Wellington Water
Committee
08 July 2019
File:
(19/910)
Report no:
WWC2019/3/151
Applications to
Become Mana Whenua Partners
Purpose
of Report
1. To consider
applications to become Mana Whenua Partners.
|
Recommendations
It is recommended that the
Committee:
(i) notes and
receives the report;
(ii) agrees to recommend
to shareholder councils that Te Runanga
o Toa Rangatira be appointed as a Mana Whenua Partner Entity, and that Te
Taku Parai be its nominated representative and Naomi Solomon be its nominated
alternate; and
(iii) agrees to recommend to shareholder councils that Taranaki
Whānui ki Te Upoko o Te Ika be appointed as a Mana Whenua Partner
Entity, and that Kim Skelton be its nominated representative and Kirsty
Tamanui be its nominated alternate.
|
Summary
2. The Wellington Water shareholders
recently amended the Wellington Water governance documents to allow for
Māori representation.
3. The Shareholders Agreement allows a
Māori authority to approach the shareholder councils and seek to be
recognised as a Mana Whenua Partner Entity to provide representation on the
Wellington Water Committee.
4. The Wellington Water Committee has
received two applications from two Māori authorities in the lower
Wellington region and the Committee is asked to consider these applications.
Background
5. The Wellington Water Committee has
been working to ensure the Wellington Water model allows for genuine Māori
representation and shareholder councils have amended Wellington Water’s
governance documents (Shareholders Agreement, Wellington Water Committee Terms
of Reference and constitution) to reflect an inclusive approach.
6. The Shareholders Agreement allows a
Māori authority to approach the shareholder councils and seek to be
recognised as a Mana Whenua Partner Entity. Upon joint approval by the shareholders,
the Mana Whenua Partner Entity can nominate a person to be a Wellington Water
Committee member (and the shareholders must unanimously appoint). A Mana Whenua
Partner Entity must be a Māori authority within the geographical area in
which the Company operates.
7. The relevant Māori authority will
become a Mana Whenua Partner Entity upon acceding to the Shareholders Agreement
by way of a deed of accession.
8. The Wellington Water Committee has
received applications from two Māori authorities, Te Runanga o Toa
Rangatira and Taranaki Whānui ki te Upoko o Te Ika to become Mana Whenua
Partner Entities and the Wellington Water Committee is asked to consider their
applications.
Remuneration
9. The amended Wellington Water Committee
Terms of Reference provides that the shareholders will be responsible for
remunerating the Committee members nominated by the Mana Whenua Partner
Entities, and their alternates for any costs associated with being a member on
the Committee.
Discussion
10. The proposal is to appoint two Mana Whenua
Partner Entity representatives to the Wellington Water Committee.
11. The two Māori authorities, Te Rūnanga o
Toa Rangatira and Taranaki Whānui ki Te Upoko o Te Ika are Post Settlement
Governance Entities. Post Settlement Governance Entities are entities created
for management of Treaty Settlement interests and assets and are recognised as
the formal partnership mechanism between Crown and Mana Whenua.
12. The two Māori authorities both cover the
lower Wellington region in which Wellington Water operates. These entities have
Crown recognition for the area in which they operate in and it makes sense that
they are representing the lower Wellington region’s water interests from
a Mana Whenua perspective.
Next
steps
13. If agreed, the proposal to
appoint the two Mana Whenua Partner Entities and the nominated representatives
will be forwarded to each shareholder council for their consideration.
Appendices
|
No.
|
Title
|
Page
|
|
1⇩
|
Application from Te Runanga o Toa Rangatira)
|
7
|
|
2⇩
|
2019 06 28 CM Wellington Water Application Form
|
10
|
|
3⇩
|
2019 06 28 CM Wellington Water Letter
|
11
|
Author: Wendy Walker
Chief Executive, Porirua City Council
Wellington Water Committee
28 June 2019
File:
(19/861)
Report no:
WWC2019/3/137
Proposal for South
Wairarapa District Council to Become a Shareholder in Wellington Water Ltd
Purpose
of Report
1. To consider the proposal for South Wairarapa District
Council (SWDC) to become a shareholder of Wellington Water Ltd (the company).
|
Recommendations
That the Committee:
(i) notes and receives the report;
(ii) notes the risk assessment report and addendum prepared by
Wellington Water Ltd for South Wairarapa District Council (SWDC) setting out
the risks associated with SWDC becoming a shareholder and the way Wellington
Water Ltd proposes to manage these risks; and
(iii) agrees
to support the proposal and recommend to shareholder councils that SWDC
become a shareholder in Wellington Water Ltd.
|
Summary
2. The Wellington Water Committee (the Committee) has been
working to make the Wellington Water model available to other willing councils
within the region and as a result, the SWDC has applied to become a
shareholder. In response, the Committee requested that the company
complete the work necessary for SWDC to become a shareholder including carrying
out a risk assessment of the proposal.
3. The Committee has undertaken a risk assessment process to
understand the situation surrounding the proposal for SWDC to join and how best
to manage those risks and its report is attached. An addendum has been
prepared to update the original report as some work has been undertaken since
the report was first prepared in April 2019.
4. The Committee has received assurance from the Board of the
Company that they are comfortable accepting the risks outlined in the report.
5. The proposal is for SWDC to have a 5% shareholding in the
Company. This would bring the number of shareholders of Wellington Water to six
councils within the region.
6. It is considered the proposal provides broad benefits to
the region and the identified risks are manageable. It is therefore recommended
that the Committee support the proposal.
Background
7. In 2018 the Government commenced a review on the three
waters and, in response, the region worked on a proposal for better three waters
management and submitted this to Government. One of the proposals was that the
Wellington Water model be available to work at a regional level.
8. Since the proposal was submitted, the region has been
moving forward in implementing its proposed recommendations where it can,
including facilitating a process whereby interested councils can apply to
become shareholders of Wellington Water.
9. The mechanism to enable this is included in the most recent
changes to the governance documents that have been agreed by the shareholders.
10. The
SWDC indicated an initial interest in joining Wellington Water as a shareholder
in mid-2018. In response, the Committee requested that the company complete the
work necessary for SWDC to become a shareholder including carrying out a risk
assessment of the proposal. The Committee has now received a risk assessment
report from the Chair of the company which is attached. An addendum has also
been prepared to update the original report as some work has been undertaken
since the report was first prepared in April 2019.
11. One
of the Committee’s responsibilities under its Terms of Reference is to
provide recommendations to the shareholders regarding changes to the
Shareholders’ Agreement. On this basis, the Committee is asked to review
the proposal for SWDC to join, including considering the associated risks, and
if agreed, recommend to the shareholder councils that SWDC join.
Proposal
for the South Wairarapa District Council to join Wellington Water
12. The
proposal is for SWDC to join Wellington Water as a shareholder. This would
bring the number of shareholders to six councils within the region.
13. The
proposal is for SWDC to have a 5% shareholding and for the shareholders to
issue the following shares:
150
Class A Shares (voting rights)
25
Class B Shares ($2,000 per share)
14. Each
shareholder will have the same amount of voting A shares. The B shares are only
relevant on a winding up of the assets of the company.
15. The
basis on which Class B shares has been calculated is a relative size
methodology based on operational costs. The buy-in price ($2,000) is the same
amount per share paid by the other shareholders.
16. A
revaluation of the company has not been completed to determine share value
although an evaluation of the share allocation could potentially occur as part
of any future governance review if this was desired.
17. It
is proposed SWDC officially join on 1 October 2019.
Benefits
of the proposal
18. There
are a number of benefits to this proposal including:
· The
shareholders demonstrating that local government can proactively work together
to work on a regional basis and look after its smaller neighbours.
· Continuing
to scale up and build critical mass and capability within the region under a
shared service delivery model.
· Greater
buying power as a shared service.
· Providing
services to a council with a different service delivery model (rural based,
meters, discharge to land experience) will grow the Company’s knowledge
and capability as well as inform shareholder councils.
· Strengthening
emergency resilience within the region due to geographical spread.
Disadvantages
of the proposal
19. The
only clear disadvantage is that SWDC is remote and would be the only
shareholder council in the Wairarapa.
20. Some councils may consider there is a
disadvantage in having additional shareholders as there are more decision
makers. However, arguably, this is balanced by the diverse pool of experience
from which to draw.
Wellington
Water has completed a risk assessment
21. Wellington
Water has completed a high level risk assessment and the attached report sets
out these risks.
22. The
risk assessment process considered the risk of SWDC’s current water
services activity for drinking water supply, wastewater, stormwater and water
races from two main perspectives:
(a) The
impact on the company - focusing on the risks associated with SWDC’s
current operations.
(b) The impact on the broader
Wellington Water model - the other shareholders’ interests around
resourcing Wellington Water’s client-councils’ work programme and
impact on the provision of level of service.
Risks to SWDC’s current
operations
23. The
company has assessed the risks to SWDC’s current operations which
Wellington Water are assuming control of as being low.
24. In
the original risk assessment report, it was assessed as medium because of
issues associated with SWDC’s treatment plants: Martinborough’s
water treatment plan upgrade and the consenting process for Featherston’s
wastewater treatment plant. However, work has now been progressed in these
areas and so these risks have been reduced.
Risks to the Wellington Water
model
25. The
company has assessed the risks to the Wellington Water model as being low due
to the size of the SWDC.
26. The
proposed SWDC shareholding is 5%. The SWDC’s water budgets would
typically be less than 5% of the regional budgets managed by Wellington Water
and approximately 2% of the regional pipe network (refer to graphs below).
27. A
very large adverse event in SWDC in terms of stress on Wellington Water
resources would be equivalent to a relatively minor event in one of its
metropolitan councils. For example, a repeat of an incident on the scale of the
recent Martinborough Ecoli incident would typically tie up approximately
five staff for two weeks.
28. The
company proposes to manage any adverse event risks by implementing a robust
transition plan.
29. The
company’s Board has expressed comfort in accepting the risks outlined in
the report.
Discussion
30. The
Committee has previously expressed a desire for the Wellington Water model to
operate at a regional level and to work with willing councils to make this
happen. This provides an opportunity to demonstrate the ability to continue to
scale up the shared service delivery model.
31. Accepting
SWDC as a shareholder in Wellington Water is not without risk. However, the
risks need to be considered within the broader context of how the risks will be
managed, as well as considering the impact on the whole region and the size of
Wellington Water’s operations.
32. The
risk assessment report outlines the risks and sets out how the risks will be
managed. The risks appear to be low and are unlikely to have a significant
adverse effect on the Wellington Water model as a whole. Like all the other
shareholders, SWDC will continue to own its water assets and control the level
of investment. Current funding levels have been assessed as being adequate.
33. The
biggest risk is that SWDC will utilise the Company’s resources in a
disproportionate manner to the other client councils because of adverse events
such as Martinborough’s recent water supply issue. However, this is
unlikely to happen as the SWDC is a small council and Wellington Water has the scale
and capability to manage these issues. In the Martinborough situation,
Wellington Water was able to quickly provide assistance while at the same time,
building its own response and technical capability.
34. There
is a level of reputational risk to the other shareholders should an adverse
operational event occur. However this would be managed through the
company’s normal controls – as are events for the other shareholder
councils.
35. Taking
into account the broader advantages that a regional service delivery provides,
it is therefore recommended that the Committee support the proposal for SWDC to
join.
Next Steps
36. If the proposal for SWDC to join is supported, the
Committee’s recommendation will be forwarded to each of the shareholder
councils for their approval if agreed.
Appendices
|
No.
|
Title
|
Page
|
|
1⇩
|
Letter dated 7 June 2019 from David Wright, Chair,
Wellington Water - Risk Assessment Report
|
18
|
|
2⇩
|
Attachment to Letter - SWDC Risk Assessment Report
|
20
|
|
3⇩
|
Letter dated 26 June 2019 from David Wright, Chair,
Wellington Water – Addendum to Risk Assessment Report
|
27
|
|
4⇩
|
Attachment to Letter - Addendum to Risk Assessment
Report
|
29
|
Author: Wendy Walker
Chief Executive, Porirua City Council
