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Greater Wellington Regional Council Newspaper Advertisement [2015] NZASA 4 (16 February 2015)

Last Updated: 21 February 2015

SUMMARY

The advertisement by the Greater Wellington Regional Council (GWRC) appeared in the Hutt News community newspaper and promoted the Local Government’s Commission’s draft proposal for the reorganisation for the Wellington region.

The Complainant, the Hutt City Council (HCC) said by misquoting the draft proposal, the Advertiser had presented readers with a view that did not reflect the view of the Commission’s draft proposal. The Complainant noted that advertisements from both GRWC and HCC could influence submissions, however, the Complainant said misleading and deceptive advertisements meant many submissions would be based on “untruths and wrong impressions.”

After confirming jurisdiction over the advertisement, the Complaints Board said that expression of opinion in advocacy advertising was an essential and desirable part of the functioning of a democratic society. However, it emphasised that with all rights, there were fetters, and freedom of expression was not absolute. The ASA Codes fetter the right granted by Section 14 of the Bill of Rights Act 1990 to ensure there is fair play between all parties on controversial issues.

It noted where the Advertiser added: “The Advocacy Principles accept that ‘in advocacy advertising and particularly on political matters, the spirit of the code is more important than technical breaches.” The Complaints Board agreed. It ruled Statements 2, 5 and 6 were not in breach of the Code of Ethics.

However, it said in Statements 1, 3, 4, 7 and 8 the Advertiser had misrepresented and misquoted the Commission’s draft proposal to the point that it went beyond technical breaches. In these instances, the Complaints Board found the Advertiser had presented its own assumptions and opinions as fact which was misleading and was likely to exploit the lack of knowledge of the reader.

Therefore, the Complaints Board ruled these statements were in breach of Basic Principle 3, and Rules 2 or 11 of the Code of Ethics. Consequently, the Complaints Board ruled these parts of the advertisement had not been prepared with a due sense of social responsibility, breaching Basic Principle 4.
Denigration
The Complaints Board noted the Complainant’s view that the misleading statements in the advertisement had denigrated the HCC’s reputation. However, the Complaints Board was of the view that robust opinion and contra view – even if misleading – did not constitute denigration. Rather, it said misleading statements in advocacy and political advertising were more appropriately and comprehensively dealt with under Rule 11. Therefore, the Complaints Board ruled none of the statements that were subject to the complaint denigrated competitors and ruled the advertisement was not in breach of Rule 8 of the Code of Ethics.

Accordingly, the Complaints Board ruled the complaint was Upheld (in part).

[Advertisement to be amended as specified]

Please note this headnote does not form part of the Decision.



Preliminary Matters

The Chairman directed the Complaints Board to consider a number of preliminary matters before deliberating on the complaint. The first matter for the Complaints Board to consider was whether the advertisement fell within its jurisdiction.

Jurisdiction – Advertising or Editorial?

The Complaints Board noted where the Advertiser (GWRC) questioned whether the item before it was within the Advertising Standards Authority’s jurisdiction despite acknowledging the ASA’s definition of an advertisement was wide and included “advertising which promoted the interest of any person, product or service, imparts information, educates, or advocates an idea, belief, political viewpoint or opportunity.”

While the Advertiser accepted, under these guidelines the newsletter was not editorial journalism, and acknowledged it was a paid for notice, it argued that “the bulk of the content of these newsletters is not readily described as advertising.”

The Complaints Board then referred to the editorial test^[1] entitled Advertisement or Editorial? prepared by T. Snow and D. Churchill, former Print media representatives, Advertising Standards Complaints Board, which read, in part:

“THE IMPORTANCE OF CONTEXT

6.6 The publishing, broadcasting or screening context will determine to an extent whether an editorial-looking presentation is at first glance independent editorial generated by the media operation, or advertorial presented on behalf of an advertiser.

ADVERTORIAL TEST

6.9 The public is entitled to know when it is reading, listening to or viewing advertorial because it will regard differently information generated by an advertiser in its own favour and which comes under the Advertising Codes of Practice, and information generated by the media in its own right which can be expected to have a quality of independence but needs to meet the tests of the industry's Code of Broadcasting Practice.

6.10 To check if an editorial feature, whether in print, broadcast or electronic media, is in fact advertorial, the following tests could be applied in this order:

TEST 1
6.11 Is it part of an editorial framework or advertising framework?

If it is clearly part of an advertising framework, whatever editorial format it is in, then a complaint against it should go to the Advertising Standards Complaints Board, where the Advertising Codes will apply.

TEST 2
6.12 Is it independent of control in any measure by the advertiser?
If it is not, then any complaint against it will go to the Advertising Standards Complaints Board as advertising.

TEST 3
6.13 Is there any financial consideration affecting the editorial or which has caused the appearance of the editorial?

If any financial consideration has been exchanged so that the advertiser has created the occasion for the editorial, or bought the right to any measure of oversight over the editorial, then any complaint against this kind of presentation should fall within the jurisdiction of the Advertising Standards Complaints Board.

The Complaints Board said the advertisement was a paid for notice, placed by the Agency, Adcorp that expressed the views of the Greater Wellington Regional Council in its promotion of the Local Government’s Commission’s draft proposal for the reorganisation for the Wellington region and advocated for a single unitary authority .

Taking into account the editorial test by Snow and Churchill, the Complaints Board ruled the material before it clearly fell into the category of advocacy advertising. Therefore, the Complaints Board said the Advertising Codes of Practice applied.

With jurisdiction confirmed, it then turned to consider the Advertiser’s views about the application of Cameron in the complaint before it.

THE APPLICATION OF CAMERON

The Advertiser emphasised the difference between political speech and commercial speech. It referred to the finding of the Court of Appeal in Electoral Commission v Cameron [1997] NZCA 301; [1997] 2 NZLR 421,424 (Cameron). In Complaints Board Decision 13/501 the Complaints Board found the Advertiser, Waikato District Health Board, was a local authority with “a duty to provide information to the public.” It considered that the Advertiser would be seen as an expert body with regard to its statutory role. Therefore, in accordance with the findings of Cameron, the Complaints Board was required to “tread carefully” and ensure that it did not substitute its opinion for that of the expert body.

The Advertiser stated: “The GWRC is not arguing Electoral Commission v Cameron precludes the ASCB from hearing this case. But it contends that the Court’s warning above is salient...”

The Advertiser continued: “The GWRC argues that the ASA should not interfere with messages that are conveyed in a political context unless there is a particularly compelling justification ... the GWRC and the HCC are both high profile actors in relation to local government reform. Both made application to the Local Government Commission concerning reorganization of local government in the Wellington region and have been active in the public debate."

The Complaints Board disagreed. It said in the matter before it, the Advertiser (GWRC) and Complainant (HCC) were two local authorities with two differing political viewpoints. It said while both councils could be considered experts in the context of their statutory powers, their political opinions were not outside of the Complaints Board ambit and the context of political debate was not a situation where the Complaints Board could potentially be at risk of substituting its opinion for that of the expert body as cautioned by the High Court in Cameron.

Given this finding, Complaints Board was of the view the application of Cameron was not valid in this instance.

BASIC PRINCIPLE 1 OF THE CODE OF ETHICS

The Complainant, Hutt City Council, said the Advertiser was “required to follow the Local Government Act 2002 and guidelines by the Office of the Auditor General when making advertisements or doing any public communications.” The Complainant said by misquoting and publishing deceptive and misleading statements the Advertiser had breached the Act and guidelines.

The Complaints Board acknowledged that Basic Principle 1 of the Code of Ethics required all advertisements to comply with the laws of New Zealand. However, a decision about whether or not an advertisement was in breach of Local Government Act 2002 and guidelines by the Office of the Auditor General was not a matter the Complaints Board could adjudicate on. Therefore, the Complaints Board declined to adjudicate on the advertisement under Basic Principle 1 of the Code of Ethics.

COMPLAINTS BOARD DECISION

The Chairman directed the Complaints Board to consider the advertisement with reference to Basic Principles 3 and 4 and Rules 2, 8 and 11 of the Code of Ethics. This required the Complaints Board to consider whether the advertisement created an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, or likely to deceive or mislead the consumer or whether or not the advertisement contained anything which denigrated identifiable competitors. The Complaints Board was also required to consider if the advertisement had been prepared with a due sense of social responsibility to consumers and to society.

The Complaints Board considered the provisions of Rule 11 of the Code of Ethics which allows for expression of opinion in advocacy advertising, provided that the expression of opinion is robust and clearly distinguishable from fact.

The Complaints Board noted also relevant were the Advocacy Principles, developed by the Complaints Board in previous Decisions for the application of Rule 11. These said:

1. That Section 14 of the Bill of Rights Act 1990, in granting the right of freedom of expression, allows advertisers to impart information and opinions but that in exercising that right what was factual information and what was opinion, should be clearly distinguishable.
2. That the right of freedom of expression as stated in Section 14 is not absolute as there could be an infringement of other people’s rights. Care should be taken to ensure that this does not occur.
3. That the Codes fetter the right granted by Section 14 to ensure there is fair play between all parties on controversial issues. Therefore in advocacy advertising and particularly on political matters the spirit of the Code is more important than technical breaches. People have the right to express their views and this right should not be unduly or unreasonably restricted by Rules.

4. That robust debate in a democratic society is to be encouraged by the media and advertisers and that the Codes should be interpreted liberally to ensure fair play by the contestants.
5. That it is essential in all advocacy advertisements that the identity of the advertiser is clear.

The Complaints Board said the advertisement before it was clearly an advocacy advertisement promoting the Local Government Commission’s draft proposal for the reorganisation for the Wellington region. The Complaints Board confirmed the identity of the Advertiser was clearly displayed and therefore met the identification provision.

The Complainant said by deliberately misquoting the draft proposal, the Advertiser had presented readers with a view that did not accurately reflect the Commission’s draft proposal. The Complainant said advertisements from both GRWC and HCC influenced submissions, however, the Complainant said misleading and deceptive advertisement meant many reads submissions would now be based on “untruths and wrong impressions.”

The Advertiser said the Complainant failed to take into account the latitude that should be afforded to political speech, particularly as the target audience had been continuously informed about the central issue of local government amalgamation. It said it was summarising the Commission’s draft proposal and explaining the local implications if it came to be adopted and the content was factual and substantially justified.

As in all cases, the Complaints Board said that where a claim in an advertisement was challenged by a complainant, the onus fell on the Advertiser to provide the Complaints Board with substantiation of that claim. The Complaints Board then turned to consider the statements in the advertisement that were the subject of complaint.

Statement 1. “The Wellington Local Boards will have greater power than the Auckland Local Boards through the proposed allocations and decision-making responsibilities.”

The Complainant said: “We assume the real quote is from page 6 (paragraph 1.28) of Volume 1 is: [our emphasis]

The Commission expects the Wellington local boards will have greater power than Auckland local boards with respect to non-regulatory functions, for example, functions outside the consents and permits of the Resource Management Act 1991 or Building Act 2004. This is achieved through the proposed allocations and delegations of decision-making responsibilities to the local boards. Auckland Council has kept more functions within CCOs (council-controlled organisations) than Wellington, which limits the ability of local boards to influence decisions such as those involving local transport. Auckland Council also does not appoint councillors to local boards, but this is proposed for Wellington to improve communication and coordination.”

The Complainant said the removal of the word "expects" was deliberately deceptive. “It changes the meaning from something like "may possibly" to "will definitely". The removal of the words "with respect to non-regulatory functions" is also deceptive. It leaves out the fact local boards have limited powers and responsibilities.”

The Complaints Board noted an acknowledgement from the Advertiser that the advertisement contained two quotations from the Local Government Commission report that were not verbatim. The Advertiser accepted “this is not best practice” and said it will ensure this will not be repeated in the future and that all quotations used in existing material on its website are verbatim.

The Complainant said the readers would assume this quote is directly taken from the draft proposal and the removal of the word “expects” and the words “with respect to non-regulatory function” from the quote would also mislead the reader as “it left out the fact that local boards have limited powers and responsibilities.”

The Complaints Board then turned to the response from the GWRC where it rejected the Complainant’s assertion the statement in the advertisement was misleading. It said the statement “captures the essence” of the draft proposal and that readers would not be misled by the absence of the word “expects”. The Advertiser was of the view the target audience - the Hutt News Readers - would have understood the claim to mean the Commission’s plan would see local boards in the Wellington region “allocated greater powers than their equivalents in Auckland.” It said “the whole article is about what the Commission expects would happen if its proposal were brought to fruition. The article is written using the word “will” as shorthand for “under the proposal being put forward by the Local Government Commission”. This is a standard journalistic technique that the audience would readily understand.”

The Complaints Board disagreed. It said while advocacy allowed Advertisers to impart information and opinions, when exercising that right, Advertisers had to clearly distinguish what was factual information.

It said the readers would rightly assume the statement within speech marks was a verbatim quote from the draft proposal, not what the Advertiser had decided was the “essence” of the Commission’s plan. The Complaints Board was of the view that by omitting the word “expects,” the statement appeared definitive and, as such, blurred the line between fact and opinion.

Consequently, the Complaints Board said the advertisement had the potential to mislead readers and, as such, had not been prepared with a due sense of social responsibility to consumers and to society. Therefore the Complaints Board ruled this part of the advertisement was in breach of Basic Principles 3 and 4 and Rules 2, and 11 of the Code of Ethics

Statement 2. “As the cornerstone of local democratic arrangements the boards will service the same communities as existing councils and effectively take over their local responsibilities, including parks, events, libraries, town planning, rural roads, pavements and cycle paths.”
The Complainant said the above statement would mislead readers into thinking the new local boards will “in effect, take over from the currents councils” however, they would not serve the same communities and will not set rates, control consent processes or make district plans.

The Advertiser said the statement is “substantially true: in fact, in relation to the target audience, it is true. The Lower Hutt (and Upper Hutt) constituencies will remain exactly the same. There are minor changes proposed in relation to some other boards. Wellington city is divided into three, but this will be almost entirely along the lines of the existing WCC wards, so the same communities will still be represented (except Tawa).The existing Wairarapa Councils will be combined into one, but again this will represent the same communities.”
The Complaints Board said constituents would still have local representation under the proposal and there were no boundary changes signaled for Lower Hutt. It noted this point was further clarified in the next sentence that stated: “Major projects that affect the region will be funded and managed by the proposed region-wide elected body of the Greater Wellington Council, which will undertake regional functions such as major infrastructure, water, regional spatial planning and economic development.’”

Therefore, the Complaints Board was of the view that this part of the advertisement was not misleading and as such, had been prepared with a due sense of social responsibility to consumers and to society. Consequently, the Complaints Board ruled this part of the advertisement was not breach of Basic Principles 3 and 4 and Rules 2, and 11 of the Code of Ethics.

Statements 3 - “The Hutt Valley faces challenges that are ‘regional in scale and impact and will require regional scale responses’.”

The Complainant said the Advertiser deliberately misquoted the draft proposal as the Commission described the challenges a “predominantly” regional in scale and impact. The Complainant said there are no references to the challenges being just for the HCC and the absence of the word “predominantly” suggests the Commission is implying the HCC is facing challenges that are regional in scale.

The Advertiser said the Complainant’s assertions were incorrect. It said the rider “predominantly” did not appear in the report. It also said the statement does not claim that only the Hutt Valley is facing challenges as Commission stated that “all the communities of Wellington” are facing such challenges, which includes Hutt Valley.

Statement 4 These [challenges] include “its aging population, uneven patterns of growth and expected decline, exposure to natural hazards, and the longer term consequences of climate changes and the sea level rise.”
The Complainant said “the actual quote from the Commission's draft proposal is on page 2 (paragraph 1.15) and 8 (paragraph 2.8) of Volume 1 or page 4 (paragraph 1.18) of Volume 2: [our emphasis]

Wellington is our capital city. It matters to our country It is at the heart of decision-making about the future of our country and our international standing. It is often the face the country shows the world when New Zealand hosts high-profile international events. Wellington faces particular region-wide long-term challenges relating to:

• its ageing population
• uneven patterns of growth in some areas and expected decline in others
• exposure to major earthquakes, tsunami, floods which could devastate the region
• the need to diversify the region's economy to build competitiveness, resilience and performance
• the longer term consequences of climate change and sea level rise.”

The Complainant said the advertisement misquoted the draft proposal to a point that it implied the Commission has identified HCC as having all of these challenges, when in fact it was a list of general challenges that the Wellington region faced.

The Complainant said the statement as it appeared in the advertisement gave a “completely different meaning” to that stated in the draft proposal. The Complainant said “It suggests Hutt Valley is expected to be in decline when the intended meaning in the draft proposal is that some areas will grow and others will decline.”

The Advertiser acknowledged the quote was not verbatim. However, it said readers would not be misled as the language used in the original report is similar and the fact remained; that the Hutt Valley “does indeed face these challenges.” The Advertiser said the Commission specifically identified that Lower Hutt has a declining working age population and also cited HCC’s own Urban Growth Strategy that stated: “It is therefore highly likely that the city will experience population loss over the next 20 years. This paints a worrying picture which will be highly detrimental to the City unless positive action is taken ...”

When considering Statements 3 and 4 together, the Complaints Board considered the misquotation of the draft proposal implied only the Hutt Valley faced issues rather than the wider Wellington region.

The Complaints Board also said the statement: “uneven patterns of growth in some areas and expected decline in others” appearing in the advertisement as “uneven patterns of growth and expected decline,” conveyed a different meaning to how it was stated in the proposal. It said this misquotation by the Advertiser strongly implied only Hutt Valley was expected to decline which was a misrepresentation of the findings in draft proposal that was likely to mislead and deceive readers.

Consequently, the Complaints Board said statements 3 and 4 were likely to mislead readers and as such, and not been prepared with a due sense of social responsibility to consumers and to society. Therefore the Complaints Board ruled this part of the advertisement was in breach of Basic Principles 3 and 4 and Rules 2, and 11 of the Code of Ethics

Statement 5. “After extensive analysis the Local Government Commission concluded that councils in their current form are ill-equipped to meet these challenges over the next 30 years ....”

The Complainant said the term “ill-equipped” did not appear in Volume 1 or 2 of the Commission’s draft proposal, nor did it come to this conclusion.

The Advertiser responded: “This characterisation is fully justified. There are many examples in the Local Government Commission’s draft proposal (volume 2) to support GWRC’s statement that the Commission has concluded that councils in their current form are ill-equipped to meet the challenges of the future.”

The Complaints Board noted the advertisement listed a number of factors identified by the Commission that included, but were not limited to: “administrative and regulatory frameworks which differed between councils without apparent reason and thereby frustrated businesses and residents and slowed the speed of business development and increasing difficulty in attracting and retaining the high level professional staff that are necessary to tackle the issues facing communities; high transaction costs associated with multiple council engagement in important aspects of regional decision-making, including slow and expensive processes, the inability to make trade-offs, duplication of effort, sub-optimal decisions, and a high propensity to re-litigate issues (perhaps best illustrated by the prolonged debate over Transmission Gully and alternatives).”
The majority of the Complaints Board said the full list of factors identified by the Commission justified the Advertiser’s suggestion the council was “ill-equipped” to meet future challenges. Therefore, the majority of the Complaints Board said the Advertiser’s assertions on the basis of the Commission’s analyses was fair and provided for under advocacy and said the above statement was not likely to mislead readers.

Consequently, the majority of the Complaints Board ruled the Advertiser’s interpretation in this part of the advertisement was provided for under the rules of advocacy and had been prepared with a due sense of social responsibility to consumers and to society. Therefore the Complaints Board ruled this part of the advertisement was in breach of Basic Principles 3 and 4 and Rules 2, and 11 of the Code of Ethics.

A minority disagreed. It noted the Commission itself did not use such a term. While it acknowledged the Commission’s findings showed the HCC and other Councils in the region were not in an optimal position, it said the use of the term ill-equipped was not supported by the evidence before it.

Therefore, the minority of the Complaints Board said the Advertiser had made a misleading characterisation of the Commission’s conclusions that went beyond the provisions of advocacy. As such, the minority of the Complaints Board said the advertisement had not been prepared with a due sense of social responsibility to consumers and to society. Therefore the minority said this part of the advertisement was in breach of Basic Principles 3 and 4 and Rules 2, and 11 of the Code of Ethics.

However, in accordance with the majority, the Complaints Board ruled to Not Uphold this part of the complaint.
Statement 6: “As the Commission points out, all corners of the region could benefit from a more integrated approach to managing its economic and environmental assets – including through a more robust approach to spatial planning – in contrast to the status quo of nine councils overseeing 131 plans.

The Complainant was of the view the Advertiser had again misleadingly misquoted the Commission’s report and said the draft proposal does not refer to “131 plans” as stated in the advertisement. Rather, it noted the report said there are “currently over 300 plans administered by the regional councils.” The Complainant said the inference of this statement was a “more robust approach to spatial planning will reduce the need for so many plans.”

The Complaints Board noted the Advertiser acknowledged there were 321 plans across the region, not 131. It also noted the Advertiser had taken steps to ensure the error was not replicated in future publications. However, the Advertiser said the advertisement emphasised a more integrated approach would be more beneficial that “a plethora of plans across the region.”

The Complaints Board agreed. It was of the view a reader’s overall takeout of this statement would be that the proposed reform would result in a more unified approach to planning. The Complaints Board said the referral to only 131 plans instead of over 300 was not a significant issue, nor would the Advertiser’s inference be likely to mislead of deceive the reader. As such, the Complaints Board said the advertisement had been prepared with the requisite sense of social responsibility to consumers and to society and ruled this part of the advertisement was not in breach of Basic Principles 3, 4 or Rules 2 or 11 of the Code of Ethics.

Statement 7: “... For example, the Commission reported that across the Wellington region, “almost 50% of existing water pipes and around 40% of wastewater pipes are in poor or very poor condition and the largely unbudgeted cost of replacing them is between $1.7 and $2.6 billion.” This shortfall is proving beyond the reach of some councils including the Hutt City ...,
Statement 8: continued “...which the Auditor General has ranked among New Zealand’s three poorest performing councils in terms of infrastructure spending (Auditor General, Local Government: Results of the 2012-2013 audits Part III).

The Complainant said that while the Advertiser had quoted directly from the Commission’s draft proposal, it had distorted the Commission’s meaning and said the “the quote is relevant to waste water and water pipes across the whole of the Wellington region and not just for HCC.”

The Complaints Board then turned to the response from the Advertiser and noted where it stated: “...the Commission’s report explains that it was based on research commissioned “by reputable independent experts MWH Global. The GWRC had no reason to question it. The GWRC was reporting the findings of an independent statutory commission that had produced a four-volume report based on expert research. The GWRC is fully entitled to rely on authoritative sources in its publication.”

The Advertiser also said the Complainant’s 2012-2022 Long Term Plan itself identified unbudgeted costs as a significant problem ...”

The Complainant said “There is no basis in the draft proposal or elsewhere for the claim of a “’ shortfall nor that replacement costs when due are ‘beyond the reach of the HCC’. The use of wider statistics is misleading and deceives the reader into believing the HCC faces a situation more dire that it really is ... According to HCC over 80 per cent of all storm water, waste water and water supply pipes are in 'good' or 'very good' condition, with the rest scheduled for fixing and replacement. The quotes from the draft proposal on the pipes derives from Tables 1.10 and 1.11 of the MWH report "Survey Asset Management Activities Wellington Region Local Authorities (7 November 2013)10. Table 1.10 (below) shows HCC has the second lowest percentage of wastewater assets which are in "poor to very poor" condition. The HCC sits in the middle of Table 1.11 ...”

The Complainant said there was “absolutely no shortfall in the HCC’s budget” and this was shown in an email to the Complainant from the Auditor General. It also said the Auditor General had not ranked Hutt City Council in the way it is stated in the advertisement and the council had confirmed this with the Auditors.”



Email from the Auditor General

In order to assess Statements 7 and 8, the Complaints Board turned to the email from the Auditor General to the Complainant and noted where it stated, in part:

“In Part 3 of our report to Parliament, on the results of the 2012/13 audits of local government, we did not use the words “poor performing” in relation to Hutt City Council or rank councils for infrastructure spending. We note that the comment about Hutt City Council in paragraph 3.77 of the report needs to be read in context of Part 3 as a whole.

Part 3 of the report looks at indicators across the sector in 2012/13, and trends when compared other audit years. In particular Part 3 looks at operating revenue and rates revenue, operating expenditure and capital expenditure. This information is used to present a picture of sector performance to Parliament and to communities.

Hutt City Council is mentioned in context of the section ‘Ability to invest in the future’, which focuses on ‘capital expenditure to depreciation’, ‘gross debt to total assets’ and ‘net cash flows from operations to capital expenditure’.

We noted that Hutt City Council was one of three councils that were identified as having expenditure to depreciation of less than 100%, and we said that a consistently low percentage can be an indicator of whether a local authority has the ability to maintain its assets in the long-term.

We note too that the 2015-25 LTPs that will be produced next year will give the latest picture of individual councils infrastructure strategies and spending proposals.”
The Complainant said while the council was ranked in the lower three on a table produced by the Auditor General, “there is no indication whatsoever, that this means the Council is a poor performing council. In contrast, it could be an indication of a very effective infrastructure management programme. The primary reason for the position of Council on the table ... is the age profile of the Councils assets and the continued good performance of the Council’s pipe network.”

The Advertiser said the information in the email justified its statements.

The Complaints Board disagreed. It noted where the email from the Auditor General stated: “... we did not use the words “poor performing” in relation to Hutt City Council or rank councils for infrastructure spending” and that the comment about Hutt City Council in paragraph 3.77 of the report “needs to be read in context of Part 3 as a whole.”

The Complaints Board said Statements 7 and 8 were opinion statements presented by the Advertiser to the reader as fact. The Complaints Board said by misattributing the information in the email from the Auditor General, and misinterpreting wider information from the proposed draft plan, the Advertiser had blurred fact with opinion in such a way as to mislead readers of the advertisement. As such, the Complaints Board said the Advertiser had breached the provisions of advocacy and the advertisement not been prepared with a due sense of social responsibility to consumers and to society. Therefore the Complaints Board ruled this part of the advertisement was in breach of Basic Principles 3 and 4 and Rules 2, and 11 of the Code of Ethics.

Denigration
Lastly, the Complaints Board turned to the Complainant’s view that the misleading statements in the advertisement had denigrated the HCC’s reputation. However, the Complaints Board was of the view that robust opinion and contra view – even if misleading – did not constitute denigration. Rather, it said misleading statements in advocacy advertising were more appropriately and comprehensively dealt with under Rule 11. Therefore, the Complaints Board ruled none of the statements that were subject to the complaint denigrated competitors and ruled the advertisement was not in breach of Rule 8 of the Code of Ethics.

Summary

In summarising its findings, the Complaints Board said that expression of opinion in advocacy advertising was an essential and desirable part of the functioning of a democratic society. However, it emphasised that as with all rights, there were fetters, and freedom of expression was not absolute. The Advertising Codes of Practice did fetter the right granted by Section 14 to ensure there is fair play between all parties on controversial issues.

It noted where the Advertiser added: “The Advocacy Principles accept that ‘in advocacy advertising and particularly on political matters, the spirit of the code is more important than technical breaches.” The Complaints Board agreed. It ruled Statements 2, 5 and 6 were not in breach of the Code of Ethics.
However, it said in Statements 1, 3, 4, 7 and 8 the Advertiser had misrepresented and misquoted the Commission’s draft proposal to the point that they went beyond technical breaches. In these instances, the Complaints Board found the Advertiser had presented its own assumptions and opinions as fact which was misleading and was likely to exploit the lack of knowledge of the reader. As such, the Complaints Board ruled these statements were in breach of Basic Principle 3, and Rules 2 and 11 of the Code of Ethics. Consequently, the Complaints Board ruled these parts of the advertisement had not been prepared with a due sense of social responsibility, breaching Basic Principle 4.

Accordingly, the Complaints Board ruled the complaint was Upheld (in part).



DESCRIPTION OF ADVERTISEMENT

The advertisement by the Greater Wellington Regional Council appeared in the Hutt News community newspaper on 16 December 2014. The advertisement consisted of an entire page made up from separate articles promoting the Local Government’s Commission’s draft proposal for the reorganisation for the Wellington region. The advertisement was entitled "Our Region: News from the Greater Wellington Regional Council and included a list of regional councillors and a diagram of the proposed governance framework.


COMPLAINT FROM LEGAL COUNSEL FRANKS OGILVIE ON BEHALF OF HUTT CITY COUNCIL

1. This complaint is submitted for our clients, the Hutt City Council ("HCC") on behalf of their citizens. Please address all correspondence to the sender.

2. This complaint is about an advertisement (enclosed) by the Greater Wellington Regional Council ("GWRC") published on page 22 of the Hutt News on 16 December 2014 ("the advertisement"). The advertisement promotes the Local Government Commission's draft proposal for reorganisation of the Wellington region ("the draft proposal").

3. In our opinion the advertisement breaches of the Code of Ethics: Basic Principles 1, 3, 4, and Rules 2, 8 and 11. The advertisement:

(a) Is likely to deceive or mislead people who will be making submissions on the draft proposal by suggesting:

1. Local boards will have the same responsibilities as the current councils under the proposal
2. Wellington local boards will have greater powers than Auckland local boards under the proposal
3. Hutt Valley is in decline
4. HCC cannot afford to fix aging water pipes and waste water pipes
5. HCC is "ill-equipped to meet these challenge"
6. HCC is a "poor performing" council

(b) Promotes ideas which are untrue and not substantiated by fact; and

(c) Does not clearly distinguish opinion from factual information.

The HCC are not averse to other councils communicating their opinion of the draft proposal to their citizens. They expect and hope there will be a vigorous expression of views on the pros and cons of the draft proposal. But they do not tolerate use by the GWRC of advertisements to deceive readers. As well as breaching your code, it is contrary to the duties of local authorities and their members to act in good faith and with honesty and integrity.

ADVERTISEMENT

4. The newspaper advertisement by GWRC was on page 22 of the Hutt News on 16 December 2014. It is an entire page made up of several articles, a list of regional councillors and a diagram of the proposed governance framework. The page is entitled "Our Region: News from the Greater Wellington Regional Council". It is a paid article by GWRC.

5. There are two substantial items: "Eight Local Boards proposed for Wellington Region" and "Meeting the Hutt Valley's long term challenges".

6. It advertises the Commission's draft proposal. It informs readers when they need to make submissions and how to do this. The title "Meeting the Hutt Valley's long term challenges" sets the scene for the main item, "Meeting the Hutt Valley's long term challenges", which is a mix of quotes from the Commission's draft proposal interlaced with one-sided comments from GWRC.

7. The advertisement is both a public notice and an expression of opinion. It is by a local authority. Newspaper advertisements by local authorities have been the subject of other complaints to the ASA.¹

8. Some of the quotes have been taken out of context or changed to mean something quite different to the intended meaning in the draft proposal. Misquoting to give a different meaning is simply dishonest. Misleading readers about HCC in order to promote the Commission's draft proposal is inexcusable. Examples of the misleading or inaccurate quotes are in the Appendix.

CONTEXT

9. The same issue of the Hutt News has a similar advertisement from HCC on page 17 (enclosed). HCC did not know in advance of the GWRC's advertisement. HCC sets out to give its citizens a balanced notice of the draft proposal and the various views on it.

10. HCC sees the GWRC publication as part of a pre-planned propaganda scheme. GWRC has published almost identical advertisements in: (both enclosed)

(a) Kapiti Observer (page 13, 18 December 2014); and

(b) Upper Hutt Leader (page 12, 17 December 2014).

11. These advertisements included the same article "Eight Local Boards proposed for Wellington region" and therefore were also inaccurate and misleading. They have the same diagram and notices about "What happens now" and "Local leaders to direct transition". Instead of the article "Meeting the Hutt Valley's long term challenges" they had "Meeting Upper Hutt's long term challenges" (in the Upper Hutt Leader) and "Meeting Kapiti Coast's long term challenges" (in the Kapiti Observer). Both of these also included statements likely to mislead readers. This complaint does not include these advertisements.

12. In comparison, the GWRC's advertisement in the Kapi Mana (page 13, 16 December 2014) (enclosed) is more balanced and does not have so many inaccuracies or misleading statements about Porirua City Council. This may be because Porirua has publicly supported the Commission's draft proposals, while the councils for Kapiti, Upper Hutt and Hutt City have either publicly opposed it or not shown a preference yet.

13. The subject of the advertisement is the draft proposal released by the Commission on 4 December 2014 entitled "Draft Proposal for Reorganisation of Local Government in Wellington". The draft proposal was in response to two applications for reorganisation received by the Commission:

(a) application from three Wairarapa District Councils (Masterton District Council, Carterton District Council, South Wairarapa District Council) on 22 May 2013.

(b) an application from the Greater Wellington Regional Council for reform of local authorities in the wider Wellington Region on 21 June 2013

14. The draft proposal closely resembles the proposal made by GWRC in its application. It is for a new unitary authority, the Greater Wellington Council, which would take over the functions of the existing nine councils: Masterton District Council; Carterton District Council; South Wairarapa District Council; Upper Hutt City Council; Hutt City Council; Wellington City Council; Porirua City Council; Kapiti Coast District Council, and the Greater Wellington Regional Council.

15. The HCC made an alternative application for either an enhanced status quo or alternatively for four unitary authorities to replace the existing councils. The GWRC would be disestablished under this second option.

16. Public consultation on the draft proposal is now underway. Submissions close on 2 March 2015. The Commission will then decide whether to issue the draft proposal as a final proposal, issue a modified draft proposal as a final proposal, do a new draft proposal or not issue a final proposal at all (Schedule 3, clause 21(1) Local Government Act 2002). If a final proposal is released a poll may be demanded by a petition of 10% or more of affected electors enrolled in any one of the districts in Wellington region. If the petition is successful a poll will be held. If more than 50% of valid votes case in the poll are for the final proposal then it goes ahead. If 50% or less of the votes are against it then it does not go ahead.

17. The advertisements by both GRWC and HCC (and any other affected council) are likely to influence submissions. We think the advertisement by GWRC was likely timed to leave citizens with an impression intended to sink into consciousness and public discussion over the holiday period, with limited opportunity for prompt and effective correction or rebuttal. There has only been one issue since 16 December. Hutt News is circulated widely. The advertisement could be the first time readers have heard about the draft proposal. First impressions are important as they colour any later impressions. If the GWRC continues to make such misleading and deceptive advertisements over the next few months many of the submissions made on the draft proposal will be based on untruths and wrong impressions.

BREACH OF CODE OF ETHICS — BASIC PRINCIPLE 1

18. Basic Principle 1 of the Code of Ethics states

All advertisements must comply with the laws of New Zealand.

19. GWRC is required to follow the Local Government Act 2002 and guidelines by the Office of the Auditor General when making advertisements or doing any public communications.

Local Government Act 2002

20. The principles relating to local authorities (including both GWRC and HCC) in s 14 of the LGA require a local authority in performing its role to:

(a) a local authority should— (i) conduct its business in an open, transparent, and democratically accountable manner;

(b) a local authority should make itself aware of, and should have regard to, the views of all of its communities;

21. The GWRC knows that most of its community is likely to begin from a position disfavouring the changes it seeks. Prior to the notification of the draft proposal HCC commissioned a survey of residents across the affected area. Over 75 per cent across the Wellington region and over 80 per cent in the Hutt said they would prefer to keep the status quo.²

22. The GWRC is not conducting its business in an accountable manner or having regard to the views of all of its community if it is publishing statements which are deceptive and misleading

23. Local authorities are required to have a code of conduct for their members (Schedule 7, clause 15 LGA). The Code of Conduct for GWRC members includes as a principle of good governance:³

(a) Honesty and integrity - Members should not place themselves in situations where their honesty and integrity may be questioned, should not behave improperly and should on all occasions avoid the appearance of such behaviour.

24. The GWRC councillors should not have authorised an advertisement which is deceptive. If it was not referred to them for authorisation, the officers responsible should not have acted in a way that could bring the GWRC into disrepute.

25. The process for reorganisations is in Schedule 3. Subpart 3 of Schedule 3 is on advertising. Local authorities cannot do any advertising after a final proposal is released (cl 30). They can, however, publish material that: (cl 31(1)):

(a) does not expressly or impliedly promote or oppose the final proposal; but

(b) contains factual or referential material presented—

(i) in a balanced way; and

(ii) to assist electors considering promoting or signing a petition for the purposes of subpart 2 or voting in a poll to make a better-informed decision.

26. Subpart 3 is relevant only to final proposals. The advertisement in question is in relation to a draft proposal. However, given the principles in s 14 andthe context of Subpart 3 of Schedule 3 of the LGA it is implied that councils affected by a reorganisation proposal should have regard to the views of their communities who may be for and against a proposal. They should be open and transparent and not use devious means to influence their communities.

Office of the Auditor General Guidelines

27. The Office of the Auditor-General's guidelines "Good Practice for Managing Public Communications by Local Authorities" (April 2004) recommends that every council adopt a communications policy which embraces these guidelines. The guidelines are not binding on councils. However they codify standards of propriety which GWRC should have followed and which the ASA is entitled to take into account in considering the boundary appropriate here between advocacy and informative advertisements. Principle 6 and 7 are particularly relevant to the advertisement:

Principle 6 —

Factual and explanatory information should be presented in a way that is accurate, complete, fairly expressed, and politically neutral.

Principle 7 —

Communications about matters that are under consideration by the Council, or are otherwise a matter of public debate, should present the issues in an evenhanded and non-partisan way.

BREACH OF CODE OF ETHICS — BASIC PRINCIPLE 3 AND RULE 2

28. Basic Principle 3 of the Code of Ethics states:

No advertisement should be misleading or deceptive or likely to mislead or deceive the consumer.

29. Rule 2 states:

Truthful Presentation - Advertisements should not contain any statement or visual presentation or create an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, is likely to deceive or mislead the consumer, makes false and misleading representation, abuses the trust of the consumer or exploits his/her lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading).

30. The statements of fact in the advertisement are variously false, or framed deceptively and likely to mislead. Examples of these misleading and false statements are in the Appendix.

31. There is strong evidence of deliberately misleading readers and deceptive statement in the advertisement. HCC is willing to consider evidence in support of the statements made in the advertisement if GWRC can supply it, but in its absence we urge that GWRC's conduct get the highest level of censure.⁴

BREACH OF CODE OF ETHICS — BASIC PRINCIPLE 4

32. Basic Principle 4 of the Code of Ethics states:

All advertisements should be prepared with a due sense of social responsibility to consumers and to society.

33. This advertisement deals with a major change to local governance in the Wellington region. If the draft proposal is eventually implemented it will change the way Wellington citizens are represented in local matters, the level of rates and many other aspects of local government services and responsibilities.

34. By making statements which are misleading and deceptive, the GWRC is not acting in a socially responsible manner. People reading the advertisement may be worried HCC is in financial strife and the infrastructure in poor condition. They will be misinformed on the draft proposal. They may decide the draft proposal is the only option based on these misleading and factually incorrect statements.

35. Complaint number 14/453 was on the advertisement by the Internet Mana Party on Youtube which includes video footage of an event featuring "Kim Dotcom Internet Party Founder and Visionary". Those at the event reacted to a number of statements from Mr Dotcom and then chanted "Fuck" John Key" a number of times. The Complaints Board agreed that as the advertisement was in breach of Rule 4 of the Code of Ethics, it had not been prepared with a due sense of social responsibility to consumers and society and was also in beach of Basic Principle 4 of that Code.

36. Although the advertisement in question does not use such emotive language as the Mana Party advertisement, it does attempt to sully the reputation of HCC without foundation and is recklessly indifferent to the effect on civic pride and confidence of the Hutt people with HCC.

BREACH OF CODE OF ETHICS — RULE 8

37. Rule 8 of the Code of Ethics states:

Denigration - Advertisements should not denigrate identifiable products or competitors.

38. The meaning of "denigrate" is "To blacken, sully, or stain (character or reputation); to blacken the reputation of (a person, etc.); to defame."⁵

39. The GWRC by putting the advertisement in the Hutt News and entitling the main article "Meeting the Hutt Valley's long term challenges" is clearly trying to persuade Hutt residents that their council is in strife. It is attempting to blacken FICC's reputation. GWRC plainly thinks it is in competition with HCC in terms of persuading communities to submit for or against the draft proposal.

40. In Complaint number 07/283 an advertisement for Miles Toyota was published in The Press newspaper, with the headline "COMPARE OUR VALUE", the Toyota Logo and the words "DARE TO COMPARE". The advertisement showed a comparison of prices to replace front brake pads using four local providers. One of these providers gave evidence the quotes were not accurate. The Complaints Board decided that as the advertisement could mislead consumers, it also denigrated identifiable competitors and was therefore in breach of Rule 8.

41. In comparison the advertisement in question does not compare HCC with GWRC. But it does include misleading statements intended to make HCC sound like a poor performing council in financial strife.

BREACH OF CODE OF ETHICS — RULE 11

42. Basic Principle 1 of the Code of Ethics states:

Advocacy Advertising - Expression of opinion in advocacy advertising is an essential and desirable part of the functioning of a democratic society. Therefore such opinions may be robust. However, opinion should be clearly distinguishable from factual information. The identity of an advertiser in matters of public interest or political issue should be clear.

43. The advertisement mixes expressions of opinion with factual information. It is advocating for the Commission's draft proposal.

44. The quote below shows how the advertisement mixes fact with opinion. The facts are the quote from the draft proposal on the pipes. The opinion is "This shortfall is beyond the reach of some councils including Hutt City Council". This comes across as a fact. If GWRC tries to justify its behaviour by claiming it is really an opinion of the GWRC then it should have made that clear. But in any event it would be a disguised claim as to the facts expressed as opinion to reduce culpability on challenge. That kind of conduct is reprehensible under the other grounds of objection.

For example, the Commission reported that across the Wellington region, "almost 50% of existing water pipes and around 40% of wastewater pipes are in poor or very poor condition and the largely unbudgeted cost of replacing them is between $1.7 billion and $2.6 billion". This shortfall is proving beyond the reach of some councils including Hutt City, which the Auditor General has ranked among New Zealand's three poorest performing councils in terms of infrastructure spending (Auditor General, Local Government: Results of the 2012-2013 audits Part Ill).

CONCLUSION

45. If the ASA finds in favour of this complaint, HCC wants the GRWC to:

(a) Publish a correction and apology in the Hutt News acknowledging that it has breached the ASA Codes as well as being deceptive;

(b) Correct any misleading or deceptive statements; and

(c) Pay a reasonable contribution to HCC costs of getting correction.

46. We realise you do not have authority to order such remedies. That does mean you are precluded from expressing your view on proper conduct by an advertiser at fault.

47. There is urgency to this complaint. The public consultation period closes on 2 March 2015. Please let us know if you require any further information.

¹ For example, Complaint no. 13/044 by M. Gibson on an advertisement by Wellington City Council on a proposed rezoning change

² Wellington City Council "Survey shows over 75% of us don't want our councils to amalgamate" (Press release, 3 November 2014) available at http://wellington.scoop.co.nz/?p=72441. The survey report can be found at http://www.huttcity.govt.nz/Documents/Your Council/2014 Public Opinion report.pdf

³ The GWRC Code of Conduct for councillors is available at http://www.2w.govt.nz/councillor-code-of-conduct/

⁴ The onus will be on GWRC to highlight evidence in support of the advertisement: Complaint no. 14/460 "The Appeal Board considered a number of statements in the advertisement were presented as statements of fact. This meant the Appeal Board needed to consider whether the Advertiser had satisfactorily substantiated those claims. The Appeal Board emphasised when claims were challenged, the onus was on the Advertiser to highlight supporting evidence in support of the statements made."

⁵. Oxford English Dictionary online

APPENDIX: INACCURACIES, FALSE AND MISLEADING ELEMENTS OF THE ADVERTISEMENT

Examples of inaccuracies and misleading statements in the article "Eight Local Boards proposed for Wellington region"

1. The article "Eight Local Boards proposed for Wellington region" deliberately misquotes the draft proposal. An example is:

"The Wellington Local Boards will have greater power than the Auckland Local Boards through the proposed allocations and decision making responsibilities," the Commission wrote.

2. We have searched the Commission's draft proposals (both volumes)s, the Commission's Fact Sheet', press releases on 4 December and cannot find this quote. We assume the real quote is from page 6 (paragraph 1.28) of Volume 1 is: [our emphasis]

The Commission expects the Wellington local boards will have greater power than Auckland local boards with respect to non-regulatory functions, for example, functions outside the consents and permits of the Resource Management Act 1991 or Building Act 2004. This is achieved through the proposed allocations and delegations of decision-making responsibilities to the local boards. Auckland Council has kept more functions within CCOs (council-controlled organisations) than Wellington, which limits the ability of local boards to influence decisions such as those involving local transport. Auckland Council also does not appoint councillors to local boards, but this is proposed for Wellington to improve communication and coordination.

3. The removal of the word "expects" is deliberately deceptive. It changes the meaning from something like "may possibly" to "will definitely". The removal of the words "with respect to non-regulatory functions" is also deceptive. It leaves out the fact local boards have limited powers and responsibilities.

4. A reader would assume this quote is directly taken from the draft proposal and there is no question that the proposed Wellington local boards will be more powerful than those in Auckland. The powers of local boards are set in s 48H of the LGA. The Commission is only able make the initial allocation of decision-making under Schedule 3, clause 42A. Although the Commission may allocate more responsibilities to the proposed Wellington local boards than the Auckland local boards have, this may change in the future. This is shown by how local boards in Auckland have collectively protested to the Mayor Len Brown over their growing lack of power and funding

5. Another example of an inaccuracy is where the same article states: [our emphasis]

1. As the cornerstone of local democratic arrangements the boards will service the same communities as existing councils and effectively take over their local responsibilities, including parks, events, libraries, town planning, rural roads, pavements and cycle paths.

6. To start with, the proposed local boards will service different communities to the current councils. For example, the Porirua Tawa local boards would service communities who are currently separated under Porirua City Council and Wellington City Council.
7. Further, a reader would think from this statement that local boards would, in effect, take over from the current councils. This is wrong and misleading. Local responsibilities of the current councils include setting rates, resource consent processes, consulting on and making district plans. The local boards will not be able to set rates, will not participate in the resource consent processes and will only have limited participation in the planning processes. There are many differences between the responsibilities of local authorities and those of local boards.

Examples of inaccuracies and misleading statements in the article "Meeting Hutt Valley's long term challenges"

8. There are several examples of inaccuracies in the item "Meeting Hutt Valley's long term challenges". For example, where it says:

The Hutt Valley faces challenges that are 'regional in scale and impact and will require regional scale responses" according to the Local Government Commission.

9. This suggests the draft proposal is saying the HCC is facing large challenges which are "regional in scale". In fact the Commission's report states on page 47 (Schedule D] of Volume 1: [our emphasis]

The key advantages of the proposal are that it:

recognises that the people of the whole Wellington Region share a strong community of interest as well as recognising the distinct more local communities of interest within the region

offers the greatest scope to address the significant future issues facing the communities of Wellington relating to:

• the provision and maintenance of infrastructure networks
• the consequences of demographic trends
• the desire for more effective economic development
• the need to manage the risks of natural hazards and respond effectively to hazard events
• the ongoing pressures for more effective and sophisticated and environmental management.

These issues are predominantly regional in scale and impact and will require regional scale responses.

10. There are no references to the challenges just being for HCC. The advertisement leaves out the word "predominantly". Misquoting to give a different meaning is simply dishonest.

11. The statement above carries on: [our emphasis]

These include "its ageing population, uneven patterns of growth and expected decline, exposure to natural hazards, and the longer term consequences of climate changes and sea level rise.

12. The actual quote from the Commission's draft proposal is on page 2 (paragraph 1.15) and 8 (paragraph 2.8) of Volume 1 or page 4 (paragraph 1.18) of Volume 2: [our emphasis]

Wellington is our capital city. It matters to our country It is at the heart of decision-making about the future of our country and our international standing. It is often the face the country shows the world when New Zealand hosts high-profile international events. Wellington faces particular region-wide long-term challenges relating to:

• its ageing population
• uneven patterns of growth in some areas and expected decline in others
• exposure to major earthquakes, tsunami, floods which could devastate the region
• the need to diversify the region's economy to build competitiveness, resilience and performance
• the longer term consequences of climate change and sea level rise.

13. The advertisement misquotes the draft proposal. It suggests the Commission has identified HCC as having all of these challenges, when in fact it is a list of general challenges for the Wellington region. Instead of saying "uneven patterns of growth in some areas and expected decline in others" it says "uneven patterns of growth and expected decline". This has a completely different meaning. It suggests Hutt Valley is expected to be in decline. The intended meaning in the draft proposal is that some areas will grow and others will decline.

14. To be more accurate, the GWRC could have quoted from the draft proposal where it says at page 9 (paragraph 2.13) of Volume 1:

• the particular challenges the Hutt Valley and Wairarapa communities face with forecast declines in their working-age populations, but substantial required investment in infrastructure

15. The same article carries on: [our emphasis]

After extensive analysis the Local Government Commission concluded that councils in their current form are ill-equipped to meet these challenges over the next 30 years.

16. We do not know where the GWRC got this conclusion from. Volumes 1 and 2 of the draft proposal do not use the word "ill-equipped" or come to this conclusion. HCC plan to submit on the fact that there is very little problem definition in the draft proposal which justifies such a drastic change.

17. If the GWRC was to accurately reflect the Commission's conclusion on the need for change it could have used this quote from page 5 (paragraph 1.26) of Volume 1:

On balance, the case for change in Wellington is not as compelling as it was in Auckland. Wellington does not face the growth pressures of Auckland. Nor does it hove the level of dysfunction between current councils that was evident in Auckland prior to amalgamation. None of the current councils is in a situation of immediate crisis or at risk of short-term failure

18. This suggests the Commission does not see a great need for urgent change, at least in the short term.

19. Another example of inaccuracies is where the article says:

As the Commission points out, all corners of the region could benefit from a more integrated approach to managing its economic and environmental assets — including through a more robust approach to spatial planning — in contrast to the status quo of nine councils overseeing 131 plans.

20. This is not a direct quote, but rather a summary of what the Commission has pointed out in the draft proposal. The problem is the draft proposal does not use these words. The draft proposal does not refer to "131 plans" at all. At page 15 of Volume 2 it states:

The proposed Greater Wellington Council also provides a significant opportunity to simplify and streamline the number of plans and planning documents that are required to govern Wellington. There are currently over 300 plans administered by the region's councils.

21. The inference from the advertisement is that having a more robust approach to spatial planning will reduce the need for so many plans. In fact, the Wellington Region Growth Strategy already contains a strong spatial planning dimension which is acknowledged by the Commission. Having spatial planning does not mean there is any need for less regional plans or district plans. A spatial plan has quite a different function that a regional or district plan under the LGA. The advertisement misleads the reader and distorts the truth.

22. An example of a misleading statement which is directly aimed at HCC is where the article states: [our emphasis]

"After extensive analysis the Local Government Commission concluded that councils in their current form are ill-equipped to meet these challenges over the next 30 years."

"For example, the Commission reported that across the Wellington region, "almost 50% of existing water pipes and around 40% of wastewater pipes are in poor or very poor condition and the largely unbudgeted cost of replacing them is between $1.7 billion and $2.6 billion". This shortfall is proving beyond the reach of some councils including Hutt City, which the Auditor General has ranked among New Zealand's three poorest performing councils in terms of infrastructure spending (Auditor General, Local Government: Results of the 20122013 audits Part Ill).

23. The advertisement quotes directly from the Commission's draft proposal but distorts the meaning. The quote is relevant to waste water and water pipes across the whole of the Wellington region and not just for HCC. The purportedly factual sentence after the quote is false. There is no basis in the draft proposal, or elsewhere, as far as HCC is aware, for the claim of a "shortfall" nor that replacement costs when due are "beyond the reach" of HCC. The use of wider statistics is misleading and deceives the reader into believing the HCC faces a situation more dire than it really is.

24. The inference of a looming infrastructure crisis in the Hutt is unsupported. According to HCC over 80 per cent of all storm water, waste water and water supply pipes are in 'good' or 'very good' condition, with the rest scheduled for fixing and replacement.

25. The quotes from the draft proposal on the pipes derives from Tables 1.10 and 1.11 of the MWH report "Survey Asset Management Activities Wellington Region Local Authorities (7 November 2013)10. Table 1.10 (below) shows HCC has the second lowest percentage of wastewater assets which are in "poor to very poor" condition. The HCC sits in the middle of Table 1.11 (below).

26. The HCC has an annual programme and budget to deal with the scheduled replacements and are well able to manage that. According to HCC:

Engineers regularly check the condition of the pipe networks, grading them on a scale of 1 to 5, where 1 is excellent and 4 and 5 need replacing.

Grade 4 and 5 pipes are replaced, or upgraded to ensure uninterrupted service to ratepayers and residents.

Currently 68 percent of Hutt City's wastewater pipes (by length) are graded 1 to 3, which means that around one-third are in category 4 and 5 and need replacing. Hutt City is spending just over $3 million annually on replacing category 4 and 5, and some category 3 pipes. That level of spend will continue for another 10 years, or so.

In 20 years' time, the annual spend on waste water pipes will drop below $2 million.

90 percent of storm water pipes are category 3 or better. Over BO percent are category 1 and 2, and storm water pipes often outlast their expected lives. This means very low levels of storm water pipe renewal is likely over the next 35 years.

The situation with fresh water supply pipes is intermediate between waste water and storm water. Nearly 75 percent of the pipes are rated grade 3 or better, and the majority are grade 1 and 2. Hutt City is currently spending $2 million annually in this area. After 2030 this steps up to just under $3 million before dropping away from about 2050.

27. The quoted words on the cost of replacing waste water and water pipes being between $1.7 billion and $2.6 billion are simply wrong. The Commission has compared the total replacements they say are needed within the next 30 years with the total budget provided for only 10 years when it should have been for 30 years. Even a simple extrapolation of the ten year budgets across the 30 year replacement period reveals there is little cause for concern, at least for HCC.

28. The statement "The shortfall is proving beyond the reach of some councils including Hutt City..." is a false, misleading and deceptive statement. Firstly, there is absolutely no shortfall in Hutt City Council's budget provision for infrastructure replacement. This can be confirmed by the Council's auditors and professional asset managers. Secondly, Hutt City Council has substantial funding capacity that is far more than is adequate to accommodate any unexpected additional infrastructure related costs. The extent of the Council's surplus funding capacity can be confirmed by Council's credit rating agency.

29. The fact that this is a false statement by GWRC would have been readily apparent to the experienced senior managers within their organisation.

30. The GWRC may claim that it is entitled to use and republish Local Government Commission material without responsibility for its accuracy. That could be the case ordinarily, but in this case the Commission's error is obvious. GWRC has claimed senior responsibility for water matters in the region. It has many experts and planners. It purports to know this area well. Yet it has retailed an elementary falsehood, obvious to HCC on casual review. GWRC must know HCC has the replacement of aged waste water and water pipes in hand. HCC plans to raise the error with the Commission. It is among a long list of evidences of incompetence in the Commission's draft proposal. But HCC never expected GWRC to make cynical propaganda capital out of the obvious error.

31. The advertisement carries on to suggest the Auditor General has ranked HCC among New Zealand's three poorest performing councils in terms of infrastructure spending in their report "Local government: Results of the 2012/2013 audits'''.

32. This is also misleading and deceptive. The statistics in the Auditor-General's report deal with the reinvestment needed to improve asset capability. Hutt City assets are depreciating properly in accounting terms. But that does not mean capital expenditure must match depreciation for age since construction. Prudent and non-wasteful asset management schedules replacement according to service conditions which is exactly what HCC does.

33. The Auditor General has not ranked Hutt City Council in that way. The Council has confirmed this directly with their auditors. The Council is ranked in the lower three on a table produced by the Auditor General, but there is no indication whatsoever that this means the Council is a poor performing Council. In contrast, it could be an indication of a very effective infrastructure management programme. The primary reason for the position of Council on the table in question is the age profile of the Council's assets and the continued good performance of the Council's pipe network.

34. Again, the fact that this is a false statement by GWRC would have been readily apparent to the experienced senior managers within their organisation.

35. The report does not rank councils, use the words "poorest performing", or suggest in any way HCC is one of the poorest performing councils. Instead it says:12

3.77 Three local authorities consistently had capital expenditure to depreciation of less than 100%:

• Hutt City Council ranged from 71% to 90% from 2007/08 to 2012/13;
• Waimate District Council ranged from 63% to 98% from 2006/07 to 2012/13; and
• Kawerau District Council continued to show the least capital investment, with a range of 44% to 72% in the last seven years.

3.78 A consistently low percentage could call into question the local authority's ability to maintain assets in the long term. Kawerau District Council put its low reinvestment down to the relative newness of the town. However, the Council needs to carefully consider whether capital expenditure is enough to maintain desired levels of service in the long term and whether the relative age of the town remains a valid argument. Capital expenditure that is too low, even if it is in line with long-term plan forecasts, could lead to a sizeable need for renewal-related capital expenditure beyond the period of the long-term plan forecasts.

36. The caution is that having a low percentage in capital expenditure to depreciation "could call into question the local authority's ability to maintain assets in the long term". Infrastructure spending is not necessarily a determiner of poor performance nor is it stated to be so in the Auditor General's report.

37. The Mayor of HCC, Ray Wallace, has responded to this criticism:

"I am totally confident that we have a good understanding of the assets we own, their current condition, the levels of service the assets are required to provide, and what needs to be done to properly manage and maintain them both within the 20-year plan horizon and out to the end of the current century."

"I refute the suggestion that we should always spend our depreciation. Sensible people paint their house every 10 years as it needs it, with touch-ups in between - you don't paint one-tenth of your house every year, that's just nonsense”

6 Available at

http://igc.govt.nz/the-reorganisation-process/reorganisation-current-applications/view/wellington-region-reorganisation/?step+34

7 Available at

http://www.lgc.govt.nz/assets/Wellington-Reorgansation/Wellineton-reorg-Factsheets.pdf

8 Available at http://www.lgc.govt.nz/commission-news-and-contact-information/media-statements-and-speeches/a-greater-wellington-council-proposed-for-region/

9 Note, the recent letter from the Auckland Local Boards to Mayor Len Brown dated 14/10/14 stated: "The energy and momentum coming into the new Auckland Council demonstrated willingness on the part of Aucklanders to put aside their concerns and aim for a new beginning. We as local board chairs, some of whom have served since establishment in November 2010, have worked tirelessly to put into practice your aspirational words. In effect, your vision for inclusion, equity, and unity, has been our calling.

However, as local board chairs we have witnessed cuts in funding for local priorities.

Community based innovation has been stifled through policy that has in the most part ignored Local Board feedback over that of officer's recommendations.

The Mayoral proposal and the organisational response to your Worship's proposal will result in significant reductions in local asset based services. We recommend a priority reset and request that the shared governance model be respected. This includes ensuring that decision making on the Long-term Plan 2015-2025 is informed by local board plan priorities, as envisaged by the Local Government (Auckland Council) Act 2009.

10 Available at

http://www.igc.govt.nz/the-reorganisation-process/reorganisation-current-applications/view/wellington-region-reorganisation/?step=34

11 Available at http://www.oag.govt.nz/2014/local-govt/docs/local-govt.pdf

12 Office of the Auditor-General "Local government: Results of the 2012/2013 audits" available at http://www.oag.govt.nz/2014/local-govt/docs/local-govt.pdf

CODE OF ETHICS

Basic Principle 1: All advertisements must comply with the laws of New Zealand.

Basic Principle 3. No advertisement should be misleading or deceptive or likely to mislead or deceive the consumer.

Basic Principle 4: All advertisements should be prepared with a due sense of social responsibility to consumers and to society.

Rule 2: Truthful Presentation - Advertisements should not contain any statement or visual presentation or create an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, is likely to deceive or mislead the consumer, makes false and misleading representation, abuses the trust of the consumer or exploits his/her lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading).

Rule 8: Denigration – Advertisements should not denigrate identifiable products or competitors

Rule 11: Advocacy Advertising - Expression of opinion in advocacy advertising is an essential and desirable part of the functioning of a democratic society. Therefore such opinions may be robust. However, opinion should be clearly distinguishable from factual information. The identity of an advertiser in matters of public interest or political issue should be clear.


RESPONSE FROM LEGAL COUNSEL STEVEN PRICE ON BEHALF OF THE ADVERTISER, GREATER WELLINGTON REGIONAL COUNCIL

1. This is the Greater Wellington Regional Council’s (GWRC) response to the Hutt City Council’s (HCC) complaint. It is not made on behalf of anyone else.

2. The GWRC rejects the complaint. The page complained about is a monthly newsletter. This edition was summarising the Local Government Commission’s amalgamation proposal and its implications for the readers of the Hutt News if the proposal is accepted. It is almost entirely based upon and justified by the contents of the Commission’s draft proposal.

3. The essence of the response is that the complaint is misconceived. Some of the basic principles and rules cited in the complaint are simply inapplicable. Its allegations of inaccuracy are generally nit-picking; the impugned statements are substantially justified on the evidence. Its quibbling approach fails to take account of the latitude that needs to be accorded to political speech, particularly given that the target audience has been continuously informed by the widespread public debate on the central issue of local government amalgamation. (Copies of all the key documents mentioned here are attached).

4. The response is structured as follows:
   1. Background to the “Our Region” newsletter
   2. GWRC’s position
   100. The ongoing debate about amalgamation
   4. Is it an advertisement?
   5. Submissions on the proper approach in cases like this
   6. The standards:
      • Compliance with law
      • Denigration
      • Social Irresponsibility
      • Misleading/Deceptive/Truthful presentation
      • Advocacy
   7. Conclusion

Background: Our Region

5. “Our Region” is effectively a monthly newsletter from the GRWC. It is published in the Hutt News. Variations are published in other community papers. It covers GWRC news of interest to the local readers, such as the opening of a new boatshed, a breakdown of what rates are spent on, a new rat control programme, a summary of the annual plan, and the Christmas timetable for trains, buses and ferries. It encourages readers to make submissions on important policy matters such as the Draft Natural Resources Plan. It sets out the dates of council and committee meetings and contact details for councillors. It is not a vehicle for the political views of councillors, though they are sometimes quoted there. In general, the style, the aim and the contents are journalistic.

6. The edition complained about was devoted to explaining the Local Government Commission’s draft proposal for amalgamation in the Wellington region. This is perhaps the most significant and far-reaching issue facing the region’s residents. It is also a very complicated one. The Commission’s report ran to four volumes, and the main part is almost 300 pages long. The GWRC needed to provide a very short summary so that readers understood the gist of the plan and how it might affect them if it went ahead. The GWRC wanted to educate readers, and also to engage them and encourage them to participate in the decision. To do so, it needed to provide a local focus, and tease out the possible implications for the Hutt Valley in particular.

GWRC’s position

7. The GWRC’s position is that it was simply summarising the Commission’s draft proposal and explaining the local implications if it comes to be adopted. The content was factual and substantially justified.

The ongoing debate about amalgamation

8. It is important for the Complaints Board to understand this complaint against the intensely political debate about amalgamation that has been going on for five years. The debate has played out very prominently in the media, both before and after the release of the Commission’s draft proposal. This provides context to the complaint, and shows that the target audience were well informed about the issues.

9. On 21 June 2012 the GWRC submitted an application to the Local Government Commission advocating a single unitary authority for the Wellington region, including a regional governing body and local boards. This was given widespread coverage.^[2]

10. The HCC has effectively conducted a campaign against this form of amalgamation. In a series of opinion pieces,^[3] full page advertisements,^[4] and their own “Our Hutt City”^[5] page in the Hutt News, it opposed the “super city”. In August 2013, the HCC lodged an alternative application for local government reform, advocating an enhanced status quo. Again, it publicised this in the Hutt News.^[6]

11. The HCC justifies its position by referring to surveys it conducted, one of which was also in the Hutt News. In an advertisement containing its survey in June 2013 it described the amalgamation application lodged by GWRC as combining all the councils’ functions “into one council for the whole region... It would undertake all the local and regional activities currently undertaken by these councils.”^[7] This can be said to be extremely misleading as it leaves out any reference to the local boards, which it knew were an integral part of the amalgamation application.

12. This campaign continued after the Local Government Commission’s draft proposal was released. Mayor Ray Wallace told the Hutt News that “the people will resoundingly reject a super-city”.^[8] This reported on the front page of the Hutt News, which also noted that the draft proposal “closely reflected the Greater Wellington regional council’s proposal”.

13. In the “Our Hutt City” newsletter of 16 December, he said, “This proposal means people will be paying more, for less say” and “we see the costs as greatly underestimated and the benefits as greatly over-estimated.”^[9]

14. Those comments were made in the “Our Hutt City” newsletter that appeared in exactly the same edition of Hutt News as the GWRC’s one that they are complaining about.

15. Since then, the Hutt News has published follow-up stories, letters to the editor and opinion pieces explaining and debating the proposal.^[10]

16. Even this week, Mayor Wallace has been inveighing against the amalgamation proposal.^[11] In an opinion piece in the Dominion Post, he claimed there was “not a shred of evidence it [the amalgamation] is needed”. He mentioned local boards, but only to characterise their role as being “to chip in opinions.” These statements are deeply misleading, as anyone who takes even a brief glance at the actual proposal and the vast array of research assembled by the Local Government Commission – much of it prepared by independent experts – can see. He also referred to the “imaginary water pipe issue” that is part of the current complaint.

17. In addition, the contents of the Commission’s draft proposal and the arguments for and against its recommendation have been widely publicised in a variety of other media available to those in the Hutt Valley.^[12] GWRC chair Fran Wilde was widely interviewed and argued in favour of the proposal; HCC Mayor Ray Wallace was widely interviewed and argued against it. For example, both featured on Radio New Zealand and in the Dominion Post.

18. The result is that the readers of the Hutt News are closely familiar with the issues and the positions of the various councils concerning amalgamation.

19. Those readers are also closely familiar with HCC’s objections to the GWRC’s “Our Region” articles about the Commission’s proposal – the newsletter complained about here. The HCC’s objections were also front page news.^[13] A further story followed shortly afterward.^[14] The mayor and chief executive were prominently quoted. The views of the GWRC were not included. (This complaint has also received widespread coverage in other media).^[15]

20. All of this means that the issues are being resolved in the court of public opinion, where they should be. There is little need for self-regulatory intervention. This point is developed further below.

Is it an advertisement?

21. The ASA defines “advertisement” as embracing “any form of advertising” and includes “advertising which promotes the interest of any person, product or service, imparts information, educates, or advocates an idea, belief, political viewpoint or opportunity.”

22. The ASA has prepared guidelines on when particular articles are editorial, and when they are advertisements. The GWRC accepts that under these guidelines, its newsletter is not editorial journalism. It is paid for by the GWRC. It is not checked or independently assessed by the newspaper. It is openly presented by, and attributed to, the GWRC.

23. The GWRC also accepts that its newsletter aims to impart information and to educate.

24. However, one key element of the definition is that the content must be “advertising”. The GWRC wonders whether this is really apposite here. The essence of advertising is surely a paid-for notice that is intended to persuade or to sell. “Our Region” is a vehicle for community engagement. Is “advertising” really an appropriate label for a bulletin that leads with information that “seismic strengthening has begun at the Waterloo treatment plant”^[16] or “New boatshed is a nod to history”?^[17] That tells people about upcoming events and meetings and encourages them to make submissions about important policy matters?

25. Certainly, some of the newsletters have advertisements within them (for example, for safety flotation devices for $49.95). These would certainly be subject to the ASA’s jurisdiction. But the bulk of the content of these newsletters is not readily described as advertising.

26. Furthermore, it would be odd if the press releases and articles posted on councils’ websites were not advertisements, but were transformed into advertisements - triggering the ASA’s jurisdiction - if they were published in a newsletter like “Our Region”.

27. Whether or not these newsletters are advertisements, it is surely clear that they are messages of a special sort. The GWRC argues that they should be treated with extra caution.

Submissions on the proper approach to be taken by the ASA to council newsletters like this

28. The GWRC argues that the ASA should not interfere with messages that are conveyed in a political context unless there is a particularly compelling justification.

29. The context of this complaint is inescapably political. It revolves around a Council newsletter that discusses a proposal to transform local government, and its implications for Hutt Valley residents. The newsletter was written by a regional council. The complainant is a city council. The HCC has sought to gain publicity through discussing this complaint.

30. What’s more, as described above, the GWRC and the HCC are both high-profile actors in relation to local government reform. Both made applications to the Local Government Commission concerning reorganisation of local government in the Wellington region, and have been active in the public debate.

31. The GWRC points out that there are widely accepted reasons for taking particular care before penalising speech that takes place in a political context, even if it is not expressly advocating particular viewpoints. Those reasons are discussed below.

The special nature of political speech

32. Political speech is almost universally regarded – by theorists, courts and even self-regulatory authorities^[18] – as the most valuable type of speech to society. It allows us to receive information about those who govern us so that we can understand their actions. It allows us to question and criticise their conduct so we can hold them accountable. It facilitates democratic participation in the development and improvement of policies. For these reasons, liberal countries allow great latitude to robust political debate. Constitutional guarantees of freedom of expression are interpreted to ensure that political debate is “uninhibited, robust and wide open,” as the US Supreme Court put it in the famous case of New York Times v Sullivan [1964] USSC 40; (376 U.S. 254).

33. This reluctance to penalise political speech is not just because of its importance to society. It is also because of the unique dangers of punishing it. For one thing, political truths are often slippery. How does one prove, for example, that councils are “ill-equipped” to meet future challenges? This absence of clear truth creates a danger that those who set themselves up as decision-makers will be unwittingly influenced by their own biases. Further: penalising speech can chill it, as speakers become reluctant to engage, or become timorous and risk-averse in their statements, to the detriment of healthy debate. Political actors, in turn, increasingly use complaints organisations as political weapons. Public debate can become overly lawyered.

Political speech compared with commercial speech

34. This is to be contrasted with commercial speech. It is widely accepted that this can be regulated without creating the same dangers. Such speech, while valuable to society, is not in the same league as political speech. Evidence about its accuracy is usually clearer. In addition, society depends much more on advertising standards authorities to police commercial speech. There is usually no marketplace of ideas to debate commercial claims and expose errors. There is no public debate about it. There is no public service element. Advertisers’ motivations are usually narrowly commercial. They are not democratically accountable for their errors. Self-regulation plays a vital role here.

35. Regulation of political speech is not only more dangerous, it is less necessary: when contentious claims are made, they are invariably addressed in public debate. Politicians have ready access to public platforms including the media to respond to claims they disagree with. The public can participate too. In addition, the speakers are often accountable in a higher forum: the ballot box. As the Court of Appeal put it in Electoral Commission v Cameron: “as with other advertising in the electoral field, any public statements made by the Commission always will be susceptible of dispute, correction or complementation in the public arena.”^[19]

ASA approach

36. None of this will come as news to the Advertising Standards Authority. It has long robustly defended advocacy, and recognised the special nature of political advocacy. The Advocacy Principles accept that “in advocacy advertising and particularly on political matters, the spirit of the code is more important than technical breaches”^[20] and “robust debate in a democratic society is to be encouraged by the media and advertiser and the Codes should be interpreted liberally to ensure fair play by the contestants.”^[21]

37. It is certainly true that political advocacy falls at the heart of political speech. But it needs to be noted that political speech is not always about advocacy. For example, the series of Washington Post articles about Watergate that brought about the downfall of US President Richard Nixon could not be said to be advocacy, but they were clearly political speech. Any attempt to regulate or punish such speech can create the same harms and fall prey to the same dangers as speech involving political advocacy.

Engaging the public

38. A final point about political speech: some political speech is by government authorities themselves, and seeks to inform and engage the public. It invites participation in decision-making, often in relation to issues that are complicated and not sexy. In such cases, a degree of simplification – and sometimes provocation – is required. This has been well put by the Advertising Standards Complaints Board:

“advocacy advertising often invited or indeed provoked people into voicing opinions, which in turn stimulated debate in the community. In the Complaints Board’s view, such a tactic was occasionally necessitated by displays of apathy towards issues such as local government reform.”^[22]

Electoral Commission v Cameron

39. This point was also made in Electoral Commission v Cameron: the Electoral Commission noted that its advertising was aimed at “people with a wide range of educational attainments and interest in, and understanding of, the political process. A number of those at whom the advertisements are aimed have a short attention span and relatively low literacy skills. ... In this context a complex message with qualifications and exceptions is not likely to be effective.”

40. The Court of Appeal accepted that the Electoral Commission was within its rights to “determine that complex issues realistically can be imparted only by a series of simple statements...”^[23] It concluded:

We would expect the [advertising standards complaints] board to tread carefully in relation to such matters as the public education advertisements of the Commission and similar public authorities to ensure that it does not substitute its views for those of an expert body charged with particular responsibilities.^[24]

41. The GWRC is not arguing Electoral Commission v Cameron precludes the ASCB from hearing this case. But it contends that the Court’s warning above is salient since:
    • The GWRC is pursuing its statutory purpose: “to enable democratic local decision-making and action by, and on behalf of, communities”^[25] by communicating information of direct interest to its constituents and encouraging them to participate in the amalgamation decision;
    • It had to decide how best to convey the information contained in a multi-volume report by the Local Government Commission;
    • It had an electoral mandate and statutory and democratic responsibility to convey information about local government to the electorate;
    • That necessarily involved choices and simplification;
    • The audience had a range of educational levels and knowledge and interest in local government;
    • The GWRC employed professionals to assemble the material in such a way as to engage the audience; and
    • Its key motivation was to educate and encourage participation in governmental matters.

New Zealand Bill of Rights Act

42. The ASA accepts the relevance of the NZ Bill of Rights Act.^[26] In fact, it seems very likely that the ASA is exercising public functions, and so is bound to comply with the Act and be subject to judicial review if it does not.^[27] Since its decisions penalise speech, they are only lawful if they are reasonable and such as can be demonstrably justified in a free and democratic society (section 5 of the Bill of Rights Act).^[28] The usual shorthand for this is “proportionality”. It involves assessing the significance of the speech complained about against the importance of the objective of the rule that limits it. As Asher J said in a recent case involving the Broadcasting Standards Authority:^[29]

In carrying out the section 5 balancing exercise of right breached against justification for the breach, the importance of the particular form of expression that is affected is relevant. Distinctions can be made between different types of speech. In Campbell v MGN Ltd, Baroness Hale said:

There are undoubtedly different types of speech, just as there are different types of private information, some of which are more deserving of protection in a democratic society than others. Top of the list is political speech...

43. Asher J concludes:

Political speech may be at the top of the list and any decision by the [Broadcasting Standards] Authority that has the effect of restraining such expression will need clear justification.

44. And:

More formal reasoning will be required if a limit is placed on a major decision or policy of a government department rather than a limit placed on a short scene in an episode of a television drama.

45. He accepts that there is no magic formula for carrying out this assessment of proportionality, but says:

The Authority should, in its own reasoning, show transparently why it has reached the conclusion that the limitation is justified under s 5, and not by reference to generic statements in other earlier decisions. I am satisfied that it is unnecessary for the Authority to undertake a detailed analysis of the factors relevant to s 5 in its written decision, although on occasions this may be appropriate. Generally a succinct summary of reasons will be sufficient. If the nature of the summary indicates that there has been no proper s 5 exercise carried out, then the Court may well conclude that there has been a failure to take into account a relevant consideration.

46. A later passage gives some guidance on when “a detailed analysis of the factors relevant to s 5” might be called for:

I take into account that shorter reasons can be justified for a s 5 decision relating to a short sex scene, than might be expected if a complaint concerning a significant political programme was being upheld.

47. In the present case, the GWRC newsletter relates to a political proposal of the utmost significance to readers. The proposal has the potential to transform local government representation in the Wellington region. The newsletter was a serious and substantive attempt by the elected regional council to summarise the proposal and draw out its implications for Hutt Valley residents. Accordingly, a particularly compelling and well-articulated justification is required before any complaint against it can be upheld.

Upshot

48. None of this is to say that the GWRC newsletter is completely immune from advertising standards. But the GWRC argues that the ASCB should exercise great care in relation to complaints such as the present one, bearing in mind that it concerns significant political speech, attacks a government body performing a statutory function to inform and engage its constituents, and involves issues that have been widely canvased before the target audience.

49. This means, in particular, that breathing space needs to be given to simplification and paraphrasing. Errors should only be penalised where the evidence is cogent and the mistake is significant. Anything that may convey opinion should be given wide latitude. Any doubt or ambiguity should be resolved in favour of the speaker. The court of public opinion is often the best place to resolve disputes like this.

50. Against that background, I turn to the specific standards.

Compliance with law: Basic Principle 1

51. HCC alleges the GWRC has breached the requirement that all advertisements must comply with the law. It says the GWRC breaches the Local Government Act 2002 in relation to its obligation to conduct business in an open, transparent and democratically accountable manner and have regard to the views of all its communities; it breaches its Code of Conduct requiring honesty and integrity; it implicitly breaches legislative provisions on advertising relating to reorganisations; and it breaches the guidelines of the Office of the Auditor General.

52. These allegations are manifestly unfounded. The ASA applies this principle to obvious clear breaches of specific laws, such as those governing therapeutic advertising. Its approach in most cases is: “whether or not the advertisements complied with the laws of New Zealand was a matter for the Courts.”^[30]

53. The laws allegedly broken are a far cry from the sorts of clear breaches the ASA might adjudicate on.

54. The alleged breaches of the Local Government Act concern “principles” relating to local authorities. It is difficult to see that they are even justiciable. (That is, they are so amorphous, it is unlikely a court would ever be prepared to rule on an issue about whether a principle had been breached). In any event, there can be no serious suggestion that these principles are not being adhered to. Is it really suggested that the GWRC is only accountable if it always and only follows the prevailing view?

55. The alleged breaches of the code of conduct only apply to Council members. It seems doubtful that this code is properly regarded as a “law”. Again, it cannot seriously be suggested that there is any evidence here of dishonesty or lack of integrity by any Council member. In any event, there is a separate complaints mechanism for such allegations.

56. The HCC accepts that the rules concerning advertising of reorganisations only apply to final proposals. It then illogically insists that it somehow has some bearing on draft proposals. The more obvious inference is that if Parliament wanted to regulate advertising of draft proposals, it could easily have done so: the omission can only be taken to be deliberate.

57. The HCC also accepts that the Auditor-General’s guidelines are “not binding on councils”. It is difficult to see why the HCC thinks this standard applies here.

58. In conclusion, these allegations are so contrived and tenuous that it is hard to see that this part of the complaint is even being made in good faith.

Denigration – Rule 8

59. The HCC alleges that the GWRC newsletter breaches the rule concerning the denigration of identifiable products or competitors. In an attempt to justify this complaint it says “GWRC plainly thinks it is in competition with HCC in terms of persuading communities to submit for or against the draft proposal.”

60. This is plainly not within the scope of the rule. Even the HCC accepts that the GWRC newsletter does not compare the two councils. Nor could they be said to be “identifiable competitors”.

61. As the Complaints Board held late last year, “Rule 8 of the Code of Ethics relating to denigration of an identifiable product or competitor had not been intended to apply to political advertising...”^[31]

Social Irresponsibility – Basic Principle 4

62. HCC argues that the GWRC newsletter displays social irresponsibility because it attempts to “sully the reputation of the HCC without foundation and is recklessly indifferent to the effect on civic pride and confidence of the Hutt people with HCC.” In support, it cites the ASA case dealing with the Internet/Man ad showing people chanting “Fuck John Key”.

63. It is encouraging that the complainant accepts that the GWRC newsletter “does not use such emotive language”. It is less encouraging that the HCC believes that the Internet/Mana case has even a tenuous relevance to the present one. Instead, the comparison merely sheds light on the hyper-sensitive mindset of the complainant.

64. It is submitted that an advertisement can only be found to be socially irresponsible if there is some moral turpitude attached: deliberate deception or extreme negligence. There is nothing of the sort here. The newsletter was prepared in good faith, is based in substance on the Local Government Commission draft proposal, and was intended to provide information and encourage participation.

Misleading or deceptive (Basic Principle 3)/ Truthful Presentation (Rule 2)

65. The HCC claims that the GWRC newsletter contains eight misleading statements. These will be addressed in turn. First, however, the GWRC accepts that there are two quotations from the Local Government Commission report in the newsletter that are not verbatim. It argues below that they were not substantially misleading. I note the Press Council has accepted some changes to the wording of a quotation if they do not alter the substance of the original source,^[32] and it is submitted that a similar principle should apply here.

66. However, the GWRC accepts that this is not best practice, and will not be repeating it in future. It has ensured that all quotations it uses in existing material on its website are verbatim.

Statement 1

“The Wellington Local Boards will have greater power than the Auckland Local Boards through the proposed allocations and decision-making responsibilities,” the Commission wrote.

67. This is not precisely what the Commission wrote, as the HCC points out, although the language is very similar. But it captures the essence and is not materially misleading.

68. The target audience – the Hutt News readers – would have understood the claim here to mean that the Commission’s plan would see local boards in the Wellington region allocated greater powers than their equivalents in Auckland.

69. This is exactly what the Commission had in mind:

Local Government Commission draft proposal^[33]:

As noted, the Commission is only required to propose allocations of decision-making responsibility between the governing body and local boards for a Greater Wellington Council as part of a final proposal. However for the information and guidance of those who wish to make submissions on the draft proposal, the Commission has prepared a schedule of potential allocations and attached this as Schedule C to the draft proposal set out in Part 8. These potential allocations reflect the statutory requirements of the Local Government Act 2002, the experience of Auckland Council in relation to local boards and the Commission’s view that maximum possible allocations to local boards, consistent with effective decision-making, is desirable.(Italics added).

70. The powers of Wellington boards would be greater in another respect too: their powers are not eroded by transfer of key functions to council-controlled organisations, as happened in Auckland. As the Local Government Commission says in its pamphlet describing the draft proposal:

Local boards would be responsible for local parks and reserves, recreational centres, arts and cultural facilities and libraries, community and cultural events, decisions about public spaces such as town centres and main streets, and grants to local groups. Local boards are also expected to be responsible for some local transport infrastructure, waste and recycling facilities, and economic development initiatives.

71. The reference to transport is to be contrasted with Auckland, where a council-controlled organisation manages this vast function.

72. Readers would not be misled by the absence of the word “expects”. The whole article is about what the Commission expects would happen if its proposal were brought to fruition. The article is written using the word “will” as shorthand for “under the proposal being put forward by the Local Government Commission”. This is a standard journalistic technique that the audience would readily understand.

73. It is also worth noting that the final allocation of non-regulatory functions to the local boards will be guided by the principles in the Act set out in section 48L(2)^[34] and will be made through a Transition Board, on which all the current councils will be represented. HCC says that these allocations could change in the future. While this is correct, the Act’s principles will continue to apply to any changes in allocations, and the Act includes a dispute resolution procedure where Boards and the Governing Body do not agree with any changes (s48R). Ultimately the Local Government Commission would be the adjudicator of unresolved disputes and its decision binding.

74. Nor will readers be misled just because the article doesn’t expressly say the Commission is only talking about “non-regulatory functions”. Non-regulatory functions – that is, parks management, libraries, infrastructure management and the like – are estimated to be about 90% of current councils’ workload. The allocation of the remaining 10% of functions is not material to the statement about the powers of the local boards in Wellington under the Commission’s draft proposal. The Commission is not able, by law, to allocate regulatory functions. Regulatory functions can only be delegated by the governing body once the new council is established.

75. In any event, in the very next sentence the article describes the powers the local boards will retain: functions “including parks, events, libraries, town planning, rural roads, pavements and cycle paths.” This is a much more effective way of explaining to readers the powers that will be kept than talking of “non-regulatory functions”, which is likely to mystify them.

76. It may have been more accurate to say, “Wellington Local Boards will have greater power than the Auckland Local Boards under the intended allocations by the Local Government Commission, if its final plan still includes local boards. Some of those allocations might eventually be redistributed later in a process involving agreement between the board(s) and governing body”. But this would be self-evidently difficult for a lay audience to understand, and impractical in the limited space available. Some simplification is necessary for these newsletters.

Statement 2

As the cornerstone of local democratic arrangements the boards will service the same communities as existing councils and effectively take over their local responsibilities, including parks, events, libraries, town planning, rural roads, pavements and cycle paths.

77. The HCC says the new local boards will not serve the same communities.

78. However, the statement in the newsletter is substantially true: in fact, in relation to the target audience, it is true. The Lower Hutt (and Upper Hutt) constituencies will remain exactly the same.

79. There are minor changes proposed in relation to some other boards. Wellington city is divided into three, but this will be almost entirely along the lines of the existing WCC wards, so the same communities will still be represented (except Tawa).The existing Wairarapa Councils will be combined into one, but again this will represent the same communities.

80. Local government specialist, PwC Director David Walker has commented:

The Commission’s recommendation for the Local Board looks to align well with the existing communities of interest (Carterton, Masterton etc) which would make for smoother integration and feel less like change.^[35]

81. The HCC also says readers will be misled into thinking the new local boards will “in effect, take over from the current councils” when in fact they will not set rates, control consent processes or make district plans.

82. But readers will get no such impression. The statement talks about council’s “local” responsibilities, and gives details about the sorts of activities being discussed: parks, events, libraries, town planning, rural roads, pavements, cycle paths. The examples provide a clear impression of the activities councils currently do that are local in nature and that the Commission has said would be allocated to local boards under its proposal. As discussed above, readers find it much easier to understand a list of examples like this that abstract phrases such as “non-regulatory powers”. It is clear from the statement that not all responsibilities are being taken over.

83. This is made even clearer when the next sentence is considered. That sentence sets out the powers that would devolve to the new Greater Wellington Council:

Major projects that affect the region will be funded and managed by the proposed region-wide elected body of the Greater Wellington Council, which will undertake regional functions such as major infrastructure, water, regional spatial planning and economic development.

84. Finally, the newsletter says only that the local boards will “effectively” take over current councils’ local responsibilities. Readers will understand that there will not be a perfect match.

Statement 3

The Hutt Valley faces challenges that are “regional in scale and impact and will require regional scale responses”.

85. The HCC claims that this is a “dishonest” misquote because the Commission in fact describes the challenges as “predominantly” regional in scale and impact.

86. This is incorrect. This quote is taken from para 1.67, page 14 of volume 2 of the Commission’s draft proposal, where the rider “predominantly” is not used.^[36]

87. The HCC also says the statement is inaccurate because it suggests the Commission is saying that the HCC is facing challenges that are regional in scale.

88. This is semantics. The Commission says “all the communities of Wellington” are facing such challenges. This of course includes the Hutt Valley. The GWRC statement does not claim it is only the Hutt Valley facing challenges that are regional in scale. The Hutt Valley is simply the area of interest to the Hutt News’ readers, so that was the area the GRWC mentioned in the newsletter.

89. In any event, the HCC has itself identified challenges it faces that are regional in scale in its strategic plans. For example, HCC’s Environmental Sustainability Strategy 2015-45 identifies “major issues we face” including natural hazards, climate change, and economic shocks.^[37]

90. Flood risk is another example of a regional scale challenge that the Hutt Valley faces. This is discussed in a number of HCC documents, including the Stormwater Plan^[38] As a regional scale issue, flood management in the Hutt Valley is implemented through the Hutt River Floodplain Management Plan, which is the result of more than 10 years work by the Regional Council, the Upper Hutt and Hutt City Councils, the Manawhenua and the people of the Hutt Valley.^[39]

Statement 4

These [challenges] include “its aging population, uneven patterns of growth and expected decline, exposure to natural hazards, and the longer term consequences of climate changes and the sea level rise.”

91. HCC says this misleads by suggesting the Hutt Valley faces all of these challenges, when it is a list of general challenges for the Wellington region. Moreover, HCC says it suggests the Hutt Valley is “in decline”.

92. Again, the GWRC accepts that this is not a verbatim quotation. Again, however, the original language is very similar.

93. Readers are not misled, because the Hutt Valley does indeed face these challenges.

94. It is accepted that there is a degree of ambiguity in the quotation. Is it suggesting a patchy and declining population, or patchy and declining economic growth?

95. In relation to population, the Commission specifically identifies the Lower Hutt as facing a decline in the working-age population:

Population decline is projected for some of the rural parts of the region. Significant reductions in the working-age populations of Lower Hutt, Upper Hutt and the Wairarapa are also forecast.^[40]

96. The HCC’s own Urban Growth Strategy says:

It is therefore highly likely that the city will experience population loss over the next 20 years. This paints a worrying picture which will be highly detrimental to the City unless positive action is taken.” (p. 16)^[41]

97. In addition, a study by Professor Natalie Jackson has found that:

Only Wellington City is projected to experience gains in most age groups, with five TAs (Lower Hutt and Upper Hutt Cities, and Masterton, Carterton and South Wairarapa Districts) expected to see decline at most ages below 55 years.^[42]

98. Therefore it is accurate to say there is an expected decline in population in the Hutt Valley. It is a matter of simple logic that population change will not be uniform throughout the Hutt Valley. Therefore it is also accurate to say that the decline will be uneven throughout the Valley.

99. In relation to economic growth, it is also accurate to say that the Hutt Valley is expected to decline in coming years. For example, BERL is predicting “a decline in employment in the primary production, product manufacturing, and wholesale and distribution industries” in Lower Hutt City.^[43]

100. This month, BERL’s situational analysis for the Wellington region^[44] says:

The economy of Lower Hutt City performed poorly in 2014, with declines across most of the key indicators.

101. provides the following table:

102. It concludes:

Despite the growth in the number of new businesses, employment growth declined, particularly in the Construction and Business services sectors. This decrease in employment also led to associated declines in GDP. Business size growth was significantly lower than both the regional and national trends which, when read with the concurrent increase in business unit growth, would suggest that a few large businesses may have ceased operating in Lower Hutt or moved their operations elsewhere.

103. Equally, it is obvious that the decline will not be uniform throughout the Hutt Valley. So it is not inaccurate to suggest that there will be both uneven growth and expected decline.

Statement 5

After extensive analysis the Local Government Commission concluded that councils in their current form are ill-equipped to meet these challenges over the next 30 years.

104. HCC objects to the term “ill-equipped”, saying it does not appear in the Commission’s report.

105. It is to be noted that the GWRC does not claim the Commission used this word. It is characterising the Commission’s conclusion.

106. This characterisation is fully justified. There are many examples in the Local Government Commission’s draft proposal (volume 2) to support GWRC’s statement that the Commission has concluded that councils in their current form are ill-equipped to meet the challenges of the future.

107. In particular, on page 151 (Vol 2), the draft proposal lists “factors identified in the material reviewed by the Commission which were said to constrain the current local government system from more effectively meeting the current needs and issues of the region’s communities:
     • limited resources and high fixed operating and compliance costs
     • multiple and duplicated decision-making processes which mean that responding to any new issue or responsibility imposed a significant cost of change on each community, with little opportunity to share costs across all communities
     • administrative and regulatory frameworks which differed between councils without apparent reason and thereby frustrated businesses and residents and slowed the speed of business development
     • current council boundaries which meant that the majority of the high income households and the high value employers were in one council district contributing to differing levels of service and different costs per ratepayer and per property across the region – the current framework has inherent inequities
     • an inability to fully ensure that user-pays principles were adhered to, that is those who either benefit from or cause the need for expenditure, but who live or operate their business in another council area should contribute to the solution
     • underutilisation of the discounts which may be achieved through the purchasing power of a larger council
     • increasing difficulty in attracting and retaining the high level professional staff that are necessary to tackle the issues facing communities
     • high transaction costs associated with multiple council engagement in important aspects of regional decision-making, including slow and expensive processes, the inability to make trade-offs, duplication of effort, sub-optimal decisions, and a high propensity to re-litigate issues (perhaps best illustrated by the prolonged debate over Transmission Gully and alternatives)
     • an inability to make timely strategic decisions
     • the lack of an effective voice to advocate for the needs of the region with central government and others, and provide clear leadership.”

Statement 6

As the Commission points out, all corners of the region could benefit from a more integrated approach to managing its economic and environmental assets – including through a more robust approach to spatial planning – in contrast to the status quo of nine councils overseeing 131 plans.

108. This is misleading too, says the HCC. Spatial planning won’t alleviate the need for plans, it insists. And the “Wellington Region Growth Strategy” already contains a strong spatial planning dimension. Besides, there are more than 300 plans, not 131.

109. The GWRC is happy to acknowledge that there are in fact 321 plans across the region, not 131. It has taken steps to ensure that this error will not be repeated in future publications. However, this does not make the newsletter misleading. In fact, it simply underscores the essential point readers will take from this paragraph: that there are a plethora of plans across the region and a more integrated approach would be beneficial. The existence of 321 plans means the current situation is even worse than the article suggests, and the benefits of reform are greater.

110. That applies in particular to spatial planning. Spatial planning is a strategy for developing a region that relates to its geography, and has broad aims. It is a collaborative effort, and relates to coordinated planning about priorities, actions and investment. The multitude of local, district, and regional plans do not deal with high-level strategy like this, and in fact can cut across it.

111. It should be noted that the GWRC does not say that having a spatial strategy will mean there is no need for district and regional plans. It says that a more integrated regional approach to spatial planning is an advantage of amalgamation.

112. In any event, any inference in the article that having a more robust approach to spatial planning will reduce the need for the large number of existing plans is supported by comments in the Commission’s draft proposal:

Full regional-scale district and regional planning is likely to better accommodate the results of comprehensive spatial planning than through the development of the current large number of separate plans.^[45]

113. The HCC’s suggestion that this is already taken care of through the “Wellington Region Growth Strategy” is wrong on two counts. First, there is no “Wellington Region Growth Strategy.” (The Commission got this wrong too). The Commission and the HCC probably mean the Wellington Regional Strategy. However, this Strategy was reviewed and refreshed in 2012, and during the refresh it was decided by the Wellington Regional Strategy Committee (including HCC representation) that the spatial planning elements should be removed and the Strategy should focus more narrowly on achieving sustainable economic growth. The current version of the Wellington Regional Strategy does not have a spatial planning dimension.^[46]

Statement 7

After extensive analysis the Local Government Commission concluded that councils in their current form are ill-equipped to meet these challenges over the next 30 years.

For example, the Commission reported that across the Wellington region, “almost 50% of existing water pipes and around 40% of wastewater pipes are in poor or very poor condition and the largely unbudgeted cost of replacing them is between $1.7 and $2.6 billion.” This shortfall is proving beyond the reach of some councils including the Hutt City, which the Auditor General has ranked among New Zealand’s three poorest performing councils in terms of infrastructure spending (Auditor General, Local Government: Results of the 2012-2013 audits Part III).

114. The HCC is very sensitive about this statement. It says the Commission’s figure is in error. It says there is no basis for concern about the HCC’s ability to meet replacement costs of water and wastewater pipes.

115. The HCC does not contend that this quotation is inaccurate. The GWRC emphasises that the figures about water infrastructure are said to apply “across the Wellington region”.

The Commission’s report explains that it was based on research commissioned by reputable independent experts MWH Global. The GWRC had no reason to question it.

116. The GWRC was reporting the findings of an independent statutory commission that had produced a four-volume report based on expert research. The GWRC is fully entitled to rely on authoritative sources in its publication. The ASCB routinely accepts this. For example, someone citing a reputable scientific journal to back an advertising claim does not to check the details of the study to ensure there was no error in data transcription.^[47] This is also the approach of the Press Council, which will not uphold accuracy complaints against the media if they reasonably relied, with proper attribution, on authoritative sources such as expert authorities.^[48]

117. In any event, the HCC in its 2012-2022 Long Term Plan itself identifies unbudgeted costs as a significant problem:^[49]

While the financial position is good, our capacity to meet future requirements is a concern. This is illustrated by the graph below, showing the future capital spend as an increasing trend which pushes up debt. (Italics added).

118. HCC then includes a graph which demonstrates that by 2027 they are at the limit of their debt target and the following four years they are projected to exceed their debt target significantly.

119. The HCC amended this in 2014, and this commentary was removed.^[50] It is not clear why. The presentation of the accompanying graph was also changed. However, the graph still projects the same challenges meeting net debt targets in coming years.

120. Finally, the data provided by the HCC to demonstrate the soundness of their infrastructure is oddly slanted. The HCC doesn’t “sit in the middle” of the table about water asset condition, as the HCC claims, it’s third worst. And even if it is better placed in relation to waste water assets, the table reveals that nearly a third are in poor or very poor condition.

Statement 8

... the Hutt City, which the Auditor General has ranked among New Zealand’s three poorest performing councils in terms of infrastructure spending (Auditor General, Local Government: Results of the 2012-2013 audits Part III).

121. The HCC says this is misleading because the Auditor General never describes the HCC as one of the “poorest-performing” councils.

122. Again, the GWRC newsletter does not claim that this is a direct quotation.

123. The HCC sets out the passage from the Auditor-General’s report that this statement is based on:

3.77 Three local authorities consistently had capital expenditure to depreciation of less than 100%:

• Hutt City Council ranged from 71% to 90% from 2007/08 to 2012/13;

• Waimate District Council ranged from 63% to 98% from 2006/07 to 2012/13; and

• Kawerau District Council continued to show the least capital investment, with a range of 44% to 72% in the last seven years.

3.78 A consistently low percentage could call into question the local authority’s ability to maintain assets in the long term. Kawerau District Council put its low reinvestment down to the relative newness of the town. However, the Council needs to carefully consider whether capital expenditure is enough to maintain desired levels of service in the long term and whether the relative age of the town remains a valid argument. Capital expenditure that is too low, even if it is in line with long-term plan forecasts, could lead to a sizeable need for renewal-related capital expenditure beyond the period of the long-term plan forecasts.

124. The HCC also supplied an email from the Auditor-General’s office which it says supports its views:

Thanks for your email of 24 December, advising us of your complaint to the Advertising Complaints Authority about a newspaper item by Greater Wellington Regional Council and seeking our comment on the following statement in the item:

“...Hutt City, which the Auditor-General has ranked among New Zealand’s three poorest performing councils in terms of infrastructure spending (Auditor General, Local Government: Results of the 2012-2013 audits part III)”.

In Part 3 of our report to Parliament, on the results of the 2012/13 audits of local government, we did not use the words “poor performing” in relation to Hutt City Council or rank councils for infrastructure spending.

We note that the comment about Hutt City Council in paragraph 3.77 of the report needs to be read in context of Part 3 as a whole.

Part 3 of the report looks at indicators across the sector in 2012/13, and trends when compared other audit years. In particular Part 3 looks at operating revenue and rates revenue, operating expenditure and capital expenditure. This information is used to present a picture of sector performance to Parliament and to communities.

Hutt City Council is mentioned in context of the section ‘Ability to invest in the future’, which focuses on ‘capital expenditure to depreciation’, ‘gross debt to total assets’ and ‘net cash flows from operations to capital expenditure’.

We noted that Hutt City Council was one of three councils that were identified as having expenditure to depreciation of less than 100%, and we said that a consistently low percentage can be an indicator of whether a local authority has the ability to maintain its assets in the long-term.

We note too that the 2015-25 LTPs that will be produced next year will give the latest picture of individual councils infrastructure strategies and spending proposals.

125. But these passages do not show the GWRC’s statement to be inaccurate. They show that it is substantially justified. Readers will understand the statement to be saying that the Auditor-General had identified the HCC as among the councils that have performed worst in recent years in terms of infrastructure spending.

126. An examination of the Auditor-General’s statement and email shows this to be essentially what they are saying. The Auditor-General establishes a benchmark signal of concern: capital depreciation of less than 100%. She explains that a consistently low percentage may call into question the local authority’s ability to maintain assets in the long term. She then examines local authorities across periods of years to look for repeated failures in relation to the benchmark. She identifies three councils that have such consistently low percentages.

127. The HCC has performed poorly against this benchmark for six years. The Auditor-General provides an explanation for Kawarau District Council’s performance. There is no such explanation given for HCC’s. She sets out her conclusion: “Capital expenditure that is too low, even if it is in line with long-term plan forecasts, could lead to a sizeable need for renewal-related capital expenditure beyond the period of the long-term forecasts.”

128. There is no escaping the fact that this is an expression of concern. The HCC has been specifically identified as a council sending up warning signals about its ability to maintain infrastructure long-term. This is undoubtedly a measure of performance. The HCC is undoubtedly performing poorly when measured against it. The Auditor-General’s email says nothing different.

129. It is worth noting that this dovetails with the HCC’s own expression of “concern” about its “capacity to meet future requirements” in its 2012-2022 Long Term Plan, discussed above.

130. The GWRC must be allowed to paraphrase the Auditor-General’s report, providing it does not say anything substantially misleading. If the description here is not acceptable, then the same may be said of any number of advertisements and political claims.

Advocacy: Rule 11

131. The newsletter does not fall at the heart of the advocacy rule. The GWRC’s newsletter is in the nature of a public service bulletin. This is in keeping with what readers have come to expect from this page: information about relevant services, activities and significant upcoming policy decisions. This service is not used to promote political viewpoints. The articles complained about very largely simply contain a summary of the Commission’s proposal and a brief exploration of the parts that are particularly relevant to the Hutt News’ readers. As discussed above, there is sound justification for all of the claims made in the newsletter, both because they accurately capture the views of the Commission and because they are supported by the evidence.

132. In a sense, the articles do advocate for the proposed reform. This is because they set out the reasons for the Commission’s recommendation. The views expressed are clearly attributed to the Commission.

133. The advocacy rule rightly reflects the importance of robust political debate. It has already been argued, however, that other contributions to political dialogue besides those that are forthrightly expressing views, also require special consideration. This newsletter falls into that category.

134. In terms of any application of the of the advocacy rule in the present case, the following factors are also relevant:

1. The advertiser is clearly identified as the GWRC.
2. The readers of the Hutt News are already closely familiar with the roles played by both the HCC and the GWRC in the debate.

100. The very same issue of the Hutt News contained a newsletter from HCC assessing (very largely critically) the Commission’s draft proposal.

4. Both newsletters allowed readers to access further information about the proposal online.
5. The HCC has taken advantage of its opportunity to publicly and prominently rebut the claims in the newsletter, both in the Hutt News and elsewhere. The HCC has had ample chance to air its criticisms unanswered, and the public interest in robust debate has been served.

Conclusion

135. It is telling that in their written complaint, the HCC has itself made a series of errors. It wrongly states that the GWRC newsletter claims the Hutt Valley as a whole is in decline (para 3). It misquotes one of the articles (see para 44). It repeats the Commission’s mistake by referring to the “Wellington Region Growth Strategy” and then wrongly claims that this deals with spatial planning (Appendix, para 21). It wrongly asserts that the HCC sits in the “middle of the table” about wastewater asset condition indicators (Appendix, para 25). Many of its claims are hyperbolic (“pre-planned propaganda scheme” (para 10); “devious means to influence their communities” (para 26);“deliberately misleading readers” (para 31); “cynical propaganda capital” (Appendix, para 30). Some are exaggerated: for example, the complaint talks of “examples of inaccuracies” as if there are many others, and as if they haven’t picked out everything they could possibly find.

136. In short, the complaint suffers from many of the same flaws it alleges. The HCC has posted its complaint on Scoop, and provided it to the media, where it has been reported in the Hutt News, Radio NZ, the Dominion Post, Radio Live, NewsTalk ZB and the Nelson Mail.

137. In its public statements, the HCC also makes many misleading claims as discussed at the beginning of these submissions.

138. The GWRC takes the view that this is the nature of political debate, and the appropriate forum for it to take place is the public realm. Occasional errors are made, arguments need to be simplified, authoritative documents are cited though they may later turn out to have mistakes, latitude needs to be granted as to the way things are expressed. The best place to resolve differences is in the cut and thrust of public debate. This reflects the conclusion of courts and theorists about the leeway that must be provided to speech that occurs in a political context.

139. The newsletter here provided readers with detail about an important but complicated proposal by an authoritative statutory commission. It sought to explain to local readers how it might affect them if implemented. It was based very largely on information provided in the Commission’s report. It played a small part in a bigger debate that has been widely aired across the media. In performing this political service, the GWRC should not be held to meticulous technical standards that might have the effect of discouraging this sort of newsletter or incentivising councils to litigate at every opportunity.

APPENDICES: Key documents

1. Flying squad shoots down democracy, Mayor Ray Wallace, Hutt News, 24 July 2012
2. NO SUPER CITY, 9, 16 and 23 April 2013, Hutt News.
3. SUPERCITY DEAD IN THE HUTT VALLEY 25 June 2013, Hutt News.
4. HUTT CITY LODGES ALTERNATIVE APPLICATION TO LGC 20 August 2013, Hutt News,.
5. YOUR VOICE, YOUR CHOICE 28 May 2013, Hutt News.
6. Super split: Mixed reactions to formula for amalgamation, Hutt News, 9 December 2014, p1.
7. Should Lower Hutt be part of the next “Super-city”? Hutt News, 16 December 2014, p17.
8. Where’s the proof that regional amalgamation is better? Dominion Post, 10 February 2015, p7.
9. Summary of media responses to Local Government Commission draft proposal.
10. Councillors furious at ‘mistruths’ in ad, Hutt News, 23 December 2014, p1.
11. Councillors extend their complaint, Hutt News, 13 January 2015, p 3
12. Recent editions of “Our Region”.
13. HCC Long Term Plan 2012-2022, original version.
14. HCC Long Term Plan 2012-2022, amended
15. The Wellington Region - Situation analysis 2014: A snapshot , Berl, 2015, pp20-23.

Also attached:

Draft Proposal for Reorganisation of Local Government in Wellington, Local Government Commission, December 2014

(Three volumes)

RESPONSE FROM MEDIA, THE HUTT NEWS

In response to the complaint regarding a Greater Wellington Regional Council advertisement that appeared in the Hutt News on 16 December we are pleased to provide the following information.

The advertisement in question was booked by Adcorp (advertising agency). We accepted the booking in good faith, Adcorp are a well established and respected advertising agency who place a lot of business with us.

The content and finished material was not prepared by our staff; it was supplied complete by Greater Wellington Regional Council as camera ready material.

If we can be of any further assistance please do not hesitate to make contact.

^[1] The full paper can be viewed on the Advertising Standards Authority website: http://www.asa.co.nz/advert_edit.php

^[2] For example, the Hutt News published: TWO TIER GETS GWRC’S NOD, 18 June 2013, Hutt News, SUPER-CITY REJECTED BY HUTT VALLEY RESIDENTS, 25 June 2013, Hutt News
^[3] Flying squad shoots down democracy, Mayor Ray Wallace, Hutt News, 24 July 2012. Appendix 1.
^[4] NO SUPER CITY, 9, 16 and 23 April 2013, Hutt News, Appendix 2.
^[5]SUPERCITY DEAD IN THE HUTT VALLEY 25 June 2013, Hutt News, Appendix 3.
^[6] HUTT CITY LODGES ALTERNATIVE APPLICATION TO LGC 20 August 2013, Hutt News, Appendix 4.
^[7] YOUR VOICE, YOUR CHOICE 28 May 2013, Hutt News, Appendix 5.
^[8] Super split: Mixed reactions to formula for amalgamation, Hutt News, 9 December 2014, p1 Appendix 6.
^[9] Should Lower Hutt be part of the next “Super-city”? Hutt News, 16 December 2014, p17, Appendix 7.
^[10] For example, Council merger fears, 16 December 2015, Hutt News; Hands off the Hutt, Simon Edwards, Hutt News, 16 December 2014, p2; Locals may end up with no clout, Hutt News, Letter to editor, 6 January 2015; Council merger in some form crucial, 6 January 2015, Hutt News, p17; Referendum will tell, 13 January 2015 Hutt News, Letter to the editor, p 12;
^[11] Where’s the proof that regional amalgamation is better? Dominion Post, 10 February 2015, p7. Appendix 8.
^[12] See Appendix 9.
^[13] Councillors furious at ‘mistruths’ in ad, Hutt News, 23 December 2014, p1. Appendix 10.
^[14] Councillors extend their complaint, Hutt News, 13 January 2015, p 3, Appendix 11.
^[15] Taranaki Daily News, 29 December; Voxy.co.nz, 29 December; Scoop, 29 December; Dominion Post, 29 December; Radio NZ, 29 December; RadioLive, 29 December; Dominion Post, 30 December; Nelson Mail, 30 December; RadioLive, 30 December; Newstalk ZB, 30 December; Radio NZ, 30 December.
^[16] Our Region, August 14. Appendix 12.
^[17] Our Region, 14 September. Appendix 12.
^[18] See, eg, Case 938 Gerard v Kaiapoi Leader
^[19] 2 NZLR 421, 434
^[20] Principle 3
^[21] Principle 4
^[22] Decision 10/259 Advertising Standards Complaints Board (Deeming v Whangarei District Council – advertising about an amalgamation proposal.)
^[23] pp 425, 433.
^[24] P 434
^[25] Local Government Act 2002, s 10(1)(a)
^[26] Advocacy Principles, principle 1
^[27] Electoral Commission v Cameron held that the board “must be regarded as exercising public power.” See also the factors in Ransfield v The Radio Network [2005] 1 NZLR 233 (HC)
^[28] NZ Bill of Rights Act 1990, ss 5, 14.
^[29] TVNZ v West [2011] NZHC 435; [2011] 3 NZLR 825, paras 99, 103, 104, 105, 108
^[30] See, for example 13/346, p 4.
^[31] 14/453
^[32] Case 940 James Scott v NZ Herald (It did not uphold the complaint, though it said the practice was “unwise”)
^[33] Volume 2 p.241. See Draft proposal report, attached.
^[34] 48LPrinciples for allocation of decision-making responsibilities of unitary authority
(1) Decision-making responsibility for any non-regulatory activity of the unitary authority within a local board area must be allocated by the governing body—

(a )to either the governing body or the local board for that area; and

(b) in accordance with the principles set out in subsection (2); and

(c) after considering the views and preferences expressed by the local board.
(2)The principles are—

(a) decision-making responsibility for a non-regulatory activity of the unitary authority within a local board area should be exercised by the local board for that area unless paragraph (b) applies:

(b) decision-making responsibility for a non-regulatory activity of the unitary authority within a local board area should be exercised by its governing body if the nature of the activity is such that decision making on a district-wide basis will better promote the interests of the communities in the district because—

(i) the impact of the decision will extend beyond the local board area; or

(ii) effective decision making will require alignment or integration with other decisions that are the responsibility of the governing body; or

(iii) the benefits of a consistent or co-ordinated approach in the district will outweigh the benefits of reflecting the particular needs and preferences of the communities within the local board area.

^[35] [4 December 2014] http://www.pwc.co.nz/news-release/local-government-analyst-sees-pros-and-cons-in-wellington-supercity-proposal/
^[36] See also, to the same effect, page 16, para 1.76. Draft proposal report, attached.
^[37] (p.18 onwards) http://www.huttcity.govt.nz/Documents/az/Environmental%20Sustainability%20Strategy.pdf
^[38] (e.g. p.12) http://www.huttcity.govt.nz/Documents/a-z/Stormwater%20plan%202012-2017.pdf
^[39] http://www.gw.govt.nz/assets/Our-Services/Flood-Protection/Hutt/FP-Hutt-River-FMP.pdf
^[40] Vol 2, p.3, para 1.17. See Local Government Commission draft proposal attached.
^[41] http://www.huttcity.govt.nz/Documents/a-z/Urban%20Growth%20Strategy%202014.pdf
^[42] Greater Wellington socio-demographic profile 1986-2031, p6
^[43] ‘Growth scenarios for the Wellington region: Towards 2041. See Tables 7.5 and 7.6 on p.21 and p.22. http://www.wrs.govt.nz/assets/WRS/Publications/Growth-scenarios-for-the-Wellington-Region-Towards-2041-BERL.pdf, 7.2.1
^[44] The Wellington Region - Situation analysis 2014: A snapshot, Berl, 2015, pp20-23. Appendix 15.
^[45] Volume 2 p.204. See Draft proposal attached.
^[46] http://www.wrs.govt.nz/assets/WRS/Publications/Wellington-Regional-Strategy-2012.pdf
^[47] See generally, for example, 13/400 (Pestrol Rodent Repellant) and 14/347 (Stone Dine Television).
^[48] Newman v Whangarei Leader, Case 171; Koolfoam Industries v NZ Herald Case 842; X v Waikato Times Case 858; Burstyn v Hawkes Bay Today Case 1019.
^[49] HCC Long Term Plan 2012-2022, original version. Appendix 13.
^[50] HCC Long Term Plan 2012-2022, amended. Appendix 14.