The Local Authorities (Members' Interests) Act 1968 and other conflicts of interests

The Local Authorities (Members' Interests) Act 1968

The Auditor-General has responsibilities under the Local Authorities (Members' Interests) Act 1968 (the Act), which applies to councils and a range of statutory bodies.

The Act helps protect the integrity of council decision-making by ensuring that elected members are not affected by personal financial motives when carrying out their role.

Under the Act an elected member cannot:

• enter into contracts with their council worth more than $25,000 in a financial year, without approval from the Auditor-General (a breach of the rule results in a disqualification from office); or
• discuss or vote on matters before their council in which they have a direct or indirect pecuniary (financial) interest, other than an interest in common with the public (it is an offence for a member to breach this provision, and, if convicted, they automatically vacate office).

The Auditor-General's role in administering the Act includes:

• deciding applications for approval of contracts worth more than $25,000 in a financial year;
• providing guidance to council members and officers, to help them comply with the Act in particular situations; and
• investigating and prosecuting alleged offences against the Act.

You can find out more about the Act in our publication Guidance for members of local authorities about the Local Authorities (Members' Interests) Act 1968.

Other conflicts of interests

The Act is a small subset of the law about conflicts of interests that apply to council members, and only applies to financial conflicts of interest. The body of law on non-financial conflicts of interest has been developed by the courts over a long period of time, and applies to council members when they are making certain decisions.

As noted above, the Auditor-General has a specific role in relation to financial conflicts of interest that are regulated by the Act. The Auditor-General does not have the same statutory role for non-financial conflicts of interest – only the courts can determine whether the law has been breached in any particular instance and what the consequence should be.

However, as part of the Auditor-General's broader mandate we can look into matters of probity involving a member of a council and the use of council resources, which could include examining whether a member had a non-financial conflict of interest and how the member and council had managed that.

You can find out more about conflicts of interests in our publication Managing conflicts of interest: Guidance for public entities. We also discuss non-financial conflicts in Guidance for members of local authorities about the local authorities (Members' Interests) Act 1968.

Both of these documents are on our website: www.oag.govt.nz