KOMITI ITI AHUMONI I TŪRARU

Audit and Risk Subcommittee

1 July 2021

Order Paper for the meeting to be held in the

Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt,

on:

Thursday 8 July 2021 commencing at 2.00pm

Membership

Ms Suzanne Tindal (Independent Chair)
Mayor C Barry (Deputy Chair)	Cr J Briggs
Cr S Edwards	Cr A Mitchell
Cr S Rasheed	Cr N Shaw

For the dates and times of Council Meetings please visit www.huttcity.govt.nz

Have your say

You can speak under public comment to items on the agenda to the Mayor and Councillors at this meeting. Please let us know by noon the working day before the meeting. You can do this by emailing DemocraticServicesTeam@huttcity.govt.nz or calling the Democratic Services Team on 04 570 6666 |0800 HUTT CITY

OVERVIEW:

This Subcommittee has a monitoring and advisory role in reviewing the effectiveness of the manner in which Council discharges its responsibilities in respect to governance, risk management and internal control.

The Committee is primarily aligned with the Office of the Chief Executive.

Its areas of focus are:

§ Oversight of risk management and assurance across the Council Group with respect to risk that is significant

§ Internal and external audit and assurance

§ Health, safety and wellbeing

§ Business continuity and resilience

§ Integrity and investigations

§ Monitoring of compliance with laws and regulations

§ Significant projects, programmes of work and procurement, focussing on the appropriate management of risk

§ The LTP, Annual Report and other external financial reports required by statute.

PURPOSE:

To carry out a monitoring and advisory role and provide objective advice and recommendations around the effectiveness of the manner in which Council discharges its responsibilities in respect to governance frameworks, risk management, internal control systems and the Council Group’s financial management practices.

DELEGATIONS FOR THE SUBCOMMITTEE’S AREAS OF FOCUS:

§ The Subcommittee has no decision-making powers other than those in these Terms of Reference.

§ The Subcommittee may request expert advice through the Chief Executive where necessary.

§ The Subcommittee may make recommendations to the Council and/or Chief Executive.

Risk Management:

§ Review, approve and monitor the implementation of the risk management framework and strategy, including significant risks to the Council Group.

§ Review the effectiveness of risk management and internal control systems including all material financial, operational, compliance and other material controls. This includes legislative compliance (including health and safety), significant projects and programmes of work, and significant procurement.

§ Review risk management reports identifying new and/or emerging risks.

Assurance:

§ Review and approve, and monitor the implementation of, the assurance strategy and detailed internal audit coverage and annual work plans.

§ Review the coordination between the risk and assurance functions, including the integration of the Council’s risk profile with the internal audit programme. This includes assurance over all material financial, operational, compliance and other material controls. This includes legislative compliance (including health and safety), significant projects and programmes of work, and significant procurement.

§ Review the reports of the assurance functions dealing with findings, conclusions and recommendations (including assurance over risks pertaining to Council Controlled Organisations and Council Controlled Trading Organisations that are significant to the Council Group).

§ Review and monitor management’s responsiveness to the findings and recommendations, inquiring into the reasons that any recommendation is not acted upon.

Fraud and Integrity:

§ Review, approve and monitor the implementation of the assurance strategy, including the fraud and integrity aspects.

§ Review the arrangements in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters, and ensure that there is proportionate and independent investigation of such matters and appropriate follow-up action.

§ Review the procedures in relation to the prevention, detection, reporting and investigation of bribery and fraud.

§ Review and monitor policy and process to manage conflicts of interest amongst elected and appointed members, management, staff, consultants and contractors.

§ Review internal and external reports related to possible improprieties, ethics, bribery and fraud related incidents.

Statutory Reporting:

§ Review and monitor the integrity of the Long Term Plan and Annual Report including statutory financial statements and any other formal announcements relating to the Council’s financial performance, focussing particularly on the areas listed below.

§ Compliance with, and the appropriate application of, relevant accounting policies, practises and accounting standards.

§ Compliance with applicable legal requirements relevant to statutory reporting.

§ The consistency of application of accounting pollicies, across reporting periods, and the Council Group.

§ Changes to accounting policies and practices that may affect the way that accounts are presented.

§ Any decisions involving significant judgement, estimation or uncertainty.

§ The extent to which financial statements are affected by any unusual transactions and the way they are disclosed.

§ The disclosures of contingent liabilities and contingent assets.

§ The clarity of disclosures generally.

§ The basis for the adoption of the going concern assumption.

§ Significant adjustments resulting from the audit.

External Audit:

§ Discuss with the external auditor, before the audit commences, the nature, scope and fees of the external audit, areas of audit focus, and error and materiality levels.

§ Review, with the external auditors, representations required by elected members and senior management, including representations as to the fraud and integrity control environment.

§ Review the external auditor’s management letter and management responses, and inquire into reasons for any recommendations not acted upon.

§ Where required, the Chair may ask a senior representative of the Office of the Auditor General to attend meetings of the Subcommittee to discuss the office’s plans, findings and other matters of mutual interest.

Interaction with Council Controlled Organisations and Council Controlled Trading Organisations:

§ Other committees dealing with CCO and CCTO matters may refer matters to the Audit & Risk Subcommittee for review and advice.

§ This Subcommittee will inquire to ensure adequate processes at a governance level exist to identify and manage risks within a CCO. Where an identified risk may impact on Council or the Council Group, the Subcommittee will also ensure that all affected entities are aware of and are appropriately managing the risk.

Matrix of Experience, Skills and Personal Qualities

Experience, Skills and Personal Qualities	Member A	Member B	Member C	Member D	Independent Chairperson
The recommended combination of experience is:
· financial reporting
· broad governance experience
· familiarity with risk management disciplines
· understanding of internal control and assurance frameworks
· good understanding of the roles of internal and external audit
· local government expertise
For an “advisory-oriented” audit committee, particular emphasis should be placed on:
· Strategy
· Performance management
· Risk management disciplines
In determining the composition of the audit committee, the combined experience, skills, and personal qualities of audit committee members is critical. Members should bring:
· the ability to act independently and objectively
· the ability to ask relevant and pertinent questions, and evaluate the answers
· the ability to work constructively with management to achieve improvements
· an appreciation of the public entity’s culture and values, and a determination to uphold these
· a proactive approach to advising the governing body and chief executive of matters that require further attention
· business acumen
· appropriate diligence, time, effort, and commitment
· the ability to explain technical matters in their field to other members of the audit committee

10

HUTT CITY COUNCIL

Komiti Iti Ahumoni I Tūraru |Audit and Risk Subcommittee

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

 Thursday 8 July 2021 commencing at 2.00pm.

ORDER PAPER

Public Business

1. APOLOGIES

Cr Edwards.

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

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

4.       Kerbside Rubbish and Recycling Services Implementation Update (21/885)

Report No. ARSC2021/3/144 by the Strategic Advisor                                     11

Chair’s Recommendation:

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

5.       RiverLink Update (21/944)

Report No. ARSC2021/3/145 by the Project Manager Riverlink                      16

Chair’s Recommendation:

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

6.       Eastern Bays Shared Path Project Update (21/927)

Report No. ARSC2021/3/146 by the Senior Project Engineer                           26

Chair’s Recommendation:

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

7.       External Audit Update - Hutt City Council (21/879)

Report No. ARSC2021/3/160 by the Financial Accounting Manager              33

Chair’s Recommendation:

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

8.       Sensitive expenditure disclosures (21/909)

Report No. ARSC2021/3/83 by the Financial Accounting Manager                58

Chair’s Recommendation:

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

9.       Insurance renewal update (21/937)

Report No. ARSC2021/3/147 by the Financial Accounting Manager              63

Chair’s Recommendation:

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

10.     Information Items

a)    Naenae Projects Update (21/943)

Memorandum dated 16 June 2021 by the Project Manager (Naenae)          68

Chair’s Recommendation:

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

b)    Strategic Change Programme Update (21/913)

Memorandum dated 28 June 2021 by the Strategic Programmes Manager  73

Chair’s Recommendation:

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

c)    Managing COVID-19 Risks (21/800)

            Memorandum dated 21 May 2021 by the Risk and Assurance Manager     79

Chair’s Recommendation:

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

d)    Audit and Risk Work Programme (21/723)

Report No. ARSC2021/3/84 by the Committee Advisor                              85

Chair’s Recommendation:

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

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.

12.     EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

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

13. Further Information on Agreement to Lease Events Centre and Develop a Hotel

14. Cyber Security

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

(A)	(B)	(C)
General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.
Further Information on Agreement to Lease Events Centre and Develop a Hotel	The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities (s7(2)(h)) and negotiations (including commercial and industrial negotiations) (s7(2)(i)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.
Cyber Security	The withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.s7(2)(j)	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

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

Toi Lealofi

DEMOCRACY ADVISOR

11                                                             08 July 2021

Audit and Risk Subcommittee

08 June 2021

File: (21/885)

Report no: ARSC2021/3/144

Kerbside Rubbish and Recycling Services Implementation Update

Recommendation

That the Subcommittee notes and receives the report.

Progress Report

1. This report provides an update, as at 28 June 2021 on the project to implement the new kerbside rubbish and recycling services with particular emphasis on risk management.

· All bins have been received, apart from the final shipment from Australia.  The shipping company unilaterally decided to bump the Rotaform booking to a later sailing; now expected to arrive 4 July 2021 in Wellington. This follows previous cancellations and shipping delays.  About 3,000 properties will be affected.

· As at 27 June 2021, 92% of bins had been delivered.  Rotaform expect to have all bin deliveries (bar the 3000 short) by 30 June 2021.

· Contingency planning has been undertaken so that properties without bins for the start of the service will receive free bags for the first two weeks, until bins are delivered.  These were delivered by a team of Council staff on Thursday 24 and Friday 25 June 2021.

· A calendar delivery problem was identified and contingency plan developed to mitigate. New calendars were produced and delivered to affected residents.

· Assisted service assessments were completed and letters have been sent to property owners.

· Five EV (Electric Vehicle) trucks have been delivered to Waste Management Limited’s (WML) premises in Seaview and are being trialed.

· WML continues to recruit and train staff for the new contracts.

· The communications plan has been updated to take into account recent issues that have arisen.

· The “Feet on the Street” campaign was carried out over May and June with generally good feedback and response from residents who, in the main, appear to be looking forward to the new services.  This involved staff visiting high traffic areas around the City to hand out fridge magnets on recycling, promote the new services and answer questions.

· Saber has completed the prototype for managing BAU, which has been tested and expected to be operational early July.  

· An online tool developed for residents to access information on bin collections on phones and other devices.

Risks and issues

2. The following table outlines the risks and issues, which are reported regularly as part of a wider project update to the Corporate Leadership Team.  The main risk to the project has been, from the beginning, that of having sufficient resourcing to have the service up and running within a tight timeframe.

3. A copy of the Risk Register is attached as Appendix 1 to the report.

Risk	High, Med, Low	Risk Mitigation
COVID-19 resurgance (or other pandemic) resulting in lockdown, restricts ability to roll-out bins in time for start of service on 1 July.	Med	Obtain clearance from MBIE to classify roll out as an essential service to enable roll-out to commence or continue. Arrangement in place with rubbish bag supplier to provide bags at short notice for distribution throughout the City should they be required.
Bins or vehicles not available on time to commence the service on 1 July.	Med	Contingency plans in place with WML to secure vehicles and bins from its existing operations in NZ and with bag supplier, should bins not be available.
BAU software and processes in place on time to commence the service on 1 July.	Low	Saber will have system in place but won’t be fully operational until mid-July.  Changes captured manually up until then.

Issue	High, Med, Low	Issue Mitigation
Some information booklets delivered without determining if they had the correct calendar for that area.	High	New calendars printed and delivered to affected households with explanation.  Communication plan adapted to include.
Increased opposition to the new services generated through social media and other means.	Med	Coordinated information campaign is in place to ensure reasons for change are clearly outlined and appropriately socialised.
Adequate resourcing required to ensure roll-out occurs on time.	Med	Additional people resources, either new or re-prioritised from existing resources, assigned to the project. Budget variation approved.
Organisational change programme impacts project through loss of key staff or staff engagement generally.	Med	Managed change programme in place. Key staff separately contracted.
Final shipment of bins cancelled and rebooked for delivery to Wellington on 4 July 2021.	High	Bags delivered to affected residents with explanation for a two week hiatus. Communication plan adapted to include.

Climate Change Impact and Considerations

4. Council’s decision to opt for a rates funded rubbish and recycling bin service took into account climate change considerations, such as the use of electric vehicles and reduction in the number of trucks operating the same routes.

Appendices

No.	Title	Page
1	Appendix1: Risk Register	15

Author: Bruce Hodgins

Strategic Advisor

Approved By: Helen Oram

Director Environment  and Sustainability

Attachment 1

Appendix1: Risk Register

22                                                             08 July 2021

Audit and Risk Subcommittee

16 June 2021

File: (21/944)

Report no: ARSC2021/3/145

RiverLink Update

Purpose of Report

1.    The purpose of this report is to update the Subcommittee on the RiverLink Project (the Project) since the last report dated 9 April 2021.

Recommendations

That the Subcommittee:

(1)   receives and notes the information contained in the report;

(2)   notes the Project Risk Register attached as Appendix 1 to the report; and

(3)   notes the increased Long Term Plan budgets approved by Council. This process has seen an increase in both expenditure of $138.4M and revenue of $43.5M. This takes the total net budget (total budget minus revenue) to $94.9M which is unchanged from what was consulted on in the draft LTP.

Project Update

2.    In April 2021, the consultant team was granted an extension of time for consent lodgement to 30 June 2021. Delays with the consultant team’s work, client-side requests and legal advice to make the submission as robust as possible have resulted in an extension to the programme with a working date for lodgement of 2 August.

3.    In considering the extended resource consent submission deadline the RiverLink Project Partner Board agreed that producing a high quality resource consent application was priority one as it would mitigate risks around a protracted approval process.

4.    A delay to the date of receipt of consents is more important than the lodgement date due to the potential impact on funding and approvals processes within the partner organisations. Consents are scheduled to be received in April 2022 whilst the procurement processes lead to a milestone of August 2022 to identify the preferred consortia to join the Alliance. Therefore, at present, the critical path through the programme is procurement related activities rather than the consenting timescales.

5.    Mr Tom Newson has been appointed as the new Project Director in place of Mr Martin White.

6.    Council have voted in favour of increasing the Long Term Plan budget for RiverLink (see Financial Considerations).

7.    Waka Kotahi has secured funding for their elements of RiverLink through the central government New Zealand Upgrade Programme (NZUP), which places a strong emphasis on delivery.

8.    An independent Quantity Surveyor has produced cost estimates for the whole project and has been working with the project partners to refine these. These cost estimates are currently going through a peer review process.

9.    The project partners have agreed in principle to a ‘hybrid alliance’ delivery model for RiverLink. The commercial framework and memorandum of understanding are currently under development. A workshop with Hutt City Council and GWRC Councillors on the proposed hybrid alliance delivery model took place in March 2021.

Project Governance

10.  The Project Governance structure is shown on the proceeding page.

11. The Project is overseen by the RiverLink Project Partner Board which includes two representatives each from the three partner entities (Greater Wellington Regional Council, Hutt City Council and Waka Kōtahi New Zealand Transport Agency).

12. The Chief Executive Relationships Board provides a further layer of oversight for the project and provides a forum for strategic and relationship matters and issues within each of the respective organisation to be identified and addressed.

13. The Project will also be reporting into the recently created internal Hutt City Council Major Projects Board.

14. A paper will be prepared for approval by Council which sets out the appropriate project governance process, delegations and reporting lines as the Project transitions into the delivery phase.

Risk

15. The Project Risk Register is attached as Appendix 1 to the report. A risk workshop for the whole project was held in May 2021 and the risk register from this is in the process of being finalised. The key HCC risks are as follows:

a.   Failure to meet NZUP milestones compromising Waka Kotahi funding. The resulting effect of this could make deliverability of HCC components of the project impossible.

b.   Managing the relationship among partner organisations

c.   Hutt City Council does not achieve the objectives and deliverables expected from the Project - against stakeholder expectations, needs and outcomes for the city.

d.   Managing the uncertainties around the allocation and availability of sufficient budget to deliver project

Project Milestones

Milestone	Date
Submission of resource consent application	31 May 21 – Delayed to 2 August 2021
Appointment of Principal’s Technical Advisor to develop reference design	August 2021
Release of project requirements to consortia to develop design and construction proposals	December 2021
Identify preferred Design & Construction consortia to join the Alliance	August 2022
Early Works start on site	Late 2022
Main construction works start on site	Early 2023
Construction completion	2026

Financial Considerations

16.   The draft project objectives for Council are that Te Awa Kairangi between Ewen Bridge and Kennedy Good Bridge becomes the centre piece of the city by:

·    Turning our city around to face and embrace Te Awa Kairangi;

·    Pedestrian cycle bridge linking new Melling station to Lower Hutt City Centre;

·    Revitalised open space alongside the river to provide various features for rest and play; and

·    Engaging with the private sector to redevelop key sites along the river corridor for residential and leisure use.

17.   What this means more specifically for  Council is an investment in key projects which include:

·    Intersections within the Hutt CBD (eligible for Waka Kotahi subsidy);

·    Streetscape improvements;

·    A pedestrian cycle bridge (eligible for Waka Kotahi subsidy);

·    A riverbank park; 

·    A riverbank carpark; and

·    Strategic property purchases to enable future development.

18.   As a part of the Draft Long Term Plan 2021-31 Council consulted on the RiverLink project. Feedback was sought on two options:

·    Option 1 - Increase the total RiverLink budget to $121.5M (preferred option); or

·    Option 2 - Leave the RiverLink budget as it currently stands; $57M (alternative option).

19.   The gross budget for RiverLink as consulted on in the LTP was $121.5M (excluding operational expenditure) with revenue of $27.2M. Taking into account operational expenditure, this takes the total net budget (total budget minus revenue) to $94.9M.  

20.   Before and during the consultation period of the Draft LTP the RiverLink project team have been going through a process of refining the scope of work based on community feedback for the wider RiverLink project. An independent Quantity Surveyor then produced cost estimates and worked with the project partners to define cost allocations to each organisation. Following receipt of the cost estimates Council has been able to further refine the scope of the RiverLink project and adjust the budgets of each of the key components needed to deliver the Council project objectives.

21.   This process has seen an increase in both expenditure of $138.4M and revenue of $43.5M. This takes the total net budget (total budget minus revenue) to $94.9M which is unchanged from what was consulted on in the draft LTP. 

22.   In summary, the increase in expenditure is largely due to an increase in funding allocation for the transport related scope items identified in paragraph 16, which attract 51% subsidy from Waka Kotahi. The effect of this is that the overall budget and revenue are both increased, which offsets the total expenditure. 

23.   The timing of Council’s expenditure has also been revised to align with the overall project programme of works, with completion scheduled for 2026.

24.   Table 1 below shows the budget in the final LTP 2021-2031 adopted by council.

25.   In line with the Council’s Revenue and Financing Policy, Council’s share of the capital expenditure will be funded from borrowing and rates.

Table 1: 2021/31 Final LTP Budget for RiverLink (NET)

Financial year $M	2021/22	2022/23	2023/24	2024 /25	2025-2031	Total
LTP 2021-2031	2.70	28.98	31.41	41.38	(9.55)	94.92

Partners and Stakeholders

26.   A high level external stakeholders and partners list has been developed:

·    Partners

o  Greater Wellington Regional Council

o  Hutt City Council

o  Waka Kōtahi

·    Iwi Partners

o  Taranaki Whānui

o  Ngāti Toa

·    Stakeholders

o  Waka Kōtahi (co-funding of specific transport initiatives)

o  Residents and business alongside the river edge

o  Hutt City rate payers and residents

o  General public regional/national

o  Community boards

o  Local Schools

o  Media

Climate Change Impact and Considerations

27.   The design of the RiverLink project takes into account climate change projections and is partly premised on increasing Lower Hutt City’s resilience to effects of climate change. 

28.   Climate change has been at the centre of all planning and design of RiverLink as we work to achieve carbon zero by 2050, and make our operations more sustainable and climate friendly. For example, the project team are looking at using the Infrastructure Sustainability Rating tool for RiverLink to ensure the infrastructure meets our sustainability objectives.

29.   All three partners are passionate about providing integrated sustainable transport solutions and RiverLink will deliver a step change in this regard. Access from the city to the replacement Melling Station across the new pedestrian cycle bridge will be a major improvement, as well as our proposed high quality cycleways linking with other upcoming projects like the Te Ara Tupua cycleway, the Eastern Bays Shared Path and routes to Hutt CBD.

30.   The flood defence elements consider the effects of climate change with rising sea levels and changes in rainfall patterns both an integral part of the design.

Consultation

31.   Extensive community engagement has been undertaken since 2016 on the Project with open days, workshops, online and printed media. In November 2020 and February 2021 the project office undertook open days in order to inform the resource consenting process. Over 400 people participated in the open days.

32.   The request for a further increase in the RiverLink Project budget (noted at paragraph 20 above) was included in the consultation document for the Long Term Plan which closed on 6 May 2021.

Legal Considerations

33.   The only legal agreement Council has entered into is the RiverLink Project Partner Agreement which sets out each partner’s responsibilities and requirements for the partnership.

Appendices

No.	Title	Page
1⇩	Appendix 1: Riverlink Risk Register - February 2021	23

Author: Tom Biggin

Project Manager Riverlink

Approved By: Kara Puketapu-Dentice

Director Economy and Development

Attachment 1

Appendix 1: Riverlink Risk Register - February 2021

30                                                             08 July 2021

Audit and Risk Subcommittee

14 June 2021

File: (21/927)

Report no: ARSC2021/3/146

Eastern Bays Shared Path Project Update

Purpose of Report

1.   To update the Subcommittee on the Eastern Bays Shared Path.

Recommendations

That the Subcommittee:

(1)   receives and notes the information contained in the report;

(2)   notes the Procurement Programme attached as Appendix 2 to the report;

(3)   notes the updated Project Risk Register (attached as Appendix 1 to the report); and

(4)   notes that $29M of funding has been included in Council’s Long Term Plan 2021-2031.

For the reason that the report is consistent with Council policies and processes around project management.

Background

2.   The completion of an Eastern Bays Shared Path (the Project) has been an aspiration for the Council and its residents for many years. The shared path has featured in past strategies and is a key project in providing a safe and integrated network for commuting and recreational purposes.

3.   The Project forms a key part of the Te Aranui o Poneke (the Great Harbour Way), a walking and cycling route around Te Whanganui-a-Tara, the harbour of Wellington.

4.   The Eastern Bays Shared Path project was successful in receiving co-funding of up to $15M, which will be managed through Crown Infrastructure Projects (CIP).

5.   The Project also remains eligible for the New Zealand Transport Agency Waka Kotahi (Waka Kotahi) subsidy on the balance of the project at a Funding Assistance Rate (FAR) of 51%, subject to satisfying the gateways required.

6.   Funding for the Project was included in the draft LTP 2021-2031, which went to public consultation in April 2021. The Council confirmed funding for the project in the decisions to finalise the LTP 2021-2031.

7.   The main benefit sought by CIP is job creation, with the Project expected to create the equivalent of 100 full time jobs. A series of project milestones have been agreed and the project will receive co-funding instalments at the completion of each milestone.

8.   As a requirement of the Funding Agreement, officers have advised CIP that Council have approved co-funding of the Project which was included in the draft Long Term Plan 2021-2031. (Minute No. LTPAP 20503)

9.   In October 2020 the Project Plan and Terms of Reference for the Eastern Bays Shared Path project were created.

10. The project will be overseen by a Project Board which will make decisions within the defined limits of the project as delegated by Council. The Project Board will meet monthly from November 2020. The Chief Financial Officer and Chief Legal Officer will attend Project Board meetings to provide advice.

Discussion

Project Update

11. The Hearing for the Project was held with GWRC on the 15 – 17 December 2020 with a decision likely in mid to late February 2021.

12. Resource Consent was granted by the Commissioners on 5 March 2021.

13. An appeal to the granting of the Resource Consent was received on 26 March 2021 from a local resident with a number of interested parties (Section 274’s) joining both for and against the appeal.

14. The grounds of the appeal were that the project would have significant adverse effects on health and safety due to 70kph speed limit on Marine Drive and the bus stop reconfiguration was in an unsafe manner.

15. Due to the tight project timeframes and potential CIP funding implications an affidavit was filed with the Environment Court on 21 April 2021 requesting priority mediation and hearing.

16. Mediation was held at the Environment Court on the 25 May 2021 with all interested parties and consensus was reached on an agreement through some minor amendments to the consent conditions.

17. The consent order was received from the Environment Court on 10 June 2021.

18. A Hui was held with the Mana Whenua Steering Group (MWSG) in early June 2021 to discuss the project and an ongoing partnership that enables collaboration opportunities around the Mana Whenua narrative and how these can be woven into the existing fabric of the project and the Kaitiaki Strategy Design Principles that were agreed for the Te Ara Tupua project.

19. CIP have confirmed they are satisfied with the content of the proposed early works package which therefore satisfies the site works commencement milestone in the agreement.

20. Work is underway on a high level Council Communications Strategy for the project.

21. Procurement for the first two bays is programmed for early July 2021.

22. The updated project programme is attached as Appendix 2 to the report.

23. A MoU has been signed with Waka Kotahi to investigate and discuss if the Eastern Bays Shared path project would benefit from partnering with the Te Ara Tupua Alliance.

24. An experienced industry multi-disciplinary Project Manager is yet to be engaged to assist in the management side of the project in conjunction with the Hutt City Council Project Manager and the Project Team.

Risk

25. The updated Project Risk Register is attached as Appendix 1 to the report. The key risks remains as follow:

·      Managing the uncertainties around project cost (including consent mitigation costs and the uncertain economic environment due to Covid-19).

·      Managing the key funding milestones of CIP and obtaining the funding subsidy of Waka Kotahi.

·      Appointment of key Hutt City Council client side staff including the multi-disciplinary Project Manager and the replacement Senior Project Engineer to manage the entire project for Hutt City Council.

Financial considerations

26. Council has budgeted $30M for the Project (including contingency) for both consenting and the construction phases. Central Government is expected to co-fund $22.4M (being $14.5M from the Covid-19 Response and Recovery Fund and $7.9M from Waka Kotahi) and the balance of $7.6M to be funded by Council. The CIP funding assumption is conservative as we expect to recover some of the expenditure incurred during 2020/21.

27. It is our understanding that a considerable portion of Waka Kotahi’s budget for the co-funding of cycling and micro-mobility projects has been exhausted (or is close to it) however we have not received any formal correspondence from Waka Kotahi to confirm this. Updates will be provided, when and if we receive further correspondence on funding.

28. Following the cost estimate peer review completed in October 2020 by an external and independent Quantity Surveying (QS) provider on the Prelim Design (Rev J), a re-estimate was undertaken in November 2020.

29. The updated interim detailed design project budget for construction in November 2020 was $29.43M including all contingencies of $6.13M.

30. With the detailed design of the first two bays approaching 90% an Engineers estimate for construction is to be completed. This estimate will include the latest design information, updated quantities and the content of the previous QS review.

31. The Year to Date expenditure to June 2021 is $1.2M of an expected Year End forecast expenditure of $1.6M, which is 600k above the adjusted budget for 2020/21. This is primarily due to the cost of consenting, including the appeal and work associated with the consent conditions.

32. The Financial tables 1 and 2 that follow show the budget in the LTP 2021-2031. The public consultation on the LTP took place from 6 April to 6 May 2021. The Council has confirmed the inclusion of the budgets for the project in the final LTP 2021-2031.

33. In line with the Council’s Revenue and Financing policy, the Council’s share of the capital expenditure will be funded from borrowing.  The phasing of the proposed budgets for the LTP has been aligned with the signed crown funding agreement.

Table 1: Revenue/Funding sources  included in the LTP

Financial year $M	2020/21	2021/22	2022/23	2023/24	2024 /25	2025-2031	Total
LTP 2021-2031	0.51	3.78	2.64	4.53	3.78	7.17	22.41
Further details: Waka Kotahi subsidy funding	0.51	1.28	0.89	1.53	1.28	2.42	7.91
Covid response and recovery co-funding*		2.50	1.75	3.00	2.50	4.75	14.50

*Covid Response and Recovery co-funding pays for up to $15M share of the Capital outlay of $30M

Table 2: Capital budgets – This is aligned with the signed crown funding agreement

Financial year $M	2020/21	2021/22	2022/23	2023/24	2024/25	2025-2031	Total
LTP 2021-2031	1.00	5.00	3.50	6.00	5.00	9.50	30.00

Climate Change Impact and Considerations

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

Communications and Consultation

35. Extensive community engagement has been undertaken in 2016 and late 2017 before the Resource Consent was submitted to GWRC in early 2019. Updates to the community following submission have been provided to the community via the Eastbourne Community Board and the current Chair has been involved within the Project Team since 2016.

36. Further community engagement is now ongoing to complete the remaining Detailed Design and the Management Plans as noted in the finalised conditions of consent.

Legal and Regulatory          

37. Currently only the legal agreement entered into is with CIP, which has specific requirements for Council to meet to receive government funding.

Appendices

No.	Title	Page
1⇩	Appendix 1: Eastern Bays Shared Path - Risk Register Update - June 2021	31
2⇩	Appendix 2: Eastern Bays Shared Path - Procurement Programme Update June 2021	32

Author: Simon Cager

Senior Project Engineer

Author: John Gloag

Head of Transport

Approved By: Kara Puketapu-Dentice

Director Economy and Development

Attachment 1

Appendix 1: Eastern Bays Shared Path - Risk Register Update - June 2021

Attachment 2

Appendix 2: Eastern Bays Shared Path - Procurement Programme Update June 2021

34                                                             08 July 2021

Audit and Risk Subcommittee

28 June 2021

File: (21/879)

Report no: ARSC2021/3/160

External Audit Update - Hutt City Council

Purpose of Report

1.    To provide an update on the plans for the preparation and external audit of the Group Annual Report for the year ended 30 June 2021.

Recommendation

That the Subcommittee notes the Audit New Zealand audit plan for the Group Annual Report for the year ended 30 June 2021, attached as Appendix 1 to the report.

Background - Group Annual Report 2019/20

2.    The Group Annual Report 2019/20 was finalised and adopted by Council on 21 December 2020 and the Audit NZ audit opinion issued. This was ahead of the statutory deadline of 31 December 2020.

3.    There were audit issues and delays in finalising the Wellington Water Ltd audit which impacted all shareholder Council’s in the Wellington region. This was largely in relation to Wellington Water performance reporting information.

4.    Whilst an unmodified audit opinion was issued on the Hutt City Council (HCC) financial statements, there was a modified opinion issued on certain performance information relating to the Department of Internal Affairs mandatory performance measures for Council’s water activities. This was due to significant issues identified with the Wellington Water underlying systems and information.

5.    An improvement plan has been agreed with Wellington Water to address these matters, with implementation underway in 2020/21. It is expected the audit issues will not however be fully resolved before 30 June 2021. As a result the Hutt City Council audit opinion is expected to be impacted in a similar manner. Officers are working proactively with Wellington Water and Audit NZ to plan ahead for the next audit and manage the risks related to the performance reporting issues. It is important to note that this impacts all Wellington Water shareholder Councils.

6.    The final Audit NZ management report for the Group Annual Report 2019/20 was received by HCC on 14 April 2021 and was reported to the Audit and Risk Subcommittee 23 April 2021 (refer report ARSC2021/2/83). 

Group Annual Report 2020/21

7.    Planning is well progressed for the preparation and external audit of the Group Annual Report 2020/21, refer Appendix 1. The interim audit started in May 2021 and the final audit will start on 30 August 2021. The final audited Group Annual Report will be presented to Council on 28 October 2021 for adoption, when the audit opinion is planned to be issued. The statutory deadline for the completion of the Group Annual Report is the 31 October 2021.

8.    There is a dependency on Wellington Water to complete their Annual Report ahead of the Council’s Group Annual Report being finalised. As described in paragraph 5 and 6, the audit opinion for the financial year ended 30 June 2021 will be impacted by the performance measure reporting issues at Wellington Water. This will impact all the Wellington Water shareholding Councils.

9.    The interim unaudited year end performance results for 2020/21 are scheduled to be presented to the Policy, Finance and Performance (PFS) on 14 September 2021. The draft Annual Report will be presented to PFS on 5 October 2021.    

Climate Change Impact and Considerations

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

Legal Considerations

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

Financial Considerations

12. The financial considerations are detailed in this report in the relevant areas.

Appendices

No.	Title	Page
1⇩	Appendix 1 - Audit Plan for the Group Annual report  2020/21	35

Author: Darrin Newth

Financial Accounting Manager

Approved By: Jenny Livschitz

Group Chief Financial Officer

Attachment 1

Appendix 1 - Audit Plan for the Group Annual report  2020/21

59                                                             08 July 2021

Audit and Risk Subcommittee

17 June 2021

File: (21/909)

Report no: ARSC2021/3/83

Sensitive expenditure disclosures

1.    The purpose of this report to provide the Subcommittee with a listing of Sensitive Expenditure incurred by Elected Members, Chief Executive and Directors for the period 1 January 2021 to 31 March 2021.

Recommendations

That the Subcommittee:

(1)   notes and receives the report; and

(2)   notes the Sensitive Expenditure disclosure information attached as   Appendix 1 to the report. 

Background

2.    The first listing of Sensitive Expenditure incurred by Elected Members, Chief Executive and Directors was provided to the Subcommittee on 23 April 2021 (Report: ARSC2021/2/64) covering the period from 1 July to 31 December 2020.

3.    Information has been extracted from our financial system from relevant cost centres and expenditure codes where sensitive expenditure is highly likely to be coded to.

4.    The list of transactions for the quarter from 1 January 2021 to 31 March 2021 is attached as Appendix 1 to the report.

5.    This information will also be published on Council’s website. http://www.huttcity.govt.nz/Your-Council/sensitive-expenditure/

Appendices

No.	Title	Page
1⇩	Appendix 1: Summary of Sensitive Expenditure 1 January 2021 to March 2021	60

Author: Darrin Newth

Financial Accounting Manager

Approved By: Jenny Livschitz

Group Chief Financial Officer

Attachment 1

Appendix 1: Summary of Sensitive Expenditure 1 January 2021 to March 2021

67                                                             08 July 2021

Audit and Risk Subcommittee

15 June 2021

File: (21/937)

Report no: ARSC2021/3/147

Insurance renewal update

Purpose of Report

1.    To provide the Subcommittee with an update regarding Council’s 2020/21 insurance programme renewal and an overview of several work streams currently underway to best protect Council against continued insurance market tightening, both in terms of insurance cover capacity and cost.

Recommendations

That the Subcommittee:

(1)   notes that Council has successfully renewed its Property and Infrastructure insurance programme for policies commencing 1 May 2021 for a 12 month term;

(2)   notes the remaining policies, renewed on 1 November 2021, for a 12 month term;

(3)   notes the budget of $3.87M has been approved in the Long Term Plan for the 2021/22 year; and

(4)   notes officers will obtain insurance cover for Petone Wharf after completion of its restoration work.

Background

2.    Council together with Kapiti Coast District (KCDC), Porirua City (PCC) and Upper Hutt City Councils (UHCC), collectively known as the Outer Wellington Shared Services Insurance Group (OWSS), has been purchasing insurance for their respective assets on a combined basis since 2009.

3.    Greater Wellington Regional Council (GWRC) joined the OWSS in 2016 to insure it’s above ground assets only through the collective. For insurance purposes only, the OWSS Councils and GWRC are collectively known as the Wellington Councils Insurance Group (WCIG).

4.    Previous insurance update provided to the Subcommittee, (Report ARSC2020/2/64 on 12 March 2020) provided extensive background information regarding the nature of Council’s insurance programme since October 2017.

5.    Council’s insurance programme has two renewal dates of 1 May 2021 and 1 November 2021. The major policies were renewed on 1 May 2021, being the:

a.   Material Damage and Business Interruption (MDBI) for above ground assets; and

b.   Natural Catastrophe Damage to Infrastructure (NCDI) for underground assets.

6.    This report builds on previous insurance updates and seeks to provide the Subcommittee with detailed information on Council’s 2021/22 insurance renewal challenges and highlight several work streams currently underway to best position Council against continued insurance market tightening, particularly for the Wellington region, and increasing premiums.

Discussion

2021/22 Insurance Renewal

Insurance Renewal Challenges

7.    2020 proved to be one of the most challenging years in modern history with COVID-19 the most prolific global pandemic since Influenza in 1918, impacting most organisations to some extent and causing turmoil in the global insurance marketplace. In 2021 New Zealand, like the rest of the world continues to deal with the economic and social impacts of the pandemic. The substantive impact on the global economy has led to considerable human and fiscal impacts that will be felt for years to come.

8.    In 2020, global economic loss and insured loss derived from natural disasters increased from 2019 (although it was not a record-setting year). The most widespread and newsworthy events were recorded in the United States of America. Weather-related disasters accounted for nearly all insured natural disaster losses (99%). This was due to a relatively low number of significant earthquake events, and the fact that where the events did occur, they were located predominantly in regions with lower insurance take-up.

9.    The severely hardening market of the past 24-36 months on the back of years of core underwriting losses driving  insurers to remediate their books with actions such as the Lloyd’s Decile 10 review, now appears to be stabilising, but there are some areas that continue to prove challenging. Rates will remain at elevated levels; however, there are early signs that the pricing trajectory may be moderating in some areas. Policy terms are the focus, so that insurers avoid unexpected losses.

10.  With respect to property, areas that continue to be especially challenging include natural disaster cover in locations in higher risk earthquake regions, in particular, Wellington, and industries which utilise high risk materials such as expanded polystyrene sandwich (EPS). 

11.  Liability market challenges include directors’ and officers’ liability insurance driven by reduced capacity, reduced risk appetite and insurers’ perceived exposure to ‘event driven’ claims exposures such as cyber incidents and New Zealand having an evolving class action environment.

12.  Cyber incidents continue to dominate global and local media headlines, including earlier in the year the Microsoft Exchange hack. Increasing Cyber claims frequency and severity has resulted in Cyber insurance market conditions firming with notable acceleration during Q1 2021.

Summary of Council’s Insurance Programme

13.  As in previous years, Council’s two largest insurance policies relate to Material Damage and Business Interruption (MDBI), for above ground assets, and Natural Catastrophe Damage to Infrastructure (NCDI), for below ground assets. The latter insurance cover is based on 40% of the city’s Probable Maximum Loss (PML), with the remaining 60% at this stage still covered by central government (with conditions).

14.  Given the strong indications that insurance capacity for the Wellington area will continue to harden, Council’s 40% share of NCDI remains placed 100% offshore. However, MDBI is split between offshore underwriters (55%) and domestic New Zealand underwriters (45%).

15.  The following chart provides a comparison between renewal terms for the renewal periods between 2016/17 and 2020/21.  Percentage wise, the significant cost increases relate to MDBI and NCDI, being Council’s more significant insurances within its total insurance programme.  These cost increases will be discussed separately below.

Material Damage and Business Interruption (16% cost increase reflected in 2020/21 financial year)

16.  The significant increase is due to:

(a)   market driven premium increases;

(b)   12% increase in values insured; and;

(c)   A review of the premium allocation model between the WCIG Group which increased HCC’s share of the overall premium.

Natural Catastrophe Damage to Infrastructure (4% cost increase reflected in the 2020/21 financial year)

17.  The 2020 insurance renewal was particularly challenging with limited insurer appetite for Natural Catastrophe risk in the Wellington region, specifically for underground assets.  A number of insurers have moved to a new risk modelling tool which severely increased their assessment of the possible losses, and media stories around water infrastructure for Wellington City Council also caused nervousness for some underwriters. 

18.  Similar to Material Damage and Business Interruption, the significant increase is due to:

(a)   market driven premium increases;

(b)   a review of the premium allocation model between the WCIG Group which increased HCC’s share of the overall premium.

Work Streams Underway to Best Position Council

19.  For the three waters underground network assets, OWSS place an order for insurance cover up to 40% of the Probable Maximum Loss (PML) for the Wellington region. The remaining 60% will, at this stage, be met by Central Government. The PML for the OWSS was last determined in 2019 and was estimated to be $1,158M, with Council’s PML estimated to be up to $676M.  This is an increase on the 2015 assessment and OWSS may need to seek additional cover for the amended PML estimates.

20.  In light of increasing likelihood of reduced insurance capacity for the Wellington market, OWSS engaged Aon to complete a criticality and risk assessment of the three waters network, in partnership with Wellington Water Limited, for this Council, PCC and UHCC. The results of this analysis will enable OWSS to make informed decisions regards what assets Council might choose not to insure in the event that there was insufficient insurance capacity for the Wellington market, or as a means to reduce insurance premiums. Phase 1 of this study has been completed. Council need to determine if we will proceed with Phase 2.

21.  In September 2019 an analysis of the premium allocation for both above and below ground assets of OWSS and WGIC was completed by Aon.  The change in allocation were applied over two renewal periods, and as a result Councils percentage of the premium allocation increased by 6.8% for the below ground assets and 3.8% for the above ground assets.

22.  In an effort to limit or reduce premium increases officers enquired as to increasing the levels of deductible.  As a number of policies are part of the OWSS we were unable to amend without agreement from other members, which we did not seek.  For those policies where changes were able to be made, the cost in percentage or dollar terms was immaterial.  This was largely due to our good claims record, where insurers do not deem our non-natural disaster risk as a significant exposure so would not offer meaningful savings for increasing this deductible.

Significant asset classes not covered by any insurance policy

23.  Roading infrastructure assets are not covered under Council insurance policies.

24.  Wharves have been historically covered for demolition costs only. Subsequent to the refurbishment, Rona Bay and Days Bay Wharves are now covered under the material damage and business interruption policy. Officers will obtain insurance cover for Petone Wharf after completion of its restoration work.

Consultation

25.  There are no consultation matters arising from this report.

Legal Considerations

26.  There are no legal matters arising from this report.

Financial Considerations

27.  The total cost of insurance stated and approved in the LTP for 2021/22 year is expected to be $3.87M. This represents a projected 10% increase on the actual cost for 2020/21 year of $3.49M.

Appendices

There are no appendices for this report.    

Author: Darrin Newth

Financial Accounting Manager

Author: Glenn Phillips

Treasury Officer

Approved By: Jenny Livschitz

Group Chief Financial Officer

70

Our Reference          21/943

TO:                      Chair and Members

Audit and Risk Subcommittee

FROM:                Andrew Quinn

DATE:                16 June 2021

SUBJECT:           Naenae Projects Update

Recommendation

That the Subcommittee receives and notes the information.

Purpose of Memorandum

1.    To provide an update to the Subcommittee on the progress and management of the Naenae Project (pool and town centre development) since the last meeting on 23 April 2021.

Project Update

2.    Since the last report in April 2021, the procurement process for the Multi-Disciplinary Team has been completed and Architecture HDT is now confirmed as the preferred proponent. The team includes Powell Fenwick, Boffa Miskell, GHD and Visitor Solutions. All are experienced in the design of aquatic facilities.

3.    The design process has commenced, starting with validation of the design brief and a master plan for the Pool site, within the confines of the spatial plan for Naenae. 

4.    Preparation for the demolition of the existing pool building and community hall continues. Tenders will be sought from the market in June 2021, in parallel with the lodgement of consent. Demolition is scheduled for late August 2021.

5.    Since the last report we have had further engagement with Crown Infrastructure Partners (CIP). After their series of visits to projects around the country they have come back with questions around whether the timeframe for the project can be shortened to deliver on the outcomes they are seeking from the funding sooner. They have pointed to some examples of other aquatic projects (e.g. Gisborne Olympic Pool, Hawkes Bay Regional Aquatic Centre) that have been able to achieve this through accelerated procurement methods. We are looking at ways we can achieve this whilst ensuring that the design also delivers a low carbon footprint.  We are currently working with them to re-set the project’s early milestones.

6.    We have also met with Te Atiawa and we are working with them to consider how the cultural narrative can be woven into the Pool Building design and internal educational displays, and how other shared outcomes can be achieved through the Pool and Town Centre work.

Naenae Town Centre development

7.    Meantime progress is being made on the development of an active Town Centre. Conversion of the ground floor retail units at 11A Hillary Court for a pop-up community space is progressing and should be open to the public late-June 2021. This space will feature a ‘Whakatupu Ngaengae project space’, with displays and drop-in times for the public to find out about the project. Through a partnership with Council, Kokiri Marae will set up in the adjoining office offering health and well-being services to the community.

8.    Discussions are also progressing to secure a significant community space in Hillary Court, focussing on the former Post Office at 27 Hillary Court and the Theatre space at the rear of 11A Hillary Court. Together these properties could yield up to 1,300m2 for community space. This would return the space lost by the closure of the community hall as well as other shared community spaces.   

Financial Considerations

9.    The Council has finalised decisions on the Long Term Plan 2021-2031 and the funding of up to $68M for the Naenae pool has been included in the plan.

Risk

10.  The updated Risk Register is attached as appendix 1 to the memorandum. Since the last report the risk profile of the project has not changed significantly. As noted above, we continue our engagement with Crown Infrastructure Partners (CIP) in order to reset some of the early milestones for the project, leading to a successful outcome.     

Climate Change Impact and Considerations

11.  The project team is working with Callaghan Innovation on the introduction of sustainable technologies that will assist to lower the carbon footprint of the Pool building and reduce the operational cost of the new facility.    

Legal Considerations

12.  There is no change to the legal position of the project.

Appendices

No.	Title	Page
1⇩	Appedix 1: Risk Register - Naenae Projects June update	71

Author: Andrew Quinn

Project Manager (Naenae)

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

Reviewed By: Kara Puketapu-Dentice

Director Economy and Development

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities

Attachment 1

Appedix 1: Risk Register - Naenae Projects June update

MEMORANDUM                                                                                                                    08 July 2021

Our Reference          21/913

TO:                      Chair and Members

Audit and Risk Subcommittee

FROM:                Grant Herman

DATE:                28 June 2021

SUBJECT:           Strategic Change Programme Update

Recommendation

That the Subcommittee notes and receives the memorandum.

Purpose of Memorandum

1.    This is a first time report to brief the Audit and Risk Subcommittee on the formation of a Strategic Change Programme and its progress to date.

Background

2.    In the latter half of 2020, council commenced a number of initiatives to improve its organisational capability and effectiveness. These were:

a.  A review of council’s organisational structure

The staffing transition following Phase 2 is almost complete and a number of change-related activities are underway to ensure successful transition to the new organisational structures.

Activities have been identified by a cross-council group of staff as tasks necessary to ensure that the new structure is able to transition to “business as usual”.  These have been listed, prioritised and responsibilities assigned. The activities range from transactional (eg new titles are on business cards and email signatures) to significant (eg new delegations, team relationships, capability requirements with changed roles, new accountabilities).

b.  The Go Digital programme

This is a transformational programme that will:

·   create new and easier ways for people to communicate and interact with the council

·   improve online forms and processes across council

·   standardise how customers request and pay for services

·   improve and align availability of data

·   allow greater flexibility in working patterns across the organisation.

The foundation project in this programme is Te Pātaka - our new digital workplace. It will allow us all to work anywhere, anytime, on any secure device. It will give us the tools we need to collaborate internally and to engage with external users. Managing and finding information will be quicker, with new, intuitive content management systems, and a better interface for the tools and resources we use every day.

The project will provide all staff with:

·   SharePoint Document Management

·   Team collaboration and document sharing

·   M365 Desktop and Office Applications (email etc.)

·   Enterprise search 

·   A new version of iPortal

The project will migrate all current and active content from old systems such as shared drives and TRIM into the new SharePoint environment.  It will provide an Extranet to enable self-service access to building information and the Hutt City Council Archive.  The project will mitigate operational risks (information loss, information security and business continuity) and legal/compliance risks (Public Records Act, LGOIMA and Privacy Act)

First tranche is starting next week 28th June, and the expected completion is end of November 2021.

The project will decommission TRIM/CM9, old iPortal and Ourspace.

c.  Property Optimisation Project

The purpose of this project is to reduce our carbon footprint, create ongoing savings in operational costs and support the new organisation structure. This will be done by bringing staff into Laings Road from leased premises and by reorganising the way we use our workspaces and with more flexible work patterns.

The project has obvious links to the Te Pātaka project.

d.  Planning and Performance Framework

This piece of work will focus on the key business processes that need to be in place to address business performance across the organisation e.g. business planning, performance reporting, performance monitoring and management, and HR processes. These are important to embed change and enable real organisation benefits to be realised.

This piece of work will reinforce the people and work practice changes that will come with each of the above.

e.  The Organisational Capability Strategy

This is a People and Capability-led initiative to (1) identify future people capability needs to develop the competencies, culture, work practices and performance that are needed for a “fit-for-purpose” council and (2) put in place people-related initiatives to address these needs.

A Strategic Change Programme Approach

3.    The Strategic Change Programme has been established to ensure alignment and synergies for the projects/initiatives outlined in the Background section above.

4.    Its purpose is to provide a strategic context for the above projects/initiatives and to deliver a transformational shift in how council delivers its outcomes. 

5.    The Programme will develop a broad view of what is a “fit for purpose” council in terms of people, processes, tools, technology and work environment as it moves into 2022 and beyond. This will guide the various projects and initiatives outlined above to collectively deliver a “future state”.

6.    The approach can then be repeated and applied to future projects and initiatives and so embedding business effectiveness across the council.

7.    The diagram below summarises this:

8.    The first key piece of work is to develop a Strategic Change Programme Plan that will include milestones, phasing, decision points, resourcing, benefits, risks and interdependencies.

9.    It is intended that a Programme Plan will be submitted to the CLT for approval on 3 August 2021.

Programme Update

10.  The decision to fund what was then termed a transformation programme, was made in December 2020. After a recruitment process in February/March 2021, the approach was modified. The Strategic Change Programme was established and a Strategic Programme Manager was hired in April 2021.

11.  Work to date has included:

a.  Familiarisation with the various projects, scoping the programme, assessing interdependencies and developing a proposed approach to the work.

b.  Scoping and developing a Terms of Reference for the Planning and Performance Framework project.

c.  Developing an agreed approach to the work. A key principle behind the recommended approach is that strategic change will be most effectively delivered through the business projects and initiatives that comprise the wider programme. This approach was approved by CLT on 26 May 2021.

12.  Each component project/initiative has its own management and governance structures and the Strategic Programme Manager will attend these governance meetings. 

13.  A Programme Oversight Group has been established to ensure alignment across the programme. The Group comprises the respective project managers and initiative owners and the Strategic Programme Manager and will meet fortnightly. It is also proposed that each project team present monthly updates to the Chief Executive and Directors to communicate progress and potential issues.

14.  An update on the programme will be provided to this Subcommittee on 9 September 2021.

Financial considerations

15.  Most costs lie within the projects themselves and these have been subject to their own budget approvals and reporting.

16.  The only direct cost for the programme is resourcing the Strategic Programme Manager. The fixed term role is currently full-time as its purpose is to develop and deliver a programme plan to the CLT. Once the plan is approved, there will be an ongoing need for strong coordination and governance to ensure the strategic interdependencies of the programme are maintained. An ongoing part-time role will provide this.

Risks

17.  A Programme Risk Register is attached as Appendix 1 to this report.

18.  At this early stage, the potential programme risks identified are:

a.  Individual projects falling behind schedule and so affecting key interdependencies within the Programme

b.  Heavy business workload and/or resource capacity affecting staff availability and capacity to contribute to the Programme at key stages

c.  General change fatigue within the organisation creating a barrier to staff buy-in for further changes in processes and ways of working. This risk also extends to council’s business as usual activities.

19.  Apart from these risks and general coordination issues, risks to the Programme – and their mitigation – lie within the component projects themselves and will be addressed by the respective project managers. These risks are captured at a high level in the council-wide Risk Register. Attached as Appendix 1 to the report is the next level below.

Consultation

20.  All CLT members, relevant project managers and other key council managers have been individually consulted on the preparatory work outlined in this report.

21.  There will be continued consultation with wider Council leaders. The component project managers will also be consulting closely with staff affected by their respective projects.

Legal Considerations

22.  There are no legal considerations identified at this stage.

Appendices

No.	Title	Page
1⇩	Appendix 1: Strategic Change programme Risk and Issues Register	78

Author: Grant Herman

Strategic Programmes Manager

Approved By: Matt Boggs

Director, Strategy and Engagement

Attachment 1

Appendix 1: Strategic Change programme Risk and Issues Register

MEMORANDUM                                                  84                                                             08 July 2021

Our Reference          21/800

TO:                      Chair and Members

Audit and Risk Subcommittee

FROM:                Enid Davids

DATE:                21 May 2021

SUBJECT:           Managing COVID-19 Risks

Recommendation

That the Subcommittee:

(1)  notes and receives the memorandum;

(2)  notes that officers will update members during the meeting if there are any changes to the report; and

(3)  considers how often it would like to receive this report. Our approach to responding to COVID-19 risks is now part of everyday business. Reporting on COVID-19 risks is part of our risk and issues reporting.

Purpose of Memorandum

1.    To provide assurance to the Subcommittee that risk around council’s response to the coronavirus (COVID-19) pandemic is being managed appropriately.

2.    To confirm council has in place a methodology for continuous service delivery to seamlessly transition between Alert Levels 1, 2, 3 and 4 and to manage and minimise the risk of COVID-19.

Background

3.    This report provides an update on activity since the previous update provided to this Subcommittee on 23 April 2021 (see the Risk Management Update, paragraph 47 onwards) around how council is managing the risks associated with COVID-19.

4.    The Chief Executive’s statement provided to each Council meeting and the quarterly performance report to the Policy, Finance and Strategy Committee also provides details on how council is responding to COVID-19.

Discussion

5.    The Wellington region moved to Alert Level 2 at 6pm on Wednesday 23 June 2021. This will stay in place until 11:59pm on Tuesday 29 June 2021. The Alert Level change comes after a person who travelled from Sydney to Wellington tested positive for the virus upon their return to Australia. The person was in Wellington from 19 June until 21 June. There is a pause on Quarantine Free Travel from New South Wales to New Zealand until 11:59pm (NZT) on 6 July 2021.

6.    Emergency Management Hutt Valley District Health Board clarified the rapidly evolving response. Council has been asked to work to help them to establish a pop up Community Based Assessment Centre (CBAC). From Friday 25 June 2021 (until 27 June), the north end of the River Bank Car Park was closed and a pop up drive-through CBAC testing station was opened. Council officers worked with health officials to undertake a health and safety site assessment (by our Health, Safety and Wellbeing team), a traffic management design and plan (by our Transport team), council’s mobile container was located on site to accommodate the health officers printers, laptops etc. and communications around this were issued on our internal and external channels. Testing priority is being given to individuals who have been at a location of interest at the specified time and for individuals who are symptomatic.

7.    Our top priority is ensuring that we have the necessary protections in place so that people can visit, use and work in our places safely.

8.    From Wednesday 23 June 2021 council activated our COVID-19 Resurgence Action Plan and we’re following our guidelines for Alert Level 2. These are tried and tested, having served us well in the past. The Chief Executive has had regular (initially daily) meetings via Microsoft Teams with senior leaders to ensure continuous service delivery under Alert Level 2 guidelines.

9.    Council remains vigilant and is ready to respond to any further upward Alert Level change and any resurgence of COVID-19 in the community. Council has a methodology in place to transition between Alert Levels 1, 2, 3 and 4 and to manage and minimise the risk of COVID-19. In readiness, Senior leaders have reviewed the Alert Level 3 guidance and their business continuity plans.

10.  The key message for people is to wash your hands regularly, sneeze into your elbow, maintain physical distance, stay at home if unwell or seek advice about getting a test, use the New Zealand COVID Tracer app. (scan QR codes) to enable quick tracing and wear a mask on public transport or places where it is hard to physically distance. Be vigilant and follow Alert Level 2 guidelines.

11.  Under Alert Level 2, council facilities and services are mostly continuing as business as usual under Alert Level 2 with an increased focus on contact tracing for everyone visiting our facilities and places in our city, health and hygiene practices, restricted number and wherever possible accessing Council services like payments online.

12.  Actions following the 23 June 2021 Director-General of Health’s announcement included: ensuring our cleaning regime is in place, checking our facilities to ensure they have appropriate PPE gear, supplies of sanitiser etc., checking on our front line staff to ensure they are being supported, installing physical distancing equipment and updating our communications both internally and external channels to align with government Alert Level 2 advice and guidance. There is out-of-hours rostering for our Communications team to enable timely messaging to our staff and communities.

13.  There have been impacts on our facilities due to restricting number and from challenges with physical distancing. These include: the Clubhouses are reduced to collage aged members only, The Dowse Art Museum family lounge and Toi Hut is closed to the public, Aquarobics classes and Learn to Swim lessons are cancelled and spas/saunas are closed. The following facilities are open, but with restricted numbers to 100: Libraries, Pools, Community Halls, Ricoh Sports Centre, Lower Hutt Events Centre, Little Theatre and Walter Nash. The events team will assess upcoming events such as volunteer awards (8 July 2021) and citizenship (23 July 2021). The Saturday Riverbank Market and Naenae Village Market do not operated under Alert Level 2 due to restrictions on numbers.

14.  The Hutt City Emergency Operations Centre is on standby. Rosters have been reviewed and food and welfare support is ready to stand up.

15.  A watching brief is maintained over developments within Australia in regards to COVID-19 restrictions as the virus spreads across multiple states and territories.

16.  Advice has been given to staff following the opening of the NZ/Australia trans-Tasman travel bubble from 19 April 2021 and subsequent pauses since then. Ministry of Health messaging and guidance is shared, both internally and through external channels, and links provided to locations of interest in Australia and now Wellington. Restrictions are in place for travel from New South Wales to New Zealand from 9:59pm 22 June until 7 July 2021. Restrictions continue to be in place for travel from Victoria to New Zealand since 25 May 2021.

17.  Council continues to monitor announcements around waste water testing results in light of the Alert Level change. Prior waste water testing mid-May 2021 in the Wellington region provided weak positive COVID-19 test results in Karori and Porirua. The Ministry of Health’s advice is that the results were likely due to recent recovered cases continuing to shed the virus. There is no risk of infection from COVID-19 in wastewater. Staff were reminded to continue to be vigilant and follow the level 1 guidelines.

Vaccinations

18.  Council is in full support of the Ministry of Health’s efforts to roll out the COVID-19 vaccine, New Zealand’s largest immunisation roll-out.

19.  COVID-19 vaccination centres have been set up at the Wainuiomata Community Marae (1 June 2021), Waiwhetu Sports and Fitness Centre under Tamaiti Whāngai (9 June 2021) and the Community Vaccination Centre for Lower Hutt by Te Awakairangi Health Network Primary Health Organisation (end of April 2021) and is supported by Capital & Coast and Hutt Valley District Health Boards. These services are being promoted on our communications channels.

20.  The free COVID-19 vaccination programme, for everyone aged 16 and over, is an important step towards protecting our communities from COVID-19. Bookings are available for priority groups and then Group 4 (the majority of the population) over the coming months.

21.  Information on the Tamaiti Whāngai Vaccination Centre has been reiterated to staff on our external communications channels that Maori and Pacific Island staff aged 55 plus and people with disabilities can apply to have their vaccination at Waiwhetu.

Emergency management

22.  Hutt City Council has moved to strengthen its emergency management preparedness with the creation of a fulltime Emergency Management Lead role with additional duties as the Controller for Hutt City. The new Emergency Management Lead started their duties on 8 June 21. The previous Emergency Management Lead has been employed until 25 June 2021 in order to facilitate a comprehensive handover and ensure a seamless transition. The new Emergency Management Lead will assume the duties of Alternate-Controller from 25 June 2021. The role of Controller will be assumed at a later stage, once the incumbent Controller and the Wellington Region Emergency Management Office deem them fully trained and practiced.

Technology

23.  The upcoming deployment from July 2021 of our new digital workplace, Te Pātaka, will enhance resilience by enabling staff to work anywhere, anytime, on any secure device to access, collaborate and share information.

Workforce, health, safety and wellbeing

24.  Free flu vaccination sessions were held for staff in May 2021. COVID-19 vaccinations are currently scheduled to be available to the general public as of July 2021 according to current advice from the Ministry of Health.

25.  Guidelines and protocols for flexible working arrangements have been further developed as part of ongoing flexible workplace initiatives and assists with council’s response to any resurgence of COVID-19.

Operations, community facilities, services and projects

26.  Attendance and activities at most council facilities have returned to pre-COVID levels.

27.  Officers are continuing to promote online services and online payments, including through signage at facilities and rates notices.

Community initiatives, welfare and funding

28.  The Chief Executive attended sessions at Police Headquarters alongside National Emergency Management Agency, Wellington Regional Emergency Management Office and Iwi to look at modelling a new emergency response approach with Iwi at the centre, following on from lessons learned during the COVID-19 lockdown.

29.  The Mayor and Council Committee Chairs have approved the allocation of funding to support an initiative that develop and deliver a programme to better utilise skills of our non-clinical Pacific workforce in a Pacific pandemic response.  Officers are continuing to work on the allocation of the rest of the COVID Response Fund.

30.  Facilities and services continue business as usual with additional health and safety measures such as additional cleaning, regular checks and restocking of hand sanitiser and cleaning products, prominent display of QR codes at all facilities and that people stay at home if unwell and seek advice from HealthLine or their doctor about getting a COVID-19 test.

Response to Business

31.  Council officers continue to work closely with the Hutt Valley Chamber of Commerce on issues relevant to business and continue to monitor and act, if necessary, on local business surveys. The latest survey indicates businesses expect things to moderately improve in the next six to 12 months; the major barriers being impact of COVID-19; shortages of labour and material and general uncertainty of impact of government policies.

32.  After the initial signs of recovery last year, the Lower Hutt economy recorded a 0.6% fall in electronic card spending in the March 2021 year (comparatively -3.2% Wellington Region (WR) and -3.8%New Zealand (NZ)). This contributed to a 1.1% fall in the city’s GDP over the same period (-2.3% (WR) & -3.0% (NZ)).

33.  Employment (based on place of residence) grew 0.4% in the March 2021 year (+0.7% (WR) & -0.2% (NZ)) whilst Jobseeker Support recipients increased by 23% in the same period.  The unemployment rate in Lower Hutt was 4.2% in March 2021, up from 3.9% a year earlier (4.6% (WR) & 4.7% (NZ)).

34.  The joint business response team with the Chamber and Upper Hutt City Council remains able to be reactivated if required.

Risk Reporting

35.  Uncertainties and risks arising from COVID-19 are incorporated in the risk registers. The risk registers will be provided to this Subcommittee as part of the risk management update on 9 September 2021.

36.  This report is currently being provided to each meeting of the Subcommittee. Officers would recommend that now the risks and risk registers are part of business as usual, reporting move to quarterly or six-monthly.

Appendices

There are no appendices for this report.   

Author: Enid Davids

Risk and Assurance Manager

Author: Caryn Ellis

Head of Chief Executive's Office

Approved By: Jo Miller

Chief Executive

85                                                             08 July 2021

Audit and Risk Subcommittee

10 May 2021

File: (21/723)

Report no: ARSC2021/3/84

Audit and Risk Work Programme

Recommendation

That the work programme be received and noted.

Appendices

No.	Title	Page
1⇩	Appendix 1: Work Programme - Audit and Risk July 2021	86

Author: Toi Lealofi

Democracy Advisor

Approved By: Kathryn Stannard

Head of Democratic Services

Attachment 1

Appendix 1: Work Programme - Audit and Risk July 2021