Education Minister takes aim at university over $5m Parnell mansion

The Education Minister has taken aim at the University of Auckland after the Government’s financial watchdog panned the purchase of a $5m Parnell mansion for its vice-chancellor.

The university bought the four-bedroom luxury home in November last year as a rental for incoming Vice-Chancellor Dawn Freshwater.

Chris Hipkins yesterday joined a chorus of criticism about the purchase, saying he was “very disappointed” and universities taking taxpayer dollars needed to spend their cash “wisely”.

Staff and student unions also labelled the purchase “frivolous” and called for the home to be immediately sold, given their members faced potential job losses and cuts to teaching services as a result of Covid-19.

Freshwater joined the university earlier this year on a $755,000 salary. The vice-chancellor’s role was listed as the nation’s fourth highest-paid public sector job in 2019.

She paid $1100 per week to rent the home, even though a valuer noted it could command $2000 on the open market.

But though Freshwater was involved in choosing a property- specifying Parnell as her preferred suburb – the home was not formally considered part of her employment terms.

That raised issues with Auditor-General John Ryan, who yesterday released a report saying there was no justifiable business case to buy the home.

“The Auditor-General has said this expenditure did not meet expectations on a number of levels, which is very disappointing,” Hipkins said.

The university said it accepted the Auditor-General’s findings and had called in independent advisors to improve its processes around sensitive expenditure.

In January, the Herald revealed the university’s decision to snap up the boutique property.

Boasting manicured gardens, 338sq m of floor space across three storeys and a spa and lap pool, the house is located near Sir John Key’s St Stephens Ave home.

The university paid $5.06m for the property – $1.5m above its council valuation.

It then spent between $160,000-$170,000 repairing the home’s roof and swimming pool.

The Auditor-General’s office subsequently launched an investigation.

It reviewed copies of the Freshwater’s employment contract, the home’s sale and purchase agreement, rental valuations, and interviewed university staff, an Official Information Act (OIA) response to the Herald revealed.

The university had earlier said the property was intended as both a rental for Freshwater and venue to host university-related events.

The Auditor-General did not agree that Freshwater needed help finding a place to live.

“It is hard to accept that purchasing a house to provide accommodation for the incoming vice-chancellor, and to host an anticipated 14 events in two years, justifies the $5 million expenditure,” the Auditor-General said.

“Nor does that level of hosting, in my view, justify an almost 50 per cent reduction in the property’s rent.”

The OIA documents show the university planned to host eight “donor dinners” in 2020/21 at the Parnell residence.

It also planned a further six “stakeholder dinners” where politicians and foreign university representatives were on the invite list.

However, none of the dinners took place due to social gathering restrictions sparked by the Covid-19 pandemic.

The Auditor-General found that while former Vice-Chancellor Stuart McCutcheon rented a university-owned home in Remuera from 2004 until recently, no university-related events had been hosted at that rental in the last two years.

The report said it knew of only two other New Zealand universities with vice-chancellor residences.

But both of these properties were gifted to the universities at least 70 years ago.

The report was released after the University of Auckland forecast a $48m drop in revenue by 2023 as it faced an unknown period without fee-paying overseas students.

“Universities across the country are saying they are in dire need of government support to get through this period,” NZ Union of Students’ Associations president Isabella Lenihan-Ikin said.

“But frivolous spending like this doesn’t add to their case and shows they are completely out of line with the reality facing staff and students.”

Tertiary Education Union organiser Nicole Wallace called for the home to be sold and said its purchase called into question the quality of the university’s overall financial management.

Freshwater, meanwhile, told staff in a group email in October she had recommended the university’s board sell the controversial home to help pay down debt.

A university spokeswoman denied Freshwater’s decision was linked to the Auditor-General’s review.

“It is the right thing to do, not something the university has to do,” she said at the time.

The Auditor-General said the university had taken steps to review the home’s purchase and its policies after earlier being shown a draft copy of the report.

The university said it accepted the Auditor-General’s findings and acknowledged its shortcomings in its “handling of the purchase process”.

“As is noted in the report, we have already commenced work to rectify those issues.”

This included commissioning independent advisers to review the university’s sensitive expenditure policies.

“The University of Auckland takes its responsibilities regarding the use of public resources very seriously.”

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