Te Waka - Failure
Waikato economic development agency Te Waka launched six years ago will wind up at the end of this month, after announcing it is closing due to a “lack of regional commitment and inadequate funding”.
Te Waka has three full-time staff and runs on a budget of approximately $1 million with $750,000 of that amount coming from the Waikato Regional Council.
Te Waka which was business led and governed was launched as “the authority on how best to power up the Waikato economy for the benefit of its residents and New Zealand more widely”.
One board member and independent economist Cameron Bagrie said: “that it was not fit for purpose and it did not look like there was a pathway to making it fit for purpose”.
He said that the authority wasn’t fit for purpose because it lacked some key characteristics required by Economic Development Agencies. You need strong funding from business or a mechanism that allows funding from business and it clearly didn’t have that.
He also said that you need all parts of the region to be involved with every party and every council in the region contributing or else you end up with “free riders”.
The suggestion was made by many that it just did not get enough funding – including from its prime constituency, business.
My question is why the ratepayers of the region should have been committed to put funding into this when it is in effect just a vehicle to promote the business economy of the region with no realistic benefit to the ratepayers.
The ratepayers have over the past six years put approximately $5million into Te Waka and I don’t believe they have received any benefit from this funding and now it has failed and they are unlikely to see any return on their investment at all.
The whole situation is in my opinion well outside of what should be Councils core responsibilities as representatives of the ratepayers.
What is the role of a council in New Zealand?
Council's role is to enable democratic decision-making by and for communities and to promote their social, economic, environmental and cultural wellbeing. In practice, this means everything from footpaths and lighting and the supply of freshwater to resource management and environmental health and safety.
Councils provide services to meet the needs and priorities of local communities such as waste collection, recycling, water supply etc. Services vary between councils depending on a council's location, size, demographics, resources, growth patterns and community preferences.
The problem as I see it is that over time the local authorities (Councils) have developed into bureaucratic organisations that seem to be continually expanding their empires and taking on new roles that look to benefit councils with no direct benefits to the ratepayers.
Many of the roles that have become accepted by the councils as being part of their responsibility have in actual fact just been things that the central government have passed down to the local council as a way of removing the obligation on central government for funding those roles.
As a ratepayer I don’t personally see why my rates should subsidise local businesses to advertise or promote their goods or services, which is what was occurring under Te Waka.
I know that the council will say that they are supporting the region and trying to grow the local economy for the benefit of the ratepayers, but I don’t see how as a ratepayer, my funding of this economic development agency (Te Waka), provides anything other than an increase in costs to my local regional council.
Whilst it can and probably does provide some benefits to the local business community there are very few benefits for the ratepayers, but plenty of downsides.
The more people that are encouraged to reside in a region and commence business in that region the more services that are required to support them, and that requirement is ongoing.
While growth in the regional economy and in the regional population numbers may bring with them more and better services for the ratepayers, they come at a cost and those costs are being paid currently by the ratepayers.
The Te Waka situation is a classic example of what often happens when councils get involved in things that are outside of what would be considered by most ratepayers as part of the council’s core functions.
I.E.: they incur a lot of costs for the ratepayers without any real benefits and with a lack of any real commercial expertise they eventually end up with a failing organisation, when in fact what should happen is that local businesses should be funding these organisations and using their own expertise to ensure that they are providing a decent return on their investment of time and money.
When the councils are involved and basically providing the main direction for such economic development organisations, the ratepayers end up with a double hit of the costs, which should be on a user pays basis.
The ratepayers under the council directed economic development organisations are funding what is basically just a promotional tool for local business and if they are successful in their objectives (i.e. they manage to increase business numbers and build the local economy by doing so) the ratepayers then have to foot the bill for providing increased levels of basic services and infrastructure as well as the ongoing maintenance costs.
Yes I know you will say that the new residents and businesses will be paying rates and covering their costs the same as at present with the existing ratepayers, but this does not take into account things such as the provision of services such as rubbish collection, street cleaning, road maintenance sewage disposal etc. which is required due to increased levels of visitors to the region who are not ratepayers.
It also does not take into account the increase in the size of the bureaucracy that is expanded to manage this council operation.
It all adds up to a situation such as the present time where we have an economic downturn (for any reason, currently covid is being blamed) and the ratepayers are facing increased rates demands to cover this increase in council costs without any increase in their income to cover for those increased demands of rates.
Te Waka failed and that failure is mostly being blamed on a lack of business funding and input, yet the WRC want to recreate the same type of model and they seem to believe that they can make it work this time.
Well its time the powers that be in the councils realise some things:
- 1. Economic development of businesses is a business issue and as such should be both funded and driven by business.
- 2. Ratepayers don’t have bottomless pockets.
- 3. Ratepayers and particularly those on fixed incomes can be rated out of their own homes by these decisions.
- 4. Councils, like any other organisation that requires funding to exist, can go broke particularly when they get to the point where their own ratepayers cannot afford to pay their exorbitant rate demands.
- 5. Councillors will rapidly find out at the ballot box when they have made the wrong decisions but this still does not help the ratepayers who are liable for the bills.
- 6. There is a finite limit when it comes to the size of the council organisations and the ability of the ratepayers to fund those organisations.
- 7. The council empires cannot just continue to expand and expect the ratepayers to either be able to, or to actually fund those expanding bureaucracies.
Regional Council Chair Pamela Storey told the Herald that her council was looking at the potential for a new economic growth entity.
“The decision just made by council as part of our long term plan deliberations was a direction to staff to continue to work with our key stakeholders to develop an appropriate structure… a report will be coming back to our council in September to provide councillors the opportunity to hear what stakeholders feel is an appropriate structure to serve this region” she said.
When examining its draft long term plan, the council considered a targeted rate on business and industry to support economic development, as do some other regions she said, but it didn’t proceed with the idea – at least for this planning round.
Waikato Mayoral Forum Chair and Hauraki District Council Mayor, Toby Adams said “there is never a right time” to start a new Economic Development Agency venture and in economic hard times “you should be more focussed and trying to grow businesses and capitalise on things like tourism”.
He may well be right but the fact of the matter is that whenever they are looking to start a new Economic Development Agency to grow businesses and capitalise on things like tourism, it must be funded by the businesses involved and not by the ratepayers.
When looking at recreating something like Te Waka the council should remember that old quotation:
Insanity is doing the same things over again and expecting a different result.