The Ihumtao land deal is ‘illegal’ before Parliament approves it, according to the Auditor-General.

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Since the ministry did not obtain the required permits for using the $29.9 million, the government would have to pass laws to make the acquisition of the land at Ihumtao legal.

The Auditor-investigation General’s was launched in response to concerns from National and the ACT Party that the government had purchased Ihumtao against Treasury advice using money from the Land for Housing Fund.

In December of last year, the government reached an agreement with Fletcher Building to purchase the property.

National MP Nicola Willis and ACT leader David Seymour were concerned the fund went against the purpose of the fund as there was no guarantee houses would be built at Ihumātao.

That was despite Finance Minister Grant Robertson having vowed the land would be used for housing.

The Auditor-General’s Office did not have any concerns about that aspect of the deal, but it did find spending was not appropriate because the right approvals were not sought when the government set up the new fund.

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“In our view, the intent of the Ministry and the intent of Ministers, was to establish a new appropriation that would provide authority for the purchase of the land at Ihumātao.”

“However, because the Ministry did not seek the correct approvals, the expenditure was incurred without appropriation and without authority to use Imprest Supply. For these reasons, the payment is unlawful until validated by Parliament.”

The Ministry of Housing and Urban Development failed to request approval from Cabinet to set up the new fund, and it did not put in a request in the relevant legislation, Appropriation (Supplementary Estimates) Bill, to add the new fund.

Without those correct approvals, “the payment is unlawful until validated by Parliament,” the Auditor-General said.

The government must now pass the Appropriate (Confirmation and Validation) Act for the payment to be validated, and the Minister of Housing has to explain to parliament what went wrong.

It must also report the unappropriated expenditure in report, Financial Statements of the Government of New Zealand 2020/21, which will be audited by the Auditor-General.

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Treasury had advised against using a fund earmarked for land swaps for housing, which Finance Minister Grant Robertson has said fulfilled all the requisite rules and regulations.

Prime Minister Jacinda Ardern this afternoon said the government was confident it was using funding that was allocated for housing.

“It was funding that was intended to purchase land for housing – that has been our intent – the difference here being of course there’s a lot of work to go through between all parties to determine where on the land, how it can be most appropriately done and how it can be used for housing for the community.”

Ryan said he did not plan to carry out further inquiry work into this matter, as it would be addressed in his role as Controller.

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