Agenda of Activities Performance Audit Committee

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Activities Performance Audit Committee

OPEN MINUTES

Minutes of a meeting of Activities Performance Audit Committee held in the Council Chambers, 15 Forth Street, Invercargill on Wednesday, 28 October 2015 at 10.30am.

present

Chairperson	Lyall Bailey
	Mayor Gary Tong
Councillors	Stuart Baird
	Brian Dillon
	Rodney Dobson
	John Douglas
	Paul Duffy
	Bruce Ford
	George Harpur
	Julie Keast
	Ebel Kremer
	Gavin Macpherson
	Neil Paterson

IN ATTENDANCE

Chief Executive Steve Ruru, Group Manager Services and Assets Ian Marshall, Group Manager Policy and Community Rex Capil, Group Manager Environment and Community, Bruce Halligan, Chief Financial Officer Anne Robson, Chief Information Officer Damon Campbell, Management Accountant Susan McNamara, Manager Communications and Governance Louise Pagan and Committee Advisor Alyson Hamilton.

1 Apologies

There were no apologies received.

2 Leave of absence

There were no requests for leave of absence.

3 Conflict of Interest

Item C9.3 – “Wastewater Scheme Upgrade at Curio Bay;” Councillor Duffy declared an interest relating to this item.

4 Public Forum

Moved Cr Keast, seconded Cr Douglas and resolved:

That the Activities Performance Audit Committee go into Public Forum to allow members of the public to speak.

4.1 David Clapp

Mr Clapp was in attendance and addressed the Committee in support of of his objection at being declared a Probationary Dog Owner.

Mr Clapp felt the two infringement notices he has received recently in regard to his dog being out of control and disobedient are unjustified and proceeded to give an explanation on each situation.

Mr Clapp advised that he has paid the two infringement notices relating to these incidents as he felt that in not disputing this issue it was the easiest solution without ending in court having to pay a hefty fine.

Mr Clapp advised the effects of being classified as a Probationary Dog Owner is unfair as he is experienced in training many working dogs and felt having to attend a dog obedience course being a waste of time and expense to himself.

A question answer forum took place with Mr Clapp responding to Members queries.

The Chair expressed appreciation to Mr Clapp for this presentation to the Committee advising that this item will be discussed in the formal section of the meeting.

Moved Cr Paterson, seconded Cr Dobson and resolved:

That the Activities Performance Audit Committee moves out of Public Forum and returns to the formal meeting.

5 Extraordinary/Urgent Items

There were no Extraordinary/Urgent items.

6 Confirmation of Minutes

Resolution

Moved Cr Keast, seconded Cr Harpur and resolved:

That the minutes of Activities Performance Audit Committee meeting held on 16 September 2015 be confirmed.

7 Reports

7.1

Objection to Probationary Dog Owner Classification

Record No: R/15/10/18041

Manager Environmental Health Michael Sarfaiti, Animal Control Officer, Ranger Manager Julie Gillan, Customer Service Officer Animal Control, Environmental Health Tracy van Veldhuisen and Animal Control Ranger Jill Munro, were in attendance for this item.

Report by Mr Michael Sarfaiti (Environmental health Manager) requesting the Committee to consider and determine the objection to a probationary dog owner classification, lodged by Mr David Mervyn Clapp, was tabled.

Mr Sarfaiti advised Mr Clapp was classified as a probationary dog owner because of his repeat offending under the Dog Control Act.

The Committee was advised that Mr Clapp is entitled to appear before this Committee and speak in support of his objection.

3 Mr Sarfaiti explained the Dog Control Act prescribes the matters that the Committee is required to have in regard to considering Mr Clapp’s objection. He added the recommendation of staff is to uphold the classification.

In his report Mr Sarfaiti summarised the definition of a probationary dog owner.

Members queried the effects of becoming a Probationary Owner.

Mrs Gillan responded that Mr Clapp has received three or more infringements within a continuous period of 24 months and Mr Clapp’s classification is to apply from 11 September 2015 to 10 September 2017 unless terminated earlier by the Southland District Council.

Mrs Gillan explained during this period Mr Clapp may not become the registered owner of any further dogs and that he is to undertake, at his expense, a dog owner education programme or a dog obedience course approved by the Southland District Council.

The meeting was informed that whilst Mr Clapp is considered a good dog owner in the rural area Mrs Gillan felt the probationary period will educate Mr Clapp that the rules of controlling dogs within an urban area differ from the rural area.

In his objection to the classification as a probationary dog owner Mr Clapp stated he does not agree that his dog “Sid” was either out of control or being disobedient in the latest two infringement notices he received.

Mr Clapp added he used to manage a farm where he had 3 packs of 5 dogs and is a fully experienced dog handler.

In considering the objection lodged the Committee took into consideration the presentation made by Mr Clapp in the Public Forum section of the meeting together with his written submission.

Mr Sarfaiti advised that Council’s Policy on Dogs 2015 has application to this objection. Extracts include:

“The intention of this policy is to strike the proper balance between the need to control dogs and the recognition of the overall benefits of responsible dog ownership.”

“The Council’s objective is to encourage responsible dog ownership that allows dog owners to enjoy their dogs without impinging on the enjoyment and safety of others.”

“The Council will use the full range of enforcement options available to it under the Dog Control Act 1996 and other legislation to ensure that dog ownership in the District is undertaken in accordance with this policy.”

Mr Sarfaiti added the recommendation to classify Mr Clapp as a probationary dog owner is consistent with this policy.

Resolution

Moved Cr Dobson, seconded Mayor Tong and resolved:

That the Activities Performance Audit Committee:

a) Receives the report titled “Objection to probationary Dog Owner Classification” dated 19 October 2015.

b) Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

c) Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d) Upholds the decision to classify Mr David Mervyn Clapp as a probationary dog owner, and gives notice of this decision and reasons for it to Mr Clapp.

7.2

Financial Report for the period ended 31 August 2015

Record No: R/15/10/18060

Management Accountant Finance Susan McNamara was in attendance for this item.

Financial Report for the period ended 31 August 2015, prepared by Ms Susan McNamara (Management Accountant), was tabled.

Ms McNamara informed the report outlined the financial results to 31 August 2015.

It was pointed out to the Committee 16.7% of the financial year is complete and that no issues have been identified that raise concerns for Council.

Ms McNamara advised the format of this report is being redefined over the coming months with additional features being added to enhance the financial information given.

Ms McNamara reported the operating income, due to seasonality of the capital works programme Roading and Transport income is under budget by $880K. She advised the budget for capital funding from NZTA is currently phased evenly over the twelve months. Roading capital expenditure is expected to be under budget at year end due to reseal contract prices being under budget and a falling bitumen index and a reduced drainage programme.

Ms McNamara then spoke on matters relating to the operating expenditure, capital expenditure, balance sheet and strategic transport.

The Chair, Councillor Bailey commented on the format of the report stating it is easy to understand and the layout is good.

In regard to the capital expenditure Councillor Kremer noted the budget for the year is $4.8 million and queried if staff are confident this budget will not be exceeded.

Mr Ruru responded a report will be presented to Council in due course regarding this matter.

Councillor Kremer commented on the Strategic Transport capital expenditure being under budget noting the comment from staff that this is primarily due to timing with Council staff in the planning stage for this year’s programme, and queried when is the programme expected to commence.

Mr Marshall advised work is to commence in the 2016/2017 year.

The Chair queried if staff has received a response from the Environment Court indicating a time for the proposed hearing regarding the Cycle Trail and an enquiry was made for an indication of costings involved.

Mr Marshall confirmed the Environment Court has advised that the appeal lodged by Southland Fish and Game will not be heard until February/March next year. He added costings cannot be confirmed at this stage, but could be estimated up to a million dollars.

Mr Marshall advised that by the time a decision has been released construction of the final stages of the Cycle Trail will not be able to be completed until next spring/summer at the earliest.

He added that staff will be communicating the impacts of this delay to central Government so that they are aware of the delays.

Councillor Duffy queried the progress on the Southern Scenic Route. The Committee was advised staff has prepared a business case which has been forwarded to New Zealand Transport Agency (NZTA) and a response is awaited. A report is to be presented to the Committee in due course.

Resolution

Moved Cr Macpherson, seconded Cr Dillon and resolved:

That the Activities Performance Audit Committee:

a) Receives the report titled “Financial report for the period ended 31 August 2015” dated 19 October 2015.

7.3

Service Delivery Review- Roading

Record No: R/15/10/18217

Roading Engineer Roading/Transport Department Hartley Hare was in attendance for this item.

Report by Mr Ian Marshall, Group Manager, Services and Assets, on the Service Delivery Review-Roading, was tabled.

Mr Marshall reported the purpose of the report is to inform the Council of the findings of a service delivery review of the Council’s roading services and to seek the Council’s decision in relation to future delivery of those services.

2 Mr Marshall advised in so doing the Council will fulfil its requirements under section 17A of the Local Government Act 2002. He added this report outlines the requirements of the Local Government Act to carry out a delivery of service review.

4 The Committee was advised a review of the Council’s Roading services was carried out by independent consultants Morrison Low and their findings were presented with the report.

Mr Marshall informed the Morrison Low report review findings recommend little change to the methods of service delivery or to the actual levels of service undertaken by Council.

The Committee’s attention was drawn to the conclusion summary that included a comment stating that Council’s actual service delivery performance is of a high standard and providing very good value for money.

The Committee queried Fonterra truck drivers undertaking data recovery on road conditions around the Southland District and whether this is to be ongoing.

Mr Hare responded by advising data received from the drivers is stored and that this service provided by the drivers is ongoing.

Members commented that the service provided by Fonterra drivers saved staff having to travel and inspect all roads within the Southland District.

Mr Marshall recommended that taking into consideration the findings from Morrison Low that Council continues to use its current service delivery framework of in-house client/owner and representational functions and outsourced specialist engineering advice and physical works services.

Resolution

Moved Mayor Tong, seconded Cr Douglas and resolved:

That the Activities Performance Audit Committee:

a) Receives the report titled “Service Delivery Review- Roading” dated 20 October 2015.

b) Receives the report titled “Service Delivery Review- Roading” dated 20 October 2015.

c) Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

d) Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

e) Recommends to Council that it continues to independently govern its roading services delivery as at present.

f) Recommends to Council that it considers initiating within the Otago/Southland Regions a review of options for future sustainability of roading services delivery in the light of continually constraining budgets and aging or increasingly loaded roading networks.

g) Recommends to Council that it continues to use its current service delivery framework of in-house client/owner and representational functions and outsourced specialist engineering advice and physical works services.

Public Excluded

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

Resolution Moved Cr Ford, seconded Cr Dillon and resolved: That the public be excluded from the following part(s) of the proceedings of this meeting. C9.1 Risk Reports C9.2 Code Compliance Certificate Status of Building Consents approved by the Southland District Council C9.3 Wastewater Scheme Upgrade at Curio Bay 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 are as follows:
General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under section 48(1) for the passing of this resolution
Risk Reports	s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege. s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.	That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists.
Code Compliance Certificate Status of Building Consents approved by the Southland District Council	s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege. s7(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).	That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists.
Wastewater Scheme Upgrade at Curio Bay	s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities...	That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists.

That the Chief Executive Steve Ruru, Group Manager Services and Assets Ian Marshall, Group Manager Policy and Community Rex Capil, Group Manager Environment and Community, Bruce Halligan, Chief Financial Officer Anne Robson, Chief Information Officer Damon Campbell, Management Accountant Susan McNamara, Manager Communications and Governance Louise Pagan, Manager Building Control, Kevin O’Connor, Projects Accountant Dean Williamson and Committee Advisor Alyson Hamilton be permitted to remain at this meeting, after the public has been excluded, because of their knowledge of the items; C9.1 Risk Reports, C9.2 Code Compliance Certificate Status of Building Consents approved by the Southland District Council, C9.3 Wastewater Scheme Upgrade at Curio Bay

This knowledge, which will be of assistance in relation to the matters to be discussed, is relevant to those matters because of their knowledge on the issues discussed and meeting procedure.

The public were excluded at 11.45am.

The meeting adjourned at 12.40pm and reconvened at 2.20pm.

The meeting returned to open meeting at 2.45pm.

The Meeting concluded at 2.45pm. CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Activities Performance Audit Committee HELD ON 28 OCTOBER 2015.

DATE:...................................................................

CHAIRPERSON:...................................................

Activities Performance Audit Committee

18 November 2015

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Financial Report for the period ended 30 September 2015

Record No: R/15/10/19332

Author: Susan McNamara, Management Accountant

Approved by: Anne Robson, Chief Financial Officer

☐ Decision ☐ Recommendation ☒ Information

Background

1. This report outlines the financial results to 30 September 2015. At 30 September 2015, 25% of the financial year is complete.

2. Within the report, no issues have been identified that raise any concerns for Council relating to the end of year financial position.

Overview

3. The financial commentary centres on the summary sheet in Appendix A which draws the totals from each of the key groups together. Commentary provided focuses on the year to date (YTD) results.

4. More detailed variance explanations for each group can be found in the attached Appendix B.

5. As part of the monthly review, finance staff review the phasing/timing of the budgets and they are revised where appropriate. Where specific phasing of the budgets has not occurred, one twelfth of budgeted cost is the default to establish the monthly budget.

6. Council will implement a formal forecasting process in November 2015 once the 31 October financial results are available. This process will allow budget managers to indicate their anticipated year-end financial results to the Executive Leadership Team and Council. These forecast results will be incorporated into the monthly Council report following formal approval by Council of the forecast changes.

7. The format of this report is being refined over the coming months, with additional features being added to enhance the financial information given. Any feedback or suggestions on further amendments that could be made to this report are welcomed.

8. Discussions relating to the Roading and Chief Executive groups are included at Section 1
8-21. This is to ensure the links between Income, operating expenditure and capital expenditure are shown.

9. Results at a glance, compared to budget year to date.

INCOME YTD			OPERATING EXPENDITURE YTD
Actual	Budget		Actual	Budget
$15.3M	$18.0M		$12.4M	$12.7M
Variance	$2.7M	15%	Variance	$0.3M	2%

NET SURPLUS YTD			CAPITAL EXPENDITURE YTD
Actual	Budget		Actual	Budget
$2.9M	$5.2M		$2.8M	$5.8M
Variance	$2.3M	45%	Variance	$3.0M	51%

1 Income

10. Overall for the YTD, income is 15% ($2.7M) under budget ($18.0M budget v $15.3M actual).

11. Services and Assets income is under budget by $544K due to a number of items. The largest impact is from forestry. As the forestry sales plan is yet to be approved for the year, harvesting is yet to start. This has resulted in the revenue being $215K under budget. There is 40,000 tonnes scheduled to be harvested this year, from Dipton and Ohai. There is a phasing issue with the budget relating to rates, that has contributed $121K under budget across this group. Additionally invoicing for Water Meter charges was $20K lower for the first quarter than previous years. As part of the change in accounting standards for 2014/2015 an additional $22K of the first quarters invoicing was accrued into 2014/15.

12. Work scheme revenue is $47K under budget as a result of less work being completed over the winter months. Work Scheme Supervisor is currently liaising with Probation Services t secure a contribution for this financial year. This contribution is expected to be approximately $32K. In the event that this contribution is not secured, revenue from internal Council departments and external customers will need to be increased to ensure that this activity breaks even at the end of the financial year.

3 Operating Expenditure

13. Overall for the YTD, operating expenditure is 2% ($0.3M) under budget ($12.7M budget vs $12.4M actual).

14. Environment and Community expenditure is $162K under budget. Generally expenditure relates to income levels for the regulatory teams. Additional costs can be incurred for specialist advice relating to notified consents, that are charged to the applicant. This is shown with Building regulations expenditure being $53K under budget. Also Resource Planning/Policy is $48K under budget due to minimal expenditure on the District Plan to date. Mediation processes have been delayed at the direction of the Environment Court due to the status of Environment Southland’s Regional Policy Statement. Until the Regional Policy Statement is progressed the amount of expenditure on the District Plan during this year is uncertain.

5 Capital Expenditure

15. Overall for the YTD, capital expenditure is 51% ($3.0M) under budget ($5.7M budget vs $2.8M actual).

16. Information management capital expenditure is under budget $429K due to minimal capital work being undertaken to date. Included in the budget are costs associated with the core systems review and digitisation project. Work has been planned for the digitisation project in the second half of this financial year. The budget for this year for the digitisation project is $756K, but it is expected that $200K will be spent this year with the reminder in 2016/2017 when the property files are sent away. At this stage no significant expenditure has been identified for the core systems review.

17. Services and assets capital expenditure is under budget $365K due to minimal capital work being undertaken to date. Included in this budget are costs associated with the Curio Bay sewerage project, the Hansen software upgrade, public convenience upgrades in Waikaia, Winton (Ivy Russell Park) and Dipton, as well as the forestry revaluation.

7 Roading and Transport

18. The seasonality of the capital works programme directly affects the level of income received from NZTA. During the winter month the team has been working on the ‘lead in work’ required for the planning of its capital works programme. The capital expenditure is currently $1.9M under a budget that is phased evenly throughout the year. Income is $1.2M under budget.

19. Roading and transport are forecasting that capital expenditure will be under budget at the end of the year. This variance is partly caused by a significant drop in the bitumen index over the last three months, along with the expectation that the Southern Scenic Route extension and Mararoa Bridge projects will be deferred to the 2016/2017 financial year.

9 Chief Executive

20. Within the Chief Executive budget is the Around the Mountains Cycle Trail project. Income is $680K under budget, operating expenditure is $15K under budget and capital expenditure is $155K under budget.

21. The remaining half of the $1 million grant from the New Zealand Lottery Grants Board will be received on completion of Stage Two of the trail. The appeal for Section 8 and 9 of the trail is yet to be heard in the Environment Court. This hearing is not expected to be heard until early in 2016. Although the current budget allows for the estimated cost to construct Sections 8 and 9, given the timing of the hearing, any construction would likely not take place until the 2016/2017 financial year.

10 Balance Sheet

22. Council’s financial position as at 30 September 2015 is detailed below and is only for the activities of Council. The balance sheet as at 30 June 2015 represents the audited balance sheet for activities of Council (ie includes SIESA and Venture Southland).

23. At 30 September Council currently had $6.0M invested in four term deposits ranging from three to six month maturities. Interest rates on these deposits vary from 3.3% to 4.05% per annum. Two term deposits have been reinvested since the end of September at interest rates approximately 0.5% lower.

24. On-call accounts earn interest at 2.3% and 2.5% per annum. The funds on call are the result of rates received at the end of August and held to ensure there is enough cash available to meet commitments as they fall due.

25. External borrowings have still not been required, with internal funds being used to meet obligations for the year-to-date. The borrowings shown in current liabilities is the outstanding amount of assets funded by finance leases.

Recommendation

That the Activities Performance Audit Committee:

a) Receives the report titled “Financial Report for the period ended 30 September 2015” dated 10 November 2015.

Attachments

a Report to Activities Performance Audit Committee - Report to 30 September - Summary Financial Report View

b Report to Activities Performance Audit Committee - Report to 30 September - Detailed Commentary View

Indicator	Target*	Actual	Variance	Compliance
External Funding: Non rateable income/Total income	> 39%	28%	-11%	x
Working Capital: Current Assets/Current Liabilities	>1.09	1.91	0.82	a
Debt Ratio:** Total Liabilities/Total Assets	<0.73%	0.66%	0.07%	a
Debt To Equity Ratio: Total Debt/Total Equity	<0.01%	0.00%	0.01	a

*Key*
	Largely on Track
	Monitoring
	Action Required

Financial Tracking vs Plans
YTD	Forecast	Annual Plan	NZTA Approved
*25%*	*27%*	*26%*	*25%*

Financial Tracking vs Plans
YTD	Forecast	Annual Plan	NZTA Approved
*25%*	*16%*	*15%*	*13%*

Chief Executive	Steve Ruru
Committee Advisors	Fiona Dunlop and Alyson Hamilton