Well the report is out, the head has rolled, the fix is in. The saga of the rotting and dangerous power pole network operated by Dunedin City Council-owned Company Delta/ Aurora has come to an end.
Of note is that it was the Chairman of the company whose head rolled not the CEO, which is as clear an indication as you will get that this was not a management failing. The CEO was actually endorsed by the upper echelons as having done a good job in difficult circumstances. Which is spin- speak for: the CEO was just doing as he was ordered and had found the copy of the Board minutes to prove it. Damn his efficient filing system. Those minutes would have included a copy of the report highlighting the urgent need for a drastic increase in maintenance work on the power poles; that report was presented to the Board six years ago, in 2010; that was the year Dave Cull became Mayor. There was some splutter that the root of the problem was Delta/ Aurora having to contribute $29 million to the Stadium debt. But that payment would not have been necessary if Dave Cull had not committed a $24 million budget for his cycleway project; a budget that went into blowout phase from day one and, if it ever gets completed, will more likely nudge $100 million. If the cycleway does not get finished, then it will be left as a half-cocked disaster. Lose-lose.
The backstory is that, not long after first taking power, Mayor Cull initiated a total overhaul of the structure and personnel of Dunedin City Holdings (DCHL) the governing body overseeing all the Council’s commercial operations. The start of the process was the sudden decision to sell Citibus, one of the companies that DCHL governed. An urgent meeting of city councillors was called for a Friday afternoon; no agenda was advised, no pre-briefing papers offered. But Mr Cull obviously already had the numbers for his cause because, by the time they broke for Friday drinks, Citibus was on the market. After 100 years of history, the Mayor withdrew the City Council from all practical influence in the public transport service of the city in an informal afternoon meeting with not a hint of advance notice of the pros and cons for Councillors nor a consideration for public consultation with the owners – the ratepayers.
There were hints before the move that the City Council had a desire to take over the management of the whole public transport network from the Regional Council and ownership of Citibus may create a conflict of interest. Five years later there is not the slightest hint that Mr Cull was ever serious about that intent.
But that sale was only the start of the process. Soon after the whole Dunedin City Holdings board structure was overhauled. Heads rolled. Heads that had been very astute, in my opinion; certainly men that I would never try to bluff, nor would I ever dare turn up to a Board meeting and tell them I was prepared to compromise public safety to get the profits up. I would have walked out of such a meeting with a cardboard box full of my personal possessions.
At the time I was General Manager of Citibus. From a timing point of view, in terms of maximising company value, it was a very naive decision since Citibus was entering negotiations for a major contract. As part of the sale process, Citibus had to open its books to competitors who requested to go through due diligence for purchase. While the tender bid itself obviously would not be disclosed during due diligence, a lot of operational information had to be exposed. The tender worth over $7,000,000 over seven years was won by one of those companies that went through the due diligence process; they won the contract, from Citibus as the underbidder, by less than $1,000. Then they withdrew from the purchase process and brought their own fleet to town for the contract.
Mr Cull was very defensive about the sale in the press, claiming Citibus was making huge losses. In fact Citibus had no problem paying its bills and most certainly never required money from the ratepayers to top it up as was insinuated.
Citibus was structurally a very sound operation, well staffed, well resourced and providing a high standard of fleet, driving staff and maintenance staff. Citibus introduced a living wage policy for its drivers long before it became fashionable in these minimum wage industries. Every time we could muster up another million dollars we would invest further in new fleet and we made impressive progress in upgrading the fleet over the years.
The directors of Citibus set realistic levels of provision for depreciation to ensure that the standards of vehicle maintenance and replacement were never compromised. That level of depreciation meant that the books showed losses. But this was a ratepayer-owned company that set the bar high for all private bus companies to match and we focused on delivering high standards of service and safety to the ratepayers ahead of paper profits. But Mr Cull had a cycleway to build, in spite of the existing commitments to fund major projects like the stadium. He could not afford to risk a big rates increase so soon after being elected, so Citibus was sold after a single meeting on a Friday afternoon.
I can make no comment about Delta / Aurora management; I had absolutely no inside knowledge of their operation except that to note that during my time within the DCHL group of companies I never heard a bad word said about their CEO, Grady Cameron. I also know that the men who I faced in my Boardroom then were the same men that Grady faced in his.
But that all changed. The emperor emptied the seats around the Boardroom table and put his own people into them. He sought nationwide to bring his people from out of town. Sharp businesspeople. People who know how to squeeze a bit of extra profit out of a company when his worship might need it for the cycleway cockups and budget blowouts.
A few years later the power poles start falling over. Now we have to ring in the changes. But when you hear that ringing, Mr Cull, ask not for whom it tolls……