Agenda of Audit, Risk and Finance Subcommittee

Audit, Risk and Finance Subcommittee

24 May 2022

Page No.

Karakia and Mihi Timatanga

1. Apologies

Nil

2. Confirmation of Order of Business

3. Interests

3.1 Updates to the Interests Register

3.2 Identify any conflicts of interest in the agenda

4. Public Forum

5. Confirmation of Minutes

5.1 22 February 2022 8 - 14

Document number M19252

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 22 February 2022, as a true and correct record.

6. Chairperson's Report 15 - 16

Document number R26893

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Chairperson's Report (R26893).

7. Privacy Act 2020 - reporting 17 - 20

Document number R26518

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Privacy Act 2020 - reporting (R26518)

8. The Health and Safety at Work Act 2015 and Elected Members 21 - 27

Document number R26539

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report The Health and Safety at Work Act 2015 and Elected Members (R26539) and its attachment (A2873272).

9. Quarterly Health, Safety and Wellbeing Report - 31 March 2022 28 - 45

Document number R26769

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Health, Safety and Wellbeing Report - 31 March 2022 (R26769) and its attachment (A2872306).

10. Draft Annual Internal Audit Plan to 30 June 2023 46 - 54

Document number R26801

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Draft Annual Internal Audit Plan to 30 June 2023 (R26801) and its attachment (A2867251).

Recommendation to Council

That the Council

1. Approves the Draft Annual Internal Audit Plan for the year to 30 June 2023 (A2867251).

11. Quarterly Internal Audit Report - 31 March 2022 55 - 67

Document number R26792

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Internal Audit Report - 31 March 2022 (R26792) and its attachment (A2813648).

12. Quarterly Risk Report - 31 March 2022 68 - 97

Document number R26793

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Risk Report - 31 March 2022 (R26793) and its attachment (A2587873).

13. Quarterly Finance Report - 31 March 2022 98 - 126

Document number R26662

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Finance Report - 31 March 2022 (R26662) and its attachments (A2881543, A2867009, and A2880764).

Confidential Business

14. Exclusion of the Public

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Excludes the public from the following parts of the proceedings of this meeting.

2. 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:

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Audit, Risk and Finance Subcommittee Meeting - Confidential Minutes - 22 February 2022	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege · Section 7(2)(c)(ii) To protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest
2	Quarterly Update on Debts - 31 March 2022	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege
3	Quarterly Report on Legal Proceedings	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(g) To maintain legal professional privilege

Karakia Whakamutanga

Audit, Risk and Finance Subcommittee Minutes - 22 February 2022

Minutes of a meeting of the

Audit, Risk and Finance Subcommittee

Te Kōmiti Āpiti, Kaute / Tūraru / Pūtea

Held in the via Zoom on Tuesday 22 February 2022, commencing at 9.00a.m.

Present: Mr J Peters (Chairperson), Her Worship the Mayor R Reese, J Edgar, M Lawrey, R Sanson and Mr J Murray

In Attendance: Group Manager Strategy and Communications (N McDonald), Group Manager Corporate Services (N Harrison), Group Manager Environmental Management (C Barton), Team Leader Governance (R Byrne), Governance Adviser (K McLean), Governance Support Officer (A Bryce-Neumann)

Apologies : Nil

1. Apologies

There were no apologies

2. Confirmation of Order of Business

There were no changes to the order of business.

3. Interests

There were no updates to the Interests Register, and no interests with items on the agenda were declared.

4. Public Forum

There was no public forum.

5. Confirmation of Minutes

5.1 25 November 2021

Document number M19121, agenda pages 8 - 14 refer.

Resolved ARF/2022/001

That the Audit, Risk and Finance Subcommittee

1. Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 25 November 2021, as a true and correct record.

Murray/Sanson Carried

6. Chairperson's Report

Document number R26631, agenda pages 15 - 16 refer.

Audit, Risk and Finance Subcommittee Chairperson, John Peters, took the report as read.

Resolved ARF/2022/002

That the Audit, Risk and Finance Subcommittee

1. Receives the report Chairperson's Report (R26631).

Peters/Edgar Carried

7. Service Delivery Reviews (s17A reviews) work programme

Document number R26275, agenda pages 17 - 25 refer.

Economic and Policy Adviser, Gareth Power Gordon, presented the report and answered questions about proactivity, requested table that outlined key items, forward thinking and forward reporting. The addition of clause two was made to reflect this discussion.

Discussion was held around the Section 17a Review of Three Waters activities being delayed/deferred, Mr Power Gordon confirmed that the reviews were scheduled for 2022/23 and that the recommendation was an exemption until the government had made their final announcement around the government reform programme, noting that the announcement would outline if the services were being retained by Council or moving to a water services entity.

The Motion was taken in parts.

Resolved ARF/2022/003
	*That the Audit, Risk and Finance Subcommittee* 1. Receives the report Service Delivery Reviews (s17A reviews) work programme (R26275) and its attachment (A2762199).
Sanson/Edgar Carried
Resolved ARF/2022/004
	*That the Audit, Risk and Finance Subcommittee* *2. Requests* a six-monthly report to the Audit, Risk and Finance subcommittee providing a rolling 2-year contract review work programme and section 17A review work programme as well as monitoring of progress on the completion of the reviews.
Sanson/Edgar

Resolved ARF/2022/005
	*That the Council* *1. Approves retention of the current threshold that triggers a service delivery review under section 17A of the Local Government Act 2002; and*
Sanson/Lawrey Carried
Resolved ARF/2022/006
	*That the Council* 2. Approves applying the two exemptions under the Local Government Act 2002 sections 17A(3)(A) and 17A(3)(b) for the Nelson Regional Sewerage Business Unit and Utilities – Stormwater/Flood Protection/Wastewater (including Wastewater Treatment Plant(s)/Water Supply.
Edgar/Sanson

The meeting was adjourned from 10.15am until 10.28am.

8. Quarterly Finance Report - 31 December 2021

Document number R26519, agenda pages 26 - 50 refer.

Manager Finance, Prabath Jayawardana, presented the report and answered questions.

Health, Safety and wellness Adviser, Malcolm Hughes, answered questions regarding the Civic House ceiling tile project and progress. It was agreed that officers provide an update to the Subcommittee prior to the next meeting outlining the timeframes for the project and assurance that the risks had been mitigated.

Group Manager Environment Management, Clare Barton, answered questions regarding the Nelson Plan, noting she would circulate the documentation that supported the Nelson Plan project being paused.

Group Manager Corporate Services, Nikki Harrison, answered questions regarding KPI’s that had not been met but were within Council’s control, noting that enhanced reporting could be implemented for these KPI’s.

Resolved ARF/2022/007

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Finance Report - 31 December 2021 (R26519) and its attachments (A2829541, A2821555, and A2750424).

Sanson/Edgar Carried

9. Quarterly Health, Safety and Wellbeing Report - 31 December 2021

Document number R26521, agenda pages 51 - 68 refer.

Health Safety and Wellness Adviser, Malcolm Hughes, presented the report. He answered questions regarding the review of key health and safety risks, radioactive items found at Founders Heritage Park collection, workplace survey and COVID-19.

Resolved ARF/2022/008

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Health, Safety and Wellbeing Report - 31 December 2021 (R26521) and its attachment (A2818999).

Murray/Sanson Carried

10. Quarterly Internal Audit Report - 31 December 2021

Document number R26485, agenda pages 69 - 72 refer.

Audit and Risk Analyst, Chris Logan, presented the report and answered questions.

Resolved ARF/2022/009

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Internal Audit Report - 31 December 2021 (R26485) and its attachment (A2813648).

Sanson/Edgar Carried

11. Quarterly Risk Report - 31 December 2021

Audit and Risk Analyst, Chris Logan, presented the report and answered questions regarding service delivery, annual revenue and risks.

Resolved ARF/2022/010

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Risk Report - 31 December 2021 (R26486) and its attachment (A2587873).

Lawrey/Her Worship the Mayor Carried

12. Exclusion of the Public

Resolved ARF/2022/011

That the Audit, Risk and Finance Subcommittee

1. Excludes the public from the following parts of the proceedings of this meeting.

Sanson/Her Worship the Mayor Carried

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Audit, Risk and Finance Subcommittee Meeting - Confidential Minutes - 25 November 2021	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege · Section 7(2)(c)(ii) To protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest · Section 7(2)(j) To prevent the disclosure or use of official information for improper gain or improper advantage
2	Quarterly Update On Debts - 31 December 2021	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege
3	Quarterly Report on Legal Proceedings	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(c)(ii) To protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest · Section 7(2)(g) To maintain legal professional privilege

The meeting went into confidential session at 11.36am and resumed in public session at 12.00pm.

13. Restatements

It was resolved while the public was excluded:

1	CONFIDENTIAL: Quarterly Update On Debts - 31 December 2021
	2. Agrees that the Report (R26522) and its attachment (A2830075) remain confidential at this time.

2	CONFIDENTIAL: Quarterly Report on Legal Proceedings
	2. Agrees that the report Quarterly Report on Legal Proceedings (R26499) and its attachment (A2825562) remain confidential.

There being no further business the meeting ended at 12.01pm.

Confirmed as a correct record of proceedings by resolution on (date)

Resolved

Item 7: Privacy Act 2020 - reporting

Audit, Risk and Finance Subcommittee

24 May 2022

REPORT R26518

Privacy Act 2020 - reporting

1. Purpose of Report

1.1 To provide an update on actions underway to monitor and manage privacy related matters following the coming into force of the Privacy Act 2020.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Privacy Act 2020 - reporting (R26518)

3. Background

3.1 On 1 December 2020 the Privacy Act 2020 came into force. This is the first comprehensive reform since the Privacy Act 1993 was enacted and brings New Zealand legislation into better alignment with comparable overseas jurisdiction.

3.2 The most significant change for Council is the mandatory notification (to the Privacy Commissioner) of serious breaches. Other changes to the Act include the ability to enforce requirements on internationals undertaking business in New Zealand, new refusal grounds for requests, and the increase in number and strengthening of compliance tools and offences under the Act.

3.3 The requirement for an agency to appoint a Privacy Officer remains (s201, Privacy Act 2020). Council’s Privacy Officer is the Group Manager Strategy and Communication. The Group Manager is supported in the role by the Manager Governance and Support Services, as well as having input from the Chief Information Officer, Legal Services Team, the Information Management Team and Official Information Adviser as required.

4. Systems and controls

Privacy policy and breach management plan

4.1 Work is underway on a privacy policy, breach management plan and associated compliance register to outline the expectations of the organisation in relation to privacy matters and provide guidance in responding to a possible or actual breach of personal information.

4.2 The policy will apply to officers, employees and members of Council, in line with section 10 of the Privacy Act 2020 (which states that personal information is deemed held by the agency – that is, Council – if held by an officer, employee or member of that agency).

4.3 It will also be applied to volunteers, as these roles typically only collect and or hold personal information on behalf of Council. The application to contractors (where they are not acting of officers of Council) is more complex and currently being worked through.

4.4 Work to identify other privacy-related policies or processes which need to be developed or updated has also now begun (for example, work on a process for responding to requests under the Privacy Act).

4.5 The guidance is being prepared based on best practice outlined by the Office of the Privacy Commissioner.

Information Technology Security

4.6 A significant number of activities have been led by the Customer and Information Services business unit, to ensure Council continues to meet security best practice. The results include increased privacy protections.

4.7 These activities include:

· The annual external Security Review has been completed,

· A contractor has been engaged for 24/7 security monitoring and proactive response,

· Specific implementation of security improvements for staff when remotely accessing the internet has taken place,

· Restrictions have been imposed on the duration of contractor network access,

· The approach to cyber security awareness for staff has been redesigned,

· A review of CCTV implementation has been completed, along with equipment improvements and a policy update,

· Outside organisation emails are now flagged to assist with response to spoofing attempts, and

· Implementation of smart hyperlinks checking on emails has been completed, as well as attachment scan checking on internal emails.

Training and advice

4.8 One-to-one training and advisory opportunities have occurred regularly throughout 2021 and 2022. Topics covered have been broad and included privacy statements, the limitations on use of existing personal information, and safe storage of material to avoid breaches.

4.9 Privacy is also touched on briefly within the training on Official Information and processes for responding to requests under the Local Government Official Information and Meetings Act 1987 (LGOIMA), to help identify a Privacy Act request that might be received via through LGOIMA channels and in recognition that a request may reference (and must be responded to under) both Acts.

4.10 A number of webinars and training opportunities have been attended. This included several webinars in November/ December 2021 which took the form of interviews with the outgoing Privacy Commissioner John Edwards, who took up the role of UK Information Commissioner in January this year. These interviews provided useful guidance as to Mr Edwards’ views on the future of privacy and recommended areas to focus on, including ensuring that privacy awareness is an integral part of the culture of an organisation at all levels. Liz MacPherson (Deputy Privacy Commissioner) is now Acting Privacy Commissioner as of 1 January 2022.

Early internal compliance investigations

4.11 Three compliance matters were raised and investigated in the 2021 calendar year.

4.12 One was raised by a member of the public when a phone number was unintentionally provided to another party in an email thread.

4.12.1 The unintended recipient was contacted, it was confirmed that the thread including the number had not been provided to any others, and the thread confirmed as destroyed.

4.12.2 The affected parties were contacted and advised of the actions taken to rectify the incident.

4.12.3 Targeted training on managing personal data was undertaken with the staff involved.

4.13 A second incident occurred where a phone number was given to a contractor in order to complete some work that had been notified to Council. The individual who had contacted Council had not expected their number to be provided to a third-party contractor and raised a concern.

4.13.1 Following this incident Council updated its processes. All callers to the main Council line now hear an automated message advising that their contact details may be provided to contractors where this would usually facilitate completing work, and advising them to notify the customer service representative they are about to speak to if they do not wish this to occur.

4.14 The third incident identified that an official information (LGOIMA) response published to the website in August 2020 had incorrectly attached to it some of the source data for the statistics provided including personal information.

4.14.1 Following use of the Privacy Commission’s “NotifyUs” online tool, which confirmed the threshold for mandatory notification had not been met, affected parties were contacted with a letter of apology.

4.14.2 A thorough process for the publication of LGOIMA responses to the website has since been developed, including multiple points of assessment and review prior to publication to prevent reoccurrence.

4.15 One compliance matter has been raised and investigated in the 2022 calendar year to date.

4.15.1 Although raised in 2022 the matter related to two email communications sent in the second half of the 2021 year.

4.15.2 Following a conservative initial assessment of the issue which had one affected party, the Office of the Privacy Commissioner was notified, and provided with updates as the investigation progressed.

4.15.3 The findings of the investigation were that Privacy Principle 11 had not been upheld. The investigation has recently been concluded and learnings from the matter are to be built into staff training.

5. Conclusion

5.1 Following the coming into force of the Privacy Act 2020 on 1 December 2020, a number of activities have been underway to ensure Council is well-placed to upskill workers, and to monitor and manage risk in this space.

Author: Devorah Nicuarta-Smith, Manager Governance and Support Services

Attachments

Nil

Item 8: The Health and Safety at Work Act 2015 and Elected Members

Audit, Risk and Finance Subcommittee

24 May 2022

REPORT R26539

The Health and Safety at Work Act 2015 and Elected Members

1. Purpose of Report

1.1 To outline the responsibilities of Nelson City Council applicable to Elected Member activities under the Health and Safety at Work Act 2015 (“the Act”).

2. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report The Health and Safety at Work Act 2015 and Elected Members (R26539) and its attachment (A2873272).

3. Background

3.1 This report was requested by resolution at the 25 November 2021 Audit, Risk and Finance Subcommittee. This arose due to a lack of clarity regarding the application of the Act to Elected Members and their activities, including interactions with the public and wellbeing.

4. Application of the Act to Elected Member Activities

4.1 The Act imposes duties on employers as persons conducting a business or undertaking (PCBU) to its workers, workers whose activities are influenced and directed by it and “other persons”. Elected Members fall under the definition of “other persons” under the Act (s 36(2)).

4.2 Elected Members have dual Governance and Representative roles and are not Nelson City Council (“Council”) workers for the purposes of the Act. Similarly, Elected Members are not employees of the Council.

4.3 Exercise of the Governance role includes making strategy and policy decisions for the benefit of the community, and the setting of overall direction for Council and Nelson. This requires attendance at Council meetings at the Council offices, as well as visits to other sites on behalf of the Council.

4.4 The Representative role includes building relationships with constituents and representing the Nelson community.

Where Council has a duty of care toward Elected Members

4.5 Council has a duty of care to Elected Members to ensure, as far as is reasonably practicable, that their health and safety is not put at risk from work that is carried out as part of Council’s ordinary business. This duty is limited to the extent to which Council has, or would reasonably be expected to have, influence and control over the risks.

4.6 To this end, Council has a duty of care in respect of Elected Members in the following situations:

· Elected Members’ attendance at Council meetings;

· Site visits on behalf of Council;

· The performance of duties related to Elected Members’ Governance roles at any location; and

· When Elected Members are at Council workplaces for the purpose of carrying out their Governance or Representative roles.

4.7 A non-exhaustive list of examples that would fall under the scope of the Act is:

· Attending a hui to discuss activity management plans at any location;

· In a Council workshop at any location;

· Meeting constituents at a Council workplace;

· Site visits for the purpose of health and safety due diligence; and

· While entering and exiting a Council workplace for any of the above activities.

4.8 In these situations Council has an obligation to eliminate, as far as is reasonably practicable, risks to Elected Members’ health and safety. Where it is not reasonably practicable to eliminate risks, Council has an obligation to minimise those risks so far as is reasonably practicable.

Where Council does not have a duty of care toward Elected Members

4.9 Council does not have a duty of care to Elected Members when they are performing their Representative role away from Council workplaces or premises controlled by the Council. This is because the health and safety of Elected Members in these circumstances is not put at risk from work carried out as part of the Council’s ordinary business (s 36(2)). However, when the Representative role is performed at a Council workplace, Council has a positive duty of care towards Elected Members under the Act.

4.10 A non-exhaustive list of examples that do not fall under the scope of the Act is:

· Attending an event if not directed by Council to attend.

· Meeting and greeting constituents in public.

Obligations of Elected Members

4.11 While Elected Members are not workers under the Act, nor employees of the Council, under the Act they are considered to be officers of Council (s 18). This confers some due diligence duties upon Elected Members to ensure the Council meets its health and safety obligations (s 44). However, when acting in their capacity as an Elected Member, failure to comply with these due diligence duties will not amount to an offence under the Act (s 52).

4.12 Elected Members must comply with due diligence under the Act to ensure the Council complies with the obligations imposed by the Act (s 44). Elected Members also have a level of personal responsibility for ensuring Council meets its obligations under the Act. To this end, Elected Members should proactively engage in health and safety matters during the exercise of their Governance role.

4.13 As “other persons” under the Act, Elected Members while at a Council controlled workplace must; take reasonable care of their own health and safety, and that their acts or omissions do not adversely affect the health and safety of other persons; and comply as far as reasonably able with any reasonable instruction given by Council to allow Council to comply with duties under the Act.

5. Conclusion

5.1 Council has duty of care toward Elected Members in respect of health and safety in some but not all circumstances. Primarily this is when the activity is either:

· Taking place in a workplace controlled or influenced by Council; or

· Relating to the Elected Members Governance role as part of the ordinary business of Council.

5.2 Councils duties are limited to the extent it has or would reasonably be expected to have influence and control over risks to health and safety.

Author: Malcolm Hughes, Health Safety and Wellness Adviser

Attachments

Attachment 1: Appendix A - Health and Safety at Work Act 2015 (A2873272) ⇩

Item 9: Quarterly Health, Safety and Wellbeing Report - 31 March 2022

Audit, Risk and Finance Subcommittee

24 May 2022

REPORT R26769

Quarterly Health, Safety and Wellbeing Report - 31 March 2022

1. Purpose of Report

1.1 To provide the Subcommittee with a report on health, safety and wellbeing data collected over the period January to March 2022.

1.1 To update the Subcommittee on key health and safety risks, including controls and treatments.

2. Summary

2.1 Incidents reported for this period include a number of security incidents at Founders Heritage Park.

2.2 Council’s key health and safety risks remain unchanged since the previous report.

3. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Health, Safety and Wellbeing Report - 31 March 2022 (R26769) and its attachment (A2872306).

4. Background

4.1 Elected members, as ‘Officers’ under the Health and Safety at Work Act 2015 (HSWA), are required to undertake due diligence on health and safety matters. Council’s Health and Safety Governance Charter states that Council will receive quarterly reports regarding the implementation of health and safety. Council has delegated the responsibility for health and safety to the Audit, Risk and Finance Subcommittee.

4.2 Health, safety and wellbeing performance data reports provide an overview based on key lead and lag indicators. Where a concerning trend is identified more detail is provided in order to better understand issues and implement appropriate controls.

5. Discussion

5.1 Incidents of note

5.1.1 The previous report identified that some items in the Founders collection store may contain radioactive materials. A detailed report following a specialist assessment has confirmed that these items are low risk and adequate controls are in place.

5.1.2 A significant incident occurred at Elma Turner Library when a trespassed person activated the fire alarm. This resulted in a full evacuation of the library. Attending fire crew members were assaulted by the person who was bleeding from injuries sustained when activating the fire alarm. Police were called in the early stages of this incident.

5.1.3 Injury illness incidents included two medical events and a back injury while lifting.

5.1.4 Near misses included a library customer choking incident and a staff member slipping and falling into shallow slow moving water during river monitoring work. Dry clothing was available in the team’s vehicle.

5.1.5 The majority of security incidents for this period related to compliance with COVID-19 controls such as vaccine pass and mask wearing requirements.

5.1.6 During this period 7 security incidents at heritage facilities were reported. These included the theft of copper spouting from Broadgreen House and a number of break-ins or vandalism at Founders Heritage Park. Actions to improve security at Founders are being progressed as budgets will allow.

5.2 COVID-19 Response

5.2.1 During the Omicron outbreak weekly reporting to the COVID-19 Incident Management Team (IMT) includes the number of staff who have tested positive to COVID-19 or are self-isolating. Breaking this down by business unit helps to understand impact and potential impact on Council staff, facilities and services.

5.2.2 Disruption to services delivered by Council staff has been minimal, however there have been some delays of infrastructure projects due to contractors impacted by COVID-19.

5.2.3 Regular screening of staff that are required to be in the workplace using Rapid Antigen Tests is an additional control that has been implemented during the Omicron outbreak to further reduce the likelihood of workplace transmission.

5.3 Lead Indicators

5.3.1 Overspeed events as reported by ERoad in vehicle monitoring remain below 1 every 300kms travelled.

5.3.2 Contractor health and safety oversight activities have reduced due to the need to minimise contact with other workplaces.

5.4 Staff Survey

5.4.1 The Ask Your Team staff survey was completed in March by 81.7% of staff. The previous survey was in 2020.

5.4.2 Health and safety and wellbeing questions in the survey continue to be some of the highest scoring with 4 in the top 10 questions. The average score of these questions improved slightly over the previous survey.

5.4.3 The most improved score for a health safety and wellbeing question was ‘the Senior Leadership Team creates a culture where health and safety is actively lead from the top’.

5.5 Due Diligence Activities

5.5.1 One safe work observation or safety tour was reported for this period. One SLT member and three elected members attended this visit to the Modellers Reserve redevelopment.

5.5.2 The Omicron COVID -19 outbreak has impacted the scheduling of these visits and the one that did go ahead had the numbers attending significantly reduced to ensure COVID-19 risk could be well managed.

6. Key Health, Safety and Wellbeing Risks

6.1 Key health safety risks are assessed to be unchanged since the last report.

6.2 Changes to treatments and controls since the previous report are shown in red text.

6.3 The risk of heavy suspended ceiling tiles falling or whole ceiling systems failing during an earthquake is captured in the key risk ‘High energy Sources’. Temporary solutions are being investigated to reduce this risk as soon as practicable.

6.4 Remediation of the of the heavy ceiling tiles and inadequately braced ceiling grids In Civic House has been delayed, pending a workshop to further discuss this project.

Author: Malcolm Hughes, Health Safety and Wellness Adviser

Attachments

Attachment 1: Health, Safety and Wellbeing Report - January-March 2022 (A2872306) ⇩

Item 10: Draft Annual Internal Audit Plan to 30 June 2023

Audit, Risk and Finance Subcommittee

24 May 2022

REPORT R26801

Draft Annual Internal Audit Plan to 30 June 2023

1. Purpose of Report

1.1 To approve the Draft Annual Internal Audit Plan to 30 June 2023.

2. Summary

2.1 The Internal Audit Charter, approved by Council on 15 November 2018, requires that at least annually, the internal auditor submits to the Audit, Risk and Finance Subcommittee (ARF) an internal audit plan for review and recommendation to the Council for approval.

3. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Draft Annual Internal Audit Plan to 30 June 2023 (R26801) and its attachment (A2867251).

Recommendation to Council

That the Council

1. Approves the Draft Annual Internal Audit Plan for the year to 30 June 2023 (A2867251).

4. Background

4.1 The internal audit plan consists of a work schedule as well as budget and resource requirements for the next fiscal year. These items are described in the attachment Draft 2022-23 Internal Audit Plan – 30 June 2023.

4.2 The internal audit plan has been developed based on a prioritisation of a list of all potential audit topics using a risk-based methodology.

4.3 Feedback on the draft topics was sought from the Chair of the Audit, Risk and Finance Subcommittee prior to the Senior Leadership Team review. Neither the Chair nor the Senior Leadership Team requested any changes to the planned topics.

5. Discussion

5.1 Last year, the audit plan contained three planned topics and a placeholder for two ad hoc audit topics. This year, the audit plan contains four planned topics and a placeholder for one ad hoc audit topic. As one of the planned audits includes use of an external advisor, no budget allowance has been made for the ad hoc audit topic (last year’s allowance $25,000).

5.2 The planned topics are:

5.2.1 Controls audit of workplace stress (first half of 2022-23)

5.2.2 Annual Fraud & Conflict of Interest Control Effectiveness Assessment (first half of 2022-23)

5.2.3 Records management compliance following Objective to SharePoint Migration Project (second half of 2022-23)

5.2.4 Resource Consents Case Reviews (second half of 2022-23, completed by an external highly experienced resource management practitioner)

5.3 More details for each planned topic and a list of potential ad-hoc audit topics is included in the attached.

6. Options

6.1 Option 1 – Preferred Option – Approve draft plan.

6.2 Option 2 – Reduce Planned Audits - involves removing one of the planned and replacing it with a placeholder for an ad-hoc audit topic

6.3 Option 3 – Swap-Out Option - involves removing one of the planned and replacing it with an item, selected by the Subcommittee, from the list of potential ad-hoc audit topics as per attachment Draft 2022-23 Internal Audit Plan to 30 June 2023.

Option 1: Approve Draft Internal Audit Plan (Preferred)
Advantages	· Greater certainty of the audit plan.
Risks and Disadvantages	· None
Option 2: Reduce Planned Audits
Advantages	· Greater flexibility to audit emerging risks.
Risks and Disadvantages	· Increased delivery risk as placeholder ad hoc audit topics not fully scoped.
Option 3: Swap-Out Option
Advantages	· Greater certainty of the audit plan.
Risks and Disadvantages	· Increased delivery risk as placeholder ad hoc audit topics not fully scoped.

Author: Chris Logan, Audit and Risk Analyst

Attachments

Attachment 1: A2867251 - Draft 2022-23 Internal Audit Plan - 30 June 2023 ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

This report provides a plan to assess whether certain areas of Council's risk management, governance and internal control processes are operating effectively.

Execution of the plan provides assurance that Council is effectively promoting the social, economic, environmental, and cultural well-being of communities in the present and for the future.

2. Consistency with Community Outcomes and Council Policy

This report aligns with the Internal Audit Charter, approved by Council on 15 November 2018.

3. Risk

If internal audits are not approved: the cost of external audits may increase, the frequency and severity of internal control failures may increase and it may become more difficult to retain Council’s current credit rating.

4. Financial impact

This decision will fit within existing budgets.

5. Degree of significance and level of engagement

This matter is of low significance because it does not directly impact financial decisions, or the levels of services provided. Therefore, no consultation is required.

6. Climate Impact

There has been no specific climate change impact considered in the preparation of this report.

7. Inclusion of Māori in the decision making process

No engagement with Māori has been undertaken in preparing this report.

8. Delegations

The Audit, Risk and Finance Subcommittee has the following delegations to consider the Annual Internal Audit Plan and the resourcing.

Areas of Responsibility:

· Internal audit

Powers to Recommend (if applicable):

· All other matters within the areas of responsibility or any other matters referred to it by the Council.

Item 12: Quarterly Risk Report - 31 March 2022

Audit, Risk and Finance Subcommittee

24 May 2022

REPORT R26793

Quarterly Risk Report - 31 March 2022

1. Purpose of Report

1.1 To provide information to the Audit, Risk and Finance Subcommittee on the organisational risks through to end of quarter three 2021-22.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Risk Report - 31 March 2022 (R26793) and its attachment (A2587873).

3. Background

3.1 This report includes information on risk management practice, a summary of Council risks and a deeper dive into key risk areas, sliced by risk theme (organisational risks) and reporting group.

4. Risk Management Practice

4.1 The 2021-22 risk management work plan is on track:

4.1.1 risk training for two business units was completed over quarter one of 2021-22;

4.1.2 partly automated risk reporting is now available to Group Managers to further embed management oversight of risk;

4.1.3 no progress has been made on reporting enterprise level risk metrics in this report to inform and test against an organisation wide risk appetite however this is only due in the second half of the financial year;

4.1.4 The risk management maturity self-assessment was completed and reported in quarter one of 2021-22; and

4.1.5 A review of the descriptions for the consequence domain Legal Compliance has been postponed to quarter one of 2022-23 (previously third quarter of 2021-22) following an initial scan which showed that the current description is similar to other councils so changes are likely to be minor.

5. Putting Organisational Risks in Context

5.1 This section summarises risks relating to Council and joint operations. Risks relating to subsidiaries and joint ventures are limited to ownership risks. Risks relating to contracted-out activities is limited to residual/non-contracted-out risks. Specific asset, activity, legal matter, or project risks, are rolled up into more general asset, activity, legal or project risks however any significant items are summarised in the last section.

5.2 There were 431 risk entries in the centralised register at 31 March 2021 compared to 427 in the prior quarter, with six risks deleted and ten risks added. Changes came from:

5.2.1 changes in employee conflicts of interest (six risks deleted and six risks added).

5.2.2 four newly reported risks, two from Parks and Facilities and two from Transport and Solid Waste business units

5.3 Nine of the risk entries have status overdue as treatments have not been signed off compared to six in the prior quarter. Ten to twenty overdue risk entries is considered reasonable given the treatment renewal process is new and the sign-off delays associated with newly identified risks.

5.4 The following chart is the heatmap for all the risk entries, noting that inherent risks are notionally before controls (including risk transfers), whilst residual risks are notionally after controls.

5.5 Risk entries are categorised in two ways:

5.5.1 risks with no apparent common theme or cause^{^[1]} and hence are unlikely to pose a threat at an organisational level (310 risk entries), and

5.5.2 risks with identified common themes or causes which create risk concentrations that pose a threat at an organisational level^{^[2]} (127 risk entries)

5.6 The latter is the focus of this report of which further detail is provided the next section.

6. Key Risk Areas By Theme (Organisational Risks)

6.1 With exception to R1 - Central-government-led-reforms, there have been no organisational risk movements to report during quarter three of 2021-22.

6.2 A summary of key risk themes is provided below. The attachment to this report describes each risk theme in more detail, its existing controls and planned risk treatments. For ease of comparison to the prior quarter, new text in the attachment has been coloured red.

6.3 R1 - Central-government-led-reforms (Owner: Chief Executive). A strategic review to define the projects within the three-waters transition program is in scoping and planning phase. The risk rating has increased to Very High (last quarter High).

6.4 R2 - Lifeline services failure (Owner: Group Manager Infrastructure). No new emerging risks to report at this time. The risk rating remains at Medium.

6.5 R3 - Illness, injury or stress from higher hazard work situations (Owner: Group Manager Corporate Services). Staff vacancies across various operating groups continue, impacting workloads and staff stress. The risk rating remains at High.

6.6 R4 - Loss of service performance from ineffective contracts and contract management (Owner: Chief Executive). Work on planned treatments has recommenced (previously delayed due to staff vacancies). The risk rating remains at Medium.

6.7 R5 - Compromise of Council service delivery from information technology failures (Owner: Group Manager Corporate Services). Council continues to monitor the cyber risk landscape and respond accordingly as demonstrated by participation in the local government cyber security continuous improvement programme. Increased risks from viruses and phishing attempts are being seen and have been actively met with increased security. The risk rating remains at Low.

6.8 R6 - Council work compromised by loss of and difficulties in replacing skilled staff (Manager People and Capability). A number of vacancies across the Environmental Management Group and Strategy and Communications Group were filled in quarter three of 2021-22. More challenging vacancies, which have been open for some time, are being reviewed to improve the likelihood of filling these roles. The fully reopened border, scheduled for October 2022, presents both opportunities for recruitment and risk of staff movement. The organisational risk rating remains at Medium.

6.9 R7 – Legal Risk (Group Manager Strategy and Communications). No new emerging organisational risks to report at this time noting that any new legal proceedings or emerging areas of increased litigation risk are separately reported in the quarterly report on legal proceedings. The risk rating remains at Medium.

6.10 R8 - Reputation damage and loss of public trust in the organisation (Group Manager Strategy and Communications). No new emerging risks to report at this time. The risk rating remains at Medium.

6.11 R9 - Disruption to Council service delivery due to significant increase in COVID-19 cases (Owner: Chief Executive). Elevated levels of working from home remain in place. The process for monitoring and reporting of employee COVID-19 infections and household contacts is in place and effective. Existing controls remain adequate. The organisational risk rating remains at Medium.

7. Key Risk Areas By Reporting Group

7.1 Infrastructure Group: COVID-19 related risks are being realised including on-site project delays from Omicron self-isolation requirements and previously noted related supply chain risks for materials. The Utilities and Roading business units, NTRLBU and NRSBU labour and contractor capacity remains constrained resulting in elevated operational risk. For the Utilities team, the situation is expected to deteriorate especially with the work expected on the three-waters reform ; resourcing risks related to three-waters reform are being explored by the Three Waters Transition project team.

7.2 Community Services Group: Risks associated with Council owned campgrounds (one operated and two leased) remain elevated whilst non-compliance remediation actions are being implemented.

7.3 Environmental Management Group: All but one business unit in this group has at least one staff vacancy. Non-priority work is being deferred where it can be including in City Development. The risk of non-compliance with statutory timeframes (resource and building consents) are being realised.

7.4 Strategy and Communications Group: Retention and recruitment remains an area of underlying risk.

7.5 Corporate Services Group: No new emerging risks to report at this time.

Author: Chris Logan, Audit and Risk Analyst

Attachments

Attachment 1: A2587873 - Council risk profile - 3Q22 key organisational risks for ARF ⇩

Item 13: Quarterly Finance Report - 31 March 2022

Audit, Risk and Finance Subcommittee

24 May 2022

REPORT R26662

Quarterly Finance Report - 31 March 2022

1. Purpose of Report

1.1 To inform the Subcommittee of the financial results for Council for the first three quarters of 2021/22, and to highlight any material variations.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Finance Report - 31 March 2022 (R26662) and its attachments (A2881543, A2867009, and A2880764).

3. Background

3.1 Quarterly reports on performance are being provided to each Committee on the performance and delivery of projects and areas within their responsibility.

3.2 The whole of Council financial reporting provided to this subcommittee focuses on the nine-month performance (1 July 2021 to 31 March 2022) compared with the year-to-date (YTD) approved capital and operating budgets.

3.3 The Quarterly report includes Nelson City Council performance only and does not include its subsidiaries, associates and Joint ventures.

3.4 Unless otherwise indicated, all information is against approved operating budgets, which is year one of the Long Term Plan 2021-31 (2021/22), plus any carry forwards, plus or minus any other additions or changes as approved by the Council.

3.5 Commentary is provided below for significant variances of +/- $100,000.

4. Financial Performance

4.1 For the nine months ending 31 March 2022, the Council’s draft deficit is $14.4m favourable to budget.

4.2 Profit and Loss

4.3 Income

4.4 Rates income is greater than budget by $108,000. Wastewater rates are over budget by $82,000 due to additional wastewater connections being added after wastewater charges had been set, resulting in more units than budgeted paying charges for the year.

4.5 Other income greater than budget by $10.6m with significant variances as follows:

4.5.1 Investment Management income is greater than budget by $9.8m. A non-cash gain on Council’s interest rate swaps of $8.6m has been recognised due to the increase in interest rates since last year. Last year we recognised a derivative liability of $7.7m and now it has become a derivative asset of $869,000 as at 31 March 2022. Reversal of last year liability and recognition of the derivative asset resulting in this non-cash gain of $8.6m. This has no rating impact.

An unbudgeted special dividend was received from Port Nelson of $280,000 which has been used to repay debt in accordance with Council policy. This dividend was paid in September 2021 for the 2020/21 financial year in addition to the $2 million dividend already recognised in this financial year. A further dividend of $750,000 has been received from Port Nelson ahead of budget, with the remainder budgeted to be received in June. Interest on Short Term Investment is over budget by $175,000 due to more funds being invested than planned as a result of pre-funding some debt to take advantage of favourable borrowing conditions at the time.

An adjustment for reduced income from rent relief provided by Council to tenants due to COVID-19 was made with the full budget held in this cost centre. Actual rent relief provided totals $217,000 and been granted across various cost centres but mainly in Trafalgar Centre, Esplanade & Foreshore Reserves, Greenmeadows Centre and Rental properties. Rent relief is tracking under budget, with YTD rent relief budget being $167,000 behind budget.

4.5.2 Forestry income is greater than budget by $935,000. Maitai Forest income is behind budget by $945,000 but anticipated to finish $402,000 over budget this year. Brook/York Valley Forest income is $655,000 over budget. Marsden Forest is $1.2m over a nil budget with work being brought forward from future years.

4.5.3 Saxton Field Stadium income is less than budget by $111,000. Casual Use income is under budget by $67,000 due to Covid restrictions with sporting events impacted by alert level changes. TDC’s contribution is $38,000 behind budget due to timing with the invoice for the quarter not processed until April.

4.5.4 Saxton Field income is less than budget by $194,000. Income from TDC for their contribution and recoveries is behind budget by $178,000 due to timing with the invoice for the quarter not processed until April.

4.5.5 Nelson Library income is greater than budget by $127,000. Unbudgeted DIA grant income of $134,000 has been received which is used to fund seconded staff and library electronic resources.

4.5.6 Economic Development income is greater than budget by $104,000. TDC’s contribution is $101,000 ahead of budget due to timing.

4.5.7 Parking Regulation income is greater than budget by $214,000. Infringement Fees are over budget by $194,000 with the new system capturing more incidents of non-compliance.

4.5.8 Parking and CBD Enhancement income is less than budget by $137,000. Rental Income is under budget by $104,000 due to ongoing Covid impacts as well as credits being provided to tenants who are on income-based rental agreements for the last financial year due to impacts from Covid restrictions.

4.5.9 Millers Acre Centre income is less than budget by $110,000. Rental income from tenants is less than budget by $119,000 due to vacancies and a budgeting error; budgeting for rental income from a vacant space.

4.5.10 Environmental Advocacy/Advice income is greater than budget by $198,000. Maitai Ecological Restoration Plan Grant is $180,000 ahead of budget due to timing.

4.5.11 Building Services income is greater than budget by $493,000. Building Consent income and Quality Assurance levies are ahead of budget by $287,000 and $140,000 respectively with stronger market demand than anticipated.

4.5.12 Resource Consents income is less than budget by $188,000. Consent Fees are $173,000 behind budget although the consent numbers are similar compared to last year. There is a lag in invoicing which is causing part of this variance. However, income is expected to finish at a similar level as last year and around $115,000 under budget by year end.

4.5.13 Waste Minimisation income is less than budget by $184,000. Local Disposal Levies recoverable from Landfill is $215,000 behind budget due to expenditure items it funds being behind budget. The details of the expenditure items are in the below programmed expenditure section.

4.5.14 Transfer Station income is greater than budget by $203,000. Local Disposal Levies recoverable from Landfill is $179,000 ahead of budget due to expenditure items it funds being ahead of budget. The details of the expenditure items are in the below base expenditure section.

4.5.15 Recycling income is less than budget by $106,000. Local Disposal Levies recoverable from Landfill is $92,000 behind budget due to expenditure items it funds being behind budget. The details of the expenditure items are in the below base expenditure section.

4.5.16 Wastewater income is less than budget by $386,000. Commercial Trade Waste income is under budget by $388,000 and forecasted to be $400,000 down by the end of the year due to the impacts of Covid lockdown.

4.6 Expenses

4.7 Staff Operating expenditure is less than budget by $321,000. This positive variance is caused mainly by a number of vacancies across the organisation and will cause a permanent variance in this financial year. Also January and February are the months that staff tends to use the largest level of annual leave across the organisation, which leads to lower levels of Staff Operating expenditure across the organisation. IT Costs, which are allocated through overhead, are tracking less than budget causing lower than budgeted allocated overhead year-to-date.

4.8 Base Expenditure is less than budget by $1.8m.

4.8.1 Civic House expenditure is less than budget by $114,000. Electricity is behind budget by $55,000 due to capacity restrictions for Civic House as well as a lag in receiving invoices from the new electricity supplier.

4.8.2 Forestry expenditure is greater than budget by $939,000. Brook/York Valley ($712,000) and Marsden Valley ($817,000) harvest costs are over budget due to work being brought forward. Maitai Valley harvest costs are $630,000 behind budget but forecast to finish $276,000 over budget.

4.8.3 Marina expenditure is less than budget by $116,000. Various base repairs & maintenance expenditure items are $83,000 behind budget with the majority now forecast to be spent on Hardstand maintenance in the last quarter. Electricity is $56,000 behind budget mainly due to a delay in billing with a change in supplier.

4.8.4 Subsidised Roading expenditure is less than budget by $454,000. Street Light Power ($105,000) and Bridge Maintenance ($58,000) are behind budget but expecting to be spent. Pre-seal repairs ($41,000), Crack Sealing ($59,000) and Travel Demand Management ($67,000) are under budget with ongoing difficulties in delivery due to Covid and a shift in the programme of works.

4.8.5 Monitoring The Environment expenditure is less than budget by $185,000. Several expenditure items are behind budget as the majority of the programme will be completed over Autumn.

4.8.6 Developing the Resource Management Plan expenditure is less than budget by $772,000. Significant changes have been approved by Council in November 2021 to change the programme of works. This has delayed major work that was to occur this year which has resulted in underspends across expenditure items with Nelson Plan expenditure being under budget by $929,000 and forecasting to be $1.0m under budget by the end of the year.

4.8.7 Resource Consents expenditure is greater than budget by $226,000. External Consultants are over budget by $241,000 and forecast to be $295,000 over budget by the end of the year. This is driven by staff vacancies requiring consultants to perform work to deal with the volume and complexity of consents being sought (see 4.7 above).

4.8.8 Recycling expenditure is behind budget by $118,000. The base contract is behind budget by $97,000 due to timing of invoices.

4.8.9 Water Supply expenditure is less than budget by $198,000. Electricity is $126,000 behind budget due to a delay in billing with a change in electricity supplier. Water Treatment ($88,000) and Headworks ($74,000) Maintenance are behind budget but expected to be spent. Insurance is $94,000 over budget due to higher than anticipated asset revaluations which was not known at the time of budgeting.

4.9 Unprogrammed Expenditure is greater than budget by $604,000.

4.9.1 Forestry expenditure is less than budget by $206,000. Tantragee Hazardous Tree Removal is under budget by $206,000 and forecast to finish under budget by $200,000.

4.9.2 Landscapes Reserves expenditure is greater than budget by $207,000. Heavy Rain events are $183,000 over a nil budget due to slips from rain events at Grampians, Botanical Hill and Sir Stanley Whitehead which is forecast to reach $360,000 by the end of the financial year. Savings across the activity of $150,000 have been found to fund this, with the Emergency Response Fund funding the remainder.

4.9.3 Subsidised Roading expenditure is greater than budget by $273,000. Winter Storm Damage is over budget by $154,000 due to the unexpected weather event. February 2022 Storm Damage is over budget by $64,000. These costs are subsidised by Waka Kotahi. Covid Response is over budget by $42,000 which is a one-off cost claimed by a contractor as part of a wider contract due to Covid related costs. This is expected to be subsidised by Waka Kotahi.

4.10 Programmed Expenditure is less than budget by $2.6m.

4.10.1 Conservation Reserves expenditure is less than budget by $158,000. Programmed Maintenance and Weed Control are behind the budget by $121,000 and $42,000 respectively with work expected to be increasing in autumn and both are forecast to be fully spent.

4.10.2 Esplanade & Foreshore Reserves expenditure is less than budget by $101,000. Programmed Maintenance is behind budget by $44,000 and will be used to cover contract variations, Modellers Pond Maintenance is $47,000 behind budget with a possible underspend and Bridge Maintenance is $30,000 behind budget with work commenced.

4.10.3 Marina expenditure is less than budget by $114,000. Professional Advice is behind budget by $89,000 due to uncertain timing for the governance review which has now commenced. Maintenance Dredging Consent is behind budget by $30,000 with the work to take place in the last quarter of the year.

4.10.4 Festivals’ expenditure is less than budget by $164,000. Opera in the Park is $90,000 under budget due to its postponement, Summer Festivals is $25,000 behind budget and forecast to be $35,000 under come the end of the year.

4.10.5 Economic Development expenditure is less than budget by $315,000. The Events Contestable Fund is behind budget by $133,000 while International Sporting Events are under budget by $84,000 and likely to finish $120,000 under by the end of the financial year due to the ongoing impacts of Covid.

4.10.6 Subsidised Roading expenditure is greater than budget by $218,000. Condition Inspections and Data Collection are over budget by $193,000 and will be offset by underspends elsewhere in the subsidised programme. Cycle Safety is $40,000 ahead of budget which should reduce over the remainder of the year.

4.10.7 Unsubsidised Roading expenditure is less than budget by $257,000. Akersten Street rock repairs are behind budget by $220,000 with design work with the contractor nearing completion and work set to commence in the final quarter of the financial year.

4.10.8 Environmental Advocacy/Advice expenditure is less than budget by $328,000. Nelson Nature expenditure items are behind budget by $234,000 with the bulk of the programme completed in quarter 4 and with some work completed and awaiting invoices, as well as contracts being in the process of finalising to complete the remainder of the work. Insulation Grant Programme is under budget by $36,000 due to a prior year applicant refunding an unspent portion of their grant.

4.10.9 Waste Minimisation expenditure is less than budget by $149,000. The Community Engagement Contract is under budget by $70,000 and likely to be underspent because of low community uptake due to covid disruptions. Street Litter Bin Technology is behind budget by $40,000.

4.10.10 Wastewater expenditure is less than budget by $171,000. Trade Waste Improvement Programme and Natural Hazards Risk Assessment are behind budget by $82,000 due to timing but on track to be fully spent. A variety of other expenditure items are also behind the budget across the activity.

4.10.11 Community Tools and Enablers expenditure is less than budget by $105,000. Community Partnership Funds grants are $87,000 behind budget due to $54,000 being received from DIA as their contribution to the programme.

4.11 Finance expenditure is greater than budget by $297,000. This is due to prefunding of some debt to take the advantage of favourable borrowing conditions prevailing during the year and is therefore partially offset by the higher than planned interest income of $175,000 as explained in 4.5.1.

4.12 Depreciation expenditure is greater than budget by $264,000.

5. Capital Expenditure

5.1 Capital Expenditure (including staff time, excluding vested assets)

5.2 As at 31 March 2022, Capital Expenditure is $16.5 million behind the Operating Budget of $53.9 million of which $7.1 million relates to Infrastructure, $1.2 million relates to Environment, $2.0 million relates to Corporate Services, $1.2 million relates to Strategic Development & Property, and $5.0 million relates to Community and Recreation.

5.3 Out of the $16.5 million variance above, $8.0 million relates to Level of Service, $7.1 million relates to Renewals and $1.2 million relates to Growth projects.

5.4 The largest year-to-date capital variances contributing to the $16.5 million variance are as follows:

· Washington Valley Stormwater Upgrade is under budget by $2.0m. It is forecast to finish $1.4m under budget. The project was awarded six months later than expected and did not start on site immediately, resulting in the project rephased to run over two years. The carry forward request is to allow the project to continue through 2022/2023 financial year, as was planned when contract was finalised.

· Elma Turner Library Extension is under budget by $1.7m. It is forecast to finish $2.2m under budget. Discussions around the site exchange with Wakatu have taken longer than expected resulting in delays to planned activities. The underspent money is planned to be carried over to 2023/2024 financial year.

· Modellers Pond Solution is under budget by $1.1m. It is forecast to finish $38,000 over budget. Forecast over spend is a result of increased costs, project continuing into 2022/2023 financial year.

· Sealed Road Resurfacing is under budget by $910,000. It is forecast to finish $500,000 under budget. Contractor resourcing shortages have resulted in the surfacing renewals being behind schedule. Work is continuing but may be restricted by the weather conditions being too cold and/or wet. The maintenance contract is being retendered and any underspent budget will be requested to be carried forward to enable the new contract to deliver the programme.

· Saxton Creek Stage 4 Upgrade is under budget by $1.0m. It is forecast to finish $116,000 over budget in this financial year 21/22 but remains within the overall budget.

· Streets for People is under budget by $839,000. It is forecast to finish $1.2m under budget. Adoption of the City Centre Spatial plan was prioritised prior to any capital works being undertaken. A request has been made to carry forward the funds to allow works to be undertaken in 2022/2023 and 2023/2024 financial years.

· Wastney Terrace Stormwater is under budget by $830,000. It is forecast to finish $1.0m under budget. Late tender award has moved construction programme into next financial year resulting in requested carry-forward.

· Civic House Roof Renewal is under budget by $643,000. It is forecast to finish $910,000 under budget. This project is linked to the Civic House upgrade, construction has been delayed pending decisions on the wider project and a request has been made to carry forward unspent budget to 2022/2023 financial year.

· Structures Component Replacement – Retaining Walls is under budget by $512,000. It is forecast to finish $420,000 under budget. Carry forward will be requested for Poleford Bridge and Jenner Road work next year.

· Awatea Place is under budget by $601,000. It is forecast to finish $1.2m over budget. Delayed materials supply affecting sequencing of work, covid effects on resourcing and a design clash with stormwater services has slowed productivity affecting programme. Construction work has now moved into next financial year resulting in requested carry-forward.

5.5 Please note that the forecast numbers above were current as at 22 April 2022, and changes have been made since then during the process of finalising the 2022/2023 Annual Plan. As at 22 April 2022, the total capital expenditure forecast was $60.4 million - this has reduced to $58 million at the time of writing this report on 12 May 2022. This is due to the Council approvals and carry forwards requested by staff as part of the Annual Plan 2022/23. Main variances are coming from the below projects;

· Decrease in Elma Turner Library Extension/ Relocation by $270,000

· Decrease in Sealed Road Resurfacing by $435,000

· Decrease in asset management Capex by $295,000

· Decrease in Airlie street project by $200,000

· Decrease in Wastney Terrace Stormwater by $220,000

· Decrease in Tahuna Beach to Great Taste Trial by $195,000

· Decrease in Flood Mitigation by $100,000

6. Events Fund

6.1 The Nelson Regional Development Agency (NRDA) administers funds distributed through the Council’s Events Fund. They advised that, as at 31 March 2022, 13 events had been cancelled or postponed due to the traffic light shift to RED. The NRDA has estimated a loss in spend of more than $20 million to the city for the financial year to date ($10 million of this since 24 January 2022).

6.2

Nelson City Council supported events as at 31 March 2022:
Total events cancelled	9
Total events postponed	4
Total amount paid out	$60,750
Total amount committed but not yet paid	$22,000

6.3 The Adam Chamber Music Festival was able to recover 50% of its costs, which meant $18,750 returned to the Events Fund, and Marchfest was approved for central government event insurance of which a certain amount will be able to be returned to the Events Fund.

6.4 Most event agreement payment schedules now stipulate the first payment is to be made close to the date of the event, and this has minimised the financial risk to the Events Fund since COVID-19.

7. Project Health

7.1 A table summarising the health of projects across Council for which project sheets have been generated is included as Attachment 2. It gives a red, amber, or green rating for quality, time, and budget factors.

7.2 The full project sheets are included as attachments to the Infrastructure, Community and Recreation, Environment and Climate, and Strategic Development and Property Committees’ quarter three reports.

8. Performance Measures

8.1 Council reports on 67 non-financial performance measures across its activity areas, as set out in the Long Term Plan 2021-31. These are evaluated as ‘on track/not on track/not measured yet’ for the first three quarters of the year.

8.2 Of the 67 measures, 50 are on track to achieve, 9 are not on track, and 8 have not been able to be measured yet as at quarter three. (Quarter two's results were 49, 7 and 11 respectively).

8.3 Attachment 3 details Council’s performance measure results so far across all its activities. They will also be discussed in the Infrastructure, Environment and Climate, and Community and Recreation Committees’ respective quarterly reports.

Author: Prabath Jayawardana, Manager Finance

Attachments

Attachment 1: A2881543 - Finance Dashboard and Graphs - Quarter Three 2021/22 ⇩

Attachment 2: A2867009 - All of Council Project Health Summary - Quarter Three 2021/22 ⇩

Attachment 3: A2880764 - All activities' performance measure results - Quarter Three 2021/22 ⇩