Saturday, November 5, 2016

Gerry Eckhoff: Monopolies and Accountability

It is said that you reap what you sow. The developing saga of lines company Aurora /Delta which is in turn owned by the Dunedin City Council (DCC) raises several other issues beside delinquent maintenance of their power lines. Delta estimate around 3000 of their power poles are not fit for the purpose. There has already been one staff death due to a pole snapping during routine “maintenance”. 

There is a widespread belief that public ownership of utilities such as a lines company gives the public greater security of supply, control of service delivery at a fairer price, coupled with a healthy dividend back to the parent company. That simply isn’t true. 

There is also an expectation of council owned companies to be as good, if not better employers than the private sector with a major emphasis on health and safety. That’s not true either. As for financial benefit thru full public ownership, the Otago Regional Council and therefore the public of Otago, ‘enjoy’ a 1% return on its public ownership of Port Otago and its subsidiary company - Chalmers Property. How good is that?

Councils are a monopoly so it should come as no surprise that all councils exercise that privilege to a very high degree. Indeed, the DCC was widely seen as having paid far too much for the lines network formally owned by the Central Otago generator Pioneer Central. This was because the new owner (DCC) was deemed to be entitled to a 10% return on its investment (by the Electricity Authority) while devoid of competition. Thus, we of the peri urban sector, pay more in lines charge from this monopoly provider (Delta) than we do for the actual electricity delivered by Delta.

The growing disconnect between governance and management has yet again been illustrated by this sorry power pole saga where frustrated staff are apparently forbidden to talk with their governing body. Due to this demarcation between staff and councillors or board, vital information is not being passed on to the board /council who set the policy for management to administer. Surely the free exchange of knowledge or concerns between staff and governance is essential for the wellbeing of any organization so that an understanding of the actual situation at the coal face is better understood by all.  Matters of managerial jurisdiction are obvious or at least should be but it does need to be clearly understood that a duly elected councillor is in fact an independent contractor, whose duty is to the public and not in the first instance - to the council. A board member’s duty is to the wellbeing of the company and not the shareholder.

Dunedin City Holding LTD chair Graham Crombie (appointed by the DCC) has announced that an independent investigation will be conducted into the state of the lines network - which is entirely appropriate. As Mr Crombie has something of a conflict of interest, should not the appointment of a suitably qualified person be achieved by the Electricity Authority? It is also reasonable to expect that Mr Richard Healey – a former employee who went public with his concerns  should be reinstated as - say -the overseer of health and safety operative if Delta is to start being a good employer.  Any renewing of confidence in Delta, Aurora, DCHL, and the DCC requires an open and transparent inquiry process that the public can have confidence in which in turn means the inquiry cannot be held - “in house “
As for the board of Aurora and Delta especially -  they would do well to remember the comments and actions of Lord Carrington the British Foreign Secretary once the news broke of the Falkland Islands invasion by Argentina.

“I was wrong in my assessment of what they were doing therefore I am responsible. I am responsible but not to blame.” He resigned. I can confidently predict that no director of Delta will resign or be sacked

Politics is a performing art. The public need to see their local Government politicians and their appointees performing as they should with transparency and accountability. Anything less is perhaps predictable but entirely unacceptable.

1 comment:

Peter said...

Great article Gerry!!!So true. A few weeks ago the Otago Daily Times had an editorial questioning the right of CEOs of council companies to expect huge salaries.

I wonder how many people remember the Peter Principle? A person reaches their level of incompetence. In today's world 'management' are not held accountable. They move on in a few years. In North Otago a public relations person was hired (at huge cost) by the District Council. Her achievement was (she claimed) great signage for all the districts towns and villages. Like the emporers new clothes town after town accepted these. Suddenly little Herbert stood up and said they were ugly. Sepia tones and Victorian cursive writing which was not easy legible to driving motorists. They wanted their own sign back.

Meanwhile the instigator of these signs had moved on. A red faced Council and villages left with unattractive signs and well out of pocket.

I ask -
What does a CEO or CFO on a huge salary achieve that a dedicated Town Clerk did not? Often these dedicated Town Clerks served for long periods and gained respect. Most CEOs are here and gone in a few years. Off to meddle elsewhere. Leave that for big business. Time for our towns, cities and districts to have sensible stable and hard working people dedicated to their domain not their bank account.