The Regional Council got busy last week, trying to shake years of somnolence. Its watchwords for the next few months will be vigilance and efficiency.
Unfortunately these two themes clashed somewhat at the Council’s meeting on Wednesday.
Let’s take vigilance first.
In a fresh display of official alarm, Councillors caned its own business unit, Venture Hawke’s Bay, for running a budget deficit of $495,000 as the fiscal year ends (VHB’s budget had an approved deficit of $117K). At times during the Council discussion, it wasn’t entirely clear where Councillors were directing their ire … VHB’s exited management, HBRC CEO Andrew Newman to whom the unit reports, or VHB’s advisory board, chaired by the HBRC’s own Neil Kirton.
But whoever’s fault it was, Councillors were angry … so mad that they turned down the CEO’s recommendation that a $250,000 loan be provided to “clear the books” in the current fiscal year and start afresh with a clean slate (the balance would be offset by $250,000 in reserves VHB also carried on its books). Instead there will be another “full report” on what went wrong and why … with heaps more table-thumping to come. And then HBRC will cover the loss.
With VHB making extensive quarterly reports to the full Regional Council for at least the last year, it’s hard to see how this situation evolved. CEO Andrew Newman gives his explanation of the unfolding saga in his briefing memo to the Council (Download here).
By one accounting, the “surprise” in all this is $128,000 ($495K, minus approved $117K, minus $250K reserves) … still a deficit demanding explanation and accountability, but a pimple — you spending watchdogs — compared to, say, nearly $2 million in “odour remediation” at the Hastings wastewater treatment plant.
As for efficiency …
The Council also “received” (that’s Council-speak for “accept staff report, thank staff, go back to sleep”) a report entitled Local Government Shared Services: Present and Potential Collaboration in Hawke’s Bay (Download here).
The two main insights of this paper:
1) No such collaboration would occur unless the various council staffs buy into the idea (now there’s a mystery unraveled!); and,
2) Start small.
Be still my heart! I’m not sure Hawke’s Bay can stand the excitement and turmoil this report is going to generate.
In true inter-Council collaborative fashion, the cover memo to the report noted: “It is understood that both Napier City and Hastings District Councils will also be considering papers on the topic in the near future and ongoing discussions among the Chief Executives will continue.”
So each of the councils is preparing its own paper on collaboration. Isn’t that the problem?!
Tom Belford
The $2M as yet unproven odour problem solution involves putting chemicals into the wastewater via dosing stations when the rest of the western world is putting in treatment plants to remove chemicals from wastewater prior to discharge to the environment that are the main cause of toxic blooms and aquatic insect, animal and fish deaths.
It is not part of the operational HBRC consent either and must on that count be an illegal pollutant additive.
Thanks for the info it's quite depressing!! As our average business owners starve slowly and are stressed to the max (running daily cashflows and accounting for every cent to survive) this seems all the more tragic. The big and bright empire with 22 staff ( now 9) which always seemed a crazy overhead for the size of Venture HB however as you point out so many qualified people were in charge so all must be ok… to many chiefs not enough indians? Maybe a group of longserving retailers from throughout the region could do a report ( and get paid a fraction of what consultants would be paid) and give a lesson to our 'management' on how to live on very little without the luxury of a big pool of cash belonging to ratepayers to bail them out?? I think people who have not earned over $40K (a high percentage like 80%??) should run the country at least they have some idea of how to budget and go without!!
Of course whilst the staff are preparing all the reports for the Council
will anybody be actually doing anything about promoting the ‘Bay?
The sooner Lawrence Yule achieves the amalgamation of all three authoritie sin Hawkes Bay the sooner these 'clowns', sorry, Regional Councillors can wander off to their retirement homes where they justly belong.
Good grief Hawkes Bay, why on earth do you elect morons like these!
Absolutely fascinating!
Venture Hawke’s Bay, in changing its name from Hawke’s Bay Inc, inherited a surplus of $250,000, yet the former organisation regularly said it had no funds available to promote our region.
The rumours that have been bouncing around the region for weeks have now been confirmed that Venture Hawke’s Bay’s deficit is $495,000, but this does not include the $130,000 that the Regional Council has already loaned its own business unit to meet its World Rugby Cup commitments.
According to Mr Newman’s Council briefing paper the operating deficit has grown from an initial budgeted deficit of $117,000, to $199,000 in April, $477,000 in May and now $495,000 in June. Where will the increase in the deficit stop?
No wonder there are no funds available to promote the region!
Further more Mr Newman highlights that the deficit is caused by:
• “An unsustainable cost structure”.
• “Outsourcing of business and revenue streams to other parties with no subsequent adjustment in the cost structure”.
• “Delivery of some unfunded work”
• “Revenue earned for web services is anticipated to be below budget”.
What Mr Newman fails to mention in his Council briefing paper is the cost of engaging academic consultants to meet the skill shortcomings of Venture’s highly over paid staff.
For sometime now the visitor industry has been highlighting that Venture Hawke’s Bay and its predecessor Hawke’s Bay Inc personnel numbers have been growing like topsy and have been spending far too much of the ratepayer provided funding on salaries, administration costs and academic reports on strategy, without delivering any tangible outcomes.
Why is revenue for web services below budget? The simple answer is, the visitor industry (which has highlighted significant issues with the new website) are choosing not to list their businesses on the site, and seeking more effective marketing/distribution channels. Furthermore they lack confidence in Venture’s ability to attract web traffic to the website to justify their marketing investments.
Clearly this situation did not occur overnight, but has been occurring for a long period of time.
How has this situation been allowed to occur????
Where has been the prudent and effective management been?
According to Mr Newman in his email to the visitor industry dated 26th May…
“We would like to acknowledge Janet's outstanding effort over the past two years in transforming Venture Hawke's Bay into an effective Regional Development Agency. She has built a strong team that is well placed to carry on the momentum created during this time”.
..and in Mr Kirton’s pre-election flag waving whitewash “Kirton defends Venture Hawke’s Bay” which is nothing more than an attempt to draw attention away from the current situation that can only be described as mismanagement.
“Janet Takarangi did a superb job in achieving this result”.
I am sorry gentlemen but your accolades are misdirected, if you consider that achieving a deficit of $495,000 and no tangible outcomes is something to celebrate!
Where is the financial control??
Surely the Regional Council’s own financial managers were monitoring the situation and highlighting their concerns? Who was listening to them? Obviously no one….
How effective were the board governance processes or were they even aware of what was/is happening? Who was informing the Board on the current situation?
This situation is absolutely appalling, and to have the cheek, Mr Newman to suggest that the deficit be covered by an interest bearing loan to your own Council’s business unit which will adversely impact on the future promotion of this region is an insult to any ratepayer’s financial intelligence.
The Council needs to wake up, Venture Hawke’s Bay is a business unit of the Regional Council for which it is ultimately responsible, not some separate legal entity which it might try and distance itself from.
Quite simply the Council needs to take this cost on the nose, overhaul this ineffective organisation and put in place an effective new structure with the appropriate skills for promoting Hawke’s Bay, and achieving real growth in visitors to our fabulous region.
Messers Dick, Newman and Kirton you must all accept responsibility for this deficit and the ineffectiveness of Venture Hawke’s Bay.
Mr Kirton you have made only one accurate statement in your article “Kirton defends Venture Hawke’s Bay” and that is…
“But it is time to move on”.
Quite right Mr Kirton you are correct! It is time for you to move on, as you have clearly demonstrated that you have not been able to deliver anything for this region other than a $495,000 deficit wasting ratepayers hard earned dollars, and a bleak outlook for operators who have risked all in the visitor industry in Hawke’s Bay and are just struggling to survive.