Audit fails to subdue Parker's optimism

LOIS CAIRNS
Last updated 08:31 21/12/2013
Bob Parker
KIRK HARGREAVES/Fairfax NZ
NO SURPRISES HERE: Former Christchurch mayor Bob Parker says there are no surprises in the findings of an audit into the council's finances.

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Former mayor Bob Parker says there are no surprises in the findings of an independent audit into the Christchurch City Council's finances.

"There is nothing in there that was not widely talked about or discussed around the council and the city over the last year," Parker said yesterday. "We've always known we faced challenges; we have been very open and real about that."

KordaMentha, an advisory firm specialising in insolvencies and corporate recovery, was commissioned by the new council to audit the council's finances.

In a brief two-page interim report released this week, it raised serious concerns about the council's financial position. It said the amount the council would get from insurance remained a big risk and that it might have under-estimated rebuild costs.

Mayor Lianne Dalziel described the findings as confirmation of the new council's "worst fears".

The council, in its three year plan (TYP), assumed it would get $1 billion in insurance payouts, but so far had been paid only $300 million. Much of the balance remained subject to dispute.

Getting that insurance money was vital to the council's finances as it was banking on using it to help fund its share of the costs for the anchor projects, as agreed under the terms of the cost-share agreement with the Crown.

Parker admitted yesterday there was a gap between what the council had hoped to have received from its insurers by now and what had been paid, but negotiations were ongoing and he remained optimistic about the city's overall financial health.

"The council does face challenges . . . but we have the resources and flexibility we need," Parker said. "Given what we have been through we are in a strong position to face those challenges. This is a time to live in the optimistic space, not to be living in the fears because, as history shows us, most of our fears don't come true."

Former city councillor Helen Broughton, who chaired the previous council's corporate and financial committee, said Dalziel had taken the right action in commissioning an independent analysis because it was important the new council was fully appraised of the financial risks.

The previous council had struggled to get information on insurance issues and had been deterred from seeking independent advice until the middle of this year, which meant it was only now that a clear picture was emerging of the council's position.

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"I agree with KordaMentha's assessment that insurance is a big risk for the city," Broughton said. "The previous mayor and a small group of councillors around him were burying their heads in the sand - never a wise thing to do."

Cr Yani Johanson, the only councillor to vote against the council's cost-share agreement with the Crown, said he had repeatedly raised concerns about the costs to which the council was committing, but to no avail.

The previous council should not have agreed to producing an unaudited TYP, nor should it have delegated final sign-off on the cost- share deal to Parker and then chief executive Tony Marryatt. Johanson said he felt vindicated by KordaMentha's findings, but took no satisfaction from them.

KordaMentha is due to finish its review of the council's finances early in the new year.

- © Fairfax NZ News

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