The council labelled "dysfunctional" by Prime Minister John Key will now come under the watch of a Government-appointed observer.
Ongoing ructions at Christchurch City Council came to a head this afternoon as the Government stepped in for crisis talks.
Mayor Bob Parker and Government ministers held a closed door council meeting following months of infighting and outrage over Chief Executive Tony Marryatt's $68,000 pay rise.
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After today's meeting Marryatt said he had declined his controversial pay rise.
Local Government Minister Nick Smith said the Government is installing former president of Local Government New Zealand, Kerry Marshall, as Crown Observer at the council. He will start the job on Monday.
Mayor Bob Parker has expressed support for the move, saying councillors have lost trust and need external help.
Smith says the appointment will help address governance issues and work to rebuild public confidence in the council.
It is the first time the Government has acted in such a way and Smith admits Christchurch will be a bit of a guinea pig for the policy.
The minister said he would like to see legislative change that would provide "lower order interventions rather than the nuclear approach of sacking a council and putting commissioners in".
The observer will have no real decision making powers in council but can run and facilitate meetings.
'People have a choice'
Smith said effective governance has never been so important in the 150 year history of Christchurch.
"I have emphasised to the council that people have a choice whether to stay or invest and they are looking to the council for effective leadership."
Smith said the observer's role will be to rebuild good professional relationships between the mayor, councillors and staff and to provide guidance on how they can effectively govern.
He said the appointment is in response to widely-held concerns that the council's decision making and governance roles are becoming dysfunctional.
Earlier some people were calling for commissioners to be brought in to replace the council but Local Government Minister Nick Smith had previously made it clear that he didn't want to resort to that scenario.
Before the meeting Smith said with all the challenges from the ongoing earthquakes, the city needs its council to be functioning well and that is what he would be focusing on.
The infighting is casting a shadow over the rebuild of the quake-ravaged city.
Council chief executive Tony Marryatt earlier said he may reconsider accepting the payrise pending the outcome of today's meeting.
Marryatt says he has instructed the payroll office to stop paying him his salary increase from today. He says his decision is based on what's best for the council and its staff.
"The negative publicity and public opinion has been tough for staff at the organisation and has the potential to distract this council from the very important task at hand of rebuilding our city," Marryatt says.
"I want to show my commitment to Christchurch, to the council and to all our staff. I want to lead our team through the rebuild."
Marryatt said the councillors have said today that they will work together collegially.
"If they can be true to this commitment, I will make a similar commitment in the same spirit of good faith and will give back any increase I've received to date."
Strong words
In a live interview on TV ONE's Close Up last night Mayor Bob Parker and Reverend Mike Coleman from the Wider Earthquake Communities Action Network exchanged strong words over the payrise controversy.
Parker said the row is destructive and the outcome is in the hands of Marryatt because the council voted for his $68,000 pay increase at a market rate.
But Coleman said the damage has already been done.
Parker said the public furore has "seriously damaged" trust among the councillors and he backed comments by Prime Minister John Key that the council has become dysfunctional.
'No understanding'
Coleman has slammed Marryatt saying he is intent on fighting for, and justifying, his pay rise while people are out of their homes and still paying rates towards that pay rise.
"He seems to have no understanding of what is going on across the city," said Coleman.
People were especially upset when Marryatt chose to stay in the Gold Coast while the city was battling with significant earthquakes, Coleman said.
"Marryatt didn't have to return home to no power, sewerage or water for months on end...he was able to go home to Hamilton and play golf.
Appeal for trust
Parker believes Marryatt is willing to compromise over the issue of his salary but needs to see the council is prepared to do its job, "play by the rules, treat each other fairly and get on with the very important work".
"We need a working environment where councillors can trust each other and where the staff and chief executive aren't publicly criticised by the very people who employ them," Parker said.
Parker said it is important to retain the chief executive and executive structure which has built up a lot of loyalty and "you could rip the heart out of this organisation in the middle of a rebuild by removing a figure like that".
Coleman wants to see Commissioners appointed to run the city but Parker said that "would be the end of democracy in Christchurch City".
"I want my council to stop breaking the trust that is essential for us to work effectively and well.
"Council is sitting on the brink of a cliff. If we can't work together cohesively and co-operatively and with ethics I don't think we deserve to have the jobs."
But Coleman says the dysfunction in the council needs to be addressed. "Bob Parker and Tony Marryatt run the show and tell the elected councillors what's going to happen."
Coleman said Marryatt came to Christchurch with a reputation for creating an environment of fear and bullying and "that's exactly what's happening in our council now".
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