Agenda of Governing Body - Thursday, 23 February 2023

Governing Body

23 February 2023

Approval of Auckland Council's submission on the Draft Report of the Future for Local Government Review Panel

File No.: CP2022/16999

Te take mō te pūrongo

Purpose of the report

1. To seek approval of Auckland Council’s submission in response to He mata whāriki, he matawhānui, the Future for Local Government Review Panel’s Draft Report.

Whakarāpopototanga matua

Executive summary

2. The Future for Local Government Review Panel released its Draft Report He mata whāriki, he matawhānui in October 2022.

3. The Report makes 29 recommendations around the basic premise that a shift to citizen-led democracy and priority setting is needed to be able to address declining trust and confidence. Achieving this shift requires a much stronger focus for local government on community wellbeing, working alongside communities, iwi/hapū, central government and others.

4. The council’s submission makes a number of statements in support of the Review. Where the council does not have a position, it recommends areas where further policy work would be useful.

5. The submission states that deliberative democracy practices are part of a full suite of engagement tools that is needed to revitalise democracy and rebuild trust. Requirements for engagement between Māori and local government need particular review. However, central government should be accountable for engaging with iwi/hapū/mana whenua on its reform programme not local government. Overall, clarity is needed on the application of te Tiriti o Waitangi to the Māori and local government relationship.

6. The council’s submission supports the role envisaged for local government in community wellbeing including enabling communities to lead their own responses to wellbeing issues. However, a shared understanding is needed on the scope of this role, including how it would differ from current activity, and how local government would collaborate and partner with community groups, hapū/iwi and central government. The way central government works with local government requires a significant re-set.

7. The council’s submission supports a more equitable funding system that supports communities to thrive and recommends more emphasis on such a system in the Review.

8. It is critical that, as part of this Review, there is a clear plan for achieving the preferred future for local government.

9. Some local boards have provided input into the draft submission and all local boards have the opportunity to append their formal feedback to the council’s submission.

10. All iwi entities were asked for feedback but none was received by agenda close, possibly due to time constraints. IMSB staff have been given the opportunity to review earlier drafts of the submission.

11. Staff will finalise the submission following input received at this meeting. The submission will be lodged with the Review Panel by 28 February 2023. The Review Panel must provide its final report to the Minister of Local Government by June 2023. The draft submission is appended as Attachment A.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whakaae / approve the council’s submission (Attachment A of the agenda report) in response to He mata whāriki, he matawhānui, the Future for Local Government Review Panel’s Draft Report, inclusive of changes agreed at this meeting.

b) tuhi ā-taipitopito / delegate final approval of the council’s submission to the Mayor and Deputy Mayor and a member of the Independent Māori Statutory Board.

Horopaki

Context

12. The Minister for Local Government established the Future for Local Government Review (the Review) in April 2021. The purpose of the Review is to identify how our local democracy and governance system needs to evolve over the next 30 years, to improve the wellbeing of communities and the environment and to actively embody the Treaty partnership.

13. The Review Panel released its Interim Report in October 2021. The case for change described a local government under pressure without all the levers needed to deliver on community wellbeing. The sector therefore needs to work collaboratively with others including central government, iwi/Māori organisations, business and community groups. It noted that trust had broken down and that there is a need for greater understanding between central government and local government.

14. The Panel released its Draft Report He mata whāriki, he matawhānui (the Report) on 28 October 2022. The Report can be found at https://www.futureforlocalgovernment.govt.nz/reports/

15. The Report makes 29 recommendations and asks a range of questions intended to inform the Final Report to the Minister for Local Government by June 2023.

16. The Panel states that we are in a period of change (climate change, pandemics, biodiversity loss, social and economic inequity). This is causing many of our communities to lose trust in democratic institutions and to disengage. Government reform is creating further uncertainty for the role of local government in communities.

17. The challenges facing Aotearoa New Zealand are too big for central government to address alone. Local government has a fundamental role to play in responding to these complex issues and improving the wellbeing of communities. This will require renewal and change (shifts) to many aspects of the local government system.

18. The Panel previously indicated five shifts are needed to make this change: strengthened local democracy, authentic relationships with hapū/iwi and Māori, a focus on wellbeing, genuine partnership between central and local government, and more equitable funding. Two additional shifts – system design and stewardship – will also need to be considered.

19. The Report sets out recommendations and asks questions in relation to: revitalising citizen-led democracy, Tiriti-based partnership between Māori and local government, allocating roles and functions, local government as champion and activator of wellbeing, replenishing and building on representative democracy, and equitable funding and finance.

20. The Panel has engaged with Auckland Council elected members three times since commencement of the Review: July 2021, March 2022 and December 2022.

Tātaritanga me ngā tohutohu

Analysis and advice

21. The Review into the future for local government has proceeded against a backdrop of the removal of functions traditionally carried out by local government.

22. The Review is looking out 30 years and is asking local government and others to “reimagine” the future for local governance. This requires the council to set aside current challenges and concerns to consider a future that has in place the system conditions needed for councils to successfully perform their roles.

23. While the Review proposes a number of shifts needed to achieve that system change, many of the individual recommendations could equally apply to the status quo, incrementally improving the performance and effectiveness of the current local government system.

24. The Report does not describe the relationships between all the elements of the Review. Auckland Council’s submission recommends focus on the establishment of a clear pathway for transformation to reduce the risk of disconnected actions around individual recommendations.

25. The council’s submission makes the following key points:

· A full suite of tools is needed to revitalise democracy and rebuild trust – the council recognises the value of deliberative and participative democracy practices and believes they complement rather than replace representative democracy and other forms of consultation and engagement.

· Requirements for engagement between Māori and local government need review – any review should take into account new mechanisms that are being established through reform processes currently underway (e.g. Three Waters and resource management) and evolving case law on Te Tiriti o Waitangi obligations.

· Central government must be accountable for engaging with iwi/hapū/mana whenua on its reform programme - it should not be left to local government to inform and identify potential impacts on iwi/hapū/mana whenua. Local government should, however, understand what those impacts might be, and be invited to engage with central government where policy changes are developed that have an impact on local government.

· Clarity is needed on the application of te Tiriti o Waitangi to the Māori and local government relationship - the varying form of statutory obligations to Māori, and the varying interpretation of those statutory obligations, has resulted in uncertainty.

· A shared understanding is needed of the scope of the role envisaged for local government in community wellbeing, including how this would differ from current activity – the council would be concerned if local government were expected to play an enhanced wellbeing role without increased funding and improved partnership models and mechanisms with central government and others.

· The way central government works with local government requires a significant re-set – the lack of constitutional status for local government has tended to diminish its legitimacy and ability to form partnerships with central government. Auckland Council encourages the Review to consider what a future model would look like where local government is an equal partner.

· There should be more emphasis in the Review on a more equitable funding system that supports communities to thrive. Funding tools at the council’s disposal must be appropriate for the demands and decisions the council is responsible for and the scale of growth – open and transparent discussions between central and local government are required on the cost of infrastructure to support growth and how that will be financed and funded.

· It is critical that this Review sets out a clear plan towards the preferred future to avoid other central government policy or direction, or other events, getting in the way of reaching that future.

26. This submission represents the council’s final formal opportunity to input into the Review. Since the central government elections will be held in October 2023, decisions on the final recommendations of the Review Panel will be for the next government.

27. Staff will report back to the Governing Body when any policy or legislative proposals are made in response. This is unlikely to be before the second half of 2024.

Tauākī whakaaweawe āhuarangi

Climate impact statement

28. The Report acknowledges that councils have a significant role in mitigating and adapting to climate impacts in their areas. It also notes that the future climate challenge for local government is likely to be greater than the challenge it has faced over the past 30 years to address the infrastructure deficit.

29. Current funding streams to manage the impacts of climate events are already being challenged, placing many communities at risk and requiring a long-term approach to addressing these issues. The sums involved to mitigate and respond to climate effects are likely to be significant.

30. Auckland Council’s draft submission supports Recommendation 23, that central government develops an intergenerational fund for climate change, with the application of the fund requiring appropriate regional and local decision-making input.

31. Central government funding is crucial and must have a long-term focus. There is a need to clearly define roles and responsibilities, including the sharing of costs between levels of government.

32. The Climate Adaptation Act is one of three pieces of legislation that make up the resource management reforms. The Bill is expected to be introduced this year and is intended to address issues associated with managed retreat. An intergenerational fund is likely to be considered as part of this legislation.

33. Auckland Council’s submissions on the Spatial Planning Bill and the Natural and Built Environment Bill argued that, without a clear understanding of the scope of the Climate Adaptation Act, it is difficult to anticipate how the three acts work together and how the reforms will reduce emissions and effectively address the impacts of climate change.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

34. Any change to the future for local government would have impacts across the council organisation and CCOs. Experts from the council organisation and CCOs have provided input into the development of the council’s submission.

35. CCO chairs and chief executives were provided with a summary and high-level analysis of the Draft Report shortly after its release.

36. Staff have been invited to present to the Auckland Transport Board on 14 March 2023.

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

Local impacts and local board views

37. The Panel’s Draft Report proposes that putting wellbeing at the core of council’s purpose and its roles and functions will unlock greater wellbeing outcomes for communities. Councils have an opportunity to strengthen and expand their role in three key ways: as anchor institutions, place-makers, and systems networkers and convenors.

38. The Draft Report also proposes a framework to guide the allocation of roles and functions between different groups/agencies: central government, local government, hapū/iwi and community. The framework starts with a local-first approach (the subsidiarity principle) and is guided by te ao Māori values. The council’s draft submission supports the concepts of localism and subsidiarity and notes that under Auckland Council’s governance decision-making responsibilities, local boards make all the decisions regarding non-regulatory activities unless there are good reasons for such decisions to be made regionally by the Governing Body. This approach has been suggested for the allocation of functions and roles between central government and local government.

39. The Review Panel has engaged with local board members over the course of the Review in July 2021, March 2022 and most recently on 5 and 6 December 2022 through three separate in-person sessions held across Tāmaki Makaurau Auckland.

40. Staff provided a briefing on the Draft Report to local boards on 23 January. Local boards have been invited to provide input into the council’s submission and to append formal feedback to the submission.

41. While there is no overall consensus amongst local boards that have provided input to date, the following points were incorporated into the council’s submission:

· Any additional costs to local government because of changes to legislated engagement and consultation requirements should be accompanied by increased central government funding.

· Different iwi have different levels of capacity to undertake engagement with local government and a “one-size-fits-all” approach may not work.

· There is a need to simplify the voting process and to make the voting process between central and local government elections as similar as possible.

· A co-design rather than a prescriptive approach would be preferred for allocating roles and functions.

· The Single Transferrable Vote (STV) system requires voters to take more time to fill out their ballots and to have a high level of knowledge of the candidate in order to be able to rank them.

· In the Auckland context, local boards play a significant role in ascertaining and delivering on community priorities.

· Existing capacity-building activities are already taking place, for example, the Strategic Partnerships Programme in Maungakiekie-Tāmaki Local Board area which supports fledgling and growing community organisations with funding and coaching as they become more established and well-networked, working towards independence and sustainable funding streams.

Tauākī whakaaweawe Māori

Māori impact statement

42. The new framework proposed by the Review for achieving Tiriti-based partnership is in three broad parts: setting the system conditions (new legislative framework, strategic role for Māori in local governance), supporting the change to happen (building capability and capacity), and fostering the relationship at a number of levels (specific arrangements for partnership and co-governance, improving Māori participation in local government, improving Māori representation in council governance).

43. The current legislative baseline is spread across a number of statutes, including the Local Government Act 2002 and the Resource Management Act 1991. The varying form of statutory obligations to Māori, and the varying interpretation of those statutory obligations, has led to uncertainty on the application of te Tiriti o Waitangi to the Māori/local government relationship. Clarification of this relationship would ensure a clear understanding and consistent approach across local government.

44. Recommendation 20 proposes a new model of council governance to address the issue that local elections do not always provide councils with the comprehensive mix of governance capabilities needed to respond to increasingly complex issues, and Māori wards were not designed to provide for a Tiriti-based partnership around the council table. In response to the latter point, the Review considers partnership will be significantly enhanced if hapū/iwi, and in some cases representatives from wider Māori entities, are represented at the council table. Appointment proposals would be subject to the approval of an independent statutory body.

45. Staff have engaged with iwi on the system shifts proposed by the Panel at earlier stages in the Review process. Following the release of the Report, iwi were asked for their views to be considered for inclusion in the council’s submission. At the time of writing, no input had been received.

46. There has been ongoing engagement with IMSB staff on the Review and they have been given an opportunity to provide feedback on the council’s draft submission.

Ngā ritenga ā-pūtea

Financial implications

47. The submission has been developed within existing resources.

48. The recommendations in the Draft Report are multi-faceted and there is insufficient information to anticipate or quantify financial implications for the council.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

49. No risks have been identified in relation to preparation of the council’s submission.

Ngā koringa ā-muri

Next steps

50. Staff will finalise the submission on the basis of direction from this Governing Body meeting and seek approval for the final submission from the delegated approvers’ group. The submission will be lodged with the Future for Local Government Review Panel by 28 February 2023. The Review Panel must provide its final report to the Minister of Local Government by 30 June 2023.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Draft Submission on the Future for Local Government Review

Ngā kaihaina

Signatories

Author

Denise O’Shaughnessy - Manager Strategic Advice

Authorisers

Jacques Victor – General Manager Auckland Plan Strategy and Research

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

23 February 2023

Auckland Council's submission on the Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill

File No.: CP2023/01065

Te take mō te pūrongo

Purpose of the report

1. To approve Auckland Council’s submission on the Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill.

Whakarāpopototanga matua

Executive summary

2. The Finance and Expenditure Select Committee called for submissions on the Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill on 14 December 2022. Auckland Council has an extension to provide its submission by 24 February 2023.

3. The Water Services Legislation Bill is an omnibus bill that amends other Acts, including the recent Water Services Entities Act 2022, to detail the implementation arrangements, functions, powers, obligations and oversight arrangements of the water services entities.

4. The Water Services Economic Efficiency and Consumer Protection Bill sets out the economic regulation and consumer protection framework.

5. A Governing Body workshop on the three waters reform was held on 8 February 2023 to discuss the council’s submission points on the bills. These include:

· Stormwater, land use and planning – integrated nature of these functions and risks in separating them between entities

· Pricing and economic regulation – lack of political oversight and narrow charging principles

· Performance and accountability – lack of effective control and oversight

· Land assets and transfer – lack of clarity on open space assets

· Financial impact – insufficient detail in the legislation

· Transition – risks and gaps in planning.

6. The submission is still being finalised based on elected members’ feedback and will be circulated under separate cover.

7. The Government is considering changes to the Three Waters Reform Programme. The impact of any future changes on the content of the bills is unknown.

Ngā tūtohunga

Recommendations

That the Governing Body:

a) whakaae / approve Auckland Council’s submission on the Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill.

b) tautapa / delegate to the Mayor and Deputy Mayor the final approval of council’s submission as a result of any feedback from the Governing Body.

c) tautapa / delegate to the Mayor or his representative/s the authority to speak to the submission on behalf of the Governing Body at the Finance and Expenditure Select Committee.

Horopaki

Context

8. The Government has, over the last five years, been working to address a complex set of issues relating to the regulation, financing, funding and provision of drinking water, wastewater, and stormwater services – the Three Waters Reform Programme. The programme has four key outcomes:

· safe, reliable drinking water

· better environmental performance of water services

· efficient, sustainable, resilient and accountable water services

· making it affordable for future generations.

9. The reform programme has two elements: new economic and environmental regulatory frameworks and a new service delivery model.

10. Auckland Council has supported the new regulatory frameworks, to lift standards of water quality and wastewater treatment across New Zealand and introduce economic regulation to improve efficiency and productivity (GB/2021/110).

11. Auckland Council notes that the greater scale and capability sought through the reform has already been achieved in Auckland with the delivery of water and wastewater services by Watercare.

12. Auckland Council has not supported the reform’s service delivery changes which establish four publicly owned entities to take responsibility for drinking water, wastewater and stormwater infrastructure across New Zealand. Council is concerned over the ownership and governance arrangements that remove democratic accountability and the loss of direct control by councils over water service entities. It considers that there are alternative governance and financial models to that proposed which will achieve most of the government’s water reform outcomes (GB/2021/110).

13. The Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill were referred to the Finance and Expenditure Select Committee on 14 December 2022. The select committee called for submissions on 21 December 2022.

14. Local government submissions were due by 17 February 2023. This is a very short timeframe and makes it challenging to respond to the detailed and technical content in the bills, especially given various changes made to the Water Services Entities Act when enacted in December 2022. Auckland Council has an extension to lodge its submission by 24 February 2023.

15. The Prime Minister announced on 8 February 2023 that cabinet is considering changes to the Three Waters Reform Programme but he was also clear that “the need for reform is unquestionable”. The impact of any future changes on the content of the bills is unknown.

Tātaritanga me ngā tohutohu

Analysis and advice

16. The Water Services Legislation Bill is an omnibus bill that amends many Acts, including the recent Water Services Entities Act 2022, to set out the implementation arrangements, functions, powers, obligations and oversight arrangements of the water services entities. It sets out:

· provisions relating to the transfer of assets, liabilities, and other matters from local authorities to new water services entities

· service delivery functions and powers, to enable water services entities to deliver water services in place of local authorities

· regulatory functions and powers of the water services entities

· pricing and charging arrangements for water services

· changes to Treaty settlement legislation to ensure that settlement obligations are carried forward from territorial authorities to the new water services entities

· detailed changes to local government legislation, the Resource Management Act 1991, the Water Services Act 2021.

17. The Water Services Economic Efficiency and Consumer Protection Bill sets out the economic regulation and consumer protection framework.

18. The bills follow the Water Services Entities Act 2022, which contains the overall ownership, governance, and accountability arrangements relating to water services entities, and the transitional arrangements during the establishment period.

19. While some changes were made to the Water Services Entities Bill on enactment as a result of earlier submissions, these did not address council’s fundamental concerns with the reforms. The details contained in these further bills reinforce many of the policy concerns with the reform identified by the council previously about council control and democratic accountability, and the unnecessary complexity when simpler policy responses could have been made.

20. A Governing Body workshop on the three waters reform was held on 8 February 2023 to discuss the council’s submission. A general concern is the scale of the corporatisation which extends beyond service delivery and into matters of strategy, policy and “taxation” usually reserved for elected representatives. While the water services entities are supposed to be plan-takers rather than plan-makers, the full scheme of the reforms blurs those demarcation lines.

21. Six themes were discussed, which are listed below.

22. Stormwater, land use and planning - Stormwater functions should not be transferred to water services entities. The concerns the council expressed to the Select Committee on the Water Services Entities Act about the inclusion of stormwater are borne out by this new Bill. The benefits of transferring stormwater have not been demonstrated whereas there are significant additional costs and bureaucratic complexities for integrated land and water management and other matters. The risks of misalignment are significant, and the transfer effectively splits a range of stormwater activity, resulting in disaggregation contrary to the stated aims of the reforms.

23. Pricing and economic regulation - Economic regulation through the bill is focused on ensuring efficiency and protecting consumers and it is not clear how the regulator will consider matters beyond the direct costs and benefits from the consumer or household perspective. The charging principles are relatively narrow and a Government Policy Statement may include expectations as to geographic price averaging. Auckland customers would likely to be cross subsidising Northland customers of Entity A under geographically averaged pricing. Council has limited ability to influence delivery priorities, investment and pricing decisions. It is also now confirmed that the stormwater funding model for water services entities will be akin to a targeted rate, but set by the water services entities in accordance with their decisions on service levels.

24. Performance and accountability - The drive for balance sheet separation from councils as the owners has resulted in a compromised accountability framework for the water services entities. This is in contrast to previous public sector corporatisation reforms which emphasised the shareholder’s strategic direction-setting role at the political level, and the performance accountability of the boards for service delivery. The result is added complexity and cost and limited democratic accountability compared to a council-controlled organisation model. There is also significant alignment, integration and performance risk.

25. Land assets and transfer - Council proposes that all open space is excluded from transfer to the new water services entities. Instead, use, access and management rights can be provided through lease, licence and service level agreements as appropriate. The water services entities should be treated the same as other utilities for rating purposes.

26. Financial impact - Councils will be compensated for three water assets through the payment of three waters debt only. There is not enough detail provided in the legislation to determine financial implications for Auckland Council.

27. Transition - The transition process is not clear enough to enable risks to be managed. Much of the decision-making around the form and function of the new regime is left to water services entities and the Minister in consultation with local authorities. Definitions, timeframes and processes for decisions are unclear, resulting in a risk of gaps in or duplication of the services the water services entities and councils provide to our communities. Proposed timeframes also leave a six-year gap in coordinated long-term infrastructure planning for Auckland.

28. Council’s submission is still being finalised and will be provided under separate cover.

Tauākī whakaaweawe āhuarangi

Climate impact statement

29. One of the six objectives of the new water services entities will be to deliver water services in a sustainable and resilient manner that seeks to mitigate the effects of climate change and natural hazards.

30. The Minister may issue a Government Policy Statement on the overall direction and priorities for water services and this may also include the Government’s expectations for the contribution of water services entities to climate change mitigation and adaptation.

31. It is not clear that the reform details under these bills will assist Auckland to achieve its goals under Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan. The reform separates stormwater functions from councils without proper linkages to land use planning, transport planning and environmental management roles and therefore there are significant concerns as to how these reforms will enable Te Tāruke-ā-Tāwhiri to be achieved.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

32. Contributions from relevant council departments and Auckland Transport have been provided to develop the council’s submission to the bills. Of particular concern to Auckland Transport is the future relationship between its transport stormwater systems and Entity A’s other stormwater functions.

33. Information has been shared with Watercare, which is also preparing a submission focused on entity operational matters.

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

Local impacts and local board views

34. Local boards were briefed on 17 February 2023 and formal local board feedback received will be appended to the council’s submission.

Tauākī whakaaweawe Māori

Māori impact statement

35. Council has sought feedback on the Three Waters Reform Programme from mana whenua and the Tāmaki Makaurau Mana Whenua Forum.

36. In 2021 the Forum advised the Governing Body that it agreed that reform is required, including to enable greater investment in water infrastructure to benefit all who reside in Tāmaki Makaurau, and to enable iwi rights and interests. The Forum concerns included:

· That the Regional Representative Group proposed falls well short of co-governance and co-ownership and would not provide effective oversight and accountability.

· There is not a clear interrelationship between the range of interconnected reform processes currently underway, and that the resulting siloes need to be addressed.

· Lack of priority shown by successive Governments on the issue of recognising iwi rights and interests in freshwater including allocation concerns which are fundamental to te mauri and to mana o te wai.

37. Council’s submission was provided to the Independent Māori Statutory Board for feedback.

Ngā ritenga ā-pūtea

Financial implications

38. This submission has been developed within existing budget provisions.

39. It is noted that around 28 per cent of the council’s existing assets are water, wastewater and stormwater assets, and that in the 10-year budget 2021-31, around 25 per cent of council’s total funding was allocated to water, wastewater and stormwater.

40. The final financial outcome for Auckland Council is still unclear as work continues with the Department of Internal Affairs.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

41. Significant risks of the three waters reform were identified in previous advice to the Governing Body in June 2022, including:

· strategic direction of Entity A may not reflect Aucklanders’ interests

· higher costs and poor community outcomes from fragmented and uncoordinated planning and provision of infrastructure

· levels of service determined by an economic regulator or Entity A which could see Auckland deprioritised to meet obligations outside Auckland

· insufficient industry capacity to undertake all the investment required

· the costs of the reform to council

· the decoupling of stormwater and land management functions making developing and implementing efficient and effective responses to big challenges such as climate change, hazards and growth more challenging.

42. A report on the Three Waters Reform Programme was provided to the Audit and Risk Committee in December 2022. The key risk for council highlighted in the report is the transition phase, including the lack of clarity in the government’s reform programme and timing of reform, along with council’s ability to adequately resource the reform transition. There is a limited pool of resources to ensure momentum in the delivery of council’s business as usual programmes as well as supporting transition activities. Lack of resource is a high risk, exacerbated by the impact of recent storm events in Auckland.

43. Staff have considered these risks in developing the council’s draft submission.

Ngā koringa ā-muri

Next steps

44. Auckland Council must lodge its submission to the Finance and Expenditure Select Committee on the bills by 24 February 2023. The select committee has resolved to conduct its hearings between 27 February and 15 March 2023.

45. The deadline for the Finance and Expenditure Committee to report back on the bills is 25 May 2023.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Authors

Trudi Fava - CCO Programme Lead

Bram VanMelle - Manager Property and Commercial

Authorisers

Megan Tyler - Chief of Strategy

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

23 February 2023

Amendments to the Governing Body Terms of Reference and to the Constitution of Ports of Auckland Limited

File No.: CP2023/00587

Te take mō te pūrongo

Purpose of the report

1. To approve amendments to the Auckland Council Governing Body Terms of Reference (ToR) and the constitution of Ports of Auckland Limited (POAL) recommended by the Performance and Appointments Committee.

Whakarāpopototanga matua

Executive summary

2. At its 21 February meeting the Performance and Appointments Committee considered various director appointment issues including delays in the CCO director appointment process, decision-making responsibility for appointing POAL directors, and two clauses relating to director appointment in the POAL constitution.

3. The Performance and Appointments Committee approved a series of changes to address the identified issues that require amendments to the ToR and POAL constitution. These changes will improve the timeliness of director appointments; increase the democratic accountability and transparency of appointment decisions to the POAL board; and improve shareholder control of POAL. The agenda item can be accessed here. The decision from the Performance and Appointments Committee will be tabled at the meeting.

4. Because the Governing Body has decision-making responsibility for the ToR and the POAL constitution, the Performance and Appointments Committee made the following recommended changes to the Governing Body.

The recommended changes to the ToR are:

· Increase the frequency of Performance and Appointments Committee meetings to monthly to improve the timeliness of appointment decisions.

· Delegate responsibility for appointments to the POAL board to the Performance and Appointments Committee and revoke the delegation to the Ports of Auckland Limited Appointments Panel (POALAP).

The recommended changes to the POAL constitution are:

· Simplify the term length by including a straightforward three-year maximum term as is the case with the CCOs. On expiry of the three-year term a director will be eligible for reappointment. No director will be appointed for more than three consecutive terms of three years. This will replace the current complicated rotation system whereby a third of directors retire at each Annual General Meeting.

· The shareholder appoints the chair and deputy chair of the board replacing the current election of a chair and deputy chair by the board members. This change aligns with the constitutions of the substantive CCOs.

5. Any change to the POAL constitution requires the prior approval of the Minister of Transport. Therefore, the recommended changes are subject to approval from the Minister of Transport.

6. On approval of these changes the Appointments and Remuneration Policy for Board Members of Council Organisations (Appointments Policy) will be amended so that future POAL appointment processes will follow the same decision making as for substantive CCOs.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whakaae / approve an amendment to the Governing Body Terms of Reference so that the Performance and Appointments Committee meets monthly

b) tautapa / decision-making responsibility to the Performance and Appointments Committee for appointments to, and removals from, the Ports of Auckland Limited board

c) whakakore / revoke the delegation to the Ports of Auckland Limited Appointments Panel for appointments to the Ports of Auckland Limited board

d) tautapa / delegate to the Director, Governance and CCO Partnerships power to make the necessary amendments to the Governing Body Terms of Reference to give effect to clauses a), b) and c)

e) whakaae / approve amendments to the Ports of Auckland Limited constitution (subject to approval from the Minister of Transport) so that:

i) the term length for board members is up to three years. On expiry of the three-year term a director will be eligible for reappointment. No director will be appointed for more than three consecutive terms of three years

ii) the shareholder appoints the chair and deputy chair of the board

f) tautapa / delegate to the Mayor to write to the Minister of Transport to seek approval for the changes to the Ports of Auckland Limited constitution

g) tautapa / delegate to the Director, Governance and CCO Partnerships to make the required amendments to the Ports of Auckland Limited constitution, subject to approval by the Minister of Transport.

Horopaki

Context

7. A full review of the Appointments Policy is on the Performance and Appointments Committee work program. The full review is due to be completed in the second half of this year. Staff have started the review and identified the issues discussed in this report which should be dealt with immediately.

8. At its 21 February meeting the Performance and Appointments Committee approved various amendments to address the identified issues. The amendments require changes to the ToR and POAL constitution.

9. Because the Governing Body has decision-making responsibility for the ToR and POAL Constitution, the Performance and Appointments Committee agreed the following recommended changes to the Governing Body:

a) recommend to the Governing Body that the frequency of Performance and Appointments committee meetings is increased to monthly.

b) recommend to the Governing Body that it delegates responsibility for appointments to the Ports of Auckland board to the Performance and Appointments Committee and revoke the delegation to the Ports of Auckland Appointments Panel.

c) recommend to the Governing Body that the necessary steps are taken to amend the Ports of Auckland Limited constitution so that:

ii) the shareholder appoints the chair and deputy chair of the board.

Tātaritanga me ngā tohutohu

Analysis and advice

10. Tables 1-4 below set out the analysis for the decisions that the Performance and Appointments committee has recommended to the Governing Body.

Table 1:

Frequency of Performance and Appointments Committee meetings
Issue	Performance and Appointments Committee meetings are held too infrequently which can cause delays in the appointments process.
Performance and Appointments Committee Recommendation	The frequency of Performance and Appointments Committee meetings should be monthly.
Analysis	The requirement in the Appointments Policy to seek committee approval of a short-list of candidates prior to interviews adds time to the process in preparing advice and awaiting the next committee meeting. The committee is currently scheduled to meet quarterly which could mean that approval to interview the short-listed candidates is delayed by more than a month. To deal with the delays the Performance and Appointments Committee delegated the approval of the short-list to a panel consisting of the Mayor, chair and deputy chair of the committee and the Independent Māori Statutory Board chair for the appointment processes initiated in December 2022 [PACCC/2022/3]. This solution is inconsistent with the Appointments Policy and is not a long-term solution. Scheduled monthly meetings will help to reduce delays. The meetings may not be needed, but monthly meetings will provide the committee with the flexibility needed to address board appointments efficiently.
Required Governing Body Decision	The Governing Body is asked to amend the ToR for the Performance and Appointments Committee to allow for monthly meetings.

Table 2:

Decision-making responsibility for POAL director appointments
Issue	Decisions to appoint directors to the POAL board are made by the POALAP and do not have the same democratic accountability and transparency as appointments to the substantive CCO boards which are made by the Performance and Appointments Committee.
Performance and Appointments Committee Recommendation	Responsibility for appointments to the POAL board should be delegated to the Performance and Appointments Committee and the delegation to the POALAP be revoked.
Analysis	On the disestablishment of Auckland Council Investments Limited, the responsibility for appointing POAL board members was delegated to the POALAP. Membership of the POALAP is the Mayor (acting as chair of the POALAP), Chief Executive of Auckland Council and Chair of the POAL board. This is a small panel with only one elected member. POALAP decisions do not have the same democratic accountability and transparency as appointments to the substantive CCO boards which are made by the Performance and Appointments Committee. The POAL board has been informed of this change through the board chair and have not noted any concerns. The Memorandum of Understanding between POAL and the council (MOU) notes that the council is required by the Local Government Act 2002 to have a policy for board appointments to council organisations. The Appointments Policy is annexed to the MOU. The MOU should be updated with the amended Appointments Policy and a copy provided to the POAL board. Subject to this decision, the Performance and Appointments Committee has agreed to amend the Appointments Policy so that the appointment process for POAL mirrors the process for the substantive CCOs. This change will mean that Council is responsible for the director recruitment process. Currently the POAL board is responsible for the recruitment process.
Required Governing Body Decision	The Governing Body is asked to: a) delegate decision-making responsibility to the Performance and Appointments Committee for appointments to, and removals from, the POAL board; and b) revoke the delegation to the POALAP for appointments to the POAL board. The ToR will be amended to record the delegation and revocation.

11. Under section 4 of the Port Companies Act 1988, any change to the POAL constitution requires the prior approval of the Minister of Transport. Therefore, the Governing Body is asked to approve the recommended changes to the POAL constitution in tables 3 and 4 subject to the approval from the Minister of Transport. This approval will be sought through a letter from the Mayor to the Minister of Transport.

Table 3:

Amendment to POAL Constitution: Tenure of board members
Issue	The POAL constitution has a director rotation clause that requires a third of directors to retire at each Annual General Meeting and the retiring directors are eligible for reappointment. In practice this rotation clause is unnecessarily complicated and can lead to recently appointed directors having to retire if a longer serving director was recently reappointed.
Performance and Appointments Committee Recommendation	Amend the POAL constitution so that the term length for board members is up to three years. On expiry of the three-year term a director will be eligible for reappointment. No director will be appointed for more than three consecutive terms of three years.
Analysis	The POAL constitution includes a director rotation clause (clause 26.7) which requires one third of the longest serving directors to retire each year. The retiring directors are eligible to be reappointed. The constitution should be amended to simplify the term length by including a straightforward three-year maximum term as is the case with the CCOs. On expiry of the three-year term a director will be eligible for reappointment. No director will be appointed for more than three consecutive terms of three years. The POAL board and the POALAP have previously requested this change. It is appropriate to the make this change now while other changes are made to director appointments.
Required Governing Body Decision	The Governing Body is asked to amend the POAL constitution so that the term length for board members is three years. On expiry of the three-year term a director will be eligible for reappointment. No director will be appointed for more than three consecutive terms of three years. The Governing Body is also asked to delegate responsibility to the Mayor to write to the Minister of Transport seeking approval for the proposed change to the constitution.

Table 4:

Amendment to POAL constitution: Chair and Deputy Chair appointment
Issue	Under the POAL constitution the directors elect the chair and deputy chair.
Performance and Appointments Committee Recommendation	Amend the POAL constitution so that the shareholder appoints the chair and deputy chair of the board.
Analysis	Under clause 33.9 of the POAL constitution the directors may elect the chairperson and deputy chairperson of their meetings and determine the period for which they respectively are to hold office. By comparison, under the constitution of the CCOs it is the council who appoints the chairperson and deputy chairperson of the board. The POAL constitution should be amended so the council appoints the chairperson and deputy chairperson to improve shareholder control of the company.
Required Governing Body Decision	The Governing Body is asked to amend the POAL constitution so that the shareholder appoints the chair and deputy chair of the board. The Governing Body is also asked to delegate responsibility to the Mayor to write to the Minister of Transport seeking approval for the proposed change to the constitution.

Tauākī whakaaweawe āhuarangi

Climate impact statement

12. These decisions are unlikely to result in any identifiable changes to greenhouse gas emissions. The effects of climate change will not impact the decision’s implementation.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

13. The POAL board has been consulted via the board chair and are not opposed to the changes proposed in this report.

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

Local impacts and local board views

14. Board appointments and related policy are the role of the Governing Body. Local boards may participate in the nomination process for director vacancies.

Tauākī whakaaweawe Māori

Māori impact statement

15. Kia ora Tāmaki Makaurau sets as a mahi objective that: "Mana whenua and Māori are active partners and participants at all levels of the council group's decision making".

16. The recommendations in this report mean that the IMSB would have a greater role in making appointments to the POAL board as members of the Performance and Appointments Committee and as members of the selection panel.

Ngā ritenga ā-pūtea

Financial implications

17. There are no material financial implications from the recommendations of this report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

18. There are no identified risks associated with the recommended amendments to the ToR.

19. If the Minister of Transport does not approve amendments to the POAL constitution, resolutions of the Governing Body will not be implemented.

20. If the recommendations are not implemented, this would mean that the POAL board would retain responsibility for choosing their chair and deputy from within their membership and the current system of director retirement at the AGM would remain in place.

Ngā koringa ā-muri

Next steps

21. The ToR will be amended to reflect the decisions of the Governing Body.

22. Staff will schedule additional meetings of the Performance and Appointments Committee so that the committee meets monthly.

23. The MOU between the council and POAL will be updated with the amended Appointments Policy and a copy provided to the POAL board.

24. The Mayor will seek approval from the Minister of Transport for the agreed amendments to the POAL constitution.

25. Following approval by the Minister of Transport, the POAL constitution will be amended.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Authors

Chris Levet - Principal Advisor

James Stephens - Senior Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Director, Governance & CCO Partnerships

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

23 February 2023

Te Whau Pathway Project - options to complete three areas

File No.: CP2023/00623

Te take mō te pūrongo

Purpose of the report

1. To seek a decision from the Governing Body on the future of sections of the Te Whau Pathway Project (TWPP) that are funded by Crown Infrastructure Partners (CIP).

Whakarāpopototanga matua

Executive summary

2. Te Whau Pathway Project is a partnership project that was initiated in 2014. It is a shared path for pedestrians and cyclists, following a traditional Māori taonga waka (portage). Fully realised, the pathway would connect Manukau Harbour at Green Beach to the Waitematā Harbour at Te Atatū Peninsula.

3. To date, a total of 2.2 kilometres has been delivered, including 730 metres as part of the Shovel Ready Project initiative.

4. In 2020, as part of the COVID-19 recovery, TWPP was identified as a ‘shovel ready’ infrastructure project through the process agreed by the Emergency Committee (EME/2020/13). The project was then allocated $35.3 million of funding from central government through Crown Infrastructure Partners (CIP) for design and delivery.

5. To date, a total of 2.2 kilometres has been delivered, including 730 metres as part of the Shovel Ready Project initiative.

6. In the funding proposal submitted to CIP the budgeted costs for future stages were based on early estimates available from the concept design.

7. In July 2021, a funding shortfall was identified as the project progressed to detailed design. To address the shortfall, CIP agreed to reduce the scope of the project and a council funding contribution was made.

8. The revised scope of the project was:

· Area 1 - Section 2: Wingate Street to Ken Maunder Park - within the Whau Local Board area (partially complete)

· Area 2 - Section 5 Roberts Field to Bridge Avenue, within the Henderson-Massey Local Board area, and

· Area 3 - Section 5 State Highway 16 to Bridge Avenue within the Henderson-Massey Local Board area.

9. To mitigate the impacts of inflation and global shipping delays, an early works contract was established to procure key materials for Area 2 (the critical path section of the project) and Area 3, and establish site yards to store the materials and commence the project.

10. The main works contract price was confirmed upon completion of detailed design. Volatile market conditions and a high-risk environment have caused realisation of identified project funding risks. There is currently a budget shortfall with no confirmed source for additional funding.

11. Due to the insufficient budget available to enter the construction contract, the project is currently paused. CIP have been notified and existing funding allocated to the project has been suspended pending a decision on its future.

12. A decision is sought from the Governing Body on whether to progress the project and the source of any additional funding.

13. The substantive discussion on the project will take place in the confidential part of the agenda as the report contains financial implications under negotiation with central government, project partners, and contractors.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) tuhi ā-taipitopito / note the information about the Te Whau Pathway Project – options to complete three sections

b) tuhi ā-taipitopito / note the report in the confidential section of the agenda on options and potential future funding sources

c) tuhi ā-taipitopito / note that the report is confidential due to the financial implications under negotiation with central government, project partners and contractors.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

Taryn Crewe - General Manager Parks and Community Facilities

Authorisers

Claudia Wyss - Director Customer and Community Services

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

23 February 2023

Summary of Governing Body and Committee information memoranda and briefings - 23 February 2023 including the Governing Body Forward Work Programme

File No.: CP2022/16990

Te take mō te pūrongo

Purpose of the report

1. To receive a summary and provide a public record of memoranda or briefing papers that may have been distributed to the Governing Body or its committees.

Whakarāpopototanga matua

Executive summary

2. This is a regular information-only report which aims to provide greater visibility of information circulated to Governing Body members via memoranda/briefings or other means, where no decisions are required.

3. The following memos or information were circulated to members of the Governing Body:

Date	Subject
13.12.22	Health Safety and Wellbeing Report to the Audit and Risk Committee meeting of 12 December 2022 Agenda Report Minutes of Item
14.12.22	Early Childhood Education CONFIDENTIAL (No attachment)
14.12.22	Accommodation Provider Targeted Rate (APTR) appeal to the Supreme Court CONFIDENTIAL (No attachment)
14.12.22	Submission to the Ministry of Transport on the Proposed Government Policy Statement on Land Transport 2021 and the Draft New Zealand Rail Plan
3.2.23	Sharing the cost of Drurys growth – Contributions Policy 2022 variation A
14.2.23	Submission to the Justice Committee on Auckland Council’s submission on the inquiry into the 2022 Local Election
17.2.23	Urgent works to demolish Colonial Ammunition Company Shot Tower

4. The following workshops/briefings have taken place for the Governing Body:

Date	Subject
14.12.22	Development Contributions – ‘Have Your Say’ Event
7.2.23	Annual Budget 2023/2024 – Communications and Engagement Plan and Draft Tupuna Maunga Authority Operational Plan 2023/2024
8.2.23	Three Water Review CONFIDENTIAL
8.2.23	Future for Local Government Review CONFIDENTIAL
10.2.23	Annual Budget 2023/2024 – Consultation Document and Supporting Information

5. This document can be found on the Auckland Council website, at the following link:

http://infocouncil.aucklandcouncil.govt.nz/

o at the top left of the page, select meeting/Te hui “Governing Body” from the drop-down tab and click “View”;

o under ‘Attachments’, select either the HTML or PDF version of the document entitled ‘Extra Attachments’.

6. Note that, unlike an agenda report, staff will not be present to answer questions about the items referred to in this summary. Governing Body members should direct any questions to the authors.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whiwhi / receive the Summary of Governing Body and other committee information memoranda and briefings – 23 February 2023.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Development Contributions – ‘Have Your Say’ Event (Under Separate Cover)
b ⇨	Submission to the Ministry of Transport on the Proposed Government Policy Statement on Land Transport 2021 and the Draft New Zealand Rail Plan (Under Separate Cover)
c ⇨	Sharing the cost of Drurys growth – Contributions Policy 2022 variation A (Under Separate Cover)
d ⇨	Submission to the Justice Committee on Auckland Council’s submission on the inquiry into the 2022 Local Election (Under Separate Cover)
e ⇨	Urgent works to demolish Colonial Ammunition Company Shot Tower (Under Separate Cover)
f ⇨	WORKSHOP: Annual Budget 2023/2024 – Communications and Engagement Plan and Draft Tupuna Maunga Authority Operational Plan 2023/2024 (Under Separate Cover)
g ⇨	WORKSHOP: Annual Budget 2023/2024 – Consultation Document and Supporting Information (Under Separate Cover)

Ngā kaihaina

Signatories

Author	Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors
Authoriser	Jim Stabback - Tumu Whakarae / Chief Executive

Mayor	Wayne Brown
Deputy Mayor	Cr Desley Simpson, JP
Councillors	Cr Andrew Baker	Cr Mike Lee
	Cr Josephine Bartley	Cr Kerrin Leoni
	Cr Angela Dalton	Cr Daniel Newman, JP
	Cr Chris Darby	Cr Greg Sayers
	Cr Julie Fairey	Cr Sharon Stewart, QSM
	Cr Alf Filipaina, MNZM	Cr Ken Turner
	Cr Christine Fletcher, QSO	Cr Wayne Walker
	Cr Lotu Fuli	Cr John Watson
	Cr Shane Henderson	Cr Maurice Williamson
	Cr Richard Hills

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