Kerre Woodham: How is it that we need a Crown Observer?

The Government is set to appoint a Crown Observer to Wellington City Council within weeks. The writing was on the wall really, wasn't it? It was whether they were going to go the whole hog with the Commissioner, a’ la Tauranga, or settle for an Observer, and that is what they've gone with.  

Local Government Minister Simeon Brown made the announcement yesterday and said he's written to Wellington City Council with draft terms of reference – he's given the Council ten working days to respond, as required under the law. The move follows months of wrangling over the Council's Long Term plan. They were looking to fund it through the sale of Wellington Airport shares, that sale is now not going ahead, and they're having to scratch around and find a whole lot of money to fund the goings on of the city. The planned sale of the shares, and it was one that was pushed by Mayor Tory Whanau, was scuttled at the last minute, following a vote by councillors earlier this month.  

Tory Whanau is resigned to the fact that there is an Observer coming in and she said, “I welcome the Minister's intention to bring in an observer”. She said the Minister has fairly pointed out examples where councillors had walked out of meetings and acknowledged the Council has some tough decisions ahead in the next few months. She also conceded that the Council must do better – but she does not accept there's been financial mismanagement at the Council surrounding water infrastructure investment, and she does not intend to cancel crucial plans for the city.  

Well, it may not be mismanagement, but there seems to be a little bit of financial incomprehension. Simeon Brown said the council has demonstrated an inability to understand the mechanisms it has available to manage the financial pressures it's facing. So, you don't know your arse from your elbow when it comes to budgeting, basically, to boil it down into simple language. This includes the Council choosing in its Long Term plan to use rates revenue to pay for its water infrastructure upfront, rather than appropriately using debt finance.  

Former Wellington Mayor Dame Kerry Prendergast spoke to the Mike Hosking Breakfast this morning and says the person selected to be the Observer will have to have a specific skill set: 

KP: I think the Minister has made the right call and I am positive he didn't make that decision lightly. It is not easy for central government to step into local government. Local government’s responsible for its own decisions, and this is a centre-right government. I'm sure that he took lots of advice and it wasn't something that he came to an easy decision on, but I do think it's the right decision. And let's hope with the right person in there, and a council and mayor and management who are now listening, we're going to see the right response coming from them. 

MH: Would you want to be a Crown Observer? 

KP: I don't think that's the skill set they're looking for. They'll be looking for someone who is maybe an accountant/financial expert, someone who will be able to display the qualities I've just set out, that's the sort of person they'll be looking for. 

Yes, somebody who does know their arse from their elbow when it comes to a set of accounts. The Government's appointment of a Crown Observer at Wellington City Council has prompted concerns that other councils too could be in the firing line. The Opposition believes the bar for intervention is too low, and that Wellington is hardly the only council with bickering members and money struggles. Labour said many councils were struggling to fund their mandates, especially after the government changed the water legislation, and it pointed out the funding and financing tools for water infrastructure was still not available.  

Chris Hipkins said if Wellington is the threshold needed for an Observer, then he expected other councils around the country to also get interventions. He said, “I think the threshold for that kind of intervention needs to be quite high, my concern here is that if they're doing it for Wellington City Council, they could be doing it for other councils in relatively short order”.  

A couple of things on that, call me old fashioned, but I'd really like to have somebody who knew what they were doing in charge of the sums. And if Wellington have shown that they don't know how to manage sums, and if they have shown that they cannot take advice, because I'm presuming that the highly paid permanent staff members at Wellington City Council, the public service if you will, the ones who are not elected but appointed, surely they must know how to manage a set of sums? So how come they haven't been able to spell it out to the Council that this is what we need to do? You've got people who

Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerrywood and Mornings podcast from News
Talks B.

Speaker 2 (00:11):
The government is set to appoint a Crown observer to
Wellington City Council within weeks. The writing was on the raw, really,
wasn't it. It was whether they were going to go the
whole hog with a commissioner, a La Todonger, or settle
for an observer, and that is what they've gone with.
Local Government Minister Simeon Brown made the announcement yesterday and

(00:32):
said he's written to Wellington City Council with a draft
terms of reference. He's given the council ten working days
to respond, as required under the law. The move follows
months of wrangling over the council's long term plan. They
were looking to fund their long term plan through the
sale of Wellington Airport shaares. That sale is now not
going ahead and they're having to scratch around and find

(00:55):
a whole lot of money to fund the going zone
of the city. Ah. The planned sale of the shares,
and it was one that was pushed by Mayor Torifano,
was scuttled at the last minute following a vote by
councilors earlier this month. Tori far now is resigned to

(01:16):
the fact she hasn't resigned, but she is resigned to
the fact that there is an observer coming in, and
she said, I welcome the Minister's intention to bring in
an observer. She said the Minister has fairly pointed out
examples where councilors had walked out of meetings and acknowledged
the council has some tough decisions ahead in the next
few months. She also conceded that the council must do better,

(01:41):
but she does not accept there's been financial mismanagement at
the council surrounding water infrastructure investment, and she does not
intend to cancel crucial plans for the city. Well, it
may not be mismanagement, but there seems to be a
little bit of financial incomprehension. Simeon Brown said the council

(02:02):
has demonstrated an inability to understand the mechanisms it has
available to manage the financial pressures. It's spacing so you
don't know you're asked from your elbow when it comes
to budgeting. Basically, to boil it down into simple language,
this includes the council choosing in its long term plan

(02:24):
to use rates revenue to pay for its water infrastructure
upfront rather than appropriately using debt financing. Former Wellington mayor
Dame Kerrey Prendegarde spoke to the Mike Hosking Breakfast this
morning and says the person selected to be the observer
observer will have to have a specific skill set.

Speaker 3 (02:46):
I think the Minister has made the right corn eye
and positive he didn't make that decision lightly. It is
not easy for a central government to step into local government.
Local government's responsible for its own decisions, and this is
a center right government. I'm sure that he took lots
of advice and it wasn't something that he he came

(03:06):
to an easy decision on. But I do think it's
the right decision. And let's hope with the right person
in there and a council and mayor and management her
our listener, we're going to see the right response coming
from them. Would you want to be a crime observer?
I don't think that's the skill set they're looking for.
They'll be looking for someone who is maybe an accountant,

(03:27):
a financial expert, someone who will be able to display
the qualities I've just set out. That's the sort of
person they'll be looking for.

Speaker 2 (03:35):
Yeah, somebody who does know their ares from there elbow
when it comes to a set of account's books. So
the government's appointment of a Crown observer at Wellington City
Council has prompted concerns that other councils too could be
in the firing line. Oh The opposition believes the bar
for intervention is too low and that Wellington is hardly

(03:58):
the only council with bickering members and money struggles. Labors
said many councils were struggling to fund that mandates, especially
after the government changed the water legislation and it pointed
out the funding and financing tools for water infrastructure was
still not available. Chris Hopkins said if Wellington is the

(04:19):
threshold needed for an observer, then he expected other councils
around the country to also get interventions. He said, I
think the threshold for that kind of intervention needs to
be quite high. My concern here is that if they're
doing it for Wellington City Council, they could be doing
it for other councils in relatively short order. He said.

(04:42):
A couple of things on that though. Really call me
old fashioned, but I'd really like to have somebody who
knew what they were doing in charge of the sums.
And if Wellington have shown that they don't know how
to manage sums, and if they have shown that they
cannot take advice. Because I'm presuming that the highly paid,

(05:05):
per eminent staff members at Wellington City Council, the people
who are in charge of the departments the public service,
if you will, the ones who are not elected but appointed,
Surely they must know how to manage a set of sums.
So how come they haven't been able to spell it

(05:29):
out to the council that this is what we need
to do. You've got people who have been hired to
do a job at the council, all councils around the country,
and presumably they know what they're doing. They're the infrastructure,
they're they under Councilors can come and go and they
will keep the cities and the town's operational and functional.

(05:56):
So do councils not listen to the heads of department
when they present their reports? Do they ignore the advice
of pretty well paid specialists in their field and just
override their recommendations. How is it that we need an

(06:17):
observer to come in who knows about finance and knows
about accounts When you've got a chief executive, and you've
got heads of department who are already on staff being
well paid. I mean I would be I would be
all for it having somebody who knew what they were

(06:41):
doing overseeing what the council was doing, if they weren't
supposed to already be people there that rate payers are
paying for to do precisely that. So you get counselors
elected who really don't have much of a clue that.
They might have recognizable names, or they might have good intentions,

(07:02):
but they don't have much experience in running big budget businesses.
So you bring in these people from the council staff
and say this is what we recommend, and then what happens?
How does it all go so pear shaped? If it

(07:22):
was just the council poodling along and muddling along, and
there's a lot of money, isn't it. I wonder where
we'll find that from. Then I could understand the need
for an observer to come in and go children, children
bang heads together and see what happens. But there are
all these people up and down the country working for council,

(07:44):
and I'd really love to hear from you what happens
as your advice just simply ignored. Is it not your
responsibility to come up with a budget. Surely counselors would
come to you for advice. If I was elected to council,

(08:05):
I'd say, what do you recommend we do? First? How
much money have we got to do all of these jobs?
Where can we get money from without necessarily pinging the ratepayers?
And I would assume that people who have been working
for council for ten years would have some answers. You know,

(08:27):
why have a dog and bark yourself. You've got a
chief executive? Why do you have an observer? What's the
chief executive doing? I'm just interested because otherwise the whole
concept of local democracy is flawed. If we can't manage
to manage ourselves, then just appoint a highly trained CEO

(08:48):
and let them get on with it.

Speaker 1 (08:50):
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