6 November 2003 Media Statement

Comment on Awatere Huata report

State Services Minister Trevor Mallard today welcomed the release of the Auditor General’s report into the public funding of organisations associated with Act MP Donna Awatere Huata.

Trevor Mallard said the report provides an extensive analysis of the contracting arrangements between government agencies and organisations associated with Mrs Awatere Huata.

“The report does not determine whether any criminal activity has taken place, as this is the responsibility of the Serious Fraud Office.

“But it does raise extensive concerns over the pressure which Mrs Awatere Huata put on government officials in the funding of organisations that she was associated with.

“The Auditor General, commenting on the funding of the four minute reading programme, says the following:

“ ‘In our view the pressure that Mrs Awatere Huata put on officials combined with the lack of clarity as to her role, significantly undermined the integrity of the processes that had to be followed to give effect to the cabinet decision to fund the programme.’”(Report of the Controller and Auditor General, para 3.94, page 46).

Trevor Mallard said the report raised questions about whether there should be a code of conduct for MPs. Legislation (the Members of Parliament (pecuniary interests) Bill) is currently being considered by the standing orders committee that will require MPs in the future to outline their pecuniary interests, including involvement in trusts.

“If it’s believed that this legislation should now also include code of conduct issues, then submissions to that effect should be made to the committee for consideration for inclusion into that bill.

“The Auditor General’s report does raise some specific contract management issues for government agencies involved. It is also a good reminder for all government organisations to ensure they have appropriate systems and procedures in place.

“But it appears that the contracting process in respect of the Awatere Huata organisations was flawed from the start because of decisions made by ministers in the previous government that undermined usual procedures.

“In spite of this, the report says that in general, good practice contracting policies and procedures were in place in the government agencies under review.

“Ministers expect high standards from their departments. It is of concern that the report identifies several instances where agency policies and procedures were not followed correctly. In addition, the investigation found a number of areas around contract development, management and monitoring that need improvement.

“Ministers have been assured by the agencies involved that they have already taken action to address the specific concerns around their performance and that further steps will be considered now that the whole report has been released.

"Other initiatives include a current government review of the Treasury guidelines for contracting with non-government organisations (NGOs). These guidelines are intended to encourage the use of better contracting practices by all departments and Crown entities involved in negotiating arrangements with NGOs for the provision of services that support the government's objectives.

“The guidelines are not designed to be a manual on how to write contracts. It is still appropriate for government agencies to exercise informed judgement about the arrangements that may be appropriate in their own circumstances.

“It is sometimes a difficult balancing act to ensure that the costs of monitoring a contract do not outweigh the value of the contract to an agency.

“The Auditor General has indicated he will conduct a more comprehensive review of contracting arrangements between NGOs and government agencies in 2004. The results of this bigger review process will help to improve management practice across the whole of government.

“Following this process, I would hope future audit procedures will include some form of random sampling of departments and agencies to ensure that any recommended contracting procedures are being followed.

“Ministers will also be expecting their chief executives to ensure their departments auditing and contract management practice and procedures are up to scratch,” Trevor Mallard said.

ENDS

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