Residents' association presents a $54m bill

Auditor General Lyn Provost, seen here speaking to Mangawhai residents, is being billed more than $54million for alleged failure by Audit NZ to control expenses relating to the Mangawhai Community Wastewater Scheme. Photo / John Stone

A Northland lobby group has billed the Auditor General for more than $54 million for her alleged failure to rein in overexpenditure on the controversial Mangawhai Community Wastewater Scheme that cost more than five times originally expected.

The Mangawhai Residents and Ratepayers' Association has fought unsuccessfully through the High Court and the Court of Appeal to have the Kaipara Validation Act, which retrospectively validated irregularities in the setting and assessing of rates in respect of the scheme, overturned.

Now the association has sent Auditor General Lyn Provost an invoice titled "OAG failure to perform statutory function" with a due date of payment of January 20, 2016. The association wants $46 million for negligence/dereliction of duty, $500,000 for besmirching of reputations/insults, $320,000 in legal costs, and $492,000 for hours not reimbursed. With GST of $7,096,800 added, the total claimed is $54,408,800.

Mangawhai Residents and Ratepayers' Association chairman Bruce Rogan has billed the Auditor General for $54 million over the controversial Mangawhai sewerage system.

In 2012, Mrs Provost's office began a 20-month inquiry into Kaipara District Council's poor management of the scheme and came up with a 420-page report which contained no recommendations. She said the KDC had been out of its depth and blamed it for the council debt totalling $86 million in 2011. She has apologised for poor work done by the Audit Office when scrutinising the council books but rebuffed suggestions by angry Kaipara ratepayers that she resign.

Association chairman Bruce Rogan said his members decided to send an invoice to her after the Court of Appeal said in its judgment the association should have sued her. Justice Forrest Miller of the Court of Appeal said others, including the Auditor General, might be liable to make compensation, but that too could be left to the courts. Mr Rogan said the amount demanded of the Auditor General was far less than the financial damage that had been caused.

"Instead of suing her, we're billing her. If she doesn't act on it, we'll ask Parliament through a petition to investigate the Auditor-General," he said. In a letter accompanying the invoice, Mr Rogan said when the money was paid, it would be held in a trust until a democratically-elected council came into office.

"At that time, the council will be approached with an offer to make the most of the funds available to it, so long as there is a binding and verifiable commitment from the council to apply the money as set out in a deed of settlement that will be drafted in the open with full community consultation. Some of the funds will be used immediately to reimburse people of limited means who dipped into their own personal reserves to support the ratepayers' association in its frustrated attempts at securing a just outcome."

Ms Provost could not be reached for a comment because her office is closed during the festive season.

The government-appointed commissioners running the council have filed legal proceedings against former chief executive Jack McKerchar and the Auditor General over the scheme that ended up costing ratepayers about $57 million. In August 2014, commissioners voted to pursue Mr McKerchar through the courts for his handling of the "botched" system that was initially estimated to cost $10.8 million. Papers were filed in December 2014 against Mr McKerchar in the Employment Relations' Authority and against Ms Provost in the High Court.