In this update, who’s in and who’s out as local campaigns shape up, Winder Report 2 projects significant savings from reorganisation, and the mayors get nervous about the dam.

Campaigning Underway

On July 26th, the official window will open for political wannabes to declare their candidacies for local body elections. That window will close on August 23rd.

Already the jockeying has begun in earnest, particularly in the Hastings and Napier mayoral contests.

Hastings mayoralty

On the surface, the Hastings race, with Mayor Lawrence Yule seeking a fifth term, seems like a snooze. Not because Yule is invincible (he won 54% of votes cast in 2010), but because he looks to be facing two primary candidates who are likely to split the ‘change’ vote – Councillors Wayne Bradshaw and Simon Nixon.

Nixon won 32% of the vote in 2010 and two other candidates, both Mäori (Des Ratima and Peter Nee Harland), together picked up the remaining 14%. Both Bradshaw and Nixon present themselves as far more cautious than Yule about spending ratepayer dollars, and both criticise Yule for being a part-time mayor distracted by his Local Government NZ presidential duties.

At present, the casual punter would have difficulty distinguishing between Nixon and Bradshaw. A closer observer might say that Bradshaw does more homework and has been more engaged with the community. Be that as it may, the standard jab of Yule supporters regarding both of his opponents is … What are they for?

For his part, Mayor Yule, seems most focused on salvaging the ‘regional’ in Regional Sports Park (this time with an international hockey turf), and championing reorganisation. He presents a more affirmative, activist look than Nixon and Bradshaw, prepared to use his office and the resources of the council to ‘make things happen’ for the community.

Too bad Hastings voters will be denied the opportunity to see how the two styles and philosophies fare in a simple mano-a-mano contest.

Napier mayoralty

With Mayor Barbara Arnott stepping aside (complemented by the resignation of NCC Chief Executive Neil Taylor), Napier is about to undergo the political earthquake of 2013. So far, candidates for mayor include Councillors John (Bertie) Cocking, Bill Dalton, Michelle Pyke and Rob Lutter, plus Tamatea Intermediate School principal Roy Sye and Christmas in the Park organizer David Trim.

Cocking, Dalton and Pyke are proven vote-getters on a Napier at-large basis, and there are only about 18,000 mayoralty votes up for grabs (based on 2010 returns). Arnott received 13,515 of those votes last time, against Pyke’s 4,476.

The ‘change’ candidates in this pack are clearly Sye and Pyke. Sye, with a base in the education community, also has the strong support of a group of business leaders dissatisfied with the Arnott regime, as well as other leaders committed to reorganisation. Pyke, although an incumbent, speaks for a part of the community that (with the exception of Maxine Boag) has not had a voice at the council table. A Sye-Pyke ‘change’ alliance perhaps?

Regional Council

With three of nine incumbents departing so far (von Dadelszen, Remmerswaal and Kirton), the Regional Council is guaranteed new faces in October, unlike 2010 when all nine incumbents were re-elected. The main action will occur in the Hastings and Napier constituencies, where vacated seats exist.

In Napier (with three HBRC seats), environmentalist Paul Bailey and Transparent Hawke’s Bay leader Pauline Elliott are expected to stand. Both are strong critics of present HBRC direction. The Napier open seat created by Neil Kirton’s departure will undoubtedly lure other contenders into the race.

In Hastings, voters can expect plenty of choice. Incumbents Kevin Rose and Ewan McGregor are expected to stand again; 2010 challengers Tom Belford and (quasi-incumbent) Murray Douglas are tipped to compete again as well. And former Labour MP Rick Barker has announced his intention to stand.

In a new twist, the Hastings constituency of the HBRC is now split into two wards – an urban ward with three seats, and a rural ward with one seat. What is not clear is where various candidates will decide to stand.

For example, one might think the Hastings incumbents – Rose and/or McGregor – both of whom present themselves as protectors of rural Hawke’s Bay from the urban green horde, might choose to run in the new rural ward. Of course, as urban retirees, they would face the risk of a candidate with stronger rural credentials emerging. Perhaps better to face the ‘devils they know’ in the urban ward!

The changed make-up of the Council could also affect the choice of the next HBRC chairman, as councillors elect one of themselves to that post. Chairman Fenton Wilson’s 1,322 votes in the Wairoa constituency earned him 46% of the vote in 2010, enough to prevail over three other contenders. Should Wilson be fortunate enough to win over divided opposition in 2013, he’ll still be at the mercy of the new HBRC councillors to retain his chairmanship.

Given the emerging candidate line-up, voters for Regional Council will be choosing whether they want to see the HBRC operated as an economic development agency or as a steward of the region’s environment and natural resource base.

Reorganisation

The amalgamation front has been quiet lately, but that’s about to change. First, more definitive projections of potential reorganisation savings are now available. And second, reorganisation options are being narrowed by the Local Government Commission.

On June 26th, the long-awaited Part 2 – Prosperity Report prepared by consultant Peter Winder (Winder 2) detailing potential savings from reorganisation was released. This report calculates the transition costs and ongoing savings that might be expected from each of three possible reorganisation scenarios for Hawke’s Bay.

Scenario One asumes the ‘One Council’ plan proposed by A Better Hawke’s Bay, which consolidates all five of the region’s councils. Winder projects that this reorganisation would cost $18.4 million to implement, while returning net savings of $59.3 million by the end of fiscal 2021/22.

Full amalgamation as proposed by ABHB could deliver over $10 million per year in net savings once initial transition expenses were met (most of these would occur in the first two years in each reorganisation scenario).

Says ABHB Chairman Rebecca Turner: “The ongoing compound benefit of $10 million annually will be immense for our HB region. Of course there will be upfront transition costs, but these will be recovered inside two years from the savings. And the other benefits coming from unified regional leadership, a regional vision and the simplification and consistency of policies for business and the community are unquantifiable!”

Scenario Two envisions consolidation of the four territorial authorities, while leaving the Regional Council as is. This approach would cost $14.2 million to implement, while delivering net savings of $48.2 million in the same time period.

Scenario Three envisions consolidating the Napier and Wairoa councils, and Hastings and CHB councils (using the Tutaekuri River as a boundary between north and south), and leaving the Regional Council as is. This approach would cost $13.6 million to implement, while delivering net savings of $16.1 million in the same time period.

There are a number of key points to take into account in considering the projections of Winder 2.

First, the savings discussed are those gained exclusively from operating efficiencies – such as consolidated procurement and implementing best business practices across all activities – and reducing personnel and “backroom overhead”. Winder 2 assumes that the existing Long Term Plans of the region’s five councils would be rolled out exactly as projected … but managed more efficiently.

Thus the savings do not reflect any potential programmatic changes in those plans, such as more strategically planned facilities and infrastructure development. Winder 2 points out that such changes – whether to capital expenditure, borrowing strategy or service levels – would be political decisions to be made by any new council.

Nor do these projected savings reflect the savings in time and resources that would benefit businesses, community organisations and individuals who must interact today with multiple councils in their day-to-day affairs.

Second, Winder 2 also notes that the savings actually achieved might not translate directly into rate reductions. If, for example, full amalgamation began producing annual savings in excess of $10 million, new councillors would still need to decide how to allocate those savings – they could be allocated to curbing rates (or debt) or to enhancing services and infrastructure, or some combination. Again, a political decision to be made by any new council.

Third, Winder 2 deals a blow to shared services (as did Winder’s initial report), the fallback of status quo advocates, commenting: “There is potential for savings in overheads and back office systems through shared services. However, to date there has been little progress on a scale that would be required to deliver the potential saving in overheads identified in some of the reform scenarios considered here.”

Defenders of the status quo will need to counter the reality that Winder has observed and, in effect, make the case that ratepayers should continue to pay $10 million more per year than they need to for local government.

The Regional Council, in its zeal to protect its existence, has sought to minimise the savings from reorganisation, and indeed initially released incorrect figures to the media, for which it had to apologise. Ultimately, it is ratepayers (actually, voters) who will decide whether saving $10 million per year in council spending is an appealing prospect.

So clearly the availability of these financial projections will sharpen the reorganisation debate.

By December, the Local Government Commission (LGC) is expected to have narrowed the options to only two. I’m willing to wager a major consolidation along the lines proposed by A Better Hawke’s Bay, versus the status quo.

Mayors worried about the dam

In May, Mayors Yule and Arnott stepped forward and expressed their concerns about conflict of interest and financial risks surrounding the Regional Council’s proposed $600 million dam for Central Hawke’s Bay.

In a joint letter sent on behalf of the Hastings and Napier Councils to HBRC Chairman Wilson, the mayors voiced concern about some regional councillors and HBRC CEO Andrew Newman holding dual roles both on behalf of HBRC and its regional investment company (and advocate of the dam project), HBRIC.

The Regional Council has ordered up legal advice on the conflict issue, due in July.

The mayors’ additional concerns went to the now uncertain, but major, financial risks inherent in the scheme, and their potential impact on Hastings and Napier ratepayers.

Regarding risks, they said:

“…we believe that a thoroughly prepared risk analysis report (single document) would be helpful to all parties including the Council itself. This would be consistent with the best practice advocated by the Office of the Auditor General in Local Government capital works planning …

“It is a fact that these projects carry large single factor and multi factor risk elements including the bottom line risk of cost overruns of both capital and operating that could fall entirely on current and future ratepayers of the region.”

And regarding specific financial information:

“…we suggest that further work be undertaken in the area of feasibility (the big picture financially), insurance, certainty and sensitivity analysis around pricing, cost overrun risk and uptake lag …

“…without further assurance around the financial modelling there is an inevitable risk for the ratepayers that is larger than any other single financial risk that we are aware of or can reasonably forecast. Unless this work is completed in a manner that brings confidence to the community, the project itself (regardless of its merits) runs a serious risk of being fatally flawed in its process.”

The mayors, speaking for their councils, then offered to directly fund a peer review of the issues they had raised.

Chairman Wilson’s response was essentially: Thank you for your letter mayors, but full speed ahead. His letter asserted that there is “plenty of time” to address the issues and that “we will take further advice on all issues”. He did not comment at all on the mayors’ proposal for an independently prepared risk assessment.

The mayors are now preparing terms of reference for an independent assessment they will commission directly if necessary. Both Yule and Arnott stress that they are “not opposed” to the dam; however, nor can they support it without far more substantial investigation of the economic case and financial risk situation.

[You can view the full correspondence at www.baybuzz.co.nz/archives/6808]

So, while plans proceed to consider the environmental aspects of the Regional Council’s plans for the dam and Tukituki management through a Board of Inquiry appointed by the Environment Minister, here in our own backyard, the economic assumptions underpinning the entire scheme are facing more and more skeptical scrutiny.

One might argue that HBRC has got the cart before the horse … spending millions on environmental defense of a dam that might not hold water economically in the first place.

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