Agenda of Appointments, Performance Review and Value for Money Committee

Terms of Reference

Responsibilities

The Council Appointments, Performance Review and Value for Money Committee is established to:

1. Review the chief executive’s performance and to recommend to the Governing Body the terms and conditions of the CE’s employment including any performance agreement measures and annual remuneration

2. Make appointments to Council-Controlled Organisations (CCOs), Council Organisations (COs) and exempt CCOs and COs

3. Approve policies relating to the appointment of directors and trustees to CCOs and COs.

4. Monitor and report to the Governing Body on the implementation of service delivery reviews required under s17A of the Local Government Act 2002, and the recommendations arising from those reviews

5. Approve the scheduling of the forward s17A work programme, and recommend to the Governing Body the terms of reference for individual reviews

6. Request reports on Auckland Council parent and CCO value for money, savings and effectiveness-focused initiatives that are beyond the scope of s17A reviews, and make recommendations on these reports to the Governing Body.

Powers

All powers necessary to perform the committee’s responsibilities.

Except:

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

(b) where the committee’s responsibility is limited to making a recommendation only

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

At the close of the agenda no apologies 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 Appointments, Performance Review and Value for Money Committee:

a) confirm the ordinary minutes of its meeting, held on Thursday, 3 May 2018, including the confidential section, 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.

Appointments, Performance Review and Value for Money Committee

07 June 2018

Value for Money (s17A) Review programme

File No.: CP2018/05879

Te take mō te pūrongo / Purpose of the report

1. To provide an overview of the findings and recommendations contained in two completed value for money (s17A) review reports:

· Parks and Open Spaces

· Group Procurement.

2. To seek endorsement for the two completed reports (contained in Attachment A and Attachment B), to be recommended to the Governing Body for approval.

Whakarāpopototanga matua / Executive summary

3. In March 2017 (resolution number FIN/2017/23) the Finance and Performance Committee endorsed a value for money programme for the Auckland Council Group (the group) and subsequently in September 2017 (resolution number FIN/2017/128) approved the terms of reference for the parks and open spaces and group procurement reviews.

4. Each review is the first step in identifying the key strategic opportunities to improve value for money. The recommendations contained in each report are at a conceptual stage. They require management review and detailed investigation, including feasibility studies, business case development and consultation on potential plans, options, process changes and associated decisions.

5. The Long-term Plan 2018-2028 (LTP) for parks and open spaces allocates $4.2 billion in operating costs for this area and $1.9 billion in capital costs over the next ten years. The parks and open spaces review generally found a clear strategy and policy to support the council’s expenditure, its role, objectives and standards.

6. Most park users are satisfied with their park visits and the majority are satisfied with parks provisioning. Comparisons with other New Zealand cities suggest Auckland is comparatively well-provisioned with parks for its population.

7. The key challenge is to accommodate population growth which makes it difficult to meet changing community expectations and to protect the natural environment.

8. Park land which does not meet the requirements of the Parks Provision Policy (in terms of function, configuration, or location) is currently identified and marked for disposal on an ad-hoc basis. It is then subject to individual consultations with the local boards and their communities. While the policy is robust the application of the policy and the overall disposal process is cumbersome and lacks wide public consultation.

9. The LTP includes a target for divestment of non-service assets. To help meet this target, a plan should be developed. This should be extensively consulted on as part of the LTP and the Annual Budget. The divestment process should be improved with clear accountability for implementation.

10. The review of group procurement services shows that the group spends $2.9 billion annually with suppliers with a significant level of commonality for the top thirty suppliers across the group. Compared to benchmarks procurement is cost-efficient. Given the scale and complexity of the future long-term plan capital programme, the level of investment in procurement capability should be monitored

11. The review noted that all council organisations have approved the Group Procurement Policy (September 2017) but this has yet to result in the development of a group procurement strategy or changes in the way procurement is undertaken across the group. Procurement functions are currently operated separately across the group. Each entity in the group operates largely independently in managing suppliers, with an emphasis on meeting each entity’s own needs. This means that entities can be in the market at the same time for the same products which increases cost.

12. Significant value will be delivered from improving procurement across the group so that scale can be leveraged with key suppliers and duplication eliminated. Progress has been made with the informal collaborative model for group activities but value for money will be achieved with more formality around group procurement strategy and in setting ambitious hard savings targets and tracking performance given the financial pressure facing the group.

13. Some procurement functions are best kept close to the business. Activities like procurement template maintenance spend analysis, procurement improvement programmes, learning and development, supplier management and procurement systems are happening in each entity and could be done once for the group.

Ngā tūtohunga / Recommendation/s

That the Appointments, Performance Review and Value for Money Committee:

a) receive the Parks and Open Spaces and Group Procurement Value for Money (s17A) Review 2018 reports.

b) endorse the recommendations contained in the two reports and recommend that the Governing Body approve the reports and their recommendations

c) require that local boards are consulted in the development of the divestment plan noted in the Parks and Open Spaces review.

Horopaki / Context

Background

14. In March 2017 (resolution number FIN/2017/23) the Finance and Performance Committee endorsed a value for money programme for the Auckland Council Group and subsequently in September 2017 (resolution number FIN/2017/128) approved the terms of reference for the parks and open spaces and group procurement reviews.

15. In March 2018 (resolution number GB/2018/57) the Governing Body approved the terms of reference for the Appointments, Performance Review and Value for Money (APRVFM) Committee. This incorporated the oversight for the value for money (s17A) programme.

16. The two reports (Attachment A and Attachment B) are the latest outputs from the value for money programme, which delivers on the requirement, in s17A of the Local Government Act 2002, to review the cost-effectiveness (or value) of current arrangements for delivering local infrastructure, local public services and regulatory functions.

17. Each review is the first step in identifying the key strategic opportunities to improve value for money. The recommendations contained in each report are at a conceptual stage. They require management review and detailed investigation, including feasibility studies, business case development and consultation on potential plans, options, process changes and associated decisions.

Review process

18. The value for money review takes a now well-established strategic and evidence-based approach to the review. It draws on published reports, council data, interviews with management and CCOs, and the input of subject matter experts engaged for each review. Each report contains an overview of the review methodology.

19. The reports were scrutinised by the Independent Review Panel, and council management and CCOs were consulted as part of the review, leading to these two reports.

Tātaritanga me ngā tohutohu / Analysis and advice

Key findings of the parks and open spaces review

20. The parks and open spaces review found a clear strategy and policy to support the council’s provision of parks and open spaces. The LTP has allocated $4.2 billion in operating costs and $1.9 billion in capital costs over the next ten years.

21. Most park users are satisfied with their park visit and a majority are satisfied with parks provisioning. Comparisons with other New Zealand cities suggest Auckland is comparatively well-provisioned with parks for its population.

22. The key challenge is to accommodate population growth. Given growing demand on space, council needs to be clear if land allocated to parks is used to best community effect. The review’s recommendations are to give greater clarity.

23. A key finding is that the divestment process should be improved. Park land which does not meet the requirements of the Parks Provision Policy (in terms of function, configuration, or location) is currently identified and marked for disposal on an ad-hoc basis. It is then subject to individual consultations with the local boards and their communities. While the policy is robust, the application of the policy and the overall disposal process is cumbersome and lacks wide public consultation.

24. The review recommends that the LTP target for the divestment of non-service assets needs to come with a supporting plan. This should be extensively consulted on as part of the LTP and the Annual Budget and have clear accountability for implementation. Being part of the LTP consultation enables a broader and more transparent discussion with the community on the choices. An improved process is expected to result in a cash flow benefit of between $200-600 million over a ten-year period, net of proceeds already budgeted for and an allowance for replacement acquisitions.

Key findings of the group procurement review

25. The group procurement review found the group spends $2.9 billion annually with suppliers. There is a significant level of commonality of the top thirty suppliers across the group. Compared to benchmarks, procurement is cost-efficient.

26. A key finding is that, while all council organisations have approved the Group Procurement Policy (September 2017), this has yet to result in substantial changes in the way procurement is undertaken across the group. Procurement functions are currently operated separately across the group, with an emphasis on meeting each entity’s own needs.

27. The review identifies a $140 million incremental procurement benefit over the next 10 years from improving procurement across the group, so that scale can be leveraged with key suppliers and duplication eliminated. While progress has been made with the informal collaborative model for group activities, value for money will be achieved with more formality, including a group procurement strategy, setting ambitious hard-savings targets, and tracking and reporting against performance, given the financial pressure facing the group.

28. Some procurement functions are best kept close to the business. But activities like procurement template maintenance, spend analysis, procurement improvement programmes, learning and development, supplier management and procurement systems could be done once for the group, rather than duplicated.

Key Value Opportunities

29. The two reviews set out a number of focused recommendations aimed at addressing systems, processes and accountabilities to enable improvements over time. These are set out in the attached review reports.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

30. The Governing Body holds the budgets for acquisition of parks and open spaces and divestment decision rights. However local boards hold the budgets for asset improvement arising from regional policy and have a significant interest on behalf of their communities in the parks and open spaces service area.

31. A briefing on the findings from the parks and open spaces review was held with the local board chairs in April 2018 as a key party in the processes associated with the service delivery of parks and open space services.

32. The chairs were generally supportive of the findings in respect to improving public consultation, strengthening visibility of the divestment plans for surplus land not meeting provisioning policy and streamlining the associated divestment process including simplifying accountabilities.

33. Assuming acceptance of the reports it is recommended that engagement with the local boards be deepened as the recommendations of direct relevance to the local boards are designed and implemented and that formal feedback be sought from local boards prior to the adoption of any plan or associated process.

Tauākī whakaaweawe Māori / Māori impact statement

34. The Auckland Plan seeks to enable and support mana whenua and mataawaka aspirations in recognising Te Tiriti o Waitangi/The Treaty of Waitangi.

35. The parks and open spaces review in particular recognises that Māori have an active and specific role in Auckland’s open spaces, including the maunga (volcanic cones), wahapu (harbour), motu (islands) and kaitiakitanga (guardianship) of our land and marine resources. Land has a specific role in protecting, enabling and building Māori social and cultural capital.

36. Marae, kohanga reo, and other Māori entities have been established on reserve status land, offering spiritual, cultural, as well as a range of social, educational, health and justice services, and providing a cultural base for urban Māori (taura here).

37. Any review of funding or other arrangements or any analysis on use arising from the two reports must accommodate the perspective and needs of Māori and the impact on Māori of any policy, plans or processes including formal feedback be sought from Māori prior to the adoption of any plan or associated process.

Ngā ritenga ā-pūtea / Financial implications

38. Any financial implications arising from the implementation of these review reports will be determined when implementation plans are developed and reported back to this committee. Any resourcing or budget requirements will be requested through the Finance and Performance Committee.

Ngā raru tūpono / Risks

39. The primary risks arising from these recommendations are regarding the implementation. Reputational risk may result if the recommendations within the report are not followed up on. Financial risks may arise should the proposed actions require large levels of resourcing and budget. Both will be addressed through implementation plans and where required business plans.

Ngā koringa ā-muri / Next steps

40. Should the report and their recommendations be endorsed then the next step will be for the reports to be tabled with the Governing Body for adoption.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Parks and Open Spaces Value for Money (s17A) Review 2018	37
b ⇩	Group Procurement Value for Money (s17A) Review 2018	115

Ngā kaihaina / Signatories

Author

Sally Garrett – Programme Manager

Authorisers

Kevin Ramsay - General Manager Corporate Finance and Property

Matthew Walker - Acting Group Chief Financial Officer

Phil Wilson - Governance Director

Appointments, Performance Review and Value for Money Committee

07 June 2018

Case Study on

Chamberlain Park removed – judicial review proceedings in high court.

Appointments, Performance Review and Value for Money Committee

07 June 2018

Appointments, Performance Review and Value for Money Committee

07 June 2018

Board Performance Review Framework

File No.: CP2018/07518

Te take mō te pūrongo / Purpose of the report

1. To approve the development and pilot of a board performance review framework for council’s substantive council-controlled organisations (CCOs).

Whakarāpopototanga matua / Executive summary

2. The Governing Body at its 23 February 2017 meeting approved (GB/2017/17) the recommended programme of work to improve the strategic alignment, accountability and responsiveness of CCOs. This included considering the best way of assessing and assuring the performance of the CCO boards, including a shareholder-led independent CCO board performance review.

3. Board performance reviews can be a constructive mechanism for improving board effectiveness, maximising strengths, and identifying and addressing gaps and issues. Staff have reviewed best practice for board evaluations, reviewed current CCO board practices, developed a draft board performance framework and analysed four options for implementing the framework.

4. The review found that all boards were undertaking board performance reviews but that the objectives for these reviews, the methodology adopted, the reporting and monitoring of performance improvements all differed. Initial feedback from CCOs found support for developing a framework to help guide CCOs in their board performance reviews.

5. With three new chairs being appointed to CCOs this year, there is an opportunity to embed a culture of improvement. It is recommended that the draft board performance review framework is further refined with CCOs. The chair of the Auckland Transport board has indicated that they are due to commence a review within the next few months and would be keen to work with the council to develop and pilot the framework.

6. All CCO board directors will be made aware of the approach being developed and what will be involved. It is recommended that an information paper is provided to CCO boards.

Ngā tūtohunga / Recommendation/s

That the Appointments, Performance Review and Value for Money Committee:

a) approve the development of a board performance review framework

b) approve, in principle, the following elements of a board performance review framework, those being that the reviews:

i) be held on a biennial basis, with monitoring of agreed performance improvement initiatives

ii) be undertaken by an independent, external reviewer

iii) be based on a methodology that includes qualitative, quantitative and observational approaches

iv) include relevant assessment criteria that relate to the board’s governance role, practices and responsibilities, including strategy, risk and compliance, performance and board culture

v) assess the board as-a-whole, the individual board members and the chair of the board

vi) seek feedback from senior management as well as individual board members

vii) allow for input from the shareholder into the themes or topic areas evaluated

viii) provide a written report to the CCO board summarising findings and suggesting areas for improvement

ix) provide council with a high‑level feedback report addressing theme areas and areas of focus for improvement

c) approve that the board performance review process will be board-led

d) approve that the chairs of the CCO boards be required on at least an annual basis to discuss with the mayor, the relevant chair of the committee and the manager, CCO governance and external partnerships, the progress the board is making in addressing any areas of improvements

e) agree that the substantive CCO boards are provided with an information report on the proposed framework for feedback

f) agree that the Appointments, Performance Review and Value for Money Committee agree to workshop the shareholder questions to be included in board performance reviews

g) agree that the recommended board performance review framework is piloted with Auckland Transport in 2018

h) agree that the board performance review framework is included in the Governance Manual for substantive CCOs.

Horopaki / Context

7. At its 1 February 2017 meeting the Appointments and Performance Review Committee recommended (APP/2017/4) to the Governing Body a programme of work to improve the strategic alignment, accountability and responsiveness of CCOs. The objectives of the review are to:

1. increase the transparency of council-controlled organisation decision‑making

2. increase the responsiveness of council‑controlled organisations to the public and council

3. improve the recognition of ratepayer funding for council‑controlled organisation activity

4. increase the ability to align council‑controlled organisations to the direction set by the council

8. The Governing Body at its 23 February 2017 meeting approved (GB/2017/17) the recommended work programme. The programme includes a work-stream that assessed current board performance reviews, including considering the benefits of a shareholder-led independent CCO board performance review.

9. The Governance Manual for substantive CCOs, due to be updated later this year, currently states that:

‘A board-led review of board performance is to be undertaken at least once every triennium. The board chair will advise the CCO Governance and Monitoring Committee that the review has been completed and discuss any areas of concern with that committee’ (page 18).

10. Board performance reviews can be a constructive mechanism for improving board performance. Well conducted board evaluations can help establish the individual and collective responsibilities of directors and identify where directors need to enhance their performance. Corporate governance guidelines, that set out principles of good corporate governance, are becoming more common and typically recommend that boards regularly undertake rigorous reviews of the performance of the board as a whole, individual directors and committees of the board.

11. In terms of improving accountability, a board evaluation can help focus the board’s attention on its duties to its shareholder and stakeholders to and being responsive to them.

12. There is an opportunity with three new chairs being appointed to the Auckland Tourism, Events and Economic Development Limited, Regional Facilities Auckland and Panuku Development Auckland Limited boards this year to embed a culture of improvement and to create a benchmark for each CCOs board performance, from which they can work to improve.

Tātaritanga me ngā tohutohu / Analysis and advice

13. In undertaking the analysis, consideration has been given to:

· whether a board performance review framework is needed to provide stronger guidance to CCOs on conducting board reviews

· the proposed content of a board performance review framework

· who would lead board performance reviews.

Need for a board performance review framework

14. A workshop was held in April with the CCOs’ board secretaries to inform CCOs of the review, and to:

· collect information on current practices

· identify what is working well

· identify areas for improvement

· determine support for the development of a board review framework to guide future reviews.

15. After the workshop, follow up conversations were also held with the chair of Auckland Transport and the board secretaries. The views collected do not represent formal feedback from the CCO boards.

16. The review of current practice, identified that all CCOs recognised the value in board performance reviews and were undertaking reviews. However, there are differences in frequency, methodology, documenting and reporting on reviews, as well as monitoring and follow up.

17. In general, CCO staff spoken to were supportive of the development of board performance review framework, where the purpose of the reviews was made clear and with the aim of creating a continuous culture of improvement.

18. Some concerns were expressed around the need for sensitivity around the disclosure of performance material and the impact this could have on board buy-in.

19. Those spoken to felt that to ensure transparent and productive outcomes, independent reviewer(s), rather than in-house, should be considered.

What is the purpose and proposed framework methodology

20. The overall purpose of a board performance review framework for Auckland’s substantive CCOs is to guide and focus CCO board reviews to achieve better outcomes for all of Auckland, and to create a culture of improvement.

21. The proposed framework would provide guidance to CCOs on:

· the methodology of the reviews, including how and when the performance reviews should be undertaken

· what the performance reviews should address

· the feedback process for reporting back to the board(s) and the council.

22. The expected benefits of developing a framework are to:

· align and standardise the purpose and goals of board evaluations and reviews

· create a more coordinated, transparent appraisal process

· ensure the quality and frequency of board reviews by:

- identifying opportunities for the board as-a-whole and individual board members to improve governance performance over time

- reviewing the effectiveness of the board’s strategic thinking and decision-making

- identifying areas for improvement, which are followed up on

- reviewing board and committee composition and assessing the balance of skills, knowledge and experience on the board

· assist in the appointment and reappointment of directors

· provide an opportunity for the shareholder to assess how well the boards understand shareholder expectations and goals.

What is the proposed methodology

23. The most commonly referenced elements of successful board performance reviews are set out in the table below.

Table 1: Key elements of a successful board performance review

Element	Description
1. A clear purpose and objectives	Being clear about the purpose of a review and what it is intended to achieve. The benefit of this clarity is that it: · ensures that the review is more likely to deliver tangible outcomes and benefits · sets the framework for the scope of the review and approach or methodology; ensuring that the review is tailored to meet objectives
2. Buy‑in and commitment from the board	Buy‑in and commitment from individual directors and the board as-a-whole to the review purpose, scope, process and to implementing the findings of the review is critical. Board reviews that are motivated by compliance are unlikely to produce the kind of insights that drive real change. Anonymity is essential.
3. Assessment against agreed objective criteria	Board performance reviews should relate to the board’s governance role, responsibilities, sphere of influence and should be customised or tailored to reflect the context and nature of the company. For example, its objectives, corporate structure, the stage of the company’s lifecycle, legislative and regulatory frameworks and governance context. Commonly assessed areas of board effectiveness include: · strategy and direction setting · monitoring, oversight and reporting · risk management and internal controls · board dynamics, leadership and culture · board composition, skills, knowledge and expertise · governance processes, including committee structures, board agendas and minutes, quality of reports, frequency of board meetings, etc
4. Follow up	The review process should identify and formulate action items to address opportunities and areas for improvement that emerge from the review.

24. In line with best practice, the reviews should embrace an inclusive approach by collecting information from a broader sample of key stakeholders, including senior management and the company secretary, as well as shareholders.

25. The methodology of board performance reviews should include a combination of techniques, such as:

· performance survey(s) - questionnaires can be tailored to specific types of organisation, are simple to set up, easy to use and impartial

· interviews with directors and management

· board meeting observation

· board papers and agenda reviews.

26. Given the potential sensitivities in undertaking the reviews and to ensure transparency and objectivity, it is recommended that a comprehensive review is undertaken by an external party(s).

27. External board-led board performance reviews should be held on a biennial basis to provide a basis for improvement.

What the board performance review should address

28. At a minimum, the review should consider:

· the key functions of the board and whether these functions are being properly performed (refer table 1, element 3 for function criteria)

· the key objectives of the shareholder and board, and where these objectives are being achieved

· room for improvement in the board’s administrative and operating arrangements (governance processes, including committee structure, board agendas and minutes)

· board skills and expertise

29. The board and the shareholder need to agree any specific issues the shareholder is interested in. For example, the council might want to consider the inclusion of questions that relate to the core principles of governance as outlined in the Governance Manual for substantive CCOs, e.g.

· leadership

· valuing Te Ao Māori

· ensuring value for money for all Aucklanders

· accountability and collaboration

· adherence to the Statement of Intent

· knowledge of the council’s strategic direction.

30. It is recommended the Appointments, Performance Review and Value for Money Committee have a workshop to finalise the questions they wish to include in any CCO board performance review.

How should board performance reviews feedback be provided

31. The reviewer(s) should:

· provide a high-level performance report to the board that does not compromise the anonymity of the information collected

· provide the board chairs with the full results of the evaluations

· provide each director on the board with their full results

· undertake facilitated discussions on findings with the board.

32. The board chair should:

· have a formal post-evaluation meeting with mayor, the relevant committee chair and the manager of the CCO governance and external partnerships department to share insights on board performance, key considerations for the future board composition, and to help the shareholder support board development

· following feedback and input from the CCO board, provide council with a high‑level feedback report on key findings at a thematic level, overall board performance and key focus areas for ongoing development.

Who would lead board performance reviews?

33. Four options have been considered to undertake the proposed board performance reviews. These are summarised in the table below:

Table 2: Summary of board performance implementation options

Option	Description
1. Status quo	A board-led review is taken at least once every triennium, with the board chair informing the committee that review has been completed and discussing any areas of importance.
2. Board-led performance review with input from the shareholder (recommended option)	Performance reviews continue to be board‑led but council provides increased direction to boards on expectations through the proposed board performance framework.
3. Shareholder-led internal review of board performance	Council staff lead review of board performance by applying the proposed board performance framework and using internal resources.
4. Shareholder‑led external reviews of board performance	Council contracts an independent external party or parties to undertake a review of the performance of the board of each substantive CCO; according to a planned review schedule and the proposed framework.

34. These options were assessed against criteria selected to reflect the accountability review objectives, best practise and cost to council and CCOs. Table 3 provides a summary of the assessment (refer Attachment One for detailed analysis of options).

Table 3: Summary of option assessment

Options	Trans-parency	Board buy-in and commitment	Assessment against agreed criteria/Focus areas	Ability for Shareholder input -	Cost / Resource to CCO	Cost / Resource to Council
1. Status Quo
2. Board-led perf. review with increased input from council
3. Shareholder-led internal review
4. Shareholder-led external review

Key: Green = positive outcome, yellow = neutral, red = negative outcome

35. Based on the above analysis, option two is the recommended option.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

36. Board performance matters for region-wide entities are the role of the Governing Body. Therefore, the views of local boards have not been sought.

Tauākī whakaaweawe Māori / Māori impact statement

37. The operation of CCOs has been noted by the previous Independent Māori Statutory Board as lacking transparency and not fully cognisant of the needs of Māori. The recommendations made in this report do not directly impact on the way in which CCOs aim to deliver outcomes for Māori, they do seek to improve:

· the ability to align CCOs to the direction set by council

· transparency and accountability of the appointment of board members of council organisations.

38. Council could require CCO boards, through their performance reviews, to consider what actions they are taking to demonstrate how they value Te Ao Māori and are helping to achieve outcomes for Māori in line with council policies. These issues should be considered when council determines what topics it requires CCOs to consider as part of their board reviews.

Ngā ritenga ā-pūtea / Financial implications

39. CCOs should be budgeting for board performance reviews in their programmed work. For some CCOs the proposed approach to contract an external reviewer may have a higher cost than what is currently budgeted. It is estimated that the cost of the proposed approach should be approximately $30,000 per CCO every two years.

Ngā raru tūpono / Risks

40. The key risks associated with this report are gaining CCO board agreement and buy-in to the proposed board performance review framework and its implementation. CCO boards may also feel that the extra cost and extra time involved with board reviews do not outweigh the benefits. Staff will work with board chairs to mitigate this.

41. There is also a risk that if the framework becomes too prescriptive there is a danger that the differences in size, context and function of the CCO boards is lost resulting in CCO boards believing they are being unfairly judged and compared to other CCOs. The piloting of the framework with Auckland Transport will help determine the cost and benefit of the proposed framework.

42. There is a risk that while CCO boards agree with the concept of board performance reviews and continuous improvement, they are sensitive to the results of such reviews being made available outside of their organisations. Without the visibility of the results, the council does not currently have any objective assessment of how boards are performing. This risk is mitigated by seeking a high-level performance report to the board, mayor and manager, CCO governance and external partnerships that does not compromise the confidentiality of the information collected.

Ngā koringa ā-muri / Next steps

43. Staff will produce an information report for CCO boards and work with the chair of Auckland Transport to pilot the recommended framework.

44. The Appointments, Performance Review and Value for Money Committee workshop the shareholder questions/themes to be included in board performance reviews.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Board Performance Review Option Analysis	199

Ngā kaihaina / Signatories

Author

Claire Gomas - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Chairperson	Hon Phil Goff, CNZM, JP
Deputy Chairperson	Hon Christine Fletcher, QSO
Members	Cr Josephine Bartley
	Cr Ross Clow
	Cr Chris Darby
	Cr Richard Hills
	Cr Penny Hulse
	Cr Desley Simpson, JP

Ex-officio	Deputy Mayor Bill Cashmore
	IMSB Chair David Taipari