Business case 'blown apart'

Independent analysis of AgResearch's $100 million restructuring plan has ''blown apart'' the case for slashing jobs at Invermay, local politicians say.

The analysis by Business and Economic Research Ltd (Berl) - which was contracted by the Dunedin City Council and the Otago Regional Council - questioned the methods AgResearch used in its Future Footprint business case, given the large amount of money being spent.

But Science and Innovation Minister Steven Joyce late yesterday responded to questions about the report by slamming the quality and independence of Berl's work.

A spokesman for the minister said the report would not determine a final decision on AgResearch's plan to cut about 80 jobs from Invermay and move staff north to Lincoln.

The authors of the report took issue with a number of aspects of AgResearch's business case, including its failure to fully investigate other options, such as an ''enhanced'' status quo and keeping jobs at Invermay.

''We believe that there is a high level of risk involved in AgResearch proceeding to prepare a proposal for a project costing $100 million, relocating valuable staff and selling farmland and campus facilities, when the magnitude is not known of the relative costs and benefits of this option compared with an option that retained staff and obtained some collaboration benefits through other means,'' the report said.

It also questioned why Mr Joyce did not require AgResearch to follow Treasury's best-practice guidelines.

''Given the monetary value of the property to be disposed of and the lack of information contained in the business case, we believe that it is extremely risky for [Mr Joyce] not to have required AgResearch to develop their business case in accordance with Treasury's ... guidelines,'' the report said.

Dunedin Mayor Dave Cull and ORC chairman Stephen Woodhead said the report showed AgResearch and Mr Joyce should reconsider the restructuring proposal and the evidence used to support it.

Mr Woodhead said given the ''damning'' nature of the review he ''failed to see how the board of AgResearch can continue down the path that they are on at the moment''.

''I just can't see how they can continue with this proposal when, as I say, it has been blown apart and the justification is not there,'' he said.

The fact the review was ''independent'' and ''objective'' added further weight to the southern delegation's calls for jobs to be kept at Invermay, he said.

Mr Cull said the case for keeping jobs at Invermay had only become stronger since AgResearch announced its restructuring plan in July.

''I don't think on that day we called together all the regional stakeholders ... we had any idea of how flimsy the background work and analysis had been. It's appalling.''

However, Mr Cull and Mr Woodhead shied away from being critical of Mr Joyce over the report.

''I think he had understandable, but as it turns out unjustified, confidence in AgResearch's analysis,'' Mr Cull said.

He hoped the review would change Mr Joyce's mind.

''If objective credible economic analysis from [an organisation] with the status of Berl doesn't make people think twice, then I don't know what will.''

The $10,000 fee for the Berl review was split evenly between the DCC and the ORC, Mr Cull saying it was ''absolutely'' money well spent.

A spokesman for Mr Joyce responded to questions about the report by hitting out at the quality and independence of Berl.

''The minister stresses he hasn't had the opportunity to read the report but was interested in comments about robustness because in his experience in the five years he has been a minister he has had concerns about the robustness of some of Berl's analysis.

''It's also difficult to describe Berl as 'independent' because again, in the minister's experience, they tend to write reports which uncritically support the views of those who commission them,'' the spokesman said.

The way the report had been presented and comments from Mr Cull suggested the report was ''another part of an ongoing campaign to influence the outcome of AgResearch's deliberations''.

''While the minister understands and appreciates the councils' views in this matter, it is the process we are currently going through that will determine the outcome, not a Berl report,'' the spokesman said.

It was also ''important to note'' it was the job of AgResearch's board of directors to assess the business case, and not the minister's, the spokesman said.

''The minister would encourage Mayor Cull and Chairman Woodhead to continue to engage directly with AgResearch, as that's the best way to proceed.''

AgResearch chief executive Dr Tom Richardson declined to comment on the report, issuing the following statement: ''We have only just received the report this [yesterday] afternoon and haven't had time to read it.''


The Berl report's key findings
• AgResearch's Future Footprint business case did not follow Treasury's best-practice guidelines.

• Estimations of benefit to New Zealand's GDP from restructuring plan based on ''convoluted and at times confused'' assumptions and ''does not engender confidence''.

• AgResearch did not thoroughly explore alternative options for improving its research outputs, including keeping jobs at Invermay.


- vaughan.elder@odt.co.nz

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