Editorial: Auckland University vice-chancellor mansion unjustifiable

The Parnell house bought by the University of Auckland for $5 million and repaired with more than $160,000. Photo / Dean Purcell

EDITORIAL

When details first emerged of the purchase of a $5m Parnell residence for the University of Auckland's vice-chancellor, student representatives called it "frivolous" and "a slap in the face".

This week, Auditor-General John Ryan concluded an investigation into the arrangement by adding the descriptions of "immoderate" and "unjustifiable".

The university bought and renovated the four-bedroom luxury home in November last year as a rental for incoming Vice-Chancellor Dawn Freshwater. The university said it would benefit from the four-bedroom residence by hosting 14 "dinners" at the venue.

The arrangement is unlikely to be unique in the private sector and would have been no one's business but for the public money that flows into the institution.

In 2019, the university's annual report noted $380m in 23,592 separate donations from more than 7000 donors - the result of a seven-year fundraising campaign. More to the point, the University of Auckland received in excess of $478m in Government grants.

Education Minister Chris Hipkins this week echoed the criticism about the house purchase, saying he was "very disappointed". He said universities taking taxpayer dollars needed to spend money "wisely".

The criticism should not reflect badly on Freshwater, who joined the university earlier this year on a $755,000 salary in a role reportedly the nation's fourth highest-paid public sector job in 2019.

She paid $1100 per week to rent the home, even though a valuer noted it could command $2000 on the open market. But this was the arrangement agreed to by the University of Auckland.

Although Freshwater specified Parnell as her preferred suburb - the home was not formally considered part of her employment terms.

This leads to one aspect which particularly concerned the Auditor-General - the lack, if not avoidance, of disclosure about the purchase and rental deal.

"In my view, the university could ... have been more transparent about the arrangement," the report said. "If the university is of the view that it has acquired an asset for business purposes, and agreed an appropriate rental agreement that accurately reflects the asset's use, it should be prepared to disclose and justify that."

The response from the university to the Auditor-General's criticism was little solace to those still troubled by whether the institution has accepted where it had failed.

A spokesman said while accepting and acknowledging the report, the university would be commissioning independent advisers to review the university's policies related to sensitive expenditure.

However, the university already has adequate structures in place to carry out this sort of diligence, and simply didn't use them.

As the Auditor-General pointed out, the university's "sensitive expenditure policy
requires a person at a more senior level to approve this kind of spending".

"The policy also requires the expenditure to have a justifiable business purpose and not provide a private benefit to an individual.

"We did not see evidence that these requirements were met. The capital expenditure approval process requires significant purchases (more than $100,000) to be supported by a robust business case, which we have not seen for this purchase."

Given the stinging criticism from the Auditor-General, it seems almost breathtaking to consider the university may not have learned the lesson handed out this week.