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:

Thursday, 21 September 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, CNZM, 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

18 September 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:

o Local Board agreements

o Financial policy related to the LTP and AP

o Setting of rates

o 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

· Exercising Auckland Council’s powers as a shareholder or given under a trust deed, including but not limited to modification of constitutions and/or trust deeds, granting shareholder approval of major transactions where required, exempting CCOs, and approving policies relating to CCO and CO governance

· 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.

Finance and Performance Committee

21 September 2017

ITEM TABLE OF CONTENTS PAGE

1 Apologies 9

2 Declaration of Interest 9

3 Confirmation of Minutes 9

4 Petitions 9

5 Public Input 9

6 Local Board Input 9

7 Extraordinary Business 10

8 Notices of Motion 10

9 Value for Money (s17A) Review Programme 11

10 Consideration of Extraordinary Items

PUBLIC EXCLUDED

11 Procedural Motion to Exclude the Public 41

C1 Council-controlled organisations fourth quarter report for 30 June 2017 41

C2 Auckland Council organisation performance report for the period 1 July 2016 to 30 June 2017 41

C3 Approval of and recommendation for adoption of the 2016/2017 Annual Report and Summary Annual Report for Auckland Council and group 42

C4 2016/2017 budget carry-forward 42

1 Apologies

At the close of the agenda an apology from Cr L Cooper for absence had 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, 19 September 2017, as a true and correct record.

4 Petitions

At the close of the agenda no requests to present petitions had been received.

5 Public Input

Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Governance 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.

At the close of the agenda no requests for public input had been received.

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.

At the close of the agenda no requests for local board input had been received.

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

There were no notices of motion.

Finance and Performance Committee

21 September 2017

Value for Money (s17A) Review Programme

File No.: CP2017/19444

Purpose

1. To consider and approve:

a. Two new services to be reviewed and the associated terms of reference for the s17A Value for Money programme.

b. Delegation to be given to the Chair and Deputy Chair of the Finance and Performance Committee as to the future reviews of services and their Terms of Reference.

Executive summary

2. Over the next 10 years the Auckland Council group is seeking to spend over $60 billion and continue the drive for efficiency savings. This plan is to be achieved against a backdrop in Auckland of rapid population growth, increased demand in public services including associated infrastructure investment and a requirement to maintain service levels within an environment of continuing budget constraints.

3. Given this background, the Finance and Performance Committee has resolved as part of its mandate to approve a programme of value for money reviews, as required under section 17A of the Local Government Act 2002 (LGA02). The programme of value for money reviews is sponsored by the Group Chief Financial Officer, as Lead Office reporting to the Finance and Performance Committee.

4. The programme has developed a framework to evaluate expenditure and to provide greater accountability to the Governing Body and the ratepayer on what is being achieved with public expenditure. The objective of the programme is to analyse cost effectiveness in a systematic manner across the Auckland Council group and to provide a basis on which more informed decisions can be made on long term planning priorities.

Recommendation/s

That the Finance and Performance Committee:

a) approve the selected services and the proposed Terms of Reference for the Value for Money (s17A) reviews of Group Procurement and the Parks and Open Spaces Service Management.

b) delegate to the Chair and Deputy Chair of the Finance and Performance Committee authority to approve the services for future reviews as well as the associated terms of reference in consultation with the members of the Value for Money programme’s political oversight group.

Comments

Background

5. Section 17A requires that Auckland Council must review the cost effectiveness of current arrangements for meeting the needs of communities within its district or region for good-quality local infrastructure, local public services, and performance of regulatory functions^{^[1]}.

6. The legislation states that a review should consider three elements: how a service is governed, how it is funded and how it is delivered for the provision of local public services, local infrastructure services and regulatory functions delivered by Auckland Council.

7. The transition provisions (Schedule 1AA of the LGA02) in relation to s17A require that the first reviews need to be completed by August 2017^{^[2]}. After that, s17A requires that reviews are conducted every six years, or when:

a) Council is considering a significant change to relevant service levels.

b) A Council contract or binding agreement in relation to delivery of infrastructure, service or regulatory function is expiring within the next two years^{^[3]}.

Approach

8. The s17A reviews have introduced a framework to evaluate expenditure and to provide greater accountability to the governing body and the ratepayer on what is being achieved with public expenditure. The objectives of the reviews are to analyse cost effectiveness in a systematic manner and to provide a basis on which more informed decisions can be made on long term planning priorities.

a) Significantly contribute to council’s effective and efficient management of urban development and the provision of urban infrastructure.

b) Address major public policy issues including the integration of governance, funding and service delivery options.

c) Can be completed in time to inform the next two Long Term Plans.

9. Each review is testing whether resource allocation is well aligned to strategy and whether Council is operating efficiently and effectively. Developing an understanding of these matters forms the general objective of each review. The evaluation framework for each review would consider the following value for money including Section 17A criteria illustrated below.

10. Four reviews have been approved (Three Waters, Domestic Waste, Communications & Engagement and Investor Attraction and Global Partnerships). These reviews are near completion for submission to the Finance and Performance Committee on 24 October 2017.

11. Two new large reviews are proposed: These are:

d) Group Procurement (comprising procurement services across the Auckland Council group being parent plus CCOs including Auckland Transport and Watercare). This review is expected to take three months to complete.

e) Parks and Open Spaces Service Management (comprising the management of the LTP activities of regional and local parks and open spaces) including sports fields, walkways, cycle ways within those reserves and open spaces. The review scope excludes management of cemeteries and community facilities such as aquatic, leisure centres and library services all of which will be subject to a separate review of community facility services. This review is expected to take three months to complete.

12. The terms of reference including objectives and lines of inquiry for each review are attached in the Appendix to this report.

Consideration

Local board views and implications

13. The views of local boards have not been sought in relation to this advice. Feedback on the review programme will be sought from the Local Board Chairs throughout the review process.

Māori impact statement

14. If approved, matters of relevance to Māori will be considered in the evaluation work for each review. To assist with this, a Te Ao Māori advisor has been appointed to this programme of work.

Implementation

15. Finance is overseeing the programme with the Group Chief Financial Officer as Sponsor and Lead Officer reporting to the Finance and Performance Committee.

16. The key milestones for the two new reviews are show in Table 1.

Table 1: Key Programme Milestones

Milestone	Due Date
Terms of reference approved	19 September 2017
Current state assessment	20 October 2017
Options Assessment	17 November 2017
Findings & recommendations	8 December 2017
Final Report	20 January 2017

Attachments

No.	Title	Page
a ⇩	Terms of Reference Value for Money Review (s17A): Parks and Open Spaces Service Management	15
b ⇩	Terms of Reference Value for Money Review (s17A): Group Procurement	27

Signatories

Author

Sally Garrett – Programme Manager, Value for Money

Authorisers

Kevin Ramsay - General Manager Corporate Finance and Property

Sue Tindal - Group Chief Financial Officer

Finance and Performance Committee

21 September 2017

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

That the Finance and Performance Committee:

a) exclude the public from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

C1 Council-controlled organisations fourth quarter report for 30 June 2017

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution