Source: Radio New Zealand
Nelson mayor Nick Smith. Supplied / Nelson City Council
A first time Nelson councillor may have to vacate her seat and face prosecution over a local government law Nelson’s Mayor has labelled “an ass”.
Nick Smith said councillor Lisa Austin was the victim of a daft interpretation of outdated rules.
The Audit Office agreed that the law had shortcomings, but said guidance for candidates was provided to all councils before the election and the rules meant a candidate could be made ineligible for election or disqualify them from office once elected.
Lisa Austin was a top polling candidate in the central ward at last year’s October local elections.
She co-owns Austin Transport Tippers with her husband that Nick Smith confirmed did not have any direct business with the Nelson City Council, but it did some work for two of the council’s contractors.
The Local Authorities (Members’ Interests) Act prevents people from being elected or appointed as a member of a local authority if they are “concerned or interested” – either personally or through a spouse or partner – in contracts or subcontracts from that authority totalling more than $25,000 per year unless the Auditor-General grants an exemption.
The Audit Office confirmed that the council had flagged Lisa Austin had financial interests in various subcontracts with the council when she was elected on October 16.
She was sworn in on October 30 – a week later, on November 6, the Audit Office said the council applied for retrospective approval of her existing contracts.
But the Auditor-General did not have the power under the Act to approve contracts between a council and a candidate when they were standing nor could contracts be approved after they became a councillor, the Audit Office said.
“The Act does not allow us to do that. We only have the power to approve contracts entered into after the person is elected.”
The Audit Office told the council that it did not have the power to retrospectively approve Lisa Austin’s subcontracts on April 17.
“While prosecutions under the Act are very rare, we are required to consider whether to prosecute individuals when breaches of the Act come to our attention. We intend to advise the council of our decision very shortly.”
Nick Smith said Austin had done nothing wrong and she had fully complied with registering her interests.
“She was democratically elected last October and it is neither fair to her – nor, more importantly, to the people of Nelson who voted for councillor Austin – for her to be excluded from council,” he said.
“The combination of the law being an ass and daft interpretations is undermining our local democracy.”
He was surprised when he received advice that the company’s work could potentially create a problem with the Act but council staff made a cautious approach to contact the Audit Office in November.
“Many approvals have been granted in the past. They’ve never been an issue. The assumption was made that it would be able to get the approvals from the Auditor General’s office,” he said.
Smith said it was difficult to quantify the value her company had received due to the nature of the work – it was estimated to be above the $25,000 threshold, but “nowhere near” a $1 million.
A by-election could cost ratepayers $200,000, he said.
The Audit Office’s view conflicted with that of Nelson City Council’s own legal advisor.
Smith had written to the Office of the Auditor-General to ask for a decision on whether Austin would be prosecuted as soon as possible.
“The difficulty with your legal team’s view is that it creates a catch-22 situation where a candidate cannot apply for approval prior to the election but neither can they apply after the election as a councillor,” Smith said in the letter.
Dismissing a councillor who chose to stand for the good of their community and had been an effective and constructive member around the council table could have a “corrosive effect on people’s public confidence in our local elections and people’s willingness to stand for council”, the letter said.
“The uncertainty is compromising the democratic governance of the city,” he said.
“I have some sympathy for the Auditor-General as the law is outdated and an ass. The Auditor-General has previously advised Parliament that this Act is ‘poorly drafted’, has ‘an unclear rationale’ and has said: ‘We have expressed doubts about whether the contracting rule continues to serve a useful purpose at all’.”
The council had been working with its legal advisers for months to get the approval.
Austin said she stood for council in good faith and had been careful to keep her business interests separate.
“This situation is very distressing,” she said.
“I do not feel able to participate in council meetings today and tomorrow with this hanging over me. I do not wish to resign and believe I have done nothing wrong.”
She had been transparent and open about her business interests, Austin said.
“I am aghast that I face the risk of being prosecuted and ousted.
“I am caught in a catch-22 situation where the Auditor-General will not consider an application from a candidate like me before an election and will not consider applications retrospectively after being elected as a councillor. I cannot understand the logic of why, if I was a councillor re-standing, I could get an approval.”
The Audit Office said the eligibility rules around contracting were an effect of the Act, not a decision of the Auditor-General.
“We have previously written to Department of Internal Affairs and the Minister of Internal Affairs about shortcomings of this 1968 legislation and intend to do so again.”
The Audit Office confirmed it had no power to remove or dismiss a councillor from office.
The maximum penalty under the law is a $200 fine.
RNZ has approached the Local Government Minister for comment.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand