Agenda of Extraordinary Finance and Performance Committee

I hereby give notice that an extraordinary meeting of the Finance and Performance Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Wednesday, 19 June 2019

9.30am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

Komiti ā Pūtea, ā Mahi Hoki /
Finance and Performance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Cr Ross Clow
Deputy Chairperson	Cr Desley Simpson, JP
Members	Cr Josephine Bartley	Cr Penny Hulse
	Cr Dr Cathy Casey	Cr Mike Lee
	Deputy Mayor Cr Bill Cashmore	Cr Daniel Newman, JP
	Cr Fa’anana Efeso Collins	Cr Greg Sayers
	Cr Linda Cooper, JP	Cr Sharon Stewart, QSM
	Cr Chris Darby	IMSB Chair David Taipari
	Cr Alf Filipaina	Cr Sir John Walker, KNZM, CBE
	Cr Hon Christine Fletcher, QSO	Cr Wayne Walker
	Mayor Hon Phil Goff, CNZM, JP	Cr John Watson
	Cr Richard Hills	Cr Paul Young
	IMSB Member Terrence Hohneck

(Quorum 11 members)

Sandra Gordon

Senior Governance Advisor

11 June 2019

Contact Telephone: (09) 890 8150

Email: sandra.gordon@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.

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 Petitions

There is no Petitions section.

4 Public Input

There is no Public Input section.

5 Local Board Input

There is no Local Board Input section.

6 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.”

Finance and Performance Committee

19 June 2019

Auckland Council Group and Auckland Council quarterly performance reports to 31 March 2019

File No.: CP2019/09242

Te take mō te pūrongo

Purpose of the report

1. To provide an update on the financial and non-financial performance for the Auckland Council Group against the 10-year Budget for the nine months to 31 March 2019.

Whakarāpopototanga matua

Executive summary

2. The 10-year Budget 2018-2028 was adopted in June 2018. The budget included a
$26 billion investment programme to address growth pressure on transport, water, environment and community infrastructure. It also included additional operating budgets to address areas such as the natural environment.

Summary of the attached quarter three performance pack

3. Attachments A to G reports on the performance against the 10-year Budget for the first nine months from 1 July 2018 to 31 March 2019. It covers progress at a group level and across the Auckland Council and council-controlled organisations (CCOs). Attachment H includes a cover letter from Auckland Transport to support their performance report.

4. The Auckland Council Group has delivered a strong performance over the last nine months.

5. There has been solid capital progress, with $1.3 billion capital investment being delivered during the nine-month period. This is a $213 million increase compared to the same period last year, delivering 85 per cent of the budget for this period.

6. The key capital highlights for the period are:

· A $100 million contract has been signed for part of the Auckland Manukau Eastern Transport Initiative (AMETI) Eastern Busway between Panmure and Pakuranga between the council and New Zealand-owned construction company Fulton Hogan.

· Auckland Transport constructed a new 1.8-metre wide footway at Parerekau Road, Karaka to provide safe pedestrian access along a higher speed road, which allowed residents of a retirement village, amongst others, to access their local shops and facilities.

· A new tunnel boring machine has arrived at Army Bay, Whangaparaoa, to help install a new outfall pipeline, as part of $31 million upgrades to the Army Bay Wastewater Treatment Plant.

· The Te Manawa (Westgate) multi-purpose community facility is operational now with functionality and systems being configured as well as all outstanding items of work being finalised.

· The Victoria Linear Park professional services contract has been awarded to Jacobs New Zealand Ltd for development of the business case and conceptual design.

· There have been delays in the delivery of some capital programmes including Watercare programmes, Panuku’s waterfront development and Transform and Unlock programmes, and Regional Facilities Auckland’s zoo development and Aotea refurbishment programmes. The unspent budget has been reflected in the Annual Budget 2019/2020.

7. There has also been strong operating performance during the nine-month period. Direct revenue (revenue excluding rates, dividend, finance and regional fuel tax revenue) is
$24 million ahead of budget, while direct expenditure (expenditure excluding depreciation and interest) has been underspent by $32 million. Overall, this is a $56 million favourable variance in direct operating budgets.

8. The key drivers of this operating performance are:

· Higher than expected fees and user charges revenue from higher volumes in regulatory and public transport, offset by reduced revenues in Regional Facilities Auckland and Ports of Auckland.

· Earlier than anticipated receipt of $19 million NZ Transport Agency (NZTA) operating subsidies on approved public transport related programmes.

· An underspend of $16 million employee benefits due to unfilled vacancies and an increased capitalisation of staff costs from capital projects ahead of budget.

· Other underspends across the council group of $17 million mostly due to timing changes of projects which deferred spending to quarter four and further out.

9. The Auckland Council Group balance sheet remains healthy, with net debt currently at
$8.4 billion and on track to be under the year-end budget of $9.0 billion. This level of debt equates to a debt-to-revenue ratio of 243 per cent, below the year-end forecast of 254 per cent and the 265 per cent internal limit. This also represents a net debt to total assets ratio of 16.1 per cent.

10. During the nine-month period net debt increased by $201 million in order to finance capital investment. This means approximately 85 per cent was funded through operating cash flows, grants and other sources with the remaining 15 per cent finance via debt.

11. The outlook for the rest of the year of the Auckland Council Group’s operating performance remains strong with no material issues expected to impact on the performance achieved to date.

12. The risk of rising construction costs and potential market capacity constraints remain and could create further issues for the council’s ambitious capital programme. Council staff will continue to monitor these trends and manage capital projects accordingly.

Presentation of the Auckland Council Group performance

13. Representatives of the substantive council-controlled organisations (CCOs) boards,
Chief Executives and Chief Financial Officers will be presenting at the meeting. The programme for the day is outlined in the table below:

Item	Time
Auckland Council Group Performance: · Financial overview Cross Organisational initiatives: · Group Māori Outcomes · City Centre Programme · 36^th America’s Cup (AC36)	9.35am
Auckland Council	10.15am
Auckland Transport	11.15am
Lunch	12.15pm
Panuku Development Auckland	12.45pm
Auckland Tourism, Events and Economic Development	1.30pm
Watercare Services Limited	2.15pm
Regional Facilities Auckland	3.00pm

14. A separate report will be presented on the day for this committee to receive the Auckland Council progress report on savings to 31 March 2019. This is consistent with the recommendations from the Appointments, Performance Review and Value for Money Committee from its meeting on 6 June 2019.

Ngā tūtohunga

Recommendation

That the Finance and Performance Committee:

a) receive the Auckland Council Group quarterly performance report for the period ending 31 March 2019 which includes the Auckland Council and substantive council-controlled organisations.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Group Performance Overview - Quarter 3 Performance for the period ending 31 March 2019	13
b ⇩	Auckland Council - Quarter 3 Performance for the period ending 31 March 2019	29
c ⇩	Auckland Transport - Quarter 3 Performance for the period ending 31 March 2019	45
d ⇩	Panuku Development Auckland - Quarter 3 Performance for the period ending 31 March 2019	59
e ⇩	Auckland Tourism, Events and Economic Development - Quarter 3 Performance for the period ending 31 March 2019	73
f ⇩	Watercare Services Limited - Quarter 3 Performance for the period ending 31 March 2019	81
g ⇩	Regional Facilities Auckland - Quarter 3 Performance for the period ending 31 March 2019	91
h ⇩	Auckland Transport Cover Letter 2019 - Quarter 3 Performance for the period ending 31 March 2019	99

Ngā kaihaina

Signatories

Authors

Robert Irvine - Head of Group Financial Planning

Hinewairere Warren - Project Manager

Louis Ong – Financial Analyst

Nick Bird - Financial Analyst

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Matthew Walker - Group Chief Financial Officer

Finance and Performance Committee

19 June 2019

Recommendations from Appointments, Performance Review and Value for Money Committee - Auckland Council progress on savings up to 31 March 2019

File No.: CP2019/10357

Te take mō te pūrongo

Purpose of the report

1. To receive the recommendations from the Appointments, Performance Review and Value for Money Committee from its meeting on 6 June 2019.

Whakarāpopototanga matua

Executive summary

2. At its meeting on 6 June 2019, the Appointments, Performance Review and Value for Money Committee considered the attached report and resolved as follows:

Resolution number APP/2019/37

MOVED by Mayor P Goff, seconded by Cr D Simpson:

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

a) receive the Auckland Council progress report on savings up to 31 March 2019.

b) request staff to send the presentation to all councillors and local board members for their information and refer the report and presentation to the Finance and Performance Committee on 19 June 2019.

3. The original report and presentation to the 6 June 2019 meeting is attached (Attachment A) which provides detailed information. A presentation in support of the report will also be made at the meeting.