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Watchdog finds Auckland University's $5m mansion purchase wasn't justified

The Government’s top watchdog has found the University of Auckland’s purchase of a $5 million mansion for its Vice-Chancellor to stay in upmarket Parnell wasn’t justified. 

The Parnell house purchased by the University of Auckland for $5 million. Source: Google Maps

In a report published today, the Auditor-General said its inquiry into the purchase found the university failed to follow its policy on sensitive purchases and its policy on approving spending on capital. 

“We have not seen evidence that the university considered whether spending $5 million was appropriate,” Auditor-General John Ryan said in the report.

“We would expect to see full consideration given to such a decision.”

The university bought the property in November last year for its Vice-Chancellor Dawn Freshwater, who was appointed in 2019, to stay at and host social events for donors and stakeholders.

The three-storey property has four bedrooms, three bathrooms, a spa, a lap pool and a large, landscaped garden. 

In its report, Ryan's office “saw no documented consideration about why the university needed the house for hosting, the benefits of that hosting, and how often it might be used”. 

“We also understand that the university expects most of these events to involve professional caterers and cleaners engaged and paid for by the university. Therefore, the only apparent future cost saving to the university in this arrangement would be the venue hire.”

The university then entered into a tenancy agreement with Freshwater, with rent set at about 50 per cent of its market rent. 

“In my view, the university has not been able to show a justifiable business purpose for purchasing the house,” Ryan said. 

“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. 

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

The rating value of the house was $3.475 million, with an asking price of $5.35 million. The university purchased the house for $5.062 million, then spent more than $150,000 on remedial work on the house. 

The university told the Auditor-General the property market in Auckland was “particularly competitive”, and that it was “unreasonable” for Freshwater to come from overseas and buy a house for a five-year term in the role. 

The purchase came after the university sold its Remuera property due to “weathertightness issues”, which meant it was no longer fit for hosting events. 

In a statement to 1 NEWS, the University of Auckland said it accepted the report’s findings “and acknowledges there were shortcomings in the university’s handling of the purchase process”.

“We have commissioned independent advisors to undertake detailed reviews of the university’s policies and processes relating to sensitive expenditure,” a spokesperson said.

“Once completed, any changes the university makes in response to those reviews to its policies and processes will be made publicly available.”

The university is forecasting a $48 million drop in revenue by 2023 with the Covid-19 pandemic impacting international student enrolment. 

RNZ reported in October that Freshwater had recommended the house be sold in the wake of the pandemic to help reduce the university's debt.

Freshwater made $755,000 in the Vice-Chancellor role in 2019. This makes her the fourth highest-paid person in New Zealand’s public sector.