Agenda of Appointments, Performance Review and Value for Money Committee

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.

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, 1 August 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

05 September 2019

Legal and Risk Value for Money report

File No.: CP2019/14080

Te take mō te pūrongo

Purpose of the report

1. To provide an overview of the findings and recommendations contained in the Value for Money (s17A) review report of Group Legal and Risk Management Services (Legal and Risk).

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

Whakarāpopototanga matua

Executive summary

3. The legal and risk functions of council are the latest to be reviewed by the Value for Money Programme.

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

5. The review of Legal and Risk found that:

· the legal and risk functions are key enablers in delivering for Auckland

· risk management is critical to governing authorities discharging their obligations

· there is no consolidated group perspective on risk and there would be merit, including lifting the level of maturity, in sharing practices across the group

· legal costs are increasing as the volume of work also increases

· legal operational efficiency is constrained by technology at Auckland Council

· good procurement practices are in place and adopting the same approach in other professional services categories like regulatory and tax advice would be beneficial

· group sharing of legal services exists with a high level of satisfaction but there may be further opportunities

· an opportunity exists to move from a transactional to a strategic approach for insurance

· technology presents a future opportunity for efficiency and effectiveness.

6. All recommendations provide efficiency opportunities. Savings have not been valued in this review.

Ngā tūtohunga

Recommendation/s

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

a) agree to recommend to the Governing Body that the council’s chief executive collaborates with the chief executives of the council-controlled organisations to:

i) develop and implement a group assessment of risk by:

A) developing a framework for combining the same or similar risks identified by each organisation into a cumulative group risk

B) determining the most effective way to treat cumulative risk – either as a group or as individual organisations – and whether a portion of the risk should be insured

C) reporting the cumulative group risk to the Audit and Risk Committee on a quarterly basis

ii) build a business case to improve legal operational efficiency

A) determining and understanding the current gaps impacting efficiency

B) identifying and evaluating a range of options (largely technology) which will close the identified gaps and complete the approved business case

iii) adopt a more strategic approach to insurance

A) understanding the risks the group faces and the strength of the group balance sheet to manage that risk

B) assessing current insurance cover against our risk profile to:

1) purchase insurance only when events have potential to materially and adversely impact council’s credit rating

2) insure key assets that materially affect service delivery and the group balance sheet

3) apply meaningful deductibles consistent with balance sheet capacity ($52 billion in assets) and risk appetite.

Horopaki

Context

7. In March 2017 the Finance and Performance Committee endorsed a Value for Money Programme for the Auckland Council group (resolution number FIN/2017/23).

8. 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).

9. The report (Attachment A) is the latest output from the Value for Money Programme, which delivers on the requirements of the Act, to review the cost-effectiveness (or value) of current arrangements for delivering local infrastructure, local public services and regulatory functions.

10. 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.

11. The value for money review uses a well-established strategic and evidence-based approach. It draws on published reports, council data, interviews and engagement with management and council-controlled organisations (CCOs). Each report contains an overview of the review methodology.

12. The report is reviewed by the Independent Reference Panel and council management. CCOs were consulted as part of the review leading to this report.

Tātaritanga me ngā tohutohu

Analysis and advice

13. The Legal and Risk functions are part of the organisational support group of activities.

· Legal supports the Group complying with legislation, provides legal advice to council and supports council’s role as a regulator

· Risk is the effect of uncertainty on achieving objectives and risk management is our approach to identifying and managing these risks

· Internal audit provides assurance that the council is ‘doing things right’.

14. A summary of the key findings of the review:

Legal and Risk are key enablers in delivering for Auckland	· The Long-term Plan (LTP) outlines the council’s work programme over 10 years with the legal, risk and internal audit departments all having key supporting roles to play in successful delivery. · The Legal department also plays a key role in enabling the group to deliver other activities and its regulatory functions. · Risk management helps the council increase the likelihood of achieving the delivery of the LTP by effectively identifying threats and managing them. · Internal audit provides assurance that the council is ‘doing things right’.
Risk management is critical to governing authorities discharging their obligations	· The council’s Audit and Risk Committee has independent members who provide oversight on strategic risks. · Effective risk management is core to the Governing Body’s and CCO boards’ accountability and members discharging their obligations. Each organisation’s governing authority needs to determine the appropriate level of investment in these areas. · Internal audit, under international standards, is required to be independently assessed every five years. Auckland Council will be assessed in 2019.
There is no consolidated group perspective on risk and there would be merit, including lifting the level of maturity, in sharing practices across the group	· Risks (for all organisations) are reported to the council’s Audit and Risk Committee on a quarterly basis but there is no consolidated view of the cumulative risks facing the group. · Auckland Council is a significant funder of the CCOs (apart from Watercare) and collectively they deliver the LTP; with members of the Governing Body ultimately accountable to the community. A joined-up perspective would support the Governing Body in its decision making. · Each organisation has different levels of risk management maturity and there would be merit from sharing of practices across the group. · There is an opportunity for Auckland Council to review its delivery of risk management services in line with the organisation strategy refresh.
Legal costs are increasing as the volume of work also increases	· The group spends $38 million on legal with 71 per cent of this cost in Auckland Council. Legal represents 1 per cent of council’s operating costs. · Over the past five years, legal costs have increased by 49 per cent (excluding weathertightness). Over the same period, the number of legal matters has increased at the same rate. · Managing demand is key to managing legal costs and approaches are in place to help council staff understand when and how best to work with legal.
Legal operational efficiency is constrained by technology at Auckland Council	· Operational efficiency is constrained by technology at Auckland Council. · Improved use of data and analytics would improve efficiency and enable more targeted initiatives to manage cost. · The Auckland Council Legal department has very high staff engagement. It has high customer satisfaction and is viewed as a trusted adviser.
Good procurement practices in place and adopting the same approach in other professional services categories like regulatory and tax advice would be beneficial	· Legal services are provided by internal staff and external legal firms. For Auckland Council, approximately 80 per cent of legal matters are provided by the internal team. Our analysis indicates that the in-house legal team are around one-third of the cost of external law firms. · External law firms (and often the same ones) are used across the group but not through an all-of-group procurement approach. · Auckland Council procures legal services including where law firms are appointed on a fixed fee basis for a specific legal category. · There is potential for this type of contracting model to be used in other professional services categories e.g. tax advice, some regulatory professional services.
Group sharing of legal services exist with a high level of satisfaction but there may be further opportunities	Auckland Council provides legal services to the following members of the group as a shared service with positive feedback. · Auckland Tourism, Events and Economic Development · Panuku Development Auckland Limited · Regional Facilities Auckland · All organisations adopt the international standard on risk management (ISO 31000) and develop their own tools and templates. Auckland Council and Auckland Transport are both considering a technology solution for tracking risks and a shared approach should be considered.
An opportunity exists to move from a transactional to a strategic approach to insurance	· A group approach is taken to insurance. The group insures to protect against significant events which would materially and adversely impact the council, and to protect the council balance sheet. · Historically, a transactional rather than strategic approach has been taken to insurance but with rising premiums, work is underway to assess alternative approaches to insurance.
Technology presents a future opportunity for efficiency and effectiveness	· Technology is disrupting many professions including legal. The increase in the use of digital documents is already changing the way lawyers work. · The nature of work, workers and work is changing and creating opportunities, and the legal and risk teams should ensure they are ready for these changes.

15. All recommendations provide efficiency opportunities but have not been valued as further analysis, including business cases, is required.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

16. The review considered all substantive organisations in the group who have been consulted with during the review and provided an opportunity to input to both the draft and final report.

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

Local impacts and local board views

17. The decision to endorse this report has no direct implications for local boards. Consideration of local impacts and reviews will be considered during the implementation of the recommendations.

Tauākī whakaaweawe Māori

Māori impact statement

18. The decision to endorse this report has no direct implications for Māori. Consideration of Māori impacts will be considered during the implementation of the recommendations.

Ngā ritenga ā-pūtea

Financial implications

19. 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.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

20. 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

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

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Group Legal and Risk Management Services Value for Money Review report	15

Ngā kaihaina

Signatories

Author

Ross Chirnside – Programme Lead Value for Money

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

05 September 2019

PDF Creator

Appointments, Performance Review and Value for Money Committee

05 September 2019

Value for Money Programme quarterly update

File No.: CP2019/14079

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

· domestic waste services

· investment attraction and global partnerships

· group procurement

· information, communications and technology

· customer services.

6. The final implementation status report for communications and engagement services was provided in December 2018 and for ‘Three Waters’ in June 2019 to the Appointments, Performance Review and Value for Money Committee meeting.

7. The ‘Finance services’ review was approved in June 2019, with the first status report part of the next quarterly update.

8. 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.

9. Business managers are available at today’s meeting 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:

i) domestic waste services

ii) investment attraction and global partnerships

iii) group procurement

iv) information, communications and technology

v) customer services.

Horopaki

Context

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

11. 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

12. 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

13. There has been a delay to the 2019 work programme with the Human Resource review commencing later than anticipated. This review will be reported to the appropriate committee in the new term of council.

Implementation status update

14. The following reviews have been completed

Review	Status	Comment
Three waters		Final status update provided to the June 2019 Appointments, Performance Review and Value for Money Committee meeting
Domestic waste		Quarterly status update provided
Communications and engagement		Final status update provided to the December 2018 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
Customer services		Quarterly status update provided (first report)
Finance		First status report at next quarterly update

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)
$538	$430	$270

16. In the table in paragraph 15 above, benefits are the cash benefit (both operating and capital).

· Benefit opportunity – potential identified by Value for Money reviews (10 years)

· Benefit forecast – amount forecast by council managements staff, based on implementation progress (10 years)

· Benefit realised – amount ‘banked’ in accounts (1 year). This reflects that only one 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 Value for Money reviews consider all organisations in the council 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 Value for Money 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 to the appropriate committee in the new term of council.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Value for Money Programme status update June 2019	89

Ngā kaihaina

Signatories

Author

Ross Chirnside – Programme Lead Value for Money

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

05 September 2019

Value for Money programme – end of council term status and review

File No.: CP2019/13267

Te take mō te pūrongo

Purpose of the report

1. To provide a review of the Value for Money programme to date and seeks feedback from the Committee on future considerations.

Whakarāpopototanga matua

Executive summary

2. The Value for Money (VfM) programme, while structured to comply with section 17A of the Local Government Act 2002, has taken a much broader and more robust approach to the exercise than is envisaged by legislation. This involves taking a strategic approach to value assessment, a consistent methodology, political oversight through this committee and involvement of external expertise including an independent reference panel.

3. Ten groups of activities have been reviewed to date. Eight of these activities have moved to the benefit realisation stage and a range of financial and non-financial benefits have been, or are expected to be, achieved. The potential financial benefits of the projects completed to date are estimated to be $430 million over 10 years - $270 million of this has been realised in year one. More details are provided in Attachment A to this report. A status report is also included as a separate item on this agenda.

4. A number of common themes have emerged from the individual projects. One of the key issues is the barrier to maximising benefits from the council group structure, where the council-controlled organisations (CCOs) have a high degree of autonomy in many areas. Developing a group strategic approach for specific activities, improving cooperation and collaboration at a management level and more engagement at a governance level are all potential mechanisms to break through those barriers.

5. There were other key themes identified.

· Procurement, while already delivering significant cost savings, continues to offer further potential savings.

· There is a good deal of work going on across the group organisations to improve efficiency and effectiveness. Because these projects sit outside a formal structure, benefits are not easily measured.

6. A stocktake of the programme has been undertaken to identify the learnings from the last couple of years and to inform a briefing paper on the future of the programme to the incoming council.

7. The key issues from the stocktake are:

· the challenges of working across the council group to ensure buy-in and appropriate engagement at both the management and governance levels in order to achieve the identified benefits

· ongoing political leadership, particularly as the programme moves into some of the community-facing activities

· the areas of focus to include both cross-cutting activities (such as project management, asset management) as well as prioritising those activities that may deliver most value

· a number of process improvements that are already underway or planned.

8. Moving forward, the drivers for continuing with some form of VfM programme are strong. Apart from the legislative and best practice requirements to review the cost effectiveness of activities, Auckland Council faces ongoing financial pressure from population growth, historical under-investment in infrastructure, debt constraints and major pending costs from macro issues such as climate change impacts, housing shortages and environmental degradation. Ensuring that existing services are delivered in a cost-effective manner is vital to releasing funding for these other challenges.

9. It is proposed that a briefing paper be prepared for the incoming council covering:

· aligning the programme to other relevant programmes including the next long-term plan

· developing a programme that covers a mixture of priority activities as well as some cross-cutting functions

· a project structure that provides for appropriate political leadership and direction, particularly in those community-facing activities which impact at a local level

· an ongoing role for independent oversight (such as the Independent Reference Panel).

10. The committee is invited to provide feedback to inform this briefing paper.

Ngā tūtohunga

Recommendation/s

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

a) note the end of council term status and review report

b) agree that a Value for Money programme briefing paper be prepared by the group chief financial officer for the incoming council.

Horopaki

Context

11. The Local Government Act 2002 (LGA) section 17A requires all councils to undertake regular reviews of the cost-effectiveness of their delivery of “good-quality local infrastructure, local public services, and performance of regulatory functions”. The LGA also requires that these reviews “consider options for the governance, funding, and delivery of infrastructure, services, and regulatory functions”.

12. Auckland Council has several strong drivers for seeking to manage costs and chose to broaden the s17A process into a more robust vehicle than that required by the legislation. Since 2017 a systematic approach to reviewing services and activities has been undertaken, incorporating the legislative requirements of s17A. In March 2018 the Governing Body adopted the mayor’s proposal to amend the Terms of Reference for the existing Appointments and Performance Review Committee to provide political oversight of the VfM programme.

13. The current VfM programme has a number of distinct features designed to ensure maximum effectiveness, those being:

· a broader approach than just that required by the LGA – the programme has looked at value in a strategic sense i.e. the value to Auckland from the four wellbeings perspective, rather than just the cost of delivering the activity. Value has been assessed using an evidence base and benchmarking against comparable organisations. It has also taken a group perspective by including the relevant activities in CCOs as part of the review.

· a consistent methodology for each service/activity – this has allowed the development and evolution of a framework and reports that are consistent in their presentation to decision makers, transparent to all stakeholders, and resulted in the development of internal capability which can be applied to a range of issues.

· oversight and input from an Independent Reference Panel – the members of the panel bring in-depth experience from their backgrounds in engineering, public policy and the legal profession. The elements of independent challenge, an outside perspective and professional credibility have been valuable assets to the overall process.

· external expertise as required – a number of the projects have used external subject matter experts to challenge the review findings, ask the right questions and add another perspective. Included in this expertise has been a Te Ao Māori advisor, to ensure that Māori interests have been considered in the relevant reviews.

· political oversight and ongoing monitoring of expected benefits – this ensures that there is continued focus on delivery as well as review.

Tātaritanga me ngā tohutohu

Analysis and advice

Status of delivery

14. Ten groups of activities have been through the review process in full or part. Two of these are not yet at the benefit realisation stage, those being:

· parks and open spaces – the broader governance issues being considered through the Governance Framework Review are relevant to this project, and Parks and open spaces will be revisited once this work has advanced

· legal services – this review has recently completed and is a separate item on the agenda.

15. A brief summary of the remaining projects, in the benefit delivery stage, is provided in Attachment A.

16. In reflecting on the work completed to date, some consistent themes emerge.

· Auckland Council and its CCOs were set up with a significant degree of autonomy. This has resulted in a lack of cooperation and consistency across the group, with a range of duplicated systems and effort in many areas and a lack of data sharing.

· A lack of a coherent organisational strategy for shared services across the group which hampers the opportunities for improved cooperation and more effective delivery between the council parent and the CCOs. Developing a set of consistent and agreed outcomes would support a group approach to achieving greater benefits. The Three Waters review is an example of where this was identified as an issue, but it has also been evident in some of the support functions such as communications and engagement.

· Notwithstanding the points above, the VfM programme has been a catalyst for cross-organisational cooperation, particularly between the council parent organisation and the CCOs. This has delivered not only financial benefits (through more coordinated planning, procurement and delivery), but also has laid the platform for better working relationships in the future.

· Procurement is the area that gives the greatest potential for cost savings. While in-roads have been made in achieving cost savings through procurement processes over recent years, particularly using the council’s size and buying power, the programme has highlighted further opportunities in this area.

· There is already a great deal of good work happening to improve organisational efficiency and effectiveness. The VfM programme has identified where improvement in value can be added but has also found that within individual pockets of the council and CCO organisations, improvements have been implemented without the structure of a formal programme. Because of the ad-hoc nature of these projects the benefits have not been captured in a consistent manner.

Wider context

17. The Value for Money programme is only one initiative in an ongoing drive for organisational efficiency and savings.

18. The Auckland Council group is faced with significant cost pressures. Population growth and historical under-investment in some infrastructure has resulted in the need to invest in a significant capital expenditure programme since the amalgamation of the legacy councils. This programme drives ongoing costs of financing, depreciation and the consequential operating costs associated with the new or upgraded infrastructure.

19. These additional infrastructure-related costs, coupled with the desire to maintain general rate increases at acceptable levels, have kept the focus on minimising cost increases and wherever possible, finding more effective, cost efficient ways of delivering services.

Efficiency savings

20. As part of the annual budgeting process there is a focus on the costs of all activities and services. Scrutiny is applied to refreshed budgets prepared by departments of the council organisation and the CCOs. To maintain the tension of continuous efficiency improvements, a savings target is set each year. This requires ongoing organisational attention to the management of costs and seeking better ways to deliver services. These savings are built into the budget. The annual savings target set as part of the Long-term Plan 2018-2028 are:

2018/19 $23 million

2019/20 $23 million

2020/21 $16 million.

Simplification project

21. After being identified as a key ‘game changer’ for the organisation, a programme of work called ‘Simplification’ has recently been established to make things easier for staff to deliver services to our customers. Fundamentally covering people, processes and technology, work has started on the first project - the planning to reporting cycle within the council. It aims to simplify how we create, collect and present financial information.

Previous organisational reviews

22. Other reviews to improve the efficiency and effectiveness of services have also been completed. Projects such as ‘Libraries Fit for the Future’, the contact centre consolidation to Manukau and the changed approach to facilities management (Project 17) have all made improvements to value for money.

Learnings from the VfM Programme

23. Over the last couple of months, a stocktake of the programme has been undertaken, with input from a number of participants, including the Independent Reference Panel. The purpose of the stocktake was to learn from the activity to date and to inform the future shape of the programme. The key points from the review are set out below.

Strategic

24. There are particular challenges in involving the wider group in the VfM programme. Any change-oriented project needs to overcome barriers to change within existing staff, processes and systems. These barriers are multiplied when dealing with individual organisations and their own governance structures. Mechanisms for better engagement with the governance structures of the CCOs need to be considered.

25. Ongoing political leadership is important to the programme. As the focus of the programme moves to more of the community-facing activities, rather than the support functions, this leadership will become increasingly important. The role of the VfM programme is to question the value of the way that services are delivered rather than the policy decisions related to which services are delivered (essentially political decisions). However, these two areas inevitably impinge upon each other and it is important to ensure that political involvement and guidance is provided at appropriate points. Political involvement needs to provide for the complexity of Auckland’s governance model (governing body, local boards and the Independent Māori Statutory Board).

26. The current programme has primarily adopted an approach of systematically working through groups of activities as identified in the council’s public documents (annual plan, long-term plan, annual report). While this ensures no activities are overlooked there are opportunities to change the areas of focus to include cross-cutting functions such as property management, asset management, project management and contract briefing/management. There are also opportunities to prioritise activities that will add most value.

Process

27. The programme tended to start as an independent review and only involve existing management after the initial findings stage. The current view is that involving management from the beginning allows a broader understanding of the issues from that perspective and can allow the programme to act as a catalyst for change. It will also ensure that the managers are invested in the programme and provide a smoother transition to implementation.

28. The Independent Reference Panel have added value through their expertise and fresh perspectives on council activities. Mechanisms for maximising this value have been considered and include more open-ended questions and debate with the relevant staff as well as more opportunities for interaction with the governance of the council (appropriate committee) and the CCO boards.

29. The programme needs to be managed at the right pace. It is important to ensure that momentum is maintained, but also that the programme enables robust participation and engagement. This may mean timelines differ depending on the activity under review.

Future of the VfM Programme

30. Leading into the term of a new council it is appropriate to consider the future shape of the programme and the advice that would be provided to the incoming mayor and councillors on continuing with the programme.

31. Many of the drivers to continue with the programme are unchanged, those being:

· the legislative requirement to continue with s17A reviews

· the challenges of Auckland’s ongoing growth and managing the costs and debt constraints associated with funding that growth

· a ‘best practice’ approach to ensuring that ratepayers are receiving best value for their money through optimising service delivery and costs

· ongoing political and organisational focus on the trade-offs between costs to ratepayers and the levels of service that are demanded in different activities

· transparency to the community of such trade-offs.

32. In addition, the macro issues that face the council and New Zealand generally (climate change, housing provision, environmental degradation) are making significant demands on constrained resources. Continuing a programme that ensures funding is released wherever possible to meet these increasing costs is essential in some form.

33. The VfM programme can also have a part to play in improving the community’s trust and confidence in the council’s performance. It provides the assurance that the council takes its responsibilities seriously in managing public funding through a robust programme of reviewing all activities with independent oversight. Given the global decline in trust in governments and institutions (e.g. Edelman Trust Barometer 2019), providing such assurance is valuable.

34. The form that the programme takes and the amount of effort and resource that go into it are essentially political decisions. Key issues for that consideration include:

· aligning the VfM programme with other initiatives (such as the annual efficiency savings, the simplification project) to ensure there is an integrated overview of all these activities

· acknowledging the wider approach to measuring ‘value’ that the VfM programme brings and capturing that within the integrated approach (i.e. that value is more than simply cost reductions)

· aligning the integrated programme with the next long-term plan process

· determining the programme approach in terms of specific groups of activities, cross cutting projects or a mixture of both

· a project structure that provides for appropriate political leadership and direction, particularly in those community facing activities which impact at a local level

· an ongoing role for independent oversight (such as the Independent Reference Panel).

35. It is proposed that staff will prepare a briefing paper to the incoming mayor and council setting out a recommended way forward. Reflections from the committee to inform that briefing paper would be welcome.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

36. The Value for Money programme has deliberately taken a group view of activities. This report sets out some of the challenges and opportunities to continue that approach. The briefing paper for the incoming council will seek the views of the substantive council-controlled organisations.

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

Local impacts and local board views

37. The programme to date has not significantly impacted at a local level. Many of the activities have been corporate support activities and others have been within the regional decision-making allocation. As the programme progresses there will be impacts at a local level and this report suggests that consideration needs to be given to the involvement of local boards at the appropriate time.

Tauākī whakaaweawe Māori

Māori impact statement

38. At an individual project level there has been consideration of the impact for Māori and some specific recommendations on this. This focus should continue to be a feature.

Ngā ritenga ā-pūtea

Financial implications

39. The Value for Money programme is focused on ensuring maximum value for the community from council expenditure. The cost of the programme ($1.54 million over two years) has more than been covered by the potential benefits identified and realised to date ($270 million). An ongoing focus on maximising value while minimising costs is essential in the context of some of the financial challenges that the council faces.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

40. There are no specific risks associated with adopting the recommendations of this report. Risks associated with adopting recommendations of individual projects within the overall programme are dealt with at the time of each report back.

Ngā koringa ā-muri

Next steps

41. Following agreement from the committee meeting today, staff will prepare a briefing paper on the future shape of the Value for Money programme, to be presented to the incoming mayor and council.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Summary of projects at benefit realisation stage	115

Ngā kaihaina

Signatories

Authors

Theresa Stratton - Senior Business Analyst

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

05 September 2019

Auckland Council progress on savings up to 30 June 2019

File No.: CP2019/14500

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 operating budget savings target for Auckland Council.

Whakarāpopototanga matua

Executive summary

2. The 10-year Budget 2018-2028 includes total cumulative operating savings for Auckland Council of $565 million over the next 10 years. The target for the 2018/2019 financial year was $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 10-year Budget 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. For the year ended 30 June 2019, the council performed well with a net direct expenditure that was $16 million more favourable than budget. After adjusting for the 2018/2019 carry-forwards and other one-off items and provisions, the underlying result is that the council has achieved $24.6 million of savings. Therefore, the savings target of $23 million has been realised.

6. On top of the $23 million, the council was targeting a further $7 million of savings to cover additional cost pressures from increased waste services, legal and insurance costs. However, only a further $1.6 million was achieved. The residual cost pressures of $5.4 million were able to be covered via interest costs being lower than budget. Therefore, there is no adverse impact on debt.

7. The majority of the savings of $24.6 million have been met through a strong focus on prudent financial management, totalling $18 million. The remainder was achieved across the other workstreams below respectively:

· procurement: $1.2 million

· organisational design: $2.6 million

· technology: $1.3 million

· increase non-rates revenue: $1.0 million

· Value for Money: $0.5 million.

8. On top of the cost savings, the Value for Money s17A programme has also identified potential benefits of over $500 million across the wider council group over the 10 years.

Ngā tūtohunga

Recommendation/s

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

a) note the Auckland Council progress report on savings up to 30 June 2019.

b) request staff to send the presentation to all councillors and local board members for their information.

Horopaki

Context

9. Savings are an important mechanism for Auckland Council to achieve a high level of cost efficiency and value for money. Savings targets are set at a level to provide enough focus on efficiencies without detriment to agreed service levels or health and safety.

10. Since Auckland Council was formed, it has included savings targets in its annual and long-term budgets after considering the level of the expenditure required to provide council services and the level of rates we collect.

11. From amalgamation to financial year 2017/2018, $270 million per annum savings have been realised.

12. Building on this progress, additional savings targets are included in the 10-year Budget 2018-2028, by including total cumulative operating savings for Auckland Council of
$565 million over the next 10 years. The target for the 2018/2019 financial year was $23 million.

13. 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

· Value for Money – reviewing the cost effectiveness of our services. This report primarily focuses on the cost savings on operating expenditure, not the overall benefits of the programme. Separate reporting is provided to this committee on the wider Value for Money programme.

14. The savings target relates to operating expenditure. It excludes any benefit relating to capital works and cost avoidance. These benefits are tracked separately.

Tātaritanga me ngā tohutohu

Analysis and advice

15. Up to 30 June 2019, $24.6 million of savings have been realised, with $6.4 million savings realised in the last quarter of the year. The majority of the savings have been met through a strong focus on prudent financial management, with the rest spread across the other workstreams.

Procurement

16. Savings to date of $1.2 million have been achieved.

17. Previously reported initiatives in this workstream include lower reparation costs for corporate property leases, lower internet connection costs and cost reductions from implementing a supplier panel for professional services related to processing resource consents and other applications.

18. A total of $146.6 million (annualised) procurement benefits have been achieved for 2018/2019, including benefits from productivity improvements, costs avoided, cost savings and revenue generated. In addition to these benefits, the council group has focused on creating better buying outcomes such as targeted employment and environmental outcomes.

19. The council procurement is currently exploring further savings opportunities from panel agreements and syndicated contracts for services delivered across the group. These agreements allow the council to benefit off work already completed, saving time and money for the wider organisation. They are also actively working on supplier diversity and engaging Maori businesses.

Organisational design

20. Savings to date of $2.6 million have been achieved.

21. Initiatives in this workstream previously reported include the redesign of Commercial Finance, the disestablishment of ACIL and changes to the composition of the executive leadership team.

22. A Corporate Finance Support Review was completed in May 2019. This has consolidated the Commercial and Finance teams for operations and support into a single team reporting to the Group Chief Financial Officer. This will lead to staff cost savings from closing-off vacant roles for future financial years.

Technology

23. Savings to date of $1.3 million have been achieved.

24. Initiatives in this workstream previously reported include the reduction of technology infrastructure licencing costs, robotics process automation and the reduction in licensing costs which has been found through the council’s Oracle licence.

25. A further $0.2 million has been achieved in the fourth quarter, primarily from discontinuation of ICT Support for Pathways and reduction in the number of staff required for complex bank reconciliations.

26. The SAP Hybris project was also completed in June. This project involved streamlining the process of transferring Regulatory Services data between Hybris and SAP CRM. The removal of manual key entries from both systems will reduce the processing time for regulatory services and improve customer experience through faster delivery of applications and consents.

27. Further to this, Community Facilities is now implementing an integrated utilities management system that will allow better management of utilities across council assets. This will reduce the costs associated with utility consumption and also reduce carbon emissions. It is expected to avoid $0.5 million of costs and generate $0.4 million in savings each year.

28. Major digital initiatives such as website redevelopment and single sign-on have improved our customer experience of numerous council services. With a more user-friendly digital interface for core services such as event booking and waste collection, the overall customer satisfaction has increased from 58 per cent in 2014/2015 to 65 per cent 2018/2019.

29. Other work underway that will be delivering benefits in the future include:

· myAUCKLAND – a new, personalised, digital dashboard which will enable customers to ‘track and trace’ their service interactions, request information and make payments

· governance technology - phase 1 – a technology platform that provides elected members with information in multiple forms such as videos, pictures, texts and graphs for clarity and ease of consumption

· legacy property records digitisation

· multi-cloud data centre

· pools and leisure staff rostering

· digital engagement platform.

Increasing non-rates revenue

30. Additional non-rates revenue of $1.0 million has been earned.

31. This has been achieved primarily through venue and facilities hire. With the improvements in the digital booking system, revenue is 15 per cent above budget. For the full year of 2018/2019, 41 per cent of venue hire bookings and 91 per cent of regional parks bookings were online.

32. Ongoing improvements in digital technology will help support future revenue growth through more self-service offerings and increasing awareness of the services council offer.

33. Further to this, the Business Opportunities Advisory Group (BOAG) at the council has been meeting regularly and discussing the non-rates revenue growth opportunities with a focus on new revenue streams. They have currently identified 15 commercial initiatives, most of which are now at the business case stage. These initiatives have the potential to generate additional non-rates revenue in future financial years.

Prudent financial management

34. Savings to date of $18 million have been achieved.

35. This is primarily due to a general focus on costs through a culture of questioning and challenging all expenditure.

36. Specific initiatives include:

· better use of contingent workers

· decommissioning budgeted inactive roles

· improved workforce planning and reporting

· reductions in redundancy costs as a result of a new redeployment function

· use of tools such as Skype for Business to reduce the need for travel.

37. The savings have been achieved primarily across the Finance, Planning and Governance functions.

38. This workstream also captures the savings resulted from BAU technology and procurement process improvements which are not captured under specific workstreams.

Value for Money

39. Savings to date have resulted in an operating cost reduction of $0.5 million.

40. Initiatives in this workstream previously reported include reduced costs for OurAuckland publication and research reports for communications and engagement.

41. The Value for Money s17A programme has realised $270 million of benefits to date. Specifically, $208 million has been realised in 2017/2018 and $62 million in 2018/2019. 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.

42. In total the programme has identified potential benefits of over $500 million across the wider council group over the 10 years.

43. 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

44. 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

45. 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

46. The savings initiatives delivered or in delivery have no specific impact on Māori outcomes.

Ngā ritenga ā-pūtea

Financial implications

47. The savings target of $23 million has been met. Therefore, there is no impact to the debt level and flow on effects on budgets for the financial year 2019/2020.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

48. Some of the initiatives that have been identified to deliver future 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

49. Progress has been made to develop a robust benefits register. The register is now capturing detailed initiatives from the six workstreams to support the 10-year budget savings programme.

50. A savings reporting project overview group has been set up to coordinate and monitor the reporting on savings progress and other benefits captured in the benefits register.

51. The next update will be provided after the council’s quarter one results are finalised for the financial year 2019/2020.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Authors

Tracy Xu - Financial Analyst

Robert Irvine - Head of Group Financial Planning

Authorisers

Matthew Walker - Group Chief Financial Officer

Phil Wilson - Governance Director

Appointments, Performance Review and Value for Money Committee

05 September 2019

Process for appointment of board members to the Community Education Trust Auckland - COMET

File No.: CP2019/15747

Te take mō te pūrongo

Purpose of the report

1. To receive information on the appointment process to fill two vacancies on the board of Community Education Trust Auckland – COMET, a council-controlled organisation.

Whakarāpopototanga matua

Executive summary

2. The power to appoint trustees to COMET’s board is vested in Auckland Council by the Deed of Trust (deed) that established COMET as a council-controlled organisation (CCO) in 2012.

3. COMET has undertaken an appointment process based on COMET’s trust deed requirements. This process is consistent with Auckland Council’s Appointment and Remuneration Policy for Board Members of Council Organisations.

4. A separate confidential report on this meeting agenda contains information and advice regarding recommended appointees to the COMET board.

Ngā tūtohunga

Recommendation/s

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

a) note that there is a confidential report on this meeting agenda with recommendations regarding the appointment of trustees to the board of Community Education Trust Auckland.

b) note this report is confidential due to the personal information due to the personal information contained in it and the final appointment decisions will be made publicly available at the conclusion of the appointment process.

Horopaki

Context

5. COMET’s deed calls for no fewer than seven and no more than twelve trustees. COMET has recently operated with nine trustees and advises that this number of trustees continues to be optimal. One recent resignation and one pending resignation mean that two trustees need to be appointed to maintain this current and desired level.

6. The power of appointment of all trustees to the board is vested in council as the settlor of COMET’s deed.

7. In 2015 COMET sought council approval for an amendment to its deed to allow for the appointment of trustees in the case of casual vacancies from time to time, for periods of three years to maintain continuity and institutional knowledge of trustees. This amendment was approved. The appointments sought at today’s meeting are to fill casual vacancies.

8. Appointment of the two recommended candidates will bring the total number of trustees to nine which is within the range of trustees required by the deed.

Tātaritanga me ngā tohutohu

Analysis and advice

9. COMET has undertaken a board appointment process based on their deed requirements and consistent with council’s Board Appointment and Remuneration Policy. This process included:

a) identifying skills, knowledge and experience, including current or future gaps on the board

b) advertising the board vacancy through an expression of interest process, including listings in Seek Volunteering, COMET’s social media channels, and the Institute of Directors website and newsletter

c) shortlisting and interviewing qualified candidates

d) recommendation of preferred candidates to council’s Appointments, Performance Review and Value for Money Committee (this report).

10. For these appointments, financial and legal expertise, strong connections with and understanding of the Māori community, knowledge of early childhood education, business expertise and fundraising experience were established as preferred qualifications based on current board composition and COMET’s mission.

11. Nine applications were received for the vacant positions. COMET’s chief executive and the chair of the board shortlisted two applicants. These applicants were interviewed by a subcommittee of the board and chief executive and evaluated against desired qualifications. These are the candidates recommended to the committee to appoint.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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

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

Local impacts and local board views

13. Appointments to CCO boards are the role of the governing body. Local board views are not sought on these matters.

Tauākī whakaaweawe Māori

Māori impact statement

14. COMET’s work is strongly focused on making access to education and skills more effective and equitable across Auckland. As COMET takes a cross-sector approach to education several areas of COMET’s work are directed to Māori and Pasifika communities where gaps in education have been identified and economic and social benefits can be realised.

15. COMET’s board vacancies offer an opportunity to contribute to the development of Māori capacity in governance. One of the key qualifications sought through this appointment was familiarity with and connection to Auckland’s Māori communities (mana whenua and mataāwaka).

Ngā ritenga ā-pūtea

Financial implications

16. Costs associated with these appointments will be managed from existing budgets.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

17. There are risks associated with all board appointments, including:

a) Reputational Risk: All candidates are appropriately screened to meet the skill requirements for directors of a board such as COMET’s and have appropriate governance experience especially with public-facing entities. To mitigate potential risks of appointing unqualified or under-qualified candidates, the following controls are in place:

i) a due diligence process is conducted on all candidate applications in conformance with council’s appointment policy.

ii) short-listed candidates will complete council’s director consent form prior to appointment which requires them to confirm that there is nothing that would compromise their effectiveness as a board member.

b) Reputational risk: Breach of privacy if confidential candidate information is released prior to final decisions of the committee. The risk is that fewer, and potentially less-qualified, candidates would be attracted to board service in the future. To mitigate this risk, staff will assure confidentiality during the board appointment programme.

c) 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 that the board lack innovation and fresh thinking. There is a need to maintain an appropriate balance of new and longer-serving board members to avoid these problems and to retain institutional knowledge.

Ngā koringa ā-muri

Next steps

18. Following approval by this committee, CCO Governance and External Partnership staff will work with COMET to ensure appropriate induction and documentation are completed for each of the approved candidates.

19. The appointment decisions of this committee will be made publicly available one the successful and unsuccessful candidates have been notified.

20. Current directors whose terms are ending will receive a letter of thanks.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Authors

Steven Branca - BID Partnership Advisor

Sarah Holdem - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Appointments, Performance Review and Value for Money Committee

05 September 2019

Process for the appointment of directors and board members to the Auckland's council-controlled organisations, the Auckland War Memorial Museum, and the Museum of Transport and Technology

File No.: CP2019/08916

Te take mō te pūrongo

Purpose of the report

1. To provide an update on the programme of appointments to the boards of Auckland Transport and Regional Facilities Auckland. These two entities are substantive Auckland council-controlled organisations (CCOs).

2. To provide an overview of the process to appoint directors to the boards of the Auckland War Memorial Museum (AWMM), the Museum of Transport and Technology (MOTAT).

Whakarāpopototanga matua

Executive summary

3. Auckland Council appoints directors to the boards of AWMM and MOTAT. Regional Facilities Auckland (RFA) supports the board appointment process by undertaking the candidate selection process and making recommendations regarding appointments to council.

4. The council appoints five of the ten members to the AWMM board. There are three board appointments to be considered this year by council.

5. The council appoints six of the ten members to the MOTAT board. There are three board appointments to be considered this year by council.

6. A confidential report is included in this agenda which provides the relevant information for the committee to make its decisions.

7. A second confidential report seeks approval from the committee regarding director appointments to Auckland Transport and RFA. Council is currently looking to appoint a director to Auckland Transport and RFA, and to also appoint a new chair of the Auckland Transport Board.

Ngā tūtohunga

Recommendation/s

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

a) note there is a confidential report on this meeting agenda providing recommendations regarding the appointment and/or reappointment of directors to the Auckland War Memorial Museum and the Museum of Transport and Technology boards

b) note that Regional Facilities Auckland supports the board appointment process for Auckland War Memorial Museum and the Museum of Transport and Technology boards by running a board member selection process and making recommendations to Auckland Council

c) note there is a confidential report on this meeting agenda requesting the committee make decisions regarding the appointment of directors to Auckland Transport and Regional Facilities Auckland

d) note that these reports are confidential due to the personal information contained in them and the final appointment decisions will be made publicly available at the conclusion of the appointment process.

Horopaki

Context

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

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

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

Links to legislation

11. The Auckland War Memorial Museum Act 1996 and the Museum of Transport and Technology Act 2000 govern the board appointment processes of these institutions. The advisory and management agreement requires RFA to recommend candidates to Auckland Council for these appointments.

12. A sub-committee of the RFA board has undertaken candidate selection process for these appointments which is consistent with Auckland Council’s Appointment and Remuneration Policy for Board Members of Council Organisations.

13. A separate confidential paper on today’s agenda considers the recommendations made by RFA.

Auckland War Memorial Museum

14. Auckland Council appoints five of the ten members to the AWMM board based on RFA’s recommendations. Four board members are appointed by the Auckland Museum Institute, and one board member is appointed by Taumata-a-Iwi.

15. RFA’s board appointment subcommittee has worked with the Auckland Museum Institute to jointly interview and identify candidates for the AWMM board.

Museum of Transport and Technology

16. Auckland Council appoints six of the ten members to the MOTAT board. The other four are appointed by the MOTAT Society.

17. RFA’s board appointment sub-committee worked with the deputy chair of the MOTAT board to jointly identify and interview candidates for the MOTAT board. The MOTAT Society runs a separate board appointment process for their appointments.

Regional Facilities Auckland

18. A confidential report on this meeting’s agenda provides advice regarding whether to reappoint two RFA directors, whose terms are ending in October 2019.

Auckland Transport

19. Auckland Council is currently in the process of appointing a director and a new chair to the Auckland Transport Board.

20. A confidential report on this meeting’s agenda provides advice about potential candidates for the vacant director role. The committee will be asked to make decisions about which candidates to interview.

21. A further confidential report will provide advice regarding the interviews for the Auckland Transport board chair role. The committee will be asked to make decisions regarding the appointment of a board chair.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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

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

Local impacts and local board views

23. Board appointments to external partnerships and 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

24. One AWMM board member is appointed by Taumata-a-Iwi. Taumata-a-Iwi is a committee established to ensure that the AWMM board’s policy aligns with Māori values, and matters enshrined in te Tiriti o Waitangi. Taumata-a-Iwi also advises on matters of Māori protocol within the museum and between the museum and tangata whenua at large.

25. The MOTAT board has a statutory duty to observe and encourage the spirit of partnership and goodwill envisaged by te Tiriti o Waitangi, including implications for Māori, and elements of Māori cultural property that only tangata whenua can provide appropriate care for.

26. Appointments to CCOs give opportunities for Māori to participate in the process. This includes appointing an Independent Māori Statutory Board member who can bring a specific lens to the process, provide the selection panel with recommendations, and participate in the shortlist and appointment process.

Ngā ritenga ā-pūtea

Financial implications

27. The costs associated with these appointments will be managed from existing budgets and existing RFA budgets.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

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

i) Reputational risks: all candidates are appropriately screened to meet the skill requirements for directors on boards such as these 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. RFA also ensures there is nothing that would prevent a candidate being appointed to the board of MOTAT and AWMM.

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

ii) Reputational: 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: 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

29. Once this committee has made decisions to appoint board members, staff from the CCO Governance and External Partnerships department and RFA staff will notify the candidates (successful and unsuccessful), and the chairs of the relevant boards. The decisions of the committee will be made publicly available once all of the candidates and the relevant boards have been notified.

30. Staff will also prepare letters of thanks for board members whose terms end in 2019.

31. CCO Governance and External partnerships department and Kerridge staff will undertake the next steps in securing interviews for the Auckland Transport vacancies. The candidates unsuccessful in the shortlist interviews will be notified by Kerridge staff.

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Attachments

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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

05 September 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: Appointment of board members to the Community Education Trust Auckland - COMET

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