The Dam

Let’s start with the dam, as the months of November and December could well prove decisive, if all goes according to HBRIC’s forecasting.

HBRIC, the Regional Council’s holding company seeking to advance the scheme, has done its utmost under the reign of its chairman, Andy Pearce, to operate with as little transparency as possible. So even I, as a regional councillor, am usually forced to speculate about the state of affairs.

For instance, as I write this update, councillors face a council meeting in a few days in which HBRIC is offering only a verbal briefing on a $300 million project which they have claimed is on the path to ‘financial’ close by Christmas. They’ve condescended to brief us further on ‘work streams’ in a public-excluded ‘workshop’ that day.

Let’s be clear, workshops are where heads get nodded – or not – as to how projects like the dam proceed and on what terms. Does HBRIC need more ratepayer money? More time? Have water sales stalled short of the required target? Why? Officially, of course, decisions are not made in workshops; that would violate the Local Government Act. But I think you get the picture.

So, where does the dam stand at the end of October?

The most important metric for measuring the project’s likelihood of proceeding is advance sale of 35-year water contracts to CHB farmers. HBRIC has always had excuses as to why this process was moving so slowing – for example, uncertainty over the environmental standards that would apply, with HBRIC championing the least restrictive possible.

But even after HBRIC insisted proudly that its dam scheme could essentially evade the stronger-than-expected standards set by the Board of Inquiry, water sales have stalled. At the last public accounting, given at the September regional council meeting, no new water sales had been made in the prior 60 days. None.

At that point, sales were stalled with less than half the water sold required to proceed with the project – 20.5 million cubic metres/year sold, against a benchmark of close to 50 million (that benchmark relates to the cash flow required for the scheme to be viable). If water sales are not magically rejuvenated, the scheme is a goner.

Of course, HBRIC has always assured the council that a reservoir of potential water buyers were somewhere in the decision-making pipeline, busily doing their homework on the value of irrigation. We’ve been shown wonderful algorithms and weightings that project water sales victory is at hand.

But here are the last reported facts: 57 farmers have signed water purchase agreements (accounting for the 20.5 million cubes mentioned above) and 170 have said no thanks.

Almost two years into the sales effort, that leaves 195 somewhere in the pipeline.

Are there signs HBRIC’s sales effort will become more productive any time soon? Hardly.

HBRIC has been in the process of negotiating a ‘re-pricing’ of the dam scheme itself, given that the contractor’s original bid is now years old. It’s unlikely that the dam has become cheaper, unless its physical delivery footprint has shrunk markedly. But the opposite has occurred as HBRIC has striven to expand the footprint to enlarge the base of potential water purchasers. Indeed, HBRIC signaled at the September HBRC meeting that it would need to come up with a “final decision” on the water price charged to farmers, further indicating that it would need to revisit existing water purchasers to get agreement to the new price.

Further clouding the water is a legal appeal by Forest and Bird challenging a land swap HBRIC orchestrated with DOC to remove from conservation status a portion of land HBRIC needs to flood as part of its proposed reservoir. F&B contends that the de-classification of this land (downgrading its status into a category where the swap might proceed, if justified) is illegal and, if permitted, would set a terrible precedent threatening to NZ’s entire conservation estate.

As I write, the parties are awaiting a High Court date. But even if the court acts ‘with urgency’ the matter is unlikely to be settled before year’s end. And if F&B’s challenge is successful, then the entire scale and viability of the proposed water storage scheme needs to be re-evaluated.

If HBRIC has evaluated the consequences of losing this appeal, they have not shared their assessment with regional councillors. One might have thought that HBRIC directors – the likes of Andy Pearce, Sam Robinson and Jim Scotland – would consider it to be their primary fiduciary responsibility to inform the council of such risk.

So, for these reasons alone (setting aside the availability of external commercial investors or government funding), the verdict remains out on the dam.

Post-Amalgamation

The amalgamation saga is over; our politicos must now pick up the pieces and move forward.

I conducted video interviews with Mayors Dalton and Yule, each about 20-25 minutes in length, shortly after the referendum tally was announced, and those can be viewed here.

Part of the interviews provide their views on the campaign and the amalgamation proposal itself. Perhaps interesting to politicos and historians.

But what is most relevant going forward are the views of these two protagonists as to what should happen next. In the last pages of this article you’ll find excerpts from the interviews providing those views.

There are some important points of agreement, and perhaps one point of disagreement, that are especially noteworthy.

Cooperation and collaboration

Not surprisingly, Yule believes the little cooperation that has occurred amongst councils has been merely a political reaction to the threat of amalgamation, while Dalton asserts that more cooperation has occurred, and would have occurred, if amalgamation politics had not stymied such efforts.

In any case, now we hear heaps of rhetoric from both Dalton and Yule about burying past disagreement and – in response to the overwhelming popular demand expressed during the amalgamation debate – working cooperatively. Other mayors and Regional Council chairman Fenton Wilson have made similar noises.

However, the real issue now is: what processes or structures will be established to ‘institutionalise’ such collaboration and make it transparent and accountable?

Dalton and Yule agree that two existing forums need to be dusted off, upgraded and made fit for the newly-embraced purpose of cooperation.

One is a somewhat irregular private meeting of the four mayors, Fenton Wilson, and their chief executives – the ‘mayors and chairs’ meeting – called to sort out the occasional spot of conflict or collaboration. This group, for example, commissioned the so-called Winder Report (eventually dismissed by four of the councils) that reviewed opportunities (including amalgamation) and obstacles for growing HB’s prosperity.

The other is the Inter-Sectoral Leadership Group, including these same political leaders, MPs, plus senior representatives from agencies like the DHB, Police, Ministry of Social Development, Ngati Kahungunu and others. This group is intended to look at broader social challenges facing the region. Dalton says the group has been in the past a “bit of a talk fest”, but has high hopes of getting it properly resourced and sees it as a “fantastic initiative”; Yule sees it doing “grunty work” in a more accountable manner.

The two mayors agree that both of these forums could operate with greater public access and transparency.

Regional funding

Going further, both Yule and Dalton agree that certain organisations and activities that are “truly regional” (Dalton’s term) should treated as such and funded through a region-wide rate. Indeed, both mayors claim this concept as their own. As Dalton says: “…it is a nonsense that those organisations have to come cap in hand to the whole bunch of different councils looking for their funding.” With such strong endorsement, it will be interesting to see just how far and fast this proposition can be advanced!

Regional funding of “truly regional” activities could be a transformational step forward for Hawke’s Bay. The devil will be in the details, and a key challenge – apart from the political football of what’s in and what’s out – would be to prevent ‘double-dipping’ as now occurs with ratepayer funding in the tourism promotion space.

Disagreement to watch

To Yule, the need for amalgamation involved providing more ‘fit for purpose’ local government to restore HB competitiveness and help lift the region from its social and economic doldrums. “I was motivated by largely a falling set of statistics as a region, a lack of cohesion, as to how we operate and a lack of competitiveness against the rest of NZ.”

Dalton disputes the doldrums analysis; his rejoinder in a nutshell: “…amalgamation was never going to cure teenage pregnancies. It was never going to cure excessive drinking. These are some of the claims that were made. They were really just silly.”  He regards the 2:1 referendum outcome as an endorsement of that view.

As you can read in the interviews, there’s a significant disagreement here about the role of local government in addressing ‘the social issues’ – Yule more proactive; Dalton, who’s now the alpha-dog of HB politics, more conservative.

This will be the debate to watch if the Inter-Sectoral Group is in fact to be given a serious mission to better the region.

Mayor Bill Dalton Looks Ahead

34% of the voters wanted amalgamation to occur. What do you have to say to them?

The proposal that was put before us was entirely unfit for purpose. So what I would say is: I acknowledge that you wanted to get a more prosperous, a stronger Hawke’s Bay. I acknowledge that we saw a different path to that prosperity. But now the decision has been made, we need to all work together. Forget about the hostilities, if you like, we need to work together and get on and make Hawke’s Bay a better place.

Was this a vote against change or a vote against the proposition on the table?

I don’t think there was any doubt about it – it was a vote against the proposition on the table. It was inappropriate, not fit for purpose and people saw that. The proposal tried to be everything to everybody and it ended up being nothing to nobody. So the people weren’t saying to us, “We don’t want change”. People were saying, “We didn’t want the change that was recommended or suggested to us.”

Do you agree that the public wants to see more collaboration take place than they have seen or at least have perceived?

No question about it all. The public have said they want to see us work more cooperatively, and collaboratively and we will. During the last few years there has been the shadow of amalgamation hanging over HB. One group has been trying to show that we don’t work collaboratively together. And that has all gone now. I think we are in for a period of real prosperity in HB as we all pull on the same end of the one piece of rope.

Are there concrete steps that you could outline that you think would ensure that collaboration does occur?

Yes we are going to change the structure of all those things quite dramatically.  For instance we have had what we call the ‘mayors and chairs’ meeting where the four mayors and the chairman of the Regional Council meet, probably about three or four times a year. That is now going to be monthly where we will be having the chief executives in to report to us. We will have a report from HBLASS (HB Local Authority Shared Services company) to those meetings. Now it is going to be a much more formal structure so we can take HB forward.

Do you see any way of opening that up to more public visibility, with more accountability to that process?

I personally always believe in openness in my council, we only handle things behind closed doors if it is absolutely essential. On balance we will always handle things in public and I think in time there will be an opportunity to open up that forum to the public, but we have got a bit of sorting out to do first.

During the debate, Napier put forward a proposal during the long term planning process to identify some regional functions, like tourism let’s say, and perhaps fund those in a single levy regional wide. Is that the sort of thing you can imagine going forward with?

Well I have got to tell you, Tom, that is my personal initiative. That is what I have been trying to do for a long time and a lot of the agencies will acknowledge that. I think that everywhere we have HB-based organisations – Sport HB, Tourism HB, all of those sort of things – they should be funded on a regional levy basis. You can do it on an asset basis, you can do it on a population basis, there are different ways you can do it. But it is a nonsense that those organisations have to come cap in hand to the whole bunch of different councils looking for their funding. I have always said that.
It was presented before the campaign. You can ask the guys at Sport HB, you can ask the guys at Tourism HB, it has always been my policy that this is what we should be doing.

That seems like such common sense. Where would the opposition come from?

Well I have to say, when the original paper we presented, we spread it too wide and we included museums and things in that as well … So we need to go back, have another look at it and see which of those organisations is truly regional, and to me it is absolutely essential that it is put in place.

How do you put that forward in a way that the public can get behind it, that there can be some milestones? Where is the process?

Well – I think you have identified something, and that is the process didn’t work before.  Because it was presented as a paper from the Napier City Council, and it didn’t proceed.  Again I stress it is my view that the sword of amalgamation hanging over our head was the one thing that stopped it happening. We can put all that aside now – we can work, we are all on the same side of the fence now – and I think we can get these things working.
Pro-amalgamation advocates raised concerns about HB’s
dismal socio-economic standing.

What is the role of local government in dealing with those kinds of social issues?

We are now looking at 2015 and going into 2016, and whilst we were told that we were running about 11th in NZ, it looks like we are probably running 5th or 6th now. And when you realise that Auckland will always be number 1, Canterbury  2, Wellington 3, sitting 5th or 6th is not perfect but nowhere as bad as 11th that we have been talking about.  But a lot of those things, they told us that we should be doing, I mean to be honest, Tom, amalgamation was never going to cure teenage pregnancies. It was never going to cure excessive drinking. These are some of the claims that were made. They were really just silly.

This inter-sectoral group – what role do you see for that going forward?  Is that something that we should be building on?

I think that is a fantastic initiative, and don’t forget it was originally an initiative from the DHB, from the two Kevin’s – Kevin Atkinson and Kevin Snee. I think it has huge potential for HB. But like a lot of these things, it started off and, dare I use the term, is a bit of a talk fest, but didn’t have anything that made things happening. It didn’t have an implementation group. So now it has got an implementation group, it has got staff; it has got people that are making things happen.

Community leaders like Kevin Atkinson, Graeme Avery, Kim Thorpe, the Tremains, Rebecca Turner, Stuart McLauchlan – people who presumably know something about how things work or don’t work in HB – passionately believed that there was a need to change the structure. Do you think there was anything improper about their motivation?

I think whatever their motivation, their plan for the future of HB was wrong.  Because one thing that is common amongst all those people is lack of local government experience.  When you look at what we have put in place over the last couple of years, despite having amalgamation hanging over our head, the progress we have made, well certainly in the last 18 months, since September 2013, the progress is tremendous and without the threat of amalgamation then that progress will just accelerate.

How do you plan to engage those folks?

It is absolutely required of me to reach out to those people – and just let me give you a quick example. One of the first people to offer their congratulations was Simon Tremain. I went straight back to Simon and said “Simon, thank you for your comments, we will meet up for a beer over the next couple of weeks and have a yarn.” He came back and said yep – we all need to pull together now.  That is how I do it – on a personal basis.

Does seem though that the campaign got a bit nasty at times, so there are some wounds out there.

I want them to be part of what we are going to do in the future, and you know, I can’t go and smooch up them all but my door is always wide open and I would love them to come and visit me and talk about their ideas for the future of HB. I would love them to be part of the future of HB and I am sure they will be. But, as you say, there are a few wounds to heal up and that is not going to happen overnight. But we need to get on with the job of making HB a better place, and they are every bit a part of it as I am, and I look forward to working with them all. There is not one of those people who I wouldn’t be happy to work with in the interests of HB.

Mayor Lawrence Yule Looks Ahead

[Amalgamation] is an issue you staked your reputation on, it was something you put on the table as a better way forward for the region – two to one defeat of it, that is a pretty big political blow isn’t it?

It is I accept that, and it is quite a big personal blow to me but I still believe what I was trying to propose was in the best interest of the region; I am frustrated and disappointed that the people did not buy into that; but I respect their view. And at the end of the day part of my role is to show some leadership, and I was motivated by largely a falling set of statistics as a region, a lack of cohesion, as to how we operate and a lack of competitiveness against the rest of NZ and other parts of the world.  That is what motivated me. So I went about a process, and a lot of others tried to help. I will accept the fact that the people have spoken clearly and said they do not want change and I will move on and work within that environment.

Would you agree that one reading to take from this is that people were all happy, enough of this doom and gloom stuff, let us just go about our business?

The happiness index is great; we are happy. I just don’t think we often realise what we could be doing and what our potential is. One of the things I have found sort of most difficult in the reflection since the result, is this fact, there has never been a successful amalgamation in NZ where the people had to vote for it.  The only time amalgamations have happened they have been imposed by central government … In 1989 we had the biggest set of reports ever, and there was controversy about debt, loss of identity, the rates will go up all those things, the government pushed it through – it was successful and people are happy with it.

If the government had come in and said we are going to rationalise HB and this is what we are going to do, there would have been some shouting and screaming, but in three or four years time, everybody would have said well that is fine, no big deal, just get on with life.  But we were unable to do that sort of thing ourselves. Which is a reflection of democracy, human nature I think, that fear of change, but it is what it is.

Would you agree voters expect a higher degree of collaboration amongst councils now than has been historically the case?

The international evidence would say that unless people are threatened by amalgamation they rarely look at shared services.  And no amalgamation threat they often go back to the status quo.  So one of the challenges will be what does the status quo mean – are we still going to do shared services without amalgamation, and I am not talking about buying lightbulbs or insurance or cars.  Shared services if they are going to have any real meaningful value will have to get into the service delivery side.  That is building consenting, roading, water – that is where the value can be gained out of shared services, but of course that fundamentally impacts on staffing regimes, people, the things that are harder to manage.

During the campaign Napier put forward a proposal to identify some regional activities like tourism and maybe come up with a regional levy to fund those and set priorities. Is that the sort of proposal that you think could get some traction now?

I personally have always supported that type of approach. Napier now appear slightly more open to that. And if we are going to fund regional facilities or tourism on a levy basis then I think that is probably a good thing to do.

You referred to the regular meeting of the mayors and the regional council chairman, is that really a sufficient process for now sorting out where are we going to collaborate?

There is a little bit of an agenda, there is no work programme, and we just chat.  I think the grunty work will probably be done in the inter-sectoral leadership group, where we bring together the [government and social] agencies as well as the councils and we work out what we need to do. Earlier in the year Craig Foss put up some targets that we should attain to, but we could not actually get agreement on what the targets should be, how they should be measured and who should be held accountable to them.

Do you think if it was given more visibility in some way that it could become more of a force?

Absolutely, I really see no reason why they couldn’t be public.  One of the challenges we face though is you have two representatives from each council.  So you are sitting there, as a mayor and chief executive, you actually have no decision making ability on all of these things – you then have to go back to five different councils, put it through a formal process and get an agreement.  That is not always easy … Now we might have to look at another forum as to how you bring all the councils together … once a year or twice a year or something to look at these macro issues.

Do you think there is any way to harness the public expectation of great collaboration?

I think potentially yes.  Through the inter-sectoral group you could agree annually, for instance, on a key set of things you were going to measure, you publish them, you might even get input into them and say this is what we have done – some accountability for the general public because I think the general public do expect some things to change and do expect maximum efficiency in delivering of things that we can achieve together.

Opponents of amalgamation would dismiss your recitation of social statistics and the low economic standing and say it has nothing to do with local government, there is nothing we can do about this. Where does that leave the whole matter of the poor social economic standing of the region?

Those same stats are still there today … And one of the challenges for us is to decide whether we are going to substantially do something about that or try to. There is no other form of leadership in this region that can actually seek to change some of those things. I don’t buy into the argument that local government has no input. I think we need to change slightly our focus.  We need to assume that infrastructure is properly looked after, that we have the staffing we need, that we are doing things as efficiently as we can. We need to target and look at some new things for local government and some of that is around showing leadership and social education in other spaces where we are lacking.

Whether my colleagues will support me on that will be an interesting thing to watch for … if the other leaders in the region don’t want us to look at some of the other social economic metrics, and I am only one out of five, better off if it is off the agenda.

So if that turns out to be the reality where do you spend your time over the next year?

I have got a lot of things to do in Hastings, the Opera House is a massive project for us. I am really committed. And I am seeing some exciting things coming out about how we can redevelop that. I will play my part by all means, and doing things that advance the region, but as I say I have only got one voice out of five, and my focus will clearly be on Hastings.

Did you indicate at some point that you would not run again?

Yes I said if amalgamation did not happen I was unlikely to run – so that is still probably the position. But I have indicated that, because other people are saying you need to think about that Lawrence, I will use the next six months to reflect on what I am about to do, what other options or opportunities there are.  And then I will make my decision in June of next year.

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