Raetihi agency law questioned

Ruapehu Bulletin, Volume 11, Issue 493, 6 July 1993, Page 10

Raetihi agency law questioned

At last week's Special Meeting in Taumarunui Ruapehu District councillors had before them a letter from Audit New Zealand setting out Audit NZ's concern as to Council's authority in law to undertake the bank and postal agencies in Raetihi. The letter stated that, after receiving advice from their National Director of Local Government, "the Council has no local authority to undertake such activities and accordingly is acting ultra vires (beyond legal power) in doing so. While we do not propose to take any specific action on the matter at this stage, we have a responsibility to point out the situation to Council and to recommend that Council seek legal advice on the matter. Councillors should be aware however that in operating outside Council's legal authority they run the risk of personal liability". In his Chief Executive's Commentary (attached to the above letter) Cliff Houston said that legal advice had been sought and referred councillors to a letter received from Council's solicitors, Le Pine and

Company of Taupo. Council had sought legal advice on the particular wording of Section 598(1) of the Local Government Act 1974 which states: "The Council may, either singly or jointly with ... any body of persons ... undertake ... services and facilities as it considers necessary in order to maintain and promote the general wellbeing of the public ..." According to Le Pine and Company the crucial words in this context were "the general wellbeing of the public". They point out that the heading to Section 598 of the Local Government Act is "Council may promote community welfare" and on that basis, the section would indicate that some form of specific and identifiable benefit must result from a service undertaken under Section 598(1). They continue: "It is not easy to identify services which either fall within or outside of Section 598(1) as there will always be a degree of arbitrary assessment in that regard". "In the present case however, we believe there is a distinction

which can be made to assist in the application of 598(1). That distinction is whether the type of service proposed in the community exists at all or whether the proposed service merely adds an additional service of the same type to that which already exists in the community." "In the latter case, if the proposed service will

provide a service where there would not otherwise be one at all, then we feel it can be more clearly said that there is a promotion of 'general wellbeing' of the public." "On that basis, if there is no banking or postal service at all within a specific community, and commercial organisations cannot be

persuaded to operate such services, then it is arguable that Section 598(1) authorises the Council to undertake such services in order to promote the general wellbeing of the public". Cr Peck said he wants to have his displeasure (at the apparent attempt of Audit New Zealand to deny Raetihi its postal

and banking services) recorded. Chief executive Cliff Houston said that when Council took on the postal and banking services in Raetihi "we were concerned with the needs and interests of the local community who might otherwise be deprived of these essential services". Cr Stuart Shaw said

that Audit NZ may be picking on the Ruapehu District Council as a test case as he felt sure other local authorities in small communities were probably also operating agencies that otherwise wouldn't exist. Mr Houston assured councillors that further legal opinion was being sought on the matter.