Governing Body – September 2015. How Much Will Local Boards Get? #AKLPols

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

  1. 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.
  2. The Audit and Risk Committee received the report and reviewed the audit with Audit New Zealand on 15 September 2015 (see Attachment A).
  3. The Finance and Performance Committee received the report at its meeting on 17 September 2015 (see Attachment A).
  4. 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.
  5. 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

  1. 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.
  2. The report and financial statements have been audited by Audit New Zealand on behalf of the Auditor-General.
  3. 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
  1. 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.
  2. 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.
  3. 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.
  4. The recommendation of the Finance and Performance Committee will be reported at the Governing Body meeting.
  5. 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.
  6. 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.
  7. 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

  1. 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.
  2. 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

  1. 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

  1. 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..
  1. 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.
  1. 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.

  1. 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

  1. The Governing Body has created a discretionary fund for capital expenditure for local boards. On May 7 the Budget Committee passed the following resolution:
  2. a) Provide a new Local Board discretionary capex fund of $10 million per annum noting that this will incorporate the existing Facilities Partnership Fund.
  3. b)   Approve the following parameters for this fund:
  4. The fund may be managed as a three year amount
  5. 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.
  6. 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

  1. 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)

  1. 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.
  1. 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

  1. 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

  1. 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.
  1. 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.
  1. The following page present these five models in table form.
  2. 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
  1. The costs of providing small local capital projects doesn’t vary widely across local boards.
  2. 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.

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