Date:                      

Time:

Meeting Room:

Venue:

 

Thursday 7 November 2013

10.00am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

 

Governing Body

 

OPEN MINUTE ITEM ATTACHMENTS

 

 

 

ITEM   TABLE OF CONTENTS                                                                                         PAGE

 

6.2       Public Input – Penny Bright

A.      Tabled information                                                                                                  3

10        Annual Plan 2014/2015 - Mayoral Proposal

A.      Annual Plan 2014-2015 - Mayoral Proposal report                                                5

B.      Attachments to Mayoral Proposal Report                                                            11

C.      PowerPoint Presentation                                                                                      71

11        Committee Terms of Reference

A.      Amendments to the Infrastructure Committee                                                    85

13        Meeting schedule - November, December 2013

A.      Amended Attachment A -schedule of meetings                                                  87



Governing Body

07 November 2013

 



Governing Body

07 November 2013

 

 

 

MAYOR’S PROPOSAL FOR THE DRAFT ANNUAL PLAN 2014/15

 

PURPOSE

 

This report sets out the Mayor’s proposal for the Annual Plan 2014/15. This will be further discussed and considered for approval at the Long-term and Annual Plan Committee on 21 November 2013.

 

 

EXECUTIVE SUMMARY

 

The Annual Plan 2014/15 is year three of the existing Long-term Plan. Early next year will be the start of a more in-depth review for the next LTP so this Annual Plan has focused on reviewing costs and the capex programmes for savings.

 

The officer review of costs has identified both savings and new cost pressures giving a new starting point of a rates increase of 2.3%.

 

Funding has also been included for the introduction of a phased approach to introducing the Living Wage policy and also further funding for the Tamaki Redevelopment Company giving a total rates increase of 2.5 %.

 

Some deferral of capital works has already been assumed in this budget, further work on the CCO capital budgets is needed.  In coming months and particularly through the LTP, we will review our capital programme and funding mechanisms with a view to having an informed debate with the community about sustainable debt levels.

 

Local Board budgets are unchanged in total (other than efficiency savings that will have been reflected) but Local Boards will re-prioritise as part of their Local Board agreement process.

 

There are some minor changes to fees and charges and the ongoing application of our policy as it relates to the transition cap, the business differential and the calculation of the UAGC.

 

 

RECOMMENDATIONS

 

That the Governing Body:

 

a)      receive the Mayor’s Proposal for the draft Annual Plan 2014/2015 report.

 

 

BACKGROUND

 

The Long-term Plan (LTP 2012-22) set the ten year work programme, budget, policies and performance measures for Auckland Council and its CCOs. The Auckland Plan was the guiding document for the LTP but fiscal constraints and a prudent approach required prioritisation of the major strategic initiatives in the first LTP.

 

Early next year the council will start a review of the LTP allowing 18 months to construct the next ten year programme and budget. It is intended that this will be a much more in-depth analysis of major cost areas and priority projects than was possible in the first LTP process – when the recent amalgamation meant that financial information was not in the best shape and the organisations were still coming to grips with costs of running the newly consolidated services and projects.

 

The overall direction of the LTP is sustainable and this Annual Plan, as year three of the LTP, will continue the work of the last three years.

 

On that basis the approach to this Annual Plan has been one of reviewing costs for further savings, considering requests for new funding and looking at the capex programme for opportunities to defer projects.

 

 

DISCUSSION

 

Budget – operating costs

 

At the time of the preparation of the LTP the rates increase for 2014-15 was projected to be 4.9%. During the course of the last Annual Plan (2013/14) a number of cost savings were identified and some new projects added. The net result of these changes when reflected through into 2014/15 reduced the projected rate increase to 3.5%.

 

Over recent weeks staff in the council and CCO organisations have been reviewing the projected operating costs for 2014/15 and have identified a number of cost pressures as well as the potential for additional costs savings. More detail of this is set out in the attached officer reports (Attachment 1). In summary the impact of these changes is as follows:

 

 

$000’s

%age Impact

 

Starting Point

 

Revised Inflation Assumptions

 

 

 

(10,000)

 

3.5%

 

-0.7%

Net cost reduction (after additional cost pressures)

(7,300)

-0.5%

 

 

 

Revised Starting Point

 

2.3%

 

The $7.3 million net reduction in core costs is after providing for a range of additional cost pressures such as Unitary Plan hearings, bylaw implementation, alcohol licensing reform, additional land acquisitions, increased legal resources and additional Democracy Services support staff.

 

 


This level of funding and consequent rate increase will enable us to continue to deliver the same levels of service as those being delivered in the current year. There are then a number of specific issues that need further consideration as the result of either changed circumstances or resolutions from the last term of Council. These are:

 

Issues for consideration

Requested

Proposed

%age Impact

Tamaki Redevelopment Company

4,100

1,600

0.1%

Living Wage Policy

3,750

1,250

0.1%

Voyager Maritime Museum

800

-

-

Auckland Transport

18,000

-

-

 

 

 

 

Proposed Rates Increase

 

 

2.5%

 

In the Mayoral Proposal I have included the following items:

 

·    Tamaki Redevelopment Company - $1,600,000.  Any grant for operating funds for the next financial year is subject to a number of issues being resolved:

 

The Crown has not yet signed off on the detail of the budget for the current year and will not be considering the 2014/15 year until early 2014. Our funding commitment is very much tied to negotiations with the Crown.

The initial concept for the TRC is based on operating costs being funded from proceeds from redevelopment. At this point the process and timing for asset transfer to the company is less than clear and an ongoing commitment to funding operating costs is not appropriate until this is clarified.

The request for $4.1 million is based on an extensive work programme that needs to be scrutinised.

 

On that basis I am proposing that we have a placeholder budget at a similar level to the current year but subject to further discussion and negotiation with the Crown and TRC.

 

·    Living Wage policy - $1,250,000. I believe that we should adopt a leadership position in this matter and ensure all of our staff are paid at a level that enables them to support themselves and their families. However, I am also mindful of the effect that rate increases have on the wider population. For that reason I am proposing that the introduction of this policy be phased in over three years and alongside this that we prepare a remuneration policy. This will enable us to ensure that while protecting our lower paid staff we are ensuring upper level salaries are not over inflated and are appropriately placed within the market. 

 

The second part of the work required on this is to consider adopting a policy related to contractors who deliver for the council group. This could be approached on a progressive basis as each contract is re-tendered, for example through:

 

a)   Making the Living Wage a criteria in the weighting of tenders; or

b)   Seeking two prices (where relevant) – with and without a living wage provision.

Further work on the approach will be brought back to the appropriate committee.

 

·    Voyager Maritime Museum – no increase. This proposal was raised at the end of the last term of Council based on a concern that Voyager paid approximately $800,000 in rates, rent and loan repayments to the Auckland Council group. The proposal was to remove this requirement. Voyager receives funding through the Auckland Regional Amenities Funding Board which is in turn funded by Auckland Council. In determining the level of funding allocated, the funding board looks at the costs of running the organisation. It is likely that any reduction in costs would result in a similar reduction in the level of funding. Other similar entities pay rates and, in some cases, repay loans. On that basis I am not supporting this request.

 

·    Auckland Transport – at this stage no increase. Auckland Transport have signalled a budget issue which is related to both shortfalls in revenue and increased costs. However, before any increases in funding are considered we need to have a robust discussion with the Board and senior staff on the issues that have led to this shortfall and explore a range of alternatives to simply topping up the budget with ratepayer funding.

 

The net result of these changes is an overall rate increase of 2.5 %.

 

Budget – capital expenditure and debt

 

The budget continues the push to deliver some key projects for the city, such as the City Rail Loop and electric trains and a continuation of the programme set out in our LTP.  This programme is based on $1.2 billion in new assets to be built for Auckland, in addition to essential asset renewals over the next year.

 

A growing city needs a high level of investment, and we are still catching up with under-investment in some areas, however, I am concerned at the level of borrowing needed to support our capital programme.  I have heard the concerns about debt and it is time for us to have a discussion among ourselves and with our community on what is a sustainable level of debt for Auckland.  Council debt is projected to grow to $7.4 billion by June 2015.  When you compare this to our asset base and our prudential ratios this is still well within our limits.

 

Moving forward I am signalling my desire to more aggressively manage down our projected debt levels.  In order to do this we need to look at our alternatives such as:

 

·    Alternative Revenues

 

We have to grow our revenue base and move away from our reliance on rates and borrowings.  I want to see alternative revenue streams developed to help us fund the growth in our city.  Now is the time to have a discussion with the community about ways to move some of the burden away from property based rates.


 

·    Our Operational costs for Council and CCO’s

 

One way to reduce our debt is to fund a greater proportion of our capital spend from our operating revenues.  We can do this if we look hard at our operational spend of $2.1 billion (excluding interest and depreciation).  As part of the next LTP we need to scrutinise our operational spend and look for opportunities to redirect this towards our capital programme.

 

·    The size of our capital program for both new assets and asset renewals

 

Our capital programme has in excess of $1 billion being spent on new assets and $500 million spent on asset renewals each year. Some hard decisions may need to be made to slow down the programme in some areas so that we can focus on our key transformational spend areas. Both the programme for new assets and the level at which we renew our existing assets need a more in-depth review.

 

·    Looking at other funding opportunities

 

We need to explore different mechanisms for providing public assets which do not require the council to carry the debt on its balance sheet.

 

Local Board budgets

 

The tight fiscal parameters that we are working to in this budget do not allow for any increase in the overall allocation of funding to Local Boards, beyond that which is already in the underlying budgets.  Operational savings with no impact on service levels have been reflected through to the Local Board budgets. I recognise that there is still concern about equity of funding between Local Boards. The Local Board funding policy is the piece of work that will address this and it is intended to progress this in a timeframe that will allow the new policy to guide the next Long-term Plan.

 

Rating policy

 

A considerable amount of work went into the rating policy during the preparation of the LTP 2012-22. Changing the key principles behind the rating policy at this stage has not been considered for the following reasons:

 

·    The change to the new amalgamated system is still in transition – this will be the third and last year of transition caps for non-business ratepayers. Business ratepayers will be fully transitioned in this Annual Plan year – except for Franklin who have a longer transition due to the very significant impact in that area.

·    The revaluation process is three yearly. At the time of the next LTP when new valuations will have been produced the impact of the existing rating policy on both lower and higher value properties can be re-assessed and any changes in policy considered.

 

On that basis only minor changes have been incorporated in this Annual Plan. The detail of these issues is in the attached officer report (Attachment 2). In summary these are:

 

a)   The rates decrease cap has been estimated at 3% - this is calculated based on the amount required to fund the 10% cap for increases

 

b)   The business differential strategy of reducing the amount of the business differential from 2.63 to 1.63 over 10 years continues. This moves $11.1 million from the business sector to the non-business sectors – an approximately 1% increase for the non-business sector

 

c)   The UAGC will be adjusted in line with the overall rate increase to maintain the relative proportions in fixed and variable rates. At a 2.5 % increase this gives a UAGC of $373.35.

 

d)   The UAGC remissions for occupants of “license to occupy” rest homes and retirement villages has been reviewed and is recommended to continue in its current form.

 

e)   The discount for early payment of rates is estimated to be 1.1% and will be confirmed when the Annual Plan is adopted in June 2014.

 

Fees and charges

 

As with the rating policy, a significant amount of work was done in the LTP 2012-22 on fees and charges, however, there were some areas of activity where the level of information was not sufficient at the time and there has been a progressive process of standardising fees across the region. In last year’s annual plan we addressed food premise licensing, dog fees, hairdressers licenses and mooring fees. This year further work has been done on health and hygiene licensing fees and a standardised approach adopted for both licensing and charging.  The details of these charges are set out in the attached officer report (Attachment 3) and I support this approach.

 

Another area where regional standardisation has not yet been addressed is in the council’s social housing for older persons. There is a wide degree of variation in current levels of rental and quality of the housing stock. This needs to be worked through carefully with the residents of our 1400 units and it is proposed that we start work on this in the new year with a view to introducing any changes in policy through the next Long- term Plan. Our newly formed seniors panel will also be a very useful sounding board for this work. In the meantime officers are suggesting a 5% increase across all rentals which have not been moved for at least 3 years and in some cases 6 years. I support this recommendation.

 

Building control fees have also been reviewed in line with an ongoing exercise to properly align costs with revenue and give as much certainty as possible to applicants. This has resulted in some, mostly minor, increases and decreases.

 

The remaining issue included in the officer report is a request from Great Barrier Island Local Board to introduce a discount of 50% for food premise licensing fees.  This is based on the argument that these premises are only open for part of the year. However, the costs of licensing these premises are equal to other similar premises and there are other parts of the region where food premises only open for part of the year. Accordingly I support the officer recommendation that this request be declined.


Governing Body

07 November 2013

 

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Governing Body

07 November 2013

 















Governing Body

07 November 2013

 

1.1.       INFRASTRUCTURE COMMITTEE

 

Terms of Reference (Delegations)

Parent committee:      Urban and Rural Development Committee

 

Responsibilities

Overview and provide feedback on key infrastructure plans and projects relating to the development of Auckland.

Provide strategic direction to guide the development of transport, water, wastewater, and stormwater strategies.

Consider views of Local Boards, public, stakeholders and infrastructure providers in relation to infrastructure planning, delivery, and operation.

To act directly on the committee’s responsibilities under urgency when required

Make recommendations to the parent committee to ensure:

·    alignment between the infrastructure sector, the Auckland Plan, the Unitary Plan, and Local Board Plans to manage Auckland’s growth

·    alignment of Regional Land Transport Plan and Integrated Transport Programme with the council’s strategic direction

·    alignment of water, wastewater, and stormwater strategies with the council’s strategies and plans

·    asset management plans for physical infrastructure support the Unitary Plan and other relevant council plans and policies

·    council input to legislative changes, central government policies and plans and key infrastructure projects

·    council consideration of infrastructure strategy and planning matters from across Auckland’s infrastructure sector

 



Governing Body

07 November 2013

 

Schedule of meetings for November and December 2013

 

The venue for all meetings is the Auckland Town Hall

 

Date

Time

Meeting

21 November

9.30 am

Budget Committee

26 November

8.30 am

Tenders and Procurement Committee

26 November

10.00 am

Hearings Committee

26 November

1.00 pm

Unitary Plan Committee

28 November

9.30 am

Auckland Development Committee

3 December

9.30 am

Regulatory and Bylaws Committee

3 December

1.00 pm

CCO Governance and Monitoring Committee

4 December

9.30 am

Arts, Culture and Events Committee

4 December

1.00 pm

Infrastructure Committee

5 December

9.30 am

Regional Strategy and Policy Committee

10 December

8.30 am

Tenders and Procurement Committee

10 December

10.00 am

Hearings Committee

10 December

1.00 pm

Unitary Plan Committee

11 December

9.30 am

Parks, Recreation and Sport Committee

11 December

1.00 pm

Environment, Climate Change and Natural Heritage Committee

12 December

9.30 am

Finance and Performance Committee

17 December

9.30 am

Audit and Risk Committee

18 December

9.30 am

Economic Development Committee

18 December

1.00 pm

Community Development and Safety Committee

19 December

10.00 am

Governing Body