Agenda of Appointments, Performance Review and Value for Money Committee

I hereby give notice that an ordinary meeting of the Appointments, Performance Review and Value for Money Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Wednesday, 1 May 2019

2.30pm

Room 1, Level 26
135 Albert St
Auckland

Komiti Tohu me te Arotake Tūranga Mahi, me te Rite o te Whiwhi ki Tā Tērā i Utu Ai /
Appointments, Performance Review and Value for Money Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Hon Phil Goff, CNZM, JP
Deputy Chairperson	Cr 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 Cr Bill Cashmore
	IMSB Chair David Taipari

(Quorum 4 members)

Sandra Gordon

Senior Governance Advisor

26 April 2019

Contact Telephone: (09) 890 8150

Email: sandra.gordon@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

Appointments, Performance Review and Value for Money Committee

01 May 2019

Terms of Reference

Responsibilities

The Appointments and Performance Review 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.

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.

ITEM TABLE OF CONTENTS PAGE

1 Apologies 7

2 Declaration of Interest 7

3 Confirmation of Minutes 7

4 Petitions 7

5 Public Input 7

6 Local Board Input 7

7 Extraordinary Business 7

8 Value for Money quarterly progress reports 9

9 Update report for director appointments to Watercare Services Limited and shortlist candidates for Regional Facilities Auckland 31

10 Re-appointment of City Rail Link Limited directors 35

11 Consideration of Extraordinary Items

PUBLIC EXCLUDED

12 Procedural Motion to Exclude the Public 39

C1 CONFIDENTIAL: Re-appointment of City Rail Link Limited directors 39

C2 CONFIDENTIAL: Appointing a director to Watercare Services Limited and approving the shortlist candidates for Regional Facilities Auckland (Covering report) 39

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, 4 April 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

01 May 2019

Value for Money quarterly progress reports

File No.: CP2019/03617

Te take mō te pūrongo

Purpose of the report

1. To provide a progress update on the status, the 2019 work programme and the implementation progress of the completed reviews in the Value for Money review programme.

Whakarāpopototanga matua

Executive summary

2. In March 2017 the Finance and Performance Committee endorsed a Value for Money programme for the council group under Section 17A of the Local Government Act 2002.

3. Overall the programme status is green.

4. Following the initial planning some changes have been made to the 2019 work programme reflecting better alignment with other organisational priorities and a more logical grouping of reviews.

5. Six reviews have been completed and implementation status updates are provided for:

· Three waters

· Domestic waste services

· Investment attraction and global partnerships

· Group procurement

· Information, communications and technology

6. The final implementation status report for Communications and Engagement was provided at the December 2018 Appointments, Performance Review and Value for Money Committee meeting.

7. Business managers across the group have developed implementation plans for the completed reviews. In the programme status report information is provided on each review, how the recommendations will be implemented and current progress. These areas may change as the work is further scoped or developed, feasibility work is completed, and dependencies are refined.

8. Business managers are available to address specific questions on completed reviews.

Ngā tūtohunga

Recommendation/s

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

a) note the Value for Money Programme status and 2019 work programme

b) receive the progress updates for the Value for Money reviews on:

· Three waters

· Domestic waste services

· Investment attraction and global partnerships

· Group procurement

· Information, communications and technology

Horopaki

Context

9. In March 2017 the Finance and Performance Committee endorsed a value for money programme for the Auckland Council group (resolution number FIN/2017/23).

10. In March 2018 the Governing Body approved the terms of reference for the Appointments, Performance Review and Value for Money Committee. This incorporated the oversight for the value for money programme required by section 17A of the Local Government Act 2002 (resolution number GB/2018/57).

Tātaritanga me ngā tohutohu

Analysis and advice

Programme status

11. Overall the programme status is green with no significant issues to report. The programme now has a range of reviews in different phases from initiation through to benefit realisation.

2019 work Programme

12. As indicated in previous reports the VFM work programme will be managed to align with other planned activities. As such there are some changes to the 2019 programme from the version provided to the June 2018 Appointments, Performance Review and Value for Money Committee meeting, those being:

· Previously scheduled Transactional services and payroll, Finance and financial planning. These two reviews were combined into the Finance review currently underway with payroll part of the Human Resources review.

· Human Resources, Legal and Risk. This was split into two reviews – Legal and Risk and Human Resources. Legal and Risk is underway and the terms of reference for Human Resources has been approved and will commence in May 2019.

· Corporate property. This review was scheduled for 2020. It is being brought forward to 2019 to complete all the organisational support reviews.

· Economic development. This review is moved to 2020 (swapping with Corporate property) as ATEED are implementing the results of their first principles review.

· Strategic advice, community and social policy and Conventions and events scheduled to commence in November 2019 will be scheduled for 2020.

13. A copy of the overall work programme for 2019 is included in the attachment.

Implementation status update

14. The following reviews have been completed

Review	Status	Comment
Three waters		Quarterly status update provided
Domestic waste		Quarterly status update
Communications and engagement		Final status update provided to the December Appointments, Performance Review and Value for Money Committee meeting
Investment attraction and global partnerships		Quarterly status update provided
Group procurement		Quarterly status update provided
Information, communications and technology		Quarterly status update provided (first report)

Benefit realisation

15. Details of the benefit realisation are included in the status report. A summary is

Cash releasing benefit ($m)
Benefit opportunity (10 years)	Benefit forecast (10 years)	Benefit realised (1 year)
$527	$430	$260

16. In the table at section 20, benefits are the cash benefit (both operating and capital).

· Benefit opportunity – potential identified by VFM review (10 years)

· Benefit forecast – amount forecast by management based on implementation progress (10 years)

· Benefit realised – amount “banked” in accounts (1 year). This reflects that only 1 financial year has been completed since the review findings were approved.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

17. The VFM reviews consider all organisations in the group. Group organisations are involved in the development of the implementation status updates, where appropriate.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

18. The decision to receive this report has no direct implications for local boards. As recommendations from completed reviews are implemented the impact on local boards is considered.

Tauākī whakaaweawe Māori

Māori impact statement

19. The decision to receive this report has no direct implications for Māori. As recommendations from completed reviews are implemented the impact on Māori is considered.

Ngā ritenga ā-pūtea

Financial implications

20. Any financial implications arising from the implementation of the VFM reviews will be determined as implementation plans are developed and included in the reporting back to this committee.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

21. The primary risks arising from these recommendations are regarding their implementation which will be addressed through implementation plans and where required business cases.

Ngā koringa ā-muri

Next steps

22. The next quarterly progress report will be provided at the August 2019 meeting of the Appointments, Performance and Value for Money Committee.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Value for Money Programme Status updated March 2019	13

Ngā kaihaina

Signatories

Author

Ross Chirnside – Programme Lead Value for Money

Authorisers

Kevin Ramsay - General Manager Corporate Finance and Property

Nicola Berghaus – Acting Group Chief Financial Officer

Phil Wilson - Governance Director

Appointments, Performance Review and Value for Money Committee

01 May 2019

Update report for director appointments to Watercare Services Limited and shortlist candidates for Regional Facilities Auckland

File No.: CP2019/05072

Te take mō te pūrongo

Purpose of the report

1. To provide an update on the programme of appointments to the board of Watercare Services Limited (Watercare) and Regional Facilities Auckland (RFA). These two entities are Auckland council-controlled organisations (CCOs).

Whakarāpopototanga matua

Executive summary

2. On today’s committee agenda is a confidential report that considers the appointment for one of the two director vacancies on Watercare’s board. This follows the interviews conducted by the selection panel of the candidates who were shortlisted on 4 April 2019 by this committee.

3. The confidential report also includes the shortlist candidates chosen by the Regional Facilities Auckland selection panel for pre-interview by council’s external director recruitment support partners Kerridge and Partners (Kerridge).

4. The committee will today make decisions regarding the recommended shortlist of candidates (from Kerridge), and any other candidates whose skills and experience qualify for a shortlist interview for the vacancy on the RFA board.

Ngā tūtohunga

Recommendation/s

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

a) note that a confidential report is included on today’s committee agenda that provides information to:

i) make decisions on the candidate selected for director one vacancy on Watercare Services Limited

ii) make decisions on the shortlist candidates for the director vacancy on Regional Facilities Auckland

b) note that the report is confidential as it contains personal information relating to the candidates.

Horopaki

Context

5. The board appointment process for appointing directors to any CCO and external partnership board is outlined in the table following.

6. The confidential reports on this agenda provide advice and options to assist the committee to make decisions regarding the shortlist candidates for interviews.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

7. There are no significant impacts on other parts of the council group as a result of these director appointments.

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

8. Board appointments to CCOs are the role of the Governing Body. Local boards can participate in the nomination process for each director vacancy. The nomination of a candidate requires the consent of that candidate.

Tauākī whakaaweawe Māori / Māori impact statement

9. Council’s policy also aims to achieve a diverse range of directors to all CCO boards.

10. This can have positive impacts for Māori by creating opportunities for Māori directors.

11. In line with the policy, an Independent Māori Statutory Board member may be appointed to the selection panel to provide a Māori perspective throughout the process.

Ngā ritenga ā-pūtea / Financial implications

12. The costs associated with these appointments will be managed from existing budgets.

Ngā raru tūpono / Risks

13. There are risks associated with all board appointments including:

i) reputational risk: all candidates are appropriately screened to meet the skill requirements for directors of a board such as this and have appropriate governance experience especially within public-facing entities. To mitigate any potential risks of disqualified directors or under-qualified candidates:

a) a thorough due diligence process will be completed on all candidate applications in line with the council’s appointment policy

b) short-listed candidates have completed the council’s director consent form prior to interview which requires directors to confirm that there is nothing that would disqualify them from being a director

c) thorough reference checks of candidates who are approved for appointment to the CCOs are being conducted by Kerridge and Partners.

ii) reputational risk: breach of privacy if confidential candidate information is provided to media outlets prior to final decisions being made by the committee. The risk is fewer and potentially less qualified candidates being attracted into future board appointment programmes. To mitigate the risk staff will continue to highlight the need for maintaining confidentiality during the board appointment programme.

iii) governance risk: the risk of an unbalanced board where a loss of institutional knowledge impacts decision-making. Conversely, retaining board members for too long can mean the board lack innovation and fresh thinking.

Ngā koringa ā-muri / Next steps

14. Following approval from this committee, staff from the CCO Governance and External Partnerships department and Kerridge will maintain progress on the appointment programmes for 2019.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

Josie Meuli - Senior Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Appointments, Performance Review and Value for Money Committee

01 May 2019

Re-appointment of City Rail Link Limited directors

File No.: CP2019/05556

Te take mō te pūrongo

Purpose of the report

1. To receive information about the expiry of the terms of two City Rail Link Limited directors.

Whakarāpopototanga matua

Executive summary

2. City Rail Link Limited (CRLL) is a company set up jointly between Auckland Council and the Crown with responsibility for building the City Rail Link. The company assumed responsibility for the project from Auckland Transport on 1 July 2017.

3. Council and Crown are jointly responsible for appointing the CRLL Board.

4. CRLL has a board of five directors, including the chair. The Governing Body approved the appointment of Sir Brian Roche as chair in December 2016, while the Appointments and Performance Review Committee approved the appointments of the other four directors on 8 June 2017. Cabinet also considered the appointments in June 2017.

5. Two of the directors were appointed for three-year terms, with the other two being appointed for two-year terms concluding 30 June 2019.

Ngā tūtohunga

Recommendation/s

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

a) note that Auckland Council and the Crown are jointly responsible for appointing the City Rail Link Limited Board and that the terms of two directors expire on 30 June 2019

b) note that a confidential report is included on today’s committee agenda that considers whether to reappoint the two directors whose terms expire

c) note that the report is confidential due to the personal information relating to the two directors.

Horopaki

Context

6. City Rail Link is a project to construct a 3.4km tunnel linking the current Britomart Station with the western line near the current Mt Eden Station. Two new stations will be constructed at Aotea (midtown) and Karangahape (beneath Karangahape Road), and a range of related works to ensure appropriate operational interface with the current Auckland metro rail network.

7. The project was previously part of Auckland Transport, but as part of the agreement between Crown and Auckland Council to jointly fund the project, CRLL was set up to deliver the works. The company assumed responsibility for the project from Auckland Transport on 1 July 2017.

8. Council and Crown are both joint sponsors of the project, and as 50/50 funders, also joint shareholders. Council and Crown are therefore jointly responsible for appointing the CRLL board.

9. CRLL has a board of five directors, including Sir Brian Roche who was approved as chair by Governing Body in December 2016. The Appointments and Performance Review Committee approved the appointments of the other four directors on 8 June 2017.

Tātaritanga me ngā tohutohu

Analysis and advice

10. The CRLL Board was newly appointed in 2017. All the members were appointed with a range of skills to meet the specific requirements of CRLL’s mandate to deliver the City Rail Link.

11. At the time of the original appointments in 2017, two appointments were made for only two years through to 30 June 2019. This was to allow both shareholders to review skill set requirements, board performance and make appropriate decisions regarding reappointments.

Skill set requirements

12. The skill sets required from CRLL directors have not fundamentally changed since the original appointments were made, as the project is currently still in its procurement phase. Through 2019, the major contracts for tunnels and stations (‘C3’) and the tracks and systems (‘C7’) will be let, and alliances with the contractors and delivery partners set up. At the same time, a number of other contracts which are already under construction will continue.

13. From 2020 however, the focus of the company will shift from this procurement focus to a focus on project delivery and on delivering the benefits of the wider programme, including delivering development benefits in and near the new and redeveloped stations.

Board performance

14. No formal board performance review has been undertaken, due to the still relatively recent establishment of the board.

15. There will be a further opportunity to review the overall skill-set on the board in 2020, when the remaining directors’ terms conclude.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

16. The proposal has no impacts on other parts of the council group.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

17. No local board input has been sought for this report.

Tauākī whakaaweawe Māori

Māori impact statement

18. The original board appointment process included government department Te Puni Kokiri, which submitted nominations. Te Puni Kokiri has not been re-consulted for this re-appointment process but will be when the appointments are reconsidered in mid-2020.

Ngā ritenga ā-pūtea

Financial implications

19. Board costs will be met from the overall CRLL budget, which is jointly funded by Auckland Council and the Crown.

20. CRLL is listed in Schedule 4A of the Public Finance Act 1989 and is not a council-controlled organisation. As a Crown company, its fees are set and approved by shareholding Ministers. These were considered at the time of the original appointments in 2017, and the fees paid align with other similar Crown organisations and are lower than those fees paid to directors of Auckland Transport and Watercare Services Limited.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

21. There are risks associated with all board appointments including:

i) reputational: all candidates are appropriately screened to meet the skill requirements for directors of a board such as this and have appropriate governance experience especially within public-facing entities. To mitigate any potential risks of disqualified directors or under-qualified candidates a thorough due diligence process is completed (in this case in line with the Crown’s appointment procedures)

ii) reputational: breach of privacy if confidential candidate information is released prior to final decisions being made by the committee. The risk is that fewer and potentially less qualified candidates will be attracted into future board appointment programmes. To mitigate the risk, this decision is being considered in confidential session, as will be Cabinet’s consideration of the appointments

iii) governance: the risk of an unbalanced board where a loss of institutional knowledge impacts decision-making. Conversely, retaining board members for too long can mean the board lack innovation and fresh thinking. This risk will be covered in the confidential report at today’s committee meeting.

Ngā koringa ā-muri

Next steps

22. Subject to the decision of this committee in its confidential session, appointments to the CRLL will be considered by the Cabinet Appointments and Honours Committee at a meeting in June 2019.

23. Should Ministers elect not to reappoint one or both of the directors, Crown would need to consult with Auckland Council on a new appointment process to ensure the CRLL board has a full complement of directors with appropriate skills.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

Edward Siddle - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Appointments, Performance Review and Value for Money Committee

01 May 2019

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

That the Appointments, Performance Review and Value for Money 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 CONFIDENTIAL: Re-appointment of City Rail Link Limited directors

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

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

In particular, the report contains information relating to director appointments.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C2 CONFIDENTIAL: Appointing a director to Watercare Services Limited and approving the shortlist candidates for Regional Facilities Auckland (Covering report)

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

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

In particular, the report contains private information about hte candidates that have applied for the four director vacancies on Auckland's council-controlled organisations.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.