Notice of Meeting:

I hereby give notice that an ordinary meeting of the Audit and Risk Subcommittee will be held on:

 

Date:                             Tuesday 3 October 2017

Time:                            3.00 pm

Venue:                          Otaru Room, Civic Centre, The Octagon, Dunedin

 

Sue Bidrose

Chief Executive Officer

 

Audit and Risk Subcommittee

PUBLIC AGENDA

 

MEMBERSHIP

 

Chairperson

Susie Johnstone

 

 

 

 

Members

Janet  Copeland

Dave Cull

 

Doug Hall

Mike Lord

 

Chris Staynes

 

 

Senior Officer                               Sandy Graham, General Manager Strategy and Governance

 

Governance Support Officer      Wendy Collard

 

 

 

Wendy Collard

Governance Support Officer

 

 

Telephone: 03 477 4000

Wendy.Collard@dcc.govt.nz

www.dunedin.govt.nz

 

 

 

 

 

 

 

Note: Reports and recommendations contained in this agenda are not to be considered as Council policy until adopted.

 


Audit and Risk Subcommittee

3 October 2017

 

 

 

ITEM TABLE OF CONTENTS                                                                   PAGE

 

1        Apologies                                                                                                  4

2        Confirmation of Agenda                                                                              4

3        Declaration of Interest                                                                                5

4        Confirmation of Minutes                                                                             11

4.1   Audit and Risk Subcommittee meeting - 2 August 2017                            11     

Part A Reports (Committee  has power to decide these matters)

5          Audit and Risk Subcommittee Work Plan 2017/18                                           21

6        Schedule of Governance/Financial Policies                                                     26

7        10 Year Plan update - October 2017                                                             29

8        Insurance Renewal Year Ended 30 June 2018                                                 55            

Resolution to Exclude the Public                                                                             64

 

 


Audit and Risk Subcommittee

3 October 2017

 

 

 

1     Apologies

Apologies have been received from Mayor Dave Cull and Cr Chris Staynes.

 

That the Committee:

 

Accepts the apologies from Mayor Dave Cull and Cr Chris Staynes.

2     Confirmation of agenda

Note: Any additions must be approved by resolution with an explanation as to why they cannot be delayed until a future meeting.


Audit and Risk Subcommittee

3 October 2017

 

 

Declaration of Interest

 

  

 

EXECUTIVE SUMMARY

1.     Members are reminded of the need to stand aside from decision-making when a conflict arises between their role as an elected representative or independent member and any private or other external interest they might have.

2.     Elected and Independent members are reminded to update their register of interests as soon as practicable, including amending the register at this meeting if necessary.

 

RECOMMENDATIONS

That the Committee:

a)     Notes/Amends if necessary the Elected or Independent Members' Interest Register attached as Attachment A; and

b)     Confirms/Amends the proposed management plan for Elected or Independent Members' Interests.

 

 

Attachments

 

Title

Page

a

Members' Register of Interest

7

  



Audit and Risk Subcommittee

3 October 2017

 

 


Audit and Risk Subcommittee

3 October 2017

 

 


Audit and Risk Subcommittee

3 October 2017

 

 


Audit and Risk Subcommittee

3 October 2017

 

 


Audit and Risk Subcommittee

3 October 2017

 

 

Confirmation of Minutes

Audit and Risk Subcommittee meeting - 2 August 2017

 

 

RECOMMENDATIONS

That the Committee:

Confirms the public part of the minutes of the Audit and Risk Subcommittee meeting held on 2 August 2017 as a correct record.

 

 

 

Attachments

 

Title

Page

A

Minutes of Audit and Risk Subcommittee meeting  held on 2 August 2017

12

 

 



 

Audit and Risk Subcommittee

UNCONFIRMED MINUTES

 

Unconfirmed Minutes of an ordinary meeting of the Audit and Risk Subcommittee held in the Otaru Room, Civic Centre, The Octagon, Dunedin on Wednesday 02 August 2017, commencing at 2.05 pm

 

PRESENT

 

Chairperson

Susie Johnstone

 

Members

Cr Doug Hall

Cr Mike Lord

 

Cr Chris Staynes

 

 

 

IN ATTENDANCE

Sue Bidrose (Chief Executive Officer), Gavin Logie (Acting Chief Financial Officer), Andrew Slater (Risk and Internal Audit Manager), Tami Sargeant (Senior Policy Advisor), Phil Sinclair (Crowe Horwath), Julian Tan (Audit NZ) and Amanda Nicholls (Audit NZ)

 

Governance Support Officer      Vivienne Harvey

 

 

 

 

1       Apologies

 

Moved (Cr Mike Lord/Cr Doug Hall):

That the Subcommittee:

 

Accepts the apologies from Mayor Dave Cull and Ms Janet Copeland (for absence) and Councillor Chris Staynes for part of the meeting to attend the Citizenship Ceremony.

 

Motion carried (AR/2017/033)

 

2       Confirmation of agenda

 

 

Moved (Chairperson Susie Johnstone/Cr Chris Staynes):

 

That the Subcommittee:

 

Confirms the agenda with the following alteration:

 

a)     That Item 7 – Long Term Plan 2018 – July Update be taken before Item 5 due to the availability of staff.

 

b)     That Item C3 – Report to the Council on the Interim Audit of Dunedin City Council for the year ended 30 June 2017 be taken before Item C1 due to the availability of staff from Audit NZ.

 

Motion carried (AR/2017/034)

 

 

3       Declarations of interest

Members were reminded of the need to stand aside from decision-making when a conflict arose between their role as an elected representative and any private or other external interest they might have.

 

The following amendments to be made to the Interest Register:

·      Gavin Logie owned a section in Central Otago district.

·      Sandy Graham was no longer a Board member on the Otago Rural Fire Authority.

Susie Johnstone declared that she was a member of the Audit and Risk Committee of Audit NZ.

 

 

Moved (Cr Chris Staynes/Cr Mike Lord):

 

That the Subcommittee:

 

a)     Amends the Elected or Independent Members' Interest Register attached as Attachment A; and

b)     Confirms the proposed management plan for Elected or Independent Members' Interests.

Motion carried (AR/2017/035)

 

4       Confirmation of Minutes

4.1    Audit and Risk Subcommittee meeting - 6 June 2017

 

Moved (Chairperson Susie Johnstone/Cr Mike Lord):

 

That the Subcommittee:

 

Confirms the public part of the minutes of the Audit and Risk Subcommittee meeting held on 6 June 2017 as a correct record.

 

 Motion carried (AR/2017/036)

Part A Reports

7       Long Term Plan 2018 - July update

 

A report from Community and Planning provided an update on the development of the Long Term Plan 2018-2028 (LTP).

The report included the timetable which showed where the touch points would be and where quality control check points would occur.

 

The framework for the consultation document would be developed within the next two months.  The framework and key messages to be included in the consultation document would be brought to the December meeting of the Audit and Risk Subcommittee. 

 

There was a discussion on the Financial and Infrastructure Strategies which included the development of a LTP timetable with the interface with Audit and Risk Subcommittee built in and a workshop for the Subcommittee.

 

 

Moved (Cr Mike Lord/Cr Doug Hall):

 

That the Subcommittee:

 

a)     Notes the Long Term Plan 2018 – July Update.

Motion carried (AR/2017/037)

 

5       Schedule of Governance/Financial Policies

 

A report from Civic and Legal provided the updated Schedule of Governance/Financial Policies. 

Following discussion, it was agreed that an update on the Information Technology Security Policy be provided for the next meeting and the inclusion of the Asset Management Policy.

The General Manager Strategy and Governance (Sandy Graham) responded to questions regarding the Policy database which was currently being trialled.

 

 

Moved (Cr Chris Staynes/ Susie Johnstone):

 

That the Subcommittee:

 

a)     Notes the Schedule of Governance/Financial Policies.

Motion carried (AR/2017/038)

 

6       Audit and Risk Subcommittee Work Plan 2017/18

 

A report from Civic provided the updated Audit and Risk Subcommittee Work Plan 2017/18.  There was discussion on the work plan, and it was requested that the Sensitive Expenditure Policy needs to be done (as it was due for review in July).

It was requested that the legal compliance report is added to the work plan.  Mr Slater advised that this would be reported to the next Subcommittee meeting with the first reporting round to the end of June 2017.   The legislation compliance report would be provided annually to the Subcommittee.

 

 

Moved (Chairperson Susie Johnstone/Cr Chris Staynes):

 

That the Subcommittee:

 

a)     Notes the Audit and Risk Subcommittee Work Plan 2017/18.

Motion carried (AR/2017/039)

 

             

 

Resolution to exclude the public

Moved (Susie Johnstone/Cr Mike Lord):

That the Subcommittee:

 

Pursuant to the provisions of the Local Government Official Information and Meetings Act 1987, exclude the public from the following part of the proceedings of this meeting namely:

 

General subject of the matter to be considered

Reasons for passing this resolution in relation to each matter

Ground(s) under section 48(1) for the passing of this resolution

 

Reason for Confidentiality

C1  Audit and Risk Subcommittee meeting - 6 June 2017 - Public Excluded

S7(2)(j)

The withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C2  Audit and Risk Subcommittee Action List Report

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C3  Report to the Council on the interim audit of Dunedin City Council for the year ended 30 June 2017

S7(2)(b)(ii)

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

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C4  Proposed DCC Internal Work plan 2017-18

S7(2)(b)(ii)

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

S7(2)(c)(i)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C5  Update on the DCC Internal Work plan - August 2017

S7(2)(b)(ii)

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

S7(2)(c)(i)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C6  Internal Audit Outcomes Report - August 2017

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C7  External Audit Outcomes Report - August 2017

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C8  Strategic Risk Register Update - August 2017

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C9  Treasury Risk Management Compliance Report

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C10  Annual Review - Dunedin City Council, Treasury Risk Management Policy

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C11  Draft DCC Procurement and Contract Management Policy

S7(2)(b)(ii)

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

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C12  Draft DCC Purchase Card Policy and Procedures

S7(2)(b)(ii)

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

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C13  Health and Safety Board minutes and report from 26 June 2017

S7(2)(a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C14  Protected Disclosure Register

S7(2)(a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

S7(2)(c)(i)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C15  Investigation Register

S6(b)

The making available of the information would be likely to endanger the safety of a person.

 

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 6.

The matters detailed in this report are subject to investigation and information should remain confidential so as not to prejudice the investigation and any possible outcomes of the investigation...

This resolution is made in reliance on Section 48(1) (a) of the Local Government Official Information and Meetings Act 1987, and the particular interest or interests protected by Section 6 or Section 7 of that Act, or Section 6 or Section 7 or Section 9 of the Official Information Act 1982, as the case may require, which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as shown above after each item.

 

That Julian Tan (Audit Director, Audit NZ) and Amanda Nicholls (Audit Manager, Audit NZ) be permitted to remain at the meeting, after the public has been excluded, because of their knowledge of Item C3.  This knowledge, which would be of assistance in relation to the matters discussed, was relevant because they would be reporting on the item under consideration.

That Phil Sinclair (Partner, Audit and Assurance, Crowe Horwath) be permitted to remain at the meeting, after the public has been excluded, because of his knowledge of Items C4 and C5.  This knowledge, which would be of assistance in relation to the matters discussed, was relevant because he would be reporting on the item under consideration.

 

Motion carried (AR/2017/040)

 

 

The meeting moved into non-public at 2.30 pm.

 

 

 

..............................................

CHAIRPERSON

   

 

     


Audit and Risk Subcommittee

3 October 2017

 

 

Part A Reports

 

Audit and Risk Subcommittee Work Plan 2017/18

Department: Civic and Legal

 

 

 

 

EXECUTIVE SUMMARY

1      This report provides a copy of the updated Audit and Risk Subcommittee Work Plan 2017/18.  As this is an administrative report only, the Summary of Considerations is not required.

2      It should be noted that the items without ticks shown have not been scheduled for action in the 2017/18 year.

 

RECOMMENDATIONS

That the Committee:

a)     Notes the Audit and Risk Subcommittee Work Plan 2017/18.

 

 

 

Signatories

Author:

Wendy Collard - Governance Support Officer

Authoriser:

Kristy Rusher - Manager Civic and Legal 

Attachments

 

Title

Page

a

Audit and Risk Subcommittee workplan

22

 

 

 


Audit and Risk Subcommittee

3 October 2017

 

 


 


 


 


Audit and Risk Subcommittee

3 October 2017

 

 

 

Schedule of Governance/Financial Policies

Department: Civic and Legal

 

 

 

 

EXECUTIVE SUMMARY

1      This report provides a copy of the updated Schedule of Governance/Financial Policies.  As this is an administrative report only, the Summary of Considerations is not required.

 

RECOMMENDATIONS

That the Committee:

a)     Notes the Schedule of Governance/Financial Policies

 

 

 

Signatories

Author:

Wendy Collard - Governance Support Officer

Authoriser:

Kristy Rusher - Manager Civic and Legal 

Attachments

 

Title

Page

a

Schedule of Governance/Financial Policies

27

 

 


Audit and Risk Subcommittee

3 October 2017

 

 


 


Audit and Risk Subcommittee

3 October 2017

 

 

 

10 Year Plan update - October 2017

Department: Community and Planning

 

 

 

 

EXECUTIVE SUMMARY  

1      This report provides the Audit and Risk Subcommittee with an update on the development of the Council’s 10 year plan 2018-2028 (previously known as the Long Term Plan or LTP).

RECOMMENDATIONS

That the Committee:

a)     Notes the 10 year plan update – October 2017.

 

BACKGROUND

2      The Local Government Act 2002 (LGA) requires all local authorities to develop a 10 year plan. The purpose of a 10 year plan is to: describe the Council’s activities; describe the community outcomes of Dunedin; provide integrated decision-making and co-ordination of resources; provide a long-term focus for the decisions and activities of the Council; and provide a basis for accountability of the local authority to the community.

3      As part of the development of the 10 year plan, the Council is also required develop a consultation document to provide an effective basis for public participation in the Council’s decision-making processes relating to the content of the 10 year plan.

DISCUSSION

Project update

4      Work on the content and information required for the 10 year plan and consultation document is well underway and the 10 year plan project is currently on track.  The Council has considered two update reports on the 10 year plan and supporting documents on 30 May and 29 August 2017, including:

·           Draft community outcomes and headline indicators;

·           Draft Dunedin city profile;

·           Strategic forecasting assumptions (e.g. population and dwelling growth; climate change variables); and

·           Revised significance and engagement policy. 

5      The third 10 year plan update report with supporting documents will be considered by the Council on 31 October 2017, including:

·           Draft financial strategy;

·           Draft infrastructure strategy;

·           Draft levels of service for groups of activities; and

·           Draft financial policies (e.g. rates remission and postponement policy, revenue and financing policy).

6      10 year plan workstreams are focussed on their respective deliverables.  Of note are the 10-year capital and operational expenditure budgets; infrastructure strategy; financial strategy; statements of service provision (including service levels); and community engagement and communications plans.

7      A consultation hui with the Māori community was held on 20 September 2017 in partnership with the Māori Participation Working Party to provide early input into the development of the 10 year plan. 

Quality Assurance

8      The 10 year plan project team has utilised the SOLGM 'health check' and quality assurance tools to assess the effectiveness of project management processes, systems and resources for LTP delivery. SOLGM quality assurance checks to date have all been satisfactory, and have been scheduled in the Project Plan to be undertaken every three months.

Risk

9      A comprehensive risk assessment has been undertaken on the 10 year plan project. This will be utilised to inform the delivery of the project as it progresses. At this stage all risks are appropriately managed. The risk profile sits alongside the aforementioned SOLGM ‘health check’ and quality assurance assessment.

Audit Liaison

10    The 10 year plan timetable has been updated to include when updates will be presented to the Audit and Risk Subcommittee for consideration (Attachment B).

11    The final 10 year plan and consultation document must contain a report from the Auditor General.  To ensure the documents benefit fully from the audit process and meet all compliance obligations, an LTP Audit Working Group has been established. The Group will facilitate internal quality assurance activities and project delivery, as well as support the relationship with, and role of Audit New Zealand.

12    LTP Project staff attended an Audit NZ update on 7 June 2017, and an initial liaison meeting with DCC and Audit NZ was held on 4 July 2017. Regular informal liaison meetings with Audit NZ have been scheduled on a fortnightly basis with DCC staff and the Audit NZ Manager assigned to the DCC group.

13    It is anticipated Audit NZ will undertake a formal review of the consultation document, supporting documents and 10 year plan proper at the following stages:

LTP deliverable

Indicative date for Council approval

Indicative date for Audit NZ review

1       Community outcomes

30 May 2017

27 November - 8 December 2017

2       Draft financial strategy

31 October 2017

27 November - 8 December 2017

3       Draft infrastructure strategy

31 October 2017

27 November - 8 December 2017

4        Asset management plans and Group management plans

n/a

27 November - 8 December 2017

5       Draft financial policies

31 October 2017

27 November - 8 December 2017

6        Significant forecasting assumptions

30 May &

31 October 2017

27 November - 8 December 2017

7       Performance framework

29 August &

31 October 2017

27 November - 8 December 2017

8       Draft financial statements

11-13 December 2017

27 November - 8 December 2017

9      Consultation Document

27 February 2018

28 January ­– 9 February 2018

10    LTP Proper

26 June 2018

4-15 June 2018

 

14    Relevant comments and recommendations from the Office of the Auditor General regarding the 2015/16 LTP have also been disseminated with Councillors, key project staff and managers for their consideration in the development and delivery of the 10 year plan.

15    In addition, Audit NZ has provided the Council with a LTP Self-Assessment, to be completed by the end of October 2017. The Self-Assessment is provided as an attachment to this report. The Self-Assessment will be completed by the project workstream leads in the coming weeks, and a final draft reviewed and approved by the 10 Year Plan Audit Working Group prior to submission with Audit NZ.

OPTIONS

16    There are no options.

NEXT STEPS

17    A 10 year plan progress update will be provided to the Audit and Risk Subcommittee at the next meeting of the 5 December 2017.

 

Signatories

Author:

Tami  Sargeant  - Senior Policy Analyst

Authoriser:

Maria Ioannou - Corporate Policy Manager

Sandy Graham - General Manager Strategy and Governance

Attachments

 

Title

Page

a

Audit NZ - LTP Self Assessment template

35

b

10 Year Plan Project Timetable - October 2017

53

 

SUMMARY OF CONSIDERATIONS

 

Fit with purpose of Local Government

The development of the 10 year plan enables democratic local decision making and action by, and on behalf of communities; and meets the current and future needs of the Dunedin communities for good quality public services in a way that is most cost effective for households and businesses.

Fit with strategic framework

 

Contributes

Detracts

Not applicable

Social Wellbeing Strategy

Economic Development Strategy

Environment Strategy

Arts and Culture Strategy

3 Waters Strategy

Spatial Plan

Integrated Transport Strategy

Parks and Recreation Strategy

Other strategic projects/policies/plans

The 10 year plan contributes to all of the objectives and priorities of the strategic framework as it describes the Council’s activities; the community outcomes; and provides a long term focus for decision making and coordination of the Council’s resources, as well as a basis for community accountability.

Māori Impact Statement

The 10 year plan provides a mechanism for Māori to contribute to local decision-making.

Sustainability

The 10 year plan contains content regarding the Council’s approach to sustainability. Major issues and implications for sustainability are discussed in the Infrastructure Strategy and financial resilience is discussed in the Financial Strategy.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides an update on the development of the 10 year plan 2018-2028.

Financial considerations

There are no financial implications for this 10 year plan update report.

Significance

This 10 year plan update report is considered low significance in terms of the Council’s Significance and Engagement Policy.

Engagement – external

There will be extensive community engagement throughout the development of the 10 year plan 2018-2028.  As referenced in the report, ongoing formal and informal meetings with Audit will be undertaken throughout the development of the 10 year plan 2018-2028.

Engagement - internal

Staff and managers from across the Council are involved in the development of the 10 year plan 2018-2028.

Risks: Legal / Health and Safety etc.

Risks for the 10 year plan development have been identified in the report.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards are involved in the development of the 10 year plan 2018-2028

 

 


Audit and Risk Subcommittee

3 October 2017

 

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Audit and Risk Subcommittee

3 October 2017

 

 

PDF Creator



Audit and Risk Subcommittee

3 October 2017

 

 

 

Insurance Renewal Year Ended 30 June 2018

Department: Finance

 

 

 

 

EXECUTIVE SUMMARY  

1      This report provides a summary of the insurance renewal for the Dunedin City Council for the year ended 30 June 2018.

2      For the purposes of this insurance policy renewal, the DCC Group (where referenced) comprises the Dunedin City Council and any Council Controlled Organisation and/or subsidiary company more than 50% owned by the Council – including but not limited to: Dunedin City Holdings Limited; Dunedin City Treasury Limited; City Forests Limited; Dunedin International Airport Limited; Dunedin Stadium Property Limited; Dunedin Venues Management Limited; Taieri Gorge Railway Limited; The Theomin Gallery Management Committee (Olveston); and Dunedin Transport Limited.

Note: Some CCOs and subsidiaries hold individual policies and/or have particular policy terms, conditions and limits.

3      This report details the changes that have been negotiated around policy terms, conditions, coverage, excesses and premiums applied. 

4      The material damage premium for 2017/18 have been impacted by a number of factors including: increase in insured values (8.5%) and tightening of local market pricing and capacity following recent insurance events (Kaikoura earthquakes and Edgecumbe flooding).  The note 14 graph does however highlight the continued increase in asset value covered while maintaining a relatively low cost per dollar insured.

 

RECOMMENDATIONS

That the Committee:

a)     Notes the Insurance Renewal Year Ended 30 June 2018.

 

BACKGROUND

5      The Council historically placed its insurance cover with New Zealand underwriters only.  The risk with this strategy became evident following the Christchurch earthquakes when capacity in this market became constrained. 


 

6      As part of the 2014/15 insurance renewal Council was able to place 35% of its core cover into the international market, which provided significant risk mitigation in relation to market capacity, but also delivered the opportunity to extend cover to infrastructure assets as well as creating market tension to ensure other renewal terms and conditions were favourable.

7      This strategy has continued in subsequent years with placement into the international market dropping to 30% as capacity returned to the local market.

8      In the most part of 2016 insurers were actively competing to protect existing market share while new entrants were seeking to gain market share.  Unfortunately the November 2016 Kaikoura earthquake (and consequential damage caused elsewhere including Wellington) has quickly seen the market tighten as insurers reassess their exposures in the New Zealand region.

DISCUSSION

9      The initial approach to the market for the 2017/18 financial year was on the basis of existing local placement set at 70% and international placement set at 30%.

10    Significant capacity restrictions in the local market resulted in this placement at only providing 60% cover.  London was able to fill the 10% gap, but did so on the basis of a $750.0 million limit any one occurrence or in the aggregate for the natural disaster cover.

11    What this means is Council will be self-insured beyond this $750.0m limit for 10% of any claim.

12    Infrastructure cover is provided on the understanding that Central Government will contribute 60% of funding towards reinstatement.  The limits and excesses noted for this cover are for the DCC's portion only.  Therefore a loss would need to exceed $5.0 million before the insurers would contribute to any claim i.e. 40% of $5.0m being the current excess of $2.0m.

13    Table A provides a comparison of insurance premiums between 2016/17 and 2017/18. All premiums are quoted exclusive of GST.

 

14    The following graph provides a historically perspective on value insured and the associated unit premium.

 

Policy Limits

* This limit applies to 90% of the assets insured.  The remaining 10% is limited to
$750.0 million any one claim or in the aggregate ie: 10% self-insured for claims in excess of $750.0m.

 

** Natural Disaster Perils include earthquake, volcanic eruption, tsunami, geothermal activity, hydrothermal activity and, in respect of the outfalls only cover extended to include storm (Force 10).  This definition excludes the impact of floods. 

Policy Excesses

Uninsured Risks/Emerging Insurance Trends.

15    It is acknowledged that with any insurance cover the Council will accept a degree of uninsured risk, whether it be reflected as higher excesses, policy limits and/or uninsured assets.  In terms of particular risks associated with the current programme the following should be noted:

·         Policies do not provide cover for automatic reinstatement of the sum insured in the event of fire or Natural Disaster losses. If a significant loss occurs additional insurance cover may need to be purchased.

·         While Asset Schedules have been extensively reviewed and updated, any assets excluded from the schedules will not be covered, and those incorrectly valued may not be adequately covered.

·         Liability Policy limits will need to be continually reviewed in light of claims history, emerging trends and because these policy limits are held as group limits.


 

·      Emerging trends that remain under consideration include an extension of current policy coverage for more robust Cyber Risk protection, as well as risks posed by terrorism, climate change, contagious disease, pollution and weather tight home claims.

·      An increasing recognition of the extent of asbestos risks and the potential costs of identification/ maintenance/ removal activities may necessitate further Policy reviews.

·      The Material Damage - Fire First Loss limit of $250m needs to be sufficient to provide cover for fire following any cause including Natural Disaster losses (it incorporates all assets insured by the Group). In order to test this limit, a review exercise was completed in October 2014. It is recommend that a similar review exercise is completed to ensure the existing first loss limit remains adequate based on adjusted values since 2014.

·      Infrastructure asset coverage can be extended to include a sub limit of $25.0m for damage caused by flood (defined as 'the covering of normally dry land by water that has escaped or been released from the normal confines of a lake, river, creek and other natural watercourses, a reservoir, canal or dam) and storm (defined as winds, rain or snow) perils for an additional premium of $430k per annum.

·      Government Levies – fire service and earthquake commission levies are subject to change outside the control of Council. Notably, there has been an amalgamation of the urban and rural fire services into one organisation (Fire and Emergency New Zealand). The funding structure for this new organisation is in transition, however it is believed that levies will be charged on commercial property based on the sum insured (previously fire first loss limit $250.0m). The initial impact of this change will see an increase in fire service levies (FSL) of some 40%, with the move to sum insured planned for 2019.

Options

16    Not applicable.

Next Steps

17    The DCC Group Insurance Policy is subject to an annual review and renewal.

18    Additional and ongoing Policy review, monitoring and negotiation activities will be undertaken by Council staff and representatives of the Crombie Lockwood Insurance Programme Service Team to ensure adequate coverage remains in place for the DCC and DCC Group Companies.

 

Signatories

Author:

Gavin Logie - Acting Chief Financial Officer

Authoriser:

Sue Bidrose - Chief Executive Officer 

Attachments

There are no attachments for this report.

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

The financial expenditure detailed in this report relates to providing local infrastructure, public services and regulatory functions for the community.

Fit with strategic framework

 

Contributes

Detracts

Not applicable

Social Wellbeing Strategy

Economic Development Strategy

Environment Strategy

Arts and Culture Strategy

3 Waters Strategy

Spatial Plan

Integrated Transport Strategy

Parks and Recreation Strategy

Other strategic projects/policies/plans

 

This report has no direct contribution to the Strategic Framework, however the financial expenditure noted in this report is reflected within the Financial Strategy and the Insurance Policy contributes to the effective and ongoing realisation of all DCC strategies.

Māori Impact Statement

There are no known impacts for tangata whenua.

Sustainability

There are no implications for sustainability.

LTP/Annual Plan/Financial Strategy

The planned insurance programme is as noted in the LTP.

Financial considerations

The budget for insurance cover plus brokerage 2017/18 is $2.769 million.  The current quoted premium falls just below this budget.  Note that the final premium may differ slightly due to changes in the declared insurance values.

Significance

Not applicable – reporting only.

Engagement - external

·                The insurance programme has been developed in conjunction with our insurance brokers and key staff from Council and CCOs.  The Acting Chief Financial Officer and Aurora Chief Financial Officer presented to local insurers in Auckland on the programme for 2017/18.

Engagement – internal

The insurance programme has been developed in conjunction with DCC insurance brokers and key staff from Council and CCOs. 

Risks: Legal/Health and Safety etc.

This report identifies a small number of risks that remain untreated or are emerging as factors that require further review.

Conflict of Interest

There are no identified conflicts of interest.

Community Boards

There are no known implications for Community Boards.

             


Audit and Risk Subcommittee

3 October 2017

 

 

Resolution to Exclude the Public

 

 

That the Audit and Risk Subcommittee:

 

Pursuant to the provisions of the Local Government Official Information and Meetings Act 1987, exclude the public from the following part of the proceedings of this meeting namely:

 

General subject of the matter to be considered

 

Reasons for passing this resolution in relation to each matter

Ground(s) under section 48(1) for the passing of this resolution

 

Reason for Confidentiality

C1  Confirmation of  the Confidential Minutes of Audit and Risk Subcommittee meeting - 2 August 2017 - Public Excluded

S7(2)(j)

The withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.

 

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

 

S7(2)(b)(ii)

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

 

S7(2)(c)(i)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

 

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

 

S7(2)(a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

 

S6(b)

The making available of the information would be likely to endanger the safety of a person.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C2  Dunedin City Council Annual Report for the year ended 30 June 2017

S7(2)(b)(i)

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

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

The information in the annual report is subject to final audit clearance..

C3  Report to the Council on the interim audit of Dunedin City Council for the year ended 30 June 2017

S7(2)(a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 This report is confidential because it refers and impacts Council staff positions where those staff have not had the opportunity to respond or comment on the report..

C4  Strategic Risk Register Update - Sept 2017

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C5  Update on the DCC Internal Workplan - Sept 2017

S7(2)(b)(ii)

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

 

S7(2)(c)(i)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

 

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C6  External Audit Outcomes Report - Sept 2017

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C7  Internal Audit Outcomes Report - Sept 2017

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C8  Internal Audit - Goods & Services Tax

S7(2)(a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

The report is considered confidential because it refers to Council staff positions where those staff may not have had the opportunity to respond or comment on the report..

C9  Dunedin City Holdings Ltd - Update on Audit and Risk Activity

S7(2)(b)(ii)

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

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C10  DCC Comply With Legal Compliance Survey - initial findings (2016-17)

S7(2)(c)(ii)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C11  DCC Procurement and Contract Management Policy - draft Sept 2017

S7(2)(b)(ii)

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

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C12  Sensitive Expenditure Policy - revised Sept 2017

S7(2)(b)(ii)

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

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C13  Top 100 Suppliers 2015/16

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

The information in this report is commercially sensitive..

C14  Treasury Risk Management Compliance Report

S7(2)(h)

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C15  Protected Disclosure Register

S7(2)(a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

 

S7(2)(c)(i)

The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C16  Investigation Register

S6(b)

The making available of the information would be likely to endanger the safety of a person.

S48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 6.

The matters detailed in this report are subject to investigation and information should remain confidential so as not to prejudice the investigation and any possible outcomes of the investigation..

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987, and the particular interest or interests protected by Section 6 or Section 7 of that Act, or Section 6 or Section 7 or Section 9 of the Official Information Act 1982, as the case may require, which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as shown above after each item.