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Is this how to make a $600 million decision?

Is this how to make a $600 million decision?

by Tom Belford
April 13 2014

www.baybuzz.co.nz/archives/7341

This week, at our Wednesday meeting, Regional Councillors will be asked to set in motion a public consultation process regarding ratepayer investment in the CHB dam.

Here’s what we are expected by HBRC management to base our decision on:

1. A so-called ‘business case’ tabled by HBRIC, the holding company team promoting the scheme. What Councillors (and the public) have seen is a ‘business case’ with no supporting numbers regarding cash flows, sensitivity analyses of differing assumptions or risks, or investment returns. Indeed at this point it is not clear if there even are any investors.

When HBRIC presented its case, I offered a motion, which was voted down 5-4 (I think you can guess that line-up by now), that listed the information we Councillors needed to see and review so as to appropriately evaluate any potential ratepayer investment. I’ve attached the failed motion here.

Call me crazy, but don’t you believe this is the kind of information you would expect me and other Councillors to have and weigh? In fact, shouldn’t such information be available to you?

2. The so-called ‘Nimmo-Bell’ report on alternative investments HBRC might consider to advance economic development goals for the region. This report was so hastily prepared, devoid of information, and lacking in analytic rigour that it was ridiculed by some Councillors, while others apologised to the hapless consultant for giving his team an impossible task. I termed it a ‘fool’s errand’. Even at that, the report concluded that the economic benefits of the scheme — jobs, GDP growth, etc — had been over-stated in HBRIC studies by 20%.

3. And now on Wednesday we are scheduled to receive a verbal ‘interim report’ — that’s right, a verbal report — from our other consultants, Deloitte, who have been charged with giving Councillors (and the public) an independent peer review of the HBRIC ‘business case’. In other words, we’re getting a verbal report reviewing a business case Councillors have yet to see in any reasonable detail!

On the basis of our insights from the above, Councillors will be asked on Wednesday to endorse commencement of a public consultation process that, technically, would test public views on HBRC investing up to $80 million in the proposed dam, but effectively will serve as the public test of proceeding with a $600 million, all in, irrigation scheme in Central Hawke’s Bay.

It would seem that HBRIC and our Regional Council chaperones are determined for Councillors to be as uninformed as possible in making this decision. Do we have ‘STUPID’ stamped on our foreheads or what?!

Indeed, this process has all the elements of a brilliant case study for the Auditor General … How NOT to make a $600 million decision!

I know that some Councillors take our fiduciary duty seriously. They believe as firmly as I do that this process is a travesty. We will do our best to ensure that we and the public are far better informed before we make any kind of decision regarding whether this proposal deserves to go forward to public consultation.

ENDS

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