Part 9: Inquiries into local government

Local government: Results of the 2011/12 audits.

9.1
The Auditor-General is able to inquire into concerns about how public entities use resources. Our focus is on the way public entities use their resources, which can include financial, governance, management, and organisational matters. Parliament funds this discretionary function. Our Office is not a "complaints agency", so is not an avenue for resolving individual complaints or concerns about how a public entity has handled a particular matter.

9.2
The Auditor-General gets inquiry requests from members of Parliament, public entities, and members of the public. Most of the inquiry requests we receive concern local government, including requests under the Local Authorities (Members' Interest) Act 1968 (LAMIA), where we have a specific role to help local authorities and councillors manage financial conflicts of interest and to investigate complaints.

9.3
We look at each non-LAMIA request to decide the most appropriate way to proceed. We identify whether the matters raised suggest:

  • financial impropriety;
  • problems with the organisation's overall governance or management; or
  • other systemic or significant concerns that could be important for the organisation, the field in which it operates, or the general public.

9.4
We consider how serious the matters are, whether we have the resources and technical skills to consider them properly, and whether the matters could be better addressed through other avenues.

9.5
Some of the requests we receive show that many people do not understand our role and limits. For example, we get many requests asking us to:

  • intervene in decision-making by local authorities and stop work or reverse decisions;
  • make a judgement about the legality of actions; or
  • review individual decisions with which the correspondent disagrees.

9.6
In many instances, we explained that we do not have the authority to do what was sought and suggested that the complainant raise the concern directly with the local authority to allow the authority the opportunity to respond.

9.7
Although the concerns with the decision and the process might be well founded, in practical terms, people often hope that asking us to inquire might stall or stop the process. We cannot do this, because the Auditor-General has the power only to inquire and report – not to intervene.

9.8
Most of the requests about local government in 2011/12 were from individual ratepayers or ratepayer groups, but the requests that resulted in our agreeing to carry out major inquiries into local government were from local authorities.

9.9
We briefly outline below the major local government inquiries that we completed in 2012 or are working on. The terms of reference for the major inquiries that are under way, and the completed inquiry reports, are available on our website.

Completed inquiries

9.10
In 2011/12, we completed 154 inquiries into local government. Since 1 July 2012, we have received more than 100 requests. We usually have about 20 inquiry matters open at a time.

9.11
We responded to 54 LAMIA matters in 2011/12, and provided a comprehensive submission to the Department of Internal Affairs in response to a discussion paper on options for reform of the LAMIA.

9.12
Our general inquiries workload spans a range of local government activity. The inquiry requests that we received concerned matters such as:

  • local authorities' long-term plans;
  • major spending proposals for significant projects, such as the Waikato Velodrome;
  • operational matters for infrastructure projects, such as sewerage and wastewater schemes;
  • financial management and financial prudence, including debt;
  • matters of ongoing concern to ratepayers, such as the Dunedin stadium;
  • financial and non-financial conflicts of interest; and
  • CCOs' decisions or activities.

9.13
In many instances, we declined to inquire but asked the complainant to contact the local authority with their question or concern. This was especially so where the local authority was consulting on the matter in the long-term plan process. In some instances, we did not carry out a formal inquiry but passed the information on to our appointed auditor of the local authority for consideration and any appropriate action during the annual financial audit. These routine inquiry requests must be dealt with carefully to work out the most appropriate response.

9.14
We tend to get more inquiry requests about the larger metropolitan councils, with the most inquiry requests coming from Auckland and Christchurch. This is to be expected given those cities' larger populations and the stronger interest in local government in Auckland after the local government reforms and heightened interest in actions of public entities responsible for recovery and rebuilding in Christchurch after the earthquakes. A few smaller local authorities generated more complaints than usual because of high public interest in matters such as proposals to make significant changes to rates.

9.15
A few councillors complain reasonably often to us about their own councils. However, we usually consider that councillors should raise their concerns with the chief executive or at the Council table.

More significant inquiries

9.16
In April 2012, we completed an inquiry into how Christchurch City Council managed the potential for its chief executive to have a conflict of interest as a result of his being a director of the local government insurance company, Civic Assurance. We carried out this inquiry at the request of a Christchurch City Council councillor and Christchurch City Council. We considered how Christchurch City Council managed the need for someone other than the chief executive to be involved in arranging the Council's insurance and whether his two roles were compatible.

9.17
In August 2012, we completed an inquiry into a dispute between Far North District Council and its Mayor about rates and charges payable by the Mayor's company. We carried out this inquiry at the request of Far North District Council and the Mayor. For some time, the two had been in dispute about the amount that the Mayor's company owed for a Kerikeri subdivision that his company developed. The two parties were unable to resolve the complex matters involved. We made findings on the amounts owing to allow Far North District Council and the Mayor to resolve the dispute.

Major inquiries under way

Kaipara District Council

9.18
In March 2012, at Kaipara District Council's request, we agreed to begin a major inquiry into the Mangawhai Community Wastewater Scheme. This is a matter of high interest to Kaipara ratepayers, the Government, and local government as a whole.

9.19
We are looking at how Kaipara District Council prepared, put into place, and oversaw the Mangawhai Community Wastewater Scheme, including:

  • planning and decision-making, including how well the Council complied with policies and strategies and the legal and other requirements for decision-making;
  • the governance, management, and contracting arrangements for the project;
  • financial management, monitoring, and reporting;
  • funding for the scheme, including the use and setting of rates, borrowing, and development contributions; and
  • the overall suitability and cost-effectiveness of the scheme that has been built.

9.20
The inquiry will consider the role that we played as Kaipara District Council's auditor and the roles of other relevant agencies.

9.21
This is a significant inquiry and is taking considerable time and resources. We hope to complete it in the next few months.

Delta Utility Services Limited

9.22
In November 2012, we agreed to a request from Dunedin City Council to look at decisions made by one of its CCOs – Delta Utility Services Limited (Delta) – to invest in residential property developments at Luggate, near Wanaka, and at Jacks Point, Queenstown.

9.23
The work will look at:

  • how and why Delta decided to acquire an interest in the joint venture at Luggate and to buy the land at Jacks Point, including how it considered risks;
  • compliance with legislation, including the Act and the Companies Act 1993;
  • the identification and management of any conflicts of interests; and
  • any consultation with or involvement by Dunedin City Council in the transactions.

9.24
We hope that this work will contribute to a broader study of CCOs that we intend to carry out (see paragraphs 8.76-8.83).

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