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Finance and
Performance Committee
24 September
2014
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Monthly Budget
Update
File No.: CP2014/19873
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
2014/2015 capex deferrals
2. On 21 August,
this committee agreed to capex deferrals from 2014/2015 for the Council
Controlled Organisations (CCOs), but resolved to further engage with local
boards before agreeing to any deferrals for Auckland Council.
3. Council staff
have reviewed the list of regional deferrals to ensure that this list reflects
the most accurate and up-to-date information available, and factor in any other
relevant considerations such as the application of CBD targeted rate funding.
As a result, the list of regional deferrals has been revised down from $80
million to $74 million. A revised list of regional deferrals is included as
Attachment A.
4. All 21 Local
Boards have now considered the list of proposed deferrals at their business
meetings and passed formal resolutions in relation to this list. The
local board resolutions are included as Attachment B. If the committee were to
agree to all of these resolutions, the list of local capex project deferral
would be revised down from $35 million to $21 million overall,
with some boards having very few or no deferrals.
5. To ensure an consistent approach
across all boards, staff have reviewed the local board resolutions and provided
a set of recommendations based on the objective criteria that has been used
throughout this process. If the committee were to agree to these staff
recommendations, the list of local capex project deferral would be revised down from $35 million to $30 million overall, with all
boards having some material level of deferrals.
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Recommendation/s
That the Finance and
Performance Committee:
a) agree to the
list of regional deferrals set out in Attachment A
b) note the local
board resolutions included as Attachment B
c) agree to the
staff list of local deferrals set out in Attachment C which reflects the
application of standard criteria across all local boards
d) note that 17
local boards resolved that the capital deferrals be given priority in
2015/2016
e) agree that the
council’s budgets be updated to reflect the financial implications of the
above decisions.
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Comments
Background
6. The Finance and Performance
Committee has delegated authority to approve changes to budgets during a
financial year. Rates for 2014/2015 have been set with no provision made for
accommodating new or additional expenditure items. Any new 2014/2015
expenditure committed to will either require reprioritisation of existing
budgets or increased borrowing.
2014/2015 capex deferrals
7. On 21 August,
this committee agreed to capex deferrals from 2014/2015 for the Council
Controlled Organisations (CCOs), but resolved to further engage with local
boards before agreeing to any deferrals for Auckland Council.
8. Council staff
have reviewed the list of regional deferrals to ensure that this list reflects
the most accurate and up-to-date information available, and factor in any other
relevant considerations such as the application of CBD targeted rate funding.
As a result, the list of regional deferrals has been revised down from $80
million to $74 million. A revised list of regional deferrals is included as
Attachment A.
9. All 21 Local
Boards have now considered the list of proposed deferrals at their business
meetings and passed formal resolutions in relation to this list. The
local board resolutions are included as Attachment B. If the committee were to
agree to all of these resolutions, the list of local capex project deferral
would be revised down from $35 million to $21 million overall,
with some boards having very few or no deferrals.
10. To ensure an consistent approach
across all boards, staff have reviewed the local board resolutions and provided
an alternative set of recommendations based on the objective criteria that has
been used throughout this process. If the committee were to agree to these
staff recommendations, the list of local capex project deferral would be revised down from $35 million to $30 million overall, with all
boards having some material level of deferrals.
11. The specific categories used to
assess the 2014/2015 council parent capex programme were:
a) Legally committed – Legislative or contractual
commitment for delivery in 2014/2015
b) Growth related – Development contribution
funded capex but not committed
c) Urgent health and safety renewal
– A significant health and safety risk that must be addressed
in 2014/2015
d) In tender
process – Signed procurement plan, currently under tender or about to go to
tender
e) Cost savings – Capital works
that support cost savings
f) Revenue generating – The
investment will be offset by associated revenue
g) Renewals – To maintain
existing levels of service
h) Discretionary –
Projects have flexibility to be deferred and reconsidered through the LTP
process
All expenditure in categories a-g is recommended to be
retained, while all expenditure in the last category is recommended for
deferral. For some projects the total cost may have been allocated across more
than one category. For example, phase 1 may be committed, but phase 2 remains
discretionary.
Consideration
Local
board views and implications
12. All 21 Local
Boards have now considered the list of proposed deferrals at their business
meetings and passed formal resolutions in relation to this list. These
board resolutions are included as Attachment B.
13. Some of these
resolutions state that particular projects are a high priority for the board
and should not be deferred, even though the objective criteria for retention
are not met. In most cases, these arguments relate to community expectations
and/or previous planning and engagement work. However, there are two specific
local projects where the board has identified potential efficiency benefits
from aligning project timing with other related capital works:
· Pioneer
Women’s and Ellen Melville Hall – Waitamata Local Board resolved that this
project should proceed this year to coincide with the upgrade of the adjoining
Freyberg Square. While they have resolved not to accept the proposed $1.9
million deferral, they have acknowledged that only about $400,000 would be
likely to be completed in 2014/2015.
· Mt
Roskill Village Centre Upgrade – Puketepapa Local Board resolved that this
$527,000 project should proceed this year to align this with Auckland
Transport’s work on Dominion Road which is due to commence in October.
Staff acknowledge the potential benefits of proceeding with
these two projects in 2014/2015. However, at this stage they remain on our list
of recommended deferrals as they do not meet our objective criteria for removal
from the list.
14. 17 local boards resolved that
deferred projects be given priority in 2015/2016.
15. The LTP process will provide the
opportunity to discuss with the community the relative importance of projects
and programmes, based on the priorities identified in the Local Board Plans.
16. Through September and October
Local Boards, the Governing Body, CCOs and council staff will all contribute to
the development of draft LTP 2015-2025 budgets in response to the Mayoral
Proposal. Decisions on discretionary local budgets will be made by Local Boards
in October and decisions on regional activities and local asset based services
will be made by the Budget Committee on 5-7 November.
17. Final decisions on which projects
are included in the LTP 2015-2025 will be made by 30 June 2015, following full
public consultation.
Maori
impact statement
18. From discussion
with Te Waka Angamua early in the process, no individual project proposed for
deferral has been noted as significant for delivering the intended Maori
outcomes.
Implementation
19. 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
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No.
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Title
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Page
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aView
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List of Regional Deferrals
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9
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bView
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Local Board Resolutions
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11
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cView
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List of Local Deferrals
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53
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Signatories
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Authors
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Taryn Crewe - Financial Planning Manager - Council
Parent
Ross Tucker - Team Leader Capital Planning
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Authorisers
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Matthew Walker - Manager Financial Plan Policy and
Budgeting
Andrew McKenzie - Chief Finance Officer
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