Audit and Risk Committee
Open Agenda – Late Report
Thursday 20 June 2019
TABLE OF CONTENTS
1. Annual Plan 2019/20
Type of Report:
Local Government Act 2002
Reporting Officer/s & Unit:
That the Committee review and provide feedback to Council on the Annual Plan 2019/20 prior to the final adoption on 28 June 2019.
The Audit and Risk Committee:
a. Receive the Annual Plan 2019/20.
b. Provide any feedback to Council on the Annual Plan 2019/20 prior to the final adoption on 28 June 2019.
c. Receive the minutes of the Council meeting held on 4 June 2019.
That the Committee resolve that the officer’s recommendation be adopted.
1.2 Background Summary
The Committee at its meeting on 28 March received the Draft Annual Plan for 2019/20 and recommended to Council for information to be approved for consultation. The Committee were advised at this meeting that information had been received indicating that kerbside recycling costs would increase further bringing the average rates increase to 6.4%.
Council has now completed all the relevant provisions contained within the Local Government Act 2002 regarding the preparation of an Annual Plan. Key changes adopted by Councillors at the 4 June 2019 meeting are outlined below.
This report is an administrative matter. We are now at the last stage of the process with a report going to the Council meeting on 28 June recommending that the 2019/20 annual plan be adopted. This is the final step in the annual plan process and is one of technical compliance with the provisions of the Local Government Act 2002. The annual plan is not audited and does not require audit approval prior to adoption.
The final overall budget position for the 2019/20 is a 6.4% average increase in rate requirement for existing ratepayers as agreed at the 4 June 2019 Council meeting.
The Annual Plan 2019/20 is attached as attachment A.
Key changes from the Draft Annual Plan presented to the Audit and Risk Committee on 28 March 2019 are:
· Council has confirmed that water is Council’s number one priority
· A seminar on drinking water quality with representatives from the Ministry of Health and the Hawke’s Bay District Health Board is scheduled for 18 June 2019. This will be a subject of another paper to the Audit and Risk committee (either intersessionally or at the next Audit and Risk).
· Council has allocated 200K (funded from loans-rates) to undertake an independent review of the options and costings for the supply of un-chlorinated water for Napier
· The funding for the Whakarire revetment ($1.7m) has been moved to the 2020/21 financial year and inflated accordingly for LGCI price movements.
· The proposed Whakarire revetment targeted rate is withdrawn to allow Council officers an opportunity to address issues raised by residents and work through their perceived cost-benefit concerns.
· Council have endorsed changing the funding source for all 3 Waters projects in the capital programme for 2019/20 which are currently funded by rates, to be funded by loans-rates to better reflect inter-generational equity of the investment ($860k).
· Council approved transferring the rates funding of $860k from 3 Waters projects to Council’s property assessment and compliance projects for 2019/20
The minutes from the Council meeting held on 4 June 2019 are attached as attachment B.
1.4 Significance and Engagement
Officers assessed the changes from year 2 of the Long-Term plan 2018-28 and advised Council of the significant and material changes. Consultation has occurred in accordance with the Local Government Act 2002.
There are also financial implications from bringing forward projects without these having a direct impact on the 2019/20 year rates, and new capital work, including the War Memorial and Kennedy Park ablution block. In the development of future Annual Plans there is the ability to further refine the annual budgets contained in that year within the Council’s Long Term Plan (year 3 of the LTP). This will be at the discretion of the new Council to be elected October 2019. The following items have been approved as part of the Annual Plan and impact future years.
Cost of servicing additional loans:
· New War Memorial spending proposal (0.2%)
· Kennedy Park ablution block (0.3%)
· Changes to water projects (0.7%)
· Independent assessment – water (0.02%)
Waste Minimisation and Management Plan impacts – these impacts are ongoing:
· Impact of phasing in kerbside recycling over 3 years (0.5% in 2020/21 and a further 1.15% in 2021/22) to be confirmed after confirmation of tender.
· Rubbish collection service changes (to be confirmed with tendering).
Social & Policy
The Annual Plan 2019/20 aligns with all Council policy including the Joint Waste Management and Minimisation Plan 2018-24.
Changes to the Revenue and Financing Policy and Rates Remission Policy have been consulted on concurrently but separately to the Annual Plan and Council adopted the amended policies on 4 June 2019.
The following risks were noted as part of the development of the Annual Plan 2019/20:
- Strong Construction market demand – pressure on capital programme
- Climate change – Central Government requirements
- Government Healthy Home requirements
- Living wage/Min Wage changes
- Wellbeing legislation
- Insurance market (costs escalating as market making a loss)
- Outstanding detailed seismic assessments on Council owned buildings
- Timing of sections sold for Parklands development
- Elections and new Council requirements
- Limited general reserves
- Year-end provisions for weather tightness
- The impact on rates in future years from loan funding capital projects in 2019/20
- Implementing WMMP waste recommendations could result in an average rates increase of between 1% and 2% for 2020/21
- Implementing WMMP recycling recommendations will result in an average rates increase of 1.7% (0.5% in 2020/21 and a further 1.15% in 2021/22)
- Provincial Growth Fund projects:
o ongoing costs
o cap on Government support
o impact on current programme of work resulting from pressure to get work completed before Central government elections
The options available to the Committee are as follows:
a. Advise whether there are concerns on the changes made to the Annual plan budgets, and any other decisions made by Councillors at the 4 June 2019 meeting.
If there are concerns, officers will take these concerns to the Council meeting on 28 June 2019. However, at this late stage there is no ability for officers to amend the plan further without breaching our legislative requirements. Officers’ note that an annual plan, as per the Local Government Act is an intentions document, and so if there are concerns by Audit and Risk, it is recommended that these concerns are dealt with post-adoption of the Annual Plan.
b. Advise that there are no concerns on the changes made by Councillors at the 4 June 2019 meeting.
Officers will note that at the Council meeting on 28 June 2019.
1.7 Development of Preferred Option