Part 7: What lessons can be learned?

Inquiry into the sale of Paraparaumu Aerodrome by the Ministry of Transport.

In this Part, we attempt to draw lessons from the sale of Paraparaumu Aerodrome, that would be of value today in comparable circumstances.

Public Works Act and Treaty issues

There is a need for any department to be clear on how the Crown’s Treaty partnership affects its work, and therefore clear on what specific Treaty-related considerations might apply to each particular piece of work. Where a matter involves the sale or other transfer of land, there are likely to be Treaty considerations – as were recognised in this case.

In this case, the Ministry needed to consider the implications of both the Public Works Act and the Treaty. It acted correctly by seeking advice from other departments. But it did have an opportunity to identify the full range of affected interests, by seeking more information about former owners of the land as well as claimants. Section 3A(6A) of the Airport Authorities Act protected the rights of former owners. It would have been desirable, at the least, to have informed them of the proposed sale and of the protection of their Public Works Act rights by section 3A(6A).

Former Māori owners and the hapū were, it appears, effectively the same group. Contacting the former owners (including non-Māori owners) would have provided additional assurance that all those with an interest in the sale had been identified and, where appropriate, informed of their rights under section 3A(6A).

The art of Treaty consultation is an evolving one. There was a genuine attempt at Treaty consultation in this case. Ministry officials thought at the time that they had gone to considerable lengths to treat the groups they consulted as fairly as they could, and to give them every opportunity to satisfy themselves of the position. The advice they received was that the Ministry should consult with claimants to identify whether they accepted that the aerodrome land was “substitutable”. But it is important, when consulting, to keep an open mind to all concerns and possibilities, and to give active consideration to them.

We acknowledge that it is often very difficult for government departments to find out accurately who is representing whom, and relatively easy for a claimant group to say it was not consulted when in fact some of its members have been consulted. But it is important to bear in mind the need to obtain the views not only of iwi but also of hapū.

We think the events leading up to the sale of Paraparaumu Aerodrome provide a useful case study of what depth of consultation can be required, the need to consider the full range of Māori interests that may be affected, and the need to keep an open mind on how those interests might best be addressed.

The sale process

The Ministry followed a robust and considered approach when giving effect to the Government’s policy objectives for the sale. It conducted the sale on an arm’s-length basis, without Ministerial or other political involvement.

Price maximisation was normally the driving consideration of asset sales. Other criteria needed to be factored into this particular process. This was a good example of how competing policy considerations need to be balanced, and how there is sometimes no single solution which can fully meet all of them. There is a positive lesson to be learned from the way the Ministry designed the sale process to achieve the best balance it could. It is also important to bear in mind that when agreed policy objectives conflict, the task of determining the balance falls ultimately to Ministers. The Ministry referred matters to Ministers throughout – except in the actual sale process, which rightly needed to be conducted without Ministerial involvement.

The process for the sale ought to have been better carried out and documented. All of those involved seem to us to have relied on accumulated knowledge of asset sales. That should not have been at the expense of a properly documented process.

It is also important to have clearly defined governance arrangements for any significant commercial transaction – especially when both officials and external advisers are involved.

For the future, we would expect that there would be a complete documented record of the evaluation process (including the timetable), the governance arrangements (including decision-making responsibility), and the evaluation criteria and how they were applied. All external advice, including legal advice, should be in writing to the point that all process decisions can be fully justified after the event.

The final stage of the evaluation process was completed in a hasty manner. The lesson to be learned is that, even though the vendor of a public asset might think it is open to bids throughout the process, the process of receiving and evaluating tenders needs to be sufficiently sound and defensible to be, and be seen to be, fair to all parties.

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