Establishing the length and strength of reins on GHL

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

Gisborne District Council has an interesting dilemma on its hands as it considers the sort of constitution it should adopt for an enlarged Gisborne Holdings Ltd.

On the one hand it wants GHL to act commercially and without the political constraints it has as an asset owner. It expects GHL to significantly grow the profitability of its commercial operations, as it looks to first have it take over council property management, then the ownership and operation of its holiday park, vehicle testing station and social housing.

On the other hand, it wants to retain some control over GHL’s decision-making — potentially retaining some of the key political constraints that hinder the development of these assets.

The big question then is the degree of control the council should have over GHL’s directors. To help establish this they held a workshop last week with leading constitutional lawyer Mai Chen.

Presenting a draft constitution to the council, Ms Chen said it might like to take a more heavy-handed approach in its letter of expectation — with a view to taking a lighter approach in the future if things go well.

Ms Chen drew laughter from councillors when she said that if the directors did not do what they were told, it could “shoot them”.

The present constitution of GHL dates back to the formation of the port company in 1997, with only two minor amendments.

It is accepted that it is not fit for purpose for a modern council-controlled trading organisation but has sufficed for the sole asset which GHL currently looks after, Tauwhareparae Farms Ltd.

One interesting issue raised during last week’s debate was whether the operation of its buildings was a core business of council. Another was a claim that the community had never said council-owned businesses should not compete with private businesses — when this is often part of Chamber of Commerce submissions arguing against the council’s ownership of businesses. The strong negative views expressed over community-owned Eastland Group’s foray into the local helicopter market should also be instructive.