Warning – when it hits the fan
Think back to any tax problem you’ve had – claiming for car running expenses, entertainment claims they turned down.
Imagine the plight of Kaipara ratepayers with $80 million in debts hanging over them that just won’t go away.
Don’t turn this page and mutter that ‘‘Kaipara is a long way away … someone must have fouled up the council books … the law will fix up the problem.’’
It won’t. And there are lessons for ratepayers anywhere – particularly in Auckland – about closed doors.
Kaipara ratepayers didn’t know because the council deliberately okayed the loans in secret.
Some people could find it comical that the Kaipara community has got itself into (you know what) over a sewerage system at Mangawhai. But it’s far from funny.
When one elected councillor raised alarms, they shut him out of discussions. They ‘‘ knew what they were doing …’’
Certainly the people who’d elected them didn’t know what the council was doing.
Not until it hit the fan, they didn’t.
By that time, the council was in it up to its ears.
Councillors were sacked and commissioners were appointed.
Auditor-general’s investigators found that the Mangawhai sewerage system cost was up from a first total of $17 million, then $35m to $63m.
The report highlighted ‘‘poor governance, poor decision-making, bad record-keeping, lack of attention to detail, lack of clarity about who was responsible for particular decisions, using workshops instead of council meetings to make important decisions’’.
Example: The cost of effluent disposal rose from $361,000 in 2005 to $14m.
Auditing and Assurance Standards Board chairman Neil Cherry found the auditor used by Audit New Zealand was ‘‘substandard’’ between 2006 and 2009.
His report said the auditor relied on the council staff as the primary source of audit evidence and did not independently corroborate the information provided. The errors affected four annual audits and long term plan audits.
When the shocking situation was detected, two things happened.
Kaipara ratepayers planned to ask for a judicial review of the council’s decisions – a hearing before a judge.
But the Government did some legal sleight of hand.
In a rush before last Christmas, it revised the act involved to get rid of clauses allowing for judicial hearings to be sought retrospectively.
The Kaipara ratepayers’ request for a judge’s review of the council borrowing was dead in the water. And the total of money they were said to owe was up to $80m and counting.
As one victim put it: ‘‘Justice Paul Heath has created an alarming and draconian precedent that has huge ramifications for everyone who pays rates in New Zealand.
‘‘Under the law as it stood until this judgment, councils were supposed to consult their ratepayers before they borrowed significant amounts of money.
‘‘In 2005/6, Kaipara council borrowed more than $60m in secret and undisclosed deals with various banking institutions like the Royal Bank of Scotland and others which have since gone up in smoke.
‘‘A draft judgment on May 28 found that the actions of the council were illegal (unlawful).
‘‘Now the final judgment makes it clear that if Parliament had not acted (in flagrant violation of all constitutional principles and ethics) the ratepayers’ case for a review would have been wholly successful.
‘‘But because of what Parliament did, the court’s hands were tied. It could not make findings and declarations in line with what was sought.’’
And Kaipara’s debts keep on mounting. So do the rates.
And a scheme promised to cater for 4200 connections is just coping with 1500.
Questions: Who is going to pay for shonky decisions like Mangawhai’s – made when ratepayers were shut out?
Why did the Government change the law to protect incompetent councillors?
Controversial: A rates revolt at Mangawhai has polarised portions of the community.