Business Hawke’s Bay today announced that the organisation is considering closing its doors. The reason given: inadequate financial support from the region’s five councils.

Leaders of the five councils who presently fund BizHB to the tune of a (some would say) paltry $300k per year responded with hardly a sniffle, suggesting that what BizHB might couch as a ‘possibility under consideration’ was already being treated as a done deal.

Consider this official comment from HBRC chair Rex Graham: “While we are considering the review and the recommendations of this report, we acknowledge that Business Hawke’s Bay are proposing to wind-down operations. We will work positively with Business Hawke’s Bay to help them through this transition…”

“Transition” … uh huh.

Mayor Alex Walker was a bit more oblique: “…we have the opportunity to strengthen how we approach a new model that will add more value.”

“New model” … uh huh.

The politicians are pointing to a yet-to-be-publicly-released review that has apparently opened their eyes to a better approach to supporting the region’s economic development. In their release responding to BizHB’s announcement:

“The review was part of Hawke’s Bay’s councils’ legal obligation to periodically review the cost effectiveness and performance of local government funded initiatives, and ensure the ratepayers of Hawke’s Bay receive value for money. It was recognised that the review could also present opportunities to improve regional coherence and regional impact.”

As a key player in the region’s Matariki economic development strategy, BizHB would be privy to the recommendations in this review, which BayBuzz understands to be pointed toward creating a new Economic Development Agency (EDA) for the region.

One can only conclude that BizHB saw some ‘handwriting on wall’ in that review, sought some assurances from the politicians about the organisation’s future role and funding, and didn’t receive the warm embrace they sought. Kind of like Diana and the Queen in The Crown.

And so the BizHB Board, populated by some of HB’s savviest  business leaders, has said effectively … ‘If we’re unwanted, we’re outta here”.

Despite its achievements, BizHB has always maintained that their council funding was insufficient to make major impact — for example, $300k per year to support high-value economic development (of all kinds) for the region, while HB Tourism received $1.5m per year to promote visitors. At the same time, councils have invested ambitiously in their own economic development staffs and projects, obviously spending more on themselves than on BizHB.

The politicians have noted they can’t just whip up extra money outside their normal annual and LTP budgeting processes, and BizHB should be well aware of that constraint. But perhaps when they saw $1m whipped up with out breaking a sweat for relief to farmers (and then watch much of that sit unclaimed), they might have thought there was hope for additional assistance from the cookie jar.

But there will be no additional assistance and no reassurance about future role. And the merits of any new ‘model’ for encouraging regional economic development via ratepayer support will be debated over the period next fall when each council puts its next LTP together. If there is to be a new EDA, it will need to be floated in exactly the same form in each council’s own LTP, alongside the dollar amount each council is proposing to chip in.

It will be a breathtaking achievement to see all the councils get on the same page as to the governance and funding of this new entity by next June 30! And it won’t be worth the candle if a helluva lot more money isn’t committed to the mission than the $300k now spent on BizHB. Frankly, it will cost the councils collectively at least half that amount just to consult on and create something new!

But nevertheless, if the BizHB Board thinks they’ve laid a ‘dare’ before the councils that councils can’t chance, they’ve made a major political miscalculation. The ‘truth’ is that BizHB hasn’t in the past delivered a passionate constituency prepared to storm the councils and thump the tables in its defence (think, in contrast, of the noise the hospitality industry made when HBRC proposed its cutbacks on HB Tourism).

And they are unlikely to do so now.

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1 Comment

  1. A well constructed summary Tom. The business community just hasn’t engaged. It would be nice to hear from the Chamber of Commerce an entity that has actual business members. Thanks. Dean

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