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Getting the Validation Bill ready for Parliament



See the MRRA video on YouTube







Parliament "solves" the problems of Kaipara with the Validation Bill


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The judgments of Heath J in MRRA v KDC can be seen here and here

Winston Peters' views on the Kaipara problems

"Ladies and gentlemen this is not the script for a novel or a bodice-ripping bestseller. This is a sorry litany of negligence, corruption and cover-up."


Checkpoint's report on the KDC's legal action against ratepayers can be heard here.

The report's references to a cease-fire and the MRRA backing off are not quite correct.  The whole issue of the legality of the rates is still before the Court of Appeal and will be resolved next year.

In spite of chairperson John Robertson's criticism of the MRRA for appealing to the Court of Appeal and wasting ratepayers' money on legal proceedings, he has issued separate legal proceedings against numerous rate strikers at a huge cost to the Council.  At this stage it is not known how many proceedings have been issued but it is expected to be large.

The ratepayers involved had already tendered payment for the rates that were not disputed, with the legality of the balance to be decided by the court.  However, the Council rejected the proposal and, no doubt driven by the Department of Internal Affairs and the banking fraternity, is seeking to teach Kaipara ratepayers a lesson.   It is a warning to other whistle-blowing ratepayers not to stand up and be counted or to challenge the illegal actions of their own local authorities.

Nothing like a few ratepayers strung up in public just "to encourage the others".

But the decision to issue proceedings is going to create another battle for the Council and another festering wound that will not heal.  The MRRA is offering to provide legal advice for those who want to defend the proceedings and more inormation about this will be provided as it becomes available.

Those ratepayers who have been served with proceedings and intend to continue the batttle should contact Bruce Rogan of the MRRA to find out more about the matter.

As time goes by it is becoming apparent that democracy is never going to return to Kaipara.

In 2012 the government (through the DIA), and in collaboration with the banks, applied enormous pressure on the Councillors to resign and appointed Commissioners to run the Council.

They did so not because of the incompetence or illegal actions of the Council. That had been apparent for years but the government and the government's appointed regulatory authority, the OAG, had turned a blind eye to it.

They took action because they were concerned that the Council would default on its huge illegal debt and the assumption that local authorities are financially bullet-proof - which is the foundation of local government in NZ and the underlying principle of the new Local Government Funding Agency - would be shot to pieces.

If Kaipara went down financially then the concern was that other shonky councils would follow suit. The old Domino Effect. The facade of financial impregnability had to be maintained at all cost.

Appointing Commissioners meant that there was no longer any democratic local government in Kaipara. No matter how badly the Commissioners performed, they could not be voted out at an election.

It was a form of state dictatorship that, when you really look at it, has no place in a democratic society.

Commissioners were not appointed because of the fault of the ratepayers but because the government had delegated powers to local government and failed to ensure adequate safeguards to ensure that the delegated powers were exercised in compliance with the law.

The laissez-faire approach, with the OAG and the Minister, fast asleep, created the Kaipara debacle. A dictatorship was then appointed so that central government could ensure that its own policies were cemented in place and the crumbling foundations of local government could be shored up and the disintegrating facade of financial security could be painted over.

Although technically and legally the Commissioners are obliged to consult with the ratepayers to comply with the Local Government Act and the Rating Act, and at all times to act in the best interest of ratepayers, the reality is that they have ignored those obligations, as their predecessors did, and as most local authorities in New Zealand do.

The only difference between the old and the new is that the Commissioners are far more adept at hiding their illegalities and incompetence behind a carefully crafted facade of glib persuasiveness, and have displayed a mastery of the dark arts of propaganda and dirty tricks that has been honed by years in the local government service.

Local government, central government and the banks will never want the light of day to be cast over the fraud that has been perpetrated on the people of Kaipara.

A return to democracy would invariably mean that, for the first time, the books would be opened and the financial reality laid bare. The EcoCare project would be exposed to the laser light and exposed for the fraud that it is. And all of those who have played a role in concealing the truth over many years and conspiring to bankrupt the ratepayers of the district would be exposed for what they are, not what they pretended to be.

If the truth about Kaipara gets out of the bag then many reputations will be destroyed.

As sure as day follows night, the powers that be, whose sole intent is to dump on the ratepayers, will extend the Commissioners' dictatorship for another year so that their forced occupation of Kaipara will coincide with Kaipara being absorbed into the Unitary Authority that will be forced on the people of the North.

The Kaipara problems will be buried in a massive bureaucracy with no chance of redress.

In the meantime, the Commissioners will enlist the support of handpicked patsies from the community to rubberstamp the new grand scheme to disguise the fact that the EcoCare plant is a $62 million lemon that has come to the end of its life.

They will continue to cast their smokescreen over the fact that the Council is insolvent, and, driven by the banks and the DIA, they will spare no cost in extracting their pound of flesh from the ratepayers.

So says the headline (here), but it only applies if you are buying carpet.

The Court of Appeal has ruled in a case between carpet makers Godfrey Hirst and Cavalier Bremworth, that retailers can no longer use fine print to hide information or mislead people.

However, ratepayers should note that the law relating to fair trading and misrepresentation does not apply to local authorities. As the Kaipara experience has shown, councils are not subject to the laws of the land.

Forget the fine print. Unlike carpet sellers, a local authority can not only fail to reveal the true figure or cost of project, but it can cover up lie, dissimulate, act fraudulently and completely misrepresent the true situation and leave the scattered fragments of broken laws in its path, and still come out of it all smelling like roses.

Not only are the wretched ratepayers compelled to stump up with the hidden price but they are also gouged for penalties for having the sheer effrontery to question and challenge the fraud.

The Beca consortium was an adviser to the KDC during the EcoCare fiasco and was joint project manager.

Many of the recommendations for the illegal extension of the scheme and the doubling of the costs arose from Beca recommendations that were kept secret by the KDC and not made available to the ratepayers until after the departure of Chief Executive Jack McKerchar in late 2011.

The competence of the KDC and its advisers was slated by the OAG in its report on EcoCare and it is apparent from that report that the KDC, its lawyers and adviser were all out of their depth and had no real understanding of the mess that they were getting themselves into.

It is also clear that the Council and its advisers either did not have any understanding of local government law, or they chose to ignore compliance with the law because they believed that the ratepayers would always bear the burden of any debt, whether legal or not, because of the operation of the protected transaction provisions in the LGA.

The KDC was represented by Beca and Bell Gully during the negotiating and executing of the EcoCare contracts and loan agreements, and ABN Amro, the Dutch bank that bank-rolled the scheme, by Russell McVeagh.

In spite of this very high-powered representation, none of the advisers appear to have raised the alarm that all the decisions made by the KDC in relation to the project were illegal and ultra vires and breached very basic requirements of the LGA.

Justice Heath in his High Court decision ruled that all the EcoCare decisions were illegal.

The Council has now requested an opinion from David Goddard QC in relation to potential claims by the Council against the Beca Consortium,

WORZEL ON GANGS   24.10.16
Worzel's World - Just one of the gang in the Mangawhai Focus (here) considers what the Police Minister means by promising to fix the "gang problem".

Worzel states:

What then do organised criminal gangs do? Do they meet in secret to conspire and break the law? Do they engage in lies and intimidation in order to obtain compliance with their wrongdoing and suppress opposition? Are they a burden financially and socially to their communities? Do some of the more powerful gangs have friends in politics who can pull a few strings and ‘fix’ things for them? Does this sound like the Mongrel Mob, Headhunters, Hells Angels or Ulysses Motorcycle Club to you?

Sounds more like the Kaipara District Council to me.

When you look at the financial damage the KDC has done to our communities, businesses and families then you can safely say that the KDC is the most destructive gang in all of our lives.

The KDC fraudulently and illegally entered into a Ponzi type arrangement that was planned to enrich those involved with full knowledge that the ratepayers of the district would be dumped with a massive illegal debt.

They lied and misrepresented the situation for years, they pilfered all the funds set aside for other purposes to feed their rort and stole the Mangawhai Endowment funds monies. They created a smoke pall to disguise the financial realities and the utter ineptness of the EcoCare scheme and they even persuaded Parliament to force the luckless ratepayers to pay their illegal tithes plus vindictive penalties.

As ex detective Mike Sabin said about the Councillors who were responsible for the Kaipara rorts: "if they had been company directors they would all be in jail now."

And that's where they should be, along with all the others who suspended their judgement and their obligations to the community and to their professions, and allowed the Kaipara rorts to proceed, condoned the excesses and incompetence and illegalities, and stood by and watched as the people of Kaipara were fleeced.

They are all now sitting back with smug smiles on their faces while the current gang continues to pursue and harass the only people who come out of this indecent shambles with clean hands - the ratepayers of the district.

Has the lemon been squeezed dry?  Is there any juice left in it, or should it be consigned to the compost heap?

The $62 million super-duper sewerage scheme was supposed to service the Mangawhai community for years to come. We were told that it would service 4,500 connections. That was a lie. It is now servicing only 1,600 connections and has come to the end of its life, five years after it was commissioned.

The Commissioners will not allow any independent assessment of the plant but are being forced to admit that no more connections can be made because the disposal farm (the purchase of which still has the lingering smell of fraud) has reached capacity. No more connections allowed.

Not only that, reticulation for new developments cannot be undertaken because there is no money to pay for it.

In many instances the development contributions levied do not even meet the cost of the new reticulation, so where does the extra money come from?

And have you forgotten that those development contributions have already been ear-marked for repayment of the existing debt? That is the $26.4 million allocated to future developments that the Commissioners cannot pay the interest on.

But the problem is even worse than that because the EcoCare system is a cot-case waiting to disintegrate. Any of the experts around town will tell you of the plumbing, drainage, and electrical shortcomings of the system are already apparent and, sooner rather than later, vast sums of money will have to be expended to effectively rebuild the scheme.

Would it not be better to call it quits now and ensure that all new developments have their own private state of the art sewerage schemes? Why link in to a lemon?

There is, of course, a problem with the debt. What do we do with it? With respect, it is not the debt of the ratepayers. The debt was illegally and immorally incurred by the Council in collusion with its consultants and advisers, and was provided by a bank that knew that the Council was acting illegally and that it was a shonky deal. That is why it was sold as an impaired debt at a 40 per cent discount.

The bank needs to take a massive haircut. The lawyers and consultants for the Council need to chip in as does Jack McKerchar. So do those who provided the financial models that proved to be, in the accepted parlance, less than robust.

The government has to foot the rest of the bill. Not because the ratepayers expect a hand-out, but because the government was responsible for the whole fiasco. The negligence of the Office of the Auditor-General, the watchdog for local government and the auditor of the Council, was the principal cause of all of Kaipara's problems. If the Auditor-General had done her job properly then there would have been no oxygen for the other miscreants to breathe. She allowed them unlimited latitude to wreak their rorts.

And the government knew what was going on and allowed it. A whole series of Ministers of Local Government endorsed and protected the illegalities of the KDC and the refusal of the OAG to get involved. They sat and watched the rorts. They betrayed the people of the Kaipara; they failed to protect them from the illegal actions of their local authority; they fed them to the dogs.

The Commissioners are going through a mock process of appointing a ratepayer group to consult with about the future of EcoCare. it will be the usual farce with hand-picked cronies hiding behind smoke and mirrors and getting Kaipara further into debt.

Time for an honest independent appraisal and perhaps time to consign the lemon to the compost heap.

The EcoCare lemon has been squeezed dry

he Mangawhai Focus has presented another startling piece of unbalanced reporting with its article entitled Rates Arrears: Numbers Tell the Story (here).

It is uncertain if the article is an editorial or a letter to the editor.  It is under the name of Peter Nicholas but one gets the impression that it is straight from the pen of the Commissioners.  It is unadulterated propaganda, biased, with only one side of the coin presented.

Can anyone identify Peter Nicholas?

Cameron Slater's article on Auckland City Council's financial woes (here) will strike a resonant chord with Kaipara ratepayers. Kaipara's problems are the problems of many local authorities in New Zealand.

Try this for size:

The Council’s AA credit rating is not based on a ‘loan to value ratio’ but on Council’s legal entitlement to mandate rates. Essentially Council can put up rates by any amount it wants and that means it is technically not able to go bust (of course massive rate hikes would draw protests in the street). Credit agencies and banks don’t give a toss about assets in the context of rates, particularly in a big growing city like Auckland.

In other words, ratepayers guarantee the debts of their council (and under the Local Government Funding Agency Scheme the debts of every other council in new Zealand). There is no requirement of financial prudence, and compliance with the law is no longer required. Councils have for a long time operated on the basis that they are outside the law and are not required to comply with the requirements of the Local Government Act and the Rating Act. That has now been confirmed judicially by Heath J in the MRRA judicial review. The fact that a council has a debt entitles the council to set a rate to meet that debt even though the High Court rules that the debt itself is illegal, and the purpose for which the debt was incurred is illegal.

That is why the Court of Appeal decision in the MRRA action is so vital. A decision by the Court of Appeal to limit a council's power to rate ratepayers for legal debts and purposes only would mean that local authorities would have to comply with the law of the land and banks would be obliged to "do due diligence" as they do with all other loans.

The blog also refers to the way local authorities mislead ratepayers as to the true level of debt. Something that Kaipara ratepayers are very aware of

Debt is much higher than what is known as ‘external debt’. The debate around that is as such one that calls for much more detail but suffice to say Council has for a long time used the mechanisms of short term internal loans to fudge the numbers.

In Kaipara the cupboard is bare. All the reserve funds have been appropriated for other purposes and the debt figure quoted by the commissioners is completely misleading.

In summary, Cameron Slater's blog states:

Don’t believe the hype. Auckland Council is in the ka-ka and is only playing smoke and mirrors with the truth.

In Kaipara we have heard it all before.

ECOCARE PLANS   28.09.14
The proposals for the EcoCare further capital developments (see article below) can be seen in the latest Council agenda at page 224.  it is interesting that the new advisory panel will not be allowed to look at the historic problems of EcoCare so the deficiencies in the system will continue to be shrouded in a thick fog. 

Six community representatives will be appointed to the panel along with two Commissioners.  BUT the community representatives must have an open mind and no publicly expressed views on the matter.  They will also be appointed by the Commissioners and not the community.

The Chair of the panel has already been appointed by the Commissioners.  He is D'Arcy Quinn. 

Those who have not seen the latest edition of the Mangawhai Focus should look at that latest from spin-meister John Robertson under the heading Extending the Mangawhai Wastewater Scheme.

As warned on this website over and over again, the Commissioners have sucked in ratepayers for a couple of years with lower than expected rate rises. But the reality is that the banks will not wait for ever for their debt to be repaid and the first Rate Bomb is being prepared for release. and will form part of the new long term plan due for next year.

But it is the EcoCare lemon that has to be squeezed first. Lemon? Because that is what Mangawhai's sewerage scheme is . We were sold a dog.

There is an illegal debt of over $60 million that we are being forced to pay for our Ferrari of a sewerage system (twice the price of what we agreed to) and we now discover that what we have got is a Ford Anglia. Not only that it a Ford Anglia that has ground to a halt and needs massive sums spent on it if it is to be of any further use.

Read what you are in for. Comment will follow.

EcoCare Lemon

"Hi, I've come back to haunt you again."

In THE SMOKE THICKENS 13.09.14  (scroll down) I looked at some of the propaganda put out by spin-meister John Robertson in the Mangawhai Focus in Your Questions Answered - Dealing to history,. There is much more. He outlines the tasks that faced the Commissioners:

Fix up the rating errors of the past in a transparent way. This was done by Parliament. Members of Parliament scrutinised this past. They visited Kaipara, listened to the various opinions expressed. They then passed the Validation Act with support of Act, Greens, Labour, Maori Party, National, and United Future.

• Transparent? The Commissioners reneged on the Council's resolution to resolve the issue of the illegal rates jointly with ratepayers via a focus group. The Commissioners totally rejected any consultation with ratepayers on the issue and unilaterally forced through the Validation Bill.

• As, detailed in MIKE SABIN ASHAMED OF VALIDATION BILL? 10.09.14 below, the Commissioners, Mike Sabin, and the DIA misrepresented to Parliament the true nature of the illegalities being validated and sneaked into the Bill completely ultra vires rates and levies that were completely outside the law.

• In an act of utter vindictiveness they also validated penalties on the rates as a lesson to ratepayers in the future that whistle-blowing and rates strikes that brought to light the illegal and reckless acts of a local authority, no matter how justified, would be dealt with ruthlessly.

Spend time to try to “heal the wounds” of those who felt let down by their elected members and others who are in roles that undertake the checks and balances to support our functioning democracy. We have been partly successful with these endeavours, but there remains a grievance with some that may never be healed.

What arrant nonsense. Ratepayers were more than happy to let the past go if the current Council had only admitted the errors, acknowledged the illegalities and resolved the issues with ratepayers. The truth is that the Commissioners have carried on in the same way as the previous dysfunctional Council with its secrecy, lack of transparency, illegalities, and it refusal to consult with ratepayers. Its arrogant denial of ratepayers' rights in the promotion of the Validation Bill was the last straw for many ratepayers.

John Robertson's crocodile tears about the wounds not being healed are a complete sham. The solution is in his own hands.

The Auditor General’s Inquiry Report took far longer than she forecast, and was only published in December 2013. This delayed our ability to pin down accountability, and thus take the legal action just announced.

Gosh! Wow! What a surprise! Wasn't that part of the Grand Plan? The OAG would hold an independent inquiry into the OAG' s incompetence (yes, believe it or not, this is New Zealand 2014, the least corrupt country in the world), and delay the findings until the Commissioners - aided and abetted by the local MP and the DIA - could shaft home the liability of ratepayers for all the illegal debts and rates, and until the limitation period had expired so that the OAG could get off with the usual wet bus ticket wrist-slap, and the other guilty parties could slope off into the shadows..

More to come on the real reasons why the MRRA was forced to go on rate strike and why it had no alternative but to go to court.

"Let ratepayers beware". That is the warning being sent out by local authorities throughout the country who are ignoring the legal obligations to consult with ratepayers, to act prudently and as fiduciaries for ratepayers, and are embarking on reckless enterprises that will create a financial burden that will impoverish ratepayers for generations to come.

In Kaipara ratepayers have been victims of the EcoCare Ponzi scheme, and many ratepayers throughout the country have been victims of, or are currently being sucked into, similar Ponzi schemes.

Auckland seems to be careering out of control and Bernard Oarsman in the NZ Herald (here) looks a the Auckland Council raising a 'targeted rate' to plug the $12b transport fund gap.

A targeted rate is just another rate set under the Local Government (Rating) Act to fund a specific activity, with those who benefit from the activity been hit with the targeted rate. The EcoCare rates are examples of such a rate.

However, under the Local Government Funding Agency all ratepayers in New Zealand will effectively be guarantors for Auckland's debts and will be responsible for the debts if the local ratepayers are unable to cope with the burden.

Caveat ratepayers.

John Robertson and his Commissioners, no doubt driven by the banks and the Department of Internal Affairs, are planning to waste more monies on fruitless legal escapades in their vindictive pursuit of whistle-blowing Kaipara ratepayers.

They are planning to take defaulting ratepayers to the District Court even though the legality of the rates in question has still to be decided by the Court of Appeal.

The Commissioners have already squandered over $700,000 of ratepayers money (see the Northern Advocate article here) in an attempt to force ratepayers to pay rates that have been charged to meet massive secret debts on loans raised to fund the EcoCare debacle.

Both the loans and the decision to embark on EcoCare have been declared by the High Court to be illegal because of the failure of the Council to comply with statutory requirements.

The MRRA is now asking the Court of Appeal whether the Kaipara Council, or any local authority for that matter, has the legal power to set, assess and collect rates for a purpose that has been declared by the High Court to be illegal .

It is a fundamental question which the MRRA put to the High Court, but unfortunately the Court did not respond to the question.

If the Commissioners are right and the EcoCare rates are valid, it means that local authorities in New Zealand are not obliged to comply with any legislation, they are not obliged to consult, they can simply do whatever they like - whether legal or not - and the ratepayers will be obliged to pay the bill.

This, of course, is the Grand Plan for local government that central government is imposing on the people of New Zealand. Unfettered power for local authorities coupled with unrestricted obligations placed on ratepayers.

Many councils all over New Zealand suffer from the Kaipara illegalities and rorts and you only have to look at the Auckland behemoth, totally out of control, to see where local government in New Zealand is heading

The Local Government Funding Agency will cement in the obligations of ratepayers. All local authorities will cross-guarantee the debts of all other local authorities. That means that all ratepayers in New Zealand will be responsible for the Kaipara debts, and more alarmingly, for the debts of Auckland.

Ratepayers have no idea that the local government has, effectively, a mortgage over every single property in the country and if a ratepayer does not meet his obligation to pay all the debts of all local authorities then the ratepayer's property can be sold.

The spin behind the Agency is that the banks can offer cheaper loans to local authorities and ratepayers benefit. It is a complete fallacy. It is being put in place so that bank loans to councils are 100% guaranteed and, very importantly, the banks don't have to do due diligence to ensure that the councils are solvent or have complied with the law.

The banks know that even if a council is insolvent or the loan is used for illegal purposes, the ratepayers will still have to foot the bill.

The MRRA case to the High Court, and now before the Court of Appeal, threatens to derail the whole concept underlying the Grand Plan. If the Court of Appeal decides that ratepayers are not responsible for rates charged for an illegal purpose, then local authorities will be obliged to comply with the law and the banks will have to be diligent in lending monies.

And that is why the Commissioners are acting as they are. They are directed by the DIA - the eminence grise behind the scenes of local government - that is determined that the Grand Plan will not fail, and by the banks who do not want to see their cosy local government money-earner challenged in any way.

The Kaipara Council is insolvent. It is not a going concern. It cannot repay its debts. It puts out spin about reducing debt, but that is just book-keeping creativity. Its LTP acknowledges that it cannot even pay the interest on its debts. Unpaid interest is being capitalised. Each day the debt grows bigger.

The Council has already defaulted several times on its loans and the banks can call up the loans at any time. It is therefore completely beholden to the banks and it is the banks that pull its strings.

Forget about its fiduciary obligations to ratepayers, and Justice Heath's ruling that it must put the interests of ratepayers first. The Commissioners do as the DIA and the banks tell them.

Local government is a financial merry-go-round that enriches all of those involved, with no legal limitations, no checks or balances, no watchdogs, and with ratepayers legally bound to keep pouring money into it like some giant Ponzi scheme. The only difference is that the local government Ponzi scheme does not suck in new investors to replace the old ones. The government compels the same ratepayers to keep poring in money again and again and again, year after year, into the bottomless slush-fund

The MRRA judicial review threatens to put a spanner in the works. If the application is successful then the local government Ponzi scheme will be exposed for what it is, a massive rort at the expense of ratepayers.

For those who are interested in cases involving auditors' liability for negligence, the following may be of interest:

Belgrave Finance

Korda Mentha

The Telegraph

Last night's Campbell Live ran stories on two councils that are out of control.  First the Auckland Council with its massive wage payments, and then the South Taranaki Council that is poisoning the residents of Eltham and running for cover.

People are just beginning to realise how they have been victims of a dirty tricks campaign.  Read Wendyl Nissen's article in the NZ Herald (here)

In its latest newsletter the MRRA has offered to advise financial members on how to deal with the latest threat of legal action from the Commissioners against ratepayers who are withholding their rates.

Many "withholders" will of course succumb to the latest threats but there is a staunch group of ratepayers who will not pay one cent of rates to the Commissioners until the issue of the illegal rates and the illegal debt has been decided once and for all by the courts.

The arrears of genuine rates is not the real issue. What galls the withholders is:

• The imposition of penalties on rate-strikers who were forced to strike because the Council, the Minister, the Government, the auditor, the Auditor-General, and the ombudsman failed to take any action on the clear evidence of persistent illegalities and financial imprudence. It was the rate strike that forced them to take action. In an act of total vindictiveness the whistle-blowing ratepayers were then compelled - retrospectively- to pay penalties on the rates that were withheld.

• The spiteful validation of rates that were ultra vires and could never be set by any Council in New Zealand. Certainly Parliament was misled by the "mantras" of the Commissioners, Mike Sabin and the DIA, but that does not excuse its abuse of the validation procedure.

• The refusal to acknowledge that the illegal rates were illegal. Even though the Council and all its supporters publicly accepted that the EcoCare rates were illegal - and had their own lawyer's legal opinion to prove it - the fact is that officially they refused to acknowledge that illegality and worked on the principle that the rates were legal until a court decided otherwise. Ratepayers were therefore forced to go to the High Court to prove the illegality. The Council then did all it could to block the ratepayers access to the Court.

• The introduction of a validation bill, without any consultation and with the deliberate intention of denying New Zealand citizens their common law and statutory rights to seek a judicial review, was an act of tyranny of the worst sort. It is almost unimaginable that a local authority in New Zealand, aided and abetted by central government, could be guilty of such a travesty of the rule of law and democratic governance.

• The refusal of the Council, the Commissioners, and central government and its agencies to take any action against the parties responsible for the Kaipara debacle. Action should have been taken years ago when the issues were first revealed. There has been a conspiracy at all levels to deny, obfuscate, and delay so that those responsible could escape any liability.

• The failure of the Commissioners to get an independent assessment of the financial status of the KDC's finances. The Commissioners have persisted in misrepresenting that financial status and proclaim that the Council is in good shape and is now repaying its debt. That is absurd. It has jiggled the books, reduced depreciation, deferred roading and other expenditure, appropriated all of the Mangawhai Endowment Fund and all Council reserves for general purposes, and completely misrepresents the true indebtedness of the Council.

The truth is that the Council is not, and cannot be, a "going concern" (able to meet all of its debts out of income for the foreseeable future) because its true debts are too large for the district's ratepayers to cope with. Far from repaying debt, the real debt is actually growing. For instance, until last year only 10% of the interest on $26.2 million part of the debt was being paid, with the rest being capitalised as a hidden debt. That was increased to 50% of the interest, but has it been paid? How can you possibly reduce debt when interest is still being capitalised?

• The Commissioners refuse to have an independent investigation into the EcoCare plant. We paid for a scheme that would service 4,500 properties. It is now at considerably less than 2,000 and can take no further connections. The plant itself can take a few more connections but the reticulation and disposal systems have reached capacity. The Commissioners are planning further capital input next year which will mean greater debt/ higher rates. There are rumours abounding in Mangawhai about the inferior quality of the scheme and the rorts associated with it. It is looking more and more that we were sold a lemon. We need independent experts to shed a bit of sunlight on the problems.

• The Commissioners continue down the illegal path well-worn by the previous council. Their decisions in respect of pursuing a validation bill and to defend and strike out the MRRA application to the court were made without the obligatory statutory consultation, without going through the appropriate statutory decision-making process, and in breach of their fiduciary obligations to ratepayers. Their decision to remit penalties pursuant to a policy that did not allow such a remission was an arrogant abuse of power.

For those who wish to continue withholding their rates the MRRA can be contacted here: mrra@vodafone.co.nz The annual membership fee is $10 single or $15 for a family.

Mike Sabin has made a lot of the Auditor-General being held responsible for the incompetence of her Office and has taken much of the credit for the decision by the Kaipara Commissioners to pursue legal action against her.

The problem is that it is far too little and far too late and there is a suspicion that any action is merely window-dressing. The outcome has been orchestrated long ago by those driving the issue. Any compensation paid - and Mike Sabin has lowered the bar from $30 million to between $1 and $30 million - will not detract from the basic principle underlying this whole debacle, namely that the ratepayer must foot the bill.

Ask yourself, why does the ratepayer have to pay to sue the OAG whose negligence caused all this? Two hundred thousand dollars so far to consider whether to sue Parliament's appointed regulator that did not do its job, while the government that is responsible for the performance of the regulator gets off scot-free.

Mike Sabin, in his Mangawhai presentation, was quick to gloss over the role of Parliament in disciplining the Auditor-General. He implied that she was beyond attack and that, once again, it was over to the ratepayers to initiate any action in the courts and to pay the costs.

His suggestion that Parliament lacked the power to take action is surprising since she has single handedly destroyed the reputation of the OAG and Audit New Zealand, has been roundly criticised for her incompetence by MPs, and is now facing legal action in the courts.

And, of course, it is not true. The power of Parliament is set out in the Public Audit Act:

Schedule 3

4 Removal or suspension from office

(1) The Auditor-General or Deputy Auditor-General may at any time be removed or suspended from office by the Governor-General, on an address from the House of Representatives, for disability affecting the performance of duty, bankruptcy, neglect of duty, or misconduct.

Pretty simple really. "Neglect of duty" would seem to be the appropriate basis for dismissal.

So why have Mike Sabin and his mates not done anything about the Auditor-General? Why is she allowed to carry on when evidence of her incompetence is sufficient to file proceedings in the High Court?

You don't have to be a rocket scientist to understand that is one of the underlying principles of local government in New Zealand that the statutory protections for ratepayers are completely illusory. All the hundreds of obligations placed on local authorities in the LGA and the LGRA - "a local authority must ...." - are meaningless because, effectively, a local authority can do anything that it likes without restriction. Any decision it makes, or any action it takes, is deemed to be legal until the High Court decides otherwise.

It can, therefore, ignore all legal constraints on its decision-making and actions.

Another principle is that there is an understanding between the government, local government and the regulators - the OAG, the Ombudsman and the Minister of Local Government - that the regulators will not interfere or take action in respect of illegal acts, thereby giving their implied approval to the non-complying actions. They will adhere to the previous principle and advise that they have no power to act and that it is for the Court to decide if a council has acted illegally.

And of course, if you get to Court, they will try and try and strike out the proceedings, and, if necessary force the ratepayers to pay for a validation bill to retrospectively validate all the illegalities.

Readers might be interested in one of the exchanges I had with the OAG back in 2010 when I filed submissions with it about the illegality of the EcoCare rates.

One of the first issues that arose was the Council's decision to charge a portion of the 2009/10 year's annual rate based on the expectation that the service would be available later in the rating year.  The rate was based on connection to the (working) EcoCare reticulation system which was not yet operational.

I pointed out that the lhe law is quite clear.  Section 43 Local Government (Rating) Act states that the rates for a property are to be based on the situation applying immediately prior to the commencement of the rating year on 1 July.  So, for the rate in question, if a property is connected to an operational system at that time then the rate is payable for the whole year.  The section also states that if a connection is made later in the year then no rates are payable.  There can be no apportionment of the rate for a part-year.

The charging of a portion of the rate was therefore illegal.  The law came into effect in 2003.

This is what the OAG had to say about the clear breach of the law in its letter to me of 27 August 2010:

We have considered the Council's approach in 2009/10 to charging for connection to the scheme during the year based on the quarter of the year when properties were scheduled to be connected. We do not think the Council's overall approach was unreasonable, being based on people being charged from the start of the quarter of the year in which their properties were to be connected. We note that some people understood from information provided by the Mayor that a different approach would be taken. However, where a servic is in fact provided during the quarter it is not unreasonable to be charged for it provided there was not undue delay.

Yes, but what about the law?  Jack McKerchar must have been laughing his head off at the dopiness of the OAG.

And he must be laughing even more now.  Clearly illegal, clearly ultra vires, this illicit charge totally outside the power of any council in New Zealand to charge, was included in the Validation Bill by the Commissioners and the promoter Mike Sabin, and Parliament retrospectively validated - and imposed penalties - on a rate that was specifically outlawed by the legislation.

And Mike Sabin wonders why ratepayers feel that he betrayed us.

Broker Chris Lee, never one to pull punches, paints a dismal picture (here) of the dirty tricks of Hanover and how New Zealand fell for it.

The MRRA will be advising members in the next couple of days of the steps they should take to respond to the Commissioners' threats of legal action.  Details will be also be published on this website.

Expert spin-meister John Robertson is at it again in his propaganda sheet, the Mangawhai Focus. His latest offering Your Questions Answered - Dealing to history, comes across as a factual account but is, as usual, riddled with misinformation and misrepresentation.

He presents his own sanitised version of the facts, and goes on to malign the MRRA and other individual ratepayers who have had the effrontery to challenge the tyranny that he and his fellow Commissioners have imposed on Kaipara.

Let's look at his comments and then, as Winston Peters suggested, expose them to "the cleansing light of public scrutiny".

In this first I will look behind the decision to pursue some of the parties responsible for the financial ruin of the Council.

John Robertson
These decisions (to pursue the OAG and Jack McKerchar) have not been taken lightly. They follow months of work by the Council and its advisers.


• Jack McKerchar announced his resignation in August 2011..and was allowed to stay on for a further three months and finally quit in November 2011.

• He was forced to resign because of impropriety and there was already a mountain of evidence against him in relation to illegalities, impropriety and financial imprudence.

• The MRRA and other ratepayers made representations to the Council, and to the Minister to have McKerchar removed immediately and for the forensic people to be brought in to seal the evidence of misfeasance and malfeasance. The Council and the Minster refused and allowed him to serve our his three months notice.

• The Auditor-General later complained in her report that there was little in the way of a paper trail in the Council records to piece together what went wrong. Surprise, surprise.

• When Steve Ruru came into the picture in December 2011, I personally challenged him to draw a line in the sand to separate the old and the new and get independent forensic accountants and investigators in to isolate and identify the misdeeds of the past. He refused.

• In mid 2012 Steve Ruru agreed to the MRRA request to have a forensic accountant to work within the Council to identify the misdeeds of the past. As soon as they came to power, the Commissioners vetoed any independent investigation on the basis that the OAG was carrying out her own.

• The OAG investigation announced in March 2012 was announced by Assistant Auditor-General Legal Nicola White at Kaiwaka at the same time that she apologised, on behalf of the Auditor-General, to myself, John Dickie, Helen Curreen and the MRRA for ignoring all our complaints and allegations of impropriety and illegalities which we had lodged with the OAG and the Ombudsman in 2010.  All of our complaints had been summarily dismissed.

• Council has always taken credit for calling in the Auditor-General. The real reasons were:

o Following the rejection of their complaints by the OAG in August 2010, ratepayers and the MRRA pressured the Council relentlessly to get an independent report on the illegal rates.

o With the departure of Jack McKerchar in November 2011 the Council finally agreed  to commission its own solicitor to review the rates. (Local government will never agree to an independent review.) This resulted in the Salter report which confirmed every one of the allegations of ratepayers and the MRRA.

o The MRRA and ratepayers had publicly exposed the financial improprieties of the past and the precarious financial state of the Council.

o In December 2011 the MRRA obtained from the Council (after the departure of Jack McKerchar and before the arrival of Steve Ruru) under the Official Information Act, copies of all the secret resolutions and reports relating to the EcoCare project. These were absolute dynamite and revealed a totally unknown world to ratepayers. I put together a legal paper arguing that the EcoCare decisions were all illegal and sent it to the Council, the Minister, and the OAG just before Christmas 2011. Steve Ruru referred the paper to the Council's lawyers who confirmed that the allegations were serious, with the end result that the OAG announced its review of the whole EcoCare project.

• The OAG inquiry was a massive smokescreen that was cast over the KDC and its historic incompetence from March 2012 until it reported in December 2013. It effectively hijacked the problem and placed it into limbo while the evidence was dissipated, the limitation period was running out, thus putting the guilty parties out of reach of the courts. By delaying the report, any offending was diminished in importance because it was becoming more and more historic and not relevant to the new mantra of leaving the past behind and going forward.

• We all acknowledge, and that includes most MPs and Lyn Provost herself, that the Kaipara debacle would never have happened if the OAG had performed its roles as watchdog and auditor competently. Why then was the OAG allowed to appoint itself as an "independent" investigator to report on the woes of Kaipara when in fact it was the party that was mainly responsible for the problems? It is a bit like appointing Judith Collins to chair the current inquiry into her relations with the SFO.

• Why was the OAG allowed to investigate the matter with her reputation of softly, softly and wet-bus-ticket approach when a thorough receivership type investigation was needed?

• Other questions remain unanswered:

• Did the OAG warn off the SFO?  Why was the SFO so reluctant to get involved?  Mike Sabin states that the SFO investigated four or five matters.  Is that true? 

• Did the OAG turn a blind-eye to fraud and illegal activities?  Why was the evidence of fraud and impropriety ignored?

• Did the OAG deliberately delay the report to allow the limitation period to run so that much of its own negligence and incompetence was out of reach of the courts?

• Did the OAG's report cover up that the EcoCare plant is a lemon? It is overpriced, inferior, and cannot service anywhere near the 4,500 connections promised and paid for.  No one will allow an independent assessment of the plant.  Why?

• Was the OAG report a way that the government, the Minister, the banks, the DIA, and the Commissioners could effectively put the past and the liabilities of the true culprits out of reach for the best part of two years and they could then concentrate on validating all the illegalities, sell their new propaganda slogan of "going forward" and putting the past behind, and ensuring that the debt was dumped fair and square on the shoulders of ratepayers?

• Getting back to the comment of John Robertson, the question has to be asked, why it took so long for the Council to act when all the evidence was lined up, and why has it taken 8 months after the release of the OAG report for the Commissioners to come up with a half-hearted proposition. This is the sort of issue that receivers have for breakfast. An experienced receiver with his team of experts would have ripped into the records and come up with a strategy in a very short space of time.

• Why is Jack McKerchar not being sued for negligence? Why are the Councillors not being sued for negligence? The excuses offered carry no water. Is it because local government in New Zealand will not tolerate an attack on the very foundations of the principles on which it is constructed, that those in power are allowed unfettered power to do what they want regardless of legal limitations, and the ratepayers must bear all the costs. If Chief Executive and Councillors were held to account in a court of law it would be the end of local government as we know it.  Local authorities have to be seen a no-risk investment and the the Local Government Funding Agency would be at risk if councillors and chief executives could be held to acount.

• None of the Commissioners or Council staff or the Council lawyers were around when the events took place. But there are out there many people who were closely involved with the Council at the time and have bucket loads of evidence that could have been helpful to any genuine inquiry. I dealt with Jack McKerchar and his Councillors in-depth when they were perpetrating their illegalities and have files of papers which would help immeasurably in establishing negligence. Some of the past Councillors themselves would be willing to help and so would past employees who were right in the thick of it. Have any of us been approached about the evidence we have?

• Is this whole performance by the Commissioners a charade, a nominal, last-minute, face-saving and highly contrived effort blown up by the spin machine to placate ratepayers, with a nominal penalty for the truly guilty, but with the burden of the debt still where it belongs, on the shoulders of the ratepayers? A crime-scene that has been stripped of evidence and sanitised, an innocent party targeted from day one to take the rap, a campaign of disinformation to lead public opinion away from the true perpetrators, and vital witnesses never interviewed: a true recipe for a cover-up.

Next: John Roberston's spin on the amazing financial recovery of the KDC and his further digs at the MRRA.

Is Mike Sabin having second thoughts about his role as promoter of the Kaipara Validation Bill?  Like most of us in Northland I have just received an 8 page flier from our local MP - YOUR MP ON THE JOB - setting out the achievements of Mike Sabin and the National Government in Northland.

But remarkable by its absence is any mention of his sterling feats in driving the Kaipara Validation Act through Parliament that validated 6 years of utter incompetence and illegal activities of the Kaipara Council and betrayed those ratepayers who had blown the whistle on the Council. 

No mention that he allowed the Commissioners to disguise the substantive matters of non-compliance - 73 of them in the Preamble to the Act - as minor procedural irregularities.  And no mention that he persuaded Parliament to include in the Bill rates that were completely ultra vires and could not have been charged.

There is no reference to his greatest achievement: including in the Bill, and slipping it past Parliamentary Counsel, Jack McKerchar's "unit of demand" tithes.  This illegal charges were totally outside the law and a fantasy fabrication of Jack McKerchar and his staff.  It was one of his greatest acts of malfeasance in his Reign of Error and was deliberately designed to gouge monies illegally out of Mangawhai ratepayers when the reality of the costs of EcoCare started hitting home.

Mike Sabin and the Commissioners included those unit of demand tithes in the Bill knowing that they were utterly illegal and knowing that they could slip them through Parliament without them being picked up.

Mike Sabin will plead in his defence that he did not know that the unit of demand rates were in the Bill.  But he did, because I told wrote and told him.  He passed my letter on to Steve Ruru because he didn't understand it..

Steve Ruru and the Commissioners knew that the unit of demand tithes were completely outside the law and,  knowing that, still made the decision to include them in the Bill.  One of the reasons for going down the Validation Bill route was because it was one of the only ways that they could validate McKerchar's illegal tithes.  They did it cleverly and in such a way that, buried in a heap with 72 other illegalities, it was lost in the crowd and almost impossible for trusting MPs to pick up. Their aim, very much like Jack McKerchar's when he introduced the tithe, was to gouge as much money as they could out of ratepayers. 

It is ironic that Jack McKerchar is being targeted for his negligence and incompetence and yet the Commissioners, Steve Ruru, Mike Sabin, the DIA and Parliament have all been willing to take advantage of, and endorse, his acts of gross misfeasance and validate them retrospectively.  And then they have the gall to  tell us ratepayers that they were doing us a favour.

Perhaps Mike Sabin was wise to leave his Kaipara Bill achievements out of his proudest successes flier.

A report of the meeting can be seen here.

Mike Sabin has been highly critical of the Auditor-General and her Office, and of her agent Audit New Zealand. He has been pressuring them for some time to cough up with $30 million compensation because of the incompetent performance as local government watchdog and as auditor of the KDC.

Recently the Commissioners announced that they were finally going to take action against the OAG and Audit New Zealand. But is it too little and too late? Is it just a charade, a going-through-the-motions to satisfy the masses, with no real intention to seek any substantial compensation?

Let us start by looking at the role of the Auditor-General as described on the OAG website.

About us

The Controller and Auditor-General (the Auditor-General) is an Officer of Parliament. Her mandate and responsibilities are set out in the Public Audit Act 2001.

The Auditor-General is independent of executive government and Parliament in discharging the functions of the statutory office, but is answerable to Parliament for her stewardship of the public resources entrusted to her.

Parliament seeks independent assurance that public sector organisations are operating, and accounting for their performance, in accordance with Parliament’s intentions. There is also a need for independent assurance of local government. Local authorities are accountable to the public for the activities they fund through locally raised revenue. As an Officer of Parliament, the Auditor-General provides this independent assurance to both Parliament and the public.

This independent assurance is provided through the reporting requirements set out under the Public Audit Act 2001 and other statutory requirements.

We all know that in 2010 when Lyn Provost was presented with cast-iron evidence of the KDC's illegal rates, she decided to run for cover and did nothing.  She allowed Jack McKerchar another year to wreak his mayhem and his crazy Council another year after that.  It was only the rate strike by ratepayers that brought matters to a head and resulted in the resignation of the Council in 2012.

So, what did Parliament do about its own Officer who according to Mike Sabin and many other MPs failed completely to do her job properly, lumbered Kaipara with a massive debt because of her inaction, and brought her Office into disrepute?

An answer to that later, and how the OAG hijacked the EcoCare inquiry.

New Zealand may be perceived as one of the least corrupt countries in the world but it is becoming alarmingly clear in the last few weeks that there are forces beneath the surface that we are totally unaware of and which are affecting the way that we think and react.

Dirty tricks are alive and well in this country and we are only beginning to see the tip of the iceberg.

Years ago I got ripped off by a trust company that was deplorably negligent and showed no remorse whatsoever. When I threatened to go public I was immediately threatened by the trust companies lawyers with defamation proceedings.

I see that even Bryan Gaynor of the NZ Herald is not immune from such threats. In his article Market watchers all feel the pressure (here) he recounts how in 2011 he wrote articles for the Herald critical of Mark Hotchin's role in Hanover Finance with the result that he and the Herald were threatened with defamation proceedings by Hotchin. He states:

The defamation claim had an impact on my willingness and ability to continue writing about Hotchin and Hanover and this is my first column on the subject since March 2011.

Hopefully, alleged attacks on the FMA and SFO haven't had a similar impact on their willingness and ability to fully investigate the activities of Hanover Finance.

With the revelations of some of the dirty tricks going on beneath the surface we need to re-examine the Kaipara fiasco to see if the ratepayers of Kaipara were the victims of some massive dirty tricks campaign.

There are suggestions that the Council has accepted payment from some rate strikers with substantial amounts outstanding on a full and final settlement basis and without accrued penalties being paid.

I sought information on this matter under the Official Information Act. Steve Ruru has replied:

To the best of our knowledge Council has not settled on a “full and final” settlement basis with any ratepayers unless they have paid the full amount that is outstanding. Some ratepayers paid before they notified Council of their conditions. We have not accepted these either and have written to advise them of this.

I am not sure what "to the best of our knowledge means". Steve Ruru is the Chief Executive and should be making such decisions and no one else. It leaves it open to wonder if the Commissioners could be privately coming to discreet arrangements.

If any ratepayer has reached such an accord with the Council then I would like to hear about it - absolute confidence guaranteed. I am interested to see if the Council has compromised in some cases. I do not need to know names.

At a meet the candidates meeting at Mangawhai on Sunday, New Zealand First leader, Winston Peters, threw out a lifeline to the beleaguered ratepayers of Kaipara. He pulled no punches in spelling out what he termed the "corrective" history of the "sorry saga" of EcoCare, outlining the questionable roles of all those involved in the scheme:

Ladies and gentlemen this is not the script for a novel or a bodice-ripping bestseller. This is a sorry litany of negligence, corruption and cover-up.

His words were music to the ear of those of us who have fought so hard against the tyranny of the Council, the Commissioners, and central government:

Illegalities in entering into loans are not mere technicalities or formalities but go to the heart of local government's obligation to consult ratepayers before entering into large financial commitments.

What a difference to Mike Sabin's words a week earlier when all the substantive illegalities of the Council were sanitised as minor "procedural irregularities".

Winston Peters delivered some telling blows:

• But the key issue here is what is the responsibility of central government in this sorry mess. The auditor general's office is a key agency in central government.

• Retrospective legislation that is harmful to any party should be an abomination in a democracy.

• In this instance, it was used as a device to brush incompetence and corruption under the carpet.

• New Zealand First's view is clear; inconvenient truths should not be buried but exposed to the cleansing light of public scrutiny.

• Cover up – deny – and avoid scrutiny whilst the innocent suffer and the guilty walk away unscathed and fully paid.

• How the Audit Office allowed five years of clean audits to go through on the Kaipara District Council while the sewerage scheme racked up so much debt is incredible, especially as some of you were voicing concerns early on.

It was made very clear to ratepayers that if they wanted any action to be taken on the matter by central government then they should ensure that New Zealand First was part of the new government.

The full version of Winston Peters' speech can be seen here.

r I will be studying the returns from the Mangawhai polling booth very closely. Your commitment to go in to bat for me will be directly linked to how hard I go in to bat for you.

FROM THE MRRA   05.09.14

Public meeting at the Recreation Centre, Insley St Mangawhai,

1:30pm, Sunday 7 September..

The purpose of the meeting is:-

1. To allow you to hear the views of a number of political parties..

2. Let you ask the candidates questions about their plans and policies..

3. To bring you up to date with our Court of Appeal challenge and let you ask questions about that.

Meeting Format:-
This is our meeting and it is for our benefit. So long as we exhibit the high standards of fairness that our community demonstrates (but very seldom receives), there is no reason why this should not be a robust and challenging test of the candidates’ positions. Some candidates have been heard to say that they rue the passing of the street corner face-to-face exchanges- let’s see if we can bring that back on Sunday! There is an open invitation to the media to be present.

Confirmed attendees, in Surname order are:-

David Clendon, MP, Northland-based Green Party List candidate

Colin Craig, Party Leader Conservatives, possibly accompanied by Melanie Taylor, Northland Conservative party Candidate.

Rt Hon Winston Peters, MP and Party Leader NZ First

Ken Rintoul, Phyllis Rintoul and Northland area candidates of the Focus New Zealand Party

The ACT Party have indicated their intention to attend but have been unable to tell us in advance who specifically will come.

Many readers of the Mangawhai Focus have long-held concerns about the impartiality of its editor Rob Pooley. Everyone is entitled to their own opinion about issues such as the KDC and the performance of its Commissioners and should be free to voice them. However, an editor of newspaper, especially in a small township where an issue divides the community, has a special obligation to be fair and impartial, and to base any personal views on an understanding of the facts.

The Mangawhai Focus has for some time provided a platform for the chair of Commissioners, John Robertson, to spread his propaganda through the district. It is not known whether the Commissioners pay (for Commissioners read ratepayers) for the service or whether it is a community service offered by the newspaper. But, whichever it is, it is unfortunate, to say the least, that one side of a dispute that has divided the community should be at liberty to use the Mangawhai Echo as a propaganda sheet to try and win over the residents of Mangawhai to the Commissioners' point of view.

It is clear from his editorials that Rob Pooley is a staunch supporter of the Commissioners. Sometimes his "Ed says" pieces are philosophical musings that do little harm, but sometimes he loses all sense of balance and fairness, and bases his opinions on speculation or personal prejudices rather than on fact.

This is what the New Zealand Press Council says in its Statement of Principles:

An independent press plays a vital role in a democracy. The proper fulfilment of that role requires a fundamental responsibility to maintain high standards of accuracy, fairness and balance and public faith in those standards.

That should be even more so where there is no democracy, such as in Kaipara and Mangawhai.

I have made little comment in the past about what I consider to be Rob Pooley's breach of the ethical standards of journalism. In a blog headed A LITTLE LEARNING IS A.......... 05.05.14 (scroll down) I chided Rob Pooley for his "humble opinion" on the effect of any receivership on the KDC which was based on complete ignorance of the law.

In the latest edition of the Mangawhai Focus, which I have so far only seen on line (now located here), he shows his true colours in many senses in an article headed Council looking forward. I invite all residents in the district to read it and see for themselves what Rob Pooley is up to.

His first paragraph contains silly comments about the MRRA executives knowing the Local Government Act "by heart, and backwards in fact" He then goes on to refer to the MRRA's offer to settle outstanding rates which, he states quite categorically but erroneously, "came with a number of unreasonable demands".

He examines the democratic right to go to court and to appeal but then adds that by appealing "they have chosen not to accept the law of the land".

In respect of the appeal he states:

they kick off another long drawn-out and costly process that will likely be borne entirely by their own members.

Long-drawn out? Not true.

Costly? A bargain compared to the High Court case. And what price do you pay for justice for the community? If the MRRA are successful then ratepayers of Kaipara will not be responsible for the illegal decisions and the illegal debts incurred by the KDC.

Borne by their own members? Largely true. But the litigation fund is paid by voluntary donations only and by those who believe that there are fundamental principles at stake here. I say largely true because a lot of the donations are received from non-members, and from people from throughout New Zealand and some overseas who believe in what the MRRA is fighting for.

The piece then goes on to make some cynical comments about the crisis in 2012 (not 2010 as he says) with the Rates Bomb threatening to destroy Mangawhai, and then points out that in reality nothing happened and Mangawhai is flourishing. What he conveniently fails to point out is that it was the MRRA with its rate strike that forced the Council to back down on its Rates Bomb and it is the rate strike and pressure from the MRRA that has forced the Commissioners to keep rate increases at a low level.

But we all know that cannot go on. The reality is that the illegal debts incurred by the Council are just too large for the people of Mangawhai and Kaipara to cope with. The Commissioners cannot even meet the interest payments on the debts. They have appropriated all the monies from the Mangawhai Endowment Fund, the reserves fund and other funds and have tried to sell off vital reserve land that plays a vital role in the community. It was only a concerted effort by the MRRA and the community that prevented that.

The EcoCare scheme is a "lemon" and cannot take any more connections beyond the current 1500 (4,500 were promised) without further massive capital investment, which means even more debt and higher rates.  We cannot pay the huge debte for the existing plant and we will now be forced to pay for further capital expenditure to make the plant viable.

When the Commissioners quit in just over a year the cupboards will be stripped bare and the banks will be demanding repayment of the principal of their debt. The new LTP, which is now being considered, will set out the fate that awaits Kaipara, and it is not going to be pretty.

I won't go into detail about Rob Pooley's endorsement of the Commissioners' plans to finally take action against various parties that were responsible for the Kaipara debacle except to point out that this should have happened two years ago when the Commissioners were appointed.  It is too little and too late.  The Commissioners were appointed to dump the debt on ratepayers and have done everything that they could to achieve that end. As for the delay in pusuing other parties, was there a conspiracy to delay any action against the truly guilty parties so that the limitation period would stymie legal action? Even Mike Sabin has suggested that the OAG might have delayed the release of its report for that purpose.

Rob Pooley takes a swing at the MRRA:

Imagine how much further down the track towards conclusion this saga could have been had the MRRA put the same effort into pursuing those responsible and working WITH the Commissioners and other MPs sympathetic to their plight, rather than against them.

That comment sounds fairly plausible and would sway anyone who was not aware of the truth. The reality is that it was the MRRA and other ratepayers that identified the illegality of all of the EcoCare rates as far back as 2009. They also identified the illegality of the development contributions. All this information in the form of detailed legal submissions (which proved to be 100% accurate) was provided to the Ombudsman, the OAG, and the Minister. All were ignored.

The MRRA and other ratepayers continued their pressure on the Council to have an independent expert review the rates. I recommended Jonathan Salter of Simpson Grierson, as an expert in the rating field, to the Council and the Salter Report that resulted (in early 2012) confirmed all the allegations of the MRRA and ratepayers.

It was the MRRA that obtained from the Council under the OIA all the secret resolutions relating to the doubling of the EcoCare costs. And in December 2011 I lodged a submission with the Council, with the OAG and the government arguing that the EcoCare decisions were all illegal. As a direct result in March 2012 the Auditor General sent Nicola White, Assistant Auditor-General Legal, to apologise to myself, Helen Curreen, John Dickie and the MRRA for failing to heed our warnings about the illegalities of the KDC. She also announced the OAG review into the Kaipara issues.

What Rob Pooley does not appear to know, or simply ignores, is that the MRRA worked closely with Steve Ruru in early 2012 when the Salter report was released to resolve the issue of the illegal rates. In fact in July 2012 the Council resolved to appoint a focus group of ratepayers to work with the Council to resolve the legal issues cooperatively. With the appointment of the Commissioners in August 2012 the whole attitude of the Council changed and in December 2012 the Commissioners resolved to rescind the agreement to work with a ratepayer focus group and unilaterally, without a skerrick of consultation, decided to pursue a validation bill.

The rates strike was implemented originally to force the Council to acknowledge the illegality of its rates, to accept the illegality of the EcoCare decisions and the EcoCare debts, and to pursue those who were responsible for the illegalities. It was absolutely clear that when Jack McKerchar's shenanigans were revealed in 2011 that the forensic boys had to have access to the Council's offices to preserve evidence. That was resisted by the Council, and by the government, via the Minister. The MRRA's calls for an independent financial scrutiny of the accounts to gain evidence of wrong-doing were ignored.

In mid 2012 Bruce Rogan of the MRRA reached an agreement with chief executive Steve Ruru that a forensic accountant should be appointed to examine the records of the Council, but, with the appointment of the Commissioners soon after, that agreement went the way of the ratepayer focus group.

At one stage the MRRA were going to take legal action against the OAG but it did not have the resources or access to the Council records to enable it to put a case together.

The comments from Rob Pooley about the MRRA being "an uncontrollable rabble or posse" does not need any comment. It is pure Whaleoil stuff.  It denigrates the hard-working people of the district who have fought so staunchly, and through legal channels to bring some accountability to the KDC, and who still insist on the law being applied fairly.  They do not deserve the abysmal treatment meted out to them by the Commissioners.  Nor should they be obliged to suffer verbal abuse from the editor of their local newspaper

It is also troubling that Rob Pooley wears his political colours on his sleeve. Take the following comments:

MP Mike Sabin has given his word (should he be re-elected) that he too intends pursuing the matter with the OAG. Is he not therefore due some support along with a number of other sympathetic MPs?

The Validation Law has certainly been a bone of contention in this saga but prospective anti-National voters should remember this was the brainchild of the 2002 Labour Party which has led to systemic failure.

The latter comment is simply ridiculous. Rob Pooley seems to be suggesting that the systemic failure of the KDC was due to the 2002 Local Government Act, which was introduced by a Labour government.  That is political red herring. There is nothing wrong with the legislation itself. It is just that the government (whichever colour it is) has provided ineffectual watchdogs and local authorities are allowed to breach the provisions of the Act with impunity. Even Mike Sabin agrees. At the Kaipara meeting last Saturday he said:

A lot of Councils don't follow due process. That's a real issue."

Enough said.

Chair of Commissioners, John Robertson, has been threatening through his personal propaganda sheet, the Mangawhai Focus, that the KDC will now proceed to take legal proceedings against defaulting ratepayers.

It is an interesting decision given that the whole matter of the disputed rates is before the Court of Appeal.  

One would have thought that the Council would have waited a few months until the matter was finally decided by the Court of Appeal rather than seeking a pitched battle with ratepayers in the District Court  

No doubt the banks and the Department of Internal Affairs are pressing the Commissioners to extract their last pound of flesh from ratepayers but one might have thought that wiser minds might have resisted the temptation to waste more of ratepayers monies in a pointless battle.

It is also worth reflecting on what would have happened if the MRRA had won in the High Court and the rates has been declared illegal.  The Commissioners would have appealed to the Court of Appeal.  But would they have responded in the way that they suggest ratepayers should?  Would they have refunded all the illegal rates immediately?

And pigs might fly

As ususal it is one law for the Commissioners and one law for the ratepayers.

If you receive a letter from the Council threatening legal action and you do not want to pay your rates then please send a copy to contactus@kaiparaconcerns.co.nz  Do not be intimidated by any threats. Remember that the High Court only declared certain rates to be valid.  The Council is fully aware that there are defects in the rates assesment notices and the invoices that it sent out,  It is also aware that it remitted penalties in breach of its its own penalties remission policy which could render many rates assessments and invoices invalid.

The KDC poised to launch its attack on ratepayers. 

Those who were at Mike Sabin's meeting in Mangawhai last Saturday will have heard him trotting out, again and again and again and again, his untrue mantras that are all part of his propaganda to fool the people of Kaipara.

One of his old chestnuts is that "Parliament is the highest court in the land", and, on the basis that if you keep repeating a lie long enough then people will eventually come to believe it, he repeated it at least four times at the meeting.

It is of course completely untrue. The adage actually related to the UK where there is a two tiered Parliament, the House of Commons and the House of Lords. The Appellate Committee of the House of Lords was the highest appeal court in the UK until it was replaced by the Supreme Court of the United Kingdom in 2009.

So the adage is no longer true of the UK.

Parliament in New Zealand is not, and has never been a court. The highest court in New Zealand is the Supreme Court of New Zealand.

Mike Sabin clearly believes that Parliament's power is unlimited.  He is correct.  Technically it can declare black to be white.  We have seen how it turned a renegade council that flouted the law and financial prudence, and lumbered its ratepayers with unconsionable debts, into a sanitised, legally complying local authority.  We have watched with utter amazement and disbelief as it turned six years of fundamental breaches of the law and ultra vires acts into minor "irregularities" and validated them retrospectively.

But he seems to be unaware that the New Zealand Bill of Rights Act (NZBORA) establishes a fundamental right to challenge the legality of public decision-making to guard against the abuse of public power.  It guarantees the right to apply to the High Court for judicial review of a decision, based on the law as it was when the decision was made.  The rights under the Act are subject to such reasonable limits that can be "justified in a free and democratic society".

The MRRA challenged the illegal rates pursuant to the rights of ratepayers under the Bill of Rights Act, only to be gazumped by Mike Sabin and the Commissioners who persuaded Parliament to change the law retrospectively to defeat the Association's claim.

This is what Justice Heath said about the matter:

I hold that where a judicial review application is extant at the time a statute such as the Validation Act is passed, the right affirmed by s 27(2) is intended to guarantee the applicant’s ability to obtain a remedy to right any wrong that occurred before the validating legislation came into force that the Court finds to exist. On that basis, there is an apparent inconsistency between s 27(2) and the effect of the Validation Act, which removed the ability of the Association to obtain the relief that it sought in respect of the impugned rating decisions.

In other words, Mike Sabin's Validation Act breached the Bill of Rights Act and denied ratepayers their legal rights.

Justice Heath went on to state that the passing of the Validation Bill was a "justifiable limitation" on the rights guaranteed by the Bill of Rights Act simply because it was not for the courts to "second-guess [Parliament's] political judgment".  Heath J went on to state:

The Court cannot look behind parliament’s processes to evaluate that decision. Whether one agrees or disagrees with the Commissioners reasons for taking that stance is beside the point.

That is one of the grounds of appeal to the Court of Appeal.  The MRRA maintains that the "justified limitations" should only relate to situations where the public interest, viewed objectively,outweighs the rights of individuals guaranteed under the Bill of Rights Act.  Mere political expediency and the protection of the best interests of the banks - which were the driving forces behind the Validation Bill - should not in a free and democratic society override the guaranteed fundamental rights of New Zealanders under the Bill of Rights Act.

It is also noteworthy that Heath J awarded indemnity costs to the MRRA.  This award of actual costs rather than nominal costs reflects the equity of the situation.  Heath J stated:

[113] The right for the Association to seek an effective remedy was removed after a hearing date had been set for its application and much work undertaken in preparation. It was removed by enactment of a statute, passed in consequence of a Local Bill promoted by its opponent in this proceeding.

Nicky Hagar's revelations in Dirty Politics have highlighted the power of propaganda and the importance of controlling the press.  

The past master of propaganda was the Third Reich's Joseph Goebbels.  Here are some quotes:

“It would not be impossible to prove with sufficient repetition and a psychological understanding of the people concerned that a square is in fact a circle. They are mere words, and words can be moulded until they clothe ideas and disguise.”

― Joseph Goebbels

“The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over.”

― Joseph Goebbels

“Think of the press as a great keyboard on which the government can play.”

― Joseph Goebbels

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

― Joseph Goebbels

John Armstrong's article in Saturday's NZ Herald (here) put a few things in perspective. It has always amazed me how the government allowed the rogue finance companies carte blanche to fleece New Zealanders of their life savings . The government appointed watchdog that was supposed to protect the best interests of investors, the Securities Commission, was an incompetent mongrel, deaf, dumb, blind and paralysed and was humanely euthanised but only once many kiwis were robbed of their life savings.

Why did those running the government stand by and watch the lawless plunder? John Armstrong gives us some insight when he considers Judith Collin's role in undermining the SFO inquiry into Mark Hotchin's Hanover.

It will be a sore point among the tens of thousands of voters who lost millions of dollars in savings from the collapse of finance houses. The undermining of the SFO says to those voters that National was never on their side when it came to sheeting home responsibility for the chaos in that part of the finance industry. It brings the whole issue of "dirty politics" much closer to home.

The Kaipara experience reinforces this perception. Jack McKerchar and his cowboys would never have even got off the ground with heaven knows how many years of incompetence and illegalities IF the OAG - another government regulatory authority - had done its job properly.

The OAG was not only the watchdog for the sector to prevent excesses and ensure legal compliance but it also acted as auditor to ensure that all decisions of the KDC were legally compliant, prudent and followed best practices.

The OAG failed miserably to do either. But it did more than that. By turning a blind eye to the patent and persistent incompetence and illegalities, it actually encouraged errant councils to start down and continue on their lawless track. It was the policeman who stood by and watched the looters pillage to their hearts' content, thus giving its tacit approval to the plundering.

The promise - as per the OAG website

The reality

Councillors put the same question to me time and time again when I warned them of Jack McKerchar's illegalities:

If Jack is so wrong, and you are so right, why do the Minister, the OAG and Audit New Zealand all support Jack?

Good question. The Councillors chose to believe that the regulators were right. After all, how could the Minister of Local Government be wrong?  How could the OAG be wrong?  How could Audit New Zealand be wrong

Events now show that the regulators were all wrong and that they had long given up even pretending to be watchdogs.  But they went further than that.  They tried to deflect the concerns of the ratepayers (all of which were subsequently vindicated) and refused to hold the Council to account.  Even worse, they created a culture within local government where shonky councils knew that they could flout the law and financial regulations at will without any come-back from the regulators.  It was like the finance companies all over again.  

Is it a coincidence that all the regulators dealt with ratepayer complaints in the same way?  Was it purely chance that they were all incompetent.  Or was there a hidden agenda?  

I don't believe in conspiracy theories, but when you read about what the government got up to via Whaleoil it makes you wonder what went on behind the scenes in respect of Kaipara.  

Were the ratepayers of Kaipara the victims of dirty tricks? 

BOB DEY'S REPORT   28.08.14
See Bob Dey's assessment of the Commissioners' decision here.

REPORT ON 1ZB  27.08.14
Comment from Bruce Rogan here.

See Mike Dinsdale's article here.  He only covers the McKerchar story, but scroll down to Comments.

More details on the Council's decison to sue other parties can be seen in in this article from the Kaipara Lifestyler and the video of Joanne Speechly

As suspected (see blog below) the Commissioners have resolved today to sue the former Chief Executive, Jack McKerchar, and Audit New Zealand, for their part in the EcoCare debacle.

They are also looking at taking action against the Beca consortium.  Former Councillors are not being sued but pressure is being applied on the Auditor General to exercise her powers under the Local Government Act to hold them responsible.

The press releases can be seen here and here.

At a public excluded meeting of the Council today the Commissioners are going to consider pursuing the following for their share in the EcoCare debacle:

1. Elected Council - the previous Councillors

2. Previous CEO - Jack McKerchar

3. Auditor General - and its agent Audit New Zealand

4. Bell Gully - legal advisers to the Council at the time.

There is no mention of Beca who were consultants to the Council and the EcoCare Project and whose report recommended the upsizing of the scheme and the massive increase in expenditure.

John Robertson muses on the situation in his usual propaganda column in the Mangawhai Focus and reveals that the Council has to date spent over $200,000 on legal advice relating to the "pursue them or not" decision.

Many believe that the Commissioners are too close to the local government community and will not take any steps to embarrass their colleagues in the business. As it stands at present, ratepayers bear all the financial responsibility for the incompetence of local government and those who feed at its teat, and there is absolutely no need to rock the boat or change the system.

However, we may be surprised. Something is in the wind. Local MP, Mike Sabin, is venturing into the lions' den.

As a sponsor, the promoter and supporter of the Validation Bill, he has in the past taken a mauling on what many see as his betrayal of the people of Kaipara. It was not just that he promoted the Bill for political reasons, but because he allowed the Commissioners to validate the vindictive penalties and to sneak into the Bill rates that were completely ultra vires and unsupportable.

He was fully aware of the feelings about the penalties and was fully informed on the ultra vires rates. He could have drawn his line in the sand on behalf of ratepayers rather than letting the Commissioners extract every last cent out of ratepayers.

His persistent promises to leave no stone unturned in pursuit of the liable parties have been treated with some scepticism, and he has shunned Mangawhai as though it is the centre of the Ebola epidemic.

That is until this week. In a political column in the Mangawhai Focus he includes a little piece on "judgment" and his role as an MP which is insightful. He quotes Edmond Burke "viewed by many as the philosophical founder of modern conservatism":

Your representative owes you - not his not his industry only, but his judgment - and he betrays, instead of serving you, if he sacrifices it to your opinion.

Which seems to mean that the opinion of ratepayers is worthless and we should trust the collective judgment of Jack McKerchar, Bell Gully, Beca, the ex councillors, Audit NZ, the Office of the Auditor General, the Ombudsman, the Minister of Local Government, the Commissioners and Mike Sabin.

I will leave readers to decide what they think of that theory

In the same article Mike Sabin also announces that he is venturing into Mangawhai and holding a public meeting next Saturday 30 August at the Mangawhai Recreation Centre, Insley Street at 1.30 pm. The theme is: Mangawhai - Looking forward.

It all seems a bit coincidental with the election looming, the Commissioners finally deciding on the pursuit of those responsible, and Mike Sabin venturing back into Mangawhai and facing his harshest critics.

What is behind it all?

Cynics might look for a conspiracy theory, and no doubt that will only become apparent when we hear what Mike Sabin has to say. He might just pull a rabbit out of his hat.

The Kaipara Commissioners have rejected the MRRA's offer to settle the historic illegal rates dispute.  Mike Barrington in the Northern Advocate reports (here) that cheques amounting to nearly $1 million will be returned to ratepayers.

The parties will now have to wait until the Court of Appeal decides if the EcoCare rates are valid and whether the Council has the legal power to set rates for an illegal purpose.

It is uncertain at this stage what the Commisioners will be instructed to do by those who direct them.  They boast of a High Court judgment in their favour but the reality is that the whole issue is now before the Court of Appeal and there is serious doubt over the enforceability of the rates in question. 

Justice Heath expressed his concern at the Commissioners' failure to consult with ratepayers and emphasised on several occasions that every decision made by the Commissioners must be in the best interests of ratepayers.  Clearly that has not happened in the past and ratepayers, who have been deprived of all their democratic rights in Kaipara, are staunchly opposed to the arrogant, autocratic style of the Commissioners.

Feelings are high, especially in Mangawhai, and the Commissioners might be well advised to avoid precipitous action and let the Court of Appeal decide whether the rates and the debt are payable or not.  

It does seem somewhat ironic that a Council that has flouted the law for many years, set illegal rates for six years, charged illegal development contributions, misled ratepayers over EcoCare and, according to the High Court, entered into illegal contracts in respect of EcoCare and borrowed monies illegally to finance it, is contemplating using the law to enforce rates whose validity is still in issue before the courts.

After years of acting outside the law and denying its ratepayers' claims of illegality, it would be appropriate if the Kaipara Council changed its direction and abided by the rule of law and waited for the Court of Appeal to make its ruling


The MRRA has made a forceful offer to the Kaipara Commissioners to settle the historic illegal rates issues.

Yesterday many members of the Association paid their outstanding rates - but without penalties - in full and final settlement of all claims in respect of the rates.

Over half a million dollars in cheques was delivered to the Council by Bruce Rogan, chair of the Association. Another large amount was also sent in by mail, again without penalties.

The cheques were all tendered on the basis that If the Council accepts them then all claims in respect of the penalties are extinguished.

In a Press Release issued yesterday, the Association has also urged the Council to remit ALL penalties that have already been paid and credit ratepayers' accounts with the amount remitted. That would ensure equal treatment between ratepayers.


On 20 August 2014 the Mangawhai Ratepayers and Residents Association handed to Kaipara District Council $550,000 in rates arrears, to resolve part of the long-running saga of injustices against the community. A large sum was also posted in by individual association members. The money was tendered on the basis that all penalties would be cancelled.

The fact that at very short notice such a large sum was assembled shows not only the goodwill of the ratepayers but also their united opposition to the unjust imposition of penalties on rates that were acknowledged to be illegal for years until they were retrospectively validated by parliament. Even the sponsoring National MP, Mike Sabin, has stated publicly that the Bill was distasteful and undemocratic.

The community feels that insisting on charging penalties is vindictive and is a major stumbling-block both to resolving the historical rates issues, and to re-establishing trust between council and the community it is there to serve.

A condition of passing the Validation Act was an undertaking that no penalties would be imposed. If the commissioners remitted all the penalties many ratepayers would pay their historical rates and the tension between the ratepayers and the council would be markedly eased.

Once the historical rates are dealt with the only remaining major issue is the ability of councils to set and assess rates to recover illegal debts, and this issue is going to be decided at the Court of Appeal.

The option is now there for the commissioners to be reasonable and extend their rates remission policy to cover all of the penalties on these rates.

Authorised by the Executive Committee of the MRRA

Chairperson Bruce Rogan 094315413 or 02108180162

Email mrra@vodafone.co.nz


The MRRA also set out the Background to the payment:


1. Commencing in 2008 ratepayers raised concerns about the legality of the rates being set to fund the new sewage system known as Ecocare.

2. When the council refused to respond, ratepayers raised their concerns with The Auditor General, The Ombudsman, the Minister for Local Government, and even the Police and the Serious Fraud Office.

3. Not one of these agencies was prepared to intervene.

4. In 2010 when the huge indebtedness resulting from the sewage scheme became known it was realised that a very large amount of money had been borrowed illegally.

5. Ratepayers initiated a rates strike to highlight their concerns about the illegalities. It was widely adopted.

6. In 2011 the Chief Executive who had caused all these problems was forced to resign, and he was replaced in October.

7. The new CE commissioned a report on the validity of the rates from Law Firm Simpson Grierson. This report disclosed that the rates were unlawful and that a court would almost certainly set them aside.

8. The mayor at the time issued a public apology, and a dialogue began with ratepayers to identify ways to fix the problems.

9. The community expected some action to remedy the problems but the council then adopted the position that until the rates were actually declared illegal by the High Court it would carry on as though they were valid.

10. On 27 June 2012 The MRA advised the CEO and the then deputy mayor that it had no option but to ask for Judicial Review.

11. The council was then replaced by government-appointed commissioners, on the recommendation of a ministerially appointed review panel, the chair of which was an employee of one of the creditor banks.

12. The ratepayers applied to the High Court to get the rates reviewed there.

13. The commissioners immediately cancelled all dialogue between the council and the community and prepared a local Bill to validate the illegal rates and all penalties.

14. The commissioners then sought to have the judicial review application struck out, in order to buy time to get their Bill enacted.

15. The strike-out application was rejected by the court and a date set (Feb 2013) for the hearing.

16. In December 2012 Parliament enacted the Bill, while the case was on foot in the High Court, effectively killing the ratepayers’ case.

17. The hearing took place after the court allowed re-pleading because of the effects of the Validation Act

18. The court found that All of the actions of council that were complained about (The Ecocare Agreements and the associated loan agreements) were, indeed, illegal.

19. It found also that were it not for the Validation Act, the application for Judicial review would have been entirely successful for the applicant.

20. The High Court found that because the loans were “protected” the council could, if it exhausted other options, set rates to repay them. This is being challenged on appeal.

This is an offer in respect of historic rates only and does not affect the MRRA's judicial review, now before the Court of Appeal. Effectively that case will decide whether the Council has the power to set rates in the future to meet the EcoCare debt. The High Court decided that the debt was illegal but still enforceable against the Council because it is a "protected transaction" under the Local Government Act.  However, the question remains open as to whether the Council can set rates for an illegal purpose.

If the Court of Appeal decides that ratepayers cannot be rated for an illegal purpose then the Council and the banks will have to decide which other parties they will target to recover the monies.

The Commissioners will certainly be buoyed by the decisions of Heath J and have indicated that they will start enforcement proceedings for the rates arrrears and the penalties.  It will be interesting to see how they react to the MRRA's offer.  It would certainly be advantageous for the Commissioners to resolve the historic illegal rating issue, accept the bird in the hand, and move on, but that will depend on whether they are compelled by external influences to extract every morsel of their pound of flesh from ratepayers.  

No doubt they are at present running up another substantial legal bill with Simpson Grierson and taking instructions from the Department of Internal Affairs and the banks.

The MRRA has advised that it will go ahead with its appeal to the Court of Appeal against the judgment of Heath J.

It consulted with its lawyers and with its members who voted overwhelmingly to support the appeal (500+ for and 4 against).

It is uncertain how long it will take to get a fixture but it is hoped that the appeal will be heard before Christmas.

BE MY GUEST  15 08.14
Bill Guest offers a good analysis of the High Court decision in his article in the Kaipara Lifestyler (here).

His summary of Heath J's decision is succint and accurate:

The court ruled that the loan contract for the Mangawhai sewerage scheme falls under the ‘protected transaction’ regime and therefore is deemed to be valid and enforceable against the council as debtor at the suit of the creditor. That means that there is a debt that the council must satisfy whether by payment of what is owed in full or under an agreed compromise.

The fact that a debt exists means that the council must consider how to respond to a demand for repayment.

Its ability to raise money through rates to meet that lawful commitment is not affected by any failure to comply with procedural prerequisites.

The MRRA never challenged the fact that the protected transaction provisions made the debt valid and enforceable against the Council.  Everyone accepts that the Council has a legal obligation to pay the debt.

The point of difference is that the MRRA believes that the protected transaction provisions are limited to the enforceability against the Council.  They do not empower the Council to set rates for an illegal purpose, namely EcoCare.  (The Court had already decided that the entry into EcoCare was illegal.)

If Heath J is correct then it means that local authorities who raise loans are free to set rates in any way they like and do not have to comply with the legislation, or what Heath J calls "procedural prerequisites"

Heath J also decided that the Validation Act validated the illegal EcoCare rates "for all purposes" and not just the defects that were listed at some length in the Preamble to the Act.  That means that the right to judicial review of the decision to rate, guaranteed under the New Zealand Bill of Rights, has been excluded.

Bill Guest also looks at the liability of the auditors, the former chief executive and the councillors and urges the Commissioners to pursue those parties.

No one would disagree with those suggestions.  The problem is that ratepayers have been set up to bear the brunt of the Council's incompetence by those who are running the show, and whilst ratepayers are the easy targets the Council is not going to pursue anyone else.

It is absolutely vital to the Department of Internal Affairs, to Local Government New Zealand, and to the Government, that ratepayers are held responsible for all the debts of their local authority whether they are illegal or not.  It is the foundation that local govenment in New Zealand is built on.  And they will do anything to ensure that nothing changes that.

Bruce Rogan, Chair of the MRRA, can be heard on the  National Programme's Checkpoint here.

Heath J's decision can be seen here.

Kaipara Chief Executive, Steve Ruru, has resigned, effective 17 October 2014.  The presss release can be seen here.

The High Court hearing of the MRRA's judicial review application was continued and completed in the High Court in Christchurch today.  A live video of the hearing was relayed to the High Court Whangarei.

Justice Heath advised that his final written decision on all matters will be available by next Wednesday, depending on his timetable, but hopefully by the end of next week.

The Judge will reconsider the wording of his orders and also decide if additonal orders are appropriate.  

Counsel for the MRRA has requested that an order be made that the Council is obliged to consult with ratepayers on options for dealing with the illegal debt before setting any rates.  

The Judge is also to consider an important issue that was missing from his earlier judgment, namely whether a local authority can set a rate to fund a debt that was raised illegally to fund an activity entered into illegally.

The MRRA has also applied for an injunction to stop the Council recovering the "illegal" rates pending the outcome of the Court of Appeal hearing.

Heath J will also decide on the quantum of costs that are awarded to the MRRA.

The telephone conference between Heath J and the barristers for the MRRA and the KDC was held on 2 July. Heath J decided that the issues to be heard were too complex for a telephone conference and that they should be heard in person at the High Court in Christchurch (to suit the Judge and legal counsel) on 18 July.

A live video link of the proceedings will be available at the Whangarei High Court.

Heath J confirmed that his previous decision was only a provisional view and that he did not seal it for that reason.

At the Christchurch hearing the MRRA will be allowed to argue that the Council has no power to set and collect rates to fund an illegal loan, an issue which was not dealt with in the Judge's interim decision.

The MRRA will also be applying for an interim order for relief in respect of any declaration of legality in respect of the EcoCare rates that the Court makes. In other words, if the High Court finds that the disputed rates are legal then the Council will not be able to collect them until the Court of Appeal has made its decision.

The Court will hear legal argument on the amount of costs to be awarded and in respect of the wording of the various orders.

It is understood that the decision of the Judge will be given orally at the end of the hearing or will be available in writing soon after the hearing.

A copy of the letter from the MRRA to its members can be viewed here.

The liquidator of finance company Capital + Merchant Finance has announced an $18.5 million settlement with the company's previous auditors BDO Spicers.  
The $18.5m settlement was made without any admission of liability on BDO Spicers' part and without the necessity of issuing court proceedings.

See the NZ Herald article by Hamish Fletcher here.

The liquidator of the failed finance company said the settlement was reached after "assessment of the risks and benefits of litigation and the associated costs".

This announcement is hot on the heels of the recent announcement that the receivers of Strategic Finance had reached a $60 million settlement with that firm's auditors (also BDO Spicers)  - scroll down to: PURSUING THE GUILTY - TOO  HARD? 06.06.14).

Meanwhile the Kaipara Commissioners are doing all they can to force the innocent ratepayers of the district to pay the illegal debts and the illegal rates while they do nothing about the guilty parties whose negligence caused all the losses.  They have announced that no decision will be made on pursuing third parties until August.

Compare that to the Capital + Merchant liquidator who advised that the successful outcome "was achieved after rigorous negotiations and consultation".

"My team of insolvency personnel, experts, and legal counsel have all worked diligently to ensure the best possible outcome for the company and its investors,"

There are no insolvency experts involved in the Kaipara receivership and there is no one working diligently to ensure the best possible outcome for the council and the ratepayers.

The judicial conference between counsel for the MRRA and the KDC and Heath J will now be held next Wednesday 2 July.  The Judge will hear submissions on the final form of the orders, the award of costs, and an application for a stay on charging the validated rates until the Court of Appeal has made its decision on the legality of the rates.

The sealed judgment should be available soon after that.

Local MP Mike Sabin is still making a lot of noise about pursuing the OAG for compensation for its negligent auditing of the KDC.  His latest roaring is in the Mangawhai Focus under the heading Front up OAG.

Mike Sabin says:

I have made it very clear to the Auditor General, Lyn Provost, through the media, personally and formally, that her office should do the honourable thing and compensate the council and its ratepayers for the value of their failure.

The problem with all this hype is that it is just hype.  The OAG is NEVER going to voluntarily pay compensation of any sort.  The OAG has indemnity insurance for this type of cover and it is the insurance company that would be forced to cough up.  

We all know that the first rule of any insurance company is that you never admit liability even if you are seen next to the body holding a knife dripping blood and yelling "I killed the bastard!"

The second rule is that getting money out of an insurance company is like getting the proverbial blood out of a stone. 

So no amount of evidence and no amount of grandstanding by an MP is going to make the slightest bit of difference.  If you scroll down this page you will see earlier articles that I have written on this matter.  The only way that you will get any money out of the OAG and the other negligent parties is to get some ruthless receiver into the equation who knows how to apply the thumb screws and extract copious amounts of blood from the driest stone.  And that has to happen now.  Not next week, not next month or in a few months time.

Mike Sabin has been beating this drum for over a year and has actually done nothing.  Worse than that, he has created a smokescreen that suggests that he is taking some action when in fact he is not, and in the meantime the Commmissioners quitely announce delay after delay.

Remember last year that they announced that they were going to get their lawyers on to it and report to them by February.  That got delayed and they are still thinking about it. At the Council meeting this week (25 June) they announced:

Following release of the Auditor-general’s inquiry report, officers were asked to seek legal advice on the options which might exist for holding those responsible for the failings identified in the inquiry report to account.

Work is well advanced on exploring the options which might exist. At this stage it is expected that decisions will be able to be made in the next 2-3 months.

Forget all the blarney from Mike Sabin.  No action is ever going to be taken by the Commissioners against any other party whose negligence led to the Kaipara debacle.  

No one in local government is ever going to implicate anyone else in local government.  It is an unwritten rule.

The other unwritten rule of local government is that everything is dumped on ratepayers.

The MRRA has filed an appeal in the Court of Appeal against the judgment of Heath J.  The appeal is a "protective" appeal.  This means that the final judgment of Heath J will not be available until after the time-limit for an appeal has expired, so the MRRA is protecting its position in case there is no change to the provisional judgment.

Heath J will be holding a telephone conference with counsel from both sides on, at this stage, 1 July (previously scheduled for 20 June) and will hear further submissions.  His final judgment will be made after that.  The MRRA will then decide whether to proceed with the appeal or to withdraw it.

The MRRA advice on the matter can be seen here.  It also contains advice to those pondering over whether to pay the rates by the end of June.

The MRRA and Legal Eagle are receiving a lot of calls from ratepayers anguishing over this decision.  The decision has not been made easy by the rather strange provisional decision Heath J has given and the ruthless attitude of the Commissioners.

At the end of the day, the decision is a personal one that each individual must make, but the following should be taken into account:

+ If the provisional decision of Heath J remains unchanged then the appeal to the Court of Appeal will go ahead.  The MRRA considers that it has good grounds for the appeal.

+ Pending a decision from the the Court of Appeal the rates in question are not "due and payable" as their legality is still before the court.

+ The rates for 2014/15, due to be set tomorrow (24 June), may well be challengeable if the Commissioners fail to consult with ratepayers as indicated by Heath J in his provisional judgment (see article below).

+ The MRRA has made an offer to the Council to settle the whole matter with the sanction of the High Court.  A response from the Commissioners is awaited.

+ If an appeal proceeds then the MRRA will apply for a stay of the order in respect of the legality of the rates until the matter has been decided by the Court of Appeal.  If that succeeds the Council will not be able to enforce the collection of the rates.

+ There is an increasing body of ratepayers - and others beyond the district - that realises that the issues here are of fundamental importance to the future of New Zealand and we must continue the fight to stop the craziness that has infected local government in New Zealand, and to put an end to the growing governmental disdain for the rule of law that threatens the very basis of our society and our democracy.  

The courts are the only effective limit on the abuse of power by the government and local government and we must do everything we can to give the courts the opportunity to draw a line in the sand.  This is a fundamental battle between right and wrong and those of us who see it as such are going to do everything within the law to ensure that those who have abused the power bestowed on them in Kaipara are brought to heel and are held responsible for their actions.  

Further it is unconscionable, and we believe contrary to the law, that ratepayers should be compelled to pay rates to meet debts that the the High Court has decided were completely illegal.  If that is the case then all local authoprities in New Zealand are free to breach the law with impunity and then force ratepayers to pay the bills.

If the MRRA fails to re-establish the rule of law in Kaipara then every New Zealander has to ask where this country is heading.  To me that is a battle worth fighting.

See Bob Dey's latest articles here.

The Kaipara Commissioners have put their steamroller into top gear as they try and crush the rate revolt in Kaipara. They have sent threatening letters to ratepayers citing the finality of the Heath J judgment when in fact the judgment has not been sealed and no binding orders have been made. See the Kaipara Lifestyler here.

The Commissioners are not phased by the Judge's findings that the decisions to proceed with EcoCare agreements were illegal, as were the loan agreements that have condemned Kaipara to financial ruin.

The Commissioners are proceeding to perform the role allotted to them by the government in their Terms of Reference - undertake actions to enforce the payment of 2012/13 rates and any unpaid rates from previous years - to break the rate strike and to ensure that ratepayers pay the debts to the banks, whether they are illegal or not.

Like the Tiller Council before them, they have ignored the requirements of the legislation when it clashes with their objectives. They are purporting to remit some penalties even though they clearly do not have the legal right to do so and they refuse to consult with ratepayers over significant decisions.

When pursuing the validation bill the Commissioners failed to consider the various other options for dealing with the illegal EcoCare rates and also side-stepped the statutory requirement to consult with ratepayers. This was not lost on Heath J at the February hearing. In his judgment he states:

[59] The Council is not under a duty to levy rates to meet the debt. It should consider all available options in an endeavour to ascertain what approach to repayment will be in the best interests of its ratepayers. That includes evaluating the advantages and disadvantages of negotiating with existing creditors to ascertain whether there are means of restructuring debt arrangements that would place less of a burden on its ratepayers. The possibility of recovering some of the costs from third parties67 should also be considered. That type of analysis should enable the Commissioners to make more informed decisions about its options.

Having decided that in the past that the Council failed to make such an assessment, he goes on to say:

[62] Nevertheless, in relation to future rates that might be struck, it will be necessary for the Council to give proper consideration to these issues before making its rating decisions.

Pretty clear words that one would think the Commissioners would heed.   But will they?

Those rating decisions are due to be made at the Council meeting tomorrow (24 June 2014) when rates for 2014/15 are to be set. Given the massive report in the agenda on this matter it is highly unlikely that the directions of the Heath J will be followed. The report is all smoke and mirrors and fudges the decision-making options. It also seems almost certain that there will, yet again, be no consultation with ratepayers on the fundamental issues highlighted by the Judge.

The Council recently sent a letter to all ratepayers demanding payment of all rate arrears and penalties by the end of June and offering a carrot of remitting some penalties if that date is met. The letter noted that the High Court judgment "removes any doubt that your rates are valid and payable".

Unfortunately, many of the comments that emanate from the Commissioners are not true, and this is one of those comments.

The High Court has not made a final judgment on the matter. Justice Heath has advised that he is "minded" to make certain orders but those orders will not be finalised until there has been a conference between counsel for both parties and the Judge, sometime after 20 June. In the meantime the Judge has ordered that the judgment should not be sealed.

This means that the tentative judgment is not legally binding.

In addition to that, either party has the right to appeal to the Court of Appeal and such an application has to be filed by 26 June. John Robertson has advised that the Council will not be appealing the decision.

If an appeal is lodged then the issue of whether the historic rates are valid still remains before the courts. The question arises whether the Council has the power to include the arrears and penalties for such rates in the new rates assessments that are effectively issued on 1 July 2014.

So where does this leave ratepayers? Should they or should they not pay their rates arrears by the end of June?

My advice is to hold fire on making any decision until closer to the due date (30 June). By then we will know what the final judgment of the High Court is. We will also know if either party is appealing the decision. There is also the possibility that a settlement could be reached by the parties.

The next two weeks are very important for the future of Kaipara so I urge all ratepayers to withhold any further payment of rates until the MRRA is in a position to report on the situation and offer some advice.

It seems pretty clear that the KDC is in effective receivership and the Commissioners are acting as de facto but very inexperienced and very unwilling receivers.

There is little doubt that the illegal but enforceable debts incurred by the Council are so massive that they can never be paid by the Council in the normal course of its operations.

What the banks are trying to do through the Commissioners is to force the ratepayers of the district to stump up with the monies to bail the banks out without upsetting the local government apple-cart.

They are trying to force the KDC's insolvency onto the ratepayers.

So far they have been aided and abetted in this nefarious scheme by the so-called local government watchdog and head auditor, the OAG, which conveniently turned a blind-eye to the ongoing shenanigans; by the immediate auditor, Audit New Zealand, which showed an unparalleled incompetence; by Parliament which evinced an utter disregard for the rule of law and fair play; and by the government which treated breaches of local authority laws and financial incompetence and recklessness with total disinterest.

But that does not alter the fact that the KDC is insolvent. It cannot meet its debts out of its income. It does not meet the "going concern" test that the OAG is supposed to apply to all local authorities.

Don't be fooled by comments from the Commissioners about the Lazarus-like revival of the Council's financial fortunes. Statistics can be manipulated to suit any purpose.

Chief Executive, Steve Ruru, presented a dire picture to the Select Committee six months ago warning of financial Armageddon if the Validation Bill was not passed before Christmas. Using those same figures, Heath J commented in his judgment - para [58] - on "Council's precarious financial position".

And yet, with the same figures, but with the help of a bit of smoke and mirrors and a dose of creative accountancy, that threatened Armageddon has been turned into a success story and financial turnaround that the Commissioners pronounce to the world.

Nothing has changed, of course. It is all bumph. The Commissioners are playing a clever game of sucking in the ratepayers to defeat the rate strike and get the confidence of ratepayers before going for the jugular next year.

The debt remains the same. It will not go away. The only way that it can ever be paid, if the MRRA court review fails, is by the ratepayers of Kaipara stumping up every last penny. And if that destroys many individuals and families both financially and health wise, destroys businesses and communities, then so be it. That is what local government in New Zealand is all about and none of the those who get their living from local government could give a fat rat's.

Compare the local government situation to the commercial sector which operates in the real world. Take a look at Hamish Fletcher's article in today's NZ Herald in relation to the liquidation of an IT company. The liquidators are suing the three directors for nearly $2 million for reckless trading, for failing to exercise the skill and diligence of a reasonable director and for failing to keep proper accounting records.

So, you may ask, what is the difference between them and the councillors and the former chief executive and his staff of the KDC who were, in the view of both the Auditor General and Heath J, utterly incompetent and were responsible for an endless trail of illegalities and financial mismanagement?

Certainly in the IT case they were company directors and had an obligation under the Companies Act not to trade if the company was insolvent, but in general they both breached their duty of care owed to shareholders or ratepayers. They were, it is claimed, totally negligent.

Why then is action not being taken against the former chief executive and his staff and the councillors who made all the illegal decisions relating to EcoCare?

And what of the liability of the current commissioners. There is absolutely no doubt that there is an awful lot of smoke and mirrors and the fudging of financial figures. The failure to disclose the true indebtedness of the Council is an example. Another is the fanciful total reliance on development contributions to fund a major part of the EcoCare debt in future.

If, as I allege, the KDC is operating whilst insolvent, and a receiver is eventually appointed, could the Commissioners be sued because of their misleading statements, their poor financial management, and their questionable spending on the Validation Bill and the defence of the judicial review which appear to be decisions that were not made in accordance with legal requirements?

There appears to be an incredible reluctance on the part of the Commissioners to bring in an independent receiver-type person to take action against those responsible for the losses of the KDC.  Is that because the Commissioners fear that they themselves may be implicated and targeted?

The big question: How do we get an independent receiver to get stuck into the KDC?

And are these words of liquidator Damien Grant appropriate for the badly holed SS Kaipara?

"In some ways this ship was always going to sink, the only question was how far out from shore it was when it did and it was a long way out when it finally did go down."

The MRRA's senior counsel, Dr Matthew Palmer, has just been appointed a QC (Queen's Counsel) by the Minister of Justice.  A full report in the New Zealand Herald can be seen here.

Those of us who saw Matthew arguing the MRRA case in the High Court in Whangarei will confirm that the accolade is well deserved.

Matthew Palmer QC

Andrew Laxon's article in the New Zealand Herald (here) reveals that things are happening behind the scenes in respect of the liability of the Office of the Auditor General (OAG) for the Kaipara debacle.

It appears that the Commissioners have reached an agreement with the OAG that the clock has stopped from the point of view of the Limitation Act.

That is good news that compensates for MP Mike Sabin's suggestion that the report on EcoCare was deliberately dragged out by the OAG to take advantage of the six year limitation period.

The problem with all of this is twofold.

First, it is all being done in secret. The Commissioners find it impossible to consult with or to communicate with ratepayers or the MRRA. They will have to change that attitude substantially if Kaipara is going to be salvaged. The MRRA, through the High Court, has wrapped them in illegalities, and Justice Heath has laid down onerous new requirements both for setting rates in the future and pursuing the liable parties.

Only an honest and open approach by both sides will achieve a fair and binding settlement.

The other problem is one that I highlighted in a post yesterday (PURSUING THE GUILTY - TOO HARD?), namely that the Commissioners do not have enough experience to handle what is effectively the receivership of the KDC, and they are too close to those that they should be pursuing.

With the approval of the Council's bankers the Commissioners desperately need to appoint one of the receivership specialists to proceed on a pseudo receivership type basis to look at recovering monies from the OAG, Audit New Zealand, the former Chief Executive, the Council's consultants and lawyers, and the councillors who made the illegal decisions.

The Commissioners have dragged the chain for far too long and the job should be given to experts who could resolve the situation in a very short time.

Ratepayers will also have to pay their part. It has always been the understanding of ratepayers that they would be responsible for a fair share of the EcoCare debt. That would be based on an engineering appraisal of the EcoCare plant and a subsequent valuation.

Ratepayers would be responsible for that amount, less whatever has been paid off in capital contributions, development contributions and the government subsidy under the sanitary subsidy scheme.

If Council gets an independent assessment of its financial situation, if it pursues other liable parties through an expert receiver, and if it obtains an independent assessment and valuation of the EcoCare plant, then ratepayers would have no problem with chipping in their fair share. They would, however, insist on the reserve funds that have been raided being reimbursed.

On such a basis, ratepayers would also agree to paying all arrears of rates provided that penalties were completely wiped along with the charges for the year when EcoCare was not operative, and the unit of demand levies.

With ratepayers paying their share and a few of the liable parties chipping in, and with the banks taking a moderate haircut, it would not be difficult for a settlement to be reached

One hopes that the Commissioners and the MRRA, with some prodding from the High Court bench, achieve some progress in the next few weeks in resolving once and for all the Kaipara problems.

Note: Andrew Laxon suggests that taxpayers will end up paying part of the Kaipara debt. Presumably this is on the basis that the OAG will cough up some monies. That suggestion is incorrect. As the Auditor General revealed at the Kaipara meeting earlier this year, her Office has full indemnity insurance, as does Audit New Zealand. The consultants, lawyers and the former chief executive will also have indemnity insurance.

ABN AMRO, the Dutch bank which financed the illegal EcoCare project, has lost an Australian court appeal against a decision that, along with the rating agency Standard & Poors, they "deceived" 12 investor councils prior to the 2008 financial crisis.

The article in the BBC Business News can be seen here

(Referred by John Dickie)

Chris Hutching's article on the High Court judgment can be seen here.

(Thanks to John and Ron for pointing out the broken link.)

Last year I reported on the Commerce Commission reaching a deal with the promotors of the shonky Credit Sails investments whereby those companies believed to be responsible for the massive losses were asked to front up with the cash or go to court with the risk that they would have to pay compensation and their reputations would be somewhat tarnished.  They stumped up with $60 million.  See the story here.

Hamish Fletcher in the NZ Herald reports here that the FMA and the receivers of Strategic Finance have just reached a settlement with the directors of Strategic and BDO Spicers, its auditors, whereby they opted to pay $22 million rather than risk court proceedings.  Fairfax's "Chalkie" (Tim Hunter) reported (here) on the negotiations relating to this settlement last year.  He outlined how settlements are reached:

As Chalkie understands it, negotiating an out of court settlement works like this - the opposing lawyers face each other across a conference table high in a glass office tower and take turns to stand up and say: "Do you feel lucky, punk?"

The one who can say it most like Clint Eastwood wins.

Receivers are tough hombres.  Their job is to get the money from those who are responsible for the failure of an undertaking.  They are ruthless and take no prisoners.  That is the problem with Kaipara.  The Commissioners are in fact acting as de facto receivers but they have absolutely no experience in that area.  Not only that, they are members of the very cosy Local Government Club and appear to have no stomach for taking action against those who may be colleagues, acquaintances or personal friends.  They have already wasted valuable time dilly-dallying and pussy-footing around while the Limitation Act clock is fast winding down.

Justice Heath issued some stern words in his judgment about pursuing those responsible for the Kaipara debacle.  The guilty ones can be clearly seen lurking in the shadows hoping that the hapless ratepayers will be dumped with all the debt.  Whilst the Commissioners are running the show then that is very likely what will happen.

If Clint Eastwood was available then he might just make a difference.


Report from the Northern Advocate here

"Mixed outcome for Mangawhai ratepayers" - Kaipara Lifestyler (here)

"Be my Guest" - Kaipara Lifestyler (here)

The MRRA has issued the latest advice to its members:

Update on litigation and other matters

1. There have been reports in the media that the high court action between the KDC and the MRRA is now over.

A press release on the KDC website purported to say that the judgment was final and complete. (This was challenged and the KDC apologised to the challenger and removed this from their website).

2. One media outlet has also said that the MRRA is recommending to its members that they pay any rates still owing.

Neither of these statements (1 & 2) is true.

The High Court judgment is a draft judgment only. The judge has made no final determinations on any of the matters before him (although he has indicated what he is “minded” to do) and in a move that we understand is highly unusual he is seeking input from counsel before he finalises his position and seals the judgment.

No court judgment can take effect until it is sealed. The process of getting counsel’s views will not take place until June 20th at the earliest.

After that the judge may alter some aspects of his judgment, or add things to it.

While the judgment as it stands vindicates the MRRA’s contention that the council was acting both illegally and ultra vires over many years, it does not yet contain declarations on some matters upon which declarations were sought by us.

The situation is very fluid, with extensive legal review and discussion under way, including new discussions between the MRRA and the Commissioners, initiated by them, which are productive, cordial and candid. We will come back to you as soon as possible with advice about whether or not to pay any of the withheld rates. Pending this advice, please patiently wait a little longer in the knowledge that we are hard at work advancing your interests.

The judge clearly wants the parties to find a way through the legal and financial quagmire we are in that gives fairness and justice to everyone. He has signaled the things that are of concern to him and suggested the matters that need to be brought to him. He has indicated that parties other than the ratepayers should be pursued for the illegal debts. This is, of course, of fundamental concern to us on your behalf. We will not agree to anything that does not satisfactorily deal with this issue.

Just so that nobody is left wondering, both parties to this litigation have the option to appeal all or part of the judgment. If in our view the judgment, when finalized, is wrong, or is harmful to our interests, we will not exclude the possibility of lodging an appeal. KDC will also reserve the right to do this, of course. If we go to appeal it is highly likely that we will have to again ask our members to assist with financing that, but it will not cost anything like as much as the previous hearings. If an appeal is necessary, and we sincerely hope it is not, we will only proceed if we have enough money to see it through.

Legal Eagle reiterates that all ratepayers should withhold their rates until the results of the current negotiations with the Commissioners have been concluded and the judgment of Heath J has been finalised. 

Bob Dey's comments on the Heath J judgment can be seen here.

Read Imran Ali's hard hitting article in the Northern Advocate here

Dunedin, like many districts in New Zealand, has its own council created white elephant in the shape of the Dunedin stadium.  The local action group has kept close tabs on the developments in Kaipara and the comments on their website in respect of the High Court judgment can be viewed here.

The carefully crafted judgment of Justice Paul Heath in MRRA v KDC represents a signal victory for ratepayers in New Zealand and perhaps world-wide. For years ratepayers in Mangawhai challenged the legality of rates set by the Kaipara Council, and out of desperation went on rate strike to drive their point home.

After many years the Council finally acknowledged the illegality of the rates but, to the chagrin of ratepayers, then proceeded to validate the illegalities by courtesy of a vindictive Validation Bill that an overly compliant and politically driven Parliament rubber-stamped in December 2013.

But that was not all. In late 2011 the Ratepayers had discovered secret resolutions relating to the EcoCare sewerage project which made it clear that the Council had not complied with the requirements of the Local Government Act by consulting with ratepayers before embarking upon the project.

The Council stoutly resisted such allegations and forced the ratepayer group to issue legal proceedings. The Council did all that it could, at ratepayers' expense, to block the application for review in the High Court. So far it has spent $700,000 trying to deny ratepayers' access to justice.

In his decision Justice Heath had no doubt about the legal situation. He paints a picture of a council that was totally out of its depth and comments that

"this proceeding has exposed a high degree of incompetence among those who were elected to serve on the Council, and also their executive officers".

In respect of the first contract for EcoCare the Judge states:

It is sufficient to say that the failures to comply with relevant statutory procedures were both manifold and serious. and that the Council had entered into the contract unlawfully.

He makes the same finding in respect of the subsequent amendment to the EcoCare contract which increased the scope and price, and comments:

In particular, proper consultation was not undertaken and no adequate disclosure was made of the true cost of the project at the time the decision to commit contractually was made.

The importance of these decisions is substantial. There is a culture in local government in New Zealand where local authorities are effectively above the law. They have a tendency to flout the law at will, hide behind self-supporting legal opinions that are claimed to be privileged, and adopt the stance that everything that they do is legal until the High Court decides otherwise.

They know of course, that most ratepayers simply do not have the finances, the stamina and the good health to pursue a High Court review. That gives them the freedom to flout the law at will.

However, in this instance, miffed at the blatant illegality of the Council's decisions, dumb-founded at the utter incompetence of the auditors and watchdogs, stone-walled by intransigent commissioners, and shamed at the thumbing of the nose at the rule of law in modern day New Zealand, the MRRA decided to make its mark in the sand.

The MRRA's courage and determination should be applauded. As should the support and contributions of its members and other supporters, world-wide, who offered moral support and financial contribution to its legal fighting fund. They realised that this was not some minor dispute about petty parish-pump politics but encapsulated principles about what our democracy and freedoms are all about.

MRRA, its members and supporters, take a bow.

The significance of the decision is also shown in the award of costs to the MRRA. In a very rare move Justice Heath has awarded indemnity costs to the MRRA. That means that the Council has to pay all the legal costs of the MRRA not just the standard nominal contribution.

That in itself perhaps reflects the way in which the judiciary perceives the blatant abuse of power by the KDC and its attempts to block its ratepayers access to the courts and to justice.

More later on the nuances of the decision.


3 News

Radio NZ

The UK Daily Mail has reported on the Heath J judgment

Joel Cayford's blog on the High Court decision can be seen here.

The judgment of Heath J can be seen in full on the website Judical Decisions of Public Importance (here).  Scroll down to High Court judgments.

The decision is only an interim decision and still needs input from counsel on both sides before the declarations are finalised and the judgment sealed.  That will not happen until July at the earliest.

A full assessment of the judgment will be posted in the near future.  

A lot of silly comments have been made about the actual description of the properties that the Commissioners are going to sell.

At the Mangawhai hearing Commissioner Winder, under intense pressure from ratepayers to list the properties being targeted, ran for cover and equivocated by saying that it depended on the interpretation of the expression "non-strategic surplus council-owned properties" which was used in the Draft Annual Plan.

This is, of course, just another smokescreen to hide the simple truth.

The expression was included in the DAP which was written by the Commissioners. Those were their actual words so they know exactly what they meant to say.

Not only that, in the Summary of the DAP the expression is immediately followed by the definition of the word "non-strategic":

By non-strategic we mean property that has no current of future plans for public use.

Surplus, of course, means not needed, unused, superfluous.

Could anything be clearer than that?

The problem is that the Commissioners have been caught red-handed lying to ratepayers. Two of the properties that they intend to sell, and are in the process of selling, in Alamar Crescent, Mangawhai Heads are not surplus or unused but are a vital part of the waterfront reserve and an integral part of the KDC Management Plan for the area.

The police unit section behind the Fishing Club is not only used for trailer parking but is absolutely necessary for compliance with the parking requirements for the resource consent for the adjacent boat ramp.

The irony of all this is that parking is already short a peak times and yet the Council has just given its consent to doubling the size of the ramp, which will necessarily require even more parking, and yet is taking away the parking that is needed for consent compliance..

Perhaps Messrs Robertson, Winder and Booth have some novel idea for parking - such as in the Cloud - or perhaps they simply don't give a damn about Mangawhai and are simply intent on extracting as much money for the banks as they can before they quit.

Larry Mitchell has today released his council League Table that compares the financial performance of all councils in New Zealand.  

Kaipara ratepayers will be especially interested in Item 12 on page 9 which highlights the "raiding" of funds held for one purpose and used for a completely different purpose.  

The KDC is, of course, in the bottom "class" of three of all councils.  In the tables it is number 66 out of 66.  It was awarded one star (five being the best) with the comment:  "Barely surviving under the adminstration of Commissioners." 

Compare that to the comments of John Roberston in the letter accompanying the final rate demand recently sent out, extolling the competence and performance of the KDC..

The Kaipara figures are worse than suggested.  Bear in mind that if the EcoCare debt is dumped solely on the ratepayers of Mangawhai who are connected to the scheme - which is what the Commissioners are trying to do -  then the debt for that alone will be in excess of $40,000 per property.  

The total indebtedness of Mangawhai EcoCare ratepayers will be nearly three times the per property Auckland debt which is supposedly the highest in the country.

Will Kaipara be relegated, and if so where will it be relegated to?  The League Table has confirmed its cot-case status and we now await the decision of the High Court to see what happens next.

The League Table can be viewed here.

The Minister of Finance, Bill English, has announced in today's Budget the supension of import duties on building materials.  This will save $3,500 on an average house, and, along with the proposed reduction in development contributions, is part of the Government's policy to reduce building costs.

In the meantime the Commissioners in Kaipara have increased the cost of building a house by between $10,000 and $20,000 by requiring compliance with the draconian Fire Safety Code that has been shunned by many councils.  Other requirements, which necessitate resource consents for a basic house, push the price higher, as does the increase in the cost of all consents and other charges in the Annual Plan.  

See WHAT ARE THEY DOING TO OUR DISTRICT below for more details.

Do not believe for a moment that the sheepish Commissioners at the Mangawhai hearings took a blind bit of notice of what ratepayers said to them about not selling land in Mangawhai.

Plans to sell off Sellars Reserve have moved along rapidly since the hearings and a real estate agent has been seen showing the land to prospective purchasers.

The Commissioners are a law unto themselves and responsible only to the banks that are "calling up" their pound of flesh.  The niceties of reserve land being untouchable, the legal requirements of consultation with ratepayers, and the long term benefits for Mangawhai, are all utterly irrelevant when there is a grab for money.

One day soon we are going to wake up and find that the land has gone forever.  To stop that we need to take action now.  We urgently need to set up a special group to fight the Commissioners.   

But, more than that, we need to send a very strong message to the Commissioners that we totally disapprove of their actions.  We can do this by withholding the last payment of rates for the current year.  This would send a very loud and clear message to the Commisioners that they are not elected representatives and that they have no mandate to sell our land.

The Commissioners are fully aware that all the rates assessments for the current year throughout the district are invalid because they include rates that could be declared invalid by the High Court.  This refers not only to the targeted rates for EcoCare for Mangawhai residents but the general rate across the whole district which includes an EcoCare element.

So all rate assessements include rates that are not "due and payable" in law, which renders the rates assessments invalid.  The Rating Act is quite clear that if a rates assessment is not delivered to a ratepayer in the correct form then there is no legal obligation to pay the rates.

This is an opportunity for every ratepayer in Mangawhai, and hopefully Kaipara, to make their mark in the sand.  

Withhold all rates until the High Court decides whether they are legal or not.

Little by little those building houses in Kaipara are beginning to realise the new draconian rules that are buried in the new District Plan.

The new minimum size for a section is now !000m2 and all the rules appear to be based on lots of that size. So if you try to build on an existing smaller section you are going to run into massive problems.

Sure, you can obtain multiple resource consents to exempt you from the provisions but you are going to have to employ costly experts to do that and then jump through so many hoops and pay so many Council fees, consultants fees and lawyers fees.

You have to have deep pockets, infinite patience and excellent health to survive a building project in Kaipara.

The irony is that while Nick Smith as Minister of Housing is trying to free up the building process and reduce compliance costs, the Commissioners in Kaipara are doing the exact opposite.

Kaipara desperately needs development if it is going to get back on its feet and yet the Commissioners appear to be doing everything to stifle any progress in that direction.

Here are some comments from readers:

"The fire code is an absolute dog. Pretty much every new build requires resource consent because of the rule,"

"The new plan makes it virtually impossible to build a standard house on a section without obtaining resource consents."

Draconian new rules relating to :

Excavation and Fill.

Section Sizes
Council has allowed 600 m2 sections to be subdivided within overlay areas and the plan now stipulates a minimum of 1,000 m2.

A residential dwelling must have minimum yard setbacks of 5 m front, 3 m BOTH sides, 3 m rear.

Permeable Surfaces
The area of any site covered by impermeable surfaces (includes any surface – not just dwellings and driveways) shall be less than 40% of the NETT site area.

Building Coverage
Buildings shall not cover more than 35% of the NETT site area.

Vehicle Access and Driveways
Vehicle manoeuvring shall use 8 m radius turning circles (other councils use 5.6 to 6.2 m radius circles)

No vehicles shall reverse off a site onto the adjacent street or road.

Proximity to Areas used for Commercial Activity
A resource consent MUST be applied for if a dwelling is planned to be constructed within 300 m of a commercial activity. This relates to activities – not zoning.

"As for the fire safety code, I will not put in writing what I and some of the volunteer firemen think of this clause."

"So much for affordable housing."

It is getting to the stage where virtually every district in the country has a "white elephant" that has exhausted the financial resources of ratepayers, thanks to the incompetence of the local council.

Dunedin has its stadium which is the subject of Cameron Slater's blog here.  Auckland is, from the way that things are going under Len Brown's regime, going to end up with a herd of white elephants.  

Kaipara, of course, is famous for its failed sewerage system which cost far in excess of the $60 million dollars quoted by the Commissioners to service a mere 1500 properties.  That's at least $40,000 per property.

Perhaps Mangawhai should install a giant gold plated dunny at the entrance to the town to remind residents and visitors of the pillaging of local ratepayers as a result of the incompetence, the lack of financial prudence, and the disregard for compliance with the law  that pervades local government in New Zealand.

Tsunami warning sirens are being set up all over the country but there is one tidal wave that so far has been largely ignored and that is the tidal wave of council debt that is poised to sweep the country and impoverish the ratepayers of New Zealand.

That may sound alarmist but Geoff Cumming's article in the NZ Herald presents clear evidence that council debts are spiralling out of control throughout the whole country and it will take generations of ratepayers and massive rate hikes to pay the debts that are being incurred.

The problem is that whilst council spending is running out of control, the government has policy of keeping rate increases to a minimum and cutting back on development contributions, creating a fiscal straitjacket which necessarily means massive deficits in the future that someone will have to pay for.

Even Local Government New Zealand, which is usually quick to dump on ratepayers, has acknowledged that there are problems and that "its doubtful rates will be able to cut it going forward". There has to be other sources of income to fund local government

The reality is that local government in New Zealand is a crumbling edifice that is on the edge of collapse. The Kaipara debacle has highlighted many of the problems including inexperienced and incompetent councils, out of their depth, incompetent auditors, incompetent watchdogs, advisers and consultants feathering their own nests, predatory banks and contractors, and a local government system that seems based on an archaic feudal system of the past rather than a viable plan for the future.

Local Government in New Zealand

Teetering on the edge of collapse

In spite of what the Commissioners say, and John Robertson's facile claims in newspaper articles and letters to ratepayers of a Lazarus-like financial revival, the KDC is the ultimate cot-case and teetering on the brink of financial collapse. The Commissioners are creating a massive smokescreen of misinformation to disguise the true state of affairs, but no doubt Larry Mitchell's local council League Table, which is due out this week, will provide a reality check and insert a massive dose of reality into the equation.

With a General Election due in a few months it is surprising that no party has taken a stand on the fundamental restructuring of local government. But, perhaps the reality is that it is far too great a task for any single political party to tackle. This is bigger than Ben Hur.

Bill Guest has written a very thought-provoking article in the latest Kaipara Lifestyler on the law of defamation and how it relates to the criticism of councillors in social media and blogs.

He refers to the Joe Karam defamation case and then states:

Many people believe that everything is fair game and make the mistake that you can say what you like and get away with it. It is amazing to see on the internet for example, cases where people make derogatory remarks about their local government councillors, thinking that they are entitled to do so.

He then goes on to add:

Some make the mistake of thinking that if you don’t name the person it is not defamatory. However, if a person’s reputation has been clearly impugned as a result of the statement and that person loses standing within the community, the law allows redress. For example, if a person who is advocating an issue to a council, refers publicly to councillors as lacking integrity or acting dishonestly without naming them individually, legal actions can still be taken by councillors to protect their reputations.

A couple of points about these comments.

It appears to me that Bill is taking a swing at those commentators and bloggers like me who are highly critical of the KDC Council, and its elected members and its former Chief Executive.

It also so happens the Bill Guest was one of the Councillors at the time that the competence and integrity of the Council has been brought into question over the EcoCare decisions.

So Bill Guest has a very special personal interest in the matter, which is not disclosed in his article.

Unfortunately it is not until the very last sentence of the article that some balance is restored to his attack on critics:

In a democracy, freedom of speech requires that public statements should be true and opinions honest.

That of course is the nub. Truth and honest opinion are not in law deemed to be defamatory.

If someone, like a councillor or a chief executive, makes a hash of performing the obligations that are imposed on that person by law, then its not defamatory to point this out.

Certainly that person's reputation may suffer but that is the result of their failure to perform in accordance with their duties and not the public exposure of that failure.

It is absolutely vital in a democratic society that people should be able to bring to account and publicly criticise those who have failed to perform appropriately, especially where they are public servants.

Incompetent councillors cannot hide behind the defamation laws and suggest that they are beyond criticism.

As for the truth behind the criticism of councillors, it is there in spades. The OAG 's report is utterly damning in its assessment of the Kaipara councillors' competence, and the Council itself has acknowledged 6 years of illegal rates and making illegal decisions in respect of EcoCare.

For years the KDC buried the truth and the current Commissioners have done all they can to block access to the courts. We must reject any attempts to stifle public debate about the issues and fight to retain the freedom to speak our minds and to criticise those who have betrayed the trust that we placed in them.

The Northern Advocate reports here on the options spelt out by Justice Heath.

It appears that someone boobed hugely in drafting the new District Plan.  The Fire Service Fire Fighting Water Supplies Code of Practice was included in the plan without any consideration or, dare I mention that C word again, without any CONSULTATION.

The Code is draconian and places impossible burdens on new home builders that will put building out of reach for many.  It was drafted by bureaucrats in Wellington who have little idea of what goes on in real life and the practicalities of fire fighting in rural areas.

Many local authorities have realised this and consigned the Code to the rubbish bin where it belongs.  Not so with the KDC.  It has adopted the whole Code holus bolus, almost certainly without reading it and without realising the disincentive it is going to create for development in the area.

Kaipara is desperate for development and yet we have Commissioners who seem hell-bent on blocking development at every turn.  The Fire Service Code is not enough for them.  They are now planning to increase all consent fees and other charges in the new annual plan.

More on this later.  

If anyone has experience of the new Code and would like to share it with others, please send your comments to contactus@kaiparaconcerns.co.nz

Justice Heath has been in touch with the MRRA and the KDC and advised that he is still tied up with
the South Canterbury Finance trial and will be for many months, but he offers two options.  He can give a decision on the MRRA claim by the end of May but without any reasons at that stage, or he can give a full decision by the end of July with reasons.

The parties have to decide which they prefer.

To have a decision without reasons is very rare and makes it difficult for either party to decide on any subsequent course of action.  Not only that, there is a time limit for an appeal which runs from the date when the decision is given.  It is almost impossible to appeal if the reasons for the decision are not given.

The decision may not be clear cut.  Following the enacting of the Validation Bill  the MRRA's legal team changed its pleadings to take into account the passing of the Bill and the effect that it had on its submissions.  

These changes centre around the scope of the Validation Act and whether it overrides all defects in the rating process including those fundamental defects that were not referred to in the Act, or whether it relates only to the minor procedural irregularities listed in the Act.

It was agreed that there was insufficient time to prepare for a change in the pleadings prior to the February hearing and that the Judge would decide if another hearing was required to hear the further submissions.  

Nothing further has been heard from Justice Heath and it is possible that his decision could require a further hearing.

A LITTLE LEARNING IS A..........      05.05.14
In his latest editorial in the Mangawhai Focus the editor Rob Pooley has offered his "humble opinion" on the outcome of the MRRA judicial review.

The editorial can be viewed here.

Humble opinions are fine and it is everyone's privilege in a free country to have one but the editor of a newspaper has to be a little circumspect and ensure that any opinion proffered has a factual base.

Rob's article is riddled with errors and misconceptions that could have been avoided if he had taken the trouble to ring myself or Bruce Rogan of the MRRA.

Rob appears to pass himself off as an expert on insolvency but most of his comments are well wide of the mark.

His suggestion that Mangawhai Park and other vital properties could be sold is simply scaremongering and has no basis in fact.

The truth is that there are very special rules for the receivership of councils and the security for the debts is only over the power to rate and not against any property.

So the properties mentioned are far more at risk from the Commissioners than any imaginary receiver.

Even if a receiver were to be appointed, which is unlikely, the levying of any special rate would be supervised by the High Court. In the eyes of many that would be far preferable to having the previous Council and the current Commissioners in charge.

If the ratepayers are found not to be liable for the illegal debts then the Council and the banks will finally be forced to pursue those whose incompetence and more resulted in the illegal debt.

The Auditor-General has identified all the parties in her report and local MP Mike Sabin has vowed to make the Office of the Auditor-General responsible for $30 million. No doubt the banks would have to take a haircut as well.

Such an outcome would be far preferable to innocent ratepayers having to foot the bill for the incompetence and recklessness of others.

Those Mangawhai residents who attended the Draft Annual Plan hearings in Mangawhai on 30 April should take a bow.

I sat through most of the different sessions and I was impressed with the passion, the concern, and the grasp of the fundamentals of most of the submitters.

Those submitting had a sense of utter outrage in respect of the Commissioners' sneaky attempt to sell vital land in the district, but, more than that, at the Commissioners' incompetence, lack of integrity and total lack of transparency and lack of willingness to consult in relation to virtually everything that they do.

On the other hand the Commissioners really struggled to make any impression. They were on the back foot trying to defend the indefensible and being panned incessantly by frustrated ratepayers who had fought so hard to get rid of an incompetent council only to have a similar regime forced on them by the government.

Those who were there realised that the Commissioners simply do not get it. They are worlds apart from the reality of the problems facing Kaipara.

They are graduates of the school of local government where local authorities have limitless power, have a culture of superiority, and are not answerable to the law or to their ratepayers. They find it hard to grasp such concepts as transparency, consultation, conflict of interest etc.

Consultation is a dirty word in the Commissioners' vocabulary. As soon as they came to power they reneged on the arrangement with Steve Ruru to have an independent forensic accountant analyse the financial status of the KDC.

They reneged on the prior Council's agreement with ratepayers to have a focus group to consider options for dealing with the illegal rates. Instead they steam-rolled ahead with their Validation Bill without any consultation.

They did all they could to stymie the MRRA application for judicial review even though the OAG report made it clear that the matter should be left to the High Court and Justice Heath himself said that the issues were of public importance.

The Commissioners completely abdicated their legal obligations as fiduciaries to the ratepayers and acted solely to protect the interests of the banks. To date they have used $700,000 of ratepayers' money to stop ratepayers getting the justice that they are entitled to.

In total they have spent over a million dollars of ratepayers' monies foisting the Validation Bill on Kaipara and trying to prevent the High Court from considering the legality of their actions. All without proper decision-making and all without consultation. In other words, illegally.

When Richard Booth was asked why the Commissioners opted to oppose the MRRA case he naively advised that the Commissioners took advice from their lawyers. In other words they abdicated personal responsibility and legal responsibility. 

One gets the distinct impression that the Commissioners are incapable of doing anything without getting a legal opinion from their lawyers. Deloitte, the new auditor, suggests that all rating documents should now be vetted by lawyers because the Council staff is incapable of performing the basic function of drafting simple, bread and butter rating documents in compliance with the law.

The Commissioners are ploughing ahead with the remission of penalties even though it is absolutely clear that they predetermined this significant decision, refused to consult, and are using a policy that simply does not allow them to do what they are doing.

They obtained a legal opinion on their action but will not let me see it. Why? Probably because the opinion says exactly what I have said, but perhaps with the proviso that even if the decision is illegal none of the watchdogs will do anything about it and it is unlikely that ratepayers will file another application for judicial review. Like the previous council, the Commissioners can flout the law at will.

But it is a risky business. Flouting the law in respect of remitting penalties is tempting fate especially when Justice Heath has still to deliver his findings.

The Commissioners' attempt to cover up the what amounts to theft by the previous Council of the Mangawhai Endowment fund monies was pathetic. Instead of coming out and stating the truth they hide behind misinformation and smokescreens. (See following articles.)

They will leave Kaipara with a massive debt larger than it was when they arrived, but, in addition, there will not be a single cent in the Mangawhai Endowment Fund and all the other reserve funds of the Council. The cupboard will be bare.

The cupboard will be bare

Where is the Mangawhai Endowment Fund?

They are trying to pull the wool over the eyes of ratepayers and in doing so are hanging out their lack of integrity and financial dishonesty for all to see.

What an opportunity has been lost. When the previous Council was ousted by the joint forces of the DIA and the banks, Kaipara desperately needed experts to take charge who had the necessary skills to solve its problems.

Grant Kirby was appointed sole commissioner for Rodney a few years ago and had the skill to draw on outside and independent experts to get that council back on its feet.

The government made a major mistake with Kaipara. it underestimated the problem and thought that the issues could simply be resolved by brow-beating ratepayers into accepting their lot and coughing up with the rates to pay for all the illegalities.

It rewarded four bureaucrats for their services to local government with the Kaipara junket, none of whom had the skills and experience that were needed.

Kaipara was insolvent and fast heading down the gurgler. It needed someone with vast experience of such situations who could draw on receivers to look at liability, lawyers to isolate the illegality issues and come up with solutions, and forensic accountants to spell out the true state of finances of the Council.

It required independence, integrity and transparency. Sharing with the ratepayers and getting ratepayer input had to be a vital part of the equation.

We got none of that. As one submitter at the hearing said, Colin Dale had nothing to offer, and left the Council a lot poorer.

Richard Booth appears to be out of his depth and has no skills that can be utilised in fixing Kaipara's problems.

Peter Winder is the government's "go to " man who fixed the Rugby World Cup transport problems. But he appears to be lost in Kaipara. He appears dogmatic and stubborn. His whole approach is autocratic, with an intolerance for the views of ratepayers that he finds hard to hide. Consultation and transparency do not appear to figure in his range of priorities.

Avuncular, smiling John Robertson is exactly what Kaipara did not need. He has an easy charm that is sadly misused; he seems unable to present any plain facts unless they are dollied up with an ample dose of smoke and mirrors, laid on with lashings of double-speak.

The letter that accompanies the latest rate demand and extols the Lazarus-like financial performance of the Council with the Commissioners at the helm is his tour de force. It is a master-piece of dissemblance, riddled with misrepresentations and fantasies.

What did Kaipara do to deserve its fate? For years we fought to get rid of an incompetent Council that found it virtually impossible to act within the law, only to have foisted on us replacements who are simply not up to the mark.

I am sure that the Commissioners now realise that they have been a complete failure and the drubbing that they received in Mangawhai might convince them that the ratepayers of the district have no confidence in them.

It would be nice to see the three survivors do a Colin Dale and head off to easier targets, but I suspect that the lure of the money is too strong.

They will stick it out until they can dump us safely into the jaws of their mate Basil Morrison's unitary authority.

Where have all the monies gone? That was the question that many ratepayers put to the Commissioners at the recent Mangawhai hearings.

The Commissioners ummed and aahed and tried to pass the microphone on to their fellow Commissioners like a hot potato. (see Doug Bone's comments following)

The OAG report was unable to tell us. However, a report of the Chief Executive dated 25 June 2013 (here) at page 196 attempts to explain what happened to monies in various funds and equity accounts of the Council. That includes the Mangawhai Endowment Fund

It appears that there were limited records of transactions and monies raised for one purpose were used for another completely different purpose. Accounting and legal requirements were not complied with.

That, of course, raises the question, yet again, of how the Auditor-General, as auditor of the Council, allowed such fundamental breaches to pass without comment.

Even the Minister of Local Government awoke temporarily from his stupor and expressed concern at the actions of the Council. The Ruru report relates misgivings about Council's accounting of funds held in different reserves and states:

In September 2011, for example, questions were raised by the Minister of Local Government about how the funds in the Mangawhai Endowment fund and Land Subdivision Reserve were being used. Implicit in the questions raised was a concern that funds were being used to fund Council's general operating costs without an appropriate level of supporting documentation to enable the use of funds to be tracked.

The equity accounts and funds were in a shambles.

There were 21 unique accounts held for the various activities throughout the district showing monies received over the years from special rates. For instance the Aratapu Swamp Drainage District had a credit of $27,466.03 and the Raupo Land Drainage District $201,199.00.

The Council has now resolved, pursuant to the Ruru report, that most of these accounts, totalling in excess of over half a million dollars, be "washed up" without a detailed audit and used for general expenses. They will therefore show a nil balance.

This sounds draconian but the reality is that the Council used all the monies in the accounts for other purposes many years ago and only the paper entry remains.

There is a note in the report that states:

... the effect of this decision is that future funding required for renewals will need to be raised from rates and/or borrowing against the relevant activity

In other words, the Council has spent all the monies raised for that activity on unrelated expenses and if more expenditure is required then a new targeted rate will be set. So effectively ratepayers will be paying over and over again.

Two historic reserves are to remain.

One is the Mangawhai Endowment Fund (renamed Mangawhai Endowment Lands Account).

At a meeting of the Mangawhai Endowment Lands Account Committee on 4 March 2013 it was reported that:

"after consultation with the community over ten years ago the Council adopted the policy of protecting the capital of the fund.

The gist of this is that only the net income of the fund from interest is available each year for grants. That is, after allowing for inflation by deducting a percentage based on the consumer price index to ensure that the capital is inflation-proofed..

It is ironic that a policy to protect the capital of the fund was adopted when in fact Council "stole" the whole capital of the fund some years ago.

Like all the other funds, the capital of the Mangawhai Endowment fund has long disappeared. No one knows when it went or where it went, but it has gone.

All that is left is a "paper" accounting entry.

The other reserve that remains is the Land subdivision reserve made up of reserve contributions from developers under the RMA. That too has all been spent and it survives only as a paper entry.

Two new reserves have also been created. The Ruru report expressed concern that there was no depreciation account and no separate account for development contributions collected.

These new reserve accounts have now been set up. But, of course, they are just paper entries and all monies contributed or allocated for those purposes had also been spent on other "general" expenses without any record.

What the Commissioners have now done is to comply with current accounting requirements by creating accrual accounts which show the various monies that should be in each account, but in so doing they have effectively covered up the "theft" of the monies by their predecessors.

I am sure purists may quibble with the word "theft" because effectively, according to the Ruru report, the capital of the various funds was "borrowed" by the Council under its treasury policies and "net cash management" policy which allow such borrowing.

However, the Commissioners have indicated that they have no intention of repaying the monies taken from the various funds and accounts before they leave in 18 months time. To do this they would have to borrow more monies and this would be contrary to current debt management policies.

The problem is that because the capital does not exist, it does not generate any interest as it would if invested with a third party, such as a bank.

Because the monies are lent internally to the Council it is the Council that has to pay the interest each year. But the Council 's income is derived mainly from rates so that the interest has to be paid out of general rates.

Those rates are contributed by all ratepayers in the district. So, all ratepayers are effectively paying the annual interest bill which is then applied as grants to organisations in the Mangawhai area.

If there is insufficient monies in the Council coffers to meet the annual interest payments then rates have to be increased.

Likewise, if substantial payments out of capital are required and the rates are insufficient to meet the payment, then a new loan will have to arranged.

Ratepayers will have to foot the bill both to pay interest under the new loan and eventually to pay of the principal.

This must be one of the best Ponzi schemes around.

The Council is entrusted with ratepayers monies for specific purposes. It spends the trust monies for other unrelated purposes and then makes ratepayers pay the annual interest bill to fund grants to local organisations. When the capital has to be repaid the Council borrows monies externally and then bills the ratepayers for the interest on that loan and for the principal repayment.

If any trustee in real life carried on in such a way then they would end up in jail. But, in the rarefied alternative universe of local government in New Zealand, the rules are totally different and allow ratepayers to be shafted again and again.

Coincidentally, Doug Bone sent in his own comments on the Commissioners' evasiveness about the whereabouts of the capital of the Mangawhai Endowment Fund:

At one of the recent hearings of submissions to the KDC Draft Annual Plan, I had the opportunity to question the Commissioners over the “missing” Mangawhai Endowment Fund principal of $5.7 million. The Commissioners freely agree that the money no longer exists. It was not them that used it, but a previous Council. My question was why there was no provision in the DAP to repay our money, and why it is not acknowledged as being a debt.

The Commissioners response was that the principal of $5.7 million now only exists in a notional sense, but as Council makes “interest” available for community projects, there is really no need for the principal to actually exist in a bank account. Such an arrangement seems, on the surface, to be perfectly fine – the community continues to benefit from the interest. But, where does that interest actually come from now? Not from the missing principal obviously, so it really just comes straight out of our rates!

But then, I asked, what if there was a Community project so important that the use of some of the principal was justified. After some consultation, they agreed that such a scenario was possible and that if it happened Council would have to provide the money. Now, given their financial state, how would Council manage to front-up with the cash? They would have to borrow it, of course!

Now let’s enlarge upon that scenario. What if we all decided that we weren’t happy with the way KDC was managing our Endowment Fund, and we wanted the stewardship of our money moved to another body. Since the Fund was created by an Act of Parliament in 1966, it would probably need another such Act to replace or amend the original. A Local Bill, perhaps – they’re easy to come by! Maybe Mike Sabin might like to sponsor it, and redeem himself in the eyes of Kaipara!

If this happened, then KDC would have to front-up with the $5.7 million. They would have to take out a loan. The ratepayers would be the security. The ratepayers, through their rates, would have to repay the loan, plus interest. So, to get back our money – and it is (or was) OUR money not KDC’s – it would cost us all more than the amount, whereas it should cost us nothing!

That, in my opinion, is where “creative accounting” crosses the fine line and becomes fraudulent accounting. Let’s not be fooled – we are never going to see our money again. It’s been stolen, and the perpetrators are getting off scott-free.

THE MARCH  02.05.14
There was a very good turn out for the March protesting against the Kaipara Commissioners surreptitiously slipping into the Draft Annual Plan a proposal to sell land in Mangawhai on the waterfront that is of strategic importance to the people of Mangawhai and to visitors.  

The Commissioners misled residents by asking in the Draft Annual Plan if ratepayers agreed with selling "property:that has no current or future plans for public use"  to repay debt.  The problem is that some of the properties on their "for sale" list are public reserves that are absolutely vital for the enjoyment of the coastal reserves in Mangawhai, and are used extensively by residents and visitors.

Mangawhai residents made it perfectly clear to the Commissioners at the Draft Annual Plan hearings that they are not elected representatives, that they have no mandate from the ratepayers, and that they should back-off selling the Mangawhai land.

The report of Mike Barrington in the Northern Advocate can be seen here.

The March gathering at Sellars Reserve.  By the time it had reached the Club, where the hearings were being held, it had grown dramatically 

One of the pieces of land that the Commissioners wish to sell is the Sellars Reserve.  It is on the corner of North Avenue and Alamar Crescent in Mangawhai Heads and was purchased to serve as a reserve in 1999 for $912,000 with monies from the Mangawhai Endowment Fund.  The aim was for the KDC to refund the monies to the Endowment Fund when it had sufficient monies from the sale of other reserve land in Mangawhai,

In October 2006 the land was valued at $3.25 million but a report from the Chief Executive stated that the Council did not have the monies from the sale of land in Mangawhai to reimburse the Endowment Fund and recommended leaving things as they were until other properties were sold..  

The interesting thing is that the Commissioners maintain that in spite of the there being no monies to reimbuse the fund, according to the Chief Executive's report presented to the Council meeting of 25 October 2006, the $912,000 was repaid to the Endowment Fund on 1 November 2006.

Council so far has been unable to produce any evidence of this including the resolution at the meeting of 25 October 2006.

We are waiting for the Council to respond to our request for documentation to support the repayment.

Footnote:  Pursuant to a resolution of the Council of 25 October 2006 the sum of $912,000 was transferred from the Reserves account to the Mangawahi Endowment fund.  There was no need to raise any loan because the monies in both accounts did not exist.  They were simply paper entries that were amended to show the transaction.

The MRRA and other organisations have organised a protest march against the Commissioners prior to the Draft Annual Plan hearings at The Club in Mangawhai next Wednesday 30 April.  The MRRA circular is as follows:

CALL TO ARMS: March planned for Wednesday 30 APRIL!!!

Today it is timely to remember that the struggle we are engaged in against oppressive and arrogant bureaucracy is part of a fight that thousands of young New Zealanders gave their lives for in two terrible wars. Attendance at parades and services is an important symbolic gesture that raises awareness of what sacrifices were made, but what we are doing is carrying on the fight against injustice and oppression, and, as always, our contribution will get recognised, if it gets recognised at all, long after the struggle is over.

If you can make it, we are going to march on the hearings into this sham annual plan on Wednesday 30th April commencing at 2:00pm. Bring a placard expressing the point that most irks you about the commissioners and their behaviour, or about any other act of injustice or unfairness that concerns you. Many groups other than the MRRA are up in arms over the Commissioners’ proposals.

We will start from the Sellars land at the south end of Alamar Crescent (the water end of North Avenue). We will walk from there to the Club, where the “hearings” are being held. If you can’t walk that distance try to be at the Club carpark by 2:45 and we will assemble there to make our collective voice heard.

The specific issue of protest is the Appalling arrogance of these unelected commissioners in thinking that they can sell off OUR assets without any consultation and without even waiting for the High Court to decide whether there is a debt problem anyway. They have always treated us with contempt- it will be interesting to see if they can get away with treating the court with contempt as well.

There have been far more objections to this mock plan than the council was bargaining for. Let’s show up in big numbers and register our disgust at their behaviour!!.

Concerns are being expressed in many corners about the Commissioners overseeing the Northland Unitary Authority Inquiry being conflicted.

Their individual backgrounds, the lack of depth and factual support in the proposal, and their comments and their demeanour at hearings, have not gone unnoticed.  They appear to give the impression of being advocates for the unitary proposal rather than unbiased, independent assessors.

Frank Newman, ex Whangarei Councillor, is staunchly opposed to the unitary plan.  The reception that he received from the Commissioners in Whangarei can be seen here, and his submissions here.

The views of the Whangarei Council can be seen here.

Only a handful of people attended the hearing in Mangawhai and no reporters were present.

Te Kopuru residents gave the Commissioners a difficult time at a meeting to discuss the Draft Annual Plan.  They have now presented a petition with 150 signatures objecting to the rate increases, especially in respect of the sewerage charges.  The article in the Kaipara Lifestyler can be seen here

All the submissions on the draft annual plan lodged with the KDC can now be viewed on the Council website here.

All submitters should ensure that their submissions have been received.

Steve Ruru has responded to concerns about the lodgement of submissions on the DAP:

We were made aware that there was an issue with our online submission process between 1.30 pm – 1.45 pm on the last day, Tuesday. This was as a result of a Telecom outage and was fixed quickly. We were made aware of the short outage by a potential submitter who called our customer services staff. We went immediately back to her to let her know the problem had been resolved.

We continued to receive submissions up until the close of the submission period at 5 pm at which point the online submissions link was disabled. I am advised that the site was monitored regularly by the provider of our submission software and no other problems were detected.

If submitters have problems in the future I would suggest that you ask them to contact the Council customer services staff direct so that we can have the issue addressed as quickly as possible.

In relation to your query about the availability of submissions on our website it may help if I explain how the submissions software works. Submitters make a submission on line. We receive it and then we need to process it to make it live on the website. It does not automatically go live. Submissions we receive through other channels must be scanned and manually entered into the system so that they too appear live on the website. This takes time and those doing the processing carry out their normal roles and responsibilities at the same time.

As at midday Friday we had processed all the submissions we had received and these were available online. The bulk of the submissions came in over a two day period – Monday 07 and Tuesday 08 April – we received around 400 submissions, the bulk of which were paper based. In total we have received around 500 plus submissions. The final figures will not be available until all the submissions received have been processed.

In recent years Council has made a point of accepting late submissions so as to receive and consider all the feedback provided by submitters. We have received around a dozen late submissions which we will process along with the others received. Given Council’s past practice of accepting late submissions, I can see no reason why submissions received late in this round of consultation would not be considered along with all the other submissions Council has received.

So if you have concerns about your submission not being received, chase the matter up with Council staff.

All submissions should be available for viewing on-line in the next day or so.

Local government in New Zealand is doomed. It is heading down a track where incompetent councils are getting into projects that they do not have the competence to handle.

These councils are run by amateurs who are totally out of their depth and are captured by consultants, advisers and contractors who cream off a massive profit and leave the ratepayers to pay for the disasters they leave behind.

The history of Kaipara is littered over the past few years with such ventures: EcoCare, Hakaru tip, Dargaville swimming pool, the Proposed District Plan etc.

But is not just Kaipara. Every council is afflicted with the "incompetence disease" to a greater or lesser extent. Take look at our neighbour Whangarei and its very new expensive hole in the ground.

Mike Dinsdale's article in the Northern Advocate (here) tells of a disastrous project that could cost $20 million to fix that was signed off by Council staff who appear to have been out of their depth.

This is the future of the Unitary Authority, and this is the future of local government in New Zealand. Stuff-ups by amateurs with ratepayers footing the bill every time.

Read the comments following the article. This is what John Dickie of Mangawhai, a drainage engineer and a battler for many years against the illegalities and excesses of EcoCare, has to say:

Unfortunately this has all the hallmarks & similarities of the Ecocare system at Mangawhai. There were numerous official & informal complaints by me & others throughout the Ecocare saga, all of course ignored with the response "We know what we are doing" by Councillors & Council staff alike.

The so-called comprehensive investigation into all aspects by the Office of Auditor General sidestepped much of the evidence submitted by many persons, on same aspects that were not possible to avoid. The OAG said "Sorry, there have been mistakes including by my Office, but of course no one should take any responsibility other than the ratepayers being forced to pay".

Most of the publicity has been about the rates and illegalities associated with that, but the already evidenced technical problems have been largely glossed over (though of course when corrected, at cost (& probably plus, plus, plus) to the ratepayer).

Quite likely there will be substantive on-going high costs associated with a combination of inappropriate design, material selection and quality, and workmanship - even more of a debt to the Kaipara and possibly Amalgamated North ratepayers to be burdened with.

Welcome to the "real world" of Local Government NZ.

It appears that ratepayers are not going to be consulted about the sale of KDC land in Mangawhai or elsewhere.

A ratepayer queried the issue of consultation in respect of the Eveline Street property and this was the response:

Thank you for your further email.

Community consultation is only legally required when a decision is considered significant in terms of Council’s Significance Policy. Selling a strategic asset is considered significant and would require community consultation. However the 2009/2019 Long Term Plan set out what Council considered a strategic asset. These were:

• Roading network and infrastructure

• Wastewater networks and treatment

• Water treatment storage and supply network

• Mangawhai EcoCare Wastewater Scheme

• Stormwater networks

• Recreation and Reserves

• Housing for the elderly.

A single property, not held as a reserve, as is the case for the Evelyn (sic) St property, does not therefore require anything but a Council resolution for approving its sale.

Council’s 2012/22 Long Term Plan and 2013/14 Annual Plan outlines Council is to only own property that are necessary to achieve its strategic objections. As a general rule, Council will not maintain a property investment where it is not essential to the delivery of relevant services and property is only retained where it relates to a primary output of Council.

While Council has previously resolved to sell this land and further consultation is not legally required, further considerations, ie the vehicle access and eroding issues, will be taken into account before it is sold.

The Commissioners have 18 months left in which to pillage our communities.

Are we going to allow them to do it?

This sign has appeared on Sellars Reserve in Mangawhai

I sent this letter to Steve Ruru yesterday about the failure of the on-line submission process:

Hi Steve

There is a lot of unrest out here.

Your system failed yesterday afternoon and it was impossible to lodge submissions.

The Commissioners’ credibility is so bad that many are suggesting that they did it deliberately to block the flood of negative submissions.

Are you going to extend the time for those who could not lodge in time?

And why were the submissions on the site not kept up to date? There were none added for several days.

They have now been taken down completely.

Are you going to put them up again?

Waiting for a reply, but this was posted on the KDC website today:

Council received a high number of submission on the last day. These submissions will be processed over the next few days and will be available on our website upon completion.

A BRIDGE TOO FAR    10.04.14
The Commissioners have badly judged the people of Kaipara. Since they were put in power they have shown an arrogance and contempt for the people of the district that they have disguised behind the gushing, fawning dissemblance of John Robertson.

Many have been sucked in by his snake-oil salesman patter. But doubts have been creeping in, even amongst the die-hard fans of the Commissioners, that our new rulers have their own agenda - or at least the agenda of the DIA and the banks - and do not give a toss about the people of Kaipara, or the future of the Kaipara district.

Against the wishes of the people, and with no consultation, they validated all the illegalities of the past regime along with most of the penalties. As lackeys of the banks and the DIA, they tried to block access to the courts to challenge their illegal decisions, thus denying ratepayers their rights under the New Zealand Bill of Rights Act.

For some time now they have fudged the finances by creative accounting and using accounting devices (I call them "rorts") to hide the true situation.

A few months ago Steve Ruru told the Select Committee of Parliament that the KDC was on the point of financial collapse if the Validation Bill was not passed before Christmas. Now in the Draft Annual Plan (DAP) he is boasting that everything is under control and that the KDC paid off nearly a million of its debt.

On of the biggest lies is the size of the debt. Based on some accounting "nicety", only the external debt is included in the debt figure. That is money owing to third parties such as banks.

But it does not include the many millions filched from the ratepayers accounts such as the reserve funds and the Mangawhai Endowment Fund. They have all gone, disappeared, spent elsewhere, and the Commissioners have no intention of replacing them when they leave. That means that ratepayers will have to borrow externally to replace the monies that were held on trust for them. More debt that the Commissioners have disguised

Is that theft? Councillors and Commissioners are trustees of our monies and taking monies belonging to beneficiaries with no intention to repay was "theft" when I was at law school.

But what I did not know then is that in New Zealand in 2014 local authorities operate outside the law with the blessing of the government.

Little by little ratepayers right across the district are seeing thought the ruses of Robertson and Co., but perhaps the "bridge too far" for the Commissioners is their down-right dishonesty in the DAP with their proposal to sell "unused" land in Mangawhai.

That has really pissed the locals off hugely. Some of the land turns out to be highly important Reserve land that is essential to the operation of the Mangawhai Coastal Reserve and was purchased with Mangawhai Endowment Fund monies.

And, what many people do not know, is that the Commissioners already have the surveyors in there subdividing the various properties ready for sale.

But more than that,   This arrogant act of deliberate deception has caught the Commissioners in a very powerful headlight and shown them up for what they really are.

Like little boys caught red-handed with their hands in the cookie jar.

This is how Bruce Rogan, Chair of the MRRA (in his latest Newsletter) sees the "selling off our assets to pay down illegal debt":

The way I read it, if they press ahead with this utterly unmandated , arrogant, high-handed, oafish, bully-boy scheme to transfer our wealth into the hands of their personal friends and the banks, they will precipitate an unprecedented outbreak of civil disobedience that will make the rates strike look like a picnic.

He comments on the financial cover-ups:

The obscene eulogising of the CEO for doing their bidding and covering up the truth of the financial situation and carrying out a litany of creative accounting moves shows that they are a cosy little club together, conspiring to screw over the district’s ratepayers for the benefit of banks, lawyers and foreign corporates.

And comments on receivership:

John Robertson has repeatedly said that if the council went into receivership the ratepayers would suffer terribly. If the council went into receivership it would then be managed by the High Court of New Zealand, and under that regime NOBODY would be able to rape and pillage the District in the way that these unaccountable commissioners and their tame CEO are planning to do.

Be very aware that they have already instructed surveyors to slice and dice all our community owned land and truss it up for sale.

This consultation process is an utter sham. We got up and marched in the streets once before. It is time to do it again. For my money, and from what I have seen of the way the Court operates, I would vastly prefer to be in its control than having my neck stood on by government-appointed, unelected, recycled hatchet-men.

And his final comment:

The asset sale issue has touched raw nerves way beyond the MRRA. It is almost as if the commissioners set out to find something that would completely unite the whole District against them!

Submissions on the draft annual plan must be in by 5 pm today.

Unfortunately there are a few gremlins in the KDC system (no comment please) and it is hard to lodge their submission form on line.

They also seem to way behind in posting the submissions.

To post a submission go to the Council website and scroll down to drft annual Plan - Make a submission on line

If you want to see other submissions then click submissions at the top of the page for making a submission.

Stockbroker Chris Lee looks here at the problems facing receivers pursuing auditors and trustees for negligence.

As many firms that act as liquidators also act as auditors then there is a clear conflict of interest. They do not want to queer their own pitch.

He also points out that the insurers for auditors are a dogged lot and will fight hard to protect their patch.

New Zealand is waiting for someone, as Chris Lee puts it, "to display manliness" and take a case so that the court can define modern standards of trustee and auditor behaviour.

There is virtually no chance that the Kaipara Commissioners will take action against anyone. The relationship between those involved in the local government field is far too cosy, and that applies to chief executives, councillors, auditors, advisers, and consultants. Many are personal friends and they are not going to rock the boat and implicate their mates.

In fact there is no need to, because the ratepayers' role in local government is to carry the can for the incompetence of everyone else.

If Heath J decides that the EcoCare debt is not ratepayers' responsibility, then the situation gets interesting. The bank either takes a massive haircut itself or appoints a receiver to pursue the liable parties.

The question is: Does anyone have the balls to take on the Auditor-General?

Annette Lambly reports in the Dargaville and Districts News (here) on Te Kopuru residents giving the Commissioners little quarter over rate rises in the area at a recent meeting.

PAY HIKE FOR RURU    03.04.14
The Kaipara Lifestyler
(here) reports that the Chief Executive, Steve Ruru, has been rewarded for his "extraordinary performance" with a 2% pay rise and a one-off payment of $15,000.

At the same time the Commissioners are mulling over the legal advice that they have received in respect of pursuing those responsible for the cost blow out for the EcoCare scheme.

According to the report, the Commissioners are "considering options".

It is noticeable that the Commissioners are quick to reward good service but are very reluctant to take any action against those who have clearly failed to comply with their duty of care.

The Commissioners are between a rock and a hard place.  It is not part of the ethics of local government to pursue incompetent fellow players who might be negligent.  Local government is based on a "no care and no responsibility" philosophy for those employed in the club, on the basis that the ratepayer foots the bill for excesses and incompetence.

The dificulty is, however, that if the Commissioners play by the local government conventions and turn a blind eye to past transgressions, they might be hoist with their own petard if the High Court decides that the EcoCare debt is illegal.

If that happens then the banks and the Commissioners will be obliged to take action against those responsible, otherwise the banks will have to take a larger haircut themselves.

So, the Commissioners will play a waiting game in the hope that Heath J might find some spare time during the South Canterbury trial and make his decision on EcoCare.

It is a nervous time for the Commissioners, and the banks.

WAKE UP, MANGAWHAI!      01.04.14
It is a couple of weeks now since I first revealed that the Commissioners are planning to sell Council owned land which is of vital importance to ratepayers, and yet there has been little response from the community.  

Many of the people that I talk to are not aware of the Commissioners' plans.

Like all things associated with these Commissioners, they never reveal openly what they plan to do.  In the Have Your Say pro forma response for ratepayers there is an innocuous question:(No 4):

Do you support Council selling non-strategic surplus property to free up funds to repay debt?

The online submission form is even worse.   It gives no information at all and seeks a mandate from ratepayers without providing any information.

The truth is that the Commissioners propose to sell land in Mangawhai that is of fundamental importance.  What they don't reveal is that some of the land in question is strategic. is used extensively by ratepayers, and in some instances is reserve land which plays a major part in the management of Mangawahai's reserves under the KDC's own Reserve Plan..

The proposals include selling off Sellar's Reserve at the bottom of North Avenue where it turns sharp left into Alamar Crescent.  This Reserve is important for picnickers but principally serves as a parking area for boats and trailers using the adjacent beach ramp and an overflow for the main ramp further down Alamar Crescent.

[To see earlier articles scroll down to SELLARS MARKET? 13.03.14 and then up to SELLARS RESERVE 15.03.14.]

Without Sellars Reserve the parking situation around the ramps would be chaotic.  But that is not all.  The Commissioners are also planning to sell off part of the camp site in Alamar Crescent, namely the sections which incorporate what are called the police units and the paddock along side.  These are behind the Fishing Club and the paddock serves as overflow parking for cars and boat trailers.

Money from the sale is is to be used to repay the massive debt incurred as a result of the incompetence of the councillors, Jack McKerchar, KDC advisers and consultants, and the KDC auditors, all of whom have so far escaped any liability.  It is also the debt which mah may be decalred to be illegal by the High Court.

The sales are part of the overall plan to placate the banks who effectively "own" Kaipara and dictate the policies of the Commissioners.

The comments about the sale in the Draft Annual Plan are deliberately vague and misleading.  Several people have sought clarification of the Commissioners' intentions but totally inconsistent stories emerge from different people in the Council as to what is proposed.  It is the usual KDC smoke and mirrors with John Robertson himself dissembling and fudging with every response to queries.

However, it is absolutely clear that if ratepayers do not object to what is proposed, and object strongly, then the Commissioners will take itheir silence as an endorsement to sell off the family silver without any further consultation.  Sure, when pinned down they will make a big thing about consultation sometime in the future but, based on experiences so far, that will never happen.  We will wake up one day and our valuable land will have been sold off.

So make sure you say a very loud NO to question 4 if you use the Have Your Say document.

Submissions on the Draft Annual Plan have to be in by 5pm next Tuesday 8 April.

Many ratepayers will use the Have Your Say (see it here) form which is drafted in such a way, with 8 simplistic questions, to hide the true intent of the Commissioners and to get the response that they seek.  

Legal Eagle's comments on the 8 questions can be viewed here.

FOX ON THE RUN   01.04.14
"Fox" comments here on the Commissioners' obfuscated accounting and on the effect of development contributions on Kaipara's development.

Will there be a Unitary Authority in the North, or not?  The Whangarei Council and the NRC have come out against it.  I am not sure where the FNDC stands now that Wayne Brown (the architect of the plan) has now departed.

The KDC Commissioners say they are sitting on the fence because it would not be appropriate for them to make such a decision when there is no democracy in Kaipara and they do not represent the ratepayers.  (Nice sentiment but where was it when they acted against the wishes of ratepayers, and gobbled up a large proportion of their rates, in pursing the Validation Bill and opposing the MRRA proceedings as lackeys of the banks?)

One gets the feeling that the government, the banks, the DIA, and Local Government New Zealand have a vision for the future which involves Unitary Authorities throughout the country which are funded by the Local Government Funding Agency, with each Authority guaranteeing the debts of the others.  The new Unitary Authorities are then free to pursue their ideologies knowing that ratepayers throughout the country are responsible for the debts and excesses of each and every Authority.

Len Brown and his management of Auckland City (see here) is the way of the future, the only difference being that Auckland's debts will be guaranteed by every ratepayer in New Zealand.

The Office of the Auditor-General has got off lightly so far in respect of its inept Kaipara performance. It failed miserably as auditor of the KDC and failed miserably as the watchdog for the local government sector.

It also showed a total lack of understanding of the concept of conflict of interest when it investigated its own failures in its auditing role.

The OAG is answerable only to Parliament, and Parliament's acceptance of the OAG incompetence in the local government field suggests that Parliament does not want an effective watchdog in that sector.

The concept of the ratepayers being responsible for all the incompetence and rorts of local authorities clearly sits comfortably with the policies of all the main political parties. National, Labour and the Greens show no inclination to rock the local government gravy train and rein in reckless councils.

Nothing will come of the Commissioners' investigation into possible legal action against the OAG and other incompetents who were responsible for the Kaipara debacle. Those in local government are staunch and it is a basic understanding of all those at the local government trough that you do not implicate your fellow feeders.

But it is good to see that the OAG did not inflict its incompetence solely on Kaipara. Tim Hunter ("Chalkie") reports here on :

a series of deals that burned several million dollars of Dunedin ratepayers' money in a manner that involved the handling of conflicts of interest, structures that avoided public scrutiny and commercial acuity about as sharp as a turnip.

Again, local authority incompetence and lack of transparency. Again, Audit New Zealand failed to do its job properly. And again, the problem was put gently to bed by a report from the OAG. Chalkie comments:

After discussing these deals for 120-odd pages, the A-G was sufficiently relaxed about the debacle that it found nothing wrong and made no specific recommendations on what should have been done differently

He goes on to add:

Chalkie can think of one option straight off, which is to make sure the office of the  A-G is not tasked with investigating its own work.

Such comments, along with many similar ones made during and following the OAG Kaipara report, are water of a duck's back. In the current laissez-faire approach to local government the OAG and Parliament have a partnership role in white-washing the excesses and illegalities of local authorities and anaesthetising public concerns about outdated principles such as the rule of law and conflict of interest.

Local authorities are the favoured sons, and they can do no wrong. And that approach will carry on until ratepayers decide that they are not going to carry the can for incompetent and reckless local authorities..

Legal Eagle exposes the plan of the Commissioners to appropriate most of the monies held in the Reserves Contribution account (to be used on establshing or improving reserves) so that they can be spent for other purposes and obviates the necessity of borrowing.more from banks to meet the Council's commitments.

There is no provision for repaying the monies.

Comments on the draft policy can be seen here.

May I recommend that you read the article entitled Worzels World - The Estates of Democracy in the Mangawhai Focus (here)

It is an excellent overview of democracy in New Zealand and poses some serious questions..

Can we once again show the courage and commitment that once made an egalitarian New Zealand ‘Gods own Country’ or will we remain content to have our policy and our future dictated by global corporate interests and the power brokers they support?

That is the decision facing the ratepayers in Kaipara.  We have seen how for many years the Council has been run for the benefit of the banks, the consultants, the advisers and the international companies with no benefit to ratepayers who are simply left to pick up the tab when everything fails. 

The problem is that is not an easy job for ratepayers to be informed about what is going on.  As Worzel says:

obtaining honest, spin-free information is like looking for a wedding ring in a septic tank.

Ratepayers who want information about how the Commissioners borrow money internally should read the report of the Chief Executive which can be seen here.at page 196.

It explains a lot about the various reserves of the Council and why the Commissioners persist in excluding internal debt when quoting the indebtedness of the Council

At the Council meeting on 22 July 2013, at which the report was tabled, the Commissioners attempted to bring a sense of order to the various accounts holding monies for special purposes and the borrowing of those monies by the Council

Traditionally the Council collected specific rates for 23 different activities such as the Aratapu Swamp Drainage district, Otamatea Ward Roading contributions etc.

Local authorities were obliged to keep each account separate and the monies in each account could only be spent on that particular activity.

That has now changed and the Commissioners resolved to cancel many of the accounts because "the purpose for which the reserves were created has passed". Any monies credited to those accounts would in future be applied for general purposes.

However some reserves remain. There is the Mangawhai Endowment Fund with a balance of $5.5 million.

There is also the land subdivision reserve account which is made up of reserve contributions paid by developers under the RMA to provide reserves and open spaces. The balance of this reserve is approximately $3.8 million.

However the Commissioners created two new funds as at 1 July 2012 which had been overlooked by the previous Council:

• A depreciation reserves account to fund asset renewal because of the gradual devaluation of the relevant assets.

• A development contribution fund for development contributions raised from developers for specific projects. This is divided into different accounts for different projects which are EcoCare, Otamatea roading and district roading.

Council's use of the funds
In the unbridled days of Tiller, McKerchar and Geange the Minister of Local Government was critical of the KDC for pilfering the various monies in the fund for general purposes and not providing the appropriate documentation and accounting entries that reflected the situation. The monies became part of the great piggy bank that sucked in monies and then disbursed it to greedy mouths with little paperwork or due process.

"The great Kaipara piggy bank that sucked in monies and then disbursed it to greedy mouths..."

Ratepayers may ask why the auditor allowed this, but that is another story.

Things have now changed. The Treasury Policies adopted by the KDC allow the Council to reduce its need for external borrowing by utilising the monies in the various reserves accounts and applying them for other purposes. But this is strictly on the basis that the balance in each account is properly accounted for and shown in the accounts. The monies are "effectively on call and the fund receives interest at midway between Council's cost of borrowing and the investment rate".

Internal borrowing
So far, so good. The comments and decisions are sensible.

Unfortunately the report starts going pear-shaped when it comes to define "internal borrowing".

It quotes section 112(b)((iii) LGA which defines internal borrowing as the use, for any purpose, of funds received for any other purpose if the local authority has resolved to repay the funds.

The Commissioners then go onto argue that because the Council appropriated the monies from the various accounts and there was no Council resolution to repay the monies, then it can not be seen as "internal borrowing" according to the LGA definition of internal borrowing.

On that basis, internal borrowings can be excluded from the total indebtedness of the Council because it is not borrowing. The result is that when the Commissioners state the full indebtedness of the Council, only the external debt of the Council is quoted and the true liabilities of the Council are seriously understated.

The argument is, of course, nonsense. Council itself acknowledges that the monies are effectively "on call" and that it is obliged to repay them at some stage.

Such a semantic distinction employed by a fiduciary to misrepresent the financial status of the Council to beneficiaries only goes to confirm the view of many ratepayers that the Commissioners lack transparency and integrity.

Ratepayers know that all the money "borrowed' by the Council, whether internally or externally, has to be repaid some day by the Council. In fact, the Council makes it abundantly clear that when that happens it will have to raise further borrowings externally to meet its commitments. It says that it has the loan facility in place to do that

In any fair and sensible person's vocabulary, the monies borrowed from the internal accounts are borrowings and the Commissioners need to ensure that ratepayers are not misled, and that the total indebtedness of the Council includes all external and internal debt.


From my reading of the OAG’s report, it would appear that technical people were consulted, and their findings are described in Section C 16.14 onwards. There were plainly many shortcuts taken by the contractors building the treatment plant!

I wrote some time ago to the Commissioners querying the “fit for purpose” aspect of Browns Farm and was advised that “my comments had been noted”!

Another interesting “poor workmanship” example relates to the depth of the main pipeline in Molesworth Drive. After the project was completed, there was a major resurfacing and drainage project undertaken by Rhodes for Roads Ltd in a length of Molesworth Drive just north of the junction with Old Waipu Road. I happened to be talking to one of the contractors and was told that Council had specified that they lay draincoil at a certain depth to be above the sewer line. The contractors encountered the sewer before they even got as deep as they should. Apparently they queried this with Council, and were told “never mind, just go as deep as you can”!

Doug Bone

Is Eco Waste Water a lemon,Yes quite definitely.

I've just added up from the CEO reports for the last 11 months there was 84 grinder pump failures

Cant be bothered to go back further,but i think with that many failures it is a lemon.

How many grinder pumps are there and have they all failed at some time?


Steve Ruru's response to my query about the sale of lands to repay debt can be seen here.

Note that Sellars Reserve in Alamar Crescent is shown as three lots in North Avenue.  Note also the statement that only part of the Reserve might be sold.

Ratepayers really need to ask themselves whether ANY properties should be sold by the Commissioners.  Not only is there no democracy in Kaipara but the Commissioners have been completely lacking in honesty and transparency in their dealings with ratepayers.  They have also shown a disdain for consultation in nearly all the major decisions they have made even though it is required under the LGA.

Until the High Court gives its decision, and until there is transparency and an independent assessment of the financial status of the KDC, we ratepayers should not agree to anything.

Selling land at this stage is simply a response to pressure from the banks.  They want to gouge as much from the ratepayers as they can before the Commissioners quit in 18 months time.  

Ratepayers need to realise that the banks lending to the Council was utterly reckless and the banks have to accept the responsibility for that.  Having been conned by the Council in respect of the illegal loans, ratepayers should not be selling off properties to keep the banks happy.

If the banks want repayment then they should wait until the High Court makes its decision and they should be pressuring the Commissioners to pursue those reponsible for the illegalities.

We should not offer ourselves up as easy targets.

RATES STRIKE    20.03.14
Don't forget that until the High Court makes a decision on the legality of any KDC rate which has an EcoCare component (which is basically all the KDC rates), the Commissioners cannot issue legal proceedings against you and they cannot force your bank to pay if you have a mortgage and have not paid rates for the current year.

The rates are not "due and payable" until their legality has been settled by the High Court.

The earth will not fall in if you withhold the your rates.  I have never withheld my rates in the past but my wife and I now have retained over $20,000 which the Commissioners would love to get their hands on.

We will not pay a single penny until the Court has made its decision.

And, whatever you do, don't listen to all that nonsense about the roads being neglected.  For years the KDC has been ripping you off and using your monies to pour down the gullets of contractors and advisers.  They are still pouring massive amounts of money into disasters like Hakaru (and keeping it quiet).  They have filched all the monies from the Mangawhai Endowment Fund and have no intention of repaying it.

They paid a small fortune to force through the Validation Act (a complete betrayal of the people of Kaipara by its own Council and Parliament which will one day be recognised for shameful betrayal that it is) at ratepayers expense to legalise 6 years of incompetence and illegalities.  They are now spending $500,000 of ratepayers monies to stop ratepayers having the issue of illegal rates resolved by the courts.

And, we now find out, they are planning to sell reserve land of huge importance to ratepayers (and bought with Endowment money) without proper consultation and disclosure.

Just to keep sweet with the banks.

The Commissioners, like the Council before them, have betrayed the trust of ratepayers and we should not pay them any further monies until the issues of illegality are resolved, they open up the books to independent scrutiny, have the EcoCare scheme independently asessed, and they adopt the values of transparency and integrity.


ECOCARE LEMON   20.03.14
Do you have any stories that suggest the EcoCare scheme is a lemon (see the post below)?

Legal Eagle was charged for two connections because of the draconian and illegal unit of demand regime that was used to gouge money out of Mangawhai residents.  Virtually any outbuilding was treated as a separate unit.  However when excavating near the old septic tank I heard water still running into it.  Further excavation revealed that only one gully trap/sewer was connected to the new EcoCare and the other was left connected to the septic tank.

How many other properties are the same?

Comment from Doug Bone
Your connection issue could be quite common. Remember that KDC originally decreed that you were to remove your septic tank, and fill in the hole, at your cost. As far as I know, very few have done this, and strangely Council has not pursued it. Perhaps they are all too aware of what will be found!

Send your story to contactus@kaiparaconcerns.co.nz

MRRA DECISION   20.03.14
The High Court decision on the MRRA judicial review looks some way away.  The Judge, Paul Heath, is now involved with the South Canterbury Finance fraud trial in Timaru which could last four months or even more.

We will soon be in April and we can expect the Commissioners to advise that they have received a report from the KDC's solicitors recommending that no action be taken against those responsible for the EcoCare debacle.  That is pretty well guaranteed.

It will be interesting to see if local MP Mike Sabin also tows the official line.  A few months ago he was an angry ram battering at the door of the Auditor-General.  Will all that be forgotten and will he renege on his promises and leave the stones unturned?

IS ECOCARE A LEMON?   20.03.14
Many ratepayers believe that the EcoCare sewerage system is a "lemon". There is ongoing concern about the capacity of the plant itself, the capacity of the highly expensive farm disposal system, and there is a lot of talk about inferior piping, pumps and other hardware, and the poor workmanship.


Those are concerns that should have been put to rest long ago.

In fact it was part of the Commissioners' terms of reference that they tackle the following prior to December 2012:

identify the capacity of the Mangawhai Community Wastewater Scheme, whether it is fit for purpose, and the ideal funding model for the scheme for the future. This work is to have regard to the findings from the Auditor-General’s Inquiry into the Mangawhai Community Wastewater Scheme ("the Auditor-General’s report");

The Commissioners have never complied with this obligation.

No doubt they can argue that they were obliged to wait for the report from the OAG.

That report, when it finally came out, made it abundantly clear that Council was completely out of its depth and paid far too much for the scheme.

The report also made some vague statements about ratepayers getting a system that worked well. However, there appears to have been no in depth technical assessment of the plant and its performance and quality during the OAG inquiry and the comments appear to have no basis.

One gets the feeling that they were just "feel-good" comments that were designed to try and put that issue to bed and draw the curtain on the past.

The Commissioners appear only too ready to accept that the OAG report was the final word on the matter and feel no pressure to pursue the tasks that the Minister set them, namely: Is the scheme fit for purpose, what is its capacity and what is the ideal funding model for the future?

Ratepayers feel very uneasy. They know that they been ripped off in respect of the cost of the scheme but they still do not know whether they have been sold a "lemon".

The Commissioners have become experts in smoke and mirror techniques to mask the rorts of the past, to cover up the liability for the illegalities and extravagance, and, just as they deny independent scrutiny of the financial status of the Council, they are also blocking any independent assessment of the EcoCare plant

Ratepayers have the right to have an independent engineering assessment and valuation of the plant to see if they got - at a very exorbitant price - what they were promised.

So what were they promised?

The 2006 statement of proposal stated that the number of properties in the EcoCare reticulation area was 2,000 at June 2006 with the scheme designed to cope with future growth to a total of 3,300 properties.

The rather vague and secret amendment in late 2006 and 2007 (Modification1), which was the final proposal, talks of the scheme eventually servicing 4,500 connections.

So where are we now in March 2014?

As usual the Commissioners are very coy about figures, but it is possible to get them through the back door, so to speak.

If you have look at the table of rates on page 164 of the draft annual plan you will see the number of units connected to what is now called the Mangawhai Waste Water Scheme. There are 1,540 residences and 42 other (commercial etc).

That means that there is a total of 1,582 units paying the full connection fee.

Bear in mind that some of those are SUIPs (separate units) which, although they are charged separately, actually share a connection with the principal property. In fact many of the SUIPs are simply annexes that are illegally being charged the separate connection charge.

So, in fact, the actual number of connections is somewhat less than 1,580.

That makes for very sober reading.

It is even worse when you read the following comment at page 107 in relation to the capacity of the EcoCare scheme

Mangawhai – servicing or able to service around 2,000 properties in the Mangawhai Village and Heads areas. The system includes around 112 kilometres of pipeline and 18 pump stations, a water reclamation plant, and a transfer main to Lincoln Downs where the treated water is stored awaiting irrigation to pasture

So the scheme can only service about 2,000 properties.

The plan states that there will no more extensions to any sewerage scheme in the whole of the Kaipara district:

The exception to this is the expansion of the Mangawhai reticulation network within the current scheme area to include additional existing properties where this is viable. The level of service is projected to remain at current levels for 2014/2015. However, extension to the Mangawhai connections is being investigated.

Council is investigating the potential to increase connections to the Mangawhai Community Wastewater scheme. The Plant has the capacity for far more connections and to use this capacity the reticulation network requires extension and the disposal site has limited expansion potential.

On page 22 there is more detail:

Currently the MCWWS plant can cater for this increase in use, but the reticulation network and disposal facility on the Brown Road farm cannot. Extending the reticulated district for MCWWS requires extending the reticulation infrastructure (pipes and grinder pumps) and increasing the capacity for disposal. Work is underway to develop options for extension so that a business case can be considered

In summary it appears from these various comments that the plant itself can only handle a maximum of 2,000 connections The promises of 3,300 and 4,500 appear to have disappeared in the smokescreen that the Commissioners have put up.

As for the disposal site, it looks like there is no further capacity. It also appears that the Commissioners are going to sit on their hands until they can come up with a "business case".

In the 2013/14 annual plan $600,000 was set aside for capital costs for reticulation for further connections, with the caveat that many developments would cost more to connect than would be recouped in development contributions.

As it turned out, much of that $600,000 was swallowed up in extending the irrigation on the disposal farm.

It now appears that things have ground to a halt. There is no more money for further reticulation and no more capacity on the disposal farm. Which means no more connections until a "business case" is formulated. Which is "council-speak" for canning the future development of the scheme for a further 18 months when the Commissioners will be well clear of Kaipara and the new Unitary Council gets dumped with the problem.

There is further bad news coming from the Local Government Amendment Bill before Parliament at the moment, which will prevent development contributions being used to fund existing debt, That will blow apart the Commissioners' plans to fund a large part of the EcoCare debt from future development

So effectively the EcoCare scheme has come to a grinding halt and cannot take any more connections without a massive injection of capital, which mean more debt that will have to be paid by existing ratepayers.

So what does that leave us with?

A sewerage system that services approximately 1500 properties and which cost $62.4 million according to Steve Ruru. That means a cost of nearly $42,000 for each connection.

There are an awful lot of people out there counting the profit that they made out of EcoCare and laughing at the ratepayers for putting up with such an absurdity.

The Commissioners' attempt to disguise the true amount of the KDC debt is coming unstuck.

The Commissioners quote the debt as "under $78 million" but that figure only includes long term public or external debt, which is monies borrowed from third parties such as banks.  

Excluded from that figure is the amount that Council needs to borrow to reimburse the monies taken from various funds held by the Council for specific purposes which have been used for other purposes.  As mentioned in the post below, this includes $5 million to reimburse the Mangawhai Endowment Lands Account, $3.9 million for the Reserves fund, and there may be other similar funds that have been raided which I am waiting for Steve Ruru to reveal.

In addition there are short term loans that are not mentioned anywhere when considering debt.  This is from the latest Chief Executive's report

Council has a $5.0 million cash facility with the Bank of New Zealand. $5.0 million is undrawn at 31 December 2013.

Council also has a $25.0 million facility with the ANZ for working capital refinancing core debt as it falls due.

At the end of December $9.8 million was drawn 

Now there's a little secret that no one knew about.  Another $30 million dollars of banking facilities of which $9.8 million has been drawn down.  That is another $9.8 million to be added to the true debt figure of the Council.

If you add the figures together of the additional liabiities that have been revealed then it is clear that the debt has, so far, been understated by $18.7 million.

In response to a request for information about the proposed sale of surplus land raised in the draft annual plan (see SELLARS MARKET? below) the KDC has provided me with a copy of all land owned by the KDC. The land approved for sale is highlighted in blue and properties undergoing further investigation are highlighted in yellow.

The full document can be seen here.

Unfortunately, the actual Mangawhai properties referred to in the draft annual plan are not identified so the document is not of much assistance..

The response from the Council also stated that it was consulting on "the principle rather than specific titles or locations".

Now that may be correct if you look at the wording of the question put to ratepayers in the actual plan itself:

Do you support Council selling non-strategic surplus property to free up funds to repay debt?

However in the shorter Summary of the plan the question is different. After referring to the streets in which the properties are situated, it states:

We want to know if you support Council selling this land to free up money to repay debt?   (My underscoring)

That is a very specific question about specific properties.

The Council is clearly trying to get global approval for the sale of properties without identifying the properties and by misrepresenting their current use by ratepayers.

The whole question is designed to mislead ratepayers and utterly fails to provide the basic information that is necessary for ratepayers to make an informed decision.

Many ratepayers would be seduced by the innocuous question and tick the approval box but would be horrified to discover that they had unwittingly given their approval for the sale of Sellars Reserve in Alamar Crescent.

The Sellars Reserve has been identified as one of the pieces of land vaguely referred to in the plan and illustrates perfectly the blatant chicanery of the Commissioners.

They state unequivocally that the land is non-strategic and surplus and there are no current of future plans for public use.

None of that is true.

From what I can piece together so far, the land (which consists of three vacant lots) was offered to the Council by the Sellars family at a reduced price. Ratepayers pressured Council to buy it. The price paid was, I am told, $945,000 (far less than its actual value) and I have also been told that the monies came from the Mangawhai Endowment Fund.  There was a proposal for this money to be repaid from the Reserves fund but this never went through.

I also understand that the intention was that the land be vested as a Reserve, which is presumably why it is called Sellars Reserve.

It also appears that the Council has not been through the legal process of vesting the land as a Reserve.

The statement that the land is surplus, with no plans for its public use may come as a surprise for all of the thousands of visitors, picnickers and boaties who use the Reserve each year. Without the extensive parking facilities for boat trailers, which it provides, the boating fraternity would have no room in which to park their trailers and chaos would reign along the Alamar Reserve waterfront.

Steve Ruru and the Commissioners, as newbies to the district, may not be aware of the use of the land, but there is no excuse for being ignorant of the KDC's management own management plan for the area.

If you have a look at the Mangawhai Coastal & Harbour Reserves Management Plan of 2009 you will see that the Sellars Reserve is included in the Management Plan (page 15)

On page 47 the Plan states:

8.3 Council will assess the requirements for car and boat trailer parking at Alamar, Sellars and Lincoln Reserves in light of the existing and likely future demands on these reserves and their capacity to provide additional parking without compromising other users of the reserves. This will be undertaken the Council’s Roading Strategy for the area (sic).

Appendix 3 (page 66) sets out details of all properties that are considered to be Reserve Lands. The three lots forming the Sellars Reserve are not shown in the list of properties (which are hard to identify as no street addresses are provided). However the map on page 93 shows the Sellars Reserve at the corner of Alamar Crescent and North Avenue as 7a-c (being the three lots). The legend shows that the land is "Section 14 land".

This refers to section 14 of the Reserves Act 1977 which states:

Section 14 Local authority may declare land vested in it to be a reserve
(1) Subject to this section, any local authority may by resolution declare any land vested in it to be a reserve within the meaning of this Act subject to any conditions specified in the resolution, to be held for any of the purposes specified in sections 17 to 23.

So clearly the Sellars Reserve is part of the Management Plan and it has always been Council's intention to confirm its status as a Reserve under section 14.

Which of course makes it abundantly clear that the Commissioners description of the land as "non-strategic and surplus" with "no current of future plans for public use".is seriously misleading.

So what of the other properties that the Commissioners want to sell?

The other property at the other end of Alamar Crescent behind the boating club is also an integral part of the Alamar Reserve. The Fagan Street property refers to the pensioner flats, and the Robert Street property to Reserve land.

The other properties have not yet been identified.

Originally called the Mangawhai Endowment Fund, this account has caused a lot of consternation amongst ratepayers, including the present writer.

The Council has been less than transparent in the past about the Account and many ratepayers are concerned that the monies have been illegally used by the Council.

The truth is that under its Treasury Policies the Council is allowed to use the Account, and similar funds, for internal borrowing provided that it is properly documented and that interest is paid to the account by the Council at a fair rate.

That did not happen in the past but the Account has now been placed on a proper footing, with trustees selected from ratepayers. The agenda and minutes of meetings are available on the KDC website.

As at 30 June 2013 the fund's position was:


Properties and valuations      $

27 Mangawhai Heads Road   196,000

43 Mangawhai Heads Road   191,000

3 Olsen Avenue                    204,000

250 Molesworth Drive            226,000

Total land value                                                    817,000

Undistributed funds (all "borrowed" by the Council)   4,725,595

Total held in fund                                              $ 5,542,595

INCOME AS AT 30.06.13

Interest at 3.2%                      138,750

Rental income                          23,889

Total income for the year   $162,639

The other major difficulty that ratepayers have with the account is the failure of the Commissioners to treat borrowings from this account (and from the Reserves Fund) as debt in the balance sheets. When the total debt figure is quoted it only includes external debt i.e. monies borrowed from thirds parties like banks.

That of course is how it is done in local government. There are certain accounting tricks and ruses which are employed by councils to cloud the true financial position and make the financial position look more attractive than it is.

Larry Mitchell highlights the problem in his comments on this very issue. See the comment below.

The Council has never explained to ratepayers where the monies borrowed from the Mangawhai Endowment Lands Account went. We can only presume that they disappeared into the numerous, nebulous sinkholes labelled EcoCare, Dargaville Pool, Proposed District Plan, Hakaru Tip etc, that between them swallowed up, and continue to swallow up, a vast amount of ratepayers' money.

As the monies no longer actually exist - they are just a book entry - they are not invested and therefore produce no interest, except for the income from rentals on the four remaining properties (see above). That means that the income from the fund, which is paid out yearly, has to be borrowed or filched from rates or other income.

It is a merry-go round of Peter robbing Paul to pay Peter.

So when the Commissioners pack their bags in eighteen months time and the books are finally opened to independent scrutiny, we will find a certain level of debt (which they now quote as "under $78 million"), but we will also find that there are no monies in the Mangawhai Endowment Lands Account or the Reserves Fund.

The Council will be obliged to borrow monies externally to replace the monies taken from the funds. The external debt will therefore increase by nearly $5 million just to reimburse the Mangawhai Fund alone. It appears that to replace the Reserves Fund would require additional borrowing of about $3.9 million.

Then there is the question of other funds for drainage and depreciation which appear to have disappeared behind the Commissioner's smokescreen

That means that the true debt of the KDC is understated consistently by the commissioners by at least $9 million and probably considerably more.

However, one of the problems is that the KDC has already exceeded its recommended debt level and is going to find it impossible to borrow any further monies. The Council is already in breach of its loan conditions and is going to struggle to persuade its banks to refinance its major loans in July this year. Even that may be too much for the banks whilst the legality of the debt is before the High Court, the rate strike is in full swing, and the Commissioners face another legal challenge in respect of their failure to consult on the rates remission policy.

As one commentator said: "There is no wriggle room left."

The other problem is that the banking facilities that the Commissioners have in place total around $104 million. This includes the $78 million acknowledged as debt but also includes overdraft and other short term loan facilities. Some of this money has been drawn down and some hasn't.

The problem is that because of the lack of openness and transparency on the part of the Commissioners the ratepayer has no idea of the true indebtedness of the Council.

The Commissioners and Steve Ruru no doubt believe that they can fudge the figures and the ratepayers will be sucked in. The problem is that ratepayers are not sucked in and, not only that, the Commissioners and Steve Ruru destroy their own credibility. Ratepayers do not believe a word that they say.

The truth of the situation in respect of the Mangawhai Endowment Fund (as it was then) is shown in a report from Mark Vincent the KDC Policy and Planning Manager on 11 November 2011.

He examines the option to ‘ring-fence’ the investment cash available from the Fund and invest it externally. He acknowledges that this would provide a much better return to the Fund.

However, he goes on:

A consequence of this option is that while returns to the Fund would be increased, the Council would also have to borrow more money cover the unavailability of Fund money to assist with cashflow. Council has recently indicated its reluctance to increase borrowing, and indeed is looking for ways to reduce debt. Investing the Fund externally would not achieve this. Indeed it could be expected to result in an increase in Council rates in order to service the additional debt.

In other words, you can't have your money back because the Council would have to borrow to repay you and then we would have to charge you higher rates to cover the extra borrowing.

And that's how things sit at the moment. The problem is that this fiction or rort, depending on how you see it, will have to come to an end sometime. Ratepayers who are the beneficiaries, for various reasons, may require the expenditure of some of the capital of the account. Or, quite simply, the ratepayers might prefer to have the moneys ring-fenced and invested externally.

That will of course mean more external borrowing, if the Council can twist the bank's arm. But at least it would finally give us an honest figure in respect of the total debt.

Perhaps it is time for Steve Ruru and the Commissioners to stop pretending and start acknowledging the true indebtedness of the Council.

Footnote: One of the rejected options put forward by Mark Vincent in his report was:

A further alternative is that the available funds could be released to fund part of the Mangawhai Community Wastewater Scheme shortfall permanently or until the Scheme becomes self-funding and the Mangawhai Endowment Fund could be reimbursed. Interest could be set at 0% or at the internal borrowing rate if Council wished to continue with the grants.

That was in 2011 when Council staff actually believed the fairy story that one day the EcoCare scheme would be self-funding.

See Larry's comments here.

SELLARS MARKET?   13.03.14
Coincidentally with the discovery that the Sellars Reserve (see article below) is being sold to pay for the EcoCare excesses, workmen and trucks hit the reserve today in force.  Curious neighbours sidled along to see what was going on.  The workmen maintain that they were just providing a road through the trailer park with compacted metal. That did not ring true.  Given the financial penury of the KDC and its deferring of millions of dollars of highway maintenance, it seemed unlikely that it would spend money on putting in a road for a trailer park that was in perfectly good condition.

I don't believe in conspiracy theories, however it may be that this is a feeder road so that the reserve can be carved up into several beachfront sections.  Either that or the Commissioners have money to burn.

It's there on page 13 of the Draft Annual Plan:

Sale of non-strategic surplus property
The Council has completed the second stage of an investment review. In last year’s Annual Plan we noted that from an initial scan, there were no quick gains in this area. A more comprehensive review has identified a number of non-strategic surplus properties that can be considered for sale. By non-strategic, we mean property that has no current or future plans for public use, and is not part of the Mangawhai Endowment lands still in Council ownership. These properties are mostly situated in Mangawhai Heads and include residential land in Eveline Street, Robert Street, Fagan Place and Alamar Crescent.

Do you support Council selling non-strategic surplus property to free up funds to repay debt?

And that's all you will find about it. None of the properties are identified and one could take the Commissioners' word for it that these properties are non-strategic, are surplus, and have no current or future plans for public use.

But do you trust the Commissioners?

Which properties are being sold and why are they so coy about being open and transparent? How much extra room would it have taken to give details of the properties?

Or did the Commissioners hope that everyone would give their approval or simply acquiesce with silence to the sale of these properties without knowing what they are, or their significance.

I have written to Steve Ruru and asked him to come clean on what properties are involved.

However, I do know that the one of the properties referred to in Alamar Crescent is the Sellars Reserve at the bottom of North Avenue.

This property was purchased by the Council some time ago and perhaps someone can enlighten me as to its history.

What I do know is that it serves as an essential car park and boat trailer park for the boat ramp at the end of North Avenue and an overflow for the main ramp at the end of Alamar Crescent.

The other property in Alamar is the paddock behind the Fishing Club that is also used as overflow land for parking boat trailers.

According to the Commissioners these properties have no current public use. That is simply not true. Come down during the holidays or an a weekend and you will see for yourself what use they get. In fact without those two properties it would be absolutely bedlam around the boat ramps with insufficient room to park.

It will be interesting to see what else the Commissioners are planning to sell. But it looks to me that they are going to sell the family silver to pay for the illegal debts rather than taking action against those who ripped us off. Again they take the easy way out, pull the wool over ratepayers' eyes, and ratepayers foot the bill.

It appears that most browsers have no problem with this website.  It is just Firefox that shifts the script across to the right on to the black margin. So if you are using Firefox and have problems, try Chrome of Internet Explorer.

It appears that some people are having problems viewing this website.  The printing on this page shifts across to the right and is superimposed on the black margin.

I would appreciate any feed-back on this problem.  In particular:

  • What happens?.
  • Does it happen on just the Home page or on all pages?
  • What browser are you using?  eg Internet Explorer, Chrome, Firefox, Safari etc.

It may well be a browser compatibility problem.  I use Internet Explorer and Chrome and have no problems, and Safari on Apple products seems to be ok.

The banks in New Zealand are fast learning that doing due diligence is vital for all loans no matter who is the recipient of the monies.  Gareth Vaughan highlights in an article on interest.co.nz the importance of the restructuring of Solid Energy.  The implicit guarantee for SOE's by the government was just a fiction and several banks have had to take a hefty haircut.

Banks may well have made the same mistake with local authorities.  There is little doubt that they have been seduced into thinking that the protected transaction regime under the Local Government Act offers a cast-iron guarantee of repayment of all loans taken out by local authorities.  It does nothing of the sort.  It simply means that an illegal debt is still enforceable.  But being enforceable does not mean that payment of the full debt is guaranteed.  Repayment of any debt, even where there is security, depends on the solvency of the borrower, the value of the security that is charged, and the powers of the creditor in the debt instrument.

Due diligence to check the financial viability of the borrower and the transaction being funded, adequate collateral as security, and a well-drawn loan debt instrument are absolutely vital.if the bank is to be protected.

A big learning curve for banks and their advisers.

If you read the article by Bernard Oarsman below you will see that Auckland City are misrepresenting the residential rate increase for the new rating year.  Our Commissioners are boasting a 2.3 per cent increase but can we believe what they say?  

The figure is not audited and for all we know it could be as misleading as the Auckland figure and as deceptive as some previous KDC rate increase figures.

It could, like many of the figures that have been the ruination of this Council, have been dreamed up by the Council spinmeisters to suck in the ratepayers.

The cop-out is that the increase is the average increase, Which really tells you nothing.  the worst case is that 50 per cent of people are going to pay more and 50 per cent less.

Have a look at your own anticipated rates for the coming year and see what percentage increase you will be charged.  Go to this link and type in your address and it will show the proposed rate for 2014/15.

THE DRAFT ANNUAL PLAN 2014/15    07.03.14
The draft annual plan is now available on the KDC website here.

Comments on any aspect of the plan can be sent to contactus@kaiparaconcerns.co.nz for publication.  Please advise the name that the comment is to appear under.

Local authorities in New Zealand have learned nothing from the Kaipara debacle.

Read Bernard Oarsman's article in the NZ Herald which highlights Len Brown's reckless borrowing for Auckland City without any consultation with councillors and you will see what I mean.

The Super City was supposed to bring efficiencies and saving, not to create demi-gods who could wield unbridled power. Is this where Kaipara is heading with the super duper-cure-all-ills Unitary Authority of the Far North?

Note also the brazen misrepresentation of the actual rate rise for Auckland for next year.

Mr Brown is proposing an overall rates increase of 2.4 per cent this year, but nowhere in any of his or the council's information is there mention that the average household increase is 3.6 per cent.

That is the sort of dishonesty that local authorities resort to, simply because they can get away with being dishonest and because they are not accountable to anyone.  Kaipara has done the same.  In the past it has quoted average rate rises but omitted from the calculations capital charges for the EcoCare scheme. Utterly dishonest. A capital charge or levy, or whatever you want to call it, is a rate, and calling it by another name and excluding it from statistics is deliberately misleading.

Ask any expert on local authority finances and they will tell you of all the tricks that local authorities employ to fudge the figures.

Take segmented debt.  When I first came across the concept of segmented debt I was, as a layman, alarmed that such a flawed concept could have passed muster by the auditors. It was nothing but a contrivance to get around the prudent limits of borrowing set down in the KDC's treasury policies.

For instance, at that stage the KDC had an income to debt ratio of 2:1. In other words its borrowings could not exceed 50% of its annual income. That ratio limited the Council's ability to spend up large on major projects and, coincidentally, enrich its consultants, advisers and contractors.

There was a simple solution. By embracing the concept of segmented debt any amount of money could be borrowed from eager banks and ploughed into any big ticket item like EcoCare.

The debt to income ratio could be completely ignored. Simply by stating that the debt was "segmented" - separate from the general debt - and that it was self supporting was an open sesame to a bottomless pit of available money.

"Self-supporting" meant that the costs of interest and principal repayments would be completely met by income from targeted rates and development contributions and other charges levied on that project.

All you needed to prove that a debt was self supporting were some shonky figures based on fanciful off-the-planet presumptions provided by some consultant with a recognised brand name, that no one ever bothered to read, were kept secret, were never referred to again, and did not come within cooey of being achieved.

To make everything look kosher you also needed very strict rules relating to the segmented debt, which made gave it some weighty credibility but which in practice were completely ignored, were never applied and were never referred to again.

The segmented debt policy disappeared without trace in the 2012/22 LTP and was replaced by a far more liberal and very vague debt policy that now gives local authorities far greater latitude to misuse ratepayers' monies.

According to the draft annual plan for 2014/15 (at page 23) the maximum debt level allowed for the KDC is now 250% of revenue. That means that it is five times higher than the 50% that was considered prudent just a few years ago.

No wonder there is no need for the contrived segmented debt policy. It is easier to keep raising the debt ratio to meet whatever level of expenditure that the Council commits to. All the Council has to say is that it considers it prudent and no questions are asked. After all there is an endless supply of money for any mad-cap scheme, and, as we know, ratepayers are legally obliged (until the High Court decides otherwise) to foot the bill for any imprudent, reckless or illegal spending.

The current debt of the KDC is 200% of its revenue, which is four times higher than the prudent maximum of 50% when the debt was incurred. Council is boasting that it intend hopes to bring that the debt down to 175% of its revenue by the end of the 2014/15 rating year.  That is now the "preferred level" of debt, and is three and a half times the previous prudent level.

It is all meaningless mumbo jumbo and verbiage that local authorites churn out to make themselves sound authoritative and is an integral part of the parallel universe that local government in New Zealand lives in, where there are no controls and local authorities are free to deem any action to be prudent knowing that they can do so with impunity and the ratepayer will foot the bill.

Why do we tolerate such a systematic abuse of our basic rights as citizens?

A few days ago I did a post on the RATES HONEY TRAP which the Commissioners are using to persuade ratepayers to get back on the pay-your rates train so that the rate strike can be dealt to and all is hunky-dory in July when KDC's major loans have to be refinanced.

John Robertson takes every opportunity that he can (see the latest Kaipara Lifestyler) to boast of the financial genius of himself and his fellow Commissioners.  It appears that like magicians they have waved a magic wand and "disappeared" the massive debt that was threatening to destroy Kaipara.  No more talk of any debt,  Just a simple "Hey presto!" and Kaipara has returned to an annual rate increases of 2.3 per cent for the next rating year.  And, if you believe John Robertson, that is the sort of figure that you can expect for the next 9 years.

Hey Presto!  The debt has disappeared

Suddenly the whole fiscal landscape has changed.  The overblown debt is suddenly irrelevant, the effect of the rate strike, which had Council on its knees a few months ago (according to Steve Ruru's advice to the Select Committee) is irrelevant, and the deferred contract work that was so important a few months ago is also irrelevant.  Kaipara has, apparently, stopped being the cot-case on the verge of collapse and has returned to being a well-run, financially stable little council that can cope with minimal rate increases.

It might be said that almost overnight it has finally lived up to the much vaunted claim of being the "best little council in New Zealand".

It is, of course, utter bullshit.  Nothing has changed at all.  The KDC is insolvent, as it has been for many years, and is incapable of balancing its books without some accounting creativity.  It is just that the Commissioners and the banks have developed a new strategy to suck ratepayers in.

If John Robertson is prepared to give his own personal guarantee (with security) that the KDC rates will not rise more than 2.3 per cent annually over the next nine years, then he might have a chance of convincing us.  

But the reality is that we will all be stitched up in the Unitary Authority when Judgement Day comes and the butchers from the banks come looking for their pound of flesh from each of us

And when that happens, John Robertson and his mates won't be seen for dust. .    

In his latest propaganda piece in the Kaipara Lifestyler, chair of Commissioners John Robertson casts another smoke-screen around the true total debt of the KDC.  He takes a swing at Bruce Rogan of the MRRA for suggesting that the true debt is $106 million and states  that "the debt is now below $77.5 million, and declining".

The problem with the Commissioners is that they have been consistently dishonest about the true total debt of the Council.  They have deliberately referred to the external debt borrowed from the banks but excluded the internal debt borrowed from ratepayers funds held in trust, such as the Mangawhai Endowment Fund and the Reserves Funds.  They argue that internal debt is not real debt.

That is rubbish and utterly misleading. Both of the funds in question have been used by the KDC for other purposes (which the Commissioners refuse to explain).  Borrowing such monies internally is fine provided that the paper work is in order, a fair rate of interest is paid, and Council has the capacity to repay the monies at any time.

The problem is that the Council cannot repay the trust monies without borrowing externally.  That means that the total amount of internal debt borrowed must be added to the external debt to get a true picture of the total debt.

The Commissioners and the Chief Executive are fully aware of this and were severely embarrassed when they had to face questions on this issue when they first met the ratepayers at Mangawhai last year.  However they still continue to misrepresent the true situation.

Certainly many ratepayers are sucked in by John Robertson's figures, but the reality is that the Commissioners have destroyed their credibilty in the financial field as much as they have destroyed their credibility in the legal field.  Giving ratepayers shonky figures for the overall debt when absolute honesty is required wins no friends. Such a fundamental misrepresentation of a very simple and important figure destroys the credibility of the Commissioners.  

But that is not all. The fanciful future projections of income from development contributions in the last LTP - which are supposed to fund a major part of the EcoCare debt -  are utterly irresponsible and are tagged with serious warnings by the auditor.  The projections are so fundamentally flawed that company directors would likely end up in prison if they based the whole future of an undertaking on such shonky figures.

Likewise, the movement of the KDC's financial position from a ten million loss in one year to a one million dollar profit for the following year has been heralded as an example of the financial wizardry of the Commissioners.  The reality is that the massive swing arose because depreciation was massivley reduced in the latter year, and major works were postponed.  Deliberate or fortuitous?  You take your pick.

John Robertson will tell you that the financial status of the KDC is a veritable silk purse, but if you examine it closely it smells like, looks like, and feels like a pig's ear.

Until we get independent financial experts into the KDC to give it a real financial shake-down, we will not believe a word that comes from the Commissioners.

And one final question.  If the KDC has a debt of less than $77.5 million why does it have a total banking facility that totals, according to Steve Ruru, $106 million?

Mike Barrington's report on this matter in the Northern Advocate can be seen here.

It appears that the new Minister of Local Government, Paula Bennett, has neatly side-stepped the poisoned chalice that is Kaipara and has dumped responsibility for it on her Associate Minister Peseta Lotu-liga. He will now have to decide if Colin Dale will be replaced as Commissioner. He is apparently going to take advice from the chair of Commissioners, John Robertson. 

Peseta Sam Lotu-liga

This could be a great junket for "one of the boys" from the local government team but given the widespread unpopularity of the current Commissioners it may not be seen as a good career move.  Kaipara is likely to descend into chaos unless the best interests of ratepayers are addressed soon, and being responsible for the Kaipara debacle is not going to look too respectable on a potential commissioner's CV.

Applicants also need to look at the personal liability of the Kaipara Commissioners for illegal acts.  The Commissioners have made several significant decisions without complying with their obligations to consult with the community.  These include the decision to introduce the Validation Bill into Parliament, the decision to defend and to strike out the MRRA legal action, and the decision to remit rates' penalties pursuant to a policy that does not allow such a remission.

But more than that, the Commissioners have breached their fundamental fiduciary obligations to act in the best interests of ratepayers.  It is clear that they are acting solely for the banks, and for the banks' benefit, and are abusing their roles as trustees by using ratepayers' monies for the benefit of third parties.

If these decisions are challenged in court and found to be illegal then the Commissioners could be held personally responsible for the costs of those actions.  The bill so far is well in excess of a $1 million.

Accepting the role of Commissioner at Kaipara could be a poisoned chalice.

Ratepayers are the new serfs of local government.

Have a look at Dr Muriel Newman's article on the Kapiti Coast couple who employed an arborist to remove some rotten trees on their own property.

According to media reports a neighbour had complained to the Kapiti Coast District Council about the work. The KCDC then rang the Police, who turned up with an ecologist and a search warrant!

As a result of their actions, the couple, and their arborist separately, have been charged with contravening the District Plan and face up to two years in prison or a fine of $300,000 for breaches of the Resource Management Act!

Compare that with the actions of the Kaipara District Council which over many years systematically flouted the law as set out in the LGA and the LGRA, ignored all its obligations to the community, incurred massive illegal debts, set illegal rates, concocted financial accounts that totally misrepresented the true situation, and virtually destroyed Kaipara as a viable community.

And yet, all of those responsible have got off scot-free.  Not even the proverbial wet bus ticket.

The current KDC Commissioners have fought a staunch rearguard action to sanitise the illegalities and incompetence of their predecessors (and fellow feeders at the local government trough). They have forced through a shonky and flawed Validation Act, with the shameful complicity of Parliament, to validate six years of utter and unbelievable incompetence and have done all they can to block ratepayers gaining access to the courts to challenge the madness.

And all this has been done at ratepayer expense.

Even now, under the government appointed Commissioners, the illegalities continue. The Commissioners are effectively running the Council on the instructions of the banks that are owed the massive debts, and compliance with the law, consultation with ratepayers, transparency, and acting in the best interests of ratepayers, have all been conveniently booted into touch.

The OAG, after its mauling at its own hands in the EcoCare inquiry report, has retreated into a sleep that would rival that of the Sleeping Beauty,and has confirmed its total irrelevance as a watchdog for the local government sector.

The latest Minister of Local Government, who has been AWOL since he was appointed, has finally been given the boot and has now joined the roll of dishonour of completely ineffectual previous Ministers who sat and fiddled and dissembled whilst Kaipara was systematically pillaged by its council, its consultants and contractors.

Effectively, because there are no effective regulatory authorities, councils in New Zealand have unlimited power. They can do anything that they want to. They can breach the law at will. The legal obligations in the various statutes that technically they should comply with, and there are hundreds of them, are completely irrelevant and are treated by the everyone in local government as optional. There is absolutely no accountability of any sort. And if you happen to have a dictatorship of commissioners running your council, as in Kaipara, you cannot even get rid of them at the elections.

One law for councils, and one law for ratepayers.  That is local government in New Zealand.

ONE DOWN, THREE TO GO   26.02.14
Colin Dale, one of the four Commissioners appointed by the Minister of Local Government to run Kaipara as a dictatorship, has resigned.

He has come under intense pressure from ratepayers to quit his Kaipara role having been appointed recently as acting Chief Executive of the FNDC, but refusing to resign from his lucrative junket in Kaipara.  Accusations were made that he was sucking off the teat of both Councils.

The official announcement, together with the accompanying John Robertson spin, can be seen here.

Colin Dale was given the monicker "Community Champ" by John Roberston but the feeling of most ratepayers was that he did nothing to promote the best interests of ratepayers.  In fact he was behind the flawed and vindictive Validation Bill and the arrogant and irresponsible defence of the MRRA's judicial review proceedings.  Rather than the Community Champ, he championed, like his fellow Commissioners, the best interests of the banks over those of ratepayers.

Many believe that his appointment - and the appointment of the other Commissioners - were rewards for services to local government in New Zealand..

Sadly the Commissioners have followed down the same track of secrecy, lack of governance, and ignoring legislative requirements that was well worn by the previous Council, and they have bled the Council dry with their oppressive tactics in trying to quell ratepayer opposition and protect the illegal debts of the banks.

I have said time and time again that Rodney had only one commissioner who managed to get that council back on track.  The difference there was that he acted in the best interests of the ratepayers and the council.  The Kaipara Commissioners are hell-bent on destroying Kaipara (the remnants will be absorbed by the Unitary Authority), transferring the Council's insolvency onto ratepayers, and the illegal debt will then be payable by the Unitary Authority and guaranteed by every local authority in New Zealand under the the Local Government Funding Agency.

Ratepayers are mere pawns in this plan that has been hatched by the Department of Internal Affairs that is being imposed on Kaipara by the Commissioners..

They will bulldoze Kaipara into submission unless we recognise the fact and stop paying rates to fund our own destruction.

Many will have read reports of an average 2.3 per cent rates increase for Kaipara recently announced by the Commissioners.  The full details will be in the annual plan released on 4 Februrary.

Many will read the report and the accompanying spin put out by John Roberston and wonder what has happened to the massive debt that the Council has and how we can afford such a low increase.

The answer is, quite simply, that we can't.  However, if the true situation was spelled out then ratepayers would be in revolt and there would be a widespread rate strike.  Massive rate increases are counter productive, as the KDC found out in 2012.

The plan, which has been formulated by the DIA and put in place by the Commissioners, (and referred to in the post above) is far more subtle.  The aim is to package up the remnants of Kaipara into the Unitary Authority in 2016 where the debt will be guaranteed by a larger council and by the Local Government Funding Agency.

Foregoing interest and capital repayments for a couple of years is not an issue.  Better to add all that to the principal and defer payment for a few years when repayment is absolutely guaranteed.

The only problem in this scenario is the fact that the main loans are all being refinanced in July.  That creates a problem because of the questions hanging over the legalilty of the rates and the 2012 LTP.  Whilst they are in doubt the banks are not willing to refinance the loans.  That is why the Commissioners were driven to push through the Validation Bill and to try and strike out the MRRA action in the High Court.  That is why the Commissioners are illegally remitting penalties so that that issue can all be wrapped up to the banks' satisfaction prior to July.

Another problem is the rate strike.  To appease the banks the Commissioners are doing all that they can to bring this to an end.  While John Roberston is pouring out the snake oil salesman's unctuous charm, Steve Ruru and the Council's lawyers have taken on the role of snipers, carefully picking out targets for demands of rate arrears on mortgagees.  And of course the low rate increase is the final ploy to suck every one in and get them paying their rates again.  

The legality questions must be resolved and the rate strike must be broken by July or the Council is in financial schtuck.

Things are not going too well.  The decision of Heath J has the potential to throw a massive spanner in the works, and the rate strike is actually spreading as ratepayers realise that they are being conned by the Commissioners.  The Commissioners' decision to remit the penalties outside the law will also come back to bite them in the posterior.

Colin Dale does not have to worry any more.  Just three left to do the bidding of the banks.  And if we all stopped paying rates they would not last long.

Over a thousand ratepayers are withholding their rates.  Not just in Mangawhai but in the rest of Kaipara as well.  Donations to the MRRA legal fight are also coming from across the district and from throughout the country.

Many people are now realising that the battle against the Kaipara Commissioners is for the benefit of all ratepayers in Kaipara and ultimately for all ratepayers in New Zealand.  It is important that we send a loud and clear message to the Commissioners that we oppose what they are doing, the decisions they are making and their total failure to consult with ratepayers and to act in the best interests of ratepayers and not the banks.

The Commissioners and the banks have been shaken by the rate strike so far, and the MRRA has stunned them with the power of their judicial review proceedings.  We now need to build on that and simply stop paying any monies to them.

Many ratepayers understand the situation and have individually withheld tens of thousands of dollars in rates, but there are those who are still concerned about the perception of acting "illegally" by not paying rates.  Acting outside the law, of course, is something that has not troubled the previous Councillors or the present Commissioners, and the time must come when honest citizens must respond to the continuing illegalities and dictatorial attitudes and draw a line in the sand and say that "enough is enough".

I have set out 16 reasons why ratepayers should not pay their rates to the KDC and they can be viewed here.

If you have any other reasons, then please send them to contactus@kaiparaconcerns.co.nz and I will add them to the list.

There are those who support the Commissioners one hundred percent and are critical of the MRRA and rate strikers.  They believe that the rates are fair and should simply be paid.

But what happens if the MRRA's action in the High Court succeeds and ratepayers are exempted from liability for illegal debts and the true villains of the piece are forced to pay.  Rates will drop substantially.  Will the supporters of the Commissioners still opt to stick with their convictions and pay the higher rates?  Or will they simply reap the rewards of the considerable efforts of the MRRA that they have tried to sabotage?

Perhaps some of the vocal critics of the MRRA would like to share their thoughts on the matter.

The MRRA has published a flyer to be delivered to all properties in the district encouraging ratepayers not to pay any further rates to the Commissioners until the High Court has decided once and for all whether the EcoCare debt and the EcoCare rates are valid.

The flyer can be seen here.

The commissioners have refused to make available to ratepayers the Simpson Grierson opinion on the rates remission policy, which ratepayers paid for.

Legal Eagle requested a copy but Steve Ruru has declined to provide a copy on the basis that it is privileged.

The matter was discussed at length below (scroll down to THE ROAD TO ILLEGALITY 22.12.13) and the illegality of the use of the current rates remission policy to remit penalties was highlighted.  It is a blatant abuse of the law by the commissioners, and yet another example of their appetite for flouting legal compliance and their total disregard for consultation with ratepayers.

It is highy unlikely that the Simpson Grierson opinion supports the actions by the commissioners.  The wording of the current policy is absolutely clear and it is beyond any shadow of a doubt that the KDC does not have the legal power to remit rates in the way that it is intending to do.  The commissioners are obliged to propose a new policy and consult with ratepayers as part of the annual plan process.

But as in many other decisions, the commissioners have decided to opt for the illegal route and political expediency.  The rule of law and the best interests of ratepayers run a distant second to the best interests of their fiscal masters - the banks.

If the Simpson Grierson opinion had supported the commissioners' decisions in respect of penalties remission then there would have been no harm in revealing it publicly.  The refusal to publish simply confirms that the commissioners have followed the old adage that anything that they do is legal (even if blatanly non-complying with the law) until a court decides otherwise.

The Northern Advocate report can be seen here.  Note the error at the beginning of the article.  The hearing in Whangarei was the actual judicial review and the decision by Justice Heath will resolve the question of whether ratepayers can be held responsible for illegal debts entered into by the Council.

It could be weeks or months before the decision is available.  This is a very complex matter and is likely to have far reaching ramifications for the whole of local government in New Zealand.

If the MRRA is successful then it is inevitable that the banks - who would be the big losers and who effectively control all the actions of the commissioners - will pressure the commissioners to appeal to the Court of Appeal and then to the Supreme Court.  Legal fees will head towards the $1 million mark.  They will, of course, be using the rates to do this.

The odd thing about this case, and it came across clearly in Court, is that the commissioners are legally supposed to be fiduciaries acting in the best interests of ratepayers,  They should be arguing on the ratepayers' side.  However, everything that they do, and all their arguments, are based on the best interests of the banks.  And yet, the commissioners are using ratepayers' monies, without ratepayers' consent, to fund their action, and the banks are not paying one penny.

Clever stuff if you can pull it off. 

If the MRRA wins this case then every ratepayer in Kaipara, and in the whole country, will benefit substantially and the reckless financial mismanagement of many councils will be curbed.

All Kaipara ratepayers must ask themselves if they are going to continue to pay rates to a bunch of commissioners who are lackeys of the banks and acting contrary to the best interests of ratepayers, and are using ratepayers monies to fight ratepayers.

Forget all the hype and misinformation about roads not being completed.  Forget about the low rate increases promised for the next ten years - that is utterly fraudulent.  If we let the commissioners continue on the present course then when the time is right the banks will demand their pound of flesh from each and every ratepayer in the district and effectively destroy the communities of Kaipara.  

The proceedings in Court have stunned the commissioners and the banks.  We now have to follow up by withholding all rates to send a very strong message to the commissioners that they do not have the support of the community and should not be using our monies without our consent and to pursue the best interests of the banks.

This letter to the Kaipara Lifestyler from Bruce Rogan of the MRRA sums up succinctly the case of the MRRA put to the High Court


In your February 4 issue you devoted front page space to the application for judicial review by the Mangawhai Ratepayers and Residents Association.

You characterise this action as being a dispute about rates. It is not, and it never was.

It is about the right of a council to set rates to recover illegal debts. Nobody has any issue with paying rates that are lawful, but this council, by its own admission, entered into very large loan commitments illegally, and in secret.

The council might well have to repay those loans, but our view is that it is not going to dip into ratepayers’ pockets to do so. That is what we have asked the court to look into.

The big issue here, and it is a big issue for every ratepayer in the district, is whether council will be allowed to balance their books by extortion.

The true level of debt now disclosed in a new debt instrument the council has entered into without ratepayers’ knowledge or consent, is about $106 million.

If you have a calculator, put in your current annual rates, then press the X key then press 3 then press =, and if you feel like sending that amount every year, go for it.

(Commission chair) Mr Robertson says that the court proceedings are expensive. Well, they didn’t need to happen, but at least we asked (consulted) our members if it was Ok to bring them. The commissioners never asked you if it was OK to defend them and send you the bill.

Bruce Rogan, MRRA, Mangawhai.

(Letter abridged) — Editor

The MRRA report on the three day judicial review hearing can be seen here.


News Talk ZB: Feb 3:  Feb 3 : Feb 4

Bob Day Property Report: Contains a good review of the first day's judicial review hearing. 

TVNZ 6 pm news Monday 03 02.14:  A good bite to summarise the purpose of the review.  (Only on line for a few days.)

Northern Advocate:  February 3 2014

Northern Advocate:  February 4 2014.

Northern Advocate: February 4 2014. Read all the comments at the end of the article.

Kaipara Lifestyoer: 04.02.14

Please advise references to other reports at contactus@kaiparaconcerns.co.nz

Read Tony Holman's article in the NZ Herald here: PPPs short-term gain but long-term pain, along with the comments (including John Dickie's) at the bottom.

Remember that the A-G originally opined that the EcoCare PPP was a union made in Heaven.  It took her many, many years to find out the truth, even though she was the auditor and the truth of the situation was staring her in the face.

The article states:

US researchers Flyvbjerg, Holm and Buhl (2002) found contractors' estimates of construction costs were underestimated and demand forecasts were overestimated so consistently that it must be because of systematic misrepresentation, i.e lying.

In the EcoCare case, the costs and the amount of the debts were kept secret, the demand forecasts were pie in the sky, the income from ratepayers needed to meet liabilities was completely misrepresented, and the KDC had absolutely no idea how to set rates and charge development contributions to fund the scheme.  Every charge that they made turned out to be illegal.  It was a project based on lies and carried out with incompetence.

Doug Bone referred me to a Jimmy Ellingham article in the Bay of Plenty Times headed "Four years jail for 'incompetent' forex trader", and he asked the very relevant question: How can this be?? The Auditor-General says “incompetency is not a crime” !!

And the Auditor-General - on this occasion at least - is right. For it to be a crime there has to be an offence under the Crimes Act and although incompetence can create as much collateral damage as a crime, it is viewed as a civil offence. In other words the State is not concerned and leaves it to those affected to sue in the courts.

However, when you read more deeply into the forex case, which incidentally was brought by the SFO, you realise how amazingly similar it is to the Kaipara rort.

The article actually reveals that the forex dealer was utterly out of his depth to start with and then resorted to misleading his clients which resulted in criminal charges of theft by a person in a special relationship, dishonestly using a document and making false statements to investors, including his family and friends.

And isn't that, when you look at it, exactly what happened in respect of the KDC?

The report from the OAG made it perfectly clear that the KDC was completely out of its depth and had no understanding of what it was letting itself into in respect of the EcoCare scheme or how it was going to raise the monies to meet the financial commitments that it had secretly entered into. It then started misleading ratepayers as to the true cost and the extent of the scheme. All the financial figures in the Council's accounts were completely incorrect and deliberately intended to mislead ratepayers.

The forex dealer "initially received money from his family members and friends and then from colleagues and acquaintances, promising a return on the investment. Despite not delivering, he took money for fees to which he was not entitled and even took money his sister deposited in his bank account for her portfolio".

For years the KDC utterly misled ratepayers on the true cost and scope of the sewerage scheme and applied considerable pressure on some ratepayers and developers to extract monies illegally from them to fund their incompetence.

The total losses caused by the forex dealer were $1.5, whereas the losses suffered by the Kaipara community run into many tens of million dollars for the EcoCare scheme alone with many several more millions for other financial disasters perpetrated by the same incompetent crew. And that is not taking into account the pain and suffering of the Kaipara ratepayers and the utter contempt that they now have for local government in New Zealand.

As an ironic footnote, new SFO director Julie Read, imported from Australia, said the prosecution of serious financial crime is important to maintaining a confident economy:

"People must be confident about investing to create economic growth which is why the SFO places such importance on the success of prosecutions such as that of Mr Chalmers."

We all agree, but wonder why no action was taken in respect of the glaring irregularities that took place at the Kaipara Council.

The A-G says, after her extensive inquiry, that there was no evidence of criminal activity. Yet at other times her Office states quite clearly that it cannot rule whether or not actions of a council comply with local government law, so it is somewhat surprising that she suddenly becomes an expert on criminal law and can say with absolute authority that there was no criminality.

Those who know what shenanigans went on are sceptical of the OAG's comments, just as they were sceptical of her "warning off" of the SFO under Adam Feeley when the irregularities within the KDC were blatantly obvious.  There is clearly an issue there that few us understand.

It would be nice if new SFO director Julie Read could cast a fresh eye over Kaipara and do a thorough examination by independent experts of one of the largest rorts in New Zealand local government history. The chances of that happening are small. The government and Parliament are intent on dumping everything on the ratepayer.

Remember that there are special rules in Local Government in New Zealand that do not apply elsewhere. In Local Government there is no requirement of compliance with the law and criminal actions will simply go unpunished because ratepayers will pick up all the bills.

Frank Newman comments here on the Dunedin Council's fancy $230 million covered stadium that "will forever be a black hole that eats ratepayer money".

He comments:

There will be no easy fix for Dunedin’s ratepayers. Their elected representatives of the day were reckless and ratepayers will be punished for a very long time because they (as a society) elected a reckless bunch of people to make decisions on their behalf.

I do not know of the Dunedin Councillors complied with the law and consulted with ratepayers but Kaipara ratepayers find themselves in a very similar situation.

The debt for EcoCare is completely unmanageable for a small council such as the KDC but the Commissioners and the Banks have so far delayed the inevitable day of judgement by mesmerising ratepayers with promises of only three percent rate increases over the next ten year.

How can that happen, you might ask, when there is such a massive debt to pay? The answer is that it can't. But to levy high rates now and charge extra capital payments per household right across the district would result in a massive rate strike and civil disobedience and the collapse of the KDC.

To prevent that, the Commissioners and the Banks have made promises of minimal rate rises that cannot be substantiated and are so dishonest that they border on the criminal. They are nothing more than a confidence trick and the reality is that, sooner or later, ratepayers across the district will be billed for the principal of the debt. Generations of Kaipara ratepayers will pay for the EcoCare folly just as generations of Dunedin ratepayers will pay for their Stadium folly.

The only difference is that the MRRA has challenged the validity of the Kaipara debt in the High Court and is asking that Court for a ruling that ratepayers are not responsible for an illegal debt that was secretly entered into by the Councillors.

Never before have ratepayers made such a challenge and no doubt many ratepayers across the country will be awaiting the outcome.

If Councils can operate outside the law with utter impunity, with all the watchdogs sound asleep, and the ratepayers have to pay all the bills, then we have been conned into being the peasants at the bottom of a 21 Century feudal system.

That is not a good place to be but unless we get behind the MRRA and support its action, then that is where we will end up.

It has become clear in the last few weeks that the Council has been recovering payment of rates arrears where the owner of the property is on rate strike but has a mortgage to a bank.

The important issue is that notices were served on the banks at a time when the Commissioners were fully aware that the rates were invalid and at time when the Validation Bill had not become law.

Such actions illustrate the utter lack of integrity and fairness and disregard for the law by the Commissioners and the Chief Executive Steve Ruru.

Rates can only be demanded in such circumstances if they are due and payable and the Commissioners and Mr Ruru were fully aware that the rates were not legally payable.

There are many question marks over some of the policies that Steve Ruru has initiated and he needs to face up to ratepayers and tell us why he acted in such a patently illegal way.

It is interesting that Ruru and Co have not yet had the gumption to take anyone to court for not paying rates, because they know that they would be laughed out of court.

With the Judicial review only 10 days away all ratepayers in the district should unite and withhold all future rate payments. If you have no mortgage then no action can be taken in the court until the end of October 2014. If you have a mortgage then no pressure can be applied to your bank to pay the rates until after 1 November 2014.

The commissioners and Ruru are going to finally have to face up to the rule of law in a few short days when the High Court finally introduces some fairness, integrity and legal compliance back into local government in Kaipara, and it would send a very strong message to the Commissioners if all rate payers in the district stopped paying their rates.

If things go well, the KDC will be a very different prospect following the Court's intervention. Those who have sat on the fence or been sucked in by the Commissioners' promises need to finally make a stand and withhold rates. The worst case scenario is that it might cost you a few dollars in penalties, but the chances are you will be part of a movement that brings back accountability to local government and makes the EcoCare debt the responsibility of those who were negligent or incompetent.


Don't worry about all the rubbish aboput paying for the roads and other red herrings that the Commissioners and their disciples proclaim. The reality is that the KDC is being bled dry by the Commissioners themselves and their antics in Parliament and in the courts, and, when they have sucked ratepayers into the trap, the banks will pull the trigger and Kaipara will fatally haemorrhage because of the massive rates bomb lying in wait.

If you want to know how much you get for feeding on the ratepayer teat then have a look at Mike Barrington's article in the Northern Advocate about Kaipara Commissioner Colin Dale doing a juggling act to maximise his income in Northland.

Remember that Rodney managed with one single, competent commissioner a few years ago. Why does Kaipara need four?

Think also of the $130,000 spent on ratepayers' money spent on the Validation Bill that will prove to be an utter waste of money, and the hundreds of thousand of ratepayers' money that they are spending trying to stop ratepayers getting access to the High Court.

And ask yourself if you are happy to pay a share of the $70 million or so that EcoCare finally cost. Because, if the Commissioners win, then every person in Kaipara will sooner or later have to pay a share of that debt.

Colin Dale, dubbed the "People's Champ" by his fellow Commissioner John Robertson - for reasons no one understands - has just been appointed as Acting Chief Executive of the FNDC.  Kaipara's loss is the FNDC's gain.  Hopefully, that is.  Or will he suck on the teats of both councils?  More to come, no doubt.

Colin Dale - the "People's Champ" heads north

THE PHONEY WAR   17.01.14
Many Kaipara ratepayers would think that very little had happened over the holiday period. With the passing into law of the Validation Bill the Commissioners along with Mike Sabin and their supporters would have had a good Christmas. With the help of pressure from the DIA and the banks, they had managed to corral Parliament into validating the shameful catalogue of Kaipara illegalities and had also managed to hoodwink members into validating Jack McKerchar's infamous unit of demand impost, and con MPs into validating rates for two years for a service which did not exist.

The Commissioners also decided, yet again, just before Christmas to ride roughshod over the law and use the existing rates remission policy to remit penalties in the way that they had proposed to remit them to Parliament. The fact that they could not legally do it was no obstacle. They even went to the trouble of getting a legal opinion from Simpson Grierson to see if they could do it legally. That is a regular occurrence. Apparently they even get a legal opinion from Simpson Grierson before they choose their breakfast cereal.

No doubt Simpson Grierson gave them the correct legal advice, as I have done, but that advice is top secret. They have gone ahead and ignored it and chosen the illegal path simply because they can. Parliament and the OAG have embraced and endorsed just about every illegality of this Council that you can think of, so one more will not make a jot of difference.

To delay matters and go through a drawn out consultation process with those dreadful ratepayers (who might want to remit ALL of the penalties) would not serve the best interests of their masters, the banks. In fact Glennis Christie's report to Council on the matter on 11 December 2013 states that "additional consultation would be counter-productive". The words of a dictatorship at full throttle.

The thought of Kaipara ratepayers all paying their rates, sucked in with the promise of 3 per cent annual rises over the next ten years, and with the fantasy of development contributions carrying the burden of the debt, would have had the Commissioners salivating as they hoed into their Christmas tucker, reflecting on all those plump, trussed turkeys waiting for their come-uppance once they had been inveigled into the unitary authority.

Post Christmas the propaganda machine has started to wind up. The Mangawhai Focus is now giving front page headlines to its favoured son, John Robertson, with news of penalties remission that is staler than Christmas Day's ham. I am surprised that they didn't have a picture of him dressed as Santa Claus.

Even veteran Councillor Jo Roberts gets into the act in her Did You Know column. Straying from her non-partisan role, she takes a swing at rate strikers. She noted that many Mangawhai properties were covered with tents and cars and adds:

..a cynic could be justified in asking if those staying in "another striking property" were concerned about not contributing to the costs of their sewage disposal, roads, footpaths, parks etc.

I am sure that the owners of all those properties would tell Jo that they would happily pay for all of those things but they see no reason why they should pay for massive debts incurred illegally because of the sheer incompetence of Councillors, staff, consultants and auditors.

Not to be outdone, the Kaipara Lifestyler publishes a letter from Council diehard Peter Bull trotting out the same old, same old about the wonderful Commissioners.

On the other side, it has all been pretty quiet. The MRRA legal team has been working hard over the break with their barristers redrafting the statement of claim for the judicial review, preparing affidavits, and getting the legal case ready for 3 February.

As judgement day gets closer, so to speak, one cannot help wondering why there are so many people who close their minds to what is going on and follow what the Commissioners say in the same way that the earlier Councillors followed Jack McKerchar like the Pied Piper.

Kaipara has suffered under years of incompetence, lies, and a total lack of integrity. And at long, long last, thanks to the MRRA, the High Court is finally going to intervene and examine the decisions of the KDC to see if they were legal or not.

This is a day that should be celebrated by every ratepayer in the district. The action that the MRRA is bringing tackles the fundamental issues of the Council's illegal decisions in respect of EcoCare and asks the Court to decide if ratepayers should be responsible for those decisions and the debts that followed on from them.

Striking ratepayers need to stand proud and ignore the taunts of ignorant people who have succumbed to the blandishments and propaganda of the Commissioners. For most of us this is the first time that we have done anything contrary to authority, but we do it with a conviction that things have gone seriously wrong in Kaipara and we, the innocent people, are being dumped with the responsibility for debts in a way that is not just, and that is not fair. And we are prepared to put our money where our mouths are to find out whether the law is on our side or not.

If you are a rate striker then display it proudly. And, if you are not, get yourself a sign from Bruce Rogan and join the movement to get Justice for Kaipara.

Yes, its a bit like the phoney war, but, believe me, things are happening, and it will all come to fruition in the High Court in Whangarei on Monday 3 February 2014

Bruce Rogan is currently the chair of the MRRA and the driving force behind the Association's judicial review application to the High Court to finally get justice for the ratepayers of Kaipara.

Back in 2002 Bruce was a KDC Councillor warning of the dangers of the proposed EcoCare scheme and expressing his concerns about the competence and the direction of the Council.

I have unearthed a letter that he wrote to ratepayers in February 2002 with warnings that will resonate with ratepayers and all of those involved with what turned out to be the EcoCare debacle.

Our latter day Nostradamus predicted what would happen to the scheme and encouraged ratepayers to take action immediately. This is what he suggested:

1. A massive community response to tell the Council that it has got this process wrong and that it must either shut this project down or come back to us and listen this time.

2. A serious, co-ordinated letter writing campaign to the Mayor, Councillors, Members of Parliament, the Regional Council and the Minister of Local Government, asking your questions and registering your concerns.

3. A campaign of civil disobedience, such as a refusal to meet any further rates bills until Council agrees to stop this process and redesign it in accordance with community preferences. (Without Mangawhai's money there is no Kaipara District Council.)

4. A concerted campaign to extricate Mangawhai and possibly Kaiwaka from the clutches of the Kaipara District and re-align with a more community focused local authority.

5. Legal action to restrain the Council from proceeding (grounds might be failure to consult effectively, and/or failure to consult with open mind).

6. Do nothing and wear the consequences.

That was back in 2002. It took us twelve years to learn that he was right, and, as predicted, we are now wearing the consequences.

But it is not too late. The High Court hearing is only a couple of weeks away when ratepayers will finally have their claims heard by a totally independent authority that will apply the law of the land fairly and with integrity.  Fairness and integrity and the rule of law is something that Kaipara has not seen for many years.

The essence of the claim is that the EcoCare debt is illegal and should be the responsibility of those who were negligent or incompetent (or worse) and the banks which advanced money recklessly for a mad-cap get-rich scheme (for consultants, contractors and financier). Ratepayers should only be responsible for the value that they received.

Ratepayers need to get in behind the MRRA and show their support. All the MRRA's costs are met by donations from ratepayers and other concerned people from far and wide. This question of the liability of ratepayers for illegal debts is a fundamental issue for all ratepayers throughout New Zealand and the High Court's ruling will be a landmark decision that will impact hugely on the whole structure of local government in this country.

If the MRRA wins its case then Kaipara will survive with a much reduced and manageable debt. If the MRRA fails then in two years time ratepayers will be hit with massive rate increases that will make the rates bomb of 2012 look tame.

If you have any doubts then check with Nostradamus.

To make donations to the MRRA go to its website here.

If you are a rate striker - God bless you - and you have a mortgage and your bank is pressuring you to pay the arrears of rates, then see the advice here.  It appears that the KDC and some banks are picking on certain customers in an attempt to try and break the rate strike.

Christmas has not been good for the Commissioners. They thought everything was going well. They got the Validation Bill passed before Christmas so that they could deal to the ratestrikers in the New Year. The OAG had done a "lightly over" report and ensured that the ratepayers were still the major culprits in the whole affair and would be fitted up for the whole of the EcoCare debt. Everything was on track to make the banks happy so that they will renew the loans in July next year.

But then things went wrong. The Commissioners found out that their rates remission policy would not allow them to remit the rates penalties as promised to the Select Committee and Parliament. To adopt a new policy would take too much time and require consultation with ratepayers (horror of horrors), so they opted for the illegality track. That may have been ok in the past but now everyone is watching and everyone knows that what they are doing is illegal.

It also puts their banks in a difficult position. By electing to act illegally the Commissioners have now committed an act of default under their loans. The banks can ignore the default - which they have done for the past 6 years - but if the decision is challenged in court then the banks are in a very precarious situation.

Now it has been revealed that the Validation Bill was a waste of time and money and that the rates that were supposed to be laundered are in fact still as illegal as they always were. The Commissioners and Parliament were in such a haste to stitch the ratepayers up that they failed to consider all the ramifications of the illegalities. We now have to wait for a decison of the High Court to see if the rates are legal or illegal. So, in the meantime, the inducement to end the rate strike "now that the rates are legal" has been consigned to the rubbish bin.

Another blow is the acceptance by the Commissioners that they cannot issue proceedings against anyone for non-payment of the rates.  While the question of the legality of the rates is before the High Court the Council will not issue proceedings against any defaulting ratepayer.

The Council advises us that in light of the recent High Court decison, they are reviewing their position.  The Council has told us they will not take any further action at this time under any demand notice they have issued to mortgagees until the matter has been resolved in Court.  We understand the issue of whether the rates are vald is expected to return to Court in February 2014.

The final blow was the revelation to the whole world that the Commissioners had flouted an order of the Court and failed to pay the costs of the MRRA.  The Council spends an inordinate amount of money on propaganda in the local newspapers to try and prove that it has turned sewage into gold, and that the four wise men who run Council are competent and can be trusted.  And then they go and reveal their true colours by ignoring an order of the court.   

So if you are rate striker then things are looking good.  And if you are not, then this is your opportunity.  You can withhold your rates until the 30 June with only minor penalties being incurred but you will send a loud and clear message to the Commissioners that they cannot operate outside the law and that they should support the fair resolution of the legal issues by the High Court

That case is only just over a month away.and a broader rate strike would be a wonderful way of showing the community's support for the return of the rule of law to our district.

Think about it over the holidays.  You have no vote in Kaipara.  You are not consulted on anything.  You get dumped wtih all the illegal debts of those who get off scot-free.  And if you sit back and do nothing then you are going to pay very dearly in two years time.  Why not take advantage of this window of opportunity and make your position clear by withholding your rates.

You could make a New Year's Resolution to play a part in bringing Justice back to Kaipara..

See Mike Barrington's article in the Northern Advocate on the latest illegality of the Council in respect of its rates remission policy. 

Even those who have been sucked in by the Commissioners and devoutly believe their propaganda must be starting to have some doubts about their motivation and their integrity.

I invite anyone who backs the Commissioners to read the articles that I have written in the past few days (below) and then ask themselves honestly whether their opinion has changed.

If you want further evidence of the lack of integrity and the sheer arrogance of the Commissioners then you need to know about events that have been unfolding in the last few days.

On 19 December following discussions between Justice Heath and counsel for the MRRA and the KDC, the judge made an order that the MRRA was allowed to replead its case following the passing of the Validation Bill had removed part of its claims. The hearing is till scheduled for 3 February 2014.

But more interestingly the judgment contained the following:

[12] To my surprise, the Council has not yet paid the costs awarded on its unsuccessful application to strike out the first cause of action. As I indicated to Mr Goddard, I expect those to be paid in full by midday on 23 December 2013. Otherwise, the Council may be at risk of an application to debar it from defending the proceeding for non-compliance with a Court order.

The court awarded the costs in August this year but the Commissioners have simply not paid them. We do not know why but can only presume that they treat all legal obligations as optional and all deadlines as irrelevant.

Justice Heath was not pleased with the attitude of the Commissioners and his threat to debar the KDC's defence shows his clear response to the Commissioners' arrogance and indifference to his ruling on costs.

The Commissioners may well have learnt a salutary lesson. The word "must" in the Rating Act and the LGA is always treated in local government circles as creating an option to comply - but only when it relates to a council.  Likewise, deadlines can simply be ignored.

In the Courts of law "must" means exactly what it says and no latitude is given to any party.

The upshot is that the Commissioners just met today's deadline and paid the costs to the MRRA.

What a comeuppance it would have been if the KDC defence had been debarred because of the Commissioners' arrogance and aversion to legal compliance.

Now there is the question of penalties for late payment and whether the MRRA will show some reciprocative leniency and remit the penalties. No doubt Bruce Rogan will be reviewing the Association's current penalties remission policy to see if it can be fudged to allow a remission to be made.

You have to laugh.

The EcoCare rating mess created by the KDC was horrific. The Select Committee, the MPs who supported the Bill, and the Commissioners glossed over the sheer volume and extent of the technical defects or procedural irregularities, as they called them, and minimised and down-played the seriousness of the defects.

But in glossing over those defects they also glossed over the more fundamental problems with the rates and what was needed to fix those problems.

The Commissioners were in an absolute panic to get a quick fix for the defective rates. With $17.3 million owing in defective rates and another few million owing in defective development contributions the Council was completely insolvent and in breach of its banking covenants.

The banks were applying enormous pressure and demanded some action. Ratepayer consultation was dispensed with and the Commissioners made a decision soon after taking office in late 2012.

A validation bill appeared to fit the bill, so to speak. It was a speedy political solution that was guaranteed of success in a political arena that was desperately trying to ensure that ratepayers remained at the bottom of the local government feeding chain.

But those responsible for drafting the Bill did not think it through properly. It turned out to be nothing more than a band-aid that was being applied to a situation that was riddled with complex legal problems which needed far more extensive remedies.

In hurrying to keep the banks happy, those in charge of drafting the Bill got blindsided by the obvious problems, the procedural irregularities, concentrated on them alone, and completely overlooked the more fundamental problems that were less apparent.

The end result is an Act of Parliament that does anyone involved little credit.

The preamble contains information that is utterly wrong. Parliament and the Select Committee were misled by the Commissioners into believing that the statement of proposal for the first EcoCare project and debt was issued prior to the documentation being signed. (see clause (9) of the Preamble.) That was not the case. The Commissioners know it, but they insisted on leaving the misrepresentation in the Bill.

To this day, local MP Mike Sabin is maintains that the intitial EcoCare debt was agreed upon by ratepayers when in fact the decision was made and the documents signed long before ratepayers knew what was going on.

There are other major errors. In spite of all the protestations from various MPs that all the rates could have been set, and that services had been rendered, there were two years when no service was available but the rates were still validated. That was a total abuse of the validation process.

Even worse was the cunning introduction of the illegal unit of demand regime through the backdoor of the Bill. Not one person in the Select Committee would have any idea what I am talking about because they did not read the submissions with sufficient attention to detail. They simply relied on advice from the DIA with its broad, partisan brush and its lack of interest in the real issues.

Jack McKerchar would be laughing his socks off to know that Parliament had unwittingly validated his unit of demand regime. It was perhaps the most illegal of all of his actions that was totally outside the Rating Act and the LGA and more like a tithe levied by some mediaeval despot. It was the trigger for the revolt in Mangawhai and yet, and yet, Parliament validated it all without even knowing it was there.

But all of those shortcomings of the Bill are minor compared to the actual legal effect of the Bill.

Parliament believed that all the errors relating to the rates had been identified and were being fixed by the Bill. That is why the Bill was drawn with a very narrow purpose: to validate the errors that were identified in the Preamble.

And that is all the Bill does. It goes no further than that.

There was a clause in the Bill - 3 (g) - that purported to validate any other actions or omissions of the Council relating to the financial years 2006/2007 to 2012/2013 (inclusive). But it was excluded from the final version of the Bill on the advice of the DIA on the grounds that it gave the wrong impression about the scope of the Bill

The problem is that there are other major substantive errors relating to the EcoCare rates that render the rates invalid because the KDC failed to comply with the Rating Act and the LGA. These substantive errors mean that the KDC did not have the legal power to set and assess the EcoCare rates in the first place. So the validation of technical defects further down the rating process in the setting and assessing of the rates is irrelevant.

At this stage I am not going into any further detail about these substantive defects as they are the basis of the MRRA claim in the forthcoming judicial review.  Hopefully I can explain them soon.

John Robertson has flooded local newspapers with suggestions that the Validation Bill has brought some clarity to the issue of the illegal rates. It has done nothing of the sort. The Validation Bill has simply muddied the waters further.

There is no doubt that the Bill validated certain procedural defects but there is also no doubt that it totally overlooked the far more fundamental errors by the KDC that meant that it did not have the power to set the rates.

Ratepayers are therefore advised to treat all of the EcoCare rates as invalid until the High Court decides in February whether the rates are valid or not.

It is just over a month away and it will be a decision that will decide the future of Kaipara.

Will the ratepayers of Kaipara be indebted to the banks for decades to come?

Or will those responsible for the illegalities and the wastage of money be held liable for their incompetence and illegal actions and forced to pay their share of the debt?

As expected, at the Council meeting of 17 December 2013 the Commissioners stepped outside the law in resolving (page 30) to include the remission of EcoCare penalties within the current rates remission policy. (See RATES REMISSION ILLEGALITIES - Scroll down to 20.12.13)

It is absolutely clear that the proposal did not fit within the current policy and a new policy was required.

But that did not stop the Commissioners. They are under massive pressure from the banks to get the penalties paid and to end the rates strike, otherwise the loans are at risk of being called up, and risk not be renewed in July next year.

The Commissioners clearly decided to gamble on yet another illegality knowing that the OAG and the Minister would not interfere and that there was small chance of the decision being challenged in court.

They spent a lot of time (and money) with their lawyers following the criticism of the proposal by Legal Eagle.  (See RATES REMISSION ILLEGALITIES below)

There is absolutely no doubt that their lawyers advised them that the decision was illegal and that they had no power to do what they were doing.

But that means little to a local authority in New Zealand today.

The reality is that even if an action or decision is illegal it is almost certain that there would be no challenge from the OAG or other watchdogs. .

The court could be a problem.  This was a decision of significance, so the predetermination of the decision by the Commissioners, their failure to consult in any way with ratepayers, and the total inapplicability of the current rates remission policy would mean that the court would almost certainly find that the decision was illegal.

On the other hand, against that, the urgency of the situation, the unlikelihood of ratepayers taking any court action, and given the fundamental rule in local government that a local authority can do anything it likes until a court decides otherwise, the risks in proceeding with the proposals were small.

So all that was needed was to flossy up the resolution to make it look good and have the veneer of legality.

Here are some extracts from the resolution:

determines that it does not require further information, or require a further expression of community views, or analysis of the costs and benefits of the different options which might exist prior to making a decision on this matter

A significant decision and no consultation and no analysis of options. A total no no in law.

Notes that the historic issues addressed by the Auditor General’s inquiry and the need to promote and ask Parliament to pass a Local Bill to validate historical rating irregularities are extraordinary events and that the current matter before it represents an extenuating circumstance as provided for within its Rates Remission Penalties policy;

It was interesting to see how the Commissioners would creatively "interpret" the current policy to try and fit the penalties proposal within the criteria.

They must have struggled as they have clearly scraped the bottom of the barrel. They have chosen the extenuating circumstances criteria. This is what the policy actually says;

3 There are extenuating circumstances, such as the loss of records by fire or theft.

That means that penalties can be remitted where there are acts of God or where there are actions of third parties which are beyond the control of the person who has not paid the rates, and those acts have been the direct cause of the non-payment of rates..

Fair enough, that covers a situation where the non-payer had little choice in the matter. But such a provision cannot be used to embrace the situation where someone refused to pay rates for personal reasons.  Rate-strikers refused to pay rates because they made that conscious decision themselves without there being any extenuating circumstances of the type envisaged in the Criteria.

The reference to the validation Bill as an extenuating circumstance is just a red-herring to try and fool people.  The reference to it is without any merit, and no barrister would dare argue such a ludicrous linkage in court.

The passing of the Bill may have been the act of a third party, and it may have even seemed god-like considering Parliament converted six years of sewage into crystal-clear water. But the whole thing is a smokescreen.

The extenuating circumstances have to relate directly to the reason for not paying the rates.

The situation is quite clear.  There were no extenuating circumstance of the kind envisaged for rate strikers, so any penalties they incurred cannot be legally remitted under the current policy.

Notes that there are a number of reasons as to why some ratepayers have rate arrears and that it is not able to determine the particular reasons applying to different ratepayers and does not consider it necessary to do so;

And the reason for that is because there were no extenuating circumstances and the Commissioners are keen to gloss over that.

Notes that in its view, within the objective and the framework of the Rates Remission Penalties policy, it has the ability to remit penalties relating to the current financial year and to previous years at its discretion; 

Absolute balderdash. There is no mention of any such discretion in the policy. Certainly there is a requirement in the Objective of the policy  to "act fairly and reasonably" but that creates no overriding discretion of any sort.

What the Council can and cannot do is set out with absolute clarity in the Conditions and Criteria, which is the operative part of the policy. That is the part that actually stipulates what the Council has the powere to do.  And that part of the policy is absolutely clear that the Commissioners have no right to remit penalties for rate-strikers under the current policy.

The Commissioners and their lawyers are clearly troubled by their creative interpretation. They add the following justification:

Notes that in its view, within the objective and the framework of the Rates Remission: Penalties policy, it has the ability to remit penalties relating to the current financial year and to previous years at its discretion;

So, even if the decison is blatantly illegal, if the Commissioners think it is legal then that is all ok.

The whole point of rushing the rates remission through under urgency is to comply with the requirement of the banks that the rates revolt must be crushed and all rates arrears must be paid forthwith.

This a big carrot and the banks hope that the revolt will fold and there will be sufficient money in the kitty to meet the interest payments under the loans.

But, perhaps more importantly, the loans are due for refinancing in July 2014 and if the present situation continues then the refinancing will be severely prejudiced.

Deferring the rates remission decision until June under a new policy (and incidentally allowing ratepayers an unwanted say under the special consultative procedure) was simply out of the question.

So, the steamroller rolls on, ignoring illegalities and avoiding consultation with ratepayers at all costs.

Ratepayers have an enormous decision ahead of them. Do they succumb to the illegal proposal to waive some of their penalties?

Or do they dig in deep and refuse to be a party to such illegalities, refuse to pay any further monies to a Council that is not only operating outside the law, but is staring financial failure in the face.

The Commissioners propaganda machine has rolled into action with surprisingly gentle urgings to pay all rate arrears, and, as one would expect, totally misrepresenting the legal situation in respect of the validity of rates.  Ratepayers are at the crossroads.

Comment on that coming soon.

The Kaipara District Council is facing financial Armageddon.

If you read the letter (page 41) that Steve Ruru sent to the Department of Internal Affairs, pressing Parliament to pass the Validation Bill with some urgency, you will be astonished at how precarious KDC's finances are.

The withholding of a few million dollars in rates is, according to Steve Ruru, having a massive effect on the finances of the Council, and if it continues will bring the Council to its knees within the next six months or earlier.

Apparently the failure to collect the arrears will result in costs of $450,000 per month, with a one-off cost of $400,000 for redrafting the LTP.  Roading works subsidies are at risk and the refinancing of Council's loans are under threat.

The figures are, of course, ludicrous.

Why postpone $9 million dollars of roading works because there are arrears of rates of about a third of that amount and the failure to do that work will cost the Council $5.4 million in government subsidies?

And is the small amount of rate arrears the real reason for the massive concerns over the refinancing of Council's loans?

It seems pretty clear that, when you look at Steve Ruru's assessment, that Council's financial woes cannot be blamed on the shortfall of a few million dollars in rates. It seems quite apparent that the Council is no longer a going concern. It can no longer balance its books. It cannot meet its debts out of income.

Forget the rates arrears. The real reason it cannot meet its interest payments, and it cannot meet its roading budget is, quite simply, because it is broke.

And blaming the insolvency on the pittance in rate arrears is just a smoke screen to avoid the truth.

Over the past few years the Council has used any money that it can lay its hands on to prevent the receivers moving in.

It has used all the capital contributions paid by EcoCare ratepayers, not to pay off the principal of the debt which is what they were intended for, but simply to keep the Council afloat.

The Sanitary Works Subsidy of $6.6 million that it sucked out of the government in controversial circumstances, and which should have been used to reduce the capital cost of the EcoCare scheme, disappeared into the KDC piggy bank and was used to meet other debt.

EcoCare development contributions are supposed to be the saviour of this Council and should be applied to whittle away the debt over the next 50 years. The reality is that not one cent of the development contributions collected has ever been used to pay off debt. All the money collected has been frittered away to pay off the most pressing creditors.

All the monies in the Reserves Fund and the Mangawhai Endowment Fund have also been filched and used to pay creditors. All done illegally. Council is allowed to use that money but only if it has the capacity to pay it back immediately. This Council can't because it would have to borrow monies externally to do it, and the banks won't lend it any more money.

Not only that, using internal debt is a cunning way to hide real debt. The Council deliberately misleads by always quoting external debt. It puts a smokescreen around the other monies that it has pilfered from ratepayers and is a debt as much as any other debt.

Steve Ruru has painted a dire picture.  The precipice is waiting.  Council just has to take the next step.

Legal Eagle and many others have been scathing about the EcoCare financial assumptions on which the 2012-22 LTP and the 2013-14 annual plan were based. In summary these were:

• That existing properties which are connected (or capable of connecting) to the scheme pay their share of the cost of building the $35.6 million scheme that was agreed with them as part of the special consultative procedure undertaken in 2006;

• That development contributions (after June 2013) and the districtwide general ratepayers will repay the balance.

'The end result is that the existing scheme users are only paying (other than the share that they pay via their general rate) for what they had agreed.'

There are several fundamental fallacies in these assumptions:

No figure agreed
The $35.6 million project and finance was committed to long before the ratepayers ever agreed to anything.

Council decided to go ahead with the scheme and signed the contract for EcoCare and for the finance before it consulted with ratepayers. This was a fundamental breach of the requirements of the LGA which required consultation via a statement of proposal BEFORE making any decision. The subsequent statement of proposal came too late.

In any event the original proposal never proceeded. The $35.6 million proposal was scrapped. It was replaced by another proposal with a wider scope at a much greater price. That was done in complete secret. No statement of proposal before or after and Council deliberately hid the details from the ratepayers.

In terms of the LGA, therefore, the Council completely failed to consult with ratepayers. No figure was therefore "agreed to".

This is one of the principal issues in the High Court judicial review which is due to be heard on 3 February 2014 in Whangarei.

Development contributions
In the LTP and current annual plan nearly $26.2 million of the debt is allocated to future development contributions that will be used to pay off the principal of the debt.

The only problem is that this is never going to happen.

The projections are in cloud-cuckoo land.  They are as defective as all of the other financial projections that led Kaipara down the road to financial penury six years ago.

The figures are a mere fantasy.  In the last two years only a fraction of the estimated development contributions has actually been received.

In addition, not one cent of the monies collected has been used to repay debt. it has all gone into the KDC piggy bank, probably to pay for all the legal fees the Commissioners are incurring to try and justify their actions.

But more important is the change of direction by the government. Legal Eagle along with others, pointed out at the time the absurdity of the financial assumptions in light of the government's plans to review the future of development contributions.

How could you plan the future of a local authority when the major part of its debt repayment policy is about to be struck down?

The Commissioners responded to these charges with a recklessness and arrogance that is utterly breath-taking.

Whilst there is a review process underway in respect of Development Contributions by the government, no changes to the current regime have been confirmed and therefore it is not appropriate for Council to change its approach in anticipation of changes that might or might not happen.

In other words, don't worry about the iceberg directly in front of your ship. Do not change course.

In response to allegations that the assumptions were completely without any real basis the Commissioners passed the following resolution.

That it believes the projected income from Development Contributions included with the DAP etc are reasonable.

The Reason for the recommendation recites the same sort of nonsense:

With regard to the quantum of Development contributions contained in the Annual Plan, Council has based its revenue assumptions on a programmes of works for additional connections which is realistic and achievable.

As I have said on several occasions, such rampant recklessness and deliberate disregard for the true financial situation would have landed company directors in gaol. But when it comes to local government those who have absolute power can make such ludicrous financial assumptions with total impunity.

They can lead a local authority to financial disaster knowing that they will never be held to account for their total disregard of financial prudence, and with the confidence that they will walk away unscathed with their golden severance packages while leaving behind a financial disaster of massive proportions.

All the predictions have now come true. In the LGA Amendment Bill, now before Parliament, the development contribution regime is being dramatically changed. Future development contributions can only be levied to finance future infrastructure required because of that development. They cannot be used to contribute to the financing of existing infrastructure.

This has blown the financial assumptions of the Commissioners completely out of the water. The $26.2 million, and all the interest on it, allocated to development contributions in the future is now a dead duck.

The Commissioners have ploughed into the iceberg and are taking on water very quickly.

The understated warning of the auditor in the LTP has now become a reality. That warning stated that if the assumptions in respect of development contributions were no met then to cover the shortfall the KDC would have to raise more debt, or rates would have to be raised.

Council cannot raise more debt, so the only option is that current ratepayers will have to step up and pay the extra $26.2 million.

That means massive rate increase and new capital levies across the whole district.

It will be interesting to see if the Commissioners will front with the truth in the draft annual plan, or whether they will bury it in the hope that they can pull the wool over ratepayers' eyes for another two years.

More of that in PART THREE. 

The previous Council tried to keep the banks happy by hitting ratepayers with a massive rates bomb in the 2012-22 LTP. Rates soared and ratepayers protested en masse and withheld rates.

As a result the Council was forced to modify the rate increase, but it was too late to prevent the rates strike gathering support. It also triggered the demise of the Council. Under pressure from the banks, the Minister took steps to replace the Council with Commissioners who were sympathetic to the banks requirements.

The Commissioners and the banks learnt a lesson from the rates bomb experience. They realised that direct confrontation and raising rates substantially would only create opposition that would be counter-productive. So they have set about achieving their aims by stealth.

The Unitary Authority for the Far North is a done deal no matter what ratepayers think. Kaipara will be trussed up and dumped into that Authority.

The advantages for the KDC bankers are huge. An insolvent council teetering on the financial precipice will be replaced by a far more substantial council with a much greater financial backing. More importantly it will be part of the Local Government Funding Agency so its debts will be guaranteed by every other council in New Zealand.

It will also be an important move psychologically. Any continuing ratepayer opposition that is focused on the Kaipara Council's incompetence and illegalities will lose traction once the Council ceases to exist. It will be virtually impossible to carry through any claim or feeling of resentment against the new Authority.

The promises of the Commissioners about financial stability, low rates for ten years, and development contributions meeting a major part of the debt, will all disappear into thin air. The Commissioners will be long gone, clutching their generous termination packages, without even a backward glance at the financial ruin that they have left behind.

Effectively the Unitary Authority will wipe the guilt slate clean but, most importantly for the banks, the Kaipara loans will still be ring fenced to the old Kaipara ratepayers, but will have the financial backing of every council in New Zealand.

The aim, then, is for the KDC to survive until it can be swallowed up by the Unitary Authority.

The task is well under way.

All the Commissioners have to do is to persuade ratepayers that the KDC under the Commissioners is very different to the old Council. It is now in the hands of experts, is stable financially, and well on the road to recovery.

The Validation Bill, courtesy of an accommodating Parliament, puts a veneer of legality on the disputed rates, and the Commissioners can be seen as generous in remitting some of the penalties on rates for rates strikers. Hopefully that should put an end to the rate strike, get the rates flowing again and keep the banks happy.

By keeping rates increases to a modest 3% the Commissioners can show that everything is under control and massive rate increases are a thing of the past.

The financial assumptions for the next ten years in the LTP are not an issue. No one ever takes a blind bit of notice of them so the figures can be fudged with meaningless and baseless assumptions that suggest that everything will be sweet in the future.

By reiterating this message over and over again in local newspapers the Commissioners will win over most of the population. Those who oppose the Commissioners in any way, including the MRRA with its judicial review, can easily be branded as troublemakers who are rocking the boat for no reason and wasting Council's resources.

That is where it stands at present. Lots of promises, steady on its course and modest rate increases. If the Commissioners can suck ratepayers in for the next six months then they will be able to refinance in July and then cruise through until the Unitary Authority is set up.

The debt issue will not be dealt with. The banks will be happy to take what they can in interest payments. Any interest not paid will simply be capitalised with interest being paid on interest.

But the day of reckoning will come. The true debt of the KDC is somewhere between $100 and $120 million. A debt of that size does not go away.

If the KDC can survive financially until the amalgamation then the banks will be in a much better position to start recovering their pound of flesh.

The gouging will then start in earnest.

There will have to be massive yearly rate increases just to meet the interest bill alone. But the banks will also demand principal repayments to repay the loans over a short period of time.

That will mean that each Kaipara ratepayer will be billed each year for capital payments over and above the rates.

There will be no escaping this rates bomb.

The ratepayers of Kaipara are happy Christmas turkeys. They have been spared the fate that awaits them this Christmas. For the next two years they will be fed and nurtured and led to believe that they are special turkeys ............

But, as sure as day follows night, the day will come when they are rounded up, trussed and plucked, and fed to the banks.

Coming: How to stop being a turkey and escape the fate that awaits you.

Frank Newman is an ex Whangarei City Councillor and a commentator on local authority matters.  His blog on the OAG report can be seen here.

He pinpoints the root cause of the Kaipara debacle and many similar situations:

Unfortunately the smooth talking merchant banking types feed on the soft underbelly of local government, knowing full well that councillors and staff have monuments to build and little comprehension of financial complexities and contractual fine-print.

He also spells out  the failings of the OAG, as he sees it:

The Auditor General’s report is less clear about the failings of her own office. The problem the Auditor General has is one of gross negligence. Why didn’t the Audit Office pick up the lack of reporting and the lack of decision making process at the time? Those failings did not just occur in one year but over multiple years. It is simply not good enough for the Auditor General to now offer an apology to ratepayers and expect that to be the end of the matter. In the private sector, the receivers, acting on behalf of shareholders, would more than likely sue the auditors for recovery of a substantial portion of the loss, and full recovery of the auditing fees that were charged.

I don’t see why it should be any different for the KDC, except the auditor is essentially central government, the receivers are the government appointed commissioners, and the shareholders are ratepayers.

And so say all of us. But will the Commissioners take any action?  Will Mike Sabin convert his words into action?

A test of integrity for both.

The Commissioners will weasel out on their hype about pursuing those responsible on the basis of legal advice that they will undoubtedly receive.

Mike Sabin has cunninlgy crafted his grandstanding to include only criminal activities.  He knows full well that the paper trail and any evidence have long been destroyed and that the investigatory authorities are staying well clear of this minefield.  He is on very safe ground.  Watch all of his puff run out of wind.

Sabin, Roberston and crew could easily promote civil proceedings against the OAG for negligence.  Barristers would be queuing up to take the case.  But, and this is a big but, could they ever take action against one of their mates on the local government gravy train?  That would be seen as the ultimate betrayal and would not look good on their local government CVs. 

Trample over the ratepayers?  Now that's a different story altogether. 

Mike Sabin the local MP makes a lot of mileage out of both the Police and the Serious Fraud Office investigating EcoCare and both finding no record of criminal activity.  He claims that the SFO investigated 5 claims of criminal wrongdoing.

As far as Legal Eagle knows the SFO was warned off by the OAG and did not investigate the KDC at all.  

Several complaints were lodged with the Police in respect of matters not relating to EcoCare direclty but the Police advised that there was insufficient evidence to proceed any further.

Mike Sabin might well be right.  He is an ex cop and may have inside information.  But if he wants us to believe him then we need more than hearsay.  We need the hard evidence.

Over to you Mike.

From reports that I have heard, at the Council meeting on Tuesday the Commissioners decided to head down the path of illegalities.  It seems that they decided that the rates remission proposals in the Christie report would be adopted within the existing rates remission policy.  This avoided the need for a new policy and the necessity of consulting with ratepayers under the special consultative procedure.

The current policy does not allow for the back-dating of remissions or contain any criteria that fits this situation, but that did not stop the Commissioners.  

This decision was classified as significant and therefore under the LGA demanding of decision-making and consultation at the highest level.  That never happened.  There was a lot of pretence and fluff relating to decision-making, but it was all a smokescreen.  The reality was that the Commissioners had already predetermined the exact outcome based on the undertaking given to Parliament.

Predetermination of a significant decision is an absolute no no.  The court would set the decision aside in a trice.  But that is utterly irrelevant to the Commissioners because of the mantra that underlies every action that they take.  (See below)

As for consultation, there was not one skerrick of that commodity, and it now seems to be confirmed beyond any doubt that the endangered principle of consultation with ratepayers has now become extinct in local government in Kaipara.

More on this issue when the minutes of the meeting are available.

And the mantra that underlies all the Commissioners' decisions and actions?:  Anything that the KDC does, even though clearly illegal or contrary to its own policies, is deemed to be legal until a court decides otherwise.

Many ratepayers outside Mangawhai have been somewhat removed from the real problems around the EcoCare debt.  They have always considered it to be a Mangawhai problem that did not impact too greatly on the rest of Kaipara.

To some extent they are right.  The EcoCare debt was promoted on the basis that it would be ring-fenced to Mangawhai alone and the very expensive and expert financial models that Council obtained indicated that the debt was self supporting.  That meant that all payments relating to the debt, including principal and interest, would be met by the rates and development contributions from Mangawhai alone.  It would never be a financial burden on the rest of Kaipara.

The initial problem that the promoters of the scheme faced was that the EcoCare debt exceeded the debt to income ratio in the Council's Treasury Policies.  The only way that it could proceed with the scheme was if the debt could be shown to be self-supporting and therefore treated as segmented.  It could then be legitimately treated as being outside the normal debt to income ratio.

The whole concept of a segmented debt was ludicrous.  It was simply a new device (or artifice) invented to get round the debt to income ratio to allow councils to act irresponsibly.  The OAG and the auditors turned the customary blind eye to it.

In the EcoCare case the promoters of the scheme, being those salivating at the thought of the profits they were to make, arranged for a set of financial models that were in cloud cuckoo land and had only a minimal link with reality.  They were, of course, top secret, beyond the scrutiny of anyone who could cast a critical eye over them.  Councillors were denied access to them, and Councillor Bruce Rogan (now of the MRRA), who held the Finance Portfolio, was also refused access by the Chief Executive Jack McKerchar.

The problem is that the financial models were utter rubbish.  The apologists for Council, in hindsight, now label the models, with a delightful euphemism, as "less than robust".

The way the EcoCare debt was dealt with was a a farce from start to finish.  

  • The Council signed up for the debt without issuing a statement of proposal and consulting with ratepayer which is obligatory under the LGA.
  • It breached its Treasury Policies by exceeding the debt to income ratio.
  • The segmented debt policy was not adopted until after the first debt was entered into.
  • The rules of the segmented debt policy were never complied with.
  • Council failed to pass a resolution indicting the inconsistency of the EcoCare debt with its Treasury Policies. 
The end result was that the EcoCare debt was never a segmented debt.  It was simply an illegal debt that breached the requirements of the LGA and breached Council's own Treasury Policies
That means that it is a general (core debt) of the Council. In other words it is the responsibility of all ratepayers in the district, not just those of Mangawhai.  That is confirmed by the security document for the EcoCare debt which states that the security for the debt consists of the rates collected by the Council.  And that means the whole district.
What of the segmented debt policy?  It has been secretly consigned to history.  The Commissioners buried it without a trace in the 2012-22 LTP with no mention of its ineptness and the utter abuse of the Treasury Policies by the Council.  
The Commissioners are cunningly moving away from the concept of the debt being segmented.  Under the current LTP only $30 million of the debt is dumped on Mangawhai through a targeted rate.  The balance is spread over the whole of the district with a massive proportion being allocated to future development contributions.  More of that in a later post, but the reality is that the whole of Kaipara will be dumped eventually with the EcoCare debt.  

If Kaipara and Mangawhai become different wards in the single unitary authority for Northland then they will have to share the debt equally.
The true total debt of the KDC is probably about $120 million.  That means that the western side of Kaipara will be responsible for about $60 million of debt.
That is a very good reason why everyone in Kaipara should support the judicial review of the MRRA.  If the court agrees that the EcoCare debt is not the debt of ratepayers then the debt burden on ratepayers in he district will be dramatically decreased.
Ratepayers should not be misled by the comparatively low rate increases last year and in the next couple of years.  They are just being sucked in by a clever strategy of the Commissioners and the banks.  But more of that in a later post.

Prior to reading this post it might be worthwhile reading THE SMILE GETS BIGGER and PENALTY SHOOT OUT LOOMS (scroll down).

The Commissioners have finally made their intentions clear in respect of the remission of penalties with the release on the Council website of the agenda for the Council meeting of 17 December.

The agenda includes a report from Glennis Christie, the General Manager Finance, on the proposals for penalty remissions.

It also sheds some light, or perhaps confusion is the better word, on the arrangement with the Select Committee and Parliament about the remission of penalties.  

The Select Committee was absolutely adamant that there was both an agreement and an undertaking by the Commissioners that they would remit the penalties as agreed.

Not so, according to the Commissioners.  The Christie report states that the Commissioners only undertook to bring a proposal for consideration at the December 2013 meeting of Council.  There was no absolute agreement or undertaking and no agreement as to specific penalties being remitted.

Given that this undertaking was of major significance in swaying MPs from all parties to vote for the Validation Bill, this is a fundamental issue and it effectively brings into question the integrity of the Select Committee and MPs on the one side and the Commissioners on the other.

It is clear that one of them was lying, and no doubt in the next few days they will sort out which side did the misleading.  But, no doubt they will gloss over it by labelling it as a simple misunderstanding between friends. The important consideration is that the Bill passed and the the ratepayers were dumped with liability for all the illegalities.

The Christie report only considers further penalties.  An explanation is needed.

There are two types of penalties. Instalment penalties are penalties imposed on current rates when an instalment is not paid by due date.  Further arrears penalties or additional penalties are applied to rates arrears for previous years and are applied each 6 months.

The report states quite bluntly that: :

This report does not consider the remission of instalment penalties as part of the proposal.

That proposal is very specific.  It involves remitting additional penalties that were levied each six months on outstanding rates in March 2013, July 2013 and January 2014 on the proviso that all rates assessments are fully paid by 30 June 2014

It gets really interesting when the report considers whether it can use the existing rates remission policy or whether a new one will be needed.

The problem that the Council faces is that if it has to adopt a new policy then it has to go through the special consultative procedure and consult with ratepayers in detail.

It has decided that the question of rates remission is a matter of significance so that it requires decision-making and consultation at the highest level.

That introduces serious problems for the Council.

It is absolutely clear that it has already predetermined the issue of what rates are to be remitted down to the finest detail. It has already announced that it is going to remit penalties for the 2011-2 rating year and it undertook to Parliament that it would remit rates for the further penalties applied in January and July 2013.

It has also made it absolutely clear in the current report that it will not consider remitting instalment penalties.

Clearly it is very aware of the problem it faces of having pre-determined the issue, and that is no doubt why it is trying to down-grade the absolute undertaking that it gave to the Select Committee to remit the rates, to an undertaking to consider remitting the rates.

The fact that it makes a liar out of one of the parties seems to be an irrelevant consideration.

Consultation with ratepayers is absolute anathema to the Commissioners. They have a set role to play with a very clear agenda and that does not embrace any consultation with ratepayers. But to go down the new remission policy track would involve consultation at the highest level.  And it is almost certain that the majority of ratepayers would insist and demand that ALL penalties must be remitted.

The time scale is the other problem. If the current policy is utilised then the Commissioners can deal to the ratepayers immediately. If a new policy is required then no decision can be made until June.

It's a no brainer for a Council that is riding on the crest of a wave.

The fact that the existing policy does not allow the Council to remit the penalties in the way that it proposes is the least of its worries. It has proved beyond any doubt the truth of the dictum that underlies the local government system in New Zealand, that a local authority has the power to do anything that it likes and it is deemed to be legal until a court decides otherwise.

It has also discovered that it can flout the law and its own policies with absolute impunity and if court action is threatened then it will simply get Parliament to validate all of its actions.

In short, the Kaipara Council knows that it is beyond the law.

The current rates remission policy was introduced in the 2013-14 annual plan that amended the 2012-22 LTP.  It is as follows:

Twelve Rates Remission: Penalties


The objective of this policy is to enable the Council to act fairly and reasonably in relation to penalties applied when rates have not been received by the due date.

Conditions and criteria

1 Where the ratepayer meets the payment conditions agreed with the Council to resolve a rates arrears, the Council can remit any part of the penalties already incurred or yet to be incurred.

2 The penalties incurred on the first instalment of each financial year will be remitted if the ratepayer pays the total amount of rates due for the year, excluding the penalty on the first instalment, but including any arrears owing at the beginning of the financial year, by the second instalment due date.

3 There are extenuating circumstances, such as the loss of records by fire or theft.

4 If the ratepayer stops paying rates then the Council is able to reinstate the penalties.

5 The remission will apply from the beginning of the rating period in which the application is approved and may not be backdated to prior years.

Clause 5 appears to be a massive stumbling block. It prohibits any back-dating of remissions. But such a clear statement does not trouble the Council.  It "interprets" the clause with a finely crafted, unintelligible smokescreen in a footnote:

Clause 5 of conditions and criteria of the policy indicates that the remission "may not" be back-dated. Normally remissions will not be back-dated but this policy allows for back-dating (ie the default is not to allow back-dating but discretion is permitted).

The report admits that it is "interpreting the policy widely".   The reality is that it chooses to totally ignore or explain away clause 5 because it prohibits exactly what it is doing.

Search for the "discretion" that the report says is "permitted", and that supposedly overrides the clear statement in clause 5, and you will search in vain. There is no such discretion.. There is a very broad Objective but that is not part of the Conditions and Criteria, and, in any case, could not override a specific provision.

The report tries to suggest that the "extenuating circumstances" provision in clause 3 applies.  That clearly relates to an act of God or an action by a third party. The report's tenuous link to the actions of a third party in the Validation Bill is just silly.  The reason for non-payment of rates was because the ratepayer was on a rate strike and refused to pay the rates. That is not an extenuating circumstance as depicted by the clause.

The only provision that the Commissioners can hang their hat on is clause 1.   The report itself suggests that this clause could only apply to remitting the January 2014 further arrears. It would also mean that every single ratepayer in arrears would have to agree payment conditions with the Council. The Council could not apply a blanket remission over all ratepayers.

But, at the end of the day, clause 5 stands in the way and prevents the Council from remitting any arrears of penalties.

There is really only one solution and that is for the Commissioners to include an amended policy in the draft annual plan that is about to be launched and ensure that any decision that it makes is in accordance with the law, and its own policies

This is a big test for the integrity of the Commissioners.  Have they learned anything from the past or do they believe that they are bullet-proof?

It is also a big test for the Minister of Local Government and the Auditor-General.  How they respond will tell us whether they have learned any lessons from the past, or whether they will allow the Kaipara Council to continue to flout the law and its own policies with impunity.

Anyone investigating the affairs of the KDC soon becomes acquainted with the name of Beca.  The firm was consultant to the Council in respect of just about everything that the Council did, including EcoCare and the vastly expensive District Plan. 

There is little doubt that where Beca went the KDC followed, and there is also little doubt that Beca made a mint out of the KDC.

Beca was mentioned in Parliament in unfavourable terms and a big question marks hang over some of the advice that Beca gave to the KDC over many years.

Mike Barrington has highlighted in the Northern Advocate a matter that has been of concern to ratepayers for many years. Vanessa Anich worked as a consultant with Beca at the time that she was also the partner of Jack McKerchar, the previous chief executive who has been severely criticised by the OAG report.  Not only did she work for Beca but she worked from the offices of the KDC on KDC matters.  So effectively she was working with the Council but on behalf of Beca.  Beca billed the Council for her services.

That means that there was a serious conflict of interest, and raises the suspicion that work was channelled through Beca without the impartiality that should have been expected.

It was a cosy relationship that should never have been allowed to happen.  The hapless Mayor, Neil Tiller ran for cover, as did the Auditor-General, so it seems.  Lyn Provost calls all the complaints that she received on the matter as "rumours" and dismissed them as not being relevant.

Dismissing serious claims as mere rumours says a lot about the depth of the OAG inquiry.  Jack McKerchar was interviewed several times by the OAG team and one presumes that Vanessa Anich was as well.  Did no one ask them about the rumours? One simple question could have turned rumours into fact.

It is also hard to fathom how such a liaison could be deemed irrelevant when the conflict of interest is massive and goes to the root of the problems that were responsible for the Kaipara debacle.

But perhaps it is part of the Kaipara disease.  Anyone who has anything to do with Kaipara seems to lose touch with all concepts that relate to the principles of natural justice. Remember the Auditor-General carried out an inquiry into her own Office's incompetence and that of Audit New Zealand, and completely ignored suggestions that her role was conflicted.  

We all sit here shaking our heads in wonderment at the sheer inability of the OAG staff to get to grips with its responsibilities in carrying out the EcoCare inquiry.  If they couldn't ask simple questions to elicit facts, and if they thought that glaring conflicts of interest were irrelevant, then is it any wonder that they could find no evidence of criminal actions?

Would they, one has to ask, have noticed a decaying corpse with rusty daggers in its back?  And, if they did, would they have considered that it raised the suspicion of criminal actions? 

Steamroller John Robertson has a massive smile on his face.  (You can see it everywhere in the local newspapers.)  His strategy for subjugating the peasants in Kaipara is absolutely on song.  In a feat of absolute wizardry he has manged to hoodwink his mates in Parliament and get them to white-wash all of the illegalities that his Council committed over the past 6 years and to wipe his slate clean.  But more than that, he managed to get Parliament to include the vindictive penalties in the Bill so that the very people who finally forced the Council and Parliament to take note of the illegalities are now being penalised for their actions.

But the feat which must give John Roberston the most satisfaction is in forcing ratepayers to pay all the legal costs for the Validation BIll; a Bill that was used to strip them of their rights and forces them to pay unconscionable and punitive penalties.  That really shows who is the boss and running the show.

The cost he quotes as $140,000 for lawyers fees alone.  That's what ratepayers paid to be shafted by Parliament.

Smuggling totally ultra vires rates into the Bill and disguisng the utterly illegal unit of demand charges and surreptitiously slipping them in through the back door of the Bill were consummate achievements, but persuading Parliament that ratepayers should bear all the legal costs of the Bill was a real tour de force.

Another reason for the big smile is that Steamroller John managed to suck Parliament in in respect of the remission of rates.  Read the Validation Bill and you will see that the Select Committee and MPs states that an agreement was reached with the Commissioners that some of the penalties would be remitted.  Pretty definite.  There was no doubt.  In fact many MPs gave the impression that this agreement was a major factor in the Bill being passed.

But now it appears that there was no such agreement.  Apparently the Select Committee and the MPs were all wrong.

The facts have yet to be revealed but it appears that the Commissioners are now claiming that there was no such agreement.  They are now in the throes of deciding what to do about the penalties and how they can deal with what they now term "the expectations" of Parliament".  

So what we are now being told is that this very fundamental binding agreement between the Select Committee/Parliament and the Commissioners did not exist,  There was merely a gratuitous expectation on the part of Parliament without any reciprocation from the Commissioners.

Don't you feel even more shafted?

What the Commissioners are planning to do in respect of the penalties is nothing more than a complete abuse of power.  But full details on that in a later post.

I need to take issue with the comments of Steamroller John in the Mangawahi Focus where he discusses the impending court case with the MRRA.  He states:

Council is defending the action vigorously, for it is in the interests of all ratepayers that we do so. MRRA is seeking a Court ruling to deny the Council the ability to collect rates to service debt. Should this action be successful, a Receiver would likely be appointed. A Receiver would have powers to rate property owners to recover Council debt. In our view, this would not be in the interests of any ratepayers. We would expect rates set by a Receiver to place a significant burden on property owners.

There is no truth in any of this.  The court's main task in February is to decide if the EcoCare debt, which Council has already acknowledged to be illegal, is the responsibility of ratepayers.  The MRRA believes that the law is quite clear and ratepayers should not be responsible for a debt that was illegally entered into by the Council.

If the court decides in ratepayers' favour then the Council is going to be faced with some serious financial problems without any doubt.  But, like any company that is the victim of its own financial folly, it needs to face up to the reality of the situation and get the experts in to salvage it.  

Receivership is most unlikely.  The banks would not allow it to happen because any receivership would have to be managed (under the LGA) by the High Court to protect ratepayers' interests.

But a ruling from the court would force the Council, the banks and the government to get together with some receivership experts and finally sort the financial problems out in a fair manner, according to the law..  That would mean extracting - in one way or another -  contributions towards the debt from those who are truly responsible for the financial ruin of Kaipara.

We all know who the guilty ones are.  They are in the shadows smirking away because they are confident that they have got away with this massive rort on ratepayers.

But any solution must be fair.  If the guilty ones are made to pay then ratepayers would be willing to pay their fair share of the EcoCare debt, based on the true worth of the project.

We also know that the protestations of the Commissioners about taking legal advice and Mike Sabin's promises to "turn over every stone" are mere theatre and smokescreens.  We are being conned again.  They will not take any action unless the court forces them into a situation where they have absolutely no choice.

The Judge himself has said that the issues to be heard by the court are of legal importance and of public interest.

Both Parliament and the Auditor-General have stated that the issue of liability for the debt must be decided by the court.

The action seeks a fair and equitable solution according to the law.  It will bring absolute finality to issues where the Council and the Commissioners have duck-shoved for years and unilaterally imposed on ratepayers solutions that were not in accordance with the law.

For the first time ratepayers will get the truly independent hearing by an expert that they have been demanding for the past 6 years.

The judicial review is absolutely essential if this matter is to be resolved with fairness and finality.  

On a final note, it needs to be said that the Commissioners have an obligation in law, as fiduciaries, to act in the best interest of ratepayers and it is an absolute disgrace that they are doing everything they can to oppose the case.

There is only one party that benefits from the status quo being maintained, and that party consists of the banks.  They want to ensure that ratepayers remain responsible for all the debts of councils, whether legal or illegal.

In my books, it is absolutely clear that the Commissioners are acting for the banks and not the ratepayers.

Transparency International reckons that New Zealand is the least corrupt country in the world.  Well not quite.  It is perceived as the least corrupt country. 

The local New Zealand offshoot reckons that the pillars of integrity such as th OAG and the Ombudsman are doing a great job.

For Legal Eagle's comments go here.

It is quite clear that the Validation Bill validates ALL penalties charged by the Council.

That means that the original penalties for not paying an instalment on time, and the additional penalties that are charged at the end of each six months on unpaid rates, are all deemed to be valid.

However, in the Commentary on the Bill the Select Committee observed:

.....we welcome the agreement by the Kaipara District Council to implement an amnesty by way of relief of rates penalties levied on ratepayers in relation to the Mangawhai Community Wastewater Scheme from July 2012 to 1 January 2014.

That is all very vague.

Is it really an amnesty or does it mean that the Council will remit penalties charged?  And is it only for the specific period referred to?

There is no mention of any deadline for making payments to take advantage of the policy.

Comments in the press subsequent to the passing of the Bill have only mudded the water. The common them is that ALL penalties will be remitted and that the deadline date is 30 June 2013.

Following the passing of the Bill the Commissioners have taken the opportunity to flood the press with their usual propaganda but have remained surprisingly coy about the future of the penalties.

In their press release of 5 December 2013 they stated

Council has yet to formally consider the issues of whether or not rate payments would incur penalties.

This appears to be totally contrary to what the Select Committee said, and the agreement that has already been entered into with Parliament

Are we about to see the Commissioners do another U turn and break another promise?

The problem is that the Commissioners are between a rock and a hard place and they are no doubt in deep consultation with their legal advisers.

The difficulty that they are faced with is that they do not have the legal power to remit rates on the basis that they have supposedly agreed with the Select Committee. A local authority can only remit rates if the situation meets the criteria in its rates remission policy (s 109 LGA)

There is no criteria in KDC's current rate remission policy that covers the present situation.

That means that the Commissioners are obliged to amend the rates remission policy and that means going through the special consultative procedure. (section 102 (4)(b) LGA)

That creates huge problems from a time-scale point of view because of the complicated procedure that it has to follow. (section 83 LGA)

Another problem that the Commissioners face is that under section 87 (3) LGA  they have to include an analysis of the reasonably practicable options, including the proposal, identified under section 77(1).

And section 77(1) opens a Pandora's Box. They Commissioners are obliged to examine all the options for remitting rates and then go through a consultation process with ratepayers on the matter.

This is anathema to three men who to date have acted as autocrats, have already set a clear course, and who have made it abundantly clear that the opinions of ratepayers are irrelevant.

But the problem that they face is that they have already pre-determined the outcome of the special consultative procedure. They have already entered into an agreement with Parliament to remit the rates in a certain way and it is clear that they will simply be using the special consultative procedure to rubber-stamp a decision that has already been made. It is certain that any input from ratepayers will be completely discarded.

Ratepayers will no doubt unite to demand that all penalties are wiped. If the Commissioners ignore them and bulldoze their way through with their predetermined decision then they are likely to be in court again facing another judicial review.

The upshot is that the Commissioners will probably combine the amendment of the rates remission policy with the draft annual plan for 2014-15 and they will go through the special consultative procedure contemporaneously. Any decision will not be effective until after 1 July 2014.

That is unless the banks stick their noses in. The banks are getting very nervous about the increasing financial instability of the Council. They were hoping that the penalty problem would be resolved by the new year and they may be pressuring the Commissioners and insist on earlier resolution of the situation.  Setting an early deadline for the remision of penalties is, they believe, the only way of crushing the rate revolt and ensuring that there is a sufficient flow of funds to meet the interest payments that are due to them.

One has to remember that the Council has already committed several acts of default under its loans which means that the banks could immediately call up the debts and effectively put the Council into receivership at anytime.

If the Commissioners want to retain their lucrative jobs and their income from for the next two years then they have to keep the banks sweet.

The banks may well instruct the Commissioners to issue a special statement of proposal for the rates remission policy and rush it through so that they get the matter resolved and the penalty remission date set as early as possible.

The banks are clearly driving this, and the timetable, and what happens, depend on how nervous the banks are getting.

POSTURING?   11.12.13
In their press release of 3 December 2013 the Commissioners make the following comment in respect of the OAG's acknowledgement of fault of Audit NZ:

“I don’t think that acknowledgement will bring closure for Kaipara ratepayers. They have been very let down. We are seeking legal advice on potential options we have to hold those responsible to account.”

Meanwhile local MP Mike Sabin is making loud noises about "leaving no stone unturned" to collar those responsible for Kaipara's problems.

But is this all posturing?

Mike Sabin is concentrating solely on criminal liability and as the Commissioners will not allow an independent forensic investigation of the Council records there is unlikely to be any evidence located.

The Commissioners have so far shown no inclination to pursue any wrongdoers. They say they are taking legal advice but I think we can all predict with some certainty what the outcome will be.

The Commissioners have a very cosy relationship with the banks, with the OAG, with the Minister and with the Department of Internal Affairs, all of whom should bear some responsibility for the Kaipara problem, but it is unlikely that the Commissioners will ever turn on their friends. And that is especially so since they have just conspired with Parliament to dump all liability on the hapless ratepayers.

In the same press release the Commissioners make the following comment:

“The actions or inaction of some people and some organisations have done fundamental harm to this District. Kaipara is now on the road to recovery but the costs of that recovery will be borne by ratepayers for many years to come and that seems manifestly unfair for a District that already has its fair share of challenges.”

If the Commissioners truly believe that it is manifestly unfair for ratepayers to bear the costs of the fundamental harm done by others then why did they force through the Validation Bill to make ratepayers solely responsible?

Why did they do the unimaginable and make ratepayers pay all the legal costs in respect of the Validation Bill when it was the ratepayers who blew the whistle on the illegalities and they are the victims of the incompetence of many others?

Why did the government not pay for it? The Minister ignored the problem for years and his regulatory authorities, the OAG and Audit New Zealand, failed miserably in their legal obligations. The Kaipara debacle would never have happened if the government had provided the appropriate machinery of government to protect the rights of ratepayers from the excesses of local authorities.

Why did the Commissioners not pursue those who made such a dreadful hash of the rating process, the former Chief Executive and the Councillors? An open and shut case of negligence.

Why did the OAG not exercise its powers under the LGA to recover losses from the Councillors responsible?

And, while we are at it, why are the Commissioners opposing the judicial review procedure of the MRRA so vehemently? Both the OAG and Parliament seem to be very comfortable with the court finally deciding who bears the burden of the illegal debt.

The judge hearing the case has stated that the case involves important issues of public importance.

So why are the Commissioners so opposed? They are after all the fiduciaries of the ratepayers and must act in the best interests of ratepayers at all times.

If the court finds that the ratepayers are not responsible for the debt then is that not something that the Commissioners should welcome? After all they have made it clear that it is unfair that the ratepayers have been saddled with a financial burden that is the fault of others.  The court decison may exonerate them

The Council would still survive. It would just mean that the Commissioners would have no alternative but to pursue those responsible for the illegal debt and make them cough up. We know who they all are. They are lined up waiting for the axe to fall.

I predict that the Commissioners will not take action against anyone. That is not until there is some incentive for them to do so. That incentive may come in the form of action by the banks, which must be highly concerned about the precarious finances of the Council, or perhaps from an order of the court.

We will find out in the next few months.



All ratepayers in Kaipara will be very aware of the massive contribution that Jonathan Larsen made when he was a Councillor of the KDC. For several years Jonathan was the voice of reason amongst a bunch of Councillors the majority of whom followed the bizarre dictates of the Chief Executive like rats following the Pied Piper.

For those years Jonathan had the courage to stand up for the rights of ratepayers, for fairness, democracy and the rule of law in a Council where those qualities simply did not exist. Some of us sit in our studies writing about such things but, almost on a daily level, Jonathan had to endure the taunts and abuse from some of his fellow Councillors because he was not towing the official line. His personal fortitude and courage were outstanding.

Jonathan always stood firm. He voted against every motion that he thought unfair, unreasonable or illegal. He introduced many motions to try and introduce some semblance of governance into the Council, but almost invariably he was outvoted by the other Councillors

Jonathan ran his own website - Workboot Councillor - to tell the world what was going on in the KDC. He regularly outlined the totally dysfunctional, incompetent and illegal procedures of the Council.

He lodged complaints with the Minister and with the OAG to try and get the regulatory authorities to take some action. He was rebuffed by all of them.

In spite of all that, the report of the Auditor-General treats all the previous Councillors of the KDC as incompetent and inept. In her broad-brush approach Jonathan Larsen is lumped in with all the other Councillors without any credit being given to him for his sterling work.

No wonder Jonathan is utterly peeved. He is now demanding an apology form the Auditor-General and if that is not forth-coming may he be forced to take legal action to protect his good name.

A Northern Advocate article on the matter can be seen here.

Many of us find it amazing that the Auditor-General has taken such a softly softly approach towards those who are clearly responsible for the Kaipara disaster but has completely ignored the roles taken by the likes of Jonathan who have fought the battle on behalf of ratepayers.

Following the release of the OAG's report the Commissioners were quick to dish out an apology for the incompetence of the previous Councillors, but again, they did not exclude Jonathan Larsen.

The Commissioners need to set the record straight and publicly give credit to Jonathan for his contribution to the Council. They should also have a word in the ear of the A-G and get her to do the right thing.

And while they are at it, they could also say a few nice words about Bruce Rogan and Bill Guest who also fought the good fight all alone in previous Councils and who have also been completely vindicated by the OAG report.

FOOTNOTE:  Several people have pointed out the contribution that Andrew Wade also made to the Council in a way that was perhaps not so "out front" as Jonathan Larsen's contribution.  Andrew also tried, again without success, to get the regulatory authorites involved.  There is no doubt of that and Andrew should be commended for his work.  The problem is that the Auditor-General lumped all Councillors together in her criticism.  Jonathan objected publicly and I simply added weight to his objection without any intention to detract from the good work of other Councillors such as Andrew.

In her report Lyn Provost refers to the complaints that her Ofice received in 2010 that she ignored.

In 2010 both Helen Curreen of the MRRA and John Dickie made complaints to the OAG about the irregular and illegal actions of the KDC in relation to EcoCare.  Legal Eagle also made detailed legal submissions on the failure of the Council to comply with the LGRA in setting and assessing rates for the 2008-09, and 2009-10 rating years.  He specifically pointed to all the irregularities in the rating documents.  All of those submissions have subsequently been confirmed to be correct and have been supposedly validated in the Validation Bill.

However, the OAG rejected the complaints.  Undaunted, Legal Eagle then complained about the way the complaints had been handled.  He received a letter from Nicola White, Assistant Auditor-General Legal, outlining the OAG's position and ending with the following comment:

In these circumstances, we have concluded that there is no need for us to devote any further resources to investigation of this issue.  The entity that has responsibiity for the matter (KDC) is reviewing its actions including legislative compliance.  We expect that to resolve the matter.

By washing its hands of the matter the OAG allowed the Council to continue the plunder of ratepayers with, effectively, the sanction of the watchdog and the auditor.

See the story below.

A reader has alerted me to the fact that in the 2011-12 annual report the loss on the ABN Amro interest rate swap was shown as $1.785 million, and not the $840.000 quoted in the Sunday Star Times.

Perhaps Steve Ruru would like to explain to ratepayers exactly what loss was suffered.


"I will not take responsibility for the failings of others"

So said the Auditor-General to Kaipara ratepayers.  At the meeting at Mangawhai she outlined the failings of Audit New Zealand in graphic detail but then went on to startle the ratepayers present by adding that she would accept no responsibility for the failings of Audit New Zealand.

The problem is that the auditor for the KDC was Lyn Provost.  Audit NZ - which is a department of the OAG - was then appointed as her agent to attend to the audit.  You do not have to be a QC to know that in law a principal is always responsible for the work of its agent.

But Lyn Provost has probably realised that when you get into hot water then a blanket denial is the way to go.

She did the same when she launched the EcoCare inquiry.  She ignored the fundamental rule of law that you cannot be a judge in your own cause.  She was effectively holding an inquiry into her own failures. Think Oscar Pistorius being the judge at his own trial.

She did the same when she appointed Neil Cherry to inquire into the failings of Audit New Zealand.    Neil Cherry had worked for Audit New Zealand.  That is not to say that Neil Cherry did not do an excellent job, but in the democracy that is supposed to exist in New Zealand there are certain rules of law and natural justice that must be observed.  The courts have long held that the mere suspicion of any conflict of interest is a ground for setting a decision aside.

There is absolutely no doubt that Lyn Provost's role as Audito-General is no longer tenable.  She has destroyed her own personal reputation and utterly annihilated the reputation of the Office of the Auditor General.  Audit New Zealand is now a complete nonentity.  It is banned from doing audit work, so what precisely is it going to do?  

It seems to be the rule in local government that even if you are found to be utterly incompetent or failed in some extreme way that you never admit liability and you certainly do not resign.  You bluff you way through, just as Len Brown did with his recent extra-curricular sortie.

If you resign then you are down the road with no golden handshake.  But if you bluff your way through and wait until the heat goes off then you can later offer your resignation for "personal reasons" and your mates in the industry will be only too willing to reward you with that golden handshake.

Jack McKerchar played the game well.  Council was well aware of his incompetence and wanted him out, but his price for quitting was too high.  Fortunately he slipped up and the Council was able to screw him down to $240,000.

There is absolutely no doubt that the OAG and Audit NZ will in some way have to contribute a substantial sum to repay the illegal debt of Kaipara.  It is just a matter of enough pressure being applied on the Kaipara Commissioners and the government to stop them dumping on the innocent ratepayers and to start targeting the guilty parties.  But I suspect that when it does happen Lyn Provost will be long gone.

The OAG report includes a few pointers as to where all the missing millions went.  Rob Stock in the Sunday Star Times has highlighted the swap rate fiasco engineered by ABN Amro, the financier and one of the masterminds of the EcoCare project. That cost the KDC a cool $840,000.

(This is an article from February this year that deserves repeating.) 

Ratepayers should make sure that they read the article in the Herald (here) by Jamie Gray about counting the true cost of fraud to a community as a result of various Ponzi schemes and other fraudulent activities.

He quotes Harry Markopolos, the fraud investigator who uncovered the infamous Bernie Madoff Ponzi scheme in the United States, who points to stress and sometimes suicide. He adds:

"So we do have a body count from white collar fraud but it is overlooked and hidden. The damage to society and the loss of trust is incalculable."

There are many people in Kaipara who will who will have been affected in a similar way by the KDC's onslaught on the community.

The final comment in the article about large Ponzi schemes is very interesting and relates directly to the Kaipara situation:

"Everyone has to have failed to [do] their job - the bankers, the accountants and the due diligence professionals. Everyone has to have failed before they get that big," he said.

"That seems to be the commonality," he said. "And of course the regulators have to miss it all as well."

Amen to that. But why in the Kaipara situation are all those who failed to do the job let off whilst the innocent party and the victim - the ratepayer - has to bear responsibility for all the losses.



"So our job was to unravel the detail and to make sure that any rate demand, any decision, any action, or any omission that we were asked to validate could have been struck correctly, and that it was invalid only because of a technical breach. So we went through every clause with a fine-tooth comb. We looked at every irregularity, we held it up to the light and tested it, and we have only validated anything that could have been struck correctly if they got the language right."  (Nicky Wagner - Committee Stage)

So said Nicky Wagner.  But the problem is that the Select Committee got it wrong, and so did Parliament.  The Validation Bill validates EcoCare rates for 2008-09 and 2009-10 even though the Council had no power to assess rates for those years under the Rating Act.  In both those years the scheme was not completed and not operational at the statutory time for assessment of rates (1 July) so no property was connected to an operational scheme.  Yet the Council illegally assessed rates on all properties in the catchment area, and Parliament has allowed those rates to be validated.

To add insult to injury, at the time those rates were assessed the KDC did not own the EcoCare facilities.  They were still owned by Mangawhai Development Holdings Limited.  That was also a fundamental breach of the requirements of the LGA.

Nicky Wagner and her Select Committee were also seriously misled by the Commissioners who surreptitiously introduced the utterly illegal unit of demand charges into the Validation Bill through the back door. These were charges for additional units that were levied through a completely illegal mad-cap process invented by the former Chief Executive Jack McKerchar that was totally outside the provisions of the Rating Act.

You won't find any mention of this in the Validation Bill along with all the other errors because the Commissioners made no mention of it in the Preamble. There is simply a very obscure reference to it in Clause 5 (c) ,which no one would have understood, but that was enough to effectively include it in the Bill.

Legal Eagle made detailed submissions to the Select Committee on these fundamental errors but clearly they were ignored or overlooked.  But the end result is that Partliament got it seriously wrong.  Just like the KDC.

We know who the suspects are because they were all named in Parliament.  But how do we get them to pay their fair share of the illegal debt? 

The Commissioners are never going to take action against anyone now that Parliament has dumped ratepayers with the whole debt.  They're also unlikely to rock the local government cruise ship and actually make their mates in the industry legally responsible.

But if you want to see how it should be done then see how receivers PwC operate in the Strategic Finance debacle (here).  They lined up the directors for legal action and pressured them into a financial settlement.  Now they are gunning for the auditors.  No doubt they will have to prove negligence in court.  In the Kaipara case the auditor has conveniently provided a 400 page report outlining every detail of its negligence.  Open and shut.

Take a look also at the Credit Sails case where the Commerce Commission threatened all those responsible for massive losses with legal action unless they coughed up with compensation. To protect their reputations they agreed to chip in without going to court.

Who is going to make the decision to take action or will the government wait for the courts to force it?

John Fisk (PwC), are you free?

Allegations of fraud abound in respect of EcoCare but the Auditor-General has not been able to substantiate one instance in her report.  Personally I believe that the decision by the Council to double the scope and the cost of the EcoCare scheme, and illegally and deliberately withholding the information from ratepayers, was a fraud of the highest order.  If they had been company directors the Councillors would be in jail now. And many of the parties involved were accessories to that fraud.

If you want to know how good the OAG is at detecting fraud then take a look at the self-promotion video that it put out in 2012

Did EcoCare have its own "rotten old Johnny Fraud"?  See if you can pick Mike Sabin in a cameo role.  (Clue:  He looks quite dapper in his uniform.)

You will love the message at the end :  “Not on this Public Service’s watch, Johnny.”  Really?

A full transcript of all speeches in the Committee Stage and the Third Reading, and videos of all speeches, can be seen here.

JOEL CAYFORD   06.12.13
Joel's latest blogs can be seen here:

OAG - Head Should Roll

Auditing the OAG's Audit Arm

Auckland Council - Worrying Signs

Yesterday in a packed meeting in Mangawhai, in a twenty minute presentation followed by a fiery question and answer session, Lyn Provost, the Auditor-General, established beyond any shadow of a doubt her own incompetence and the utter incompetence of Audit NZ and the OAG.

Much of the direct blame for the Kaipara debacle she attributed to the shocking performance of Audit NZ but tried to side-step direct responsibility for herself and the OAG. That caused outrage amongst those present. The Auditor-General is the auditor for the Council and is legally responsible for the failure of its agent and subsidiary Audit NZ.

If Audit NZ is banned from auditing in future then the AG should have done the same to her own Office.

The report confirmed what we all knew, that the Kaipara Council was totally incompetent in virtual every aspect, but the presentation and the answers to questions showed ratepayers that if the OAG had done its job properly, as both auditor and watchdog, then it could have nipped the litany of illegality that ensued in the bud.

Likewise it became apparent that if the OAG had heeded the complaints and legal submissions it received in 2010 it could have saved ratepayers from three further years of being plundered by a Council that was totally out of control.

Saying sorry to each and every ratepayer is fine, but it does not absolve the Auditor-General from her sins. She is responsible for what happened and must bear the consequences.

Yesterday ratepayers learned:

  • The Council was to blame.
  • The former chief executive and his staff were to blame.
  • Council consultants and advisers were to blame.
  • Audit NZ and the OAG were to blame.
  • The ratepayers were completely innocent.
  • BUT only the ratepayers are to be held responsible for the illegalities.

New Zealand cannot allow that to happen.

The Kaipara Council has issued a press release as follows:

Kaipara District Council accepts full responsibility for the role Council played in failings outlined today in a damning report released by the Auditor-General.

"The Commissioners, on behalf of the organisation, apologise unreservedly to the people and ratepayers of the District for the multitude and extent of failures of previous Councils and previous management outlined in the OAG report," Chair of Commissioners John Robertson said.

"There is no excuse for the levels of incompetency and mismanagement exposed

The full release can be seen here.

Mike Sabin's press release can be seen here.


Morning Report


Radio NZ News

NZ Herald

At long, long last it is going to happen.  The OAG report on EcoCare finally sees the light of day tomorrow. All those who can should not miss the Auditor-General presenting her EcoCare report in person at Mangawhai and Maungaturoto. 

Details are below.

Date: Tuesday 3 December 2013

2pm – The Mangawhai Club, Molesworth Drive, Mangawhai Heads, Mangawhai

6.30pm – Maungaturoto Country Club, Bickerstaffe Road, Maungaturoto

The meetings are open to the public.

It is understood that the Mangawhai presentation will take place immediately the report is tabled in Parliament so there might be some delay.  So those who can't make it in person can watch the Paliamentary proceedings on TV.

This is perhaps the largest inquiry that the OAG has been involved with.  The consequences of the report have the potential to be MASSIVE - for the people of Kaipara, for those who are skulking guiltily in the shadows, and for the future of the Auditor-General herself, and the future of her Office.

Mike Sabin is raging about the OAG and its liability for the Kaipara debacle and is suggesting that the OAG throw in $30 million to reduce the debt (see article below).

The Auditor-General is comng to Mangawhai to present her report on EcoCare in person to the people that she has so badly wronged.

Andrew Laxon has coincidentally come out with a revealing article in the NZ Herald and has highlighted Mike Sabin's $30 million promise and the criticism of the OAG.

Meanwhile John "Steamroller" Robertson is all set to attend the Third Reading of the Validation Bill, and the passing of the Bill into law, which, in his mind, will be the final blow to the Kaipara revolt.


But there is a feeling of uneasiness in Mangawhai that something serious is in the wings.  Why is Mike Sabin making such promises?   And why is the Auditor-General coming to Mangawhai?  Something is clearly afoot and the next few days might produce a few surprises.

The under siege Auditor-General, Lyn Provost, is packing her bags for Mangawhai in the next few days to meet the angry ratepayers In Kaipara (see below) who have been landed with a massive illegal debt and unconscionable rate increases because of her Office's failure to audit the Kaipara Council properly and because of its total failure as a watchdog.

The OAG's reputation is in ruins and it gets worse by the day with local MP Mike Sabin demanding that the OAG fork out $30 million towards the illegal debt of Council (here).

The revelations in today's NZ Herald by Andrew Laxon highlight the criticism of the OAG and the fact that the OAG is holding an independent inquiry into EcoCare but is effectively investigating itself and its off-spring Audit New Zealand.

The article also mentions that Auditing and Assurance Standards Board Chairman Neil Cherry has carried out an independent investigation into Audit New Zealand's role that will also be released on Tuesday.

Legal Eagle, along with many others like Larry Mitchell, have questioned the independence of any auditor in New Zealand because of the work that most auditors do for the OAG. But it is worse that that. In his early career Neil Cherry actually worked for Audit New Zealand.

Did he and Lyn Provost, and everyone else involved, not consider this startling conflict of interest?

The article by Andrew Laxon was entitled, In the NZ Herald itself,  "Alice in Blunderland". I was left wondering who Alice was. But, given Lyn Provost's inclination to shoot herself and her Office in the foot with each decision she makes, I now know.

In contrast to her aloofness over the past few years, the Auditor-General, Lyn Provost, rang many people personally to advise that she will be coming to Mangawhai and Maungaturoto in person to deliver briefings about the report on the EcoCare inquiry which, believe it or not, will finally be tabled in Parliament that day.

Details are:

Date: Tuesday 3 December 2013

2pm – The Mangawhai Club, Molesworth Drive, Mangawhai Heads, Mangawhai

6.30pm – Maungaturoto Country Club, Bickerstaffe Road, Maungaturoto

The meetings are open to the public.

Ratepayers should not expect too much.  Many MPs are scandalised by the failure of the OAG to pick up the illegalities of the KDC, both as auditor of the Council and as watchdog for local government.  Even worse is the fact that detailed complaints and legal submissions on the illegalities - all of which proved to be 100 per cent correct - were all rejected by the OAG, and the KDC was allowed to continue on its merry path of destroying the lives of Kaipara ratepayers.

Local MP Mike Sabin is so incensed that he believes the OAG should foot some of the bills. That is unlikely to happen when there are so many eager ratepayers happy to pay for the misfeasance of others.

Perhaps one of the most galling things about the performance of the OAG in this whole matter is that having failed miserably to do its job properly it has now taken the moral high road and is sitting in judgement of the whole debacle, and has even taken up the role of reviewing its own performance.  That is a fundamental breach of one of the basic rules of natural justice and the rule of law.  No doubt Lyn Provost will suggest that an independent firm has been appointed to examine the situation, but the whole inquiry is vey much like Oscar Pistorius running his own trial and getting his uncle's firm to attend to forensic matters.

This website has long lambasted the OAG and Justice Heath in his recent MRRA ruling was not slow to point out, far more respectfully than I have done, the inadequacies of an inquiry by the OAG.

Lyn Provost has now confirmed that.  She gave a short briefing to an expectant Select Committee which was no doubt hoping for a list of suspects so that self-appointed Sheriff Mike Sabin could "hang'em high".  Not so.  This what she said:

The Office of the Auditor General (OAG) presented to the Local Government and Environment Select Committee regarding its inquiry into the Mangawhai community wastewater treatment scheme on 26 September 2013.

In its presentation the OAG indicated that its report on the Mangawhai wastewater scheme is due to be published on 11 November 2013. The report will be between 200 and 300 pages in length, and will provide a significant amount of detail regarding the performance of the Council and its officers, as well as the performance of the OAG and its auditors and the role of the Department. While the report will comment on the performance of the various actors, and may contain recommendations for future improvement of service delivery, it will not determine the liabilities of the various parties.

At the Select Committee hearing the OAG indicated that nothing in its report should prevent the Committee from proceeding with its consideration and reporting back on the Kaipara District Council (Validation of Rates and Other Matters) Bill. The OAG also indicated that up to the time of their briefing of the Committee its inquiry had not uncovered any evidence that would lead to them referring matters related to the Mangawhai wastewater scheme to the Police, Serious Fraud Office, of (sic)the Kaipara District Council.

So it's roll up your shirt sleeves time and those in the gun should get ready for a wrist-lashing with the OAG's wet bus ticket.  And their sense of shame will no doubt become intolerable when they hear endless homilies on what a tragedy it all was, BUT we must move on and put it all behind us, and learn from our mistakes.

Some wags are suggesting that those going to the meeting should wear sunglassess otherwise the heavy applications of whitewash could be damaging to one's eyes.

But the truth is that the dreadful travesty of fairness and justice being played out in Wellington in Parliament, in Government and in the Office of the Auditor-General makes us all realise that the courts are the only way that this matter can be solved with any scrap of fairness.

Wellington has dealt to the people of Kaipara in exactly the same way that they were dealt to by the utterly incompetent and disgraceful KDC.  It is bullying us small fry so that their mates in the banks, in the professions, in local govenerment and central government can retain the mantle of immunity for their incompetence in local government. 

Kaipara ratepayers have to decide if they are going to let this happen.

The Select Committee has unanimously recommended the Kaipara Validation Bill to Parliament with a few amendments.

For more details go here.

More details, including transcript of speeches and vdeos, can be seen here.

The beleaguered Kaipara District Council received another bombshell yesterday in an article by Rob Stock in the Sunday Star Times headed Boot looms over Kaipara Council.(I can't find this article on the stuff.co.nz website but a copy is available here: page 1 and the rest here.)

It has now been admitted by the Chief Executive, Steve Ruru, that the structure of the EcoCare scheme was actually outlawed by the Local Government Act.  Under section 137 LGA councils were required at that time to retain ownership of all water services assets. However the EcoCare scheme was owned and built by a subsidiary of ABN Amro, the financier that provided the finance for the deal, and then subsequently transferred to the KDC.

Council was well aware of the requirement, which was introduced in 2003, but still went ahead with the scheme knowing that it was illegal.

This may be yet another line of attack in the MRRA application for judicial review of the decision to go ahead with the scheme.

But the revelation raises some very serious concerns about the competence of those involved in the implementation of EcoCare.

Why did Council go ahead with a scheme that it knew was illegal?

What role did Council's lawyers play in this?

And what advice did it get from the two high profile consultant firms that oversaw the project?

Are we to believe that ABN Amro, which financed the scheme and constructed the scheme through a subsidiary, did not know of this fundamental requirement of New Zealand law?

And what of the high profile lawyers that acted for ABN Amro?

Then we come to Audit New Zealand and the OAG which, as auditors, were supposed to prevent his sort of thing happening.

Not one of the parties involved appears to have had any knowledge of the law.

Or were they all seduced by the myth that was commonly accepted in local government circles that the protected transaction provisions in the LGA meant that councils' loans were guaranteed despite any illegality.

Did they believe that the loans were utterly secure and that they could flout the law with impunity?

The Mangawhai EcoCare scheme was promoted as being necessary to prevent the pollution of the Mangawhai estuary by septic tanks.

Many have doubted that claim, citing run-off from farms as being the major pollutant.

Comparative figures are vague but it appears that there has been no improvement in water quality since the EcoCare scheme was completed.

That is not surprising given the haphazard connection programme where no proper records were kept of properties connected.

Indeed, many property owners who believe they are connected might be surprised to find out that they are still connected to their septic tank.

Council will need to check every property in the catchment area to see what its status is in the ground and not on some list of supposed connections.

It is also surprising to see that many properties bordering on the harbour are still not connected to the scheme. This includes the Mangawhai school.

Rob Stock's recent article in the Sunday Star Times - Kaipara debt shopped to rich - suggests that the EcoCare financier ABN Amro offered high returns to a group of wealthy individuals to invest in the EcoCare scheme. The proposal fell through and the financier provided the money itself.

Everything about Ecocare is rather murky but such revelations reinforce the view of many that the EcoCare scheme was a get-rich-quick scheme promoted by contractors, consultants and financiers. The pollution aspect was the spin used to promote the scheme and to suck ratepayers in.

It will be fascinating to see what the OAG report has to say about the matter. According to a recent statement from that Office the report should be out soon.

But don't hold your breathe. Destroying its own credibility is one thing that the OAG excels at.

MRRA REGROUPS   27.10.13
At a special meeting at Mangawhai on 20 October 2013 the members of the MRRA voted off the old executive, with the exception of chair Bruce Rogan, and elected a new executive.

Bruce Rogan will remain as chair with Neil Tolich as the deputy chair.

The matter was reported in the Kaipara Lifestyler here.  And on the MRRA website here.

More information about the background and experience of the new executive members can be seen here.

More opinions from Kaipara residents can be seen here.

TAKING STOCK   21.10.2013
Investigative journalist Rob Stock
has brought the Kaipara affair under some detailed scrutiny in a series of articles in the Sunday Star Times.

He started with an article in September entitled Trouble in Paradise where he outlines the history of the massive EcoCare debt in Mangawhai and the effect that it is having on locals..

He continued in October with an article (here) on the protected transaction provisions in the Local Government Act which make any debt entered into by the Council valid and enforceable even though the debt was illegal or obtained by fraud.

He cites the comments of National Party MP Judith Collins, then in opposition, when the provisions were being debated in Parliament:

"Despite all the rhetoric about accountability, despite the claim that this legislation allows councils to empower local communities, it actually states that it does not really matter, if one works at the council, because the council can do anything it likes, really. Not only that, but there is no liability! So where is the accountability? There is none."

Collins went so far as to call it "fraudulent legislation".

"The only people who are accountable are we poor people who have to pay the rates, and in this bill the Government, with the help of the UnitedFuture party, is giving carte blanche to councils . . . to do whatever they like," she said.

Words of wisdom that in hindsight have turned out to be unerringly accurate.

The irony is, however, that the National Party, that was so vocal in opposition to the provisions and to the lack of accountability, is now sponsoring a validation bill which virtually condemns any concept of accountability in local government to the history books.

In his latest article (here) - Auditor-General grilled on debt behind closed doors - Rob Stock paints a grim picture of the OAG's involvement in the Kaipara debacle, and reports on Parliament's concern that there may be more unsavoury revelations that will emerge from the OAG inquiry. 

The Sabin sponsored sanitising Kaipara Validation Bill is planning to sweep all the illegalities of Kaipara under the carpet.  It would be a major embarrassment to Parliament if subsequent evidence of "unpleasant surprises" - incompetence, recklessness, malfeasance and or even fraud - emerged.

The future of the current Auditor-General, and in fact the Office of the Auditor-General in its present form, must be under a very large grey cloud, and their responses to Rob Stock's inquiries have not helped their prospects.

A glaring conflict of interest and breach of the rules of natural justice by investigating a matter in which it has been implicated is now being rebranded and dismissed by the OAG as "an overlap of interests" which "could be managed effectively".

In addition, the article states that the OAG has categorically denied that at a meeting in a motel in Kaiwaka between three OAG representatives and Legal Eagle, John Dickie, Helen Curreen and other representatives from the MRRA, Nicola White (the Assistant Auditor-General Legal) apologised on behalf of the Auditor-General for the way in which complaints to the OAG about the illegality of the Kaipara Rates had been dealt with.

A minor issue, perhaps, but one that goes to the heart of the credibility of the OAG.

The problem that the OAG faces is that in fact there was a clear apology and that it was heard by many people. 

The Auditor-General needs to talk urgently to Nicola White to clarify what was actually said at the meeting in Kaiwaka.

The Kaipara Citizens and Ratepayers Association is holding a public meeting at the Farmers of New Zealand (FONZ) offices at 22 Normanby Street, DARGAVILLE (oops!) at 12.45 pm on this Wednesday 9 October.

It is understood that chief commissioner, John Robertson, will be in attendance along with representatives from local groups and organisations.

Given the virtual dictatorship that Kaipara is operating under, this is one of the few opportunities to hear the views of the people of Kaipara and to hear John Robertson defend his actions.

So if you feel strongly about the Kaipara issue then it is a must that you attend. Apparently if you are there early then lunch will be provided.

Legal Eagle is negotiating the Great Barrier Reef at present and will not be there. But I would be pleased to publish comments from those who do attend.

THE WAY FORWARD   03.10.13
Please feel free to let me have your comments on the WAY FORWARD proposals (see post below). Anonymous or with your name.

John Robertson is at it again, using the Mangawhai Focus as a propaganda sheet to put across the somewhat confusing views of the commissioners.

He has inherited and adopted the double-speak of Neil Tiller and has a great ability to sound authoritative but to actually say nothing. Or to recommend an action and then do the opposite.

Take this John Robertson quote from the Focus:

“Council needs the court to provide a determination on the interpretation of the protected transaction clauses within the Local Government Act. This is a relatively narrow but very important point that is being challenged by the MRRA. It is however a key point of law. It is about whether or not council can set rates to repay the debt incurred by the Mangawhai Community Wastewater Scheme."

Note the first sentence: Council needs the court to provide a determination of the interpretation of the protected transaction clauses within the Local Government Act.

Every single ratepayer in Kaipara would endorse that view. The law is unclear and needs to be clarified. Why should ratepayers be forced to pay for a debt that may not in law be their responsibility?

The matter needs to be resolved once and for all and only the court can do that.

We are all behind you, John. You appear to have realised at last that as commissioners you have the same legal obligations as councillors: to act at all times in the best interests of ratepayers.

That is what the MRRA case is all about. The Judge who is hearing the case is also in agreement. He said about the submissions of the MRRA that:

They raise difficult questions of public importance.

But ……and this is where the double-speak comes in ………..if a decision from the Court is that important and so vital to ratepayers’ best interests, why are John Robertson and his fellow commissioners actually doing everything that they can to block access to the court and to prevent the law from being clarified?

Why is he saying one thing and yet doing the exact opposite?

The answer is quite clear.

The words are all spin and puffery to show what good guys the commissioners are, and to suck in those who are disposed to be sucked in.

The reality is that the commissioners are doing everything that they can to block access to the Court and to prevent the Court from clarifying the law.

They are using stonewall tactics to delay the MRRA application at every stage and to increase costs to try and exhaust the MRRA’s meagre resources.

It is a war of attrition and John Robertson has a bottomless pit of money at his disposal – ratepayers’ money.

This is a cynical and calculated abuse of the judicial system. It shows how fundamentally rotten local government is in New Zealand when commissioners can ignore their responsibility to ratepayers and force ratepayers to pay debts that the commissioners acknowledge were illegal, and then use public money to block access to the courts to have the matter of liability clarified.

It is the sort of thing that you would expect in some third world banana republic, and it is an utter disgrace that it is happening in Kaipara and in New Zealand.

I should also point out that applications for judicial review have fairly informal procedural rules because the whole philosophy of the judicial review process is that the normal adversarial rules are softened and both parties are there to assist the Court to reach a decision on the precise meaning of the law and the legality of a decision.

That seems to have been completely ignored by the commissioners and their advisers. This, to them, is a fight to the death, with no expense spared.

And the real reason behind this fit of apparent madness? Quite simply the commissioners were appointed by the Minister (with the contrivance of the DIA) with the sole purpose of protecting the best interests of the banks, and to ensure that ratepayers are shafted for all the illegal debts of the KDC.

They were also appointed to ensure that the fundamental principle that underlies local government in New Zealand, that all financial burdens, whether legal or not, are the responsibility of the suckers at the end of the line – the ratepayers - remains set in concrete.

The commissioners, and those driving them, are petrified that the High Court would expose the whole concept of illegal council debts being guaranteed and ratepayers being obliged to foot the bills, as a total fantasy. The MRRA have an excellent case and there is a good chance that could be the outcome.

The commissioners cannot take that risk.

So, the recent so-called offer of settlement from the commissioners was nothing of the sort. It was simply a request to the MRRA to virtually abandon its case.

The MRRA’s counter-offer to agree to have this matter of public importance resolved by the court in February by agreement of the parties - an eminently sensible proposition that is the reasonable way forward - will be rejected.

The commissioners and the DIA will do all that they can to delay and block the application (strike-out application, and an appeal) and destroy the MRRA by exhausting its funding or by creating dissension in its ranks (note John Robertson’s recent comments), or using any other underhand trick to stop ratepayers’ access to the law and justice.

But they can only behave like that whilst they have funding from rates to pay their lawyers’ fees.

Until ratepayers make it perfectly clear to the commissioners that they are acting without any support from the community then they will carry on in the same way.

Time to get tough. Time to adopt a way forward. Time to insist that the commissioners comply with the wishes of the community.

And if they don’t, then time to starve them of money.

If you are looking for a simple solution to the Kaipara problem then try this for size.

1. The powers behind the scenes should sack the commissioners. Their appointment was suspect. They have failed to comply with their terms of reference, are arrogant, autocratic and incompetent. Their decisions to launch the validation bill and to defend the MRRA claim are ridiculous and probably illegal. They have completely lost the trust of ratepayers.

2. Replace them with a single, independent commissioner who is competent at restructuring companies and has the trust of all parties. Give that person the task of resolving all the problems facing Kaipara according to the law and fairly and equitably.

3. Cancel the Validation Bill. It is an insult to the rule of law, is fraught with problems, and is a complete waste of money.

4. Resolve the important question of liability for legal debts by agreement through the High Court. The costs should be met by the DIA on the basis that this is a matter, according to the judge, of public importance, and that the legal situation is unclear and the government should be responsible for clarifying the law (not the ratepayers of Mangawhai). The banks should be involved and pay their own costs. Much better for all the legal brains to work together to resolve this public issue.

5. Get some financial/liquidation experts in to assess the true financial situation of the Council (not the fairy-land mumbo jumbo that Steve Ruru concocts). Is KDC a viable proposition? How can the debt be sorted and ……………

6. Assess liability for the debts and take action against those responsible. Obtain all the info accumulated by the OAG. Haircuts all round with ratepayers taking responsibility for a “fair” proportion of the debt.

7. Get in some independent legal experts to assess the incredibly complex legal situation that the Council is in and how this can be resolved. Effectively the KDC is operating outside the law and there will have to be draconian legislation agreed to by all to bring it back into the legal fold. (Note that the current validation bill is nothing but a Band-Aid that does nothing to resolve the real issues facing the KDC.)

8. Interim measures should be put in place to get the show on the road. Draw a line in the sand on the past. Freeze the debts until the problems have been sorted.

9. Reach an interim agreement on matters of illegality and get the rates rolling again:

• Agree that all rates in the past are valid but exclude all EcoCare rates until that issue has been resolved.

• Set a general rate for the current year that is fair and based on pre EcoCare rates.

• Amend the LTP to reflect the situation.

• Put together a super validation bill that encompasses all of the problems and puts the KDC on the legal road again.

10. All to be done in full cooperation with ratepayers through a ratepayers’ liaison group.

Such a solution could be put in place very quickly. The only sticking point is that the powers-that-be believe that they have the aces up their sleeves and can force the ratepayers into paying the illegal debt.

But do they? The pendulum would swing if ratepayers became united and initiated a general rate strike to starve the commissioners of money, and if it becomes apparent that the MRRA‘s application to the court is right on target. Nothing like the prospect of the local government apple-cart being overturned to attract the attention of government.


Larry Mitchell has sent in his latest submissions to Parliament’s Sect Committee considering the Kaipara Validation Bill. They can be viewed here.

Larry prepared two financial reports for Jack McKerchar when he was Chief Executive and is very au fait with the financial situation of the Kaipara Council.

He calls for a fully independent and thorough investigation. Ratepayers concur. That should have happened when Jack McKerchar resigned in 2011. Over two years has passed since then and the paper trail has no doubt disappeared over that time.

The reality is that Kaipara is never going to go forward until independent experts are brought in to examine the problems, assess the situation, and then take remedial action in conjunction with the ratepayers.

Claire Trevett’s report in the NZ Herald on John Key’s address to the United Nations can be seen here. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11130947

Several readers have referred me to the speech and commented about John Key’s wisdom when abroad but his failure at home to uphold the legal rights of New Zealanders and his rather selective approach to the rule of law.

For years now he has ignored the Kaipara situation, presumably on the basis that, like a bad-smell, it will eventually blow away.

If John Key was truly interested in the rights of New Zealanders then his United Nations speech might have been a speech about Kaipara.

I suggest that you read the Herald article and then read my own version, set out below, of what John Key might have said as equally as forcefully about the deplorable Kaipara situation.


Prime Minister John Key has mounted a scathing attack on the failings of his own government and the Office of the Auditor General, saying they get bogged down in arcane detail and had become hostage to the interests of those who wield the power in local government.

Mr Key has just delivered a statement to Parliament, launching in with a strongly worded statement about the need for reform of local government in New Zealand, and criticism of the stubborn behaviour of those running local government for resisting reform.

He used the lack of action on Kaipara as an example.

"The rationale for local government reform is clear. Local authorities have grown since 1945. Over the same period, the sector watchdogs - particularly the OAG - have become hostage to their own traditions and to the interests of the most powerful."

He said while it was possible to blame the previous legislation for the government’s failure to act between the 1950s to 1990s, "that does not wash today."

He said the Kaipara situation showed that local authorities had assumed more power than they had under the legislation - and the fear of changing the status quo was enough to stop any of the governmental watchdogs from interfering.

National is bidding to be re-elected in 2014, and Mr Key said: "New Zealand is not advocating revolution, but we are asserting that councils can and must do better in the way they conduct their business. That is the approach the National Party will bring to Parliament if we are elected next October."

"There is no point in being part of Parliament simply to make up the numbers. Sometimes, you have to speak up and shine a light on what is going on, or not going on, even when that may be inconvenient to others."

He said that Parliament was a place for representative from throughout the country to meet, talk and try to find solutions, but often those discussions were so arcane they hid the issues they were meant to resolve.


He said the failures in local government were due to local authorities and their leaders, rather than Parliament itself. The first was Kaipara, which had failed to adhere to legal obligations (and committed 32 pages of illegal actions). The leaders of the watchdog organisations were also to blame.

“Parliament would not also have been a powerless bystander to the Kaipara tragedy for over seven years if the lack of agreement and resolve between the OAG, the Ombudsman’s Office, the DIA and the government had not shielded Mayor Tiller’s regime in Kaipara."

Mr Key called for Parliament to take strong action by passing a resolution against Kaipara for its persistent flouting of the law.

"These are crimes against the rule of law.”

He said he was pleased that Parliament had accepted unequivocally that illegal procedures were followed in Kaipara.

"Those responsible must be brought to account. Those that try to cast doubt on those conclusions make themselves look foolish and do a disservice to Parliament

Mr Key said parliament should respond to the use of illegal rates and procedures.

"It must find a means to hold those responsible to account, and establish an effective mechanism for the cancellation of all illegal rates and actions in line with the law, and with equity. The resolution must also provide for the protection of the ratepayers of the district."

For the past few weeks the MRRA has grabbed the headlines for all the wrong reasons. That is a pity because the legal action it is bringing is precisely on track to send a few shivers down the backs of bankers who have naively been led into believing that all loans to local authorities are guaranteed. That has never been the case and councils and banks across the country are in for some surprises as they realise that they and their lawyers got it all wrong.                   

For those who want to see how negotiations are progressing then have a look at these documents:

KDC’s offer of settlement.

MRRA’s counter-offer.

The commissioners’ antics are looking more and more desperate. Their strike out claim was simply part of their plan to block any court action and to try and burn off the MRRA with high costs. It had absolutely no merit. Likewise their appeal against Heath J’s decision illustrates more than anything their stubborn refusal to have this matter heard by the court.

Justice Heath said that there is an important public issue at stake. It beats me why this does not go straight to court with the consent of both sides. Then and only then can we really start resolving the problems of Kaipara.

It also beats me why some ratepayers are still paying rates knowing that they are being used to fund lawyers to validate the illegalities of the KDC and to prevent ratepayers having access to the courts.

Ratepayers have virtually given up on the OAG’s report on the EcoCare debacle.

Ratepayers are fully aware that there is a total conflict of interest in the OAG holding this inquiry when everyone accepts that the OAG’s failure to supervise the KDC properly was one of the main reasons for the debacle in the first place.

The whole process of the inquiry is a subtle way of defusing the issue. It is has taken about 18 months so far and the final report is still not on the horizon. No doubt when it does finally see the light of day it will smack a few wrists but add that life has moved on and that there is no point in crying over spilt milk or dwelling on things that are no longer relevant. By then the peasants of Kaipara will have been dealt to by the commissioners and Parliament

Not only that, the OAG has absolutely no power to actually DO anything, to fine anyone, to take any legal action or to punish anyone. It just reports. If the politicians agree with the findings they mutter a few pleasantries in that direction, and if they disagree or, if they find it politically unpalatable, they simply ignore it. I referred in an earlier post to Justice Heath’s comments on the matter and the comparison of such a report with a ruling of the High Court.

The other reason for the delay is no doubt the fact that time is fast running out for legal action to be taken against the OAG for negligence. The longer it delays any finding then the better chance it has of any proceedings falling foul of the Limitation Act. In other words, it is too late to take any legal action.

That should not deter ratepayers. The reality is that the machinery of government has failed abysmally to protect the best interests of ratepayers. It is a long standing convention in the Westminster system that central government can delegate its powers to local government provided that it provides appropriate protection for ratepayer from the excesses and illegal actions of local authorities.

The Kaipara case encapsulates the total failure of the government in this regard. The two main watch dogs, the OAG and the DIA, have failed abysmally and have, in the eyes of many, become a major part of the non-compliance and dysfuctionality problems in local government. There is absolutely no doubt that the Kaipara problem and the massive illegal debt and the complex legal quagmire that has resulted would never have happened if those agencies had done their jobs properly.

As government has failed its moral and legal obligations to ratepayers it should be taking on board the responsibility for the resulting chaos and financial disaster and must bear the costs for putting things right.

Perhaps it is a sign of the current state of democracy and disregard for the rule of law in this country that the government can dump responsibility for its own failures on an innocent sector of the community and no one finds that questionable or abhorrent.

A couple of years ago in the Nathan case Justice Heath set out a comprehensive summary of the obligations and liabilities of company directors. He is now hearing the MRRA application for judicial review and no doubt he will be very keen to ensure that those in responsible positions in local government have their legal responsibilities and liability clearly defined.

It is ludicrous that those responsible for running local authorities can run multi-million dollar business and yet they appear to have no obligations and can escape all liability while the financial losses they have incurred because of their incompetence are dumped on innocent ratepayers.

There is a barrow-load of obligations at common law such as duty of care and fiduciary obligations that should apply but, like everything in local government in New Zealand, those in the box seat can get away with anything, until the courts step in and draw a line in the sand.

The Kaipara case may result in a few lines in the sand. Besides Justice Heath laying down some rules of responsibility and liability, some of the senior judges must be salivating at the thought of having an opportunity to bring back the rule of law and the principles of equity to local government in this country.

The KDC’s utter disregard for the law over many years, the OAG’s pitiful performance, and the KDC and the DIA trying to use Parliament to oust the jurisdiction of the courts must be like gauntlets flung at the judiciary.

Likewise, the OAG’s “independent” inquiry into the Kaipara debacle must tickle a few judicial sensitivities when it is commonly accepted by all and sundry and including the OAG’s own master, Parliament, that the OAG is a major suspect.

The decision of Heath J can be seen in full here.

Mr Justice Heath quickly realised the extent of the KDC’s illegal activities and how difficult it is going to be to remedy them:

This proceeding demonstrates how badly things can go wrong when a democratically elected Council assumes significant financial obligations to an arm’s length third party without disclosing the extent of the borrowing to its ratepayers.

Those who read the decision and the Judge’s dismissal of the case put up by the commissioners must wonder why they squandered so much of ratepayers’ money on claims that simply could not be substantiated.

One also wonders why ratepayers have to bear the burden of paying for the law to be clarified. The Judge acknowledges that the meaning of the provisions in the LGA “raise difficult questions of public importance”. If that is the case, why are Kaipara ratepayers having to foot the bill for both sides when it is of public importance to clarify the issue?

The commissioners have been making a lot of the fact that the MRRA should not have issued proceedings in the first place and that they, the commissioners knew best.

Ironically, they argued in court that the MRRA’s case should be struck out because the MRRA had DELAYED in bringing legal proceedings. Heath J would have none of this and suggested that the KDC itself knew of the issues and had ample time to take remedial action.

The court also put the OAG report in perspective. It steered clear of criticising the inquiry because of its fundamental breach of natural justice but it did point out the implicit shortcomings of an OAG review:

Dealing collectively with the other discretionary grounds advanced, I accept Mr Palmer’s submission that declaratory relief could vindicate the ratepayers in a manner that might not otherwise be possible. There is, I perceive, a real difference between a solemn declaration made by the High Court, exercising its supervisory jurisdiction over statutory powers of decision made by public officials, confirming a particular state of affairs and (for example) a report issued through the Office of the Auditor-General. Without wishing to understate the value of a report from the Auditor-General, it does not carry the same authority as a decision of this Court. Any judgment of this Court will be given after full argument from both sides, contain transparent (and publicly available) reasons and be subject to rights of appeal.

Those who repose their faith in the OAG report – if and when it emanates – should heed the words of Heath J closely. Only the court can give independence and certainty.

Doug Bone sent me a copy of the commissioners’ notice following Justice Heath’s ruling:

“Pursuant to Section 46 (3) of the Local Government Official Information and Meetings Act 1987, the following meeting has been set down for 10am, Friday 6 September 2013 and is open to the public. The meeting has been scheduled to consider one item being the Judicial Review proceedings. This item will be considered in public-excluded session.”

In two very simple lines there is a complete contradiction. A meeting that is open to the public to consider one item and that item is to be “considered in public-excluded session”.

These are the folk who we are entrusting with our monies.

I understand that the meeting was subsequently cancelled. The commissioners are going to take further legal advice to see where the court case might lead before rushing into decision-making.

That is a good move. Since they were placed in power in somewhat questionable circumstances to replace the previous legally elected Council, they have made some rather unwise decisions, and that is being generous. Their decision to rule as autocrats rather than embracing the community was a major blunder especially given the warnings of Greg Gent in the report of the Minister’s review team about the absolute necessity for engagement with the community.

The bulldozing of the Validation Bill against the will of the people will not go down well with Parliament and the Bill itself is doomed, given the revelation of the KDC’s knowledge of the illegalities and its stubborn refusal to comply with the law. And, even if Parliament pushed political expediency to the limit, the Act that emerges from this questionable process will almost certainly not pass the scrutiny of the Court. The dog’s breakfast will look a little tidier but it will still not achieve the purpose that the commissioners and their lawyers believe that it will achieve.

Why did the KDC’s lawyers and Parliamentary Counsel take the impossible road and try and turn a dog’s breakfast of 32 pages of illegalities into legally complying rates when Parliament had the power to scrap the rubbish and set fair and honourable rates de novo that would have had the support of all ratepayers if handled properly?

Heath J pointed out very succinctly, if the commissioners and their advisers are listening, that they are completely on the wrong track. If they and Kaipara are to get out of this mess then they will need to rethink the whole strategy of dealing with the illegal debt of Kaipara.

It is now time for the legal advisers of the Council, the DIA and the government to get together and reach a workable compromise with the people of Kaipara. No one objects to paying fair rates that provide necessary services to ratepayers. Ratepayers would agree to that. The rates for repaying illegal debts are another matter and those in charge will have to look at some way of making those who are clearly responsible for the financial and legal debacle legally liable. An expert in liquidation would offer some very useful advice and the Credit Sails approach* might be appropriate here. Ratepayers would chip in and pay for the value of the EcoCare plant in the ground but those who illegally squandered monies have to be held responsible for the monies they borrowed illegally and expended without appropriate procedures being followed.

*Credit Sails: The Commerce Commission advised those parties that they considered were involved in the loss of shareholders monies to voluntarily agree to pay a set sum otherwise legal proceeding would be issued against them. The required monies were pain in full with no need for litigation.

The commissioners have acknowledged that for many years the KDC rates have been illegal. They also acknowledge that the EcoCare scheme was entered into and the debt incurred in breach of the law. However they are arguing that the provisions of the LGA state that all debts entered into by a council are enforceable even if they were illegally entered into. The MRRA accept that but argue that the law does not, however, give a council the right to set rates to pay a debt that is illegal.

Ratepayers have to ask themselves two questions here:

1.  Morally and equitably, who is right? Should ratepayers be obliged to pay rates for actions that the council acknowledges were contrary to the law?

To me that is not a difficult question to answer. It goes against all sense of fairness for an organisation not to be responsible for the losses caused by its own illegal actions and to be able to dump liability on an innocent party – the ratepayers. I am sure that most people would agree.

2.  Legally, who is right? That is more complex. The law is not always fair. In this instance the LGA gives some protection to banks that lend to councils on the basis that the whole debt could be invalid if there was non-compliance with the law, and that would discourage banks lending to councils. But unfortunately the provisions were loosely drafted and the meaning of the law is uncertain.

That is the whole point of the MRRA legal claim, to clarify the law to see who is responsible for the illegal debts of a council. The Judge has acknowledged that it is a genuine legal claim and a matter of public importance.

Morally the situation is beyond doubt. Legally, the Judge has said that it is an important decision to be made by the Court. He has also made absolutely clear the shortcomings of any report that comes from the OAG.
We should all wait for the decision of the court. And the “we” means the commissioners as well.

THANKS TO ALL 30.08.13
Thanks to all those who picked up my typos and advised me. I actually wrote that John Robertson had said that the rates were illegal. And pigs might fly. That I am sure will never happen. The chair of the commissioners has dug himself into a very big hole and is incapable of extricating himself. If the Kaipara problem is going to be solved then we need to have people with genuine competence and integrity who need to front up to the real problems. One-armed paper-hangers who paper over massive cracks will only carry on the past tradition of financial ruin.

WHO SHOULD PAY? 30.08,13
John Robertson and co have run up a massive legal bill trying to strike out the MRRA‘s application for the court to resolve the legal problems of Kaipara. Most experts realised that this was a time-wasting exercise, perhaps planned by the Department of Internal Affairs - which engineered the demise of the previous Council - to try and delay the court action so that Parliament could rush through the validation bill.

Why should ratepayers be dumped with those costs? There is no mandate from ratepayers for such predictable wastage and the majority of ratepayers would be opposed to the commissioners’ action. We have no democratic vote and perhaps we should be voicing the slogan of the American colonies – “no taxation (or rating or incurring legal costs) without representation”.

The arguments of Counsel for the KDC were based largely on the detrimental outcomes to local government in this country if the MRRA’s case was successful. In other words the KDC’s case was based on the best interests of the DIA and the government. It was nothing to do with the ratepayers of Kaipara. That being the case the government should foot the bill for the costs of Simpson Grierson and David Goddard QC and should also meet the costs of the MRRA. Why do ratepayers in New Zealand have to pay for all the incompetence, negligence and hidden agendas of those who run local government in New Zealand?

If Messrs Robertson and co had to dig into their own pockets to cover the costs of their ridiculous forays into trying to refloat the doomed KDC then we might have a totally different approach. But like everything in local government they have a bucketful of cash to draw on (thanks to ratepayers) with absolutely no personal responsibility for their actions.

There is a presumption that the Validation Bill will fix all the illegalities of the KDC and ratepayers will be forced to cough up to pay for the recklessness, negligence and misfeasance of the KDC. A lot of faith is being placed in the lawyers for the KDC who did the drafting and the Parliamentary lawyers who have vetted the Bill. But have they got it right?

The saga of the KDC is littered with utter incompetence from every direction. The only party that was not incompetent was the ratepayers, and ironically they are the ones, as the government sees it, who must pay for the inadequacies of others. Lawyers from many different firms were privy to the incompetence. Imagine 30 odd pages of illegalities and not one of the high powered lawyers employed by the KDC picked up a single one of the errors.

Take the EcoCare contract and think of the top firms that were engaged to represent all of the parties involved including international financiers, and yet not one of those lawyers knew the basic requirements of the LGA in respect of consultation and decision-making and the need for a statement of proposal before making any decision, or if they did, they turned a blind eye to it because local authorities in New Zealand operate outside the common-law and statue law when they borrow monies.

I have seen opinions from top lawyers relating to the KDC’s conduct that show a staggering lack of basic knowledge of the law relating to rating and local bodies. We have even seen the toing and froing as to whether the current LTP is valid and the feeble claims of John Robertson that he has a legal opinion – which he won’t show - that states that the LTP and the rates are valid BUT “for the avoidance of doubt” he is has included it in the Validation Bill. That is just puffery. Everyone knows that the LTP and the rates are invalid and that effectively the commissioners are operating outside the law. Hopefully soon the High Court will expose the Emperor’s new clothes and the strutting of the commissioners will be exposed for what they are.

But have the KDC solicitors and the Parliamentary Counsel got the Validation Bill right? It is probably the most complex validation bill to go before Parliament and my view is that they have made some fundamental errors that will mean that the Bill does not achieve its purpose.

Some of the illegal rates have been omitted for a start and it also appears that even with the validation of some illegalities some of the rates do not comply with the requirements of the legislation. This means that even if the Bill proceeds then ratepayers may challenge the validity of the rates because not all the illegalities have been included in the Bill.

Imagine all those legal cost – how many hundreds of thousands? - and the lawyers still get it wrong and we are back to square one.

Remember the days before the commissioners arrived when Steve Ruru announced that ratepayers and Council were going to work together to resolve all the issues and sort out the rating mess together. John Robertson, shortly after his arrival, put an end to any consultation or cooperation and is now reaping the harvest of his arrogant disregard for the rights of ratepayers.

Imagine what we could have achieved with cooperation, competence and integrity.

Has anyone actually been sued for not paying rates? There have been an awful lot of threats and war dances and many banks have coughed up where a mortgage is involved. But has anyone actually been taken to court? I suspect not. Some time ago both Bruce Rogan and I offered ourselves as sacrificial lambs to be sued by the KDC but the offer was never accepted. My wife and I now have what they call arrears that are in excess of $15,000 but still no sign of any action.

The commissioners know that they have absolutely no legal case and would be laughed out of court. But that does not stop them threatening and cajoling and putting out misleading information through the local propaganda sheets.

Let us know if you have been sued.

I have already had responses for comments from others about anything relating to KDC and they can be seen here.

Ratepayers will be delighted to hear that Mr Justice Heath has rejected the KDC’s bid to strike out the MRRA legal action against the Council and the judicial review will now proceed to a full hearing. A date has yet to be set. Costs were awarded to the MRRA.

Those ratepayers who are still paying rates to the illegal regime led by the commissioners must now reassess whether they should continue to pay rates that are clearly illegal to a local authority that has no legal power to collect rates or fees of any kind, simply because it does not have a valid LTP. Given the High Court’s approach in this matter it would be sensible to withhold all payments until the High Court makes its final decision on the matter.

Chief commissioner, John Robertson, continues to dig a big hole for himself by asserting that that the current rates are legal when the Department of Internal Affairs has stated quite clearly that the current rates are invalid and it is beyond any shadow of doubt that the LTP is invalid. John Robertson’s assertion that the inclusion of the current LTP in the validation bill is simply to “exclude any doubt” is not correct and Mr Robertson is well aware of that. In law things are either valid or not. There is no half-way house. Parliament has made that clear to Mr Robertson but he still repeats the same mantra to try and suck in those ratepayers who are sitting on the fence.

Ratepayers who believe that rates need to be paid so that roading can be attended to need to look at the reality of the situation. The biggest expenditure for Council is the debt bill and the interest that was illegally incurred by this Council. And if roading is so important then why is the Council wasting massive sums of money on expensive lawyers to validate the past illegalities and to try and prevent the court from making an adjudication on the matter.

Ratepayers need to stop paying rates, join the MRRA and pressure the commissioners and the government into reaching a quick settlement of this matter.

And, by the way, well done Bruce Rogan and the MRRA.

From all accounts there were some excellent submissions made to the select committee when it visited Kaipara. There were only a small number in support of the Validation Bill and some of those are possibly at risk because of their involvement in the illegalities if the Bill does not proceed.

Further submissions will be made in Wellington next week.

It will be interesting to see how well democracy works in New Zealand and see how Parliament deals with the conflict between the rule of law and political expediency. This case is of massive importance. Kaipara may be a backwater that it is generally irrelevant to life in New Zealand but the way that Parliament deals with the Kaipara problem will provide a massive insight into the health of democracy in this country.

It is a few weeks before Legal Eagle is back at his desk and in the meantime it would be nice to open up the website to those who may want to voice their views, from any side of the fence, or to make reference to any relevant articles etc. So please send your contributions to:  contactus@kaiparaconcerns.co.nz

Whilst the commissioners are using every illegal trick in the Local Government Book of Tricks to make ratepayers stump up with the illegal tithes that they have been charged, the question has to be asked whether the commissioners themselves will eventually be held personally responsible for their illegal and ultra vires actions and the vast amount of money that they are wasting.

There is little doubt that the Department of Internal Affairs and Minister acted outside their legal powers in appointing a Review Team when the legislation at that stage did not give the Minister that power. There is also evidence of undue influence brought to bear on the Kaipara Councillors by the Review Team and the DIA to force them to ask for commissioners to be appointed and to pressure them to adopt the 2012/22 LTP.

The appointment of the commissioners also has to be scrutinised to ascertain if the commissioners were appointed in compliance with the legislation.

There is also little doubt that the commissioners failed to comply with their terms of reference to consult with ratepayers on the options for dealing with the illegal rates. The Minister and the DIA may be satisfied with the commissioners’ total failure to comply with the TOR but the High Court will no doubt take a much stricter line. It may well decide that the commissioners failed to comply with their terms of reference and that their decision to launch its validation bill was ultra vires. If that is the case then the commissioners might personally have to wear the costs of the validation process and all the legal fees that they seem so keen to incur, no doubt because they believe that ratepayers are footing the bill.

Because the Council no longer has a valid LTP the commissioners have no power to set, assess or collect rates or to make any other charges. They also have no policies or rules to guide their actions.

Effectively this means that they have no decision-making powers and every decision that they purport to make is ultra vires because they are no longer operating as a local authority under the LGA.

Thus, their decision to defend the MRRA application for review was utterly ultra vires and the commissioners may well be held personally responsible for the legal fees of Simpson Grierson and the counsel that has been appointed.

What the Minister the DIA and all those involved in local government in New Zealand do not realise is that things are about to change. The Emperor’s new clothes - the fantasy world of legal liability in local government - are going to be exposed for what they are. For years the enforcement authorities have treated local authorities as being exempt from the law on the mistaken understanding that ratepayers have to foot the bill for all the incompetence and misfeasance of councils. The DIA and the Minister have been able to exert their superior power to bully ratepayers into submission and force them to pay the bills whilst allowing local authorities to ignore the legislative requirements. The banks, which have abdicated all care in the area, have been given a free ride.

The High Court now has the opportunity to restate the legal position and make it clear that the local authorities are subject to the law and must comply strictly with the requirements of the legislation. Any failure to comply will incur personal responsibility for those responsible for the decision-making of a council.

Pleas in mitigation that this was accepted practice and endorsed by the regulatory authorities will be irrelevant and carry no weight with the Court.

The banks who are happily funding local authorities in the belief that there are thousands of ratepayers guaranteeing any loans need to get their lawyers to look very closely at the legislation and perhaps insist on personal guarantees from councillors and commissioners.

Commissioners and councillors need to reassess their legal liability. It only needs one legal decision to make them personally responsible for their actions, in very much the same way that company directors are being held responsible. There is effectively no difference between the two and the courts will no doubt take the opportunity to clarify the law and outline and legal responsibility of the decision-makers in local authorities.

It is interesting that it was Justice Heath who recently defined very clearly the legal obligations of company directors, and it is Justice Heath who will hear the MRRA application for review.

The lid of Pandora’s Box of local government is working its way loose and is about to be blown off.

For those who wonder how to respond to the commissioners illegal threats to take legal action (see post below), here is some advice from Bruce Rogan of the MRRA:

Saturday, 27 July 2013v

One of my many problems is that I talk too much.

I am very lucky to have a wonderful friend who by his actions from time to time reminds me why he is a wonderful friend. He is very wealthy, because he is very energetic and focussed on what he does.

He owns multiple properties in the Kaipara and elsewhere. He has made very significant contributions to the Litigation costs of the MRRA.

At the Annual Plan hearings he offered to come into the council at no cost and fix all the problems, and he offered to do it in three to six months at the outside. They would not even look at him let alone respond (I was there). Tonight he rang me and told me the following:

He received a letter from this Paul Cresswell minion.

This is what he said in reply:

Dear Mr Cresswell,

Since you ask, No, I do not have financial difficulties, it is you that has the financial difficulties.

When you get your shit together, I will get mine together and start paying rates, but until then try whistling.

Kind regards,

Wealthy Ratepayer.

I (Bruce) wish I could be so concise.

A short visit to Singapore, and marvelling at the incredible infrastructure that it has created, puts the Kaipara problems in stark relief. Singapore is built on competence, integrity and transparency. We may protest that some of its successes have been achieved at the cost of some personal liberties but the culture of incompetence, lack of integrity and zip transparency in local government in New Zealand makes this country look like a third-rate banana republic in comparison to Singapore.

If we had asked the Singapore experts to construct a sewerage system for us in Mangawhai then you can bet your bottom dollar that it would be state of the art, that it would work, and that it would be cost effective and affordable.

We have to ask ourselves why we tolerated the incompetence of the previous council for so long, and why we are putting up with the same snake-oil treatment for the Kaipara debacle from a new bunch of incompetents when it is absolutely clear that the patient is terminal and radical and expert intervention is needed.

Legal and Mrs Eagle will soon be cruising through pirate waters off the coast of Somalia. No doubt those who have had their utter incompetence and lack of integrity highlighted in my posts over the last few years will relish the thought of me rotting in chains in Somalia squalor with no one willing to pay the modest ransom to liberate me. However, that is not going to happen. We are going through “pirate drill” and will be resisting any attack with a laser-like sonic boom-box and water cannons.

I can only wish that it were that easy in Kaipara. The pirates there are heavily disguised but they operate in much the same way as the Somali pirates. They operate totally outside the law of the land. The only difference is that in “civilised” New Zealand they operate with the blessing of the authorities.

Many ratepayers are emailing me and asking about the threatening letters sent out by Paul Creswell.

Let me make the following points:

1. The KDC is operating outside the law. It has, by its own admission in the Validation Bill, no valid LTP which means that it has no power to set, assess, or collect rates or any other charges. It has no more legal power than the Mafia. It simply threatens people and is allowed to do that because the Police, the Commerce Commission, the Department of Internal Affairs, the Minister and the OAG are not doing the job that they are supposed to do and are allowing the commissioners to act outside the law.

2. To bring an action to recover rate arrears the KDC will have to prove to the court that it has the power to set, assess, and collect rates. It cannot do that.

3. The KDC will also have to show that any debt is due and payable. The KDC has acknowledged that all rates are invalid because all the rates assessments for the past six years, and more, do not comply with the law. Ratepayers therefore have no legal obligation to pay the rates.

4. The fact that the KDC has applied to Parliament to validate the rates is irrelevant. The rates are invalid until (and if) Parliament validates them.

5. The commissioners know that the rates cannot be enforced in court but they are illegally misleading ratepayers (which in itself is a breach of the Fair Trading Act). They do this because they know that the government and the regulatory authorities treat local authorities as having unlimited powers and not subject to the rule of law. Fortunately the courts see things very differently and will enforce the rule of law. That is why the commissioners, the Department of Internal Affairs and the regulatory authorities are doing all they can to block access to the courts.

6. The Minister has confirmed (see posts below) that the financial projections of the commissioners are utter rubbish and that development contributions will never be used to repay the illegal debts. That means that ratepayers will be socked again and again, year after year, to pay the illegal debts.

7. The only way that ratepayers can bring the madness to a halt is to stop paying any monies to the Council immediately. The only way we can get government to sit up and listen is to make it impossible for the KDC to continue functioning. Painful yes, but absolutely necessary. Kaipara is bankrupt and has massive financial and legal problems which no one knows how to fix. Allowing the desperadoes to continue is utter madness. Kaipara needs radical assessment and intervention from experts. Band-aids soaked in snake-oil are not going to do the trick.

8. All ratepayers across the district need to get in behind the MRRA. A few people have issues with the MRRA for various reasons, but this is the time when everyone needs to support the Association. Most other organisations have succumbed to the persuasive charms of the commissioners and their baseless and misleading promises, and the local newspapers have become nothing more than propaganda sheets for the KDC. The MRRA has kept its focus and it is the one chance that we have of bringing back the rule of law to Kaipara and bringing back some competence and integrity to local government in the district.

9. In short, do not pay one single cent to the Council. Write to the commissioners and tell them where to stick their illegal threats. Join the MRRA and contribute to its fighting fund. And go to the High Court in Whangarei on 16 August. It is a massive day for the future of Kaipara and it is a massive day for the rule of law in New Zealand.

Larry Mitchell s comments on the Kaipara debacle can be heard here. http://www.radionz.co.nz/national/programmes/afternoons

Local government Minister Chris Tremain, who has been singularly inconspicuous, has finally emerged from his shell to make some bold statements about future directions in local government. His speech can be seen here:


Here are some quotes with some comments:

The first goal, having the books in surplus, is about good financial management. It’s simple economics: spend less than you earn, and keep your borrowing under control. In this regard central and local government should be on the same page.


Both taxpayers and ratepayers expect us to be sound economic managers of their investment in us.


I am pleased to see one of the lowest average annual rate rises across local Government in recent years. Well done.


Unless we can demonstrate significant service improvements (ratepayers) will not (and should not) stomach significant cost increases.

BUT WHAT ABOUT KAIPARA? Illegal debts and illegal spending of monies and yet you expect the ratepayers there to “stomach” the massive rate increases. Is Kaipara an exception to the rule?

I see the financial prudence regulations as part of our commitment to help promote excellence in local government financial management. I think the benchmarks will be useful to you.

They will provide elected members with early warning signals of risks, which will help to avoid the need for central government intervention in the way that happened in Kaipara

BUT central government intervention in Kaipara has been an utter disaster. The incompetence and the illegalities of the past have simply continued. The culture of incompetence and no accountability and dumping on ratepayers has to end.

The Minister makes the following comment:

Another issue which is at the forefront of both central and local government is housing affordability. As part of our work in this area we are reviewing the framework within which Development Contributions are set.

I am keen to see development contributions made more transparent and more tightly confined to infrastructure used in the development.

Whaleoil has praised those comments


Local Government has been ripping us all off for years. Spending frivolously and charging erroneously it has operated in a vacuum with no transparency and with unfettered discretion when it should have been tightly constrained to performing specific functions and roles and limited to quite clear guidelines on expenditure, income and the relationship between the two

Kaipara ratepayers will endorse those comments wholeheartedly. But they will also be concerned that these are just words from the Minister and wonder why the Minister is allowing his own commissioners to commit a massive rort on the people of Kaipara in their latest LTP and annual plan

Kaiparaconcerns has pointed out time and time again that the commissioners were misleading ratepayers with their proposals in the latest LTP that development contributions raised in the future would be used to pay off a massive part of the illegal debt. The Minister has now confirmed, as expected, that that will never happen. Development contributions will have to be tied to specific infrastructure for specific developments. The use of the contributions to pay for the reckless and illegal spending of the past will not be countenanced in any way.

This means that the all the financial projections of the commissioners are, and always have been, utterly wrong and misleading. As I have said before, if these guys were company directors they would be facing criminal charges for misleading investors. It is an absolute disgrace that in the local government sector they can make such baseless projections with impunity, knowing that they will be given the seal of approval by the OAG and that their financial imprudence will be endorsed by the DIA and the Minister.

And we all know that the result of all this is that the ratepayers of Kaipara will be in the gun for paying the illegal debts for generations to come. And the cowboys in charge will have long ridden off into the sunset, with their wallets bulging, to new pastures where they can inflict their staggeringly modest talents with utter impunity on another group of hapless ratepayers in New Zealand.

Chris Tremain needs more than words. If he really means what he says then he needs to tackle the Kaipara issue, get rid of the current commissioners and get in the real experts to tackle the root causes of the Kaipara problem.

Parliament needs to act and it needs to act NOW.

For too long the Department of Internal Affairs (DIA), the Minister and the regulatory authorities have done all they can to support the crumbling façade of local government in New Zealand by pretending that the Kaipara Council is operating within the law when clearly it is not.

The Kaipara Council ran amok for many years and would have continued to do so, with the blessing of the Minister, the DIA and the regulatory authorities. It was only the actions of ratepayers that has brought the illegalities out into the open. But the illegalities have not stopped. The commissioners under the direction of the DIA are continuing to operate outside the law and do so without the Minister, the DIA or the regulatory authorities taking any action to curtail them.

This is a bit like the Hans Christian Andersen fairy tale of the emperor’s magic clothes. Sooner or later, one hopes, the regulatory authorities and the government are going to wake up to the fact that the Kaipara Council is in fact an illegal entity operating without any legal powers.

The question is: Will Parliament adopt the same blinkered attitude?

Kaipara ratepayers would like to ask Parliament two simple questions:

1. Why is Parliament even considering a validation bill when the plans and rates that it is proposing to validate are the subject of a judicial review that was before the High Court before the validation bill was filed with Parliament? Has Parliament never heard of the separation of powers?

2. How can Parliament even consider a validation bill proposed by the Kaipara Council when that Council acknowledges in its Validation Bill that it has no valid LTP, as required by the Local Government Act, and is operating outside the law?

In other words, does the Rule of Law exist in local government in New Zealand?

A large council in the US has just declared bankruptcy. That is something that the government is desperately trying to avoid in New Zealand. That would destroy the myth of cast-iron financial security for councils that the government has tried to fabricate in New Zealand.

That myth has no legal basis but it has encouraged an incredibly cavalier approach by banks (that do no due diligence) and by their lawyers (who presume that the loans are guaranteed but without actually checking the legislation carefully).

Kaipara ratepayers are challenging the flimsy assumptions in court and all New Zealanders need to offer support as this is an issue that affects all ratepayers in New Zealand.

We have the bizarre situation where company directors are being faced with tighter regulations in respect of their responsibilities with both criminal, statutory and civil law sanctions, and yet their equivalents in local government – councillors - are given a free card to perform to the most appalling standards. Likewise the CEO’ of local authorities are regarded as having no liability for incompetence, negligence or downright dishonesty.

Why the difference? Because ratepayers are, in the eyes of government, obliged to pay for the incompetence of a council’s elected members and employees.

Kaipara ratepayers are challenging that and asking the High Court to decide if ratepayers are responsible for debts illegally incurred by their council.

If you want to support the MRRA’s action then contact the MRRA and contribute to its fighting fund for fairness in local government.

Campbell Live has already featured the Kaipara debacle but is researching the plight of ratepayers for further programmes. Those who have a “story” to tell about the illegal rates and activities of the Council and the commissioners should take heed of the advice to MRRA members from Bruce Rogan:

It has been a huge challenge trying to get the rest of Kaipara to see that the problems we face are not specific to Mangawhai, and it has been an even bigger challenge to get the rest of New Zealand to see that what has happened in Kaipara places the rule of law and the fundamentals of our democracy in peril.

Many of you will have noticed that Campbell Live have taken on the role that we really should expect our serious fraud office and our Auditor General to undertake- questioning the actions and decisions of those in power who have royally screwed up in the discharge of their responsibilities.

I am delighted to tell you that Campbell Live is going to update their story on Kaipara and Mangawhai, and they want to talk to residents on camera who have been harmed by the actions of this terrible unelected and unlawful council.

If you have experienced large rates increases (whether you are paying them or not), if you have been treated shabbily by anyone from the commissioners on down, and you are prepared to discuss your plight on camera, please either email me or phone me on (09)4315413 and I will pass on your contact info to Campbell Live.

If you would prefer to go directly to Campbell Live email zduffy@mediaworks.co.nz.

Please act on this request without delay- it is a truly FANTASTIC opportunity to bring our plight to the nation’s attention. Everybody with a TV who can afford the outrageously expensive power to operate it watches Campbell Live these days. Let’s make exposure of the criminality that is destroying Kaipara the most memorable Campbell Live ever, and let’s take this perfect opportunity to expose the terrible destructive legislation that Robertson and his gang are trying to ram through the House.

Some of you might not have caught up with the fact that Winder- Robertson’s number two, has been seconded to delete democracy from Christchurch. He, of all people, is looking into the behaviour of the CEO. Personally I was wondering who in the government had noticed that Peter Winder has two faces, and that he can suck on two ratepayer/taxpayer teats simultaneously.

I notice there has been no announcement to the effect that he is no longer drawing a daily stipend in the Kaipara.

I’m running a book on what Winder will recommend and my money says that he will be telling Minister Tremain that elected councils no longer work in Christchurch and it will need to be replaced by a small hand-picked commission of redundant politicians and ex CEOs, to be paid for by the ever-diminishing number of ratepayers still struggling to survive there. But I am biased, as you know.

Bruce Rogan

It is only twelve days before the deadline for submissions on the Validation Bill.

Every ratepayer needs to put in a submission to stop this huge miscarriage of justice.  If the commissioners are allowed to carry on down the same track then they will bring financial mayhem to the community.  A validation bill will be needed  at some time to resolve the legal mess that has been created, but only after ALL the problems facing Council have been identified by independent experts and a full remedial plan has been put in place.  That can only be done when the High Court makes its decision in the next few months, and the liability of others for the illegal debts is investigated. 

This is not the time for an ad hoc, ill-considered band-aid.

A guide to making a submission, with ideas for content, can be seen here.

According to a report of Bernard Oarsman in the NZ Herald:

Auditor-General Lyn Provost has told the Auckland Council to urgently address purchase card payments after finding they were being made without appropriate documentation.

Ms Provost said a review of the P-card reconciliation for February this year found a "significant number of transactions that have been paid were yet to be authorised or coded".

She urged the council to quickly address the concerns raised in the report "as this exposes council to the risk of inappropriate expenditure being incurred without approval".

One wonders what the Auditor-General was doing when the Kaipara Council went on an unfettered spending spree for many years and tens of millions of dollars of inappropriate expenditure was incurred without approval.

It is good to see that she is urging the Auckland Council to quickly address her concerns, which is in stark contrast to the six years that the KDC was allowed to wreak its havoc on ratepayers.

And while talking about urgency, what about the report on the EcoCare inquiry which has now taken close to 17 months?

Deloitte, the new auditor for the KDC, has done a nice little side-step in auditing the final version of the amendments to the 2012/22 LTP, which have just been adopted by the Council. (more here)

Many ratepayers ask me what they can do personally to end the "Reign of Error" in Kaipara and to bring back the rule of law, democracy, transparency and accountability to our district.  The answer is to make a submission to the Parliamentary Select Committee on the Validation Bill. 

The Commissioners are advising MPs that there are is only a small vocal minority opposing the BIl, and ratepayers need to show Parliament that the Bill is actually opposed by the majority of ratepayers in the District. 

Legal Eagle will put some of his own submissions on the website in the next day or so to show the sort of issues that are relevant to Parliament.

Remember that you have until 25 July to file a submission, and it can be filed on-line. 

MRRA MEETING   05.07.13
Advice from the MRRA:

Our next meeting will take place on 7 July 2013 at the Recreation Centre Insley St, 1:30pm.

Looking at the weather, and the fact that none of the politicians we asked to front have the courage to do so, we have decided to defer our march until later in the year.

Not one independent financial expert would maintain that Kaipara is a going concern. It cannot meet its liabilities out of its income and is falling further and further into debt.  As for the future, the Council fudges the situation with artificial figures for debt and prospective income, in particular development contributions, which satisfy the OAG and the auditor but which have no credibility otherwise.

I have pointed out in the past that if company directors included the same income projections based on growth assumptions in a prospectus then they could be facing a jail sentence for misleading investors.

This is what Dr Jill McPherson, Kaipara District Council’s new general manager of planning and community, wrote to a ratepayer:

It is important to note that growth projections are only projections and that what happens in practice will likely vary from what was originally projected.

"Will likely vary". In other words the figures mean nothing.

In respect of the quantum of Development Contributions received it is acknowledged that these are lower than projected so far this year. However, there are a large number of possible connections identified for completion in the next few years.

Actual figures lower, but possible connections. Not much comfort there.

If Council is becoming concerned about the level of risk that it is carrying in relation to development contributions then it can change the sources from which it is seeking to fund that revenue. Once a decision has been made to fund growth related expenditure from a source other than development contributions it cannot, however, then 'change its mind' and seek to fund that expenditure from development contributions in the future.

That is precisely what ratepayers are concerned about. If the figures prove to be optimistic, which they almost certainly will, then another "source of revenue" will be found. And guess what that will be? Huge rate increases. Perhaps another massive capital contribution across the district, and a heavier one in Mangawhai.

This is virtually inevitable. It is exactly what happened before and caused the Kaipara debacle. The financial projections were in fantasy land. But those responsible for a local authority's accounts can come up with such rubbish over and over again, knowing that it is pie in the sky, knowing that it is more than likely that ratepayers will be stung yet again, and knowing that no one will ever hold them responsible for their reckless projections.

It is an absolute disgrace that ratepayers are forced to entrust their monies to a bunch of financial half-wits, and, having being ripped off to the tune of tens of millions of dollars, they are forced to go down the same road again.

That is why the Validation Bill must not go through. If the Commissioners force it through then we are almost certainly heading down the road that is sign-posted Financial Ruin.

We need to get in some independent financial experts to do a thorough assessment of the Council's financial standing, its future viability, and the viability of the debt. That is what would happen in real life, which is very far removed from the ethereal, make-believe financial fantasy-land that pervades local government in New Zealand

Andrew Laxon's recent article in the NZ Herald commences with:

The commissioners of debt-ridden Kaipara District Council have begun a new inquiry into its past financial decisions, including the advice it received from former chief executive Jack McKerchar.

Sounds good . But is it true? The author goes on to state that there are two inquiries already underway, and that there is now a third:

The commissioners' investigation into other financial transactions they have discovered since taking over last September and see as questionable.

But there is nothing in the article that actually supports this statement. The only comment I can find is:

Chief commissioner John Robertson announced last month that the commissioners were keeping their options open over possible legal action against those involved in the Mangawhai scheme.

"If by taking legal action, we are able to recover costs and reduce the financial impact of the Mangawhai Wastewater Scheme on ratepayers, then it is likely we will do that."

Keeping one's options open is scarcely instigating an inquiry. Bruce Rogan of the MRRA called it a "smokescreen".

Mike Sabin the local MP, who is a staunch supporter of the Commissioners and their Validation Bill, goes out on a limb:

"I can put my hand on my heart and say that the commissioners, where they can find accountability and make it stick, they will," he said.

One would have thought that as an ex-cop he would have needed more evidence before making such a statement. The only comment that suggests the Commissioners might pursue accountability is the throw-away line of John Robertson:

"The decisions of council were advised by the CEO, so as part of general matters we're looking into that."

Ratepayers will not hold their breath. It would be very nice if Mike Sabin is right, but ratepayers have absolutely no confidence in the Commissioners. The Commissioners have already fitted the ratepayers up to take sole responsibility for the malfeasance of the past and are not going to be side-tracked by bringing other parties into the radar.

if you are going to have an inquiry into the accountability of other parties then you need put in some independent experts. But is that ever going to happen in Kaipara when the ratepayers can be forced to bear all the responsibility?

Another fascinating article from Joel Cayford here.

He recounts the history of Section 117 LGRA which makes local authority debts valid and enforceable even though they are illegal, ultra vires, or even fraudulent.

The aim of the government was to ensure that local authorities were seen as absolutely secure which would mean a lower interest rate would be charged.

There had been some cases in the UK where local authorities had wriggled out of liability for loans on the basis that they had acted ultra vires in taking out a loan.  Parliament's intention was to close this loophole.

But what of protection for ratepayers in case a local authority went off the rails and acted outside the scope of the law?

Well, Parliament never considered that a local authority would do such a thing. In those days there was minimum borrowing by local authorities.

It also believed that there were checks in place to stop any meanderings off the legal compliance track. Read John Banks' comments in Parliament, highlighted in the article, about the new borrowing regime for local authorities with the requirement for plans and strategies and borrowing polices, with transparency, in-depth consultation, and accountability:

Local authorities will be required to provide a framework for financial management strategies and policies to govern all financial decisions and policies, not just borrowing proposal. That framework will be subject to extensive consultation requirements and will provide a clear basis upon which specific expenditure, investment, rating, and borrowing proposals can be understood.

As the article points out:

Parliament intended for bank borrowings to be protected transactions all right - but ONLY after the public consultation had occurred.

What Parliament did not anticipate is that the general competence provision would create an attitude in local government where local authorities had carte blanche to launch into new borrowings to fund their growth. On top of that, section 117 and its earlier versions would help create a culture whereby compliance with legal requirements was irrelevant as all debts were valid irrespective of illegal regularities.

As for the checks created by the new requirements for plans strategies and policies and consultation, well, they were just ignored. Kaipara is the perfect example. Consultation was completely ignored in respect of the EcoCare debt and although there were policies and strategies and all the other requirements set out perfectly properly in the plans, in the real-life of Council's practice they were completely ignored as well.

Take for instance the segmented debt policy in the 2006/16 LTP. It set strict limits on the EcoCare debt and Council's power to increase the debt. Yet within months Council secretly increased the debt totally ignoring the segmented debt policy and its borrowing ratios.

All rules need to have some enforcement agency to ensure that they are complied with. Without a policeman on the street corner human-beings have a tendency to err off the straight and narrow. Parliament did not consider how the new regime was to be policed, but presumably it considered that the OAG would perform that role as the as both regulatory authority and auditor of all local authorities .

And that is the essence of the problem: the total failure of the OAG to perform its role.

No matter which avenue one goes down when reflecting on Kaipara and its problems, one always comes back to the OAG and its abysmal failure to do its job properly.

The High Court fixture for hearing the strike out application by the Council has been confirmed as 10 am on 16 August in the High Court, Whangarei.

This is only the entree before the main course.  The Commissioners are trying to strike out the main cause of action of the MRRA on the basis that the KDC debts are "protected transactions" and that the MRRA had no supportable claim in law.

MRRA LATEST    24.06.13
Our next meeting will take place on 7 July 2013 at the Rec Centre Insley St, 1:30pm.

Preceded, by popular demand, by a march beginning at the Hub at 12:30 Please JOIN in, have an invigorating walk and bring a funny eye-catching placard to wave.

We invited the minister for Local Government (Hon Chris Tremain) to attend and speak to the meeting. He did not even deign to acknowledge receipt of the invitation.

The MRA advice on submissions can be seen here.

TIME FOR A HAIR CUT?   24.06.13
No doubt many of others have not been a bit puzzled by the ease with which MediaWorks went into receivership, dumped its debts and then was reborn.

Apparently it is a good, profitable company but simply could not bear the $700 million debt burden that it was lumbered with. After the receivership that is now down to $100 million.

Clearly there have been free haircuts all round and ratepayers in Kaipara might like to get KordaMentha in to deliver a few haircuts to those who were responsible for the Kaipara illegalities.

If those responsible for the financial and legal mayhem chipped in their share of the debt we could soon have a the KDC operating well within its budget and charging reasonable rates.

We all know who the suspects are but who is going to initiate the hair-cutting procedure?

In his latest blog MRRA member and Town planner Joel Cayford asks: Are Council Bank Transactions Ultra Vires?

He explains that all loans to a Council are protected transactions under section 117 LGA, and traces the origins of that section, and the reasons for the incredible protection that it provides to the banks.

What the section effectively means is that local authorities can even act fraudulently in securing a loan but it is still enforceable. That clearly overrides the concept of ultra vires under which any act by a local authority outside its legal powers can be set aside.

That is the problem in the judicial review application. The bank debts are clearly enforceable against the Council. Of that there is little doubt. The big question that the court has to answer is whether the Council has the power under the LGA and the Common Law to set rates to pay for an illegal or ultra vires debt.

Joel Cayford also uncovers a gem in the speech of Judith Collins when the Local Government Bill was before the House. She is now the Minister of Justice but was in opposition at that stage:

Despite all the rhetoric about accountability, despite the claim that this legislation allows councils to empower local communities, it actually states that it does not really matter, if one works at the council, because the council can do anything it likes, really. Not only that, but there is no liability! So where is the accountability? There is none. This is fraudulent legislation. The only people who are accountable are we poor people who have to pay the rates, and in this bill the Government, with the help of the United Future party, is giving, carte blanche, to councils---I must say, to its shame---to do whatever they like. And, guess what, they do not even have to follow the rules set out in this legislation.

Ratepayers in Kaipara will endorse every word of that speech. That is exactly how things have turned out to be. The obligations that a local authority had in law can simply be ignored without any accountability.

Given her opposition to this clause and the sentiments expressed, it will be interesting to see how the Minister votes on the issue when the Kaipara Bill comes before Parliament.

Mike Sabin is supporting the Validation Bill on the basis that any decision will be made by Parliament, which he says is the highest court in the land.

With respect to Mike, he is completely wrong. Here is an extract that sums the situation up well:

Parliament has traditionally been called the highest court in the land because it was, once upon a time, indeed the highest court under the original Westminster model where the House of Lords or the Upper House was the highest judicial body. In fact, it remained so until recently when the Supreme Court of England was established.

Much has been lost, however, in the translation or export of the Westminster model to the Commonwealth countries where, even though Parliament retains the power to punish for contempt, it does not sit as a judicial body, and is thus not a court. Nevertheless, the misnomer persists

The reality is that Parliament in New Zealand is not a court and the highest court in the land is the Supreme Court of New Zealand.

Parliament is simply a political arena where decisions are made, not on the basis of law or on fairness or justice but pursuant to the policies of the party that has the most votes. Parliament makes the laws but it is the role of the courts to apply and interpret those laws in accordance with statutory law and the common law.

That is why this Validation Bill is an abomination for ratepayers. The chances are that the fate of Kaipara will be decided simply on party lines. Justice, fairness, equity, the rule of law and all those other fine principles which should be relevant, will give way to basic political expediency.

That is why the judicial review is so important.

Mike Sabin took a hefty swipe at the OAG in his speech in the House on the First Reading of the Validation Bill.  He now appears to be spreading his net wider and targetting others who may have been responsible for the Kaipara rort. He does not have to look far.  Any ratepayer could tell him the names of all the suspects who so far have got off scot free.  It is good to see someone making a noise about the question of liability but, sadly, that is all it probably is. 

Is Mike and his party actually going to do anything about holding others responsible?  After all he is supporting a Validation Bill that could stymie the ratepayers' application to the court which will resolve once and for all ratepayers' liability for the illegal debt.

He is also supporting a bill that is ill-considered, vindictive and utterly inappropriate.  Kaipara can never go forward unless some independent experts get stuck into Council and sort out ALL the financial and legal problems and then come up with some really genuine solutions.  And hopefully they might consult with ratepayers along the way.

And why, oh why is the OAG holding a so-called "independent" inquiry into the EcoCare disaster when Mike Sabin, his Parliamentary colleagues and everyone else, believe that the OAG must bear a great amount of responsibility for the debacle?

JUDICIAL REVIEW     19.06.13
The commissioners have applied to strike out one of the claims of the MRRA in its judicial review application on the basis that there is no case to answer in law and it cannot succeed.

Under the LGA loans from banks are protected transactions and deemed to be "valid and enforceable" against the Council even though they were illegal, ultra vires or fraudulent.  (BIzarre but true).  Council then pleads that it is therefore entitled to set rates to raise monies to repay those loans.

The MRRA contends, however, that although the loans are valid and enforceable between the parties, the loans may still be illegal for other purposes.  There are special provisions in the LGA whereby a receiver can set a special rate to repay a loan that is a protected transaction, but there is no special power vested in the Council itself.  When setting a rate the Council is therefore bound by the general provisions and principles of the Rating Act and the LGA and the principles of the Common Law, and, it is argued, does not have the power to set a rate for the purposes of repaying an illegal debt.  Any such power should have been specifically included in the LGRA, as it was for receivers but not for local authorities.

The Judge acknowledges that the case is "of some public interest" and is in the complex category.

A tentative hearing date for the strike-out application has been set for 16 August in the High Court at Whangarei.  That date will be confirmed after 24 June.

Submissions to Parliament's Select Committee have to be lodged by the deadline of 25 July 2013.  A notice is in today's Herald and the official notice can be seen here.

A guide to making a submission can be downloaded here.

In the next few days we will be issuing a guide to the issues that ratepayers should concentrate on when drafting their submissions.

The chair of commissioners, John Roberston, is working overtime selling his spin to MPs. He is telling them  that most ratepayers support the commissioners and that "resistance to paying rates is from a small, but very vocal number of ratepayers". 

Ratepayers need to to show the Select Committee that John Roberston and his crew are completely wrong.and that Kaipara as a whole rejects the autocratic and non-consulted actions of the commissioners and opposes the Validation Bill.

It is also time to put aside hyperbole and over-the-top comments.  We need to express our case clearly and with passion.  Let the facts do the talking.  We have right on our side.  We have the law and equity on our side.  We just need to win over Parliament.

Mike Sabin did an amazing about-face in his speech on the First Reading of the Validation Bill.  He came out very strongly about pursuing those who are responsible for the Kaipara carnage.  The initial feeling was that he was trying to plant a foot firmly in both camps to try and win back favour with ratepayers who see him as having put politics before the the rule of law and the best interests of the district.

I now hear through the grapevine that he has been writing very strong letters to individual ratepayers pressuring them to pay their rates.

If you have received such a letter from Mike Sabin then please let me have a copy so that we can see what our elected member is up to.

Many ratepayers, especially those in the west, do not fully understand why the MRRA opposes the Validation Bill that is now before Parliament.  The Association has summarised its position on the matter and sent it to MPs. It can be seen here.

The following extracts are taken from Mike Sabin's speech at the First Reading of the Validation Bill.  For years many of us have been pointing the finger at the OAG but with no response.  It is good to see that the same incredulity with which we have looked at the abysmal performance of the OAG and Audit new Zealand is now being shared by MPs.

Mike Sabin National –Northland

Like so many in the Kaipara people are angry at the council’s handling of the Mangawhai wastewater scheme that has burdened this district with enormous debt. It is important to note from the outset that the $30 million decision to expand the sewerage scheme is not subject to this bill. In 1999 the council estimated the cost of the Mangawhai wastewater scheme at $11 million. In 2003 it was estimated at $17 million. By March 2006, it was $35.6 million. In October 2006 the council approved a new contract for $58 million. The final actual cost was $62 million. Although there have been some changes in the scope of the scheme from what was envisaged in 1999 the question is how did they get this so wrong? The Office of the Auditor-General is investigating this and whether any individuals or organisation is culpable.

It would be wrong of me to comment further while this inquiry is underway but I await with great interest the outcomes of this inquiry, including, it must be said, the role of her own office and that of Audit New Zealand as the council auditor. The public and the residents of Kaipara depend on Audit New Zealand, as the council’s auditor to ensure the compliance of their local authority with the law, their standards of accounting, and the necessary probity and financial prudence.

Annual audits of public bodies are required for very good reasons. There are some serious questions that must be answered here. How could the cost of the scheme go from $11 million to over $62 million with such limited consultation with its ratepayers and yet the Council still receive clean audits?

How could Audit New Zealand sign off on the long term council community plan when there were major inconsistencies between the financial projections in the plan and the funding arrangements being put in place to finance the project?

How could they also sign off on the long term council community plan that relied heavily on the collection of development contributions when there were no development contributions policies in the plan?

Similarly, the long term council community plan was signed off when the rates needed to fund the Mangawhai wastewater scheme were not even included in the funding impact statement, which is critical to the council being able to set the rate.

How can it be that the council can have such deep-seated and long-standing non-compliance and other fundamental financial mismanagement issues and still get clean audits year after year when people in that district were saying that there were problems?

Why were none of the growing financial performance issues of the Kaipara District Council noted in successive audit reports?

Have the auditors failed the ratepayers of Kaipara? If so, that failure must be addressed. It must never happen again, and accountability for failure must be sheeted home.

Pretty strong words from a politician, and those sentiments were echoed by other MPs.

From today's Herald's Insider brief - scroll down to JOB-SHARING.

The transcript of the First Reading of the Validation Bill can be seen here.

OAG GETS A CANING   13.06.13
Perhaps one of the most startling thing about last night's debate in the House on the Kaipara Validation Bill was the acceptance from all sides of the House that the OAG, the Auditor-General herself, and Audit New Zealand had to bear a major responsibility for the Kaipara debacle....(continued here - scroll down)

The OAG at work

"Don't come out.  It's not over yet."

I commend to readers an article, referred to me by Craig Jepson, by Michael Bassett and Luke Malpass on interest.co.nz relating to the affordability of housing in New Zealand.

Of special interest is the response of Hugh Pavletich (scroll down to comments) who pinpoints the responsibility of local government (rather than existing property owners and greenies) for creating high house prices:

My view is that it is simply Local Governments costs getting out of control (the bigger they are generally the worse the problem) … losing the capacity to meet their infrastructure responsibilities and cope with normal growth.

To mask this governance / regulatory failure, understandably they start in to strangling land supply and then as their costs get further out of control, start imposing technically unsound Development Levies and other fees. Just wherever they can generate revenue to feed their insatiable bureaucracies.

It's nothing more or less than Parkinson’s Law on steroids (Parkinson's law - Wikipedia, the free encyclopedia ).

Within the larger Local Authorities, the interests of the bureaucracy always come first. Their communities lose control of them.

Hugh Pavletich comments can be seen in full here. And if readers want a real shock they should have a look at this.

Those comments sum up the essence of the problem facing Kaipara. The EcoCare scheme was built ostensibly to save the waters of the harbour from pollution and to provide a modern and efficient and well-priced solution.

The reality is, however, that it was a scheme to enrich the contractors, the consultants, the banks, and all those involved. Rates and development contributions were not set to service a genuine debt for an essential service but to fund the excessive payments to those who had abused the system.

And that is the problem facing the KDC under its new LTP. Massive rates are being charged to pay not for essential services, as the commissioners lamely suggest, but to fund the illegal debt that was used to pay the "abusers".

Likewise the development contributions that are supposed to rescue Kaipara from penury, sometime in the future, only exist in the fanciful minds of John Robertson and his crew. They are never going to happen. And if they did happen they would not be charges for services provided, a large part of the levies would be simply a method of repaying illegal debt that was used to enrich all of those who were involved in the racket.

The setting of development contributions is governed by very precise methodology in the LGA and those developers who feel they are being used to fund Council's illegal debts and profligacy, rather than pay for essential infrastructure under the LGA, should be looking for some expert legal advice on the matter.

If we continue on the merry-go-round of KDC incompetence, we will spend generations going round in circles, pouring endless monies into a bottomless pit, getting poorer and poorer, whilst those who profited from the scheme will be sniggering from the sidelines.

Let's stop the merry-go-round now.

The Kaipara Validation Bill passed its first reading in Parliament this evening.  There were ten speakers and the videos can be seen here:

Mike Sabin National

Su'a William Sio Labour

Nicky Wagner National

Phil Twyford Labour

Eugenie Sage Greens

Mark Mitchell National

Andrew Williams NZ First

Maryan Street Labour

Maggie Barry National

David Clendon Greens

Mike Sabin National - in reply

All ratepayers should watch all of the speeches and note that virtually everyone of them vindicates the stand of ratepayers against the KDC.

It is also obvious that the Auditor-General is held by both sides of the House to be largely responsible for the dreadful situation in which the ratepayers of Kaipara now find themselves.

Anyone who in the past had any doubts about the validity of our opposition to Council will get immense comfort from the universal condemnation of the actions of Council.  It should also encourage all those ratepayers who have been wavering about paying their rates to remain steadfast and continue to refuse to pay them.

Mike Sabin was a dark horse and no doubt his sudden epiphany after months of being in denial will be the subject of much speculation.

John Robertson and his crew must have serious concerns about the response of all the parties and they may sense that their plan to railroad ratepayers might end up as a very costly mistake.

 Local ratepayer, Monica, responds (here) to Paul Cresswell's illegal demands for monies (the latest penalty threat) in a somewhat lighter vein, but, at the same time, highlighting the fact that John Roberston and his crew are digging themselves deeper into the illegal mire with illegal actions based on previous illegal actions.

COLIN CRAIG   12.06.13
We have been alerted to the fact that Colin Craig the leader of the Conservative Party will be holding a public meeting at 7.30 pm on 21 June at the Domain Hall.

Although he will be discussing his party's policies on all topics there is no doubt that he will be addressing the Kaipara Problem in some detail.

The Conservative Party website (here) shows that it supports the stand made by ratepayers in Kaipara.

The following comments relate specifically to the government pushing through the proposed changes to GCSB legislation under urgency but also relate to the Kaipara Validation Bill:

“So far as these proposed changes to legislation are a clarification of existing arrangements, there is no problem. However, any extension of power is something that needs to be carefully looked at.”

“Civil liberties and the protection of a person’s privacy are essential, and must not be meddled with lightly. These are freedoms we hold dear, they are freedoms New Zealanders believe in, and have fought for.”

“We rely on the government to protect citizens’ privacy and rights. This must include protection from the government itself. It’s worth remembering that throughout history liberties are usually lost one small step at a time, and it’s normally the government that takes liberties away.”

In the Question and Answer part of the website the following question relating specifically to Kaipara is asked, followed by Colin Craig's answer:

Do you agree with the government passing legislation to retrospectively legalise actions by people in authority so that those not responsible and with no prior knowledge of the action are forced to pay the costs incurred illegally. An example is the local bill going through parliament now to legalise actions of the now defunct Kaipara District Council?

No of course not. Breaking the law is breaking the law and retroactive legislation to make it suddenly OK is nothing but “soft corruption”. Actions need to be judged in light of the law as it was at the time the actions took place.

As an interesting point it has always seemed odd to me that directors of private companies can be taken to court and persecuted for breech of duties but that public servants who do the same, or worse, have immunity. It is worth asking why we hold the private sector to a higher level of accountability than the public sector? Surely it is time for a level playing field.

Ratepayers will be encouraged to hear a politician stating the obvious, that validating illegalities of the past is nothing more than "soft corruption", and that elected members of a local authority should have the same accountability as company directors.

The website also includes an account of Colin Craig's meeting in Kaipara last year:

05 August 2012

Colin Craig, leader of the Conservative Party spoke to a restaurant full of angry ratepayers in central Dargaville on Sunday evening, and has now offered to assist in finding a solution to the problems of the district.

"Yes I have offered to assist Kaipara, and I have referred the situation to our Local Government team, and we will be making our recommendations known," he says.

"I have given my commitment to stand with the people of Kaipara, and to work towards a real solution," says Mr Craig.

Mr Craig spoke to the audience for approximately twenty minutes. He began by outlining a brief history of local government in New Zealand, pointing to the fantastic achievements of local government in the first 140 years.

"It was primarily local government that built the infrastructure and the communities that we see today. It was an outstanding achievement," he said.

He explained how local government had functioned basically as a direct democracy within local communities, and had been the ideal structure for New Zealand as a newly developing nation.

Mr Craig then drew attention to the more recent reforms, and how these reforms had created an inherently flawed system in which those who hold the real power are largely driven by self-interest.

"Ratepayers have primarily become the cheque account funding commercial and bureaucratic interests," he said.

"What we have now is a systematic failure, and we are watching as local body after local body finds itself in serious financial trouble."

"The need for reform is urgent, and unfortunately National's proposal in respect of local government is entirely too timid, at best they are addressing the symptoms of the problem, but not the cause."

Mr Craig then outlined six key areas where reform is required to return local bodies back to being efficient and accountable organisations that deliver value for money.

"Local Government needs to be reformed so that it stops impeding business, development, and the personal well-being of residents."

"What I'm interested in is finding a real solution, and getting Kaipara's problem solved as soon as possible."

Many long-time National supporters are totally disenchanted with the way in which John Key's government has abandoned all the fundamental principles of democracy and justice in Kaipara in the pursuit of political expediency. 

Many also feel that local National MP Mike Sabin has betrayed the people of Kaipara in his slavish, unquestioning endorsement of the autocratic acts of the commissioners. 

Colin Craig and his party might well offer one way of casting a protest vote at the next election.

The cry "Remember the Alamo!" reverberates through Texas history and culture. Over nearly two centuries, the Mexican victory over an outnumbered band of Alamo defenders has been transformed into an American victory for the love of liberty.

Perhaps Kaipara will have the same connotations for New Zealanders when in years to come they say: "Remember Kaipara".

Maggie Barry the National MP for North Shore has hinted that the name Kaipara represents everything that is bad in local government in New Zealand..

This what she had to say in Parliament on the First Reading of the Local Government (Auckland Council) Amendment Bill (No2) (here).

MAGGIE BARRY (National—North Shore):
Let me remind this House that ratepayers in this country absolutely have to know that their council is spending their money wisely on services that matter to them. New Zealand’s 78 councils spend a lot of money—some $7.5 billion of public money each year. Since 2002 council debt has quadrupled from $2 billion to $8 billion, and, on average, rates costs have increased by 7 percent per annum. There are some spectacular failings—absolutely spectacular—so it seems to me it is a very prudent form of the management that this Government is taking over the Resource Management Act reforms. This piece of legislation—a necessary piece of legislation—dovetails perfectly into our wider purpose, and actually gives this Government some say over the less able councils. We feel strongly that ratepayers need good representation and we are not about to sit back on our hands and let things like Kaipara happen.

It will be interesting to see if the National Party, having acknowledged the sheer incompetence of the Kaipara Council ("an absolutely spectacular failing"), will feel that it is appropriate to visit the sins of that Council on to the innocent and already overburdened ratepayers of the district.  Or will they see this as an opportunity to redefine the obligations of a local authority and ensure that those who are responsible for acting outside the bounds of the law, outside all concepts of fairness and honesty, and in defiance of all democratic processes, are personally held responsible for their actions?

When people in future say "Remember Kaipara", it would be nice to think that it was, like the Alamo, because democracy, fairness, and honesty prevailed because of the actions of a few ratepayers who fought the battle against massive odds to have the rule of law returned to Kaipara.

It would be sad if Kaipara were to be remembered as a sordid abuse of power where the government denied the ratepayers access to justice, and where the rule of law, democracy and the separation of powers were totally eclipsed by base political expediency.

MAKE YOUR STAND    10.06.13
You have received the latest threat from Council to add another ten percent penalty to your rates You are in a quandary. Do you give in to the illegal, unjust and immoral bully-boy tactics of Messrs Booth, Winder, Dale and Robertson, or do you stand firm and comply with your clear legal rights and withhold all payments until the court has made its decision?

Remember when making that decision that:

• Council, by its own admission, does not have a valid LTP. That means that it has no legal power to set, assess or collect rates, or to collect any charges for services. It is operating outside the law.

• The annual plan on which the rates resolution of June will be based is itself invalid because there is no underlying LTP.

• The validation bill has absolutely no status until it goes through all the processes of parliament and is enacted as law. That could be many months away, and there is a chance that it will not proceed at all, or that the penalty provisions are abandoned.

• Council has acknowledged that ALL rates set for the last six years are invalid because the rates assessment notices were all invalid. This means that under the Rating Act ratepayers are not legally obliged to pay the rates. It also means that Council cannot assess penalties on those rates.

• Note that Council is not threatening to take anyone to court. That is because its lawyers have advised that any such action would fail because the KDC cannot prove that the rates are "due and payable" in law. It is therefore abusing its power and adding penalties totally outside the law in the hope that the government will endorse its illegal, immoral and improper actions and validate all its past transgressions.

• The matter is now before the court and will be decided once and for all in a few months. Ratepayers should not pay further monies until the court makes a definitive ruling on the matter.

• Remember the words of Robert F Kennedy:

Every time we turn our heads the other way when we see the law flouted, when we tolerate what we know to be wrong, when we close our eyes and ears to the corrupt because we are too busy or too frightened, when we fail to speak up and speak out, we strike a blow against freedom and decency and justice.”

• We know that the law has been flouted. We know that what the commissioners are doing is wrong. We therefore have to be brave and make our stand. If we stick together, if we unite and insist that the ongoing tyranny must end, then we have a chance that justice will return to Kaipara.

Do not pay any rates but more than that, take a positive stand. Write to the commissioners and tell them that they have no legal right to levy rates and that they should listen to the voice of the people.

(Legal Eagle is reporting from Australia)    Many ratepayers have received letters from Council threatening further penalties.  This is all part of the illegal tactics that Messrs Robertson, Booth, Winder and Dale are employing.  They know that they are operating outside the law but they are using the political pressure of the National Party to try and validate all their illegalities and are doing their utmost to stop ratepayers gaining access to the courts.

Each ratepayer must make up his or her mind how they will react.  From my point of view, what the commissioners are doing is one of the worst abuses of power that I have ever seen in my life in what is supposed to be a democratic country where the rule of law is supposed to be paramount.   I believe devoutly that all ratepayers should stick together and refuse en masse to pay any more monies to this undemocratic, illegal and autocratic regime.

If we stick together and deny them money and push for the court to intervene then we have every chance of ensuring that justice will prevail.

Here is advice from Bruce Rogan of the MRRA in its latest newsletter:

Dear MRRA Member

Many people have received a letter from one Cresswell of the KDC who calls himself FINANCE MANAGER. The letter threatens (more) penalties if rates remain unpaid.

Let’s get a couple of things very clear here. The rates demand for 2012-13 is illegal. The resolution that is required to be passed so that the rates can be set was adopted (passed) by the council (that the government sacked) two months LATER than permitted by law. That is just the first thing that was wrong with that resolution. There were many others. The gang in charge now have admitted that the resolution was invalid because they are trying to get Parliament to declare it to be valid, retrospectively. If it was valid, as they kept claiming for months, then it would not have to be put into their infamous Retrospective Validation Bill, which, for those who missed it, has been introduced into the House while our court case is still pending AND before there is any sign on the horizon of the auditor general’s report on what went wrong!!!

Before you cave in to the threats, do yourself a favour and write to Cresswell as follows:

Dear Cresswell,
Valuation Assessment Number 01221234567 (or whatever)
If you send me a letter signed by the Chief Executive (Ruru) and the Chair of Commissioners (Robertson), saying that all of the rates resolutions and rates demands arising from them over the past three years were fully compliant with every requirement in the Local Government Act and the Local Government Rating Act, I (We) will pay the amount(s) outstanding. If you will not do that, I will conclude that the rates demands are, as suspected, completely illegal and unenforceable, as the High Court is likely to confirm. Please respond to this request within five working days of the date of this letter.

Yours faithfully,

Roger the Ratepayer.

You also need to get things in perspective. The correct way to look at all this is in relative terms- i.e. what would your position be if you had not taken action to stop the insanity. In March of 2012, 3000 people turned out to tell the council what they thought of their proposed rates increases. The result was that the council went into retreat and changed the increases from what they were proposing, to levels that were in most cases less than half. With all of the penalties that they are illegally trying to terrify you into paying the amount they are demanding from you is STILL much less than what you would be paying if we had all just lain down in the road and let them drive over us. Clive Boonham keeps saying that concerted cohesive action is the ONLY way to defend ourselves against the outrages being done to us. What more proof do you need? It worked, and it will work again, and it is the ONLY thing that will work.

Here are my own figures, and most other people’s are more favourable (because our proposed increase (47%) was less than many others, because our rates were already obscenely high, and they knew it). Our rates in 2011-12 were $4206. They proposed to increase them to $6183. As a result of our mass revolt they “reduced” ours to $4876. $4876 with 20% penalties added comes to $5851, which is over $300 LESS than what we would have paid if we had let them crush us. Sit down with your own numbers and do the sums for yourself. You are miles ahead, even if you have to eventually pay the penalties. Remember, you have probably also been earning interest on the money you haven’t paid them, which tips the balance even more in your favour.

Make absolutely no mistake, if we, the MRRA and you the people of this community had not stood up to them they would have passed that proposed increase with their eyes shut. The financial disaster would have proceeded unchecked, and having once established that the ratepayers will shoulder 50,70, 120 percent increases (and some were much more!) without batting an eyelid, they would have done it to you again. As it is, they are foisting what they claim to be a 9% increase in the year coming (they are LYING), but even the Government’s hand-picked Bully Boys are not prepared to tempt fate with the increase that is actually needed to refloat this rotting financial hulk.

The Kaipara commissioners were undemocratically foisted on the people of Kaipara and, in the true tradition of local government in Kaipara, are riding rough-shod over the legal rights of ratepayers, their common law rights, the rule of law, and all the principles of democracy and justice that you would care to name.

These usurpers are far more dangerous than the previous Councillors who stumbled along like brainless buffoons.  These guys are smart and experienced enforcers who know exactly how far they can go in suppressing ratepayers' rights.  They also know that they have not only the blessing of the government in their illegal activities, but they are also confident that the OAG, as  both auditor and watchdog, will refuse to get involved even though the commissioners are acting in blatant breach of the law.

The lodging of the Validation Bill with parliament is nothing short of shameful.  I would say that all four commissioners, and local MP Mike Sabin, should be ashamed of themselves for this act of betrayal in regards the people of Kaipara, but I feel that four of them would not give a tinker's cuss about the ramifications of what they are doing.  But I am surprised that Richard Booth has gone along for the ride with his henchmen.  For a man who believes in governance and presumably the rule of law and demcocracy, he is wandering into territory that should make his toes curl.

Legal Eagle has filed formal complaints with the OAG about the lack of legal status of the KDC because it does not have a valid LTP and cannot therefore set, assess or collect rates.  it appears that that Office has done a runner.  Both Lyn Provost and Nicola White refuse to acknowledge my letters or respond to me.

Perhaps they are peeved at my ongoing criticism of the Office's appalling performance over the years as both watchdog and auditor, or perhaps they are bogged down with finalising the EcoCare report.

But, whatever the reason, it is absolutely clear that ratepayers in New Zealand are denied the protection of any regulatory authority, and local authorities are free to breach the law at will in respect of their own obligations, whilst they have the backing of the government to enforce ratepayers obligations.

That is the sort of situation you would expect to find in some autocratic regime, and not in NZ 2013 under John Key's watch.

Legal Eagle has also lodged a complaint with the Commerce Commission on the grounds that the KDC is threatening legal action when it has no legal power to collect or enforce the rates.

It will be interesting to see if another government regulator will run for cover and exempt local authorities from the rule of law. 

The MRRA's judicial review is proceeding well.  An amended statement of claim has been filed by the MRRA broadening the scope of the claim.  There will be a case management conference on 17 June when the Judge returns from his holiday, and the barristers and the Judge will discuss how the case will proceed.  At that stage things should start heating up.

The commissioners have not yet indicated clearly how they see this case unfolding.  They have filed a statement of defence and all indications from their war cries are that they are going to be confrontational and adversarial rather than trying to resolve the matter amicably.  It is a legal custom that applications for judicial review are seen as cooperative affairs with both parties trying to help the court arrive at a resolution of an important legal issue.  After all the clarification of the law on ratepayers' obligations in respect of illegal debts is of huge benefit to both sides and to local government in New Zealand.

Rather than defend the undefendable - such as the illegal rates that Council has already acknowledged as illegal - the commissioners should concede such points and reach an agreement on resolving the real legal point at issue by jointly cooperating with the court, and at the same time reaching an accord with ratepayers as to a way out of the legal mess.

The latest MRRA newsletter sounds a warning for ratepayers who have joined the rate strike:

If you used to pay rates via direct debit, check your bank account NOW. One of our members discovered, to his horror, that the BNZ, without any warning, had re-activated a direct debit authority in favour of KDC that he had revoked a year previously, and the bank had helped themselves to all his rates arrears plus penalties and handed it over to KDC. Not only did the BNZ do this, but it also charged our member a reactivation fee!! We went to the KDC on his behalf and they immediately agreed to refund the money, which tends to suggest that on this occasion KDC is not the culprit.. But it looks very much like somebody is getting desperate, and they are prepared to resort to what amounts to theft to keep going.

Make sure that you have advised both the Bank and the Council that the direct debit has been cancelled.

An article in Sharechat highlights the massive gap between the liabilities of directors for false statements and the liabilities of councillors or commissioners.

Both are in similar situation in that they are investing monies on behalf of their investors/ratepayers and both are in a fiduciary position - the position of a trustee. In fact, because ratepayers are forced to pay rates, one would have thought that the obligations of care and prudent management should be greater for councillors and commissioners than for directors where any investment is voluntary.

In hearing the appeal against conviction of the Lombard Finance directors for the criminal charge of misleading investors, the Court of Appeal dismissed the directors argument that revealing the correct financial situation might have hastened the demise of Lombard, and held that the directors primary obligation was to investors and not to the company.

The commissioners of the KDC are faced with a similar situation. The Council is in dire financial straits and it is widely believed that the Council cannot meet the going concern test and can only survive by charging massive rates that are utterly unrealistic and cannot be supported by the ratepayers.

The commissioners have presented to ratepayers in the draft Annual Plan and amendments to the current LTP financial projections and assumptions that have been widely panned as being totally unrealistic and unachievable.

Very much like the directors of Lombard, the Kaipara commissioners appear to be driven by a duty to try and salvage the Council at all costs, to ensure that the banks get repaid, and to protect the reputation of local authorities as secure investments.

Their duty of care to ratepayers appears to come a very distant last.

The judgment of the Court of Appeal includes a strong statement on the obligations of directors, and there is no reason in law why those same obligations should not apply to councillors and commissioners.

Here is an extract from the article:

"That obligation (to investors) overrides the duty directors owe to the company to act in its best interests (where those duties may conflict," the judgment said. "It also means that if the directors cannot be satisfied that the statements contained in the offer documents are true and are not misleading by omission, the offer should not be made irrespective of the consequences that might then flow."

The size of the Lombard failure was substantial, and investors should have been made aware of its precarious position when it was seeking to raise funds in late 2007, the judgment said.

"The investing public is highly dependent upon the truthful disclosure of relevant information in offer documents," the judgment said.

"Failure to meet the required standards has a number of potential consequences: loss of investor confidence; a lack of trust in this country's financial institutions; damage to capital markets and the wider economy; and loss of funds invested by the public," it said.

It is about time that someone stood up to be counted and filed proceedings against the councillors and commissioners of a local authority so that the High Court could clearly define, once and for all, what their obligations to ratepayers are.

Kaipara would be a perfect opportunity.

The Plumbers Drainlayers and Gasfitters Federation has its own publication that highlights its battle against its own validation bill.

I get a lot of letters from armchair critics who go to great lengths to tell me what I should be doing, but never get out of their armchairs to do anything themselves.

If we are to win this battle, and we will win, then it will be as a result of thousands of ratepayers who have reached the stage where they are thoroughly "pissed off" with the illegal and dishonest antics of the KDC and decide to do something about it.

The rate strike is a perfect example. Not paying one's rates does not come easily to anyone, but Kaipara ratepayers have shown that they will take action if they are pushed to the limit (see the post below).

We need action in other areas as well.

All ratepayers should read the last three articles under Draft Annual Plan here.

If they feel incensed by Council's fundamental dishonesty in basing the whole future of the district on shonky financial assumptions that are as flimsy and as baseless as fairy dust, then they should do something about it.

In the latest financial report just released by Council called Forecast Two (included in the Agenda for the 27 May meeting ), Council admits that its financial situation is very serious and that it is reliant on the validation bill going through so that its debt of $20 million or so to ratepayers can be excluded from the books.

So what if the bill does not go through?

It also acknowledges the development contribution returns, which are the basis for repaying a major part of the debt, have been dismal and well below budget. The budget has now been amended to show the annual return for development contributions has now decreased by $0.7 million.

According to my reckoning that puts the annual return into negative territory.  So how then is the debt to be repaid in line with the amended LTP?

All of this makes fairy dust look solid and substantial.

Ratepayers should not let John Robertson get away with this nonsense. Council is now in the financial poo because of shonky figures and assumptions in the past, and it is now heading down the same track.

Robertson and Co need to know that we do not trust them. I urge every ratepayer to write to them and tell them what they think of their financial projections and make it clear that they are not acceptable to ratepayers.

Tell them that you don't trust them and demand that the financial status of Council and its future viability should be subject to examination by independent forensic experts.

We cannot afford the risk of "going forward", as the phrase goes, with shonky figures.

Legal Eagle has sent submissions to the Auditor-General and Deloitte, the Council's auditors asking them to review the auditor's certificate for the amendments to the LTP. He has also written to Steve Ruru asking him to justify his figures.

It is now over to all ratepayers to do their bit and to let their feelings be known.

commissioners @kaipara.govt.nz


The rates strike is having a massive effect. Twenty one percent of ratepayers are now on strike, according to figures just released by Council.

That means that over one in five ratepayers are not paying their rates.

That is absolutely massive and a telling indication of the mistrust that ratepayers have for the Council and commissioners and the determination of ratepayers to do something about it.

And that is in spite of the threats about penalties and the pressure put on banks to pay the rates on behalf of ratepayers.

But we need to do more. If you are on strike, encourage your neighbours and friends to be part of it. If they don't already know, make sure that they know what the commissioners are up to and that withholding rates is one of the most effective ways of stopping them.

Refer them to articles on this website. Mention that Council is acting illegally and has admitted in the validation bill that its current LTP and the rates for the last six years, including the current year are all invalid.

The MRRA application to the court to rule on the validity of the rates and the EcoCare debt is only a few months away. All ratepayers should withhold payment of rates until the High Court makes a decision on the matter. And remember that Council's own lawyer advised that the Court "would likely find all the rates invalid".


It is good to see that the MRRA in its latest letter to members has come out strongly in support of the continuing rate strike.

Kaipara desperately needs a little bit of wisdom at the moment. The commissioners are driving their freight train at full throttle down a no exit line and sooner or later there will be one almighty crash.....(continued here)

Legal Eagle looks at the massive risks the commissioners are taking with their validation bill and suggests that the commissioners should be reaching an accord with ratepayers rather than trying to beat them into submission.

The NZ Herald reports (here) that the Financial Markets Authority (FMA), the watchdog for finance companies, is in talks with the directors of failed lender Strategic Finance with a view to reaching an out of court financial settlement rather than being sued for damages.

It appears that the finance company misrepresented about $68 million worth of debt which it classified as second mortgages when they were effectively a third-ranking security.

Can any one tell me what the difference is between that and the Councillors of KDC who misrepresented the extent of the EcoCare scheme and the fact that they had illegally borrowed twice as much as they said they were going to?

Why is it that company directors are deemed to be legally liable for misleading investors but councillors are not only considered to be without any fault, but, to add insult to injury, the government forces the ratepayers to pay for the losses caused by that misleading behaviour?

How long are New Zealanders going to put up with a situation where councils can run amok and then force ratepayers to pay all the bills?

Legal Eagle explains (here) how Kaipara ratepayers have been denied the right to be consulted at every step of the way in respect of the EcoCare rates and how Mike Sabin and the commissioners, in their validation bill, are now replacing consultation with political expediency.

Legal Eagle suggests that the commissioners are completely out of the depth in financial matters. They are basing the Council's ability to repay the illegal debt on a massive inflow of development contributions in the future which critics suggest is nothing but a fantasy.

Ratepayers are encouraged to read Legal Eagle's article and then decide if they would willingly invest in a company where the directors' financial plans are based on assumptions that are clearly wrong and misleading. The article can be seen here.

Many ratepayers are sucked in by the schmaltzy charm of commissioner John Robertson and his suggestion that ratepayers must pay rates for services rendered.  That is incorrect.  Ratepayers are only obliged to pay rates that are properly set according to law but the commissioners have acknowledged in the Validation Bill that the current LTP and the current rates are invalid.

If Council is so incompetent that it cannot set rates in accordance with the law then it should not be there. 

Ratepayers are generally very happy to pay for services rendered.  What they baulk at is paying is for illegal debts and monies that have been squandered by an incompetent Council operating outside the law.

The commissioners need to be reminded that they also have an obligation to comply with the legislation and the Minister's terms of reference.  They must consult with ratepayers and carry on the affairs of Council in an open and democratic manner. 

Whilst they continue to ignore their legal obligations, whilst they operate outside the law with no LTP, and whilst they head down a path of financial ruin, ratepayers have every legal right to continue to withhold their rates.

Within a few months the High Court will give us a definitive ruling on the legality of the Kaipara chaos.  All ratepayers should show their disapproval of the commisssioners' approach and withhold their rates until the Court makes that ruling.

Garry Hooker is a respected figure in Dargaville but has earned a spot on John Roberston's blacklist  of uncooperative ratepayers (see article below).  He pretty well represents the views of the community in his oppositon to the Validation Bill expressed in this letter to Steve Ruru, Chief Executive of the KDC.

Garry has also lodged a more detailed complaint with the Ombudsman.

Commissioner John Robertson has been smooching up to locals trying to win them across to support the commissioners' policies.  He is an ultra-smooth operator with people skills honed over many years in politics, and many have fallen victim to his charms. That is until reality and the cold hard facts of the commissioners' financial fantasies spoilt the show.

Or until he and his fellow commissioners shot themselves in the foot with their cavalier attempt to resolve all legal problems with their ill-considered, unconsulted, ad hoc, flawed and incomplete Validation Bill.  It is a futile attempt at a quick fix that is doomed to utter failure and is going to cost ratepayers a small fortune.

And add to that the ridiculous response to the MRRA's judicial review with their irrational threats of massively exaggerated legal costs.  That more than anything shows that the commissioners are out of their depth and will go to any length, at ratepayers' expense, to defend the indefensible.

The chummy style of John Robertson has finally been seen for what it is.  As has his attempt to divide and conquer by sowing seeds of discontent and trying to undermine the influence of key players.

He now has a blacklist of those people who he says that he will not deal with.  On that list are all those on the executive of the MRRA, no doubt for having the effrontery to try and resolve the Kaipara legal shambles in a rational and sensible manner rather than allowing the commissioners to steamroll the ratepayers into submission.

Also included is Legal Eagle for having the temerity to expose the illegalities, the incompetence and the shortcomings of the previous regime and the current one.

New on the list is Garry Hooker who has earned his place by opposing the validation bill and generally by his lack of reticence in calling a spade a spade.

I am not privy to the full membership of this particular order and would appreciate hearing from anyone else who has made John Robertson's blacklist.

It started off as a Rate Strike but events have overtaken it and perhaps that name is no longer appropriate.  Rate Strike suggests that the rates are legal but are being withheld to bring pressure to bear on the Council.  That has all changed.  Council has now acknowledged legally in the Validation Bill that all the rates for the past 6 years are invalid.  It has also acknowledged that the current LTP is invalid.  That means that the rates for the curent year are also invalid and that it has no power to set, assess and collect rates in the future.  It is in legal limbo. 

What ratepayers are doing now is simply not paying illegal charges that Council has no right to charge in law. 

Several people have advised that they are being pressured by their banks to pay the rates that they have been withholding.as part of the rates strike.  I have therefore redrafted a standard reply to the banks that include alll the latest information.  Simply modify the standard letter to suit your own circumstances.

What is it about local government? Whilst in the real world company directors are being sent to jail for making untrue statements in offer documents and misleading investors, their counterparts in local authorities - the councillors - are free to make any fanciful promises that they wish, be as dishonest as they like, and yet the regulatory authorities simply turn a blind eye to them, and they get off scot free............(more)

ANOTHER CON 23.05.13.
In a recent blog Joel Cayford highlighted the absolute absurdity of the financial projections that the commissioners have included in the draft annual plan (DAP).

Ratepayers in Kaipara should have learnt the lesson by now that financial projections put together by so-called experts are utterly meaningless. Those who wield the power start with the outcome that they want, then get the pundits to hobble together some statistics that superficially appear to justify the outcome.....(more scroll down)

Notice of the validation billl has been filed in parliament (here).

I have pointed out on several occasions that the commissioners have got themselves into one those dreadful Catch 22 situations in respect of the validity of the current LTP.

In the face of claims from ratepayers that the 2012/22 LTP was obviously invalid because of several clear instances of non-compliance with legislation, the commissioners maintained that they had a legal opinion confirming that the LTP was valid. But they refused to disclose that opinion.

They then turned full circle by including the LTP in the Validation Bill. This was a clear acknowledgement that the LTP had always been invalid.

However they tried to fudge the issue, and have a bet both ways, by including a provision in the Bill to the effect that the inclusion of the LTP and certain other matters in the Bill was "for the avoidance of doubt". In other words they weren't sure whether it was invalid or not but were throwing it in, just in case.

The folk in Wellington would have none of it and demolished that provision. I presume on the basis that being valid is very much like being a virgin, you either are, or you aren't. There is no half way.

So the Bill now states quite categorically in section 3 that the purpose of the Act is to:

validate the rates and to validate actions or omissions the Council relating to the late adoption of its annual report for the 2011/2012 financial year and its long-term plan for 2012-2022.

That means that the LTP is not valid until the validation takes effect when the Bill is enacted by parliament, which will at best be many months down the track.

The commissioners are therefore faced with the difficult situation of not having an LTP and not being able to set or collect rates or do many of the things that councils need to do.

It is an insurmountable problem that everyone is trying to ignore because quite simply there is no legal solution. Council is effectively in legal limbo and is utterly hog-tied.

The way out for the commissioners is to turn a blind eye to the situation. John Robertson is still insisting that the LTP is legal and that it was only included in the Bill "for the avoidance of doubt", when he knows full well that the Clerk of the House and the Parliamentary Counsel Office have completely rejected that view.

The whole situation is totally farcical and the rule of law is being kicked around like a Machiavellian football. It is time the regulatory authorities - and that includes the Minister - got off their regulatory back-sides and put an end to all this cynical abuse of power by the Kaipara Council.

If they don't, then it may mean another trip to the High Court for an injunction to stop the commissioners operating outside the law.

Anyone interested?

Northland based Green MP David Clendon, who spoke at the recent meeting of the MRRA in Mangawhai, has recently written to the Minister of Local Government encouraging him to reconsider his decision not to accept an invitation to meet with the MRRA, to hear the concerns of residents and ratepayers first-hand and to provide leadership in reassuring them that the government’s best efforts are being applied to finding a fair, affordable and a sustainable resolution.

Retroactive legislation in the form of a Validation Bill does not sit comfortable with most MPs. In addition, the failure of the Minister and his commissioners to consult with or engage in any way with the community before pursuing the validation process, as required by the terms of reference and the basic rules of good governance, will be frowned upon throughout parliament.

MPs see that the validation process as a last resort and only after there been meaningful, constructive and robust consultation with ratepayers.

The failure to consult or engage with the community becomes far more relevant where there are no elections and when government appointed commissioners are involved with a clearly government-driven agenda. It has all the appearances of democracy and the interests of the community being completely hijacked.

It looks as if David Clendon may be the first of many to go knocking on the Minister's door.

Beleaguered National MP Aaron Gilmore could be the saviour of Kaipara. If he becomes an independent, and we can persuade the opposition parties to vote against the Validation Bill, his one vote could be the critical vote that stops the Bill in its tracks.

Remember that the Second Reading of the Plumbers Validation Bill only passed by a majority of one.

Such is politics. 

THE SEAT OF POWER?   10.05.13
The new seat of power for the commissioners?  The development of the KDC new offices in the Hub at Mangawhai is taking shape.

Four new chairs from Briscoes ($119.99 each) and new air conditioning.

Thanks to Doug Bone

The Kaipara commissioners' autocratic actions in pursuing a validation bill, and at the same time trying to deny Kaipara ratepayers access to the High Court, is starting to send ripples out beyond the Kaipara district. 

The MRRA, which has lodged an application for a judicial review with the High Court, has just received a substantial donation from the Russell Ratepayers' Association to help fund their action.

Clearly ratepayers across the country are beginning to realise that what is happening in Kaipara has major significance for all ratepayers.  There are some very important legal principles at stake and the feeling is growing that, given the total failure of the regulatory authorities, there is need for a watershed decision of the High Court defining the exact limits of a local authority's powers. 

Ratepayers have had enough of their councils running amock and ignoring the law.

OAG INQUIRY   09.05.13
The OAG's report on EcoCare is not yet available.  That is the gist of the update (?) just posted on the OAG's website here.

There is no indication of when the report will be available.

The update states:

As with all of our major inquiries, we will now ensure that we comply with our natural justice obligations by giving those affected an opportunity to comment on the draft report before we finalise our views.

Two points:

+  Ratepayers, the victims in all this, and the ones who are being forced to carry the can for the incompetence of others, are deemed not to be affected persons

+  Natural justice for the perpetrators it seems, but no natural justice for ratepayers. How could the OAG be allowed to carry out this inquiry when many consider that that Office bears a large responsibility for the EcoCare debacle?

RATE STRIKE 09.05.13
It is good to see that the MRRA has restated its support for the rate strike in its latest message to members.

Not only is the KDC in a precarious situation financially, it has now acknowledged that it has no valid long term plan (LTP).  The LTP is included in the validation bill because Council has finally conceded that it is invalid.

All councils have to have a valid LTP as it is the document that enables a local authority to operate legally, to set and collect rates and make charges for all other matters.  Without a valid LTP the KDC is operating outside the law.

It is a bizarre situation having a local authority operating illegally but that is the extent of the Kaipara problem.  Rather than resolving the underlying problems, the commissioners have gone for totally ineffective band-aid fixes, and the problems have just got worse and more complicated.

It has now reached the situation where there is no legal fix in anyone's tool-box.  No one ever contemplated that a local authority could get itself in such a mess.

To pay rates to an organisation that is effectively insolvent, is operating outside the law, and has gone to parliament in the hope that it will wash away all the illegalities, is not to be recommended.

If you want further encouragement to join the rate strike just consider that all the rates that you pay will go to pay for the costs of the ridiculous validation bill and to fight the MRRA judicial review.

The commissioners are using ratepayers monies to deny ratepayers the right to have their legal case examined by the court.  They are also going ahead with an incredibly stupid, confrontational and futile validation bill that will create absolute mayhem in the district,

If they had pursued their obligations in the Minister's terms of reference to consult with the community and to engage with the community, the validation bill would have had the endorsement of the ratepayers, if it was reasonable, and if it included ALL the legal problems that need to be resolved. 

Given the total indifference to the illegalities of the Council by the Minister and the OAG - the so-called watchdog - ratepayers have no alternative but to apply to the court for a ruling and to withhold their rates.

The High Court decision is only a few months away.  Do not pay your rates.  Put them into a separate account.  And let's wait for the High Court to tell us one way or another whether the rates are legal. 

LEGAL BOOBOO 2  09 05.13
The Winder validation bill is a shabby piece of work that is heading for disaster. 

Let me tell you why....(more)

LEGAL BOOBOO   08.05.13
Has commissioner Winder, the legal brains behind the Validation Bill, committed a major bungle?

The Bill only goes back six years, presumably because of the Limitation Act.  But the six year period in that act can be extended when the problems were unknown.

It is interesting that the Tasman Bill going through parlaiwmtn at the moment goes back further than six years.  And, given that Peter Winder has admitted tha ALL rates have been invalid since the Kaipara Council first commenced way back whenever - unbelievable but true - would it not be advisable to include all of the rates ever set by the KDC in the validation bill?

If the Council is going to spend $200,000 on this farce then it may as well get it right.

The commissioners have decided on the form of the validation bill that will be notified publicly and then lodged with parliament.

Ratepayers have all been sent a notice advising of the proposal and the bill can be viewed at Council offices or here.

The fact that the Kaipara Council has committed this litany of incompetence - which runs to thirty page - is bad enough, but, when you consider .......(more)

Council cannot pay monies promised to the Mangawhai Activities Zone because it has used the monies in the reserves fund for other purposes and cannot repay it without going futher into debt.

Legal Eagle (here) casts some light on the situation and suggests that it reflects a Council that cannot cope with its debt.  He calls for government intervention before the commissioners destroy Kaipara trying to impose their will on the people of the district.

John MacDonald of Dargaville reflects on the validation bill here.

Neil Tolich of Maungauturoto reports (here - scroll down) on the recent Council meeting that confirmed that the validation bill was to proceed, He also articulates his concerns about where the commissioners are taking Kaipara.

Bruce Rogan of Mangawhai points out (here) the arrogance of the commissioners who are doing all they can to block ratepayers from accessing the courts (with ratepayers' money) when in fact they themselves are going to the highest court in the land - parliament - to validate all their rating blunders (with ratepayers money).

Ratepayers are incensed by the actions of the commissioners in trying to stop the MRRA judicial review and railroading a totally unjust validation bill through parliament. 

We are therefore opening a special page for ratepayers to have their say on these matters. 

We need to show the commisioners they they are acting alone, as unelected appointees, and do not represent the people of Kaipara.

Send posts to contactus@kaiparaconcerns.co.nz

Doug Bone kicks off here (scroll down).

Uncle Joe from Kaiwaka has written to MRRA's Bruce Rogan and espressed his views in no uncertain terms about the judicial review proceedings issued by the MRRA.  A copy of his letter can be viewed here.

Anyone who has any understanding of governance and the fundamental principles underlying local government legislation in New Zealand must be cringing at some  ....(continued here

The commissioners are feeling the pressure. In an attempt to justify their dictatorial, unilateral moves to validate the gross incompetence of the past and to stop ratepayers getting the justice they deserve in the High Court, they are digging themselves into a bigger hole with their ridiculous scare-mongering tactics.....(continued here)

In a display of appalling governance bordering on petty spite the commissioners have knocked back the application for a grant from reserve funds of $131,704 for the Mangawhai Activities Zone.

The following resolution is recorded in the minutes of the Council meeting.

Delays the consideration of the application until the outcome of the Statement of Claim seeking Judicial Review taken by the Mangawhai Ratepayers and Residents Association is known;

The monies that had been promised come for the reserves fund which are to be used solely for purposes such as this.  They are not there to finance Council's cover up of its own past delinquencies. 

All in all it looks like a petty display of spite by the commissioners making the ratepayers of Mangawhai "pay" for having the audacity to challenge the commissioners powers in the High Court.

Wonder why the commissioners are fighting a desperate rearguard action to stop ratepayers getting access to the court? 

They are worried that the court will lay bare the illegalities and incompetence of the KDC and raise some very serious questions about how local government functions in this country.  It might also highlight the abject failure of the regulatory authorities to perform their functions.

Ratepayers across the country are having serious doubts about local authorities running out of control and operating in secret.

Take a look at these two NZ Herald articles on incompetence and lack of transparency and you will realise why Kaipara is just the tip of the iceberg.

Note the comment in the first article from former Mayor Michael Laws about Wanganui's disastrous sewerage system:

"The liability goes back to those engineers and designers and senior council management who informed the governance team that it would work. Just as worrying is the fact those experts had their assumptions peer-reviewed by other experts and they got it wrong too.

A repeat of the Kaipara situtation, except that in Kaipara the decision was made in secret and in defiance of the law.

It is very rare that ratepayers have the money and the cojones (google it if you don't know) to stop local authorities exceeding their statutory powers.  Thanks to the MRRA that is now happening in Kaipara.

Those who are part of the the cosy, laissez faire arrangement whereby local authorities operate with impunity outside the law will shudder at the thought of an independent judicary cutting through years of spin and misinformation and simply stating that local authrities MUST comply with the law.

The reasons why the validation bill should not proceed at this stage can be seen here.

These reasons were presented to the commissioners by the MRRA to try and get them to be fair and reasonable and to consult with ratepayers before taking this unilateral action.

The MRRA has impressd on the commissioners that the issue of legal liability for the illegal debts must be decided either by agreement or by the court.  Indications are that a court hearing could be held as early as June or July. 

To have the High Court rule on this matter, independently, fairly and in accordance with the law, would bring some finality to this long festering dispute.

After years of being told repeatedly by Council that issues of legality could only be decided by the courts, it would be a denial of ratepayers' rights if the Council and parliament united to deny them access to the court.

The MRRA has also made it clear that it would take all reasonable steps to help put Kaipara back on its feet again.  If agreement could be reached on legal issues then ratepayers would support the validation of all matters in the validation bill except for penalties on unpaid rates by rate strikers, EcoCare annual rates for one year when there was no service, and the charges on untis of demand and SUIPs which were totally outside the law.

Validation bills are having a rocky passage through parliament at the moment and the Sabin bill will push parliament's tolerance to the limit. How preferable it would be if it were delayed  until all the problems of Council are identified by the court and the OAG report (which should be out soon) so that All the problems facing Council are included in the bill.  Not only that, it would have the support of ratepayers as part of a negotiated settlement.

At yesterday's Council meeting the commissioners resolved to go ahead with the validation bill without consulting with the community.  The Council now has to comply with the public notice requirements before the matter goes before parliament.

RICHARD BOOTH   30.04.13
It is interesting that commissioner Richard Booth was again absent from yesterday's Council meeting and did not vote on the validation issue.  For such an important issue one would have though that all commissioners woud be casting their vote.

The other three commissioners are dyed in the wool political animals well versed in the mysterious arts of local government in New Zealand and have very definite views about the role of ratepayers in the local government system. 

Commissioner Booth is a local resident with a well-earned reputation and one wonders how he copes with the appalling governance of the commissioners and the denial of basic consultation over such a major issue as this. 

The commissioners are holding a special meeting on Monday to confirm that the validation bill will proceed and be presented to parliament.  The Council agenda can be seen here.

The draft bill is Attachment A at page 15.

The bill that will go before parliament is version 2.  This has never been made available to ratepayers.  However, in a surprise move it was made available to the executive of the MRRA on the basis that it was not shown to anyone else. The MRRA was asked if it wished to make any comments on the content of the draft bill.

The MRRA suspected, rightly as it turned out, that this was a ruse by the commissioners so that they could claim to parliament that they had "consulted" on the bill.

The MRRA declined to comment on the content of the bill for that reason, but did respond with a list of reasons why the validation bill should not proceed at this stage.

Like most ratepayers, the MRRA acknowledges that the KDC has got itself in such a legal mess that a validation bill will be necessary to put it back on a legal footing, However, it is pointless for a validation bill to proceed until ALL problems have been identified and consulted with ratepayers.

All ratepayers should read theMRRA's submissions - Attachment B at page 46 - as these are the sorts of issues that will become very relevant if the bill gets to parliament.

The latest comments from John MacDonald can be seen here.

In the article referred to below Chief Executive Steve Ruru suggests that there would be widespread implications for ratepayers if the judicial review proceedings go ahead:

“........given that ultimately they are the ‘owners’ of the council and would need to fund the costs of any relief granted."

It is interesting that when it comes to paying all the debts then ratepayers are conveniently considered to be the actual owners of Council and therefore totally responsible for all the years of incompetence.

But, if they are owners, they are owners who have absolutely no rights. The ratepayers appointed Councillors as trustees to act for them and to run Council professionally and competently, and in the best interests of the owners.

That trust was betrayed time and time again, and that betrayal has been acknowledged by the Councillors themselves and the Chief Executive.

But rather than recognise the concerns and claims of the ratepayers/owners, all of which have been accepted, and take some remedial steps, the government has stepped in and appointed commissioners, who, without any democratic mandate, are now sweeping all the errors of the past under the carpet by forcing a validation bill through parliament.

And, to addd insult to injury, they are forcing the ratepayers to foot the massive legal bill for doing so.

No other sector in New Zealand would put up with such arrogant and tyrannical behaviour by those who are supposed to be trustees.

And why is the government acting as the "enforcer" for such autocratic and unconscionable behaviour?

No wonder the ratepayers are asking the High Court to bring some sanity, and the rule of law, back to Kaipara.

See Bob Dey's article here about tears being shed by commissioner John Robertson over ratepayers' response to his dictatorial and ruthless validation bill. 

WE ARE NOT ALONE  23.04.13
Take a look at the article by Carl du Fresne in the Dominion Post here.  He suggests that the Wellington Council is run by its staff and the councillors play little part. 

Flashbacks to the previous Kaipara Council.

That's not a problem with the commissioners. They are well and truly driving the steamroller.

Some good sound comments from John MacDonald in Kaipara Konnection this week.

He comments about the commissioners mock indignation at the MRRA having the temerity to issue legal proceedings.:

Clearly it has come as something of a shock to the Commissioners to discover that we actually live in a supposed democracy here in the Kaipara.

Very true. We were promised collaborative commissioners who would regain the trust of the community and work transparently and cooperatively in the best interests of the ratepayers.

We have seen little of that.

Sadly the commissioners have adopted a secret and dictatorial approach. They have reneged on agreements to consult, have been arrogant and authoritarian, and the unilateral and draconian validation bill was the last straw for ratepayers.

The MRRA has made a mark in the sand. It refuses to let the commissioners - who are imposed not elected - to continue to deny ratepayers of all their democratic and legal rights. For years now Council has ducked and dived and avoided accountability and dumped all liability for its appalling incompetence on innocent ratepayers. The MRRA has said "Enough".

Ratepayers should be elated that after years of being bullied and denied their rights, the High Court will be making a decision, within a few months, on liability for the debt and the legality of rates. That decision will be honest, fair, independent and binding. Qualities that have been remarkably absent in Kaipara for many years.

John MacDonald expresses concerns about the costs of litigation and no one would disagree with him. But resorting to the court is always a last resort that sometimes is unavoidable. The commissioner have shown that they will not modify their approach in any way through consultation, so ratepayers have little alternative but to take more extreme action.

Ratepayers across the district need to get behind the MRRA. Express their support for their legal action and tell the commissioners to listen to what is being said.

If we can make them do that then they might abandon their intransigence and, rather than go head-to head with ratepayers in court, sit down at the table with them and actually respond to their concerns.

A negotiated settlement is far preferable to a war of attrition in the courts, but that can only eventuate if the commissioners decide, or are forced, to come to the negotiating table.

Submissions have now closed.  Those submissions made can be viewed on line here. Bear in mind that those submisions emailed to Council rather than using their on line submission process may not be shown.

John Dickie's comprehensive submission can be seen here.  You can also see his response to the commissioners' $500,000 fighting fund here.

Ron Manderson, chair of the Kaipara Citizens and Ratepayers Association has taken a swing (here) at that Kaipara commissioners and their press release announcing a $500,000 budget to fight the judicial review proceedings.

In what looks like another case of cynical manipulation, the press release (here) was issued the day before submisions on the DAP closed, so ratepayers have yet again been denied the opportunity to make submissions, not only on the cost but on whether the proceedings should be defended.

Ron Manderson pulls no punches:

This is surely grossly overstated unacceptable deceptive scaremongering

He looks at the logic behind the commissioners' approach:

Council has admitted many illegalities, so why should they spend ratepayers money to defend what should have been rectified already? Commissioners credibility and integrity becomes most questionable when they admit illegalities exist to the extent they seek Parliament to legislate the illegal to become in effect legal, yet oppose the ratepayers taking Court action to seek the required corrections legally.

He throws his whole support behind the MRRA:

This has gone too far, Ratepayers should Take Back Kaipara by withholding rates until this is sorted by out of Court negotiations with Ratepayer groups, including MRRA, and Commissioners.

It is heartening to see another ratepayer group endorsing the MRRA's stance.  Ratepayers have the law, equity and fairness on their side but they need to be united and support each other and not allow the commissioners to drive wedges between them.

Finance and Policy Analyst Larry Mitchell, who wrote a couple of reports for Council a few years ago, has written a paper called Councils in schtook. It can be viewed in full here.

He highlights the deceptiveness of local authorities' financial practices.......More here.

MAI CHEN  19.04.13
In an article in the NZ Herald public lawyer Mai Chen takes a swing at the poor performances in the public sector in recent months.  She refers to comments in reports such as "dysfunctional and ineffectual" and monitoring as being "light-handed and perfunctory".

She comments:

Any quality audit, finding errors of this kind, would conjecture that they are just the tip of the iceberg and as the government is 40 per cent of the economy, that should worry the rest of us who pay for that government. What other breaches are occurring that we never hear about?

Kaipara ratepayers know the answer to that.  They have suffered years of the same sort of incompetence.  Mai Chen should read up on Kaipara and scratch the surface a little.  That would be a reality check.

Alarming signs of state incompetence

Pike River, Kim Dot Com, EQC, David Bain, GCSB

and now


Rumours from the golf course have it that the marathon inquiry by the OAG into Wastewatergate  - over 12 months now - is getting to the pointy end.  John Robertson has been advising a select few of progress whilst the ratepayers in general remain in ignorance.

A notice on the Council website would have dispelled the accusation of arrogance.  Or perhaps even an announcement from the OAG, heaven forbid! 

It appears that the report following the inquiry has been sent to affected parties so that they have the opportunity to respond.  Affected parties are those who may have some negative comments made about them.

This is all part of the OAG's adherence to the principles of Natural Justice which seem to apply only when ratepayers are not involved.  Thus we do not get a copy of the report because we are deemed not to be affected.

The fact that the OAG has breached a whole swag of principles of Natural Justice by holding an inquiry into a matter in which that Office was deeply involved (and widely peceived to have been negligent), does not appear to matter because that involves ratepayers and in the scheme of local government in New Zealand ratepayers do not matter.

It's a topsy-turvy world out there.  Oh for some straight shooting from the High Court. 

Make sure that your submissions on the DAP are filed with Council prior to 4 pm today. You can do it simply on line by going here.

Legal Eagle has done his bit and his submissions can be seen here.

It is all a farce really because Council has stated in its draft validation bill that its current LTP is invalid. That means that it is in breach of the LGA because it has to have a valid LTP at all times.

The effect is that the draft annual plan is invalid and also the amendments to the LTP because they are both based on an invalid LTP. Council therefore cannot set rates and is operating outside the law.

That has not troubled Council in the past when the regulatory authorities were asleep but it is going to be very hard for the OAG to turn a blind eye to the latest digression from the path of legal compliance.

The problem that the Council faces is that the LTP remains invalid until the validation bill is enacted by parliament and that is several months at least down the track.

This may be the first instance in New Zealand history where a local authority has stepped totally outside the law into uncharted territory. It is the Armageddon that Greg Gent warned of last year.

MRRA MEETING  19.04.13
All ratepayers in Kaipara should have been at the MRRA meeting last Sunday.  Planner Joel Cayford disccussed the DAP and barrister Kitt Littlejohn gave a run down on the judicial review proceedings. This was followed by a question and answer session.

I am sure that everyone left the meeting assured that the legal action was necessary and in very competent hands.  They would have also been assured that the aim was to resolve all concerns with Council cooperatively for the benefit of the whole of Kaipara without fighting the matter out in court. 

There are indications of panic coming from the commissioners.  They have tried to frighten ratepayers by planning to find $500,000 to defend the MRRA legal proceedings.  More here

The Plumbers, Gasfitters and Drainlayers Validation Bill passed its second reading in parliament by a vote of 61 to 60.

Comments made by speakers are very relevant ot the Kaipara Validation Bill.

Maryan Street Labour, Holly Walker Greens, Andrew Williams NZ First, Trevor Mallard Labour and Brendan Horan Independent.

The second reading of the Plumbers validation bill was adjourned in parliament yesterday evening.after the Labour Party indicated that it would oppose the bill.  The report is here.

Kaipara ratepayers should listen to the speech by Ruth Dyson explaining some of the principles that are very relevant to the Kaipara validation.

All Kaipara ratepayers should read this letter relating to the validation bill going through parliament at the moment.

It shows how parliament is being used as a rubber stamp to validate all sorts of jiggery-pokery, but only for those entities like local authoities and regulatory boards that are deemed to to have a special status that places them above the law and in need of special protection.

The commissioners are now threatening ratepayers with legal action unless they pay rate arrears within 14 days.

Legal Eagle expresses the view (here) that this is deplorable given that Council has acknowledged that the rates are illegal and that it is operating without a valid LTP.

Ratepayers are advised to withhold paying any further rates until either the court or parliament makes a ruling on the legality of the rates.

Legal Eagle (here) considers the conventions of parliament in respect of validation.

He also suggests that the bulldozer approach by the local MP and the commissioners is not appropriate.

The select committee of parliament has sounded a warning to those local authorities that believe that they can use the validation process to rubber-stamp their illegalities. 

Legal Eagle reports here on the progress of the Plumbers. Gasfitters, and Drainlayers bill and some of the comments made by the select committee.

Legal Eagle suggests that the commissioners are heading for two major battles, in court and in parliament, and it may be time for a third party, such as local MP Mike Sabin, to step in and broker an accord between the parties.

The Kaipara commisioners made few friends at their meeting with Kaiwaka ratepayers last month.  Legal Eagle (here) refers to the report in the Kaiwaka Bugle that is highly critical of the commissioners.

He also asks if it is time for the Minister and the commissioners to reassess their approach and actually listen to ratepayers' concerns.  If they do that then they may be able to reach some accord to resolve the current impasse.

The MRRA media release on the application for judicial review can be seen here.

Carrying on from the post immediately below, Legal Eagle examines (here) whether this is the time for both parties in the Kaipara dispute to come together and resolve their difficulties.  Ratepayers have shown that they are not going to be bulldozed.  Rather than fight a pitched battle it would be far better for the commissioners to listen to the reasonable requirements of ratepayers and accommodate them in return for cooperation in other areas.  

VALIDITY OF DAP    06.04.13
Legal Eagle considers here whether the DAP is invalid.  He suggests that ratepayers withhold their rates until the whole question of invalid rates and plans has been resolved one way or another. 

However, he suggests that there is an opportunity for a change of direction by the commissioners.  An agreed independent assessment of the legal problems, and an agreed independent scrutiny of Council's financial situation, could see ratepayers and commissioners heading in the same direction.

Doug Bone has alerted me to section 459 of the Local Government Act 1974 which adds to the confusion over the definition of what is a "connectable" property.  See more here.

John Dickie (here) joins the fray and expresses his concerns about the "connectable" issue, about the current status of the Mangawhai sewerage scheme and the lack of honesty from the commissioners.

If your property is within 30 metres of the sewer and you are not connected then you are deemed to be "connectable" and have to pay 75 per cent of the standard charge.

Legal Eagle looks at the details and asks if this is fair (here).

They may be far apart in terms of the future of Kaipara but the KDC and Mangawhai are getting closer together physically.  The KDC is moving its Kaiwaka office to The Hub in Mangawhai Village and expects it to be open for business in May.

The Lifestyler article can be seen here.

The commissioners have six new criteria to guide them on their way in the DAP.  Legal Eagle expresses his view (here) as to whether they have succeeded.

Council has changed the whole basis of charging for water rates so that there is now a substantial standing charge that is payable regardless of how much water is used.  Accordingly, water rates have risen dramatically.

Council was clever enough to introduce this increase a few months ago to get some degree of separation from the increases in the property rates in the DAP.

Water rates are rates and should be included in with property rates when calculating the affordability of rates.

It would be worthwhile to see the sort of water rate increase that people are having to pay. 

Examples please.  Before and after.  Then add the water rates to the proposed property rates and see if you still come with the 5% affordability threshold.

Council is being unfair in its application of the new captial charge for Mangawhai properties and is disadvantaging some of those who have already paid.  And it is trying to validate the irregularity in the validation bill by cleverly slippping it in.  Read more here.

Council believes that even after two successive massive rate rises the rates in Kaipara are 'affordable'.  And it has the statistics to prove it.  See what Legal Eagle has to say here, and see if your rates meet the 'affordable" test.

Legal Eagle looks (here) at the MRRA's application to the court, the reasons for it, and the options for the future.

Legal Eagle has had some problems trying to understand the new Mangawhai capital wastewater charge in the DAP.  He has now seen through the smoke and mirrors and found out what it is all about and reports here

It looks promising initially but he suspects that it is a trap to lure ratepayers in and get over the current hurdles facing the commissioners, then they can be socked with the big bills later.

All part of the Ponzi plan.

There is a new page (refer to Link Box above) for the Judicial Review that has been filed in the High Court by the MRRA.  Those interested can have a look at the statement of claim which sets out the various decisions of Council that are being challenged, and the orders that are being sought.

Note that this is simply an application to review the decisions.  Council is not being sued for damges or anything like that.

At his stage it is unknown whether Council intends to defend the application.  It is a little hamstrung in that it has already acknowledged the illegality of most decisions in the claim by including them in the draft validation bill.  The court will be simply confirming what Council already publicly acknowledges.

In the next day or so we will also include a full guide to the proceedings, the background, the reasons, and the effect that they will have.

SUIPS    01.04.13
Residential ratepayers throughout the district are being charged wastewater rates for SUIPs or separate units on their properties.  Rating separate units in Kaipara has been a total rip-off in the past.  Council has finally got it right but will still charge you for an extra SUIP even though you do not come within the definition.  Legal Eagle (here) walks you through the DAP to ensure that you are not being overcharged for a SUIP.

Legal Eagle looks at the manipulation of figures in the DAP to arrive at an average rate increase (here).

Submissions on the DAP are due by 19 April.

Ratepayers should be careful if they are using the submission form attached to the Annual Plan Summary headed the "Big Picture". It is full of leading questions that are designed to limit the responses that you can give...(continued here.)

There is a separate page on this website (here) dedicated to the DAP which you should read. New contributions will be posted daily

Legal Eagle and the MRRA are combining to produce a summary of what they believe to be the defects in the DAP. It should be out later this week.

All comments from ratepayers gratefully received for publication.  Send to: contactus@kaiparaconcerns.co.nz

When sending them in please advise the name (real or pseudonym) the post is to appear under.

Ratepayers are advised to hold back on their submissions until they have read all the different views expressed.

EASTER FOLLY?   31.03.13
It's Easter time and the papers are full of the breaches of the Easter Trading Laws by defiant retailers.

The NZ Herald reports here that:

Labour inspectors from the Ministry of Business, Innovation and Employment were checking in on retailers today to monitor compliance with a law prohibiting them from opening on Good Friday and Easter Sunday.

It is ironic that the inspectors actually work on the prohibited days to stop others working on those days.

The law is described as archaic and yet is being vigorously enforced by the government.

It is a great pity that the government does not apply the same enthusiasm to law enforcement in local government where it allows errant councils total freedom to flout the law and act outside their legal powers.

Having the government watchdogs trying to stop people buying a few plants over Easter seems ludicrous when the same government's local government watchdogs have sat by and watched the Kaipara Council pilfer tens of millions of dollars illegally from its ratepayers.

Judge Neave is quoted as saying the breaking of the law by the shop owners is "cynical". I am sure he is right. The rule of law must prevail and rules must be obeyed.

But if selling a few plants in breach of the law is regarded by the judge as cynical then one wonders what will be the reaction of the courts when they are presented with the total abuse of power by the Kaipara Council when it secretly, and in breach of the law, doubled the size of the EcoCare scheme, and the debt, and. effectively destroyed the financial base of the whole Kaipara district..

The well-being of all the people of Kaipara is more important than a few plants, isn't it?

RATES FOR 2013/14  30.03.13
You can see the proposed new rates for your property here.  Just type in your address and then click on the appropriate valuation reference on the left if there are several options.  The screen will automatically show the rates for the current 2012/13 year.  To see the proposed rates for next year click (Next year - 2013/14)

The commissioners are busy seeking support from political parties for their disgraceful Validation Bill.  But they have many obstacles to overcome before it even gets to parliament.  The draft bill is riddled with errors (which they are keeping quiet about) and will have to go through a fundamental revamp.

Parliament's Standing Orders set out the very detailed and precise procedure that have to be followed before a bill enters parliament and then during the parliamentary process.

This Council, in all its different guises, is not too sharp when it comes to compliance with rules and regulations (which the Validation Bill itself proves) and I suspect that it will come a cropper again in spite of $150,000 dollars of legal advice.

One bright suggestion is that the Validation Bill itself is actually included in the Validation Bill so that the inevitable defects in the Bill can then be validated.

The Council has shown that it is almost incapable of doing anything in compliance with the law and Bruce Rogan of the MRRA has suggested that they open a validation "tab" with parliament, very much like a bar tab in a pub.  Every time that they make some important decision that requires strict compliance with the law, John Robertson can ring up parliament and "put in on the tab".

"Put it on the tab"

WHAT PLAN? 29.03.13
Have you seen the draft annual plan?  It is hard to access it through the computer and hard copies are as scarce as hens' teeth.

Legal Eagle wonders if it is a conspiracy so that ratepayers can only have access to the plan through the highly biased and spin-laden supplement in the Kaipara Lifestyler.

Read the full article here.

These are the worda of John Robertson to counter what he sees as innuendos and incorrect statements relating to Council.

Is Council insolvent or bankrupt?  Legal Eagle looks (here) at the facts and the financial fantasyland that passes for accounts in the DAP.

Mike Barrington's article in the Northern Advocate on the MRRA's application for a judicial review can be seen here.

It is interesting that commisioner John Roberston has slated the move and argued that ratepayers will have to pay the bill for both sides.

As usual with John Roberston's comments, not quite correct.  The legal costs of the MRRA are being met by those who have personally contributed monies to fight the illegal activities of the Council. There is no bill for ratepayers.

It is true that ratepayers will have to pay the legal costs of Council, if Council decides to defend the action. 

However, such costs should be put in context.  Ratepayers have been denied justice for many years under a corrupt and incompetent Council.  Commisioners have taken over but have indicated with the validation bill that they shun consultation with the community and intend to force all the past illegalities on to unwilling ratepayers.  They have given ratepayers little option.

The validation bill is going to cost probably in the region of $200,000.  That is the cost of the sheer incompetence of the Council staff and Councillors.  The innocent ratepayers are being forced to foot that bill rather than Council seeking it from those legally responsible under the provisions of the LGA.

Over the past few years council has wasted over $100,000 on legal opinions to counter allegaltions of illegalities.  It also handed $240,000 on a platter to the previous Chief Executive without any legal obligation to do so.

Paying a few thousand dollars to front up in court to face, for the first time, a truly indepndent appraisal of its actions is small beer compared to the tens of millions that it has squandered in the last few years and worth every penny .

Financial analyst Larry Mitchell is predicting a "huge stoush" and civil disorder in "up North" with the conflict between the commisioners' validation bill and the judicial review procedings filed by ratepayers.

His article, published in this week's NZ Truth can be seen here.

Robespierre was responsible for the Reign of Terror during the French Revolution when thousands were guillotined.

Kaipara is vying for its place in history with financial and legal bungles stretching over many years, costing the ratepayers enormous sums of money, and effectively destroying the financial fabric of the district.

No single regime is responsible. Several mayors have been involved but the eminence grise was Jack McKerchar the Chief Executive who controlled the Council like a mediaeval despot for eighteen years. But even on his forced departure the illegalities and the bungles have continued, even under the government appointed commissioners.

There appears to be no end to the incompetence, the illegalities, the misrepresentations and the lies.

In years to come, in hindsight, this disgraceful period in Kaipara's history may be seen as the Reign of Error.

The Cyprus financial crisis has dominated the news for the past few days. The Greek government proposed to "tax" monies held by citizens in bank accounts to pay for its own financial incompetence.

There has been some conjecture that New Zealand is heading in the same direction with the OBR (open bank resolution) being proposed by the government, whereby bank depositors would lose some of their monies deposited with a bank if there was a financial crisis.

Kiwis are affronted to think that something like Cyprus could happen here and that their savings could be "taxed" by the banks with government approval.

But what people do not realise is that we already have a situation far worse than what is happening in Cyprus.

Continued here.

The MRRA has filed legal proceedings against the Kaipara Council. A full report from Lois Williams on yesterday's Morning Report can be heard here.

The Association has applied for a judicial review of many of the decisions made by Council.

Both Bruce Rogan of the MRRA and chief commissioner John Robertson comment about the proceedings.

The MRRA is being represented by barristers Doctor Matthew Palmer and Kitt Littlejohn.


The government's view on validation bills and the opinions of the Ombudsman are clearly spelt out in Adam Bennett's article in the NZ Herald (here).

Minister Maurice Williamson is railroading through parliament a validation bill to legalise monies that were collected illegally by the Plumbers and Gasfitters Board.

The Ombudsman's Office recommended that the monies should be repaid. But that did not sit too well with the Minister:

"I think the Ombudsman's Office is wrong. The board would be technically insolvent if they had to pay this money back".

That raises a couple of points.

What relevance does insolvency have? If an organisation acts outside the law and as a result it becomes insolvent then that is a fact that has to be accepted. It happens to individuals and businesses throughout the world all the time.

Why then are some organisations - including the Kaipara Council - afforded special treatment and government protection from their own incompetence?

The other point is the attitude of this Minister to the recommendations of the Ombudsman. We have already seen the same dismissive comments from fellow Minister Judith Collins in respect of an independent review, and the Prime Minister dismissed the criticism of the Sky City proposals in the OAG report, saying that "he would lose no sleep over it".

What hope do we have of the OAG report into EcoCare and its recommendations making the slightest impact on this government?

Clare Curran of Labour reckons that: "There is an emerging crisis with our watchdog agencies". She goes on to say:.

"It is a paralysis of democracy."

An article by David Fisher in the NZ Herald (here) reports on the decision of the Ombudsman's Office to begin its own investigation into the way the public service is responding to the Official Information Act.

The Office is bogged down with complaints as government agencies delay or refuse requests under the Act.

Constitutional lawyer Mai Chen is reported as saying that the government expected citizens to comply with laws and it should do so with the Act.

"If they don't mean to do it, they should repeal it."

Ratepayers in Kaipara would endorse those sentiments. They are expected to comply with legal requirements and pay their rates whilst the government and all its watchdogs allow the Council itself to completely ignore the requirements of the law.

Why have rules in the LGA and the LGRA if local authorities can ignore them at will and, if anyone complains, they can always get parliament to validate the illegalities?

Lois William's comments on the draft annual plan can be heard here. There are also comments from John Robertson about reducing the KDC debt by $30 million in ten years.

Steve Ruru does little for his credibility when he says that most Mangawhai ratepayers will get a reduction of $100 in their sewerage charges. Absolutely untrue. The annual sewerage charge itself may decrease slightly but the general rate is being increased substantially to incorporate charges for the Mangawhai sewerage system.

Not only that but ratepayers will have to pay massive new capital charges for the sewerage system that are being introduced this year.

This is one of the crafty tricks that Council uses each year to misrepresent the percentage increase in rates. It treats what it calls "capital charges" as separate to rates. The truth is that there is no such thing as capital charges as such. They are targeted rates like all the others and should be treated the same as the others.

That is unless you want to pull the wool over ratepayers' eyes.

Prime Minister John Key has made it clear (here) that banks that lend to state owned enterprises do so at their own risk and have to pay their share of losses.

State owned enterprise Sold Energy is in financial difficulties and owes $390 million.

Mr Key is reported as saying that commercial banks making loans to SOEs must realise that there is no government guarantee.

It will be interesting to see if the Prime Minister will extend the same logic to local authorities. There is little doubt that banks are sucked in to lending to local authorities because they are part of local government, and, although it is clear that there is no government guarantee, the government does promote local authorities as cast-iron securities.

It looks pretty clear that when advancing funds to the KDC to finance the EcoCare scheme the bank involved (ABN Amro) was very cavalier in its approach. It failed to do due diligence, and completely ignored the clear requirements of the Local Government Act.

The original bank, and the banks that subsequently bought the debts (BNZ and ANZ), will find it difficult to argue that they acted in good faith.

If the original bank had applied the same sort of scrutiny to the KDC's proposal as it affords to most loan applications by ratepayers then the KDC might never have been able to launch its EcoCare Ponzi scheme.

The banks involved gambled, and lost. It is perhaps time for them to take a hair cut.

The Far North District Council has proposed two unitary authorities for the whole of Northland (here). This would mean the Regional Council, the FNDC, the Kaipara Council and the Whangarei Council all amalgamating.

The Local Government Commission is taking the proposal seriously and has called for alternative proposals. The deadline date for proposals is 15 April (here).

Farmers of New Zealand has come out strongly in favour of Kaipara keeping its own separate identity. That appears unlikely given the failure of the democratic process in the district, and the push from government for unitary authorities.

There will either be one unitary authority for the Far North, or perhaps two with the western part of Kaipara joining the FNDC, and the eastern part of Kaipara joining Whangarei.

There is also the remote possibility that the eastern side of Kaipara could be annexed to Auckland. That would make some sense given that the supply towns of Wellsford and Warkworth are both in Auckland and most absentee owners in the area live in Auckland.

The choice is not inspiring. Whichever is chosen it's a matter of out of the frying pan and into the fire.

A special page has been set up for comments on the Draft Annual Plan (DAP) here.

We are looking for comments from ratepayers on the DAP and also for specialists who can offer some special insights into the hidden "treasures" within the plan.  Please send to contactus@kaiparaconcerns.co.nz

Although the plan indicates an overall increase of 9.3% that is simply the percentage increase in the total rate take and is completely misleading when it comes to calculating individual rates asessments.  The method of calcualting the increase for Mangawhai ratepayers is based on a fundamental flaw which one suspects is deliberate.  More of that later.

There will be several articles on the DAP and the first, dealing with the treatment of the EcoCare debt, can be seen here.  It appears that the Council is up to its old tricks and basing the whole plan on a financial fantasy with the sole intention of covering up the fact that it is insolvent, and so that it can continue to plunder ratepayers for year after year to pay for the illegal debt.

The Minister of Local Government, Chris Tremain, has declined two approaches to work out a way to settle the Kaipara problems. Quite separately both Legal Eagle and the Mangawhai Residents and Ratepayers Association (MRRA) approached the Minister with ideas of resolving the ongoing battle between residents and the Kaipara Council.

The Minister dismissed both approaches with the same short letter.

It is also understood that the MRRA made a last minute appeal to the Minister to meet with his officials to try and achieve some common ground. The Minister declined again and referred the Association to the commissioners.

The matter is reported here in the Northern Advocate by Mike Barrington.

It's all the rage at the moment. The validation process. Every man and his funding impact statement, or his spanner, is into it. Stuff-ups abound everywhere, especially in local government, but the Plumbers and Gasfitters Board is the latest to call upon parliament to use its magic powers to turn water into wine.

Adam Bennett's NZ Herald article can be seen here.

No doubt many of us will be reflecting on our own personal stuff-ups through life and wondering if we couldn't apply to parliament, cap in hand, with a bit of mea culpa, and have all our errors rectified.

Mind you, MPs are quickly going to get tired of playing the Fairy Godmother and making everything better for all the clueless incompetents who can't do their jobs properly, and I suspect that very soon there will be an almighty backlash.  One unlucky application for validation is going to get an absolute drubbing

Let's hope that it is the Kaipara validation bill that gets the drubbing.  It certainly deserves to.  It is an affront to every principle in the manual on democracy and natural justice, and a total abuse of the validation process. MPs will pick that very quickly.

The word "Kaipara" is beginning to become synonymous with "incompetence", and I suspect that MPs will decide that validating the Kaipara shambles is a bridge too far even for an accommodating parliament.  Turning water into wine is one thing, but turning fetid wastewater into wine may be beyond parliament's inclination.

The Tasman Validation Bill which has a lot in common with the draft Kaipara Bill is progressing through parliament.  The comments and criticisms of MPs give a clue as to the sort of reception that the Kaipara Bill will get when and if its turn comes.

The full post can be viewed here.

I have transferred all posts relating to the validation bill to the new Validation Bill page which can be viewed here.

Any comments from ratepayers welcome.  Email to:  contactus@kaiparaconcerns.co.nz

The KDC annual plan for 20013/14 (AP) incorporating amendments to the 2012/22 LTP, is finally available on the KDC website here with a summary here.

At 358 pages it is a big read and will be largely incomprehensible to most ratepayers. That, of course, is one of the main aims of the document.

I have yet to delve into the smoke and mirrors that I expect to find, but a quick squiz at the first few lines show that this is definitely the work of the commissioners.

Remember that transparency and consultation are the pillars on which local government in New Zealand is supposedly built - according to the Local Government Act - and compare with that the total disdain for those principles that the commissioners have shown in the last six months.

Remember how they reneged on the commitment to consult with ratepayers and form a focus group to consider the options for resolving the illegal rates problem?

They shunned that commitment and the views of ratepayers and proceeded with the draconian validation bill without any consultation.

At the same time they breached the clear terms of reference set by the Minister of Local Government requiring them to consult with ratepayers.

Or did they?

In the Foreword to the AP (on the first page) the commissioners set out the tasks they were required to perform under the Ministerial terms of reference. One of them is:

Address the problems created by invalidly set rates and other legal compliance issues

Most people would accept that statement at its face value. However it is totally incorrect. It is a lie.

As in many other cases the commissioners have misrepresented the situation by telling only half truths and missing out vital information.

The exact wording of the Terms of Reference (here) is:

Work with the Kaipara community and ratepayers and the Department of Internal Affairs to identify options for dealing with invalidly set rates and other legal compliance matters;

Note how the obligation to work with the community (highlighted in yellow) has been unilaterally removed from the terms of reference by the commissioners. which means that the commissioners can bury and ignore their blatant failure to comply with the Minister's clear requirements.

That is fundamental dishonesty.

A big lie in the first few lines does not bode well for the rest of the 358 pages..

Ratepayers can be forgiven for thinking that all those involved with local government whether directly or indirectly are exempt from legal liability in New Zealand.

The ratepayers of Kaipara were the victims of a rort to the tune of tens of millions of dollars in a Ponzi-type scheme hatched by a deceitful Council that had no regard for legal requirements; a rort that was assisted by contractors, lawyers and auditors who failed dismally in their obligations, by government watchdogs that were asleep on the job, and by a government that delegated its power to local authorities but failed to comply with the attendant obligations to provide the machinery of government and competent regulatory authorities to protect the best interests of the people against the abuse of power by local authorities..

The ratepayers in Kaipara have learnt - and all ratepayers in NZ should take note - that ratepayers are the dumping ground for all the incompetence, negligence and even deliberate deception in local government in New Zealand.

That is the de facto situation as it stands, but the government is planning to legislate to enshrine immunity in the law. In a NZ Herald article Audrey Young reports on a proposed new lew law that would shield lax and incompetent officials:

But the Government, on the advice of the State Services Commission, wants to put public servants beyond the reach of the ordinary civil law that applies to everyone else.

The article goes on to say that Law Commission President and Court of Appeal judge, Justice Sir Grant Hammond, pleaded with a parliamentary select committee to scrap the proposal. He added that it was a matter of "grave and even constitutional importance".

For further comment on this article read John MacDonald's incisive comments in the Kaipara Konnection (here) and the post from Aardvark that he refers to.

Many believe that the Kaipara problem centres around the liability for rates. The truth is that this is a showdown about the Rule of Law and whether a determined government can run roughshod over one of the basic principles that underlies our democracy. It is one of the many matters that are causing huge concern amongst academics and those interested in protecting the freedoms that our fathers and grandfathers fought for.

The recent article by Professor Dame Anne Salmond in the NZ Herald, Time to defend democratic rights, sounds a very loud warning bell about the direction taken by John Key's government.

The people of New Zealand are waiting to see if the the Key government can force the ratepayers of Kaipara to bear the responsibiltity for an illegal debt for which they are not responsible, which they had no knowledge of, and where the Council (which supposedly represented them) totally misled them as to the nature and extent of the debt, whilst the of true culprits, including the government itself and its supposed watchdogs, get off scot free.

Legal Eagle explains why the draft validation bill is misleading (here- scroll down).

No one claimed the prize offered.



Bank robbers, burglars or any others guilty of acts of dishonesty who want to have their offences legalised should supply full details to the Kaipara District Council.

The Council is validating all of its own illegal acts and, as it is getting away with daylight robbery, it is giving the citizens of Kaipara the opportunity to do the same.

We can add your offences to the validation bill which is about to be placed before parliament.

Those who have defrauded others out of substantial sums of money may also be able to recover penalties on the monies that they have stolen.

Apply in the first instance to Chief Executive Steve Ruru.

Read John MacDonald's excellent article on the Validation Rort in the latest edition of the Kaipara Konnection (here).

No one has yet picked the misleading part of the validation bill referred to in the earlier post (three down), which suggests that the commissioners have done a good job of misleading ratepayers.  Will they be as successful in misleading parliament?

Answer tomorrow.

Ratepayers in Kaipara, and in fact throughout New Zealand, must be bemused at the widespread flouting of legal requirements by local authorities. Thirty pages of illegalities in the Kaipara validation bill stands as a testimony to the parlous state of local government in this country, and the complete failure of the government to ensure that local authorities operate within the law.

Further, the cynical legalisation of all the illegalities underlines a total lack of principles within the government.

John Key's government is developing a reputation for an arrogant disregard for the rule of law. But it is widespread throughout he community. Take a look a the NZ Herald article by John Armstrong on Mighty River Power's refusal to respond to nearly 100 of the 133 written questions submitted by the very parliamentary committee to which those running the power generator are supposedly accountable.

Thumbing one's nose at legal requirements, and getting away with it, is becoming a national pastime.

The beleagured KDC is facing a finance crisis.  It has acknowledged in the validation bill that the current LTP and the current rates are invalid and seeks to have them validated by parliament.  That means that it has no valid LTP and is therefore operating outside the law. 

The banks, which almost foreclosed on the Council last August when the commissioners were appointed, will be very nervous.  Council has clearly breached its banking convenants and the banks are entitled to  call up the loans.

It will be interesting to see whether the banks will take action or whether the government will step in again and give reassurances to the banks behind the scenes.

But whatever happens now the KDC is teetering towards self-destruction.

Readers are invited to have a look at clauses 9 and 10 of the Preamble to the validation bill (here, pages 6 and 7).

Can you see the errors in the sequence of events, and suggest a reason why the commissioners have done that?

The best response gets a parking ticket included in the validation bill.

Entries to: contactus@kaiparaconcerns.co.nz

John Roberston constantly states that the validation bill does not include the illegal EcoCare contract and the illegal EcoCare debts.

True or not? 

Legal Eagle suggests here - scroll down, that with some clever drafting the validation bill makes a clear statement to the world that the EcoCare debt is valid and enforceable.

The procedure for bills passing through parliament can be seen here.  Remember that the Kaipara bill is a local bill.

Many of us have suspected the motivation and competence of the commissioners from the start. Others saw their hollow, obsequious performance at the recent meetings with ratepayers and came to the same conclusion.

We all suspect that they are in power for one purpose only and that is to extract the last cent out of the people of Kaipara for the benefit of the banks and to protect at all costs the crumbling local government fantasy of John Key and his government.

Our worst fears have now been confirmed. The draft validation bill, which is designed to validate all the wrongs and illegalities committed by this utterly incompetent Council, has been released and can be viewed here.

For the ratepayers of Kaipara this is a bridge too far.(continued here - scroll down)

The State Government of Western Australia (here) has taken legal action against 22 councils after it found that they have levied illegal rates of more than $27 million on 10,000 properties.  The invalid rates will be quashed.  Some of the rates will be able to recharged once the correct procedures are followed but nearly half a million dollars will have to be refunded because there is little likelihood of the defects being remedied.

Note how the Australians do it correctly.  The rates are deemed to be invalid and repaid.  Once they are set correctly they are then collected again, but without penalties. 

In a surprise move the commissioners have finally conceded that the current LTP and the current year's rates are invalid.  They are going to include both of them in the validation package to go before parliament. 

This means that Council is not operating under a valid LTP and is effectively functioning outside the law.

It also means that the rates for the current year are invalid.

This is the Armageddon promised by Greg Gent when last August he pressured the previous Councillors to adopt the LTP before the commissioners took over.

Legal Eagle's comments can be seen here - scroll down.

A must read is Chris Trotter's article: Corruption exists by the shovel load (here).

He quotes Warren Berryman the American editor of the old Independent Business Weekly as saying:

"This is one of the most corrupt countries I've ever lived in. It's everywhere you look - but you Kiwis just don't see it. New Zealand tops all these surveys not because it's corruption-free, but because New Zealanders have become experts at looking at corruption and calling it something else."

Trotter cites recent examples, including the latest report from the OAG,  and suggests that we Kiwis dig for the truth with ornamental teaspoons rather than a shovel.

How much longer, I wonder, is the rest of the world going to be hoodwinked by Kiwis' perverse willingness to substitute an ornamental teaspoon for a spade?

He finishes with the comment:

And once the tradition of digging with teaspoons becomes established, the use of a spade becomes even more dangerous. Who knows what dirty deals, sleazy quid-pro-quos and ghastly miscarriages of justice might be uncovered if an honest shovel was ever allowed to turn over the topsoil of "corruption-free" New Zealand?

It is as if Chris Trotter is talking directly about Kaipara - one of the biggest rorts in recent history - but which still lies beneath the soil undisturbed by an honest shovel

And that is exactly why there is no independent inquiry into the Kaipara District Council, because all the "dirty deals, sleazy quid-pro-quos and ghastly miscarriages of justice" might be revealed to the embarrassment of people who are far more important than the ratepayers.

You can guarantee that there will no honest shovel in Kaipara unless ratepayers see the reality of the situation, stop allowing themselves to be victims, and stand up to those who are intent on destroying them.

John Roberston is at it again with his buttery spiel (here - scroll down).

Annette Lambly's article on the attack on the rate striker signs in the Northern Advocate can be seen here.

Note the somewhat equivocal response from commissioner John Robertson:

While we don't condone the "bludger" stickers, the commissioners also don't condone the non payment of rates.

The implication is there that he feels there was some justification for the vandalism.

He also takes advantage of the opportunity to make the Council sound squeaky clean.  He takes the high moral ground, and, in true Roberston style, he chooses to overlook all the relevant facts. The reason that ratepayers are not paying the rates is because THEY DO NOT CONDONE:

*The negligent rates process over 6 years at least, with twenty pages of errors that John Robrtson himself calls "a dog's breakfast", and $17.3 million dollars of illegal rates collected and not refunded.

*The repudiation of a clear undertaking (and the breach of terms of reference) to consult with ratepayers about options to fix the problems.

*The failure to comply with the LGA before signing both the first EcoCare contract and the second EcoCare contract with the result that the contracts and the debts incurred are illegal and ultra vires. 

*Deliberately misleading the ratepayers as to the cost of the EcoCare scheme for 5 years, the amount of the debt incurred, and the cost to ratepayers in annual rates and capital rates.  This was one of the biggest rorts perpetrated on ratepayers in New Zealand local government history.

*Fudging the financial accounts for 6 years to totally misrepresent the true financial status of the Council and still continuing to do so.

*Continuing to operate as a going concern when it is absolutely clear that the KDC is no longer financially viable.  This would be a criminal offence if it was in the public arena.

*Failing to get independent forensic experts in to follow up all the improprieties and "irregularities" that are clearly evident and which the commissioners continue to ignore.

*Operating under an LTP that is clearly invalid, and continuing to charge illegal rates.

*Inflicting rate rises that will effectively destroy the individuals, families, businesses and communities within the Kaipara district, all in breach of the basic principles underlying the LGA, and in breach of the fiduciary obligations that are owed to ratepayers under the common law.

I won't go on to mention the shame of the Hakaru landfill (which the commissioners have never heard of), the Dargaville Pool, the monies paid to Jack McKerchar, and all the other massive blunders that the KDC has made in its reign of ineptness.

And, John Robertson, don't tell us that you are not responsible.  Don't tell us that you inherited the mess. Legally the KDC continues as the same Council as it always was.  It is still the same legal entity. It is irrelevant who is at the helm.  So when the KDC finally becomes before the court to front up to its shameful litany of illegalities, it is John Robertson and his commissioners who willl have to front those charges.

Chris Sellars - "Worzel" to the readers of the Mangawhai Focus - comments in his own inimitable style on the meeting with commissioners at Maungaturoto last week (here).

A VIEW FROM THE WEST    24.02.13
John MacDonald, editor of the Kaipara Konnection, has some interesting comments in the latest edition (here - scroll down) on the developments in the Kaipara rates mess.  John tends to be the barometer of public opinion in the west and it is interesting to read his comments on the usefulness of the Minister's commissioners. 

He also mentions the A word - amalgamation.  There is absolutely no doubt that the task of the commisioners is to get the rates paid, the illegal debt firmly sheeted home to the ratepayers, and then Kaipara can be carved up and allocated to whatever unitary authority/authorities emerge from the jungle of the Far North.

But John MacDonald's comments suggest a swing in sentiment across the district.

The tipping point has almost been reached.  More and more ratepayers are beginning to wake up to the fact that the illegal debt is not theirs and they have to reject all attempts to inflict it on them.  They are the only really innocent parties in this whole fiasco. 

Those truly responsible are skulking in the shadows hoping and praying that the ratepayers will succumb to the pressure and blandishments of the government and the commissioners and will "take the rap".  If that happens the prime-movers in this rort will be laughing all the way to the bank.

More and more ratepayers are also beginning to see that the unctuous utterings of the commissioners are totally hollow and false.  The meeting in Mangawhai illustrated the level of superficiality and incompetence of the commissioners and their complete failure to grasp the essence of Kaipara's problems.  

They have no idea where they are going.  The only clear message that they have is that the debt belongs to the ratepayers.  Full stop. Nothing else.  They have no understanding or knowledge of the dreadful things that have gone on in Kaipara, and it is patently obvious that they do not care.

It is also absolutely clear that Kaipara cannot continue to function as a local authority under the Local Government Act.  It is not a "going concern" and cannot meet its day to day debts out of income. 

The commissioners are fudging the figures. Note the acknowledgement that the figure the commissioners bandy about for "total debt" is not total at all.  It only includes external debt owed to third parties.  It completely overlooks the monies that have been filched from the Reserve funds and the Mangawhai Endowment fund, which have been used for other purposes and have to be repaid.  They have also ignored the $20 million or so that they owe ratepayers for the illegal rates and development contributions that have been charged.

Ratepayers at the Mangawhai meeting will have been horrified to hear that only ten per cent of the interest on the debt was actually being paid each year.  The rest was being capitalised.  In other words they are borrowing to cover 90% of interest repayments.  Steve Ruru corrected this and said that it only applied to the proportion of the debt (just under 50%) which is allocated to development contributions. 

That in itself reflects a council that cannot meet its commitments out of income.  But worse is to come.  The commissioners indicated that in future ALL interest on the whole debt is to be paid out of income. 

If Council cannot balance its books now, how is going to find the monies to meet the annual interest bill? 

Development contributions have reduced to a dribble, and they are more than likely going to dry up completely in the future following the government inquiry into the affordability of land.  So who is going to pay the interest on the part of the debt allocated to development contributions?

The answer is quite obvious.  The ratepayers will now be billed for the interest on that part of the debt. And ......it will not be long before ratepayers will be obliged to pay the capital as well, because there will be no development contributions.

A massive rate hike for the next rating year (from 1 July 2013) is waiting just around the corner.  Just like last year.  And just like the year after next.

The choice for ratepayers is simple.

If you believe that you should pay for the illegal acts of others, and that they should get off scot free, then continue paying your rates.

If you believe that the commissioners are competent and in control, and will look after your best interests and Kaipara's best interests, then continue paying your rates.

If you believe that ratepayers are not responsible for the illegal debt, that those responsible should pay, that Kaipara is a financial cot-case, and that rates will continue to rise dramatically every year, then stop paying rates now and let the commissioners and the government know how you feel.

They will only listen if we all make a stand.

The offenders have not been identified yet but police are following strong leads, as they say.

Some of the stickers have been taken away for fingerprinting.

There is a feeling of fear and apprehension in the village given that in some cases the offenders entered some distance on to private property in the dead of night to carry out their attack.

If they are prepared to do that, then what else are they prepared to do?

Joel Cayford's post on the matter can be seen here.

The Northern Advocate article by Mike Barrington (here) states that the paper has obtained a copy of Jack McKerchar's employment contract under the Official Information Act.

According to the article both the Council and the Chief Executive had the right to terminate the contract on the giving of three months notice, with Council having the right to pay the Chief Executive instead of him working out his notice.

If that was the case (see* comment below) then there was no need legally for the Council to agree to any payment to the Chief Executive, except for the three months notice period.

Which means that Council paid to the Chief Executive a considerable sum of money that he was not entitled to receive and which Council was not entitled to pay.

Under sec 44 LGA the Auditor-General has the power to take action where:

"money belonging to, or administrable by, a local authority has been unlawfully expended."

And can then recover the monies from the individual Councillors who voted to support the signing of the deed of settlement (sec 46).

It will be interesting to see if the Auditor-General will act to protect the best interests of ratepayers.

* These comments are made based on the employment contract being in the form indicated in the Advocate article. It is hard to believe that the Council had the right to terminate the contract on the giving of three months notice. 

Legal Eagle believes that the costs of validation should be borne by those responsible for the illegal rates.  This especially applies to the Auditor-General and Audit New Zealand who between them failed to pick up any of the errors in the 20 pages of errors recently identified by Council in the rating documents.

He believes that the commissioners have no choice but to issue legal proceedings against the two auditors for negligence and breach of their duty of care.

See the full post here.

During the hours of darkness last night a person or persons unknown attached stickers to many of the rate striker signs that are displayed on properties in Mangawhai.


It was a concerted and widespread attack and it is suspected that several people were involved.   

A custom-made black vinyl sticker with BLUDGER in large white letters was stuck over the signs so that they read Another Bludger.

Ratepayers, or more correctly rate strikers, are incensed, especially as the offenders had to go to some trouble to enter on properties and reach the rate striker signs.

Most of the affected property owners suspect that private individuals were responsible but some do not dispel the Council having a hand in it. At the meeting with the commissioners on Monday it became apparent that the commissioners are rapidly losing control of the situation and are using every trick that they can to force ratepayers to pay the illegal debts of Council.

Many suspect that the commissioners' meetings across the district were stacked with National Party supporters who did all they could to persuade ratepayers to pay their rates and trust the commissioners.

There are also stories of Council staff putting undue pressure on elderly and disadvantaged rate strikers to get them to pay their arrears.

The commissioners and Steve Ruru need to respond immediately and assure ratepayers that they were not involved either directly or indirectly in the attack.

Rate strikers are concerned that this type of attack could escalate.

The police have been inundated with complaints and are investigating.

If you have any information in helping the police track down the offenders then please contact the Mangawhai station on 4231060.

One eye witness reports that the offenders were in a dark coloured Japanese saloon car, possibly a Mitsubishi.

Someone might have a lead as to the source of the stickers which clearly are professionally made.

Set out below are the possible criminal charges that the offenders may face.

Summary Offences Act 1981

11A Graffiti vandalism, tagging, defacing, etc
A person is liable to a community-based sentence (within the meaning of section 4(1) of the Sentencing Act 2002) or a fine not exceeding $2,000, or to both, if he or she damages or defaces any building, structure, road, tree, property, or other thing by writing, drawing, painting, spraying, or etching on it, or otherwise marking it,—

(a) without lawful authority; and

(b) without the consent of the occupier or owner or other person in lawful control

33 Billsticking
very person is liable to a fine not exceeding $200 who, without the consent of the owner or occupier,—

(a) affixes any placard, banner, poster, or other material bearing any writing or pictorial representation to any structure, or to or from any tree;

Crimes Act 1961

269 Intentional damage
(1) Every one is liable to imprisonment for a term not exceeding 10 years who intentionally or recklessly destroys or damages any property if he or she knows or ought to know that danger to life is likely to result.

(2) Every one is liable to imprisonment for a term not exceeding 7 years who—

(a) intentionally or recklessly, and without claim of right, destroys or damages any property in which that person has no interest; or

(b) intentionally or recklessly, and without claim of right, destroys or damages any property with intent to obtain any benefit, or with intent to cause loss to any other person.

(3) Every one is liable to imprisonment for a term not exceeding 7 years who intentionally destroys or damages any property with reckless disregard for the safety of any other property.


An article in the Rodney Times (here) has reported on Larry Mitchell's Local Government League Table in which Kaipara comes 67th out of 67.  It dropped from 65th last year.  Kaipara is so bad that Larry Mitchell says that "If I could have gone any lower than 67th, I would have.  We'll see what happens next year."

That may not happen.  Most pundits seem to agree that Kaipara has little chance of surviving until next year.  The commissioners clearly do not have the competence or the right approach to deal with the financial problems and the complex legal situation that the Council has landed itself in.  Kaipara can only be saved by the ruthless intervention of experts, a change in thinking and direction, and major surgery.  The tinkering of amateurs, slapping on bandaids, fudging figures, avoiding legal problems, and mouthing meaningless mantras, will only prolong the inevitable.

The full article of Larry Mitchell can be seen here

TWO-FACED JOHN? 19.02.13
The Northern Advocate article on the commissioners' meeting with ratepayers at Maungaturoto can be seen here.

At both Maungaturoto and Mangawhai John Robertson made similar comments. He emphasised that any outstanding issues had to be addressed at speed, they had to be resolved, and remedies had to be put in place. He acknowledged that there was so much anger and grievance and added:

"Until you have this satisfied, you really cannot move forward."

I am sure that these comments struck a chord with everyone in the room.   For a moment we all thought that the commissioners had suddenly grasped the essence of the problem and were going to announce immediate independent inquiries.

But that was not the case. The financial fiasco is going to drift on in the same way with no independent analysts, with the lumps in Steve Ruru's carpets getting bigger, and the gaps between reality and the fudged figures in the Council plans getting bigger as well.

As for the legal problems being addressed at speed, the commissioners have, not surprisingly, thrown their hats in with the OAG inquiry. Almost a year and no sign of any outcome. Not quite the high speed decision-making that John Robertson says is necessary.

The question remains: why did he make such statements if he had no intention of following through on them?

All it did was show him up to be a man who says one thing and does another.

One ratepayer had it off pat. She had met with him over her problems, received assurances and was let down. "A man with two faces", she called him, and she told him to his two faces as well.

The Advocate article mentioned above reports some comments on the quietest of the commissioners, Richard Booth.

He is reported as saying that the commissioners had to work on the basis that debt had to be met by ratepayers, which sounds like direct instruction from the Minister.

He also added that while another increase was in the pipeline for this year, rates would stabilise for the next ten years.

Which means that ratepayers are in for a massive rise this year and after that no one has a clue. Remember that only a couple of years ago Council was promising that the debt was under control and the capital costs of EcoCare had already been paid.

He finished off his comments with this pearler:

"(The commissioners) believe that even with recent increases, Kaipara rates were not above average for other areas."

No facts no figures, just a vague unfounded "belief" that would not be difficult to disprove. The very stuff of the smart salesman selling a dud car and the sort of comment that destroys the credibility of a man who should know better.

Joel Cayford's comprehensive report on the Mangawhai meeting with the commissioners can be viewed here.

There was one matter that exposed the true abilities of the commissioners. They spoke a lot about the competence that they had brought to the financial affairs of Council and how, under their watch, they were resolving all the problems and looking to a rosy future.

Unfortunately that was all words and lather. There is absolutely no evidence that they have been effective in any way at all.

Perhaps the crunch was the management of the Endowment Fund. There are a lot of rumours circulating about this Fund and suggestions that it has inappropriately been acquired by Council for its general purposes. That is fine provided that the correct procedure is used, that it is documented, and that appropriate interest is paid to the Fund.

Several relevant questions were asked by ratepayers at the meeting. The commissioners were like a squirming bunch of schoolboys, caught red-handed and trying to put the blame on each other. None of them had any idea about the whereabouts of the monies from the Fund, or what interest was being paid. They were clearly embarrassed.

These are monies held by Council on trust for ratepayers. It is absolutely clear that they have breached that trust because quite simply they do not know what has happened to the fund.

These are the financial gurus who want us to believe that they can manage the Council and resolve the problems of a $100 million debt, and yet they are totally incapable of managing a fund of a mere $5 million on behalf of the ratepayers. Trust and accountability clearly have no relevance in their operations.

There is absolutely no future with these four guys handling the finances of Council. The only "way forward" is to get independent forensic experts in to do an independent examination. Until that happens they will simply fudge the situation and paper over the cracks, minimise liabilities and the debt and exaggerate the income from development contributions.

The new plan will be a financial charade that would be ripped apart by forensic accountants if they were ever allowed the opportunity to get near it.

And it is perfectly clear from their demeanour that the commissioners are very aware of that.

One ratepayer at the meeting had done a lot of homework on the disparity of rate increases under this year's LTP. There seemed to be no rhyme or reason for the differences. In some streets there was a huge difference in percentage increases. Kaiwaka appeared to have been dealt a hefty blow, whereas, surprisingly, a lot of rates for farmland appear to have dropped.

The commissioners struggled to explain the situation except to say that the previous rates were complicated and not applied appropriately. Perhaps another insignificant error.

They went on to assure ratepayers that the whole rating system will be revamped in the draft annual plan which will include substantial amendments to the LTP and the rating system.

Prepare for the worst. They are going to eke out every last cent from ratepayers and everyone is going to be hit with massive rises. This time no one will escape through the cracks.

The draft annual plan is in its last stages and yet when asked to put a figure on the proposed average rate rise all the commissioners became surprisingly shy, shuffled, and looked at each other uncomfortably. Collectively they could not even hazard a guess. When asked, Steve Ruru said he did not carry the figure in his head.

They knew, of course, but did not want to introduce any negative figures to destroy their sales spiel. A bit like those TV ads where they hook you into the product with superlatives but only reveal the price when you are hooked and ring up.

The commissioners were adamant that any defects in rates older than six years were irrelevant because of the Limitation Act, which limits legal actions after six years. The validation bill is therefore going back only six years.

Peter Winder acknowledged somewhat surprisingly that the rates assessments across the whole district were all invalid for the past six years and that probably they had always been defective. He seemed to think that this was one of those cute, little idiosyncrasies of the old Council. No doubt, just another minor technical irregularity.

He also let it slip that the draft validation bill, "which is well under way", lists twenty pages of errors for the past six years. All minor technical irregularities, no doubt.

The problem with his comments about the six year limitation period is that it is not correct. That rule does not apply if the act or omission giving rise to the liability has been kept secret from the claimant.

One suspects that Peter Winder knows a lot about the law relating to local bodies, but, sadly for his own credibility, he only discloses what best serves the strategy of the commissioners, the government and the banks. Anything that could favour the ratepayers he leaves hidden away in the bottom drawer.

I bet that after the pasting that he received at the meeting he will be running back to Council's lawyers to reassess the validation process and will take a greater look at the 20 pages of errors that he believes he can validate.

He had better do his job thoroughly because if he proceeds with his ad hoc, misguided attempt to sweep incompetence and dishonesty under the carpet, and minimise the utter incompetence and dishonesty of the Council, he will be met with a barrage of evidence that will make a mockery of his validation proceedings.

And that will be another $150,000 down the tubes.

At the meeting one ratepayer came up with the very good idea of ring-fencing the illegal debt until a full inquiry has been held into how it came about and who is liable.

The debt would be isolated and no interest paid on it in the interim. This would allow the commissioners to get on with what they profess to be good at, getting the Council back on track without the problem of THE DEBT.

Such an approach would need to be driven by the government and while ratepayers continue to pay rates and meekly submit to their own financial destruction the government is unlikely to intervene. But if ratepayers showed a little more spunk and fought for their rights it could be a very different sorry.

If ratepayers accept the debt they will be done like a dog's dinner. If they stand up and fight then they have a chance to ring-fence the debt, get Council back on foot and also shaft home responsibility for the debt where it belongs.

OAG INQUIRY 19.02.13
At yesterday's meeting the commissioners seemed confident that the report from the OAG inquiry would not be published "for several months". That ties in nicely with their plans of destruction. It is absolutely essential that they get the draft annual plan, with the promised fundamental amendments to the LTP, adopted and in place, and the errant ratepayers well in the fold, before the OAG report becomes available.

If the report and its inevitable criticism were available at the consultation stage of the draft plan then ratepayers could become a bit bolshie, and, heavens forbid, refuse to pay their rates.

If the plan is a done deal it also allows the OAG to say that although there were some dreadful acts of incompetence it will not recommend any action as the commissioners now have the situation "under control".

Note that Council is an "affected" party and will be allowed access to the report before it is published to comment on any criticism contained in the report. The OAG does this, according to its website, to comply with the requirements of natural justice. However, it does not give ratepayers the same opportunity, and that Office clearly turned a blind eye to the requirements of natural justice when it undertook an inquiry to investigate its own incompetence.

It seems that in New Zealand the principles of natural justice do not apply to ratepayers.

So, even in the highly unlikely event that the report was completed prior to the adoption of the plan, Council, as an affected party, could delay its publication, by dithering and objecting, until the ratepayers are all shackled and chained.

Are we not pawns in some great conspiracy?*

*I do not believe in conspiracy theories, however,,,,,,,

Legal Eagle comments on the meeting with commissioners in Mangawhai today.  He was less than impressed.  
A lot of spin and meaningless platitudes but no substance.  They are clearly working for the Minister and the banks, papering over the cracks of the past and ensuring that ratepayers are dumped with all the illegal debt. 

The draft annual plan - due out next month - looks as if it will be the final cruncher that destroys Kaipara.  And it became clear at the meeting that the commissioners do not give a damn about that, or the  suffering of the ratepayers.  Payment of the debt is their sole priority.

The full post can be seen here.

With the announcement of almost certain changes to the development contributions regime, the Council's financial viability, which was teetering on the brink, has taken a dramatic step for the worse.  Legal Eagle considers that the Council no longer qualifies as a going concern and that the government and the banks will not be prepared to prop it up any longer.

Ratepayers need to consider very carefully whether they are prepared to pour more monies into a Council that is on its last legs.

The full post can be seen here.

Ratepayers should make sure that they read the article in the Herald (here) by Jamie Gray about counting the true cost of fraud to a community as a result of various Ponzi schemes and other fraudulent activities.

He quotes Harry Markopolos, the fraud investigator who uncovered the infamous Bernie Madoff Ponzi scheme in the United States, who points to stress and sometimes suicide.  He adds:

 "So we do have a body count from white collar fraud but it is overlooked and hidden. The damage to society and the loss of trust is incalculable."

There are many people in Kaipara who will who will have been affected in a similar way by the KDC's onslaught on the community.

The final comment in the article about large Ponzi schemes is very interesting and relates directly to the Kaipara situation:

"Everyone has to have failed to [do] their job - the bankers, the accountants and the due diligence professionals. Everyone has to have failed before they get that big," he said.

"That seems to be the commonality," he said. "And of course the regulators have to miss it all as well."

Amen to that.  But why in the Kaipara situation are all those who failed to do the job let off whilst the innocent party and the victim - the ratepayer - has to bear responsibility for all the losses?

The new KDC water rort commenced in January, to the dismay of many ratepayers.  Obviously modelling itself on the Auckland water rort, the KDC is now charging a standard charge of up to $349 (which includes the first cubic meter), and then a charge for each subsequent cubic metre.  In addition, no doubt in pursuance of the principle of non-user pays, those close to a pipe, but not connected, have to pay 75% of the standing charge.  That is the same unjustifable charge that was introduced for wastewater. 

This pressure to connect to the system is ironic given the Council warning on the back of the Mangawhai Focus that there is an extreme water shortage and conservation measures are encouraged.

I would have thought that not connecting to the system would be the best conservation measure. 

Chair of commissioners, John Robertson, included a personal letter with the latest rate demand full of the misrepresentations and half-truths that we have come to expect from him.

Legal Eagle comments (here - scroll down) on some of the inaccurate information in the letter.

Talking of Mainzeal (see post below), Brian Gaynor in the NZ Herald (here) suggests that it is imperative that the receiver and the regulators of that company carry out a wide-range investigation into the collapse. He cites several reasons including inadequate corporate disclosure.  No doubt that will happen.

Compare that to the Kaipara Council which illegally contracted to build a sewerage scheme, and raised monies to do so, in clear breach of legislation, and without consulting ratepayers. It also set rates for six years that flouted the law and in some cases were little more than an extortion racket.  Not only that, some monies have clearly not been accounted for, and there are serious questions about how the contractual side of the sewerage scheme was handled.  

All of that, and yet no independent inquiry has been held. The Council first, and then the commissioners, both with the blessings of the government, have swept all problems, concerns and illegalities under the carpet and refused to bring in independent experts.

Take a look also at the Novopay fiasco where the government finally awoke from its slumbers and appointed Mr Fixit - Minister Steven Joyce - to unravel that particular Gordian knot.

According to John Armstrong in the NZ Herald (here) things are happening quickly. The Minister has personally taken control and in a few days isolated the major issues. He has to decide whether to ditch Novopay and start again or whether it is salvageable. He has therefore instituted a technical audit to see if Novopay can be "stabilised" or whether it is past saving. That will take three to four weeks.

At the same time he has instigated another inquiry to assess all aspects of the Novopay project from go to whoa. That will also take a few weeks, unlike the OAG's EcoCare inquiry which has taken almost a year so far. The Joyce inquiry will, I bet, be totally independent, and pull no punches. Again that will be in stark contrast to the type of report that we expect from the OAG.

Steven Joyce, Kaipara needs you. Compared to Novopay this is a cakewalk. A couple of months and you would have the whole debacle well and truly sorted and Kaipara well on its way to normality.

Mainzeal has gone into receivership because it was no longer financially viable. Kaipara is in exactly the same situation. The debts that it has incurred, illegally and recklessly, are so large that the Council can no longer function as a local authority by providing the appropriate services to ratepayers and, at the same time, meet its commitments under the debts.

The income from fair and reasonable rates is simply insufficient to meet its liabilities.

Everyone in the country seems to acknowledge the situation, except of course the government and its agents, the commissioners.

In the normal world, when such circumstances apply then receivership is the only real option. Local government, however, has its own rules. The government believes that ratepayers who are totally innocent of any blame, should bear full responsibility for the illegal debts and be forced to repay the banks, irrespective of the inequity and financial ruin that such an outcome would result in.

It is like the government insisting that investors in South Canterbury Finance who have already lost all their own monies, be obliged to repay SCF's debts to the banks.

No one would tolerate such a thing. No one would tolerate it if the same thing was happening to a council in Auckland. But Kaipara is a backwater and unimportant, and the government can dump on the Kaipara people as effectively as the Kaipara Council has done over the last six years.

Well at least it thinks it can. The problem is that unless radical action is taken very soon Kaipara is going to descend into financial chaos, and that will happen in the next few months.

The new Minister, Chris Tremain, has inherited a poisoned chalice. If he heads down the commissioners' present route then he and Kaipara are both custard. He needs to act now to salvage the situation. And, this time, let us hope that the Minister takes on board the views of the community. There are some wise heads here who believe that Kaipara can be a viable entity. Far better to ditch the failed dictatorial approach and make the future of the district a cooperative venture between the ratepayers and government.

Frank Newman, ex- Whangarei councillor and local government commentator, makes some Frank comments in two articles on the Kaipara debacle on the Property Plus website.

The first article here starts with the dramatic statement:

The Kaipara District Council (KDC) is a shambles.

He then explains how it got into a financial mess and how the commissioners are effectively acting as receivers. He quotes the concerns of the auditors about the Council's financial viability and doubts whether Kaipara will be able to survive:

The figures are ugly, and unsustainable.

In the second article here he emphasises that ratepayers are the innocent parties and yet they are getting dumped with all the debt:

There is no doubt gross negligence has occurred, and not corrected by the councils statutory regulators. There is also no doubt ratepayers had no part in the debacle – they are the innocent party. Ratepayers were not even consulted about the fateful decision to expand the Mangawhai sewerage scheme – yet it is ratepayers who are being asked to pick up 100% of the cost - it seems for no other reason than ratepayers are an easy target! It’s an injustice and ratepayers are correct to protest.

He also sets out a list of those that he considers could bear the liability for what he calls "gross negligence". This includes the Councillors, the former Chief Executive, the banks, Central Government, and the Auditor-General.

In respect of Central Government he says:

Central government, on the grounds that the Minister of Local Government is the regulator who failed to adequately monitor the council’s performance;

In respect of the Auditor-General he says:

The Council’s auditor (Audit NZ) is a government agency who act for the Auditor General. The Auditor-General’s role is to give Parliament independent assurance over the performance and accountability of public sector organisations. Is Audit NZs role any different to the role of an auditor in the case of a finance company collapse and are they any less accountable?

He then considers an independent inquiry:

It would be totally appropriate for central government to initiate an independent enquiry into liability (independent because it may be that the government itself is found to be liable in full or part).

Unfortunately central government and its agencies do not have clean hands on this issue. They would probably like to take a do-nothing approach and let the cost fall upon ratepayers. The last thing they would want to do is admit liability lest Kaipara opens up a raft of claims from other negligent councils. That enquiry should also look into the possibility that some actions may have been fraudulent and may give rise to criminal prosecution.

Having stated that Kaipara's massive debtis unsustainable, he ends with the following comment:

.There are lots of unknowns in all of this but one thing is for sure – it is absolutely and totally unfair that ratepayers are being hit with 100% of the liability for fault which they can’t be blamed for. If there was ever an issue that justified ratepayers marching on Town Hall, this is it.

A final article, What's in store for Kaipara, will appear soon.


What can ratepayers take from this?  The fact that the truth about Kaipara is finally emerging.  What the commissioners are doing, as agents for the government and for the banks whose monies are at risk, is unlawful, inequitable and unfair.  Ratepayers are being victimised for a debt that is not theirs whilst the real culprits are allowed to escape liability.

Starving the commisioners of money is a simple way in which ratepayers can force the government to reconsider is options and hold independent inquiries into the financial and legal mess that has been created. 

Kaipara can only survive if the real problems can be tackled by independent experts and proper long term procedures put in place. 

Putting one's head in the sand, denying realities, and slapping on Band-aids will only court financial disaster.

Those are pretty good reasons to stop paying rates if you have not joined the rate strike already.

Council has maintained strongly that all rates are valid until a court issues a formal ruling to the contrary.  That is the advice that it says has received from its lawyers, Simpson Grierson. 

That is why it is telling ratepayers that the rates are valid and must be paid. 

But, if that is the case, why is there any necessity to go through the validation procedure at a cost of hundreds of thousands of dollars?  Why validate something that Council says is already valid?

I find the argument hard to follow.

And if the rates need validating then surely that means that they must be invalid to start with.  And if they are invalid then it means that ratepayers have no obligation to pay them.

Am I missing something?

It doesn't make sense.

John Robertson needs to step up here and offer and explanation for a further waste of ratepayers' monies.

According to our MP Mike Sabin, parliament, as the highest court in the land, is going to make a ruling on the matter after considering evidence from Council, ratepayers and himself.  Given the confusion, it therefore makes sense for all ratepayers to stop paying rates until parliament decides which rates are legal and which are not, and ratepayers know exactly where they stand legally.

Local MP Mike Sabin has put his hand up and thrown in his lot with the Kaipara commissioners.

The commissioners have ignored their obligations under the Minister's terms of reference and at the same time reneged on Council's commitment to ratepayers, both of which required them to consult with ratepayers on options for the illegal rates. They have stated that consultation with ratepayers does not not "add value to the governance process", and have unilaterally decided to pursue the validation option.

Mike Sabin has ignored this blatant breach of the terms of reference and the repudiation of the agreement with ratepayers - and the affront to good governance - and has surprisingly endorsed the commissioners' approach.

In an article headed MP's Corner in the Dargaville & District News of 23 January 2013 (here) he regurgitates much of the spin about validation that he has taken directly from the commissioners' propaganda releases. For instance he emphasises that the bill is to remedy "largely technical deficiencies". He also emphasises that "services have been provided" which suggests that the rates were justified.

This, of course, is absolute rubbish. The reality is that there was a total abuse of the rating process by the Council and every step of the process was littered with utter incompetence and meaningless provisions that made a mockery of legal compliance. Many of the rates were completely ultra vires, which means that Council had no right in law to levy the rates.

When the true facts are revealed, along with the incompetence and dishonesty of those involved in setting the original rates, the application to validate will be laughed out of parliament. MPs are not fools. When they are made aware of the true situation they will not only reject any validation application but they will be less than pleased with a Council and sponsoring MP that have wasted parliament's time and ratepayers monies by misleading parliament as to the background to the illegalities.

Mike Sabin is an ex policeman and it is disappointing that he did not examine the evidence before throwing his hat into the ring and endorsing the commissioners misleading propaganda.

Ratepayer Pete Grierson is less than impressed with Mike Sabin's comments and his response can be seen here in Ratepayer's Forum.

Mike Sabin can avail himself of this column if he wishes to respond.

It is amazing how statistics can be used to prove anything that you want them to prove.

There have been headlines in a few papers in the last few days about how more ratepayers are paying their rates. This is clearly the latest propaganda move by the commissioners to try and downplay the success of the rate strike.

I have yet to see any accurate figures come out of the KDC. If its figures for the rate strike are as reliable as its financial models for virtually anything it does then we can give them wide berth.

In spite of that, Council's figures state that 21,2 per cent of Mangawhai properties have not paid any rates for the current year and a further 16.4 per cent have only made part payments. That adds up to 37.6 per cent who are on a rate strike of some kind.

In my book that is a resounding success for the rate strike. Well over a third of people in Mangawhai are withholding rates. And that is in spite of all the pressure that has been exerted on them by the commissioners.

Ratepayers are sending a message loud and clear to the government that what is happening in Kaipara is totally unacceptable, that the commissioners are not doing their job, and that there has to be proper dialogue with ratepayers if Kaipara is going to survive.

In the next couple of months the draft annual plan will be out and ratepayers will see for themselves the full horror of the new Rates Bomb. Most households in Mangawhai in particular will have at least $2,000 added to their rates for the next rating year starting on 1 July. It will be beyond the pocket of many to pay.

John Robertson may be the master of spin, and able to convince many that black is actually white, but there is nothing he can do to disguise the reality of a massive and unsustainable rates rise arriving in the letter box.

Another run of Rate Strike notices is being ordered ready for the rush when the new Rates Bomb hits.


According to an article by Mike Barrington in the Northern Advocate, commissioner Colin Dale is now known as the "Community Champion" because of all his great work on community issues. Does the name reflect the regard of an appreciative community? Scarcely. According to the story, the name was bestowed on him by his fellow commissioners.

While he was working on commmunity issues he could have taken the time to consult with ratepayers about the options for dealing with the illegal rates, as was promised. He might then have earned the title of Champ.

After years of complaints about the dismal performance of Audit NZ as the OAG's appointed auditor of the KDC, it has finally been given the boot. According to the Chief Executive's latest report (here) the appointment has expired and Audit NZ has been replaced with Deloitte, effective immediately

It is interesting that calls to replace Audit NZ have been ignored, but now the OAG inquiry is well under way action has finally been taken.

Has the inquiry discovered something that we should know about?

This is the latest report on the OAG inquiry:

Originally, it had been anticipated that the report from the Office of the Auditor-General (OAG) into its Inquiry into the Mangawhai Community Wastewater Scheme might be able to be released by the end of the 2012 calendar year. This has not been achieved and it is understood that there is still a reasonable level of work to be completed before the Inquiry process will be completed and the report is able to be released.

The inquiry was announced on 28 Februrary 2012, so it is almost a year old. The rumour mill suggests that the report is being delayed to give the commissioners a chance to beat the Kaipara ratepayers into submision. When the report does emerge it will tell a sorry story of incompetence, but no action will be taken because of the need to "move on". But no doubt the experience will provide valuable lessons for the future.

In short those responsible for the Kaipara rort will get off scot free and the poor ratepayers will have their role as the scapegoats for local government incompetence reconfirmed.

Chair of commissioners John Robertson has responded in an article by Mike Barrington in the Northern Advocate (here) to criticism by Legal Eagle (Robertson runs for cover - here) of his rescinding the right of ratepayers to be consulted on the options for resolving the illegal rates problems.

Mr Robertson is proving to be the match of ex Mayor Tiller when it comes to fancy footwork and deflecting questions.

In response to the claim that the commissioners breached the requirement in the Minister's terms of reference that they work with the Kaipara community and ratepayers to identify the options, he advises:

"We have considered these options in depth, including with members of the community and representatives of ratepayer groups".

Sounds good but I have yet to find anyone that has been consulted. Perhaps John Robertson would like to enlighten us and let us have a list of those he consulted.

In respect of the commitment to set up focus groups with ratepayers to discuss the options, he advised that it had been rescinded by the commissioners because he did not believe that it would "add value to the governance process".

Those are the words of the man entrusted with getting Kaipara back on the road and mending relations with ratepayers.

We are learning about this man very quickly. Any problem is not the commissioners' problem, but the responsibility of the previous Council. And now commitments to consult with ratepayers do not "add value to the governance process".

Can you feel the hairs standing out on the back of your neck?

In Mike Barrington's article in today's Northern Advocate (here) Bruce Rogan of the MRRA says that the reason for ending Jack McKerchar's employment contract must be disclosed. Council needed to explain why McKerchar had left and why he was paid the sum of $240,000.

In the Northern Advocate article mentioned above (see here), Chairman of commissioners, John Robertson, is reported as saying that the McKerchar settlement was made a year before the commissioners were appointed and he had no idea why the Council had paid out Mr McKerchar, nor how they established what had been a sizeable amount to pay him..... (continued here)

This side-stepping of the commissioners' clear responsibilities does not sit well with Legal Eagle and he calls for the Minister to replace the commissioners. He suggests that if the commisioners remain in office then they will continue to alienate ratepayers and the financial situation will get worse. Sooner or later the banks will be forced to pull the plug on the KDC.

Peter Bull. ex councillor. has come out swinging again (Kaipara Lifestyler here) in support of the views of Lyall Preston and the commissioners' decision to proceed with the validation of rates. Read the full story here.

Ron Manderson of the Kaipara Citizens and Ratepayers Association comments on the contents of the McKerchar Deed here.

The receivers of Belgrave Finance are suing the company' solicitors and auditor for negligence and breach of their duty of care. According to Legal Eagle, that is what should be happening with the Kaipara Council.

The full article can be seen here.

A concerned ratepayer (here) reckons the release of the Mc Kerchar Deed has created a result that "smells as bad as a toilet door on a prawn trawler".

David Carter, the Minister of Local Government, is to be the new Speaker of parliament. He has worn his role as Minister of Local Government like a badly made suit and it must come as a great relief to him to escape the complexities of the Kaipara problem.

The new Minister is Chris Tremain.

Little is known about him but his website is here.

Jack McKerchar's right to terminate his employment agreement with the KDC can be seen here.

If he terminated the agreement himself then he was not entitled to any monetary settlement. It therefore appears that Council wanted him to go and negotiated a settlement figure to persuade him to quit.

The questions therefore follow:

Why did Council want Jack to go?

Why did Council not terminate his employment without a monetary settlement, if they had just cause?

Why did Council allow Jack to work out his notice when he could have required to leave immediately?

Mike Barrington's article in the Northern Advocate on the Deed of Settlement can be seen here. He quotes an expert on employment law who raises some questions about the terms of the agreement.

One also wonders what happened to Jack McKerchar's stated reasons for quitting, namely health reasons. Not a dicky bird about that in the agreement. That suggest that it played no part in the resignation and was just another smokescreen created by the parties to hide the truth.

But what is the truth? The disclosure of the details of the Deed raises more questions than it answers. Jack McKerchar ended his letter to accompany the release of the Deed with the words:

"I trust this will be the end of the matter."

Jack must be very naive or have his head in the clouds if he thinks that his letter will draw down a veil on this matter. This is a veritable can of worms and the worms are going to squirm for a long time until the truth comes out.

In a way it epitomises everything that has gone wrong in Kaipara over the years. Total incompetence, an arrogant attitude towards legal compliance, and covering up all the defects.and problems with lies and smokescreens.

Kaz's comments on the McKerchar Deed of Settlement can be seen here.

Steve Ruru has released the McKerchar Deed of Settlement. It can be seen here with accompanying letters.

Any comments to:contactus@kaiparaconcerns.co.nz

Lyall Preston from Ruawai took a swing at the Mangawhai Residents and Ratepayers Association in a letter to the editor published in the Kaipara Lifestyler last week. He raises some issues which he suggests that the members of the MRRA should consider whilst "enjoying their beach environs".

The issues raised are important because they reflect the views of many ratepayers west of State Highway 1. They consider that ratepayers in Mangawhai should bear the cost of their inflated sewerage scheme and have little sympathy for the rate strike.

Legal Eagle comments on the issues here.

Legal Eagle's letter to Minister, David Carter, about the decision by the commissioners to uniterally seek the validation of the illegal rates without consulting with ratepayers as per Council's commitment, and in breach of the commissioners' terms of reference.(here - scroll down)

The Office of the Auditor-General (OAG) has come up with a bizarre initiative.....(read more here - scroll down)

We are still waiting to hear whether details of Jack's farewell package are to be revealed or whether Jack has gazumped the Council with his threat of an injunction.

There was a lot of drama just before Christmas. It was like the final episode of Shortland Street at the end of a season with everything up in the air. Would Steve decide to reveal the document? Would Jack's threat to injunct be carried out? Would Steve and the commissioners call his bluff? Would the injunction go before the tribunal, and, if so, what would it decide? And, finally, what would the dastardly document reveal?

So far in the new year there have been no further developments, at least that we know about.

Looking back on it all I get the distinct impression that this whole drama has been orchestrated by the Council to achieve an outcome that I find hard to fathom.........(continued here - scroll down)

An investigation into Allan Hubbard's companies has found that he misled investors in his companies. How does that differ from the Kaipara Council? It also misled its ratepayers to the tune of tens of millions of dollars. But why did the Hubbard case get an independent investigation to find out who was at fault while the losses in the Kaipara case were all dumped on the innocent ratepayers?

Legal Eagle asks these questions (here -scroll down) and wonders why the SFO failed to investigate the Kaipara District Council when it was presented with clear evidence of irregularities that could indicate fraud.

He also questions, yet again, the role of the Auditor-General in the whole Kaipara debacle The Auditor-General was the auditor for the Council yet failed to pick up any of the procedural, legal and financial irregularities that have cost the ratepayers of the District so dearly. And yet it is the same Auditor-General that is holding an inquiry into the fiasco and at the same time investigating the competence of its own audit.

Ex Kaipara and Otamatea Councillor, Peter Bull, comes out in favour of the commissioners in the Northern Advocate (here) and urges ratepayers who have been "sucked in " to join the rate strike to reconsider and to pay their rates.

But has he got it completely wrong and is he simply regurgitating the spin of the commissioners? Is it Peter Bull who has been "sucked in"?

Legal Eagle (here) counters Peter Bull's claims and introduces some facts to dispel all the spin.

Legal Eagle is predicting that the story of the corrupt Kaipara Council will be one of the big news stories this coming year. We are only a few days into January and the Kaipara Council has been mentioned twice in consecutive days in the NZ Herald. Nothing consequential, but it does show that the word Kaipara is uppermost in peoples' minds and that the association between the worrds "Kaipara" and "Corruption" is being readily made.

The first mention of the K word was in yesterday's Herald in the summer quiz. Let's see how good you are:

5. John Robertson, Richard Booth, Colin Dale and Peter Winder run which local body?

Ten out of ten if you guesssed Kaipara. And eleven out of ten if you queried the word "run"and asked if that word is appropriate, especially as the commissioners are now operating outside their terms of reference imposed pursuant to the LGA and refusing to consult with the natives.

The second mention is in today's Sideswipe and relates to to three poles that were erected to display flags for the Rugby World Cup by the Whangarei Council at Langs Beach at a cost of $39,000, but sadly the work was not completed until after the World Cup finished. Over a year later the poles are still there. A protest banner is now flying from the poles with the following message:





Ratepayer Dave McGillivray offers some personal views on the Kaipara Council and commissioners here.

The commissioners have completed their first phase of their term in office and Legal Eagle offers his assessment (here - scroll down) of their performance based on the tasks that they were required to perform under their terms of reference.

The commissioners have been given a dismal 0/10 which reflects their failure to comply with the terms of reference, and especially their failure to engage with and consult with the community. In failing to consult with ratepayers on options to resolve the illegal rates debacle the commissioners have not only broken trust with ratepayers but have also breached their terms of reference.


Posts for 2011 can be seen here.


Legal Eagle's posts are on a separate page here.


Ratepayers can now have their views published on the
Ratepayers Forum page (here)

Kaipara District Council
Local Government Act (LGA)
Local Government Rating Act (LGRA or Rating Act)

"It is a convenient fiction for those indoctrinated in the ways of local government that ratepayers have to bear all the financial burdens of a local authority even though they arise from the incompetence or the illegal actions of those in power."

Legal Eagle  

In other words, the consultants, the contractors and the lawyers make all the money and the ratepayers pay all the costs, bear all the risks, and fund all the losses.

Dave Wolland






Christmas has n