The Australian federal government has suspended the Norfolk Island Regional Council for three months.
The assistant minister for Regional Development and Territories, Nola Marino, made the announcement on Wednesday.
It comes after councillor Lisle Snell told RNZ Pacific last month that the Council faced huge debts and needed $AU10 million to survive.
Marino said their decision is based on the findings and recommendations of an independent audit of the Council's financial viability and long-term sustainability - an audit that had been requested by the Council.
The suspension means an administrator will be appointed but the services that the Council oversees, such as waste management, will continue.
During this period Canberra will provide financial support so the Council's immediate priorities, such as staff salaries, can be paid.
The move will cause some concern on the island among the group that remains angry at Canberra removing Norfolk's limited autonomy and replacing it with a regional council with little power.
The move will cause some concern on the island among the group that remains angry at Canberra removing Norfolk's limited autonomy and replacing it with a regional council with little power.
Snell, who was also the last chief minister in the autonomous government, said last month the economy was shattered by loss of tourism caused by Covid-19.
He said that alone meant the Council was down one million dollars each week.
Another islander, Brett Sanderson, has written, "the Norfolk community should be extremely worried about the complete loss of democratic rights, and the fact that the model of governance that has just been suspended was imposed against the will of residents by the very people who have now aborted it."