Summary
- On the 22 October 2024 Local Government Minister Simeon Brown announced that he was appointing a Crown observer to Wellington City Council.
- According to RNZ, the Crown Observer is to give the Minister monthly updates and file a final report after the Observer’s ends (currently set as July 2025).
- The Minister’s press release also states the Observer will “…assist the Council on matters of governance, financial strategy and planning, the Government will be working to ensure that Wellington City Council Ratepayers can have increased confidence in their Council and that the Long Term Plan decisions are finalised in accordance with the Local Government Act”
- According to RNZ, the Crown Observer will be paid by the City Council.
- Wellington City Council received considerable media attention in October, both before and after the announcement of the Crown Observer. The Democracy Project has published lists containing dozens of these articles (lists linked to “before” and “after”).
- According to a report in interest.co.nz, the Observer announcement occurred after left and right-wing Councillors “…joined forces to halt…” Mayor Tory Whanau’s plan to sell shares in Wellington Airport. Without the funds from the airport share sales, Wellington City Council will need to re-evaluate the Council’s Long-term Plan.
- The Local Government Minister criticised the Council for using mainly rates to fund water infrastructure “…rather than appropriately using debt financing”.
- Dan Brunskill at interest.co.nz pointed out that Wellington City Council has already greatly increased its debt levels and is using rates increases to help support those increasing debt levels.
- Wellington City Council and Hamilton City Council are implementing the highest rates increases for New Zealand’s major cities and are both planning to operate close to their debt limits over the next three years.
Article Details
Headline: Wellington council intervention: Mayor Tory Whanau accepts appointment of Crown observer
Published on: 22 October 2024
Published by: RNZ
Link:
Headline: The knives are out for Wellington – the city that ‘repeatedly frustrates the locals’
Authored by: Glenn McConnell
Published on: 15 October 2024
Published by: Stuff Limited
Headline: Wellington City should be taking on more debt to limit rate increases and needs a Crown Observer to advise on this process, Local Government Minister Simeon Brown says
Authored by: Dan Brunskill
Published on: 22 October 2024
Published by: interest.co.nz
Quotes
“I have been concerned about the Council’s ability to manage their Long Term Plan amendment and adoption process, following their recent decision to rewrite its 2024-34 Long Term Plan,” Mr Brown says.
“Under Part 10 of the Local Government Act 2002 (the Act), I have powers of assistance and intervention in relation to a local authority that has a problem. Following advice from officials I have identified there is a significant problem at Wellington City Council that warrants the Government appointing a Crown Observer.
“Advice provided to me by the Department of Internal Affairs highlights that the Council is not utilising its balance sheet appropriately in order to maintain critical infrastructure like water, and that is failing to manage its insurance risk appropriately. These risks have been increased due to its recent decision to amend the Long Term Plan.
“The Department advises me that while it is not uncommon for councils to amend their Long Term Plans, it is uncommon for a council to reverse such a critical financial decision that requires such an amendment only four months into the cycle,” Mr Brown says.
Local Government Minister Simeon Brown as quoted in Government to appoint Crown Observer to Wellington City Council press release, 22 October 2024
Mayor Tory Whanau said she was now considering the Terms of Reference.
“It is my view that we accept this and work constructively with whoever is appointed. Ultimately, we all want a long-term plan amendment that delivers the best outcomes for Wellingtonians.”
Whanau said Brown had fairly pointed out to her instances where councillors had walked out of meetings, refused to vote, and publicly criticised each other and council staff.
“I hope this intervention serves as a reminder to councillors that actually, we all hold incredibly important roles on behalf of our city and we must do better.
“We must use this as an opportunity to put the past disagreements behind us and build a coherent plan that delivers the best for the people of Wellington.”
Wellington City Mayor Tory Whanau as quoted in Wellington council intervention: Mayor Tory Whanau accepts appointment of Crown observer, RNZ, 22 October 2024
“The Government is clear that by proposing a Crown Observer, the Government is not taking responsibility for any of the decisions made by the Council. The Council and Mayor are democratically elected and are responsible for the decisions made by the Council, and will remain accountable to their constituents.
“By providing a Crown Observer to assist the Council on matters of governance, financial strategy and planning, the Government will be working to ensure that Wellington City Council Ratepayers can have increased confidence in their Council and that the Long Term Plan decisions are finalised in accordance with the Local Government Act,” Mr Brown says.
Local Government Minister Simeon Brown as quoted in Government to appoint Crown Observer to Wellington City Council press release, 22 October 2024
“S&P Global Ratings downgraded Wellington City Council’s credit rating to AA from AA+ in September, citing rising debt levels and costs. The Council would materially increase debt to meet the cost of its water infrastructure renewal and rising costs of delivering services, it said.
Debt levels had historically sat around 100% of operating revenues but were already at 213% and would rise to 286% by 2027 — with rate hikes helping to support that increase.”
Dan Brunskill in Wellington City should be taking on more debt to limit rate increases and needs a Crown Observer to advise on this process, Local Government Minister Simeon Brown says, interest.co.nz, 22 October 2024
“There’s no doubt that Wellington City Council is in a challenging position. Its council is under fire, its ratepayers are feeling the pain.
People are rightly infuriated when they have to conserve water because the council has failed to maintain its pipes, yet they see money being spent on all sorts of other projects – like cycleways
But that’s not a unique frustration.
Politically, it makes sense for National and ACT ministers to blame Wellington’s Council for all the troubles of this region.
They are, for the most part, Labour and Green-aligned representatives. It allows central Government to blame the opposition.
But the issues Wellington face are systemic, widespread, foundational issues that go to the core of local government all around New Zealand.”
Glenn McConnell in Analysis: The knives are out for Wellington – the city that ‘repeatedly frustrates the locals’, Stuff Limited, 15 October 2024
“The Coalition Government plans to place a Crown Observer on the Wellington City Council as it rewrites its long term plan following a vote to retain its stake in the city’s airport.
Left and right-wing councilors joined forces to halt the sale of its 34% share in Wellington Airport, shooting down Mayor Tory Whanau’s plan which would have reduced the city’s insurance risk and diversified its investments.
The sale could have raised half a billion dollars which would have been reinvested into a perpetual fund and reduced net debt levels. Now, the Council will have to revise its long term plan and potentially cut investment in some infrastructure projects.
Local Government Minister Simeon Brown said he was concerned about the councils’ ability to manage this process and use its financial resources effectively.”
Dan Brunskill in Wellington City should be taking on more debt to limit rate increases and needs a Crown Observer to advise on this process, Local Government Minister Simeon Brown says, interest.co.nz, 22 October 2024
Further reading on this issue:
Democracy Project Article: Why Tory Whanau has the lowest approval rating in the country
