AgResearch restructuring needs an update, says auditor-general

Auditor-General Lyn Provost says more work needs to be done on the business case for a $100 million restructuring of AgResearch.

Auditor-General Lyn Provost says more work needs to be done on the business case for a $100 million restructuring of AgResearch, New Zealand's largest Crown Research Institute.

She had a look into the matter after receiving a complaint in July 2014 from Labour MPs David Parker, David Clark, and Clare Curran about how the restructuring dubbed Future Footprint was being handled and issued a response on Wednesday.

The restructuring announced in 2013 has been characterised as a once- in-a-generation reconfiguration of the research and science infrastructure supporting farming in New Zealand.

It has been sold as a modernisation but the plan to centralise operations in Lincoln and Palmerston North, while cutting staff at Invermay near Mosgiel and Ruakura near Hamilton have been controversial.

Ms Provost said an October 2012 business case was sufficient to support decisions to move to the next stages of Future Footprint planning but that an updated business case was now needed.

The Labour MPs have alleged staff are walking because of a botched restructuring but the auditor-general found there has been a small reduction in the number of AgResearch's scientists and technicians between 2011 and 2014.

"The reduction is not inconsistent with the overall trend in the Crown research institute sector. It is unclear the extent to which this reduction relates to Future Footprint."

The auditor-general's office will continue to monitor staff changes that result from Future Footprint.

Provost found appropriate guidelines were followed by AgResearch's board to manage conflicts of interest.

Labour's economic development spokesman David Clark has responded by saying the auditor-general's report was evidence that AgResearch was playing fast and loose with taxpayers' money.

He said the auditor-general found there was not a compelling up-to-date business case for the restructuring.

"The report has found there were departures from standard business case practice, and that the 2012 business case – relied upon by AgResearch – needs to be rewritten," Mr Clark said.

"It provides further evidence Steven Joyce has failed to exercise his public duty to ensure good governance and management of key risks at AgResearch." Clark said.

"Sheep farmers across New Zealand, as well as scientists and local residents who have been campaigning for Invermay to be retained in the South, will find reason for hope in this letter from the auditor-general," he said.

The auditor-general's advice was published in a letter written in response to concerns raised by Labour.

Ms Provost visited Invermay in February with a senior member of her staff.

"We were impressed with the standard of the newest buildings, and the campus grounds. I appreciate the history of the campus, its place in the local and regional economy and the considerable sense of attachment felt by staff, ex-staff, and others in the community.

"However, we also noted that most of the buildings were under-used, which gave us an appreciation of the challenging decisions that AgResearch must make to best manage its science capability and physical resources. It is outside my mandate to second-guess these management decisions."

The auditor-general commissioned Martin, Jenkins & Associates to help with its review of the original Future Footprint business case and related and subsequent processes and documents.

The auditor-general also visited AgResearch's Ruakura, Grasslands and Lincoln facilities.

She concluded that Future Footprint was a "large and relatively high-risk project that requires careful consideration and informed decision-making."

"An appropriate step at this stage would be to update the Future Footprint business case with more detail about the project. This would serve to bridge the developments since 2012 and better inform final decision-making about the required capital investment."

After considering the 2012 business case, shareholding ministers approved AgResearch to proceed to the next stages of Future Footprint and asked AgResearch to report back to them as plans were developed for an integrated hub at Lincoln.

BusinessDesk