HUTT CITY COUNCIL

 

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

 Monday 21 December 2020 commencing at the conclusion of the Long Term Plan/Annual Plan Subcommittee.

 

SUPPLEMENTARY ORDER PAPER

 

Public Business

 

6.       Annual Report 2019-2020 (20/1663)

Report No. HCC2020/6/318 by the Programme Lead - Planning and Reporting  2

Mayor’s Recommendation:

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

7.       Wellington Water Limited Annual Report for the Year ended 30 June 2020 (20/1744)

Report No. HCC2020/6/331 by the Manager Financial Strategy & Planning 180

Mayor’s Recommendation:

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

          MAJOR ITEM NOT ON THE AGENDA

             That in terms of Standing Order 10.12 Council:

(i)                 notes that a report on the Directors on Council Controlled Organisation was not included in the agenda for the meeting, for the reason that the information was not available until after the agenda had been distributed; and

 

(ii)               agrees that the request be considered at this meeting for the reason that advertising for the directors can commence early in the New Year.

7(a).  Directors on Council Controlled Organisations (20/1760)

Report No. HCC2020/6/332 by the Head of the Mayor's Office                    257

Mayor’s Recommendation:

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

 

 

Kate Glanville

SENIOR DEMOCRACY ADVISOR     

 

                                     


                                                                                       2                                                 21 December 2020

Extraordinary Meeting of Council

02 December 2020

 

 

 

File: (20/1663)

 

 

 

 

Report no: HCC2020/6/318

 

Annual Report 2019-2020

 

Purpose of Report

1.    The purpose of this report is to update Council on changes made to the Hutt City Council’s Group Annual Report for the year end 30 June 2020 and for Council to adopt the Group Annual Report.

Recommendations

That Council:

(i)    notes the changes made to Council’s Annual Report to 30 June 2020 outlined in Table 1;

(ii)   notes that the Annual Report attached as Appendix 1 will be available on Council’s website within one month of adopting the Annual Report along with the Summary Annual Report;

(iii)  adopts the Annual Report for the year ended 30 June 2020 subject to receipt of Audit New Zealand’s opinion on the Annual Report; and

(iv) agrees that the Chief Executive will approve the Summary Annual Report following completion of the audit review.

For the reasons outlined in the report.

 

Background

2.    Under Section 98 of the Local Government Act 2002 (LGA) Council must complete and adopt an Annual Report within four months of the end of the financial year to which it relates. This year due to COVID-19 and the expected delays, legislation was passed to extend the statutory reporting time frame by up to two months. Local authorities have to 31 December 2020 to adopt their Annual Report.

3.    The purpose of an Annual Report is:

a.    to compare the actual activities and the actual performance of the local authority during the year with the intended activities and the intended level of performance as set out in the Long Term Plan and the Annual Plan; and

b.    to promote the local authority’s accountability to the community for the decisions made throughout the year by the local authority.

4.    Within one month of adopting the Annual Report (21 January 2021), Council must make the Annual Report and a summary of the information (Summary Annual Report) publicly available.

Updated information incorporated into Annual Report

5.    The Draft Annual Report was presented to Policy, Finance and Strategy Committee on 17 November 2020.  Since that date there have been some changes incorporated into the Annual Report, in response to feedback received from Audit NZ.  In summary the changes are largely minor with the exception being the Wellington Water related performance measure results.

6.    The revised version of the Annual Report is attached as Appendix 1.  The table that follows provides details of the changes made to the report.

Table 1: Summary of changes made to the Annual Report since presentation to the Policy, Finance and Strategy Committee on 17 November 2020

7.  

Brief summary of change

Page number Annual Report

 

Further detailed explanation

 

Wellington Water Ltd

100

Additional information added in relation to performance measures. Further information detailed in report below.

 

COVID-19

29

Explanation of COVID-19 impact on performance information and KPIs

 

Hutt Valley Gymsports

81

Footnote updated to improve explanation

 

Roading performance measures added

33

Roading performance measures from NZTA added (the testing had been delayed due to COVID-19).

 

Roading footnote amended

33

Footnote for roading performance measure updated to reflect the new method used

 

Finance Summary and Financial Statements

109

Group “gain on disposal” revenue from sale of commercial developments of UPL Group was overstated by $1.56M. This adjustment was the result of an incorrect treatment of GST.

Overall Surplus/Deficit and Comprehensive was reduced by the same amount.

Group ’Debtors and other receivables’ was reduced by the same figure to represent a lower GST receivable at 30 June 20

Discussion

Wellington Water Limited

8.    Wellington Water Limited (WWL) has received an ‘except for’ qualification in its audit opinion in relation to performance measures in its Annual Report. The qualification is in relation to five performance measures:

a.   Water loss;

b.   Service request attendance and resolution times;

c.   Dry weather wastewater overflows;

d.   Customer complaints;

e.   Customer satisfaction.

9.    The qualifications received by WWL have a consequential impact on some of the performance measures in Council’s Annual Report.  Our Auditors view the measures noted in 8a to d above as material. As such, the qualifications in relation to these measures flow into Council’s audit opinion.

10.  Officers will work with WWL to address the matters raised by the auditors.

11.  WWL is working to improve its ability to report results that can be verified to the required audit standards. It is also working on improving its systems including better process controls and documentation and improving the way it collects and manages data.

12.  Next steps: Five issues remain in regard to future reporting on performance measures by WWL.  WWL has advised that they have agreed with Audit NZ to manage them as follows going forward:

a.  Water loss.


WWL ability to report water loss is impacted by low numbers of meters across the Wellington region.

In the absence of meters WWL will continue to apply the current ‘Benchloss’ methodology to calculate water loss across the region.

Reporting this result is more accurate as a regional percentage until more data is available to support this measure at a Council level.

b.  Fault response times - attendance and resolution.

 

Better recording and reporting of performance data will be achieved through a number of activities as part of a wider improvement programme including development of a more robust performance framework and the addition of systems controls into key response time workflows.

Specific activities will include:

·    Continuing to match vehicle attendance to job sites using E-Road data

·    Adding system controls to provide assurance that results can be verified for all urgent service requests and sample testing non-urgent service requests

·    Staff training

·    Increased internal audit programme including routine quality assurance checks for all non-urgent service requests

 

c.  Dry weather overflows.

 

WWL will review and improve the methodology to improve the accuracy and reliability of results. Improvements will include:

·    Improved data collection

·    Staff training to ensure wide understanding of the definition of a dry-weather overflow as ‘wastewater spilling to the surface’

·    Updating field crew job requirements to include a mandatory step of confirming the overflow event by taking a photograph of the job site

 

d.  Customer complaints 

 

Customer complaints reported through councils and the Palmerston North City Council (PNCC) after hours contact centre were under-reported according to council auditors. WWL will work with the councils and PNCC to review and improve the complaint reporting procedures.

 

2019-20 Annual Report

13.  The draft 2019-20 Annual Report is attached as Appendix 1. Any significant amendments requested by auditors following publication of the order paper will be highlighted at the meeting. 

14.  The document has been structured around the key strategies, community outcomes and groups of activities in the 2018-2028 Long Term Plan. The document also addresses the impact of COVID-19 on council operations and performance.   There is greater use of infographics and photography this year to make the document more accessible and attractive for the community to read.

15.  Mr Andrew Clark from Audit New Zealand will be present at the Council meeting to provide an update on the status of the audit. Audit New Zealand will issue their opinion on the Annual Report once the report is approved by Council prior to adoption.

2019-20 Summary Annual Report

16.  The Summary Annual Report comprises pages 1-29 of the Annual Report. It will include a standard disclosure statement and will incorporate the Wellington Water disclosure on pages 100-101 of the Annual Report. It is recommended the Chief Executive approve this for publication once finalised and review has been completed by audit. If any significant amendments are requested by the auditors following publication of the order paper, copies will be circulated to members.

Publicity Considerations

17.  A public notice advising the availability of the Annual Report and Summary Annual Report will be published in the Hutt News and on Council’s website. It will also be promoted via a Hutt@Heart web article and digital noticeboards, and infographic excerpts will be published on social media.

18.  As in previous years, the Annual Report and Summary Annual Report will be published on Council’s website. Hard copies of the Summary Annual Report will be available from all Council libraries, community hubs and the main administration building.   The Local Government Act 2002 requires copies of both documents to be provided to the Secretary, the Auditor General and the Parliamentary Library within one month of adopting the Annual Report. Their preference is to receive copies electronically.

19.  The cost of producing, printing and distributing the Annual Report and Summary Annual Report is provided for within current budgets.

Legal Considerations

20.  The Annual Report has been prepared to meet the requirements of the Local Government Act 2002.  The Summary Annual Report must represent, fairly and consistently, the information regarding the major matters dealt with in the Annual Report.  The Local Government Act 2002 also requires each Annual Report to be completed and adopted by resolution within statutory time frames. The Act also requires that the Annual Report and Summary Annual Report be made publicly available within one month of adoption of the Annual Report.

Financial Considerations

21.  The financial content of the Annual Report included here in Appendix 1 aligns with the results previously reported to the Policy, Finance and Strategy Committee on 17 November 2020. The Group results have been updated to reflect the audited results of CCOs. Refer table 1 above.

22.  The individual CCO Annual Report results were included in the Council meeting agenda for 8 December 2020 and include commentary about the performance of these entities.

Climate Change Impact and Considerations

23.  The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.

Appendices

No.

Title

Page

1

Annual Report 2020

8

    

 

 

 

 

 

Author: Judy Randall

Programme Lead - Planning and Reporting

 

 

 

Author: Darrin Newth

Financial Accounting Manager

 

 

 

Author: Daniel Koenders

Manager Financial Strategy & Planning

 

 

 

 

 

 

Reviewed By: Wendy Moore

Head of Strategy and Planning

 

 

 

Approved By: Jenny Livschitz

Chief Financial Officer

 


Attachment 1

Annual Report 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


                                                                                     182                                               21 December 2020

Extraordinary Meeting of Council

10 December 2020

 

 

 

File: (20/1744)

 

 

 

 

Report no: HCC2020/6/331

 

Wellington Water Limited Annual Report for the Year ended 30 June 2020

 

Purpose of Report

1.    To provide the Council with the Annual Report for Wellington Water Limited (WWL) for the year ended 30 June 2020.    

Recommendations

That the Council;

(i)    receives and notes the Annual Report for Wellington Water Limited for the year ended 30 June 2020;

(ii)   notes the qualified audit opinion to be received by Wellington Water Limited; and

(iii)  notes the qualified audit opinion will have a consequential impact on the Council’s Annual report.

 

Background

2.    It is a requirement of the Local Government Act 2002 that Council Controlled Organisations (CCOs) deliver to the shareholders an annual report on the organisation’s operations.

3.    Wellington Water Limited (WWL) is a Council Controlled Organisation owned jointly by six shareholder Councils: Wellington City Council, Hutt City Council, Upper Hutt City Council, Porirua City Council, South Wairarapa District Council, and Greater Wellington Regional Council. 

4.    WWL does not operate to make a financial return and its purpose is to create excellence in regional water services so that communities prosper. WWL plans and delivers the three waters services (drinking-water, wastewater and stormwater) to the metropolitan Wellington region on behalf of the six shareholder Councils.

5.    The three waters services include the collection, treatment and delivery of drinking water and the construction, operation, management and maintenance of the three waters network assets and systems, as well as treatment facilities, pump stations reservoirs and related networks.

6.    WWL is governed by a Board of Directors. The Chair of the Board reports to the Wellington Water Committee, which is made up of representatives of all six shareholder Councils and is currently chaired by Hutt City Councillor, David Bassett.

7.    The Wellington Water Committee provides governance oversight of WWL and its management of the network infrastructure for the delivery of the three waters services. This is done by considering WWL’s half-yearly and annual reports, monitoring WWL’s performance, appointing directors to the Board and providing recommendations to shareholders on WWL’s proposals.

Discussion

Wellington Water Limited Annual Report

8.    The WWL Annual Report is attached as Appendix 1 to this report. The draft audit opinion is attached as Appendix 2.  The final opinion had not been issued by Audit NZ at the time of preparation of the order paper.  Officers have been advised that no further changes are expected to the WWL Annual Report and that the audit opinion has been approved subject to final administrative checks.

9.    The WWL Annual Report details key achievements across the year, together with performance results compared to the Statement of Intent performance measure targets.  The financial results for the year show a net deficit of $194k.

10.  WWL develops and agrees operational and capital programmes based on the shareholder Council Long Term Plans. WWL enters into contracts directly with contractors to perform the work programmes and manage projects. The report discloses the Hutt City Council share of activity for the year which was at a similar level to the prior year. This includes a management fee of $3.6M, operational programme $13.9M and capital programme $11.8M.

11.  The draft audit opinion notes five non-financial measures where issues were identified and considered material, resulting in an “except for” qualified opinion in respect of these measures:

a.   Water loss;

b.   Service request attendance and resolution times;

c.   Dry weather wastewater overflows;

d.   Customer complaints;

e.   Customer satisfaction.

12.  WWL is working to improve its ability to report results that can be verified to the required audit standards. It is also working on improving its systems including better process controls and documentation and improving the way it collects and manages data.

Hutt City Council Annual Report

13.  The qualifications received by WWL have a consequential impact on some of the performance measures in Council’s Annual Report.  Our Auditors view the measures noted in 11a to d above as material. As such, the qualifications in relation to these measures flow into the Council’s audit opinion.

14.  Officers will work with WWL to address the matters raised by the auditors.

15.  Council’s 20% equity share in WWL means that for accounting purposes, the Company is treated as an associate and Council’s share of WWL’s post tax surplus/(deficit) is included in Council’s group accounts. Council has recognised a $40,0000 deficit in its consolidated results for the year ended 30 June 2020 (2019: $6,000 surplus), being its share of WWL’s after tax surplus.

Legal Considerations

16.  WWL must deliver to the Council (shareholder), and make available to the public, the 2019/20 Annual Report by no later than 30 November 2020. WWL delayed the completion of its Annual Report in an attempt to address concerns raised by its auditor. As a result WWL has not met its statutory deadline.

Financial Considerations

17.  There are no further financial considerations apart from those detailed in the paper.

Appendices

No.

Title

Page

1

Appendix 1 - WWL Annual Report 2020

183

2

Appendix 2 - Draft WWL Audit opinion 2020

251

    

 

 Author: Daniel Koenders

Manager Financial Strategy & Planning

 

 

Author: Bruce Hodgins

Strategic Advisor

 

 

 

 

Approved By: Helen Oram

Director Environment and Sustainability

 


Attachment 1

Appendix 1 - WWL Annual Report 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Attachment 2

Appendix 2 - Draft WWL Audit opinion 2020

 


 


 


 


 


 


                                                                                     257                                               21 December 2020

Extraordinary Meeting of Council

17 December 2020

 

 

 

File: (20/1760)

 

 

 

 

Report no: HCC2020/6/332

 

Directors on Council Controlled Organisations

 

Purpose of Report

1.    The purpose of the report is to update Council on:

a.  The planned retirement of the Chair of Urban Plus Ltd and Seaview Marina Ltd; and

b.  The proposed approach to appoint new directors to Urban Plus Ltd and Seaview Marina Ltd.

Recommendations

That Council:

(i)    notes Mr Brian Walshe has served as Chairperson of Urban Plus Ltd and Seaview Marina Ltd since his appointment as a director in April 2012;

(ii)   notes Mr Walshe has indicated he intends to step down from the board, and as the Chair of Urban Plus Ltd and Seaview Marina Ltd in 2021, and that a new chairperson will have to be appointed;

(iii)  notes a Selection Panel consisting of the Mayor, Deputy Mayor, Chief Executive (or her nominee), and the Chair of Urban Plus Ltd and Seaview Marina Ltd, will be convened to consider the appointment of a new chairperson for both organisations;

 

(iv) notes the Selection Panel will also consider further director appointments to maintain effective governance across both organisations, and that officers propose Council appoint one director to Urban Plus Ltd and two directors to Seaview Marina Ltd;

 

(v)  notes the Selection Panel will bring recommendations regarding the appointments to Council at its meeting on 24 March 2021;

(vi) agrees to extend Mr Walshe’s current term on Urban Plus Ltd and Seaview Marina Ltd through until 30 June 2021 to ensure a smooth transition and handover to a new chairperson and directors.

 

 

Background

2.    Hutt City Council is a shareholder in a number of Council Controlled Organisations – including Urban Plus Ltd and Seaview Marina Ltd where Council is the sole shareholder.  Urban Plus manages rental housing and develops land, while Seaview Marina is responsible for operating and developing the marina’s facilities and services.  

3.    Council appointed Mr Brian Walshe as a director of Urban Plus Ltd and Seaview Marina Ltd in April 2012.  He has served as the Chair of both organisations continuously from this date.  

4.    Mr Walshe has indicated that he would like to retire from the board of both organisations early in 2021.  This was reflected in his most recent re-appointment where he was reappointed for a shorter term from 1 April 2020 to 31 March 2021. 

5.    In expressing his desire to retire from the board in March, Mr Walshe emphasised the importance of renewal at the board level – while also ensuring there is sufficient overlap of appointments for continuity purposes. 

6.    Mr Walshe has made a substantial and valued contribution to these entities during his term on their boards– and this is reflected in the performance of both Urban Plus and Seaview Marina. 

7.    In order to eliminate or minimise the length of time that any vacancies would exist on the boards of Urban Plus Ltd and Seaview Marina Ltd, appointments will need to be made early in 2021.  It may also be prudent to make a short extension to Mr Walshe’s term (through until the end of the 2020/2021 financial year) to ensure he remains on the board during any period of transition. 

8.    The process for appointments to Council controlled organisations is set out in Council’s Appointment and Remuneration of Directors Policy.  The appointment process is largely overseen by a Selection Panel, comprising of an elected member, senior officer/s, and any relevant external people and HR expertise. 

9.    The Selection Panel has a range of responsibilities under Council’s policy – including overseeing any advertising/promotion of the positions, shortlisting and interviewing candidates, and recommending appointments to Council. 

Discussion

10.  Officers intend to convene two Selection Panels in the New Year for Urban Plus Ltd and Seaview Marina Ltd respectively.

 

11.  The members of the Selection Panels are proposed to be the Mayor, Deputy Mayor, the Chief Executive (or her nominee), and the Chair of both the Urban Plus and Seaview Marina boards.

12.  The Selection Panel for Urban Plus will consider the appointment of a new Chair, as well as a further director appointment to keep the number of directors at its current number (five).  It will make recommendations to Council at its meeting on 24 March 2021.

13.  The Selection Panel for Seaview Marina Ltd will consider the appointment of a new Chair, as well as further director appointments.  It will also make recommendations to Council at its meeting on 24 March 2021.

14.  In discussion with the current Chair of the Seaview Marina Ltd, officers also recommend increasing the number of directors to four.  This is consistent with the company’s constitution, which allows for up to six directors.  With the planned retirement of the current chair, as well as the planned departure of a long-serving Chief Executive, it will be important to establish and strengthen the governance of the organisation to maintain current levels of performance.

15.  Officers also recommend extending Mr Walshe’s term on both Urban Plus Ltd and Seaview Marina Ltd through until end of the current financial year (30 June 2021).  This will ensure Mr Walshe’s experience is retained through the period of new appointments, and to ensure a smooth transition and handover to a new chair. 

Climate Change Impact and Considerations

16.  Climate change considerations are not considered relevant to consideration of this matter, which addresses an administrative requirement.

Consultation

17.  Consultation on this matter is not required.

Legal Considerations

18.  The Local Government Act 2002 (LGA) requires local authorities to adopt a policy that sets out an objective and transparent process for the identification and consideration of the skills, knowledge and experience required of directors of a council organisation, the appointment and remuneration of those directors.

19.  Council’s policy on the appointment of directors provides such a process and involves the appointment of a Selection Panel to undertake the selection process.

20.  The LGA requires that local authorities appoint a person to be a director of a council organisation only if the person has, in the opinion of the local authority, the skills, knowledge or experience to guide the organisation, given the nature and scope of its activities, and contribute to the achievement of the objectives of the organisation.

21.  When identifying the skills, knowledge and experience required of directors, the local authority must consider whether knowledge of tikanga Maori may be relevant to the governance of the council organisation.

22.  The LGA also specifies that the role of a director is to assist the organisation to meet its objectives and any other requirements in its statement of intent.

Financial Considerations

23.  Urban Plus Ltd directors’ fees are currently set at $16,095.00 per annum.  Seaview Marina Ltd directors’ fees are currently set at $13,412.00 per annum.

Appendices

There are no appendices for this report.   

 

 

 

 

 

Author: Jarred Griffiths

Head of the Mayor's Office

 

 

 

Author: Caryn Ellis

Head of Chief Executive's Office

 

 

 

 

 

 

Reviewed By: Bradley Cato

Chief Legal Officer

 

 

 

Approved By: Jo Miller

Chief Executive