Agenda of Regional Council Meeting - Wednesday, 25 May 2022

Hawke’s Bay Regional Council

25 May 2022

Subject: Significant organisational activities looking forward through June 2022

Purpose of agenda item

1. The commentary following is for Councillors’ information, to highlight significant areas of Council activity. Significant Council resources are being directed toward various initiatives which reflect the Council’s evolving agenda, and it is considered important that Council is consistently informed of progress in areas that have or may create a high external profile.

Northern Catchment
Project / Activity Description	Significant Upcoming Milestone(s)	Group /Team or Section
Biodiversity and biosecurity	1. The Whakatipu Mahia project milestone for a ‘Proof of Absence’ across the trapping network has been delayed by Covid and several storms in the Mahia area and is now planned to be fully installed and operational by the end of May. The network will be supported by possum dog surveys due to run in May/June.	ICM – Catchment Services
Whakakī Freshwater Improvement Fund Project	2. Construction of the weir will be underway, and it is expected to be completed by 30 June.	ICM – Catchment Delivery
Wairoa flood event	3. Staff are developing content for delivering woolshed workshops with appropriate agencies to help flood-affected landowners farm through winter.	ICM – Catchment Delivery
Reticulated stock water and Intensive winter grazing workshop	4. Wairoa event was previously disrupted due to storm events. This will be delivered before the end of June. Date still to be confirmed.	ICM – Catchments Policy Implementation
Wairoa event mapping	5. High resolution (0.5m) satellite imagery from the March rainfall event has been contracted and collected and is in the process of being downloaded. Orthophotography (by plane at 0.3m resolution) will also be collected in spring. This imagery will be analysed to obtain a spatial understanding of the number and extent of landslides as well as improving our SedNetNZ model, and landslide susceptibility models.	ICM – Environmental Science and ICT - GIS

Central Catchments
Project / Activity Description	Significant Upcoming Milestone(s)	Group /Team or Section
Flood Control Schemes - Resilience Funded projects	6. Taradale stopbank strengthening physical works 70% complete, with construction to be completed by mid-June. Landscape planning for enhancement of berm is underway in partnership with Waiohiki Marae and is progressing well. 7. East Clive optioneering is now completed with preferred option now going into detailed design. 8. Moteo stop bank detailed design is underway. 9. Ngatarawa detailed design completed, and native forest planting is now being implemented (planting on site).	Asset Management Engineering Regional Projects
Gravel Management	10. Hearing was held in December 2021. 11. New set of conditions is now being submitted to the hearing panel for consideration. 12. A final decision by the Hearing Panel is anticipated by end of May 2022.	Asset Management Consents, Schemes
Waitangi Regional Park	13. Stage 3 development of the park includes safe vehicle access to the river and two ephemeral wetlands (wet or dry depending on season) on the flat berm area; delivery expected in June-July 2022 by the Regional Projects Team and Works Group. 14. A funding application for infrastructure for cultural events at the marquee site, and to service the proposed toilets at Waitangi Regional Park was submitted to the Tourism Infrastructure Fund (MBIE). Awaiting a response to this application.	Asset Management Open Spaces
Hawea Historical Park / Karamu Stream Diversion	15. The Hawea Historical Park cultural component of the Draft Management Plan is complete and currently under internal review, with the final management plan to be brought to Council for consideration - implementation by the end of 2022. 16. Stage 3 project delivery includes construction work for widening of the confluence and enhancement work of the old Karamū Stream (flood gate) area, as well as pathway formation within the park and native planting around the carpark. This project is being managed by the Regional Projects team.	Asset Management Open Spaces, Regional Assets
Ahuriri tributaries catchment group	17. Open day to discuss formation of this group at Holt’s Maraetara property. Date to be finalised.	ICM – Catchments Policy Implementation
Consenting of all pump stations within schemes	18. Consent planner has been engaged to work with us to start collecting data required for consent application for all pump stations. The first stage we will be focusing on collecting data on water quality and a fish passage investigation.	Asset Management Environmental Engineer

Southern Catchments
Project /Activity Description	Significant Upcoming Milestone(s)	Group /Team or Section
Upper Tukituki Flood Control Scheme	19. Two contractors are making good progress extracting gravel on the Tukipo and Makaretu. 20. The anticipated release of the next tender has been delayed due to the rain event. Is under internal review – to be released by end of May 2022. 21. Targeted areas require a new survey due to recent flooding, to confirm gravel quantities before sending tenders to market - this is now being progressed by engineering team. 22. Chilean needle grass exemption has been received from the HBRC Biosecurity team, allowing extraction in previously prohibited areas in Waipawa (with some restriction on use of material). This will be in the next tender round.	Asset Management Regional Projects, Schemes
Tukituki Land Care (Catchment Group collective) workshop	23. Second workshop helping to develop formation of this ‘umbrella’ group collective structure for sub-catchment groups will be held 9 June 2022.	ICM – Catchments Policy Implementation
Farm Environmental Management Plan (FEMP)	24. After 31 May any Tukituki FEMPs not reviewed and resubmitted will have details passed to the compliance team for follow up.	Catchments Policy Implementation & Compliance teams

Whole of Region
Project /Activity Description	Significant Upcoming Milestone(s)	Group /Team or Section
Erosion Control Scheme	25. June is the beginning of the planting season. Harvest of our poplar and willow nursery will start, and pole orders will be delivered across the region throughout June and July. 26. Catchment advisors will be supporting/advising landowners to deliver on their erosion control plans.	ICM – Catchment Delivery
River flows	27. Flows continued to be measured and ratings updated across the region as the rivers recede after recent rainfall events. Repairs at Wairoa railway bridge, Marumaru and Wharerangi sites are underway to ensure the network continues to run at full capacity	ICM – Environmental Information
Rural professional extension event	28. Grazing winter crops; covering regulations, intensive winter grazing plan module, catch crops. Date to be confirmed. Currently being planned.	ICM -Catchments Policy Implementation
Pan Sector, Primary Sector Group	29. Third meeting of this group will be scheduled for June with a focus on shared awareness to provide consistent messaging on policy implementation and opportunities for primary sector input to policy development.	ICM -Catchments Policy Implementation
3D Aquifer mapping project (SkyTEM)	30. Processing and modelling of SkyTEM data finalised for the Ruataniwha Plains in May. This marks a significant milestone with processing and modelling now complete for all surveyed areas. Interpretation of these datasets is underway with results expected near the end of the year.	ICM – Environmental Science

PMO: Strategic Projects & Key BAU Programme Reporting

Fifteen key strategic (or change) projects/ BAU programmes are being tracked by the Project Management Office (PMO) and shared monthly throughout the lifecycle of these projects. These projects were selected because of their significance in terms of investment, risks, benefits, and interdependencies.

*Risk is inherent vs residual risk (i.e., RAG status prior to mitigations and controls implemented).

Performance Indicators (RAG): Green = On Track, Amber = At Risk, Red = Off Track, Grey = Not started/On hold

Status Change Keys:

Project/Programme Title

Schedule

Risks*

Budget

Comment

Status Change

Right Tree Right Place Pilot (RTRP)

Responses to the RTRP survey of landowners are now being analysed. Follow-up will include a review of the pipeline of potential RTRP farms and identification of priority farms. Catchment advisors will be involved in this work. Development of the commercial arrangement for the initial pilot farm continues with support from a legal advisor. Farm/forestry planning continues with pilot farm 2. A Request for Interest has been issued for a lead forestry advisor to support agri and regenerative ag leads in the work involved with farm selection, streamlining farm/forestry plans and information needed for business case development for a scaled-up RTRP programme.

Updated since 27 April

Regional Water Security Programme: Project 1: Heretaunga Water Storage

The project team has finalised the scope of works for next phase of investigations based on independent peer review of technical Pre-feasibility. This is now in contractor site walkover and procurement phase. Terrestrial and Aquatic Ecological reviews are completed and awaiting reports – which will help further inform planning and consenting requirements. Lowland Stream Solutions is investigating streamflow maintenance trial options.

Updated since 27 April

Project 2: Managed Aquifer Recharge

Technical workstreams for consenting is completed. Mana whenua engagement process now extending beyond 18 months. The project team remains hopeful that this will be concluded shortly, and the production of a Cultural Impact Assessment can pave the way for the final package of the consent application, finalise landowner agreements and procurement of scheme construction.

Updated since 27 April

Project 3:
Regional Water Assessment

Industry forum held on 17 February and presented to regional leaders on 7 March. Additional internal HBRC support being mobilised for report finalisation.

Updated since 27 April

Water Efficiency Programme Review (Future Water Use)

Meetings with industry and municipal water users underway.

Updated since 27 April

Ahuriri Regional Park

The project is in the planning phase to set up the right governance model with NCC, HBRC and Mana Ahuriri. There is a risk that this project could be protracted given the many issues that surround the Ahuriri Estuary and current resourcing of Mana Ahuriri to respond. The Working Group has met with Mana Ahuriri representatives (six) and agreed on a joint committee proposal to move project governance forward. The Terms of Reference is being drafted.

Updated since 27 April

Clifton to Tangoio Coastal Hazards Strategy Implementation

The Memorandum of Transition has been agreed by all councils, and WDC and CHBDC support the S16 process. Audit NZ has advised that the proposed S16 consultation document will receive an adverse audit opinion due to uncertainty about implementation costs and rating. Parallel work streams for consultation under S16 and S82 of the LGA are running concurrently until council agree preferred process.

Updated since 27 April

On-demand Public Transport

A group (100) of bus riders has been recruited as part of the 2-week pilot to test the service and troubleshoot ahead of 7 June launch.

The first bus arrives in HB mid-end of May to be included in photoshoots for promotion. The remainder will arrive before the pilot.

Engagement with our community is ongoing and in full swing. The launch event will include prominent personalities to maximise publicity and celebrate this key moment for public transport in HB.

The operational side of the project is on track, including customer service support.

Updated since 27 April

Kotahi Plan

An All Governors wānanga was held on 13 April. Discussion was on the proposed governance structure in the takiwā, critical inputs from Governors through the plan development process and operational mahi for staff and technical advisors. Council acknowledged the resourcing requirements for mana whenua and committed to providing support/funding.

Work is commencing on defining workstreams, working groups and producing a high-level project timeframe for Governors.

Updated since 27 April

Kotahi: Mohaka Plan Change

The Mohaka ‘team’ of staff and technical advisors to NPDT met on the 30 March to review progress and next steps. The Māori-led workstream has been focussing on the values ‘pou’ desktop assessment and wānanga with mana whenua. It is intended to report back to RPC at the next meeting following approval from the Leaders’ rōpū on the values and visions.

Updated since 27 April

TANK Plan Change

Still awaiting decision from Independent Hearings Panel.

No change since 27 April

Tank Plan Implementation

Communications plan and pilot materials for rural sub-catchments to be developed and tested, in consultation with the Kotahi programme.

TANK Dashboards build is underway. Community testing of communications elements are running in parallel where opportunities present.

Updated since 27 April

Farm Environmental Management Plans (FEMPs)

Extended FEMP deadline of 31 May 2022 is looking unlikely to be met with 127 FEMPs still underway with providers and 20 properties lodged with the Compliance Team. All properties not resubmitted past the extended deadline will be passed to the Compliance Team.

Of eligible land area in Tukituki, 75.4% is covered through the 594 FEMP resubmissions plus 344 Low Intensity submissions have been received (increase of 4% of land area since last update). Audit trials are ongoing, and the recruitment of the FEMP Auditor has started.

A project brief and schedule has been collaboratively developed, with key milestones and deliverables, looking to optimise success in the 2024 FEMP cycle.

Updated since 27 April

Erosion Control Scheme (ECS) Programme (incl. Soil Conservation Nursery & HCEF)

Risks are amber due to shortages in the labour market (fencers and planting crews), and rising material costs (largely due to Covid-19)

Harvest of our Poplar and Willow poles starts in June. We have prioritised our poles for Wairoa as the recent floods have caused significant damage.

A reduction in the number of expected poles have reduced the number of hectares claimed for in the Hill Country Erosion Fund (HCEF) Programme. HCEF promotional video on reversion works has been filmed in the Gisborne/Wairoa area.

Nursery development is progressing well.

Updated since 27 April

Partial Pest Plan Review

The draft proposal was submitted to the Biosecurity Working Party for second review. Legal advice has been sought regarding potential changes for the Revenue & Financing Policy. Reporting opportunity will be at next Council meeting 25 May 2022. External stakeholder engagement has nearly concluded, and local possum contractors have been asked for feedback on the proposed new model. An engagement plan is underway with a video filmed which will be ready for release at the public consultation phase which will occur 1-31 July 2022.

Updated since 27 April

Flood Control & Drainage Scheme – IRG: Heretaunga Flood Control & Drainage Scheme Levels of Service

Physical works are ongoing at Taradale although delays have occurred due to two significant weather events. All investigations are complete for Moteo, East Clive, Ngatarawa and Roy’s Hill, and design procurement ongoing for Ōmarunui. Construction for Ngatarawa, Moteo and East Clive is due to commence in October 2022.

Two additional FTEs are being recruited to assist in programme delivery.

No change since 27 April

Flood Control & Drainage Scheme – IRG: Upper Tukituki Flood Control Scheme

First round extraction has started with two contractors on the Makaretu and Tukipo.

Some delays in extraction have occurred due to adverse weather and high river levels.

Spending is expected to catch up when the next tender rounds are sent to market and awarded.

Surveying is underway to confirm availability in each cross section for the next tender round.

Updated since 27 April

Flood Control & Drainage Scheme – IRG: Wairoa River, River Parade Erosion

Temporary Traffic management in place awaiting guardrail to be installed and slope earthworks to be complete. We are implementing some of the recommendations in reinstatement and planting.

Minor damage has occurred to the site as a result of two weather events. This will be made good prior to completion of landscaping.

No change since 30 March

Revenue & Financing Policy/ Rates Review (incl. Scheme Rating Reviews)

Workshop material has been prepared and is ready to be delivered on 1 June 2022. This is a delayed start due to the availability of an external consultant. Phase 1 (first principles) is scheduled to be completed before local government elections (October); phase 2 after the elections. To reduce the reliance on external consultancy expertise and mitigate risk of non-delivery, internal capability is being built and additional workshops added within existing timeframes. Formulaic delivery of material and a structured approach will be required to stay within tight timeframes.

Updated since 27 April

Enterprise Asset Management

An exercise to map current processes and data is underway. A demonstration from the vendor to view specific asset capabilities is scheduled. Workshops are to be scoped and scheduled. Data accuracy and confidence has been added to the scope. Current risks presently being managed are resource availability, data, Covid-19 related. Focus is on the Synergy project to ensure a solid platform to build on.

Updated since 27 April

Urban Catchment Plans (Te Karamū Catchment Plan/ Ahuriri Catchment Plan)

N/A

Karamū Catchment Coordinator commenced on 4 April. The Ahuriri Catchment Coordinator post remains vacant

A high-level project plan will be presented to EICC in quarter 4.

No change since 27 April

Project Summaries

1	Right Tree Right Place Pilot on up to five farms to understand the detailed set-up costs, partnership, and delivery options. Under the trial, we would offer a loan to landowners to plant trees on their erodible land. Opportunities being explored with The Nature Conservancy.
2	Regional Water Security Programme PGF funding has allowed us to investigate water supply options through two projects: Heretaunga Water Storage and Managed Aquifer Recharge in CHB. A 50-year Regional Water Assessment will inform the work, including regional water supply and demand into a future challenged by climate change.
3	Future Water Use Making better use of the water, we must complement water storage. Work with water users to drive more efficient and effective use to complement water storage.
4	Ahuriri Regional Park Working alongside NCC to redevelop the Lagoon Farm site into a Regional Park will allow for stormwater detention and wetland treatment for improved environmental outcomes, as well as providing cultural, educational, and recreational opportunities.
5	Clifton to Tangoio Coastal Hazards Strategy Implementation Working with HDC and NCC to implement the long-term (100 year) adaptive strategy for responding to coastal erosion and coastal inundation in priority areas of the coast between Clifton and Tangoio.
6	On-Demand Public Transport A new form of public transport that replaces fixed routes with an on-demand service. This will be a trial in Hastings and uses innovation and technology to lower the region’s transport emissions, provide better transport choices for the community, and will give more equitable access to public transport.
7	Kotahi Plan A combined resource management plan for the Hawke’s Bay region. The Regional Policy Statement and Regional Plan will be combined with the Regional Coastal Environment Plan which is due for review. In addition, the NPSFM 2020 requires us to develop a plan to give effect to Te Mana o Te Wai.
8	TANK Plan Change (Policy) Proposed TANK Plan Change (PPC9) will add new rules to the Regional Resource Management Plan to manage water quality and quantity for the Tūtaekurī, Ahuriri, Ngaruroro and Karamū (TANK) catchments. TANK Plan Change (Implementation): TANK Sub-catchments Community Engagement An external communications project, intended to inform rural landowners about the PC9 framework and to promote catchment group formation. It is a precursor to the overall PC9 Implementation, the latter contingent on a decision awaited from Hearings Commissioners and any subsequent appeals.
9	Tukituki Plan Policy Implementation Implementation of statutory deliverables related to the Tukituki Plan, with particular focus on changes arising from the Government’s response to the Science Advisory Panel’s review of Overseer. Farm Environmental Management Plans (FEMPs) FEMPs aim to address environmental outcomes and actions to improve environmental performance on properties over 4ha within the Tukituki region at this stage of the three yearly submission cycle – first resubmission was due 31 May 2021.
10	The Erosion Control Scheme (ECS) Provides access to a grant for Hawke's Bay landholders to implement soil conservation measures on highly erodible land, keeping soil on the hills and out of waterways. It provides significant financial support for erosion control work such as non-commercial tree planting, protection fencing, land retirement and assisted reversion. Hill Country Erosion Fund (HCEF) Provides Central Government funding to support ECS activities and events that are targeted at educating and supporting staff and landowners with the reduction of hill country erosion. Soil Conservation Nursery The primary purpose of the nursery is to grow poplar and willow poles for erosion control; managed primarily for the Erosion Control Scheme and Works Group river control plantings.
11	Ecosystem Prioritisation: Terrestrial This programme focuses on protecting and enhancing 700 Ecosystem Prioritisation sites across the region. To achieve this, we have partnered with internal and external stakeholders alongside land occupiers. The main actions are deer fencing, pest plant and animal control and some enhancement planting. Ecosystem Prioritisation: Coastal and Marine The Coastal and Marine team has undertaken scientific investigations to identify biodiversity prioritisation sites off the coast of Mahia and Clive, using Zonation software to inform spatial management. The outcomes and recommendations have been concluded and can now move forward to implementation phase.
12	Partial Pest Plan Review Investigating changing the current Possum Control Area Programme from an occupier responsibility model to a large-scale contract model. A contracting model will secure the continued success long term of the outcomes delivered by low possum numbers and increase the biodiversity benefits from consistently low possum numbers.
13	Flood Control and Drainage Scheme – IRG Project 1: Heretaunga Flood Control & Drainage Scheme Aims to review and upgrade flood protection assets across the Tūtaekurī, Ngaruroro, Lower Tukituki and Clive rivers, to increase flood protection across the scheme to a 1 in 500-year event. Project 2: Upper Tukituki Flood Control Scheme: Gravel Extraction Seeks opportunities to subsidise transportation of gravel from this scheme with a focus on competitive tendering and supporting the local economy. Project 3: Wairoa River, River Parade Erosion Provides steel sheet piled erosion protection works on left bank of the Wairoa river.
14	Enterprise Asset Management Aims to embed an Asset Management Information System which integrates into and expands on the Enterprise Resource System (ERP) that was introduced during the Finance Upgrade Systems & Efficiency (FUSE) project. The goal is to provide a solution that improves HBRC operational efficiency, allowing it to confidently identify assets (both spatially and uniquely within a register), manage and maintain its current infrastructure through whole-of-life, and assess risk to determine when changes or additions are required, while aligning with strategic goals through the prioritisation of capital investment.
15	Revenue & Financing Policy/ Rates Review (incl. Scheme Rating Reviews) First principles Review of Revenue and Financing policy and full review of rating system. The aim of the review is to improve transparency and fairness for who pays what, ensure legal compliance and simplify the policy thereby providing more flexibility in application.
16	Urban Catchment Plans (Te Karamū Catchment Plan/ Ahuriri Catchment Plan) Will track the development of the Te Karamū and Ahuriri catchment plans, following the appointment of the Catchment Coordinators.

Key Strategic Project Pipeline
Title	Group	Estimated Start Date
Tukituki Plan Change Policy Implementation (Land Use Consents)	Policy & Regulation (Consents)	Will be reviewed next month
Clive River Dredging 2030	Asset Management (Regional Assets)	TBC
On Demand Public Transport (Napier trial)	Policy & Regulation (Transport)	TBC

Enforcement Actions
31. There are 11 active prosecutions before the court, at various stages therefore not able to comment publicly on. There are three further investigations in progress likely to lead to prosecution.
Date	Type of Enforcement Action	Status
Oct 2021	Burning prohibited items	Before the court – First appearance
Sep 2021	Burning prohibited items	Before the court – First appearance
Jun 2021	Discharge to land/water	Before the court – First appearance
Apr 2021	Contravention enforcement order	Before the court - order granted
Feb 21	Discharge to land that may enter water	Before the court – Plea to be entered
Jan 21	Discharge to air - odour	Before the court – Plea to be entered
Nov 20	Discharge to land that may enter water	Before the court – awaiting sentencing
Jul 20	Discharge to land that may enter water	Before the court – awaiting sentencing
Jun 20	Discharge to land that may enter water	Before the court – Plea to be entered
Jun 20	Discharge to land that may enter water	Before the court – Not Guilty Plea
Mar 20	Discharge to land that may enter water	Before the court – awaiting sentencing

Environment Court Proceedings
Date	Type of Proceedings	Status
June 2021	Three Environment Court appeals lodged against Independent Panel decisions made in June 2021 on submissions to Outstanding Water Bodies Plan Change (PC7).	Mediation continues through April amongst parties.
2021	Appeals to Environment Court on the Draft Water Conservation Order application for Ngaruroro River.	Before the Environment Court. Hearing held in 2021. Awaiting Environment Court decision – no update since previous report.

Decision Making Process

2. 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 Hawke’s Bay Regional Council receives and notes the Significant organisational activities looking forward through June 2022 staff report.

Authored by:

Mell Anderson

Project Manager Hill Country Erosion Scheme

Michael Bassett-Foss

Rtrp Project Manager

Allan Beer

Team Leader Biosecurity - Animal Pests

Sarah Bell

Team Leader Strategy & Performance

Desiree Cull

Strategy & Governance Manager

Peter Davis

Manager Environmental Information

Harry Donnelly

Project Engineer

Ceri Edmonds

Manager Policy And Planning

Russell Engelke

Team Leader Open Spaces

Craig Goodier

Principal Engineer

Martina Groves

Manager Regional Assets

Sandy Haidekker

Team Leader Fresh Water & Ecology

Nathan Heath

Area Manager Northern Hawke's Bay

Gavin Ide

Principal Advisor Strategic Planning

Tim Jones

Project Engineer

Dr Kathleen Kozyniak

Principal Scientist (Air)

Anna Madarasz-Smith

Manager Science

Julie-Anne Mcphee

Senior Project Manager

Malcolm Miller

Manager Consents

Mark Mitchell

Team Leader Principal Advisor Biosecurity Biodiversity

Thomas Petrie

Programme Manager Protection & Enhancement Projects

Brendan Powell

Manager Catchments Policy Implementation

Becky Shanahan

Senior Scientist Marine And Coasts

Mike Signal

Team Leader Pollution Response And Enforcement

Richard Wakelin

Senior Catchment Advisor (Policy Implementation)

Jolene Townshend

Acting Manager Catchment Delivery

Approved by:

Katrina Brunton

Group Manager Policy & Regulation

Chris Dolley

Group Manager Asset Management

Iain Maxwell

Group Manager Integrated Catchment Management

Attachment/s

There are no attachments for this report.

Hawke’s Bay Regional Council

25 May 2022

Subject: 2020-2021 Annual Report and Summary

Purpose of Agenda Item

1. This item presents the Hawke’s Bay Regional Council Annual Report for the 2020-2021 financial year for Regional Council adoption.

2. This item also presents the 2020-2021 Annual Report Summary for information. The Summary does not require Regional Council adoption but is instead authorised by the Chief Executive.

Officers’ Recommendations

3. Staff recommend that the Regional Council adopts the Annual Report 2020-2021 as attached.

Delay in Adoption of the Annual Report 2020-2021

4. Under the Local Government Act 2020 (the Act), the annual report and summary are statutory requirements and required to be audited by an independent auditor.

5. ‘Legislation’ was passed in July 2021 to extend the statutory deadline for adoption of both the 2020-2021 and 2021-2022 Annual Reports (with 30 June balance dates) by two months due to a severe shortage of auditors. That means that those annual reports must be adopted no later than 31 December in their respective year.

6. Regional Council staff were advised by Audit NZ in December 2021 that the audit of the Regional Council’s 2020-2021 Annual Report would not be completed in time for adoption prior to the Christmas break. The extended delay was due to the Audit NZ technical team review of the ACC contract.

7. An unmodified audit opinion will be issued.

8. Due to the late adoption, a self-disclosure has been included in the Annual Report as required. The Regional Council will be included in the audit statistics reported to central government.

9. A late adoption does not affect our Level of Service Measure related to a clear audited opinion. Interim non-financial and financial results, prior to being audited, have been in the public arena multiple times via committee agendas.

10. Auditing of Hawke’s Bay Regional Investment Company Ltd’s (HBRIC) accounts has been completed and received an unmodified audit opinion.

Background

11. The purposes of the annual report are to:

11.1. compare actual financial and service performance against intended performance as set out in Year 3 of the Long Term Plan 2018-2028

11.2. promote accountability to the community for the decisions made throughout the year by the Regional Council.

12. Schedule 10 of the Act prescribes what must be included in the annual report.

13. The summary must represent, fairly and consistently, the information regarding the major matters dealt with in the annual report. It must not include any new information (not included in the full document) but does offer the opportunity to engage more effectively with the community.

Discussion points

14. The production of the Annual Report 2020-2021 financial information has been a challenging process for staff as the implementation of a new finance system for the whole organisation has taken place at the same time.

15. The Annual Report 2020-2021 includes a significant prior year adjustment. In December 2013, the Regional Council signed a contract with the Accident Compensation Corporation (ACC) to provide immediate investment funds in exchange for the future rental income from the Napier endowment leasehold properties for the 50-year term of the contract. The Regional Council has recognised a provision for the payment of the future rental income in the financial statements since the year ending 30 June 2014.

16. The contract includes two further obligations

16.1. that the Regional Council pays ACC two-thirds of the gain from the sale of the leasehold over and above the future rental income due on that property.

16.2. that the Regional Council pays ACC two-thirds of any excess rent above the minimum rental payments specified in the contract.

17. In the early years of the contract, the portion of the gain paid to ACC was immaterial, but this has evolved over time as the value of the properties has significantly increased leading to higher rents and sale prices

18. In conjunction with the auditors, the accounting treatment of the contract has been entirely reviewed.

19. The potential liability based on the valuation of the Napier property portfolio and the future rental income liability has determined that a financial liability of $21.7 million is required to correctly state the liability to ACC from the probable sale of the remaining leasehold properties.

20. The Regional Council has determined that this adjustment should be recognised in prior periods to meet accounting standards and has restated the 2019-2020 figures accordingly resulting in a $6.3 million reduction in the 2019-2020 surplus and a $2.9 million expense in the current year.

Next steps

21. Following Council adoption, and in line with section 98 of the Local Government Act 2002, both the 2020-2021 Annual Report and the 2020-2021 Annual Report Summary will be made publicly available within one month. Both will be published on Council’s website and a limited number of the Summary Annual Report will be printed.

Decision Making Process

22. The Regional Council and its committees are 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:

22.1. That because the Annual Report is a statutory report required to be adopted by Council under Section 98 of the Act, the other decision-making provisions do not apply.

Recommendations

That Hawke’s Bay Regional Council:

1. Receives and notes the 2020-2021 Annual Report and Summary staff report and recommendation from the Finance, Audit and Risk Sub-Committee

2. Adopts the Hawke’s Bay Regional Council 2020-2021 Annual Report for publication.

Authored by:

Sarah Bell

Team Leader Strategy & Performance

Tim Chaplin

Senior Group Accountant

Mandy Sharpe

Project Manager

Desiree Cull

Strategy & Governance Manager

Ross Franklin

Finance Consultant

Approved by:

Chris Comber

Chief Financial Officer

James Palmer

Chief Executive

Attachment/s

1⇨	2020-21 HBRC Annual Report	Under Separate Cover
2 ⇨	2020-21 HBRC Annual Report Summary	Under Separate Cover
3	Audit Opinion	Still to come

Topic	Raised by

Topic	Raised by