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Council Controlled Organisation Direction and Oversight
Committee
13 August 2024
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Council
Controlled Organisations - Approval of statements of intent for 2024-2027
File No.: CP2024/10719
Te take mō te
pūrongo
Purpose of the report
1. To approve the 2024-2027 statements of intent
(SOIs) for three of Auckland Council’s substantive council-controlled
organisations, and one legacy council-controlled organisation (CCO).
Whakarāpopototanga matua
Executive summary
2. SOIs
set out the objectives and activities of each CCO for the next three years.
They serve as a basis for accountability to the council, as the shareholder,
and provide an opportunity for the council to influence each
organisation’s direction.
3. Staff
have reviewed the final SOIs and reconciled these against the shareholder
comments provided to CCOs in May 2024. The shareholder comments were focused on
alignment with statutory requirements, annual letters of expectation, group
strategy and policy, and the draft long-term plan 2024-2034.
4. Staff
consider that no major modifications are required to final SOIs and that the
CCO Direction and Oversight Committee should approve the 2024-2027 SOIs for
council’s substantive CCOs – Eke Panuku, Tātaki Auckland
Unlimited and Watercare Services Limited. Staff continue to work with the CCOs
on improving how progress is reported on capital programme delivery.
5. The
council has also received the final 2024-2027 SOI from the legacy CCO
Contemporary Art Foundation and staff recommend it is approved.
Ngā tūtohunga
Recommendations
That the Council Controlled
Organisation Direction and Oversight Committee:
a) whakaae
/ approve the 2024-2027 statements of intent for Eke Panuku, Tātaki
Auckland Unlimited and Watercare.
b) tono /
request Eke Panuku, Tātaki Auckland Unlimited and Watercare provide
further information on capital programmes delivery and major project milestones
in quarterly reports.
c) whakaae
/ approve the 2024-2027 statement of intent for the Contemporary Art Foundation.
Horopaki
Context
6. The
requirements for SOIs are set out in Schedule 8 of the Local Government Act
(LGA) 2002. SOIs establish the objectives and activities of each CCO for the
next three years. They serve as a basis for accountability to the council, as
the shareholder, and provide an opportunity for the council to influence each
organisation’s direction.
7. SOIs
are one element of council’s overall strategic, planning, reporting and
accountability documentation. Other documents include the
statement of expectations, CCO accountability policy, long-term plan and annual
report.
8. Under
the LGA the council has the ability to modify a SOI to ensure it adequately
reflects the council’s strategic priorities if it considers that is
necessary.
9. Each
SOI follows a template, as recommended by the CCO review, which has the
following sections:
· Part
1: Strategic Overview – which focuses on the three-year horizon and sets
out strategic objectives, nature and scope, how it will deliver on
council’s outcomes and the 10-year budget (long-term plan) performance
measures.
· Part
2: Statement of performance expectations. It provides an annual work programme,
financial information and responses to specific requests by the shareholder.
10. A letter of
expectation was provided to each substantive CCO in December 2023. The content
of the letters was confirmed by decisions of the Governing Body on 14 December
2023 (GB/2023/234).
11. At this
meeting the Governing Body also agreed to approve a one-month extension of
statutory deadlines for the 2024-2027 SOIs, as provided for in the LGA Schedule
8, section 4 (GB/2023/234).
Key steps in the process were:
· CCOs
provided their draft SOI to council by the deadline of 1 April 2024
· The
governing body approved shareholder comments on 30 May 2024 (GB/2024/57)
· CCOs
considered the shareholder comments at a public board meeting (as required)
· Final
SOIs were received by 31 July 2024.
Tātaritanga me ngā
tohutohu
Analysis and advice
12. Staff
have reviewed the final SOIs and reconciled these against the shareholder
comments provided in May 2024. This
reconciliation is provided in Attachment A of the report. The shareholder comments were focused on alignment with statutory
requirements, annual letters of expectation, group strategy and policy and the
draft 2024-2034 Long-term plan.
13. Staff
consider that no major modifications are required for the SOIs.
14. The SOIs are
provided in attachments B-F as follows:
· Eke
Panuku Development Auckland Limited (Eke Panuku) (Attachment B)
· Watercare
Services Limited cover letter (Attachment C) and SOI (Attachment D)
· Tātaki
Auckland Unlimited (Attachment E)
· Contemporary
Art Foundation (Attachment F)
Shareholder comments to all CCOs
15. Common
direction was provided to the three substantive CCOs (Eke Panuku, Tātaki
Auckland Unlimited and Watercare), who have incorporated this into their SOIs:
· Financial
and non-financial performance and quality advice – each SOI reflects the
decisions on the Long-term Plan 2024-2034, including financial statements and performance
measures. CCOs have been asked to comply with the Budget Responsibility and
Transparency Rules.
· Capital
programme – the SOIs all have additional information included on their
capital programme and major projects. It is recommended that CCOs strengthen
the information provided on capital programmes and major project milestones in
quarterly reporting.
· Group
Shared services – a commitment to progressing group shared services is included
in each SOI.
16. Note that
Māori outcomes and climate change are covered in the relevant sections
below.
Eke Panuku
17. The
Eke Panuku final SOI responds to all the matters raised in the shareholder
feedback. Changes to the final SOI of note include:
· key projects have
been added to the work programme, following decisions on the Long-term Plan
2024-2034. This includes the central wharves masterplan, swimming facility at
Karanga Tidal Steps and the Wynyard crossing bridge.
· risks around the
failure of infrastructure assets and climate change impacts have been added, along with mitigations.
· a commitment to strengthen engagement with mātāwaka
with support from council and Houkura.
· further detail on
commitments around climate change disclosure and reporting, including
considering opportunities for lower-cost climate positive solutions.
Financial information
18. Final budgets in the Eke Panuku SOI reflect the final
Long-term Plan 2024-2034 plan decisions and include activity-based information.
Performance measures
19. Net new dwellings (housing units) – Eke Panuku will provide
information on the medium-term target reductions at their
‘deep-dive’ session at the CCO Direction and Oversight Committee in
September 2024.
20. Public
realm improvements (square meters) – the target has reduced from 15,000
to 7,000 for 2024/2025. Eke Panuku advise that this is due to changes in the
timing of specific projects, as they go through scoping, design, consenting and
internal prioritisation. This includes Roulston Park, Pukekohe (4,600sqm) which
will now take longer deliver. The Maungarei Connection, Panmure (1,200sqm) and
Osterley Way streetscape works, Manukau (2,200sqm) have been deferred to allow
other, higher priority projects to progress. Despite the lower target, Eke
Panuku advise that there are no staff or operating cost savings to report.
21. Capital
project milestones approved by the board achieved – this measure allows
council to measure progress for capital projects at
different stages of delivery. Indicative project costs have now been added to
the capital project milestones table, however the projects listed in the table
total less than half of Eke Panuku capex spend. Some material projects are not
included the table, for example the $6.5m new wastewater pump station in
Hobsonville which was deferred from 2023/2024 to 2024/2025. As noted above,
further information on key capex projects will be sought in quarterly
reporting.
22. Asset
sales – a $60 million asset sales target and a $16 million transform and
unlock sales target were agreed by the Eke Panuku Board on 22 May 2024. Staff
are working with Eke Panuku to agree information needed for oversight of asset
sales.
23. Climate
change mitigation – a new measure has been added ‘significant
capital project decisions consider and reduce carbon impacts’. The
deliverable for 2024/2025 is to adopt a methodology to quantify the carbon
impacts of capital projects to support delivery. It is expected that council
staff will be consulted on the development of this measure to ensure
consistency and to meet group expectations.
24. Delivery of ongoing or new initiatives that support Māori
outcomes - the definition methodology and targets have been revised to those
from the last statement of intent.
Tātaki Auckland Unlimited
25. The Tātaki Auckland Unlimited (TAU) final SOI
addresses or responds to all the matters raised in the shareholder feedback.
Changes to the final SOI of note include:
· Updates
made to capture changes that have occurred or decisions taken since the draft
SOI was delivered on 1 April 2024 (e.g. newly secured/confirmed events like
SailGP 2025 and the locally-led working group
on North Harbour Stadium).
· Additions
to the one-year work programme covering a review of the future options for the
Western Springs precinct and developing a refined masterplan for Go Media
Stadium.
· Changes
to the strategic framework to reframe the ‘Auckland’s
reputation’ strategic outcome, more
detail added to the cross-cutting commitments and addition of enablers section.
· More
information on the regional GridAKL innovation network including GridAKL start
up hub, GridAKL scale up hub; Te Ngahere/GridMNK, Reserve and Click Studios.
· Inclusion of the major accounting policies for TAU Trust and TAU Limited
(Appendix 3).
26. The
final SOI also includes a table of the TAU board-approved key capital projects
and programmes, corresponding FY25 budget and the number (rather than
nature/description) of milestones associated with each that are expected to be
achieved in the year. As noted above, further
information on key capex projects/programme delivery will be sought from CCOs
in quarterly reporting.
Performance
measures
27. Targets
have been revised up for three performance measures:
· Percentage
of Auckland residents surveyed who consider that TAU programme, events and exhibitions enrich their lives (FY26-27 targets
increased from 70 per cent to 72 per cent)
· Number
of programmes, initiatives and events contributing to the visibility and presence of Māori in Tamaki Makaurau (FY25-26 targets
increased from 40 to 45, FY27 target increased from 45 to 50)
· Net
promoter score for TAU’s audiences and participants (FY26-27 targets
increased from 40 to 42 in FY26 and 45 in FY27)
28. Targets
have been revised down for ‘the number of children participating in
educational experiences through TAU venues and facilities’ performance
measure from 164,000 to 150,000 for FY25-FY27.
Financial
information
29. Final
budgets in the TAU SOI reflect the final Long-term Plan 2024-2034
decisions and include activity-based information.
Watercare Services Limited
30. The Watercare
final SOI addresses or responds to all the matters raised in the shareholder
feedback. Changes to the final SOI of note include:
· Reflecting
the council’s Local Water Done Well agreement with Government and the impact
on the price path, debt to revenue and preparation for the new economic
regulation regime and the development of financial and regulatory capability
within Watercare ahead of this. The cover letter from the chair notes that an
amendment of the SOI may be required to reflect interim economic regulation
once the legislation has been enacted.
· Commitment
to working with council to progress shared services as much as legally possible,
while also ensuring that it does not negatively impact the credit rating
process.
· Deliverables
for actions in the Auckland Water Strategy are now reflected in the SOI, including:
o working with Auckland
Council to analyse and understand projected climate change impacts on water
sources specifically (Action 5.4).
o the development with council
of a peak demand management plan (Action 5.3)
o the programme for smart meters roll out.
· Watercare
has provided the work programme for full recovery of the costs of growth in the
SOI and also gave an update on this work at the deep dive performance
discussion at this committee’s meeting in July 2024.
· Identification
of specific expenditure towards Māori outcomes.
· The
refresh of the Decarbonisation Strategy and the development of a strategy for
nitrous oxide emissions are within the annual work programme.
· Milestones
for significant water and wastewater projects over 2024-27 are included and
progress will be reported in quarterly performance reports.
Performance
measures
31. As requested by the council in its feedback on
the draft, the SOI now contains a new health and safety
measure for monthly permit audits at each project/plant site.
32. The
SOI now includes an explanation of what is included in the controllable costs
target.
33. The debt to revenue ratio target is less than 4.0 in FY25,
4.35 in FY26 and 4.91 in FY27.
Financial
information
34. Final budgets
in the Watercare SOI reflect the final Long-term Plan 2024-2034 decisions
and include activity-based information.
Contemporary Art Foundation
35. Through the shareholder comment report in May
2024 (GB/2024/57) the Manager, CCO Governance
and External Partnerships was delegated the authority to
finalise shareholder feedback to Contemporary Art Foundation (CAF). There
were no matters that needed to be addressed.
Tauākī whakaaweawe āhuarangi
Climate impact statement
36. The final SOIs support the implementation of
actions identified in Te Tāruke-ā-Tāwhiri. The aim is to ensure
that climate change considerations are embedded within organisational
decision-making and culture, and to deliver on the two core goals.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
37. The substantive CCOs’ SOIs reflect
feedback from council, apply the agreed group approach and consider the impacts
on the group.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local
impacts and local board views
38. Letters of expectations sent to CCOs in December
2023 requested they provide timely, delivery focused,
quality, concise advice to local boards. Working with
local boards is reflected in all SOIs, noting however due to budget reductions
in 2023/24, TAU has reduced the scope of activity previously specified in Local
Board Engagement Plans, instead taking a case-by-case approach. This was
communicated to the Governing Body and local board members last year.
Tauākī whakaaweawe
Māori
Māori impact statement
39. The final SOIs contain each CCO’s
contribution to achieving Māori outcomes. CCOs have considered issues
raised by Houkura - Independent Māori Statutory Board and Ngā
Mātārae in finalising the SOIs.
40. Each quarter CCOs are to report on progress in
delivering their Achieving Māori Outcomes Plan. Direction will be provided
by Ngā Mātārae for a whole of group approach in this area.
Ngā ritenga
ā-pūtea
Financial
implications
41. Financial information in each CCO’s final
SOI has been reviewed by Group Financial Planning and Analysis, and the budgets
are consistent with final Auckland Council Long-term
Plan 2024-2034 decisions.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
42. There are no major risks associated with approving the CCOs’
SOIs.
Ngā koringa ā-muri
Next steps
43. If the committee approves the SOIs, each
substantive CCO will report on performance every quarter. The committee also
has scheduled deep dive performance discussions with each substantive CCO. The Contemporary
Art Foundation will report on their
performance half-yearly and presents their annual report to the committee.
Ngā tāpirihanga
Attachments
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No.
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Title
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Page
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a⇨
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Reconciliation table of final SOIs with shareholder
comments
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b⇨
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Eke Panuku Statement of Intent 2024-2027
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c⇨
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Watercare letter from the Chair 31 July 2024
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d⇨
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Watercare Statement of Intent 2024-2027
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e⇨
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Tātaki Auckland Unlimited Statement of Intent
2024-2027
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f⇨
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Contemporary Art Foundation Statement of Intent
2024-2027
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Ngā kaihaina
Signatories
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Authors
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Sarah Johnstone-Smith - Principal Advisor
Rachel Wilson - Principal Advisor
Trudi Fava - Principal Advisor
James Stephens - Senior Advisor
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Authoriser
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Alastair Cameron - Manager CCO/External Partnerships
team
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