Agenda of Corporate and Strategic Committee

Meeting of the Corporate and Strategic Committee

Date: Wednesday 3 October 2018

Time: 11.00am

Venue:

Council Chamber

Hawke's Bay Regional Council

159 Dalton Street

NAPIER

Agenda

Item Subject Page

1. Welcome/Notices/Apologies

2. Conflict of Interest Declarations

3. Confirmation of Minutes of the Corporate and Strategic Committee held on 13 June 2018

4. Follow-ups from Previous Corporate and Strategic Committee meetings 3

5. Call for Items of Business Not on the Agenda 7

Decision Items

6. Report and Recommendations from the Finance Audit and Risk Sub-committee 9

7. Tāngata Whenua Representation on Council and its Committees 15

8. Kahutia - Ngati Kahungunu Iwi Incorporated Carbon Credit Proposal 17

9. Proposed Schedule of 2019 Council and Committee Meetings 21

10. Ethical Investments Policy 25

Information or Performance Monitoring

11. 2017-18 Annual Report Update 35

12. HB Tourism Update 51

13. Establishment of a Project Management Office 61

14. Discussion of Items Not on the Agenda 65

Decision Items (Public Excluded)

15. Confirmation of the Public Excluded Minutes of the Corporate and Strategic Committee meeting held on 13 June 2018 67

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: Call for Items of Business Not on the Agenda

Reason for Report

1. Standing order 9.12 states:

“A meeting may deal with an item of business that is not on the agenda where the meeting resolves to deal with that item and the Chairperson provides the following information during the public part of the meeting:

(a) the reason the item is not on the agenda; and

(b) the reason why the discussion of the item cannot be delayed until a subsequent meeting.

Items not on the agenda may be brought before the meeting through a report from either the Chief Executive or the Chairperson.

Please note that nothing in this standing order removes the requirement to meet the provisions of Part 6, LGA 2002 with regard to consultation and decision making.”

2. In addition, standing order 9.13 allows “A meeting may discuss an item that is not on the agenda only if it is a minor matter relating to the general business of the meeting and the Chairperson explains at the beginning of the public part of the meeting that the item will be discussed. However, the meeting may not make a resolution, decision or recommendation about the item, except to refer it to a subsequent meeting for further discussion.”

Recommendations

1. That the Corporate and Strategic Committee accepts the following “Items of Business Not on the Agenda” for discussion as Item 14:

1.1. Urgent items of Business

Item Name

Reason not on Agenda

Reason discussion cannot be delayed

1.2. Minor items for discussion

Item	Topic	Councillor / Staff
1.
2.
3.

Leeanne Hooper

PRINCIPAL ADVISOR GOVERNANCE

James Palmer

CHIEF EXECUTIVE

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: Report and Recommendations from the Finance Audit and Risk Sub-committee

Reason for Report

1. The following matters were considered by the Finance Audit and Risk Sub-committee meeting on 19 September 2018 and are now presented for the Committee’s consideration and approval.

Agenda Items

2. Six Monthly Report on Risk Assessment and Management presented the latest risk management update for councillors’ review and feedback in relation to the appropriateness and assessed levels of the risks, readability of the Register and the processes themselves. An overview of the responsibilities of two new roles, Group Manager – Office of Chief Executive and Chair and Principal Advisor Organisational Performance, with input into the risk management processes was also provided. It is intended that the increased capacity the additional resources provide will increase visibility of Risk processes within the organisation and enable more accountable reporting.

3. Verbal update on the process to appoint an Independent Member of the Sub-Committee advised that the role has been re-advertised after the three respondents to the first call for expressions of interest were precluded on the basis of potential conflicts of interest. The current application period closed on 28 September and councillors were asked to invite potential candidates they are aware of to consider applying.

4. Internal Audit update provided a status report on the agreed 2018-19 internal audit work programme, including agreement of the Sub-committee to defer the Data Analytics Internal Audit report scheduled for November to the first meeting in 2019.

5. Treasury Reporting sought the Sub-committee’s input to the content for inclusion in ongoing treasury reporting on Council’s investment portfolio to the sub-committee.

6. Resource Management Information System Implementation update reported that the project is on track, with Go-Live of the Consents and Compliance modules on or before 26 November 2018.

7. Annual Report update Council’s Auditor, Stephen Lucy, was present to speak about the Audit NZ process and findings, and the Committee was provided with an updated Annual Report document to provide feedback to staff and raise any queries on the information presented. Arising from discussions, the sub-committee requested that staff investigate and report back to a future Corporate and Strategic Committee meeting on financial treatment of the Tangoio Soil Conservation Reserve land on Council’s books, as well as future management of the reserve. In addition, the sub-committee requested staff seek legal advice and advice from the Ombudsman’s office in relation to the potential disclosure of tangata whenua remuneration.

8. The following (attached) advice is in accordance with verbal advice from the Ombudsman’s office and legal opinion provided by Simpson Grierson, and offered to enable Councillors to decide the form and content of the disclosure of tangata whenua remuneration in the Annual Report in accordance with the Sub-committee resolution:

8.1. Requests that staff provide advice to enable the Corporate and Strategic Committee to consider and decide whether disclosure of Regional Planning Committee and Māori Committee tangata whenua representatives’ remuneration is included in the Council’s 2017-18 Annual Report, and if it is the form that the disclosure will take.

8.2. The Local Government Act 2002 (LGA), does not explicitly require the disclosure of remuneration of non-councillor members of any Council committees. Nor, however, does the LGA prohibit or specifically preclude such disclosures. LGA Schedule 10, clause 32 does require disclosure of the total remuneration of the Chief Executive and each of the elected members on Council.

8.3. In considering whether to disclose tangata whenua remuneration in the annual report, it is useful to consider how the issue would be dealt with if a request for that information was made under the Local Government Official Information and Meetings Act (LGOIMA). Potentially, the information could be withheld under the protection of personal privacy ground in section 7(2)(a). However, the application of that ground has to be weighed against the public interest in disclosure. In this situation, there is a strong argument that there is a material public interest in the information: it involves the payment of ratepayer funds to officials acting as members of important council committees and in a context where the remuneration of councillor members is subject to mandatory disclosure. Given the weight of the public interest, the Ombudsman’s office expressed the view, based on the circumstances described by staff, it is likely the information would not meet the tests necessary to be withheld in full.

8.4. Keeping the public interest in sight while also considering potential personal privacy issues, it might be important that Council also considers whether the public interest is still served by disclosure in a particular form or format. Put another way, If transparency of overall costs associated with tangata whenua participation on Council committees is the information being sought, is there anything to be gained from disclosing individual remuneration, or will the public interest be served just as well by disclosing the total remuneration and associated costs without including the individuals’ names?

8.5. Staff, based on the advice received, recommend that the following options are considered.

8.5.1. For each Committee, include a list of individuals’ names, the total remuneration paid, and the total expense reimbursements paid (or the two amounts as one figure) for the 2017-18 financial year

8.5.2. For each Committee, include the total remuneration and total expense reimbursements (or the two amounts as one figure) paid to Co-Chairperson and/or Deputy Co-Chairperson as relevant and listed separately plus total remuneration and total expense reimbursements (or the two amounts as one figure) paid to the remaining members of the Committee, including the number of members the combined totals represent

8.5.3. For each Committee, list the total remuneration and total expense reimbursements (or the two amounts as one figure) paid to all tangata whenua representatives on the Committee and the number of members the combined totals represent.

8.5.4. For each Committee, a statement describing the remuneration and expenses members were entitled to claim on a per meeting basis, including the number of meetings held within the period of the report.

Decision Making Process

9. These matters have all been specifically considered at the Committee level except where specifically noted.

Recommendations

The Finance Audit and Risk Sub-Committee recommends that the Corporate and Strategic Committee:

1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, and that Council can exercise its discretion and make decisions on these issues without conferring directly with the community and persons likely to be affected by or to have an interest in the decision.

Six Monthly Report on Risk Assessment and Management

2. Confirms the Sub-committee’s opinion that the risk assessment processes are appropriate and adequately identify and assess organisational risks.

Annual Report Update

3. Having considered the staff advice provided, the Corporate and Strategic Committee requests that staff include the disclosure of Regional Planning Committee and Māori Committee tangata whenua representatives’ remuneration in the Council’s 2017-18 Annual Report, in the form following, for Council approval as part of the adoption of the Annual Report for publication on 24 October 2018.

3.1. For each Committee, include a list of individuals’ names, the total remuneration paid, and the total expense reimbursements paid (or the two amounts as one figure) for the 2017-18 financial year

3.2. For each Committee, include the total remuneration and total expense reimbursements (or the two amounts as one figure) paid to Chairperson and/or Deputy Chairperson as relevant and listed separately plus total remuneration and total expense reimbursements (or the two amounts as one figure) paid to the remaining members of the Committee, including the number of members the combined totals represent

3.3. For each Committee, list the total remuneration and total expense reimbursements (or the two amounts as one figure) paid to all tangata whenua representatives on the Committee and the number of members the combined totals represent.

3.4. For each Committee, a statement describing the remuneration and expenses members were entitled to claim on a per meeting basis, including the number of meetings held within the period of the report.

4. Requests that staff provide advice about the financial treatment and future management of the Tangoio Soil Conservation Estate.

Reports Received

5. Notes that the following reports were provided to the Finance Audit & Risk Sub-committee.

5.1. Verbal update on the process to appoint an Independent Member of the Sub-Committee

5.2. Internal Audit update (resolved: Agrees to defer the “Data Analytics Internal Audit” report to the first meeting in the 2019 calendar year)

5.3. Treasury Reporting

5.4. Resource Management Information System Implementation update

5.5. September 2018 update on the Sub-Committee Work Programme

5.6. Annual Report update

Authored by:

Leeanne Hooper

Principal Advisor Governance

Approved by:

Jessica Ellerm

Group Manager Corporate Services

Joanne Lawrence

Group Manager Office of the Chief Executive and Chair

James Palmer

Chief Executive

Attachment/s

⇩1

Simpson Grierson Legal Advice

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: Tāngata Whenua Representation on Council and its Committees

Reason for Report

1. To provide the means for Council to formally appoint the Regional Planning Committee Co-Chairperson (currently Mr Toro Waaka) to Council as a non-voting member in the same manner as the Chairman of the Māori Committee, and a tāngata whenua representative of the Regional Planning Committee and/or the Māori Committee to the Finance, Audit and Risk Sub-committee.

Strategic Fit

2. The relationship between HBRC and tangata whenua is of great importance and needs to succeed.

3. Growing capacity and partnerships for co-governance and co-management with Tāngata Whenua will assist Council to achieve its strategic goals and community outcomes, including:

3.1. by 2025, Tāngata Whenua values for all catchments are identified and embedded in the Regional Resource Management Plan

3.2. by 2030, cultural monitoring tools are in-use in all catchments.

4. While much of the discussion has been in relation to the Resource Management Act, the functions of the regional council are not exclusively governed by the RMA but fall under the Local Government Act, Biosecurity Act, Civil Defence Emergency Management Act, Soil Conservation and Rivers Control Act, Maritime Transport Act, Land Transport Management Act and others.

Considerations of Tangata Whenua

5. Since the Māori Committee was established 1991, the Council has included the participation of the Chairperson (currently Mike Mohi) of the Māori Committee in Regional Council meetings as a contribution toward achieving LGA section 81 Contributions to decision-making processes by Māori:

a) … to provide opportunities for Māori to contribute to the decision-making processes of the local authority

b) … foster the development of Māori capacity to contribute to the decision-making processes of the local authority, and

c) provide relevant information to Māori for the purposes of paragraphs (a) and (b).

6. In addition, the RPC Act states:

6.1. “the purpose of this Act is to improve tāngata whenua involvement in the development and review of documents prepared in accordance with the Resource Management Act for the Hawke’s Bay region”

Terms of Reference Amendments

7. Should Council wish to appoint additional members to the Finance, Audit and Risk Sub-committee the Terms of Reference will require amendment as follows.

7.1. Membership

7.1.1. Four members of Council, being: Councillors Alan Dick, Neil Kirton, Paul Bailey and Rick Barker

7.1.2. One suitably qualified and experienced tāngata whenua representative (each) of the Regional Planning and/or Māori committees.

7.1.3. An external independent appointee, being: vacant.

Financial and Resource Implications

8. The RPC Co-Chair’s participation at Regional Council meetings will have an impact on the associated governance operational budgets of approximately $5000 per year, which will be paid on a per meeting basis to the Co-Chair in addition to the remuneration paid for his participation on the Regional Planning Committee.

9. The Finance, Audit and Risk Sub-committee meetings quarterly and the remuneration of additional tangata whenua representatives will add between $1600 (1 member) and $3200 (2 members) per annum based on current meeting fees.

Decision Making Process

10. Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

10.1. The decision does not significantly alter the service provision or affect a strategic asset.

10.2. The use of the special consultative procedure is not prescribed by legislation.

10.3. The decision does not fall within the definition of Council’s policy on significance.

10.4. The decision is not inconsistent with an existing policy or plan.

Recommendations

1. That the Corporate and Strategic Committee receives and considers the “Tāngata Whenua Representation on Council and its Committees” staff report.

2. The Corporate and Strategic Committee recommends that Council:

2.1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, and that Council can exercise its discretion and make decisions on this issue without conferring directly with the community and persons likely to be affected by or to have an interest in the decision.

2.2. Amends the Terms of Reference for the Hawke’s Bay Regional Council to include Regional Planning Committee Tāngata Whenua Co-Chair participation at Council meetings with speaking rights only.

2.3. Amends the Terms of Reference for the Finance, Audit and Risk Sub-committee to include membership of that body, being one suitably qualified and experienced member (each) as appointed by the Regional Planning Committee and/or the Māori Committee.

Authored by:

Leeanne Hooper

Principal Advisor Governance

Approved by:

Joanne Lawrence

Group Manager Office of the Chief Executive and Chair

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: Kahutia - Ngati Kahungunu Iwi Incorporated Carbon Credit Proposal

Reason for the Report

1. This item seeks endorsement from the Corporate and Strategic Committee for negotiations to be undertaken on a lease agreement for a portion of the Council’s ‘carbon credit’ portfolio to Kahutia Limited in order to accelerate afforestation projects on erosion prone land.

Background

2. Council holds a forestry portfolio that has, since the introduction of the Emissions Trading Scheme (ETS), earned New Zealand Units (NZUs) or ‘carbon credits’ for carbon sequestration. As the Council’s forests grow the Council’s balance of NZUs continues to grow based on forest measurement surveys and subsequent allocation under the ETS. The Council is also liable for surrendering NZUs where there are decreases in carbon stocks in the Council’s forests either from harvest activity or from fire, pest or wind damage.

3. The difference between the total carbon sequestered by the Council’s forests and its future liabilities is known as ‘safe carbon’, which comprises the carbon permanently sequestered into the soil from the change of land use from pasture to forest (this assumes replanting following any harvest).

4. At the end of 2016 the Council commissioned independent advice from Carbon Farm Management Consultants and Ekos Limited on the management of this carbon portfolio. This advice identified that the Council’s current forest holdings are expected to produce a carbon portfolio reaching between 250,000 and 280,000 NZUs by 2030, but that not all of these units can be monetised given the need for the Council to retain a proportion of its NZUs for future harvest liabilities. The advice identified that within the portfolio there are an estimated 110,907 NZUs of ‘safe carbon’ in the Council’s portfolio (comprising 14,907 pre-1990 NZUs and 96,000 post-1989 NZUs), which it could sell or monetise by some other means. The market value of this safe carbon is approximately $2.5 million. To date the Council has not made any decision in relation to this carbon portfolio and there are no are no revenue assumptions from the portfolio in the 2018-28 Long Term Plan.

5. Set out following is a graphical representation of the credits and liabilities in the Council’s post-1989 portfolio and a further graph showing the cumulative portfolio and the ‘safe carbon’ proportion of this.

Source: Hawke’s Bay Regional Council – Carbon Strategy Review, Authors John Parker, Megan Southwick, Murray McClintock (10 December 2016).

Decision Making Process

6. Following the recent signing of the Kahutia Accord between the Council and Ngati Kahungunu Iwi Incorporated (NKII) aimed at driving regional afforestation, Council has been approached by Kahutia Limited, a wholly owned subsidiary company of NKII, seeking the Council’s interest in leasing the safe carbon portion of the Council’s NZU portfolio to the company.

7. Kahutia Limited has been established by NKII in response to the Kahutia Accord, as an investment vehicle in commercial forestry that also generates environmental benefits. The lease would enable the company to fund the commencement of afforestation of erosion prone land in the 2019 planting season. Kahutia Limited is presently in receipt of expressions of interest for afforestation of erosion-prone, collectively-owned Māori land in the Wairoa District, including adjacent to the Wairoa River and within the Whakaki Catchment, and Central Hawke’s Bay.

8. Kahutia Limited has proposed a lease on the following terms.

8.1 commencement in 2019 for a duration of ten years, with all NZUs repayable at or before the conclusion of the lease term

8.2 Interest rate of 2% per annum repayable in NZUs or cash equivalent at spot market ETS prices

8.3 Interest to be accrued to the balance for the first 4 years and then paid to the Council six monthly thereafter

8.4 The NZUs leased to be secured by a general security agreement granted by Kahungunu Asset Holding Company (KAHC) in favour of the Council.

9 The lease of the units would effectively provide a fully repayable and secured loan to Kahutia Limited.

10 Council has also been invited by the directors of Kahutia Limited to co-invest in the company up to, and including, as a 50% joint venture shareholder. If the Council was to take up this option at a 50% shareholding the company would be deemed to be a Council Controlled Organisation and a decision to invest would require a special consultation under the Local Government Act. Any decision to invest substantial capital into the company may also trigger the significance policy which would also necessitate special consultation. It is currently intended that Council will consider the best investment models, including investment in Kahutia Ltd., and consult on this in 2019 following the completion of the Right Tree Right Place study.

Risks

11. The principal risk to Council from leasing its safe carbon NZUs to Kahutia Limited is that the company fails to repay the NZUs either in part or in full. Under the proposal the Council will have a registered security over the assets of KAHC, which have substantial asset holdings including farm land, buildings and fisheries assets, and therefore the risk of the Council not being able to recover the value of its NZU asset is, in the view of staff, low.

12. There is also an opportunity cost of leasing the safe carbon NZUs, which Council could simply sell. However, the Council has no current need to realise the value of its NZU holdings and has no current plans to dispose of them. A lease would not preclude the NZUs being sold in the future, and under the proposed arrangement the leased NZUs would need to be returned to Council at the end, or a cash equivalent based on the spot price of the day. Council would be insulated from any future policy changes that affect the value of its NZUs and still benefit from any capital value gain from the anticipated future price increases of NZUs.

Benefits

13. Council is currently building an investment case for further large-scale commercial investment in forestry and this is due to be completed over the remainder of the 2018-19 financial year. This analysis, with anticipated further public consultation, will not be completed in time to inform investment decisions for forest plantings in 2019 (given the lead in times for land acquisition and preparation, and pre-ordering of seedling stock). While this due diligence is being undertaken there are landowners interested in planting sooner. This NZU lease proposal will enable some of these properties to be planted in 2019 and in doing so provide proof of concept and demonstration through ‘pilot projects’ that use carbon financing to reforest erosion prone land. Furthermore Council would receive income on a portion of its NZU portfolio that it is not currently receiving any.

Implications for Tangata Whenua

14. The proposal advances the Council’s partnership with NKII under the Kahutia Accord and provides a low risk and low cost funding kick start of afforestation of Māori-owned land.

Financial implications

15. The NZUs leased would remain an asset on the Council’s balance sheet, as they currently are, and future revenue assumptions from the lease can be incorporated into the next Annual Plan process.

Decision Making Process

16. Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

16.1 This decision does not significantly alter the service provision or affect a strategic asset.

16.2 The use of the special consultative procedure is not prescribed by legislation.

16.3 The decision does not fall within the definition of Council’s policy on significance.

16.4 The decision is not inconsistent with an existing policy or plan.

16.5 Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

Recommendations

1. That the Corporate and Strategic Committee:

1.1. receives and notes the “Kahutia - Ngati Kahungunu Iwi Incorporated Carbon Credit Proposal “ staff report

1.2. endorses the Chief Executive negotiating a lease of New Zealand Units to Kahutia Limited consistent with the proposal as detailed

1.3. requests that the Chief Executive provides a draft contract and appropriate legal and financial advice to Council on 24 October 2018 to enable consideration of a decision, as being recommended following, to approve a lease agreement with Kahutia Limited.

2. The Corporate and Strategic Committee recommends that Hawke’s Bay Regional Council:

2.2. Approves a lease of up to 100,000 New Zealand Units of the Council’s safe carbon portfolio to Kahutia Limited.

Authored by:

Joanne Lawrence

Group Manager Office of the Chief Executive and Chair

Approved by:

James Palmer

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

SUBJECT: Proposed Schedule of 2019 Council and Committee Meetings

Reason for Report

1. Council traditionally adopts a Schedule of Meetings for the following year in October/November each year.

2. The proposed 2019 schedule of meetings (attached) has been developed taking public holidays and the following into consideration.

2.1. One Regional Council meeting scheduled on the last Wednesday of each month

2.2. One Regional Planning Committee meeting scheduled on Wednesday every six weeks

2.3. Environment & Services Committee and Māori Committee meetings are scheduled every other month

2.4. Regional Transport Committee meetings scheduled on a Friday, four times per year

2.5. Finance, Audit & Risk Committee and Corporate & Strategic Committee meetings are scheduled quarterly, to align with Audit and financial reporting requirements

2.6. CDEM Group Joint Committee and Coordinating Executives Group meetings coordinated with Regional CEs and Leaders monthly meeting

2.7. Timeframes for Annual Plan and Annual Report development, consultation and Audit

2.8. Timeframes for the 2019 Local Government Elections.

Decision Making Process

3. Council is required to make every decision in accordance with provisions of the Local Government Act 2002 (the Act). Staff have assessed requirements contained in the Act in relation to this item and have concluded that adoption of a schedule of meetings is specifically provided for under Schedule 7, Part 1, Section 21.

Recommendation

The Corporate and Strategic Committee recommends that Council adopts the 2019 Schedule of Meetings as proposed.

Authored by:

Leeanne Hooper

Principal Advisor Governance

Approved by:

Joanne Lawrence

Group Manager Office of the Chief Executive and Chair

Attachment/s

⇩1

Proposed 2019 Meetings Schedule

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: Ethical Investments Policy

Reason for Report

1. To seek guidance on advice to be given to Council’s investment managers on the ethical investment parameters for the portfolios and further direction for staff in relation to further development of Council’s own ethical investments policy.

Background

2. In the development of the Treasury Policy for the 2018-28 Long Term Plan, the following ethical investment guidelines were established.

2.1. Where practical, investments will be made taking into account the ethical practices of the investment entity. Council’s intention for the Fund is to avoid direct involvement with industries that have a negative impact on society and the environment. This includes:

2.1.1. Alcohol

2.1.2. Tobacco

2.1.3. Fossil fuels, and

2.1.4. Military/weapons.

3. This was also included in the Statement of Investment Policy and Objectives (SIPO) which was the basis for assessment of the investment management proposals.

4. During the process of evaluating the investment managers’ proposals it was communicated to staff that the fund managers would require more definitive parameters in order to build an appropriate portfolio.

5. Councillors also questioned the appropriateness of excluding alcohol given Hawke’s Bay is a leader in the wine industry.

Discussion

6. Both Mercer and First New Zealand Capital (FNZC) have provided information (attached) on ethical investment approaches and how they will implement them.

7. Council needs to determine the approach they deem appropriate and where the line is drawn as far as direct and indirect investment in the excluded industries.

8. Councillors also need to decide if they want to have a special Ethical Investment Policy or are comfortable with amending the current disclosure in the Treasury Policy and SIPO to reflect Council’s current approach.

Next Steps

9. Staff recommend that the Treasury Policy and the Statement of Investment Policy and Objectives are amended to remove alcohol from the excluded industries list, and that these are then used to provide guidance for the fund managers appointed.

10. Staff further recommend that Council undertakes an ethical investment workshop and a policy development process for a specific Council Policy over the next six months.

Decision Making Process

11. Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

11.1. The decision does not significantly alter the service provision or affect a strategic asset.

11.2. The use of the special consultative procedure is not prescribed by legislation.

11.3. The decision does not fall within the definition of Council’s policy on significance.

11.4. The persons affected by this decision are all ratepayers in the region.

11.5. The decision is not inconsistent with an existing policy or plan.

11.6. Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

Recommendations

1. That the Corporate and Strategic Committee receives and notes the “Ethical Investments Policy” staff report.

2. The Corporate and Strategic Committee recommends that Hawke’s Bay Regional Council:

2.2. Amends the treasury policy and the Statement of Investment Policy and Objectives to reflect the decision to take alcohol off the excluded industries list.

2.3. Uses the amended treasury policy and the Statement of Investment Policy and Objectives as initial guidance for the fund managers.

2.4. Undertakes a full ethical investment workshop and policy development process over the next six months.

Authored by:

Manton Collings

Chief Financial Officer

Approved by:

Jessica Ellerm

Group Manager Corporate Services

Attachment/s

⇩1	FNZC Ethical Investment Information
⇩2	FNZC Ethical Investment Answers
⇩3	Mercer Ethical Investment Answers

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: 2017-18 Annual Report Update

Reason for Report

1. To provide the committee with the opportunity to review and discuss the draft Annual Report for the year ending 30 June 2018. The amended document is attached, and provided to Councillors only in hard copy. Hard copies of the final adopted Report will be provided upon request.

Draft 2017-18 Annual Report

2. The on-site Audit work for HBRC has been completed, with final work to be undertaken off-site over the next few weeks.

3. The draft 2017-18 Annual Report is attached for review and has been updated since the version presented to Council on 29 August 2018.

4. There are two major changes that have been included in the draft Annual Report.

HBRIC Ltd Valuation –

4.1. HBRIC Ltd have decided to revalue Napier Port to a value of $291 million. This has been driven from the work done for the Napier Port capital structure transaction.

4.2. The approach agreed by Council was to use the valuation provided by HBRIC Ltd and to obtain an independent valuation of HBRIC Ltd that takes into account the value of any debt and ongoing management costs.

4.3. BDO New Zealand Ltd has provided this work and have come to a value for HBRIC Ltd of $283.5 million. This provides a fair value gain of $48 million from the previous valuation 3 years ago. The valuation report is attached.

4.4. Council needs to be comfortable with this approach and to confirm they are happy with the use of this valuation.

4.5. Group Consolidation – Draft consolidated group financials have been provided that incorporate HBRIC Ltd and Napier Port. The audited HBRIC Ltd financials are due to be finalised and adopted on 28 September 2018 to comply with their statutory deadlines.

5. There are potentially some further audit alterations and note adjustments still to be added before the final Annual Report is presented to Council for adoption at its meeting on 24 October 2018.

Maori Contributions to Decision Making Processed

6. Councillors requested that further detail be added to the Annual Report in relation to tangata whenua involved in the TANK plan change process as well as detail around the results of the Long Term Plan consultation on increasing the budgets for tangata whenua engagement. This section, as amended, is on pages 10-12 of the attached document.

Tangoio Soil Conservation Reserve

7. There has been some discussion with Land Information NZ (LINZ) which holds the interest in the Tangoio Soil Conversation Reserve on behalf of the Crown. They are interested in the treatment of the forestry assets and reserve held by Council, and indicated that they are treating this as an asset on their balance sheet while Council also records these as an asset. This brings into question where the assets should be shown.

8. The historical treatment from Council’s perspective has been that full managerial and financial control was transferred to Council in 1989 under section 16 of the Soil Conservation and Rivers Control Act 1941 and therefore the land, forestry assets and the reserve were recorded on Council’s balance sheet. There is also contingent liability in the notes to the Annual Report which highlights that these reserves are held by Council on behalf of the Crown.

9. Due to Council being so close to finalising the Annual Report staff suggest that the same historical treatment is continued for the 2017-18 Annual Report and that further investigation is continued with LINZ in regards to the correct accounting treatment.

10. The Finance, Audit and Risk Sub-committee requested that a report is provided to the Corporate and Strategic Committee with more detail around the historical transactions and Council’s obligations for consideration.

Decision Making Process

11. Staff have assessed the requirements of the Local Government Act 2002 in relation to this item and have concluded that, as this report is for information only, the decision making provisions do not apply.

Recommendation

That the Corporate and Strategic Committee receives and notes the “2017-18 Annual Report Update”.

Authored by:

Manton Collings

Chief Financial Officer

Approved by:

Jessica Ellerm

Group Manager Corporate Services

Attachment/s

⇩1	HBRIC Valuation 30 June 2018
⇨2	Updated Draft 2017-18 Annual Report		Under Separate Cover

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: HB Tourism Update

Reason for Report

1. HB Tourism reports to Council quarterly. Following the changes to HBT’s funding arrangements in the current LTP, HBT is undertaking a strategic review in order to align its activities to its reduced HBRC funding and furthermore to incorporate a number of HBRC-mandated actions into its 3 year work programme.

2. HBT expects this review will be completed in time for presentation and discussion with this Committee at its next meeting on 5 December. This will allow a revised funding agreement complete with refreshed reporting KPI’s to be presented to this Committee for review and approval. In the interim, Council and HBT agreed a variation and extension to HBT’s prior funding agreement (attached) to allow for the transition to new terms (originally expected to be October 2018).

3. A report from HB Tourism setting out Q1-18/19 achievements is attached. This is purposefully set out in a more narrative format than previous reports as a result of discussions by HBT’s Board, who would in turn welcome Committee members’ feedback as a part of the review process.

4. The General Manager is travelling overseas and will not be available to present this report.

Decision Making Process

5. Staff have assessed the requirements of the Local Government Act 2002 in relation to this item and have concluded that, as this report is for information only, the decision making provisions do not apply.

Recommendation

That the Corporate and Strategic Committee receives and notes the “HB Tourism Quarterly Update” report.

Authored by:

Annie Dundas

General Manager Hawke's Bay Tourism

Approved by:

Tom Skerman

Group Manager Strategic Planning

Attachment/s

⇩1	HBRC Extension Letter to HB Tourism July 2018
⇩2	Metrics dashboard Q1 2018
⇩3	HB Tourism July - September 2018 report

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

Subject: Establishment of a Project Management Office

Reason for Report

1. This report informs the Committee of the establishment of the Project Management Office (PMO) and the intention to provide quarterly status reports on key projects to the Committee starting in December 2018.

Background

2. As a result of the recent reorganisation, a PMO was established to act as a centre of excellence for project management. This is the first time that HBRC has had dedicated resources to implement a consistent best practice project management (PM) framework across the whole of the organisation in a structured and supported manner.

3. The four key roles of the PMO are to:

3.1 Improve project management capability across the organisation through training and coaching;

3.2 Facilitate accurate and useful reporting to the Executive and Council on projects to build confidence that ratepayer money is being spent cost-effectively for fit-for-purpose services;

3.3 Focus on continuous improvement through project reviews, sharing good practice and learning from each other; and

3.4 Manage projects where capacity allows, primarily in the Strategic Planning and Corporate Services areas.

4. In May 2018, the Executive agreed to pilot a new project management framework on a small number of projects to road-test process steps, templates, tools and the reporting needs of the business. Nineteen pilot projects have subsequently been selected and approved by the Executive Team.

5. These projects are purposefully spread across the organisation and are a mix of size, type, and stage. A list of the pilot project is included below. The pilot will run for at least the next six months, with the PMO providing support and guidance to the pilot project managers in implementing the new framework during that time.

6. It is important to note that the PMO is not resourced to project manage all projects. HBRC continues to have a decentralised model within which staff are responsible for managing their own projects.

7. Projects other than the pilot projects will continue as normal and are encouraged to use the new project management framework and templates, but the PMO’s current focus is the 19 pilot projects.

Project Management Framework

8. The graphic below illustrates the Project Management Framework we are implementing and the base requirements in each phase.

Figure 1: 4-phases of our Project Management Framework

9. The framework is based on the PRINCE2 methodology but heavily tailored to the needs of HBRC. PRINCE2 (Projects in Controlled Environments) is a widely used method originating from the UK public sector. In particular we have streamlined it, used more friendly language and linked it to our LTP cycle. Two key goals are to improve the visibility of all projects and provide staff with ready access to templates, tools, training and support from the PMO to assist them to deliver successful projects.

Reporting

10. During the pilot, the project managers of the 19 pilot projects will provide monthly status reports to the PMO. The PMO will then use this information to compile monthly reports for the Executive Team and quarterly reports for the Corporate and Strategic Committee. Over time, it is likely that we will find some projects need more or less regular reporting, depending on project risk etc.

11. Through the pilot, the PMO will learn and adapt reporting to meet the needs of Council and the Executive. It is proposed to start reporting to the Executive at the end of each month starting in October and to this Committee starting in December 2018.

Pilot projects

12. The pilot projects include:

	Project Title	Project Manager	Project Sponsor
1	Te Waiu o Tūtira	Te Kaha Hawaikirangi	Iain Maxwell / Shane Walker (MTT)
2	Ahuriri Hotspot	Anna Madarasz-Smith	Iain Maxwell
3	Whakaki	Nicolas Caviale-Delzescaux and Joanne Hales	Iain Maxwell
4	Ruataniwha Groundwater	Jeff Smith	Tom Skerman / Iain Maxwell
5	Predator Free HB	Wendy Rakete-Stones	Iain Maxwell (and DOC)
6	Ecosystem Prioritisation and Implementation	Keiko Hashiba/Mark Mitchell	Iain Maxwell
7	State of the Environment Monitoring – Lakes	Andy Hicks	Iain Maxwell
8	Future Farming Initiative	Karina Campbell	Tom Skerman
9	HB Tourism Funding	Mandy Sharpe	Tom Skerman
10	TANK to notification	Ceri Edmonds	Tom Skerman
11	FEMPs	Shane Gilmer	Jessica Ellerm
12	New Bus Ticketing System	Anne Redgrave	Tom Skerman
13	Napier Port Consultation	Desiree Cull	Jessica Ellerm
14	Improving Quality of Council Reports	Leeanne Hooper	Jo Lawrence
15	Implementation of MERI framework	Louise McPhail	Liz Lambert / Iain Maxwell
16	IRIS Implementation Phase 1	Yvette Mackay	Jessica Ellerm
17	Public use of rivers	**	Chris Dolley
18	HPFPS LOS increase	**	Chris Dolley
19	Erosion Control Scheme	Amanda Langley	Iain Maxwell

** To be confirmed

Decision Making Process

13. Staff have assessed the requirements of the Local Government Act 2002 in relation to this item and have concluded that, as this report is for information only, the decision making provisions do not apply.

Recommendation

That the Corporate and Strategic Committee receives and notes the “Establishment of a Project Management Office” staff report.

Authored by:

Desiree Cull

Strategy and Projects Leader

Approved by:

Tom Skerman

Group Manager Strategic Planning

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 03 October 2018

SUBJECT: Confirmation of Public Excluded Minutes of the Corporate and Strategic Committee Meeting held on 13 June 2018.

That the Council excludes the public from this section of the meeting being Confirmation of Public Excluded Minutes Agenda Item 15 with the general subject of the item to be considered while the public is excluded; the reasons for passing the resolution and the specific grounds under Section 48 (1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution being:

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Confirmation of Public Excluded Minutes of the Corporate & Strategic Committee Meeting held 14 March 2018	7(2)(a) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to protect the privacy of natural persons	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.
Consideration of Debt Facility - HBRC to HBRIC Ltd	7(2)(i) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations) 7(2)(j) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.
Napier Port Capital Raising Options	7(2)(b)(ii) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of that information is necessary to protect information which otherwise would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information 7(2)(i) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations) 7(2)(j) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Authored by: Approved by:

Leeanne Hooper

Principal Advisor Governance

James Palmer

Chief Executive