Charter Club Funding Fiasco

Published HBT 20 May 2015

The decision by the National Service Club members to reject a Hastings District Council merger proposal is an own goal for the council who seem to believe that if enough money is thrown at a problem it will go away. We have seen similar thinking with the Opera House and other recently delayed or cancelled projects. The most recent idea was to support a merger of various service clubs with nearly $2 million of ratepayer funding. 

Many chartered clubs are experiencing declining support. The Hastings, Napier and Napier Cosmopolitan Clubs have all closed. Members now tend to be older and a further strengthening of drink driving laws is likely to be eating into members involvement. The RSA, Hibernian and Heretaunga Clubs have already merged, the RSA premises in the centre of town have been sold and must soon be vacated, and new premises are proposed on the Heretaunga Club site away from the CBD. The National Service Club on edge of the Hastings CBD seem to be holding their own as evidenced by members rejection of the merger plan, although their premises will need some earthquake strengthening sometime in the future.  

The reasons for Council getting involved are unconvincing. The project was poorly conceived, poorly researched, and should never have been presented to council. The Mayor who was the driving force was in China and unable to attend the special council meeting called at short notice to supposedly discuss the issue. 

It has been reported that I had walked out of this public excluded council meeting when the issue was being discussed though I prefer to say I was not willing to continue taking part in a process I considered  farcical. I believed it wrong that both the media and public were prevented from hearing details of a proposal to spend nearly $2 million of ratepayers money. There was a lack of  transparency and an inability or unwillingness to answer many crucial questions, plus it was clear I was going to have no impact on the outcome. The entire process seemed staged to endorse an outcome that had already been decided on. 

Specifically some of my concerns were:

- The Clubs were not represented so councillors had no opportunity to question those running these organisations.

- The only accounts provided were for the RSA  March 2014 financial year. There were no forecasts, budgets or other estimates for the proposed combined clubs which meant councillors could not asses the financial viability of the new entity. 

- It was claimed a new city centre premises will benefit the Hastings CBD which clearly is already struggling, yet no evidence was provided to demonstrate linkage between the clubs and the CBD,  even though both the RSA and National Service Clubs are presently within walking distance of the shops. Additionally only the RSA will be shifting and the National Service Club will remain close to the CBD. 

- No membership history was provided so past and future trends could not be determined, nor was there any information on how many members use the facilities on a regular basis. 

- Claims the viability of the three clubs would have been enhanced failed to account for the additional risk of their taking on significant debt which could have imperilled rather than secured their future. 

- Some councillors claimed a similar combined facility in Blenheim proved it would work, yet no specifics on membership, financials, or other matters were provided. 

My own view is this matter has been handled in a highly unsatisfactory manor without councillors being given much of the information needed to make a wise decision. The cost in staff time is unknown but must be considerable and a figure of $10 000 seems possible. Whilst some public consultation had been proposed people are busy with their jobs, family and other issues, and rely on good governance by their councillors to make sure their money is spent wisely. Expecting widespread and representative community involvement in submissions is unrealistic. This yet another example of council being steamrolled into supporting an idea of doubtful benefit. Yet had it proceeded debt and rates for everyone would have increased. 

Council Wastes Ratepayer Funds

Published HBT 2 May 2015

The Te Mata Trust Board must be disappointed at having to abandon their proposed Peak Visitor Centre having already spent $320 000 on the project, but as Hastings District ratepayers will effectively be paying most of the bill, it is perhaps they who should be the most disappointed. 

At the same time the proposed $12.5 million Civic Square development also looks likely to be shelved, but again not before a million dollars has been spent. Shortly after I was first elected to the HDC in 2010 at least another $250 000 dollars was spent on the velodrome project, which was also abandoned when it failed to make even the short list for $7 million of government funding. 

The Hawke’s Bay Opera House also looks likely to cost ratepayers upwards of $20 million for earthquake strengthening, only a decade or so after $15 million was spent on a major upgrade. Since then ratepayers have been burdened with around $15 million more in operating grants and debt servicing costs, meaning with strengthening the total outlay will be around $50 million, or nearly the total rates income for the council for a whole year. 

These sorts of issues are not confined to the Hastings Council. The new $18 million museum in Napier has failed to deliver on it’s key promises with only about 5% of the annual 600 000 anticipated visitors actually paying to get in, whilst operating deficits could top $4 million annually. Also it is only able to store a fraction of the total collection, contrary to earlier assurances. 

There are other projects of questionable financial certainty embedded in the Hastings LTP including a proposed $5 million investment into a Hastings CBD hotel, surely suspect when no other developer appears interested, and especially risky when a similar competing private development is already underway in nearly Havelock North. A sixth aquatic facility costing between $10 - 20 million to build with unrevealed ongoing ratepayer implications is also included in Council Long Term Proposals.    

That Local government is responsible for providing parks, libraries, halls, infrastructure, and all manner of services is not in dispute. What needs to be questioned is the process councils use to decide on major investments when they fail to either deliver any meaningful benefit, or end up creating unplanned costs when completed. More basic and less ambitious projects generally seem to provide much greater value. The new facilities on Marine Parade in Napier, the new hockey turf at the Sports Park, the skate park in the Hastings CBD and the new BMX facility in Havelock North are all  examples of ratepayers money providing real and significant benefits with minimal on going cost implications.  

The enthusiasm behind these grand ideas seems to overwhelm both common sense and good governance. Rather than being demanded by the wider community, the drive for these ideas comes primarily from a small number of elected officials, frequently the Mayors, or council staff. Failure to correctly asses the risks and potential for costly failure, seem consistent with Local Government culture. Local government generally place the emphasis on cost control, because quite simply there are no corresponding income streams. Council staff are highly qualified, very skilled and very experienced in things to do with pipes, roads and many other areas, but generally lack experience in the world of consumers, markets, and competition. Unfortunately only a minority of councillors are experienced in the world of profit, loss, and risk as well. 

So in the case of both the Visitor Centre and Civic Square projects, funds were allocated and spent without any realistic consideration of market demand, operating costs, or other financial issues.  I also believe the justification for the proposed Aquatic Centre is superficial, inaccurate and misleading, and there have been no estimates of patronage, operating costs, revenues or the likely impact a new pool might have on the performance of existing pools. 

Committed councillors and staff create a very powerful alliance, and when combined with council processes and procedures a situation is created that is almost impossible to stop. For the record I have consistently voted against both the Civic Square and aquatic proposals and many others because I could see no real justification for them. I sometimes get the impression that the most enthusiastic are keen to see these achievements added to their trophies 

The private sector also gets things wrong but both shareholders and customers can opt out when dissatisfied plus mistakes can be offset through tax losses. Council mistakes are backed up by the unlimited access to the bottomless pit of ratepayer funding, and there is nothing those who are forced to pay can do about it. Misadventures waste money that can never be recovered, and opportunities for better uses of the funds are lost.  For instance the estimated $1 million spent on Civic Square could have paid for an extension to the 80 metre rock wall protecting the road to the Clifton Motor Camp, whilst the money spent on architects and other aspects of the Peak Visitor Centre project could have provided  permanent shade at the new CBD skate Park. Both these alternative projects are affected by financial restraints. 

If these sorts of mistakes are to be avoided in the future there must be a change in governance. Proposals that are not accompanied by full financial details including whole of life cost estimates and other critical information should never reach the council debating chamber and must be rejected if they do.  Failures must be investigated by independent authorities such as the audit office, with appropriate penalties for non compliance. 

If those responsible for these unwise decisions had to pay for their mistakes they might be more inclined to take greater care with other peoples money

Missing Airport Directors

Published HBT 6 April 2015

The proposed name change for Hawke’s Bay Airport could be just a prelude of what may be following.  

At the recent March half year report to HDC Councillors, Board Deputy Chair Jim Scotland excused airport Chairman Tony Porter with the explanation he was in Christchurch. Six months previously board member Sarah Park provided a similar reason for the Chairman’s absence. These absences may or may not be connected but apparently Mr Porter is quite ill, and whilst we wish him a full recovery,  this situation is both irregular and highly unsatisfactory. 

It also appears that a second director Stuart Webster has left for the USA, without a return ticket. If so it means that two of the four appointed directors have ceased to function in their governance roles. Significantly there appears to have been no mention of either of these issues by the two remaining directors when meeting with either the Hastings District or Napier City Councils. It is not believable that the Mayors, senior staff and others are not aware of this situation. This raises a great many questions.

-Why have these issues been hidden from Councillors and the public?

-When did Mr Porter become ill?

-When did Mr Webster leave the country?

-When did either of these directors last attend a board meeting?

-Are the missing directors still being paid by the airport ?

-Why are they still listed as directors in the most recent airport accounts provided to councillors? (half year to 31/12/2014).  

-Are the Mayors and senior managers of the Hastings and Napier councils aware of the situation and if so when were they notified?

-What is the role of Government?

-Who else is aware of the situation?

Could it be that Government is planning to transfer their shares in the airport to Mana Ahuriri Inc as part of the Y55 settlement, and the failure to disclose is due to an expectation of the claimants taking up the board positions. Whilst this has been a possibility for some time it would effectively transfer total control of a vital piece of Hawke’s Bay infrastructure because Government actually owns slightly more than than 50% of the airport shares. The lack of transparency is unacceptable and it is high time those in the know, reveal what they know.

No Reason to Change Airport Name

Published HBT 27 March 2015

Meaningful consultation is needed before a final decision is made to change the name of Hawke’s Bay Airport. Discussions with Mana Ahuriri and the HDC were informal and in my view amounted to an ambush with insufficient warning given to consider the ramifications such as financial implications.

Most airports have aligned their names and 3 letter IATA codes with city names. Mangere was changed to Auckland(AKL), Rongotai to Wellington(WLG), Harewood to Christchurch(CHC), and Momona to Dunedin(DUD) to name a few. Hawke’s Bay Airport (NPE) is actually an exception though the brand Hawke’s Bay is well recognised. Australia also aligns airport and city names as in Sydney, Melbourne, and Brisbane. Whilst John F Kennedy Airport in New York (JFK) has been used to as an example of where alignment doesn’t apply, not naming airports after their host cities generally happens only in super cities with multiple airports such as in London (Heathrow, Gatwick, Luton, Stanford).

Adding the name Ahuriri to Hawke’s Bay Airport will be confusing and costly. To people outside of Hawke’s Bay the word is unknown except perhaps in North Otago where apparently there is another Ahuriri. The implications with GPS navigation systems, maps, telephone directories and all manor of things have not been considered, and the name may be ignored by the aviation industry.

By all means use the name Ahuriri for the access road to the airport industrial zone, the terminal building, or even the entire area of land uplifted during the1931 earthquake, but not the airport. That it is Te Reo is irrelevant. Renaming the airport Ahuriri simply has no merit. 

Big Income increases fora Few

Published HBT  10 March 2015

Government has overridden the Remuneration Authority decision to award a 5.5 % increase in MP’s salaries back dated to July last year. The Authority is an independent body established by Government to set the salaries of salaries for MP’s, Mayors, Councillors, Government Chief Executives, Heads of Crown Entities, and various tribunals.  

That a 5.5% increase was awarded means the Renumeration Authority had determined this was the extent of the movement in salaries for equivalent positions elsewhere. Clearly senior management have been receiving significant increases despite many other workers being limited to CPI increases, or changes in the minimum wage rate. 

Relativity is clearly the major driving force as demonstrated by the recent comment by authority chair John Errington “that the pay gap between ministers and executives in the private sector was growing and would have to be addressed”. To ensure the salaries under its durestriction are competitive the Authority consults with others, though exactly who is not clear. It seems likely however that professional salary surveys are a major tool, and it seems probably these surveys are contributing to the distortion of incomes that is occurring.  

These surveys are undertaken at regular intervals and produce a range of salaries for each category of job as defined by the knowledge and experience needed, certain dimensions such as turn over or number of staff, plus the freedom to make decisions, or level of authority. Most employers have a salary policy or preferred position in the range for senior staff. They may pay at the upper quartile, or the medium or somewhere else in the range. Few employer will admit to paying below the medium. 

When the review is undertaken the organisation inevitably finds it is paying below its preferred position, and as a result and almost automatically this becomes the reason for a salary hike. This of course is happening right across the country so there is a general upward movement. When the next survey is undertaken these increases are picked up, and again most organisations will find they are paying below their preferred position, thereby justifying yet another upward adjustment thereby ratcheting salaries to ever higher levels.  

Government may have justified the lust for fairness over MP’s salaries but the changes will do nothing to fix growing inequality.  Increases for Chief executives, judges, Government and Local Government Heads must also bought into line with the wider population. This must not stop some people being paid more because of greater the levels of skill and knowledge or stop salary increases for justifiable reasons including, improved performance and increased responsibilities. However the use of surveys is part of a system that feeds on itself to create compounding increases. 

Once those at the bottom were protected by trade union negotiated awards plus a more egalitarian attitude, but an abundance of lessor skilled workers means there is no pressure to improve their incomes. In fact the system now encourages those at the top to exploit those at the bottom with zero hour contracts and other income restraining measures. It also needs to be remembered that the people who have upheld this blatantly unfair system, including those in governance roles, are clearly part of the club that benefits. 

To some extent we should be grateful that we were alerted to the widening gap between the well paid and less well remunerated but doing something about this relatively small group does nothing to fix the growing disparity between those at the advantaged end of the gravy train and the rest. 

Air New Zealand final word

Published 13 March 2015

I must thank Air New Zealand’s Louise Struthers for her recent “Talking Point (23/02/15) plus the accolade of mentioning my name on 10 occasions.  Apparently she is upset by my comments regarding Hawke’s Bay air services,  yet actually confirms as accurate all the points I raised, including this area not being included in the new $29 “Night Rider” special fare deals, and the effective doubling the price of “stand by fares”. 

Later this year we will test her claimed commitment to Hawke’s Bay when Australian league teams the Dragons and Storm face off in Napier, an event that could easily be damaged by the lack of affordable airfares. Even the most committed supporters from Sydney or Melbourne are likely to baulk at paying $500 for return domestic flights.  

Ms Strutters needs to wake up to widespread dissatisfaction as often expressed in this newspaper including recent comments by 60 minutes TV Producer Belinda Henley(5/03/15). We need uncomplicated, affordable, readily available fares so we are no longer disadvantaged compared to the main centres,  Dunedin and Queenstown, where competition is better providing for travellers needs. 

Air New Zealand Must be Audited

Published 17 Feb 2015

Air New Zealand’s Louise Strutters latest effort to deflect criticism of their high Hawke’s Bay airfares have resulted in a response that is full of inconsistencies and inaccuracies, and is lacking in credibility. 

Their claims include:

1. Hawke’s Bay has not missed out on new nightrider flights.

This contradicts the company’s own official announcement that from February 20 through until March 19, every seat on additional late night services on selected regional and trunk routes linking Auckland, Nelson and Christchurch will be priced at $29 one way and Manawatu may included  later. We are now told that due to problems with Airways New Zealand, Hawke’s Bay presents challenges beyond their control.

2. Replacing 50 seat Q300 Bombardier aircraft with 68 seat ATR’s has increased capacity by 19% over the past 5 years. 

In fact if all flights had been upgraded the increase would be 36%. There is no way of knowing if their figures are true but the claimed increase does not tally with actual numbers through HB Airport. For 2014 there were 456 672 passengers compared with 406 000 in 2009, a 12.3% increase over 5 years.  However for 6 years from 2008 when passengers totalled 449 126 the increase was only 1.7%. 

3. Over the past year airfares on all three Hawke’s Bay routes, Auckland Wellington and Christchurch have been 10% lower than 5 years ago.  

In contrast on Feb 10 last year CEO Christopher Luxton was reported as claiming that average  fares from Hawke’s Bay to Wellington and Auckland had not changed in the previous 5 years. Additionally on Sept 1 he was reported as claiming regional fares had not changed significantly over the past 6 years,  yet at that time Informetrics pointed out official Statistics showed domestic fares had increased by 9.1% in the previous year alone. 

4. Hawkes Bay is benefiting from their new $ 169  “Got to Go “ fares available 90 minute before departure and introduced from Feb 1. 

In fact the airline discontinued $ 69 stand by fares on May 6 2013, and abandoned the Starfish program offering discounts of 15 & 30% for regular flyers on Feb 12 2014 meaning travellers are now actually worse off than previously.

Clearly the airline is simply plucking figures out of thin air every time they are challenged on the issue. In the light of these inconsistencies and widespread dissatisfaction it is high time the Commerce Commission, Government or some other official agency conducted a full audit of Air New Zealand’s regional operations. 

High Airfares Hurting Tourism

Published 5 Feb 2015 

Good news for some travellers now that Air New Zealand $29 Night rider fares are to be reintroduced and even extended to some provincial regions. Unfortunately it seems Hawke’s Bay is not included. This region always seems to miss out on meaningful improvements to air services and reductions in airfares. Airfares here are excessive and typically it is cheaper to fly over 1000Km to Dunedin and Queenstown than the just over 300Km from Auckland to Hawke’s Bay. 

Over the holiday period I endured the inconvenience of this issue first hand and I suspect this experience is fairly typical. I received about a months warning of visitors planning to arrive in Auckland from the UK, with a request that I arrange connecting domestic travel. The plan was to use Hawke’s Bay as a base to explore other parts of the North Island, but the only suitable flight to Hawke's Bay was to cost an outrageous  $269 one way, each. Palmerston North and Wanganui were no better, but Wellington was only $79 ( $45 with Jetstar) and Rotorua $89. Interestingly Christchurch was only $179, and Dunedin $169.  

So rather than travelling direct to Hawke’s Bay the visitors chose to instead start in Rotorua. The problem was repeated when trying to arrange return flights, and with fares still in excess of $200 they further reduced their stay in Hawke’s Bay and decided again to use Rotorua as a base. Just how much Hawke’s Bay missed out on is uncertain, but they were spending up to $1000 a day, suggesting a significant loss to this area.

This of course is just a continuation of Air New Zealand’s exploitation of Hawke’s Bay. It’s normal behaviour for monopolies to exploit a lack of competition but that does not make it right. The airline can continue these practices only because Hawke’s Bay’s leaders appear disinterested  in stopping this outrageous situation. Perhaps this is because their own travel is being paid for by taxpayers and ratepayers, or perhaps there are other motives such as the possibility of a seat on the airline’s board. 

Government, and not just the present administration also seems totally disinterested, despite owning over half the airline shares. Perhaps this easy money makes doing nothing more appealing than taking action. Strange because competition has been forced on many areas in the economy including electricity, telecommunications, and education just to name a few. All we are told in the interests of a better performing  economy.

It is about time the NZ Commerce Commission also showed some gumption and used their initiative to investigate this clear example of monopoly manipulation, instead of just coat tailing other regulators. This unimaginative copying happened again this week when they suddenly decided to look into Air NZ’s “drip pricing” practices. The fact the ACCC (Australia) had already started looking into these same practices  in their country shows our ComCom lacks either the knowledge or willingness necessary to stamp out uncompetitive actions in the transport sector. The same happened a few years ago when they discovered easy pickings by following the actions of overseas regulators over air freight charges.

For years Air New Zealand have been blaming high high regional airfares on high fuel prices including claims that jetfuel makes up a third of the airlines costs. Well perhaps they have not noticed the price of crude oil has halved in recent months and one assumes aviation fuel has fallen steeply inline with petrol and diesel. If the airline has got its hedging arrangements wrong this should not be a burden on travellers. The  Commission might like to start by forcing the airline to pass on reductions in jet fuel prices in the same way they forced down the price of  copper based broadband.   

We need to get it into our heads that Hawke’s Bay is highly dependant on air travel because of our relative remoteness. The few bogus experts that always seem to emerge when the subject arises need to be ignored. They clearly lack expertise on the subject are are simply condoning unconscionable  behaviour. 

With the endless regurgitation of statistics confirming our poor economic performance, we should start by looking at the unnecessary barrier being created by high airfares. Surely reducing airfares is one of the easiest ways to make Hawke’s Bay more attractive to visitors and business, and as a place to live.   

Air NZ aviation prices

Published DomPost Jan 2015

When fuel prices are on the up Air New Zealand are quick to tell us about it to justify their airfares, but now crude is plummeting the silence is deafening. It’s high time  the airline started to share with their customers the hundreds of millions of dollars they must now be saving from the halving of crude oil especially on regional services where fares are often in the range of excessive to obscene.  

Perhaps it is time for Government Ministers to have a quiet word in the ear of senior management and board members including perhaps a mention of the word “price control”. 

Shabby Treatment Shackles Bay

Published  5 Jan 2015 

Hawke’s Bay’s economic performance is not great.  We have near the highest unemployment figures in the country, and lowest wages. Our qualifications profile show we have one of the lowest proportion of university graduates, and highest numbers of people with few if any formal qualifications. 

Our influence in the affairs of the nation is declining as our lack of population growth makes us less relevant. Hawke’s Bay may have already lost its 5th place population ranking to Tauranga and Dunedin.

If we are going to have any hope of turning things around we must drop the pretence that everything is all right. It may be all right for some but far too many people are seriously disadvantaged by subsistence incomes and the inevitable deprivation, while our brightest young leave, either because we do not offer attractive education opportunities, or because they see no future in remaining. Those who think amalgamating our councils into a single administrative juggernaut will fix everything are delusional. We are controlled by a very influential, mutually supportive and well off elite who are either not capable or not interested in supporting changes that might not improve their own wellbeing. Amalgamation is a side show designed to divert attention from the real issues. 

Pastoral farming, viticulture, forestry and especially horticulture are the backbone of our economy but they are also a major part of our problem. Two many jobs are seasonal and are therefore unreliable and poorly paid. If it rains, or the crop is not ready the workers are simply not needed and not paid. Nor does the repetitious work appeal to our brightest and most talented.  That’s why the industry has become dependant on RSE  workers from overseas. We need to diversify our economy.

The new  Kiwi Bank call centre in Hastings is the best thing that has happened in decades but will only replace a few of the well paying skilled employment opportunities that have been lost with the departure of PDL,  Ericssons and the head offices of Richmond’s, Wliiiams and Kettle, and Farmlands. 

Our tertiary education offerings do not meet the expectations of many of our young. We are the largest urban population centre in the country without a university campus. It is a huge problem for a number of reasons. Firstly our young leave to obtain an education elsewhere and often don’t return. Secondly this vacuums millions of dollars from our region as parents fund their children’s living and education expenses in places like Dunedin, Palmerston North and elsewhere. But perhaps the biggest cost is we fail to get the economic injection of hundreds of millions of dollars each year from government and student spending, plus we miss out on the employment and other opportunities that a university campus would provide.

Our fundamental disadvantage is our isolation and this is exacerbated by Air New Zealand’s monopoly pricing and service levels. Whilst we think of ourselves as a tourist and conference destination  progress is stifled by air services that are simply not competitive in price or quality.  Its generally possible to fly a thousand kilometres from Auckland to Queenstown or Dunedin for less than the 300 Km to Hawke’s Bay. A year ago the Hastings and Napier Councils buckled when told it could require a $4 million annual subsidy and possible $10 million upgrade of airport facilities to implement trans-Tasman flights. Yet Napier has spent $18 million on a museum with a $4 million annual operating deficit that attracts fewer patrons than the facility it replaced, whilst Hastings has poured nearly $30 million into the Opera House in renovation costs, interest on borrowings and operating subsidies. It now needs millions more to make it safe in an earthquake. 

  

Other instances of unwise Council spending include the disasterous Art Deco buses and $12 million Civic Square development plus the $5 million ratepayer contribution towards a new CBD hotel in Hastings. Both will add significantly to both council debt and interest costs. Money that could instead be used to accelerate additional industrial development that will create jobs.  

 

We have too many representatives claiming to be working for us when in fact they are simply furthering their own vested interests. We need new people who will take us forward instead of trying to cover their past inacation and mistakes. It’s a long time since Michael Laws got Flaxmere a College, and Jeff Whitticar opened up Sunday trading for our wineries.

We are also far too willing to accept excuses from Government, and others for not doing the things that need to be done. To put it bluntly we get a shabby deal. There seems to be no problem finding the money for billion dollar motorways, subway rail systems, stadiums, and all sorts of other flash projects elsewhere, but Hawke’s Bay gets nothing. Its time our MP’s came to the party and obtained firm commitments for Government  starting with funding for improved air services, and a university campus. 

Amalgamation slaging match

Published `15 Nov 2014

The slanging match over debt is sidetracking the amalgamation debate. In the end debt will have very little impact on whether or not Hawke’s Bay will be better off with a single council. If amalgamation turns out to be wrong there will be no chance of going back to what we have now.

Is surely the supporters who must prove their case because it is they who are agitating for change and their motives are questionable. Some may be bitter because they have already been rejected as representatives by the community.  Others are members of the wealthy and influential provincial elite who crave more power than they already have, while others appear to be seeking a way to continue holding office without seeming like stale bread.

Where is the proof amalgamation is going to make us more efficient?  Centres with comparable populations to the proposed Hawke’s Bay Super Council such as Hamilton, Tauranga, and Dunedin have debt levels that are multiples of our combined debt, plus their rates are higher. 

The Winder report claimed at least 100 jobs could be eliminated with one council but similar staff reduction claims were made about Auckland, though these seem to have been conveniently forgotten now our largest city employs over 1000 more staff than before amalgamation, while salary levels have exploded with over 1500 staff earning more than $100 000. If this was the private sector such expectations would be realised, but in Local Government such savings are unlikely. For example we could see five chief executives being replaced with one earning double the present highest salary, plus four additional lieutenants each earning at least as much as the people they are displacing. 

Cost reductions in other areas such as roads, and the three waters are also unlikely because most of the spending in these areas by the existing councils is awarded by competitive tender meaning there is little if any opportunity for further cost reductions. 

Those claiming the Hawke’s Bay economy will perform better under one council need to provide evidence to support their position. Yes we have lost businesses and jobs. Yes our wages are low and unemployment high. But can those proposing amalgamation provide a single verifiable example of a business that has decided not to come here, or one that has left because of our Local Government structure?

The Local Government Commissions had a myopic view of the issue. Both Winder and the Commission seemed interested only in proving a predetermined outcome and in doing so completely ignored the concerns of the four councils opposing amalgamation. It is loss of control  over funding arrangements and spending priorities that that people are worried about not who actually does the work. The present structure actually has some advantages. We now have an element of competition( rare in local Government), and each area is able to concentrate on their strengths and needs. Perhaps it was this concentration of effort that made the difference in helping attract Kiwitbank to bring over 100 jobs to Hastings. 

The Local Government Commission and Winder could have looked at the possibility that poor quality investment decisions by our councils is a better explanation for Hawke’s Bay’s anaemic economic performance. The $18 million museum upgrade with $4 million annual running cost, plus the nearly $30 million( total cost to date) poured into Opera House are costly spend ups that have contributed very little to our economic performance. If we add the Art Deco Buses plus the cost of the proposed Civic Square upgrade it’s not difficult to tote up nearly $100 million of wasted opportunity. 

 

It’s actually possible many things could get worse with a single Council. We have only to look at Auckland to appreciate the sort of things that might happen here. The people who have been running our affairs for many years have the best chance getting elected to any amalgamated Council and If that happens why will the outcomes be any different?  

Hastings cavalier takeover attitude could also backfire. It will have a maximum of just one third of the representatives on both the Transition Board and the merged council and its representatives will easily be out voted by those whose concerns have until now been ignored.   

Amalgamation will be expensive and disruptive. We need to make sure it is worth it. 

Air New Zealand Price Disparity

Published HBT Oct 6

Apparently the Prime Minister agrees there is evidence that Air New Zealand are charging provincial  air travellers more than would be possible if there was competition. This includes Hawke’s Bay.

Typically airfares between Auckland and Wellington (500Km) are less expensive, and the cheaper fares are more readily available than Auckland to Hawke’s Bay(327Km), despite the greater distance. If Jetstar fares are included the gap increases. Air New Zealand may argue economies of scale reduces costs, but their flights between Auckland and Dunedin, or Auckland and Queenstown, have similar passenger numbers to the 275 000 a year travelling between Auckland and Hawke’s Bay, yet generally cost about the same, despite the South Island flights being over 1000Km, three times further than Hawke’s Bay. Again including Jetstar flights increases the difference.  

  

Upgrading to jets would improve the quality of the services and increase the numbers of seats available. Air New Zealand cannot claim Auckland to Hawke’s Bay (327 Km) is not far enough for jet services because they already operate jets from Wellington to Christchurch (300Km), Christchurch to Queenstown (347Km), and Christchurch to Dunedin (316Km)   

Claims by Air New Zealand that regional fares have not increased in five years and that the number of sub $100 regional seats have increased from 600 000 to 1 million a year over that time, must be challenged. They never disclose how many of these are to Hawke’s Bay. Nor do they tell us how many of these cheap fares are replacements for the abandoned  stand-by, or frequent flyer discount programs, or explain how official data from Statistics New Zealand shows domestic airfares have increased by a massive 9.1% for the year to June. 

The “Grab a Seat” programme is also farcical. They are hard to obtain, need to be booked weeks in advance, and are not suitable for the average traveller, especially those connecting with international or other domestic services.  

Air New Zealand are determined to make things very difficult for competitors and over the years have dispatched Kiwi Air, Ansett, Qantas New Zealand, Trans Air, Origin Pacific, and Pacific Blue. In no other area of commerce is a dominant supplier allowed so much unfettered and unrestrained freedom. Telecommunications and electricity sectors have been broken up to create competition and others have been penalised by the Commerce Commission for abusing their dominant position.  

It would help if the Commerce Commission investigated  Air New Zealand’s costs and profitability, and their real time micro managing of fares to ensure they are not being unfairly used to stifle competition. Non competitive routes should not be allowed to cross subsidise competitive routes. 

Local Government is part of the problem. Whilst our councils lost interest in trans-Tasman flights when a $10 million airport upgrade and $4 million a year operating subsidy was mentioned, more than this is being squandered by the same people on projects that fail to deliver any meaningful economic benefit. The new Museum in Napier cost $18 million to build, apparently needs a $4 million annual operating subsidy, while attracting fewer than 40 000 visitors annually, a fraction the number already passing though the airport. The now abandoned Art Deco buses cost over  $1 million and lost nearly $0.5million during their short time on the roads.

In Hastings the Opera House had a $15 million upgrade including road works, incurred a similar amount in interest charges and operating subsidies, and now requires millions more for earthquake strengthening. Hastings also plans to spend some $8 million on the Civic Square project. 

Providing  domestic competition will cost a fraction of these amounts but could make a huge difference to our economic performance. If we continue doing nothing we will cement our position as the bottom ranked regional economy in the country. 

Airfares & Napier Mayor

Published HBT 9 Sept 2014

Napier Mayor Bill Dalton must explain the source of his information that Air New Zealand are not gouging Hawke’s Bay travellers as he so confidently claims, and how does he support his suggestion we risk losing air services altogether if the airline takes offence at our criticism. Has he actually be told this by the airline? 

The chances the airline might flag away nearly half million passengers and hand an estimated $100 million a year piece of business on a plate to Jetstar is simply not credible. 

Many organisations including Mr Daltons own Council are criticised for what some people at least think are excessive charges, and all deny the allegations. That Air New Zealand deny price gouging is irrelevant. No business, especially one half owned by Government would admit to excessive pricing, because it would immediately attract the attention of regulatory authorities. In fact there is antidotal evidence to the contrary. 

Are we to assume Mayor Dalton does not intend to protest at the possible loss of 36 local Air New Zealand jobs when he meets with Air New Zealand Regional Services Manager Ian Collier this week because of the risk of offending, or is this issue somehow exempt from the threats to leave Hawke's Bay.  

Surely he is aware of the anaemic state of our local visitor industry and perhaps would be doing the people and businesses of Hawke’s Bay a greater service if he were to add his voice to those claiming unfair treatment, rather than helping a business preserve the damaging monopoly it currently enjoys.

Amalgamation conflict

Published June 2014

Local MP Chris Tremain's apparent suggestion that Hawke's Bay will be better off if hundreds of skilled and well paid Hastings council jobs are transferred to Napier seems more like shuffling the deck chairs on the Titanic than a plan to improve our performance. Obviously he believes Hastings should play no part in the future under one council despite most of the  growth,  in population, industry and employment happening within the Hastings District Council. Such a move could be catastrophic for Hastings retailers.

As the former Minister of Local Government I would have expected Chris to be able to provide very specific details on the savings and how they will be used, details of past problems caused by our multiple councils, and exactly what opportunities we have missed in the past, because of our divided councils.  

Also his slagging opposition to the objections by three of the areas four Mayors accusing them of patch protection seems somewhat contradictory since he was a party to his governments rejection of all suggestions for reform of the MMP system, including the elimination of coat tailing. Surely one of the best examples of patch protection seen in recent times. 

Whilst many of us share concerns about our multiple council structure, the disunity currently evident within the HBRC suggests that one council may be no more unified than several. Each of our four territorial councils appear surprisingly unified within themselves if often not in agreement with each other, but if the divisions within the Regional Council were to spread into a single unitary council, the situation might be very much worse. 

It is unrealistic to blame every aspect of our poor performance on local government and the supposed differences between our councils. Perhaps some of the problem is the effectiveness of our representation within central government. 

Amalgamation

Published HBT June 2014

The slanging match over debt is sidetracking the amalgamation debate. In the end debt will have very little impact on whether or not Hawke’s Bay will be better off with a single council. If amalgamation turns out to be wrong there will be no chance of going back to what we have now.

Is surely the supporters who must prove their case because it is they who are agitating for change and their motives are questionable. Some may be bitter because they have already been rejected as representatives by the community.  Others are members of the wealthy and influential provincial elite who crave more power than they already have, while others appear to be seeking a way to continue holding office without seeming like stale bread.

Will it save money?

Where is the proof amalgamation is going to make us more efficient?  Centres with comparable populations to the proposed Hawke’s Bay Super Council such as Hamilton, Tauranga, and Dunedin have debt levels that are multiples of our combined debt, plus their rates are higher. 

The Winder report claimed at least 100 jobs could be eliminated with one council but similar staff reduction claims were made about Auckland, though these seem to have been conveniently forgotten now our largest city employs over 1000 more staff than before amalgamation, while salary levels have exploded with over 1500 staff earning more than $100 000. If this was the private sector such expectations would be realised, but in Local Government such savings are unlikely. For example we could see five chief executives being replaced with one earning double the present highest salary, plus four additional lieutenants each earning at least as much as the people they are displacing. 

Cost reductions in other areas such as roads, and the three waters are also unlikely because most of the spending in these areas by the existing councils is awarded by competitive tender meaning there is little if any opportunity for further cost reductions. 

How exactly will we be better off ?

Those claiming the Hawke’s Bay economy will perform better under one council need to provide evidence to support their position. Yes we have lost businesses and jobs. Yes our wages are low and unemployment high. But can those proposing amalgamation provide a single verifiable example of a business that has decided not to come here, or one that has left because of our Local Government structure?

The Local Government Commissions had a myopic view of the issue. Both Winder and the Commission seemed interested only in proving a predetermined outcome and in doing so completely ignored the concerns of the four councils opposing amalgamation. It is loss of control  over funding arrangements and spending priorities that that people are worried about not who actually does the work. The present structure actually has some advantages. We now have an element of competition( rare in local Government), and each area is able to concentrate on their strengths and needs. Perhaps it was this concentration of effort that made the difference in helping attract Kiwitbank to bring over 100 jobs to Hastings. 

The Local Government Commission and Winder could have looked at the possibility that poor quality investment decisions by our councils is a better explanation for Hawke’s Bay’s anaemic economic performance. The $18 million museum upgrade with $4 million annual running cost, plus the nearly $30 million( total cost to date) poured into Opera House are costly spend ups that have contributed very little to our economic performance. If we add the Art Deco Buses plus the cost of the proposed Civic Square upgrade it’s not difficult to tote up nearly $100 million of wasted opportunity. 

Is it possible we will be worse off? 

It’s actually possible many things could get worse with a single Council. We have only to look at Auckland to appreciate the sort of things that might happen here. The people who have been running our affairs for many years have the best chance getting elected to any amalgamated Council and If that happens why will the outcomes be any different?  

Hastings cavalier takeover attitude could also backfire. It will have a maximum of just one third of the representatives on both the Transition Board and the merged council and its representatives will easily be out voted by those whose concerns have until now been ignored.   

Amalgamation will be expensive and disruptive. We need to make sure it is worth it. 

Gaza Update

Published HBT 16/08/14

Hamas cannot win the military battle they have bought with Israel, so why do they bother with their continuing rocket attacks, that actually cause little real damage?  It's not clear how much support Hamas has, but In what other country are the people condemned to die because of the actions of their government? Perhaps Israel has fallen into a trap set by Hamas to provoke a military reaction so as to motivate a whole new generation of militants, suicide bombers, martyrs and others willing to perpetuate the fight. With 50% of the population of Gaza 18 years old or under there may be no shortage of volunteers for decades to come. 

The first casualty of war is truth. Initially Israel claimed Operation Protective Edge that started on 8 July was a response to the rocket attacks from Gaza,. Then they claimed it was the tunnels built to allow insurgents access to Israel. Possibly the real reason is retribution for the murders of the three Israeli teenagers. Israel may have an advantage with its confident english speaking spokespeople but Hamas have the evidence of destruction and hundreds mutilated and dead children. 

Few dispute Israel's right to protect itself. However many are questioning the killing of nearly 2000 people, 73% of them civilians including nearly 500 children, injuring over 10 000 more, driving hundreds of thousands from their homes, destroying the only power station including fuel supplies, wrecking sanitation and water reticulation systems, and ruining untold livelihoods. Rebuilding is estimated cost at least $6 billion.  It is the rest of the world who will eventually foot the bill, not Israel who caused the damage, or the USA who supplied the weapons.   

Israel's battering of Gaza repeats the 1998/99 invasion and the 2011/12 bombing. Despite having every conceivable weapons option including tanks, drones, precision guided bombs plus troops on the ground, the Hamas rocket attacks have not stopped. This military option may eventually fail despite overt support from Egypt and Saudi Arabia who view Hamas as akin to the Muslim Brotherhood, Isis, and Iran, a view supported by many Western countries especially the USA. 

This is different from the previous wars Israel has fought successfully with hostile neighbors because it is essentially a guerrilla campaign where the combatants are indistinguishable from the general population, and hide amongst them. As the USA and French discovered in Vietnam, America, Britain and Russia found in Afghanistan, and again by America in Iraq,  military might does not necessarily produce a successful outcome when the enemy is so elusive. Even the Hamas tunnels have a similarity to Viet Kong tactics that helped wear down the USA in Viet Nam. 

Also time may be running out for Israel because both the UK and Western Europe are becoming increasingly Muslim as a result of both a huge influx of refugees fleeing various Islamic countries, plus their higher birth rates. Muslims already number nearly 3 million( 4.4%)  in UK and are increasing 10 times faster than non Muslims. In the Western European Union 19 million (3.8% )are Muslims and estimates suggest over the next 15 years 85% of population growth will be Muslim This could mean in the not too distant future this group will acquire the political clout to force governments to cease their support for Israel.  

Killing so many non combatants is seem by many as immoral, inhumane and totally excessive, and matching evil with evil will not bring peace or prosperity to the Middle East. Whilst Israeli Prime Minister and hard liner Benjamin Netanyahu has the support of a majority of Israelis they may be loosing the moral high ground. Netanyahu seems incapable of developing a non military solution and his approach has also cost the lives of over 60 Israeli military personal, a terrible price to pay for pandering to public opinion. The Iron Dome missile defense system has ensured Israel was never seriously threatened by primitive Hamas rockets . Whilst the destruction of tunnels was clearly justified it is unlikely they have all been found. Israel is going to have to yield some ground with a political solution and find a way to convince Palestinians they can have a better life without Hamas who for now are the elected legitimate government of Gaza. 

Gaza & Israel

Published HBT 25/07/14

Whilst the totally unjustified shooting down of MS 17 in the Ukraine has grabbed the headlines we should not ignore what is happening in the Middle East  where Israel is engaged in a one sided clash with Palestinians in the Gaza Strip, home to nearly 2 million people and one of the most densely populated parts of the world. 

Israel claims to be trying to stop the thousands of missiles being fired by Hamas militants but these are are unsophisticated unguided limited range weapons and their inadequacies combined with the effectiveness of Israel's Iron Dome anti missile system means minimal damage and only one death. The disproportionate Israeli response from land sea and air has so far killed and maimed hundreds, mostly civilians including women, children, non combatants and old people. People who there have little option but to continue doing so. 

The abduction and murder of three civilian teenager's was totally wrong and the perpetrators must be bought to justice. Whilst Israel felt quite entitled to barge into the Gaza arresting and beating up dozens in their search for the culprits, (which they failed to find)  the Palestinians apparently had no such rights to do the same to solve a retaliatory crime committed against one of their own.  

Israel  should remember their own violent history including terrorist acts and murder. This includes killing 91 people with the terrorist bombing of the King David Hotel in Jerusalem in 1946, numerous instances of attacks on British forces, and the massacre of many non jewish settlers.  

Israel has successfully defended itself on many occasions from neighbors bent on her destruction. These threats have not disappeared but this is not the situation today in Gaza. Certainly most living in Gaza would like to see the demise of Israel but they lack the means and ability to do so. Whilst dealing to those responsible for the rockets is justified, deliberately killing and maiming innocent civilians is criminal. In fact it has a certain similarity to the treatment of Jews prior to WW2.  Even the total blockade of Gaza seems reminiscent of the containment of Jewish ghettos by the Nazies.

Jews (or Israelites) have been persecuted for most of history especially by the German Third Reich and their determination to create a safe homeland is entirely understandable. However at the time of the official formation of Israel jews were a minority in the area and others who lived there have been systematically and driven out. For instance Israel regularly bulldozes the homes of non Jews in the West Bank to make room for its own settlements even though the area was annexed in 1967 and not originally assigned to Israel.  Its little wonder so many hate the Jewish state. 

Israel is creating a dispossessed people who have no hope of escape or a better future. Their highly effective  PR machine is trying to convince us their brutality is justified. This is not collateral damage, Israel is committing atrocities and its actions are unacceptable.These are not the actions that create peace and harmony but the conditions that will create terrorism. One day as a  consequence of this wholly one sided conflict something may happen either by intent or accident  that will impact on the rest of the world. If for no other reason Israel must be made to stop these excessive attacks or the rest of us will eventually pay the price. Meanwhile Israel seems determined to make the place as miserable and dangerous as possible and appears intent on totally annihilating Gaza and its people if at all possible.  

It is wrong that the world at large is doing nothing to stop Israel's barbaric actions and one day there may well be consequences that may affect us all. The downing of flight MH17  by either Russia or pro Russian separatists demonstrates graphically just how quickly and unintentionally and tragically innocent people can become involved in issues not of their making.