Jessica Maxwell: Was review really independent?

Mayor Lawrence Yule needs to resign for appointing Craig Waterhouse as an "independent" reviewer.

When Hastings' deputy mayor, Cynthia Bowers, penned her Talking Point "HOY future bright despite loss" (Tuesday 19/7), Horse of the Year (Hawke's Bay) Limited, (HOYL), the private company she chairs, was facing insolvency.

By jumping the gun, she alerted readers to the fact that she surely must have had prior knowledge that her fellow councillors would bail it out at a council meeting last week and guess what. They did. They paid off the $170,000 loss from this year's event, provided $120,000 for next year's show and gifted a further $200,000 to the HB A & P Society for fencing and irrigation to help reduce HOYL costs (part of $500,000 for showground improvements). Plus on top of the $490,000 there is staff time and cost of the review to consider.

Clearly, councillor support for the rescue package had been pre-arranged behind closed doors, so why bother with a farcical meeting? Ms Bowers should resign. While legally she may not have a conflict of interest, many observers view her dual role as controversial.

HDC's chief financial officer, Bruce Allan, recommended that council (i.e. ratepayers) should unilaterally pay off the 2016 loss and increase their annual contribution to $150,000 and reviewer, Craig Waterhouse, recommended that councillors should set aside up to $600,000 for future losses. Yes, $600,000. Ratepayers are now locked in to cover event losses.

Last month, when the loss was made public, mayor Yule said council would commission an "independent review". So why then did he appoint a reviewer who, as far as I am concerned, was not independent?

Craig Waterhouse has been involved in council's business activities for years. The Companies Office website lists him as having been a director of Hastings District Holdings Ltd., a wholly council-owned company since 2009 along with council's CEO, Ross McLeod and councillor Tania Kerr. He is also chairman of H.B. LASS Ltd., a local government administration company with Ross McLeod and the CEOs of other local councils whose office, like the other, is registered at HDC. Additionally, he has been chairman of HDC's Parks Business Establishment Unit since 2011.

Of course Waterhouse's recommendations were welcomed by Ms Bowers, but are they realistic and will they satisfy ratepayers?

Despite criticism of the Bowers-led HOYL Board, despite criticism of SMC Events' management and despite admitting that, financially, the event is "exceptionally high risk", Waterhouse recommended that council should save HOYL from liquidation and that Ms Bowers should remain as chairwoman.

Why on earth should council as one of three shareholders in a private company, cover 100 per cent of the company's losses? It shouldn't. Never once did Waterhouse suggest that co-shareholder Equestrian Sports New Zealand, the sport's financially sound national body, contribute anything nor is the third shareholder, Show Jumping Hawkes Bay, asked to chip in. No. He dumped the $170,000 debt, shareholder input and underwriting of future losses solely on Hastings ratepayers and councillors, with minimum resistance, weakly agreed.

Last June, Ms Bowers announced triumphantly in Hawke's Bay Today that SMC Events was backing the event and that "under the new agreement, SMC would have to pay a share of any deficit if the event ran at a loss". However, when I asked her what portion of the $170,000 loss SMC Events was paying, the answer was simple ... it wasn't.

In 2007, the Christchurch City Council made a costly decision when it paid SMC Events $3 million for naming rights for the Ellerslie Flower Show and for continuation of its management rights. Seven years later, the event had racked up losses of $706,000 and was finally canned with ratepayers. I alerted Hastings councillors to this huge loss, noting it as a cautionary tale. They didn't want to know.

The claim that HOY pumps $12 million into the region is not proven. Possibly, the optimistic, theoretical figure was achieved in the show's hey-day but with entries and gate-takings down 25 per cent this year, revenue will have also dropped 25 per cent. Undoubtedly, there are economic benefits " but not $12 million.

Currently, many worthy community groups are battling to survive due to lack of funds, but council considers a potential $1 million plus outlay to rescue, support and underwrite a high-risk event, which, if it were restructured and properly managed should be self-funding. In my view, their priorities are all wrong.

I support the show being retained in Hastings, just not using vast sums of public funds. Councillors have taken ratepayers for a ride, but come election time, voters can choose to change horses.

Mayor Yule needs to resign for appointing Mr Waterhouse as an "independent" reviewer.

- Jessica Maxwell is a concerned Hastings ratepayer and self-employed funding adviser.

- Views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz