPARA REVIEW TEAM – Q &As
Why has the Review Team been appointed?
The Kaipara District Council asked for Government assistance because of considerable community concern about proposed rate increases, apparently caused by:
• substantial escalations in the cost of the Mangawhai community wastewater scheme;
• the effects of the Council adopting a more conservative approach to debt funding the Mangawhai community wastewater scheme;
• proposed changes in rating systems resulting in substantial shifts in the incidence of rates
In addition, there is community concern about issues relating to the validity of some Council rates assessed in previous years.
What support will the Review Team have?
The Government and Local Government New Zealand will collaborate to arrange experts in local government and in financial management to support the team.
Who made the decision to appoint the Review Team?
The Review Team was appointed by the Minister of Local Government in consultation with Local Government New Zealand.
What will the Review Team do?
The team will be reviewing Kaipara Council’s governance and financial management processes and systems and will be providing recommendations for options to address any issues. To do this the team will work with councillors and senior managers.
The review will inquire into:
• the Council’s core governance processes, especially its identification of strategic issues facing Kaipara District and its positioning of the Council to respond to and provide community leadership on those issues;
• the Council’s communication, engagement and relationships with ratepayersand key stakeholders;
• the Council’s asset management planning practices and how they compare with industry good practice;• the adequacy of the Council’s financial management including:
o the strengths, weaknesses and risks of its current financial position;
o identification of the underlying drivers of the proposed rate increase contained in the Council’s draft 2012/22 long-term plan (especially those not related to the Mangawhai community wastewater scheme);
o strategies for financial resilience;
o consideration of the range of financing and rating options available to it;
o the adequacy of its planned provision for investment in infrastructure; and
o use and management of debt; and
• such other matters as the Review Team considers desirable to assist the Council and the Minister to understand the current and future challenges the Council faces and the issues it must address to fulfil its statutory responsibilities.
How does this work affect the current inquiry being run by the Auditor General?
The Auditor-General’s inquiry is entirely separate from the work the Review Team will be doing. The Auditor General is looking at the Mangawhai community wastewater scheme and her inquiry is mainly retrospective. The Review Team is to look at other issues but to especially focus on the way ahead for the Council.
The Review Team will, however, keep the Auditor-General informed of the scope of its work and ensure it does not obstruct the Auditor-General’s inquiry.
Will the Review Team be recommending Kaipara amalgamate with other councils?
No. The issue of amalgamation is outside the scope of the team’s work. Amalgamations must be made on the basis of local community support.
Will the public have input into the review team’s inquiries?
The Review Team may gather information as it considers appropriate. However, this is not a public inquiry and it is not expected that the Review Team will hold public meetings or hearings about its work.
When will they report?
The Review Team is to present its final report to the Minister and the Council no later than 31 October 2012. The Review Team is to advise the Minister and the Council of its progress no later than 17 August 2012.
Review Team for Kaipara District Council Appointed
Kaipara District Council Mayor Neil Tiller said, on hearing the Local Government Minister’s announcement of the members of the Kaipara District Council Review Team, “I would like to welcome the of the Review Team. We have some big issues to work through and the Review Team’s wealth of knowledge is warmly welcomed.”
“Greg Gent who will chair the Team is a local businessman and farmer from Ruawai. He will bring a local perspective and understanding to the issues and to the Team.”
“The other two members of the Team are Peter Tennant, a former Mayor of New Plymouth and Leigh Auton a former Chief Executive of Manukau, both of whom will bring a wealth of local government experience.”
“I am hoping that my Council will get the opportunity to meet the Team next week. We are looking forward to the combined expertise and new perspective the Team will bring to the serious issues that we face.”
The Kaipara District Council sought assistance from central government and the wider local government sector on how to address its issues following its May 2012 Council meeting.
Media: Please contact Barbara Ware on 09 439 3123 for further information.
MINISTER'S MEDIA STATEMENT
Hon David Carter
Minister of Local Government
30 May 2012
Minister announces review team for Kaipara Council
Local Government Minister David Carter is to appoint a review team to assist the Kaipara District Council.
“It has become apparent that the Kaipara District Council is dealing with some serious issues that it cannot cope with alone,” says Mr Carter.
“The Council has sought help from central government and the wider local government sector. We have agreed to work with the Council and Local Government New Zealand to set up a small team to assist Kaipara to work through its issues.
“The Council recognises that the assistance the Government can provide is very limited. It also realises that it must work closely with its community to resolve any problems.
“However, it is clear that the situation in Kaipara is urgent and that action is now needed,” Mr Carter says.
“Under the current Local Government Act, there are limited options for the Government to intervene to assist councils. A situation like this illustrates why the Government has embarked on its Better Local Government reform programme.”
Mr Carter says the Council would continue with its Long Term Plan consultation and hearings in order to adopt its Long Term Plan by the end of June and set its rates for the 2012/13 financial year.
“The review team will assist the Council with its consideration of critical issues, including setting appropriate rating levels for Kaipara ratepayers for subsequent years. Continuing to borrow to pay interest and operating costs is simply not sustainable.”
Mr Carter adds the review would not affect the Auditor-General’s current investigation into the Mangawhai Community Wastewater Scheme.
“The review team’s work will be future-focused rather than retrospective. I will, however, consider carefully the implications of the Auditor-General’s report when it is released,” he says.
An announcement on the review team members and the terms of reference will be made as soon as possible.
Media contact: Vanessa Rawson, 021 245 9773
Review Team to be Appointed to Assist Kaipara District Council
Kaipara Mayor, Neil Tiller announced that having sought central government assistance for the big challenges facing Kaipara moving forward, the Minister of Local Government, David Carter is to appoint a review team to assist the Council.
Mayor Tiller said “At its meeting today my Council made the decision to ask central government and the wider local government sector for some assistance on how we address our issues. We recognise that we have some big challenges and we need a strategy to move to a more positive place.
Mayor Tiller said “Whilst the Minister has agreed to provide assistance, this assistance has its limits. Council will still be working closely with its communities to resolve the problems it has.”
Mayor Tiller stressed that assistance asked for and provided was not financial. He said “Despite what some people may think central government is not going to bail us out financially. The debt is ours and we need to find a way of repaying that debt which recognises the communities’ ability to pay and is sustainable. No one else is going to pay this debt on our behalf.”
He went on to say “The Office of the Auditor-General is looking at what has happened in the past and I am sure we all look forward to the understanding and answers the completion of its report will bring. Completion of the Inquiry process is still some time away and in the interim we need to find a solution. We cannot put everything on hold while we wait for answers and central government agrees with us on this, hence the review team.”
An announcement on the review team members and the terms of reference would be made as soon as possible by the Minister’s Office.
Media: Please contact Barbara Ware on 09 439 3123 for further information.
What is the problem at Kaipara District Council?
The Council has experienced major cost blowouts with the Mangawhai wastewater treatment scheme. This has resulted in some ratepayers facing extraordinary rate rises. The Council also acknowledges that some rates set in previous years were invalid.
The Council has proposed an average rate increase of 31 per cent for the 2012/13 financial year. Only about half of this increase appears attributable to the Mangawhai wastewater scheme.
The review team intends to clarify the problems the Council faces and help identify what other issues are driving the Council’s proposed rate increase.
Is the Government stepping in with financial support for the Council?
No. The Government will only fund costs associated with the appointment of the review team.
It is also important to remember that the Mangawhai scheme has already received a Crown subsidy of $5,896,107 (GST exclusive) through the Sanitary Works Subsidy Scheme administered by the Ministry of Health.
What will happen while the review team is working?
The Council needs to continue to fulfil its responsibilities. Under the Local Government Act 2002 the Council must adopt a long term plan for 2012-2022 by 30 June 2012. The long term plan must set out the Council’s rating policies and decisions for 2012/13 and its longer term financial and strategic policies.
What options are available for the Minister to intervene after the review team reports?
The Government will not pre-empt the review team’s work. When the Minister receives the report and recommendations, the best options for further action will then be considered.
This will definitely not include a forced amalgamation – the Government is very clear that arrangements for local government need to be set by the communities affected.
What is central government’s responsibility here?
Central government is responsible for the framework within which local government works. It is not responsible for the actions of local councils. It is essential to local democracy that local councils have the independence to make decisions and are held accountable for those decisions by their ratepayers.
Has the Council been doing anything to resolve the situation itself?
The Council has implemented new improved financial reporting to elected members and has appointed external advisors to help it manage its debt exposures more prudently. It has taken independent legal advice on the validity of its rates, but needs to progress that issue to a solution. It has also requested the Auditor-General inquire into the Mangawhai community wastewater scheme.