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Auditor-General’s inquiry into arrangements by Dunedin City Council and Otago Regional Council to fund development of new stadium

22 August 2007

Background

The Carisbrook Stadium Trust has developed a proposal to design and build a new multi-purpose stadium in Dunedin. The Carisbrook Stadium Trust is an independent trust that has received funding for feasibility work from the Dunedin City Council and the Otago Regional Council, and might receive substantially more funding from these Councils if the stadium development proceeds.

Earlier in 2007, the Dunedin City Council passed an amendment to its 2006-16 Long-Term Council Community Plan to include grants totalling up to $91.4 million for the proposed stadium during the next four years. Out of this provision, the Dunedin City Council has agreed to provide the Carisbrook Stadium Trust with up to $5.6 million by 31 December 2007 for ongoing "proof of concept" costs, provided certain conditions are met.

The Otago Regional Council is considering providing up to $37.5 million for the stadium development. Before it provides for this funding, the Otago Regional Council is awaiting the outcome of the "proof of concept" works and plans to carry out certain statutory processes under the Local Government Act 2002.

The Auditor-General is interested in this matter because of the amount of ratepayer funds that might be contributed to the stadium development, and because of the relationship with a non-council controlled organisation. We also acknowledge the uncertainty within the Otago region about the nature of the Councils' involvement. Our area of focus is the nature of the funding arrangements that the Councils have with the Carisbrook Stadium Trust, and to provide assurance to the Councils and ratepayers in the Otago region that the funding arrangements are appropriate and robust.

The inquiry is supported by the two Councils.

The inquiry

These terms of reference set out the full nature and scope of our inquiry into this matter. They also describe matters that have been excluded.

The inquiry will consider the funding arrangements that each Council has, or is considering, with the Carisbrook Stadium Trust. It will focus on:

  • the nature of each Council's funding relationship with the Carisbrook Stadium Trust, including:
    • the accountability mechanisms that each Council has in place,
    • the Councils' controls around the use of funds by the Carisbrook Stadium Trust, and
    • the means by which the Councils assess that their payments represent value for money and will achieve the purpose for which they were released;
  • compliance with best practice, as detailed in our 2006 report Principles to underpin management by public entities of funding to non-government organisations; and
  • such other matters arising out of the inquiry that the Auditor-General considers it desirable to report on.

The Auditor-General does not intend to examine the decision-making processes undertaken by the Councils in deciding to contribute funds to the stadium development.

The inquiry will focus on the funding arrangements and controls established by, and from the perspective of, the Councils, and not those of the Trust.

Our mandate

The inquiry will be conducted under section 18(1) of the Public Audit Act 2001. This section provides that the Auditor-General may inquire, either on request or on his own initiative, into any matter concerning a public entity's use of its resources. Both the Councils are public entities within the Auditor-General's mandate.

Reporting and timeframes

Section 20 of the Public Audit Act permits the Auditor-General to report on any matter arising out of the performance and exercise of his functions, duties, and powers as he considers it desirable to report on. The Auditor-General will decide on the appropriate manner in which to report his findings on these terms of reference once the inquiry has been completed.

The Auditor-General intends to report on the outcome of this inquiry by the week beginning 1 October 2007.

Contact for enquiries

Sarah McMaster (Solicitor, Inquiries Manager)

Telephone: (04) 917 1500

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