Let the Blame Games Begin

 

26 February 2014

 

It is appropriate that in the week after the end of the Sochi Winter Olympics, PwC has been announced as undertaking an independent review into “past Rotorua District Council financial disclosures”.

 

The announcement came in a press release from Rotorua mayor Steve Chadwick who confirmed that PwC (formerly PricewaterhouseCoopers) will undertake the independent review.The review stems from concerns over what has been uncovered regarding the RDC’s accounts following the local body elections in 2014.

 

Making the announcement, Mrs Chadwick said it was important that the work was completed by an external firm of the standing of PwC so the findings could enable the current council and organisation to move forward towards its shared vision of Rotorua 2030.

 

“PwC have a global reputation for completing thorough and impartial reviews and as a council we require just that, so the past can be the past and we can then channel our efforts and resources into the present and future needs of this district.

 

”The scope of the review is to investigate the adequacy of past financial disclosures made to elected members, and those made to the public during long-term plan and annual plan processes, and will cover the last two years. It will also seek comment on the framework proposed by current management to control council’s finances and reporting procedures.

 

RDC chief executive Geoff Williams said the final report will cost between $40,000 and $45,000.  It is expected to be back to the mayor and councillors before the end of the financial year and the outcomes of the report would be made public.

 

As much as Muddy Waters can’t wait to see some of this stuff flung around, some caution should be urged on all parties in this case.

 

Many of those involved not only as councillors and managers but also reporting and commenting on council matters will be skating on thin ice if they resort merely to finger pointing.

 

It would be interesting to know, for example, what motivated the Daily Post to publish in the run up to the local body election stories provided to it from the council. Two headlines stand out “Eat Streat makeover: Final phase set to begin” and “Editorial: Eat Streat right to plump for best offer”.

 

The first was an article in early July and the second a follow up editorial. The editorial backed the district council when it was criticised by councillor Mark Gould protesting against the awarding of a $2 million contract to a Tauranga firm.

 

While admitting a Rotorua company would have done well to get the contract, the writer says their prices clearly weren’t sharp enough and, as a ratepayer, notes “I’m thrilled the council has gone with the better offer”.

 

It is fair to say that very few of us in Rotorua will put up our hands to say we must also take some of the blame. We, as citizens, knew in our hearts that the council could not afford to keep rate rises as low as promised. How many of us secretly were happy with the stories we were told and were only too happy to accept the bribe and re-elect the last administration in the previous election?

 

The water below thin ice is usually quite muddy.

 

A report on the Council’s financial performance for the six months to 31 December 2013 was considered the Council’s operations and monitoring committee on 12 February. The report, prepared by the Council’s own officers, makes it clear that a number of income items were simply over-estimated when the budget for the year was prepared, and some costs were under-stated.

 

As a result, the forecast deficit would be significantly higher than the amount the councillors approved and the public was told about. Changes were recommended to reduce the deficit. Should councillors have asked why some revenue targets in the budget were, in the words of the report “at times significantly higher than what was being achieved historically”?

Muddy Waters

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