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, 14 February 2019, 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.”
|
Appointments,
Performance Review and Value for Money Committee
07 March 2019
|
|
Value
for Money (s17A) Review Programme
File No.: CP2019/01491
Te take mō te
pūrongo
Purpose of the report
1. To approve the terms of reference for the value for money review for
Human Resource Management Services so that they can be recommended to the
Governing Body for final approval.
Whakarāpopototanga matua
Executive summary
2. At its 22 March 2018 (GB/2018/57) meeting 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 review programme under section 17A of the Local
Government Act 2002.
3. This report is seeking approval from the APRVFM Committee for the
next scheduled review being Human Resource Management Services. This follows nine previously approved reviews which
have been completed or are underway.
4. This
review is proposed as it builds on previous review work that comprised the
organisational support budget groupings in the long-term plan including:
· information,
communications and technology
· group
procurement
· customer
services
· communications
and engagement
· group
financial services
· legal
and risk.
5. Organisational support represents group budgeted expenditure over
the 2018/2019 year of $534 million in operating expenditure and $60 million in
capital expenditure.
|
Ngā tūtohunga
Recommendation/s
That the Appointments,
Performance Review and Value for Money Committee:
a) agree
to recommend to the Governing Body that they approve the terms of reference
for the Human Resource Management Services review.
|
Horopaki
Context
6. The value for money (S17A) programme’s aim is to ensure
council services continue to best meet Auckland's needs for good-quality
infrastructure, local public services and performance of regulatory functions
into the future.
Tātaritanga me ngā
tohutohu
Analysis and advice
Previous decisions:
|
Date
|
Committee
|
Recommendation Number
|
Decision
|
|
21 March 2017
|
Finance and Performance
|
FIN/2017/23
|
endorsed a value for money
programme for the council group and approved the initial four terms of reference
|
|
22 March 2018
|
Governing Body
|
GB/2018/57
|
approved oversight for the
value for money (S17A) programme be moved to the Appointments, Performance
Review and Value for Money (APRVFM) Committee
|
7. This
report is seeking approval from this committee to recommend to the Governing
Body the terms of reference for the Human Resource Management Services review
(refer to Attachment A).
8. The proposed scope of
the Human Resource Management Services review includes:
· human
resource management including policy development, workforce planning, talent
management, performance management and the employee’s separation from the
organisation including resignation, retirement or redundancy
· employee
remuneration and payroll and benefits administration
· employee
relations including employment contracts and union relations, working
environment, health and safety, conflict management, quality of work life,
employee wellness and assistance programs, counselling for occupational stress
· recruitment
and selection
· training and development.
9. In
proposing this review, there is an opportunity to assist the group
shared-services work which is underway. This involves identifying
operational opportunities across the group and removing duplication. The
work is being undertaken with sponsorship from the Auckland Council Group chief
financial officers. This value for money review will complement the
development of shared-services work by reviewing areas of significant group
expenditure with high levels of commonality and potential duplication.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
10. The scope of
the review covers Auckland Council Group being Auckland Council, Auckland
Transport, ATEED, Panuku, Regional Facilities Auckland and Watercare.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
11. The views of
local boards have not been sought in
relation to this report. If the recommendations arising from the review has an
impact on local boards engagement will take place.
Tauākī whakaaweawe
Māori
Māori impact statement
12. The programme and the review’s recommendations
are potentially beneficial to Māori. The Independent Māori
Statutory Board has been engaged on the programme’s terms of reference
and timetable. Reports and recommendations are reviewed and consulted on
with an independent Te Ao Māori adviser. If recommendations within
individual value for money reports are approved, engagement with Māori on
the relevant recommendations will occur throughout the implementation process.
Ngā ritenga
ā-pūtea
Financial implications
13. There are no direct financial implications beyond
the cost of the review, which is budgeted for.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
14. No risks have been identified. The review
itself will contain a risk assessment.
Ngā koringa ā-muri
Next steps
15. The resulting approved review report will be
handed over to the Auckland Council Chief Executive to implement.
Ngā tāpirihanga
Attachments
|
No.
|
Title
|
Page
|
|
a⇩ 
|
Terms of Reference Group Human Resource Management
Services Value for Money (s17A) Review
|
11
|
Ngā kaihaina
Signatories
|
Author
|
Ross Chirnside - Programme Lead VFM
|
|
Authorisers
|
Kevin Ramsay - General Manager Corporate Finance and
Property
Matthew Walker - Group Chief Financial Officer
Phil Wilson - Governance Director
|
|
Appointments,
Performance Review and Value for Money Committee
07 March 2019
|
|
Auckland Council progress on savings up
to 31 December 2018
File No.: CP2019/01696
Te take mō te
pūrongo
Purpose of the report
1. To
provide the Appointments, Performance Review and Value for Money Committee an
update on the progress towards meeting the 10-year Budget 2018-2028 (LTP)
operating budget savings target for Auckland Council.
Whakarāpopototanga matua
Executive summary
2. The
LTP includes a $62 million savings target over the first three years for
Auckland Council. The target for financial year 2018/2019 is $23 million.
3. A
centralised process for identifying, measuring and reporting on savings to
improve transparency on the achievement of the savings target within the LTP
has been developed.
4. This
approach captures benefits across six key workstreams, being:
· procurement
– reducing contract spend with third parties
through negotiating better terms for the council
· organisational
design – implementing structures that remove duplication and leverage
capability and capacity more efficiently
· technology
– leveraging existing investments for better outcomes or implementing new
tools that create efficiencies such as automation
· increasing
non-rates revenue – identifying new or growing existing revenue streams
· prudent
financial management – a strong focus on costs through a culture of
questioning and challenging all expenditure, managing spend against budgets and
applying controls around activities such as travel and recruitment
· Value for Money – capturing benefits that have been identified
through the Value for Money reviews.
5. Up
to 31 December 2018 $13.5 million of savings have been realised, leaving a
balance of $9.5 million to be achieved for the remainder of the year.
6. The
majority of the savings has been met through a strong focus on prudent
financial management ($8.5 million), with the rest spread across the other
workstreams.
7. On
top of the $23 million, a further $7 million cost increase will be met through
strong financial management within Infrastructure and Environmental Services.
The additional cost is driven primarily by increased recycling and insurance
costs.
|
Ngā tūtohunga
Recommendation/s
That the Appointments,
Performance Review and Value for Money Committee:
a) receive
the Auckland Council progress report on savings up to 31 December 2018.
|
Horopaki
Context
8. A
savings target has been included in the LTP after considering the level of the expenditure
required to provide council services and the level of rates we collect. This
considers changes to operating budgets impacted by items such as growth,
interest and inflation, the levels of external revenue, political decisions and
the overall affordability of rates increases.
9. The
savings target is set at a level to provide enough focus on efficiencies
without detriment to agreed service levels or health and safety.
10. There
are many levers that can be used to deliver savings and efficiencies including:
· procurement
– reducing contract spend with third parties through negotiating better
terms for the council
· organisational design – implementing structures that remove
duplication and leverage capability and capacity more efficiently
· technology
– leveraging existing investments for better outcomes or implementing new
tools that create efficiencies such as automation
· increasing
non-rates revenue– identifying
new or growing existing revenue streams
· prudent
financial management – a strong focus on costs through a culture of
questioning and challenging all expenditure, managing spend against budgets and
applying controls around activities such as travel and recruitment
· Value for Money – reviewing the cost effectiveness of our
services. This report only captures the cost savings on operating expenditure,
not the overall benefits of the programme, or other financial benefits such as
cost avoidance and reductions in the cost of capital expenditure. Separate
reporting will be provided to this committee on the wider Value for Money
programme.
11. The savings
target relates to operating expenditure. It excludes any benefit relating to
capital works and cost avoidance.
Tātaritanga me ngā
tohutohu
Analysis and advice
12. As at 31
December 2018, $13.5 million of savings have been realised, leaving a balance
of $9.5 million to be achieved for the remainder of the year.
13. The majority
of the savings has been met through a strong focus on prudent financial
management, with the rest spread across the other workstreams.
Procurement
14. Savings to
date of $1.0 million have been achieved.
15. The key
initiatives in delivering cost savings over the last six months have been:
· Corporate
property ($0.8 million): savings from negotiating lower reparation costs for
property leases that were up for renewal.
· Internet
connection ($0.2 million): savings from negotiating better prices for the
council’s internet service contracts.
16. Other
procurement benefits have been achieved to avoid $26.1 million of cost
pressures and reduce costs of planned capital projects.
17. Work is
underway on streamlining low risk and low value procurements in order to reduce
both the internal cost and external cost of these procurements with further
initiatives in the pipeline.
Organisational design
18. Savings to
date of $2.1 million have been achieved.
19. The key
initiatives delivering cost savings over the last six months have been:
· Commercial
Finance ($1.1 million): The re-design of the Commercial Finance team to
reduce the number of administrative tasks, whilst continuing to provide high
quality advice and support.
· ACIL
($1.0 million): The disestablishment of Auckland Council Investment
Limited (ACIL) which reduced costs associated with management overhead and
board director fees.
20. Further work
is underway on:
· Corporate
Support Review - improving purchasing, planning and reporting processes to
simplify the way that Auckland Council carries out purchasing and develops its
financial plans and performance reports.
· Sector
shared services – discussions are in progress with another local
authority on shared service options. They are investigating replacing their
end-of-life finance technology platform. The discussions have been on a model
based on co-operative principles that could potentially work for wider sector
opportunities.
Technology
21. Savings to
date of $0.9 million have been achieved.
22. This has been
achieved primarily through:
· Technology
infrastructure costs ($0.7 million): The council has reduced costs
relating to the licencing of its information and technology
communication infrastructure.
· Robotics
process automation ($0.2 million): New robotic processes have been
introduced into the council’s transaction services, automating invoice
and payment processing.
23. Further
work underway that will be delivering benefits in the second half of the year,
and in the future include:
· Building
consents mobile inspection platform
· Digital
engagement platform
· Governance
technology - phase 1
· Legacy
property records digitisation
· Multi-cloud
data centre
· Pools
and leisure staff rostering
· Regulatory
billing improvements
· Further
robotic process automation.
Increasing non-rates
revenue
24. Additional
non-rates revenue of $0.5 million has been earned.
25. This
has been achieved primarily through venue and facilities hire ($0.5 million).
With the improvements in the digital booking system, revenue is 20 per cent
above budget.
26. Ongoing
improvements in digital technology will help support future revenue growth
through more self-service offerings and increasing awareness of the services
council offer.
Prudent financial management
27. Savings to
date of $8.5 million have been achieved.
28. This
is primarily due to a strong focus on the employee benefits spend. Specific
initiatives include:
· Better
use of contingent workers
· Decommissioning
budgeted inactive roles
· Improved
workforce planning and reporting
· Use
of tools such as Skype for Business to reduce the need for travel.
29. The savings
have been achieved primarily across the Finance, Planning and People and
Performance functions.
30. The general
focus on costs through a culture of questioning and challenging all expenditure
will be maintained.
Value for Money
31. Savings to
date has resulted in a cost reduction of $0.5 million.
32. This is
primarily reduced expenditure from:
· Communications
and Engagement ($0.5 million): This includes reduced cost for Our
Auckland and research reports.
33. The Value for
Money s17A programme has identified potential benefits of over $500 million
across the wider council group over the next 10 years. This includes benefits
that are not direct cost savings (benefits that will reduce the council’s
operating expenditure), such as cost avoidance and reductions in the cost of
the council’s capital programme.
34. Separate
reporting is provided to this committee on the progress of the Value for Money
s17A programme.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
35. The target
for 2018/2019 applies to Auckland Council. The council-controlled-organisations
have their own internal targets.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
36. The
centralised savings approach has been set at a regional level. None of the
initiatives delivered or in delivery have specific local board impact on
service level reductions.
Tauākī whakaaweawe
Māori
Māori impact statement
37. The savings
initiatives delivered or in delivery have no specific impact on Māori
outcomes.
Ngā ritenga
ā-pūtea
Financial implications
38. This report
provides visibility on how council is performing on its savings target which
supports meeting the annual budget for 2018/2019.
39. There are
financial implications on the annual budget if the savings target is not met
for 2018/2019. This may result in a slightly higher debt level and will have
flow on effects through to the Annual Budget 2019/2020.
40. Any
additional budget pressures may also result in additional savings being
required.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
41. Some of the
initiatives that have been identified to deliver savings are active projects
currently being delivered. As with any project there are risks to delivery
including resource availability, competing priorities and technical
dependencies.
Ngā koringa ā-muri
Next steps
42. Work will
continue developing a robust benefits register to support the 10-year budget
savings programme.
43. The next
update will be provided after the council’s quarter three results are
finalised.
Ngā tāpirihanga
Attachments
There are no attachments for
this report.
Ngā kaihaina
Signatories
|
Authors
|
Robert Irvine - Head of Group Financial Planning
Nick Bird - Financial Analyst
|
|
Authorisers
|
Matthew Walker - Group Chief Financial Officer
Phil Wilson - Governance Director
|
