The government's appointment of a Crown observer at Wellington City Council has prompted concerns other councils could be in the firing line.

Critics believe the bar for intervention is too low, and that Wellington is hardly the only council with bickering members and money struggles.

Local government minister Simeon Brown announced the appointment of the Crown observer yesterday, after Department of Internal Affairs officials' advice identified a number of problems with the council.

The main issue was its ability to manage its long-term plan following the scuppered sale of its stake in Wellington Airport, along with concerns the council was front-loading its water costs onto ratepayers, rather than taking on more debt financing to spread the costs later on.

"The point of having a Crown observer is to assist the council in managing these issues as they redevelop their long-term plan, for the benefit of Wellington ratepayers," Brown said.

Brown said unlike a Commissioner, the observer would not have any powers to direct council or make decisions. It would be able to provide guidance and advice, and then make recommendations. The mayor and councillors remain responsible for the decisions they make.

The announcement came as no surprise to Wellington mayor Tory Whanau.

"I know the minister has been concerned about certain things over the last couple of weeks, so I welcome his intention to bring in an observer," she said.

But Brown's comments around water infrastructure did come as a surprise, with Whanau saying the council was investing $1.8b into the long-term plan, and it was committed to moving to the regional model, which would help its financial situation further.

Labour said many councils were struggling to fund their mandates, especially after the government changed the water water legislation.

It pointed out the funding and financing tools for water infrastructure were still not available.

Leader Chris Hipkins said if this was the threshold needed for an observer, then he expected other councils around the country to also get interventions.

"I think the threshold for that kind of intervention needs to be quite high. My concern here is if they're doing it for Wellington City Council, they could be doing it for other councils in relatively short order," he said.

Green Party co-leader Chlöe Swarbrick said councils across New Zealand lacked resources. She said the government had promised to put in place city deals to help councils with funding and financing, and questioned where they were.

"Very evidently there are challenges, but WCC had its locally elected members locally elected, and the government likes to talk a lot about localism, so let's see that play out in practice."

Whanau similarly believed her council was hardly an outlier.

"Councils amend their long-term plans often. This is no different to that," she said.

"However, I do understand there has been a lot more media attention, a lot more political theatre around this issue, and that the minister has concerns. That's okay, we're going to work collaboratively with him. I certainly hope it doesn't set a precedent with other councils."

She said other councils were concerned about intervention, and elected members across the country had shared their support with her and the council.

Pushing together two problems

Dr Dean Knight - a Victoria University law professor - believed the government's move was an overreach.

He said if balance-sheet management and the reversal of the airport shares sale were behind the decision, it was a low-bar for intervention.

"[The minister] has taken two policy differences, ideological policy differences, and glued them together to try and engineer what is an apparent significant problem. And I'm just not sure that's right," he said.

Brown did not believe the councillors could work together to resolve them

"There is a lack of confidence in terms of the fact they'll be able to resolve these issues, based on the behaviour of the council," he said.

Whanau acknowledged it was unhelpful that councillors were walking out of meetings or refusing to vote.

But Knight said contention between councillors on hot-button issues was a natural part of the democratic system, and the public had the opportunity to judge them at the election.

"If this low bar is applied in the future, the government's going to be sacking councils all over the country over the next year or so. Unless there's something else going on about Wellington which is more political and less about good governance."

Finance minister Nicola Willis, herself a Wellingtonian, did not believe other councils were in the crosshairs.

"It's simply us as a government making clear that when Wellingtonians are feeling let down by their councils and things are a shambles, we will use the statutory powers we have to make sure the appropriate support and advice is there

The coalition partners struck two different tones in their support for the intervention.

"It's about time that the government intervened, in a light-touch way initially, but it shows we're watching," said ACT leader David Seymour.

"I'm concerned that a city that was once alive is being destroyed. It's the worst I've ever seen it in a long career coming to Wellington," said New Zealand First leader Winston Peters.

"I attribute it to meddling politics and meddling bureaucracies without any regard to how a city properly functions with thriving businesses and a thing called customers."

Whanau said such criticisms were not helpful.

"We need assistance. Not punching down," she said.

Knight said some of the uncertainty around water was of central government's making.

"The National-led government has chosen to change direction on water infrastructure and how it's funded. That's going to take time for all of the local authorities to catch up and organise their affairs and their programmes in the light of the new settings, and the settings that are still to come as well."

He said the government had talked a big game on devolution and localism.

"Unfortunately, I think their actions and their intervention here make us seriously doubt whether they actually believe in that," he said.

Ironically, given all the focus on spending, the council will have to pay the Crown observer's wages. Whanau did not know how much that would cost.

Main Image: Wellington mayor Tory Whanau speaks to media after the announcement that a Crown observer will be appointed to the city council. Photo: RNZ / Samuel Rillstone