Agenda of Audit and Risk Committee

Audit and Risk Committee - 18 September 2020 - Open Agenda Item 1

Agenda Items

1. Health and Safety Report

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	954020
Reporting Officer/s & Unit:	Sue Matkin, Manager People & Capability

1.1 Purpose of Report

The purpose of this paper is to provide the Audit & Risk Committee with an overview of Health & Safety activity for the year ended 30 June 2020.

Officer’s Recommendation

The Audit and Risk Committee:

a. Receive the Health and Safety report.

1.2 Background Summary

The Health & Safety at Work Act 2015 (HSWA) requires Officers to exercise due diligence to ensure the PCBU complies with all duties and obligations under the Act. At Napier City Council (NCC) the Officer is the Chief Executive. Whether any other senior employee is deemed an officer will depend on the extent of their influence over the whole business or undertaking. Section 44, under HSWA, outlines that the Officers must exercise due diligence to ensure that the PCBU complies with all its duties or obligations. The Senior Leadership Team (SLT) are also responsible for ensuring that the due diligence obligations of an Officer are being met. Napier City Council meets those obligations by:

· Applying due diligence to ensure NCC is meeting legal health and safety obligations

· Ensure that significant health and safety risks have been identified and are being suitably mitigated

· Providing a safe workplace for workers and others

· Ensuring compliance to health and safety legislation and improving its health and safety culture and systems

This report aims to provide key information on how Napier City Council meets its H&S obligations.

HEALTH & SAFETY

1. Napier City Council Fatal Risk

The Health and Safety at Work Act 2015 (HSWA) requires Officers to exercise due diligence by taking reasonable steps to understand the organisations operations and health and safety hazards/risks, and to ensure that they are managed so that Council meets it legal obligations.

NCC workers have identified fatal hazards/risks that exist within their workplaces. These hazards/risks are reviewed on an annual basis:

· Workers review the risks, give feedback to the health and safety representatives to take to the health and safety committee meetings

· The reviews take into account the controls in place, any improvements to the controls, and steps that can be taken to eliminate the hazard/risk

· The health and safety reps raise any recommended changes at the committee meeting they attend i.e. Civic, City Services, Community Services, Lead Committee

· The Lead Health and Safety committee sign off of the hazards/risks

· NCC has 11 identified hazards/risks which are in the attached Fatal Safety Risks schedule.

Attachment A. Fatal Hazards/Risks schedule.

2. Covid-19

People and Capability worked through an emergency preparedness situation relating to COVID-19 coronavirus and a high-level pandemic plan has been developed. We have taken a calm and cautious approach, using guidance from the Ministry of Health, Hawkes Bay District Health Board and Civil Defence. Two of the Health and Safety team undertook the Safety and Risk Manager role during COVID-19.

Attachment B. COVID-19 plan.

3. Changes to Legislation

There have been no changes to legislation affecting health and safety in the workplace.

4. Compliance

Officers and Directors need to have certainty about compliance to health and safety legislation. The Compliance lists the relevant Acts, Regulations pertaining to health and safety and includes approved codes of practice (ACOPs), which require higher than usual compliance in comparison to other Codes of Practice.

Attachment C. Compliance List.

5. Monitoring and Checking

The NCC Health and Safety Team are investigating the option of an external auditor to conduct a health and safety audit in 2022. We were tertiary level in the ACC accreditation system, which has been disbanded by ACC.

6. Contractor Management

b. NCC uses a contractor pre-qualification system called SiteWise. Contractors engaged by NCC must achieve SiteWise green status, (score 75% and above in the pre-qualification assessment) before they can be engaged to carry out work. There are options for contractors who carry out low risk work to become exempt in SiteWise, i.e. Consultants who work in offices but may visit a site accompanied by an NCC employee. Those contractors are required to submit their evidence to the health and safety team to review, before a recommendation to the Director of Infrastructure, who then makes the final decision regarding exemption status which is granted for one year.

7. Due Diligence by Officers

Part of the role of an Officer of a Person Conducting a Business or Undertaking (PCBU) is to ensure that there is a safe workplace, not just take the word of others for it. We achieve this in several ways including;

· By the CE and Directors attending Health and Safety Committee meetings and gaining direct feedback from elected Health and Safety Representatives

· Six weekly Lead Health and Safety committee meetings chaired by the CE

· Reviewing of internal reports and checks provided by the Health and Safety

· Reviewing of health and safety checks and audits

· Reporting to Audit and Risk committee

8. ICAM Rock Fall Bluff Hill

The Director Corporate Services informed Audit & Risk Committee of the ICAM investigation and the significant near miss situation on the Bluff Hill by the Port of Napier. An Incident Cause Analysis Methodology (ICAM) is the process NCC uses to investigate significant near misses or events.

A second managed rock fall event was carried out in August. A Project Manager from Infrastructure managed the event, and followed the Health and Safety Contractor Management Standard, he engaged with all parties involved, NCC, NZTA, PONL, Downers, Site Traffic Management, Drone operator. This project was managed with excellence and the outcome was achieved in 1 day, with the dangerous rock downed from the cliff, with no issues. They even saved a pigeon. A debrief took place one week later for lessons learnt to complete the process. A key factor in this project being successful was by following the health and safety contractor management standard. (HS CMS).

Attachment D. Lessons Learnt

Note: Rock fall from Bluff Hill cliff face poses danger to life and property and has been identified as a risk - Operational Risk OP185.

9. Worker Participation

One of the requirements of health and safety legislation is that there must be evidence of active worker participation. We formally apply this by;

· Having health and safety Reps, who cover a specific business unit

· Elections are held three yearly - some employees put their hands up where others are encouraged

· H&S Reps are consulted on worker health and safety matters

· We have 6 weekly Health and Safety Committee meetings, where H&S reps attend and are able to raise any concerns they have and be provided with important information and be consulted about health and safety matters.

10. Health and Safety Framework

While Council does not follow a formal health and management system such as ISO45001, we have developed our own internal system that ensures legislative compliance and maintains flexibility to mitigate key hazards/risks and engage workers.

NCC has a 3 tiered Framework approach, which encompasses a health and safety policy, procedures, guidelines and associated documents which have been developed and are reviewed on at least a two-yearly basis.

· Tier 1 - Policy and Framework, performance requirements, (Overview)

· Tier 2 - NCC Health and Safety systems, standards and procedures (What)

· Tier 3 - NCC manual and business units, Safe Work Method Statements, Safe operating procedures (How)

Attachment E. H&S framework Tier 1

11. Reporting

MySafety, is our online health and safety system which allows employees to report;

· Events; near misses, incidents, injuries

· Pain and discomfort

· Hazards

· Chemicals (safety data sheets)

· Audits, both internal and external

· Safety observations see above

· Chemicals – safety data sheets

· Return to Work

· Permit to work systems (in development)

Management reporting occurs monthly, and includes lead and lag indicators, workstation assessments, inductions, internal and contractor auditing, occupational health checks, Health and safety training completed, number of health and safety meetings held, significant risk and issues identified.

HEALTH & SAFETY TRAINING

Health & Safety training is a lead indicator. Below lists the compliance training undertaken during the year.

Compliance Training 2019 - 2020
Renewals	Time	Compliance Courses	Staff Attended
2 years	4-8 hrs	First Aid	68
2 years	4-8 hrs	Confined Space	39
2 years	8 hrs	Working at Heights	9
2 years	8 hrs	Elevated Work Platform	4
2 years	4 hrs	Fire Warden	6
1 years	1 hour	Breathing Apparatus	1
2 years	4 hrs	Hazardous Substances	12
3 years	3 days	Supervisor Traffic Management	7
3 years	1 day	Traffic Controller	18
5 years	1 day	Grow safe	8
3 years	1 day	Aggressive Customer Training	29
2 years	7 hrs	Forklift / Driver Training	7
2 years	4 hrs	Site Safe - Civil/Tools & Plant/Workers Health	49
2 years	4 hrs	Site Safe - Consultant	11
		Staff completed compliance training	268

HEALTH & WELLBEING

Health Monitoring

Worker health monitoring is undertaken by Loop Health & Safety. Workers are monitored depending on the work they carry out. Monitoring includes hearing, lung function, blood pressure, trace metals.

The table below shows the type of screening and the number of workers screened between June 2019 and July 2020.

Location	Total workers for hearing screening	Total workers for lung function screening/ blood pressure/height/weight	Whole blood lead level- Blood Test	Trace Metals- Blood & Urine Test
Depot	82	85
Painters	3	3	3
City Cleaning	13	7
Napier Aquatics		11
National Aquarium of NZ	11	13
MTG	5	14
Animal Control	5	5
Environmental Solutions	15	15		5
Kennedy Park Resort	5	5
Total number of workers	139	158

Wellbeing

NCC has a number of wellbeing initiatives for staff. These include:

· Resilience Workshop

· Thriving at Work Workshop

· Stay Safe training (in-house / working alone, man down system)

· MySkin checks

· Flu Vaccinations

· Covid-19 trainings

· Respirator Fit Testing

· HS forum

· Health Monitoring

· Hearing Checks

· Vaccinations

· Corruption Awareness

· Mental Health Awareness

· Bi annual health, safety and wellbeing awareness week (Attachment F. FY21 event planner attached)

Exposure to Asbestos

39 workers have indicated they have been exposed to Asbestos. Either working for Napier City Council many years ago or at another organisation. Of the 39 workers 24 have been registered onto the WorkSafe NZ asbestos register and have been allocated a reference number. The reference number is recorded in MySafety against the individual’s confidential health and safety file.

The Occupational Health Nurse will be following up with the remaining 15 workers to ensure they are on the WorkSafe NZ asbestos register.

As per the health & safety legislation the workers are to have a two yearly medical. Currently this is funded by NCC.

Hepatitis A & B Vaccinations

The following number of workers are currently receiving Hepatitis vaccinations due to the blood screening indicating they have no immunity.

109 workers have immunity to Hep A and 94 have immunity to Hep B.

Injury Statistics

For the period 1 July 2019 to 30 June 2020, the top injuries cause bruising, sprain and strains, lacerations and abrasions.

Hitting the head, spraining backs, fingers, legs and faces are predominately the top 5 body parts to be affected. Numbers have stayed predominately the same for 2 years except for injuries to backs. More education in back management will be explored in the 2020/21 year.

1.3 Attachments

a Fatal Hazard report ⇩

b Covid-19 plan ⇩

c Compliance to Health and Safety Legislation ⇩

d Lessons Learnt Rockfall ⇩

e Health and Safety Management Framework ⇩

f Annual Awareness Week ⇩

Audit and Risk Committee - 18 September 2020 - Open Agenda Item 3

3. Insurance Update

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	961847
Reporting Officer/s & Unit:	Bryan Faulknor, Manager Property

3.1 Purpose of Report

To update the committee on the finalisation of the procurement of Insurance Brokerage Services and renewal of insurance coverage.

Officer’s Recommendation

The Audit and Risk Committee:

a. Resolve to receive the report on current brokerage and insurance arrangements

3.2 Background Summary

Napier City Council has historically been part of the Hawke’s Bay Councils Collective Insurance Group.

As reported to the meeting of 12 June 2020, the five HB Councils participated in a joint procurement process with Bay of Plenty Local Authority Shared Services (BOPLASS), Manawatu LASS (MWLASS) and Waikato LASS (WLASS). This combined group totals 31 Councils.

As a result of the above, a contract for brokerage and risk management services has been signed with Aon New Zealand.

Napier City Council is now part of a collective group of 31 councils. This provides opportunities for greater buying power and where beneficial collective insurance arrangements.

All current NCC Policies (except Public Liability and Professional Indemnity) have been extended from 1.7.20 to 1.11.20 at current premium rates on a pro rata basis for the part year.

The pro rata extensions to 1 November 2020 enable the five HB Councils to align their insurance year with other Councils.

Summary of current Insurance 1 July 2020 to 1 November 2020:

Material Damage

Covering Buildings, Contents, Plant & Machinery and other property as listed in the Insurance Property Schedule. No shared limited with other Councils.

Sum Insured $440.4m.

Excess – Perils $10,000 per claim. Earthquake 2.5% site sum insured and where pre 1936 or earthquake prone 10% of site sum insured.

Material Damage – Residential

Covering Residential Dwellings and Community Housing as listed $74.6m. Excess as above. No Shared limit with other Councils.

Business Interruption

Policy linked to Material Damage.

Loss of Revenue- $12.9m covering - Halls, Pools, Aquarium, Par2, Conference Centre, Municipal Theatre, I-site, Kennedy Park, MTG.

Additional expenses- $20m (shared limit with the other HB Councils).

Indemnity period – Additional expenses 36 months, Loss of revenue 24 months.

Motor Vehicle & Third Party

All vehicles, other mobile plant and equipment. Excess $1,000 per claim. No shared limit with other Councils.

Crime Insurance

Insures loss of money and property resulting from fraud or dishonesty of Employees. Limit of Indemnity $2m, Excess $25,000. No shared limit with other Councils.

Employers Liability

Indemnity in respect of claims made by employees against employer for personal injury falling outside any Workers Compensation legislation. Limit of indemnity $1m. Shared limit with other Councils.

Statutory Liability Insurance

Indemnity for Defence costs and fines as a result of an alleged breach of any Act of Parliament other than “Excluded Acts’. Limit of Indemnity $4m (shared limit with other Councils). Excess $5,000.

Cover is included for statutory breaches of the Resource Management Act with an excess of $50,000.

Overseas Travel

Covering employees and elected members for overseas travel. No shared limit.

Marine Hull

National Aquarium of NZ Boat

Hall Hirers Insurance

Public Liability Insurance for uninsured users of Council facilities. No shared limit.

Fine Arts Collection Insurance

HB Museums Trust Collection $40.1m. Excess $2,500.

Trustee Liability

HB Museums Trust, $5m any one claim and in the aggregate during policy period. Excess $5,000.

Public Liability and Professional Indemnity

From 1 July, Council had the option of either continuing with its previous policy with Marsh or shifting to an Aon Scheme.

A decision was made to shift to the Aon Scheme. The Aon Scheme has the added benefit associated with building defects coverage. Under the Marsh policy, where a claim included any weather tightness issues all aspects of the claim including non-weather tightness defects were excluded. Under the Aon offering the building defects element is covered. Weather tightness issues are excluded.

The Aon scheme is a NZ scheme used by 32 NZ Councils and provides each Council with their own individual primary layer cover of $15m (Underwritten by Berkshire Hathaway and QBE) plus Councils can share in an excess layer of $145m (Underwritten by Lloyds of London).

Underground Infrastructure

From 1 July cover as per previous years has been rolled over. Cover is based on a Probable Maximum Loss (PML) of $120m based on a total replacement value of underground infrastructure of $587.8m. Actual insurance cover is based on the assumption that Central Government assistance will be available in a major disaster and will provide for 60% of the eligible costs. Council therefore has insurance cover for $40% of $120m with a $10m excess.

Council will engage Aon this year to carry out a Loss Modelling exercise to determine a revised Probable Maximum Loss on which to base insurance cover.

Contract Works Insurance

This is taken out as required for construction projects. In general where a project consists of alterations and improvements to an existing insured asset then Council takes out contract works insurance directly. For green fields construction the contractor is required pursuant to the construction contract to take out cover.

Uninsured Assets

Uninsured assets include roads, bridges and associated assets. In the event of a major disaster, support is anticipated to come from Central Government to reinstate the roading network.

Other uninsured assets consist of land, playground equipment, sports fields and reserves, turf, plants and trees, paved surfaces, associated roads, irrigation and other land improvements. Lagoon Farm livestock, hay, water supply and other improvements. Paved surfaces and roading relating to the Depot, Housing Villages, and Transfer Station.

Funding of Uninsured Risks and amounts over and above any insurance recovery and Government support would be provided from a combination of reserve funds, debt, and reprioritisation of Council’s planned capital and operating expenditure.

3.3 Issues

N/A

3.4 Significance and Engagement

N/A

3.5 Implications

Financial

Insurance premiums are budgeted each year but do fluctuate depending on market conditions.

Social & Policy

N/A

Risk

Insurance is an important aspect of managing Council’s risk.

3.6 Options

The options available to Council are as follows:

a. To receive the report

b. To receive the report and provide any feedback and concerns

3.7 Development of Preferred Option

N/A

3.8 Attachments

Nil

Audit and Risk Committee - 18 September 2020 - Open Agenda Item 4

4. Risk Management Report September 2020

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	961668
Reporting Officer/s & Unit:	Jane Klingender, Manager Business Excellence & Transformation Dave Jordison, Risk and Assurance Lead

4.1 Purpose of Report

To provide the Audit and Risk Committee (Committee) with an update on risk management with reference to responsibilities listed in the Audit & Risk Charter; to report on high and extreme strategic risks; and to note emerging risks.

Officer’s Recommendation

The Audit and Risk Committee:

a. Receive the Risk Management Report September 2020

b. Note the Risk Management work being undertaken

c. Note the current high and extreme risks

d. Note the emerging risks

4.2 Background Summary

In 2018 Napier City Council (NCC) developed a programme of work to develop and mature its enterprise risk capability. A risk maturity roadmap, strategy and policy were developed to guide this work and the risk register was established in the enterprise performance application called Sycle. There are three categories of risk that make up the risk register: strategic risks, operational risks, and project risks. In June 2020, an appointment was made to the newly created role of Risk & Assurance Lead and review commenced of risk documentation, and strategic and operational risks listed in Sycle.

The extract below is from the Audit & Risk Committee charter (agreed at the March 2020 Audit and Risk Committee meeting) on Risk Management.

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The points below refer to these responsibilities.

Risk Management Framework and Associated Procedures

Review of current risks in Sycle has already highlighted a number of areas for improvement such as data quality; consistent approach to risk definition and management; clarity on roles and responsibilities; and tracking progress on identified risk controls and treatments. These opportunities for improvement are consistent with streams identified within the risk maturity roadmap and progress in each area will be reported at the next Committee meeting. The Risk Management Strategy and Risk Policy will be revised accordingly and a full risk report will be presented to the Committee in the first 2021 meeting.

Strategic Risk Management Plans for Major Projects

Project risks are currently managed within individual projects. However, Sycle provides a collated view of all project risks. Current planned improvements relating to the newly adopted Chief Executive KPIs for delivery of the capital programme will include review of all project risks and support for a consistent and coordinated approach to managing project risks.

Risk Management Framework on its control environment and insurance arrangements

Refer to separate Insurance Update report brought to this meeting.

Business Continuity Planning and Disaster Recovery

Business Continuity Plans (BCPs) were updated in March 2020 in response to the COVID-19 pandemic lead by Manager People & Capability. It has been noted that, prior to this, risks and BCPs were focused on events such as tsunami and earthquake, but not a pandemic. A meeting is scheduled 18 Sept 2020 for managers to ensure all BCPs are current and accessible in the document management system; and the relevant risks, controls and treatments will be reviewed and updated.

The image below provides a summary of strategic risk SR5 in the risk register:

Processes and systems related to fraud

Refer to Audit and Risk Committee report "Internal Audit: Fraud Gap Analysis” taken to the 20 March 2020 meeting. The image below provides a summary of operational risk OR70 in the risk register:

Controls listed are:

· Financial delegation limits

· Internal audit program

· Internal controls in place

· Police checks on new employees

· Quarterly budget monitoring

· Segregation of duties

4.3 Issues

There are a substantial number of high and extreme strategic and operational risks with limited accountability. Regular reporting will be defined and activated to track progress against risk treatments. The Risk Management Strategy will be revised to better define accountability and training developed to embed understanding of roles and responsibilities in relation to risk management.

4.4 Significance and Engagement

N/A

4.5 Implications

Financial

N/A

Social & Policy

The Risk Policy will be updated in line with risk review.

Risk

Strategic Risks

There are 5 strategic risks in the register. The image below shows the 4 strategic risks with a revised rating of high:

These risks were reported at the last meeting. The risks are outside the control of NCC and risk treatments listed against these risks are ongoing. A full update on any required changes as a result of the current review will be provided at the next meeting.

The ongoing impact of COVID-19 and changing levels on Business and Tourism activities could be more significant than originally thought. This relates to strategic risk SR5 Event causing disruption or destruction of critical business functions and/or production and delivery of council services (see above).

Current controls are:

· BCP in place for some tourism sites

· Information Services have a disaster recovery plan

The following treatments are underway:

· Business continuity framework developed for NCC

· Each directorate must develop business continuity plans for their operations

· Information Services have a disaster recovery plan

Further analysis is underway and SR5 will be updated accordingly.

Operational Risks

There are currently 158 operational risks in the register. Out of those, 82 have a revised risk of high or extreme. Of note is operational risk OR24 (shown below). A separate update on the Outfall project will be presented at this meeting.

Project Risks

Project risks have been excluded from reporting.

Emerging Risks

Council has signed the Three Waters Reform Programme Memorandum of Understanding (MOU) and will look to complete the Funding agreement and Delivery Plan agreement as required by the end of September 2020. There is a risk that delivery of the plan could be delayed due to:

· Large volume of Government spend on infrastructure across all of New Zealand as stimulus packages, causing shortage of suitable service providers available at the required time

· Prolonged restrictions due to changing COVID alert levels

· Materials and plant sourced from overseas are not available due to COVID restrictions

Initial controls include a regional approach to planning. Further controls and treatments to be defined.

4.6 Options

a. N/A

4.7 Development of Preferred Option

N/A

4.8 Attachments

Nil

Audit and Risk Committee - 18 September 2020 - Open Agenda

Audit and Risk Committee

Open Minutes

Meeting Date:

Friday 12 June 2020

Time:

1pm – 1.43pm

Venue

Large Exhibition Hall

Napier War Memorial Centre

Marine Parade Napier

Via Zoom

Present

John Palairet (In the Chair), Mayor Kirsten Wise, David Pearson, Councillor Nigel Simpson and Councillor Graeme Taylor

In Attendance

Interim Chief Executive, Director Infrastructure Services, Chief Financial Officer, Manager People and Capability, Manager Property, Manager Information Services, Manager Environmental Solutions

Karen Young – Audit New Zealand

Administration

Governance Team

Apologies

The apology from the Director Corporate Services was noted.

Conflicts of interest

Nil

Announcements by the Mayor

Nil

Announcements by the Chairperson

Nil

Announcements by the management

Nil

Confirmation of minutes

Mayor Wise / Councillor Taylor

That the Minutes of the meeting held on 20 March 2020 were taken as a true and accurate record of the meeting.

Carried

Agenda Items

1. Wastewater Outfall Report

Type of Report:	Legal and Operational
Legal Reference:	Resource Management Act 1991
Document ID:	933764
Reporting Officer/s & Unit:	Catherine Bayly, Manager Asset Strategy Cameron Burton, Manager Environmental Solutions

1.1 Purpose of Report

To provide the Audit and Risk Committee with an update on the Wastewater Outfall, noting a similar report has gone to Council to:

· inform Council of an update to the status of the Awatoto Submarine Wastewater Outfall which conveys treated wastewater to the Pacific Ocean, and to;

· enable decisions to be made to bring forward funding for an expedited repair, renewal or replacement of the outfall structure.

At the Meeting

The Manager Environmental Solutions spoke to the report and provided a brief overview, noting the following:

· At the last inspection of the wastewater outfall, two areas of leakage were identified. The most difficult of which is 700m offshore.

· Council has been monitoring the leakages for a period of time and staff had ascertained that they pose very low risk to the environment.

· Council had previously been encouraged by Hawke’s Bay Regional Council (HBRC) to have work completed to fix the leak and HBRC have recently issued an Abatement Notice ordering Council to remedy the leak by 30 October 2020, and to have an emergency response plan in place by 30 July 2020.

· There is a high level of risk involved in attempting a repair of the leaks. Council is unable to replace the device like for like. A number of options have been considered in the Beca report, with the lowest risk being for specialist divers to remove each of the fibreglass joint parts slowly and one at a time, and use a caulking material to repair the leaking gaskets. The risk is that once they start undoing the bolts, that this may cause a breakage or warping of those parts. If that occurred this could cause a catastrophic failure of the device and potentially discharge all of the city’s wastewater at that point, 700 metres from the shore.

· There is a smaller leak slightly inshore which will be easier to fix.

· Both Council and the Māori Committee have been advised in relation to the current status of the outfall.

· Council will be holding risk workshops with specialist divers. Officers will then engage with HBRC to ensure they are aware of the risks and complications given the short timeframe afforded to remedy the leaks.

· $2M has been brought forward from reserves to address this work given the timeframe required to complete this work.

· A secondary risk is that staff are now focussed on the two particular leak points in the pipeline rather than the overarching, future-focussed works relating to improved treatment systems, contingency storage and improvements of the wastewater network as a whole.

In response to questions from the committee, the following points were clarified:

· The Abatement Notice being issued since the report was taken to Council does not change anything in this report. It was noted that HBRC have requested other works outside of the Abatement Notice.

· If Council is unable to remedy the leak by 30 October 2020 then a variation to the consent must be obtained by this date. If neither of these are achieved by that date, Council could be prosecuted.

· There are a number of factors outside of Council’s control including work being restricted to three hour windows only and subject to weather and oceanic conditions. Council is applying for a variation to the consent, however timing is dependent on HBRC’s ability to process this in time.

· There is no guarantee that the repair will be successful.

· Council officers will be as inclusive and transparent as possible with HBRC around the risks and process being followed.

Committee's recommendation

Councillor Taylor / DW Pearson

The Audit and Risk Committee:

a. Note the current status of the submarine wastewater outfall:

i. There remains some seepage of wastewater from sealing gaskets which form part of a bespoke fibreglass joint section of the subsurface outfall pipe structure;

ii. Despite efforts, staff have not been able to identify a way to quickly fix this seepage without putting the fibreglass joint at risk of rupturing;

iii. That frequent testing of the coastal waters surrounding the area of seepage continues to show de minimus environmental effect of those waters, caused by this seepage;

iv. That Hawkes Bay Regional Council (HBRC) have recently indicated (on 25 March 2020) that Council must take the following actions:
1) Undertake short-term repairs to mitigate the leak from the joint leak by 30 October 2020
2) Provide long-term options for repairing the joint in the outfall pipe by the same date (30 October 2020)

v. That HBRC have informally notified Council of their intention to pursue enforcement action against Napier City Council to cease the discharge at the joint if the timeframes above are not met.

vi. That a further leak has been discovered within 100m of the fibreglass joint. Divers have been to the site with the aim to repair and have found that this is an old repair that has been damaged by an anchor, or other, and will need an additional repair.

vii. Tight timeframes to effect a repair increases the risk associated with delivering a short-term fix, rather than facilitating long-term solutions which will provide better outcomes.

b. Officers are seeking approval by Council to:

i. Seek a variation to the current resource consent to authorise the discharge of wastewater via seepage at a position other than that currently authorised (at the fibreglass joint location);

ii. Seek early provision of funding assigned for later financial years in the Long Term Plan (LTP) to enable the strategic and planned replacement of the wastewater outfall, including better treatment options to facilitate a more highly treated wastewater in the future.

c. Note that funding to be released from Wastewater Reserves to attempt a fix of the two seepages and to start on investigation works for replacement of the outfall ($2m has been put forward in the 20/21 Annual Plan).

d. Note attempt the lowest risk repair option of the fibreglass joint to address Regional Council’s repair timelines.

e. Note the Beca Ltd Report entitled “Napier City Council – Wastewater Outfall – Issues and Options” dated 15 May 2020.

f. Note the Audit and Risk Committee may request further information in relation to this issue that they may require in order to fully understand the risk to Council and the community if not already provided in the report. This committee has the ability to provide any feedback on the risk assessment based on the preferred options presented as part of this paper and/or may any recommendation to Council.

Carried

2. Summary of Napier Water Safety Plan's Risks

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	933756
Reporting Officer/s & Unit:	Catherine Bayly, Manager Asset Strategy

2.1 Purpose of Report

Purpose of this report is to bring ‘high’ and ‘very high’ risks as identified in NCC’s current version of Water Safety Plan (v4.3, updated August 2019) to Audit and Risk Committee attention and for Committee to acknowledge those risks.

At the Meeting

The Director Infrastructure Services provided a brief overview of the report noting that the intention of the report is to regularly bring the risks identified through the water safety plan to the committee’s attention.

In response to questions from the committee, the following points were clarified:

· A new consent will be required before Council can move to two operational bore fields.

· Every change made to the water safety plan is put to the drinking water assessor for their approval. Council officers work in collaboration with the drinking water assessor.

· The current report addresses inherent risks, recognising what controls might already be in place and any further corrective measures required. Council officers were requested to provide further detail around timeframes for reducing risk levels.

· A number of actions are due for completion by the end of June and officers confirmed they are on track to meet those timeframes.

ACTION: Council officers are to include details around timeframes to address the risks highlighted in this report, moving forward.

Committee's recommendation

Councillor Simpson / DW Pearson

The Audit and Risk Committee:

a. Endorse the report.

b. Note the risks identified.

Carried

3. Health and Safety Report

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	933568
Reporting Officer/s & Unit:	Sue Matkin, Manager People & Capability

3.1 Purpose of Report

The purpose of the report is to provide the Audit and Risk Committee with an overview of the health and safety performance as at 30 April 2020.

At the Meeting

The Manager People and Capability spoke to the report and provided a brief update in relation to health and safety initiatives undertaken during lockdown in order to support staff during this period. It was noted that no further lost time injuries have been recorded since April.

Committee's recommendation

Councillors Simpson / Taylor

The Audit and Risk Committee:

a. Receive the Health and Safety report as at 30 April 2020

Carried

4. Draft Annual Plan 2020/21

Type of Report:	Legal
Legal Reference:	Local Government Act 2002
Document ID:	933816
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Adele Henderson, Director Corporate Services Jane McLoughlin, Corporate Planner

4.1 Purpose of Report

That the Committee review and provide feedback to Council on the Annual Plan 2020/21 underlying financial information prior to the final adoption of the reports.

At the Meeting

The Chief Financial Officer provided a brief overview of the report and tabled the updated consultation document (attached). The committee were thanked for their feedback prior to the Council meeting held on 11 June 2020. It was noted that Council adopted the consultation document and underlying information, including the proposed changes to the rates remission and rates postponement policies, and the Statement of Proposal to join the LGFA. The policies will be consulted separately but at the same time as the Draft Annual Plan.

As previously advised to the committee, the budget does not meet the balanced budget provision under section 100 of the Local Government Act 2002. As required under section 80 of the Local Government Act 2002, Council has carefully considered the unbalanced budget issue with the most financially prudent option being to reserve fund the shortfall due to the one-off nature. Council will not meet the deadline of 30 June to adopt the Annual Plan and both Audit New Zealand and the Department of Internal Affairs have been notified of this.

The Interim Chief Executive advised that following reforecasting completed between now and finalising the Annual Plan, further changes are expected due to the impacts of COVID-19.

Officer’s Recommendation

The Audit and Risk Committee:

a. Receive the underlying information as the basis for the Annual Plan 20/21:

i. Financial information

ii. 10 year revised capital plan

iii. Rates remission policy

iv. Rates postponement policy

v. Statement of Proposal to join LGFA

b. Provide feedback to Council by 9 June (via the Director of Corporate Services) to be tabled for consideration by Council at its meeting on 11 June 2020.

c. Resolve that the use reserves to fund the one-off shortfall of $6.74m anticipated in 20/21 is financially prudent and does not impact unfairly on ratepayers in the future.

d. Note that the Annual Plan 20/21 does not meet the section 100 (i) balanced budget provision of the Local Government Act, and that Council will be working towards a balanced budget for the LTP.

e. Note that Council has notified DIA and Audit NZ that it will not meet the statutory deadline of 30 June 2020 for adoption of the Annual Plan 20/21.

AMENDED MOTION

Committee's recommendation

DW Pearson / Councillor Taylor

The Audit and Risk Committee note that they have reviewed and are comfortable with the approach taken by Council in the adoption of the Draft Annual Plan and commend and note that Council has made the following resolutions:

a. Receive the underlying information as the basis for the Annual Plan 20/21:

i. Financial information

ii. 10 year revised capital plan

iii. Rates remission policy

iv. Rates postponement policy

v. Statement of Proposal to join LGFA

b. Provide feedback to Council by 9 June (via the Director of Corporate Services) to be tabled for consideration by Council at its meeting on 11 June 2020.

c. Resolve that the use reserves to fund the one-off shortfall of $6.74m anticipated in 20/21 is financially prudent and does not impact unfairly on ratepayers in the future.

d. Note that the Annual Plan 20/21 does not meet the section 100 (i) balanced budget provision of the Local Government Act, and that Council will be working towards a balanced budget for the LTP.

e. Note that Council has notified DIA and Audit NZ that it will not meet the statutory deadline of 30 June 2020 for adoption of the Annual Plan 20/21.

Carried

5. Sensitive Expenditure - Mayor and Chief Executive

Type of Report:	Procedural
Legal Reference:	N/A
Document ID:	933218
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

5.1 Purpose of Report

To provide the information required for the Committee to review Sensitive Expenditure of the Mayor and Chief Executive for compliance with Council’s Sensitive Expenditure Policy.

At the Meeting

The Chief Financial Officer briefly spoke to the report, noting that the Mayor’s sensitive expenditure for the second quarter was also attached to the report as this had been inadvertently omitted from the previous meeting’s agenda. There was no further discussion on this item.

Committee's recommendation

Councillors Simpson / Taylor

The Audit and Risk Committee:

a. Receive the report of Sensitive Expenditure for the Mayor and Chief Executive and review for compliance with the Sensitive Expenditure Policy.

Carried

6. External Accountability - Investment and Debt Report

Type of Report:	Information
Legal Reference:	N/A
Document ID:	933511
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

6.1 Purpose of Report

To consider the snapshot report on Napier City Council’s Investment and Debt as at 30 April 2020.

At the Meeting

The Chief Financial Officer provided a brief overview of the report. There was no further discussion on this item.

Committee's recommendation

DW Pearson / Mayor Wise

The Audit and Risk Committee:

a. Receive the snapshot report on Napier City Council’s Investment and Debt as at 30 April 2020.

Carried

7. Risk Management Report June 2020

Type of Report:	Information
Legal Reference:	N/A
Document ID:	934363
Reporting Officer/s & Unit:	Adele Henderson, Director Corporate Services

7.1 Purpose of Report

To provide the Audit and Risk Committee with an update on progress with risk management work and to report on the highest paid risks.

At the Meeting

The Chief Financial Officer spoke to the report and announced that the Risk and Assurance Lead position had now been appointed, with the start date being 22 June 2020. One of the first priorities for this role will be to review the risk management framework which will be brought back to this committee.

There was no further discussion on this item.

Committee's recommendation

DW Pearson / Mayor Wise

The Audit and Risk Committee:

a. Note the Risk Management Work being undertaken by Napier City Council staff and management.

b. Note the current High risks.

c. Receive the Risk Report dated 29^th May 2020

Carried

PUBLIC EXCLUDED ITEMS

Councillors Taylor / Simpson

That the public be excluded from the following parts of the proceedings of this meeting, namely:

1. Insurance Update

2. Cybersecurity Strategy

3. Revera Lead Agency IaaS Close Out Report

4. Legal Update

Carried

The general subject of each matter to be considered while the public was excluded, the reasons 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 were 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) to the passing of this resolution.
1. Insurance Update	7(2)(i) Enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	48(1)A 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 would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
2. Cybersecurity Strategy	7(2)(h) Enable the local authority to carry out, without prejudice or disadvantage, commercial activities	48(1)A 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 would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
3. Revera Lead Agency IaaS Close Out Report	7(2)(h) Enable the local authority to carry out, without prejudice or disadvantage, commercial activities	48(1)A 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 would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
4. Legal Update	7(2)(b)(ii) 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 7(2)(g) Maintain legal professional privilege 7(2)(i) Enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	48(1)A 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 would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.

The meeting moved into committee at 1.43pm.

Approved and adopted as a true and accurate record of the meeting.

Chairperson .............................................................................................................................

Date of approval ......................................................................................................................

APPENDIX A

Audit project	2020/21 plan
Cyber Security	October 2020
Records Management	November 2020
Data Analytics	March 2021
Asset Management	April 2021
Contract Management	May 2021

Committee Members	John Palairet (In the Chair), Mayor Kirsten Wise, David Pearson, Councillor Nigel Simpson and Councillor Graeme Taylor
Officer Responsible	Director Corporate Services
Administration	Governance Team
	Next Audit and Risk Committee Meeting Friday 11 December 2020

Type of Report:	Contractual
Legal Reference:	N/A
Document ID:	961277
Reporting Officer/s & Unit:	Adele Henderson, Director Corporate Services Jon Kingsford, Director Infrastructure Services