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Finance and
Performance Committee
19 June 2014
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Response to
report commissioned by the Independent Māori Statutory Board - Independent
Assessment of Expenditure incurred by Auckland Council to achieve Māori
outcomes.
File No.: CP2014/12587
Purpose
1. This report responds to the Finance
and Performance Committee request that staff report on the findings of the
‘Independent Assessment of Expenditure incurred by Auckland Council to achieve
Māori Outcomes’ report commissioned by the Independent Māori
Statutory Board (IMSB); and the steps and actions that will be taken to address
the findings, including The Long-term Plan 2015 to 2025 planning.
Executive
summary
2. KPMG undertook the work and
their overall finding was that “although Council has indicated a strong
interest to significantly lift the social and economic wellbeing of Māori
in Auckland in the Auckland Plan, there is a clear lack of alignment of
Council’s intent to [Council’s] strategy and delivery of specific Māori
initiatives”. Thirteen recommendations, attached as Appendix A, are provided in
support of this overall finding.
3. The thirteen recommendations are
a mixture of forward looking recommendations which align with the council’s
Long-term Plan 2015 to 2025 (LTP) planning process; recommendations which
support and strengthen business improvement work already underway; and
recommendations focussing on budgets and expenditure for the financial years
2012/2013 and 2013/2014. There is some cross-over and repetition between
recommendations.
4. When viewed together, the
forward looking recommendations (1, 2, 5, 6, 9, 10, 11 and 13) are proposing
that the council family:
· takes
a strategic top down approach to agreeing and prioritising activities that
contribute to Māori outcomes
· allocates
resource to the agreed activities and ensures that this is carried through into
improved budgeting, business planning, monitoring and reporting processes so
that progress towards these activities can be clearly identified.
5. We support this approach as it
aligns well with the mayor’s direction to the council family for the LTP planning
process, which includes prioritisation of activities to deliver on the
transformational shifts in the Auckland Plan. The LTP process provides the
opportunity for renewed political direction on priority Māori
transformational shift activities.
6. We also propose the development
of a comprehensive Māori responsiveness reporting framework clearly tied
to the agreed LTP priorities to ensure proactive monitoring and reporting on
Māori transformational shift activities across the Auckland Council family
as well as on long-term Māori wellbeing indicators.
7. Three recommendations (7, 8 and
12) relate to process, capacity and capability improvements across the council
and its Council Controlled Organisations (CCOs). Through the council’s Te Tiriti o Waitangi response work programme, business
improvement initiatives have been progressing for some time on a number of
these recommendations. We support the continued focus on this work that these
recommendations bring.
8. Auckland Council’s Chief
Executive has agreed to establish and lead a Māori Responsiveness
Leadership team across the Auckland Council family to ensure progress on the
agreed actions arising from this report.
9. Recommendations three and four
relating to KPMG’s assessment of expenditure against budget in 2012/2013 and
2013/2014 are not supported.
10. Recommendation three recommends
rolling over a shortfall in expenditure from those years. For 2012/2013, KPMG
appear to have misinterpreted the council’s identification of projects that
contributed to Māori outcomes, as budget allocations. While activities
occurred there was no allocated budget or tracking of expenditure against
Māori outcomes in 2012/2013.
11. Budgets with respect to
activities and projects within the 2013/2014 Annual Plan were identified that
contribute to Māori outcomes. Expenditure against this budget has been
reported regularly to this committee. Some of the 2013/2014 projects will not
be completed by year end and we have already anticipated the need to carry over
remaining budgets for those particular projects into 2014/2015. This is a
timing issue rather than a shortfall in expenditure.
12. Recommendation four that “Council
and IMSB should agree a budget for specific Māori expenditure for FY
2013/14, excluding stormwater” is not supported as there is already an agreed
budget for this financial year, which is almost over. In addition, senior
council and IMSB staff discussed whether stormwater projects and in particular
daylighting contributed to identified Māori outcomes. The monitoring and
reporting on stormwater to date reflects that it was considered to contribute
to Māori outcomes.
13. In summary, while we do not agree
with everything in the KPMG report, we acknowledge the need to continue working
on the council’s approach to Māori outcomes. The LTP provides the
opportunity to do this as of 2015. For 2014/2015 we propose reporting to this
committee on specific projects which will contribute to Māori
transformational shift activities and setting out the monitoring and reporting
process.
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Recommendation/s
That the Finance and
Performance Committee:
a) note the IMSB intends the
KPMG report findings to assist the council in improving its Māori
responsiveness in resource allocation and its key planning, budgeting and
reporting processes, particularly in preparation of the LTP
b) note the KPMG report
recommendations 1, 2, 5, 6, 9, 10, 11 and 13 are together proposing that the
council family takes a strategic top down approach to agreeing and
prioritising activities that contribute to Māori outcomes
c) agree to support this
approach through clarifying the council’s political direction on priority
Māori transformational shift activities and associated budgets in the
LTP
d) request work to be
undertaken to support c) and to ensure that the council’s budgeting, business
planning, monitoring and reporting processes identify progress on priority
Māori transformational shift activities through the LTP years
e) agree that a Māori
responsiveness reporting framework be developed to ensure monitoring and
reporting of Māori transformational shift activities across the Auckland
Council family as well as on long-term Māori wellbeing indicators
f) note that KPMG
recommendations seven and eight support and strengthen work currently
underway and that the council’s Chief Executive will progress recommendation
12 in discussion with the CCO Chief Executives
g) note that Auckland
Council’s Chief Executive will lead a Māori Responsiveness Leadership
team across the Auckland Council family to ensure progress on the agreed
actions arising from this report
h) agree that KPMG
recommendations three and four are not supported for the reasons explained in
this report
i) note that staff will
report back in July 2014 to this committee specifying those projects which
will contribute to Māori transformational shift activities in 2014/2015
and setting out the monitoring and reporting process for 2014/2015.
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Background
14. The IMSB’s purpose is to:
· assist
Auckland Council to make decisions, perform functions, and exercise powers by
promoting the cultural, economic, environmental and social issues of
significance to Māori in Tāmaki Makaurau
· ensure
that the council acts in accordance with statutory provisions referring to the Treaty of Waitangi.
15. The IMSB commissioned KPMG to
provide an assessment of Auckland Council’s and CCOs’ annual expenditure for
2012/2013. The objectives of this review were to:
· identify
plans, activities and related expenditure directed toward achieving Māori
outcomes that are included in the council’s Long-term Plan 2012 to 2022 with
greater focus on the 2012/2013 year and assessing the end of year results
· assess
whether the council processes and expenditure incurred supported the
activities, initiatives identified and communicated
· report
on the expenditure gaps identified and areas where process and systems could be
improved generally and more particularly for the LTP 2015 to 2025 (LTP).
16. The IMSB’s intention is that the
findings will assist the council in improving its Māori responsiveness in
resource allocation and its key planning, budgeting and reporting processes,
particularly in preparation of the LTP.
17. The Finance and Performance
Committee on 22 May 2014 requested council staff to report back to the next
committee meeting on the findings and steps and actions that will be taken to
address the findings, including LTP planning.
KPMG
report recommendations
18. KPMG’s overall finding was that
“although Council has indicated a strong interest to significantly lift the
social and economic wellbeing of Māori in Auckland in the Auckland Plan,
there is a clear lack of alignment of Council’s intent to [Council’s] strategy
and delivery of specific Māori initiatives”.
19. This overall finding is supported
by thirteen specific recommendations which are attached as Appendix A. The
thirteen recommendations are a mixture of forward looking recommendations which
align with the council’s LTP planning process; recommendations which align with
work currently underway; and recommendations focussing on budgets and expenditure
for 2012/2013 and 2013/2014. The recommendations are set out below with our
proposed response.
20. Auckland Council’s Chief
Executive has agreed to establish and lead a Māori Responsiveness
Leadership team across the Auckland Council family. This team will help to
ensure progress on the agreed actions arising from the committee’s
consideration of this report and provide the necessary internal leadership
around embedding the priority Māori transformational shift activities into
the council’s budgetary, activity, monitoring and reporting processes, across
the council family.
Strategic
top down approach to prioritising Māori transformational shift activities
21. When viewed together, the forward
looking recommendations (1, 2, 5, 6, 9, 10, 11 and 13) are proposing that the
council family:
· takes
a strategic top down approach to agreeing and prioritising activities that
contribute to Māori outcomes.
· allocates
resource to the agreed activities and ensures that this is carried through into
improved budgeting, business planning, monitoring and reporting processes so
that progress towards these activities can be clearly identified.
22. These recommendations are
supported.
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KPMG recommendation
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Proposed Auckland Council response
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1
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A top down view by the
Governing Body is required to ensure a clear financial commitment and
understanding of Māori priorities.
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Agree.
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2
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The Provisional IMSB Budget
Estimates for Māori Transformational shift activities and Activities
document ($295.2 million) presented to the Council in November 2011 for
consideration should be refreshed in close consultation with the Council. The
updated budget will assist IMSB to advocate for specific projects and
expenditure to be allocated to Māori outcomes.
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The IMSB is refreshing its
budget estimates in preparation for IMSB’s discussions with the Governing
Body about LTP priorities. Council staff will review this against proposals
within departmental budgets and endeavour to achieve alignment during the
development of the draft LTP.
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5
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Agree a list of Māori
specific projects and budget with IMSB and include this as part of the Annual
Plan to simplify identification and monitoring of Māori outcomes.
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Agree in LTP context.
The draft 2014/2015 Annual
Plan has been agreed and will be adopted by the Governing Body on 26 June
2014. This recommendation is consistent with the proposed top down approach
for the 2015-2025 LTP.
For the 14/15 FY, staff
will report back to this committee specifying those projects which will
contribute to Māori transformational shift activities in 2014/2015 and
setting out the monitoring and reporting process for 2014/2015.
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6
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The 2015-2025 LTP along
with the Local Board planning process is an excellent opportunity to better
align Māori outcomes to Council’s strategies. The 2015-2025 LTP should
clearly articulate expenditure to be allocated towards delivering specific
transformational shift activities. This should be developed on the basis of
specific projects linked to Māori outcomes.
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Agree.
Te Waka Angamua (TWA) are
coordinating the development of the council’s Māori outcome proposals in
the LTP process. TWA are engaging with the IMSB on their draft LTP
priorities.
As part of the LTP
development process the IMSB have been invited to the LTP workshops on 7 July
and 1 September and are meeting with the Mayor on 4 August to discuss the
LTP.
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9
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Whilst improvement
initiatives have been introduced to improve the processes over budgeting,
planning, delivery and reporting of Māori outcomes, these have not been
fully embedded in the Council’s and CCOs’ daily operations.
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Agree.
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10
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There is a need to improve
the quality of reporting to the Council Committees to present a fair view of
the Council’s progress against the Māori outcomes budget.
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Agree.
We propose the development
of a comprehensive reporting framework clearly tied to the agreed LTP
priorities that ensures monitoring across the Auckland Council family
activities.
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11
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To ensure alignment of
Council’s Māori Responsiveness Framework response programmes to the
Māori Plan, policies and procedures should be updated for the 13 areas
of gaps identified by Te Waka Angamua.
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Agree in LTP context.
This recommendation seeks
integration of the Māori Plan initiatives into the LTP and the council’s
budgets. The LTP process provides the opportunity to consider alignment of
the Māori responsiveness programme and the Māori Plan. We do not consider
it is necessary to have an additional process beyond the LTP for this
recommendation.
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13
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A need for proactive
monitoring on a regular basis by the Council and CCO Management on progress
against budgeted expenditure for Māori outcomes. This will allow
Management to identify any early warning signals of low levels of spending so
that corrective measures can be put in place to ensure the Council delivers
on its commitments for Māori outcomes.
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Agree.
The proposed change and
approach will assist this.
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Discussion
23. During
the process of developing the 2012/2022 Long-term Plan the IMSB commissioned
work to identify priority Māori outcome areas and an appropriate level of
spending on Māori outcomes.
24. The amount
identified by the IMSB was $295 million over the 10-year life of the LTP. The
council agreed to reference the eight priority outcome areas in the LTP and
each activity included statements and performance measures with respect to
Māori outcomes. However, the council did not establish a specific budget
for Māori outcomes. Rather council staff were requested to identify the
extent to which existing budgets contributed to Māori outcomes.
25. A specific
budget was not identified for the 2012/13 year nor was there active monitoring
of actual expenditure. Rather effort was applied to working with IMSB to
develop guidelines for identifying expenditure, and developing systems and
processes for capturing budget and actual expenditure. The guidelines excluded
staff costs and projects where the actions or expenditure have less than 80 per
cent focus on Māori.
26. The guidelines
have proved difficult to apply and as noted by KPMG have relied on a ‘bottom up
approach”. It has resulted in significant effort by the organisation to identify a relatively small proportion of the overall
contribution to Māori outcomes.
27. KPMG recommended
a top down approach. This will require the council to agree specific budgets
for projects and activities which will contribute to Māori outcomes. This
approach is supported and will form a much clearer basis against which to
report actual expenditure. It will not capture the council’s total
expenditure towards Māori outcomes and should not pretend to do so.
28. Taking a strategic approach to Māori
transformational shift activities aligns well with the mayor’s direction to the
council family for the LTP planning process, which includes:
· prioritisation of the top five
activities/projects to deliver on the transformational shifts and geographic
projects in the Auckland Plan
· a coordinated LTP planning process exercise
across the council and our CCOs
· a “top down” approach rather than
“bottom-up” for financial modelling
· a thorough and inclusive LTP planning
process.
29. As the KPMG report states, the
council has made a number of strong commitments to Māori in the Auckland
Plan, LTP, Unitary Plan and Local Board plans. The council has also formally
received the IMSB’s Issues of Significance, Māori Plan, and Treaty of
Waitangi Audit. Each of these contains proposed transformational shift activities,
some of which have been agreed to and/or incorporated into council strategic
documents and activities. Māori community plans and iwi management plans
also contain Māori outcomes.
30. Clarity is needed as to which of
these many activities the council is prioritising and committing resources to.
We support a top down strategic approach to agreeing and prioritising Māori
transformational shift activities and allocating resource to them. We consider
that the LTP process provides the appropriate opportunity for renewed political
direction on priority Māori transformational shift activities and
associated budgets.
31. Te
Waka Angamua (TWA) are coordinating the council’s Māori
transformational shift activity proposals as part of the LTP process. TWA staff
are engaging closely with the IMSB secretariat to achieve alignment where
possible with the IMSB’s draft LTP priorities. As part of the LTP development
process IMSB members have been invited to the LTP workshops on 7 July and 1
September and are meeting with the mayor on 4 August to discuss the LTP.
32. KPMG recommendations nine, ten
and 13 refer to the need to improve and further embed the council’s budgeting,
planning and reporting process for Māori transformational shift activities
and for proactive monitoring of expenditure on these activities. We propose the
development of a comprehensive Māori responsiveness reporting framework
that ensures proactive monitoring and reporting on Māori transformational
shift activities across the Auckland Council family as well as on long-term Māori
wellbeing indicators.
Recommendations
supporting and strengthening current business improvement initiatives
33. Recommendations seven, eight and
12 relate to process, capacity and capability improvements across the council and
its CCOs. These include clarifying TWA’s role and mandate; proactive monitoring
by council and CCO management to ensure the council delivers on priority
Māori transformational shift activities; increased staff capability and a
consistent Māori engagement framework. Through the council’s Te Tiriti o Waitangi response work program, business improvement
initiatives have been progressing on a number of these recommendations. We
support the continued focus on this work that these recommendations would
bring.
34. We understand that recommendation
twelve particularly relates to the role of TWA with respect to the council’s
substantive CCOs. The council’s Chief Executive will discuss this with the CCO
Chief Executives and agree an approach to this.
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KPMG recommendation
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Proposed Auckland Council response
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7
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The Council should consider
rolling out a consistent Māori engagement framework across the Council
and CCOs. The framework would ideally take into account the underpinning
principles of effective engagement with the iwi and results from the
Māori Strategy and Relations survey.
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Underway.
There are multiple
initiatives already underway to promote consistent best practice engagement
with Māori. “Engaging with Māori: A practical guide” is available
to the council family to provide a consistent framework through which to
engage Māori. A monthly engagement forum for CCOs has been recently
initiated by TWA and specialist and general senior advisors provide advice
and/or support to engagement with Māori across the council family.
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8
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There is a need for a
transformational uplift in capability and cultural awareness of staff in the
Council and CCOs. More focussed training should be provided to Council and
CCO staff to uplift their knowledge and awareness of the Treaty of Waitangi
obligations, Māori Responsiveness Framework Māori Plan and
Māori values/culture.
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Underway.
The training and
development work stream of the council’s Te Tiriti Audit
response programme has multiple elements. One of these, Ngā Kete
Akoranga is:
· delivering of a suite of entry level courses
available to all council staff through on-line enrolment
· facilitating the development of targeted training
upon request at the department or unit level within the council or CCOs
· facilitating delivery of entry level courses for
CCOs upon request.
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12
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The role of TWA should be
clearly specified and communicated and their mandate clearly defined to
ensure clarity of their role, manage expectations of stakeholders regarding
levels of service and ensure proper accountability.
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Agree.
The council’s Chief
Executive will discuss this with the CCO Chief Executives and agree an
approach to this.
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Recommendations
relating to expenditure against budget for 2012/2013 and 2013/2014
35. Recommendations three and four
relating to KPMG’s assessment of expenditure against budget in 2012/2013 and
2013/2014 are not supported.
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KPMG recommendation
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Proposed Auckland Council response
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3
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Shortfall in spending on
Māori outcomes in prior years should be rolled forward to the future.
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Not
supported.
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4
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IMSB and the Council should
agree a budget for specific Māori expenditure for FY 13/14 excluding
Stormwater.
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Not supported.
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Proposed response to
recommendations three and four:
Staff will report back in July 2014 clearly specifying those projects which
will contribute to Māori transformational shift activities 2014/2015 and
setting out the monitoring and reporting process for 2014/2015.
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Discussion
Recommendation three
36. KPMG recommends rolling over a
shortfall in expenditure in KPMG’s assessment of expenditure against budget for
2012/2013 and 2013/2014.
37. With respect to 2012/2013
recommendation three appears to be a misinterpretation of the report presented
to the 15 February 2012 Strategy and Finance Committee. This
report was an estimate of the extent to which existing budgets contributed to
Māori outcomes. It was not
a process of allocating budget to “a set of Māori outcomes” as stated by
KPMG; there was no allocated budget.
38. Prior to the IMSB engaging KPMG
to undertake this work, council staff advised the IMSB that assessing
Māori outcomes expenditure in 2012/2013 would be difficult and could
result in inaccurate figures, due to the lack of allocated budget or reporting
requirements in that year.
39. Budgets with respect to
activities and projects within the 2013/14 Annual Plan which contribute to Māori outcomes were identified. Some of the projects
will not be completed by year end and we have already anticipated the need to
carry forward remaining budgets for those projects into 2014/2015.
Recommendation four
40. Recommendation
four proposes that the IMSB and the council should
“agree a budget for specific Māori expenditure for FY 13/14 excluding
stormwater” on the basis that the council’s stormwater work is not
achieving a Māori outcome.
41. The financial
year 2013/2014 year is almost over. The annual expenditure on projects which
contributed to Māori outcomes in 2013/2014 was
identified collaboratively with the IMSB secretariat and has been reported on
regularly to this committee.
42. Senior council
and IMSB staff in the Māori outcomes steering
group discussed a number of activities including
stormwater (in particular daylighting) and whether the activities met the
Māori outcomes criteria. At the meeting, the La Rosa daylighting
project demonstrated how stormwater and daylighting contributed to a range of
Māori transformational shift activities. Stormwater was
not removed as a Māori specific outcome, and has been monitored and
reported on this basis to date.
43. Further, mana
whenua have consistently submitted to Auckland Council and legacy councils on
stormwater as a priority issue; and stormwater continues to be a Mayoral
Priority Area in the Annual Plan as agreed with the IMSB.
44. The 15 May 2013
Accountability and Performance Committee considered a report on the La Rosa
daylighting project which included this information. This report was provided
to KPMG prior to their report being finalised.
45. The financial year 2014/2015 will
commence on 1 July 2014. Our intention is to report back to this committee in
July 2014 clearly specifying those projects which will contribute to Māori
transformational shift activities in 2014/2015 and set out the monitoring and
reporting process.
Consideration
Local
Board views and implications
46. The KPMG report is focused on
expenditure across the council family, including local boards. Local board
budgets, including those for Māori transformational shift activities sit
with the relevant departments that undertake the work on behalf of the local
boards. The proposed response to the report will apply across the council
family including local boards.
Māori
impact statement
47. This report responds to a view
which suggests that the council should change its approach to identifying and
actioning Māori transformational shift activities and to its budgetary,
monitoring and reporting processes as they relate to Māori
transformational shift activities. This report proposes supporting many of the
KPMG recommendations.
Attachments
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No.
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Title
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Page
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aView
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Appendix A KPMG report recommendations
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13
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Signatories
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Authors
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Deborah James - Executive Officer
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Authorisers
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Grant Taylor - Governance Director
Andrew McKenzie - Chief Finance Officer
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