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PROJECTS - COST BLOW OUTS - WHO PAYS AND IS ANYBODY HELD ACCOUNTABLE?

Without Transparency and Accountability we have No Democracy.


If you were to give me $3,000 each and every year for life, plus almost $14,000 in cash in a return for a vague promise to look after your home and community, would you keep an eye on how I spent that money? If I then told you I was going to increase that yearly amount to almost $5,000 over the next ten years (although I will generously allow you to make easy weekly payments online so you don’t notice it as keenly), would you just happily accept the increase? No of course you would not! You would demand that you had good information about how that money was being spent. You would keep an eye on my budget and ensure that there was no bureaucratic creep. You would expect that when bad decisions were made in my organisation that lessons would be learnt, and people would be held to account. Yet as a ratepayer so few of us do seem to do this????


A large part of this is that we do not have the time, expertise, or energy to keep an eye on how local officials are spending our money. Part of this is also that we hope that good systems of accountability and transparency have been set up to protect our money. It is critical there are. Government is a monopoly, there is no competition, their rule is literally law. Governments are also essentially a mechanism for income redistribution. We accept this because we know that there is benefit from public good projects and living in a functioning society. Of course, we have to always be on guard against abuse of power and corruption, and in NZ we are fortunate that there are, by and large, good rules and regulations to protect the use of our money.
Systems and processes have been set up that are meant to ensure community consultation and sound decision making. Of course, we all know that any system is only as good as the people implementing it. If people are incompetent, or worse, have bad intentions, then it is easy to manipulate the laws, control information flows, use the power of government to target those asking legitimate questions, and corrupt those systems. It can take a very long time for the cracks to appear and for people to realise that something is fundamentally wrong. We can see from the many, many examples of poor governance overseas that it is critical that we keep an eye on what is happening. It can be a very quick and slippery slope.


Unfortunately, we would argue that cracks have started to appear in our NZ systems. We read on a startlingly regular basis about the massive and rising debt of our local councils, as well as the apparent cost blow outs on government projects, such as;
• The stetch of highway near Tauranga already costing $70 million per kilometre (yes you read that right) blowing out further (1 RNZ 10th Sept 2020).
• Whangarei’s Hundertwasser Art Centre going from $16.25 million to $30 million (2Denise Piper, 17th June 2020, Stuff.co.nz).
• The multi-storied carpark in Tauranga that the mayor wisely abandoned once the cost projections got out to $19 million (3 Matt Shand, 4th June 2020, Stuff.co.nz).
• The Nelson Dam costs blowing out by $25 million (4 27th Feb, 2020 Nelsonweekly.co.nz).
• Estimates to strengthen the Wellington library at $200 million (Damian George, 16th Jul 2020. Stuff.co.nz).
• Not to mention transmission gully going from $850m to $1.25 BILLION (5 Laura Wilshire, 28th Oct 2020, Stuff.co.nz). The Skypath, transport centres, railway projects… the list goes on and on and on. 


In Hamilton we have the Claudeland’s bridge cycle land and speed zone that cost the better part of a million dollars (6 Libby Wilson 19th Jul 2019, Stuff.co.nz). Increases in the cost of the transportation hub of $450,000 to add a toilet and utility block (7Mike Mather 29th June 2020 Stuff.co.nz). There was a case of the playground in Tamahere that went from $406,000 to $865,000 even with belt tightening (8 Libby Wilson, 12th Oct 2018, Stuff.co.nz). The Waikato DHB building project going from an initial $7.7million to an expected $16.9million (9 Libby Wilson 25th Jul 2020, Stuff.co.nz). And these are just the ones that have made the mainstream news media. 


Yet we seem to ignore these billions of dollars of cost blowouts and worry about saving a few pennies at the supermarket? The money tree is feed from your pocket. And how does all this happen? Oh, pumice layers were not picked up in initial soil tests, earthquake strengthening was needed, Covid delays, the list goes on and on. Yet if you hired a contractor to build something for you, would you accept that the quote suddenly Doubled, Tripled? Would you not expect them to know about these types of problems before they started? Would you sign an open-ended pricing contract? If price blowouts happened to you, wouldn’t you demand accountability and expect heads to roll? It may be there are legitimate reasons for these blowouts in costs, but if there are, it is certainly difficult to get access to those reasons, and it also has major implications for consultation processes.


Given these costs and subsequent blowouts, you must ask yourself what does this mean for consultation processes? So let’s say I am the one you have given your money to. I propose to set up a new park in your neighbourhood.
 I present the community with three options. You cannot find the detailed costings, or cost benefit analyses, so you are confused as to how you are meant to make a reasoned submission on the use of your money? The preferred one will cost $450,000, the other two $425,000 and $750,000. What? You ask, of course you want to trust me, but should not there be a range of independent views? Ok, you do not have time to do this yourself, so you accept those options.
 There is limited financial information and it seems those prices are very, very high, but all three options have these high prices, and you are not an expert in park development so surely they are ok?
 You open the link to the consultation document and find that you have limited options in terms of how you provide feedback. You agree to the questions you want to agree to, and you leave the other questions blank. Your detailed comments go into a space that was left at the end of the consultation survey. You hope they consider this as it took some effort. Unlike my staff you are not paid to do this work.
Given how the questions were worded you are not surprised to find that the preferred option is the one I am going to go ahead with. Indeed, based in your view on how the questions were presented, the preferred option was always going to be the one.
You note that I have subcontracted out the work. You accept the findings and largely forget about it. After a few months you see signs going up and large earth moving equipment sitting, often idle, on site. Six months later you read that the cost of $450,000 has blown out to $900,000 and there will be a two-year delay. Now you are not happy, you ring me and ask how this happened? I tell you it was some unexpected issue with drainage and the contractor had to increase their costs, and there is nothing I can do. You fume, but what do you do? 


And then it happens again, and again, and again… After a while you stop bothering making submissions. What is the point? One, you do not think that they allow for real consultation. Two, the information within them does not paint a full picture so it is hard to make a reasoned submission. Three, the costs you are using in those documents seem to have little connection with the final costs anyway.


So you fire me. You walk away from the $14,000 and cut your losses. I am not too worried I go down the road and set up in the next community. If this were to happen in your local council you cannot fire them. It also often appears there is no accountability. You can’t take them to court; they will fight you with your own money. The only option is the ballot box. Of course, to make a good decision at the ballot box you must know what is going on. Now we are back to the information we are provided in the consultation process… It appears to be a vicious cycle. All we can do is keep an open mind, keep asking questions, and discussing the issues. This is the only true basis for a functioning democracy.

1 https://www.rnz.co.nz/.../highway-costing-70-million-per...
2 https://www.stuff.co.nz/.../costs-will-not-keep...
3 https://www.stuff.co.nz/.../council-spent-19-million-on...
4 https://nelsonweekly.co.nz/.../dam-cost-blows-out-by-25.../
5 https://www.stuff.co.nz/.../transmission-gully-review...
6 https://www.stuff.co.nz/.../hamilton-city-wheels-spin....
7 https://www.stuff.co.nz/.../how-convenient-transport-hub...
8 https://www.stuff.co.nz/.../tamahere-playground-plans...
9 https://www.stuff.co.nz/.../build-it-like-the-dhb--from...

https://www.nzherald.co.nz/.../CRGI5GAO7IMLDRAFL4CKNYTHUA/



 

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