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.


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  • Guest

    Wow – that’s a pretty big slap down from the Auditor-General’s office! Hope your Nat mates are reading this blog.

  • Blokeintakapuna

    Great work Mr. WO! Totally agree.

    Perhaps the OAG can also now start to investigate the missing $4,000,000 or so the unions are “misappropriating” from employees where they have breached minimum legal requirements in Employment Legislation – where statutory reporting hasn’t been done for years and years.

    The “related party” funding merry-go-round obfuscation of union entities and their deliberate murky hiding of funds and the back-hander “training funds” fed to the unions by the Labour Party when they were in government, appears to be very, very cosy indeed… if not outright fraud / theft (??)

    I can’t tell though as the legal requirments the unions are supposed to meet each year, haven’t been and their deliberate withholding of this information and no follow up by authorities, makes it too dificult to understand where my money is – please help! The unions ignore my requests for information and only intimidate when I try and ask further.

  • Blokeintakapuna

    It appears the political arm has fed the union arm tax payer funds to the tune of millions and this has been “hidden” due to the numerous tangled, inter-related “related party” funding / loans.
    Bright sunlight would sort it out for us laymen whose money is missing. Please investigate this OAG – as it appear to be really dodgy if the Labour government was giving their union affiliates millions of tax payer dollars – then the unions “hiding it or spending it” without accountability.
    With what is happening right now in Aussie with the Aussie unions / Labor party – one asks “Do birds of feather flock together?”

  • Le Sphincter

    a common bureaucratic storm in a teacup. A turf war over meaningless phrases.

    Well see  who turns out to be top dog

    Dont get all teary eyed over OAG.  Most of this work is contracted out to the big firms so they are just getting defensive over who will pay when there is a humungous stuff up

    • Karl

      You may be right that nothing comes of this but …
      Your logic is definitely not right!  I read it that the “big firms” stand to get a big increaase in fees if the ComCom get their way – effectively another set of books to audit. Just not ones that conform to GAAP.

  • insider

    This is really scraping the shock horror barrel. The only mad dog on display is the ignorant person responsible for the above post – ignorance hilariously displayed in this comment
    “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.”

    Never heard of the SFO? FMA? You know, the specialists who deal with financial crimes? thought not. You’d rather have the regulator who deals with retailers who fail to back your toaster warranty doing it instead…. No doubt it’s financial and regulatory genius like yours that will propel our bright future. 
    Almost none of the commentators seem to know the slightest thing about how regulators and govt agencies actually work. Big surprise, they sometimes have conflicting agendas and objectives and tell each other about it. Hardly a big slapdown. Happens all the time. It’s actually why they publish draft rules and then ask for comment…
    Those who think this is some sign of a vicious power struggle are in cloud cuckoo land. The OAG is advocating its own view of the world. But it is only its view. Just cos they say it doesn’t make it true. Lawyers claim the world is black and white all the time. Often they find courts don’t agree with them. Funny that.  
    Incidentally Ross Paterson was kept on because most of the industry thought he was doing a good job. Apparantly they and consumer advocates don’t want to seem him go now. It’s actually quite nice to see a bureaucracy share a bit of human kindness when someone is in need. I pity your poisoned heart that you make such low dig.