QUEENSTOWN LAKES DISTRICT COUNCIL AGAINST MOUNTAIN SCENE (Quango)

Case Number: 2072

Council Meeting: MAY 2009

Verdict: Not Upheld

Publication: Mountain Scene

Ruling Categories: Errors, Apology and Correction Sought
Balance, Lack Of
Accuracy

The Press Council has not upheld a complaint from Queenstown Lakes District Council concerning an article published in Mountain Scene.

Background
On January 29, 2009, the Mountain Scene newspaper published an article on the finances of the Queenstown Lakes District Council (QLDC) based on the annual report for the year to June 30, 2008. Under the heading “Quangos are costing us” the article pointed to a series of increases in costs and charges, debt and an overall surplus recorded by QLDC subsidiaries. It said QLDC appeared to be coy over the results and had quietly dropped the report on to its website.
The following day QLDC e-mailed the newspaper giving notice it had “serious issues” with the article and on February 2 sent the editor a list of what it believed were inaccuracies. The newspaper acknowledged the complaints and before responding further referred the matter to an expert in accounting.
On February 5 Mountain Scene published a correction of one figure and stated the QLDC complaints had been referred to the expert. On February 12 the newspaper published an article under the heading "QLDC comes up short" in which financial analyst, Alan Robb, substantially dismissed the complaints and was critical of the council’s financial reporting.
On February 19 under the heading "QLDC debt to soar further" the newspaper ran a report recording QLDC was investigating future funding options and which used disputed figures from the original report.
QLDC complained to the Press Council on March 3.

The Complaints
QLDC complained on the grounds of fairness, accuracy and failure to correct. It listed ten separate complaints including: that the newspaper had compared a full year with an incomplete year which invalidated the comparisons; that the newspaper had applied the cost of council controlled organisations to rates which was inappropriate; that the cost of council controlled organisations was $56.20 per rate paying property per year, and not $585 as originally reported or $383 as in the correction; that the information on rising costs was incorrectly and inadequately explained because the newspaper had not discussed the figures with QLDC; that QLDC could not “coin” it; that QLDC controlled organisations were not “quangos”; that the information in the report was not “buried by the council” and that Alan Robb was incorrectly described as a University of Canterbury professor; it was misleading to call his report “an adjudication”; that his criticisms were unfounded and contrary to the findings of the council’s auditors.

The Response
The editor of the newspaper said that when QLDC complained on February 2 he referred the matter to his general manager who holds a B Com degree and has substantial business experience. He believed that, based on the Annual Report, the figures were correct except one, the cost figure attributed to QLDC subsidiaries which should have been $7.6million and not $11.6 million. This was corrected in the publication of February 5. They also corrected their resulting calculation that the cost to the ratepayers was thus $383 per rate paying property and not $585 as they reported.
The editor said the correction was published as a stopgap measure as they wished to check further but had deadline issues. He decided to refer the matter to an independent accountancy specialist. Alan Robb’s work had been published in major media and he was contracted to examine the newspaper reports, the material on which it was based and QLDC’s complaints. It was stressed that he was perfectly free to find the newspaper wrong and the newspaper intended to act on his findings. In the event he dismissed QLDC’s complaints and was critical of their procedures.
As his findings were lengthy and technical they were summarised for print in the article of February 12 but the full text, which included all QLDC’s criticisms, was published on the newspaper’s website and readers were directed to it.
QLDC complained that the newspaper had compared figures from an incomplete year with those of a complete year but its own Annual Report had done just the same and the Annual Report did not provide comparable figures. The complaints that the figures published were not adequately explained were unjustified because these explanations were absent from the Annual Report. The editor quoted Alan Robb noting that it was unacceptable to expect readers of an annual report to have to ask for additional information before they could expect to obtain a “correct” view. This was a case where balance did not require an approach to QLDC because all the information should have been available.
The expression “coin it” was valid if there was a margin over cost regardless of whether QLDC was a non-profit organisation and the use of the term “quango” was an appropriate generally used term for a semi autonomous body, which QLDC subsidiaries were.
It was fair to suggest the report was little publicised. The Annual Report was not the subject of any press release nor was it in the “What’s New” section of QLDC’s website.
QLDC was being insulting in challenging Alan Robb’s standing or impartiality. He is an adjunct professor at St Mary’s University in Canada and was former head of Department of Accountancy, Finance and Information Systems at the University of Canterbury. The newspaper commissioned his report at the usual professional rate. It was a quibble for QLDC to object to the word “adjudication” when Alan Robb was specifically instructed to independently test the complaint.
The fact that QLDC’s auditor had passed the Annual Report showed only it met a statutory requirement and many examples showed that such audits could not always be taken as full disclosure of the subject’s financial situation.

Further comment
QLDC responded on April 2 standing by its complaints. It said the Annual Report was adopted in public from a publicly notified agenda at a meeting at which two members of the media and two members of the public were present. QLDC had no quarrel with Alan Robb but it was factually incorrect to describe him as a former Canterbury University accounting professor and QLDC believed Mountain Scene should have disclosed he was paid for his opinion. QLDC had never been contacted for an explanation of the figures which would have been “happily given.”
In a final comment the newspaper said that several of the so-called errors were accurately drawn from the Annual Report and the council was challenging them only by using fresh information.

Discussion
As the Press Council has suggested in previous rulings it is not unusual for tensions to arise between local authorities and the local media and this is particularly true in the sensitive area of finance. It is part of a newspaper’s role to cast a critical eye on such matters. Nor is it improper for a publication to take an adversarial stance, as it appears Mountain Scene tends to do.
The interpretation of financial information is fraught with difficulty and capable of widely differing analyses, as a glance at the business pages of the world’s media will quickly reveal, particularly in the current economic climate. It is difficult to take issue with Mountain Scene’s decision to seek an outside source to examine QLDC’s response to its story. QLDC’s objections to the term “adjudication,” to the description of Alan Robb as a former Canterbury University Accounting professor - he is a professor and was formerly at Canterbury University - and to no mention being made of the normal practice of his being paid for a professional opinion lack real substance.
The publication of the full report from Robb and, therefore, the full complaints from QLDC on its website is routine practice and might be argued provided a good airing of QLDC’s interpretation of the figures. Before receiving Robb’s report Mountain Scene, in its correction of February 5, had directed readers to the full text of QLDC’s complaints.
The use of the terms “coining it” and “quangos” might not be the council’s preferences but they are unlikely to mislead the lay reader and cannot be said to be inaccurate. Whether the amount of publicity given to the release of the Annual Report amounted to its being hidden is debatable. The presence of two members of the public and two members of the media attests to the fact it was not behind closed doors but the newspaper is entitled to judge the publicity provided was not extensive.
On the matter of balance Mountain Scene and Alan Robb adopt the position that the full explanations QLDC seek to provide should have been in the Annual Report and therefore QLDC’s views need not be sought. QLDC in its correspondence says that this is the heart of the problem.
Mountain Scene's original report says specifically "the revelations are in the QLDC's newly released Annual Report."
QLDC's view is that the figures need explaining. The newspaper's view is that the document on which it relied should have been a complete statement of the financial position. It points out that QLDC states "the Annual Report is the principal financial reporting document for the Crown." The newspaper is, therefore, justified in restricting its story to the Report, they argued.
This may be true, from an accounting perspective, but in the interests of its readers’ better understanding the newspaper would have been doing them a service in approaching QLDC.
It is common practice to seek further elucidation of the information in financial statements, whether from public or private organisations. When it became apparent that the figures published were challenged by QLDC it would have been prudent to allow the council the opportunity to provide its explanation.
QLDC did respond quickly to the story offering further financial information in explanation of the bald figures in the annual report. An example, cited by both the complainant and the newspaper, was the rise in the spending on vehicles. This was substantially the consequence of the purchase of a new fire engine for Queenstown Airport. This is information which the readers would surely have appreciated, as would readers of the Annual Report had it been there.
But QLDC’s own approach hardly encouraged a cordial exchange and the newspaper acted properly in seeking another opinion to test its interpretations of the material in the Annual Report.

Decision
The complaints of inaccuracy and lack of balance are not upheld. Mountain Scene did not act unreasonably in relying only on the Annual Report in its reporting and specifically indicated that was from where its figures came.
The complaints concerning the newspaper's use of “quangos”, “coining it” and its description of Alan Robb are not upheld.

Press Council members considering the complaint were Barry Paterson (Chairman), Pip Bruce Ferguson, Ruth Buddicom, Kate Coughlan, John Gardner, Sandy Gill, Penny Harding, Keith Lees, Alan Samson, Lynn Scott.

Clive Lind took no part in the consideration of this complaint.