Two of the so-called Big Four accounting firms have charged millions in fees to a Christchurch rebuild agency. David Williams reports.
When it was created, Regenerate Christchurch was effectively forced into the open arms of consultants.
One of three rebuild agencies to rise from the legislative ashes of the Canterbury Earthquake Recovery Authority, Regenerate had an $8.1 million-a-year, five-year mandate to plan for the city’s future.
In their April 2016 letter of expectations, former Government minister Gerry Brownlee and Christchurch Mayor Lianne Dalziel gave the statutory entity some of the city’s most important jobs – to come up with plans for the almost houseless residential red zone and the central city. But, perhaps learning the lessons of bloated inefficiencies at CERA, they refused to give them the staff to do it.
“We also expect you to recognise our intent that you remain a small, lean organisation,” the letter said.
Regenerate’s civil union with consultants started immediately, as chief executive Ivan Iafeta was only appointed on June 21 of that year and, until October, Iafeta and his executive assistant were the only staff members.
“Essentially it was the likes of Deloitte and EY that ran Regenerate for a long time.” – Cam Preston
Figures requested under the Official Information Act by Christchurch accountant Cam Preston show that before Iafeta was appointed, it paid consultants $745,000. Of that, $526,000 went to “Big Four” firms EY and Deloitte. And during what it calls its “establishment” phase, between July and November of 2016, those two consultancies raked in a further $1.1 million of $1.5 million paid to external firms and contractors for professional services.
Ex-PWC staffer Preston says: “There was no forethought.
“Essentially it was the likes of Deloitte and EY that ran Regenerate for a long time and put together their statement of performance expectations and all that sort of thing, and the Christchurch City Council has pitched in as well.”
In all, of just over $7 million paid to consultants by Regenerate up to March of this year, $2.84 million, or 40 percent, went to Deloitte and EY. (Neither Deloitte nor EY would comment for this story. Deloitte’s Matt Huntington says it doesn’t comment on client engagements.)
Almost two-thirds of Regenerate’s $1.35 million corporate overhead bill has been paid to consultants acting in staff roles. The organisation’s staff recruitment was only completed in June last year. (Iafeta says Regenerate now has “up to 29” full-time-equivalent staff – including five secondments.)
“It just seems to me a ridiculously inefficient way to run a company,” Preston says. “To be fair to Ivan and Regenerate they are obviously getting that under control now but they’ve been going since April 2016. These big consulting firms have obviously been milking these guys while they get their head round what they are and what they’re doing.”
Specialist services required
Iafeta says external service providers were used during Regenerate’s establishment phase, while the leadership team and other staff were recruited.
“Regenerate Christchurch has continued to use external providers where specialist services are required for specific pieces of work or where permanent roles aren’t required. For example, IT and finance support staff. For the financial year ending June 30, we’re forecasting an overall underspend of $1.2 million.”
Iafeta says Regenerate’s achievements include publishing a long-term vision for Cathedral Square, providing a proposal for the relocation of Redcliffs School, allowing the site to be used as a park (which Woods approved last month), and providing a recommendation to Woods for the draft Cranford Regeneration Plan. Strategies for South New Brighton and Southshore are also on the way.
Paul Lonsdale, a former city councillor, is now manager of the Central City Business Association. He believes taxpayers and ratepayers don’t mind when they see results from public money being spent.
“What they do get agitated about is when they see eye-watering sums being spent for no positive outcome or result.”
Asked what he believes Regenerate has achieved, Lonsdale says it is a planning body which is unable to produce a finished result. “They need a deliver vehicle along with funding to deliver their plans. That is what is lacking at this point in time.”
Regenerate is listening
Avon Ōtākaro Network’s Evan Smith, on the other hand, is happy with Regenerate’s performance to date. Smith, a founding member of the Canterbury Communities’ Earthquake Recovery Network, or Cancern, has been in the thick of Christchurch rebuild issues since the first big quake in September 2010.
He’s not surprised or unhappy at the level of consultants Regenerate Christchurch has used, as, he says, it’s a short-term organisation with a job to do.
“I think they’ve done a better job than any other agency, including the council, in terms of engaging with communities and getting a community’s view on what should happen.”
He adds: “I’m not saying it’s perfect by any means, there’s still a lot of room for improvement in that, but they’ve done the best job than any other agency to date – in that people have been able to influence the processes and the decisions.”
Regenerate has repeatedly missed deadlines for key plans, including a vision for the future of Cathedral Square that it published last week. The organisation is in the midst of a five-week exhibition, called Red Zone Futures, asking the public what it thinks of tentative plans for a 602-hectare “regeneration area” between the central city and the sea.
Plans for 11km of river-hugging walkways, bike tracks and wetlands between the city and New Brighton – known as the “green spine” are well-advanced. But in April, Christchurch Rebuild Minister Megan Woods said a final plan for the so-called red zone – land bought by the Crown and largely cleared of houses – might take up to 30 years.
The biggest question now, as Lonsdale points out, is who will deliver these strategies and where will the money come from?
Accountant Preston, who lodged the original official information request, compares Regenerate to another rebuild agency, Ōtākaro, which is delivering Christchurch’s so-called anchor projects – “decided by a few people in Wellington”. Perhaps Regenerate isn’t so bad after all, he muses.
“Should it not be that we try and turn Regenerate around because it’s doing the right thing? It just seems to have been set up to fail.”