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Governing Body
27 April 2017
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Substantive
council-controlled organisations - shareholder comment on draft Statements of
Intent 2017-2020
File No.: CP2017/03180
Purpose
1. To
approve the proposed shareholder comments on the draft 2017-2020 Statements of
Intent for the substantive council-controlled organisations (CCOs).
Executive
summary
2. Each
of the council’s substantive CCOs has submitted a draft Statement of
Intent for the period 1 July 2017 to 30 June 2020 for shareholder review.
These are attached (Attachments A-F).
3. Letters
of Expectation sent to CCO board chairs in December 2016 provided direction on
the content of the 2017-2020 Statements of Intent. Staff have undertaken
a detailed reconciliation of the required direction set out in the Letters of
Expectation with that of the content in the draft Statements of Intent as part
of developing this report.
4. Subject
matter experts from across the council have reviewed the draft Statements of
Intent. Their feedback has shaped the proposed shareholder comments.
5. The
proposed shareholder comments contained in this report have been split into
general comments that will be applicable to all CCOs and specific comments for
each CCO. If council, as the shareholder, chooses to make comments on the
draft Statements of Intent, these must be provided in writing to the chair of
the relevant CCO board by 30 April 2017.
6. Running
parallel with the Statement of Intent process is the development of the Annual
Plan 2017/2018. Where applicable, any decisions made as part of finalising the
annual plan will be included in final Statements of Intent.
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Recommendation/s
That the Governing Body:
a) approve
the proposed shareholder comments on the draft Statements of Intent 2017-2020
for the substantive council-controlled organisations
contained in this report.
b) agree
that the Mayor or Chair of the Finance and Performance Committee may finalise
the letters to be sent to the council-controlled organisations containing the shareholder comments, and approve amendments and
editorial changes to the shareholder comments, provided they are in line with
the resolutions of this committee or any other approved council policy.
c) agree
that the Manager Council Controlled Organisation Governance and External
Partnerships be authorised to work with the relevant local boards to provide
shareholder comments on the Statements of Intent 2017/2018 for Mangere
Mountain Education Trust, Community Education Trust Auckland, and
Contemporary Art Foundation.
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Comments
Statement of intent process
7. Under
the Local Government Act 2002, each CCO is required to develop a draft
Statement of Intent by 1 March 2017 to:
a. outline its intentions and
activities for the forthcoming year
b. provide an opportunity for
shareholders to influence the direction of the CCO
c. provide a basis of
accountability for the directors of the CCO to its shareholders.
8. Auckland
Council has developed the Letters of Expectation process to signal the required
direction of the Statements of Intent, but this is not a legislative
requirement. Subject matter experts from across the council have reviewed
the draft Statements of Intent taking into account legislative requirements,
Letters of Expectation, the Auckland Plan, the Long-term Plan (LTP) 2015-2025
and other relevant strategies and policies of council. Their feedback has
shaped the proposed shareholder comments.
9. If
council chooses to provide shareholder comments, legislation requires that they
are sent to the chairs of the CCOs by 30 April 2017.
10. The proposed
shareholder comments have been split into general comments that will be
applicable to all CCOs, and specific comments for each CCO.
11. Substantive
CCOs are required to consider the shareholder comments at a public board
meeting, before submitting final Statements of Intent to the council on or
before 30 June 2017.
12. Running
parallel with the Statement of Intent process is the development of the Annual
Plan 2017/2018. Where applicable, any decisions made as part of finalising the
annual plan will be included in the final Statements of Intent. Council and CCO
staff will work closely together on aligning these processes and information.
Proposed shareholder comments
applicable to all CCOs
13. The following
are the proposed shareholder comments that are applicable to all CCOs.
Aligning the final 2017-2020
Statements of Intent with the final 2017/2018 Annual Plan
14. The final
Statement of Intent must align to the decisions made as part of the
council’s 2017/2018 Annual Plan and meet legislative requirements. This
must ensure that:
a. information
contained in the final Statements of Intent are consistent with the 2017/2018
Annual Plan
b. financial
information is provided for 2016/2017 (current) year, and the three subsequent
years
c. agreed
non-strategic asset sale targets are included where appropriate
d. performance
measures and targets are worded exactly as in the 2015-2025 LTP, and
e. the
Statements of Intent include 2015/2016 actual performance, 2016/2017 (current
year) targets and targets for the 2017-2020 years.
15. Owing to
legislative timeframes, the Annual Plan is developed at the same time as the
Statements of Intent every year. Council and CCO staff must work to ensure that
the legislative requirements are met and that all financial and non-financial
information is well aligned between these documents as they are finalised.
Proposed
shareholder comments for Auckland Council Investments Limited
16. It is
proposed that the following be included in the shareholder comments for
Auckland Council Investments Limited (ACIL) on its draft Statement of Intent 2017-2020.
17. The Statement
of Intent should clearly set out ACIL’s relationship with each
subsidiary/investment. Information about these relationships,
particularly the limits of strategic influence the Auckland Airport
shareholding gives council, is important for public understanding of
ACIL’s role.
18. Most of the
issues raised in the Letter of Expectation are covered in section 7
(Performance Outlook). When monitoring Ports of Auckland’s plans
and strategies, the Statement of Intent should not just “assess” if
they are aligned to council’s plan, but ensure that they are to the extent
possible within ACIL’s power.
19. In addition,
some more detail should be given about plans to review strategies and
operations of ACIL’s subsidiaries (where appropriate) and their alignment
to the Auckland Plan transformational shifts. In particular:
· the
degree to which the strategies of Ports of Auckland support a commitment to
environmental action, including resilience to climate change (not just
greenhouse gas reductions)
· information
about the actions taken by Ports of Auckland that contribute to Māori
outcomes (this could be a commitment to report on this through quarterly
reporting).
20. In
terms of measures (section 7), we acknowledge that new figures will be provided
as part of the 2017/2018 Annual Plan process. However, at that time
additional commentary should also be included to explain the measures and
targets, especially where dividends are projected to be lower than for the
current year.
Proposed
shareholder comments for Auckland Tourism, Events and Economic Development
21. It is
proposed that the following be included in the shareholder comments for
Auckland Tourism, Events and Economic Development (ATEED) on its draft
Statement of Intent 2017-2020 (Attachment B).
22. Council
acknowledges the comprehensive and detailed nature of the draft ATEED Statement
of Intent. In a revised draft, it would be useful for ATEED to consider what
detail could be left out, to ensure the document guides the decision-making of
ATEED’s Board, as well as being a plan of activities. In addition,
ATEED should ensure the Statement of Intent is forward looking, as some
sections report on past success than identifying and pursuing emerging issues
and opportunities.
23. In general
terms, it is important that Auckland’s investment proposition is clear to
our partners and stakeholders. The Statement of Intent should clearly set
out ATEED’s commitment to cooperate with the wider Auckland Council group
to identify and articulate comprehensive and coordinated messaging of
Auckland’s investment story.
24. Other key
points about collaboration which need to be included in the Statement of Intent
are as follows.
· the
bullet point on the Global Partnerships team (page 20) should reflect the wider
role of that team (not just civic relationships), eg. “…combining
with council’s Global Partnerships unit to leverage political and
government relationships, city networks, forums, and relevant city and
government priorities and policies”.
· add
a comment about ATEED sharing its expertise, data and insights to contribute to
strategy and policy development from other parts of the council group (page
20).
· in
respect of trade (page 30), there are larger interests and implications than
just business in the New Zealand Trade Plan Refresh (e.g. procurement
implications, social issues). A wider Auckland Council group perspective
therefore needs to be represented in this process, including the Global
Partnerships unit’s policy role and relationship with the Ministry of
Foreign Affairs and Trade.
25. The financial
information does not provide sufficient detail of cost categories as required
by the Letter of Expectation. The public should be able to understand
what activities are being funded and to what level, so that ATEED’s
priorities are clearer and can be compared against the measures/metrics.
26. In the
context of sustainability, consideration should be given to thinking about
whether a stronger focus could be given to developing low carbon
industries. While this may be an area that requires significant
development, and would need to be assessed against the current focus on
high-value foods and technology sectors, a commitment to thinking about the
role these industries could play in Auckland’s future economy should be
included in ATEED’s Statement of Intent.
27. A number of
the performance measures have issues which ATEED should resolve, those being:
· adding
a reference to working with council through the Long-term Plan process to
develop and improve measures and indicators
· a
number of targets are set lower than what has actually already been
achieved. These should be revised higher or an explanation given for the target.
Examples include:
· the
number of Māori businesses that have been through an ATEED programme or
benefited from an ATEED intervention
· business
event bid win/loss ratio
· customer
satisfaction
· value
of business event bids.
28. The
local board matrix (page 18) and the discussion on page 33 are useful, but it
would also be useful to see in the Statement of Intent a more concerted focus
on the specific areas (south and west) identified in the Letter of
Expectation.
Proposed
shareholder comments for Auckland Transport
29. It is
proposed that the following be included in the shareholder comments for
Auckland Transport on its draft Statement of Intent 2017-2020 (Attachment
C). Given the nature of the feedback for Auckland Transport, staff have
already contacted Auckland Transport to discuss the draft Statement of Intent,
and we anticipate continuing to work with Auckland Transport to revise its
document.
30. The Statement
of Intent should be more forward looking and more comprehensively respond to
the challenges set out in the Letter of Expectation. For example, instead
of noting the improvements that have already been made to the bus lane network,
we expect to see what improvements will be made in the years ahead.
31. Council
acknowledges that this is the third year of the Long-term Plan cycle and the
three-year Accelerated Transport Plan, and that the Statement of Intent is just
one of several accountability documents. However, it still needs to
outline more clearly the current context, and key transport challenges facing
Auckland, Auckland Transport’s strategic responses to these challenges
(including in the long-term), and how the work programme delivers these
strategic responses.
32. A clear sense
for the public of where money is planned to be spent is required. This
was a key aspect of the Letter of Expectation, when it referred to transparency
of reporting. In this regard:
· a
stronger context statement would be helpful in setting the scene for why more
transport activity and investment needs to occur. This could touch on
recent rapid population growth, resilience and climate change impacts, and
growing travel demand and public transport demand creating capacity challenges.
This would set up the need to address funding in the 2018-2028 Long-term Plan
as a key part of the work programme for the year ahead.
· the
standard financial tables should be supplemented with a clearer depiction of
the total net transport budget, so it can be understood by the public.
They should show what proportion of funding comes from fares, parking
fees, council and New Zealand Transport Agency, and the major areas of
investment (infrastructure, public transport services, maintenance and renewals
etc).
33. The itemised
response to the Letter of Expectation is helpful, but council expects the
Letter of Expectation themes to be developed within the commentary of the
document, and where possible in the three-year workplan in the Statement of
Intent, not sitting outside it.
34. In addition,
it would be useful for the workplan to be presented in a way that tells a
clearer story. At present, the work plan includes a mix of large projects
(e.g. City Rail Link, New Network) and smaller, discrete projects (e.g.
Westgate interchange), with no indication of priorities or what is intended to
make a difference to which problem. The workplan should describe the
major initiatives and group them into major areas like building infrastructure,
improving public transport services, planning and policy work, optimising
current operations, and so on.
35. The
discussion of strategic themes on pages 9-11 is confusing. The current
themes are set out at length, with new themes mentioned at the end. It is
not clear if the new themes are meant to influence the 2018-2028 Long-term
Plan, and how they have been developed. This should be explained and
significantly shortened.
36. A number of
specific issues raised in the Letter of Expectation need to be addressed more
clearly:
· the
draft Statement of Intent mentions in general terms the need for collaboration
with council. However, this needs to be shown in more concrete terms
throughout the work plan, with reference to early engagement with relevant
council teams (e.g. Auckland Design Office, Transport Strategy, and Plans and
Places) to ensure major investment decisions and projects align with council
strategic directions. As an example, reference should be made to how
Auckland Transport and council will work together and make decisions on City
Centre Master Plan implementation.
· similarly,
there should be reference to collaboration across other
CCOs. Specifically, the Statement of Intent includes a commitment by
Auckland Transport to jointly review with Development Auckland Limited (Panuku)
property assets managed by Auckland Transport. This should be done with a
view to transferring surplus assets to Panuku to optimise the above and below
ground development potential of those assets for the council group.
· more
clarity about how Auckland Transport partners with local boards is
required. Working constructively with local boards is part of achieving
better network optimisation, even when this requires difficult decisions, such
as removing on-street parking. The Statement of Intent should also mention
delegations to local boards beyond statements about managing conflicts and
balancing local and network priorities. While recognising that this is a
challenging issue, there needs to be a commitment in the Statement of Intent to
approaching this issue with an open mind in the coming year.
· some
detail about how the Roads and Streets Framework will be finalised and
implemented (including a commitment to collaborate with council) would be a
helpful addition to the work programme. This is a crucial element of
achieving a balance of movement and place, which was a key Letter of
Expectation issue.
· the
Mass Rapid Transit project should be specifically mentioned in the three-year
work programme, as specific funds have been requested through the Annual Plan
process to enable work to proceed on this project.
· given
the priority of enhancing the bus network that was outlined in the Letter of
Expectation, the Statement of Intent should more specifically outline upcoming
initiatives in this space (e.g. timing for next stages of new network rollout,
quantity of bus lanes to be added or extended in hours, etc).
· more
specificity is required in the Statement of Intent about improving rail trip
times, particularly dwell times at stations. We acknowledge there is a
complex mix of factors involved, and that this is an operational matter, but it
has important strategic implications. This is a key priority for council,
and therefore a clear plan over time to address this issue is required.
· the
Statement of Intent needs to indicate key priorities and timings for the
cycling programme in the next year. A reference to how improved walking
and cycling amenity will be incorporated into projects, such as checking for
opportunities to do this when renewals are undertaken, should be include.
37. In respect of
measures, the work plan for the year should also specifically anticipate
working with council through the upcoming Long-term Plan process on
developing refreshed measures and targets. For this year’s
Statement of Intent, some additional commentary about the targets could be
helpful for public understanding, such as for the public transport targets,
which appear to tail off in their growth in the outer years.
38. The inclusion
of performance measures related to the Māori
Responsiveness Plan adopted by Auckland Transport are acknowledged.
Proposed
shareholder comments for Development Auckland Limited
39. It is
proposed that the following be included in the shareholder comments for
Development Auckland Limited (Panuku) on its draft Statement of Intent
2017-2020 (see Attachment D).
40. In its
foreword and strategic objectives sections, Panuku makes references to it being
‘the’ urban development agency for Auckland, and seeks the ability
to reinvest proceeds and use compulsory acquisition powers. These
references should be changed to characterise Panuku as council’s lead
urban regeneration agency.
41. Similarly,
the reference to broad support for government’s urban development
authority proposal should simply state that it could provide additional powers
for Panuku and that Panuku is part of the joint submission process.
Reference to Panuku’s support for the urban development authority
proposal should be deleted, as a position on this has not been endorsed by
council yet.
42. Panuku should
clarify that they are the sole Auckland Council agency doing
regeneration in the areas listed on page 7. In some, central government
agencies are also operating (eg. Tamaki).
43. It would be
useful for Panuku to investigate whether it is possible and if there is value
in aligning its activities with the long-term capital planning of central
government in the Transform and Unlock areas. Wording to reflect this
should be added in key project area 6 of the three-year work plan.
44. The Statement of Intent should state that Panuku and Auckland Transport
will work together to optimise the above and below ground development potential
of council and Auckland Transport assets (both for development and to capture
value for funding transport projects) where they are in Panuku’s
Transform and Unlock areas.
45. Panuku’s
commitment to engagement with mana whenua and other Māori organisations in
various areas is good, and council will look forward to seeing reporting on the
associated performance measures in due course. A more developed sense of how
the Transform and Unlock area projects can specifically contribute to wider
outcomes for Maori should be developed (including housing and employment).
46. In terms of
measures, many of the targets are lower than current (2015/2016) actuals.
Additional explanation of this should be given in the Statement of
Intent. Staff acknowledge that targets and measures will be reviewed and
refreshed as part of the Long-term Plan process.
Proposed
shareholder comments for Regional Facilities Auckland
47. It is
proposed that the following be included in the shareholder comments for
Regional Facilities Auckland on its draft Statement of Intent 2017-2020.
48. The
strategic objectives set out in section 4 should be linked more clearly to the
work plan which follows. It is not clear what activities support which
strategic objectives, and how. The more detailed description of the priorities
on page two could usefully be moved to the strategic objectives section and
expanded.
49. A
number of elements from the Letter of Expectation need to be addressed more
thoroughly. These include the following:
· the draft Statement
of Intent needs to provide more detail about the cost of the services Regional
Facilities Auckland provides. Even if this is only in general terms, this
will assist with public understanding of Regional Facilities Auckland
operations.
· Collaboration with
the council group should include mention of working with Panuku in the
Transform and Unlock areas that include Regional Facilities Auckland assets (Takapuna (Bruce Mason Centre), Manukau (‘Te Papa
Manukau’/Vodafone Events) and the Central City (Civic Administration
building, Aotea redevelopment). It should also include how Regional
Facilities Auckland works/coordinates with ATEED in the event space.
50. Council acknowledges
Regional Facilities Auckland’s plan to review its Māori Engagement
Strategy. One aspect of this should include consideration through the Long-term
Plan of how to better measure the impact of Regional Facilities
Auckland’s contribution to Māori outcomes, so that it is not simply
limited to one facility (Auckland Art Gallery). The draft Statement of
Intent includes a degree of duplication about Māori
outcomes, which could be edited.
51. Additional
commentary about the measures and targets should be given where possible to aid
public understanding of performance. This particularly relates to the following
measures:
· event days –
now the classification issue is resolved, the targets should increase in future
years
· visitor satisfaction
– targets for the next few years are lower. This should be
explained.
Proposed
shareholder comments for Watercare Services Limited
52. It is
proposed that the following be included in the shareholder comments for
Watercare Services Limited (Watercare) on its draft Statement of Intent
2017-2020.
53. The
introductory statements to the Statement of Intent mention the priority set out
in the Statement of Intent for Watercare to work more collaboratively as part
of the council group. Specific examples, as in the Letter of Expectation,
need to be mentioned.
54. There is
reference to Watercare collaborating at a strategic level. However, the
reference to balancing Watercare’s operational needs should be deleted,
as Watercare’s growth requirements should be aligned with
council’s, not balanced against them. In addition, collaboration
should also be committed to at an operational level, both with council and
other council-controlled organisations.
55. Several
things from the Letter of Expectation have not been addressed and they need to
be. These include:
· a stated commitment
to working on the Housing Infrastructure Fund process
· a commitment to
actively support council’s value for money agenda, particularly in
respect of the Three Waters review and in contributing to a Three Waters
strategy
· reference to out of
sequence urban development and working with council on this issue. This
is crucial for alignment with the Future Urban Land Supply Strategy
(FULSS)
· demand management is
not addressed meaningfully in the Statement of Intent. Watercare’s
planned activities for the year should be discussed, including a nuanced view
of targets (e.g. difference between commercial and residential)
· building on mana
whenua engagement to commit to a Māori responsiveness plan in
2017/2018.
56. As a more
general comment, the ‘enabling growth’ section (which is
effectively the work plan) needs to have a better strategic frame, and more
detail, so readers can see the relative importance of different projects.
In particular:
· the Statement of
Intent should signal the expected completion date for these projects
· projects needed to
service greenfield areas intended to be released in the first decade of the
FULSS should be identified. Although these may not be constructed immediately,
planning will likely need to begin, and given their strategic importance to
achieving council’s growth outcomes, should be mentioned in the Statement
of Intent.
· CANOPY (Central
Auckland Network Optimisation Project) should be mentioned given its importance
to achieving council’s growth outcomes.
57. Given the
recent heavy rain events, additional reference should be made to any work
Watercare is doing or planning to do to enhance climate change
resilience. The work plan should include information about how Watercare
plans to improve its ability to respond to and mitigate such events in
future.
58. In respect of
measures, explanation should be given as to why several targets (e.g. sewerage
overflow response time, complaints, wet-weather overflows) are significantly
above achieved actuals for 2015/2016.
Non-substantive
council-controlled organisations
59. Auckland
Council has a number of other council-controlled organisations which do not
meet the test of being ‘substantive’ CCOs under the Local
Government (Auckland Council) Act 2009. Three of these community-focussed
CCOs are required to provide council with a Statement of Intent (the others are
exempt from this requirement): Mangere Mountain Education Trust;
Contemporary Art Foundation; and Community Education Trust Auckland
(COMET). These are attached (Attachments G-I).
60. An initial
analysis of these documents indicates no major issues, but in the time
available it has not been possible for staff to consult adequately with
relevant local boards. Staff recommend, therefore, that the manager CCO
Governance and External Partnerships is delegated the authority to provide
these three community-focussed CCOs with shareholder comment on behalf of
council, following consultation with the relevant local boards.
61. As well as
receiving council funding, these community-focussed CCOs are reliant on other
revenue sources such as self-generated revenue and grants. The
shareholder comments to these community-focussed CCOs should ask that the final
Statements of Intent:
· contain realistic
estimates of revenue
· that council funding
is consistent with council funding decisions that will be made for the
2017/2018 financial year
· identify which
projects/key performance indicators may be impacted if actual revenue does not
reach the forecasted levels.
Consideration
Local
board views and implications
62. In general
terms, the Governing Body is responsible for providing shareholder comments on
the draft Statements of Intent.
63. However, the
Local Board Services team has contributed feedback in the drafting of this
report, and has paid particular attention to how the CCOs have responded to the
Letters of Expectation requirements in respect of local boards.
Māori
impact statement
64. The
activities of CCOs have potential to impact Māori wellbeing and to
influence the achievement of Auckland Plan and Long-term Plan outcomes relevant
to Māori. The draft Statements of Intent were separately provided to the
Independent Māori
Statutory Board and council’s Te Waka Angamua department.
65. CCO
chief executives are part of the Te Toa Takitini executive leadership group and
are delivering on activities within Te Toa
Takitini’s work programme areas. Progress reports on Te Toa
Takitini activities are provided quarterly to the executive
leadership group, the joint Independent Māori
Statutory Board / Governing Body meeting, and to the Finance
and Performance Committee. Information on Te Toa Takitini activities delivered
by CCOs will also be visible through CCOs’ reporting to the Finance and
Performance Committee.
Implementation
66. Following the
meeting, the approved comments, with appropriate amendments, will be developed
into letters for the mayor’s signature. These will be provided to
the CCOs by 30 April 2017.
67. The final Statements of Intent must align with the 2017/2018 Annual
Plan. Some changes to the final Statements of Intent may be necessary due to
decisions made when the 2017/2018 Annual Plan is approved.
Attachments
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No.
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Title
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Page
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a⇨ 
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Draft ACIL Statement of Intent 2017-2020 (Under
Separate Cover)
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b⇨ 
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Draft ATEED Statement of Intent 2017-2020 (Under
Separate Cover)
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c⇨ 
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Draft Auckland Transport Statement of Intent 2017-2020
(Under Separate Cover)
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d⇨ 
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Draft Panuku Statement of Intent 2017-2020 (Under
Separate Cover)
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e⇨
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Draft RFA Statement of Intent 2017-2020 (Under
Separate Cover)
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f⇨
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Draft Watercare Statement of Intent 2017-2020
(Under Separate Cover)
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g⇨
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Draft Mangere Mountain Education Trust Statement of Intent
2017-2020 (Under Separate Cover)
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h⇨
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Draft Contemporary Art Foundation Statement of Intent
2017-2020 (Under Separate Cover)
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i⇨
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Draft COMET Statement of Intent 2017-2020 (Under
Separate Cover)
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Signatories
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Author
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Edward Siddle - Principal Advisor
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Authorisers
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Alastair Cameron - Manager - CCO Governance &
External Partnerships
Phil Wilson - Governance Director
Stephen Town - Chief Executive
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