Agenda of Risk and Assurance Committee Meeting

Te Rārangi Take
Order of Business

1.0	Apologies – Ngā Whakapāhatanga At the close of the agenda no apologies had been received. At the close of the agenda no requests for leave of absence had been received.
2.0	Conflict of Interest – He Ngākau Kōnatunatu Members need to be vigilant to stand aside from decision-making when a conflict arises between their role as a Member of the Council and any private or other external interest they might have. This note is provided as a reminder to Members to scan the agenda and assess their own private interests and identify where they may have a pecuniary or other conflict of interest, or where there may be perceptions of conflict of interest. If a Member feels they do have a conflict of interest, they should publicly declare that at the start of the relevant item of business and withdraw from participating in the meeting. If a Member thinks they may have a conflict of interest, they can seek advice from the General Counsel or the Manager: Democracy and Governance (preferably before the meeting). It is noted that while Members can seek advice and discuss these matters, the final decision as to whether a conflict exists rests with the member.
3.0	Confirmation of Minutes – Te Whakamana i Ngā Miniti Minutes of the Risk and Assurance Committee Meeting held Monday 29 November 2021. (Previously circulated)
4.0	Emerging Risk Review	7
5.0	Health & Safety Update Report	9
6.0	Reform Update	25
7.0	Treasury Activity and Funding Update	27
8.0	GM Corporate: Update	63
9.0	Minor Items – Ngā Take Iti
10.0	Urgent Items – Ngā Take Whakahihiri
11.0	Recommendation to Exclude the Public from Items 12 and 13	67
12.0	Contractor Health & Safety Performance Report
13.0	Cyber Security Update

Monday, 14 February 2022

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Regan Smith, Risk and Corporate Services Manager

Steffi Bird, Risk Assurance Advisor

Te Take:

Subject:

Emerging Risk Review

1.0 Purpose and summary - Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to present a range of emerging risk signals for the Risk and Assurance Committee to consider.

1.2 Known Risks

1.3 The following risks that are currently included on the Council’s Strategic Risk Register, show growing levels of uncertainty:

Risk	Current Response	Comment
Failure of climate adaptation	Council internal work programme is focused on establishing a carbon budget benchmark and resulting action programme. Response for community adaptation is focused on awareness of hazard areas.	The pace of climate adaption continues to receive attention from the scientific community. Ensuring this receives adequate attention is important despite immediate work programme challenges.
Significant operations failure	Council is focused on business continuity planning to respond to the continually changing circumstances.	Despite having robust plans in place, it is still a likelihood that COVID-19 will cause unsustainable absenteeism levels affecting service delivery.
Financial sustainability	Council is monitoring its financial forecasts in the current financial year given reduced income and increased costs with the impacts of the COVID-19 protection framework. Current Annual Plan commitments are being reviewed to achieve an acceptable rate rise.	Pressures from COVID-19 interruptions, possible inflation pressure (see emerging risks) and a significant central Government legislative review programme, may require reassessment of the targeted Annual Plan work programmes.

1.4 Emerging Risks:

1.5 There are indications that the following risks may emerge as factors that require additional attention in the short to medium term:

Risk	Possible Implication	Comment
Inflation	Inflationary pressure including, interest rates rises and increasing cost of insurance are beginning to show. Note: the World Economic Forum Global Risk Report 2022 includes “asset bubble burst” and “prolonged economic stagnation” in the top 5 risks facing New Zealand.	Inflationary pressure may result in some projects becoming unsustainable.
Supply chain	The effects on supply chain from COVID-19 are likely to linger, with impacts on shipping schedules and access to raw materials likely.	It may not be possible to secure sufficient supplies to support the current growth. Requiring delaying, reprioritisation of projects, or possibly stopping planned projects.
Talent	Retention and attraction of staff with the required skills to deliver Council’s services continues to be a potential challenge post COVID.	Delivery of planned projects will become difficult without key staff to undertake technical work.
Energy Costs.	Pressures to de-carbonise are likely to put pressure on electricity supply, while fuel prices continue to show upward trends. Both of these factors are likely to make energy more expensive in the medium term.	Energy supply concerns will make delivering new projects more difficult.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee Meeting receive the report titled Emerging Risk Review dated 14 February 2022.

Attachments:

There are no attachments for this report.

Monday, 14 February 2022

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Jennie Kuzman, Health and Safety Manager

Te Take:

Subject:

Health & Safety Update Report

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to provide an update to the Committee in regards to the management of Health and Safety risks within Council.

1.2 This report provides information on:

· Health and Safety at Work Reform

· Health and Safety forward work plan

· COVID-19 response update

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Health & Safety Update Report dated 14 February 2022.

3.0 Background – Te Horopaki

3.1 The purpose of this report is to provide information to the Committee in regards to the management of Health and Safety risks within Council.

3.2 This issue arises due to the Health and Safety at Work Act 2015 and the requirement of that legislation for Elected Members to exercise due diligence to ensure that Council complies with its Health and Safety duties and obligations.

4.0 Discussion – Te Matapakitanga

4.1 Health and Safety at Work Reform

4.2 In September 2021, the Government announced changes to a range of Health and Safety at Work Act Regulations in relation to plant and structures (this covers a wide range of topics: work machinery, equipment and tools, mobile plant such as tractors, quad bikes and elevated work platforms, existing regimes for pressure equipment, cranes, and fairground rides, working at heights and excavations). This has an obvious impact upon Council operations in particular construction and infrastructure projects.

4.3 The Ministry of Business, Innovation and Employment (MBIE) have advised that an early draft of the proposed regulations will be released in early 2022 for feedback, and final regulations are expected to be in place by late 2022. Further information in relation to the proposed reform is attached (Attachment 1).

4.4 Health and Safety forward work plan

4.5 The table below highlights the priority work for the HDC Health and Safety Team for the remainder of 2022. However, as per the rest of Council operations, this work plan is subject to potential business disruptions from the impact of Community transmission of COVID-19.

4.6 Table 1: Health and Safety Priority Work Plan 2022

Health & Safety policies & documents to be reviewed:

· Health & Safety Manual

· Working Alone Policy

· Overarching Asbestos Management Plan

· Permit to Work

· Conflict & Violence Management Policy

· Mauri Tū Mauri Ora (Wellbeing) Framework

· Rehabilitation & Fit-For-Work Policy

Health & Safety critical risk profiles to be reviewed:

· Working at Height

· Plant & Machinery

Health exposure monitoring to be completed:

· Omarunui Landfill: Vibration and Gases

· Henderson Road RTS: Vibration, Noise, Particulates and Gases

· Cemetery Operations: Vibration, Noise, Particulates and Gases

· Water Civil Operations: Noise, Particulates and Gases

Audits / Inspections to be completed:

· Annual facility inspections (Internal)

· Contractor audits (Internal)

· SafePlus H&S assessment (External)

4.7 Progress on this work plan will be reported to the Committee at the next meeting.

4.8 COVID-19 response update

4.9 As previously reported to the Committee in the November 2021 meeting, the established COVID-19 Response team has been supporting the organisation through its business continuity response and planning for any COVID-19. This approach continues to work well and is providing a joined up organisation-wide approach to managing the constantly changing environment.

4.10 Given the fast moving and constantly changing environment that we are operating in, a verbal update will be provided to the Committee based on the most up-to-date information at that time.

Attachments:

1 ⇩

Health and Safety at Work reform - September 2021

HR-03-01-22-361

Summary of Considerations - He Whakarāpopoto Whakaarohanga

Fit with purpose of Local Government - E noho hāngai pū ai ki te Rangatōpū-ā-Rohe

The Council is required to give effect to the purpose of local government as set out in section 10 of the Local Government Act 2002. That purpose is to enable democratic local decision-making and action by (and on behalf of) communities, and to promote the social, economic, environmental, and cultural wellbeing of communities in the present and for the future.

Link to the Council’s Community Outcomes – Ngā Hononga ki Ngā Putanga ā-Hapori

Māori Impact Statement - Te Tauākī Kaupapa Māori

Sustainability - Te Toitūtanga

Financial considerations - Ngā Whakaarohanga Ahumoni

Significance and Engagement - Te Hiranga me te Tūhonotanga

Consultation – internal and/or external - Whakawhiti Whakaaro-ā-roto / ā-waho

Risks

Rural Community Board – Te Poari Tuawhenua-ā-Hapori

Monday, 14 February 2022

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Aaron Wilson, Financial Controller

Te Take:

Subject:

Treasury Activity and Funding Update

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to update the Risk and Assurance Committee on treasury activity and funding issues.

1.2 Since the last update in June, Council has not borrowed any additional funds in the first six months of the current financial year.

1.3 The Council’s current total external debt is $205m as at 31 December 2021. Offsetting this is $16.7m of bank deposits, giving a net external debt position of $189m.

1.4 Officers have reviewed the Treasury policy and have recommended some changes to better align with current practice.

1.5 Council is currently compliant with its Treasury Management Policy.

The Reserve Bank of New Zealand (RBNZ) raised its Official Cash Rate (OCR) to 0.75% at its last review on 24 November 2021.

2.0 Recommendations - Ngā Tūtohunga

A) That the Risk and Assurance Committee receive the report titled Treasury Activity and Funding Update dated 14 February 2022.

B) That the Committee endorse the recommended changes to the Treasury Policy as reviewed by council officers.

3.0 Background – Te Horopaki

3.1 The Hastings District Council has a Treasury Policy which is a summarised version of the Treasury Management Policy and forms part of the 2021-2031 Long Term Plan. Under these policy documents, responsibility for monitoring treasury activity is delegated to the Risk and Assurance Committee.

3.2 Council is provided with independent treasury advice by Miles O’Connor of Bancorp Treasury Services and receives daily and monthly updates on market conditions.

3.3 Under the Treasury Policy, formal reporting to Council occurs quarterly and regular more in-depth treasury reporting is provided for the Risk and Assurance Committee.

4.0 Discussion – Te Matapakitanga

4.1 Council’s debt portfolio is managed within macro limits set out in the Treasury Policy. It is recognised that from time to time Council may fall out of policy due to timing issues. The Treasury Policy allows for officers to take the necessary steps to move Council’s funding profile back within policy in the event that a timing issue causes a policy breach.

4.2 Attachment 1 sets out Council’s overall compliance with Treasury Management Policy as at 31 December 2021.

4.3 Council’s current total external debt is $205.7m as at 31 December 2021 ($205.7m as at 30 September 2021). Offsetting this are $16.7m of bank deposits ($31.8m as at 30 September 2021), giving a net external debt position of $189m. This is supported by the Treasury Position 31 December 2021 Report in Attachment 2.

4.4 Council has bank deposits totalling $16.7m which is to fund a significant capital spend budget.

4.5 In light of Council’s current cash flows being able to meet its funding requirements, it is not expected that Council will engage in any further borrowing apart from just before year end ensuring Council maintains an ability to fund budgeted capital spend in the new financial year and meet Standard and Poors liquidity requirements.

4.6 Council last borrowed $40m with a floating and fixed debt mix in the last quarter of the prior financial year, at very competitive rates, this has enabled a strong cash flow position, but with the lowest possible cost of funds outcome, when compared to where the OCR rates are forecasted to go to.

4.7 The mix of floating and fixed debt borrowed was in order to achieve two outcomes, firstly in terms of the fixed debt, to ensure that Council was compliant with Treasury Policy parameters in terms of cover, secondly, the floating portion was to enable Council to continue to suppress and lower the cost of funds wherever possible in light of policy and market considerations.

4.8 In addition to this, officers engaged in a forward start contract for $23m that will become “live” the day before the maturing debt for the same amount comes due in May 2022. Of this $23m, $10m was a fixed interest rate bond, when it comes into effect in May 2022 it will increase the percentage of fixed interest rate cover that Council has, pushing Council towards the mid-point range of policy.

4.9 It should also be noted on the Treasury position dashboard, Council’s cost of funds remains low at 2.76%, due to the dropping off of historical high swaps, along with competitive new fixed rates.

4.10 This has been due to a strategy of borrowing at floating rates over the last 2-3 years and “banking” savings that would not be achieved if Council and the treasury advice it received had taken swaps positions based on reserve bank forecasts of the Official Cash Rate (OCR).

4.11 As was requested at the November 2021 Risk and Audit Committee meeting, officers have created a graph that forecasts the future level of debt cover due to commitments of fixing maturing debt over the next 5-15 months.

Graph One: Forecast compared to current position

4.12 HDC’s current position is the current cover line that shows cover being relatively flat with the cover in play and sitting at $128.5m and declining over time, and sitting lower down between the policy maximum/minimum dark black lines. The bright red line is our forecasted debt based on the LTP just completed.

4.13 The light blue block shows the forecasted cover based on what will be happening over the next 5 -15 months. Officers took out a forward debt contract for $23m back in July 2021 which will become live in May 2022 (in four months’ time), this is to rollover maturing debt. Of this amount, $10m was fixed and will take effect from May 2022 and you can see on the graph how the light blue block jumps in in the current period from the current position of $128.5m to $138.5.

4.14 The second factor in this forecast is that in July 2022 officers will repeat this process and will enter into another forward debt contract for $21m, which is the debt that is maturing in May 2023, and is again rolling that debt over. It is expected that all of the new debt will be on a fixed basis, and the effect of this on the cover can be seen in that increase in year one, with cover jumping from $138.5m to $159.5m, ensuring that Council debt is well within policy guidelines going forward.

4.15 Officers are comfortable with the level of cover currently in place in relation to the level of debt held. There are a number of reasons for being cautious around committing Council to additional swap cover at this time.

4.16 Firstly due to the economic conditions both at a global and domestic level, current swap pricing has already factored in the expected rise in the OCR rates over the 12 months or so, and treasury advisors Bancorp have advised against further contracts at this stage.

Graph Two: Notional effect of 3waters reform on external debt:

4.17 Should the 3waters reform take place, the effect on Council debt will be dramatic, with approximately 50% (say $100m) of Council debt related to the 3 waters. This graph shows the debt forecast (bright red line), falling by 50% based on the reform taking place and the effect also on the max/min policy limits, against the existing and forecasted debt cover that Council would have in place. Note that it is currently unknown how (or if) fixed debt instruments will be transferred to the new entity.

4.18 As can be seen, the debt cover would be in excess of 100% of limits, however until the DIA give further guidelines of how debt and associated costs will be novated over in the new entities, Councils will be awaiting further information.

4.19 Officers have also reviewed the Treasury Policy, this is in line with recent years to review this policy annually. This allows the policy to be kept relevant and up to date whilst ensuring best practice in Treasury controls and prudent management.

4.20 There are a number of small update changes that have either been recommended by officers that will align the treasury policy to the version of the treasury policy in the LTP or are operational by nature. Changes that have been recommended are:

· Adjusting the maximum daily transaction amount (borrowing, investing, interest rate risk management) by the Financial Controller on spend, from $10m to $15m, this aligns with the overdraft facility of $15m that the Council now have. (Table on Page 10).

· Net external debt as a percentage of income changing from 150% to 175% as per LTP resolution (Table in 3.1)

· In Paragraph 5.5.5 officers have removed the word “cheque” from the paragraph now that cheques are no longer used.

· On page 26 have changed to what has already been happening for some time, which is that the Treasury policy is reviewed annually.

5.0 Next steps – Te Anga Whakamua

5.1 Council officers will continue to work with Bancorp Treasury Services to keep Council’s financing costs to a minimum, maintaining adequate liquidity, while maintaining compliance with Council’s Treasury Policy.

Attachments:

1 ⇩	Treasury Dashboard 31st December 2021	FIN-15-01-22-26
2 ⇩	Treasury Policy Tracked Changes 2022	Fin-09-01-22-203

Summary of Considerations - He Whakarāpopoto Whakaarohanga

Fit with purpose of Local Government - E noho hāngai pū ai ki te Rangatōpū-ā-Rohe

Link to the Council’s Community Outcomes – Ngā Hononga ki Ngā Putanga ā-Hapori

This proposal promotes the economic wellbeing of communities in the present and for the future.

Māori Impact Statement - Te Tauākī Kaupapa Māori

There are no known impacts for Tangata Whenua.:

Sustainability - Te Toitūtanga

This report promotes sustainable financing costs ensuring the economic wellbeing of communities in the present and for the future.

Financial considerations - Ngā Whakaarohanga Ahumoni

This report will ensure that financing costs are kept within Council’s existing budgets.

Significance and Engagement - Te Hiranga me te Tūhonotanga

This decision/report has been assessed under the Council's Significance and Engagement Policy as being of minor significance.

Consultation – internal and/or external - Whakawhiti Whakaaro-ā-roto / ā-waho

There has been no external engagement:

Risks

The purpose of this report and the Treasury Policies it refers to, assist officers to manage Council’s treasury risk.

REWARD – Te Utu

RISK – Te Tūraru

To assist officers to manage Council’s Treasury risk; Finances, Reputation.

Cashflows and finance costs; Finances, Service Delivery, Reputation.

Rural Community Board – Te Poari Tuawhenua-ā-Hapori

There are no implications for the Rural Community Board:

Monday, 14 February 2022

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Bruce Allan, Group Manager: Corporate

Te Take:

Subject:

GM Corporate: Update

1.0 Purpose and summary - Te Kaupapa Me Te Whakarāpopototanga

Overview

1.1 The introduction of the Omicron variant of COVID-19 and the corresponding shift to the red traffic light in the COVID-19 Protection Framework has added a large amount of uncertainty to the operations of Council and is yet another factor that will mean the delivery of Council’s already ambitious capital programme is not achievable.

1.2 The Emerging Risk review presented by Mr Regan Smith earlier on the agenda quite rightly shines a spotlight on risks that are currently included on the Council Strategic Risk Register that are showing signs of growing levels of uncertainty and on other risks that are emerging as factors that require additional attention. These growing areas of concern and risk highlight to us that while Hastings District is operating in economic boom times, as an organisation we are facing many heightened risks that we are attempting to address across many fronts.

1.3 As an organisation we will always look to do the best by our community and we will look to be ambitious in what we can achieve. We will, however, need to be cognisant of the many growing risks we face that will continue to make this a challenging time to achieve those ambitions.

Covid-19 Business Continuity response and preparedness

1.4 Managers across the Council have been busy updating and enacting their COVID-19 business continuity plans. Given the diversity of the organisation, each team has their own specific plan which they have developed to meet the needs of their own specific requirements.

1.5 The organisation is preparing for significant absenteeism from the workplace and we are putting in measures to reduce the risk that entire teams will be taken out of action at one time, it is still a possibility that this may happen and staff are doing their best in the circumstances to have the organisation best prepared for significant disruption.

Half Year Financial Forecasts

1.6 The finance team have been putting in a lot of effort alongside budget managers to improve the accuracy of the organisation’s financial forecasting. Financial forecasts prepared prior to Christmas for the year ended 30 June 2022 show that there is a likelihood that a financial deficit will be recorded for the year.

1.7 The Lead Team are working with budget managers to understand opportunities to manage the financial risks that are being exacerbated with strong inflationary pressures and supply chain issues impacting on expenses and the COVID-19 Protection Framework settings which have included a Level 4 lockdown in August 2021 and more recently the red traffic light restrictions impacting on revenue for a number of our facilities. More work is being undertaken to ascertain the impacts of the red traffic light setting on the Toitoi operations in particular.

1.8 A more detailed commentary will be presented to the Operations and Monitoring Committee in March on the financial forecasts. The purpose of this commentary is to inform the Risk and Assurance Committee of the financial risks that the current operating environment is presenting.

Audit New Zealand

1.9 Council have not yet received a management letter from Audit NZ for the 2021 annual report at the time of writing this report. In addition to this, due to resource constraints that Audit NZ are experiencing, a number of points that were raised from earlier audits have not yet been able to be reviewed and signed off by them. With the New Zealand borders being closed Audit NZ staffing levels have been under severe pressure with Parliament extending statutory timeframes. Officers will continue to work with Audit NZ and expect to be able to update the committee at the next meeting.

Action Schedule

1.10 Attached as Attachment 1 are the outstanding actions from previous Risk and Assurance meetings.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled GM Corporate: Update dated 14 February 2022.

Attachments:

1 ⇩

Status of Actions

CG-16-6-00131

HASTINGS DISTRICT COUNCIL

Risk and Assurance Committee MEETING

Monday, 14 February 2022

RECOMMENDATION TO EXCLUDE THE PUBLIC

SECTION 48, LOCAL GOVERNMENT OFFICIAL INFORMATION AND MEETINGS ACT 1987

THAT the public now be excluded from the following part of the meeting, namely:

12 Contractor Health & Safety Performance Report

13 Cyber Security Update

The general subject of the matter to be considered while the public is excluded, the reason for passing this Resolution in relation to the matter and the specific grounds under Section 48 (1) of the Local Government Official Information and Meetings Act 1987 for the passing of this Resolution is as follows:

GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED

REASON FOR PASSING THIS RESOLUTION IN RELATION TO EACH MATTER, AND

PARTICULAR INTERESTS PROTECTED

GROUND(S) UNDER SECTION 48(1) FOR THE PASSING OF EACH RESOLUTION

12 Contractor Health & Safety Performance Report

Section 7 (2) (b) (ii)

The withholding of the information is necessary to protect information where the making available of the information would be likely to unreasonably prejudice the commercial position of the person who supplied or who is the subject of the information.

This report contains confidential Health & Safety data relating to Third Parties.

Section 48(1)(a)(i)

Where the Local Authority is named or specified in the First Schedule to this Act under Section 6 or 7 (except Section 7(2)(f)(i)) of this Act.

13 Cyber Security Update

Section 7 (2) (b) (i)

The withholding of the information is necessary to protect information where the making available of the information would disclose a trade secret.

Sharing of security elements which protect Councils Information systems.

Section 48(1)(a)(i)

Where the Local Authority is named or specified in the First Schedule to this Act under Section 6 or 7 (except Section 7(2)(f)(i)) of this Act.

Te Rā Hui: Meeting date:	Monday, 14 February 2022
Te Wā: Time:	9.00am
Te Wāhi: Venue:	Council Chamber Ground Floor Civic Administration Building Lyndon Road East Hastings
Te Hoapā: Contact:	Democracy and Governance Services P: 06 871 5000 \| E: democracy@hdc.govt.nz
Te Āpiha Matua: Responsible Officer:	Group Manager: Corporate - Bruce Allan

Mematanga: Membership:	Koromatua Chair: Jon Nichols – External Independent Appointee Nga Kai Kaunihera Councillors: Simon Nixon (Deputy Chair), Alwyn Corban, Tania Kerr, and Geraldine Travers Heretaunga Takoto Noa Māori Standing Committee appointee : Robin Hape External Independent Appointee: Jaun Park Mayor Sandra Hazlehurst
Tokamatua: Quorum:	4 members
Kaihokoe mo te Apiha Officer Responsible:	Group Manager: Corporate – Bruce Allan
Te Rōpū Manapori me te Kāwanatanga Democracy & Governance Services:	Christine Hilton (Extn 5633)

Item 5 Health & Safety Update Report
Health and Safety at Work reform - September 2021	Attachment 1

Item 7 Treasury Activity and Funding Update
Treasury Dashboard 31st December 2021	Attachment 1

Item 7 Treasury Activity and Funding Update
Treasury Policy Tracked Changes 2022	Attachment 2

Item 8 GM Corporate: Update
Status of Actions	Attachment 1

Risk and Assurance Subcommittee – Terms of Reference