Each of the council controlled organisations (CCO) has their own story and present their own issues.
The administration of Tauranga City Aquatics Ltd underwent a change this year with the appointment of Deputy Mayor David Stewart to the TCAL board.

This is the third article in the SunLive series which is providing Tauranga City Council candidates the opportunity to directly and succinctly state their views on some of the city's major issues. Below the article are links to the candidate responses categorised by the constituency they are contesting.

The appointment deflates some of the criticism levelled at TCAL that the owners' representatives, the Tauranga City Councillors, cannot find out what is happening inside the ratepayer funded organisation.
David put himself through a director's course and provides the conduit between the council politicians and the directors.
As a council appointee, he expects to lose the directorship should he fail to be re-elected.
David's appointment comes after, and may or may not be related to, the failure of the pool management company LeisureCo NZ Ltd. TCAL expects to continue running the venues in the medium term.
The numbers in the draft annual plan show TCAL is running at a loss, but the publically available information doesn't show which pools are profitable and which are not.
A move to spend $9 million upgrading the Mount Hot Pools failed to attract an investor prepared to pay for the first floor part of the design.
Revenue for 2009/10 is $5,831,000, expenditure $7,108,000. The deficit is $1,277,000.
This represents a reduction in deficit from the previous year of $131,000.
Grants paid to TCAL $895,000
Loaned to TCAL $1,805,000
Interest received $104,000
Administration services provided $125,000
Loans repaid $1,745,000
TCC is provided a guarantee in respect of redeemable preference shares issued by TCAL $4,000,000

Mayor

Mark Groos
CCOs are a good idea under the following conditions:
The CCO is set up responsibly by council and not as a vehicle to hide failing business cases.
The board members are selected on ability to do the job, not because of politics.
The CCO owns and publicly reports all the assets / liabilities / income / expenses required for their function.
The CCO does not report operational surplus as if it were profit (this is misleading).
The CCO reports actual performance against business case (or budgeted performance) bi-annually.
Directors / Council are held accountable if the CCO fails to achieve its financial targets.

Stuart Crosby
Most public swimming pools run at a loss to allow affordable access to the community.
Only the Mount Hot Pools generate a surplus which goes back to reduce ratepayer costs to other pools.
A (CCO) like Tauranga City Aquatics Ltd are a commercial structure that allow major non-ratepayer grants and non-ratepayer revenue into the pool accounts to reduce the overall costs to the ratepayer for swimming pools .
Since TCAL has been set up there has been a reduction in the deficit to council for the running of the swimming pool network.

Hori Leaming
It's widely known in the swimming fraternity that gyms and learn-to-swim classes make the money to subsidise other pool operations, so why would you choose a councillor that voted to add a $10 million add-on in the form of a wave pool to the complex? The wave pool has become a noose around Baywave's neck as predicted by us so-called uneducated observers so I warn David Stewart to be very careful about trying to push an upgrade on the Mount Hot Pools without a ground floor private contributor – the deficit figures speak for themselves. Once bitten twice shy

Mount Maunganui-Papamoa Ward

David Stewart
As a director of TCAL I serve at the pleasure of council to provide ‘cross pollination' between political governance and commercial governance. I serve in this role as part of my council duties and because I'm interested to ensure the success of TCAL. Unfortunately, apart from Mount Hot Pools, none of council's other swimming pools have ever made a surplus and have never been expected to do so.
With good governance my aim is to bring our swimming facilities under TCAL to a break even point such that ratepayer funding will not be required. Integral to achieve this aim is the upgrade of the Mount Hot Pools.

Wayne Moultrie
The projected costs of the new single story Mount Hot Pools is $7.7 million. The funding source will be non-rate funded loans. The Hot Pools generate a cash surplus which will increase.
In the late 80s some people opposed the modernisation of the then Hot Pools. They were wrong then and those who oppose the present proposal are wrong now.
We can't afford ‘leaving things the way they are' to stand in the way of an iconic facility which will benefit visitors and locals alike. Current admission advantages for locals will be maintained.

Steve Morris
It is essential that council controlled organisations have councillor representation on their various boards and all councillors should have the opportunity to attend board meetings as observers.
Elected members answer directly to the public (who are the owners of CCOs) and it is critical that councillors have access to the processes of decision making within these organisations.
It would take a strong argument to convince me that after a full $9 million upgrade that the Mount Hot Pools will subsidise other pools and reduce TCAL's deficit. Our people deserve value for money and the financial restraint they themselves exercise.

Otumoetai-Pyes Pa Ward

Andrew Cass
TCAL is an integral part of service provision for the ratepayers of Tauranga. Price should not be a barrier to pool use and some level of support is inevitably required. The management of TCAL should be accountable and at least neutral revenue should be highly incentivised. In regards to the Mount development, there are no investors for any project at the moment but planning should proceed and potential partners will make themselves involved as the economy grows again.

Mike Mills
I support in principle the use of CCOs to manage council assets and services. TCAL must find the balance between commercial imperatives and providing a community service and this includes upgrading the facilities. Council must continue to subsidise TCAL in the interests of access and affordability, equity and fairness. My greatest concern is with the declining numbers of children learning to swim. Fewer schools are providing pools and teaching kids to swim. TCAL must work with our schools to rectify this trend and ensure the safety of our children in the district's high-use and high-risk marine environment.

Catherine Stewart
Having one elected member on CCOs has not improved transparency or accountability.
Need to review CCO model.
Mount Hot Pools upgrade/redevelopment is essentially being built for massage rooms. ‘Failed to attract an investor' says it all ie. not financially viable!
Hot pools was the only complex to make money, some $500,000p.a.
‘If it ain't broke don't fix it!' is the mantra of some elected members who voted in support of this project.
Community just want pools maintained and fit for purpose.

Larry Baldock
When on the committee to investigate initial plans for Baywave facility, I believe we were told that there was hardly a single council owned pool anywhere in NZ that was not running at a loss. The new management structures put in place will need time to be tested to see if results can be achieved. More accountability and transparency would be achieved if two councillors were appointed. Pools are important facilities like sports grounds and libraries that receive subsidies. Perhaps new technology on water filters and purifiers could deliver lower long term operating costs with healthier benefits for swimmers.

Nigel Stichbury
As I understand it, the underlying purpose of creating a CCO was in recognition that for the efficient operation of any such enterprise, specialist expertise was needed that was absent within the council environment.
However, as owners, council would still set the pricing policy to ensure affordability and access of the community, making it essentially a funded operation.
I cannot understand why the owners (council), could not get detailed information if they wished to have an insight into the operational efficiency of TCAL.
In a normal parent company / subsidiary association, the subsidiary supplies information on demand.
Along with other issues facing the new council, the CCOs need analysis to ascertain whether the intent of setting up these CCOs are being met in principle.

Mike Baker
Being a city that is surrounded by water it is essential that our residents be given the opportunity to swim, hence the extensive aquatic network throughout the city.
The upgrade of the Mount Hot Pools, through a conservative business case presented, indicated that the increased profitability predicted for that facility would provide surplus funds to assist in subsidising the entire network. The entry costs into the public Mount pools would not increase, above CPI, and accordingly there would ultimately be reduced demands on rates in general.
It's easy to knock things, but in my view, TCAL is doing a good job for the city in a difficult environment.

Jane Lyndon
It is very concerning but not surprising that Mount Hot Pools failed to attract an investor despite being a little gem, popular with locals and tourists alike.
I would need to question and research this issue. From past experience and knowledge if my memory serves me correctly, the Mount Hot Pools was the only one breaking even or making a small profit some years ago.

Te Papa-Welcome Bay Ward

Michael Morris
Detailed information should certainly be available to the public so they can make an informed choice. Swimming pools and fitness centres are certainly a public good, and should therefore be under council control.
I would question however whether such a grandiose scheme as Baywave was such a good idea. Far better for council to go into partnership with school pools, like the one at Bay of Plenty Polytechnic. This well managed heated pool is under used at present and could be open to the public at certain hours in return for council funding.

Bill Grainger
The operations of a council controlled organisation is managed at arms length from council, but the risk is there; as it was with the failure of pool management Leisure Co.
The weight then lies on council, which could in no doubt affect the ratepayers.
David Stewart was appointed to assist the TCAL board.
I am not supportive at all of the proposed Mount Hot Pools.
We don't need a concrete jungle at the base of the Mount. The existing pools could be upgraded at a lot less cost and if the new pools with it's so called wellness centre attached fails... we throw the ratepayers at risk... again.

Lloyd Davies
I do question the wisdom of the Mount Hot Pools upgrade at this time notwithstanding my support for the concept. I was involved with one of the other tenders, a community based organisation, when LeisureCo NZ Ltd was granted the contract. This organisation had the proven capacity to invest in aquatic development. Recreational community organisations always endeavour to get a good return on investment and I believe that before further money is spent, council should call for tenders for the operational contract and include an investment component. This arrangement has worked well for the current Auckland City Council's aquatic facilities.

At Large

Tony Christiansen
TCAL is a commercial business – not council business.
Councils should not be involved in commercial business, especially as they are funded by ratepayers who in some instances are competing with, and funding losses, made by the council controlled organisations.
Commercial business has the potential to make a financial loss, something demonstrated by TCAL and almost every other commercial enterprise that TCC has been involved with.
If there is a demand for swimming pools in our community then private enterprise will meet that demand by providing suitable facilities. Council should concentrate on core services and leave business ventures to private enterprise.

Allan Andrews
I have to accede I do not know enough about the failure of LeisureCo NZ Ltd or the financial minefield of operating this city asset, but do accept and appreciate the value of such infrastructure within our community and do know with any part of the cities infrastructure sensible financial management is critical.

David Love
Swimming pools the world over lose money, but unfortunately a large number of people drown every year. Unlike Australia where every child must be taught to swim there is no compulsion in New Zealand. However, there is a cost of not teaching people to swim; it is a life skill and recreational activity that can and is enjoyed by all ages.
This debate is more about how we control CCOs. Council must place appropriate mechanisms in place to control all expenditure. Properly controlled, the CCO mechanism can be more efficient than direct control. Councillors must provide governance, not manage activities.

Jonnie Mead
The issue of CCOs is of interest leading up the Super City structure in Auckland (Campbell Live, 9/3/2010). Relevant to this city's unsustainable public pools is the issue of CCOs (Council Controlled Organisations). Amalgamation of district councils enables some economies of scale and therefore savings but perhaps reduces the ability to monitor service quality and operating costs, limiting transparency. In terms of our city pools, the TCAL seems to be managed by well qualified/intended individuals. TCAL has a separate governance structure from council and can attract external funding. By making these pools absolutely affordable to families however, the bottom line is more likely to increase.

Brendan Horan
Having been an international waterpolo player for many years I know swimming pools. Ours underwhelm me.
TCAL claim they deliver affordable swimming, yet Baywave charges are out of reach of many residents. Adults are charged $6.80 to swim in a 25 metre pool, and children $8.60 for admission with hydroslide. These charges are prohibitive.
The hot pools were profitable when adult admission was $2.50, now its struggling at $6.30 for locals and $9.90 for non residents. A council's first priority is to service the community. Let's lower the price and encourage people to swim. More people also equates to more profit.

Anne Pankhurst
I am a strong supporter of an upgrade to the Mount Hot Pools. They are and will be a great tourism attraction. The principle of CCOs works for some business units that need to operate at arms length from politicians who are known to change their mind, certainly far too often for good long term business decisions, and who often have not got any real business knowledge. There is often commercially sensitive information that politicians should not be in control of.

Sue Hawkins
Baywave in particular and the other pools around town are great facilities which require sound and sustainable financial management. Ratepayers need to see revenue maximised, costs minimised and more transparency so we know which pools are profitable and which are not. TCAL needs to improve its marketing and investigate ways to increase patronage and income. Possibilities include a discounted annual pass (like the Rotorua Gondola), a pass that covers all city pools, off-peak discounts and the utilisation of social media. Recently the Baywave aquatic membership monthly fee was reduced from $45 to $25 – how many people knew this?

Bonnie Leonard
Tauranga City Council has an obligation to provide flat water to Tauranga, however, Tauranga City Aquatics Limited as a CCO has failed to deliver the promised returns. Getting meaningful information is almost impossible. As a new director, Councillor Stewart has not improved the information flow.
TCAL must operate in a transparent manner as it is public money that provides these facilities. TCAL shouldn't engage in business activity because eventually ratepayers end up subsidising it. At present not all costs are accounted for in TCAL. Mount Hotpools/Wellness Centre upgrade is wasteful and not a viable proposition costing at least $9 million.

Richard Moore
The story of Baywave is a classic example of wasted money. It cost far too much, has a wave pool so powerful it cannot be turned on anywhere near full power, and it is too short. At 25 metres it cannot host money-spinning activities such as major swimming events. These would bring a lot of money to the city. According to information I have it loses around $3million a year, not $2 million as reported. Its directors do not answer to ratepayers or even let us know the true state of its books. The Mount Hot Pools are fine and only need to have their changing rooms upgraded at this point in time.

Joye Adams
The only pool to make a profit is the Mount Hot Pools. It used to provide $500,000pa to the reserves and development fund, but apparently now helps out the rest. All the rest need financial input from the ratepayers.
A report I read mid-90s said that councils should provide a 25m pool per 1000 head of population. If that is so, then TCC is way down on the number of pools it needs.