SOE on the block?
OPINION: Did the Prime Minister hint last week that the sale of Landcorp assets could be part of the manifesto for the next election?
The university and AgResearch are the lead partners in the hub, with Landcare Research, Plant & Food Research and DairyNZ as shareholders, and others expected to join as tenants. The idea is to facilitate agricultural science research, teaching and development by improved collaboration between the participants.
Lincoln and AgResearch are planning to house the hub in a new $206 million building, with construction due to start at the end of this year and be complete by the end of 2019.
However, the Treasury’s Interim Major Projects Performance Report, released in November, gives the first stage building project an amber/red rating, a downgrade from amber. Amber/red is defined as “successful delivery of the project requires urgent action to address major risks or issues in a number of key areas. Changes to budget, schedule, scope or benefits may be necessary if the project is to be delivered successfully.”
The report says the amber/red assessment is because:
The future financial viability of a key partner (Lincoln) is uncertain which presents significant financial risk for the investment
Specific benefits attributable to the project and contribution to the strategic objectives and benefits of the related Lincoln University, AgResearch and the Lincoln hub programme business cases are unclear.
Although already extended, the timeframe for submitting the business case to Cabinet in January 2017 looks challenging given these key issues.
However, a Lincoln university spokesman confirms that the required business case was delivered on January 31 to Tertiary Education Minister Paul Goldsmith.
In a statement a few days before the deadline, Lincoln University’s chief academic officer, Bruce McKenzie, said preparation of a detailed business case was “on track”.
“Detailed work has been done on benefits expected from the hub in terms of new ways of working, increased collaboration and sharing of resources by partners, and greater efficiencies gained by the partners. We are also confident of the benefits to be accrued for the land-based industries and wider economy the hub will support.”
McKenzie says the university is undergoing a ‘Refreshing Lincoln’ programme, including changes in its financial management.
“This year the university is expecting to produce a net operating surplus of $1.3 million – up $3m on the 2016 forecast, largely driven by the university’s fitness programme to contain and cut costs, mitigate risk, enhance productivity and improve student choice.”
However, McKenzie declined to release details of the business case, as it was “confidential and commercially sensitive”.
The Treasury report notes that it is the specific building project being scrutinised, not the overall hub concept. It is one of 53 major projects contained in the report, including a national bowel cancer screening initiative, several Canterbury quake rebuild projects and a major navy frigate upgrade.
The report says its assessments are not a judgment about whether a project or idea is good or bad, but indicate whether a project is “on track to deliver its intended benefits within existing constraints”.
