The Government says it has rectified the error that led to the Auditor General finding the payment of $29.9 million to pay for the land at Ihumātao to be unlawful due to officials missing key steps in gaining approval.
In a letter to National MP Nicola Willis and ACT leader David Seymour earlier today, Controller and Auditor General John Ryan wrote - "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 as part of an Appropriation (Confirmation and Validation) Act."
1 NEWS political reporter Maiki Sherman says the Government now says the error has been rectified and was found to be part of March appropriations.
Prime Minister Jacinda Ardern was asked about the Auditor General's letter.
"We’ve been confident on our side we were using funding that was from land for housing and that is exactly, ultimately, what all parties have determined we are working towards," Ardern said.
"We were very clear, this was land... that will be utilised for housing. What we fully expect though is that we have quite a large process to go through between all parties to determine how that will be undertaken."
Willis called it "disgraceful" and accused the Government of deciding the "usual rules need not apply".
Seymour said that "New Zealanders deserve better than this".
Late last year, after years of dispute, a binding memorandum of understanding (He Pūmautanga) was signed by Kīngitanga, the Crown and Auckland Council in December, with the Government buying the land for $29.9 million.
Housing Minister Megan Woods said last year the land would be bought under the Land for Housing Programme, with the intent it would avoid issues with the Treaty of Waitangi settlement process.
The Government would purchase the land with a proposal that it be used for housing. But, a steering committee (rōpū whakahaere) would ultimately decide what the land would be used for.
The letter from Ryan stated that in their view, "the intent of the document prepared by the Ministry, and the intent of the joint Ministers, was to establish a new appropriation that would provide authority for the purchase of the land at Ihumātao".
"However, as described above, there were two important omissions from the approval for the expenditure. As a result, the payment of $29.9 million used to purchase the land was incurred without the proper authority."
The two omissions by the Ministry of Housing was to not request "approval to use the necessary authority from Parliament" and it omitted to request that the new appropriation be included in the next Appropriation (Supplementary Estimates) Bill.
Megan Woods today said Ministry of Housing making a payment without the proper authority by officials was "not unusual and happened 71 times over the last five years under National".
"While it is not an ideal situation this was a technical error and there are standard processes for correcting it. The mistake happened because two recommendations that were needed to formally authorise the payment were accidentally left off the briefing paper.
"The Auditor General is not intending to investigate further. It will be addressed in the normal course of their work."
Ihumātao was confiscated from Māori in 1863 and was then held in private ownership. In 2014, Fletcher Building purchased the land with the intention to build 480 homes in partnership with local iwi, Te Kawerau ā Maki. However, a separate group claiming mana whenua of the land occupied Ihumātao and those plans were put on hold in July last year.