HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

 

 

KOMITI ITI AHUMONI I TŪRARU |

Audit and Risk Subcommittee

 

 

8 April 2022

 

 

 

Order Paper for the meeting via Zoom,

on:

 

 

 

 

 

Tuesday 19 April 2022 commencing at 2.00pm

 

Members of the public wishing to speak to an item on the agenda are asked to contact democraticservicesteam@huttcity.govt.nz

 

 

 

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


 

AUDIT & RISK SUBCOMMITTEE
Membership:	                     Independent Chair and 7 Members
	Audit and Risk Subcommittee members should be appointed so that the subcommittee has a diversity of governance skills, experiences and personal qualities. Between them, the members should bring a mix of the following attributes:
1.	Broad governance experience;
2.	Familiarity with risk management disciplines;
3.	Understanding of internal control and assurance frameworks;
4.	 An understanding of financial and non-financial performance reporting;
5.	A good understanding of the roles of internal and external audit; and
6.	A sound understanding of the local government sector.
Use of the matrix below has assisted other councils to consider the best fit for membership of an Audit and Risk Committee.
Quorum:	Half of the members
Meeting Cycle:	Meets on an eight weekly basis or as required
Reports to:	Council

HuttCity_TeAwaKairangi_SCREEN_MEDRES

 

 

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 SUBCOMMITTEES 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

 

 

 

 

 

 

    


                                                                       7                                                                       

HUTT CITY COUNCIL

 

Komiti Iti Ahumoni I Tūraru |Audit and Risk Subcommittee

 

Meeting to be held via Zoom

on

 Tuesday 19 April 2022 commencing at 2.00pm.

 

ORDER PAPER

 

Public Business

 

1.       APOLOGIES

An apology from Cr Rasheed has been received.

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.       COVID – 19 UPDATE

          A verbal update will be provided by the Chief Executive.

4.       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.

5.       Recommendation to Council – 24 May 2022

Review of Sensitive Expenditure Policy and Guidelines (22/574)

          Report No. ARSC2022/2/61 by the Financial Accounting Manager                    11

Chair’s Recommendation:

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

 


 

6.       Holidays Act Compliance (22/746)

Report No. ARSC2022/2/62 by the Finance Project Manager                               41

Chair’s Recommendation:

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

7.       Payroll tax compliance evaluation (22/791)

Report No. ARSC2022/2/9 by the Finance Project Manager                                44

Chair’s Recommendation:

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

8.       RiverLink Update (22/795)

Report No. ARSC2022/2/63 by the Project Manager Riverlink                            69

Chair’s Recommendation:

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

9.       Update on Petone Wharf (22/799)

Report No. ARSC2022/2/10 by the Head of Parks and Reserves                         77

Chair’s Recommendation:

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

10.     Tupua Horo Nuku Project Update (22/805)

Report No. ARSC2022/2/65 by the Head of Transport                                         82

Chair’s Recommendation:

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

 


 

11.     Information Items

a)      Naenae projects - progress update (22/790)

Memorandum dated 30 March 2022 by the Project Manager (Naenae)       88

Chair’s Recommendation:

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

b)      Audit and Risk Subcommittee Forward Programme 2022 (22/608)

Report No. ARSC2022/2/64 by the Democracy Advisor                          101

Chair’s Recommendation:

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

12.     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.


 

13.     EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

 

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

14.     Cyber Security (22/792)

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.

 

 

 

 

 

 

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

 

 


                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

24 March 2022

 

 

 

File: (22/574)

 

 

 

 

Report no: ARSC2022/2/61

 

Review of Sensitive Expenditure Policy and Guidelines

 

Purpose of Report

1.    The Sensitive Expenditure Policy and associated Guidelines have been reviewed. The Audit and Risk Subcommittee is requested to endorse and recommend that the updated policy and guidelines be approved by Council.

Recommendations

That the Subcommittee recommends that Council:

(1)   receive and note the information contained in the report; 

(2)   approves the updated Sensitive Expenditure Policy attached as Appendix 1 to the report;

(3)   approves the updated Sensitive Expenditure Guidelines attached as Appendix 2 to the report;

(4)   notes that the updated Sensitive Expenditure Policy and Guidelines are for the Council Group; and

(5)   notes that there will no longer be any deviation from the policy by any of the Council Controlled Organisations, in particular Urban Plus Limited.

 

Background

2.    Hutt City Council’s (HCC) Sensitive Expenditure Policy (SEP) and Sensitive Expenditure Guidelines (SEG) are reviewed every three years. The last review of both the SEP and SEG was performed in January 2020.

3.    In October 2020, the Office of the Auditor General (OAG) published revised guidance on Sensitive Expenditure Policy for public organisations. As such, HCC being a public organisation decided to revisit its SEP and SEG to align with the OAG’s guidance.

4.    The OAG defines sensitive expenditure as any spending by an organisation that could be seen to be giving private benefit to staff additional to the business benefit to the organisation. Problems can arise with expenditure related to travel, accommodation, and hospitality, and particular care needs to be taken with these. Problems can also arise from expenditure that is unusual or is not closely related to an organisation’s purpose and/or functions.

5.    HCC engaged PwC to conduct an independent review on the SEP and SEG. The key focus of the review was to perform a comparison against the revised OAG’s guidance and identify any gaps/improvement areas. The findings of the PWC review were reported to the Audit and Risk Subcommittee on 23 April 2021 (refer agenda item 11 “Sensitive Expenditure Policy Update and Disclosures”, ARSC2021/2/64).  The Audit and Risk Subcommittee resolved as follows:

a)   direct officers to action the findings of the review of the Sensitive Expenditure Policy to ensure compliance with the Office of the Auditor General guidance published in October 2020;

 

b)   directs officers to ensure that the revised Sensitive Expenditure Policy be prepared for the Council Group and that the intent be that there is no deviation to this policy by any of the Council Controlled Organisations, in particular Urban Plus Limited;

HCC’s approach to refreshing the Sensitive Expenditure Policy and Guidelines

6.    Officers approached this review of the policy with the important principles set out by the OAG front of mind. The aim is to ensure the policy is clear, easy to follow and maintains a high level of best practice and integrity. The alignment with the OAG guidance will help protect the Council Group and its people and reduce any perception of misuse of ratepayers’ funds.

7.    Officers have worked to update the policy and ensure it is fit for purpose for the Group going forward. The detailed feedback from the PwC review has been incorporated into the review process. The SEP and SEG have been aligned with the new updated OAG’s Guide.

8.    The main proposed changes made in the SEP are as follows:

Policy section

Description of update to policy

Current Policy

Refreshed Policy

2.2

Key principles updated to reflect latest OAG guidance

· justifiable business purpose;

· prudent and choose the best value for money; and

· We protect the Group’s reputation and consider the perception of how the expenditure would look to a third party.

· Have a justifiable business purpose;

· Preserve impartiality;

· Be made with integrity;

· Be moderate and conservative;

· Be made transparently; and

· Be made with proper authority.

4.1

Approval of the Mayor’s expenses

Silent in policy, however current practice is in line with refreshed policy.

Policy added “All the Mayor’s expenses are to be approved by the independent Chair of Audit and Risk Subcommittee.”

5

Compliance with the policy

Silent

This policy and the associated Guidelines are required to be complied with whenever sensitive expenditure is undertaken unless there is compelling justification to depart from these and the reasons are recorded and approved by the Chief Executive to grant an exemption.

6

Policy approved by

Corporate Leadership Team

Council

 


 

9.    The main proposed changes made in the SEG are as follows:

Guid-ance section

Description of update to policy

Current Policy

Refreshed Policy

Cover page

Policy approved by

Corporate Leadership Team

Council

1.5

Support documents language

Silent

All supporting documents relating to Group purchases must be supplied in either/both English and/or Māori.

1.7

Definition of domestic travel

Silent

Domestic travel includes to and from Australia.

1.7

Spouse/partner/

companion travel on business trips

Silent

As a general rule all costs are not covered and are paid for personally be employee. Where there is required travel by spouse/partner as part of business or/and cultural requirement this needs to be pre-approved by Chief Executive (CE) for international travel. Pre-approval by Directors required for domestic travel.

1.7

Private travel in conjunction with business trips

Silent

Permitted only if there is no additional cost to Group and is only incidental to the business purpose of the travel. Pre-approval by CE required.

1.8

Stopovers on long haul international travel

Silent

Permitted with some conditions. Requires pre-approval by the CE.

1.9

Travel – use of electric vehicles

Silent

Added guidance to reflect move to electric vehicles “where feasible and practical, fully electric vehicles should be utilised”.

1.9

Fines while using rental vehicles

All fines while using a rental vehicle are the responsibility of the driver e.g., parking or traffic offences.

Added exception “unless a fine incurred relates to the condition of the vehicle which is outside of the driver’s control.”


 

1.9

Travel between work and home on Group funded transport

Silent

As a general rule not to be used unless reason is due to work commitments requiring work beyond reasonable work hours, safety concerns or similar justification.

1.10.3

Tipping while on a business trip

In foreign countries where tipping is the norm, you are at your discretion to tip appropriately, this will be reimbursed to you.

Tipping should not be done while travelling for work in New Zealand and it is only permitted in countries where there is an established custom and expectation for such practice. e.g., USA. The tipping amount should be included in the same bill for your meal and be included in the daily meal allowance.

1.10.3

Business travel meal limits

Up to $25 for breakfast, $15 for lunch and $50 for dinner.

Up to $25 for breakfast (up to $30 for breakfast when provided as part of a Hotel/Motel stay), $20 for lunch and $50 for dinner.

1.13

Sustainability and Catering

Silent

New guidance added “When ordering catering, organisers should request minimal, reusable, or recyclable packaging, in order to minimise unnecessary waste. In line with Council’s Carbon Reduction Plan, organisers are also encouraged to order vegetarian options where possible.”

1.14

Spouses and Companions attending social activities

Partners in attendance are not paid for by the Group.

Partners/companions in attendance are not paid for by the Group, unless this is a business requirement or cultural norm. CE pre-approval required.

1.19

Sale of surplus assets to employees

General principles and guidance only

Further clarity added.

1.19

Sustainability and council retired assets

Silent

New guidance added “If assets are unable to be sold, or the cost of sale would likely exceed the value of the assets to be disposed, they may be offered to staff or a suitable charity for reuse, in order to avoid unnecessary disposal to a landfill.


 

1.23

Private use of suppliers

General principles and guidance

Further clarity added.

1.24

Gift rejection

Silent

Any gift turned down exceeding $100 should be recorded in the gift register and must include a narrative as to why it was declined.

1.29

Donations and Grants

General principles and guidance

Further clarity added.

1.30

Koha

General principles and guidance

Reference to separate Koha Policy added. This policy has recently been approved by the CE.

 

10.  The proposed changes to the SEP and SEG are in Appendix 1 and 2 of this report.

11.  Other minor editorial changes were made to the SEP and SEG. This was to ensure that content in both documents were clearer and more concise. Please refer to the Appendix 1 and 2 for these documents.

Work undertaken on Urban Plus Limited‘s Sensitive Expenditure Policy

12.  In 2019, UPL’s Board resolved to include additional clauses to the Group’s Sensitive Expenditure Policy/Guidelines due to industry specific requirements (such as celebratory events such as roof shouts which included provision of alcohol).

13.  During UPL’s 2020/21 external audit, the management letter from Audit New Zealand recommended that UPL’s SEP/SEG be reviewed and aligned with (1) OAG’s revised guidance and (2) Council’s Group SEP and SEG.

14.  PwC’s independent review also reflected the same comments as Audit New Zealand’s management letter.

15.  Council officers have been in discussion with UPL on these matters. On 31 March 2022, the UPL Board passed a resolution, revoking the additional clauses. UPL is committed to complying with the Group SEP and SEG.

Conclusion

16.  The revised SEP and SEG are now aligned with the updated OAG’s guidance and have addressed the recommendations from PwC’s independent review.

17.  Approval of revised SEP and SEG by Council will result in one uniform policy across Council and its Council Controlled Organisations.

Climate Change Impact and Considerations

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

19.  The Sensitive Expenditure Guidelines have been updated to reflect sustainability and includes reference to the use of electric vehicles where feasible and practical, and for catering purposes requesting minimal, reusable, or recyclable packaging.

Legal Considerations

20.  There are no legal consideration arising from this report.

Financial Considerations

21.  There are no financial consideration arising from this report.

Appendices

No.

Title

Page

1

Appendix 1 - Sensitive Expenditure Policy

18

2

Appendix 2 - Sensitive Expenditure Guidelines

24

 

Author: Ben Wu

Financial Accounting Manager

 

 

Reviewed By: Nishana Reddy

Risk and Assurance Manager - Finance

 

 

 

Approved By: Jenny Livschitz

Group Chief Financial Officer

 


Attachment 1

Appendix 1 - Sensitive Expenditure Policy

 







Attachment 2

Appendix 2 - Sensitive Expenditure Guidelines

 


















                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

25 March 2022

 

 

 

File: (22/746)

 

 

 

 

Report no: ARSC2022/2/62

 

Holidays Act Compliance

 

Purpose of Report

1.    The purpose of this report is to provide an update to the Audit and Risk Subcommittee on Hutt City Council’s compliance with the Holidays Act 2003 (the Act).   

 

Recommendation

That the Subcommittee notes and receives the report.

 

Background

2.    The Audit and Risk Subcommittee received a first formal report on Council Holidays Act 2003 pay compliance at the meeting held on 23 April 2021. Follow up reports were presented to the Subcommittee on 9 September 2021, 11 November 2021 and 15 February 2022.

3.    Compliance with the Holidays Act 2003(the Act) is a current issue for many organisations in New Zealand. In November 2020 Ernst & Young (EY) was engaged to undertake a review of Council’s compliance with the Act.  Following on from EY findings, a Holidays Act Remediation Project (the project) was initiated to calculate and handle remediation calculations and bring Council payroll systems and processes into compliance with the Act.

4.    A Holidays Act compliance provision of $2.5M was recorded in the financial statements for the year ended 30 June 2021. This comprised an estimated $0.5M for project costs and $2M for potential remediation payments to staff.  




 

Progress update since February 2022 report

5.    The payroll remediation calculations process, utilising a payroll calculation specialist, is progressing as planned. Testing has begun of the calculation outcomes, and these tests will continue through to May 2022.  After this time, payments to affected staff are to be made in two tranches. The first tranche will be for the period March 2015 to March 2022, which is expected to be paid to affected staff in late June 2022. The second tranche will be to address any remaining remediation owing up to the date at which Council payroll systems and processes become Act compliant. This is expected to be in late 2022.

6.    Former staff receiving remediation payments, will be requested to lodge personal details via a portal on the Hutt City Council website.  Once their details are verified, these former staff will also be able to be paid from late June 2022 onwards.

7.    A webpage on Council’s external website has been created to provide information about non-compliance with the Act.  It also outlines the process Council is undertaking to deal with this non-compliance.  A contact email address has been provided and former employees have the option of registering contact details should they wish to do so.

8.    As part of the Go Digital Programme, a HRIS and Payroll system project is underway.  The new system was originally planned to go-live mid-2022, however this date has been pushed out to November 2022, at which time compliance with the Act will also be achieved.

9.    As a result of the delay in achieving compliance, Council will be required to remediate for a longer period than originally provided for at the time of setting aside the provision in the financial statements at 30 June 2021.  It is therefore anticipated that the forecast project costs will be higher by approximately $170k due to additional remediation calculation and project costs (from $500k to $670k). This additional cost is expected to be covered by contingency set aside within the $2M remediation provision.

10.  A further report and update to the Audit and Risk Subcommittee will be presented on 28 June 2022. 

Climate Change Impact and Considerations

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

Consultation

12.  Not applicable.

Legal Considerations

13.  EY have advised that there are a number of risk areas in our compliance with the Holidays Act 2003.  Council is working with a remediation calculation specialist to traverse risks areas and seeking legal advice as appropriate.

Financial Considerations

14.  There are a range of financial matters raised in this report.

Appendices

There are no appendices for this report.    

 

 

 

Author: Angela Leong

Finance Project Manager

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Jo Miller

Chief Executive

 


                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

29 March 2022

 

 

 

File: (22/791)

 

 

 

 

Report no: ARSC2022/2/9

 

Payroll tax compliance evaluation

 

 

 

 

Purpose of Report

1.    Council approved a tax risk governance framework in May 2018. This report is an update to the Subcommittee on the Pay As You Earn tax (PAYE) Compliance evaluation, a requirement of this governance framework.  The evaluation was conducted in January 2022 and reported on in March 2022.

 

Recommendation

That the Subcommittee notes and receives the report and the PAYE Compliance Evaluation Report attached as Appendix 1 to the report and resulting planned actions in Appendix 2.

 

Background

2.    Inland Revenue (IR) has an expectation that all large organisations should have tax risk management incorporated within their governance framework.

3.    Council developed a “best practice” tax risk governance framework and tax risk management strategy that was approved by Council in May 2018 and updated June 2020.  The framework requires officers to report on all tax risk management matters to this Subcommittee at least once a year. Reports have been made in June 2020 (FPC2019/2/51) and April 2021 (ARSC2021/2/57).

4.    At the June 2022 meeting of the Subcommittee, officers will provide a further report which will outline the tax risk governance framework objectives for the upcoming 2022/23 financial year.


 

5.    As an employer of wage and salary earners, Council has a responsibility to return Pay As You Earn (PAYE) income tax to the IR on a compliant basis. To ensure that Council is adopting best practice and is compliant with current PAYE and KiwiSaver legislation, it undergoes cyclic compliance evaluation by an external expert provider. 

6.    Price waterhouseCoopers (PwC) was engaged to conduct the PAYE Compliance Evaluation in January 2022.  The aim of the evaluation was to provide an overall assessment of PAYE compliance in respect of targeted areas of risk, and involved:

a)   Identifying any material instances of non-compliance;

b)   Ascertaining areas of risk; and providing practical recommendations to mitigate those risks;

c)   Ensuring Council’s current policies and procedures facilitate tax compliance; and

d)   Enabling Council to demonstrate to Inland Revenue that it has taken reasonable care in managing its taxation affairs.

7.    Council is implementing a new payroll system in 2022.  During implementation, improvements to process and a higher level of automation, will enhance Council’s ability to meet its PAYE compliance obligations.  In addition, this PwC’s PAYE Compliance Evaluation will help inform Council’s compliance set-up in the new system.

8.    The PwC findings, their key recommendations and Council management comments are included in the report issued March 2022 (refer Appendix 1).

Key findings and recommendations

9.    PwC determined that Council had a high-level of PAYE compliance, and commended Council on its commitment to meeting its PAYE compliance obligations and ensuring its tax risks are managed appropriately.

10.  Notwithstanding this high-level of compliance by Council, areas which Council are encouraged to focus on, include the following:

a)   Reliance on payroll system – tests and checks enhanced to ensure accuracy of automatic calculations, and ongoing staff training to keep up to date with tax legislation and Inland Revenue practice with emphasis on new Payroll system training.

b)   Extra pay calculations – adopting enhanced processes with regard to extra pays, with Council focussing on appropriateness of these processes when transitioning to the new Payroll system.

c)   Trauma insurance – treatment of this allowance as subject to PAYE in the future and filing a voluntary disclosure with Inland Revenue for historic treatment.

Summary

11.  Officers have agreed PwC’s key findings and recommendations.  In addition to these, there are several other lower risk recommendations that officers have agreed. An action plan starting in April 2022 is attached as Appendix 2.

 

12.  Officers are also of the view that the new Payroll system, once implemented in late 2022, will further help to reduce PAYE compliance and calculation risk. Tax compliance will be a key consideration in the implementation of the new payroll system.

 

13.  A further report and update to the Audit and Risk Subcommittee will be presented on the 28 June 2022.

 

Appendices

No.

Title

Page

1

Appendix 1: Hutt City Council PAYE report

47

2

Appendix 2: PAYE Report Actions

67

 

 

Author: Angela Leong

Finance Project Manager

 

 

Author: Helen Stringer

Financial Transaction Services Manager

 

 

 

Reviewed By: Daniel Koenders

Manager Financial Strategy & Planning

 

 

 

Approved By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

 


Attachment 1

Appendix 1: Hutt City Council PAYE report

 





















Attachment 2

Appendix 2: PAYE Report Actions

 



                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

30 March 2022

 

 

 

File: (22/795)

 

 

 

 

Report no: ARSC2022/2/63

 

RiverLink Update

 

Purpose of Report

1.    The purpose of this report is to update the Audit and Risk Subcommittee on the RiverLink Project (the Project) since the last Subcommittee meeting dated 11 November 2021.

Recommendations

That the Subcommittee:

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

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

 

Projects Update

2.    The resource consent was lodged on 30 July 2021. The lodged documentation resides on the regulator’s website.

3.    The project team have been working with submitters to resolve the matters raised through exchange of evidence, mediation and expert conferencing. The Environment Court hearing is scheduled to begin on 26 April 2022.

4.    In parallel with the work needed for the resource consent, work has been progressing on procurement for delivery through the Waka Kotahi led hybrid alliance. GHD have been appointed as Principal’s Technical Advisor and have been working with the project partners to produce a reference design, establish our Minimum Requirements and produce the documentation needed for the procurement process.

5.    Market soundings occurred in February 2021 and March 2022 and the project team has a clear understanding of the consortia who are likely to bid for the alliance. The selection of two proponents will be confirmed by the Registration of Interest Process, which is scheduled to commence in May 2022. The project is undergoing a Stage Gate assurance process in early April 2022 in order to confirm readiness to commence procurement.

6.    An independent Quantity Surveyor produced cost estimates for the whole project and worked with the project partners to refine these. These cost estimates have been independently reviewed. The independent reviewer generally agreed with the construction cost estimates but suggested an increased allowance for consultant fees, project management and contingencies.

7.    A first principles cost estimate of the design is in preparation and this will be used to set affordability thresholds which fit within the approved budgets.

8.    Risk workshops have been held and a costed risk register is being produced in conjunction with the updated cost estimate. Risk allocation discussions are also in progress.

9.    A revision to the Project Partner Agreement (PPA) has been progressed to cover Phase 2a of the project, ie up to the point at which Waka Kotahi would enter into a Project Alliance Agreement (PAA) and a Memorandum of Understanding (MOU) with the other project partners. The following recommendations were accepted by the Infrastructure and Regulatory subcommittee on 1 March and full Council on 23 March:

That the Committee recommends that Council: 

 

a.       approves the variation to the RiverLink Project Partner Agreement (the PPA); 

b.       authorises the Chief Executive Officer to sign the PPA; and 

c.       delegates to the Chief Executive Officer all the powers and functions necessary to give effect to the PPA, with the authority to delegate to officers.

10.  A team of commercial advisers has been reviewing the commercial model necessary to recognise the relationship between the three funding partners and the PAA. A set of commercial principles will be in place before the procurement process commences and will be reviewed as part of the assurance process mentioned in paragraph 5.

11.  Council has submitted a Request for Proposal (RFP) to the Housing Infrastructure Acceleration Fund (IAF) for funding towards new wastewater and stormwater infrastructure to enable housing adjacent to RiverLink and across the valley floor. We will be notified of the outcome by Kainga Ora by the end of April 2022.

Project Governance

12.  The Project Governance structure is shown on the proceedings page.

13.  The Project is overseen by the RiverLink Project Partner Board which includes representatives from each of the five partner entities (Greater Wellington Regional Council, Hutt City Council and Waka Kōtahi New Zealand Transport Agency, Taranaki Whanui, Ngāti Toa Rangatira


 

14.  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.

15.  The report 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.

Risks

16.  A Project Risk Register is attached as Appendix 1 to the report.


 

Projects Milestones

Milestone

Date

Submission of resource consent application

30 July 2021 - complete

Appointment of Principal’s Technical Advisor to develop reference design

September 2021- complete

Secure consent

Likely August 2022, subject to no appeals

Release of ROI to consortia

May 2022

Release of project requirements to consortia to develop design and construction proposals

August 2022

Identify preferred Design & Construction consortia to join the Alliance

December 2022

Advanced Works start on site

January 2023

Main construction works start on site

2023

Construction completion

2027

 

17.  A high-level external stakeholders and partners list is provided below:

·    Partners

§ Greater Wellington Regional Council

§ Hutt City Council

§ Waka Kōtahi

·    Iwi Partners

§ Taranaki Whānui

§ Ngāti Toa


 

·    Stakeholders

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

§ Residents and business alongside the river edge

§ Hutt City rate payers and residents

§ General public regional/national

§ Community boards

§ Local Schools

§ Media

Financial Considerations

18.  The draft project objectives for Council are that Te Awa Kairangi between Ewen Bridge and Melling 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.

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

·    Intersections within Lower Hutt City Centre (eligible for Waka Kotahi subsidy);

·    Streetscape improvements (potentially eligible for Waka Kotahi subsidy in part);

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

·    A riverbank park; 

·    A riverbank carpark; and

·    Strategic property purchases to enable future development.

19.  The Final 2021 LTP set the expenditure at $136.5M and revenue of $43.5M. This results in a total net budget (total budget minus revenue) of $93.0M. Table 1 below shows the budget in the final LTP 2021-2031 adopted by Council.

20.  The timing of Council’s expenditure is profiled to align with the assumed project programme of works, with completion scheduled for 2027.

21.  In line with 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

Expenditure

2.97

35.07

41.30

44.95

12.23

136.5

Revenue

(0.77)

(7.49)

(9.90)

(3.58)

(21.78)

(43.5)

NET

 

2.20

27.58

31.40

41.37

(9.55)

93.0

Climate Change Impact and Considerations

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

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

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

25.  The key outcomes being sought by Council on RiverLink are:

a.       Using the Infrastructure Sustainability Council Australia rating tool and achieving an ‘Excellent’ rating

b.       Establishing a carbon budget, and

c.       Calculating the carbon effect of transport mode shift.

Consultations

26.  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.

27.  Options for the RiverLink Project budget were included in the consultation for the Long Term Plan which closed on 6 May 2021.


 

Legal Considerations

28.  Council has entered into a RiverLink Project Partner Agreement which sets out each partner’s responsibilities and requirements for the partnership through the consenting phase.

29.  A revision to the Project Partner Agreement has been progressed to cover Phase 2a of the project, i.e. up to the point at which Waka Kotahi would enter into an Alliance Agreement and a Memorandum of Understanding with the other project funding partners. This is discussed in paragraph 9.

Appendices

No.

Title

Page

1

Appendix 1: RiverLink Risk Register

76

 

Author: Tom Biggin

Project Manager Riverlink

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development

 


Attachment 1

Appendix 1: RiverLink Risk Register

 


                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

30 March 2022

 

 

 

File: (22/799)

 

 

 

 

Report no: ARSC2022/2/10

 

Update on Petone Wharf

 

 

 

 

Purpose of Report

1.    The purpose of this report is to update the Subcommittee on the risk status of the Petone Wharf refurbishment project since the last report was presented on 11 November 2021.

 

Recommendations

That the Subcommittee:

(1)   notes and receives the information;

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

(3)   notes that a Draft Conservation Plan has been produced for the Petone Wharf to provide greater clarity on heritage values and inform the resource consent application; and

(4)   notes the financial implications and changes to the budget spread.

 

Background

2.    A summary history of Petone Wharf was included in a report to the Long Term Plan/Annual Plan Subcommittee meeting held on 10 February 2021 and updates were presented in reports to the Audit and Risk Subcommittee in February, April and November 2021.

3.    A Quantitative Risk Assessment (QRA) was completed on the wharf project in 2021.  This has indicated a range of figures with accompanying confidence levels (eg P95 indicates a 95% confidence level, indicating that this figure will be exceeded in 5% of the risk scenarios).  This report allocated a P50 of $18,729,000 , a P80 of $19,813,000 and a P95 of $20,939,000

4.    The structural integrity of the wharf piles and supports is well below a standard that is suitable for public access. This risk is currently being managed through closure of the wharf and prioritising rebuilding of the wharf to a light recreational standard.

Update

5.    Since the November update, officers and consultants have been preparing information for the resource consent application.

6.    Officers have received a Draft Conservation Plan which is providing greater clarity on heritage values to inform the resource consent application.

7.    Upcoming discussions with Greater Wellington (GW) and Heritage New Zealand (HNZ) will determine any concerns or requirements from these parties. After this engineering design will proceed and at this stage we will have greater clarity on the impact of design on the potential cost of the project.

8.    In late November 2021, the wooden gates and sign at the wharf entrance were removed due to concerns about their safety in the high winds being experienced at the time. They are being kept in storage and will be available for re-use later on. There is currently a temporary solution in place, and officers are looking for a more permanent solution for the duration of the project.

9.    On 16 Dec 2021, officers reported to the Long Term Plan/Annual Plan Subcommittee that project budgets had been readjusted to align with the expected start of physical work in 2023.

10.  The project holds inherent risks to Council, most notably financial uncertainties and reputational risk.  These are recorded in the table in Appendix 1 attached to the report and discussed in more detail below.

11.  Scope and condition:  The condition assessment details the condition of much of the timber wharf structure, however given the variable nature and construction, much of the condition cannot be accurately assessed until the structure is dismantled.  This will be managed by allocating a generous contingency, which is accommodated in the current  budget.

12.  Heritage values:  Petone Wharf is a heritage structure under the District Plan and has been nominated for heritage status with Heritage New Zealand Pouhere Taonga (HNZ).  Early indications from HNZ are that greater scrutiny will be applied to the wharf than to other wharves previously.

13.  Conservation Plan:  In response to an HNZ request, a Conservation Plan for the wharf has been drafted.  This plan will be finalised in April by incorporating comment from Greater Wellington and HNZ. The Conservation Plan will give greater certainty over heritage issues, including the tolerance for demolishing the head of the wharf (the southern/outer 50m) which is the plan Council consulted on, and has budgeted for.

14.  Resource Consent Process:  Early indications from Greater Wellington Regional Council (GWRC) planners signal that the consent application is likely to be publicly notified. 

15.  The other leading risks associated with this project are:

·    Health and Safety – Given the structural uncertainties associated with the wharf, there is the risk of further loss of piles and localised structural failure.  This risk is very low and managed through closure of the wharf.  Contractors completing the repairs will set up procedures to keep staff safe during works, which will be approved by a qualified engineer.

·    Weather – Petone is subject to southerly winds which make conditions unsuitable to work in.  This means that the construction programme is  difficult to plan accurately.

·    Supply – The work is reliant on supply of large hardwood timbers, generally from South America.  These are becoming more difficult to source.  Some hardwood timbers have already been purchased in anticipation.  These are currently in storage.  Further management of this risk can be achieved investigating alternative wood sources such as Australia hardwoods and alternative products including concrete or composite materials.

·    Communications - A communications plan is being developed and will be finalised in April 2022.  It will contain background information about the project plus information about the process that is being followed.  Indications of the timing for key milestones such as presenting rebuild options and cost estimates, applying for consent, competing design and procurement will be provided.  Communication will be through Council’s website, on site signage and in material provided to the Petone Community Board and the Mayor and Councillors.  As the project progresses, the Communication Plan will be updated.

Climate Change Impact and Considerations

 

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

17.  As noted in previous reports, the wharf is a largely timber structure and requires large hardwood timbers.  For Days Bay wharf, these were sourced from South America, however officers are also investigating supply from Australia.  Using timber from large mature trees does raise questions of sustainability.  HNZ are likely to require a significant amount of timber to be used on the refurbished wharf, particularly on external highly visible areas, however there may be options of using concrete or fibre composite materials for some parts.  All decisions on material options will be a compromise between heritage and sustainability values.

Consultation

18.  In 2017, as part of the annual plan consultation, Council engaged with the community over the future of all four wharves.  Elected members decided to refurbish Petone Wharf, including the removal of the head of the wharf.

19.  Consultation was carried out as part of the LTP process in 2021.

Legal Considerations

20.  There are no legal considerations at this time.

Financial Considerations

21.  At this time officers expect that the physical construction works will begin in 2023.  Starting physical works is dependent on obtaining resource consent approval and successful procurement.

22.  Financial forecasts have been adjusted to push out the budgets and programme by one year. This was reported to the Long Term Plan/Annual Plan Subcommittee on 16 December 2021 for a Council decision to support the preparation of the draft Annual Plan 2022/23. The updated budgets are presented in table 1 and 2. 

Table 1: Operational budgets

Petone Wharf

2021/22

2022/23

2023/24

2024/25

Total

Draft Annual Plan 2022/23

$0.1M

$0.7M

 

 

$0.8M

 

Table 2: Capital budgets

Petone Wharf

2021/22

2022/23

2023/24

2024/25

Total

Draft Annual Plan 2022/23

0

$7M

$10M

 

$3.1M

 

$20.1M

 

Appendices

No.

Title

Page

1

Appendix 1: Petone Wharf Risk Assessment

81

 

Author: Kelly Crandle

Head of Parks and Reserves

 

Author: Jenny Livschitz

Group Chief Financial Officer

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities

 

 


Attachment 1

Appendix 1: Petone Wharf Risk Assessment

 


                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

30 March 2022

 

 

 

File: (22/805)

 

 

 

 

Report no: ARSC2022/2/65

 

Tupua Horo Nuku Project Update

 

Purpose of Report

1.    To update the Subcommittee on the Tupua Horo Nuku (Eastern Bays Shared Path) Project (the Project).

Recommendations

That the Subcommittee:

(1) notes the key risks and updates on the Project;

(2) notes the increasing construction costs to deliver the Project and that discussions are on-going with Crown Infrastructure Partners (CIP) and Waka Kotahi to seek additional funding;

(3) notes the project budgets (both capital expenditure and revenue) approved by Council in the Long-Term Plan 2021-2031 following public consultation and updated for Council decisions made in the preparation of the draft Annual Plan 2022-23, as detailed in the “Financial Considerations” section of the report; and

(4) notes that Council will be required to approve any increase in funding requirements which exceeds the Long-Term Plan 2021-2031 budgeted position and that the impact of the significance of increases on requirements for Council to consult on changes will be considered alongside the outcome of discussions with funding partners.

 

Background

2.    In March 2021, the resource consent was initially granted. Although an appeal was lodged, this was resolved in June 2021, meaning the project is approved to proceed to construction. The project is now shifting from the consenting stage to the delivery stage.

3.    Total funding currently available to the Project is $30M which includes $15M of Crown Infrastructure Partner (CIP) funding, and $7.5M allocated from both Hutt City Council and Waka Kotahi.

4.    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.

5.    Last December 2021, Hutt City Council approved to proceed with the Te Ara Tupua Alliance (the Alliance) to undertake design and construction for the first two bays of the Project – Sunshine Bay and Windy Point.  The Council agreed cost to construct the first two bays is at $16.8M.

Discussion

Project Update

6.    Successful launch of the Project’s name - Tupua Horo Nuku as well as marking the start of the implementation phase of the Project. This event was led by the Council in partnership with Waka Kotahi, Mana Whenua and the Eastbourne Community Board. The Minister of Transport and ministers were also in attendance.

7.    Developed design stage complete for the first two bays. Detailed design underway and due for completion by end of April. The Alliance also preparing management plans and construction readiness plans.

8.    Main construction with the installation of the seawalls is expected to start in August. Pre-cast plant to be set-up in advance starting in June.

9.    Landscape and Urban Design Plan (LUDP) has been certified. Engagement with the community and key stakeholders on the Bay Specific Urban Design Plans (BSUDP) commenced last 14 March for a 3-week consultation period.

10.  The Alliance has also commenced concept design and development of the target outturn cost (TOC) for the northern four bays (Point Howard, York, Lowry, and Mahina bays).

 

11.  Te Ara Tupua Project Alliance Agreement (PAA) due to be signed by Waka Kotahi and partners (Downer, HEB, Tonkin and Taylor) by April/May 2022 once Waka Kotahi Board has approved additional implementation funding for Ngauranga to Petone section of Te Ara Tupua. This will mark the formal establishment of the Alliance. The Waka Kotahi and Hutt City Council (HCC) Partners Agreement will be signed in conjunction with the PAA.


 

Risks

12.  The key Project risks are:

Risks

High, Med, Low

Risk Mitigation

Construction budget and affordability:

 

There is a threat that the price to deliver the overall EBSP Project (6 bays) is above the $30M budget.

 

Very High

The 2020 project cost estimate of $30M for the consent design needs to be updated to reflect current cost escalations in line with COVID-19 effects, an overheated market, and the increasing demand and costs of labour and materials. Also, further detailed design and pricing work need to be completed on the other four bays to have a more robust cost estimate. 

 

The updated costs to deliver Sunshine Bay and Windy Point is $16.8million.

 

With the costs of the first two bays being higher than they were originally budgeted for, this will mean that the costs for completion of the remaining bays will also be significantly higher than currently budgeted for. Alliance to advance design and pricing for the remaining four bays to confirm budget and additional funding required.

 

CIP Funding Requirements

There is a threat that the Project does not meet CIP funding requirements

 

 

High

There is a risk that HCC is unable to deliver the overall 6 bays within the current $30M budget.

 

There is also risk that CIP may not approve additional funding for the Project.

 

HCC officers are in discussion with CIP officers on potential additional funding to deliver the overall project.

 

 

 

Construction start

There is a threat that construction start is delayed due to Te Ara Tupua Project Alliance Agreement (PAA) not being signed on time by Waka Kotahi.  

Medium

Detailed design is programmed to be completed by end of April 2022. The Alliance is proposing to start enabling and ecology mitigation works in June 2022 with main seawall construction in August 2022.

 

The Waka Kotahi – HCC Partner Agreement is now being finalised between HCC and Waka Kotahi legal teams. The final draft will be ready by April 2022 for partners sign-off. The Project will then be integrated into the Te Ara Tupua Project Alliance Agreement (PAA)which is due to be signed in May. Signing of the PAA is subject to additional funding approval from Waka Kotahi Board in April/May.

 

Stakeholder engagement and communications:

There is a threat that key stakeholders (especially the Eastbourne community) are not satisfied with project communications and engagement.

Medium

Eastbourne community is very critical to the Eastern Bays Project. There are key requirements within the consent conditions that they are to be involved in the detailed design process moving forward. It is critical that the community and key stakeholders are well updated and informed especially with plans on integrating the Eastern Bays Project into the Te Ara Tupua Alliance to achieve earlier delivery, value for money, and minimising construction effects to the community.

The Alliance has also completed the Bay Specific Urban Design Plans and has shared this with the Windy Point and Sunshine Bay residents, Eastbourne Community Board, and other key stakeholders for a 3-week consultation period. The BSUDP is due to be submitted to HCC and GWRC for certification by mid-April. There is some pushback from the residents of Windy Point on the use of balustrades which are partially blocking the views. The balustrades are necessary to address the high risk from falling (2.6metre fall on sharp rocks).

 

Procurement and construction

There is threat a threat that resources will be scarce in line with construction.

Low

The Alliance now mobilising resources and procuring materials for enabling works in June and main construction works on-site in August 2022.

Mana Whenua support

There is a risk that mana whenua does not support the Project

Low

The Project is now fully integrated to the Te Ara Tupua Mana Whenua Steering Group. They have also endorsed the cultural narrative, and cultural design overlays for the Project.

Successful launch last February of the Project’s name - Tupua Horo Nuku, which was gifted by mana whenua

Climate Change Impact and Considerations

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

Consultation

14.  As noted in paragraph 9, the bay specific plans for Sunshine Bay and Windy Point are currently out for a 3-week consultation period.

Legal Considerations

15.  There are no legal considerations to this report.

Financial Considerations

16.  Current approved costs by HCC for the construction of Windy Point and Sunshine Bay:

Item

Note

Value

Alliance design, construction, and risk

Risk still to be validated

$15,143,832

Client managed costs (3%)

Salaries, Advisors, comms/events

$454,314

Insurance (estimate based on $952,000 for 6 bays)

Contract works, indemnity etc.

$250,000

Client retained contingency

Estimate

$1,000,000

Cost for Windy Point and Sunshine Bay

 

$16,848,146

 

17.  With the costs of the first two bays being higher than they were originally budgeted for, this will mean that the costs for completion of the remaining bays will also be higher than currently budgeted for.

18.  A key risk to the overall project delivery is the rising costs in the construction sector due to Covid-19. Design and value engineering/management initiatives to minimise the increase in cost are being investigated.

19.  The Alliance will also be progressing the development of the target outturn cost (TOC) to deliver the other four bays of the Project. This work will inform additional funding discussions with Waka Kotahi and CIP.

20.  Discussions with CIP and Waka Kotahi officers are on-going to request for additional funding required to deliver the overall six bays.

21.  Table 1 and 2 show the budgets in the Long-Term Plan 2021-2031 which were approved by Council following the public consultation process and updated for Council decisions made in the preparation of the draft Annual Plan 2022-23. This shows the timing of the capital investment as well as the funding from Waka Kotahi and from the COVID response and recovery fund. The Financial Delegations Policy states that Council approval is required to exceed the total LTP budget level. A detailed report presented to the LTP/Annual Plan Subcommittee on 16 December 2021 confirmed Council approval to proceed with the construction of the first two bays. Further decisions will be progressed when the costing information for the other four bays has been completed in Q4 2022.

22.  The significance of impact of any future budget decisions will be considered alongside the outcomes of discussions with our funding partners. This will include the consideration of whether there is any need for Council to consult on an LTP amendment.

Table 1: Revenue/Funding sources 

Financial year

$M

2020/21

2021/22

2022/23

2023/24

2024 /25

2025-31

Total

Annual plan 2021-2031

 

0.51

3.78

13.59

4.53

 

 

22.41

Waka Kotahi subsidy funding

0.51

1.28

4.59

1.53

 

 

7.91

CIP funding*

 

2.50

9.00

3.00

 

 

14.50

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


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

2025-31

Total

Annual Plan 2021-2031

1.00

5.00

18.00

6.00

 

 

30.00

 

Appendices

There are no appendices for this report.   

 

 

Author: Jon Kingsbury

Head of Transport

 

Reviewed By: Daniel Koenders

Manager Financial Strategy & Planning

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development

 


MEMORANDUM                                                  1                                                           19 April 2022

Our Reference          22/790

TO:                      Chair and Members

Audit and Risk Subcommittee

FROM:                Andrew Quinn

DATE:                30 March 2022

SUBJECT:           Naenae projects - progress update

 

Recommendation

That the Subcommittee notes and receives the memorandum.

 

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 held on 15 February 2022.

Naenae Pool & Fitness Centre

2.    Since the last report in February 2022, there has been good progress on the Naenae Pool and Fitness Centre. Work continues to progress on all aspects of the project to maintain the programme agreed with Crown Infrastructure Partners (CIP).

3.    Design plans for the new facility are at the developed design stage and we are preparing for stage gate sign off. Part of the sign off process includes a cost and scope check to ensure that the project will still deliver the original outcomes and costs can be contained within the assigned budget.

4.    The application for resource consent was lodged in March 2022 as planned and is currently being assessed for completeness. While this is being processed the team will proceed with detailed design and start work on building consent applications.

5.    Demolition of the old pool is taking longer than planned, due mostly to the extent of the pool substructure below ground, the media (vacuum sand) used for filtration and the presence of asbestos in the old community hall. The asbestos has been safely disposed of and it is unlikely that the public were exposed to any hazards. Latest pictures of the demolition can be found at Appendix 1 of this report. 

6.    Demolition work will now continue through April 2022 and up to 80% of the material arising from the demolition is being recycled including the concrete which is being crushed and re-used to fill in the excavations.

7.    In May 2022 we will start to prepare the worksite for the construction phase. This will involve the erection of temporary fence around the site, the creation of welfare facilities for the construction workers and a compound for laying down materials. 

8.    The art on the current panels on the fence will be re-used, and additional panels are being designed to tell the story of the project and provide updates. 

9.    We have also begun to procure through Main Contractor Apollo some of the major items for the pool commencing with the tanks for the main pool and leisure pools. This will be followed by the moveable floor and hydro-slide.

Naenae Town Centre development

10.  Planning continues for the development of the old Post Office as a new space  for the Naenae community. 

11.  This is being progressed with the Community Advisory Group (CAG) on a co-design basis using Council’s own Urban Design team to facilitate the process.

12.  Images of the new designs can be found at Appendix 2 to this report.

Risk

13.  Risk events continue to be managed on a pro-active basis by having pre-prepared mitigations ready to implement. For example, the asbestos found in the community hall has been dealt with immediately and with minimal risk to health. Similarly, filtration media from the old plant room has been disposed of with little disruption to the programme.

14.  The cost of the project is reported to be tracking well to the budget of $68M, with only mild exposure to the prevalent construction industry risks of material shortages and cost escalation. This is possible because of the early appointment of Main Contractor Apollo Projects who have been able to secure the materials required ahead of time.

15.  The twenty (20) top-rated risks for the Naenae Pool and Fitness Centre project are reported to this Subcommittee and included at Appendix 3 of this report. There are no major changes in the risk profile to report, although the risk of COVID19 interruptions and delays continues to affect the demolition crews through isolations.

Financial Considerations

16.  The project team reviewed and updated the current financial profile of the project against the Long-Term Plan 2021-2031 (specifically for the 2022/23 Annual Plan). As reported above, the project is still tracking well to the budget cap of $68.0M.

17.  Crown Infrastructure Partners (CIP) provide co-funding of $27.0M through the COVID-19 response and recovery fund. Council is currently investigating sourcing its contribution of $41.0M via the Local Government Funding Agency’s Green, Social and Sustainability Lending Programme which offer savings over a 30-year loan period. A proposal for this will go to the April meeting of the Policy, Finance and Strategy Committee.

Climate Change Impact and Considerations

18.  The Greenstar rating system has been developed by the NZ Green Building Council to encourage building owners to use sustainable technologies and energy saving devices to reduce the carbon footprint whilst in use. The system tool is used to evaluate environmental performance of the building across the nine (9) categories of management, indoor environment quality, energy, transport, water, materials, land use & ecology, emissions, and innovations. 

19.  The design team are developing environmentally sustainable technologies working in conjunction with Callaghan Innovation. It is hoped that the building once completed will achieve as a minimum, a Greenstar rating of 5 (New Zealand Excellence). Examples of design features and initiatives include.

·    High level of maintenance and serviceability of services and structure

·    A building that is resilient to the impacts of a changing climate and natural disasters

·    Metering and monitoring of energy and water use

·    Re-cycling of demolition waste products and ability to separate operational waste

·    High quality indoor air quality; high standards of acoustic, lighting, visual and thermal comfort

·    100% reduction in Green-house gases from the previous pool

·    EV parks with charging points and secure bike stands

·    The use of glu-laminated timber for the main pool hall structures

 

Legal Considerations

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

 

 

Appendices

No.

Title

Page

1

Appendix 1-Demolition progress photo

91

2

Appendix 2-Naenae Community Centre images

92

3

Appendix 3-Naenae Pool risk register

100

 

Author: Andrew Quinn

Project Manager (Naenae)

 

 

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities

 

 

 

 


Attachment 1

Appendix 1-Demolition progress photo

 

 


Attachment 2

Appendix 2-Naenae Community Centre images

 









Attachment 3

Appendix 3-Naenae Pool risk register

 


                                                                                       1                                                           19 April 2022

Audit and Risk Subcommittee

30 March 2022

 

 

 

File: (22/608)

 

 

 

 

Report no: ARSC2022/2/64

 

Audit and Risk Subcommittee Forward Programme 2022

 

 

 

 

 

Recommendation

That the Subcommittee receives and notes the Forward Programme for 2022 attached as Appendix 1 to the memorandum.

 

Purpose of Memorandum

1.  To provide the Audit and Risk Subcommittee (the subcommittee) with a Forward Programme of work planned for the subcommittee for 2022.

Background

2.  The Terms of Reference for the subcommittee requires the subcommittee to have 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.

3.  The Forward Programme for 2022 provides a planning tool for both members and officers to co-ordinate programmes of work for the year.  The forward programme is attached as Appendix 1 to the memorandum.

Forward Programme

 

4.    The Forward Programme is a working document and is subject to change on a regular basis.


 

Appendices

No.

Title

Page

1

Appendix 1: Audit and Risk Subcommittee Forward Programme 2022

103

 

Author: Toi Lealofi

Democracy Advisor

 

 

 

Approved By: Kathryn Stannard

Head of Democratic Services

 

 

 

 

 

 

 

 

 


Attachment 1

Appendix 1: Audit and Risk Subcommittee Forward Programme 2022