Annual Reports, Auditor General, and meeting held near controversial site

On Thursday the Governing Body of Auckland will meet in Mangere at the Makaurau Marae
8 Ruaiti Rd, Ihumatao Mangere which is near the Special Housing Area in Mangere that caused controversy last month. 

Rather interesting the meeting be held out there given last month and the raw emotions stemming from that controversy.

In any case you can read the Governing Body Agenda HERE (web version).

Annual Report for 14/15 year

Governing Body – 24 September 2015

Adoption of the 2014/2015 Annual Report and Summary Annual Report for Auckland Council and Group

File No.: CP2015/14212

Purpose

1. To adopt the 2014/2015 Annual Report and Summary Annual Report for Auckland Council and Group.

Executive Summary

2. Preparing and publishing an Annual Report is a legislative requirement. The Annual Report covering the year to 30 June 2015 has been prepared by Council Officers and audited by Audit New Zealand. The report compares and comments on the performance of the Auckland Council Group against the budgets and operating targets set in the annual plan.
3. The Audit and Risk Committee received the report and reviewed the audit with Audit New Zealand on 15 September 2015 (see Attachment A).
4. The Finance and Performance Committee received the report at its meeting on 17 September 2015 (see Attachment A).
5. The Governing Body is required by section 98 of the Local Government Act 2002 to adopt the Annual Report. To meet the requirements of the Listing Rules of the New Zealand Stock Exchange (NZX) the Annual Report must be adopted and released to the NZX on 25 September 2015.
6. The Local Government Act also requires Council to prepare and make publically available a summary of the Annual Report. The Summary Annual Report is included for adoption.

Recommendation/s That the Governing Body: a)      adopt the 2014/2015 Annual Report for Auckland Council and Group b)      adopt the 2014/2015 Summary Annual Report for Auckland Council and Group.

Comments

7. The Local Government Act requires Auckland Council to prepare and adopt an Annual Report each year. The Annual Report details the activities and performance of the Auckland Council Group.  It includes performance results for the Group and Auckland Council parent against planned levels of performance in the Annual Plan 2014/2015.  This comprehensive report covers all activities of the Council, CCOs and Local Boards.  The 2014/2015 Annual Report will be published on Council’s website and made available at libraries and service centres to promote accountability to the community.
8. The report and financial statements have been audited by Audit New Zealand on behalf of the Auditor-General.
9. The Annual Report (referred to hereafter as the Full Annual Report) consists of three separate books and documents:
   1. Volume 1 Overview, themes and groups of activities
   2. Volume 2 Local Boards
   3. Volume 3 Financial Statements

10. In addition to the Full Annual Report (FAR), councils are required to prepare a Summary Annual Report (SAR) of the major items in the FAR. Preparing and making available a SAR is a legislative requirement. It must be adopted independently of the FAR. The SAR must be audited.
11. The Audit and Risk Committee receives both the FAR and SAR and makes a recommendation to the Finance and Performance Committee which recommends to the Governing Body the adoption of the FAR and SAR.  The Audit and Risk Committee reviewed the Council’s preparation of the financial statements, the process undertaken to complete the Annual Reports and received feedback on the audit from Audit New Zealand before making the recommendation at its meeting on 15 September 2015.
12. The Finance and Performance Committee received the recommendation from the Audit and Risk Committee relating to the FAR and SAR.  The Finance and Performance Committee reviewed the financial and operating performance of the Auckland Council Group at its meeting held on 17 September 2015.
13. The recommendation of the Finance and Performance Committee will be reported at the Governing Body meeting.
14. The FAR includes the detailed financial statements of the Auckland Council Group. The headline Group Financial statements were released via the NZX on 28 August 2015 as required by NZX listing rules. This document was provided to Councillors on that date.
15. The FAR and SAR are currently undergoing final editing and review by Audit New Zealand. Any major changes to the versions you have received will be reported at the meeting of the Governing Body.
16. The Auditor-General, Lyn Provost, will be attending the Governing Body meeting for the adoption of the FAR and SAR. The Auditor General may wish to address the Governing Body on the audit, the FAR, SAR and other matters of interest.

Consideration

Local Board views and implications

17. The FAR includes a section featuring the achievements in each local board area. Local boards were engaged to collect and review this information and each Chair has prepared a message from the Chairperson which is included in the annual report.
18. The Local Government Act 2002 provides for each local board to comment on the section of the FAR relating to their local board area.

Māori impact statement

19. The FAR and SAR covers all aspects of Council’s governance and public accountability. The FAR and SAR includes commentary on Council’s contribution to outcomes for Māori, the role of the Independent Māori Statutory Board (IMSB) and Council’s Te Waka Angamua – Māori Strategy and Relations Department. Te Waka Angamua has been consulted on the appropriate content of the reports.

Implementation

20. There are no implementation issues.

 

Attachments

No.	Title	Page
AView	Resolutions from Audit and Risk, and Finance and Performance Committee Meetings	15

NOTE: The draft copies of the 2014/2015 Full Annual Report and Summary Annual Report are to be circulated separately and are available on the Auckland Council Councillors’ shared drive and on the Auckland Council website (from Thursday).

…….

Local Board Allocations

Governing Body – 24 September 2015

Allocation of discretionary capital budget to local boards

File No.: CP2015/19525

Purpose

• This report recommends the adoption for consultation of the amendment to the Local Boards Funding Policy (LBFP) to provide for allocation of discretionary capital expenditure funding.

Executive Summary

1. The Governing Body has created a discretionary fund for capital expenditure for local boards. The Locally Driven Initiatives (LDI) Capex fund enables local boards to deliver small local asset based projects, either directly, in partnership with the community, or through joint agreements between boards. The LDI Capex fund will be managed over three years. Local boards can use their entire three year allocation for one project or spread it over the three years for smaller projects.
2. Local boards were presented with five options for allocating the LDI Capex fund.

• 10 boards supported an allocation formula based on 90 per cent population, 5 per cent land area and 5 per cent deprivation. The remaining boards preferred funds to be allocated based on population and deprivation, or just population.
• 16 local boards supported allocating a fixed proportion of funding to Great Barrier and Waiheke local boards. 12 boards supported funding proportion set at one per cent for Great Barrier Island local board and two per cent for Waiheke Island local board..

3. Staff recommend that the LDI Capex fund be allocated on the following basis:

• one per cent of the fund allocated to  the Great Barrier Island local board
• two per cent of the fund allocated to Waiheke Island local board
• remainder of the fund allocated between the remaining local boards based on 90 per cent population, 5 per cent land area and 5 per cent deprivation.

4. Staff consider that the recommended allocation formula is:

• consistent with the formula for allocating funding for locally driven initiatives
• provides sufficient funding for the Gulf Islands.

However, staff note that an allocation based on land area doesn’t have a strong connection to demand for services and shifts significant funding to rural areas. The formula for the allocation of the discretionary LDI Capex fund must be included in the LBFP.  The council is required to undertake consultation on this proposal. This report recommends the Proposal to amend the LBFP document, and the consultation strategy.

5. Staff propose to amend the LBFP to provide a general formula for allocating any non LDI funding. This will avoid the need to amend the LBFP every time a new funding source is established.

Recommendation/s That the Governing Body: a)      agree to consult on a model for the allocation of the discretionary Locally Driven InitiativesCapex fund as follows: i)        one per cent of the fund allocated to  the Great Barrier Island local board ii)       two per cent of the fund allocated to Waiheke Island local board iii)      remainder of the fund allocated between the remaining local boards based on 90 per cent population, 5 per cent land area and 5 per cent deprivation. b)      adopt for consultation the Proposal to amend the Local boards funding policy in Attachment One of this report. c)      agree the process for consultation as set out in the report. d)      delegate authority for updating the Proposal to amend the Local Boards Funding Policy to reflect the decisions made at this meeting and to make minor editorial changes or correction of minor errors to the Chairperson or Deputy Chairperson of the Finance and Performance Committee, and the Chief Finance Officer.

Comments

Background

Local discretionary LDI Capex fund

6. The Governing Body has created a discretionary fund for capital expenditure for local boards. On May 7 the Budget Committee passed the following resolution:
7. a) Provide a new Local Board discretionary capex fund of $10 million per annum noting that this will incorporate the existing Facilities Partnership Fund.
8. b)   Approve the following parameters for this fund:
9. The fund may be managed as a three year amount
10. Local Boards may use the fund to build council owned assets, add to an existing council funded renewal or new capital project, work in partnership with an external provider or seed fund a community project.
11. The Budget Committee requested that staff and local boards develop a formula for allocation and criteria for qualifying projects to report to the Finance and Performance Committee.

Purpose of the LDI Capex fund

8. The purpose of the fund is to ensure locally important projects are given appropriate priority. It is envisaged that the fund will be used for projects similar to those historically funded by the local improvement projects (LIP’s) or small local improvement projects (SLIP’s).

Local boards funding policy formula for allocation of funding for locally driven initiatives operating expenditure (LDI opex)

9. The Local boards funding policy (LBFP) makes allocations on the following basis:

• 90 per cent based on local board population size
• 5 per cent based on the relative level of deprivation of the board
• 5 per cent based on the land area of the board
• Waiheke and Great Barrier Island are funded for a fixed amount set by the Governing Body.

10. The following table shows the level of local board support for the use of the above factors for allocating LDI opex recorded during the review of the LBFP.

Local Board Attribute	Local Boards support and comments from last review of LBFP		Relationship to need for funding	Staff Comments
Population	21	“population tends to be a key driver of the demand for services”	Strong	Strongly relates to demand for services
Deprivation	17	“areas of deprivation have characteristics that may indicate a greater dependency on local services”	Weak	Little objective evidence for relationship to demand for services
Geography	16	[Rural areas have less access to regionally funded services, so are more dependent on local services]	Weak	Distortionary effect on allocation that does not relate to need for services

Principles for funding allocations

11. In developing a formula to allocation funding for local activities to local boards the council must consider the matters set out in s19(4) of the Local Government (Auckland Council) Act 2009.  The key factors are the demographic characteristics.  The matters in the Act were considered in developing this advice. The core principles for allocating funding to local boards are an:

• equitable capacity for each local board to enhance well-being
• administrative effectiveness
• transparency.

Funding Allocation Options

12. Five models were presented for the allocation of the LDI Capex fund between all boards based on the population, deprivation and land area attributes of the boards:

• Model A: All boards funded based on 100% population
• Model B: All boards funded based on 95% population and 5% deprivation
• Model C: All boards funded based on 90% population, 5% deprivation and 5% land area
• Model D: Great Barriers receives 2.3% and Waiheke receives 2.7% of total funds, remaining funds allocated to all other boards based on 90% population, 5% deprivation and 5% land area
• Model E:  Great Barriers receives 1% and Waiheke receives 2% of total funds, remaining funds allocated to all other boards based on 90% population, 5% deprivation and 5% land area.

13. A key decision for the allocation of the LDI Capex fund is to determine the appropriate level of capital funding for Great Barrier Island and Waiheke. Two options were presented for the allocation of funding to these boards:

• LDI allocation: Great Barrier Island and Waiheke receive the same proportion of the LDI Capex fund as they currently receive of the total funding pool for Locally Driven Initiatives. (This is 2.3% of the total pool for  Great Barrier Island and 2.7% for Waiheke)
• Transport model: Great Barrier Island receives 1 per cent and Waiheke 2 per cent of the total funding pool.

14. The following page present these five models in table form.
15. Other potential funding attributes that have not been included in the modelling are:

• rates paid: there is no relationship with need for services, and support was low for this attribute during the last review, with six boards in favour.
• current levels of capital expenditure: data on regional activities is unavailable at local level. Levels of expenditure on local assets are not relevant to the purpose of the LDI Capex fund. Gaps in the provision of assets will be met through the relevant network facilities plan.
• population growth: growth will be addressed every three years through the proposed allocation formula

16. The costs of providing small local capital projects doesn’t vary widely across local boards.
17. The following table shows the impact of the five models on each local board. This shows that:

• using land area as an allocation factor significantly increases funding to Rodney and Franklin local boards
• Great Barrier Island receives less than $7,000 under a population based allocation. This rises to $77,000 under the allocation formula that includes deprivation and land area
• providing Great Barrier Island and Waiheke with fixed allocations under the LDI allocation and Transport models only has a small impact on the other 19 boards.

Model	A: 100% Population	B: 95% Population 5% Deprivation	C: 90% Population 5% Deprivation 5% Land Area	D: GBI: 2.3%, Waiheke: 2.7% of fund Other boards: 90% Population 5% Deprivation 5% Land Area	E: GBI: 1%, Waiheke: 2% of fund Other boards: 90% Population 5% Deprivation 5% Land Area
Albert-Eden	668,963	657,222	626,669	602,363	615,305
Devonport-Takapuna	391,862	386,741	369,200	355,152	362,782
Franklin	461,460	454,987	554,035	543,637	555,317
Great Barrier	6,633	44,609	77,015	229,088	100,000
Henderson-Massey	760,729	751,296	718,691	691,544	706,402
Hibiscus and Bays	634,608	617,350	596,626	573,397	585,717
Howick	898,061	868,651	830,867	797,072	814,197
Kaipatiki	582,770	573,722	548,057	527,047	538,371
Mangere-Otahuhu	501,282	513,972	493,923	477,953	488,222
Manurewa	580,990	583,821	558,564	538,791	550,368
Maungakiekie-Tamaki	494,522	500,654	479,650	463,210	473,162
Orakei	561,873	545,485	520,709	499,702	510,438
Otara-Papatoetoe	534,513	544,180	521,245	503,760	514,583
Papakura	322,369	335,109	323,104	313,327	320,059
Puketapapa	373,975	380,219	363,431	351,108	358,652
Rodney	387,687	385,200	595,331	593,444	606,195
Upper Harbour	379,146	373,043	361,197	347,758	355,230
Waiheke	58,896	85,065	97,922	274,940	200,000
Waitakere Ranges	341,910	343,031	356,306	346,071	353,507
Waitemata	544,919	540,615	515,339	496,033	506,690
Whau	512,832	515,028	492,119	474,605	484,802
Total	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000

—-ends—–

The Local Board fund will be interesting to see which way that goes although $10m is rather paltry to what the Local Board should really be getting if we are to ever embrace Community Empowerment (as the mayor says) – which Council won’t as that means letting go of its centralised grip on resources.

I will upload the Summary Annual Report when it becomes available.