A Nelson City councillor is waiting to find out if she will be prosecuted over what the city’s mayor is calling a “daft” interpretation of law.
The Audit Office is considering taking action over a conflict of interest relating to a family business that councillor Lisa Austin co-owns with her husband.
Both Lisaand Nelson City Mayor Nick Smith insist there has been no wrongdoing and say the council’s own legal advice differs to the Audit Office’s interpretation of legislation.
The Local Authorities (Members’ Interests) Act 1968 has rules around the financial interests of elected members who have contracts with a council totalling more than $25,000 in any financial year.
While Lisa’s company, Austin Transport Tippers, does not directly hold contracts with the council it does subcontract to firms that do.
The work relates to carting services for gravel, topsoil, and other materials during infrastructure projects.
During a media stand-up on Wednesday morning, Nick said that the council took a “really cautious” approach to managing conflicts of interest and in November – just three weeks after Lisa was first elected to the council – sought approval from the Audit Office for the contracts.
But the approval was declined and the Audit Office was now considering whether Lisa would be prosecuted, which would result in a $200 fine.
The Audit Office told Local Democracy Reporting that pre-existing contracts with councils can make candidates ineligible for election.
“Or, if they are elected, disqualify them from office. This is the effect of the act, not a decision of the Auditor-General.
“We have previously written to [the Department of Internal Affairs] and the Minister of Internal Affairs about shortcomings of this 1968 legislation and intend to do so again.”
The Audit Office said that, under the act, it does not have the power to approve contracts between election candidates and the council – only elected members and the council.
“We also cannot approve these contracts after the candidate becomes a councillor. The act does not allow us to do that. We only have the power to approve contracts entered into after the person is elected.”
Its website also states that subcontracts were included under the rule.
Nick said that the Audit Office was also threatening Lisa with dismissal from her role as a councillor, though the office said that it has no power to dismiss elected members.
The council’s advice from law firm Simpson Grierson also disagreed with the Audit Office’s “unfair” position, he added.
“It is a daft interpretation when an existing councillor can get approval – from when they were on council and may have been able to influence a decision – but not for a new councillor who would have had no opportunity to exert influence over any previous contracts or work," Nick said.
Other Nelson councillors have previously received repeated approvals for contracts held directly while they were already on the council, he said.
Such interpretations of the law likely risked the positions of dozens of councillors in similar situations across the country, Nick thought.
He did not have an exact figure but said the council and Audit Office would have collectively spent "thousands of dollars" on the issue over the last several months.
In addition to overseeing and enforcing the act, the Audit Office said it provides guidance for candidates to help them determine if the contracting rule might prevent them from standing.
“This guidance for candidates was provided to the Nelson City Council prior to the election.”
Indeed, page 7 of Nelson City Council’s 2025 guide for election candidates states that “when payments exceed $25,000 or any other approved amount, the elected member concerned is automatically disqualified from office.
“They also commit an offence if they continue to act as a member.”
Nick said he felt “very strongly” about probity and disclosing conflicts of interest, but thought the situation was “truly bizarre” given how removed Lisa was from the situation.
Her financial interests in her company were listed on the council’s pecuniary interests register, and she did not sit on the council’s tenders and project delivery committees.
Additionally, it was council staff, not elected members, that decided which companies to award most contracts to, but that staff also had no control over who the council's contractors subcontracted to, Nick said.
“This is Wellington bureaucracy at its worst, it’s grossly unfair on councillor Austin, and it is unfair to the 1000s of people that voted for her.”
For her part, Lisa said the entire process had been “extremely distressful” and, as a result, she was stepping back from this week’s council meetings.
“I stood for council to serve our community, not to cause controversy. I just want this resolved quickly so I can get on with the job I was elected to do.”
The Audit Office said that prosecutions under the act were “very rare”, but that it was required to consider prosecution when it became aware of breaches.
“We intend to advise the council of our decision very shortly.”
It added that it would be inappropriate to comment on the implications of prosecution until Lisa and the council had been notified of the office’s decision.
Should Lisa’s seat be vacated, the council would need to hold a by-election at a cost of about $200,000.
She was the top-polling candidate Nelson’s Central Ward in the 2025 local election, receiving 1767 votes in the first iteration of vote counting.
