The Regional Council yesterday finally approved its investment company, which will encompass the Port of Napier and other yet-to-be-invented public assets.
As several Councillors noted, it was an approval “in principle” … meaning that technically the decision can be undone if, once the detail work is completed, Councillors are dissatisified with their creation. As some said, “the devil is in the details.” Several Councillors — Scott, von Dadelszen, Rose — gave their support begrudgingly, each noting earlier and/or lingering concerns. But only Councillor Liz Remmerswaal voted against the company, believing it would engender unacceptable risk to the Council’s portfolio and less public accountability.
Assuming the investment company launches, it represents a creditable victory for Councillor Alan Dick, its original champion, along with steadfast promoter Andrew Newman, the HBRC’s chief executive.
In fact, the only thing that could now de-rail creation of the company would be a bun fight amongst Councillors about the governance structure. Submitters were pretty evenly divided on whether they thought the investment company should proceed or not. And then, among those who thought the company wise (or inevitable), submitters were divided as to whether its governing board should consist mostly (or exclusively) of Councillors, versus mostly (or exclusively) commercially-savvy private sector directors.
My reading is that most of the Councillors believe most of the directors of the company should be drawn from the private sector.
I’ve argued in BayBuzz and in submissions that the directors should be primarily private sector, with one or, at most, two Councillors also on its Board.
As Councillor Neil Kirton pointed out yesterday, the investment company is intended to serve two purposes that are hopefully complementary — improve financial returns from the Council’s assets (for the benefit of ratepayers), and advance strategic goals of the Council with respect to providing needed infrastructure in Hawke’s Bay. While the former purpose requires commercial expertise, the latter requires guidance from the public’s elected representatives. And although the ultimate accountability for the company’s performance still rests with the full Regional Council, the public good is advanced by having one or two Councillors more intimately aware of and involved in the regular workings of the company’s Board. There’s no substitute for ‘being in the room’ when key plans and decisions are being debated and decided.
Chief executive Newman indicated it would take another 2-3 months for the detail work to be completed, so that the company’s final ratification could occur. Assuming all goes to plan, the most likely first sibling to join the Port of Napier in the investment company’s portfolio will be the ‘Waterco’ that would presumptively own the Council’s proposed water storage schemes in Central Hawke’s Bay and elsewhere.
However, Councillor Tim Gilbertson has even greater aspirations for what he calls the Hawke’s Bay Investment Company. He sees it as a muscular company that should eventually own many or all of the publicly-owned assets/companies around the Bay — from Unison, Centralines and Infracon to regional sports and cultural facilities to the port and airport.
In his vision, the investment company should be the economic complement to regional political amalgamation.
Quite a grand vision for an anarchist!
Tom Belford
If Eileen, Kevin and Christine had reservations why did they vote for it??? Strange.
The problem with COEs (Council-owned entitites) lies not in the theory but in the practice. In theory placing public assets in private control to derive best value for the public is a nice idea; in practice (based on working models to date, eg Auckland's Watercare et al) the assets grow at the expense of the public – and outside of their control.
This is effectively privatisation by stealth. Sorry, don't buy it.
Unelected business-people have no inherent responsibility to the citizens they ostensibly are put there to represent. Only IF the directors could be sacked by the public – their ultimate owners/employers – would this model begin to have the safeguards it needs to perform in its stakeholders' interests. And the stakeholders are NOT the Councils, but the citizens who collectively OWN the Councils. That's the bit business-pro reformists tend to forget.
For the last 22 years the Port of Napier, now wholy owners by the HBRC, has been run by independent directors, and since 1995 without a single elected councilor on the board. Over that time I have not heard a single expression of concern at this arrangment, nor at its perfomance.
Bruce, Air New Zealand is majority owned by the tax payer and yet its board is not made up of politicians and yet it performs admirably in tough operating environments.
The board is made up of suitably skilled and qualified people who are there to get the very best return for the shareholders.
You seem to pay no attention to the fact that the Directors would be appointed by the council and the council have in turn been elected by the community to act on their behalf.
Yes the Directors do need to consider the best interests of ratepayers, but the also must consider the best interests of the business.
You also seem to have forgotten that the direction the board takes would be defined by a statement of intent, once again put in place by the council as representatives of the community.
Ewan: forgotten the issues over noise, and how the Port company fought tooth and nail to deny it was causing a problem? and how much that debacle cost the ratepayers?
or the issue over the way the structure of the port has changed the nature of the bay "behind" it, causing (or at least exacerbating) erosion of Westshore/Bay View beachfront… and how the company is fighting tooth and nail to deny its business contributes to that problem.
two prime examples i suggest of an "arm's length" COE forgetting who it actually works for… though hardly a surprise, as evidently HBRC has also forgotten.
Mike: similarly, been gouged to fly out of Napier lately? or hit by an unreasonable price hike in your electric bill?
separating business from community may be great for the business, but who pays the bills? yep. the community.