The Local Government (Pecuniary Interests Register) Amendment Bill recently passed its second reading in the House, after the select committee recommended several amendments and confirmed unanimous support for the Bill. It now seems likely that the Bill will be enacted prior to the 2022 local body elections, with the new requirements in force for incoming elected members.

In this FYI, we provide a brief outline of the Bill, the select committee report, and the implications of the recommended changes. We also identify what is not captured by the new regime, and comment on what this could mean for councils.

The Bill requires councils to keep a register of elected members’ pecuniary interests

The Bill is a member’s bill, promoted by Labour MP Tangi Utikere, the ex-deputy mayor of the Palmerston North City Council. Since its introduction, it has attracted support from all parties in Parliament.

Assuming it is enacted, every council will be required to keep and maintain a register of its elected members’ pecuniary (ie financial) interests. This new regime is based on the requirements applying to members of Parliament, but tailored for the local authority context.

The purpose of the register “is to record members’ interests so as to provide transparency and to strengthen public trust and confidence in local government processes and decision-making”. Each council will have to make a summary of its register publicly available.

The pecuniary interests that will need to be registered include:

• being a company director or owning more than 10% of the shares in a company;
• financial interests in other companies or businesses (other than a managed investment scheme), or a beneficial interest in a trust;
• employment;
• membership of any organisation that receives or applies for funding from the council;
• the location of any real property owned by a member;
• any gifts received from a person who is not a family member that have a value (separately or combined) of more than $500;
• any overseas travel funded by someone other than the member or their family; and
• payments received for any other activities in which the member is involved.

To ensure ongoing compliance and accuracy, elected members will need to provide returns to the council annually. 

Any member who fails to provide an accurate return will commit an offence, punishable by a fine of up to $5,000. 

The select committee report

The select committee was assisted by submissions from Taituarā, LGNZ, and four councils (Auckland, Matamata-Piako, Christchurch, and Dunedin), as well as the Auditor-General and Privacy Commissioner.

Some of the key improvements recommended by the committee include that:

• The regime will apply not just to councils’ elected members, but also to community board and local board members. The regime will not apply to people appointed to council committees.
• Only a “summary” of the register will need to be made publicly available, as a means of ensuring that the purpose is fairly balanced against members’ privacy.
• Members are required not just to provide returns, but also to make sure the information contained in their returns is accurate.  In addition, members must advise of any errors or omissions in their returns that they later become aware of. Members who fail to comply with these requirements will commit an offence.
• Members do not need to disclose the exact address of any property they own, rather a general location (eg suburb and city) will suffice.
• Members do not need to disclose their remuneration from any employment. The committee recognised that many elected members roles are part-time only, and that an obligation to disclose outside remuneration could discourage people from standing.
• In order to avoid any confusion or overlay, the committee recommended that the members’ obligations to disclose interests are in addition to, and do not affect, their obligations under the Local Authorities (Members’ Interests) Act 1968 (LAMIA). A supplementary order paper, which will be put to the House during the committee of the whole stage of the Bill, additionally clarifies that a pecuniary interest under the Bill’s regime is not necessarily a pecuniary interest for the purposes of LAMIA. 

You can read the full select committee report here.

Other issues, what the Bill doesn’t cover, and its consequences for councils

While the committee has recommended various amendments to resolve uncertainties, there remains potential for problems with the alignment of the relevant time periods for returns, and due dates applying to different councils and potentially different members. A careful counting of days will be required in certain situations to ensure that there is no inadvertent breach of the new regime. We expect that sector guidance (including an online calculator) may be useful to ensure compliance, after the Bill is enacted.

In contrast to many councils’ existing member disclosure requirements, the Bill does not require disclosure of the following types of interests:

• a member’s spouse’s or dependents’ pecuniary interests;
• details of a member’s debtors and creditors;
• any contracts with the council in which the member is interested; or
• any non-financial interests that the member may have.

Another key difference between existing common practice and the Bill is that it does not require any ongoing reporting of new interests as they arise between annual returns.

The implication of these differences is that the new register will be of limited help in managing conflicts under LAMIA. Councils may, therefore need to consider if / how they should supplement the statutory regime in this regard, to capture additional disclosures.

Next steps

In anticipation of the Bill being enacted (and ahead of the next local body elections), councils may wish to consider advising candidates about the potential consequences of the new statutory regime. 

Do not hesitate to get in touch if you would like assistance understanding the Bill and its implications, or if you would like advice on whether any supplementary interest disclosure requirements should be considered.