Auditor General

Auditor-General says Auckland Council budget is poo

Auditor-General Lyn Provost has pilloried Auckland Council for the state of its accounts and its budget. The Long Term Plan lacks integrity.

She has recommended – in Auckland Council’s annual report – that the Council include a sensitivity analysis in future long-term plans on how growth rates impact the budget. Sensitivity analysis is code for ‘forecast costings’.

There are a range of issues raised by the Auditor-General in her assessment.

For example she expressed concern that Council have excluded targeted rates from its calculations which meant staff were able to announce fictional levels of rate rise. Basically fudging numbers allowing for understating of rates rises. Hardly a surprise!

The Auditor-General was also unhappy with the manner in which Council calculated and recorded debt – deliberately leaving out Watercare related debts and costs which would have to be some of the biggest on the books. Council debt rose from a staggering $1.3 billion to an eye watering $7.3 billion. What was that spent on?   Read more »

Time to police local government

With nobody policing Local Government, the troughing gravy train has for years been ignoring the law on many fronts and doing whatever it likes.

Not withstanding that the brass at most Councils think they know better than anyone else and Councillors are ignorant, the fact remains that Local Government is getting away with all manner of mismanagement and law breaking that will come home to roost in years to come.

Of course nobody will be held accountable, and the mess will take decades to remedy. Our economy will grind to a halt and costs will continue to rise.

It is somewhat reassuring that the Auditor General has finally woken up to the fact that Local Government’s all over New Zealand are in poor financial shape with failing or nearly failing infrastructure that hasn’t been maintained. But all she can do is make comments. She has little power to enforce compliance with her recommendations and she is not compelled by law to make Councils remedy issues.

And the there is nobody watching Councils where it concerns their performance on Resource Management matters. Sure the MFIE and MBIE exist but that’s cold comfort. The Environment Court does at times slap down Councils when they blunder or ignore the law, but only when issues are raised to them. Given the extraordinary costs to run a successful Court proceedings (lawyers and expert witnesses all costing big bucks) an appellant is forced to focus solely on their own issues.

In short there is nobody who is carrying the high ground and keeping Local Government honest.   Read more »

Auditor General slams Local Government on infrastructure investment

I have been rabbiting on for a while now that Local Government is broken and among the rot exists significant issues with the way that Councils have managed their books. Core to the issue has been the manifest failure of Councils to adequately perform specific functions and duties that are required of them by the Local Government Act, but particularly where it concerns the management of infrastructure. Councils have for years ignored maintenance of infrastructure in the ground and in doing so has deferred the maintenance costs for future generations.

Now Auditor General Lyn Provost has come forward with a fairly blunt warning about the perilous state of Local Government infrastructure stating that without sharpened management and financial commitment by Councils failure of services is guaranteed.

Ironically, there has been a tendency to under-spend on infrastructure. Expenditure has historically come in waves, but since 1986 there has been a significant tapering off of expenditure. “Some local authorities will face real difficulties in managing decline and in ensuring that their assets are the right size for their needs. They might hope that capital investment will reinvigorate growth & prevent further decline – but it may be only hope.” Said Ms Provost. “These spending trends raise questions about local government asset planning, depreciation practices and capital expenditure management”.

And she is quoting a $7 billion funding gap by 2022 if Councils continue to spend less fixing the services they should maintain as priority. Read more »

Was the note fake?

The Shane Jones/Bill Liu saga just will not die. Now there are suggestions that the file note written by Shane Jones may well have been fabricated.

National MPs have attempted to cast doubt on the validity of a key note used in Shane Jones’ decision to grant citizenship to Yang Liu when Jones was a Associate Immigration Minister.

This morning Deputy Auditor General Phillippa Smith appeared before the finance and expenditure select committee, taking questions over her report into Jones’ controversial 2008 decision.

His decision to grant citizenship to Liu, a Chinese national who was under the scrutiny of Interpol, was made despite an active police investigation being underway and the Department of Internal Affairs telling him not to.

It was Jones’ first and only decision to grant an individual citizenship, and was made in less than a month because he wanted to complete the matter before a trip to Australia.  Read more »

ACC Privacy Breach – Pullar Leans On Board

I will now turn briefly to the Auditor General’s ramblings.  Which did not cover the privacy issues. I use the term ramblings as this report is about as nonsensical as the 100 page KPMG report in buzz words and drama.  It does though report on Bronwyn Pullar’s nagging to death of Board Member John McCliskie in September 2011.

Hear the poor man’s pain getting an ear bashing as you read the report.

McCliskie does not remember much about Pullar such as being on the verge of employing her in a contract role.  He even tries to fob her off to a claims person.

Pullar, just as she was with Nick Smith was having none of it. I respect you, I would like to meet you, ignoring that she doesn’t respect his position at all.  Just like Nick Smith’s or she never would have asked.

McCliskie then fobbed Pullar off on to John Judge who disapproved of meeting Pullar in the first place.

Pullar didn’t let them get off without yet another ear-bashing, sending an email to McCliskie advising ACC that they could obviously could do with her advice, you know, despite being unfit to work full-time and having had a payout from one insurance policy for what, almost a decade?

Really? A total piece of work.

Also this report brings out that Pullar tried to get Nick Smith to intervene in her case with action.

Despite Andrew Little’s poisonous assertions the Auditor General found NO influence that Pullar was after from the Board was actually applied in her favour.

So despite Pullar’s name-dropping, exercising her mouth and muscle and using the National Party extensively the Auditor General’s report has actually CLEARED the Board and the Nick Smith of influencing her claim.

Andrew Little’s year will only get worse from here.


Cathy Casey is right

NZ Herald

For once Cathy Casey is right. I hope the Auditor-General finds out who ordered the murky cover-up around the V8 Super Car decisions. This has all the hallmarks of the Volare dinner scandal that Len Brown tried long and hard to hide:

The Auditor-General is investigating Auckland councillor Cathy Casey’s complaint that a secret report on the V8 supercars was hidden from the council by its standalone events body.

Councillors approved $10.6 million on Thursday to ensure the return of the supercars to Pukekohe after Auckland Tourism, Events and Economic Development (Ateed) refused to show them a report on the financial position of parties involved in the event.

Councillors and the public have also been unable to see a “detailed risk review” referred to by Ateed because Auckland Council chief executive Doug McKay said it did not exist as a single document, but as a “multi-faceted” review of the risks.

“I am dumbfounded that a council-controlled organisation can refuse to disclose to councillors a ratepayer-funded due diligence report ahead of a major decision involving $10.6 million of ratepayers’ money,” Dr Casey said in a letter to Auditor-General Lyn Provost.

“This rushed decision … was made in the absence of crucial risk and due diligence information.”

“Obviously Dodgy”

NZ Herald

David Shearer has literally thrown Shane Jones under the bus with his statements to the media about SkyCity:

But Mr Shearer said Mr Joyce was being “extraordinarily arrogant in continuing to run this process while an inquiry is going on”.

“To me it beggars belief that he can continue to do this while an inquiry is going on.”

Not only should negotiations be put on hold until the inquiry was complete, but the tender should be reopened begun again from scratch.

He said there was “obviously something dodgy” around the deal “otherwise the Auditor General wouldn’t take a look”.

Quite right Mr Shearer, the Bill Liu affair involving Shane Jones was “obviously something dodgy otherwise the Auditor General wouldn’t take a look”.

Auditor-General letter slaps ComCom

Check out this substantial communication sent from the Office of the Auditor General to the Commerce Commission.

Auditor General Submission Draft ID Determination 13 March 2012

It gives the ComCom a big slap for the way they are attacking the electricity lines companies.

By way of background, the Office of the Auditor General is the most respected, and indeed the highest independent authority in NZ. We remember well the actions of Kevin Brady investigating Labour’s dishonest actions in the 2005 elections as a high water mark for the NZ Civil Service.

So this criticism from the Office of the Auditor-General is a substantial criticism of the Commission’s Mad Dog attacks, noting their misunderstanding of their role, engaging in “duty creep”, and in need of restraint.

To quote from the letter about the Commission’s overall approach:

“At this point, we have some difficulty in understanding the expectations of the Commission because of what appears to be contradictory statements in the 2012 Draft Determination and the accompanying Draft Reasons Paper.”

The OAG accuses the ComCom of imposing unreasonable costs on Electricity distributors, that may not even make sense. See here on page 2 of the letter

“Viewed one way, these expectations could result in a much more exacting audit, with consequent cost implications. Viewed another way, such an audit may be scoped at such a high level that may not meet the Commission’s expectations.”

Check out what the OAG says about the Commerce Commission’s attempts to define extra power for itself on page 3.

“We also question if the Commissioner has the statutory authority to require auditors to state if they have a duty of care to the Commissioner in the audit report.”

The ComCom is due for a mucking out at the top, we’ve pointed out a Commissioner who needed ten months of timeout to recover from self-inflicted alcohol abuse. (Which other government roles do people get 10 months of golf and book reading to recover from their addictions?)

But clearly there is a need for political intervention to ensure the culture of the Commerce Commission is also changed.

We need an authority that promotes competition and ends anti-competitive behaviour, such as price fixing by petrol companies or supermarkets.

We need an authority that stops the shady practices by financial corporates that hurt consumers, like Credit Agricole and the failed Credit Sails financial product.

We don’t need a Commerce Commission that uses anti-commercial approaches to impose extra costs on businesses for no good reason at all.

We don’t need a Commission that is confused and contradictory in its approach to New Zealand infrastructure and public policy.

We don’t need a Commission that is power hungry and seeking to expand its role.

The Office of the Auditor General is now ringing the alarm bells – and for good reason. This should be the signal that National needs to reform the Commission and bring them back into line.

Is it time for an ICAC?

With a multiple investigations currently underway with regard to the ACC in the wake of Michelle Boag’s and Bronwyn Pullar’s shameless standover attempts surely it is time to look once again at having an Independent Commission Against Corruption.

They could easily take on an investigation such as this and more to the point impartially look into a plethora of other such allegations of impropriety amongst our elected officials, civil servants, and local body affairs.

The Independent Commission Against Corruption could also take over the enforcement aspects of the Electoral Act given the police seem so unwilling or unable to deal with breaches against the laws that are supposed to protect our democracy.

With powers similar to the SFO and FMA, they could look into the financial affairs of political parties, unions, and public relations and lobbying firms.

There must be many PR practitioners that have looked at the antics that have been revealed of Michelle Boag’s shameless standover of an Insurance company, Vodafone and now ACC and start wondering precisely what they have committed in writing as they lobbied government departments and organisations.

The ICAC could easily sit under the auspices of the Auditor-General and provide real investigative and prosecutorial teeth.

I believe that the political will exists for such a body now. Labour can hardly oppose it after screaming loudly about cronyism, corruption and favouritism, never mind their own shameful record in such regard. NZ First can;t oppose it because it is one of their founding principles to establish such a body. The Greens can’t oppose it either because they have expressed a willingness to control, register and monitor lobbying firms….leaving just the Maori party, ACT and Peter Dunne. I hardly think ACT would oppose it either.

For the first time I believe there is near unanimous consensus that could allow the formation of an Independent Commission Against Corruption. Does the the government have the courage to establish it? That remains to be seen.

Tell us the truth Len, without limits

Len Brown was elected promising to open the books, but he has kept his own books on campaign donations firmly shut. The Herald headline is “Mayor relies on secret war chest” and the Dominion Post headline is “Auckland Mayor hides names of campaign donors

Auckland’s first Super City mayor was elected using largely anonymous donations, despite promising to lead an administration of openness and accountability to the public.

Of Len Brown’s total campaign war chest of $581,900 in donations, $499,000 was folded into a single trust to protect the identity of those who gave money to help elect him but wished to remain nameless.

Only 15 donors were named in his returns yesterday to Auckland electoral officer Dale Ofsoske, the largest of $17,708 attributed to an entity called Fuqing, with $15,000 from casino operator SkyCity.

The Maritime Union gave $2000 each to Mr Brown and Auckland Council transport committee chairman Mike Lee, who listed no other donations in his election returns.

Mr Brown’s campaign also received $3375 from the Counties Manukau Pacific Trust, whose chief executive, Richard Jeffery, was appointed this week as a director of the Auckland Tourism, Events and Economic Development council-controlled organisation.

Now I guess we know why the Chow brothers building was pulled down with alarming alacrity. We also know now how John Robertson and Richard Jeffrey scored their CCO jobs. John Robertson is a trustee if the Counties Manukau Pacific Trust and Richard Jeffrey is the CEO, but more on this in a moment.

Len Brown campaigned on openness, he even gets his lickspittle, tame repeater Bernard Orsman to print stories about how open Len Brown is. Yet when it comes to openness with his own election finance and donation we find that like almost everything else about Len Brown it is a stonking great secret. The hypocrisy of the man is astounding.

The secret trust, strangely called “The New Auckland Council Trust”, is an enigma. Questions need to be asked about this secret trust. When was it formed? Who are the trustees? Where is the trust deed?

It’s all very murky from “Labour’s Mayor“. Phil Goff and Phil Twyford really need to answer some questions about their Mayor’s use of big money secret trsuts to fund his campaign. They are on record being against such secret trusts and even passed a law to prevent such things happening.

“What I would like to see is a system where democracy works but doesn’t rely simply on the power of the dollar and you don’t have some clandestine funding which was the real concern that lay behind the Electoral Finance Act,”

Let’s see if Phil Goff and Phil Twyford have anything other than weasel words about Len Brown’s secret trust. Phil Twyford was especially concerned about the influence of big money in elections earlier in the year.

Since then, there has been the rather unhappy progress of the Electoral Finance Act, and to my mind the really unfortunate failure of this House to build a lasting consensus about the need to limit the influence of big money in our political system.

Quite apart from Len’s secret trust account used to hide his big money corporate backers there is a real problem surrounding the donation from Counties Manukau Pacific Trust.

Fors a start the trust is essentially part of the new city structure, and previously was, by definition a part of Manukau City Council (pdf pg 11.). The same trust now owes the new Auckland Council (previously Manukau City Council $7.5 million (pg 29).

Worse the Trust’s audited statements show an annual operations grant of $385,000 and the $7.5million loan from Manukau City Council: (pg 10)

But the real problem is that Richard Jeffrey is the CEO and John Robertson is a trustee. They are in control of what can only be described as ratepayer funds and they have donated some of those ratepayer funds to Len Brown’s campaign. The same person who pushed through council the funding in the first place and also the same person who secretly appointed the two of them to CCO board positions.

On the surface it would appear that Richard Jeffrey and John Robertson used ratepayers funds to donate to Len Brown’s campaign in order buy themselves cushy jobs on CCO boards. The only thing that could make this story worse would be if Richard Jeffrey also attended the still secret Volare dinner.

No wonder Len Brown was being very furtive and secretive over his board appointments and no wonder he wanted to rush them through in secret before the election donations were revealed. I seriously doubt whether even his supporters on the secret council committee would have countenanced the appearance of bribery in their decisions.

Certainly I think there is enough here for the Auditor-General to have a look see, especially around that massive secret trust of big money, but more importantly around the apparent buying of CCO board positions with ratepayer funds. Len Brown campaigned on opening the books, he campaigned on honesty (but with limits) and he campaigned on being straight with us.

So far he has shown that those were just tawdry lies designed to hoodwink voters into thinking he was honest.