Agenda of Finance and Performance Committee

I hereby give notice that an ordinary meeting of the Finance and Performance Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Tuesday, 11 April 2017

9.30am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

Finance and Performance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Cr Ross Clow
Deputy Chairperson	Cr Desley Simpson, JP
Members	Cr Dr Cathy Casey	Cr Mike Lee
	Deputy Mayor Bill Cashmore	Cr Daniel Newman, JP
	Cr Fa’anana Efeso Collins	Cr Dick Quax
	Cr Linda Cooper, JP	Cr Greg Sayers
	Cr Chris Darby	Cr Sharon Stewart, QSM
	Cr Alf Filipaina	IMSB Chair David Taipari
	Cr Hon Christine Fletcher, QSO	Cr Sir John Walker, KNZM, CBE
	Mayor Hon Phil Goff, JP	Cr Wayne Walker
	Cr Richard Hills	Cr John Watson
	IMSB Member Terrence Hohneck
	Cr Penny Hulse
	Cr Denise Lee

(Quorum 11 members)

Mike Giddey

Senior Governance Advisor

5 April 2017

Contact Telephone: (09) 890 8143

Email: mike.giddey@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

TERMS OF REFERENCE

Responsibilities

The purpose of the Committee is to:

(a) control and review expenditure across the Auckland Council Group to improve value for money

(b) monitor the overall financial management and performance of the council parent organisation and Auckland Council Group

Key responsibilities include:

Advising and supporting the mayor on the development of the Long Term Plan (LTP) and Annual Plan (AP) for consideration by the Governing Body including:

- Local Board agreements

- Financial policy related to the LTP and AP

- Setting of rates

- Preparation of the consultation documentation and supporting information, and the consultation process, for the LTP and AP

Monitoring the operational and capital expenditure of the council parent organisation and Auckland Council Group, and inquiring into any material discrepancies from planned expenditure
Monitoring the financial and non-financial performance targets, key performance indicators, and other measures of the council parent organisation and each Council Controlled Organisation (CCO) to inform the Committee’s judgement about the performance of each organisation
Advising the mayor on the content of the annual Letters of Expectations (LoE) to CCOs
Exercising relevant powers under Schedule 8 of the Local Government Act 2002, which relate to the Statements of Intent of CCOs
Approving the financial policy of the Council parent organisation
Overseeing and making decisions relating to an ongoing programme of service delivery reviews, as required under section17A of the Local Government Act 2002
Establishing and managing a structured approach to the approval of non-budgeted expenditure (including grants, loans or guarantees) that reinforces value for money and an expectation of tight expenditure control
Write-offs
Acquisition and disposal of property, in accordance with the long term plan
Recommending the Annual Report to the Governing Body
Te Toa Takatini

Powers

(a) All powers necessary to perform the committee’s responsibilities, including:

a. approval of a submission to an external body

b. establishment of working parties or steering groups.

(b) The committee has the powers to perform the responsibilities of another committee, where it is necessary to make a decision prior to the next meeting of that other committee.

a. the power to establish subcommittees

b. powers that the Governing Body cannot delegate or has retained to itself (section 2).

Exclusion of the public – who needs to leave the meeting

Members of the public

All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.

Those who are not members of the public

General principles

· Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.

· Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.

· Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.

· In any case of doubt, the ruling of the chairperson is final.

Members of the meeting

· The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).

· However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.

· All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.

Independent Māori Statutory Board

· Members of the Independent Māori Statutory Board who are appointed members of the committee remain.

· Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.

Staff

· All staff supporting the meeting (administrative, senior management) remain.

· Other staff who need to because of their role may remain.

Local Board members

· Local Board members who need to hear the matter being discussed in order to perform their role may remain. This will usually be if the matter affects, or is relevant to, a particular Local Board area.

Council Controlled Organisations

· Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.

1 Apologies

An apology from Cr C Casey has been received.

2 Declaration of Interest

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

3 Confirmation of Minutes

That the Finance and Performance Committee:

a) confirm the ordinary minutes of its meeting, held on Tuesday, 21 March 2017 and the extraordinary minutes of its meeting, held on Thursday, 30 March 2017, including the confidential section, as a true and correct record.

4 Petitions

4.1 350 Aotearoa - Petition relating to Auckland Council's responsible investment policy

Purpose

1. To present a petition to the Finance and Performance Committee.

Executive summary

2. Sam Vincent of 350 Aotearoa will present a petition to the Finance and Performance Committee. The prayer of the petition is as follows:

“Climate change is happening now, driven by the extraction and burning of fossil fuels. There is enough coal, oil and gas in proven reserves to breach the IPCC's agreed-upon 2 °C limit five times over. When our public institutions divest, it removes the extraction industry's social licence to continue business as usual. It's time for our council to end their support of the fossil fuel extraction industry.

To Auckland Council:

1. Freeze all new investments in fossil fuel extraction.

2. Divest all holdings from fossil fuel extraction within a three year timeframe.

3. Update your Statement of Investment Policy and Objectives (SIPO) to exclude fossil fuel extraction.”

Recommendation/s

That the Finance and Performance Committee:

a) receive the petition from 350 Aotearoa relating to Auckland Council's responsible investment policy.

5 Public Input

Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Democracy Advisor, in writing, no later than one (1) clear working day prior to the meeting and must include the subject matter. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

5.1 Richard Milne - Responsible investment policy

Purpose

1. Richard Milne, Convenor, Auckland Anglican Climate Action Group wishes to address the Committee about the proposal to divest Council’s funds from fossil fuels and in particular what the Anglican Church of Aotearoa/NZ has done about the issue and why.

Recommendation/s

That the Finance and Performance Committee:

a) receive the presentation regarding Responsible Investment Policy and thank Richard Milne for his attendance.

6 Local Board Input

Standing Order 6.2 provides for Local Board Input. The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time. The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give one (1) day’s notice of their wish to speak. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

This right is in addition to the right under Standing Order 6.1 to speak to matters on the agenda.

6.1 Local Board Input - Waitakere Ranges Local Board - 315A Glengarry Road, Glen Eden

Purpose

1. Sandra Coney, member of the Waitakere Ranges Local Board wishes to address the Committee in relation to 315A Glengarry Road, Glen Eden, which is contained in the Disposals recommendation report.

Recommendation/s

That the Finance and Performance Committee:

a) receive the presentation regarding 315A Glengarry Road, Glen Eden and thank Sandra Coney for her attendance.

6.2 Local Board Input - Hibiscus and Bay Local Board - 19 Anzac Road, Browns Bay

Purpose

1. Julia Parfitt, Chair and Janet Fitzgerald, Deputy Chair of the Hibiscus and Bays Local Board wish to address the Committee in relation to 19 Anzac Road, Browns Bay which is contained in the Disposals recommendation report.

Recommendation/s

That the Finance and Performance Committee:

a) receive the presentation regarding 19 Anzac Road, Browns Bay and thank Julia Parfitt and Janet Fitzgerald for their attendance.

7 Extraordinary Business

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

(a) The local authority by resolution so decides; and

(b) The presiding member explains at the meeting, at a time when it is open to the public,-

(i) The reason why the item is not on the agenda; and

(ii) The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a) That item may be discussed at that meeting if-

(i) That item is a minor matter relating to the general business of the local authority; and

(ii) the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b) no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

8 Notices of Motion

At the close of the agenda no requests for notices of motion had been received.

Finance and Performance Committee

11 April 2017

Disposals recommendation report

File No.: CP2017/02789

Purpose

1. To obtain approval to dispose of several council-owned properties that Panuku Development Auckland (Panuku) considers suitable for sale.

Executive summary

2. Capital receipts from the sale of surplus properties contribute to Auckland Plan outcomes and the Long-term Plan 2015-2025 (LTP) by providing the Council with an efficient use of capital and prioritisation of funds to achieve its activities and projects. In the 2016/2017 financial year, the LTP has forecast the disposal of non-strategic council assets to the combined value of of $69 million.

3. In accordance with the Local Government Act 2002, the annual Statement of Intent (SOI) states the activities and intentions of Panuku, the objectives that those activities will contribute to and performance measures and targets as the basis of organisational accountability. For the 2016/2017 financial year Panuku is required to identify properties from within council’s portfolio that may be suitable for potential sale to a combined value of $75 million and to sell $50 million of property by 30 June 2017.

4. The first property presented in this report, 6 Butler Avenue, Papatoetoe is an off-street car park identified by Auckland Transport as holding no strategic purpose for retention. Consultation about this property has been undertaken with council and its CCOs, iwi authorities and the Ōtara-Papatoetoe Local Board. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal of this property. As such, it is recommended that the site be divested.

5. The second property presented in this report, 129R Bairds Road, Ōtara is an unclassified reserve utilised for off-street parking that was released by Auckland Transport as not required for future service needs as it holds no strategic purpose to retain. Consultation about this property has been undertaken with council and its CCOs, iwi authorities and the Ōtara-Papatoetoe Local Board. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal of this property. As such we recommend the revocation of the reserve status and disposal. Final revocation of the reserve status will be subject to completing the statutory requirements of the Reserves Act 1977 and Local Government Act 2002, including public advertising.

6. The third property presented in this report, 315A Glengarry Road, Glen Eden is vacant land vested as road reserve that was reviewed by Council’s Parks department, as having little quality open space potential and with no strategic purpose to retain. Consultation about this property has been undertaken with council and its CCOs, iwi authorities and the Waitākere Ranges Local Board. The Waitākere Ranges Local Board does not support the proposed disposal of this site on the basis that it should be retained and developed as a local park. Panuku have liaised with the Parks and Recreation Policy team, which confirmed that this site does not have a high priority rating for retention when assessed against the Council’s Parks and open space acquisitions policy. As no alternative service uses have been identified for this site, Panuku recommend the revocation of the reserve status and disposal. Final revocation of the reserve status will be subject to completing the statutory requirements of the Reserves Act 1977 and Local Government Act 2002, including public advertising.

7. The fourth property presented in this report, 19 Anzac Road, Browns Bay is an off-street car park identified by Auckland Transport as not required for future service needs as it holds no strategic purpose to retain. Consultation about this property has been undertaken with council and its CCOs, iwi authorities and the Hibiscus and Bays Local Board. No alternative service uses have been identified. The Hibiscus and Bays Local Board does not support the proposed disposal of this site on the basis that it is required for current carparking purposes and future town centre growth. As no alternative service uses have been identified for this site, Panuku recommends it be divested.

8. The fifth property presented in this report, Section 1 SO 69059, East Coast Road, Redvale is an unformed stopped road surrounded by the neighbouring rural block. Consultation with council and its CCOs, iwi authorities and the Hibiscus and Bays Local Board about this property has been undertaken. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal of this property. As such, it is recommended that the site be divested.

9. The sixth property presented in this report, 78A Great South Road, Papakura is a vacant commercial property that was acquired to enable stormwater infrastructure works. These works are currently been undertaken. The rationalisation process was undertaken while these works are underway to establish the future of this site following the completion of the works. Consultation with council and its CCOs, iwi authorities and the Papakura Local Board about this property has been undertaken. The Papakura Local Board is not opposed to the disposal of 78A Great South Road, Papakura, but would like a public right of way easement registered over part of the site. The purpose of this would be to create a greenway connection in line with its draft greenways plan. The need for this connection is dependent on a new crossing being established over or under the adjacent rail corridor. The Papakura Local Board has confirmed that it does not wish to submit a business case for part of the site to be retained or for an easement to be registered over part of the site. Given that the proposed railway crossing and pedestrian linkage is not a planned or funded project, and that such an easement would impact on the value of the site, we recommend that the whole of the site be disposed of without an easement upon completion of the stormwater infrastructure works.

10. The seventh property presented in this report, Section 1 SO 375381, adjacent to 493 State Highway 16, Kumeu is a large, vacant parcel of land that was acquired by the former Rodney District Council for a proposed future cemetery. There was community opposition to this proposal and subsequent assessments found that this site is not suitable for a cemetery or required for growth planning in the Huapai-Kumeu area. Consultation about this property has been undertaken with council and its CCOs, iwi authorities and the Rodney Local Board. The Rodney Local Board could not reach a decision on the matter due to the board members having mixed views regarding the proposed disposal. No alternative service uses have been identified for this property through the rationalisation process. Due to this, Panuku recommends disposal of the site.

11. The balance of the properties presented in this report, Allotments 136, 137, 138, 139, 140 and 141 Ahuroa Parish and 147 Kourawhero Parish, Woodcocks Road, Woodcocks are parcels of stopped road. Consultation with council and its CCOs, iwi authorities and the Rodney Local Board about subject sites has been undertaken. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal of the properties. As such, it is recommended that the sites be divested.

Recommendation/s

That the Finance and Performance Committee:

a) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at 6 Butler Avenue, Papatoetoe, comprised of an estate in fee simple more or less being Lot 3 DP 39245 contained in computer freehold register NA1057/50;

b) approve, subject to the satisfactory conclusion of any required statutory processes:

i) the revocation of the reserve status of approximately 1,133m² of 129R Bairds Road, Ōtara comprised of an estate in fee simple more or less being CT-NA41D/929; Lot 12 DP55184 contained in computer freehold register NA41D/929 as it is no longer required by Auckland Council for reserve purposes;

ii) the disposal of approximately 1,133m² of 129R Bairds Road, Ōtara comprised of an estate in fee simple more or less being CT-NA41D/929; Lot 12 DP55184 contained in computer freehold register NA41D/929 as it is no longer required for reserve purposes;

c) approve, subject to the satisfactory conclusion of any required statutory processes:

i) the revocation of the reserve status of approximately 4,105m²of 315A Glengarry Road, Glen Eden, comprised of an estate in fee simple more or less being LOT 41 DP 19309 as it is no longer required by Auckland Council for reserve purposes;

ii) the disposal of the land at 315A Glengarry Road, Glen Eden, comprised of an estate in fee simple more or less being LOT 41 DP 19309;

d) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at 19 Anzac Road, Browns Bay, comprised of an estate in fee simple more or less being Section 1 SO 489800 contained in computer freehold register CT 714533;

e) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at Section 1 SO 69059, East Coast Road, Redvale, comprised of an estate in fee simple more or less being Sec 1 SO 69059 (0.6521HA) contained in computer freehold register NA118B/93;

f) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at 78A Great South Road, Papakura, comprised of an estate in fee simple more or less being LOT 1 DP 196746 contained in computer freehold register NA124C/676;

g) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at Section 1 SO 375381, adjacent to 493 State Highway 16, Kumeu, comprised of an estate in fee simple contained in computer freehold register CT 334777;

h) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at:

i) Allotment 136 Ahuroa Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simplecontained in computer freehold register NA28A/1422 comprising approximately 981m²;

ii) Allotment 137 Ahuroa Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simple contained in computer freehold register NA28A/1423 comprising approximately 1,461m²;

iii) Allotment 138 Ahuroa Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simple contained in computer freehold register NA28A/1424 comprising approximately 4,127m²;

iv) Allotment 139 Ahuroa Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simple contained in computer freehold register NA28A/1425 comprising approximately 3,465m²;

v) Allotment 140 Ahuroa Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simple contained in computer freehold register NA28A/14246 comprising approximately 837m²;

vi) Allotment 141 Ahuroa Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simple contained in computer freehold register NA28A/1427 comprising approximately 1,042m²;

vii) Allotment 147 Kourawhero Parish, Woodcocks Road, Woodcocks, comprised of an estate in fee simple contained in computer freehold register NA28A/1412 comprising approximately 43m²;

i) agree that final terms and conditions be approved under the appropriate delegations.

Comments

12. Panuku and the Auckland Council’s Land Advisory team in the Community Facilities department work collaboratively on a comprehensive review process to identify properties in the council portfolio that may be suitable to sell. Once identified as a potential sale candidate Panuku takes the property through a multi stage engagement process.

13. The first phase of the process involves engagement with all council departments and relevant CCOs. The engagement establishes whether a property is needed for a future funded project or whether it must be retained for a clear strategic purpose. Once a property has been internally cleared of any service requirements, Panuku then consults with local boards, mana whenua and ward councillors. All sale recommendations must be approved by the Panuku board before a final recommendation is made to the governing body.

Consideration

Local board views and implications

14. Local boards are informed of the commencement of the rationalisation process for specific properties. Following the close of the EOI period, relevant local boards are engaged with. Panuku attend workshops with the relevant local board and provide information about properties being rationalised in its local board area. A report is subsequently prepared for the local board business meeting so that its views can be formalised.

15. If a local board wishes to retain a site, its views are considered by Panuku and if necessary referred to relevant council departments for consideration. The local board may be asked to prepare a business case which sets out the service need that will be met by retaining the site, along with how the service use will be funded. Panuku and relevant council departments or CCOs work with local boards in preparing the business case. The business case is then considered by the cross council steering group. If the business case is accepted and funding is identified, the property is transferred back to the service portfolio. If the business case is not accepted, the business case is included in the report to the governing body for a political decision.

16. Property specific feedback received is included in the Local Board Engagement section of the property attachments to this report.

Māori impact statement

17. The importance of effective communication and engagement with Māori on the subject of land is understood. Panuku has a robust form of engagement with mana whenua groups across the region. Each relevant mana whenua group is contacted independently by email based on a contact list which is regularly updated. Each group is provided general property details, including a property map, and requested to give feedback within 15 working days. Contacts are sent reminder notices a week out from the due date and alerted of the passing of the due date in the week following if no feedback has been submitted. Confirmation of any interest expressed is sent in writing and recorded for inclusion in the disposal recommendation report. A feedback spreadsheet is provided to facilitate responses. Any requests for extensions of a due date are handled on a case by case basis.

18. Panuku’s engagement directs mana whenua to respond with any issues of particular cultural significance the group would like to formally express in relation to the subject properties. We also request express notes regarding any preferred outcomes that the group would like us to consider as part of any disposal process.

19. From discussions with our Māori and Strategy Relations Team we are developing an understanding of what could amount to a ‘matter of significant cultural relevance’ to iwi. We are also developing a range of reasonable outcomes that could be employed when such a matter of cultural significance is raised in relation to a potential disposal property. Possible outcomes could include commemoration or physical acknowledgment in the form of plaques or other mutually agreed means of recognition. In the event of any issues of particular cultural significance being raised, Panuku will work with the relevant council departments to assess the merits of any such requests and keeps the interested parties informed along the way.

20. Mana whenua groups are also invited to express potential commercial interest in any sites and are put in contact with Panuku’s Development team for preliminary discussions if appropriate to the property. This facilitates the groups’ early assessment of the merits of a development opportunity to their iwi. In the event a property is approved for sale all groups are alerted of the decision, and all groups are alerted once a property comes on the market.

21. Property specific feedback received is included in the Mana Whenua Engagement section of the property attachments to this report.

Implementation

22. The results of the rationalisation process for the subject properties are that they are not required for current or future service requirements. Due to this, we recommend that they be divested.

23. Property specific implementation issues are included in the property attachments to this report.

Attachments

No.	Title	Page
a ⇩	6 Butler Avenue, Papatoetoe property information	17
b ⇩	129R Bairds Road, Ōtara property information	21
c ⇩	315A Glengarry Road, Glen Eden property information	25
d ⇩	19 Anzac Road, Browns Bay property information	29
e ⇩	Section 1 SO 69059, East Coast Road, Redvale property information	35
f ⇩	78A Great South Road, Papakura property information	39
g ⇩	Section 1 SO 375381, adjacent to 493 State Highway 16, Kumeu property information	43
h ⇩	Allotments 136, 137, 138, 139, 140 and 141 Ahuroa Parish and 147 Kourawhero Parish, Woodcocks Road, Woodcocks property information	47

Signatories

Author

Anthony Lewis - Senior Advisor Portfolio Review, Panuku Development Auckland

Authorisers

Letitia McColl - Team Leader Portfolio Review, Panuku Development Auckland David Rankin – Chief Operating Officer, Panuku Development Auckland

Kevin Ramsay – Acting Group Chief Financial Officer

Finance and Performance Committee

11 April 2017

Responsible investment policy and Diversified Financial Asset Portfolio review

File No.: CP2017/05252

Purpose

1. To approve a revised Responsible Investment (RI) Policy.

Executive summary

2. Following a request from councillors, officers have reviewed the council’s Responsible Investment Policy.

3. In undertaking this review council has received advice from CAER (an independent research house).

4. The main changes have been to add exclusions to the RI policy. These are broadly consistent with the RI policies of other major NZ fund managers.

5. Guidelines have also been drafted to assist in the practical implementation of the policy.

6. Given the reduced size of the Diversified Financial Asset Portfolio (DFAP), officers recommend that a review of the viability of the fund be undertaken.

Recommendation/s

That the Finance and Performance Committee:

a) approve the revised Responsible Investment Policy.

b) endorse a review of the long term viability of the Diversified Financial Asset Portfolio, given current balance sheet constraints and the need for capital to fund infrastructure development.

c) note that staff will report back on this no later than 30 June 2017.

Comments

Revised Policy

7. Officers were requested to review council’s existing RI Policy.

8. The advice of an independent organisation CAER was used in the review. As an independent ESG (environmental, social and governance) research house, CAER has been working with responsible investors in Australia and New Zealand for over 15 years. Based in Canberra, CAER undertakes in-house ESG analysis on companies operating in Australia and the Asia-Pacific region.

9. CAER have also recommended that council’s RI Policy be amended. The amended RI Policy is enclosed as Appendix 1 to CAER’s report. CAER’s complete report is attached as Attachment A.

10. The most significant proposed amendment to the RI policy is to introduce exclusion on certain activities and industries. CAER recommend that the following exclusions be listed in council’s RI Policy:

· The manufacturing or development of controversial weapons (note that council is in compliance with existing legislation for cluster munitions)

· The manufacturing of tobacco

· The production of fossil fuels

· Generating revenue from the operation of gambling machines

11. Council will also seek that investment managers monitor exposure to companies that manufacture and sell high-sugar, low nutrient products. The monitoring of these issues of concern ensures that the council’s investments are aligned with the broader initiatives of the Auckland Plan.

12. If the amended policy is adopted some reallocation from existing funds and fund managers will be required to ensure compliance with the policy. There may also be a transition period to enable managers to comply with the higher reporting obligations imposed on them.

13. CAER have also drafted guidelines for practically implementing the RI policy. These are enclosed as Appendix 2 to CAER’s report. Note that this does not form part of the RI policy but will assist in the practical management of the DFAP.

Diversified Financial Asset Portfolio

14. The RI policy applies to all investments; however its main application is to assist in the management of the DFAP.

15. The Finance and Performance Committee approved a recommendation on 13 May 2016 to divest $100 million per annum in financial years 2016/2017 and 2017/2018. The divestment for 2016/2017 financial year has been completed and reduced the fund balance to $227 million as at 31 January 2017.

16. The fund balance will be further reduced to approximately $130 million once the 2017/2018 divestment is completed. As this is immaterial in the context of council’s balance sheet, together with the need to release capital to fund infrastructure development, we ask that the Finance and Performance Committee endorse a review on the viability of maintaining DFAP over the long term.

Consideration

17. Local boards were not consulted on this report as this is a region-wide issue and not specific to a particular local board.

Māori impact statement

18. The decision to review the responsible investment policy is not a significant decision for Māori.

Implementation

19. Implementation will be in consultation with council’s investment adviser and fund managers.

Attachments

No.	Title	Page
a ⇩	Responsible Investment-CAER report	55

Signatories

Authors

Alec Tang – Principal Specialist Corporate Sustainability

John Bishop - Treasurer & GM Transaction Services

Authoriser

Kevin Ramsay – Acting Group Chief Financial Officer

No.	Title	Page
a ⇩	Finance and Performance Committee Forward Work Programme 2017	101
b ⇨	CCOs second quarter report for 31 December 2016 (Under Separate Cover)
c ⇨	Queries from Finance and Performance Committee workshop 9 March 2017 - Development Contributions (Under Separate Cover)

Author	Mike Giddey - Senior Governance Advisor
Authoriser	Kevin Ramsay – Acting Group Chief Financial Officer