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Letter to Minister 25 August 2021


Tenā koe Minister.
Please consider intervening with an independent review of Rotorua Lakes Council (Council).
In this letter I set out why external and expert advice is urgently needed to restore the capacity of Council to make democratic and effective decisions in a diverse community, as required by Section 3 of the Local Government Act (LGA). I write as Chairman of Rotorua District Residents and Ratepayers (RDRR) Association, to represent 1,111 members and associates, and as an elected member of Council, to represent the interests of all constituents in the district.
Please note that, when I was elected as councillor in 2019, I brought to the role
• knowledge, skills and experience over decades of successful policy making in large public organisations, including as a professor at the University of Auckland,
• corporate leadership experience as chief executive of two large and commercially successful organizations,
• five post-graduate qualifications, including a PhD in organisational science, with 72 internationally refereed research publications, and
• many international consultancies and three Ministerial commissions assisting with major reforms of public administration systems.
In my professional view the Council urgently needs an external and systematic evaluation prior to comprehensive reform of its governance (policy making) and management (policy implementation) systems to deliver effectively on its responsibilities and to regain the confidence of our community. You are warmly invited to intervene to these ends.
This request has become necessary because repeated attempts to have Council discuss the need for expert advice have been thwarted by Her Worship the Mayor, Steve Chadwick, and Chief Executive Geoff Williams.
Two recent Notices of Motion by Cr Peter Bentley and I, the first seeking an independent review of Council’s general administration, and then a second more narrowly focussed on improving its governance, were both ruled out of order by the Mayor without discussion being allowed. Standing Order 27.7 rules that these issues cannot now be raised for another year.
The general case for a Ministerial intervention made by Paddi Hodgkiss’s ‘Request for an Independent Review of the Mayor and Councillors’ Behaviour, and Governance of Rotorua Lakes Council’ is with you. Please allow me to verify its main points before adding reasons that I trust will, together, justify preliminary terms of reference for an independent review.
An Undemocratic Decision-Making Culture
As RDRR’s Chair I can confirm that there is widespread public concern in the Rotorua District about the closed and authoritarian culture of Council, its unacceptable unwillingness to respond to the rates affordability crisis in the Covid context, and its aversion to cost compression in profligate vanity and legacy projects.
Council’s policymaking and planning methodologies have little respect for citizens’ rights to be heard. Mana whenua interests are commonly given pre-eminence over matawaka and all non-Māori interests in locality planning managed by officials. So-called ‘draft plans’ are used for symbolic consultations with other interest groups. Citizens resent policies and plans that are predetermined in secret by the Mayor’s power bloc and senior officials. There is a general perception that the Mayor and Council are “out of touch.”
The steady collapse of trust in Council is frequently traced to arbitrary decisions made in haste without public consultations in 2013 and 2014 (e.g.s renaming buildings and organisations, cancelling the Eastern Arterial by-pass), to the suspension of ratepayer satisfaction surveys from 2016, to the development of toxic internal relationships between management and staff with frequent but largely ineffective restructurings, and more recently, to the lack of transparency and authentic consultations over significant changes (such as Kainga Ora’s Wylie Court resource consent fiasco).
The current consensus of criticism directed at Council is also reflected in the bad press that Rotorua routinely gets nationally, regularly refreshed by displays of poor judgement by its leaders and inept public relations.
I can confirm that the abuse of Crs Peter Bentley, Raj Kumar and I started during induction workshops in November 2019. It has been sustained since through deliberately contrived and nasty partisan politics. We have tried to ignore the insults and quietly insisted on giving voice to the concerns of residents and ratepayers. Nevertheless, instead of being heard respectfully, the Mayor’s power bloc and senior officials continue to ignore our suggestions and adhere to a closed decision-making style they glorify as ‘The Rotorua Way.’ It is experienced as an exclusive, often ill-informed, and tyrannical ideology.
Another dimension to the adversarial viciousness is that the Mayor’s closest political affiliates on Council have taken turns to abuse the Code of Conduct for Elected Members by lodging complaints against me. The repeated tactic has reached the point where natural justice has become impossible.
Worse, from the outset of the current term, the distribution of largely symbolic ‘lead’ roles and significantly enhanced remuneration for councillors selected by the Mayor took no account of the prior experience and expertise of those elected. The three RDRR councillors were the only members of council with private sector management and corporate leadership experience and yet they were deliberately marginalised, perhaps to help enforce loyalty.
Tragically, in a policy-making context where research skills and critical analysis is crucial, these appointments act as a patronage network that generates absolute loyalty to the Mayor and unthinking policy compliance. This closed culture has become impervious to feedback from residents and ratepayers. Ministerial intervention is crucial if Council is to become a learning organisation and a local government of unity.
The high degree of narrative control achieved through the patronage network is further reinforced by the Mayor calling ‘run through’ meetings of chairs and deputy chairs before meetings of Council, and by manipulating meeting procedures to suppress or actively prevent alternative analyses and solutions.
The most extreme example occurred during the recent debate over the introduction of Māori wards. While all other councillors’ statements were heard in respectful silence, the Mayor allowed Crs Donaldson and Raukawa-Tait to interrupt me so many times that I finally despaired and walked out in protest. This reactionary and undemocratic culture can now only be challenged by Ministerial intervention or via the ballot box.
An Ineffective Decision-Making Culture
One result of Council’s inappropriate decision-making culture is that largely predetermined policies are neither debated nor nuanced to accommodate many interests in a pluralistic community – a mandatory requirement of effective decision-making in the LGA.
An even more invidious tactic is that racist, ageist and sexist hatred against me is actively generated from within the Mayor’s power bloc, rather than make rational and balanced appreciations of positive suggestions from the RDRR community. And when Council’s leaders decide to defend their actions by purchasing legal advice and investigating administrative processes, the costs are blamed on their critics.
Instead of seeking to understand and responding to ratepayers’ legitimate anxieties, the Mayor’s followers focus on how best to ‘divide and conquer’ what they cynically branded as unprincipled political opposition and mere ‘negativity’. Our interpretation is that Parliamentary Whip behaviour has been imported into our local government and that this has allowed a fundamentalist ideology to gain traction in a democracy which now denies the legitimacy of all alternative knowledge and belief systems about governance.
This latter problem was particularly evident during the recent Representation Review workshops when the expectation in the LGA – that Council would provide “democratic and effective” decision-making – was displaced by an alternative expectation that Council should provide “fair and effective” decision-making. The lawful requirement for ‘democratic’ decision making was set aside. This switch also enabled subjective notions of ‘fairness’ to displace the legal and moral requirements for democratic principles to predominate in decision-making for a pluralistic community.
The consequences are significant because a majority on Council and senior officials believe that the Treaty of Waitangi (ToW) guarantees partnership with mana whenua and 50/ 50 co-governance. Hence the most recent Representation Review workshop discussed three options. Option One best met democratic principles and current law. Option Three best satisfied ToW principles and the electoral chances of incumbents. Option Two partially failed both. Option Three alone was selected by the majority on Council for public notification and consultation.
Whatever our personal beliefs on the matter, decision making that sets aside the purpose of the LGA – to provide for democratic and effective local government that recognises the diversity of New Zealand communities – must be regarded as ineffective and unlawful.
There are three other indicators of ineffective governance in the Council’s approved Long-Term Plan (LTP) 2021-2031. The rates rises, debt increases and economic growth projected in the LTP are implausible and unsustainable.
The RDRR has repeatedly drawn Council’s attention to how accumulating rates increases have outpaced increases in disposable incomes and added to suffering, particularly among the poor who are mostly Māori and elderly. Ratepayers have endured 39.04% accumulating rates increases between 2014 and 2020 while CPI-indexed benefits rose only by 5.79%. The widening differences have helped impoverish our people.
Further, despite multiple warnings about the rates affordability crisis in households and businesses, culminating in RDRR’s 49-page rebuttal of the draft LTP, Council went ahead and approved a further 38.9% increase in rates between 2021 to 2030. Council’s financial strategy is insensitive, untenable, and regressive.
The expanding debt load proposed for 2021-2031 is similarly unsustainable. It is driven by unconstrained spending on legacy and vanity projects, at direct cost to core services and infrastructure maintenance and investment. The LTP projects capital expenditure of $749 million between 2021 and 2031, which is $268 million more than that forecasted three years earlier.
Please note that the central government’s lifting of the borrowing cap in May 2020 resulted in Council forecasting its debt to rise from $261 million in 2021 to $440 million in 2031. The LTP fails to explain how this debt will be repaid and accommodate project cost over-runs and interest rates rises. The risks are all with the 27,000 ratepaying households, some of the poorest in New Zealand.
The degree of economic growth projected by Council in the LTP was unduly optimistic and then not adjusted to take account of the impact of Covid, most especially the ending of international tourism. Population growth will probably remain positive yet modest. Despite these significant changes in context, Council has failed to scale back on the number, pace or costs of concurrent projects, resulting in a growing number of budget blowouts.
Council has also failed to consider the organisational restructurings that will be required should the Three Waters and RMA reforms proceed, and when Council services switch more into support for the four well beings. Many were alarmed when the Chief Executive recently went ahead with the costly appointments of seven deputy chief executives with exotic titles.
Other Examples of Corrupted Decision-Making Systems
The Council’s flagship Lakefront Re-development Project, in ‘partnership’ with Pukeroa Lakefront Holdings Ltd (PLHL), is one example of how Council’s decision-making systems have been corrupted. It is widely regarded as a phoney partnership because investment and maintenance in perpetuity will continue to be met solely by taxpayers and ratepayers, with assets constructed and returns on investment being retained by PLHL. The Council’s ‘partnership’ decision evidently lacked integrity because it failed the public interest test.
Council’s decision-making has been facilitating a wealth transfer from taxpayers and ratepayers to iwi partners whose master plan for the lakefront includes the Wai Ariki Hot Springs and Spa, a new QE Health building, a children’s playground, a whare waka, and a major building for retail outlets and tourism operators. Despite the significance of the project’s profile, costs and no return on public investment, there was no public consultation, at odds with Council’s Significance Policy.
The three critical councillors, more modest proposals and a public petition were all attacked instead of being treated with respect. Two questions asked recently by Cr Bentley and I under urgency, about elected members’ liability and handrail compliance with health and safety regulations, were ruled ‘out of order’ by the Mayor and referred to the Operations and Monitoring Committee. Council’s aggressive reluctance to provide public accountability for its decisions is unacceptable to residents and ratepayers.
Te Putake o Tawa (Forest Hub 2) Project is another phoney partnership project, in this case with CNI Holdings Ltd. Taxpayers and ratepayers alone have been committed to funding tourist assets and maintaining them in perpetuity, with Council’s iwi partners being the sole beneficiaries. The decision systems failed the public interest test by transferring public wealth into private enterprise on private land. And when I tabled a Notice of Motion asking that Council review its partnership in the light of Southstar Shuttles scandal, the Deputy Mayor orchestrated a retaliatory Code of Conduct complaint with iwi executives against me. It backfired and resulted in significant adverse publicity when the Mayor apologized to the complainants.
The Sir Howard Morrison Performing Arts Centre (SHMPAC) Redevelopment project is a case study in decision-making being corrupted by mission and budget creep from restoration to redevelopment, cultural imperialism and nontransparent project management lacking cost compression.
The Rotorua Museum Redevelopment project is another example of corrupted decision systems that feature nontransparent project management with low accountability, cultural imperialism, an appointment widely regarded as fake, and mission and budget creep from restoration to redevelopment.
The Aquatic Centre decision making was corrupted during the LTP ‘consultations’ by officials actively promoting mission and budget creep. They stressed the marginal weekly cost of borrowing to persuade the public to move its support for basic repairs costing $8 million to upgrades for $17.4 million, and then to $28.3 million for a redevelopment option.
The Blue Baths closure decisions remain controversial. The Council’s standards-based rationale for its decisions is being actively disputed by the tenant in court citing shortfalls in maintenance, measurement and transparency.
The Westbrook Sports and Recreation Precinct was announced to the public in March 2020. The Springfield Golf Course would be destroyed to make way for “The Home of Maori Sport” plus a housing development. The Council invited “feedback” from the public to “help inform any plans going forward.” The public were assured that the “Long Term Plan (LTP) will also provide a further opportunity for community feedback”.

The feedback received was overwhelmingly opposed to the proposal so the Council announced that consideration of the project would be deferred until 2024. This left residents and the golf club members distressed to have this hanging over their heads for another three years as this would adversely affect property values and the desirability of the area.

In March 2020 the Council released its draft LTP which made a $61 million allowance for Westbrook but provided no information about it for the public to consider and provide feedback upon. The public were explicitly told at the “Community Conversations” held by Council that they were not allowed to provide feedback on the Westbrook Precinct.

The golf club and local residents then hosted their own “community conversation” which attracted around 170 upset people, all of whom opposed the Precinct. The event was attended by the Mayor and six councillors, including myself. However, the Mayor refused to allow the ‘Council Scribes’ to attend the meeting to record the feedback offered by the public.

In April 2020 a hand-written (not online) petition of 5,017 people asking the Council to cancel the Precinct was presented to Council. In May, the Strategy Policy and Finance (SP&F) Committee considered the draft LTP, including the Precinct. The committee recommended “deferring discussion” until 2024, which would once again have left the residents and ratepayers with an unwelcome proposal hanging over their heads.

In a remarkable and unprecedented Council meeting in June, this recommendation was overturned. The meeting attracted more people to the public gallery than for any other Council meeting ever. My contingent motion, in the event of the motion failing – that the lease of the golf club be extended – was subsequently dishonoured by the Mayor when she moved to have the matter returned to the SP&F Committee.

Despite there being no public consultation and Council not making a decision in favour of ‘Westbrook’ at any time, the $61 million still made its way into the LTP. Furthermore, there have been two SP&F committee meetings since and the item has not appeared on the agenda. In fact, in response to a question I asked under urgency, I was told not to expect it on the agenda until 2024. This was directly contrary to the Council’s decision in June against “deferring discussion” until 2024.

The lack of integrity in this decision process has appalled many in the community and triggered speculation that the Mayor’s power bloc is actively assisting with what Pukeroa Deputy Chair Peter Tapsell confirmed: “At Pukeroa, Ngati Whakaue, one of our key kaupapa is looking to undertake ways to return as much of our traditional whenua as we possibly can.”
The Three Waters offer of an untagged $41.61 million from central government to Council appears to fall well short of its water infrastructure assets which have a depreciated replacement value of at least $432.58 million. The Council’s decision-making process to date has ignored the requirement in the LGA that councils consult with its ratepayers when strategic asset purchases or disposals are being considered.
Instead, it has referred the decision to a Co-Governance Committee comprising the Mayor, Crs Dave Donaldson, Merepeka Raukawa-Tait, Tania Tapsell, and Trevor Maxwell (all affiliated to Te Arawa) and five nominees from Te Arawa, one of whom is to co-chair. RDRR members take the view that appropriate decision-making by Council should serve the interests of the people, not some of the people.
Clearly, these examples of corrupted decision-making contradict the purpose of the LGA which is “to provide for democratic and effective local government that recognises the diversity of New Zealand communities.” Together they signal the need for terms of reference for an independent review of the governance and management of Council.
Towards Terms of Reference for an Independent Review
In this penultimate section I offer a preliminary and draft conceptual framework for an independent review of Council, mindful of the situation described above.
The key problem identified is that Council’s decision making has lost the confidence of Rotorua’s community because it is failing to provide democratic and effective local government that accommodates the diversity of its community.
The purpose of the independent review should be to provide summative and formative evaluation to guide comprehensive reform of Council’s decision making in governance (policy making) and in management (policy implementation) systems so that it can better deliver on its responsibilities, in its unique context.
Summative and formation evaluation needs to map the quality of decision making in each of three realms of the policy cycle:
1. reflection in the abstract world of ideas used to determine what is right and what is significant,
2. cultural agency in the social world of people that understands the currently dominant theory of appropriate organisation in the Council and both legitimates and mobilises change to structures and practices, and
3. responsive and responsible management in the material world that focuses on what is achievable given scarce resources and evaluates the extent to which priorities have been achieved efficiently, effectively, equitably and sustainably, and thereby begins a new policy cycle with reflection on purposes and significance.
Evaluating how well rightness and significance are enhanced by Council’s governance and policy advisory services should include
• reviewing how well fresh visions and policies are being generated to respond to significant changes in context, most especially during the mandatory planning cycles,
• how diverse perspectives are respected, collected and responded to,
• how the best ideas developed in other district and regions are gathered and assessed,
• the quality of participation structures, norms and practices,
• how well policy proposals cohere with challenges being faced by those in the community being served,
• how convincing the justifications for significant change and priorities are, and above all,
• the extent to which critical reflection on purposes and strategic options generate a renewed sense of rightness and significant commitments on the common ground.
Evaluating how well cultural leadership is helping to create a deeper and shared understanding of why people are organised as they are in Council, is crucial. Such cultural leadership can be expected to help participants and stakeholders to
• appreciate the relative strengths and weaknesses of current organisational structures that distribute power, responsibilities and performance indicators, and
• co-design, mobilize, and reinforce new norms and practices that boost productivity, the wellbeing of all and more equitable and sustainable outcomes.
Evaluating the extent of responsiveness and responsibility of corporate directors, and their managers and teams, is essential to achieving productivity gains and sustaining morale. The quality and coherence of corporate services (in areas such as organisational development, planning, infrastructure, human resource management and development, financial management, partnerships, and information management) and operational team management, are critical to continuous and coherent improvement towards achieving greater efficiency, effectiveness, equity and sustainability.
The purpose of this letter is to invite you to intervene with an independent review of Rotorua Lakes Council. Despite growing evidence of failures in decision making, repeated requests for an independent review have been refused and cannot now be raised for another year.
It has been shown that external expertise is needed to re-build Council’s ability to make democratic and effective decisions in a diverse community. The current decision-making culture is demonstrably ineffective and undemocratic.
The ideological commitments of the Mayor’s power bloc, iwi partners and senior officials largely predetermine Council policies and prevent them from being subjected to critical review by elected members or being nuanced to accommodate plural interests in our community, as required by the LGA.
Other examples of corrupted decision-making obviously needing independent review include two iwi partnership projects, Westbrook, and many restoration/ redevelopment projects experiencing mission and budget creep in a context of a rates affordability crises and the Covid pandemic.
Overall, it is recommended that an independent review of Council’s policy making (governance) and implementation (management) focus on rebuilding public confidence in Council’s ability to provide democratic and effective local government that accommodates the diversity of its community.
Comprehensive summative and formation evaluation is needed to map and improve the quality of decision making in all three realms of the policy cycle;
• philosophical and strategic leadership to improve policy making,
• cultural leadership to reform the organisation, and
• corporate and team management to achieve objectives and greater efficiency, effectiveness, equity and sustainability.
Thank you for your time and attention. On behalf of all members of RDRR and all constituents in the district, and with great respect, I warmly encourage you to establish an independent review of Rotorua Lakes Council.
Thank you.
Yours sincerely,

Reynold Macpherson