28 July 2020

Media: Rotorua Daily Post

Topic: Regional tourism funding

Enquiry

I am seeking comment from the mayor about the announcement on the funding for regional tourism.

https://www.nzherald.co.nz/rotorua-daily-post/news/article.cfm?c_id=1503438&objectid=12351465

• What help will $1m do for Rotorua?
• Are there any limitations to this funding?

Response

From Rotorua Mayor Steve Chadwick:

It's fabulous that Rotorua Economic Development will be receiving this funding on top of the usual investment from Council. It will support the organisation in this post-COVID-19 recovery environment as they develop new and different approaches to telling our unique stories.

This arose from a workshop that I attended with the industry sector groups. It's great to see that some of their aspirations will be met using this funding injection. This will go a long way to support our destination as it responds to the pressures of recovery in uncertain times.

*NOTE: View the media release from Hon Kelvin Davis here

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Media: Local Democracy Reporter

Topic: Council wastewater services proposal

Enquiry

Questions

NB - when I refer to Trility below I mean the Trility consortium.

• What would happen if the Trility had to withdraw from the contract (once it was signed) - what are the potential costs and or implications of that to the council if that were to occur?
• Will the council make the summary of the contract available to councillors and the public before the council decides on whether to proceed? [Can you please also provide me with it?]
• If the council enters into the proposed contract is all financial risk (for example, for all and any shock events) transferred to Trility?
• How much does the council expect Trility's five-year profit to be worth? [If you cannot provide an exact figure, please provide an approximation.]
• What would be the consequences to the council if it decided to terminate or vary the proposed contract (once signed) with Trility?
• Is it possible this could be triggered by an offer from the Government with regard to the proposed three waters reform programme?
• What was the original timeline for decision-making on this proposal (ie when was it originally to go to the council, SP+F), when did that change and why?
• What was the purpose of the workshop on the morning of July 23 and why was it scheduled for that date and time?
• Is the council comfortable the timing of the workshop allowed councillors enough time to consider the information presented in the workshop?
• Is the council comfortable councillors have enough information and time and that that information is clear enough to make an informed decision?

I also have some commentary I would like to provide you with for right of reply if desired:

One more person is to confirm their comments with me this morning - I will provide the council with these as soon as that happens.

Andy Asquith (Massey University local government academic)

Massey University local body governance expert Andy Asquith said, in his view, there were "significant weaknesses" in the governance process with regard to the Trility sewerage and sewage proposal.

"I don't think that good local governance has been particularly well served."

That was because of the speed of the decision, the underlying rationale for the proposal, and the relevance of the Government's three waters reform announcement.

He said it would be prudent to wait to see what shape the Government's three waters reform would take.

It seems a bit hasty to me.

Asquith said having a public-excluded workshop before the meeting on Thursday was, in his view, bad governance.

Local government is about engaging with people ... it doesn't smack of trust, faith and empowerment. It's about as transparent as a brick wall.

Especially when ... you've got this significant majority of the people who submitted on the issue so fundamentally opposed to it.

He said in some cases, council officers could bury councillors in paperwork.

You bamboozle them. They haven't had a chance to read it, process it, do anything with it.

Reynold Macpherson (letter to RDRR members) [Have bolded particularly critical comments for your convenience]

We have an emergency. The RDRR Committee asked me this afternoon to invite you to take action over the Council's Statement of Proposal - to outsource the management of Rotorua's wastewater system to the Trility-led consortium.

We need to persuade the Minister of Local Government and Council to pause, and to listen to ratepayers and the Department of Internal Affairs before making a seriously mistaken decision.

In our view, Council has ignored widespread opposition and critical feedback from ratepayers. It has also endangered Rotorua's participation in the central Government's Three Waters Reform Programme that is supported by all political parties to upgrade infrastructure.

During the public consultations, 23 (85%) opposed the plan, with 4 in support. At the public hearings, 11 (92%) opposed the proposal with 1 in support. At the Strategy, Policy and Finance subcommittee of Council, five out of ten councillors (Crs Peter Bentley, Sandra Kai Fong, Raj Kumar, Reynold Macpherson, and Fisher Wang) decided not to vote for the proposal because the risks were too great. It was, nevertheless, recommended to full Council by the Mayor, Crs Dave Donaldson, Merepeka Raukawa-Tait, Trevor Maxwell and Mercia Yates, and two community board representatives.

All councils have just been invited by the Government to sign an MOU to (a) submit shovel-ready project bids by the end of August to ensure capital and operational expenditure is underway by June 2021, to be paid from the first of three tranches, and (b) discuss exchanging its three-waters assets and debts for access to the second and third tranches, to be announced by future governments.

However, this Wednesday 29 July, starting at 1030, Rotorua Council will make the outsourcing decision without a briefing by the Department of Internal Affairs on the Three Waters Reform Programme.

The outsourcing proposal assumes that our heavily indebted Council will retain full ownership of its water assets and related debt for the 10-year contract, thereby keeping all borrowings on its balance sheet - for our district mokopuna to pay off. The Three Waters proposal is that councils share asset ownership and debt by moving them on to the balance sheet of new super regional water entities, in return for massive infrastructure upgrades and expert management - clearly to our ratepayers' benefit.

The outsourcing proposal will cost Rotorua's ratepayers $156 million over 10 years, that is, $15.6 million each year. One of submitters calculated that the Chinese-owned Trility's standard profit margin is between 16.5% and 19.9% of revenue. This will mean that about $2.5 million to $3.1 million will have to be taken from targeted rates and leave Rotorua's economy each year.

RDRR wants Council to keep such profits and upgrade local management and use local contractors. Worse, in the event of the contract being cancelled by Council, Trility will be entitled to five years profit, estimated at between $12.5 million and $15.5 million. This is an unacceptable risk to ratepayers in a Covid context.

Council has identified seven major problems to do with our three waters' systems; ageing infrastructure, growth in demand, increasing compliance, effects of climate change, funding and financing, internal capability, and regulating the quality of services. It has admitted that it's current mix of internal management and contracts has failed. Awarding a management outsourcing contract will do nothing to solve any of these problems. The Three Waters Reform Programme will address all of them.

It is unfortunate that critical feedback has been attributed to forgetfulness, misunderstandings, wilful mistakes and devious politics. It would have been wiser to assume that the critics were authentic, informed and often gave highly expert forms of advice based on decades of experience. Despite this, the proposal preferred by officials and the Mayor and her uncritical followers has never changed; it suffers from acute predetermination.

So much so that a $1 million contract has already been signed and implemented - for Trility to embed three managers in Rotorua's wastewater treatment plant.

Please send an email in your own words to the Nanaia Mahuta, Minister of Local Government, to Steve Chadwick, Mayor of Rotorua, to all elected Councillors, and to the Local Democracy Reporter. Their email addresses for cutting and pasting are ...

Please try and attend the Council meeting this Wednesday, starting at 1030 am, to see if our local democracy still works.

See Reynold Macpherson statement at THIS LINK

Follow up comment from Sandra Kai Fong:

On Sunday she said the discharge issue for the Rotorua wastewater treatment plant - currently before the Environment Court - was identified as a real risk for the Trility proposal and the Trility contract "does not appear" to mitigate that risk.

She wanted to know how the outcome of that process, as well as tendering and building the new treatment plant, would impact the proposed contract.

We don't have any agreed discharge option yet. How does that impact the contract and also the tendering and building of a new treatment plant in future?

She said the first briefing councillors had received on the Government's three waters proposal was on Thursday at the pre-meeting workshop.

I didn't think that gave us enough information to understand the implications or opportunities we should, or could, consider before entering into a 10-year contract."

She said she had tried to ask in the workshop what the costs may be for a termination of the contract if the Council went with a government option and a general answer regarding novation had been given.

Response

From Rotorua Lakes Council, Chief Executive, Geoff Williams:

This matter will be discussed, and a decision will be made, by the full Council at their meeting tomorrow (Wednesday 29 July). It would be inappropriate to comment further on this prior to then.

I know you attended the Strategy, Policy & Finance Committee meeting last week, however if required, further information is available via the links below.

This matter was discussed at the Strategy, Policy & Finance Committee meeting last week and you can view the agenda at THIS LINK on Council's website.Go to p10 of the agenda to view the report on this matter. The report provides background and highlights the main themes and issues identified by submitters, alongside council staff's responses to the matters raised.

Following the Strategy, Policy & Finance Committee meeting, a news item about the deliberations was available on Council's website HERE.

View the Statement of Proposal that went out to consultation HERE at Council's Let's Talk/Korero Mai engagement platform, where you will also find more detail and information about what is proposed and why.

You can view the presentation slides related to this matter HERE (full presentation from workshop held before committee meeting last week) and HERE (shortened version presented during committee meeting).

The Strategy, Policy & Finance Committee meeting was livestreamed and you can access the recording HERE on Council's YouTube channel. The Council meeting tomorrow will also be livestreamed