Notice of the Ordinary meeting of
Audit, Risk and Finance
Committee
Te Kōmiti Kaute /
Tūraru / Pūtea
Agenda | Rārangi take
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Date: Wednesday
20 November 2024
Time: 9.00a.m.
Location: Council
Chamber
Floor 2A, Civic House
110 Trafalgar Street, Nelson
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Chairperson Ms
Catherine Taylor
Members His
Worship the Mayor Nick Smith
Cr
Rohan O'Neill-Stevens
Cr
Mel Courtney
Cr
Rachel Sanson
Mr
Lindsay McKenzie
Quorum 3 Nigel
Philpott
Chief Executive
governance.advisers@ncc.govt.nz
www.nelson.govt.nz
Nelson City Council Disclaimer
Please note that the contents of these
Council and Committee agendas have yet to be considered by Council and officer
recommendations may be altered or changed by the Council in the process of
making the formal Council decision. For enquiries call (03) 5460436.
Excerpt from Nelson City Council Delegations Register
Audit, Risk and Finance
Committee
This is a Committee of Council
Areas of
Responsibility
·
Any matters raised by Audit New Zealand or the Office of the
Auditor-General
·
Audit processes and management of financial risk
·
Chairperson’s input into financial aspects of draft
Statements of Expectation and draft Statements of Intent for Nelson City
Council Controlled Organisations, Council Controlled Trading Organisations and
Council Organisations
·
Council’s Annual Report
·
Council’s financial performance
·
Council’s Treasury policies
·
Health and Safety
·
Internal audit
·
Monitoring organisational risks, including debtors and legal
proceedings
·
Procurement Policy
Powers to
Decide
·
Appointment of a deputy Chair
Powers to Recommend
to Council
·
Adoption of Council’s Annual Report
·
To write off outstanding accounts receivable or remit fees and
charges of amounts over the Chief Executive’s delegated authority.
·
All other matters within the areas of responsibility or any other
matters referred to it by the Council
For the Terms of Reference
for the Audit, Risk and Finance Committee please refer to document NDOCS-1974015928-887.
Audit, Risk and Finance Committee
20 November 2024
Page
No.
Karakia
and Mihi Timatanga
1. Apologies
2. Confirmation of Order of
Business
3. Interests
4. Public Forum
5. Confirmation
of Minutes
6. Audit
New Zealand report on the Long Term Plan 2024-2034 10 - 22
7. Quarterly
Risk Report - 30 Sept 2024 23 - 46
8. Quarterly
Internal Audit Report - 30 Sept 2024 47 - 49
9. Quarterly
Finance Report to 30 September 2024 50 - 71
10. Public
Transport Services Contract - Working Group Review 72 - 88
11. Exclusion of the Public
Karakia
Whakamutanga
Procedural Items
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 18 September 2024 5 - 9
Document number M20754
Recommendation
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That the Audit, Risk and Finance Committee
1. Confirms the minutes of the meeting of the
Audit, Risk and Finance Committee, held on 18 September 2024, as a true and
correct record.
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Present: Ms
C Taylor (Chairperson), His Worship the Mayor N Smith, Councillors M Courtney,
R Sanson and Mr L McKenzie
In
Attendance: Acting Chief Executive (A Louverdis), Group
Manager Environmental Management (M Bishop), Group Manager Corporate Services
(N Harrison), Group Manager Strategy and Communications (N McDonald), Team
Leader Governance (R Byrne) and Governance Adviser (A
Andrews)
Apologies : Deputy
Mayor R O'Neill-Stevens
Karakia
and Mihi Timatanga
1. Apologies
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Resolved ARF/2024/046
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That the Audit, Risk and Finance Committee
1. Receives and accepts the apologies
from Deputy Mayor O’Neill Stevens for attendance and Mr McKenzie for lateness.
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Courtney/Sanson Carried
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2. Confirmation of
Order of Business
There was no change 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. Confirmation of
Minutes
4.1 14
August 2024
Document number M20712, agenda
pages 7 - 13 refer.
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Resolved ARF/2024/047
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That the Audit, Risk and
Finance Committee
1. Confirms
the minutes of the meeting of the Audit, Risk and Finance Committee, held on
14 August 2024, as a true and correct record.
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Sanson/His Worship the Mayor Carried
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5. Draft Annual Report
2023/24
Document number R28614, agenda
pages 14 - 194 refer.
Group Manager Strategy &
Communications, Nicky McDonald, Group Manager Corporate Services, Nikki
Harrison, Manager Strategy, Jessica Ettridge and Manager Finance, Prabath
Jayawardana took the report as read. They answered questions on performance
measures, feedback from Audit NZ, development contributions, dividend timing,
external funding accrual, Waka Kotahi funding and key issues.
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Resolved ARF/2024/048
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That
the Audit, Risk and Finance Committee
1. Receives the report
Draft Annual Report 2023/24 (R28614)
and its Attachments; and
2. Notes that the
draft Annual Report will be audited before being presented to Council for
adoption on 31 October 2024, the statutory deadline.
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Sanson/Courtney Carried
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6. Carry Forwards -
2023/24 for Approval
Document number R28796, agenda
pages 195 - 207 refer.
Group Manager Infrastructure,
Alec Louverdis and Team Leader Accountants, Alistair Roper took the report as
read. They answered questions on scale of the funds being carried forward in
comparison to the previous financial year, comparison between storm recovery
work and carried forward budgets, overestimating budgets and carrying forward
underspent budgets, Better Off funding, Water Done Well funding and progress of
the project and Three Waters staffing.
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Resolved ARF/2024/049
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That
the Audit, Risk and Finance Committee
1. Receives the report
Carry Forwards - 2023/24 for Approval (R28796) and its
Attachments.
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His Worship the
Mayor/Courtney Carried
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Recommendation to Council
ARF/2024/050
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That the Council
1. Approves the net
capital carry forward of $12 million –$12.3 million net to 2024/25 and
$250,000 back from 2025/26; and
2. Notes that the net
capital carry forward is in addition to the net capital carry forward of
$24.2 million approved during the Long Term Plan 2024/34 process, taking the
total carry forward to $36.3 million of which $34.1 million is for the
2024/25 year and $1.4 million is for the 2025/26 year; and $500,000 is for
the 2026/27 year and $300,000 is for the 2029/30 year; and
3. Notes the savings
and reallocations in 2023/24 capital expenditure of $3.4 million including
staff time which is in addition to the $0.7 million savings and reallocations
already recognised in the May 2024 Long Term Plan 2024/34 deliberations; and
4. Notes that the
total 2024/25 capital budget (including staff costs and Aug 2022 severe
weather event related budgets and excluding consolidations, vested assets and
scope adjustment) will be adjusted by these resolutions from a total of
$107.1 million to a total of $119.3 million; and
5. Approves net
capital grants carried forward of $628,000 to align with the timing of
capital expenditure budgets; and
6. Approves capital
grant budget of $4.1 million of Crown funding for slip effected property
purchases to be carried back to 2023/24 to align with the accrual of that
income that has been made for our Annual Report 2023/24; and
7. Approves the carry
forward of $612,000 unspent operating expenditure budget to 2024/25,
accompanied by $567,000 of operating grant funding budget.
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His Worship the
Mayor/Courtney Carried
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7. Exclusion of the
Public
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Resolved ARF/2024/051
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That the Audit, Risk and Finance Committee
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:
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His Worship the Mayor/Sanson Carried
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Item
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General subject of each matter to be
considered
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Reason for passing this resolution in
relation to each matter
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Particular interests protected (where
applicable)
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1
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Audit, Risk and Finance Committee Meeting - Confidential Minutes
- 14 August 2024
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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.
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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)(d)
To avoid
prejudice to measures protecting the health and safety of members of the
public
· 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
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The meeting went into confidential session at 10.06a.m.
and resumed in public session at 10.07a.m.
The only business transacted in
confidential session was to confirm the minutes. In accordance with the Local
Government Official Information and Meetings Act, no reason for withholding
this information from the public exists, therefore this business has been
recorded in the open minutes.
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Resolved ARF/2024/052
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That the Audit, Risk and Finance Committee
1. Confirms
the minutes of part of the meeting of the Audit, Risk and Finance Committee,
held with the public excluded on 14 August 2024, as a true and correct
record.
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His Worship the
Mayor/Courtney Carried
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Karakia
Whakamutanga
There being no further business
the meeting ended at 10.07a.m.
Confirmed as a correct record
of proceedings by resolution on (date)
Resolution
Item 6: Audit New
Zealand report on the Long Term Plan 2024-2034
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Audit, Risk and Finance Committee
20 November 2024
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Report
Title: Audit
New Zealand report on the Long Term Plan 2024-2034
Report
Author: Louis Dalzell - Senior
Policy Adviser
Report
Authoriser: Nikki Harrison - Group Manager Corporate
Services
Report
Number: R28605
1. Purpose of Report
1.1 To provide the
Committee with Audit New Zealand’s report on the audit of the Long Term
Plan 2024-2034.
2. Recommendation
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That the
Audit, Risk and Finance Committee
1. Receives the report Audit New Zealand report on
the Long Term Plan 2024-2034 (R28605)
and its attachment; and
2. Notes
the areas of audit emphasis and Council’s response .
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3. Background
3.1 Audit New Zealand
conducted an audit of the Long Term Plan 2024-2034, issuing an unmodified
opinion before Council adopted the Plan on 27 June 2024. A report outlining the
audit findings (Attachment 1) is now presented to the Committee for
information. This report supplements the audit report on the Long Term Plan
2024-2034 Consultation Document presented on 5 June 2024.
3.2 During the audit a few
items were given deeper consideration because of the impact they could have on
delivery of the Long Term Plan (pages 7-8 of Attachment 1):
3.2.1 NZ Transport Agency Waka Kotahi
funding assumption (Audit accepted Council’s approach on the basis of
materiality).
3.2.2 Delivery of capital programme
assumption (Audit concluded that the capital programme remains achievable).
3.2.3 Impact of the growth assumption (Audit
reviewed for compliance with the National Policy Statement on Urban
Development).
3.3 There was also further
discussion about one Level of Service performance measure:
3.3.1 Audit recommended Council’s
Transport Activity Management Plan performance measure on the numbers of people
who walk or bike to work and school should be measured more frequently than the
five-yearly census. Council’s management comment explained why this was
not practical or affordable, and outlined the other data collected that allows
Council insight into how the measure is tracking on a more regular basis.
3.4 The report concluded
that Council had a good process and sound controls in place for developing the
Plan, and that the underlying information was reasonable. It also noted that it
was a significant achievement to adopt the Plan within statutory deadlines in
the challenging and changing environment faced by Council and the local
government sector.
Attachments
Attachment 1: Report
to the Council on the audit of Nelson City Council’s long-term plan for
the period 1 July 2024 to 30 June 2034 ⇩
Item 6: Audit New Zealand report on the Long Term Plan
2024-2034: Attachment 1
Item 7: Quarterly Risk
Report - 30 Sept 2024
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Audit, Risk and Finance Committee
20 November 2024
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Report Title: Quarterly
Risk Report - 30 Sept 2024
Report
Author: Chris Logan - Audit
and Risk Analyst
Report
Authoriser: Nikki Harrison - Group Manager Corporate
Services
Report
Number: R28839
1. Purpose of Report
1.1 To provide information
to the Audit, Risk and Finance Committee on the organisational and group risks
through to the end of the first quarter of 2024/25.
2. Recommendation
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That the
Audit, Risk and Finance Committee
1. Receives the report Quarterly Risk Report - 30
Sept 2024 (R28839) and its
attachment.
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3. Background
3.1 This report describes
key risk areas, divided by risk theme organisational risks) and reporting Group
4. Key Risk Areas by
Theme (Organisational Risks)
4.1 Risks relating to
Council and joint operations are monitored via Council’s risk register.
Approximately 30% of risk entries by count have been identified as having a
common theme or cause which create risk concentrations that pose a threat at an
organisational level. These organisational risks are described below.
4.2 R1 -
Central-government-led-reforms (Owner: Chief Executive). Risks relating to
deferral of and uncertainty around reforms remain. The risk rating remains at
High.
4.3 R2 - Lifeline services
failure (Owner: Group Manager Infrastructure). Flood-recovery work is ongoing.
The risk rating remains at High.
4.4 R3 - Illness, injury
or stress from higher hazard work situations (Owner: Group Manager Corporate
Services). Addressing workplace stress remains an organisational focus area.
The risk rating remains at High.
4.5 R4 - Loss of service
performance from ineffective contracts and contract management (Owner: Chief
Executive). The contract management improvement program continues to be
monitored quarterly by the internal Procurement Steering Committee. The risk
rating remains at Medium.
4.6 R5 - Compromise of
Council service delivery from information technology failures (Owner: Group
Manager Corporate Services). No new emerging risks to report at this time. The
risk rating remains at Medium.
4.7 R6 - Council work
compromised by loss of and difficulties in replacing skilled staff (Owner:
Manager People and Capability). Turnover is continuing to reduce throughout
2024 and no longstanding critical vacancies. Training, inducting and
establishing relationships within the organisation is now a key focus to ensure
that new talent is retained and can thrive. The organisational risk rating
remains at Medium as having the right resourcing in place is critical to our
service delivery.
4.8 R7 - Legal Risk
(Owner: Group Manager Strategy and Communications). Other new legal proceedings
or emerging areas of increased litigation risk are separately reported in the
quarterly report on legal proceedings. The organisational risk rating
remains at Medium.
4.9 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
5. Key Risk Areas by
Reporting Group
5.1 Council’s risk
register does not contain specific asset, activity, legal matter, or project
risks. Instead, these are rolled up into more general asset, activity, legal or
project risks. Any significant specific risks which are new or emerging are summarised
below by reporting group.
5.2 Office of the Chief
Executive: No new emerging risks to report at this time.
5.3 Infrastructure
Group: Construction downturn in subdivision work has resulting in
more tenders on some Council works that has realised competitive pricing in
some cases.
5.4 Community Services
Group:
5.4.1 Risks associated with two of three
Council-owned campgrounds (one operated and one leased) remain elevated whilst
non-compliance remediation actions are being implemented. The risks previously
monitored by elected members through the Strategic Development and Property
Subcommittee have been monitored through the usual organisational processes
since that subcommittee ceased at the end of the last triennium.
5.4.2 Risks associated with wood processing
waste deposited at Tāhunanui Beach in the 1960s have been investigated, a
remediation option has been approved by Council, funding has been secured from
Ministry for Environment, and work to remove the contaminated material is well
underway.
5.5 Environmental
Management Group: Some planning positions remain vacant. Workload stress
continues for both planning teams due to complexity of work and uncertainty
about national legislation reform.
5.6 Strategy and
Communications Group: No new emerging risks to report at this time.
5.7 Corporate Services
Group: No new emerging risks to report at this time.
6. Insurance renewal
update
6.1 Below-ground-essential-infrastructure
insurance was renewed from 1 November 2024 for $1.36M (prior year $1.66M). The
bulk of this ‘savings’ is expected to be used to increase the
(sub)limit to 20% of insured values (last year 9%), which equates to a maximum
pay-out of $160M. To put this into context:
6.1.1 NCC left the LAPP scheme in 2017, as
cover of approximately 7% of insured values was deemed inadequate.
6.1.2 When NCC joined the current (South
Island Collective) scheme in 2017, cover was 23% of insured values.
6.1.3 Since 2017, asset values have
increased by a factor of 2.7 yet the (sub)limit has only increased by a factor
of 1.1.
6.1.4 Aon & Tonkin +Taylor 2015 scenario
analysis indicated a 1 in 500 year earthquake return damage ratio of between
14% and 26%.
6.1.5 The Christchurch earthquake series,
saw percent of network damaged ranging from 3% (drinking water reticulation),
to 30% (waste water reticulation including pipelining).
Attachments
Attachment 1: 1Q25 key
organisational risks for ARF ⇩
Item 7: Quarterly Risk Report - 30 Sept 2024:
Attachment 1
Item 8: Quarterly
Internal Audit Report - 30 Sept 2024
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Audit, Risk and Finance Committee
20 November 2024
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Report
Title: Quarterly
Internal Audit Report - 30 Sept 2024
Report
Author: Chris Logan - Audit
and Risk Analyst
Report
Authoriser: Nikki Harrison - Group Manager Corporate
Services
Report
Number: R28840
1. Purpose of Report
1.1 To update the Audit,
Risk and Finance Committee on the internal audit activity through to the end of
the first quarter of 2024/25.
2. Recommendation
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That the
Audit, Risk and Finance Committee
1. Receives the report Quarterly Internal Audit
Report - 30 Sept 2024 (R28840)
and its attachment.
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3. Background
3.1 Under Council’s
Internal Audit Charter, the Audit, Risk and Finance Committee requires a
periodic update on the progress of internal audit activities. The 2024-25
Internal Audit Plan (the Plan) was approved by the Council on 6 June 2024.
4. Overview of
Progress on the 2024/25 Internal Audit Plan
4.1 An audit of Infrastructure
physical works procurement was completed during the quarter, resulting in two
Low recommendations.
4.2 Of the remaining
audits:
4.2.1 Two
are in progress
4.2.2 One
is yet to commence, and
4.2.3 One
is yet to be defined
5. Significant
external audits that are not reported separately to the Audit, Risk and Finance
Committee
5.1 The Building team
passed their International Accreditation New Zealand (IANZ) June 2024 audit.
The next routine audit will be in two years’ time.
5.2 Council had a security
audit through SAM for Compliance and ALGIM in August. The auditor assessed
our cybersecurity risk mitigation effectiveness. The results show an
improvement in a number of areas when compared against the framework
conformance levels observed in October 2023. A comparison of the Nelson City
Council assessment results against the ALGIM Cybersecurity Programme national
benchmark for August 2024 shows that the Council continues to have conformance
levels generally above the current benchmark. The only area where Nelson City
Council is behind the national benchmark is with the area of anomaly detection
and the primary means of improvement in this area is to implement a Security
Information and Event Management system, and officers continue to investigate
finding an affordable option for this.
Attachments
Attachment 1: Annual Audit Plan
Progress - 30 Sep 2024 ⇩
Item 8: Quarterly Internal Audit Report - 30 Sept
2024: Attachment 1
Item 9: Quarterly
Finance Report to 30 September 2024
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Audit, Risk and Finance Committee
20 November 2024
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Report
Title: Quarterly
Finance Report to 30 September 2024
Report
Author: Prabath
Jayawardana - Manager Finance
Report
Authoriser: Nikki Harrison - Group Manager Corporate
Services
Report
Number: R28871
1. Purpose of Report
1.1 To inform the
Committee of the financial results for Council for the three months ended 30
September 2024, and to highlight any material variations.
2. Recommendation
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That the
Audit, Risk and Finance Committee
1. Receives
the report Quarterly Finance Report to 30 September 2024 (R28871).
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3. Background
3.1 The
whole of Council financial reporting provided to this Committee focuses on the
three-month performance (1 July 2024 to 30 September 2024) compared with the year-to-date (YTD) approved capital and operating
expenditure budgets. The quarterly report includes Nelson City
Council performance only and does not include its subsidiaries, associates and
joint ventures.
3.2 Unless
otherwise indicated, all information is against approved operating budgets, which is Annual Plan 2024/25, plus any carry forwards, plus or minus
any other additions or changes as approved by the Council.
3.3 Commentary
is provided below for significant variances of +/- $500,000.
4. Financial
Performance
4.1 For
the three months ending 30 September 2024, the Council’s draft
deficit is $3.8m against a budgeted deficit of $4.6m ($0.8m favourable to
budget), mainly due to reasons explained from 4.3 below.
4.2 Profit
and Loss
Full Year Forecast vs. Operating Budget Net
surplus/(deficit)
4.3 The
Full Year Forecast is less than the Operating
Budget by $3.8 million. There are
increases and decreases in different areas but the significant changes are:
4.3.1 Subsidies and Grants - Opex: Tahunanui Sawdust Risk
Mitigation Grant. The forecast has been increased by $0.7m to reflect the
agreed Government Funding from the newly opened Contaminated Sites and
Vulnerable Landfills Fund. The grant amounts to 75% of the total expected
cleanup cost of $4.59m.
4.3.2 Subsidies and Grants – Capex: Forecast has
been decreased by $4.5m in Subsidised Roading to reflect the reduced funding
from NZTA Waka Kotahi however the operating budget has not been adjusted as
this requires Council approval. This is partially offset by unbudgeted $1.6m of
Maitai Flood Management Grants (RIF) with $0.7m in Stormwater and $0.9m in
Flood Protection.
4.3.3 Finance Revenue: includes an increase to forecast
of $1.3m due to additional pre-funding of future debt maturities (which
partially offsets the higher than forecast Finance Costs below).
4.3.4 The forecast for Finance Costs has increased by
($2.0m) due in part to prefunding of debt (see Finance Revenue), and in part to
higher than budgeted debt levels. Opening debt levels had some permanent
differences and some timing differences due to a delay in some funding for
weather event related costs.
4.3.5 Other Expenses includes an overall increase to
forecast of ($0.6m) however there are many increases and decreases spread over
many different areas with no one variance over $0.15m.
Operating
Budget vs. Annual Plan Budget Net surplus/(deficit)
4.4 The
Full Year Operating Budget is less than the
Annual Plan Budget by $3.6 million. There are increases and
decreases in different areas but the significant changes are:
4.4.1 Subsidies and Grants – Opex: Includes an
increase in operating budget of $0.6m for Operating Grants carried forward from
2023/24 to align with timing of costs of which $0.5m was 3 Waters Better off funding
(timing difference).
4.4.2 Subsidies and Grants – Capex (Corporate): Includes
a ($4.1m) reduction in operating budget, as the Crown capital funding for slip properties
was carried back to 2023/24 during the Annual Report audit (timing).
4.4.3 Subsidies and Grants – Capex
(Transport): Includes a total reduction in operating budget of $1.3m in
public transport for the Millers Acre bus interchange. NZTA Waka Kotahi funding
for the next three years, through the National Land Transport Programme, was
confirmed after the LTP was signed off. Budgets have been reduced to match the
reduced income from NZTA Waka Kotahi as the Council decided to proceed the
project without NZTA Waka Kotahi funding at 10 October 2024 Council meeting
(R28780).
4.4.4 Personnel Costs and other expenses include a budget
re-allocation of $2.1m from other expenses to Personnel costs with Regulatory
Services functions coming in house (reclassification).
4.5 Revenue
4.6 Rates
income is in-line with budget.
4.7 Subsidies
and Grants - OPEX income is greater than budget by
$555,000. Attachment 1 includes a
detailed analysis of this variance.
4.8 Subsidies
and Grants - CAPEX income is greater than budget by
$877,000. Attachment 1 includes a
detailed analysis of this variance.
4.9 Fees
and Charges income is in-line with budget.
4.10 Other
Revenue is less than budget by $111,000.
4.11 Development
Contributions is greater than budget by $378,000.
4.12 Finance
Revenue is greater than budget by $468,000.
This is due to additional pre-funding of future debt maturities (see partial
offset in Finance costs below).
4.13 Other
gains/(losses) is in-line with budget.
4.14 Expenses
4.15 Personnel
costs are greater than budget by $171,000.
There have been savings in personnel costs of $556,000 across different
activities however the YTD vacancy provision in the budget was high at 9% ($727,000).
4.16 Finance
costs are greater than budget by $914,000. This
increase in interest costs is due to additional pre-funding of debt (which has
a partial offset of $468,000 from Finance Revenue). The remaining is due to
higher than budgeted debt levels as addressed in 4.3.4 above, partially offset
by lower interest rates than budgeted for.
4.17 Depreciation
and amortisation costs are greater than budget by
$121,000. Depreciation has been based on the 2023/24 asset
valuations, which saw large increases. This resulted in a higher
depreciation expense than planned.
4.18 Weather
Event costs are in-line with budget.
4.19 Other
expenses are in-line with budget. There are variances within, however none are
greater/less than budget by $0.5m.
5. Capital
Expenditure
5.1 Capital Expenditure
(including staff time, excluding vested assets and joint operations)
5.2 As
at 30 September 2024, capital expenditure was $16.9m which is $1.9m under the
YTD Operating Budget of $18.8m. Transport was the main contributor being less
than budget by ($0.5m) which generates less CAPEX Subsidies and Grants as
discussed above.
5.3 The
operating budget includes the carry forwards from 2023/24 which were approved
at the October 2024 Council Meeting.
5.4 A high-level breakdown
by activity:
6. Cash Flow
Management
6.1 Net External
Borrowings
6.2 As
at 30 September 2024, there were net external borrowings of $238.0m. This has
increased from 30 June 2024 by $15.2m. The full-year Annual Plan budget is
$252.3m.
6.3 This
$15.2m increase in net external borrowings from 30 June 2024 is due to: a) to
fund the August 2022 weather event ($0.09m expenditure), b) to fund capital
expenditure during the year ($6.2m net of funded depreciation) c) the balance
is due to timing of cash inflows and outflows being different than planned.
6.4 Attachment
2 includes the statement of financial position (Balance sheet), Debtors graph
and compliance with the Treasury policy as at 30 September 2024.
6.5 The
net debt figure in the treasury compliance report (Attachment 2) is different
from above 6.2 mainly due to LGFA borrowing notes not being included in the PWC
tool.
7. Rates
7.1 City wide Revaluation
Release to Ratepayers
7.1.1 Council is required to revalue property values for
rating purposes every three years and the revaluation is due this year as at 1
September 2024.
7.1.2 Under the Rating Valuation legislation, the Valuer
General’s Office is responsible for scheduling and approving
revaluations. Council’s Valuation Service Provider (Quotable Value) are
currently working on the new 2024 property values, and these are due to be
submitted to Office of the Valuer General for auditing in March 2025.
7.1.3 Before the release of the new property values to
our ratepayers, Quotable Value will provide Council an overview of the changes
in values from our previous revaluation that was dated 1 September 2021 to the
current 2024 property values.
7.2 Rates Aging
7.3 Total rates
outstanding as at 30 September 2024 were $1.5m which includes $1.2m for Instalment
one for the current rating year. Below are the rates outstanding at the end of
each rating quarter.
Total
Rates Outstanding
YTD Rates
at 31 October 2024
7.4 Rates outstanding as
of 1 July 2024 were $797,000 and this amount has been reduced to $264,000 as of
31 October 2024.
7.5 As
at 31 October, rates outstanding for Instalment one (2024/25) are $534,000 and
this represents 1.88% of the total rates that were levied ($28,556,000) in July
2024.
8. Project Health
8.1 Attachment 3
summarises the health of projects across Council. The table gives a red, amber
or green rating for quality, time and budget factors.
8.2 A number of large
projects have progressed well this quarter with many going to tender and strong
interest from contractors due to a quiet market.
8.3 Paru Paru Road Pump
Station Early Contractor Involvement (ECI), St Vincent Street Culvert
Replacement ECI and the Bridge to Better ECI have been tendered but not yet awarded.
8.4 Atawhai Rising Main
Design Professional Services has also been tendered and negotiations are
underway with a preferred tenderer.
8.5 Bridge to Better
projects, Halifax St – Collingwood St Watermain Upgrade and Bridge Street
East Watermain Upgrade have also been tendered but not yet awarded.
9. Performance
Measures
9.1 Council reports on 40
non-financial performance measures across its activity areas, as set out in the
Long Term Plan 2024-34. These are generally evaluated as ‘on track, not
measured yet and not on track’ during the first three quarters of the
year, however, in this instance, one performance measure has already been
achieved.
9.2 For quarter one
2024/25, 26 are on track, 12 are not measured yet, 1 is not on track and 1 is
achieved. The percentages are measured as 65%, 30%, 2.5% and 2.5% respectively.
9.3 Attachment 4 details
Council’s performance measures so far across all its activities.
Attachments
Attachment 1: 1857728953-2238
Appendix for Council Reports for Sep-24 Subsidies and Grants ⇩
Attachment 2: 1857728953-2242
Appendix for Council Reports for Sep-24 Financial Info ⇩
Attachment 3: 1530519604-15548
- Project Health Summary ⇩
Attachment 4: 839498445-20010
- Performance Measure Table Q1 2024 - 2025 ⇩
Item 9: Quarterly Finance Report to 30 September 2024:
Attachment 1
Item 9: Quarterly Finance Report to 30 September 2024:
Attachment 2
Item 9:
Quarterly Finance Report to 30 September 2024: Attachment 3
Item 9: Quarterly Finance Report to 30 September 2024:
Attachment 4
Item 10: Public
Transport Services Contract - Working Group Review
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Audit, Risk and Finance Committee
20 November 2024
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Report Title: Public
Transport Services Contract - Working Group Review
Report
Author: Nicky McDonald -
Group Manager Strategy and Communications
Report
Authoriser: Nicky McDonald - Group Manager Strategy and
Communications
Report
Number: R28881
1. Purpose
of Report
1.1 To consider the report
of the Working Group looking into the public transport services project.
2. Summary
2.1 The June 2024 meeting
of the Audit, Risk and Finance Committee, concerned by the $2million project
overspend, initiated a review of the governance, management and oversight of
the public transport services contract. The Terms of Reference for the Working
Group are in Attachment 1. The report that has been prepared by the Working
Group tasked with looking into the matter is in Attachment 2.
3. Recommendation
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That the
Audit, Risk and Finance Committee
1. Receives the report Public Transport Services
Contract - Working Group Review and its attachments; and
2. Directs the Chief Executive to consider all the Public
Transport Services Contract Working Group recommendations, but in particular
the operational recommendations (as set out in 5.6.1 to 5.6.5 of report
R28881), as part of the suite of changes to Council project management that
will developed through the Shaping Our Future transformation project; and
3. Refers
the report of the Public Transport Services Contract Working Group to
Council.
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Recommendation to Council
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That the
Council
1. Consider
the recommendations from the Public Transport Services Contract Working Group
relating to governance oversight of significant projects (as set out in 5.6.6
to 5.6.13 of report R28881) and have regard for them when undertaking joint
activities with other councils/agencies and in any future review of
governance arrangements; and
2. Direct
the Chief Executive to provide Tasman District Council with recommendations
from the Public Transport Services Contract Working Group relating to
governance oversight of significant projects (as set out in 5.6.6 to 5.6.13
of report R28881) for its consideration;
3. Direct
the Chief Executive to provide the Chair of the Joint Nelson Tasman Regional
Transport Committee with a copy of the report of the Public Transport
Services Contract Working Group for the information of the Committee.
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4. Background
4.1 At its 5 June 2024
meeting, the Audit, Risk and Finance Committee resolved as follows:
ARF/2024/026
1. Requests a review of the governance management
and oversight of the eBus project with Terms of Reference to be determined by
the Audit, Risk and Finance Chair Catherine Taylor, member Lindsay McKenzie and
Councillor O'Neill-Stevens, with the intention of the review reporting back by
December 2024.
4.2 A Working Group of the
above Audit, Risk and Finance Committee members has prepared a report reviewing
the public transport project. During development of the report the Group met
with relevant Nelson City and Tasman District Council staff and with Councillor
Stuart Bryant, Chair of the Joint Nelson Tasman Regional Transport Committee
(RTC), and Christeen MacKenzie, a member of Tasman District Council’s
Audit and Risk Committee. As part of these meetings the Working Group had a
full and frank discussion with staff responsible for the project and heard how
lessons had already been taken from their reflection on the project and would
be applied in future.
4.3 The Working
Group’s report of its findings is in Attachment 2.
5. Discussion
5.1 The context for
establishment of a Working Group was the concern expressed at the RTC in April
2024 about a $2million overspend on the public transport project and the project management that led to this being a funding fait accompli
presented to the RTC. The Working Group considered the retendering and
awarding of the contract for public transport, a contract that encompassed
services in both council areas but that was negotiated and overseen by staff
from Nelson City Council. It focussed on lessons that could be learned
from the process that are relevant to the Audit, Risk and Finance
Committee’s mandate to monitor organisational risks.
Key Findings
5.2 The Working Group
findings are detailed in full in Attachment 2 and summarised below along with
all the resulting recommendations.
5.3 An early conclusion of
the Working Group was that the lack of a business case contributed to problems
in the project as did weaknesses in the project planning and risk
identification. These issues were driven in large part by timing constraints
which were not adjusted, despite the impact of the August 2022 severe weather
event, and put the project team under extreme pressure.
5.4 Another finding of the
review was that the unclear governance oversight meant there was not a
straightforward reporting line for the project. The RTC did not have the
mandate to provide the level of oversight needed for the project (eg no
financial delegations), and did not meet frequently enough to realistically
undertake that role.
5.5 Council elections
during the development of the project saw changes in governance arrangements
that added complexity to oversight of the project.
Recommendations
5.6 Following are the full
set of recommendations from the Working Group developed as part of its
investigation into the causes of problems in the public transport project.
5.6.1 Develop and use a purposeful business
case template for significant project proposals and use a common template for
joint council projects.
5.6.2 Develop and use a formal project
planning template for significant complex project proposals and use a common
template for joint council projects.
5.6.3 Develop and use a structured risk
assessment and management approach for significant project proposals.
5.6.4 Involve an independent expert voice so
that any pressures and biases that have the potential to influence officers can
be managed.
5.6.5 Appoint a dedicated suitably
experienced project manager to lead significant complex projects especially
those that involve deliverables for the two councils jointly.
5.6.6 Assign governance oversight for
significant projects to a relevant committee, subcommittee, taskforce or
working party with an express obligation to do so in its terms of reference,
with appropriate powers to act along with training for its members and support
from an independent party to perform that oversight role.
5.6.7 Establish a formal reporting (to
governance) regime for significant projects that ensures timely, accurate and
transparent information is provided on, for example -
· finances - budget, costs to date;
· stage of completion/milestones;
· estimated outturn cost;
· health, safety and environment;
· critical risks and their
mitigation;
· scope changes;
· resourcing;
· contractor performance;
· contractual matters
5.6.8 Ensure that significant complex
projects that are at critical stages are supported to be progressed during the
pre and post-election periods and interregnum by, for example a project
governance group being appointed to progress the work.
5.6.9 Ensure that committees, subcommittees,
taskforces, and other reporting bodies that have responsibilities assigned to
them are given the authority and support to effectively
carry out those responsibilities subject to appropriate reporting up obligations.
5.6.10 Establish and agree a set of obligations on the
lead council/administrator and reciprocal obligations on the other party in
relation to joint projects and their delivery.
5.6.11 Review the level and any conditions on the
exercising of officers’ delegations where the exercise of those
delegations creates obligations (contractual, financial) on another council or
entity.
5.6.12 Require prompt reporting by officers to
governance, with a recommendation to reset,
when an approved budget is likely to be exceeded.
5.6.13 Evaluate and mitigate the risks associated with
funding agreements and contract terms that are misaligned.
6. Options
6.1 The
Committee could make changes to the recommendations or decline to take action
on the recommendations. However, the preferred option is to refer the report
and recommendations to both councils for consideration and to direct the Chief
Executive to consider implementation of the recommendations, via
Council’s transformation project. As the recommendations have wider
applicability than just one project they will be helpful to consider as
standard approaches for more complex projects in future. They have the
potential to help mitigate future risk to Council in the delivery of
significant and complex projects.
7. Conclusion
7.1 The Audit, Risk and
Finance request for a review of the governance management and oversight of the
public transport project has been fulfilled.
Attachments
Attachment 1: Public Transport
Working Group Terms of Reference ⇩
Attachment 2: Public
Transport Working Group Report ⇩
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Important
considerations for decision making
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Fit with Purpose of Local Government
Review of Council project management processes with
a view to reducing risk contributes to community economic wellbeing.
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Consistency with Community Outcomes
and Council Policy
The decision in this report supports the following
community outcomes:
Our infrastructure is efficient, resilient, cost
effective and meets current and future needs
Our Council provides leadership and fosters
partnerships, including with iwi, fosters a regional perspective, and
encourages community engagement
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Risk
The recommendations from the Working Group have the
potential to reduce risk on future Council projects if included as part of
standard practice.
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Financial impact
There is no financial impact of the decision in this
report. However, if Council implements the recommendations there will need to
be allowance made within future project budgets to accommodate the extra
requirements.
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Degree of significance and level of
engagement
This matter is of low significance because it deals
with a review of a project that has now been implemented and there is no
requirement for engagement.
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Climate Impact
Improved project management
offers an opportunity to better factor climate change risks and impacts into
Council’s work programme. There is also an opportunity for climate
change considerations to be included within any new templates implemented.
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Inclusion of Māori in the
decision making process
No engagement with Māori has been undertaken in
preparing this report.
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Delegations
The Audit, Risk and Finance
Committee has the delegation for matters related to monitoring risk.
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Item 10: Public Transport Services Contract - Working
Group Review: Attachment 1
Item 10:
Public Transport Services Contract - Working Group Review: Attachment 2
Item 11: Exclusion of the Public
11. Exclusion of the Public
Recommendation
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That the Audit, Risk and
Finance Committee
1.
Confirms, in accordance with sections 48(5)
and 48(6) of the Local Government Official Information and Meetings Act 1987,
that Executive Director at PricewaterhouseCoopers (PWC), Brett Johanson
remain after the public has been excluded, for Item 3 of the Confidential
agenda (PriceWaterhouseCoopers Treasury Presentation), as he has knowledge
relating to xxxx that will assist the meeting.
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Recommendation
That the Audit,
Risk and Finance Committee
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:
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Item
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General subject of each matter to be
considered
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Reason for passing this resolution in
relation to each matter
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Particular interests protected (where
applicable)
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1
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Quarterly
Health, Safety and Wellbeing Report to 30 September 2024
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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
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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)(d)
To avoid prejudice to
measures protecting the health and safety of members of the public
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2
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Quarterly
Debt Report - 30 September 2024
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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
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|
3
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PriceWaterhouseCoopers
Treasury Presentation
|
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
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The withholding of the information is necessary:
· Section 7(2)(h)
To enable the local
authority to carry out, without prejudice or disadvantage, commercial
activities
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4
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Quarterly
Report on Legal Proceedings
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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
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