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Thursday, December 17, 2020

Reynold Macpherson: Rotorua's Warped Economic Development Strategy


This opinion piece is offered to see if other district and regional councils are responding to the Covid Depression with economic development strategies that are unbalanced, divisive and misappropriating ratepayers’ resources. 

Rotorua Lakes Council’s framework is shown to be based on a fake collectivism, Te Arawa’s Vision 2050 replacing its obsolete Vision 2030, a simplistic dualism of short-term ‘economic recovery’ and long-term ‘economic development’ instead of pragmatic ‘economic reconstruction’, the Mayor’s co-governance agenda, a false virtue of ‘partnerships’ when they range from worthy intergovernmental projects to crony capitalism, unfulfilled political promises dating from 2013, deliberately marginalising ratepayers, and practices that violate the Auditor General’s eight elements of good governance.

Rotorua’s Draft Economic Development Strategy Framework presented to Council on 11 December was pitched by a senior official as an “all-of-community response” based on the so-called principle of tatau tatau (us together), and as a “blueprint” for both short-term economic recovery from Covid-19 and long-term economic development.

This analysis is offered to counter the hostile interruptions to my questions by the Chair, Mayor Steve Chadwick, and what I see as the na├»ve positivity of her manufactured narrative in the Covid depression. It defines an economy as the sum of transactions between different agents who produce, distribute, trade and consume goods and services. It shows that the framework is unbalanced and divisive, and that it will perpetuate what I regard as the misappropriation of ratepayers’ resources.

The foundational claim, that the framework was developed using a collective approach, is false. The approach recognized the values and contribution of partners, meaning iwi, local business, local providers and government. It did not recognise the values and contributions of diverse residents and ratepayers as well as the entire agribusiness sector, who, along with forestry and wood processing, are helping sustain Rotorua’s GDP through the Covid-induced collapse of international tourism. It did not admit Council’s persistent waste of ratepayers’ resources through vanity and legacy projects and through subsidies and capital grants going to organizations politically aligned with the Mayor.

This false collectivism is coupled with pre-eminence being given to the Te Arawa 2050 Vision. It has supplanted the Council’s Vision 2030 which has been unrevised since 2014 but which became obsolete with the advent of Covid-19. Council’s short-term economic recovery and long-term economic development strategies are now primarily serving Te Arawa’s Vision. This is illustrated by how the framework document uses glossy visual imagery and the Maori language to ‘socialise’ a mayoral preference for (at least the symbolism of) co-governance. This approach is undemocratic and divisive propaganda because it promotes the interests of a 38 per cent minority over the interests of all in our community who legally expect respect for their equal human rights.

The framework uses a fake theoretical distinction between short-term ‘economic recovery’ and long-term ‘economic development’. In my opinion, given the impact of Covid-19, this false dualism should be abandoned in favour of ‘economic reconstruction’. Why? As the depression broadens, the prospect of ‘economic recovery’ loses plausibility - because we can’t recover the past. And ‘economic development’ assumes that trustworthy foundations exist for ongoing engagement and growth in our economy, when the facts point remorselessly to failing businesses, falling investment and rising unemployment, homelessness and criminal behaviour.

It is time for a more pragmatic framework of ‘economic reconstruction’ to encourage all economically active agents and organisations (people, families, enterprises, and governments) to rediscover their primary purposes, resources, and opportunities in a significantly different context. They should be encouraged by Council to reorganise themselves and their priorities and services, and to create fresh products and productive economic relationships with others, and increasingly, to do so without subsidies and grants that distort economic reality.

The framework makes a false virtue of partnerships. There are partnerships and partnerships. The Council partners effectively with central government and voluntary organisations to support families enduring hardship, with much more to be done about housing. It partners with institutions and industry organisations to encourage the development of educational, retraining and employment opportunities. It has, in general, partnered effectively with sector group leaders since lockdown to identify possible reconstruction strategies, central government agencies offering support and capex investment programmes, and the boards of CCOs.

On the other hand, it also partners with selected interest groups, such as the mountain-biking community, to transfer ratepayers’ wealth through subsidies that, sadly, retard business reconstruction. And it partners with selected private corporations, most especially in tourism, to transfer ratepayers’ wealth via investments and asset maintenance deals without any prospect of a return to ratepayers. This type of partnership is a form of crony capitalism and pre-empts healthy economic reconstruction. Council urgently needs more economically critical leadership to discriminate better between reasonable economic strategies and healthy partnerships and those that are not.

Finally, the framework prematurely announces three Agreed Key Priorities, each with an Action Plan to be detailed, followed by “stakeholder engagement” prior to final revisions. The first Agreed Key Priority is ‘Rotorua, a place of choice’ to be clarified as ‘Brand and Identity’, ‘Major Place Development’ and ‘Destination Development’. The second is ‘Rotorua, the future of forestry’ to be clarified as ‘Forestry Future’s Plan’, ‘Place-Making Initiatives’ and ‘Centre of Excellence’. The third is ‘Rotorua, ready for business’, to be clarified as ‘Advance a Vibrant City Centre, Emerging Sectors’, Infrastructure and Planning’ and ‘Commercial and Industrial Land Development, Residential Land Development’. Since most of these priorities have been promised repeatedly since 2014, residents and ratepayers will regard them with scepticism.

There is another equally strong reason for scepticism. The framework stresses the importance of collaboration with key partners - specified as central government agencies, local iwi, business leaders, industry organisations, tertiary and research institutes, and private funders, to ensure that strategies, plans and timelines are aligned. Residents and ratepayers are neither listed as key partners nor apparently considered worthy of collaboration, and recall that most consultations are not authentic and about implementing solutions predetermined by officials.

A crucial missing component here is a critical awareness by Council leadership on the nature and importance of good governance. The Auditor General has recommended eight elements; having a coherent strategy, having clear roles and responsibilities that separate governance and management, leadership by setting a constructive tone, involving the right people in robust debate who then speak on message with a unity of voice, investing in effective relationships built on trust and respect, being clear about accountabilities and transparent about performance against them, managing risks effectively, and ensuring that elected governors have good information, systems, and controls.

In my professional view, after a year as an elected member of Council, Rotorua’s Draft Economic Development Strategy Framework lacks external coherence with the need for economic reconstruction, illustrates a case where management has been allowed to subvert governance roles, exhibits divisive leadership that continues to misappropriate ratepayers’ scarce resources, reflects engagement that has been manipulated to prevent critical feedback and debate, enables abusive and hate speech tactics to destroy trust and respect between elected members, undermines accountabilities and the transparency of performance evaluation, uses cavalier risk management, and is over reliant on subjective information, arbitrary systems, and sloppy controls.

Dr Reynold Macpherson is Chair of the Rotorua District Residents and Ratepayers and an elected councillor, Rotorua Lakes Council. His PhD from Monash University was in organizational science. Prior to retirement he served as Professor of Professional Development at Auckland University, CEO of Waiariki Institute of Technology and as Foundation Chancellor and CEO of Abu Dhabi University. He can be contacted at reynold@reynoldmacpherson.ac.nz or at 021725708.

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