Two high profile enterprises in Hawke’s Bay — the Hawke’s Bay Opera House and the Hawke’s Bay Airport — apparently changed “life forms” on July 1.

The Opera House became a “charitable company” instead of merely a money-losing arm of the Hastings Council. As if by magic, this legal transformation is supposed to somehow make the operation more “business-like” and improve its financial fortunes. But it’s not clear why or how this is supposed to happen.

Yes, the deck chairs have been re-arranged, but all the same overseers, including Councillor Bowers, are occupying the chairs! One might ask: If these folks couldn’t make a go of it before, why should they be successful now, simply because they changed hats? Meantime, who provides the performance goals and the funds to balance the books? Still the Hastings Council. So much for business direction.

Up the road, the Hawke’s Bay Airport has now been “corporatised,” meaning chiefly that it can now borrow money to do things like fund runway extensions and business parks.

Its governance has also changed, with two new directors named by the Crown — Jim Scotland and Stuart Webster — and one director each appointed by the Napier and Hastings Councils (who both chose to re-appoint individuals from the previous airport authority).

Despite the two holdover appointees, this team strikes me as more likely to succeed. Jim Scotland is chairman of the board of the Napier Port, which has been doing quite well financially, thank you. The Port’s board is named by the HB Regional Council.

But perhaps the key to the Port’s success is that the HBRC doesn’t meddle in the business! Like Scotland himself, the other Port directors are savvy business people. While the board is ultimately accountable to the Regional Council, it operates on a long leash.

That’s why it was scary to see that yesterday’s HB Today was full of Mayor Yule saying the airport would do this … then it would do that … then it would do the next thing. As if he were running the show, as he definitely is with the sports park trust. But Jim Scotland doesn’t strike me like the errand boys Mayor Yule has put on the sports park trust. Indeed, the new airport company won’t have directors like Scotland for long if politicians insist on sticking their noses into the business going forward.

In fact, the Hastings and Napier Councils might consider the unique success of the Port of Napier’s governance model and practice, as they ponder what to do about their money losers like Splash Planet and Marineland, and their other business-like assets.

The less our politicians are involved in these entrepreneurial activities, the better off ratepayers will be.

Tom Belford

Join the Conversation

4 Comments

  1. While normally I’d be the first to agree that councils should stick to their core business (and charge accordingly) maybe we haven’t given them a chance. Maybe a part of their remit should be to run ancilliary busineses for the public and community good under certain guidelines whereby the business is obliged to run effeciently and NOT become a black hole of ratepayer funds.

    Why the change of heart you ask? Well as I cast my gaze across my TV screen, the newspapers and magizenes and of course the interweb thingy I have been made aware that maybe private enterprise can’t be tasked with running business’s either. GM? AIG? Fanny and wotsits? No look closer to home… look at the rapacious energy companies in our own back yard. Prices skyrocketing while infrastructure sits. Look at Fonterra, the diary Giant, at the same time as the CEO takes his multimillion dollar salary and pats himself warmly on the back for opening dairy farms in China, Peru and probably outer Mongolia the milk solids payout bounces around like a bright red superball in a carwreak.

    So no, while local authorities haven’t proven themselves to be the best bet at running community owned assets at least the community still owns the asset and there is (or should be) direct accountability to the public at large.

  2. Reminds me of the joke about the new fully automated aeroplane – only has 2 up front, a pilot and a Rottweiler;

    But if it is fully automatic what is the pilot for?

    He is there to feed the dog.

    So why is the Rottweiler there?

    He is there to bite the hand of the Pilot if he tries to touch anything.

    What we really need is a Rottweiler to bite the hand of Local Body members when they try to interfere. Anybody out there with a spare Rotty?

  3. Well said, Tom. Hopefully articles like this will help the voters of the region to understand that governments, whether national or regional or local, see the need to elect coucillors who understand that running businesses is not their role.

    Great story, Collin. It's like the British TV series "Yes, Prime Minister" which most saw as comedy when in fact it was very close to what actually happens.

  4. Good call and to refer to the Airport stuff – there seems to be a drive to build a longer airport based on thinking like – build it and they will come. This is not based on commercial realities as all the airlines would be here if it was profitable for them to be here – the numbers just don’t stack up.

    The argument that size matters is a perennial, but I believe the issue is not runway size at all for ratepayers – we are just frustrated by a lack of connectivity with difficulty flying anywhere but Auckland or Wellington from HB. I work a bit in Tauranga, and it is just quicker to drive the 4 hours…

    Like the internet, travel is an issue of speed and connectivity – and these seem to be a function of population – because it makes good financial sense for providers to service these markets. The present regimes will have us all believe that the another $10M+ will bring a change in the travelers' fortunes, but the profitability will not change so the service will not either – we’ll all just end up with some more debt on our rates.

    Maybe, travelers should be resorting to Skype anyway for sustainability purposes.

Leave a comment

Your email address will not be published. Required fields are marked *