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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, 24 JUNE 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  
    Mark Donnelly  
    Richard Northey, ONZM  
ALSO PRESENT: Councillors: Bill Christian, JP  
    Graeme Easte  

  1. Top APOLOGIES

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

    CARRIED

  2. Top CONFIRMATION OF MINUTES

    1. That the minutes of the Finance and Strategy Committee meeting held on Wednesday, 25 March 2009 be confirmed as a true and correct record.
    2. That the minutes of the 10-Year Plan hearings held on 2-4 June and 9 June 2009 be confirmed as a true and correct record.

    CARRIED

  3. Top EXTRAORDINARY BUSINESS

    3.1 AOTEA CENTRE BOARD OF MANAGEMENT RECRUITMENT PROCESS

    That the report from the Directors Review and Appointments Subcommittee be considered as an extraordinary business at item C6 in the Confidential section of the meeting for the following reasons:

    1. The information was not known at the time the Finance and Strategy agenda papers was compiled; and
    2. The decision requires the full Council's approval at its meeting on 25 June 2009.

    CARRIED

  4. Top PUBLIC FORUM

    There was no public forum.

  5. Top REVIEW OF METROWATER'S PERFORMANCE FOR THE THIRD QUARTER - 2008/2009

    Mr Ross Kennan Chairman, Mr Bryan Taylor, Board Member of Metrowater Board and Dr Jim Bentley Chief Executive of Metrowater were in attendance for this item.

    1. That the Finance and Strategy Committee receives Metrowater's report for the third quarter to 31 March 2009, noting that:
      1. net profit before tax for the year to date was $8.398 million, $6.512 million below budget;
      2. Metrowater has met its targets in relation to two out of four key performance indicators. The "cost to serve per capita" is currently better than the target, while staff turnover is near the bottom of the range of 10-20%. Unaccounted for Water was slightly outside the third quarter target, due to sales being lower than forecast, however the company reports that it has met its volumetric target. The service performance index was slightly below target, due to an unexpected increase in dry weather overflows;
      3. Metrowater has made satisfactory progress in relation to its three long-term measures of environmental, conservation and affordability and in line with the decision made at the previous Finance and Strategy Committee meeting, Metrowater will be reporting on objective ways to progress on these measures;
      4. Metrowater has advised that the Return on Public Investment of 2.2% will not be achieved due to falling customer demand. This means that the charitable payment available to the council for 2009/2010 will be considerably lower than the budgeted $16.874 million;
      5. all financial statements should be interpreted with caution as the accounts are unaudited and are based on assumptions that could change;
      6. Metrowater be congratulated on achieving a low staff turnover annualised rate of 11.8% near the bottom end of its target range and achieved during the uncertainty over the integration of Auckland's regional water entities.
    2. That Mr Ross Kennan chairman, Mr Bryan Taylor, Metrowater Board and Dr Jim Bentley chief executive be thanked for their attendance.
    3. That the Finance and Strategy Committee notes that this would be Dr Jim Bentley's final meeting as chief executive of Metrowater and that he be warmly thanked for his service over the past three years with best wishes for the future.

    CARRIED

  6. Top REVIEW OF THE EDGE®'S PERFORMANCE FOR THE NINE MONTHS ENDING 31 MARCH 2009

    Mr Peter Stubbs, deputy chairman, Mr Greg Innes, chief executive and Mr Tony Larsen, chief financial officer of THE EDGE® were in attendance for this item.

    1. That the Finance and Strategy Committee receives the report reviewing THE EDGE®'s performance for the nine months ending 31 March 2009, noting that:
      1. THE EDGE® reported a net operating surplus of $3,778 for the nine months ending 31 March 2009; and
      2. THE EDGE® is on track to meet all but two of its performance targets set out in the 2008/2009 Statement of Intent:
        1. breakeven for the 2008/2009 financial year;
        2. 200,000 participants per annum in public programmes and
        3. that the Committee notes the importance of THE EDGE® achieving its reduced revised target of 170,000 participants in public programmes particularly in youth events and school programmes.
    2. That the Finance and Strategy Committee notes:
      1. that THE EDGE® transferred a net $456,238 from the Aotea Production Fund for the nine months ending 31 March 2009;
      2. that THE EDGE® is likely to incur an operating deficit in the order of $300,000 for the 2008/2009 financial year and therefore is unlikely to meet the breakeven target set out in the 2008/2009 Statement Of Intent ;
      3. that the large loss on My Fair Lady and the Bridge Project is not accounted for in the third quarter result.
    3. That the Finance and Strategy Committee requests that THE EDGE® include a projection of future capital expenditure requirements in its assessment of the ticketing business to be reported to the Committee in August.
    4. That Mr Peter Stubbs, Mr Greg Innes and Mr Tony Larsen be thanked for their attendance.

    CARRIED

  7. Top PERFORMANCE REPORT FOR MAY 2009, INCLUDING ANNUAL PLAN PROGRESS, FINANCIAL RISKS AND EFFICIENCY GAINS

    1. That the Finance and Strategy Committee notes the performance report for the eleven months ending 31 May 2009 highlighting:
      1. council's performance in keeping its year to date operating expenditure $6.5 million favourable to budget with the expectation that full year result will be reduced to a favourable budget of approximately $2.5 million ; and
      2. a year to date capital expenditure underspend of $46.5 million against budget, comprising:
        • $54.3 million capital expenditure overspend, of which $10.1 million is the earlier than planned acquisition of 69 Captain Springs Road, offset by; and
        • $100.8 million year to date capital expenditure underspend of which the largest items are the Art Gallery development $11.6 million behind schedule and the Development With Vision land acquisition $6.9 million behind schedule.
    2. That the Finance and Strategy Committee requests that officers use their best endeavours to continue to deliver an operating surplus in excess of budget through to the end of the year.
    3. That the Finance and Strategy Committee congratulates staff on the highlights and achievements listed in particular that:
      • Visits to library facilities increased 8%;
      • Visits to the library website increased 33%;
      • The formation of an action group to enhance the wellbeing of older refugees and migrants in partnerships with the Mental Health Foundation, the Oranga Community Mural Project and "Gardening in the Community"; and
      • Over 500 residents attended a street party project in partnership with the Panama Road Neighbourhood Support Group, Panama School, The Riverside Community Centre, the NZ Police, Teen Mops and the Maungarei Christian Trust.

    CARRIED

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

    The Chairperson moved:

    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 PARKING: DRAFT STATEMENT OF INTENT FOR 2009-12 AND PARKING ADVISORY BOARD CHARTER 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 that is subject to negotiations being carried out between the Parking Advisory Board (PAB) and Auckland City Council prior to the statement of intent being finalised. Once the Finance and Strategy Committee (FSC) has determined its position on the statement of intent, the PAB and the council will undertake negotiations on this issue. The report will inform the Finance and Strategy Committee's position on the draft statement of intent. Its disclosure to the public, and thus to the other negotiating party, clearly has the potential to cause prejudice or disadvantage once the negotiations with the PAB take place.

    In addition, the report and the attached statement of intent contain information on the PAB's objectives and strategies in the off-street parking market. Disclosure of this information to the public, and thus to the PAB's competitors, is likely to disadvantage the PAB in the commercial activities it undertakes on council's behalf.

    		 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 REVIEW OF THE PARKING ADVISORY BOARD'S PERFORMANCE FOR THE THIRD 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.

    C3

    		 REVIEW OF THE EDGE® DRAFT 2009/2010 STATEMENT OF INTENT AND CORPORATE 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)(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 corporate plan contains information relating to the commercial activities of THE EDGE®. Disclosure of this information could disadvantage THE EDGE® in the competitive 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 EDGE®'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 MARCH 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)(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®' 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.
    C5 REVIEW OF WATERCARE'S PERFORMANCE FOR THE THIRD QUARTER 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 APPOINTMENTS TO AOTEA CENTRE BOARD OF MANAGEMENT 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. Section 7(2)(a)

    The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

    In particular, the report contains specific information about a candidate to the Aotea Centre Board of Management.

    		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 Warren Gibb, Chairman, and Mr Bryan Taylor, Board Member of the Parking Advisory Board be permitted to remain at this meeting after the public has been excluded for confidential items C1 and C2 because of their specific knowledge of the Parking Advisory Board.
    2. That Mr Peter Stubbs, Deputy Chairman, Mr Greg Innes, Chief Executive, Mr Tony Larsen, Chief Financial Officer, Mr Paul Brewer, and Mr Robbie McCrae of THE EDGE® be permitted to remain at this meeting after the public has been excluded for confidential items C3 and C4 because of their specific knowledge of the THE EDGE®'s performance.

    Councillor Northey moved the following amendment:

    That Item C5 (Review of Watercare's Performance for the Third Quarter) be moved to the Open agenda apart from any identified confidential elements of the report.

    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 Aaron Bhatnagar

    Cr Mark Donnelly

    Cr Paul Goldsmith

    Cr Douglas Armstrong

    Cr Peseta Sam Lotu-Iiga, Deputy Mayor David Hay and His Worship the Mayor were absent.

    The amendment was declared LOST by 4 votes to 2

    The Chairperson put the substantive motion:

    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 PARKING: DRAFT STATEMENT OF INTENT FOR 2009-12 AND PARKING ADVISORY BOARD CHARTER 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 that is subject to negotiations being carried out between the Parking Advisory Board (PAB) and Auckland City Council prior to the statement of intent being finalised. Once the Finance and Strategy Committee (FSC) has determined its position on the statement of intent, the PAB and the council will undertake negotiations on this issue. The report will inform the Finance and Strategy Committee's position on the draft statement of intent. Its disclosure to the public, and thus to the other negotiating party, clearly has the potential to cause prejudice or disadvantage once the negotiations with the PAB take place.

    In addition, the report and the attached statement of intent contain information on the PAB's objectives and strategies in the off-street parking market. Disclosure of this information to the public, and thus to the PAB's competitors, is likely to disadvantage the PAB in the commercial activities it undertakes on council's behalf.

    		 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 REVIEW OF THE PARKING ADVISORY BOARD'S PERFORMANCE FOR THE THIRD 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.
    C3 REVIEW OF THE EDGE® DRAFT 2009/2010 STATEMENT OF INTENT AND CORPORATE 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)(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 corporate plan contains information relating to the commercial activities of THE EDGE®. Disclosure of this information could disadvantage THE EDGE® in the competitive 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 EDGE®'S PERFORMANCE FOR THE HALF-YEAR ENDING 31 MARCH 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)(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®' 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.
    C5 REVIEW OF WATERCARE'S PERFORMANCE FOR THE THIRD QUARTER 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 APPOINTMENTS TO AOTEA CENTRE BOARD OF MANAGEMENT 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. Section 7(2)(a)

    The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

    In particular, the report contains specific information about a candidate to the Aotea Centre Board of Management.

    		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 Warren Gibb, Chairman, and Mr Bryan Taylor, Board Member of the Parking Advisory Board be permitted to remain at this meeting after the public has been excluded for confidential items C1 and C2 because of their specific knowledge of the Parking Advisory Board.
    2. That Mr Peter Stubbs, Deputy Chairman, Mr Greg Innes, Chief Executive, Mr Tony Larsen, Chief Financial Officer, Mr Paul Brewer and Mr Robbie McCrae of THE EDGE® be permitted to remain at this meeting after the public has been excluded for confidential items C3 and C4 because of their specific knowledge of the THE EDGE®'s performance.

    CARRIED

    Councillor Casey requested that her vote against the motion be recorded.

    There being no further business, the Chairperson declared the meeting closed at 12:15pm.