Auckland Council Annual Report

Transcription

1 Auckland Council Annual Report 1 July June 2012 A step towards becoming the world s most liveable city

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3 SNAPSHOT OF THE CITY AND REGION 3,702 km of coastline 4,894 square km of land 1.5 million people 6.5 per cent population growth rate New Zealand s largest and fastest growing city, with 32 per cent of the population Generates 35 per cent of national GDP Educates 40% of NZ s university graduates Gateway for 70% of international visitors to NZ World s 3 rd most livable city (Mercer Survey) $354 billion of property $51,094 median household income 438,528 private dwellings 513,777 ratepayers 1

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5 MIHI E nga iwi e nga reo e nga mana tangata o ia marae o ia karangatanga, tena koutou. Tena koutou i roto i nga ahuatanga o te wa i riro ai o tatou tini mate ki te rere ua o te po. Ko ratou kua rupeke ki tua, heare, haere, haere atu. Ko tatou nga mahuetanga iho e hapai tonu ana i nga take nui o te wa tena ra tatou katoa. Ko tenei purongo a tau e tiro ana ki nga kaupapa i tutuki, i oti, mo te taha putea, te taha oranga ranei. E tuwhera mai ana ko nga ara i hokoia e nga whanau kia ea tenei wawata, ko te pai me te whai rawa o Tamaki. E kokiri tonu ana matou kia ekehia nga taumata e tau ai nga hiahia o te iwi. Tetahi o aua taumata, kia tiakina te taiao, kia tiakina hoki a papatuanuku mo nga uri whakaheke. I poua te wairua o taua whakaaro me era atu, ki nga purongo LTP me te Auckland Plan. Haunga ano nga kokiringa mo te Ipu Hutupaoro o Te Ao, ko te huatau kia pai ake a matou nei mahi mo te iwi. Pera me te kapuinga o nga utu reeti. Kotahi tonu to matou aronganui. He matapiko ki te tiaki putea. 1

6 CONTENTS PART I INTRODUCTION AND EXECUTIVE SUMMARY INTRODUCTION Welcome message 6 How to read this report 7 Our stakeholders 8 The services we provide 9 The context of this report 10 Story: Auckland s regional profile 11 Story: Auckland s population growth 12 OUR RESPONSIBILITIES, VALUES AND HOW WE WORK 13 VISION STATEMENT 15 MESSAGE FROM THE MAYOR MESSAGE FROM THE CHIEF EXECUTIVE MĀORI ENGAGEMENT OUR STRUCTURE AND HOW WE WORK EXECUTIVE SUMMARY: OUR FIRST FULL YEAR 29 Introduction Case Study 1: Planning for Auckland s future Case Study 2: Introducing a consolidated rating system Case Study 3: Hosting the Rugby World Cup 2011 Activity highlights Financial summary

7 PART II ACTIVITIES AND SERVICES ACTIVITIES AND SERVICES OF AUCKLAND COUNCIL - INTRODUCTION Community Lifestyle and culture Economic development Planning and regulation Environmental management Solid waste Water supply and wastewater Stormwater Transport Commercial and investment Governance LOCAL BOARDS Albert-Eden 238 Devonport-Takapuna 247 Franklin 254 Great Barrier 260 Henderson-Massey 266 Hibiscus and Bays 272 Howick 278 Kaipatiki 285 Mangere-Otahuhu 292 Manurewa 299 Maungakiekie-Tamaki 306 Orakei 313 Otara-Papatoetoe 321 Papakura 328 Puketapapa 334 Rodney 341 Upper Harbour 347 Waiheke 353 Waitakere Ranges 360 Waitemata 366 Whau 373 INFORMATION ON CUSTOMER SURVEYS

8 PART III FINANCIAL STATEMENTS COUNCIL-CONTROLLED ORGANISATIONS (CCOS) AND WATERCARE SERVICES LTD Auckland Transport 394 Auckland Council Property Ltd 397 Auckland Council Investments Ltd 400 Auckland Waterfront Development Agency Ltd 403 Auckland Tourism, Events and Economic Development Ltd 406 Regional Facilities Auckland 409 Watercare Services Ltd 412 Statement of Compliance and Responsibility 416 Statement of Comprehensive Income 417 Statement of Changes in Equity 418 Statement of Financial Position 420 Statement of Cash Flows 422 Notes to the Financial Statements 423 Audit Report 495 4

9 PART IV PEOPLE, ENGAGING WITH OUR COMMUNITIES AND SUSTAINABILITY OUR PEOPLE Employment relations 499 Our executive team 501 The organisation structure 501 Auckland Council s code of conduct 504 ENGAGEMENT WITH OUR COMMUNITIES Auckland Council s advisory panels 505 Liaison with the Māori community 509 OURAUCKLAND our monthly newsletter to the community 514 The People s Panel 517 SUSTAINABILITY The council s Sustainability Team 524 Achievements of the council s Sustainability Team 525 Auckland Council s ecoportal 527 The Auckland Solar Project 528 Auckland Council s energy-saving initiatives 528 Auckland Council s greenhouse gas emissions monitoring regime 529 Global Reporting Initiative Index 530 APPENDICES GLOSSARY OF TERMS 540 CONTACT DETAILS GOVERNING BODY 542 CONTACT DETAILS LOCAL BOARDS 545 GETTING IN TOUCH 566 5

10 PART I INTRODUCTION WELCOME to Auckland Council s Annual Report ! NAU MAI ki te Pūronga-ā-Tau a te Kaunihera o Tāmaki Makaurau Chào mừng bạn đến với Báo cáo thường niên của Hội đồng Auckland! - - Auckland city and the surrounding region is recognized as a wonderful area to live and work in, as well as to visit. No wonder, with our two breath-taking harbours, the dramatic Tasman coast on the west and the Hauraki Gulf with its 65 islands to the east, as well as the hundreds of parks, the many beaches and our beautiful rural hinterland. The city s quality of living has placed Auckland in the top five cities worldwide for the last five years by the Mercer Quality of Living survey, and we moved up to third place in The success of the city and region is vital to our country. 32 per cent of New Zealand s population is to be found here and we generate 35 per cent of the country s GDP. Auckland is the nation s fastest growing city and its population is expected to grow from 1.4 million now to around 2.2 million by With its rich Māori and Pakeha heritage, a highly diverse mix of cultures, and a beautiful topography, Auckland is a vibrant and bustling city with neighbourhoods that have distinct identities and a pride of place. Auckland Council, which was formed following the amalgamation of eight former local authorities on 1 November 2010, is far and away the largest local government authority in New Zealand. This annual report is our first for a full twelve month period and it describes the progress we have made in establishing equitable region-wide services for all our residents. The scope of this report includes all operational activities of the Auckland Council group, which includes our local boards, our council-controlled organizations, our subsidiaries, associates and joint ventures (all of which are domiciled in New Zealand). This report incorporates the council s first sustainability report (at page xx) which assesses progress in protecting our future through our use and promotion of sustainable practices. The sustainability report has been informed by the Global Reporting Initiative (GRI), which is an independent organization that has developed a comprehensive sustainability reporting framework that is widely used around the world. In an effort to cut the impact on the environment, the council has only printed a limited number of the full annual report hardcopy document. However, a summary version in hardcopy is being made more widely available, whilst both the summary and full annual report are available online at We sincerely hope this document is of interest, particularly if you are a current or prospective resident, a business operator, government or organizational representative, student or visitor. At the end of the report there are contact details for directing comments and queries about specific information in the report. 6

11 HOW TO READ THIS REPORT This annual report covers Auckland Council s performance against the forecasts presented in the Annual Plan 2011/2012. Unlike last year s report which covered just eight months (from the time the council was established on 1 November 2010 to 30 June 2011), this report covers a full twelve months, from 1 July 2011 to 30 June HOW THIS REPORT IS ARRANGED The report has four parts Part I introduces the whole report and provides an overview of how Auckland Council works. It also provides an executive summary followed by a financial summary Part II covers the activities and services of Auckland Council, providing detailed activity statements including financial and performance information for each activity. It also includes information about local boards and council-controlled organisations Part III contains financial statements and notes Part IV contains sections on our people and our external communications strategies as well as our sustainability report. We also include information about our Advisory Panels and the results from our Peoples Panel surveys. Appendices contain our Global Reporting Initiative Index, a glossary of technical terms used in this report, an index to the whole report and information about how to contact us. 7

12 OUR STAKEHOLDERS Effective stakeholder relationships are about establishing mutual trust between partners. They strengthen democratic governance and make good business and management sense Community The Auckland community elects our councillors and local board members. It funds us through rates and provides guidance and feedback. The council provides governance, services and facilities Council employees Our people provide expertise, loyalty, knowledge and labour. The council provides training, a safe working environment, career development, and equal employment opportunities Central government The government provides a legal framework, national planning, services and budgetary support, including through the CCOs Local Businesses Overseas Partners Business and industry provide economic growth. The council encourages investment and is committed to promoting our competitive advantages. AUCKLAND COUNCIL Our international relationships provide learning experiences and investment. The council is creating better connections across New Zealand and to the world Financial Institutions Financial institutions provide funds for new asset purchases. The council operates in a prudent and affordable manner Council-Controlled Organisations Independent of the council s operations, but accountable to Auckland Council Other councils Interactions between councils provide benefits such as knowledge and resource sharing Suppliers Suppliers provide goods and specialised services that are more efficient to be sourced from outside the organisation. The council provides business opportunities 8

13 THE SERVICES WE PROVIDE Auckland Council, including the local boards and Council Controlled Organisations (CCOs) - together called the council and Group - is responsible for a very wide range of activities including: setting the strategic direction for Auckland s future developing a district plan for the region environmental planning and management, including coastal management economic development and tourism promotion working with government agencies on social and cultural issues issussing resource and building consents protecting public health (eg licensing food premises, liquor licensing, and animal management) addressing noise issues developing and maintaining regional and local parks managing sports grounds and stadia, events, recreation and community centres and swimming pools managing art galleries, museums, libraries and the zoo attracting and retaining major and local events providing water and wastewater infrastructure and services controlling stormwater issues testing beach water quality cleaning up stream pollution collecting refuse and recycling providing and maintaining roads (except state highways) and footpaths delivering public transport services buses, rail, ferries building public transport infrastructure (eg train stations and cycleways) providing street lighting providing and managing housing for the elderly administering cemeteries and crematoria. 9

14 CONTEXT THE CONTEXT OF THIS REPORT At first glance, the prospects for the global economy are somewhat brighter than six months ago. On closer inspection, though, the global economic recovery is weak, considerable downside risks remain and sizeable imbalances have yet to be addressed. Remarks by Angel Gurría, OECD Secretary-General, Paris, 22 May 2012 A major focus of the reporting year for government at all levels in New Zealand was responding to the continuing impact of global financial instability. Additionally, the earthquakes that hit Christchurch caused substantial damage and disrupted business activity, pushing the national economy into recession during the first quarter of Nevertheless, economic activity began to recover during the reporting period, with the Rugby World Cup contributing to a GDP increase in the December 2011 quarter of 0.3 per cent. GDP is forecast to grow by 3 per cent in At the end of the reporting period, the Treasury stated (in its July 2012 Monthly Economic Indicators) that the domestic economy was in relatively good shape, especially compared with most other advanced economies. This outcome was achieved despite what the Treasury described as a further deterioration in international conditions. A prime impetus behind the government s drive to pursue governance reform in the Auckland region was to achieve integrated decision-making and greater community involvement. Following the creation of the Auckland Council, reforming the local government sector continued to be a government priority, with the Prime Minister announcing the Better Local Government reforms in mid-march. The aim of the reforms is to provide clarity around the role of councils, stronger governance, improved efficiency and more responsible financial management. Statistics New Zealand main economic indicators Year to December 2010 Year to December 2011 NZ GDP growth rate 0.8% 1.8% Auckland GDP year to September 1.1% 2.8% Current Account (%GDP) -3.5% -4.0% CPI 4.0% 1.8% Unemployment rate 6.7% 6.3% Economy and Finance Monthly March 2012 Prepared by Mattia Barbera, Economist, Research, Investigations and Monitoring Unit 10

15 S TORY: Auckland s regional profile Auckland Council now oversees all of Auckland from Wellsford in the north to Pukekohe in the south and is responsible for operations and services as diverse as: maintaining more than 7,000km of roads and 6,500km of footpaths stocking 54 libraries and 4 mobile libraries in 21 local board areas managing assets worth over $35 billion. We are also custodians for a stunning, natural environment which includes: many harbours and associated islands 3,702km of coastline the wild west coast and gentle east coast 21,000 km of rivers and stream, eight per cent in our urban area and the remainder in rural areas parks covering 101,505 hectares of open space our large rural environment north and south, comprising the majority of Auckland s land our volcanic landscape the Hunua and Waitākere ranges. To give you some perspective, Auckland is:. Home to about 1.5 million people New Zealand s largest city, with 32.4 (1) per cent of the population contributing just over 35 per cent (2) of New Zealand's Gross Domestic Product (GDP), the most of any region or city New Zealand s main commercial, industrial and educational centre the most popular destination for new migrants New Zealand's primary gateway to the rest of the world. the most diverse cultural region in New Zealand with more than 150 different ethnic groups. 11

16 STORY: Auckland s population growth On 1 February 2012, the mayor welcomed the baby chosen as Auckland s 1.5 millionth citizen at Middlemore Hospital. Ramonah Patience Toomalatai was born to proud parents Sulia and Tutasi Toomalatai at Middlemore s Maternity Unit, which is the largest in the country with 6,900 children born there each year. The Toomalatai family live in Panmure and Ramonah joined her sister to Janelia (6) and brother Patrick (4). Both her parents are Samoan born; her mother Sulia grew up in Tauranga and her father Tutasi moved to New Zealand eight years ago. Statistics New Zealand determined that the 1.5 millionth Aucklander would arrive on 1 February 2012 and would most likely be a baby rather than a migrant due to existing growth patterns. Population growth in Auckland has exceeded that of all other New Zealand centres over the last 60 years and reached 1 million in the mid-1990s. Auckland is now home to 34 per cent of New Zealand s population according to 2011 figures, with estimates suggesting Auckland could reach 2 million before Our challenge is to ensure that by the time we reach the 2 million mark we can look back and know we made the right decisions, the tough decisions and built an Auckland that Ramonah will be proud of, the mayor said. 12

17 OUR RESPONSIBILITIES,VALUES AND HOW WE WORK Our responsibilities : The council is responsible for collecting rubbish, maintaining and developing parks and reserves, running public libraries, swimming pools and recreation centres, and providing services such as building and resource consents, dog registrations and liquor licensing. Our values: Innovation Respect Teamwork Pride Service Accountability Our core values underpin everything we do. 13

18 How we work: The principles by which we work to achieve our outcomes o Working together Working collaboratively and as partners. Recognising the interdependence of projects, programmes and initiatives. o Valuing te Ao Māori Acknowledging the special place of Mana Whenua and enabling their participation in decisionmaking. Building lasting and reciprocal relationships with Auckland s Māori. o Being sustainable Taking a long term view and having the resilience and flexibility to adapt to changing conditions that affect our communities, our economy, our environment and our infrastructure. Doing more with less. o Acting fairly Considering the needs of all groups in the community to ensure that all Aucklanders can participate equally. o Making the best use of every dollar spent Acting prudently and committing to projects and initiatives that achieve the best value result without compromising quality, or stifling creativity and innovation. Focusing on achieving long term benefits and intergenerational equity. o Checking progress and adapting to improve Monitoring and evaluating every initiative to ensure we move in the right direction. Adapting accordingly and continually improving the way we are working to achieve Auckland s vision. 14

19 VISION STATEMENT THE MAYOR S VISION THE WORLD S MOST LIVEABLE CITY TE PAI ME TE WHAI RAWA O TĀMAKI Auckland will have an outstanding quality of life, economic opportunity and sense of belonging As the world s most liveable city Auckland will be a place that: Aucklanders are proud of, they want to stay or return to, and others want to visit, move to, or invest in. 15

20 MESSAGE FROM THE MAYOR The momentum is building as Auckland moves closer to being the world s most liveable city. The past 12 months has seen a united Auckland hit its straps. Auckland Council has realised the savings and efficiencies of scale while absorbing the significant costs of amalgamation and confirmed the biggest programme of capital investment in Auckland s history. In February 2012, we welcomed our 1.5 millionth Aucklander. Another million people will join her in the next three decades. Together with our council-owned organisations, we have finalised a suite of far-reaching plans that will guide Auckland s physical, economic and social development over this time. Auckland will be ready, thanks in part to the thousands of Aucklanders who had their say on The Auckland Plan, a historic over-arching document that will steer our future development as a united region. Complementing that, Auckland s 21 local boards formed plans for their areas to protect and foster local identities. Our local board members established themselves as clear voices for their communities, and are delivering a huge variety of local projects. The City Centre Masterplan and Waterfront Plan will reinvigorate the heart of Auckland and make the most of the water s edge for Aucklanders and visitors to enjoy. The Economic Development Strategy gives us a road map to becoming an internationally competitive and prosperous economy that all Aucklanders can benefit from and participate in. A strong economy means more jobs and higher incomes and a city that attracts visitors, skilled workers, businesses and investment. A robust Auckland economy will help lift overall quality of life and retain our top talent. We are working with educational institutions and other agencies to make sure our young people have clear paths from school into training and employment. The work and support of the Independent Maori Statutory Board has clarified issues of significance for Maori living within Tamaki Makaurau and Council s responsibilities in accordance with statutory provisions referring to the Treaty of Waitangi, resulting in the development of a comprehensive plan to ensure our Maori heritage is properly acknowledged and all our citizens have every opportunity to succeed. In Wynyard Quarter, we are working with the government to create the innovation precinct, a vital step towards Auckland becoming the innovation hub of the Pacific, which will further drive a high-value economy based on ideas and exports. Wynyard Quarter is one of Auckland s great success stories of the past 12 months. More than 50,000 people poured into the area the day it opened, and it has become an unmissable Auckland destination. As well as the bars and restaurants alongside the working, fishing wharf, it has a great programme of outdoor cinema, markets, children s workshops and walking tours. The upgraded and expanded Auckland Art Gallery opened, pulling in locals and Rugby World Cup visitors from New Zealand and overseas alike, and going on to win a major international design award. Auckland Zoo opened its Te Wao Nui native section, scooping landscape awards and helping to boost annual zoo visitor numbers to a record 710,000 to June 2012, its busiest year yet. Developments like these and being the hub of Rugby World Cup 2011 sparked Aucklanders excitement and enthusiasm, giving us a glimpse of the world-class city we can be. It also reinforced that major events are key drivers of economic activity. RWC 2011 the largest event ever hosted in New Zealand brought more than half a billion dollars into the Auckland economy and generated the equivalent of 14,000 year-long jobs. Auckland Council has a robust major events strategy in place. Hard on the heels of RWC came the Volvo Ocean Race in March and the World Rally Championship in June. In the past year, Auckland has also successfully bid to hold the FIFA 2015 Men s U-20 World Cup, the World Masters Games in 2017 and to return the V8s to Pukekohe. As well as identifying key economic drivers like events, Auckland Council is also taking care of Auckland s transport problems, a major barrier to us realising our full economic potential. 16

21 We have committed to bus and ferry services, walking and cycling options, and upgrading roads and footpaths. We continue to progress the City Rail Link and are gearing up for a fully integrated ticketing system for public transport and the delivery for the first of our new electric trains. Aucklanders are heeding the call of improved transport services in 2011/12, public transport patronage increased by 8 per cent overall. Rail patronage rose more than 10 per cent as did the number of passengers on the Northern Express bus service. Realising Auckland s economic potential requires financial prudence, something CEO Doug McKay and I are fully committed to. In 2011/12, Auckland Council identified $81 million of efficiencies and savings while maintaining service levels, absorbed the costs of amalgamation and the held the rates increase to 3.94 per cent, lower than the 9 per cent projected by the former councils coming into amalgamation. Auckland Council is in a strong financial position and is well placed for a growing city. This was endorsed by the recent review of Council s credit ratings by Standard and Poor s and Moody s. The financial strategies in our long-term plan were confirmed by the Auditor-General. Furthermore, we have met one of the greatest challenges for the new Auckland, finalising a single rating system based on capital value. At the council s request, the government enacted a minor legislative change to mitigate the impact of moving to a single system, capping residential rates increases and phasing business rates increases over the next three years. All of this represents a vast amount of input from Aucklanders on council plans and services, and immense hard work from our council staff and elected representatives. I want to thank everyone who has contributed for their time, energy and hard work. It has not gone unnoticed outside Auckland. We have improved our standing on global liveability indices, moving into the top 10 lists in all three international quality of life surveys (10th in the Economist Intelligence Unit s Global Liveability Report, 9th in Monocle magazine s Most Liveable Cities Index and 3rd in the Mercer Quality of Living Survey). We have also created our own scorecard to measure what is important to Aucklanders strong communities; fixing transport; being an economic powerhouse; and healthy environments. Aucklanders have a renewed sense of passion for their city, and Auckland has a new sense of pace and momentum. We are well on our way. Len Brown Mayor of Auckland 17

22 MESSAGE FROM THE CHIEF EXECUTIVE The period covered in this document July to June marks the completion of Auckland Council s transition from eight organisations to one. Aucklanders can have confidence that their council delivered, and will continue to deliver, on the promise of amalgamation. Our successes and continued delivery would not have been possible without our staff who have worked incredibly hard through a period of almost continuous change. Their continued efforts have ensured that our service level has remained of high quality, while providing value for money. They have enabled our exciting innovations and are building an organisation Auckland can be proud of. Another significant achievement in the period was developing and signing off the Auckland Plan what I refer to as our 30-year prospectus for the region. This world-class city plan contains the big-picture, joined-up thinking Auckland has lacked in the past. It includes the Southern Initiative, a plan which identifies stable housing, job growth, skills development and environmental enhancement in South Auckland. We began implementing the Auckland Plan during the period, which involves ongoing dialogue with central government agencies, infrastructure network providers, other private sector organisations, and communities. We have also adopted the City Centre Masterplan, Waterfront Plan (prepared by Waterfront Auckland) and council s Economic Development Strategy, which sets the roadmap for how Auckland does business over the next 10 years. We also signed off on our Long-term Plan (LTP). This $59 billion operating and capital expenditure budget outlines how Auckland Council intends to keep its books firmly in balance, even as we embark on the largest capital investment programme in the region s history. Some $1.7 billion in savings are identified within this budget. Work progressed during the year on the Auckland Unitary Plan, which will replace all the district plans (excluding that of the Hauraki Gulf islands), and regional policies of the eight former councils, with a single document. This will transform the way people engage with the council on planning, land use and resource consent matters. The council has a higher credit rating than most of the country s entities, with the exception of the New Zealand Government, and we aim to keep it that way. Standard and Poor s looked at the budget assumptions within our LTP earlier this year and maintained our credit rating at AA, which is higher than that of the major domestic banks. This credit rating has now been supported by a similar view from Moody s Investors Service. We have now completed one of the largest transitions in New Zealand history, put in place a new innovative governance model and planning regime, successfully hosted the Rugby World Cup 2011, revalued 515,000 of our city s homes and business properties and began developing a can do culture significant achievements all while maintaining operational stability. The Rugby World Cup was a particular highlight in the period. Auckland acted as the hub of the tournament over the six weeks, providing our CCOs with challenges and opportunities for the region s infrastructure and resources such as transport, business programmes, tourism, training venues and support events. We pulled together to ensure the success of this event was felt by all in the region, bearing out that a visitor economy and major events will be a key driver of the region s economic growth. Auckland Council is now focused on transforming our organisation and we have defined how we will continue to improve our delivery. Successful transformation will free up the resources needed for us to deliver on the Auckland Plan, the strategy to create the world s most liveable city, and also deliver value for money for ratepayers. 18

23 We are: Transforming the customer experience by putting the customer at the heart of our organisation Moving from operational stability to operational excellence Working in partnership with the Independent Màori Statutory Board to acknowledge the Màori perspective and support the cultural, social, economic and environmental development of Auckland Màori Creating a high performance organisation that works for all Aucklanders We have identified 24 opportunity areas to do things as one organisation that we could not as eight separate legacy councils, which will lead to a more innovative, effective and focused council. I would like to take this opportunity to acknowledge the senior management and directors of our councilcontrolled organisations (CCOs) for their expert guidance in creating a sound base for these new organisations to build on. I also want to acknowledge the Public Service Association. The union was a true partner in change and provided valuable counsel and advice, even as those changes impacted on and affected their membership. Our elected members are especially deserving of thanks; the people of Auckland are lucky to be represented by such a committed and passionate group of hard-working individuals. Mayor Len Brown has constantly impressed me with his vision and indefatigability. You will read in these pages about the activities of Auckland's 21 local boards. Having set out visions for their communities through the Local Board Plans, they are now planning how they can turn those visions into reality, with projects that will make a real difference to the lives of all Aucklanders. All 21 local boards have adopted Local Board Agreements for 2012/2013, as well as 10-year local activity budgets for the Long-term Plan , and these were major achievements. As an organisation, Auckland Council is still young but we have come through some tough challenges and changes. We now have the expertise and products in place to enable the Auckland region to achieve ongoing success. Doug McKay Chief Executive Auckland Council 19

24 MĀORI ENGAGEMENT Partnership arrangements between iwi, the Auckland Council and the wider Auckand community, are an important means of enhancing the prosperity and quality of life of all Aucklanders. The partmerships include active mana Whenua involvment in the co governance of maunga (volcanic cones), wahapu (harbours) motu (islands and kaitiakitanga (guardianship) of land and marine resources. TE WAKA ANGAMUA - THE COUNCIL S MĀORI STRATEGY AND RELATIONS DEPARTMENT Under a number of pieces of legislation and through the process of Treaty of Waitangi settlements, local authorities have obligations to Māori. Our Māori strategy and relations function assists the council in meeting these obligations. The legislation that most affects the type and level of activities of Te Waka Angamua are the Local Government and Resource Management Acts. Te Waka Angamua has a working relationship with the Executive Officer of the Māori Statutory Board, and is responsible for all Māori-specific policy, planning, research and evaluation, stakeholder engagement, relationship management, bicultural development and training, and Māori protocol and process information and activities. A separate report outlining its work in assisting the council s planning processes is in Part IV of the annual report. Te Waka Angamua s three units are: POU WHAINGA POLICY AND STRATEGY UNIT The Pou Whainga Policy and Strategy Unit is responsible for the development of all Māori-specific policy of the council. It provides Māori input into strategic council documents and undertakes and is involved in monitoring, research and evaluation in order to provide robust, timely and accurate advice and feedback. Stakeholder engagement on policy issues is an important facet of this unit. POU HONONGA RELATIONSHIPS UNIT The Pou Hononga Relationships Unit is responsible for stakeholder engagement and management, and facilitating relationships between Māori and the council. Establishing best practice processes for engaging and consulting with tangata whenua and the wider Māori community is an important facet of this unit. Staff within this unit provide kānohi ki te kānohi engagement with external stakeholders whilst working collaboratively on issues of importance to Māori along with other units of the council. POU TIKANGA PROTOCOLS UNIT The Pou Tikanga Protocols Unit works both internally and externally of the council. Internally the unit provides pastoral care in relation to Māori protocols and processes and bicultural development and learning opportunities to assist elected members and staff to understand and engage meaningfully with Māori. Externally, the unit upholds the mana of tangata whenua as stewards of tangata whenua tikanga and kawa. This involves representing and advising the council at civic and council events and ceremonies, either directly, or through engaging appropriate tangata whenua or kaumātua, koroua and kuia, to undertake this role. 20

25 TANGATA WHENUA - KAITIAKI (IWI RESOURCE MANAGEMENT CONTACTS) The council engages with tangata whenua on resource management matters, including resource consents and plan changes. To enable us to do this we maintain a list of iwi authorities, organisations and individuals representing the interests of tangata whenua iwi and hapū of the Auckland region. LEGAL CONTEXT Section 35A(1) of the Resource Management Act 1991 requires local and regional authorities to keep and maintain information about iwi and hapū. TANGATA WHENUA INFORMATION The information we maintain also includes iwi planning documents that have been lodged with the council, as well as iwi websites that provide valuable information. We have also indicated the potential areas of customary interests of tangata whenua relative to local board areas, as not all consent applicants are completely aware of tribal boundaries and areas of interest. It should be noted that the list should be seen in the context of the council s requirements and obligations to tangata whenua and viewed without prejudice to other tangata whenua or government agencies. THE INDEPENDENT MĀORI STATUTORY BOARD The Independent Māori Statutory Board is an independent board established by legislation to promote and advise the Auckland Council on cultural, economic, environmental and social issues of significance for mana whenua groups and mataawaka of Tamaki Makaurau. It also ensures that the Auckland Council acts in accordance with statutory provisions referring to the Treaty of Waitangi. To enable the board to achieve its purpose, it develops a list of current and prioritised issues that are significant to Māori in Auckland. This guides the board in developing its work programme. The board also gives advice to the council about issues that affect Māori in Auckland, and works with the council on the design and execution of suitable documents and processes to help the latter meet its statutory obligations to Māori in Auckland. For its part, the board must choose up to two people to sit on each of the council s committees that deal with the management and stewardship of natural and physical resources. The council may also request that the board appoint a board member to sit on other council committees. BOARD MEMBERS AND THEIR MEMBERSHIP OF COUNCIL COMMITTEES David Taipari (Chairperson - Mr Taipari was selected by the Marutuahu Mana Whenua representatives) Hearings Committee, Strategy and Finance Committee, Unitary Plan Working Party Patience Te Ao (Deputy chairperson - Ms Te Ao was selected by the Ngāti Wai Mana Whenua representatives) Accountability and Performance Committee, Regional Development and Operations Committee, Waste Minimisation Hearing Panel, Social and Community Development Forum Anahera Morehu (Ms Morehu was selected by the Ngāti Whātua Mana Whenua representatives) 21

26 Auckland Future Vision Committee, Parks, Recreation and Heritage Forum, Civil Defence and Emergency Management Committee Glen Tupuhi (Mr Tupuhi was selected by the Marutuahu Mana Whenua representatives) Environment and Sustainability Forum, Auckland Future Vision Committee, Unitary Plan Working Party, Economic Development Strategy Hearings Panel (Committee Secretary), Economic Forum James Brown (Mr Brown was selected by the Waiohua-Tāmaki Mana Whenua representatives) Parks, Recreation and Heritage Forum, Transport Committee, Environment and Sustainability Forum Wayne Knox (Mr Knox was selected by the Waiohua-Tāmaki Mana Whenua representatives) Regulatory and Bylaws Committee, Regional Development and Operations Committee, Planning and Urban Design Forum, Culture, Arts and Events Forum Glenn Wilcox (Mr Wilcox was selected by the Ngāti Whātua Mana Whenua representatives) Accountability and Performance Committee, Transport Committee, Regulatory and Bylaws Committee, Council Controlled Organisations Strategy Review Subcommittee, Hearings Committee, Dog Bylaw Hearings Panel, Community Safety Forum Tony Kake (Mr Kake is a representative of Mataawaka) Planning and Urban Design Forum, Social and Community Development Forum John Tamihere (Mr Tamihere is a representative of Mataawaka) Strategy and Finance Committee, Council Controlled Organisations Strategy Review Subcommittee Māori make up 12% of Auckland's population Mana Whenua (Māori whose tribal links are within Auckland) make up 14.5% of the total Māori population Mataawaka (Māori with tribal links outside Auckland) make up 63.4% of the total Māori population 22.1% of Māori do not identify with any Iwi 22

27 OUR STRUCTURE AND HOW WE WORK The Auckland Council family comprises the governing body (made up by the mayor and 20 councillors), the 21 local boards, council-controlled organisations, the Independent Maori Statutory Board and the council s advisory panels. This section describes how the Auckland Council family works. HOW THE AUCKLAND COUNCIL GROUP WORKS THE GOVERNING BODY The governing body of Auckland Council consists of the mayor, elected by all Aucklanders, and 20 councillors elected on a ward basis. The governing body is assisted by the Independent Maori Statutory Board and focuses on regionwide strategic decisions. It is responsible for: preparing and adopting the long-term plan, annual plan and annual report setting rates and making bylaws decision making on regulatory matters and on region-wide non-regulatory matters setting regional strategies, policies and plans, including the spatial plan and the district plan to guide the development of Auckland and its growth financial and asset management the governance of CCOs consulting with and considering the views of local boards before making a decision which affects the communities in the local board area, or the responsibilities or operations of the local board negotiating a local board agreement with each local board monitoring and reviewing the performance of the organisation and managing its staff and resources. The work of the governing body is undertaken through four Committees of the Whole (in which all councillors are members) and by nine other committees and sub-committees. 23

28 COUNCIL COMMITTEES COMMITTEES OF THE WHOLE (All councillors are members of these committees) ACCOUNTABILITY AND PERFORMANCE COMMITTEE Richard Northey: (Chairperson): George Wood: (Deputy Chairperson): AUCKLAND PLAN COMMITTEE Deputy mayor Penny Hulse: (Chairperson): George Wood: (Deputy Chairperson): REGIONAL DEVELOPMENT AND OPERATIONS COMMITTEE Ann Hartley :(Chairperson): Sandra Coney: (Deputy Chairperson): STRATEGY AND FINANCE COMMITTEE Penny Webster :(Chairperson): Des Morrison (Deputy Chairperson) COMMITTEES AND SUB-COMMITTEES AUCKLAND DOMAIN RAIL CORRIDOR DESIGNATION COMMITTEE Sandra Coney (Chairperson) AUDIT AND RISK COMMITTEE Sharon Stewart (Chairperson) Richard Northey (Deputy Chairperson) CCO STRATEGY REVIEW SUB-COMMITTEE Len Brown (Chairperson) Deputy mayor Penny Hulse (Deputy Chairperson) CEO REVIEW SUB-COMMITTEE Len Brown (Chairperson) Hon Chris Fletcher (Deputy Chairperson): CIVIL DEFENCE AND EMERGENCY MANAGEMENT COMMITTEE Michael Goudie (Chairperson) George Wood: (Deputy Chairperson): 24

29 HEARINGS COMMITTEE Noelene Raffills (Chairperson) Penny Webster (Deputy Chairperson) REGULATORY AND BYLAWS COMMITTEE Des Morrison (Chairperson) Calum Penrose (Deputy Chairperson) TENDERS AND PROCUREMENT SUB-COMMITTEE Dick Quax (Chairperson) Arthur Anae (Deputy Chairperson) TRANSPORT COMMITTEE Mike Lee (Chairperson) Hon Christine Fletcher (Deputy Chairperson) AUCKLAND COUNCIL S ELECTIONS Auckland Council uses the first-past-the-post system by postal ballot for elections both to the governing body and to the local boards. Our first election ended on 9 October 2010 and our next triennial election is due to finish on 12 October

30 THE LOCAL BOARDS Local board members are elected by local board area and represent their local communities. Local boards have a significant and wide-ranging role: making decisions on local matters; providing local leadership; and representing and building strong local communities. Local boards are responsible for: working with their communities to prepare a local board plan every three years, and outlining the community s aspirations and priorities, desired projects and potential funding. These local board plans will feed into the council s long-term plan which is also produced every three years non-regulatory decision-making on local matters, including negotiating the standards of services delivered locally providing early input into formulation of regional strategies and policies, including input to CCO plans and initiatives identifying and developing bylaws for the local board area and proposing them to the governing body monitoring and reporting on the implementation of annual local board agreements any additional responsibilities delegated by the governing body. 26

31 THE COUNCIL-CONTROLLED ORGANISATIONS (CCOs) A council-controlled organisation (CCO) is defined as an organisation in which the council controls 50 per cent or more of the votes, or has the right to appoint 50 per cent or more of the directors or trustees. Auckland Council has six large (referred to as substantive ) CCOs as well as a number of smaller ones. A substantive CCO is defined as either being responsible for the delivery of a significant service or activity on behalf of the council, or that owns or manages assets valued at more than $10 million. Auckland Council Auckland Transport Auckland Council Property Ltd Auckland Council Investments Ltd Auckland Waterfront Development Agency Ltd Auckland Tourism, Events and Economic Development Ltd Regional Facilities Auckland Watercare Services Ltd Other CCOs and subsidiaries The responsibilities of the six substantive CCOs are as follows: Auckland Transport manages the Auckland region s transport services and infrastructure. It provides all of Auckland s transport requirements (except state highways) including roads and footpaths, traffic signals, rail, buses, providing parking facilities and enforcement, establishing and promoting road safety and school travel initiatives. Auckland Council Property Ltd (ACPL) manages the council s commercial properties, ensuring an appropriate return on these assets, and bringing a market perspective to its planning activities. It is also responsible for managing other selected properties, projects and activities on behalf of the council such as development at Flatbush and the council s interest in Whitford Quarry. Auckland Council Investments Ltd (ACIL) manages Auckland Council s major investment assets including its shareholding in Auckland International Airport Ltd and Ports of Auckland Ltd. Auckland Waterfront Development Agency Ltd (Waterfront Auckland) leads waterfront development consistent with the council s vision. Waterfront Auckland owns and manages a large portion of the Auckland waterfront from Harbour Bridge Park in the west to Teal Park in the east (excluding Ports of Auckland). Its area of influence extends as far inland as the original shoreline of 1840 and includes Beach Road, Customs Street, Quay Street, Fanshawe Street, Britomart and The Strand. Auckland Tourism Events and Economic Development Ltd (ATEED) brings a consistent and integrated region-wide approach to economic development, tourism and events promotion to help lift Auckland region's economic performance and support it in competing internationally. Regional Facilities Auckland (RFA) provides a regional perspective for the development of Auckland s arts, culture and heritage, leisure, sport and entertainment venues including Auckland Art Gallery Toi o Tamaki, Viaduct Events Centre, Auckland Zoo, Mt Smart 27

32 Stadium, Western Springs and The Edge (including the Aotea Centre, Civic Theatre, south Town Hall and Aotea Square). Watercare Services Ltd (Watercare) Watercare Services Ltd became a substantive CCO on 1 July 2012.Watercare is responsible for water and wastewater services in the Auckland region.. The exception is in the Papakura area where United Water manages the local networks and retailing of water and wastewater under a franchise agreement. 28

33 EXECUTIVE SUMMARY: OUR FIRST FULL YEAR INTRODUCTION This summary highlights the achievements made by Auckland Council in its first full year of operations. We start by presenting three case studies of our work illustrating the very broad nature of the services we provide. The three case studies are: Planning for Auckland s future Introducing a consolidated rating system Hosting the Rugby World Cup 2011 We provide summaries of all our activity areas, noting our patterns of expenditure and highlighting our main achievements. We then give a quick visual overview of our performance indicators and summarise our service delivery performance for the year, noting where appropriate how we will be focusing our efforts to achieve improved results in the coming year. The executive summary concludes with an overview of our financial performance for the year ended 30 June CASE STUDY 1: PLANNING FOR AUCKLAND S FUTURE Auckland s time has come. We have a widely-shared vision to be the world s most liveable city. And for the first time in our history, we have a single, comprehensive plan to deliver this vision for all of Auckland and all its people the Auckland Plan. It is a plan that will help us compete on the international stage, and one that will help every Aucklander achieve the best they can. Auckland is our place, and we are ready to grasp this opportunity for a prosperous future. From the Auckland Plan portal, Auckland Council website at: The Auckland Plan is a 30-year strategic vision that embraces change and growth as Auckland embarks on its journey to become the world s most liveable city. Developed from the mayor s visionary "Auckland Unleashed" document, released in March 2011, the Auckland Plan outlines how the key priorities of housing, transport, economic growth, heritage, and social and environmental action can be tackled. 29

34 Mayor s vision Creating the world s most livable city Auckland Plan 30 year vision and strategy for Auckland Local Board Plans 3 year plans of 21 local boards Unitary Plan Policies & rules to implement the Auckland Plan Place-based plans Special plans fpr geographical areas. E.g Local area plans, City centre masterplan & Waterfront plan Core strategies E.g Economic development strategy, Waste management & minimisation strategy Long TermPlan Council s 10 year plan and budget for and Annual plan (2012 Local Board Agreereements Annual budgets of 21 Local Boards It is the collective result of contributions from central government, iwi, business, community and nongovernmental organisations. The Auckland Plan is a single, comprehensive plan to deliver this vision for all of Auckland and all its people. It centres around six transformational shifts to achieve the vision of Auckland being the world s most liveable city. These shifts are: Dramatically accelerating the prospects of Auckland s children and young people by focusing on issues of education and learning, youth employment, housing conditions, and societal harm Strongly committing to environmental action and green growth by improving the health of our natural environment, resolving issues of air and water pollution and declining fish stocks, and capitalising on international market opportunities associated with Auckland s clean green image and clean technology Delivering outstanding public transport within one network, and ensuring a major shift from private cars to an integrated public transport system Radically improving the quality of urban living so our built environment grows to match our beautiful natural environment through sustained and radical improvement in planning, building, urban design and public places Substantially raising living standards and addressing social inequality through a focus on significantly improving educational attainment, economic growth and income levels Significantly lifting Māori social and economic wellbeing through iwi partnerships, education and entrepreneurship. A key focus of the Auckland Plan is addressing how to accommodate an estimated one million new residents by 2040, promoting flexibility of housing choice and affordability, and protecting the rural environment by supporting quality compact development. The Economic Development Strategy, the City Centre Master Plan and the Waterfront Plan were also developed to support the Auckland Plan. Public views were sought on each of the plans with more than 2500 submissions received in total and more than 4300 submission points. 30

35 The most popular topics were: making a quality compact city the City Centre Master Plan transformation shifts Auckland's economy the southern initiative building enduring town centres and neighbourhoods. Three supporting plans were developed to support the Auckland Plan. These are the Economic Development Strategy, the City Centre Master Plan and the Waterfront Plan. The Economic Development Strategy aims to achieve ambitious goals including increasing the region s exports, growing real GDP and lifting productivity. The City Centre Masterplan focuses on cost-effective, smart solutions to transform the city centre, working with rather than changing the existing infrastructure, while the Waterfront Plan builds on previous public feedback, discussion and strategies to identify new investments and projects to unleash the waterfront s true potential. Work also progressed during the year on the Auckland Unitary Plan, which will replace the district plans and regional policies of the eight former councils with a single document and which will be one of the main tools for implementing the visions contained in the Auckland Plan. "The Unitary Plan will bring a fresh and simplified approach to planning across Auckland," says Deputy Mayor Penny Hulse. "It will be Auckland Council s rule book for how we use and develop our natural and built environment, outlining where homes and businesses can be built and conditions applying to certain areas." Targeted consultation on the Auckland Unitary Plan is taking place throughout 2012, and it is proposed the plan will be released for public submissions in March Once completed, the Auckland Unitary Plan will be available as a plain-english, easy-to-use online tool on our website, transforming the way people engage with the council on planning and resource consent matters. CASE STUDY 2: INTRODUCING A CONSOLIDATED RATING SYSTEM Over the past year significant changes have occurred to the systems for assessing and collecting rates throughout the region as the Auckland Council moved to consolidate the schemes that the eight legacy councils had employed, which it was required to do by government legislation. Some of the changes included The introduction of a region-wide rating system so that all properties of similar value and use will be charged a similar amount of rates A new Uniform Annual General Charge (UAGC) of $350 - previously UAGC amounts have ranged from $308 - $831 New rating differentials for nine ratepayer groups (Rate differentials are used to change the proportion of rates the council collects from each group of ratepayers. The council may choose to apply a higher rating differential for groups that place greater demands on council services) The introduction of a capital value rating system - all properties will be rated on capital value, rather than annual or land value The introduction of transition mechanisms to smooth the impact of any significant rates changes for residential and business ratepayers over a three-year period. From February to August 2011, the council (with assistance from Quotable Value) undertook what was New Zealand s largest ever property revaluation. The revaluation of properties - about 516,000 in all resulted in a total real estate capital valuation region-wide of some $354 billion. The aim of the revaluation was to bring properties formerly covered by the legacy councils into the same valuation cycle. Following certification of the revaluation by the government s valuer-general, from late October property owners received new valuation notices in the mail. Residential values in the former Auckland City Council areas showed the greatest growth in the region, with an average increase of 5.1 per cent. The strongest average capital value increases were in the inner city suburbs of Grey Lynn (18 per cent), Point Chevalier and Sandringham (13 per cent), Ellerslie, Epsom 31

36 and Mt Eden (at 10 per cent each). Residential values in Rodney district showed the greatest decrease, averaging a 7.8 per cent decline since the last revaluation, which was done at the peak of the market in September Commercial, industrial, rural and lifestyle values showed a general decrease across the region. Auckland ratepayers concerned they might have been adversely affected by the move to a single rating system were able to apply for a rates remission according to the following limits: $1,000 and 20 percent of the current rates of business properties with the maximum remission of $6,000 $300 and 15 percent of the current rates for residential properties $500 and 15 percent of the current rates for farm/lifestyle properties The numbers expected to be eligible for a remission in the first year were 173,000 residential properties, 5,800 businesses and 3,800 farm/lifestyle properties. These numbers are expected to decrease considerably over the next few years. Meanwhile, from early August onwards, ratepayers throughout the region began to receive new-look rates notices combining the former Auckland Regional Council rates and former local council rates into one Auckland Council rates bill, with the exception of wastewater rates. While the council inherited a rates increase of 9.2 per cent, it reduced this down to 3.94 per cent by driving $81 million in efficiencies. CASE STUDY 3: HOSTING THE RUGBY WORLD CUP 2011 The Rugby World Cup 2011 (RWC 2011) was the largest event ever hosted in New Zealand. Out of the 48 RWC 2011 matches across New Zealand between 9 September and 23 October 2011, Auckland hosted 15, including three matches that had to be accommodated following the Christchurch earthquakes. While Auckland s primary focus was on supporting the delivery of the Tournament itself, Auckland also hosted a programme of activities ranging from business investment, to free concerts to community festivals. Auckland Council and its council-controlled organisations developed a vision for the return on its investment, based on five strategic objectives and five legacy goals of making the most of the waterfront, telling the world Auckland s story, taking pride in place, making public-transport use a habit, and positioning Auckland as a major events destination. The Auckland Council Group commissioned Sapere Research Group and its partners Market Economics and Gravitas, to carry out a comprehensive evaluation of the immediate and legacy economic and social impacts in Auckland. The resulting Rugby World Cup 2011: Evaluation Report indicates that the RWC2011 in Auckland is regarded as a very successful event as the following survey results show: Regardless ofch team wins/won, RWC 2 Regardless of which team wins/won, RWC 2011 in Auckland has been a successful event Agree Disagree Auckland residents 89.3% 3.3% Auckland businesses (interim results) 89.6% 3.9% Domestic visitors 96.2% 0.6% International visitors 95.4% 0.5% Visiting media (interim results) 91.8% 2.7% Auckland has been a successful Ag ree Disagree These surveys also indicate a substantial majority of visitors gained a very positive 32

37 impact of Auckland during their stay: Domestic visitors International visitors Visiting media Auckland is a great place for an event of this kind 93.4 % Agree 0.6% Disagree 90.9% Agree 2.2% Disagree 87.7% Agree 4.1% Disagree Quality of service provided overall by Auckland Auckland has attractions and things to see and do Friendliness of the local people 93.3% Good / Very Good 0.4% Not so good/poor 93.2% Good/Very Good 0.2% Not so good 92.3% Good/Very Good 95.3% Good / Very Good 0.6% Not so good/poor 90.0% Good / Very Good 2.0% Not so Good/Poor 93.2% Good/Very Good 90.4% Good / Very Good 1.4% Not so good/poor 75.3% Good / Very Good 4.1% Not so Good/Poor 93.6% Good/Very Good Likely to recommend Auckland to others as a place to visit 0.2% Not so good 88.3 % Likely/Very Likely 2.2% Not so good/poor 92.0% Likely/Very Likely 1.7% Unlikely/very 2.2% Unlikely/very unlikely unlikely Source: Visitors Survey: International and Domestic, and Visiting Media survey-interim results The surveys also indicate strong support for bidding for similar events in future: m wins/won, RWC2 Auckland should bid to host future large events Auckland residents Agree 83.1% 69.7% Disagree 7.8% 15.6% Auckland has been a successful The Evaluation Report goes on to comment: 4.2% Not so good/poor 87.7% Likely/Very Likely 2.8% Unlikely/very unlikely Auckland businesses (interim) Results of these magnitudes and their consistency - seem quite rare for public opinion surveys and are perhaps all the more surprising given some of the concerns expressed around the management of Opening Night. It would seem that RWC2011 is widely regarded as a positive event and one that generated good will for Auckland and for the holding of future events in the region. The free Opening Night celebration on 9 September was one of the largest public events ever held in New Zealand. 120, ,000 people came to Auckland s downtown waterfront to experience two major celebratory components. The first was a special welcome for the start of the tournament which was integrated with a display of distinctive Māori culture, and which included the arrival of a fleet of 20 waka into the Viaduct Harbour. The second component, All Lit Up, was the largest firework display ever seen in New Zealand with fireworks and lighting displays strategically located across the Auckland skyline utilising notable landmarks and the city s tallest buildings. As part of the live international broadcast of the RWC 2011 opening night, there was an unprecedented twelve minute segment that was used to deliver a positive vibrant image of Auckland to a worldwide television audience estimated to be in the vicinity of million. The Opening Night concerns arose because larger than anticipated crowds strained infrastructural capacities, leading to multiple challenges, particularly for the public transport network. Lessons learnt were quickly applied and public transport was largely trouble free for the remainder of the tournament. 33

38 ACTIVITY HIGHLIGHTS COMMUNITY Through community activities, the council helps to build strong communities by funding libraries, community services, emergency management and cemeteries. The council budgeted to spend $208 million on providing community activities. Our actual expenditure was $216 million - a difference of 3.7%. This difference was due to additional costs incurred in delivering services including at the libraries where the cost of servicing region-wide rental requests was considerably higher than we had budgeted for. While we had budgeted to spend $45 million on purchasing, renewing and constructing assets, by 30 June 2012 the timing for completing some projects had been extended and we had spent only $33 million. The incomplete projects will be completed in the 2012/2013 financial year. Some of our key activities, projects and priorities were: Libraries purchased 528,280 new items for the library collections used for borrowing and reference at a cost of $11.2 million. Tupu Library reopened following the completion of the redevelopment which mainly occurred in 2010/2011 the Mt Roskill library was refurbished at a cost of $1.4 million 13,964,150 people visited library facilities, an increase of 2% over last year refurbishment of housing for older person units in Manukau and Papakura undertaken at a cost of $3.6 million. the Fickling Centre upgrade was completed and the centre reopened Readynet was introduced to 250 organisations throughout the Auckland region (Readynet provides emergency preparedness planning and assembles, stores and shares emergency management information) 69 communities are being assisted to be more prepared in a disaster through the Neighbourhood Response Plan process Summary of performance measures for the Community group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Overall, we improved our service delivery performance in the community group of activities, compared to last year, achieving or coming very close to meeting 68 per cent of our targets. We are making good progress in two areas of customer satisfaction with our community services activity and there has some increase in the percentage of respondent who feel their neighbourhood is safe at night. Satisfaction with older person s housing remained short of our target, and we must focus on grounds maintenance in order to achieve a better result next year. In several instances where there was no result for specific performance measures, results based on similar criteria are detailed in Part II. 34

39 LIFESTYLE AND CULTURE Through its lifestyle and culture activities, the council ensures that Auckland is a dynamic, exciting and distinctive region in which to live, work, and visit. Two CCOs are directly involved in this. Through its venues, business units and strategic partnerships, Regional Facilities Auckland helps to run and develop on a regional basis Auckland s lively and exciting culture, leisure, sports and entertainment sectors. Auckland Tourism, Events and Economic Development Ltd provides a co-ordinated approach to attracting, sponsoring and delivering major and signature events to Auckland and provides logistical and operational support for their duration. The council budgeted to spend $416 million on providing services in this area; our expenditure was actually $435 million - a difference of 4.5%. This difference was due to additional money being extended to RFA for costs relating to the Zoo and Auckland Art Gallery as well as for the construction of a broadcast tower at North Harbour stadium and for facilities at Mt Smart stadium. We budgeted to spend $139 million on capital projects, but by the end of the financial year we had spent $123 million since several significant land acquisitions did not occur. The incomplete projects will be completed in the 2012/2013 financial year. Some of our key activities, projects and priorities were: successfully hosting in Auckland 15 out of the 48 Rugby World Cup 2011 matches as well as delivering a wide programme of associated activities ranging from public open training sessions and team engagement to community festivals and the Victory Parade opening public art at various locations throughout Auckland, including at the Wynyard Quarter with a restored Wind Tree sculpture and the Sounds of Sea, Silt Line, and Flooded Mirror installations, and at Henderson where the Triangle Road Pou Whenua project features pou tuwatawata posts and two large waka on each side of the Huruhuru bridge carved by Whare Thompson providing funding to such key facilities as the newly reopened Auckland Art Gallery Toi o Tāmaki, MOTAT with its new Aviation Display Hall, the Auckland War Memorial Museum, and the Viaduct Events Centre which opened in August 2011 completing numerous parks projects, including the new Gulf Harbour breakwater, the staircase and boardwalk at Pt Resolution, the Cliff Face park development in Panmure, the Pt England beach access and sand replenishment, the Victoria Park Skate Park, mangrove removal at Pahurehure Inlet in Papakura, and the redevelopment of the Massey Park grandstand, fields, and playground completing the two-year restoration and upgrade to Auckland s iconic Tepid Baths which date back to 1914 and which reopened on 23 June completing the zoo s Te Wao Nui precinct which celebrates New Zealand s natural world, and which reopened on 23 September. Summary of performance measures for the Lifestyle and Culture group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result We met or exceeded over 70 per cent of our service delivery targets for this group of activities. One of last year s lower areas of performance was Parks, but this year good progress is being made in five of the seven service delivery areas in that activity that did not meet targets. The other activity that showed a lower performance score last year, Recreation Services, saw its overall performance this year affected by water quality issues at a leisure centre which have now been rectified. 35

40 ECONOMIC DEVELOPMENT Through its economic development activities, the council contributed to developing Auckland as an internationally competitive region in which to live, work, visit, invest and do business. Two CCOs play key roles. Auckland Tourism, Events and Economic Development Ltd is the region s economic growth agency, coordinating approaches to growing Auckland s export, business and tourism economy. The Auckland Waterfront Development Agency Ltd also plays a key role in delivering the council s economic development activities through its focus on redeveliping Auckland s waterfront. The council budgeted to spend $61 million on this group of activities, but our expenditure was actually $77 million - a difference of $16 million. This difference was due to additional costs being incurred including a contractor s expense of $7 million for street maintenance. Although this was incurred by the council, following an agreement $5.4 million was on- charged and recovered from Auckland Transport. Additiional, depreciation and interest costs were incurred in comparision to budget as some capital projects in 2011 were delivered earlier than scheduled so that the projects would be completed prior to the commencement of the Rugby World Cup.. Of the $7 million we had budgeted to spend on purchasing, renewing and constructing assets, by 30 June 2012 we had completed $6 million on such projects. Some of our key activities, projects and priorities were: completing six business area improvement and infrastructure initiatives, including in Howick, Papatoetoe, Otara, Hunters Corner, Mangere and Manurewa developing business connections during the Auckland Council Trade Mission to China, during the ASEAN Heads of Mission visit, and with a number of business delegations from cities around the Pacific region completing and having approved the economic development component (Chapter 6) of the Auckland Plan, setting a strategic framework for the next 30 years developing a Broadband Forward Works programme to maximise the benefts of digital technology for the region completing initial work on cost benefit implications of the City Rail Link launching the WiFi 2 Network the world s first fully integrated metropolitan WiFi network with rollout commenced in time for the Rugby World Cup Summary of performance measures for the Economic Development group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Although we only achieved one of our service delivery targets (completion of business area improvement and infrastructure initiatives), we were either very close to our targets or showed progress in all but one of the other performance measures. Whilst there was one performance measure showing that improvement is needed, the result here indicated that 90% of customers remain satisfied with the services that the council offers in this case, visitor information centres. 36

41 PLANNING AND REGULATION The planning and regulation activities are vital to ensuring that Australasia s largest local authority is developed and maintained for the benefit of the whole community in a way that embraces change and sustainable growth. Of the $329 million that the council budgeted to spend on providing planning and regulation services, expenditure actually amounted to $354 million. The direct costs of service delivery were in line with the budget. However, the total final expenditure reflected additional costs allocated to this group of activities for interest, depreciation and a share of corporate overheads, which arose mainly because of the impact of a large capital expenditure programme in the previous financial year. While we had budgeted to spend $116 million on capital projects, by the end of the financial year we had spent $49 million. Under this group of activities in which we plan and perform city transformation projects, several significant undertakings were not completed in the financial year and will therefore be continued during 2012/2013 and in some cases, beyond. These include the Lorne and Fort street upgrades, the continuation of the Wynyard quarter development, the regeneration of New Lynn and the NorSGA transport project. Some of our key activities, projects and priorities were: adopting the Auckland Plan a 30-year strategic vision, launched by the mayor in May, that outlines how the key priorities of housing, transport, economic growth, heritage, and social and environmental action can be tackled developing key specific strategies in support of the Auckland Plan, including the Economic Development Strategy, the City Centre Master Plan and the Waterfront Plan developing the Long-term Plan (adopted in July 2012), which sets in motion the development blueprint provided by the strategic-level Auckland Plan, and which includes funding for a number of significant projects such as the City Rail Link and the electrification of the rail network, job creation projects such as the planned innovation precincts, public transport initiatives and major stormwater infrastructure improvements progressing the Unitary Plan, which will replace all the district plans of the legacy councils with a single document, and which is designed to simplify how people engage with the council on planning and resource consent issues progressing the council s Consolidated Bylaw Review Programme, which consolidates the bylaws of the legacy councils Summary of performance measures for the Planning and Regulation group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Like last year, we did well in achieving our Planning and Policy targets. We did less well, again like last year, in reaching targets set for our Regulation activities. However, there was a marked improvement in our peformance. Whereas last year we failed to meet two-thirds of our performance targets, this year only three out of 20 were missed; in many of the others there were considerable improvements for example, the percentage of resource consent applications processed within the statutory timeframe rising from 65% to 84%. Scores for customer satisfaction with our regulation processes overall highlight the challenges that continue to face us as we integrate the regulatory systems of the eight legacy councils. Improving performance in this area will be a high priority during 2012/

42 ENVIRONMENTAL MANAGEMENT Through its Environmental Management activities, Auckland Council protects and enhances Auckland s harbours, coasts, beaches, and islands. Auckland Council s commitment to sustainability means that the council develops and implements strategies to make the natural environment more sustainable and applies a sustainable approach to all of its internal operations. The council budgeted and spent $45 million on providing environmental management services. Our budgeted capital expenditure was $14 million, whereas we spent $3 million. The difference is largely accounted for by the $10 million Built Heritage Protection budget which was unspent during the year. The council is developing a Historic Heritage Plan which will guide the council in this area in the future. The Long-term Plan includes a Built Heritage Acquisition Fund with $33 million budgeted over 10 years to protect the built environment and secure the heritage value of at-risk buildings. Some of our key activities, projects and priorities were: contributing technical inputs to the Auckland Plan and Unitary Plan and to area spatial planning undertaking surveys of kauri trees in order to check for the preszence of kauri dieback disease pursuing research into kauri dieback disease, including on soil properties, tree disease detection, phytosanitary effectiveness, animal vectors and a range of other issues eradicating pest incursions on Hauraki Gulf islands extending the Retrofit Your Home sustainability programme, by providing financial assistance for householders to install clean heating and insulation supporting conservation and heritage restoration through the council s Environmental and Heritage funding schemes commencing development of a water infrastructure strategy completing the regeneration of the 6-hectare Newmarket Park which borders the inner urban suburbs of Newmarket, Parnell and Remuera Summary of performance measures for the Environmental Management group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result We lifted our performance significantly across the Environmental Management group of activities. For a number of reasons not least because of the very real difficulties in combining the monitoring programmes of the legacy councils making it difficult to obtain consistent data sets across the region we failed to meet many of our performance targets last year. The results this year have been far more satisfactory. There still remain six perfomance measures for which no results could be obtained, but part of the explanation is that measurements of some activities are deliberately not made on an annual basis. An example is the calculation of prime land loss which is calculated through an analysis of regional aerial photography. This photography is collected every three years and thus assessments cannot be made on an annual basis. Detailed explanations about all the missing results are provided in the relevant sections of Part II. 38

43 SOLID WASTE The council s strategic approach to solid waste activities is driven by its commitment to minimise waste and the vision that solid waste activities will produce a clean, green and attractive city that as far as possible transforms its waste into useful resources. The council budgeted to spend $95 million on providing solid waste services but our expenditure was actually $80 million. The accounting treatment for the fees paid to for the disposal of waste was amended from how we constructed the budget resulting in a difference of $4 million. In addition, savings were made in costs associated with recycling collection, litter and waste bin collection, street cleaning and landfill operations. Capital expenditure of $1 million was in line with budget. Some of our key activities, projects and priorities were: running the annual series of hazardous waste collections ( Hazmobiles ) at seven recycling centres around the Auckland region and running a special agricultural chemicals amnesty progressing the council s draft Waste Management and Minimisation Plan, due to be finalised later in 2012 cleaning up successfully after major events, including during the Rugby World Cup Summary of performance measures for the Solid Waste group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Results of performance measures showed an almost uniform improvement across all the Solid Waste activities compared with last year. It was particularly pleasing to see that customer satisfaction over the reliability of our waste collection and recycling services had shown improvement. 39

44 WATER SUPPLY AND WASTEWATER High-quality water and wastewater services are key factors supporting our vision of Auckland becoming the world s most liveable city. The council s CCO, Watercare Services Ltd (Watercare), provides safe, healthy drinking water and high-quality wastewater services. Rising population levels and changing patterns of demand are requiring careful planning and development of assets in order to maintain the highest possible levels of service to the community. The council collected and passed to Watercare $87 million of wastewater rates for those properties that received a wastewater service but do not pay Watercare Services Ltd directly. Watercare constructs and maintains water supply and wastewater assets. These activities are not funded by Auckland Council. Key activities, projects and priorities undertaken by Watercare were: preparing for the introduction of the standardised wastewater tariff for residential customers on 1 July 2012, following the introduction of a standardised (and substantially reduced) water price for all Aucklanders in July 2011 progressing two large water supply construction projects: the Hunua No.4 watermain pipeline, running from Manukau Heights to Epsom, the construction phase of which commenced in May 2012, and the even larger Central Interceptor project, which will be starting soon planning for a number of projects on the North Shore, including the Northern Interceptor, which will allow wastewater flows to be diverted from the Northern Strategic Growth Area (NorSGA) progressing a three year, $48 million expansion of the Waikato water treatment plant for completion by early The expanded plant will help support the Auckland region s continued long term growth and increased demand for high quality treated drinking water working at the Franklin Water Treatment plant to address issues regarding discoloration of the Pukekohe water. The result has been an increase in the quality of drinking water with work underway on a permanent long term solution upgrading Watercare s Ardmore Water Treatment Plant which when completed will provide additional capacity and increase water supply security to Aucklanders completing a major five year upgrade project on the sludge dewatering and conveying systems at Mangere Wastewater Treatment plant in response to forecast growth in solid waste levels from the increasing Auckland population completing the Kawakawa Bay wastewater treatment scheme (opened in September 2011) which replaced failing private septic tanks. This has been the result of long term co-operation between residents, the former Manukau City Council, Manukau Water, iwi Ngati Paoa, and Ngati Tai, Fulton Hogan, Watercare and Auckland Council. Summary of performance measures for the Water Supply and Wastewater group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result As last year, our delivery of Water Supply and Wastewater Services generally performed well. Customer perceptions of water quality improved over last year. We achieved a substantial improvement in customer service with complaints falling and the percentage of complaints and enquiries responded to within 10 working days coming close to 100% (up from 89%). 40

45 STORMWATER The stormwater management activity is carried out by the council to protect people, property, and the environment from the adverse effects of flooding, erosion, stream degradation, and water pollution. The council budgeted and spent $106 million on providing stormwater services. We had budgeted to spend $65 million on capital projects, but by the end of the financial year we had spent $49 million. The planned stormwater budgets were reviewed and reprioritised during the year because in many instances the land acquisitions and consenting processes that must occur prior to the commencement of construction took longer to complete than expected. In addition, adverse weather conditions affected construction timetables in some cases. The projects identified in the Annual Plan will be completed but some will be finished later than originally planned. Examples include the Flat Bush water quality ponds, the Hillcrest flood protection works and the NorSGA stormwater project. Some of our key activities, projects and priorities were: completing the Martyn Wilson Reserve Stormwater Upgrade, an important project which will improve the water quality in Hobson Bay as well as improving the reserve itself constructing a timber boardwalk and footbridge alongside the Martyn Wilson Reserve to allow the public to enjoy the new streamside environment completing work on the Alexandra Stream bank restoration project, on the North Shore completing 380m of major stormwater lines as Stage 2 of the Ranfurly Road catchment upgrading programme. Summary of performance measures for the Stormwater group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Delivery of stormwater services generally performed well, as it did last year. There was some improvement in the level of customer satisfaction with the council's effectiveness in providing stormwater services, although it still fell some way short of the target. 41

46 TRANSPORT The council s CCO, Auckland Transport, is responsible for delivering the council s transport targets and major projects which are set out in the Auckland Plan. Auckland s new governance arrangements provide the opportunity for the first time to plan and manage the region s transport as an integrated system. Auckland Council is responsible for preparing the regional land transport strategy, and provides funding to Auckland Transport. Auckland Council provides funding to Auckland Transport, who also receive funding from other sources such as NZTA..The council budgeted it would spend $318 million. Our expenditure was $337 million. The variance includes an unbudgeted $46 million grant recognised as payable to Auckland Transport for 57 Electric Multiple Unit (EMU) train sets. The grant money will be received from the Crown. This is partially offset by a reduction of $36 million in operational funding provided to Auckland Transport, as the budget assumed revenue for parking would be received by the council and passed to Auckland Transport. Instead, this revenue was received directly by Auckland Transport. The Annual Plan included $546 million of Transport capital projects, of which the council budgeted to fund $395 million with the remainder being budgeted to be received by NZTA and other third parties. Auckland Transport incurred $568 million of costs including unbudgeted costs of $95 million for the EMUs, and received $77 million of third party revenue. Some of Auckland Transport s key activities, projects and priorities were: achieving major increases in patronage across all modes of public transport continuing to progress various public transport projects, including real-time public information systems, integrated fares and ticketing, electric trains and more bus and transit lanes commencing the Auckland Manukau Eastern Transport Initiative (AMETI), which is designed to unlock the economic potential of the eastern suburbs with phase 1 creating a new busway to significantly speed up travel times as well as creating an important transport interchange at Panmure bringing into service (in April) the first new rail line in Auckland for over 80 years, at Manukau. The new station has been developed to meet expected capacity in 2040 and was constructed using innovative technologies that give the main structure an expected 100-year lifespan, reducing its environmental footprint implementing in August 2011 a new Central Isthmus bus service and simplifying and increasing service frequencies signing a contract in October 2011 with Spanish manufacturer Construcciones y Auxiliar de Ferrocarriles to supply and maintain 57 three-car electric trains to replace most of the current ageing diesel units and locomotives planning the upgrade of a 4km stretch of Albany Highway between the Upper Harbour Motorway (SH18) and Dairy Flat Highway (SH17) completing new roading connections and improvements (including the Totara Avenue shared space) associated with the New Lynn rail trenching and transport interchange. Summary of performance measures for the Transport group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Most of the instances where targets have been missed can be accounted for by factors beyond our control (such as bad weather) affecting transport patterns, giving results for traffic flows that cannot reliably be compared with those of last year. 42

47 COMMERCIAL AND INVESTMENT With the assistance of three CCOs (Auckland Council Property Limited, Auckland Waterfront Development Agency Limited and Auckland Council Investments Limited), the council ensures commercial and investment activities are managed in a way that optimises financial returns while supporting the achievement of the council s broader strategies. While the council budgeted to spend $42 million in this area, our expenditure was actually $50 million. This difference is related to the allocation of interest on borrowings, which was higher due to a change in the timing of loan repayments We had budgeted to spend $18 million on capital projects, and by the end of the financial year we had spent $38 million. The principal reason for this difference was that the settlement of land purchases was not included in the orginal budget. These acquisitions of land included those at the Marine Industrial Precinct at Hobsonville, a significant development for which the council has budgeted an expenditure of $45 million over the 10 years of the Long-term Plan Some of our key activities, projects and priorities were: signing off the Ormiston Town Centre Development Masterplan progressing construction of New Lynn Town Centre ahead of schedule rephrasing the Hobsonville Marine Precinct (Yard 37) development to ensure that minimum site sales targets are achieved before significant construction commences exceeding profitability targets and achieving a 100 per cent pass rate for health and safety audits undertaken in June 2011 restructuring the Diversified Assets Portfolio and reviewing the Statement of Investment Policies and Objectives acquiring the remaining 55.6% of shares in Auckland Film Studios Limited for $1.5 million, a significant discount in relation to the market value of the underlying assets commencing development of a strategic plan for the 100 per cent-owned Ports of Auckland Ltd. Summary of performance measures for the Commercial and Investment group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Like last year, the one target that was not reached related to the satisfaction of marina berth holders with the provision of services. We will continue to identify how we can improve this result.. The new measures introduced last year to enable us to report on a range of new services provided by this group of activities have been successfully integrated into our performance monitoring regime. 43

48 GOVERNANCE The council enables local decision-making and action by, and on behalf of, communities to promote the wellbeing of the Auckland region now and for the future through its governance activities. In doing so, the council aims to ensure a clear vision and direction for the region, effective representation of local communities, and that the council and its CCOs remain responsive and accountable to the public. We had budgeted to spend $11 million on capital projects, by the end of the financial year we had spent $4 million. The principal reason for this was that the local board and discretionary funds which are available for minor capital works in local board areas were underspent as there were delays in confirming how they would be allocated. The unspent funds will be carried forward to the 2012/2013 financial year. Some of our key activities, projects and priorities were: completing successfully the Local Board Plans which set direction on behalf of their communities implementing innovative hearings processes that managed 40,000 submissions during the calendar year responding to the Independent Māori Statutory Board Audit and ensuring that the council has a clear programme of work to integrate improvements with our Māori community Summary of performance measures for the Governance group of activities - Achieving: Meeting or exceeding target Satisfactory: Within 2% of target Progressing: Target not achieved, but improvement over last year Improvement: Needed Target not achieved; no improvement over last year No result Our performance in this activity has improved considerably compared to last year. However, we still have some way to go in the area of satisfying our stakeholders including Māori, governing body and local board members as well as in finding innovative and appealing methods by which we can interact with the community other than through established formal channels. An example of the less formal interaction which we are introducing is the new method for hearing verbal submissions, called hearings forums. These provide flexibility to enable the council to hear large numbers of submitters within a short timeframe, whilst also allowing elected members to engage appropriately and effectively with the community. We have also better resourced Local Board Services to improve delivery of this objective in the future. 44

49 FINANCIAL SUMMARY Auckland Council $millions Council Actual Council Budget Rates 1,400 1,399 Service & Other Finance 57 6 Other Total 1,965 2,029 Personnel Depreciation Finance Other 1,318 1,017- Total; 2,167 1,817 (Deficit) / surplus (202) 212 Income tax (4) - (Deficit)/ surplus after tax (198) 212 Other comprehensive income Total comprehensive income The formation of Auckland Council on 1 November 2010 was the largest local government reorganisation undertaken in New Zealand or Australia, bringing together eight Councils and over 30 subsidiary organizations into one group. The Auckland Transition Agency developed an eight year and eight month Long Term Plan for the new Council. That plan was based on the plans and budgets from the eight legacy Councils, adjusted for the formation of the new CCOs and other known changes. The Auckland Council developed its first Annual Plan for the 2011/12 financial year based on that Long Term Plan s forecast for the year, again updated for known changes including a savings target for the new organization of $81 million. The Annual Plan sets out the budget for the parent only, as this was the basis of the Long Term Plan. Given the nature of the Council s operations and its subsidiaries there are significant elements of the Council s operations that are performed by the subsidiaries and funded by the parent, as property rates are the only means to pay for those activities. As a consequence the final financial statements for the parent include a significant level of intra-group transactions. Council budgeted for revenue of $1,399 million from rates and $630 million from other sources in 2011/12. Operating expenditure was forecast at $1,817 million and there was a capital programme of $446 million. Total comprehensive income, which represents the full economic gain to ratepayers from the operations and holding of assets by Council over the year, was projected to be $447 million, with an operating surplus of $212 million. The comprehensive income and operating surplus include projections of revenues that will be collected from both developers and government agencies, for the purchase of infrastructure assets to provide for the future of Auckland. There was no budget for asset and financial instrument revaluation write downs. The final results for the Auckland council are a total comprehensive income surplus of $123 million, and an operating deficit of $202 million. These results have been heavily influenced by four factors over the last year: Slow growth in the Auckland property development market; Asset revaluations; Intra-group transactions; and Legacy Council tidy-ups. The slow growth in the Auckland and New Zealand economies has effectively created a timing difference for Council of $77 million in the revenue it gets to pay for growth related capital expenditure. Development activity in the region is 45

50 expected to pick up as the economies pick up. In future years we will regain the capital income shortfall from this year. Assets and financial instruments were written down by $135 million, partially offset by reversing an impairment booked in 2011, $43 million. While some of our assets fell in value, others, particularly land, increased. Unlike the losses, this gain of $345 million is not recorded as a component of the Operating Surplus. Instead it is recorded as Other Comprehensive Income. We had anticipated these assets would increase by only $235 million. Council has a significant financial hedging portfolio which it uses to give more certainty to its expenditure into the future. This cost will reverse in the future as interest rates rise from the current historically low rate. Intra group transactions have seen funding by the parent of subsidiary capital works recorded as operational expenditure, and $28 million of vested assets passed directly to Auckland Transport. A grant to Auckland Transport to fund their acquisition of road and transport assets, $55 million, was budgeted as capital expenditure but has been recorded as operating expenditure. There were a number of matters inherited from the legacy Councils that have affected our financial results for this year. Over $41 million of cost or lower revenue was incurred across a variety of areas such as tidying up Balance Sheets with debt write-offs, correctly classifying income and expenditure, and adjusting income projections. These costs are a one off cost financed from working capital and did not affect the level of rates in 2012 or The Council inherited more debt than expected from the legacy Councils, adding $15 million to interest costs. Lower receipts from asset sales, development contributions and other capital subsidies also required additional borrowings to fund the capital expenditure, and added $12 million to interest costs. The provisions for remediation of closed landfills and weather tightness were updated. This restated the current value of the projected costs by $26 million. This does not impact on current or future rates. Auckland Council continues to be in a very sound financial position. We have ratepayer equity of $26.6 billion at June 2012, very positive cash flows, and a financial strategy that sees budgets rebalanced annually. A number of transitional issues have been addressed this year, while the Council continues to invest in the City. As the property market grows Council will see particularly the timing differences that have reduced developer related income reverse. Standard and Poor s and Moody s both reviewed the credit rating of the Council and confirmed our respective AA and Aa2 ratings. 46

51 Where did we spend it? Operational expenditure The graph illustrates the activities funded by the council. The expenditure on transport and water and wastewater only includes the funding passed by Auckland Council to Auckland Transport and Watercare Services Ltd. Most of the operating expenditure for these activities are incurred within those organisations. Capital expenditure 47