Agenda of Finance and Performance Committee


Membership:	10
Meeting Cycle:	Meets on a six weekly basis, as required or at the requisition of the Chair
Quorum:	Half of the members
Reports to:	Council

HUTT CITY COUNCIL

Finance and Performance Committee

Meeting to be held in the Council Chambers,
2nd Floor, 30 Laings Road, Lower Hutt on

Wednesday 1 March 2017 commencing at 5.30pm.

ORDER PAPER

Public Business

1. APOLOGIES

2. PUBLIC COMMENT

Generally up to 30 minutes is set aside for public comment (three minutes per speaker on items appearing on the agenda). Speakers may be asked questions on the matters they raise.

3. CONFLICT OF INTEREST DECLARATIONS

4. Recommendations to Council - 14 March 2017

i) Living Wage Considerations for Hutt City Council (17/264)

Report No. FPC2017/1/83 by the Divisional Manager Human Resources 6

Chair’s Recommendation:

“That the Committee:

(i) notes the information in the report;

(ii) recommends that the Community Plan Committee considers a Living Wage for full time employees with service exceeding one year and, should this be accepted, that the costs, as far as possible, be recovered by way of user charge increases in the activity areas affected; and

(iii) recommends that officers report to the Community Plan Committee with further information about extending a Living Wage requirement to contractors and suppliers.”

ii) Review of Draft Statement of Intent 2017/2018 for the Hutt City Community Facilities Trust (17/60)

Report No. FPC2017/1/66 by the Senior Management Accountant 65

Chair’s Recommendation:

“That the report be discussed.”

iii) Review of Draft Statement of Intent 2017/2018 for Seaview Marina Limited (17/193)

Report No. FPC2017/1/67 by the Senior Management Accountant 69

Chair’s Recommendation:

“That the report be discussed.”

iv) Review of Draft Statement of Intent 2017/2018 for UrbanPlus Limited (17/194)

Report No. FPC2017/1/68 by the Senior Management Accountant 74

Chair’s Recommendation:

“That the report be discussed.”

v) Review of Draft Statement of Intent 2017/2018 for the New Zealand Local Government Funding Agency (17/195)

Report No. FPC2017/1/69 by the Chief Financial Officer 78

Chair’s Recommendation:

“That the report be discussed.”

5. Hutt City Community Facilities Trust Six Month Report to 31 December 2016 (17/61)

Report No. FPC2017/1/70 by the Senior Management Accountant 80

Chair’s Recommendation:

“That the report be received.”

6. Seaview Marina Limited Six Month Report to 31 December 2016 (17/34)

Report No. FPC2017/1/71 by the Senior Management Accountant 83

Chair’s Recommendation:

“That the report be received.”

7. Urban Plus Limited Six Month Report to 31 December 2016 (17/56)

Report No. FPC2017/1/72 by the Senior Management Accountant 86

Chair’s Recommendation:

“That the report be received.”

8. New Zealand Local Government Funding Agency 2016 Annual Report (17/196)

Report No. FPC2017/1/78 by the Chief Financial Officer 89

Chair’s Recommendation:

“That the report be noted.”

9. Audit New Zealand Management Report for the Year Ended 30 June 2016 (17/250)

Report No. FPC2017/1/80 by the Chief Financial Officer 92

Chair’s Recommendation:

“That the report be noted.”

10. Risk and Assurance update and Strategic Risk Register (17/102)

Report No. FPC2017/1/73 by the Risk and Assurance Manager 114

Chair’s Recommendation:

“That the report be noted.”

11. Sale and Supply of Alcohol (Fees) Regulations 2013 - Regulation 19 (1) - Reporting by Territorial Authorities (17/37)

Memorandum dated 23 January 2017 by the Manager Environmental Inspections 130

Chair’s Recommendation:

“That the memorandum be discussed.”

12. Hutt City Libraries: Clubhouse Coordinators Conference Travel April 2017 (17/119)

Report No. FPC2017/1/77 by the Content and Service Development Manager 133

Chair’s Recommendation:

“That the recommendations contained in the report be approved.”

13. Finance Update (17/228)

Report No. FPC2017/1/79 by the Budgeting and Reporting Manager 138

Chair’s Recommendation:

“That the report be noted.”

14. Information Items

a) Standard and Poor's Credit Rating (17/113)

Report No. FPC2017/1/31 by the Chief Financial Officer 171

Chair’s Recommendation:

“That the report be noted.”

b) Finance and Performance Work Programme 2017 (17/75)

Report No. FPC2017/1/32 by the Committee Advisor 190

Chair’s Recommendation:

“That the report be noted.”

15. QUESTIONS

With reference to section 32 of Standing Orders, before putting a question a member shall endeavour to obtain the information. Questions shall be concise and in writing and handed to the Chair prior to the commencement of the meeting.

16. EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

“That the public be excluded from the following parts of the proceedings of this meeting, namely:

17. Living Wage Considerations for Hutt City Council (17/273)

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.


Living Wage Considerations for Hutt City Council.	The withholding of the information is necessary to maintain legal professional privilege (s7(2)(g)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

This resolution is made in reliance on section 48(1) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as specified in Column (B) above.”

Annie Doornebosch

COMMITTEE ADVISOR SECRETARIAT SERVICES

6 01 March 2017

Finance and Performance Committee

16 February 2017

File: (17/264)

Report no: FPC2017/1/83

Living Wage Considerations for Hutt City Council

Purpose of Report

1. To provide Council with an understanding of the Living Wage and options and steps for the possible implementation of a Living Wage at Hutt City Council.

2. To seek recommendations from the Committee regarding the possible implementation of a Living Wage.

Recommendations

That the Committee recommends that Council:

(i) notes the information in the report;

(ii) recommends that Council EITHER:

a. not adopts the Living Wage at Hutt City Council; OR

b. adopts the Living Wage for Council employees with effect from
1 January 2018; OR

c. adopts the Living Wage for Council employees meeting specified criteria only, with effect from 1 January 2018;

(iii) recommends that Council EITHER:

a. not adopt a Living Wage policy at Hutt City Council in respect of direct contractors to Council; OR

b. adopts a policy whereby contractors applying a Living Wage approach are given a weighted preference during Council tender processes; OR

c. requests officers to conduct a thorough investigation into the potential costs and benefits of enforcing a Living Wage approach with significant direct contractors for service to Hutt City Council.

Background

The Living Wage Movement

3. The Living Wage Movement is modelled on living wage movements in other cities around the World.

4. Living Wage Movement Aotearoa New Zealand brings together community/secular, union and faith-based groups to campaign for a Living Wage.

The Living Wage

5. The Living Wage Movement Aotearoa New Zealand defines the wage as: ‘The income necessary to provide workers and their families with the basic necessities of life. A living wage will enable workers to live with dignity and to participate as active citizens in society.’

6. The original Living Wage identified in December 2012 and announced in 2013, was constructed through independent research by the Family Centre Social Policy Research Unit led by Mr Charles Waldegrave and Dr Peter King.

7. The Living Wage rate is based on a rate in the market. A full review every five years will involve analysis of the movements in expenditure items, wages and inflation to check that the annual increases remain realistic, robust and true to the Living Wage definition.

8. The original New Zealand Living Wage rate of $18.40 per hour was publically announced in February 2013.

9. The recalculated Living Wage hourly rate for 2016, which came into effect on 1 July 2016, is set at $19.80 per hour. This is an increase, in line with the average movement of wages, of 55 cents on the 2015 rate.

10. The rate is based on research into the needs of a model family of two parents (working 60 hours a week) and two children.

11. The living wage is $4.55 per hour more than the government minimum wage of $15.25 per hour.

12. As of 1 April 2017 the government minimum wage will rise to $15.75 per hour.

13. Council estimate the Living Wage may increase to be around $20.20 per hour in 2017/2018 based on Council staff inflators. Annual adjustments to the Living Wage are announced in February each year.

Accredited Living Wage Employer

14. The criteria to be an accredited living wage employer is:

a. all directly employed workers are on the living wage;

b. all indirectly paid workers employed by contractors, delivering a service to the business/ organisation on a regular and on-going basis, are either on the current Living Wage or on milestones agreed as part of the Licence;

c. employers have provided workers with access to a union; and

d. workers terms and conditions have not been reduced due to being on the Living Wage e.g. reduction in hours or other benefits.

15. The Living Wage Licence lasts for 12 months – licence fees currently are $2,500 for our sector and our organisation size.

16. Once the licence has been signed and fees paid you will be recognised as a Living Wage Employer and licensed to use the Living Wage Employer Mark.

17. The Living Wage Movement has confirmed the full list of accredited employers as at July 2016, with a total of 58 organisations earning the recognition.

Submission to the Hutt City Council – Hutt Valley Living Wage Network

18. A submission on the Hutt City Council proposed Annual Plan 2016-2017 was given by the Hutt Valley Living Wage Network to the Community Plan Committee meeting on 17 May 2016.

19. The Network called on Council to include the following in the Annual Plan 2016-2017:

a. support for the principle of a living wage;

b. have an understanding of the impact of low pay and inequalities in our community;

c. to then work together with the Hutt Valley Living Wage network to examine the feasibility of introducing a living wage for employees of Hutt City Council, Hutt City Council Controlled organisations and those organisations that directly contract to Council for regular and ongoing services; and

d. actively support and encourage Hutt employers to become living wage employers.

20. According to the submission there are currently three living wage employers in the Hutt Valley. Two of these employers are community organisations, Hutt Union and Community Health Service and Common Unity, and one small business enterprise - Fresh Desk.

21. At the Community Plan Committee meeting the Mayor requested that the Chief Executive prepare a report for Council to consider in relation to the Living Wage. A decision was later made to prepare and present the report after the fast approaching election. This was to avoid the possibility of the matter being debated twice (both before and after the election) as a result of changes to Council’s elected members.

22. This report has been prepared to coincide with the first meeting of Council’s newly established Finance and Performance Committee.

Discussion

The Living Wage debate

23. The level of the Living Wage is calculated to ensure that a particular level of disposable income can be met from a combination of after tax income and available government assistance.

24. However, the extent to which the employer, or the social welfare system, should be responsible for adequate living standards is contentious.

25. On the Living Wage Aotearoa website ‘the movement believes it is the responsibility of employers to pay wages at a level that allows people in full-time work to support themselves and their families. This is a matter of human dignity. It is only in recent years that it has become acceptable in countries such as England and New Zealand for employers to pay very low wages, in the expectation that these will be topped up to a somewhat livable level by governments. This means that taxpayers are subsidising wages to the tune of billions of dollars for profitable enterprises.

26. The Movement is not aware of anyone who would prefer to be paid a low wage and then deal with a government agency to receive a top-up of that wage, rather than simply being paid enough to live on by the employer. While the Movement believes it is a fundamental obligation of employers to pay wages on which people can live, we accept the reality that the free-market model presents many with a challenge in doing so. That is why the accreditation system for Living Wage Employers is a voluntary programme.’

27. Contrasting this point of view, on RNZ's Sunday Morning programme, Mr Eric Crampton, who is an economist and the director of the New Zealand Initiative, said among developed countries New Zealand already had the highest minimum wage in relation to the average wage.

28. Mr Crampton said it was unreasonable to set the minimum wage high enough for people to live off it without any subsidy.

"I don't think that there is any problem that is solved by the minimum wage that is not better solved through things like wage subsidies and Working for Families," he said.

The minimum wage was poorly targeted and welfare systems were better placed to support lower-income workers, he said.

"We should look at where the burden of supporting lower productivity or lower income workers should fall," he said.

"Should it fall on the employers and customers of firms that supply goods and services that are produced by lower income workers? Or should it fall on the tax base more broadly?”

"We've got a tax system that's progressive - it tries to spread the burden to where it can be afforded. When we instead put that burden onto employers of lower productivity workers, we knock them out of work."

29. Council’s Senior Research and Policy Advisor has conducted a literature review on the Living Wage and summarised his findings attached as Appendix 1 to the report.

30. The Treasury made a Living Wage information release in November 2013. That report is attached as Appendix 2 to the report. The report forms some strong conclusions, such as: “The Living Wage is therefore not well targeted at low income families with children.” However the weekly income of these types of household would still increase under the Living Wage calculation.

31. Additional information related to the Living Wage is available online. Selected information in support of the Living Wage can be found on livingwage.org.nz/information. The Taxpayers Union has just released a report entitled “Best of Intentions, Worst of Results”, which highlights some negative effects and can be found at taxpayers.org.nz.

The Living wage and government assistance

Working For Families

32. Working for Families makes it easier to work and raise a family. It pays extra money to many thousands of New Zealand families and is available for:

a. almost all families with children, earning under $57,000 a year;

b. many families with children, earning up to $74,000 a year;

c. some larger families earning more; and

Working for Families is delivered by Work and Income and Inland

Revenue.

33. The Living Wage interfaces strongly with Central Government income support measures such as Working for Families. A paper prepared by New Zealand Treasury on the Living Wage estimates that over and above standard PAYE and ACC taxes, a further 50% of the cost to ratepayers of implementing the living wage flows directly to central government by way of benefit and income support abatements, and additional GST. The extent to which rates funding for the Living Wage flows to Central Government rather than the individual is determined by each person’s circumstances. The more abatement of income support they incur, the less net benefit they personally receive from a headline wage increase. Single and young people receive less income support than workers with dependents, and therefore suffer less abatement.

34. There is no way for Council to target Living Wage income increases to those most in need without the introduction of an intrusive personal circumstances questionnaire. This is not recommended due to privacy concerns and the extent to which officers would need to make value judgments about individual living situations.

Council’s current remuneration practices

35. Council’s Remuneration Policy states that Council is committed to ensuring its remuneration practices are competitive in the market to attract and retain the best people, while also being affordable to Council.

36. Council offers employees remuneration which is competitive against other organisations and consistent with the worth of their role to the organisation. This also recognises the contribution of employees to the achievement of the organisation’s goals and objectives.

37. Remuneration systems and structures take account of remunerations levels and practices outside Council, but are based also on the need for internal consistency and relativities.

Living Wage – Financial Impact

38. Payroll data for all Council employees irrespective of employment type (full time, part time, or casual), was analysed for a 12 month period. This provided an estimate of cost to Council if the Living Wage had been paid to employees who were paid less than the Living Wage.

39. Inclusive of holiday pay and Kiwisaver, but excluding employer ACC obligations (this would be an additional 1%), the additional direct cost to Council would have been $470k. This is before considering the issue of pay relativity which is estimated would cost a further $100k to address. The total cost to Council if the Living Wage had been paid for all employees is therefore estimated to be $570k.

40. A breakdown of the cost by employment type detailed below shows casual employees working an average 8.5 hours a week, with an average age of 22 and average employment tenure of 19 months (1.6 years), would account for $245k (52.2%) of the additional direct cost.

41. From an Activity perspective, Pools would incur $256k (54.6%) of the additional direct cost.

42. Breakdowns of the cost per Activity by employment type are provided in the following tables;

How should the Living Wage be funded?

43. Wages are an operating cost and should be funded as such and not from additional debt. Any additional costs not able to be recovered from user-charges would need to be added to the General Rate requirement. If no additional income is recovered from increased activity revenues, rates would need to increase on average by about 0.6% plus GST to fund all of the additional cost.

44. In the following paragraph the impact to Community Services, and in particular increased user charges for swimming pools, is considered.

Impact on Community Services

45. The majority of the budget impact for Council staff would be felt in the Community Services Group – in particular within the Leisure Active and Libraries divisions. Museums and Parking Services budgets would also be impacted, albeit to a lesser degree.

46. Our swimming activities would face the largest impact. Annual cost implications based on payroll figures for Swimming Pool Activities would be $280,000 in additional costs. When taking wider relativity payroll issues into account this would probably be about $350,000 per annum. This would either be an additional cost to ratepayers or passed on in increased user charges.

47. To recover this additional cost in user charges would require an average estimated price increase of around 15% across the board e.g.:

	Current	New
Adult Swim	$5.00	$5.75
Child Swim	$3.00	$3.50
Swim Lesson	$15.00	$17.25
Gym Weekly	$12.00	$13.80

48. The above scenario also assumes that a significant price increase wouldn’t have a material impact on visitor numbers and participation. Having ‘no’ impact would be extremely unlikely.

49. Activities such as fitness gyms and swimming lessons operate in a market environment and therefore this level of increase would make these services uncompetitive. An example of this would be the recent Request for Proposal completed for Huia Gym. If the living wage was used in the operating model proposed by Council, profitability would reduce by approximately $90,000 per annum making it more likely that an outside contractor would have been selected to run this operation.

50. For Fitness Suite Operations and also arguably ‘learn to swim’ operations, attempting to recover the additional cost of a living wage through increased user charges would effectively result in a non-competitive model.

Effect on Council-Controlled Organisations

51. Council’s 100% controlled subsidiaries have the following employee numbers being remunerated below the Living Wage:

Seaview Marina Limited – one employee

Urban Plus Limited – no employees

Community Facilities Trust – no employees

Contractors

52. Living Wage Aotearoa New Zealand is calling for workers whose wages are funded by public money to receive a living wage as well as large enterprises that can afford to do so.

53. Whilst this is their main aim they encourage employers to also extend this to contractors who deliver services on a regular and ongoing basis. This is done through the procurement process whereby the tenderer would have to assure the customer that their staff were being paid a living wage.

54. This is a requirement for an ‘accredited living wage employer’. Officers recommend that Council only consider extending Living Wage requirements to contractors if and when the Living Wage has been fully applied to Council employees. At that point further work could be done evaluating likely impacts.

55. To place Living Wage requirements on contractors in advance of full implementation at Council would appear hypocritical.

56. An alternative option for Council would be to place importance on Living Wage adoption during tendering, without stipulating that it is essential for potential contractors. This could be done by applying a Living Wage weighting to tender evaluation formulae in a similar way as may be applied favouring local businesses and businesses with other beneficial practices relating to Health and Safety, environmental issues, etc.

Legal Considerations

General report

57. The purpose of Council is defined in the Local Government Act 2002 as:

10 Purpose of local government

(1) The purpose of local government is—

(a) to enable democratic local decision-making and action by, and on behalf of, communities; and

(b) to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.

(2) In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are—

(a) efficient; and

(b) effective; and

57. There are two major concerns with implementing a blanket living wage. The first is that Council has a duty at law to its ratepayers to pay no more than is strictly necessary for service.

58. The second is that it could be challenged as being beyond the powers (“ultra vires”) of Council. The main challenge would be that Council implementing the living wage would not be the “most cost-effective” way of fulfilling its purpose and therefore beyond its legal powers.

59. For this reason, Council would need to be satisfied it could justify why the implementation of a living way would be the most cost-effective method of fulfilling its purpose. It would need to do this by identifying benefits (for example, improved quality or effectiveness) that justified the additional cost.

60. This means, when considering whether to implement the living wage, Council would need to consider all the available options. This would include paying the living wage as one option and not paying the living wage as another. Council would need to be satisfied that it had enough other information when making the decision to conclude that paying the living wage was the most cost-effective of the two (or more) options (ie. more cost effective than not paying the living wage). It would need to do this by reference to clear additional benefits that outweigh the additional cost. To be clear, this task goes beyond simply identifying practical benefits from paying a living wage. Council must be satisfied that those benefits outweigh the extra cost involved and make paying the living wage the most cost-effective option available. If this is not done, the decision will be at risk of losing a judicial review.

61. From a legal risk perspective, the best way to implement a living wage is on a case-by-case basis. This allows all the relevant information to be considered and a decision to be made on whether the benefits outweigh the additional cost enough to make paying the living wage the most cost-effective option.

62. It is easier to justify a living wage for Council staff. This is because Council has an obligation to be a good employer under the Local Government Act 2002. This goes some way to balancing the additional cost involved.

63. It is difficult to envisage a blanket policy to require external contractors to pay a living wage that would meet the test in the Local Government Act. This is because the benefits the living wage is trying to produce, such as greater productivity and better service outcomes, will already be built into procurement and the contracts. If Council requires the living wage to be paid to contractor’s employees, in almost all cases this will simply result in increased cost, without the benefits that could justify a requirement for the living wage to be paid. This may not be true in every single case but the implementation of a blanket policy would not allow for a case-by-case analysis.

Other Considerations

64. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that Council needs to carefully consider the information and options before it, to ensure the decision made falls within the scope of section 10.

Appendices

No.	Title	Page
1 ⇩	Policy Research Paper	19
2 ⇩	Treasury Living Wage Information Release November 2013	41

Author: Jo Beck

Divisional Manager Human Resources

Author: Bradley Cato

Solicitor

Reviewed By: Joycelyn Raffills

General Manager, Governance and Regulatory

Approved By: Tony Stallinger

Chief Executive

65 01 March 2017

Finance and Performance Committee

25 January 2017

File: (17/60)

Report no: FPC2017/1/66

Review of Draft Statement of Intent 2017/2018 for the Hutt City Community Facilities Trust

Purpose of Report

1. The purpose of the report is to provide a review of the draft Statement of Intent (SOI) for the Hutt City Community Facilities Trust as delivered to Council for Council’s consideration.

Recommendations

That the Committee recommends that Council:

(i) notes that the Board of the Hutt City Community Facilities Trust (CFT) has submitted a draft Statement of Intent (SOI), attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002;

(ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis;

(iii) reviews the draft SOI and considers any modifications that should be made;

(iv) receives the draft SOI; and

(v) provides comment for the Board of the Trust to consider in finalising its SOI (including any modifications suggested by the Committee arising under paragraph (iii) above).

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft SOI on or before 1 March of each year.

Discussion

3. The Board of Hutt City Community Facilities Trust (CFT) has submitted a draft SOI to Council. This is attached in Appendix 1 to the report.

4. The board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9, Schedule 8 of the LGA). The compliance of the company within the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2017/2018 –SOI are detailed below:

Required Content	Draft SOI Content
(a) the objectives of the Trust	The objectives of the CFT are stated.
(b) a statement of the board’s approach to governance of the group	A statement is included.
(c) the nature and scope of the activities undertaken by the group	The nature and scope of activities are outlined.
(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms	The terms are defined. No shareholder funds are distributed to CFT.
(e) the accounting policies of the group	Accounting policies are outlined.
(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives	Performance targets are included.
(g) an estimate of the amount or proportion of accumulated profits and capital reserves that is intended to be distributed to the shareholders	Information provided. There is no intention to pay a dividend to the shareholder.
(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report	The kind of information to be provided is outlined. The Trust will provide annual and six-monthly reports.
(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation	Information included. Express approval from Council is required.
(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation)	No compensation anticipated.
(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed	A statement as to the net value of shareholders investment is provided.
(l) any other matters that are agreed by the shareholders and the board	No other matters included.

5. This draft SOI has reduced the scope of the “Activities” undertaken by CFT to a very specific list of projects, following the trend from the previous year.

6. The structure of the Performance Targets is also focused on the specific projects the CFT is currently undertaking.

Consultation

7. There are no consultation considerations.

Legal Considerations

8. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the LGA. Also Council may suggest changes which the Board must consider in finalising its SOI.

9. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation should be met by Council officers in respect of the CFT SOI.

10. Note that despite anything in the Trust’s constitution, Council may, by resolution, require the Board to modify the SOI and the Board must comply (section 5, Schedule 8), provided that Council first consults the Board.

Financial Considerations

11. The net shareholder’s investment in CFT is estimated to be valued at $27.314m as at 30 June 2017 (compared with $19.327m at 30 June 2016).

Other Considerations

12. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of the community through contributing the community outcomes.

Appendices

No.	Title	Page
1 ⇨	Hutt City Community Facilities Trust Draft Statement of Intent 2017-2018 - marked up version (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Reviewed By: Bradley Cato

Solicitor

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Joycelyn Raffills

General Manager, Governance and Regulatory

69 01 March 2017

Finance and Performance Committee

10 February 2017

File: (17/193)

Report no: FPC2017/1/67

Review of Draft Statement of Intent 2017/2018 for Seaview Marina Limited

Purpose of Report

1. The purpose of the report is to provide a review of the draft Statement of Intent for Seaview Marina Limited as delivered to Council for Council’s consideration.

Recommendations

That the Committee recommends that Council:

(i) notes that the Board of Seaview Marina Limited (SML) has submitted a draft Statement of Intent (SOI), attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002;

(ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis;

(iii) reviews the draft SOI and considers any modifications that should be made;

(iv) receives the draft SOI; and

(v) provides comment for the Board of the company to consider in finalising its SOI (including any modifications suggested by the Committee arising under part (iii) above).

Background

2. The Local Government Act 2002 (LGA) requires the Board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft statement of intent on or before 1 March of each year.

Discussion

3. The Board of Seaview Marina Limited (SML) has submitted a draft SOI to Council. This is attached as Appendix 1 to the report.

4. The Board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9 Schedule 8 of the LGA). The compliance of the company with the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2017/2020 SOI are detailed below:

Required Content	SML Draft SOI Content
(a) the objectives of the company	The objectives of the SML are stated.
(b) a statement of the board’s approach to governance of the group	A comprehensive statement is included.
(c) the nature and scope of the activities undertaken by the group	The nature and scope of activities are outlined.
(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms	Statement of the ratio is not included and is stated as not being considered appropriate.
(e) the accounting policies of the group	Accounting policies are outlined.
(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives	Performance targets are included.
(g) an estimate of the amount or proportion of accumulated profits and capital reserves that it is intended to be distributed to the shareholders	Information provided. There is no intention to pay a dividend to the shareholder. Trading profits are reinvested in the company.
(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report	The kind of information to be provided is outlined, and includes half yearly reports and annual reports. Financial projections are included in the SOI.
(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation	Information included.
(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation)	No compensation requested.
(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed	A statement as to the net value of shareholders investment is included as well as a statement on the estimated commercial value.
(l) any other matters that are agreed by the shareholders and the board	Forecast financial statements provided as per previous agreement.

5. The company’s proposed key performance indicators for 2017/2020 are set out in section 11 of the report. There are no material changes from the previous year. Over the next three years SML is focused on continuing the development of the marina while maintaining the return on investment (ROI) agreed with the shareholder. The rate of return on shareholders’ funds remains at 5.0%.

6. The strategic objectives of the company have been added to and include:

(i) Removing residential development as an option on the marina;

(ii) The SOI states the legal advice on ownership of the seabed has been unclear. This is not correct. The advice is unequivocal. The Marine and Coastal Area (Takutai Moana) Act 2011 placed ownership with the Crown.

(iii) Completion of the final “in-water” development of 60 additional berths;

(iv) Providing a floating diesel/petrol facility at the southern end of the development;

(v) Resolving the tenure of the 2 breakwaters (currently owner by Council);

(vi) Reviewing the opportunity for additional retail and commercial facilities on the marina;

(vii) Providing facilities to support other marine related activities on the marina;

(viii)Expansion of the boat storage across Port Road;

(ix) Exploring the potential for a dry stack facility on the marina site;

(x) Continuing to improve the facilities.

Legal Considerations

7. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the Act. Council may also suggest changes which the Board must consider in finalising its SOI.

8. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation will be met by Council officers in respect of the SML SOI.

9. Note that despite anything in the company’s constitution, Council may, by resolution, require the board to modify the SOI and the Board must comply (section 5, Schedule 8), provided that Council first consults the Board.

Financial Considerations

10. The net shareholder’s investment in SML is estimated to be valued at $5.783m as at 30 June 2017 (compared with $5.413m at 30 June 2016).

Consultation

11. There are no consultation considerations.

Other Considerations

Appendices

No.	Title	Page
1 ⇨	Seaview Marina Draft Statement of Intent 2017-2020 - marked up version (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Reviewed By: Bradley Cato

Solicitor

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Joycelyn Raffills

General Manager, Governance and Regulatory

73 01 March 2017

Finance and Performance Committee

10 February 2017

File: (17/194)

Report no: FPC2017/1/68

Review of Draft statement of Intent 2017/2018 for UrbanPlus Limited

Purpose of Report

1. The purpose of the report is to provide a review of the draft Statement of Intent for UrbanPlus Limited as delivered to Council for Council’s consideration.

Recommendations

That the Committee recommends that Council:

(i) notes that the board of UrbanPlus Limited (UPL) has submitted a draft Statement of Intent (SOI), attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002;

(ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis;

(iii) reviews the draft SOI and considers any modifications that should be made;

(iv) receives the draft SOI; and

(v) provides comment for the Board of the company to consider in finalising its SOI (including any modifications suggested by the Committee arising under paragraph (iii) above).

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft SOI on or before 1 March of each year.

Discussion

3. The Board of UPL has submitted a draft SOI to Council. This is attached as Appendix 1 to the report.

4. The Board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9, Schedule 8 of the LGA). The compliance of the company with the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2017/2018 SOI are detailed below:

Required Content	UPL Draft SOI Content
(a) the objectives of the company	The objectives of the UPL are stated.
(b) a statement of the board’s approach to governance of the group	A comprehensive statement is included.
(c) the nature and scope of the activities undertaken by the group	The nature and scope of activities are outlined – no significant changes.
(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms	Ratio provided.
(e) the accounting policies of the group	Accounting policies are outlined.
(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives	Performance targets are included.
(g) an estimate of the amount or proportion of accumulated profits and capital reserves that is intended to be distributed to the shareholders	Information provided. There is no intention to pay a dividend to the shareholder.
(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report (and, in particular, what prospective financial information is required and how it is to be presented)	The kind of information to be provided is outlined. The Company will provide annual and six-monthly reports. Forecast financial information is included in the SOI.
(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation	Information on procedures is not provided but it is noted that there is no intention to subscribe or invest in any other organisation. A further note states UPL has established a subsidiary. There are procedures in place which require approval from the CEO of Council, who can grant authority to UPL on certain conditions.
(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation)	No compensation requested.
(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed	A statement as to the net value of shareholder’s investment is provided.
(l) any other matters that are agreed by the shareholders and the board	Some additional information is provided.

Legal Considerations

5. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the LGA. Council may also suggest changes which the Board must consider in finalising its SOI.

6. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation will be met by Council officers in respect of the UPL SOI.

7. Note that despite anything in the company’s constitution, Council may, by resolution, require the board to modify the SOI and the board must comply (section 5, Schedule 8), provided that Council first consults the board.

Financial Considerations

8. The net shareholder’s investment in UPL is estimated at $14.439m as at 30 June 2017 (compared with $15.123m at 30 June 2016).

Consultation

9. There are no consultation considerations.

Other Considerations

10. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of the community through contributing the community outcomes.

Appendices

No.	Title	Page
1 ⇨	UrbanPlus Limited Draft Statement of Intent 2017-2018 (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Reviewed By: Bradley Cato

Solicitor

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Joycelyn Raffills

General Manager, Governance and Regulatory

82 01 March 2017

Finance and Performance Committee

20 January 2017

File: (17/34)

Report no: FPC2017/1/71

Seaview Marina Limited Six Month Report to 31 December 2016

Purpose of Report

1. To provide the Committee with an update for Seaview Marina Limited (SML), for the six month period to 31 December 2016.

Recommendations

That the Committee receives the half year report from Seaview Marina Limited attached as Appendix 1 to the report.

Background

2. The Local Government Act requires Council Controlled Organisations (CCO’s) to deliver to shareholders a half yearly report on the organisation’s operations within two months after the end of the first half of each financial year. The report should include information required to be reported as outlined in the organisation’s 2016/2017 Statement of Intent.

Discussion

3. The Chair and General Manager of SML will be in attendance to present their report and answer any questions.

4. Overall, SML reported a surplus of $144,908 for the 6 months to 31 December 2016 - just over $20,000 unfavourable to budget. Unfavourable revenue and favourable business as usual expense variances offset each other resulting in an ‘on budget’ business as usual result, with the overall unfavourable variance to budget due to necessary repair costs incurred as a result of the November 2016 earthquake.

5. The revenue shortfall is due to difficulties in filling the new 12m berths, partially offset by better than expected results for the hardstand activities.

6. Operational expenses are higher than planned due to costs incurred as a result of the November 2016 earthquake.

7. Depreciation and finance charges are lower due to the decision taken to place the commercial pier development on hold until berth occupancy improves.

8. Occupancy rates for both the trailer park and berth storage are currently operating at 100% and 83% respectively. Berth storage is lower than planned due to difficulties in filling the 12m berths.

9. The Marine Centre has had only one tenancy vacant over the first six months of this financial year. YTD the income for the six months is 100% of budget. Four units were due for renewal at the end of 2016 and these have all been renegotiated and signed off. The Board was successful in achieving an average rental increase of 21.5% for the four units.

10. Additional berth developments planned for this financial year have been postponed until berth occupancy figures improve. Investigations are progressing on widening the travel lift dock way and providing a maintenance pier for contractors to work on vessels in the water.

11. Cash flows have been strong. Cash surpluses from operations have been used to fund capital expenditure and to reduce the current account balance with HCC. During the 6 months, the current account balance was reduced from $449,074 to $189,535 (and to $50,551 by the end of January 2017).

12. Total equity at 31 December 2016 was $5,558,254.

Options

13. No options are presented.

Consultation

14. No requirement for further consultation.

Legal Considerations

15. No further legal considerations noted.

Financial Considerations

16. No additional financial considerations noted.

Other Considerations

17. No other considerations noted.

Appendices

No.	Title	Page
1 ⇨	Seaview Marina Six Month Report to 31 December 2016 (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Approved By: Brent Kibblewhite

Chief Financial Officer

112 01 March 2017

Finance and Performance Committee

30 January 2017

File: (17/102)

Report no: FPC2017/1/73

Risk and Assurance update and
Strategic Risk Register

Purpose of Report

1. The purpose of this report is to update the Committee on risk and assurance actions and activities to maintain and improve Council’s internal control framework and to present the Strategic Risk Profile.

Recommendations

That the Committee:

(i) notes the information in this report; and

(ii) notes the Strategic Risk Profile 2016 as approved by the Strategic Leadership Team, attached as Appendix 1 to the report.

Background

2. The Risk and Assurance Manager provides an update twice a year on the actions taken to maintain and improve Council’s assurance and risk management framework. The preceding Risk and Assurance Update was presented to the Finance and Audit Committee meeting held on 13 July 2016.

Discussion

Strategic Risk Profile

3. Strategic risks are those that affect the achievement of Council’s strategies, strategic objectives, key goals and strategic execution.

4. This profile considers each key strategy and provides a high level snapshot of strategic risk context, plans and treatment actions.

5. Attached as Appendix 1 to the report is the annual Strategic Risk Profile for 2016 for Council as approved by the Strategic Leadership Team (SLT) and Risk Management Working Group.

6. The risk profile now includes a risk status update key to show movements in risk status or risk ranking from the previous profile. The risk status update provides an indication of a decrease, no change or increase in the risk ranking, which is derived from a combination of consequence and likelihood assessments for the risk based on the risk ranking matrix.

7. Leisure and Wellbeing strategic risk rating has decreased (improved) in light of strategic community facilities projects being completed and positive progress of community programmes and initiatives that enhance the lives of our communities.

8. Organisation strategic risk rating has increased as we have a greater awareness of health and safety exposures and plans are in place to address identified areas that require attention and improvement.

9. Natural Hazards strategy rating remains HIGH. Following the Kaikoura earthquakes on 14 November 2016, a number of actions are underway to address our susceptibility to, resilience and preparedness for natural hazards. Also refer to the Risk Management Working Group activities below for details.

10. The annual Strategic Risk Profile was last presented to the Finance and Audit Committee on 23 November 2015.

Internal Audit

11. The payroll internal audit report was issued on 21 October 2016. The overall objective of this review was to determine the adequacy and effectives of controls and systems in place to manage their operations, and to identify any improvement opportunities. Audit work aimed to avoid gaps and overlaps with other sources of assurance.

12. Payroll internal audit opinion on management control is that it is effective. The control framework is appropriate and effective. Controls are appropriately designed and executed as intended. Overall processes are controlled. The following two low rated findings were raised:

i. Monitoring of patterns for casual and temporary staff; and

ii. Document and test service continuity plan.

13. The Internal Audit Plan 2016-2018 was approved by SLT on 5 December 2016. Planning for the first two reviews is underway for i) high level review of the official information requests process and ii) Community Funding and Grants internal audit.

14. Monitoring processes are in place to track and follow up findings raised in internal audits to ensure corrective actions are cleared as the resolution date falls due.

15. Monthly reporting continues to assess compliance with legislative and regulatory requirements. To date for the 2016/2017 year there has been one significant breach in relation to a response to an official information request response not meeting the statutory timeframe.

Risk Management Working Group

16. The Risk Management Working Group (RMWG) has met twice since the 13 July 2016 update provided to the Finance and Audit Committee.

17. Last month a workplace security assessment for the Laings Road administration building reception area was undertaken by the Health and Safety Manager and Health and Safety Consultant. The assessment was based on the guidelines in the judgement from the prosecution of the Ministry of Social Development by WorkSafe New Zealand following the shootings in the Ashburton Work and Income Office in September 2014. WorkSafe have also issued guidelines to manage risk in customer service areas, a fact sheet on best practice in developing plans, so far as is reasonably practicable, to ensure the health and safety of workers, and ensure that others are not put at risk.

18. OPSEC Solutions, external consultant, completed workplace security risk assessments of the Walter Nash Centre, Taita and the Computer Clubhouses at the Naenae and Taita sites.

19. A total of 24 council sites having had workplace security assessments since October 2014. Progress updates on remedial actions are provided directly to SLT.

20. Security of the Pavilion server room has been strengthened and is considered adequate with the installation of security cameras in addition to the changing of access locks and a PIN.

21. In October 2016 the RMWG reviewed and updated the key service priorities for council services. This forms part of the service continuity framework and prioritises the areas/services for recovery following a disruption event. Priority rankings have been communicated to Divisional Managers.

22. An emergency power test at the Laings Road administration building is scheduled for 3 March 2017. The planned test will ensure minor issues have been cleared from the two unexpected power outages since staff moved back into the refurbished building.

23. The Chief Financial Officer took up the role of Crisis Manager in September 2016. A Crisis scenario is being investigated and may form part of the emergency power testing in March 2017.

24. Coordinated Incident Management System (CIMS) training continues to take place approximately six weekly and is run by Wellington Regional Emergency Management Office (WREMO) staff.

25. The Divisional Manager, Regulatory Services and the Regional Manager/Group Controller of WREMO will provide a separate briefing on the WREMO 12 month update to the Community Services Committee to be held on 2 March 2017.

26. All sites have emergency evacuation plans in place and drills are held regularly.

27. Staff Receiving of Gifts policy was reviewed by the RMWG (no significant changes) and SLT approved the updated policy on 5 December 2016.

28. The risk management system has been reviewed. The document, previously approved by Council, is being finalised by SLT.

29. Responsibilities and supporting processes of the risk management framework are reinforced regularly. Processes are in place for escalation outside of the regular reporting channels on any emerging operational risks or issues. Managers’ reported on operational risk in January 2017.

Other Considerations

30. In making this recommendation, the Risk and Assurance Manager has considered the purpose of local government in section 10 of the Local Government Act 2002. The Risk and Assurance Manager believes that this recommendation falls within the purpose of the local government in that it provides the Finance and Performance Committee with information to support their governance role. It does this in a way that is cost-effective because it provides assurance on the effective and efficient management of risks within Council.

Appendices

No.	Title	Page
1 ⇩	Strategic Risk Profile 2016	119

Author: Enid Davids

Risk and Assurance Manager

Approved By: Joycelyn Raffills

General Manager, Governance and Regulatory

Attachment 1

Strategic Risk Profile 2016

Strategic risk

Risk is the effect of uncertainty on objectives. Strategic risks are those that affect the achievement of Council’s strategies, strategic objectives, key goals and strategic execution. They are key matters that impinge on the whole business, rather than an isolated unit or activity.

Strategic risk links how the whole organisation is positioned in relation to its environment and is not affected solely by what Council decides. It involves a clear understanding of strategy, the uncertainties in adopting it and the uncertainties in executing it. These may be triggered from inside or outside our organisation.

NB: Risk is commonly articulated using “If / Then” statements: IF [Event], THEN [Consequences]. Risk is “an uncertainty that matters”. Therefore the Event is the uncertainty, and the Consequences are why it matters. Risk can be a threat OR opportunity. This risk register attempts to articulate risks in a positive way.

Council’s purpose:

(a) To enable democratic local decision-making and action by, and on behalf of, communities; and

(b) To meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.

Vision:

An Integrated Vision for Hutt City is to make our city a great place to live, work and play. A city where our people are proud to live, where working and investing here is a smart choice, and where there’s always something for our families to explore.

A Better City Every Day.

The following key strategies are in place to help achieve this vision:

§ Leisure and Wellbeing Strategy 2012-2032	§ Infrastructure Strategy 2015-2045
§ Urban Growth Strategy 2012-2032	§ Environmental Sustainability Strategy 2015-2045

Strategy implementation is prioritised by:

§ Provide the Best Local Government Services

§ Develop World-Class Community Facilities

§ Stimulate Economic and Social Development

1.Strategic risk profile 2016

The execution of all strategies impacts Council’s standing in the community, carries stakeholder, reputational and legal risk that will generally have a financial impact.

1.1 Urban Growth Strategy

1.1.1 CONTEXT: Statistics New Zealand medium level population projections indicate a declining population. Hutt City has lower than regional average population growth and an aging population. Incentives to stimulate building and business development continue with a focus on STEMM: science, technology, engineering and manufacturing industries. Council investment in development strives for balance so not to place an unreasonable burden of rates increases or debt on residents. Ambitious targets are set around new housing developments city-wide. Targets include: growing households by 6,000 (average 300 p.a.) and population growth to 110,000 by 2032. The expected benefits from the new Events centre alone are $51M to $93M brought into the economy over a 20 year period and 74 direct and 104 total new jobs created in the fifth year.

1.1.2 Strategic risk description

This strategy contributes to the city’s economy and growth and focuses on growth targets, new homes and businesses and how this supports development.
If Council does not stimulate economic and social development this may impact the city’s ability to retain and grow businesses and population and/or the ability to attract new businesses and/or tourists to the city. This will have a flow on impact on the city’s rate-payer base. Reaching growth targets relies on:

§ Economic development plans being realised (four-star hotel, Events Centre, River Link Promenade)

§ Achievement of District Plan Changes

§ Achievement of city population growth

§ Political leadership

1.1.3 Key Strategies / Plans

1.1.4 Risk Treatment, actionS

District Plan

Urban Growth Strategy 2012-2032

Economic Development Plan 2015-2020

CBD Making Places 2030

CBD Development Charges Rates and Remission Policy and Citywide Development Remissions Policy

Rates Remission for Economic Development

Development Contributions Policy 2015-2018

Wainuiomata Development Plan and Petone 2040

Events Strategy 2013-2023

Housing Policy

Gracefield Innovation Precinct Vision (awaiting Callaghan Innovation)

STEMM projects and programmes to promote related employment options and grow the economic wealth of these sectors and the ‘Technology Valley’ brand

Manage within Resource Management Act the sustainable management of physical and natural resources and environmental management. Balancing environmental impacts with economic activities.

Provide development incentives – development contributions and rates remission schemes to attract investment to the city.

Gain political and community buy-in for District Plan Changes to achieve growth targets.

Housing growth challenge – change required in supply and type, particularly with the impact of an increasing ageing population and smaller households.

Urban Growth Strategy Projects:

§ Kelson ¡ Stokes Valley

§ Wainuiomata ¡ District Plan Changes

CBD development projects:

§ Hotel construction underway ¡ 177 High Street

§ Attracting commercial activity to CBD ¡ River Link and Promenade

§ Events Centre ¡ District Plan

Petone West rezoning plan change 29 created a mixed use area, promoting more diversity in activities in the area.

Ongoing monitoring of progress, outcomes and implementation of Urban Growth Strategy

1.2 Leisure and WellBeing Strategy

1.2.1 context: Hutt City has some of the highest levels of social deprivation in New Zealand, in particular Naenae, Taita, Pomare and Delaney, Epuni East and Waiwhetu North.
There is pressure on project costs due to heightened nationwide construction activity impacting the availability of project resources, contractors, project/building costs and health and safety compliance. There is pressure within the funding sector impacting on Community Facilities Trust ability to achieve fund raising goals.

1.2.2 Strategic risk description

This strategy contributes to the city’s culture, physical and educational wellbeing and aims to positively impact residents’ quality of life, prospects, safety and connectivity. If this strategy is unsuccessfully executed, the above outcomes may not be achieved and will impact the delivery of the Vision for Hutt City.

Council has a suite of capital projects that focus on revitalisation and rejuvenation to update Council facilities as a mechanism to stimulate positive change in the community. This capital commitment continues and a number of capital projects will be delivered in 2017. The key uncertainties associated with the successful redevelopment into World-Class Community Facilities relies on:

§ Funding and fundraising

§ Best Practice Project Management

§ Meaningful Community Engagement

§ Managing any political uncertainties

Further to this, organisation preparedness and organisational alignment is necessary to successfully achieve project outcomes.

1.2.3 Key Strategies / Plans

1.2.4 Risk Treatment / actionS

Leisure and Wellbeing Strategy 2012-2032

Renewal and revitalisation of facilities

Rejuvenation Hutt City

CBD Making Places 2030

Long Term Integrated Community Facilities Plan 2015-2045

Walk and Cycle The Hutt strategy 2014-2019

Go Outside and Play – a comprehensive plan for play in Hutt City

Smoke Free Outdoor Places Policy

Strengthen current social projects focussing on high deprivation communities with a focus on core strengths that make a difference (literacy, arts, recreation). Including:

§ YOUth Inspire Majors task-force for Jobs

§ North East Kids Initiative and North East Pathways

§ TAKA: Te Awa Kairangi Access Trust and corporate relationships

§ Healthy Families

§ Computer Clubhouses

§ Action Replay Project

Proposed Accessibility and Inclusiveness Plan 2017 to 2027

Updated facilities provide a mechanism to simulate positive change in the community. Large scale projects include:

§ Civic Precinct (Town Hall, Events Centre and Riddiford Gardens)

§ Fraser Park Sportsville (stage 2 works in progress, stage 3 ongoing)

§ Huia Pool Redevelopment for Learn to Swim and hydrotherapy pools

§ Purpose built Stokes Valley Community Hub

§ Walter Mildenhall Regional Bowls Centre

Completed projects include Avalon Park, Walter Nash Centre Taita, refurbished Admin Building and Petone Settlers Museum upgrade.

Cycling project spend of $13.5M over 2015/18 from Council/NZTA/Urban Cycle Fund

Strategic Leadership Team has overarching programme view of prioritisation, staging, funding and resource allocation across strategic projects in capital programme.

Effectively resourcing projects, particularly the availability of people and mix of skills, to successfully implement this strategy.

Monitoring processes are being agreed to measure progress against strategic objectives to ensure outcomes for lifestyle, culture and heritage, physical and educational wellbeing to ensure outcomes are achieved in a cost effective manner. Community outcomes will be apparent in future years.

Sound analysis for decisions making and meaningful stakeholder communications.

1.3 Infrastructure Strategy

1.3.1 context: Council aims to deliver reliable, quality infrastructure services for water treatment and supply, wastewater disposal, stormwater drainage, flood protection, roading and footpaths that meet the current and future needs of the city in the most cost effective way. The provision of assets and infrastructure assets are essential for the continued delivery of critical services and public and social good.

1.3.2 Strategic risk description

The Infrastructure Strategy, supported by Asset Management Plans, provides for good-quality essential infrastructure networks to meet the current and future needs of communities in a cost-effective way for households and businesses. If this strategy is unsuccessfully executed, infrastructure network outcomes may not be achieved.

Key risk with Infrastructural Asset Management Plans revolves around essential infrastructure networks being reliable, resilient, fit for purpose, affordable and sustainable for the long term.

Water supply vulnerability if pipelines and reservoirs are damaged due to a major earthquake, climate change, accidents or other threats affecting Hutt Valleys reticulated water supplies

1.3.3 Key Strategies / Plans

1.3.4 Risk Treatment, actionS

Infrastructure Asset Management and Maintenance Plans

Infrastructure Strategy 2015-2045

Local Government Act 2002, Resource Management Act 1991 and Land Transport Management Act 2003

Hutt Valley Floodplain Management Plan

Public Health Risk Management Plan for water supply

Asset Renewal Strategy and Asset Development Strategy

Infrastructure based projects in the Long Term Plan completed or on target for delivery as a method for implementing asset management plans

Renewal, maintenance and upgraded assets to meet future service levels

RiverLink project with Greater Wellington to deliver flood protection outcomes. Regional Council ratified Stopbank decision to upgrade the river defences from Kennedy Good Bridge to Ewen Bridge that will protect our city from up to a one in 440 year flood event.

Seismic strengthening is underway for two (of three) remaining bridges on seismic review programme. Works on the remaining third (and final) bridge will commence in 2020/21.

Planning process – District Plan and Annual Plan

Contract management, safety audits and testing programmes

Emergency Response Plan / Evacuation Plans

Contingency plans for infrastructure risks

Wellington Water “Shaping Our Future” business model review is underway to ensure it is set up in the best way to deliver value to Council

WWL resilience work on regional water supply. Refer ‘Natural Hazards’ below.

Opus study of road network resilience

Wellington Regional Natural Hazard Management Strategy Stocktake July 2015, Natural Hazards Programme, Natural Hazard Management Planning coordinated through Wellington Regional Emergency Management Office.

Water Wellington ‘Water Supply Resilience Road Map’ March 2016 outlines three year plan to achieved agreed resilient level of service, per resilience strategic case Aug-2015

Execution of Regional Asset Management Plan and investment in water infrastructure.

Alignment with New Zealand Infrastructure Management Goals (Treasury National Infrastructure Unit).

Planning for critical water supply pipelines and water reservoir seismic upgrades.

Priority supply plans for priority users during an event.

1.4 Environmental Sustainability Strategy
1.4.1 context: There are four major fault lines within the Wellington region, making the Hutt Valley vulnerable to earthquakes. Hutt City sits on a natural flood plain and is high flood risk due to its topography. Weather volatility, flood frequency and intensity in Hutt Valley is projected to increase. Sea level rise may impact low-lying Petone, Eastbourne and Seaview and disrupt transport systems.
1.4.2 Strategic risk description The Environmental Sustainability Strategy contributes to the city’s environmental protection, sustainability, natural disasters, safety and climate change. If this strategy is unsuccessfully executed, then outcomes to protect, maintain and enhance the quality of the environment now and for the reasonably foreseeable needs of future generations may not be achieved. Preparedness is vital to manage the city’s exposure and susceptibility to natural hazard events and emerging environmental trends in order to be resilient and able to plan for, respond to and thrive after an emergency event.
1.4.3 Strategic risk description	1.4.4 Key Strategies / Plans	1.4.5 Risk Treatment, actionS
Council strives to show leadership in environmental protection and community resilience; and ongoing adaption and enhancement, so to protect and enhance the environment, air and water quality. Council actions must align with this aim and ensure business practices and resourcing is provided accordingly (reputational risk).	Ongoing monitoring of outcomes and implementation of ESS Environmental Sustainability Strategy 2015-2045 Regional Waste Management and Minimisation Plan Regional Waste Education Strategy ESS Implementation Plan Hutt River flood management planning Walkway and cycleway projects	Environmental Impact and Aspect Register for ISO14001:2015 certification Waste Minimisation programme and actions Recycling and refuse collection Silverstream Class A Landfill meets standards outlined in the Centre for Advanced Engineering’s Landfill Guidelines Public open spaces network, reserves, parks, Urban Forest Plan,
1.5.1 Natural Hazards RIsk	1.5.2 Key Strategies / Plans	1.5.3 Risk Treatment, actionS
Lack of emergency preparedness may result in the inability to respond to and/or recover from natural hazard/s. Refer ‘Infrastructure Strategy’ above for Water supply details relating to infrastructure maintenance and renewal requirements to keep pace with natural hazard and climate change risk	Co-ordinated Emergency Response Plan incorporates emergency preparedness 4R’s reduction, readiness, response and recovery Governance and strategic planning Asset management plans Service Continuity Framework Clear responsibilities for emergency management capability/arrangements between HCC and WREMO	Evacuation procedures, co-ordinated Emergency Operating Centre operable, Standard Operating Procedures and use of Coordinated Incident Management System (CIMS). Cooperation with Wellington Regional Emergency Management Office, CDEM Group and getready.org.nz for preparedness and early warning system. Civil Defence Emergency Management Act 2002 s58 allows for reduced services during and after an event. Emergency management mapping and use of GIS technology Input to Regional resilience initiatives. Council’s Resilience Framework has been prioritised into four key areas: disaster preparedness, addressing inequalities, climate change and sea level risk and economic vulnerabilities.

1.6 Financial strategy

1.6.1 context: Council has limited sources of revenue (rates, fees and charges, subsidies) and borrowing to adequately fund agreed levels of service and facilities. Failure of income streams and/or unplanned expenditure could impact the level of funding and/or levels of service if:

§ A major adverse event, such as an earthquake or flood requiring substantial additional expenditure by Council; and/or

§ Economic conditions changed such that there is a significant increase in Council costs or significant reduction in Council revenue (outstanding rates and other debt), such as severe financial market or economic downturn

1.6.2 Strategic risk description

This strategy is based on plans and assumptions regarding financial position, funding options, borrowings, asset management plans, resourcing etc., is set in public consultation and agreement and aims to ensure rates are affordable, competitive and promote the sustainable funding of Councils services being delivered efficiently.

The key risk is that Council is unable to adequately fund services to fully meet its objectives, projects and programmes to rejuvenate and create an exciting Hutt City now and into the future.

1.6.3 Key Strategies / Plans

1.6.4 Risk Treatment, actionS

Long Term Plan 2015-2025 and Annual Plan 2016-2017

Treasury Risk Management Policy – including adherence to limits, liability management and investment policy, debt management and expert independent advice

Revenue and Financing Policy

Robust budget setting and financial forecasting processes

Financial Strategy is agreed as part of the public consultation process

Long Term Plan / Annual Plan activities to be funded within the limits approved in the Financial Strategy

Regular monitoring and year end forecasting to SLT and Councillors including recommended actions where a year end variance is forecast. Six weekly monitoring of strategic (significant) projects review status, risks and financial forecasts.

Standard and Poor’s AA long term with “stable” outlook and A-1+ short term credit rating re confirmed in September 2016

Strong history of rates revenue collection percentages and creditor/debtor controls

Adequate insurance cover is in place based on accurate reinstatement / replacement costs. Valuation review underway of above ground assets and modelling of maximum possible loss. Risk profiling to identify under and over insurance.

1.7 Organisational performance
1.7.1 context: Council operates in a complex and varied environment: regulatory, infrastructure, environmental, community, recreation and leisure, economy and city development, customer services etc. These operations are carried out within financial, technical, technology and workforce constraints. Council’s workforce is a diverse group of people who perform a wide variety of roles that contribute to making Hutt City a great place to live, work and play. Council must attract, retain and develop skilled and engaged staff and leaders in order to deliver its Vision, long term strategies and plans.
1.7.2 Strategic risk description The achievement of Council’s strategies and strategic execution are key matters that impinge on the whole organisation, rather than an isolated unit. People, processes and technology must be managed, maintained and developed in relation to workforce capability, capacity, engagement and retention, and workplace practices in order to achieve Council’s Vision and strategic priorities, be a well-governed city and avoid central government intervention. The achievement of Council’s vision, strategic priorities and to keep pace with the development of change requires an ongoing focus on organisation factors such as: § Health and safety risks being addressed; § Successful initiatives that drive high performing staff and grow confident and inspirational leaders; § Effective performance monitoring of progress against strategic outcome and strategic outputs; and § Alignment of systems, resources and decision making processes are adequate to the needs of the organisation to deliver the LTP. A new triennium commenced after October 2016 Local body elections, which may create some uncertainty in relation to governance model and strategic direction. There is potential for central government to impose changes to the legislative framework for local authorities. Any changes will have unknown impacts on service delivery and Council’s structure. Councils in the region need to show increased cross council efficiencies to propel our region forward both economically and socially, which may circumvent central government impositions.
1.7.3 Key Strategies / Plans	1.7.4 Risk Treatment update / actionS
Significance and Engagement Policy 2015-2018 Human Resources Plan Health and Safety Plan 2016-2017. Health and Safety Strategy, Policy Statement, Governance Charter revisited and updated Ongoing Operational Risk profiling Strategic initiatives, plans and projects for all strategic priority strands – Best Local Government Services Initiatives and projects, Development of World-Class Community Facilities and Stimulate Economic and Social Development	There is additional perceived risk awareness of exposures in health and safety matters. Focus on implementing health and safety plan ‘Safer Workplaces’ that promotes a culture of health and safety ownership across the organisation to promptly identify, resolve and reduce risk. An additional Health and Safety Consultant is undertaking detailed risk assessments to engage staff at all levels, across all divisions and raise awareness. Workplace Security Risk Assessment 2.0 underway. On the Road to High Performance programme continues to drive staff performance, grow confident and aspirational leaders and improve performance and remuneration processes. Planning and actions from Best Places to Work Survey and Focus 2016 feedback sessions Business planning process aligns with strategic objectives and outcomes. Monitoring and reporting, particularly against initiatives and progress towards Best Local Government Services and Customer Champion Group initiatives. Active involvement in submissions process and campaigning to influence proposals to Local Government Act changes to reorganise councils. Continue to seek and exploit shared-service opportunities.

Attachment 1

Strategic Risk Profile 2016

2. Legend

The risk classification (Low, Medium, High or Extreme) is an expression of risk in terms of a combination of the impact/consequence of an event and the associated likelihood of occurrence to derive a rating for the risk based on the risk ranking matrix.

Refer 2.4 for impact/consequence and 2.3 for risk likelihood guides, which are proposed in the updated risk management system.

2.1 Risk Rating / Assessment Chart

Likelihood	Consequence
Likelihood	Insignificant	Minor	Moderate	Major	Catastrophic
Almost certain	H	H	E	E	E
Likely	M	H	H	E	E
Moderate	L	M	H	E	E
Unlikely	L	L	M	H	E
Rare	L	L	M	H	H

E: extreme risk; immediate action required

H: high risk; senior management attention is needed

M: medium risk; management responsibility must be specified

L: low risk; manage by routine procedures

2.2 Risk status update

The risk status update illustrates the movement of risk from the previous period and is denoted by the following format:

Decrease

No change

Increase

2.3 Risk Likelihood Guide

Descriptor	Description
Almost Certain	The event could occur in most circumstances, e.g. 50% + chance of occurring in the next 12 months or five out of every 10 years.
Likely	The event will probably occur in most circumstances, e.g. 20% chance of occurring in the next 12 months or two out of every 10 years. Or the event has occurred.
Possible	The event should occur at some time, e.g. 15% chance of occurring in the next 12 months or 1.5 times out of every 10 years. The event might occur.
Unlikely	The event could occur at some time, e.g. 10% chance of occurring in the next 12 months or once out of every 10 years. Possible but uncommon.
Rare	The event may occur only in exceptional circumstances, e.g. up to 5% chance of occurring in the next 12 months or once in 20 years or could occur under combination of circumstances.

2.4 Strategic Risk – Impact / Consequence

For information, refer 2.4.1 for criteria for risk ‘Impact/Consequence’.

Strategic risks are significant as to materially impact Council’s future success or failure. Further, strategies have interdependencies and contribute to one another, which also add to the difficulties in mapping strategic risk to a defined impact. For the purposes of this strategic risk profile, determining the potential impact of risk events on strategic value drivers is as follows:

Factor	Catastrophic	Major	Moderate
Strategy	Council’s viability, reputation and services may be severely damaged should the risk eventuate	Council’s viability, reputation and services may be affected in a major way should the risk eventuate	Council viability, reputation and services will only be affected in a moderate way should the risk eventuate

2.4.1 Risk Impact / Consequence Guide

Factor	Catastrophic	Major	Moderate	Minor	Insignificant
Financial	Loss, $20M or greater	Loss $5M - $20M	Loss $250K - $5M	Loss $100K - $250K	Loss less than $100K
	Ongoing loss of $2M p.a.	Ongoing loss $500K-$2M p.a.	Ongoing loss $25K-$500K p.a.
Health and Safety	Fatality(s)	Immediate hospital transfer or multiple serious injuries	Injury, possible hospitalisation, days lost	Minor injury, first aid treatment required	No or minor injury, no first aid required
Human Resource		Inability to recruit into key skilled positions on an ongoing basis	Inability to recruit into key positions
Legal	Sued/fined $20M or greater	Sued/fined $5M - $20M	Sued/fined $250K - $5M	Council sued or fined for up to $250K	Council prosecuted for minor offence
	Legislative non-compliance involving the potential for imprisonment of Councillor or senior management. Judicial review of Council decision on matter relating to funding or rates (rates invalid)	Failure to follow correct statutory processes Legislative non-compliance involving the prosecution or significant criticism of Council by Judiciary	Failure to follow correct statutory processes	Minor breaches first of its kind, one-off issues. Complaints to the ombudsman or other statutory offices	Small non-systemic and/or technical breach
Environmental Impact/Aspects	Significantly irreversible effect on the local ecosystem Serious damage of national importance	Long term contamination Serious damage of regional importance Strong statutory response with legal action E.g. Loss of Biodiversity	Some significant effect on environment, may have residual effect May cause response from regulatory authorities	Minor in itself but combined effects may be significant Some public complaints possible E.g. spilling copious amount of diesel into stormwater	Unlikely to cause public complaint No damage or contamination E.g. minor chemical spill of DDE
Image	Negative national multi media coverage for 2+ weeks	Negative national multi media coverage for 1-2 weeks	Negative national multi media coverage for one week	Negative national media coverage
Service Delivery	Unable to deliver services across 2 or more divisions for 10+ days	Unable to deliver services across one division for 10+ days	Unable to deliver services across one division for up to one week	Unable to deliver services across one division for 1-2 days	Disrupted service for small number of customers for one day
	Infrastructure service/s out for city for 10+ days	Infrastructure service/s out for 2 suburbs for one week	Infrastructure service/s out for city for one day		Infrastructure service/s out for one suburb for one day
	Permanent loss of infrastructure, service or facility	Public amenity closed for 1 month or more	Public amenity closed for 2 weeks or more	Public amenity closed for 1 week or more	Public amenity closed for less than 1 week
Community	Loss of life	People in several suburbs ill through failure of infrastructure, facility or service	People in 2-3 suburbs ill through failure of infrastructure, facility or service	People in one suburb ill through failure of infrastructure. facility or service

MEMORANDUM 126 01 March 2017

Our Reference 17/37

TO: Chair and Members

Finance and Performance Committee

FROM: Raaj Govinda

DATE: 23 January 2017

SUBJECT: Sale and Supply of Alcohol (Fees) Regulations 2013 - Regulation 19 (1) - Reporting by Territorial Authorities

Recommendation

That the Committee approves the publication of a report on its website showing the alcohol licensing income received from fees payable in relation to, and its costs incurred in:

a. The performance of the functions of its District Licensing Committee under the Sale and Supply of Alcohol Act 2012 (the Act);

b. The performance of the functions of its inspectors under the Act; and

c. The undertaking enforcement activities under the Act.

Purpose of Memorandum

1. To advise the Committee on its responsibilities to annually prepare and make publicly available a report showing its income from fees payable in relation to, and its costs incurred for all activities related to Alcohol licensing and enforcement under the Sale and Supply of Alcohol (Fees) Regulations 2013 (Regulation 19 (1) – Reporting by Territorial Authorities).

Background

2. The Act came into force on 18 December 2012 and through a defined transition process, the Act became effective in December 2013. The introduction of this new legislation was not well supported by Central Government and local authorities have had to a large extent develop processes to manage the new licensing regime.

3. One of the most significant changes to the way alcohol licences are issued under this new Act is the establishment of a District Licensing Committee (DLC) of Council. Public Hearings are run under the same rules as the Commissions of Enquiry and require formal procedures and protocols to be observed. Every application for a licence and manager’s certificate must be reported on by Licensing Inspectors and then considered by the DLC before a formal decision is issued.

4. The Act requires the NZ Police and Medical Officer of Health to report on licence applications and manager’s certificate which is a wider spectrum of applications than they were required to under the previous legislation.

5. The Act also requires additional accounting and reporting requirements as a result which are undertaken by Licensing Inspectors and administration staff.

6. As the Act’s focus is on alcohol harm reduction, it has resulted in Licensing Inspectors having to spend a considerable amount of their time on stronger enforcement and alcohol harm reduction initiatives and working in collaboration with the NZ Police and Medical Officer of Health.

7. The Act requires Territorial Authorities to report is prescribed in:

Regulation 19(1) Reporting by territorial authorities

· (1) Every territorial authority must, each year, prepare and make publicly available a report showing its income from fees payable in relation to, and its costs incurred in,—

· (a) the performance of the functions of its licensing committee under the Act; and

· (b) the performance of the functions of its inspectors under the Act; and

· (c) undertaking enforcement activities under the Act.

· (2) The first report required by this regulation must relate to the year commencing 1 July 2014.

8. The amounts received through fees and the expenses are detailed in the table below. All charges are stipulated in the Act and the Council has not made any amendments to it, as it is not able to without setting a Bylaw for this specific purpose.

9. The legal and other expenses associated with the development, consultation, and implementation of the Local Alcohol Plan (LAP) apart from the time the Licensing Inspectors spent on providing some intel during the development phase has not been included as the staff time involved for this particular task could not be separated out from other strategic functions that take place within Council.

10. The actual cost of the DLC function that is shown on the table below is an estimate as the DLC function sits within the Council’s Secretariat Services team and its costs run as part of the team’s annual OPEX, which makes it challenging to separate out.

11. Although the income under the previous legislation was significantly lower, the administration, reporting and enforcement costs were correspondingly lower. Under the new Act, the increase in fees provides the Council with an increased income, but it does not offset the time officers spend on the performance of its DLC, inspectorate and enforcement activities.

Table of Income vs Expenditure for 2015/16 Financial Year (GST Exclusive)

TOTAL FEES RECEIVED 2015/16	$246,271.09
ARLA FEES	$19,085.00
FEES RETAINED BY HCC	$227,186.09

COST OF PERFORMANCE OF THE DLC FUNCTIONS	$26,791.94
COST OF PERFORMANCE OF THE LICENSING INSPECTORS FUNCTIONS	$200,252.72
COST OF UNDERTAKING ENFORCEMENT	$10,757.80
COST OF PERFORMANCE FOR ADMINISTRATION WORK AND SUNDRY COSTS	$48,000.00

TOTAL COST TO HCC TO CARRY OUT COMPLIANCE WITH SASAA 2014	$304,887.45

TOTAL LEFT / OVER	-$58,616.37

Appendices

There are no appendices for this Memorandum.

Author: Raaj Govinda

Manager Environmental Inspections

Reviewed By: Geoff Stuart

Divisional Manager, Regulatory Services

Approved By: Joycelyn Raffills

General Manager, Governance and Regulatory

129 01 March 2017

Finance and Performance Committee

31 January 2017

File: (17/119)

Report no: FPC2017/1/77

Hutt City Libraries: Clubhouse Coordinators Conference Travel April 2017

Purpose of Report

1. To seek approval from the Finance and Performance Committee for the Coordinators from Naenae and Taita Clubhouses to travel to the Clubhouse Network’s annual conference in Minneapolis, United States of America from 3-6 April 2017.

Recommendations

That the Committee:

(i) notes that attendance at the Clubhouse Network’s annual conference is mandatory as per the terms of the Clubhouse licences; and

(ii) authorises the overseas travel to Minneapolis, United States of America in April 2017 for the Coordinators from Naenae and Taita Clubhouses at a cost of approximately $7,050.

Background

2. Hutt City Libraries holds licences from the international Clubhouse Network to operate Clubhouses in Naenae and Taita. These licences stipulate that all Clubhouse Coordinators attend the mandatory annual conference. Further background information about Clubhouses is attached as Appendix 1 to the report.

Discussion

3. The Naenae Clubhouse Coordinator is Ms Lily Chalmers. Lily started this role in February 2015.

4. The Taita Clubhouse Coordinator is Mr Tom Johnson. Tom started this role in January 2015.

5. The Clubhouse Network provides a $1,040 USD travel grant for each
Co-ordinator to offset costs associated with travel to the conference. A breakdown of likely costs is shown under the Financial Considerations heading below.

Options

6. There are no options.

Consultation

7. Not applicable.

Legal Considerations

8. Co-ordinators are required to attend the annual conference as a condition of the Clubhouse licences.

Financial Considerations

9. The cost of this travel is budgeted for within existing 2016/17 operational budgets.

10. Please see the table below detailing likely costs to attend.

Item (all 2 pax)	Amount (NZD)
Flights – Wellington to Minneapolis return	$5,650
Accommodation for seven nights	$2,800
Travel related meals	$1,000
Airport transfers to and from Wellington Airport	$ 100
Airport transfers to and from Minneapolis Airport	$ 200
SUBTOTAL	$9,750
Travel grant received from Clubhouse Network	Minus USD $2,080 = $2,700 NZD
TOTAL LIKELY COST TO COUNCIL	$7,050

Other Considerations

11. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it provides an internationally recognised programme for young people, meets Council’s imperatives for the north east of the city, and is included in the Children and Young Persons Plan (CYPP).

It does this in a way that is cost-effective because through the Clubhouse licences we hold, we receive other benefits such as international networks, international professional development resources, sponsorship, grants, and benchmarking.

Appendices

No.	Title	Page
1 ⇩	Computer Clubhouse Background Information	136

Author: Denise Clarkson

Content and Service Development Manager

Approved By: Matt Reid

General Manager Community Services

134 01 March 2017

Finance and Performance Committee

14 February 2017

File: (17/228)

Report no: FPC2017/1/79

Finance Update

Purpose of Report

1. The purpose of the report is to present the Committee with Council’s financial performance to 31 December 2016 and the forecast year-end financial position.

Recommendations

That the Committee notes the year to date financial performance and the forecast year-end position.

Background

2. The report provides information comparing year to date actual and year-end forecasts against budgets set by Council in its 2016/2017 Annual Plan.

Discussion

3. Operating Position

There is a year to date operating deficit of $4.2m compared to a budgeted deficit of $4.8m giving a favourable variance of $0.6m. The variance is due to reduced operating costs mainly because of timing difference with the CFT Stokes Valley Hub project and reduced interest and depreciation expenses. This is offset mainly by operating and capital subsidies being less than budget at this stage due to programmed work being behind schedule, and additional repair costs due to the November earthquake and storms.

At year end there is expected to be a forecast deficit of $12.0m compared to the budgeted deficit of $14.6m, giving a favourable variance of $2.6m. This is mainly due to a forecast underspend in the budgeted operating grant payments to CFT for Fraser Park Sportsville and savings in Interest costs of about $1.4m due to underspend on Capital projects.

This is expected to be offset by reduced revenue due to capital subsidies being less than budget because of the deferral of some roading projects including the cycleway projects. There is also a forecast unfavourable variance in Parks & Reserves due to unbudgeted costs for remediation work to address soil contamination at the former Summit Road Depot and costs arising from the November earthquake and storm events which are expected to be about $1.2m.

Capital subsidies of $2.4m and CFT grants of $4.2m will need to be carried over to 2017/18.

YTD interest rate swaps have increased in value by $6.0m due to high market floating interest rates relative to interest rates fixed by Council.

4. Capital Position

There is a favourable year to date variance of $13.5m against a year to date budget of $33.7m. Of this variance $1.9m relates to the Huia Programme Pool, $1.2m relates to the Civic Events Centre project, and $6.1m relates to Roading & Traffic projects which have been delayed.

At year end there is a forecast favourable variance of $21.8m mainly due to delays in some major projects. Of this amount; $6.2m relates to the Roading cycleway and shared path projects which will require carryovers; $0.7m relates to Avalon Park; and $1.2m relates to Riddiford Gardens which will also require carryovers. A further $13.7m of this forecast variance relates to the Civic Events Centre project which will also require a carryover to next year. At this stage a total of $22.8m will need to be carried over to 2017/18.

Most other projects at this stage are expected to be completed on time and within budget by year end.

5. Asset Sales

Asset sales at this stage are forecast to be $1.3m for the year which is $0.2m above budget due to the inclusion of two sales not completed in 2015/16.

6. Net Debt

Debt as at 31 December 2016 is $19.3m below budget which reflects the YTD favourable variances in operating and capital expenditure offset by an unfavourable variance in asset sales. Forecast year end debt is expected to be under budget by $24.5m mainly as a result of the forecast underspend in capital and the favourable variance in operating costs.

7. Annual Leave Liability

There has been a decrease in the annual leave liability over the past few months which is expected at this time of year as staff take leave over the festive and school holiday period. The leave liability for both December and January is lower than for the same months last year.

Consultation

8. There is no requirement to consult.

Legal Considerations

9. There are no legal considerations.

Financial Considerations

10. The financial considerations are covered in the report.

Other Considerations

11. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it provides it provides Councillors with the necessary information to effectively undertake their governance role.

Appendices

No.	Title	Page
1 ⇩	Financial Tables	142

Author: Philip Benseman

Budgeting and Reporting Manager

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

Deputy Mayor Bassett	Cr Barratt
Cr Briggs	Cr Cousins
Cr Edwards	Cr Lulich

Cr Sutton	Mayor Ray Wallace (ex-officio)

Description	Author	For Council
Cycle 2 – 3 May 2017
Finance Update	B Kibblewhite
Insurance Update	B Kibblewhite
Finance & Performance Work Programme	A Doornebosch

Cycle 3 – 2 August 2017
Finance Update	B Kibblewhite
Risk and Assurance Update and Operational Risk Register	E Davids
Audit NZ Interim Management Report	D Newth
Activity Report – Information Technology	CIO
Appointment of Directors CFT	B Cato	·
Finance & Performance Work Programme	A Doornebosch

Cycle 4 - 27 September 2017
Finance Update – 2016/2017 Provisional Year End Position	B Kibblewhite
Annual Reports for CCOs – UPL, SML, CFT	B Kibblewhite	·
Finance & Performance Work Programme	A Doornebosch
18 October 2017
Hutt City Council’s Annual Report	J Stevens	·
Annual Report for LGFA	B Kibblewhite

Cycle 5 - 29 November 2017
Finance Update	B Kibblewhite
Risk and Assurance Update and Strategic Risk Register	E Davids
Audit NZ Final Management Report	D Newth
Insurance Update	B Kibblewhite
Finance & Performance Work Programme	A Doornebosch


FINANCE AND PERFORMANCE COMMITTEE
Membership:	10
Meeting Cycle:	Meets on a six weekly basis, as required or at the requisition of the Chair
Quorum:	Half of the members
Reports to:	Council

Determine and monitor: