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Finance and
Performance Committee
24 July 2014
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Monthly Budget Update
File No.: CP2014/13693
Purpose
1. This report is provided on a
monthly basis as required. It collates decisions required of the Finance and
Performance Committee on changes to the budgets, and provides a financial
context within which the decisions can be made.
Executive
summary
2013/2014
Budget underspends to be spent in 2014/2015
2. Auckland
Council’s financial policies do not allow the general deferral of operational
expenditure (opex) budgets from year to year.
3. For specific
time-bound projects or events where the timing has changed, departments have
requested that budgets which were funded in 2013/2014 and remain unspent, be
approved for spend in 2014/2015.
Staff have assessed the requests against Auckland Council’s internal financial
policies, and recommend approval in this report of the items which meet the
criteria.
4. The timing changes
recommended do not have any funding impact on the 2014/2015 budgets as the
items have either already been funded through rates and external revenue
sources, or they relate to a capital grant which is debt funded at the time it
is paid.
5. The following
projects which are underspent in 2013/2014 have been recommended to be
re-phased and spent in 2014/2015:
· Alternative
Transport Strategy Funding
· Priority
Maori Outcomes Project
· Hauraki Gulf
Forum
· Hauraki Gulf
Marine Spatial Plan
· Great Barrier
Broadband Development Project
· Data Centre
Consolidation Project
· Performance
Monitoring and Progress Reporting Tool
· Independent
Maori Statutory Board (IMSB) capital grant
· Hobsonville
Pump Station
· Kaipatiki
Education Centre capital grant
· Albany
Community Hub
6. The
National Ocean Water Sports Centre (NOWSC) unspent budget in 2013/2014 and
budget in 2014/2015 is proposed to be re-phased into 2017/2018, as a resource
consent application and other issues remain outstanding.
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Recommendation/s
That the Finance and
Performance Committee:
a) agree
that the following 2013/2014 underspends be spent in the
2014/2015 financial year:
i) $2,170,000
to progress work on Alternative Transport Funding
ii) $150,000 for
priority Māori Outcomes
iii) $177,000 for
the Hauraki Gulf Forum
iv) $91,000 for
the Hauraki Gulf Marine Spatial Plan
v) $226,000
capital grant for the completion of the Great Barrier Broadband Development
Project
vi) $1,900,000
for the completion of the Data Centre Consolidation project
vii) $548,000 for
the completion of the Performance Monitoring and Progress Reporting Tool
viii) $50,000
capital grant to the Independent Maori Statutory Board to develop an
educational tool
ix) $750,000
for the Hobsonville Pump Station
x) $105,000
capital grant for the Kaipatiki Education Centre
xi) $99,000 for
the scoping of the Albany Community Hub
b) agree that
$500,000 underspend from 2013/14 and $2,500,000 budget from 2014/2015 for the National Ocean Water
Sports Centre to be re-phased in 2017/2018, and
c) agree that the
council’s budgets be updated to reflect the financial implications of the
above decisions.
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Comments
Background
7. The Finance and Performance
Committee has delegated authority to approve changes to budgets during a
financial year. Occasionally, it may be necessary for this committee of the
whole to make urgent decisions on the budgets for future years, which would
ordinarily be made by the Budget Committee as part of the annual/long-term
planning processes.
8. Rates for 2013/2014 and
2014/2015 have been set with no provision made for accommodating new or
additional expenditure items. Any new expenditure committed to will either
require reprioritisation of existing budgets or increased borrowing. When
considering requests, the impact on 2014/2015 and 2015/2016 operating
expenditure also needs to be considered.
2013/2014
Budget underspends to be spent in 2014/2015
9. Auckland
Council’s financial policies do not allow the general deferral of opex budgets
from year to year.
10. The requests
generally relate to specific time-bound projects which have been funded and the
timing has changed, or commitments for capital grants where conditional
criteria are not yet met.
11. A number of requests have
been received to seek the approval of unspent opex funding in 2013/2014 to be
spent in 2014/2015. Staff have assessed the requests against Auckland Council’s
internal financial policies and have included in this report the items that
meet the criteria for consideration.
Alternative Transport Funding
Project
12. The Alternative
Transport Funding project is an important piece of work required for
investigating credible alternative funding options for the development of the
Long-term Plan (LTP) 2015-2025. This work is led by the Chief Executive’s
office.
13. In December
2013, this committee resolved to allocate an additional $2,000,000 to this
project in addition to the $400,000 budget in 2013/2014. (Resolution number
FIN/2013/5)
14. At the end of the 2013/2014
financial year, $2,170,000 of the $2,400,000 budget remains unspent and there
is no funding for a continuation of this work in 2014/2015.
Priority Maori Outcomes
15. Resolution
number SF/2013/59 stated “that $900,000 of the $2 million budget in 2012/2013
for addressing urgent actions arising from the Te Tiriti o Waitangi Audit be
reallocated to priority Māori outcomes and note that some of this budget
may now be spent in 2013/2014”. This work is on-going.
16. At the end of the
2013/2014 financial year end, $150,000 of the $900,000 budget is unspent and
there is no funding in the 2014/2015 budget to complete the work relating to
the remaining priority actions.
The Hauraki Gulf Forum
17. The Hauraki Gulf
Forum is a statutory body, which promotes and facilitates integrated management
and the protection and enhancement of the Hauraki Gulf under the Hauraki Gulf
Marine Park Act 2000. In addition to rates funding, $122,000 external funding
was received from the other contributing councils and the Minister of
Conservation.
18. An amount of $177,000
remains unspent at the end of the 2013/2014 year, and the forum have committed
to the completion of activities which are funded by the amounts received to
date. In order to fulfill the obligations of the forum, this funding is
required to be spent in 2014/2015.
Hauraki Gulf Marine Spatial Plan
19. The
Hauraki Gulf Marine Spatial Plan is a partnership led by mana whenua with
central and local governments formed to create Sea Change – Tai Timu Tai Pari,
a marine spatial plan designed to safeguard the Hauraki Gulf and to secure a
healthy, productive and sustainable resource for all users.
20. This
project is funded by Auckland Council and Waikato Regional Council. It is the
first Marine Spatial plan in New Zealand and is expected to be used as a model
for other Marine Spatial plans around the country.
21. An
unspent 2013/2014 budget of $91,000 is required to be spent in 2014/2015 in
order for this plan to be completed as there is insufficient funding provided
in this year to complete the plan.
Great Barrier Broadband Development
Project
22. This
broadband development project is key to providing improvements in broadband
availability on the island. The project has had unexpected timing delays, as
the land on which the second tower would be placed was due to be agreed on. An
agreement has recently been reached and work is to recommence shortly.
23. A
capital grant was budgeted for in 2013/2014, and $226,000 of this grant remains
unspent at year end. In order to complete the project, the funds are required
to be spent in the 2014/2015 financial year. The Great Barrier Local Board
agreed a balanced budget for 2014/2015 subject to this funding being available
in 2014/2015.
Data Centre Consolidation Project
24. This
project involves consolidating the existing data centres of the council into
data centres hosted by Revera. It involves the migration of all legacy servers
as noted in the business case presented to the Governing Body in May 2013.
25. The
council’s current data centre profile represents a significant operating risk,
as all are at operating capacity or are extremely old, with no disaster
recovery functionality in place.
26. The
project is expected to be completed in October 2014. Of the $6 million budget
approved by the Governing Body for 2013/14, $1.9 million remains unspent. This
budget is required to be spent in 2014/2015 in order to complete the project.
Performance Monitoring and Progress
Reporting Tool
27. A
project (Sentient) was initiated in May 2014 to develop a performance
monitoring tool, which would deliver dashboard reports to the senior and
executive managers on major capital items of expenditure. The tool will
increase visibility of major project delivery and cost management at a project
line level.
28. The
project involves a combination of external costs and internal staffing. The
project is in its final stages of implementation, training and testing. Once
testing is complete, a final payment will be due to the external suppliers,
which had been budgeted for in 2013/2014.
29. The
project is anticipated to be completed by 31 October 2014. An underspend of
$548,000 in 2013/12014 on this project is required to be spent in 2014/2015.
IMSB capital grant
30. The
funding agreement between the council and the IMSB for the 2013/2014 year
included $50,000 for capital projects relating to development of an educational
tool. The IMSB did not spend this amount, but are keen to still develop the
tool. The capital grant requirement was not included in the new funding
agreement for 2014/2015 as this was already budgeted for in 2013/2014.
31. The
IMSB have requested that the Governing Body approve this spend in the 2014/2015
year in addition to their current agreed funding.
Hobsonville Pump Station
32. An
Infrastructure Funding Agreement between the council and the Hobsonville Land
Company (HLC) requires the council to fund 50 per cent of the cost of a
wastewater pumping station at the Landing, as it serves the Marine Industrial
precinct as well as HLC.
33. Delays
in the payment from the budget allocated in the 2013/2014 budget were a result
of negotiations around the final cost of the pump which was being shared. An
agreement has been reached and the council is required to pay $750,000 in July
2014.
Kaipatiki Environment Education
Centre capital grant
34. The
Kaipatiki Local Board resolved to contribute a capital grant over a number of
years to assist with the development of the environment education centre. There
has been a delay in the centre meeting its funding agreement conditions in
order for the local board to make their contribution.
35. An
unspent budget of $105,000 in 2013/2014 is likely to be required in 2014/2015
when the centre is expected to meet its obligations.
Scoping of Albany Community Hub
36. As
indicated in their draft local board plan, the Upper Harbour Local Board are
scoping and developing preliminary designs for the Albany Community Hub, which
is expected to be constructed in 2015/2016 and 2016/2017. This work has
commenced, but was not completed in 2013/2014, due to resourcing issues.
37. The
unspent budget of $99,000 in 2013/2014 is required in 2014/2015 to complete the
scoping and preliminary design work for this project.
National Ocean Water Sports Centre
capital grant
38. A
funding agreement between the council and Harbour Access Trust (HAT) is being
finalised which commits the council to a $3 million capital grant towards the
development of the National Ocean Water Sports Centre which was approved in
2010 by the then North Shore City Council. There have been delays in the payment
of this grant due to conditions outstanding including finalising an agreement
on community access, land lease issues and HAT acquiring a resource consent.
39. It was originally
envisaged and budgeted that the council would contribute $500,000 in 2013/2014
and $2,500,000 in 2014/2015. It is now expected that these conditions would
only be met in 2017/2018, and therefore it is proposed that the budgets be
re-phased accordingly.
Consideration
Local
board views and implications
40. The
Broadband development project is a key priority project for the Great Barrier
Local Board. The local board has formally indicated its support for this spend
in 2014/2015 from the 2013/2014 budget.
41. The
Kaipatiki Local Board consider the development of the Environment Education
Centre an important community initiative to help protect their natural
environment.
42. The
Albany Community Hub has been highlighted by the Upper Harbour Local Board as a
key project in their draft Local Board Plan which is being consulted on.
Scoping of this project is therefore important.
43. The
Devonport-Takapuna Local Board are not opposed in principle to the NOWSC
facility being located somewhere in Takapuna, but consider the existing
relationship agreement outdated and deficient. The board have resolved to
request the Governing Body form a joint working party with the board to oversee
the council’s relationship with the Harbour Access Trust and the delivery of
the NOWSC.
Maori
impact statement
44. The
work programme relating to priority Māori outcomes is of significant
interest and benefit to Māori.
45. The
work that will be delivered through the Hauraki Gulf Forum and the Hauraki
Marine Spatial Plan are important to Maori in delivering Maori outcomes.
Implementation
46. Budgets
will be amended in core financial systems and used for internal management
reporting, regular reporting to councillors and financial control for the
2014/2015 financial year.
Attachments
There are no attachments for this report.
Signatories
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Authors
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Neil Huang - Senior Analyst - Evaluation
Taryn Crewe – Financial Planning Manager
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Authorisers
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Ross Tucker - Team Leader Capital Planning
Matthew Walker - Manager Financial Plan Policy and
Budgeting
Andrew McKenzie - Chief Finance Officer
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