Fears reform of the local government sector poses a
serious threat to the Dunedin City Council's group of companies
and their activities are to be investigated.
The concern was raised at yesterday's council 2013-14
pre-draft annual plan meeting, as councillors considered a
legal briefing on the reforms from lawyer Michael Garbett.
Mr Garbett warned the reforms sought to focus councils on the
provision of local infrastructure, services and regulatory
functions in the most cost-effective manner for households
However, a lack of definition around some of those key new
phrases meant the council faced a greater risk of legal
Responding to questions from Cr Lee Vandervis, Mr Garbett
said the changes could also have an impact on council-owned
That included previous decisions by Delta - a
council-controlled organisation (CCO) - to invest in property
at Jacks Point, at Queenstown, and Luggate, which led to a
$7.5 million write-down last year.
Mr Garbett agreed local government reforms would constrain
similar investments in future, due to the uncertainty created
by references to ''local'' in the revised legislation.
Such terminology lacked definition, and could lead to legal
challenges by individuals or groups contesting council
activities they believed went beyond the purpose of the
reforms, he warned.
Cr Paul Hudson - the former chairman of Dunedin City Holdings
Ltd (DCHL) - said that would have ''very serious financial
implications'' for the council's group of companies, which
operated outside Dunedin. He called for a written legal
opinion on the implications for the companies, but Mayor Dave
Cull suggested the council and DCHL look into it first.
It might be that the companies' ability to maximise profits,
and therefore dividends to the council, from operations
outside Dunedin meant they were operating in the most
cost-effective manner, as required by the reforms, Mr Cull
Cr John Bezett was also concerned, saying the council's
investments in property and other areas outside Dunedin
provided significant benefits. Whether the reforms
constrained that type of activity needed to be sorted out
quickly. Mr Garbett said the reforms were forward-looking,
but whether existing activities could also be constrained
''needs to be looked at carefully''.
He doubted it would, in practice, prevent investment beyond a
council's territory, but the lack of definition within the
reforms ''creates uncertainty that we haven't previously
''There's that issue about what is local? . . . someone will
have to figure out, in the absence of an answer in the Act,
what is the answer?''An attempt by Cr Vandervis to draw out
Mr Garbutt's views on whether the Forsyth Barr Stadium could
have been built under the new rules was blocked by Mr Cull.
Cr Vandervis wanted a written opinion on that, and the
implications for similar future projects, but Mr Cull ruled
he was not prepared to ''waste council money finding out what
might have happened three years ago''.
Councillors voted to amend their decision-making templates,
so future decisions clearly considered the purpose of the