Agenda of Finance and Performance Committee

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 26 September 2018 commencing at 5.30pm.

ORDER PAPER

Public Business

1. APOLOGIES

An apology has been received from Cr Edwards and an apology from Mayor Wallace for late arrival.

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 - 9 October 2018

i) Final 2018-2021 Statement of Intent for Hutt City Community Facilities Trust (18/1493)

Report No. FPC2018/4/256 by the General Manager Corporate Services 8

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

ii) Final 2018-2021 Statement of Intent for Seaview Marina Limited (18/1488)

Report No. FPC2018/4/257 by the General Manager Corporate Services 25

iii) Final 2018-2021 Statement of Intent for Urban Plus Group (18/1487)

Report No. FPC2018/4/258 by the General Manager Corporate Services 46

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

5. Sale and Supply of Alcohol (Fees) Regulations 2013 - Regulation 19(1) - Reporting by Territorial Authorities (18/1306)

Memorandum dated 31 July 2018 by the Team Leader Environmental Health 70

Chair’s Recommendation:

“That the recommendations contained in the memorandum be endorsed.”

6. Effect of Living Wage on Pool and Fitness Financial Returns (18/1450)

Report No. FPC2018/4/259 by the Divisional Manager, Leisure Active 73

Chair’s Recommendation:

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

7. 2018 Standard and Poor's Credit Rating (18/1438)

Report No. FPC2018/4/260 by the Chief Financial Officer 78

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

8. Draft 2017/2018 Financial Performance and Position (18/1467)

Report No. FPC2018/4/261 by the Budgeting and Reporting Manager 90

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

9. Finance & Performance Committee Work Programme 2018 (18/1299)

Report No. FPC2018/4/117 by the Committee Advisor 134

Chair’s Recommendation:

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

10. Information Items

a) 2018-2028 Long Term Plan Audit Report (18/1411)

Memorandum dated 27 August 2018 by the Corporate Planner 139

Chair’s Recommendation:

“That the information be noted and received.”

b) TechnologyOne SaaS Project Update (18/1482)

Report No. FPC2018/4/127 by the Chief Information Officer 148

Chair’s Recommendation:

“That the information be noted and received.”

11. 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.

Donna Male

COMMITTEE ADVISOR

10 26 September 2018

Finance and Performance Committee

12 September 2018

File: (18/1493)

Report no: FPC2018/4/256

Final 2018-2021 Statement of Intent for
Hutt City Community Facilities Trust

Purpose of Report

1. The purpose of this report is to consider the final Statement of Intent (SOI) for the Hutt City Community Facilities Trust (CFT), for the three year period commencing 1 July 2018.

Recommendations

That the Committee recommends that Council receives and agrees to the final Statement of Intent for Hutt City Community Facilities Trust for the three year period commencing 1 July 2018, attached as Appendix 1 to the report.

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders, a final SOI on or before 30 June each year.

3. The LGA also requires Council to agree to a SOI, or if it does not agree, take all reasonable steps to require a SOI to be modified, as soon as practicable after a SOI of a CCO is delivered to it.

Discussion

4. This Committee received and considered the draft SOI for CFT at its meeting on 28 February 2018.

5. No feedback on CFT’s draft SOI was provided by the Committee to the CFT board for consideration in finalising its SOI for the three year period commencing 1 July 2018.

6. There has been no change to the strategic direction or intent from the draft SOI, however the financial projections have been updated to reflect only confirmed CFT/Council developments and the timing of these. The draft SOI also expected greater (financial) completion of the Fraser Park Sports Hub by 30 June 2018 and therefore less of a carryover than has been assumed in the final SOI.

7. To clarify, the final SOI assumes completion of the Fraser Park Sports Hub in 2018/19 along with commencement of the Naenae Community Hub in the same year and completion in 2019/20. While provisions have been made in Council’s Long Term Plan for the Wainuiomata Sports Hub and the Gym Sports Building, until Council approval for these projects has been given, these projects will remain on the CFT’s possible future work plan but have not been included in the Prospective Financial Statements.

8. Other changes to the draft SOI include grammatical corrections and wording changes to reflect the known CFT activities for the next 36 months, plus formatting (presentation) changes.

9. Officers recommend that Council agree to the final SOI for CFT attached as Appendix 1 to this report.

10. The 30 June final SOI delivery to shareholder requirement was not met as the CFT Trustees did not formally approve the final SOI until their 30 July 2018 meeting. This (minor) compliance breach has been self-disclosed in CFT’s 2018 Annual Report.

Options

11. If Council do not agree to the final CFT SOI, it may by resolution, require the CFT board to modify its SOI. Before giving notice of the resolution to the CFT board, Council must consult the CFT board as to the matters requiring modification.

Consultation

12. Consultation is not required. This Committee previously reviewed the draft CFT SOI.

Legal Considerations

13. Council’s General Manager Corporate Services and General Counsel have reviewed the final CFT SOI for compliance with the requirements of the Local Government Act. There were no non-compliance issues identified in the draft SOI and this remains the case for the final CFT SOI.

14. There is an obligation on the board of a CCO, that each SOI and each modification that is adopted to a SOI, “must be made available to the public within one month after the date on which it is delivered to the shareholders or adopted, as the case may be”. CFT met this obligation. The final SOI is available to the public via the CFT website.

Financial Considerations

15. The SOI contains the financial forecasts for CFT for the three year period commencing 1 July 2018.

16. CFT’s planned activities for the period covered by its SOI, are funded via retained earnings; rentals from tenants; grants from Council; grants, donations and sponsorships from third parties; and an approved loan agreement with Council. Council loans to CFT are funded by Council through borrowings resulting in nil impact to Council net debt.

Other Considerations

17. 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 local government in that it is a requirement of the act for boards of Council Controlled Organisations to submit to their shareholder, their final SOI.

Appendices

No.	Title	Page
1 ⇩	Community Facilities Trust Final 2019-2021 Statement of Intent	11

Author: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

27 26 September 2018

Finance and Performance Committee

11 September 2018

File: (18/1488)

Report no: FPC2018/4/257

Final 2018-2021 Statement of Intent for
Seaview Marina Limited

Purpose of Report

1. The purpose of this report is to consider the final Statement of Intent (SOI) for Seaview Marina Limited (SML), for the three year period commencing 1 July 2018.

Recommendations

That the Committee recommends that Council receives and agrees to the final Statement of Intent for Seaview Marina Limited for the three year period commencing 1 July 2018, attached as Appendix 1 to the report.

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders, a final SOI on or before 30 June each year.

3. The LGA also requires Council to agree to a SOI, or if it does not agree, take all reasonable steps to require a SOI to be modified, as soon as practicable after a SOI of a CCO is delivered to it.

Discussion

4. This Committee received and considered the draft SOI for SML at its meeting on 28 February 2018.

5. No feedback on SML’s draft SOI was provided by the Committee to the SML board for consideration in finalising its SOI for the three year period commencing 1 July 2018.

6. Officers recommend that Council agree to the final SOI for SML attached as Appendix 1 to this report. There has been no change to the strategic direction or intent from the draft SOI, however there have been changes to the financial projections, particularly Capital Expenditure.

7. The major changes to Capital Expenditure are the inclusion of the breakwater purchase from HCC in 2018/19 for $1.15 million and $765,000 in 2019/20 to widen the dockway and purchase a cradle transporter. The ownership of the breakwater purchase is still under discussion, with SML leasing rather than purchasing it remaining an option. The widening of the dockway and the purchase of a cradle transporter provide the uplift in earnings in 2020/21 (and beyond), but will require the development and approval of a business case before this investment proceeds.

8. Other changes to the draft SOI include:

a. provision of the LGA required content, identified as being non-compliant by Officers in the draft SOI;

b. full disclosure of SML’s Accounting Policies;

c. grammatical corrections and amendments; and

d. formatting (presentation) changes.

9. The 30 June final SOI delivery to shareholder requirement was not met with the last SML director providing approval on 2 July 2018. This (minor) compliance breach has been self-disclosed in SML’s 2018 Annual Report.

Options

10. If Council do not agree to the final SML SOI, it may by resolution, require the SML board to modify its SOI. Before giving notice of the resolution to the SML board, Council must consult the SML board as to the matters requiring modification.

Consultation

11. Consultation is not required. This Committee previously reviewed the draft SML SOI.

Legal Considerations

12. Council’s General Manager Corporate Services and General Counsel have reviewed the final SML SOI for compliance with the requirements of the Local Government Act. The non-compliance issues identified in the draft SOI have been resolved in the final SML SOI.

13. There is an obligation on the board of a CCO, that each SOI and each modification that is adopted to a SOI, “must be made available to the public within one month after the date on which it is delivered to the shareholders or adopted, as the case may be”. SML met this obligation. The final SOI is available to the public via the SML website.

Financial Considerations

14. The SOI contains the financial forecasts for SML for the three year period commencing 1 July 2018.

15. SML’s planned activities for the period covered by its SOI, are funded via retained earnings, operating cash flows, and an approved loan agreement with Council. The Council loan to SML is funded by Council through borrowings resulting in nil impact to Council net debt.

16. No dividends have been budgeted for the period covered by the SOI.

Other Considerations

Appendices

No.	Title	Page
1 ⇩	Seaview Marina Final 2019-2021 Statement of Intent	28

Author: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

48 26 September 2018

Finance and Performance Committee

11 September 2018

File: (18/1487)

Report no: FPC2018/4/258

Final 2018-2021 Statement of Intent for
Urban Plus Group

Purpose of Report

1. The purpose of this report is to consider the final Statement of Intent (SOI) for Urban Plus Group (UPL), for the three year period commencing 1 July 2018.

Recommendations

That the Committee recommends that Council receives and agrees to the final Statement of Intent for Urban Plus Group for the three year period commencing 1 July 2018, attached as Appendix 1 to the report.

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders, a final SOI on or before 30 June each year.

3. The LGA also requires Council to agree to a SOI, or if it does not agree, take all reasonable steps to require a SOI to be modified, as soon as practicable after a SOI of a CCO is delivered to it.

Discussion

4. This Committee received and considered the draft SOI for UPL at its meeting on 28 February 2018.

5. There was a request from a Councillor to increase the targeted number of UPL residential units and to amend the criteria to enter into a UPL residential unit to be based on need. Officers advised that these requests would be significant variations to the current strategic direction of UPL, that significant analysis would be required by the UPL board and management, and that it was unlikely this could be done before 30 June 2018.

6. It was agreed that a Councillor workshop would be held in late 2018 to reconsider the role of UPL and whether Council should request the UPL board to review its strategic direction and targets when preparing its draft SOI for the three year period commencing 1 July 2019. The said workshop is scheduled to be held on 31 October 2018.

7. No further feedback on UPL’s draft SOI was provided to the UPL board for consideration in finalising its SOI for the three year period commencing 1 July 2018.

8. Officers recommend Council agree to the final SOI for UPL, attached as Appendix 1 to this report. There has been no change to the strategic direction or intent from the draft SOI, nor to the performance metrics or financial forecasts. Changes to the draft SOI have been limited to grammatical corrections and amendments, and formatting (presentation) changes.

9. The 30 June final SOI delivery to shareholder requirement was not met with the final SOI delivered to Council Officers on 20 July 2018. This (minor) compliance breach has been self-disclosed in UPL’s 2018 Annual Report.

Options

10. If Council do not agree to the final UPL SOI, it may by resolution, require the UPL board to modify its SOI. Before giving notice of the resolution to the UPL board, Council must consult the UPL board as to the matters requiring modification.

Consultation

11. Consultation is not required. This Committee previously reviewed the draft UPL SOI.

Legal Considerations

12. Council’s General Manager Corporate Services and General Counsel have reviewed the final UPL SOI for compliance with the requirements of the Local Government Act. There were no non-compliance issues identified in the draft SOI and this remains the case for the final UPL SOI.

13. There is an obligation on the board of a CCO, that each SOI and each modification that is adopted to a SOI, “must be made available to the public within one month after the date on which it is delivered to the shareholders or adopted, as the case may be”. UPL met this obligation. The final SOI is available to the public via the UPL website.

Financial Considerations

14. The SOI contains the financial forecasts for UPL for the three year period commencing 1 July 2018.

15. UPL’s planned activities for the period covered by its SOI, are funded via retained earnings; profits on properties developed for resale; sales of properties no longer deemed appropriate for UPL’s residential rental portfolio; and approved loan agreements with Council. Council loans to UPL are funded by Council debt resulting in nil impact to Council net debt.

16. No dividends have been budgeted for the period covered by the SOI.

Other Considerations

Appendices

No.	Title	Page
1 ⇩	Urban Plus Group Final 2019-2021 Statement of Intent	49

Author: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

MEMORANDUM 72 26 September 2018

Our Reference 18/1306

TO: Chair and Members

Finance and Performance Committee

FROM: Dean Bentley

DATE: 31 July 2018

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 ‘table of income versus expenditure’ on Council’s website showing the alcohol licensing income received from fees payable in relation to, and costs incurred in:

(a) the performance of the functions of Council’s District Licensing Committee under the Sale and Supply of Alcohol Act 2012 (the Act);

(b) the performance of the functions of Council’s Inspectors under the Act; and

Purpose of Memorandum

1. To advise the Committee on Council’s responsibilities to annually prepare and make publicly available, a report showing all income from fees payable in relation to, and costs incurred for all activities related to alcohol licensing and enforcement under the Sale and Supply of Alcohol Act 2012.

Background

2. The Sale and Supply of Alcohol Act 2012 (the ‘Act’) came into force on 18 December 2012 and became effective in December 2013.

3. 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. The team works in collaboration with the New Zealand Police and the Medical Officer of Health.

4. The Act requires Territorial Authorities to report annually as follows:

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.

5. The amounts received through application and annual fees are detailed in the table below. All charges are prescribed by the Sale and Supply of Alcohol (Fees) Regulations 2013 and can only be deviated from by having a bylaw in place pursuant to section 405 of the Act, and Sale and Supply of Alcohol (Fee-setting Bylaws) Order 2013.

6. Total revenue decreased by $9,908.45 (5.12%). While there has been a slight increase in applications for most categories of licence, this has not been enough to offset a significant decrease in manager’s certificate renewals.

7. The reasons for Council running a loss of $41,965 for the period of 1 July 2017 to 30 June 2018 are as follows:

a. slight decrease in overall revenue; and

b. work carried out by inspectors in undertaking enforcement is not recoverable; and

c. the actual cost to inspectors and the District Licensing Committee to process, report and determine applications is not reflective of the fees received.

8. This loss is however significantly less than last year ($114,006.32). This is due to only one licensing inspector being dedicated to alcohol reporting for much of this period, rather than several. It should however be noted that this has resulted in a backlog of applications to report on. Due to recent additional resourcing it is anticipated that this backlog will be reduced quickly.

9. The percentage of cost Council recovered from fees for carrying out its functions under the Sale and Supply of Alcohol Act 2012 for the 2017/18 financial period is 81%.

10. Council’s Policy Advisors are currently undertaking work on a potential bylaw that would allow Council to set its own fees in accordance with Sale and Supply of Alcohol (Fee-setting Bylaws) Order 2013. A report is anticipated to be put to Council later this year.

TABLE OF INCOME VS EXPENDITURE (GST EXCLUSIVE)

Required under Regulation 19 (1) of the Sale and Supply of Alcohol (Fees) Regulations 2013

Revenue	2017/18	2016/17
- Fees	$183,377	$193,286

Expenses
- Alcohol Regulatory Licensing Authority (ARLA) Fees	$18,118	$19,105
- District Licensing Committee Functions	$34,762	$26,996
- Licensing Inspectors Functions	$114,572	$202,746
- Undertaking Enforcement	$6,930	$10,444
- Administration and Sundry	$48,960	$48,000
Total Expenses	$225,342	$307,292
Surplus/Deficit	-$41,965	-$114,006
Cost Recovery Rate	81%	63%

Appendices

There are no appendices for this report.

Author: Dean Bentley

Team Leader Environmental Health

Approved By: Helen Oram

Divisional Manager Environmental Consents

77 26 September 2018

Finance and Performance Committee

03 September 2018

File: (18/1450)

Report no: FPC2018/4/259

Effect of Living Wage on Pool and Fitness Financial Returns

Purpose of Report

1. To provide information to the Committee on the financial effects of the introduction of the Living Wage Policy at Hutt City Council on Swimming Pool and Fitness operations.

Recommendations

It is recommended that the Committee:

(i) receive the information;

(ii) note that increases to salaries have been allocated for in future budgets and that swimming pools are expected to remain within funding policy guidelines; and

(iii) note that any proposed fee increases will be considered as part of the annual plan process.

For the reason the information provided indicates that despite the increase in costs associated with the Living Wage Policy, Council will continue to operate within the funding limits set by the Revenue and Financing Policy for swimming pools, if projected budgets are achieved. The report provides options for Council to consider if these limits are breached in the future.

Background

2. Council adopted a Living Wage Policy in July 2018 and has been working towards achieving this for all staff over the past 12 months.

3. As swimming pools are the largest Council employer of staff on minimum and/or low wages, this policy has a significant effect on operating costs for this activity.

4. Council also sets funding requirements for all activities based on the public benefit derived from these.

5. This report provides information for the Committee on the effect of the Living Wage Policy on current budgeted financial returns for swimming pool operations.

Discussion

6. The following table sets out the estimated increase in salaries and wages for Swimming Pools and Fitness Suites due to the Living Wage Policy including adjustments for relativity issues.

Revenue and Finance Policy

7. Hutt City Council’s Revenue and Finance Policy outlines Council’s approach to funding its activities. It provides information on what funding tools are used and who pays, as well as describing the process used to make these decisions.

8. The policy sets target funding bands for the two main funding sources (Public and Other) for each activity. These bands are:

· high 80-100%

· medium/high 60-79%

· medium 40-59%

· medium/low 20-39%

· low 0-19%.

Swimming Pools

9. Swimming Pools are currently assessed as medium benefit and therefore funding from other sources (user charges) should return between 40-59% of total costs.

10. The following table sets out the cost recovery rates for Swimming Pools and includes allowances for paying the living wage in the 2018/19 budget.

NB: Fitness Suites are included in these calculations as they are an integrated part of each pool.

11. In the 2016/17 financial year, swimming pools fell below the prescribed cost recovery target. This was due to a poor summer affecting patronage, and disruptions to operating hours at Huia Pool due to the major capital upgrade being undertaken.

12. Provisions were made within 2018/19 budgets for application of living wage rates.

13. All increases have now been applied to staff salaries and uploaded to forecasting models. This indicates that there will be approximately a $150k shortfall against budgeted employee costs, with $60k of this attributable to the Living Wage and $90k due to transfer of staff from the Walter Nash Fitness Suite.

14. Even with this shortfall in employee budgets the table indicates Swimming Pools will continue to meet the criteria of the Revenue and Finance Policy if targeted revenues are achieved.

Fitness Suites

15. Fitness Suites are not included as a separate activity in the Revenue and Finance Policy however they are considered to operate in a commercial environment and therefore should return an operational profit to Council without undercutting local business on price.

16. The following table sets out the operational recovery rates for Fitness Suites.

NB: these figures do not include the Walter Nash Fitness Suite as it does not appear under the Aquatics and Recreation Activity.

17. Returns in 2017/18 were budgeted to be lower due to the start up period for the new Fitness Suite at Huia. Over the next two years operational profits for this site are expected to produce higher returns.

18. 2018/19 forecast modelling indicates budgeted allowances are sufficient to meet Living Wage increases.

19. Reallocation of Walter Nash Fitness Suite staff however has not been budgeted for and is predicted to increase costs by $90k as previously indicated. This is likely to be mitigated by not replacing positions when vacancies occur through the year.

20. The table indicates that the Fitness Suites will continue to achieve operational returns for Council as long as membership targets are met.

Options

21. If Council wishes to improve cost recovery of pools then it can do this by either reducing costs or increasing revenues.

a. Reducing Costs – To reduce costs significantly would require Council to consider reducing operating seasons or hours at some or all of our sites.

This would likely be strongly opposed by the affected communities and has not been a preferred strategy of the current Council and therefore not a realistic option.

Therefore smaller gains will continue to be explored through procurement and efficient allocation of resources.

b. Increasing Revenues - User Charges are the main cost recovery method for swimming pools and therefore with rising costs it is important to consider fee increases as a means of cost recovery. The last fee increase for pools was in July 2017.

To achieve a 50% cost recovery (middle of prescribed range) of the living wage would require a 20% increase in core fees. In this scenario an adult entry would rise from $5.50 to $6.60. This level of increase would likely discourage usage and not result in the returns desired.

The following is a comparison of core pool prices across the region.

The table shows that Council could consider a small increase in fees (5%) during the next Annual Plan process to offset some of these increased costs.

Council Officers will continue to explore every opportunity to increase usage and revenue at our swimming pools.

22. Council reviews the Revenue and Finance Policy periodically to ensure activities are performing within the ranges targeted and to re-assess the level to which activities are considered to provide public benefit.

Consultation

23. None at this stage, however, any fee increase or changes to policy will require public consultation.

Legal Considerations

24. There are no legal considerations.

Financial Considerations

25. There are no financial considerations at this stage.

Other Considerations

26. 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 local government in that it considers the provision of local public services that are cost effective.

Appendices

There are no appendices for this report.

Author: Marcus Sherwood

Divisional Manager, Leisure Active

Approved By: Matt Reid

General Manager City and Community Services

80 26 September 2018

Finance and Performance Committee

30 August 2018

File: (18/1438)

Report no: FPC2018/4/260

2018 Standard and Poor's Credit Rating

Purpose of Report

1. The purpose of this report is to inform the Committee that on 29 August 2018, Standard and Poor’s (S&P) Global Ratings affirmed Council’s credit rating as AA long term with “stable” outlook, and A-1+ short term, being unchanged from 2017.

Recommendations

That the Committee notes and receives the report.

Background

2. S&P annually review Council’s credit rating. The most recent review was completed in August 2018.

3. The rating received by Council is the same as the New Zealand sovereign rating so any upward movement of the rating is restricted by the sovereign rating. In addition, Council has the equal best rating of any Council in New Zealand and is better than New Zealand banking institutions.

4. S&P determined that Council has:

a. experienced and very strong financial management, including good governance and oversight of its Council-Controlled Organisations (unchanged from 2017) ;

b. strong budgetary flexibility (unchanged from 2017);

c. strong liquidity (unchanged from 2017);

d. low contingent liabilities and prudent insurance policies (unchanged from 2017);

e. average budgetary performance (improved from “weak” in 2017); and

f. high debt burden (weakening from “moderate” in 2017 but S&P acknowledged that this reflects Council’s substantial planned capital expenditure programme during the next few years).

5. These factors combined with a strong economy (improvement from “average” in 2017) and an extremely predictable and supportive institutional framework in which New Zealand local government operates, resulted in Council’s strong credit rating.

6. S&P acknowledged Council’s new financial strategy, noting that debt limits had been increased in 2017/18 to accommodate long term capital investment in the City.

7. Furthermore, S&P also determined that Council’s prefunding strategy of upcoming debt maturities in 2018/19, together with its $35 million credit facility, ensured that Council’s liquidity remained strong, particularly in light of S&P view that New Zealand capital markets, whilst liquid, are not very deep, as seen during the severe market dislocation in 2008 and 2009.

8. S&P also consider Council’s budgets to be highly flexible, mainly because its rates revenue is subject only to self-imposed limits (as per Council’s financial strategy). To retain Council’s S&P credit rating in the future, budgetary performance and flexibility must remain strong.

9. The 2018 Research Update, provided by S&P, is attached as Appendix 1 to this report.

Consultation

10. There are no consultation requirements arising from this report.

Legal Considerations

11. There are no legal considerations arising from this report.

Financial Considerations

12. Council’s credit rating is essentially a “signal” to lenders that Council can fully meet its interest and principal obligations. Consequently, Council is able to access multiple debt markets (Local Government Funding Agency (LGFA), banking institutions, private placements etc,), at lower cost due to less perceived risk.

13. Currently, the LGFA provides lending at least cost to the local government sector. Subject to Councils’ credit rating, the LGFA apply the following additional margins to the total cost of borrowings:

Credit Rating	Additional Lending Margin
AA	Nil
AA-	0.05%
A+	0.10%
Unrated Guarantor	0.20%
Unrated Non-Guarantor	0.30%

14. As can be seen, Council‘s credit rating reduces its cost of borrowings by up to 0.30% compared to other borrowers. Compared to a local authority with an A+ credit rating, Council’s annual cost of borrowings is $50,000 less for every $50 million borrowed.

15. Credit ratings are re-assessed annually and a fee is paid to the Rating Agency. Based on current Rating Agency fees, organisations with debt levels between $30 million to $60 million would see little to no benefit having a credit rating. At the time of writing this report, Council’s total net debt was $161 million. The savings achieved directly from Council’s credit rating more than offset the annual fee payable to S&P.

Other Considerations

16. 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 local government in that it provides the Mayor and Councillors with the necessary information to effectively undertake their governance role.

Appendices

No.	Title	Page
1 ⇩	S&P Ratings Direct - Credit Rating for 2018	81

Author: Mark de Haast

Chief Financial Officer

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

103 26 September 2018

Finance and Performance Committee

06 September 2018

File: (18/1467)

Report no: FPC2018/4/261

Draft 2017/2018 Financial Performance and Position

Purpose of Report

1. The report sets out Hutt City Council’s (Council) unaudited financial performance and position for the year ended 30 June 2018, with explanations of key results and variances.

Recommendations

That the Committee notes Council’s unaudited performance and position for the year ended 30 June 2018.

Background

2. The Committee is provided with information on five broad areas of financial performance:

Part A: Statement of Comprehensive Revenue and Expense

Part B: Statement of Financial Position

Part C: Statement of Cash Flows

Part D: Capital Spending Programme

Part E: Treasury Management

Unaudited Financial Information

3. The information as detailed in parts A to E of this report is unaudited and excludes all of Council’s Council Controlled Organisations (CCOs). Best endeavours have been made by all Council Officers to ensure the accuracy, completeness and robustness of the financial information contained within this report.

4. Council’s draft financial performance and position for the year ended 30 June 2018 may be subject to further changes, as required by Council’s auditors, Audit New Zealand.

5. The audited financial results will be presented to the Committee at its meeting scheduled on 17 October 2018, as part of Council’s Annual Report for the Year ended 30 June 2018. Any major differences between the information provided in this report and the subsequent Annual Report will be fully explained to the Committee.

6. At the time of writing this report, there were no particular financial issues and/or risks to specifically highlight to the Committee for consideration and discussion.

Part A: Statement of Comprehensive Revenue and Expense

7. The Statement of Comprehensive Revenue and Expense covers all of Council’s revenue and expenditure for the year ended 30 June 2018.

8. The net position of revenue less expenditure provides the operating surplus or deficit for the year ended 30 June 2018.

Financial Performance Summary

9. Excluding unrealised gains on asset revaluations, Council’s financial performance for the year was $7.8M unfavourable to budget. This was due to $4.2M less capital subsidy revenue than planned due to project delays, an unrealised loss of $2.9M on Council’s financial derivatives and a $1.9M budgeting error on depreciation as a result of the new budgeting system which has now been corrected.

10. Council’s unrealised loss of $2.9M on its financial derivatives is due to derivative interest rates falling further since 30 June 2017. There is no intention to realise these fair value changes (whether gains or losses). This is recognised for accounting purposes only and does not represent a cash loss.

11. Including unrealised gains on asset revaluations, Council’s financial performance for the year was $10.3M unfavourable to budget. Officers advised the Committee on 2 May 2018 that Council’s three yearly asset revaluation as at 31 December 2017 resulted in an uplift of $72.6M. Since then, Officers have identified that Upper Hutt City Council owns $2.6M of the revalued wastewater assets and have since been removed. This has resulted in a net unfavourable variance of $2.5M to budget.

Explanation of Key Revenue Variances

12. Rates

Brief Description	Rates include all rates earned by Council. Rates remissions and rates billed to Council owned properties are excluded.
Full Year Variance:	$477,000 unfavourable to budget as actual growth in the rating base in 2016/17 did not meet the budgeted (expected) growth when the 2017/18 rates were set.

13. Fees, charges and metered water

Brief Description	All non-rates revenue, (including metered water charges), for providing services to the Community. This also includes fines and penalties charged.
Full Year Variance:	$1.7M favourable to budget mainly due to higher building consent revenue and reserve contributions than planned.

14. Subsidies and grants

Brief Description	Includes grants received by Council for operating and capital spending. The majority of grants revenue received is from the New Zealand Transport Agency (NZTA) for their share of Council’s roading maintenance and capital spending programme.
Full Year Variance:	$4.2M unfavourable to budget mainly due to delays in the Cycleway and Shared Paths Development projects.

15. Other Revenue

Brief Description	Includes assets vested to Council, petrol tax, sale of goods, animal shelter fees and central government subsidies for Ministry of Health initiatives, Kiwi Sport and Waste Minimisation levies.
Full Year Variance:	$900,000 favourable to budget mainly due to more vested assets than planned.

Explanation of Key Expenditure Variances

16. Employee Costs

Brief Description	Includes total costs of full time employees and fixed term contractors, including PAYE, Kiwi Saver contributions, annual leave entitlements, and staff training and development.
Full Year Variance:	$1.0M unfavourable to budget mainly due to additional costs associated with the organisation restructure and additional consents staff required (offset by building consent revenue).

17. Annual leave liability at the end of June is slightly higher than June last year. However over the past three years the overall liability has shown a slight downward trend as reflected in the chart below.

18. Other Expenses

Brief Description

Includes direct operating costs excluding internal rates, finance charges, employee costs and depreciation.

Full Year Variance:

$842,000 unfavourable to budget mainly due to:

1. software licenses costing $221,000 more than planned;

2. Wharf maintenance costs of $415,000 that was incorrectly capitalised during the year.

19. Unrealised gain/loss on financial derivatives

Brief Description

Council recognises its interest rate swaps at fair value at reporting date.

The change in fair value between 30 June 2018 and 30 June 2017 is treated as either an unrealised gain (fair value has decreased, or an unrealised loss (fair value has increased).

Full Year Variance:

$2.9m unfavourable to budget because swap rates are lower compared to opening rates as at 1 July 2017. (See Part E: Treasury Management).

20. Gains/losses on property revaluation

Brief Description

Council has elected to revalue its property, plant and equipment every three years.

Council revalued its infrastructure assets, land, buildings, parks and reserves as at 31 December 2017.

Full Year Variance:

The Committee was initially advised that the December 2017 asset revaluation resulted in an uplift of $72.6M. Since then, Officers have identified that Upper Hutt City Council owns $2.6M of the revalued wastewater assets. These have since been removed and has resulted in a $2.5M unfavourable variance to budget.

21. The financial performance for each Activity is attached as an appendix to this report. For each Activity, a Funding Impact Statement, Cost of Activity Statement, summary of key operating and capital projects and key variance explanations are provided. These will be included in Council’s 2017/18 Annual Report.

22. The financial performance for each Activity is attached as an appendix to this report.

Part B: Statement of Financial Position

23. Council’s financial position as at 30 June 2018 and the full year budget for the year is shown below, followed by a summary of key variances.

Overall Summary

24. Council’s financial position as at 30 June 2018 is sound with net assets of $1.3 billion. Council’s material changes to its financial position for the year ended 30 June 2018 were in respect of its other assets, property, plant and equipment and borrowings.

25. Other assets are $19.12M favourable to budget, mainly due to issuing $20M of additional debt during the year, placed on term deposit to prefund $24M of debt maturing in 2018/19. (See Part E: Treasury Management).

26. Property, plant and equipment is $49.1M unfavourable to budget at year end. This mainly reflects temporary timing differences because $45.5M of significant Council assets (ie, Town Hall, Events Centre, Riddiford Gardens and Avalon Park) were not fully in-use as at 30 June 2018 and remain classified as assets under construction, for accounting purposes.

27. In addition, asset sales at year end were $9.5M under budget mainly due to delays in sales due to legal process to gain separate titles or negotiations that have taken longer than expected. These will now occur in the first quarter of 2018/19. These asset sales include Copeland Street Reserve, the site of the former bowling club at Mitchell Park, land to the north of Avalon Park and Durham Crescent.

Net debt

28. $20.1M of planned 2017/18 capital spend was carried over to 2018/19. Council’s net debt as at 30 June 2018 was $156.5M compared to budget of $159.7M. The favourable budget variance of $3.2M is mainly due to $20M of debt prefunding issued during the year, together with reduced revenues and asset sales. A breakdown of net debt is shown below:

Part C: Statement of Cash Flows

29. Council’s cash flow for the year ended 30 June 2018 and the full year budget are shown below, followed by a summary of key variances.

Overall Summary

30. Council’s cash on hand as at 30 June 2018 was $871,000. Operating activities generated a net cash inflow of $9.8M after suppliers were paid $20.6M more than planned for the year.

31. Council spent $49.1M on capital projects during the year and the $13M net on investments, being the $20M of prefunding less $7M of funds held on term deposit at the start of the financial year. Due to Councils reduced capital spend for the year, total cash flows from investing activities was $8.9M less than planned.

32. Lastly, Council issued $63M of debt during the year, including $20M of new debt prefunding. $27M of debt was refinanced during the year, which included $10.7M of loans issued to Council’s CCOs.

Part D: Capital Expenditure Programme and Asset Sales

33. A summary of the 2017/18 capital works programme is shown below.

34. Total capital expenditure for the year was $22.1M below budget mainly due to project delays. $20.1M of this unspent budget has been carried over to 2018/19 following Council approval on 6 June 2018. The table below shows significant capital project underspends, including the approved carryover budget to 2018/19.

	Actual 2017/18 underspend	Council Approved budget carry-over to 2018/19
Making Places Projects	$1.3M	$1.0M
Strategic Property Purchases	$5.6M	$5.6M
Cross Valley Link – Investigations/Design	$0.9M	$0.9M
Cycleway/Shared Paths Projects	$8.3M	$8.4M¹
Solid Waste Projects	$1.0M	$0.9M
Integrated Community Services Projects	$2.8M	$1.8M
Parks and Reserves Projects	$1.4M	$0.6M
Support Services (IT) Projects	$0.8M	-
Civic Precinct Upgrade	-	$0.5M²
Total	$22.1M	$19.7M

Note 1- Carry-overs are estimated and approved in advance of year end. Actual spend in 2018/19 for Cycleway/Shared Paths Projects will not exceed $8.3M.

Note 2 –Actual 2017/18 project spend was more than planned. The carry-over budget is required in 2018/19 to complete the precinct, mainly Riddiford Gardens.

Part E: Treasury Risk Management

Summary for the Year

35. The total amount of new debt issued during the year was $63M, which includes $20M of new debt to prefund $24M of Council debt maturing in 2018/19.

36. $20M of debt matured during the year and was refinanced. This included debt on-lent to Council’s CCOs. Council’s credit facility was increased from $15M to $35M and Council’s working capital requirements are being fully funded through least cost commercial paper.

37. The Official Cash Rate (OCR) has remained static at 1.75% for 2017/18 with some market economists now suggesting a potential cut in mid-2019.

38. Council’s weighted average cost of borrowings has improved slowly as Council takes advantage of lower interest rates. The weighted average cost of borrowings as at 30 June 2018 was 3.9% (30 June 2017: 4.28%). This is in-line with Council’s treasury advisor’s target expectations.

39. All of Council’s Treasury Risk Management Policy limits have been complied with and are shown below:

40. The table below presents Council’s debt maturity profile and compliance with its debt maturity buckets. “Linked assets” represent the loans on-lent to Council’s CCOs and “Available” represents Council’s credit line facility.

41. The table below presents Council’s hedging position and compliance with its floating/fixed hedging limits.

42. As at 30 June 2018, Council had of $192M of gross borrowings. 82% ($157M) was drawn down at floating interest rates with quarterly roll-overs until maturity and 18% ($35M) was drawn down at fixed interest rates to maturity.

43. To mitigate interest rate risk, Council enters into notional interest rate swap agreements with banks. Council “pays” a fixed interest rate in “return” for a floating interest rate, rolled over quarterly for the term of the swap agreement. Council’s interest rate swaps result in Council’s floating/fixed borrowings ratio now being 24% ($46M) floating and 76% ($146M) fixed. This is shown by way of a diagram below:

Consultation

44. There are no consultation requirements arising from this report.

Legal Considerations

45. There are no legal considerations arising from this report.

Financial Considerations

46. There are no financial considerations in addition to those already noted in this report.

Other Considerations

47. 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 local government in that it provides Councillors with the necessary information to effectively undertake their governance role.

Appendices

No.	Title	Page
1 ⇩	Financial Summaries by Activity	104

Author: Philip Benseman

Budgeting and Reporting Manager

Author: Darrin Newth

Financial Accounting Manager

Reviewed By: Mark de Haast

Chief Financial Officer

Approved By: Brent Kibblewhite

General Manager Corporate Services

136 26 September 2018

Finance and Performance Committee

30 July 2018

File: (18/1299)

Report no: FPC2018/4/117

Finance & Performance Committee Work Programme 2018

Purpose of the Report

1. The purpose of the report is to outline the Committee’s forward work programme and to propose changes to the frequency of providing Finance Updates to the Committee.

Recommendation

That the Committee:

(i) notes and receives the programme; and

(ii) approves receiving quarterly Finance Update reports from November 2018.

Proposed Changes to the Frequency of Financial Update Reporting

2. Except for the year end reporting cycle, the Finance and Performance Committee is currently provided with Council’s financial performance updates every nine weeks. Typically, this includes financial performance updates for the past two months and full-year forecasts since the last Committee Meeting.

3. Whilst Finance Updates will continue to report on year-to-date actuals and full-year forecasts, Officers recommend that these updates are only provided on a quarterly basis. The reason for this is two-fold, namely:

a. by setting tranches of three month reporting periods (instead of two months), the full-year forecasts will become more considered and more accurate; and

b. Officers will have more time to focus on the financial management of their projects, resulting in better quality accounting, better budget variance commentary and better forecasting.

These will be discussed in more detail, separately below.

Better Full-year Forecasts from Quarterly Reporting

4. Whilst the Committee will certainly be interested in year to date financial performance, the full year forecast should be the primary focus for the Committee.

5. Officers wish to improve the accuracy and rigour of the full–year forecasts by only requiring budget managers to review their expected full-year forecasts at the end of each quarter. Current practice suggests the requirement for monthly re-forecasts is onerous on budget managers who see little value in giving this their full attention every month. Officers believe quarterly reporting and forecasting will improve the accuracy of forecasts and the quality of explanation of variances.

6. The proposed changes to reporting and forecasting frequency is demonstrated in the table below:

	Current Reporting		Proposed New Reporting
	Months of actual spend	Months of forecast spend	Months of actual spend	Months of forecast spend
Report back 1	2 months	10 months	3 months	9 months
Report back 2	4 months	8 months	6 months	6 months^*
Report back 3	6 months	6 months	9 months	3 months^**
Report back 4	8 months	4 months	12 months	N/A
Report back 5	10 months	2 months
Report back 6	12 months	N/A

* - This forecast will be used to determine the estimated opening balances of the following year’s draft Annual and/or Long Term Plan.

** - The estimated opening balances of the following years draft Annual and/or Long Term Plan will be updated with the most recent estimates from this forecast for the final Annual and/or Long Term Plan.

Better Financial Management of Projects

7. Currently, budget managers are required to provide full year forecasts and budget variance explanations every month. Work load pressure(s) have been known to compromise the quality of budget variance commentaries and full year forecasts.

8. In addition to wanting to improve the accuracy and robustness of the full–year forecasts, Officers also want to improve the financial management of projects and the quality of budget variance commentaries.

9. Shifting to quarterly reporting will require budget managers to provide full year forecasts and budget variance explanations once every three month (instead of monthly at present). This will free up budget managers to better understand and manage the financial performance of their projects, including budget variance commentaries, key milestones and project delivery financial risks.

Other Benefits

10. The accounting resources in the Finance team currently spend a disproportionate amount of time compiling and critiquing monthly financial results and reports. A move to quarterly reporting to this Committee will provide capacity for the accounting resources to better assist budget managers with financial management and other value-added tasks, and to work on system and process improvements.

Appendices

No.	Title	Page
1 ⇩	Finance and Performance Work Programme 2018	137

Author: Donna Male

Committee Advisor

Author: Mark de Haast

Chief Financial Officer

Reviewed By: Kathryn Stannard

Divisional Manager, Democratic Services

Approved By: Brent Kibblewhite

General Manager Corporate Services

Attachment 1

Finance and Performance Work Programme 2018

Finance & Performance Committee Work Programme 2018

Cycle 3 4 July 2018	Officer	For Council
Risk and Assurance Update and Operational Risk Register	E Davids
Internal Audit Charter and Internal Audit Plan 2018 - 2021	E Davids
Remuneration and Employment Policy Amendment	T Stallinger	·
Finance Update	M de Haast
Health & Safety Update	D Tyson
Technology One SaaS Governance Procedures	L Allott
Appointment of Directors to UPL/CFT/SML	B Cato	·
Finance & Performance Work Programme	Committee Advisor

Cycle 4 26 September 2018	Officer	For Council
Standard and Poor’s Credit Rating Review	M de Haast
Draft 2017/18 Financial Performance and Position	P Benseman/D Newth
Effect of Living Wage on Pool and Fitness Financial Returns	M Sherwood
Technology One SaaS Update	L Allott
Sale & Supply of Alcohol (Fees) Regulations 2013 – Regulation 19 (1) – Reporting by Territorial Authorities	D Bentley
Final SOIs for CCOs – CFT, SML and UPL	B Kibblewhite	·
2018 - 2028 Long Term Plan Audit Report	J Askin
Finance & Performance Work Programme	Committee Advisor
17 October 2018	Officer	For Council
Hutt City Council’s Annual Report	J Askin/M de Haast	·
Audit NZ Final Management Report	D Newth
Annual Reports for CCOs – CFT, SML, UPL	B Kibblewhite
Annual Report for LGFA	M de Haast

Cycle 5 28 November 2018	Officer	For Council
2018/19 Annual Plan Timetable and Assumptions	J Askin/M de Haast
Risk and Assurance Update and Strategic Risk Register	E Davids
Six Monthly Strategic Property Update	G Craig
Q1 Finance Update	P Benseman
Insurance Update	M de Haast
Redesign of GWRC Combined Rates Invoice	M de Haast
2019/20 Revenue Increase and Cost Reduction Targets Update	M de Haast/A Yip
Technology One SaaS Update	L Allott
Health & Safety Update	D Tyson
Activity Report – Governance, Engagement and Organisation – City Governance	Finance/Legal/HR/Elected Members
Finance & Performance Work Programme	Committee Advisor

Cycle 1 2019	Officer	For Council
Draft SOIs for CCOs – CFT, SML, UPL	B Cato/B Kibblewhite	·
Draft SOI for LGFA	M de Haast
Six Monthly Reports for CCOs	CCO GM/CE’s & B Kibblewhite
Six Monthly Report – Huia Pool Development and Funding	M Sherwood
Health & Safety Update	D Tyson
Technology One SaaS Update	L Allott
Q2 Finance Update	P Benseman
Finance & Performance Work Programme	Committee Advisor

Cycle 2 2019	Officer	For Council
Tax Risk Management Update	D Newth
Six Monthly Strategic Property Update	G Craig
Redesign of GWRC Combined Rates Invoice	M de Haast
Technology One SaaS Update	L Allott
Q3 Finance Update	P Benseman
Finance & Performance Work Programme	Committee Advisor

Pending - Fraser Park Sportsville Update – Including progress against FPS Business Case – M Reid – June 2019

MEMORANDUM 140 26 September 2018

Our Reference 18/1411

TO: Chair and Members

Finance and Performance Committee

FROM: Josie Askin

DATE: 27 August 2018

SUBJECT: 2018-2028 Long Term Plan Audit Report

Recommendation

That Committee notes the findings from the 2018-2028 Long Term Plan audit from Audit New Zealand.

Purpose of Memorandum

1. To provide the audit report from Audit New Zealand on Council’s 2018-2028 Long Term Plan (LTP).

Background

2. Under the Local Government Act 2002 Council’s LTP Consultation Document and LTP are audited.

3. On 28 March 2018 Audit New Zealand issued an unmodified audit opinion on our LTP Consultation Document. They were satisfied the Consultation Document met statutory purpose and provided an effective basis for public participation in the Council’s decisions about the proposed content of the 2018-2028 LTP.

4. Audit New Zealand issued an interim report on their audit and made a number of recommendations for the final LTP. Council received the report on 28 June 2018.

Discussion

5. On 28 June Audit New Zealand issued an unmodified audit opinion of the Council’s LTP, meaning they were satisfied the 2018-2028 LTP meets the statutory purpose.

6. Audit New Zealand acknowledged previous recommendations in the Consultation Document audit had been addressed in the delivery of the final LTP.

7. Audit New Zealand was satisfied with community consultation, the level of feedback received and the adjustments made to the LTP as a result of the consultation process.

8. Audit New Zealand reviewed setting of the 2018-19 rates and recommended Council seek legal advice to confirm the rates setting process is compliant with all aspects of legislation.

9. Audit New Zealand recognised a number of challenges in the LTP that led to inefficiencies. This included changes to the staff responsible for the LTP, very late final decisions on consultation topics and late finalisation of the rate resolution. As a consequence Audit New Zealand is discussing the fee with Office of the Auditor-General with the intent to seek a cost recovery.

10. Audit New Zealand made a number of recommendations for the next Annual Plan or LTP. This included agreeing consultation topics prior to the beginning of the year the plan is developed. This is in line with what Council agreed on 28 June 2018 for the 2019-20 Annual Plan.

Appendices

No.	Title	Page
1 ⇩	FINAL 2018-28 LTP Audit Report	141

Author: Josie Askin

Corporate Planner

Reviewed By: Wendy Moore

Divisional Manager, Strategy and Planning

Approved By: Kim Kelly

General Manager, City Transformation

149 26 September 2018

Finance and Performance Committee

07 September 2018

File: (18/1482)

Report no: FPC2018/4/127

TechnologyOne SaaS Project Update

To provide the Finance and Performance Committee with an update on the TechnologyOne SaaS Project and Governance Structure.

Recommendation

That the report be noted and received.

Background

1. At the Finance and Performance Committee meeting on 2May 2018 the business case to move Council’s TechnologyOne software to SaaS (Software as a Service) was approved.

2. The Finance and Performance Committee requested a project update at each meeting while the project is in progress.

Governance

3. We are close to establishing the project governance group. The group will align to the Prince2 Project Management governance group structure and consist of a Senior Manager, Senior User representative (Divisional Manager), CIO, Project Manager and an external quality assurance representative.

4. Since the last Finance and Performance Committee meeting we have requested and received additional proposals from three consultants/organisations to participate on the governance group as the external representative. The proposals have been evaluated and a decision made to engage Pauline Burke, an independent consultant who has worked on several TechnologyOne projects. Pauline will provide assurance that the project is set up to deliver successful outcomes. The scope of her assurance work will include the following aspects of project management controls:

Initiation	Scope and scope change	Organisational Change
Structure	Risk and Issues	Vendor Management
Governance	Reporting	Quality
Planning	Cost Management	Training
Team and Resource	Go-Live Readiness	Closure

Project Update

5. The TechnologyOne contract has now been signed.

6. A temporary contractor Tony McDonald has been appointed in the role of Business Transformation Manager until 4 October 2018. Tony is currently the Project Manager for this project.

7. The permanent role of Business Transformation Manager has been accepted by an external candidate. Once on board they will take the project management lead.

8. The project team has been established and the initial project meeting completed. Work is underway with TechnologyOne to create the project plan and define timeframes.

9. The first governance group meeting will be completed before the end of October 2018.

10. At this stage the tentative Go-Live timeframe for Technology SaaS is March 2019.

Appendices

There are no appendices for this report.

Author: Lyndon Allott

Chief Information Officer

Approved By: Tony Stallinger

Chief Executive

Deputy Mayor D Bassett	Cr G Barratt
Cr J Briggs	Cr MJ Cousins
Cr S Edwards	Cr M Lulich

Cr L Sutton	Mayor WR Wallace (ex-officio)

Determine and monitor:

Consider and make recommendations to Council:

General: