Part 4: Other comments

Investigation into conflicts of interest of four councillors at Environment Canterbury.

The proposal to recover water management costs is an ongoing issue for the Council. The Council has set up a working group that includes Cr McKay, to further consult on the proposal. The issue will come back to the Council in the near future for further decisions. The councillors risk further breaches of the Act, depending on the nature of those decisions.

The Act contains two possible options for dealing with this situation. Under section 6(4) of the Act, the Auditor-General can grant a declaration to allow a member to participate in a matter in which they have a disqualifying pecuniary interest, in a limited range of circumstances. In particular, the Auditor-General can grant a declaration if the prohibition on discussing and voting would impede the business of the council (for example, if a large number of councillors are affected, or if it would be in the interests of the electors or inhabitants of the district that the prohibition should not apply).

For a declaration based on the need not to "impede the transaction of business", the Auditor-General considers factors such as whether:

  • the pecuniary interest rule would preclude most of the members of the council from participating in the matter;
  • the declaration sought is only for minor or procedural decisions; or
  • the application of the rule could unduly distort the way in which the council deals with the matter.

For a declaration based on participation being in the "interests of the electors or inhabitants", relevant considerations include whether:

  • the members have any particular expertise in the matter under consideration;
  • the views of the people in the area would be inadequately represented if the members were not able to participate; and
  • the matter justifies the involvement of all elected members because of its significance to the community as a whole.

The Auditor-General must weigh the benefits of allowing members to participate against the risk that their pecuniary interests could be seen to unduly influence the outcome. The Auditor-General can grant a declaration on her own motion, or after considering applications from members.

The other option that may apply to some councillors is section 6(3)(f) of the Act. Under that section, a member can apply to the Auditor-General, before an issue is debated at a meeting, arguing that the prohibition in section 6(1) of the Act should not apply because the member's financial interest is so insignificant that it cannot reasonably be regarded as likely to influence their decision.

We have been concerned at the lack of awareness of the Act and of general guidance on conflicts of interest that has been evident in this case. We intend to work with the Council and the individual councillors as necessary to help them deal more appropriately with any conflicts of interest in future decisions on water management matters. In particular, we are continuing to discuss with them whether it would be appropriate to grant a declaration to enable these councillors to participate in future decisions on these issues.

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