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Council Controlled Organisation Direction and Oversight
Committee
11 March 2025
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Quarter two
performance reports 2024/2025 for substantive council controlled organisations
and Port of Auckland Limited
File No.: CP2025/01297
Te take mō te
pūrongo
Purpose of the report
1. To receive a summary of, and comments on, Eke Panuku,
Tātaki Auckland Unlimited, Watercare and Port of Auckland Limited (POAL) quarter two reports, for the period ending 31 December 2024.
Whakarāpopototanga matua
Executive summary
2. The
CCO and POAL performance reports for the second quarter of 2024/2025 are
contained in Attachments A to D.
3. Staff
have reviewed the performance reports. Key issues and risks are summarised in
the table below.
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Council-controlled
Organisation
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Summary of key issues
and risks
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Eke Panuku
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· Operating financial results for Eke Panuku
and its activities managed on behalf of the council, were favourable for the
half-year. Capital expenditure totalled $40 million, broadly in line with the
phased budget of $41.9 million.
· The
full-year asset sales combined target of $76 million will not be met due to
subdued market conditions. $4.5 million of asset sales were completed by the
end of quarter two, with approximately
$50.5m of further conditional sales under negotiation. 38 housing units
were completed, against a target of 157. This target is also unlikely to be
met.
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Tātaki Auckland Unlimited (TAU)
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· Of the twelve TAU Statement of Intent
performance measures, at the end of quarter two, ten performance measures
were met or on track to be met, and two are not reported this quarter.
· TAU’s operating financial result was slightly
favourable to budget, driven by higher event revenue and strong film studio
margins, while expenditure remained largely on budget.
· Capital expenditure was $39.1 million for the
half-year, tracking at 46 per cent of the year-to-date budget, with spending
accelerating in quarter two as some projects were brought forward.
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Watercare
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· Watercare’s net direct financial result for the
half-year was favourable to budget, with lower spending offsetting revenue
shortfalls. Watercare’s capital delivery is behind schedule, with $479
million spent, tracking at 78 per cent of the year-to-date budget.
· Targets were achieved for twenty-three of
Watercare’s 30 performance measures. An additional six measures have
yearly targets.
· Watercare’s credit raise remains on
track to be achieved by 1 July 2025.
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Port of Auckland
Limited
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· POAL has delivered a strong first half-year performance,
with container volumes up 7.7 per cent on the previous year. Weakness in
vehicle imports and construction materials continues to affect trade volumes.
Despite this, coal imports and breakbulk trade have remained strong,
partially offsetting the decline.
· Revenue reached $196.0 million for quarter two, $17.7
million above budget, while net profit after tax (NPAT) hit $42.0 million,
surpassing the budgeted $26.8 million. Despite weaker vehicle trade and
construction material volumes, overall profitability remains robust, and the
full-year NPAT target of $65 million is on track.
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4. Issues
and risks for each CCO and POAL are noted in this report. Committee members may
identify any additional matters that they want staff to follow up.
Ngā tūtohunga
Recommendation
That the Council Controlled
Organisation Direction and Oversight Committee:
a) whiwhi /
receive the 2024/2025 second quarter reports of the substantive
council-controlled organisations and Port of Auckland Limited, provided as
attachments A to D of the agenda report.
Horopaki
Context
5. Each
substantive CCO must provide a quarterly report to the CCO Direction and
Oversight Committee. They are required to:
· summarise
the CCO’s performance against the approved budget and agreed targets in
the 10-year Budget and Statement of Intent (SOI);
· provide
a forecast of the CCO’s performance;
· identify
the cause of major variances;
· highlight
major achievements for the quarter; and
· signal
any potential or developing issues.
6. The
CCO reports for the second quarter of 2024/2025 are in Attachments A to C of
the agenda report. The reports are the six-monthly reports as required by the
Local Government Act 2002, s 66(2).
7. Under
the Memorandum of Understanding (MOU) between POAL and the council, POAL is
required to provide quarterly reports to the council as shareholder. The report
for the second quarter of 2024/2025 is contained in Attachment D.
Tātaritanga me ngā
tohutohu
Analysis and advice
Eke Panuku
Half-year performance
Financial
performance overview
8. Eke
Panuku finished quarter two with direct revenue $5.7 million above budget,
primarily due to $3.2 million in property lease revenue being recognised
upfront and $1.6 million from tenanted properties that were initially planned
for sale or vacancy. Direct expenditure was $0.8 million below budget, driven
by lower spend in staff cost and lower spend on the Central Wharves master
planning project. The forecast underspend of $0.8 million will be deferred into
the next year, through CCO transition.
9. Capital
delivery progressed well with $40 million spent, tracking closely against
budget. Additional information has been included on capital projects greater
than $5 million, to allow greater oversight of delivery.
Performance measures and programme
deliverables
10. The below
table sets out a summary of performance against Statement of Intent 2024-2027
performance measures at the end of quarter two:
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Eke Panuku
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Target met or on track
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Target not met or not on track
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Not reported in the period
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Total
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Measures
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7
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3
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2*
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12
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*Two are annual surveys.
11. Three
performance measures are not on track by the end of quarter two, primarily due
to subdued market conditions:
· Asset
recycling target – $4.5m sales were achieved, with Eke Panuku advising
they will not meet the annual target of $60m. Note that this figure has been
updated from the $3.9m reported in the group quarterly report to the Governing
Body on 27 February.
· Transform
and unlock (urban regeneration) property sales – no properties were sold
and the annual target of $16m is unlikely to be met. There are risks to the
completion of unconditional agreements for sales in Takapuna, North Wharf and
Papatoetoe.
· Net
new dwellings (housing units) – 38 units were completed, against a target
of 157 units. This target is also unlikely to be met due to project
construction delays or restaging from a challenging property market.
12. Eke
Panuku have 13 programmes with deliverables for 2024/2025. 10 programmes are on
track and three are at risk (Takapuna, Avondale and Panmure).
13. Eke
Panuku have revised the development strategy for Northcote (against that
detailed in their Statement of Intent 2024-2027). This is because a market
process for a development partner for the whole town centre was unsuccessful.
They are now taking on a master developer role and creating smaller development
opportunities, staged to match market demand and property market conditions.
14. Quarter
two delivery highlights include:
· Karanga
Plaza Harbour pool opening in the waterfront in December 2024.
· Completion
of the Westhaven Seawall upgrade to protect the area from extreme weather
events and create wider walkways for recreational purposes.
· Reopening
of the Te Wero Wynyard Crossing Bridge in December 2024 following the
completion of an extensive maintenance programme.
Key Issues and Risks
15. Market
conditions and uncertainty around the development contributions policy update
mean that there could be a significant shortfall of asset sales against
targets, although approximately
$50.5m of conditional sales are under negotiation. The property market is challenging from a wider economic
perspective with a significant number of listings and developers holding unsold
stock. This risk was also highlighted in the group quarterly report.
16. Property
sales and completion of housing units are still expected once the property
market improves, but the timing may need to be rephased to subsequent years.
17. The review of
property management and functions is expected to improve governance, processes
and improved efficiency across the group. This includes improving the
development of the asset sales pipeline, with the process strengthened to
improve delivery.
Tātaki Auckland Unlimited
Half-year performance
18. TAU’s
operating net financial result was slightly favourable to budget, with higher
revenue from events, film studio operations, and insurance recoveries
offsetting timing variances in grant revenue, while expenditure remained
largely on track. Capital expenditure totalled $39.1 million for the half-year,
with 46 per cent of the annual budget spent. After a slower start, spending
accelerated in the second quarter, with some projects brought forward to
maintain delivery momentum.
19. The below
table sets out a summary of performance against SOI 2024-2027 performance
measures at the end of quarter two:
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Tataki Auckland Unlimited
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Target met or on track
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Target not met or not on track
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Not reported in the period
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Total
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Measures
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10
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0
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2
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12
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20. TAU
has 12 SOI measures, of which five are Long-term Plan (LTP) measures. Nine of
the 12 measures are tracked quarterly; one is a six-monthly measure; and two
are annual measures. At the end of quarter two, ten performance were met or on
track to be met, and two are not reported this quarter.
21. Quarter
two delivery highlights include:
· At the end of
quarter two, ticketed attendance across TAU venues and events was more than
1.03 million – 49 per cent of the year-end target of 2.12 million.
· The BNZ
Auckland Diwali Festival was delivered on behalf of Auckland Council on 19-20
October, featuring more than 1800 performers across 250 performances –
the highest number ever.
· Go Media
Stadium was crowned New Zealand’s Large Venue of the Year at the 2024
Events and Venues Association of New Zealand Awards in December 2024. Go Media
Stadium also hosted Auckland FC’s inaugural A-league match against
Brisbane Roar in front of a capacity crowd of 24,000 in October 2024.
· After decades
of collaboration on numerous species recovery and conservation programmes and
after several years of planning and negotiation, Auckland Zoo signed a National
Strategic Partnership Agreement with the Department of Conservation in October
2024.
· Auckland Live
concluded a successful quarter with Matilda the Musical at the Bruce
Mason Centre (18,000 paid tickets sold), and Lord of the Rings a Musical
Tale at The Civic Theatre (16,000 tickets sold across its season).
· Major events
supported by TAU across FY25 to the end of quarter two are estimated to have
contributed more than $41 million to regional GDP including Coldplay who
performed three sold-out shows at Eden Park in November, drawing 170,000
attendees.
· The Ministry
of Business, Investment and Employment (MBIE) agreed to extend its funding for
Project Ikuna through to the end of FY25 for a total value of about $2.2m.
Key Issues and Risks
22. TAU
highlight that over quarter two, the CCO reform process created challenges from
an operational perspective, particularly engaging in external markets and
driving long-term commercial and philanthropic partnerships – as per
TAU’s strategy to harness external revenue sources. The Economic
Development transition will require significant support to ensure continued
progress is made on economic development initiatives and programmes.
23. TAU also note that without the introduction of a bed night visitor
levy, there will be a budget gap of $7m for 2025/2026 for funding major events. Pending outcomes of the consultation process and decisions on the
final Annual Budget 2025/2026, TAU may need to
reduce its 2025/2026 major events portfolio significantly to accommodate this
reduced funding.
Watercare
Half-year performance
24. Watercare’s
net direct financial result for the half-year was favourable to budget, with
lower spending offsetting revenue shortfalls. Direct revenue was $9 million
below budget, primarily due to lower water and wastewater volumes, higher
leakage allowances, and reduced Infrastructure Growth Charges and Waikato
District Council (WDC) contract revenue. Correspondingly, lower WDC costs
contributed to the $17 million underspend, along with reduced professional
services in programme delivery and timing differences in tankering and
technical costs.
25. Watercare’s
capital delivery is behind schedule, with $479 million spent, tracking at 78
per cent of the year-to-date budget. Initial uncertainty around financial
separation and FY25 funding led to a slower-than-expected project ramp-up. To
maintain momentum, Watercare has brought forward other projects, including
property purchases, and revised its full-year capital programme forecast down
to $1.17 billion from the original $1.21 billion.
26. Watercare supported the council in the group submission on the Local
Government (Water Services) Bill which establishes arrangements for the new
water services delivery system and a new economic regulation and consumer
protection regime for water services.
27. Watercare
also worked with council staff to provide submissions to the Commerce
Commission and Taumata Arowai on their plans to levy water service providers to
cover the costs of economic and quality regulation of water services
respectively. The total costs of the proposed levies added to the costs
recovery for interim economic regulation will be in the range of $10 -11
million per annum for Watercare.
28. Watercare is
subject to interim economic regulation under the Local
Government (Water Services Preliminary Arrangements) Act 2024. Policy settings for the Watercare Charter were approved by Cabinet
in December 2024. The Charter is expected to be enacted as secondary
legislation in March 2025 to commence 1 April 2025. To meet the requirements of
the Act, Watercare has developed a 10-year
business plan that covers priorities and challenges, asset management approach,
infrastructure investment, revenue and funding plans for the next 10 years.
29. Thirty of Watercare’s 36 SOI measures are reported in
the quarter two report.
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Watercare
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Target met or on track
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Target not met or not on track
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Not reported in the period
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Total
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Measures
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23
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7
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6
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36
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30. The seven measures where targets were not met in the
quarter are:
· Response time for attendance at sewerage overflows – 79
minutes median compared with a target of less than 75 minutes. Along with the
water quality assurance targets not met, this also means that the target to
meet all 15 DIA measures has been missed.
· Leakage performance
– 110.94 litre/connection/day (l/c/d) against a target of 98.29 l/c/d. Watercare’s
proactive leak detection (and pressure reduction) programme surveys pipes to
reduce water loss.
· Compliance with
Taumata Arowai Quality Assurance Rules – Microbiological compliance in
the distribution network was not achieved in one of the 40 zones. E.coli of 5
cfu/100mL was detected in the Maungawhau zone on 13 November 2024. This was
notified to Taumata Arowai with resamples, network flushing and detailed investigations undertaken
that indicated sample contamination as the likely cause of the result.
Watercare advise that there was no risk to public health.
· Compliance with
Taumata Arowai Quality Assurance Rules – Residual disinfection (chlorine)
compliance was not achieved in three of the 40 zones: North shore (2 samples),
Te Henga (1 sample) and Wellsford (1 sample). Wellsford also did not meet the target
85 per cent compliance rate for chlorine residual (77 per cent). Reactive
flushing or rechlorination was completed for all instances. Proactive network
flushing has been implemented in Wellsford.
· Provision of
specialist advice into resource consents – Input was provided within 10
working days for 87.9 per cent of resource consents, below the 90 per cent
target.
· Health and safety
– Permit audits were conducted at only 26 of the 36 sites, (15 major
operational sites, and 21 major construction project sites). This result was
impacted by the holiday close down.
31. Of those measures with a yearly target, planned network
pipe renewal, at 6km completed, sits well below the
yearly target of 26 km, and the proportion of procurement sourced through
Māori-owned business currently sits at 3.1 per cent against a target of 5
per cent.
32. Central Interceptor (including Pt Erin Tunnel Works) budget
was behind plan due to resequencing of activities. Steady progress across all
sites continues and the southern section including the Māngere Pump
Station has been commissioned. A formal event was held on 14 February 2025 to
mark this milestone.
Key Issues and Risks
33. The
complex programme of balance sheet separation and Watercare’s credit
raise remains on track to be achieved by 1 July 2025.
34. The
‘Waikato 50’ treatment plant has been brought into service due to
lack of rainfall that was previously forecasted. This has resulted in
approximately $20,000 unbudgeted costs per day. If there is more rain, then the
Waikato 50 plant can be turned off in a few days.
35. On
23 January 2025, the Waitākere No. 1 Transmission watermain failed in
Mountain View Road. This led to up to 1,000 people being without water for 12
hours and another approximately 8,000 people having lower pressure.
36. A
Level 3 incident was declared to manage arsenic exceeding the maximum accepted
value of 0.01mgL with a result of 0.011mgL in a sample collected on 25 November
2024. Similar elevated results occurred at Hamilton City Council, Waikato
District Council and Waipa District Council water treatment plants. Taumata
Arowai were notified, production reduced at the Waikato water treatment plant,
and extensive sampling was undertaken. All subsequent samples have complied
with the maximum acceptable value for arsenic. There was no immediate risk to
public health.
Port of Auckland Limited
Half-year performance
Performance
Overview
37. POAL has delivered a strong first half-year
performance, with container volumes up 7.7 per cent on the previous year. The
company continues to focus on efficiency improvements, customer engagement, and
long-term infrastructure planning.
38. Financially, revenue reached $196 million for
quarter two, $17.7 million above budget, while net profit after tax hit $42
million, surpassing the budgeted $26.8 million. Despite a weaker vehicle trade
and construction material volumes, overall profitability remains robust, and
the full-year NPAT target of $65 million is on track.
39. POAL also maintained cost discipline, with
operating expenses slightly below budget. An interim dividend of $45 million is
expected, continuing the positive trend from last year’s $40 million.
40. Operational and safety highlights include:
· Berth window performance improved to 63 per cent, despite
continued global supply chain disruptions.
· Container handling productivity increased, reaching an
average berth rate of 37.9 moves per hour, meeting internal targets.
· 77.2 per cent of trucks turned around within 30 minutes,
though higher container demand has slightly impacted efficiency.
· Zero serious injuries or fatalities, with safety
performance (HSPI) tracking at 84 per cent, exceeding the 80 per cent target.
Key Issues and Risks
41. Cruise season impact: The cruise season is in full swing, with
downtown Auckland experiencing a surge in tourists. Although cruise calls are
slightly down year-on-year, the impact is not as severe as initially expected.
However, looking ahead to FY26, cruise traffic may decline further due to
advance scheduling constraints.
42. Economic challenges: Weakness in vehicle imports and construction materials
continues to affect trade volumes. Despite this, coal imports and breakbulk
trade have remained strong, partially offsetting the decline.
43. Rail usage below target: A continued preference for trucking over rail
due to cost advantages has kept the percentage of
containers moved by rail below expectations.
Strategic Developments
44. Bledisloe
North and Ferguson North Wharf projects: POAL is set to submit resource
consent applications as soon as the government’s fast-track process
opens.
45. New
cruise terminal: Plans for a cruise terminal integrated into the Bledisloe
North Wharf vehicle handling facility are progressing, positioning POAL to
expand its cruise business in the coming years.
46. Decarbonisation
efforts: The solar array installation on the car handling facility is
nearing completion, expected to supply 7-8 per cent of the port’s
electricity needs.
Outlook for FY25
47. With
a strong first half of the year completed, the focus remains on sustaining
operational efficiency, managing costs, and addressing economic headwinds. The
full-year NPAT target of $65 million remains achievable.
Tauākī whakaaweawe
āhuarangi
Climate impact statement
48. The CCOs and POAL quarterly reports contain commentary on activities
relating to climate change. Important points to highlight are:
49. Eke Panuku progress on their climate goals in quarter two includes:
· Deconstruction
projects to enable redevelopment in Papatoetoe and Avondale, to salvage
materials for reuse.
· Further
embedding climate considerations in business case processes and the risk
management framework.
· Ongoing
work in Te Whakaorangao te Puhinui to engage and empower the community through
this stream regeneration project.
50. For TAU, Auckland Stadiums hosted a successful e-waste day at Go
Media Stadium. The day was delivered in partnership with Echo and One NZ and
diverted 12,700kg of e-waste from landfill. Go Media Stadium now has more than
30 food bins during games. Solar installation is
also progressing at Go Media Stadium, with physical works starting in December
2024 and will be completed by April 2025.
51. Water audits are taking place at the same time as energy audits to
inform a water efficiency plan for TAU. The BTune Building Management
System optimisation project at Aotea Centre is ongoing, with an estimated nine
per cent energy savings for November against the baseline.
52. Watercare
performance against the greenhouse gas SOI measure is tracking well, with
54,116 tCO2e against the SOI target of a maximum of 139,170 tCO2e. This result
is largely based on positive performance in electricity emissions.
53. Watercare has
published its Greenhouse
Gas and Climate Change Summary for 2024. Nitrous oxide and methane
generated from wastewater treatment processes and biosolids disposal are their
most challenging emission sources. To start to address this, direct monitoring
of nitrous oxide emissions is underway at the Māngere Wastewater Treatment
Plant to provide better information and develop options to reduce emissions.
54. POAL’s
report outlines several climate impact initiatives under its Kaitiakitanga
(Sustainability) Framework, focusing on emissions reduction, harbour health and
waste management. The Decarbonisation Roadmap is progressing, with discussions
underway on low-emission fuel options for the diesel fleet and infrastructure
development for electric equipment. The Car Handling Facility rooftop solar
project is set for completion in March 2025, expected to supply 7–8 per
cent of the port’s annual electricity needs.
55. Harbour
health efforts include a long-term environmental plan released at the Moana
Auckland Sustainability Expo. POAL is also working with Eke Panuku and the
council on using dredged material for the Te Ara Tukutuku (Headland Park)
project.
56. Waste
reduction remains a challenge, with total waste disposal exceeding targets. The
port is implementing new waste minimisation initiatives across departments to
improve diversion rates and drive a circular economy.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
57. Each CCO and
POAL quarterly report contains information on how they are contributing to the
council’s outcomes and objectives.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
58. The governance of substantive CCOs (with the
exception of Auckland Transport) and POAL is a responsibility delegated to the
CCO Direction and Oversight Committee. We have not sought the views of local
boards. CCOs provide six-monthly progress and performance reports to local
boards. The quarterly reports also provide a summary of the engagement that
CCOs have carried out with local boards during the quarter.
Tauākī whakaaweawe
Māori
Māori impact statement
59. Each CCO and POAL report on their contribution towards achieving
Māori Outcomes in their quarterly report.
60. Highlights for Eke Panuku in quarter two, include:
· Engagement
with iwi rangatira and delegates to support delivery of iwi aspirations and
outcomes in relation to Eke Panuku programmes and project.
· Use
of Amotai, our supplier diversity advisor to identify potential iwi and
Pasifika providers for Roulston Park and Onehunga Wharf to contribute to
supplier diversity targets.
· Engagement
with iwi with interests in key projects, including the central wharves master
planning and stormwater plans in Onehunga.
61. Highlights
for TAU in quarter two include:
· Participating
in a 12-week intern programme aimed at increasing the number of Māori and
Pacific leaders in the workplace and corporate sector.
· Publishing
in December 2024 the second edition of Ākina, TAU’s
Māori Outcomes highlights and successes publication, which was shared with
key partners and collaborators.
· TAU,
alongside the Ministry for Pacific Peoples, piloted a two-week Oyster & Moon Collective pop-up store at Britomart, showcasing indigenous
enterprise. This initiative was timed to link into the cruise ship season and
generated income, new products and retail experiences for visitors to town and
valuable experience for the entrepreneurs involved.
62. Watercare are
currently redrafting their Achieving Māori Outcomes Plan. During the
quarter, there were discussions about the sites of significance to mana whenua
and the implications for Watercare assets, and factors impacting marae,
including the commissioning of sprinkler systems for Makaurau Marae, Manurewa
Marae, and Te Piringatahi Marae.
63. POAL’s
report outlines progress on its Tauru Herenga Waka/Māori Outcomes
Framework, including plans for a refresh in January 2025 and further
collaboration with Auckland Council and Maritime Union of New Zealand. The
report also details multiple iwi engagements such as marae openings and a hura
kohatu event.
64. POAL cultural
and leadership initiatives are emphasised through programmes like the upcoming
Te Ara Rangatira Emerging Leaders course and Te Ara Ahurea Wananga Tiriti
training. In addition, staff engagements include monthly whakatau sessions and
comprehensive te reo Māori training—from beginner courses and NZQA
Level 2 sessions to ongoing online learning.
65. POAL also
note two annual iwi internships and the TIPENE scholarship fund for 19 iwi that
underscore POAL’s commitment to deepening Māori participation and
embedding cultural values across the organisation.
Ngā ritenga
ā-pūtea
Financial implications
66. Each of the CCOs and POAL’s quarterly reports contain
information regarding their financial performance. These are summarised
at a high-level in the sections above.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
67. Each of the
CCOs and POAL’s quarterly reports contain information regarding their
risks and mitigations, key points are summarised above.
Ngā koringa ā-muri
Next steps
68. The next CCO and POAL quarterly performance
reports (quarter three, January to March 2025) will be provided to the CCO
Direction and Oversight Committee in May 2025.
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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Eke Panuku Quarter Two Report 2024/2025
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b⇨
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Tataki Auckland Unlimited Quarter Two Report 2024/2025
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c⇨
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Watercare Quarter Two Report 2024/2025
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d⇨
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Port of Auckland Quarter Two Report 2024/2025
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Ngā kaihaina
Signatories
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Authors
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Chris Levet - Principal Advisor
Sarah Johnstone-Smith - Principal Advisor
Rachel Wilson - Principal Advisor
Trudi Fava - Principal Advisor
Tracy Xu - Principal Advisor CCO Financial Planning
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Authoriser
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Alastair Cameron - Manager CCO/External Partnerships
team
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