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Finance and Strategy Committee
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MINUTES OF A MEETING OF THE
FINANCE AND STRATEGY COMMITTEE
HELD ON WEDNESDAY, 25 MARCH 2009 AT 9.30AM
IN THE COMMITTEE ROOM, LEVEL 15
CIVIC ADMINISTRATION BUILDING
1 GREYS AVENUE
AUCKLAND

PRESENT: Councillors: Douglas Armstrong, QSO [Chairperson]
    Paul Goldsmith [Deputy Chairperson]
    Aaron Bhatnagar  
    Dr Cathy Casey [until 12:40pm, item C5; from 12:44pm, item C5]
    Mark Donnelly  
    Richard Northey, ONZM [until 11:55am, item C3; from 12:02pm, item C3]
ALSO PRESENT:   Bill Christian  
    Leila Boyle [until 12:47pm, item C5; from 12:53pm, item C6]
    Graeme Easte  

  1. Top APOLOGIES

    That the apology from Councillor Lotu-Iiga for non-attendance be accepted.

    CARRIED

  2. Top CONFIRMATION OF MINUTES

    That the minutes of the Finance and Strategy Committee meeting held on Wednesday, 18 March 2009 be confirmed as a true and correct record.

    CARRIED

  3. Top EXTRAORDINARY BUSINESS

    There was no extraordinary business.

  4. Top PUBLIC FORUM

    4.1 MS PENNY BRIGHT - METROWATER ISSUES

    Ms Penny Bright addressed the Committee regarding Metrowater's performance relating to water conservation, unaccounted for water and the need for a cost-benefit analysis of the Metrowater model.

    That Ms Bright's presentation regarding Metrowater issues be received.

    CARRIED

  5. Top REVIEW OF METROWATER'S PERFORMANCE FOR THE HALF YEAR 2008/09

    The Chairperson moved:

    1. That the Finance and Strategy Committee receives Metrowater's report for the half year to 31 December 2008/09, noting that:
      1. net profit before tax for the quarter was $6.033 million, $3.099 million below budget;
      2. Metrowater has met its half year targets in relation to three out of four key performance indicators. Unaccounted for Water (UfW) was slightly outside the second quarter target, due to sales being lower than forecast as UfW is expressed as a percentage of total sales;
      3. Metrowater has made satisfactory progress in relation to its three long-term measures of environmental, conservation and affordability; and
      4. all financial statements should be interpreted with caution as the accounts are unaudited and are based on assumptions that could change.
    2. That the Finance and Strategy Committee notes the efforts being made by Metrowater to minimise shortfall on budget and requires the Metrowater Board to work with council officers to achieve the best year-end financial outcome.
    3. That the Finance and Strategy Committee notes that issues were raised in 2007 regarding the legality of local network operators charging for conveying trade waste through local sewers and that these need to be resolved following decisions about Auckland's governance, in order to satisfy Audit New Zealand concerns.
    4. That the Finance and Strategy Committee thanks Mr Ross Keenan, Chairman, and Mr Jim Bentley, Chief Executive, of Metrowater for their attendance.

    Councillor Northey moved the following amendment by way of addition:

    1. Given that in the last half year the number of long-term debtors increased by 22%; that the size of the long-term debt increased by 26% that the Finance and Strategy Committee urges Metrowater to review its Debt Collections process in light of the economic recession.

    A division was called for, voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Dr Cathy Casey

    Cr Mark Donnelly

    Cr Richard Northey

    		 Cr Douglas Armstrong

    Cr Aaron Bhatnagar

    Cr Paul Goldsmith


    His Worship the Mayor, Deputy Mayor Hay and Councillor Lotu-Iiga were absent.

    Voting in the division was TIED with 3 votes for and against. The Chairperson exercised his casting vote against the amendment. The amendment was declared LOST by 4 votes to 3.

    Councillor Casey moved the following amendment by way of addition:

    1. Given that in the last half year the number of Metrowater customers that had their water restricted increased by 24% the Finance & Strategy Committee urges Metrowater to review its debt collection process with a view to ending water restriction as a means of debt enforcement.
    2. That Finance and Strategy Committee informs Metrowater that the up to 175 households that may have cost affordability issues with their water bills are a concern for Auckland city and urge both Metrowater and the Metrowater Community Trust give priority to addressing this issue effectively.

    A division was called for, voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Dr Cathy Casey

    Cr Richard Northey

    		 Cr Douglas Armstrong

    Cr Aaron Bhatnagar

    Cr Mark Donnelly

    Cr Paul Goldsmith


    His Worship the Mayor, Deputy Mayor Hay and Councillor Lotu-Iiga were absent.

    The amendment was declared LOST by 4 votes to 2.

    The Chairperson put the substantive motion:

    1. That the Finance and Strategy Committee receives Metrowater's report for the half year to 31 December 2008/09, noting that:
      1. net profit before tax for the quarter was $6.033 million, $3.099 million below budget;
      2. Metrowater has met its half year targets in relation to three out of four key performance indicators. Unaccounted for Water (UfW) was slightly outside the second quarter target, due to sales being lower than forecast as UfW is expressed as a percentage of total sales;
      3. Metrowater has made satisfactory progress in relation to its three long-term measures of environmental, conservation and affordability; and
      4. all financial statements should be interpreted with caution as the accounts are unaudited and are based on assumptions that could change.
    2. That the Finance and Strategy Committee notes the efforts being made by Metrowater to minimise shortfall on budget and requires the Metrowater Board to work with council officers to achieve the best year-end financial outcome.
    3. That the Finance and Strategy Committee notes that issues were raised in 2007 regarding the legality of local network operators charging for conveying trade waste through local sewers and that these need to be resolved following decisions about Auckland's governance, in order to satisfy Audit New Zealand concerns.
    4. That the Finance and Strategy Committee informs Metrowater that progressive reductions in Unaccounted for Water remain a priority for Auckland city and notes that appropriate volume related measures will be used in the 2009/10 Statement of Intent.
    5. That the Finance and Strategy Committee thanks Mr Ross Keenan, Chairman, and Mr Jim Bentley, Chief Executive, of Metrowater for their attendance.

    CARRIED

  6. Top AUCKLAND INTERNATIONAL AIRPORT LTD INTERIM RESULT

    1. That the Finance and Strategy Committee notes that Auckland International Airport Limited achieved a good operating result for the six months to 31 December 2008 and that council's interim dividend receipt is in line with expectations.
    2. That the Finance and Strategy Committee notes that council's total dividend receipt for the 2008/09 year is lower than budgeted at $9.7 million, as Auckland International Airport Ltd increased its 2007/08 interim dividend to make use of surplus imputation credits that would have been lost following a takeover, and reduced its final 2007/08 dividend to offset this increase.
    3. That the Finance and Strategy Committee requests that the Committee be kept informed, as council heads towards a decision on the Ten-year Plan, on the implications of IRD's consideration of refunds of allowing imputation credits for non-taxpayers like Auckland city including its implications for CCO structures.

    CARRIED

  7. Top REVIEW OF THE EDGE®'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 DECEMBER 2008

    The Chairperson moved:

    1.  That the Finance and Strategy Committee notes that THE EDGE® reported a net operating deficit of $515,790 for the half-year ending 31 December 2008.
    2. Whilst the Finance and Strategy Committee notes that THE EDGE® is on track to meet all but two of its performance targets set out in the 2008/09 Statement of Intent, which is detailed in a separate report on the confidential agenda of this meeting, the Committee is extremely concerned at the poor results and requires the Board to take all necessary steps to minimise the budget shortfall.

    Councillor Casey moved the following amendment by way of addition:

    1. That those parts of THE EDGE®'s report that are not commercial be discussed in the open section of this meeting.

    A division was called for, voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Dr Cathy Casey

    Cr Mark Donnelly

    Cr Richard Northey

    		 Cr Douglas Armstrong

    Cr Aaron Bhatnagar

    Cr Paul Goldsmith


    His Worship the Mayor, Deputy Mayor Hay and Councillor Lotu-Iiga were absent.

    Voting in the division was TIED with 3 votes for and against. The Chairperson exercised his casting vote against the amendment. The amendment was declared LOST by 4 votes to 3.

    The Chairperson put the substantive motion:

    1. That the Finance and Strategy Committee notes that THE EDGE® reported a net operating deficit of $515,790 for the half-year ending 31 December 2008.
    2. Whilst the Finance and Strategy Committee notes that THE EDGE® is on track to meet all but two of its performance targets set out in the 2008/09 Statement of Intent, which is detailed in a separate report on the confidential agenda of this meeting, the Committee is extremely concerned at the poor results and requires the Board to take all necessary steps to minimise the budget shortfall.

    CARRIED

  8. Top EXCLUSION OF THE PUBLIC : LOCAL GOVERNMENT OFFICIAL INFORMATION AND MEETINGS ACT 1987

    Items 8A C1, 8A C2 and 8B were taken and items C1 and C2 were discussed at this time.

    Items 8A C3 and 8C were taken and item C3 was discussed at this time.

    Items 8A C4 was taken and item C4 was discussed at this time.

    Items 8A C5, 8A C6, and item 8D were taken and items C5 and C6 were discussed at this time.

    1. That the public be excluded from the following part(s) of the proceedings of this meeting.

    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 follows.

    Item No. General subject of each matter to be considered Reason for passing this resolution in relation to each matter Particular interest(s) protected (where applicable) Ground(s) under section 48(1) for the passing of this resolution
    C1. REVIEW OF THE EDGE®'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 DECEMBER 2008 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(b)(ii)

    The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

    In particular, THE EDGE®'s commercial activities take place in a very competitive environment. Disclosure of sensitive information such as profit margin and sales numbers will disadvantage THE EDGE® in the competition.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C2. PROPOSAL TO PROVIDE THE EDGE® WITH WORKING CAPITAL FUNDING Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(b)(i)

    The withholding of the information is necessary to protect information where the making available of the information would disclose a trade secret.

    In particular, the report contains trade information related to THE EDGE®'s commercial investment, which, if released to the public, could prejudice and disadvantage THE EDGE®'s commercial position.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C3. REVIEW OF THE PARKING ADVISORY BOARD'S PERFORMANCE FOR THE SECOND QUARTER 2008/2009 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains material that in a competitive environment, competing with privately owned car parks, and disclosure of strategic intent could have an adverse impact on the market.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C4. REVIEW OF THE PROPERTY ENTERPRISE BOARD'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 DECEMBER 2008 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains information about potential property transactions that would place council at a disadvantage in carrying out commercial activities if released to the public.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C5. REVIEW OF WATERCARE'S PERFORMANCE FOR THE QUARTER ENDING 31 DECEMBER 2008 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains capital and operating expenditure information relating to suppliers, contractors and other third parties, which if released to the public, would prejudice and disadvantage Watercare Services Limited's commercial position.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C6. INITIAL REVIEW OF WATERCARE'S 2009 FUNDING PLAN Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(i)

    The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

    In particular, the report contains information which if disclosed has the potential to prejudice or disadvantage the negotiations with Watercare.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    1. That Mr Greg Innes, Chief Executive, Mr Tony Larsen, Chief Financial Officer, and Ms Victoria Carter, Board Member, of THE EDGE® be permitted to remain at this meeting after the public has been excluded for confidential item C1 and C2 because of their specific knowledge of the THE EDGE®'s performance.
    2. That Mr Steven Bonnici, Director, and Mr Warren Gibb, Chair, of the Parking Advisory Board be permitted to remain at this meeting after the public has been excluded for confidential item C3 because of their specific knowledge of the Parking Advisory Board.

    Councillor Casey moved the following amendment by way of addition:

    1. That the agenda items of Review of Watercare's Performance and the Initial Review of Watercare's 2009 Funding Plan be discussed in the Open agenda and that officers separate the open and confidential aspects of the Reports preferably at, or otherwise subsequent to, this meeting with the Open reports circulated with the Open minutes and made publicly available.

    A division was called for, voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Dr Cathy Casey

    Cr Richard Northey

    		 Cr Douglas Armstrong

    Cr Aaron Bhatnagar

    Cr Mark Donnelly

    Cr Paul Goldsmith


    His Worship the Mayor, Deputy Mayor Hay and Councillor Lotu-Iiga were absent.

    The amendment was declared LOST by 4 votes to 2.

    The Chairperson put the substantive motion:

    Items 8A C1, 8A C2 and 8B were taken and items C1 and C2 were discussed at this time.

    Items 8A C3 and 8C were taken and item C3 was discussed at this time.

    Items 8A C4 was taken and item C4 was discussed at this time.

    Items 8A C5, 8A C6, and item 8D were taken and items C5 and C6 were discussed at this time.

    1. That the public be excluded from the following part(s) of the proceedings of this meeting.

    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 follows.

    Item No. General subject of each matter to be considered Reason for passing this resolution in relation to each matter Particular interest(s) protected (where applicable) Ground(s) under section 48(1) for the passing of this resolution
    C1. REVIEW OF THE EDGE®'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 DECEMBER 2008 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(b)(ii)

    The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

    In particular, THE EDGE®'s commercial activities take place in a very competitive environment. Disclosure of sensitive information such as profit margin and sales numbers will disadvantage THE EDGE® in the competition.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C2. PROPOSAL TO PROVIDE THE EDGE® WITH WORKING CAPITAL FUNDING Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(b)(i)

    The withholding of the information is necessary to protect information where the making available of the information would disclose a trade secret.

    In particular, the report contains trade information related to THE EDGE®'s commercial investment, which, if released to the public, could prejudice and disadvantage THE EDGE®'s commercial position.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C3. REVIEW OF THE PARKING ADVISORY BOARD'S PERFORMANCE FOR THE SECOND QUARTER 2008/2009 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains material that in a competitive environment, competing with privately owned car parks, and disclosure of strategic intent could have an adverse impact on the market.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C4. REVIEW OF THE PROPERTY ENTERPRISE BOARD'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 DECEMBER 2008 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains information about potential property transactions that would place council at a disadvantage in carrying out commercial activities if released to the public.

    		Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C5. REVIEW OF WATERCARE'S PERFORMANCE FOR THE QUARTER ENDING 31 DECEMBER 2008 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains capital and operating expenditure information relating to suppliers, contractors and other third parties, which if released to the public, would prejudice and disadvantage Watercare Services Limited's commercial position.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C6. INITIAL REVIEW OF WATERCARE'S 2009 FUNDING PLAN Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(i)

    The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

    In particular, the report contains information which if disclosed has the potential to prejudice or disadvantage the negotiations with Watercare.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    1. That Mr Greg Innes, Chief Executive, Mr Tony Larsen, Chief Financial Officer, and Ms Victoria Carter, Board Member, of THE EDGE® be permitted to remain at this meeting after the public has been excluded for confidential item C1 and C2 because of their specific knowledge of the THE EDGE®'s performance.
    2. That Mr Steven Bonnici, Director, and Mr Warren Gibb, Chair, of the Parking Advisory Board be permitted to remain at this meeting after the public has been excluded for confidential item C3 because of their specific knowledge of the Parking Advisory Board.

    CARRIED

    [Secretarial note: Councillors Casey and Northey requested that their vote against items 8A C5 and 8A C6 be recorded.]

    There being no further business the Chairperson declared the meeting closed at 12:55 pm.