Legislation is slated to be tweaked after a Nelson City councillor faced prosecution from the Auditor-General, but one law expert says the situation warrants a comprehensive review.
Two weeks ago, councillor Lisa Austin found herself in hot water due to subcontracts held by a company she co-owns with her partner.
Austin Transport Tippers doesn’t directly hold any contracts with Nelson City Council but subcontracted to council contractors both before and after her election.
Mayor Nick Smith said the council had acted cautiously to seek Audit Office approval for the contracts, as it had for contracts held by other councillors, but the application was declined.
The Audit Office’s interpretation of the Local Authorities (Members’ Interests) Act 1968 keeps it from retrospectively approving contracts held by councillors before they were elected.
In addition, the guidance it provides to councils before local elections explicitly forbids people with financial interests greater than $25,000 from standing for election.
Austin has partly credited her election as the Central Ward’s top-polling candidate to voters’ valuing her business acumen and did not hide her commercial activities on the campaign trail.
But, when brought to the Audit Office’s attention, it was obliged to consider prosecuting her.
Smith said that independent advice from law firm Simpson Grierson disagreed with the Audit Office’s interpretation of the law.
The Auditor-General eventually decided not to prosecute, saying it would not be in the public interest.
In a statement, the Audit Office said it had previously written to the Department of Internal Affairs and the Minister of Local Government about the “shortcomings” of the 1968 law.
“We are writing to the Minister of Local Government and the Department of Internal Affairs to once again urge them to consider legislative reform.”
Welcoming the decision, Mayor Nick Smith echoed his intention to do the same, “urging that this ass of a law be replaced”.
Local Government Minister Simon Watts told Local Democracy Reporting that he had been aware of the situation involving Austin but was unable to intervene.
“While it is the candidate’s responsibility to ensure they comply with requirements of being an elected member, there is no suggestion the councillor has done anything inappropriate.”
Austin’s financial interests are listed on the council’s pecuniary register, and she doesn’t sit on the council’s tender committee.
The council itself is also not involved in choosing to which companies its own contractors subcontract.
Watts said the act had not been reviewed in “some time” and there were no plans this term for a full review, but said the Government was adjusting the contract threshold from $25,000 to $100,000.
The change is part of Minister of Internal Affairs Brooke van Velden’s Regulatory Systems (Internal Affairs) Amendment Bill, which passed its second reading last Wednesday with the full support of Parliament.
She said the bill sought to improve the DIA’s efficiency by “tidying up” the legislation it administers.
The increased contract threshold aimed to align with modern times.
Van Velden added that the $25,000 limit was set in 1982 and, valued against the year’s fourth quarter, equated to $107,500 in the same quarter of 2024.
A Local Government New Zealand spokesperson said the organisation has long advocated to updates to the Local Authorities (Members’ Interests) Act 1968.
“The current interpretation… creates an unreasonable ‘Catch-22’ for candidates where a candidate cannot apply for approval prior to the election, but neither can they apply after the election as a councillor.”
LGNZ was advocating for the limit to be adjusted yearly with inflation to avoid similar amendments in the future.
The most recent available data, for the first quarter of 2026, shows that $25,000 in 1982 was now worth $111,850.
But Dr Myra Williamson, a senior law lecturer at the Auckland University of Technology Law School, recommends doing more than just “tinkering” with one subsection of the act.
“There’s that saying, ‘Don't let a crisis go to waste.’ I think it would be a good opportunity to have a much broader look,” she said.
“What’s at the heart of the legislation is really important.”
With declining trust in government across New Zealand and the country “slipping down” the international Corruption Perceptions Index, it was important to have a comprehensive look at the nation’s systems of managing conflict of interests, she said.
“If [people] think that politicians are making decisions for their own benefit, then you run the risk of undermining democracy.”
Williamson acknowledged the contract threshold could be limiting for potential council candidates, especially in smaller districts where councils were a greater proportion of the local economy but did not think a “simple” subsection tweak was the way to go.
“There are different ways to ensure that you have good candidates, who may be otherwise disqualified because of their business interests. On the other hand, you want to balance that against the need to protect our democracy and avoid conflicts of interest,” she said. “I don’t think just looking at… one section in one law is really a satisfactory solution.”
On Austin’s case specifically, Williamson gave her “all credit” for being upfront about her business interests to the public but said she “probably shouldn’t” have run for election.
“The law is quite clear. The law is outdated, perhaps… but it’s quite clear,” she said. “If you have those interests and you’ve read the Audit Office’s advice, then you ought to seek legal advice, because it looks as if you are not eligible to stand as a candidate.”
When asked by Local Democracy Reporting, Austin did not disclose if she had sought legal advice regarding her financial interests before running for election.
“Austin Transport is not a Nelson City Council-affiliated business. We do not have a contract with Nelson City Council,” she said.
“My Councillor Nomination Form information was completed fully, including the Candidate Profile Booklet that went to every household. This information was presented to the Electoral Officer as required, I met all my obligations, was transparent, my signature was on it and I standby that information.”
