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MINUTES FOR AN EXTRAORDINARY MEETING OF THE
FINANCE AND STRATEGY COMMITTEE
HELD ON TUESDAY, 29 SEPTEMBER 2009 AT 9:30AM
IN THE RECEPTION LOUNGE, LEVEL 2
TOWN HALL
301 QUEEN STREET
AUCKLAND

PRESENT: Councillors Douglas Armstrong, QSO [Chairperson]
    Paul Goldsmith [Deputy Chairperson]
[until 10:15am, item 4; from 10:25am, item 4]
  His Worship the Mayor, Hon John Banks, QSO [from 11.10am, item 5]
  Councillors Ken Baguley  
    Aaron Bhatnagar  
    Leila Boyle  
    Dr Cathy Casey  
    Bill Christian, JP  
    Mark Donnelly  
    Graeme Easte  
    Glenda Fryer [until 10:15am, item 4; from 10:20am, item 4]
  Deputy Mayor David Hay, JP  
    Peseta Sam Lotu-Iiga [from 9:35am, item 3]
    Toni Millar, JP [from 9:50am, item 3]
    Greg Moyle, ED [from 9:35am, item 3]
    Graeme Mulholland, JP  
    Richard Northey, ONZM  
    Noelene Raffills [until 10:25am, item 4; from 10:33am, item 4]
    Denise Roche  

  1. Top APOLOGIES

    That the apologies from Councillor Lister for non-attendance, Councillor Lotu-Iiga, Councillor Millar and Councillor Moyle for lateness be accepted.

    CARRIED

  2. Top EXTRAORDINARY BUSINESS

    There was no extraordinary business.

  3. Top PROPOSED APPROACH TO THE ANNUAL PLAN 2010/2011

    The Chairperson moved:

    1. That the Finance and Strategy Committee notes the transition to Auckland Council on 1 November 2010 creates uncertainty, complexity, and resourcing issues, which require a pragmatic, flexible and constrained approach to the 2010/2011 annual planning round.
    2. That the Finance and Strategy Committee notes the following legislative planning requirements for 2010/2011 created by the Local Government (Auckland Council) Act 2009:
      1. councils must prepare an annual plan for the 2010/2011 financial year, but this will apply only for the first four months;
      2. the Auckland Transition Agency (ATA) must prepare a planning document for the Auckland Council covering the remaining eight months of 2010/2011 (which may include the allocation of funds and activities to local boards);
      3. councils must set rates and other revenue mechanisms for the full12-month period;
      4. councils are not required to conduct a special consultative procedure on the annual plan provided it is generally consistent with their 10-year plan; and
      5. councils must consult the ATA throughout the preparation of the annual plan.
    3. That the Finance and Strategy Committee agrees to the following approach to Auckland City Council's 2010/2011 annual planning round be agreed:
      1. prepare an annual plan for the full 12-month period of 2010/2011 based on the 2010/2011 budgets in the 10-year plan;
      2. limit changes to 2010/2011 budgets in the 10-year plan as much possible;
      3. prepare budgets for the first four months and last eight months of 2010/2011;
      4. do not conduct a statutory consultation process provided the requirements of the Local Government (Auckland Council) Act 2009 are met;
      5. conduct a tailored process for gathering feedback on proposed changes relative to the 10-year plan including promoting these on the web and in the City Scene, meeting with key stakeholders, and consideration of feedback documented by officers prior to adopting the final plan; and
      6. remain attentive and responsive to external factors requiring a change in approach.

    Councillor Northey moved the following amendment:

    1. (iv) conduct a consultation process, in tandem with a proposal for an amendment to the development contributions policy which itself requires a special consultative procedure and provided that the requirements of the Local Government (Auckland Council) Act 2009 are met;

    Amendment C (iv) was put by show of hands and declared LOST by 11 votes to 6.

    Councillor Casey moved the following amendment by way of replacement to C (v):

    C (v) use less resources to solicit submissions but conduct hearings for all those wishing to be heard on the Annual Plan and also conduct a tailored process for gathering feedback on proposed changes relative to the 10-year plan including promoting these on the web and in the City Scene, meeting with key stakeholders, including community boards, interest groups representing all four wellbeings and Tangata Whenua, and consideration of feedback documented by officers prior to adopting the final plan; and

    A division was called for the first part of Councillor Casey's amendment C (v) on the wordings "use less resources to solicit submissions but conduct hearings for all those wishing to be heard on the Annual Plan", voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Leila Boyle

    Cr Dr Cathy Casey

    Cr Graeme Easte

    Cr Glenda Fryer

    Cr Richard Northey

    Cr Denise Roche

    		 Cr Ken Baguley

    Cr Aaron Bhatnagar

    Cr Bill Christian

    Cr Mark Donnelly

    Cr Paul Goldsmith

    Deputy Mayor David Hay

    Cr Peseta Sam Lotu-Iiga

    Cr Toni Millar

    Cr Greg Moyle

    Cr Graeme Mulholland

    Cr Noelene Raffills

    Cr Douglas Armstrong

    His Worship the Mayor and Councillor Lister were absent.

    First part of amendment C (v) was declared LOST by 12 votes to 6.

    A division was called for the second part of Councillor Casey's amendment C (v) on the wordings "including community boards, interest groups representing all four wellbeings and Tangata Whenua", voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Leila Boyle

    Cr Dr Cathy Casey

    Cr Mark Donnelly

    Cr Graeme Easte

    Cr Glenda Fryer

    Cr Richard Northey

    Cr Denise Roche

    		 Cr Ken Baguley

    Cr Aaron Bhatnagar

    Cr Bill Christian

    Cr Paul Goldsmith

    Deputy Mayor David Hay

    Cr Peseta Sam Lotu-Iiga

    Cr Toni Millar

    Cr Greg Moyle

    Cr Graeme Mulholland

    Cr Noelene Raffills

    Cr Douglas Armstrong

    His Worship the Mayor and Councillor John Lister were absent.

    Second part of amendment C (v) was declared LOST by 11 votes to 7.

    The Chairperson put the substantive motion:

    1. That the Finance and Strategy Committee notes the transition to Auckland Council on 1 November 2010 creates uncertainty, complexity, and resourcing issues, which require a pragmatic, flexible and constrained approach to the 2010/2011 annual planning round.
    2. That the Finance and Strategy Committee notes the following legislative planning requirements for 2010/2011 created by the Local Government (Auckland Council) Act 2009:
      1. councils must prepare an annual plan for the 2010/2011 financial year, but this will apply only for the first four months;
      2. the Auckland Transition Agency (ATA) must prepare a planning document for the Auckland Council covering the remaining eight months of 2010/2011 (which may include the allocation of funds and activities to local boards);
      3. councils must set rates and other revenue mechanisms for the full 12-month period;
      4. councils are not required to conduct a special consultative procedure on the annual plan provided it is generally consistent with their 10-year plan; and
      5. councils must consult the ATA throughout the preparation of the annual plan.
    3. That the Finance and Strategy Committee agrees to the following approach to Auckland City Council's 2010/2011 annual planning round be agreed:
      1. prepare an annual plan for the full 12-month period of 2010/2011 based on the 2010/2011 budgets in the 10-year plan;
      2. limit changes to 2010/2011 budgets in the 10-year plan as much possible;
      3. prepare budgets for the first four months and last eight months of 2010/2011;
      4. do not conduct a statutory consultation process provided the requirements of the Local Government (Auckland Council) Act 2009 are met;
      5. conduct a tailored process for gathering feedback on proposed changes relative to the 10-year plan including promoting these on the web and in the City Scene, meeting with key stakeholders, and consideration of feedback documented by officers prior to adopting the final plan; and
      6. remain attentive and responsive to external factors requiring a change in approach.

    CARRIED

  4. Top HIGH LEVEL BUDGET REVIEW

    The Chairperson moved:

    1. That the Finance and Strategy Committees notes that despite recent changes in legislation, Auckland City Council will still need to prepare prospective financial information for the full 12 months of the 2010/2011 year.
    2. That the Finance and Strategy Committee confirms the principle of keeping the average rate increase for the 2010/2011 year within the council rate of inflation, while maintaining all current service levels except where specifically reported to and increased or reduced by the Committee, noting that this is consistent with the principle of affordable progress (as set out in the 10-year plan) and recognises the current economic climate.
    3. That the Finance and Strategy Committee notes that based on current information, the 2010/2011 council rate of inflation is projected to be 3.0%.
    4. That the Finance and Strategy Committee notes that a net operating budget shortfall of $3.4 million above council rate of inflation was identified during the high level budget review.
    5. That the Finance and Strategy Committee notes that additional material risks to operating costs of over $6.6 million were identified during the high level budget review.
    6. That the Finance and Strategy Committee notes that the currently projected capex programme for 2010/2011 is $545.0 million and that this will be thoroughly reviewed with the aim of preparing a capex programme for 2010/2011, which is both affordable and deliverable.
    7. That the Finance and Strategy Committee notes that, officers will present a report to the November 2009 Annual Plan Direction Setting meeting setting out how the budget shortfall will be resolved.
    8. That officers keep Councillors informed on the current and projected costs of the transition to the new Auckland Council and on options for funding these costs.

    Councillor Northey moved the following amendment.

    1. That the Finance and Strategy Committee supports the principle of keeping the average rate increase for the 2010/2011 year close to the council rate of inflation, noting that this is consistent with the principle of affordable progress (as set out in the 10-year plan) and recognises the current economic climate.

    Amendment B was put by show of hands and declared LOST by 11 votes to 6.

    The Chairperson put the substantive motion:

    1. That the Finance and Strategy Committees notes that despite recent changes in legislation, Auckland City Council will still need to prepare prospective financial information for the full 12 months of the 2010/2011 year.
    2. That the Finance and Strategy Committee confirms the principle of keeping the average rate increase for the 2010/2011 year within the council rate of inflation, while maintaining all current service levels except where specifically reported to and increased or reduced by the Committee, noting that this is consistent with the principle of affordable progress (as set out in the 10-year plan) and recognises the current economic climate.
    3. That the Finance and Strategy Committee notes that based on current information, the 2010/2011 council rate of inflation is projected to be 3.0%.
    4. That the Finance and Strategy Committee notes that a net operating budget shortfall of $3.4 million above council rate of inflation was identified during the high level budget review.
    5. That the Finance and Strategy Committee notes that additional material risks to operating costs of over $6.6 million were identified during the high level budget review.
    6. That the Finance and Strategy Committee notes that the currently projected capex programme for 2010/2011 is $545.0 million and that this will be thoroughly reviewed with the aim of preparing a capex programme for 2010/2011, which is both affordable and deliverable.
    7. That the Finance and Strategy Committee notes that, officers will present a report to the November 2009 Annual Plan Direction Setting meeting setting out how the budget shortfall will be resolved.

    H. That officers keep Councillors informed on the current and projected costs of the transition to the new Auckland Council and on options for funding these costs.

    CARRIED

  5. Top FUNDING ISSUES FOR 2010/2011

    The Chairperson moved:

    1. That the Finance and Strategy Committee notes that the new legislation requires the council to prepare an annual plan that covers the first four months of 2010/2011, although it must set its rates revenue based on the planned expenditure for the full year.
    2. That the Finance and Strategy confirms that the overall rates increase (excluding the impact of the CBD, Mainstreet and additional recycling targeted rates) for 2010/2011 be applied by increasing the refuse collection targeted rates and the uniform annual general charge, as decided by the council during the 10-year plan process.
    3. That the Finance and Strategy Committee confirms that the next step of the long-term differential strategy for the general rate will be applied, which will transfer around $2.7 million from non-residential properties to residential properties, as decided by the council during the 10-year plan process.
    4. That the Finance and Strategy Committee confirms that council will continue to fully fund the cost of its rubbish and recycling services through the refuse collection targeted rate and the cost of providing additional recycling services through the additional recycling targeted rate.
    5. That the Finance and Strategy Committee confirms that the CBD targeted rate for CBD residential ratepayers be retained at $57 per residential unit for 2010/2011, as the targeted rate has increased slightly more than council rate of inflation due to the practice of rounding the rate to the next dollar.
    6. That the Finance and Strategy Committee confirms that the council will retain the rates assistance policies from 2009/2010 without any changes for 2010/2011, as they are achieving the intended objectives.
    7. That the Finance and Strategy Committee notes that the revenue from the CBD targeted rate for the CBD non-residential group is projected to increase by around $2.3 million to $16.2 million (excluding GST) for 2010/2011, in line with the decrease in this group's general rate from applying the next step of the long-term differential strategy noted above.
    8. That the Finance and Strategy Committee notes that there is $5.4 million of unallocated refuse collection targeted rate surplus revenue and officers will report to the November 2009 Annual Plan Direction Setting meeting on options to use the surplus.
    9. That the Finance and Strategy Committee notes that officers will report to the November 2009 Annual Plan Direction Setting on the projected level of the different rates and assistance schemes, based on the proposed budget presented at the September 2009 Annual Plan Direction Setting meeting.
    10. That the Finance and Strategy Committee notes that officers will report to the City Development Committee on options to address the higher interest cost to fund the bigger gap in growth capital expenditure and development contribution revenue resulting from the slow down in consented development.
    11. That the Finance and Strategy Committee notes that officers will report to the Transport Committee on the impact of New Zealand Transport Agency's decision to increase funding of state highways at the expense of funding for local roads.

    Councillor Northey moved the following amendment:

    1. That the Finance and Strategy resolves that the overall rates increase (excluding the impact of the CBD, Mainstreet and additional recycling targeted rates) for 2010/2011 be applied by increasing the general rate.

    Amendment B was put by show of hands and declared LOST by 13 votes to 6.

    Councillor Boyle moved the following amendment:

    1. That the Finance and Strategy Committee confirms that council will continue to fully but only fund the cost of its rubbish and recycling services through the refuse collection targeted rate and the cost of the providing additional recycling services through the additional recycling targeted rate.

    Amendment D was put by show of hands and declared LOST by 12 votes to 7.

    Councillor Roche moved the following amendment:

    1. That the Finance and Strategy Committee notes that there is $5.4 million of unallocated refuse collection targeted rate surplus revenue resolves that $4.8 million be used to cover the waste levy and the remainder provide a reduction on $4 to the targeted rates in 2010/2011.

    Amendment H was put by show of hands and declared LOST by 13 votes to 6.

    Councillor Fryer moved the following amendment to C:

    1. That the Finance and Strategy Committee requests a report to the November 2009 Annual Plan Direction Setting meeting on the proposed application of the next step of the differential strategy for the general rate will be applied, which will transfer around $2.7 million from non-residential properties to residential properties, as decided by the council during the 10-year plan process.

    Amendment C was put by show of hands and declared LOST by 12 votes to 7.

    The Chairperson put the substantive motion:

    1. That the Finance and Strategy Committee notes that the new legislation requires the council to prepare an annual plan that covers the first four months of 2010/2011, although it must set its rates revenue based on the planned expenditure for the full year.
    2. That the Finance and Strategy confirms that the overall rates increase (excluding the impact of the CBD, Mainstreet and additional recycling targeted rates) for 2010/2011 be applied by increasing the refuse collection targeted rates and the uniform annual general charge, as decided by the council during the 10-year plan process.
    3. That the Finance and Strategy Committee confirms that the next step of the long-term differential strategy for the general rate will be applied, which will transfer around $2.7 million from non-residential properties to residential properties, as decided by the council during the 10-year plan process.
    4. That the Finance and Strategy Committee confirms that council will continue to fully fund the cost of its rubbish and recycling services through the refuse collection targeted rate and the cost of providing additional recycling services through the additional recycling targeted rate.
    5. That the Finance and Strategy Committee confirms that the CBD targeted rate for CBD residential ratepayers be retained at $57 per residential unit for 2010/2011, as the targeted rate has increased slightly more than council rate of inflation due to the practice of rounding the rate to the next dollar.
    6. That the Finance and Strategy Committee confirms that the council will retain the rates assistance policies from 2009/2010 without any changes for 2010/2011, as they are achieving the intended objectives.
    7. That the Finance and Strategy Committee notes that the revenue from the CBD targeted rate for the CBD non-residential group is projected to increase by around $2.3 million to $16.2 million (excluding GST) for 2010/2011, in line with the decrease in this group's general rate from applying the next step of the long-term differential strategy noted above.
    8. That the Finance and Strategy Committee notes that there is $5.4 million of unallocated refuse collection targeted rate surplus revenue and officers will report to the November 2009 Annual Plan Direction Setting meeting on options to use the surplus.
    9. That the Finance and Strategy Committee notes that officers will report to the November 2009 Annual Plan Direction Setting on the projected level of the different rates and assistance schemes, based on the proposed budget presented at the September 2009 Annual Plan Direction Setting meeting.
    10. That the Finance and Strategy Committee notes that officers will report to the City Development Committee on options to address the higher interest cost to fund the bigger gap in growth capital expenditure and development contribution revenue resulting from the slow down in consented development.
    11. That the Finance and Strategy Committee notes that officers will report to the Transport Committee on the impact of New Zealand Transport Agency's decision to increase funding of state highways at the expense of funding for local roads.

    CARRIED

    There being no further business the Chairperson declared the meeting closed at 11:25 am.