2014/15 Annual review of the Meteorological Service of New Zealand Limited

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1 2014/15 Annual review of the Meteorological Service of New Zealand Limited Report of the Commerce Committee Contents Recommendation 2 Introduction 2 Financial performance 2 Social media strategy 2 Improving access to weather information 2 Extreme weather events, and commercial vs public access to MetService data 3 Cyclone Winston 4 Ongoing infrastructure investment 4 Appendix 5

2 Meteorological Service of New Zealand Limited Recommendation The Commerce Committee has conducted the annual review of the 2014/15 performance and current operations of the Meteorological Service of New Zealand Limited, and recommends that the House take note of its report. Introduction Established in 1992, the Meteorological Service of New Zealand (MetService) is a mediumsized State-owned enterprise. It has four offices in New Zealand and two offshore, and 267 full-time equivalent staff. MetService focuses on safety, good science, and a commercial return on its intellectual property. MetService has built a global business as a highly specialised meteorological service for weather-sensitive industries. MetService has commercialised its core weather analysis systems and capabilities worldwide. It is also a heavily used weather resource for the general public. More than 40 percent of MetService s revenue comes from its contract with the Ministry of Transport, but this proportion will decrease as other parts of MetService s commercial business continue to grow internationally. A key priority for the coming year will be strengthening the organisation s information technology infrastructure and resilience. This will include the re-engineering of the Weatherscape Media Visualisation software system and replacement of ageing IT infrastructure. The chair of the board is Anthony Howard, and Peter Lennox is the chief executive. Financial performance Delayed confirmation of MetService s contract with the Ministry of Transport had a major effect on MetService s full year pre-tax profit. At $1.38 million, this was 67.5 percent below its 2013/14 pre-tax profit. Total revenue was $46.05 million, an actual rise of 0.9 percent. Operating profitability was down $2.28 million to $9.52 million. Setting aside the effect of the contract delay, MetService s commercial revenue rose by 7.2 percent in 2014/15. Social media strategy We asked about MetService s current social media strategy. We heard that a revolution in data availability has changed how it provides weather information. MetService was the first weather service to launch an app five years ago, the first to establish an Instagram presence, and one of the first to set up a Facebook page. MetService now has 11 apps. This has driven domestic revenue growth in the year under review, with a 71.3 percent year-on-year increase in downloads of MetService weather apps. Improving access to weather information We asked about future opportunities to improve New Zealanders access to weather information. We heard that there is a spectrum of weather information available, including 2

3 some freely available on the internet. However, the level of accuracy and precision of this information varies significantly. MetService s membership of the World Meteorological Organisation (a United Nations (UN) body) requires a high level of accuracy and precision. MetService s weather information must be fit for purpose. Misleading coverage of weather events can often be traced to media outlets using the results of a single computer model, rather than the 200 routinely run by MetService. We heard that accurate forecasts are an important selling point for MetService s services. Extreme weather events, and commercial vs public access to MetService data We heard that MetService is able to provide location-specific advice to commercial ventures such as factories or manufacturing sites. MetService s commercial clients often ask for it to set up extra observation sites and require highly detailed topographical modelling. We asked why commercial clients should have access to better quality information about severe weather events than a boatie or a fisherman. We heard that this reflected the degree of detail required by different users. However, MetService provides information about severe weather events to the general public free of charge through MetService s website, through social media, and through interaction with the Ministry of Civil Defence and Emergency Management, the police, and local authorities. Some of us remained concerned that MetService s commercial clients receive better and more precise information than the general public. We noted that MetService advertises its ability to provide commercial customers with extremely specific weather data, down to the size of a single farm or vineyard. We asked why MetService does not freely provide this detailed information to all who request it. This information could, in some cases, help people save their businesses during adverse weather events. We heard that providing this level of detail across the board would be impossible in terms of time and resources. We heard that MetService s commercial clients pay both for the observational tools and the time spent collecting information relevant to their businesses. In many cases, the client owns the observational tools. However, MetService made it clear that, even if that information had been generated for commercial purposes, there was never any risk of critical weather data being withheld from the general public. MetService would never withhold information if it compromised public safety. We heard that MetService provides open access to selected weather data. We understand this conforms with UN requirements for meteorological services. MetService also conducts international data exchanges with countries in the South Pacific, to improve safety in the region. However, MetService noted that as a State-owned enterprise, its principal objective is to operate as a successful business. We asked whether MetService accepted that some of the forecasting services overseas, for example in the United Kingdom, USA, Canada, South Korea, and Japan, do not charge for their weather observations. In response, MetService said that this was not entirely correct; it pointed out, for example, that such observations in the United Kingdom are funded by a grant from a government-sponsored group. We heard that data that was freely available to the public overseas had still been paid for by somebody. Some of us expressed concern that publicly available free weather data was not at the same standard as that offered overseas. 3

4 Cyclone Winston We expressed concern at the gap between recent predictions made by the National Institute for Water and Atmospheric Research (NIWA) and by MetService about Cyclone Winston striking New Zealand. We asked whether this variance is acceptable and also whether it pointed to a need for MetService to coordinate with NIWA better. We heard that MetService is New Zealand s authoritative provider of weather information, running more computer weather models than anyone else and with 100 meteorologists on its staff. Coordination with NIWA is good, with the two organisations chairs and chief executives meeting regularly to resolve any competitive tensions. Ongoing infrastructure investment We heard that MetService is considering adding new radar systems and asked about its ongoing investment in infrastructure. We were advised that 15 Paraparaumu-based engineers travel New Zealand maintaining MetService s existing nine radar facilities. Two new potential radar sites in Invercargill and Nelson are under discussion. 4

5 Appendix 2014/15 ANNUAL REVIEW OF THE METEOROLOGICAL SERVICE OF NEW ZEALAND LIMITED Committee procedure We met on 3 March and 17 March 2016 to consider the annual review of the Meteorological Service of New Zealand Limited. We heard evidence from Meteorological Service of New Zealand Limited and received advice from the Office of the Auditor- General. Committee members Melissa Lee (Chairperson) Kanwaljit Singh Bakshi Ria Bond Dr David Clark Hon David Cunliffe Clare Curran Brett Hudson Gareth Hughes Alfred Ngaro (from 16 March 2016) Simon O Connor Maureen Pugh (until 16 March 2016) Evidence and advice received Meteorological Service of New Zealand Limited, Presentation, received 3 March Meteorological Service of New Zealand Limited, Responses to written questions, received 3 March and 17 March Office of the Auditor-General, Briefing on Meteorological Service of New Zealand Limited, dated 3 March

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