Minutes of Corporate and Strategic Committee

1. Welcome/Karakia /Apologies/Notices

The Chair, Cr Neil Kirton welcomed everyone and Rick Barker led a karakia to open the meeting.

The Chair proposed that due to limited time to consider the items, the Forestry item and two Public Excluded items be deferred.

Resolution

CS1/22 That the apologies from Councillor Charles Lambert for lateness and from Apiata Tapine for early departure be accepted.

Barker/Foley

CARRIED

2. Conflict of Interest Declarations

There were no conflicts of interest declared.

3. Confirmation of Minutes of the Corporate and Strategic Committee held on 17 November 2021

CS2/22

Resolution

Minutes of the Corporate and Strategic Committee held on Wednesday, 17 November 2021, a copy having been circulated prior to the meeting, were taken as read and confirmed as a true and correct record.

Barker/van Beek

CARRIED

Follow-ups from previous Corporate and Strategic Committee meetings

The item was taken as read.

CS3/22

Resolution

That the Corporate and Strategic Committee receives and notes the Follow-up Items from Previous Meetings.

Barker/van Beek

CARRIED

5.	Call for Minor Items not on the Agenda
	There were no items raised.

Clifton to Tangoio Coastal Hazards Strategy - Memorandum of Transition

Chris Dolley introduced the item and provided a brief history of the process undertaken to date. Discussions noted:

· All partner councils have agreed in principle to the outcomes of the funding review and all but HBRC to the Memorandum of Transition

· Timeframes consist of four gateways being (1) endorsing the Memorandum of Transition (MoT), (2) Notification of a Long Term Plan (LTP) amendment under s.16 of the Local Government Act, (3) Adoption of the LTP Amendment and the Strategy, and (4) Adoption of 2024-34 LTP including funding provisions

· Currently at Gateway 2 in the process

· HBRC sought minor amendments to the MoT, to which Hastings District (HDC) and Napier City (NCC) councils have agreed

· Concerns raised about increased costs, resourcing and capability for HBRC undertaking this activity. Resource will be available if sufficient time is allowed for recruiting and training.

· Delivery and construction will not commence until the next Long Term Plan in 2024-2025

· LTP amendments will not be financial, and the financial analysis will be consulted on through the following 2024-2034 LTP

· Coastal Hazard Transfer Agreement will stipulate that the transfer will be at no cost to HBRC and will ensure rate neutrality, but will include any outstanding debt ($2m) on the assets as at the Transfer Date

· The Parties will endeavour to ensure that there are no additional costs to ratepayers arising solely from the transfer of the Coastal Hazard Assets

· Actual transfer of assets will not happen before the Coastal Hazard Transfer Agreement has been formalised

Charles Lambert arrived 9.19am

· Next steps will be to seek agreement from Wairoa District and Central Hawke’s Bay District councils that they do not object to the MoT as required by the Triennial Agreement

· Ongoing Tangata whenua engagement will continue through the s.16 consultation process

· Concerns were expressed about committing $15m of Capital Expenditure to build hard engineering solutions on the east coast, however it was noted that the pathways are adaptive and not confirmed, and will only be constructed if they are approved through rigorous resource consent application processes.

CS4/22

Resolutions

1. That the Corporate and Strategic Committee receives and notes the Clifton to Tangoio Coastal Hazards Strategy - Memorandum of Transition staff report.

2. The Corporate and Strategic Committee recommends that Hawke’s Bay Regional 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 or persons likely to have an interest in the decision.

2.2. Endorses the Memorandum of Transition as proposed.

2.3. Instructs the Chief Executive to execute the Memorandum of Transition on behalf of the Hawke’s Bay Regional Council following satisfaction of consultation requirements under Clause 7 of the Hawke’s Bay Region’s Triennial Agreement for the Triennium October 2019 – 2022.

2.4. Delegates to the Chief Executive authority to approve changes to the Memorandum of Transition should they be required by the Hastings District Council and Napier City Council in consultation with the Hawke’s Bay Regional Council members of the Clifton to Tangoio Coastal Hazards Strategy Joint Committee.

van Beek/Barker

Against: Kirton

CARRIED

Order of Candidates Names on Voting Documents

James Palmer introduced the item, which seeks a recommendation to Council for the order that candidates’ names will appear on voting documents for the 2022 local body elections. Queries and discussions traversed:

· Choices are alphabetical, pseudo-random or fully random, and staff recommendation is for random

· Random order will result in an equal number of instances of each candidate’s name appearing at the top or bottom of the list

· No difference in costs whether voting papers are printed in alphabetical or random order

· Pseudo-random is determined by a draw, after which all voting papers list the candidates’ names in the same order as drawn.

CS5/22

Resolutions

1. That the Corporate and Strategic Committee receives and considers the Order of Candidates Names on Voting Documents staff report.

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

2.2. Resolves that the names of candidates at the 2022 Hawke’s Bay Regional Council elections and any intervening by-elections be arranged in alphabetical order.

Kirton/Foss

For: 2

Against: 6

Abstained: Barker

LOST

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

2.2 Resolves that the names of candidates at the 2022 Hawke’s Bay Regional Council elections and any intervening by-elections be arranged in random order.

van Beek/Foley

Abstained: Barker

CARRIED

Proposal to Participate in Regional Sector Council-Controlled Organisation

Andrew Siddles introduced Mark Donnelly, General Manager of Regional Software Holdings Ltd. Queries and discussions covered:

Apiata Tapine left the meeting at 10.28am

· Staff recommend that HBRC joins a Regional Sector Shared Services Council Controlled Organisation

· Benefits to participation are highlighted in the agenda item

· Council must consult prior to becoming a shareholder of a CCO. As this is a relatively procedural matter staff recommend that a streamlined consultation be undertaken

· A Statement of Proposal for consultation will be provided to the April 2022 Regional Council meeting for adoption if participation is agreed.

CS6/22

Resolutions

1. That the Corporate and Strategic Committee receives and notes the Proposal to Participate in Regional Sector Council-Controlled Organisation staff report.

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

2.1. Agrees that the decisions to be made are in accordance with section 56 and 82 of the Local Government Act.

2.2. Agrees to participate in a Regional Sector Shared Services Council Controlled Organisation subject to consultation.

2.3. Agrees to the ‘streamlined’ public consultation process proposed.

Ormsby/van Beek

CARRIED

Updated HBRC Appointment and Remuneration of Directors Policy

James Palmer introduced the item. Discussions highlighted:

· The policy review was required to support changes to the investment mandate of HBRIC to grow its investment portfolio by up to $100m over the next decade, and to ensure that the Council’s more active investment objectives are appropriately governed for optimum investment performance, while maintaining appropriate Council oversight and accountability

· The updated policy will explicitly state that Council values and supports the benefits that diversity of thought, experience and skills bring to CCO boards and will support initiatives that lead to an inclusive recruitment and selection process that is open and transparent and upholds Council’s commitment to achieve diversity and inclusion

· Preference is that councillors are not eligible for appointment as directors to subsidiaries of HBRIC to maintain separation between active commercially focussed activities and the role of elected representatives

· Transitional arrangements are proposed for Councillors currently serving on the Napier Port and Foodeast boards, to manage the transition to the new policy with minimal disruption to the relevant commercial entity

· The HBRIC Chair has provided feedback on the policy to staff

· Napier Port is a strategic asset for the region and as an IPO requires directors be appointed solely based on skills and qualifications and separated from political influence.

CS7/22

Resolutions

1. That the Corporate and Strategic Committee:

1.1. Receives and considers the Updated HBRC Appointment and Remuneration of Directors Policy staff report.

1.2. Agrees the Appointment and Remuneration of Directors Policy be amended to reflect the following preferences.

1.2.1. HBRIC should continue to be governed by a blend of commercial and councillor directors to support integrated objectives setting and strategic alignment between Council and HBRIC, while incorporating independent perspectives and commercial skills, with a minimum of two independent directors within an overall maximum of eight directors.

1.2.2. Councillor directors are to be paid for their director duties on the board of HBRIC only if they are not already remunerated for higher duties as Council committee chairs or Council Chair or Deputy, and in such event are to be paid the difference between a base councillor salary and that of a Council committee chair.

1.2.3. In the event a Councillor director is appointed Chair of HBRIC, remuneration should be equivalent to that which would be paid to an Independent Chair.

1.2.4. HBRIC’s commercial subsidiaries should be run for commercial objectives by independent directors only, in order to maintain separation between active commercial investment activity and the role of councillors as community representatives overseeing this activity via HBRIC and Council, enabling councillors to hold the investment entities accountable for their performance without being conflicted.

1.2.5. In the event that Council, by resolution, suspends the Policy in respect of 1.2.4 above and enables councillors to be considered for appointment by HBRIC to a subsidiary company in response to special circumstances, the appointment is to be made by independent directors of HBRIC to ensure councillors being appointed to commercial entities attracting market-based fees are only appointed following an objective and apolitical assessment of the suitability of their skills for the role.

1.2.6. Commercial subsidiaries and CCOs must have skills-based boards, constituted of directors with the relevant industry experience and knowledge, governance and commercial skills.

1.2.7. All boards of entities for which HBRIC holds significant shareholdings are required to consider how they support diversity and inclusion, with open and transparent appointment processes.

1.2.8. HBRIC is delegated the authority to appoint directors to its subsidiaries in consultation with Council.

1.2.9. The Chair of HBRIC should be an Independent Director.

1.2.10. Board fees should be paid for all non-councillor Director positions, and that Council supports payment of market-based fees.

1.2.11. Existing councillor directors on HBRIC subsidiaries should stand down from their roles in a managed transition that minimises disruption to the commercial interests of their entities, and Council with board fees paid for all work to that point.

1.2.12. In consultation with Council, HBRIC may appoint executive directors to HBRIC subsidiaries with directors’ fees paid by the subsidiary or CCO to the parent company, unless otherwise agreed as part of a modified remuneration package for the executive that reflects adjusted responsibilities and accountabilities.

1.2.13. In consultation with Council, HBRIC will nominate two directors for the board of Napier Port for as long as a majority shareholding is held by Council via HBRIC.

1.3. Instructs Council officers to provide a revised Appointment and Remuneration of Directors Policy to the Council meeting on 30 March 2022 that incorporates the amendments resolved in 1.2.1 through 1.2.13 above.

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

2.2. Adopts the Appointment and Remuneration of Directors Policy as amended to incorporate the Corporate and Strategic Committee’s preferences resolved by resolutions 1.2.1 through 1.2.13 above.

Barker/Ormsby

Abstained: Foss

CARRIED

The meeting adjourned at 11.20am and reconvened at 11.34am.

10.

HBRIC and Foodeast draft Statements of Intent

James Palmer introduced the item and Dan Druzianic, HBRIC Chairman. Discussions noted:

· Minor editorial amendments only, made to the HBRIC Statement of Intent (SoI) from last year, which was approved by the Board in February 2022

· Seeking the committee’s feedback on potential amendments for the Boards to consider for incorporation into the final SoIs which will go back to Council for agreement on 29 June

· This is Foodeast’s first SoI. Financials are expected to be available in May 2022 and will be included in the final document

· The purpose of Foodeast, a limited partnership, is to construct and operate a food innovation hub

· The purpose in the Foodeast SoI should not only focus on jobs, but food innovation as well.

CS8/22

Resolutions

1. That the Corporate and Strategic Committee receives and considers the HBRIC and Foodeast Draft Statements of Intent staff report, with feedback provided verbally for potential incorporation into the final 2022-2023 Statement of Intent.

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

2.2. Further considers the HBRIC Ltd 2022-2023 draft Statement of Intent (SoI) and undertakes to provide any additional feedback on the Draft SoI to HBRIC Ltd by 1 May 2022 (LGA Sch8 cl3) to enable delivery of the completed Statement of Intent to Council on or before 30 June 2022 for adoption.

Barker/Foss

CARRIED

11.

HBRIC Quarterly update

The item was taken as read, and it was noted that:

· Shares of Napier Port Holdings (NPHL) down 10% however, dividends appear to be on track

· HBRIC received endorsement and feedback from the Māori Committee for the proposed name change and rebrand to Te Matau Investments Ltd

· HBRIC has been making enquiries with fund managers in relation to the Russian invasion of Ukraine, to ensure HBRIC and Council don’t hold investments in Russian companies

· Disruption of supply chains with goods and services all around the world and real concerns about shipping disruptions

· Blair O’Keeffe has resigned as HBRIC Chief Executive effective from end of March 2022

· Tom Skerman has been seconded to HBRIC for 2 days a week building a pipeline of possible investment opportunities, talking to potential partners such as PSGE’s, The Crown, other councils and investigating opportunities that may arise.

CS9/22

Resolution

That the Corporate and Strategic Committee receives and notes the HBRIC Quarterly Update.

Barker/Ormsby

CARRIED

12.

Report from the Finance Audit and Risk Sub-committee meeting

Councillor Neil Kirton introduced the item and Councillor Craig Foss provided context as Chair of the sub-committee. Discussions highlighted:

· The sub-committee received the Six-Monthly Enterprise Risk Report as well as several regular reports

· The breadth and depth of external uncertainties are resulting in several emerging risks impacting all risk types (operational, strategic and financial) for Council. Therefore the overall residual risk profile for Council has increased despite implementing additional controls in response to the uncertainties.

· FARS feedback on the draft Scope for a Fund Manager Review in relation to frequency, performance compared to their peers, and criteria will be incorporated into a final document to be presented to the 10 August 2022 FARS meeting for agreement to undertake the review

· The HBRC Forestry and Tūtira Manuka Plantation updates are deferred to the May Environment and Integrated Catchments Committee meeting

· The new Chief Financial Officer, Chris Comber, was acknowledged

· In relation to the Risk Maturity Update, the Risk Team will be working collaboratively with the Strategy and Performance Team to strengthen risk and performance metrics within the Organisational Performance report.

CS10/22

Resolution

1. That the Corporate and Strategic Committee receives and notes the report from the Finance, Audit and Risk Sub-committee, including the sub-committee recommendations, being that the Finance, Audit and Risk Sub-committee:

Six Monthly Enterprise Risk Report

1.1. Reports to the Corporate and Strategic Committee, the sub-committee’s satisfaction that the Six-Monthly Enterprise Risk Report provides adequate evidence of the robustness of Council’s risk management policy and framework and progress to implement the maturing risk management system.

Risk Maturity Update

Reports to the Corporate and Strategic Committee that:

1.2. Delivery of phase IV of the roadmap was re-evaluated to identify a less resource-intensive approach for embedding risk-based thinking into the business due to the level of business disruption from Covid19 and the tight labour market, and

1.3. The revised delivery plan for phase IV of the roadmap still aligns to Council’s overall risk maturity strategy of embedding risk-based thinking into the business.

Internal Audit Annual Plan Status Update FY2021-2022

1.4. Reports to the Corporate and Strategic Committee, the sub-committee’s satisfaction that the Internal Assurance Programme Update provides adequate evidence of the adequacy of Council’s internal assurance functions and management actions undertaken or planned to respond to findings and recommendations from completed internal audits.

Annual Internal Assurance Plan 2022-2023

1.5. Receives and considers the draft Annual Internal Assurance Plan 2022-2023 staff report.

2020-2021 Annual Report Audit Update

1.6. Receives and notes the 2020-21 Annual Report Audit Update staff report.

Quarterly Treasury Report for 1 October – 31 December 2021

1.7. Receives and notes the Quarterly Treasury Report for 1 October – 31 December 2021.

1.8. Confirms that the performance of Council’s investment portfolio has been reported to the sub-committee’s satisfaction.

HBRC Forestry Update

1.9. Receives and notes the HBRC Forestry Update staff report.

Tūtira Mānuka Plantation Update

1.10. Receives and notes the Tūtira Mānuka Plantation Update staff report

Internal Assurance Dashboard - Corrective Actions Status Updates

1.11. Receives and notes the Internal Assurance Dashboard - Corrective Actions Status Update staff report and accompanying dashboard.

1.12. Confirms that management actions undertaken or planned for the future adequately respond to the findings and recommendations of the internal audits.

1.13. Confirms that the dashboard reports provide adequate information on the progress of corrective actions and the progress of the approved Annual Internal Audit programme.

1.14. Reports to the Corporate and Strategic Committee, the sub-committee’s satisfaction that the Internal Assurance Programme Update provides adequate evidence of the adequacy of Council’s internal assurance functions and management actions undertaken or planned to respond to findings and recommendations from completed internal audits.

Talent Management Internal Audit Update

1.15. Receives and notes the Talent Management Internal Audit Update staff report.

Scope for Fund Manager Review

1.18. Receives and considers the Scope for Fund Manager Review staff report

1.19. Provides feedback, particularly on the staff recommendations made, sufficient to enable preparation of a formal scoping document that includes timeframes, objectives and milestones.

Foss/Kirton

CARRIED

13.

Financial Report for the Period 1 July - 31 December 2021

James Palmer introduced Chris Comber, newly appointed Chief Financial Officer. The item was taken as read, and discussions noted:

· Operating expenditure for the last six months was below budget with operating income above budget, resulting in an operating surplus of $1.3m for the period compared to a forecast budget deficit of $4.8m

· The planned budget deficit was to be funded by borrowing as per the long term plan financial strategy

· Capital expenditure was mainly below budget due to delays in consents and assessments, supply chain delays and other Covid-19 impacts

· Environmental enhancement projects co-funded by Central Government were characterised by proposals developed at pace to meet short deadlines, and often community politics and expectations from mana whenua around co-design were underestimated and so unspent funding will likely be carried forward in multi-year projects to enable the projects to continue to completion.

The Chair, Councillor Neil Kirton, left the meeting at 12.35pm and Councillor Will Foley assumed the Chair

Councillor Neil Kirton re-joined the meeting at 12.38pm and resumed the Chair

· Confident that Council will not have to consult on any significant variations from the 2022-2023 annual plan, particularly on non-performing Level of Service delivery

· The Regional Water Security programme is $2.5m behind budget mainly due to Covid-19 and capacity impacts. A Cultural Impact Assessment currently awaits completion.

CS11/22

Resolution

That the Corporate and Strategic Committee receives and notes the Financial Report for the Period 1 July - 31 December 2021.

Kirton/Barker

CARRIED

14.

Organisational Performance Report for the Period 1 October - 31 December 2021

James Palmer introduced the item and discussions noted:

· Covid-19 has had a significant impact on the civil defence group over the last 2 years. The CDEM group is On track in terms of the independent review and changes to the regional operating model currently being developed. The “Off track” measure relates to the Group workplan which was due for review.

· Council will sell a portion of its NZUs (carbon credits) to fund the Climate Action Ambassador role and operating budget, with the first tranche sold toward the end of 2022.

· A Carbon Policy is to be developed

· Concerns were raised about resourcing for the Regional Water Security programme.

CS12/22

Resolution

That the Corporate and Strategic Committee receives and notes the Organisational Performance Report for the Period 1 October - 31 December 2021.

Barker/van Beek

CARRIED

The meeting adjourned at 1pm and reconvened at 1.20pm.

15.

Corporate Plan Implementation

James Palmer introduced the item. Andrew Siddles presented the IT capital work programme highlighting some initiatives and some of the challenges. Discussions traversed:

· Acknowledged the good progress Council has made in the Customer Experience which has been a longstanding area of improvement for Council

· The Corporate plan was developed alongside the 2021-2024 LTP to provide the support base for the ambitious LTP work programme

· Significant amount of capital ($30m) allocated through the 2021-2031 LTP to underpin Council’s ability to deliver its ambitious work programme

· ICT Capital Work programme is an integrated work programme with prioritised portfolios within each enterprise group such as FUSE, Asset Management Operations, Water Allocation Calculator, IRIS next generation, Freshwater Accounting SharePoint, Nintex Platform process automation, Aerial imagery, LiDAR and GIS infrastructure.

· Proposed next steps for FUSE (TechOne) will improve functionality within the current modules across the board as well as introduce two or three new features and functionality

· Building an integrated enterprise wide system for financial management and planning, People Management, etc to manage the organisation holistically.

CS13/22

Resolution

That the Corporate and Strategic Committee receives and notes the Corporate Plan Implementation staff report.

Taylor/Foss

CARRIED

16.	Discussion of Minor Items not on the Agenda
	There were no items raised for discussion.

17.

Report from the Public Excluded Finance, Audit and Risk Sub-committee meeting

CS14/22

Resolution

That the Corporate and Strategic Committee excludes the public from this section of the meeting, being Agenda Item 17 Report from the Public Excluded Finance, Audit and Risk Sub-committee Meeting 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

Report from the Public Excluded Finance, Audit and Risk Sub-committee Meeting

s7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees, and persons from improper pressure or harassment.

s7(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.

van Beek/Foley

CARRIED

18.

Possible Sale of Wellington Leasehold Property

CS15/22

Resolution

That the Corporate and Strategic Committee excludes the public from this section of the meeting, being Agenda Item 18 Error! No document variable supplied. 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

Possible Sale of Wellington Leasehold Property

s7(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).

The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

van Beek/Foley

CARRIED

The meeting went into public excluded session at 1.46pm and out of public excluded session at 2.39pm

Closure:

There being no further business the Chairman declared the meeting closed at 2.39pm on Wednesday, 16 March 2022.

Signed as a true and correct record.

DATE: ................................................ CHAIRMAN: ...............................................