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Audit and Risk Subcommittee
18 February 2021
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10 year plan 2021-31 Update Report
Department: Corporate Policy
EXECUTIVE SUMMARY
1 The
purpose of this report is to provide the Audit and Risk Subcommittee with an
update on the development of the 10 year plan 2021-31 (10 year plan).
2 As
this is an update report, there are no options or Summary of
Consideration.
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RECOMMENDATIONS
That the Committee:
a) Notes the 10 Year Plan 2021-31 Update Report.
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DISCUSSION
3 Since
the last update to the Audit and Risk Subcommittee on 2 December 2020,
significant progress has been made on the development of the 10 year
plan.
4 A
Council meeting was held on 14/15 December 2020, to consider option reports for
capital projects. Decisions made at that meeting have assisted the
development of capital budgets, and identified options, both preferred and
alternative, for projects that will be included in the consultation
document.
5 A
further Council meeting was held on 27 – 29 January 2021, to consider the
following:
· Capital
and operating budgets,
· Financial
and infrastructure strategies,
· Significant
forecasting assumptions,
· Climate
2030 Rapid Review and DCC emissions reduction opportunities,
· Significance
and Engagement, Revenue and Financing, and Rates Remission and Postponement
policies, and
· Rating
method for 2021/22.
6 Levels
of service will be considered at a meeting on 23 February 2021.
7 There
are some key areas that our auditors are expected to focus on during the 10
year plan audit and our response to these are discussed below.
COVID-19
8 The
impacts of COVID-19 have been taken account of in the development of the draft
10 year plan.
9 The
Significant Forecasting Assumptions, provided at Attachment A, discuss the
possible impacts of COVID-19 on DCC revenue, services and capital delivery,
staff, population, dwellings and rating projections, visitor numbers, the
economy, and the community. These assumptions have a high level of
uncertainty for reasons including the extent of any possible future community
transmission, new variants, the timing of a vaccine rollout, and the extent of
ongoing border restrictions.
10 The
Financial Strategy, provided at Attachment B, recognises the upheaval from
COVID-19, and the resulting uncertainty around Dunedin’s growth and
economic performance into the future.
11 The
Consultation Document will include commentary on COVID-19, recognising the
important role that the DCC needs to play in the way the city recovers, and the
need to keep investing in the city.
Climate change and zero
carbon
12 Climate
change and Council’s zero carbon 2030 target have been considered
throughout the development of the draft 10 year plan. All option reports
presented to Council included an analysis of the impacts of each presented
option on climate change and zero carbon, to assist decision making.
13 The
Financial Strategy discusses two workstreams, climate change adaptation, and
zero carbon 2030 which is focused on climate change mitigation. The
Financial Strategy recognises that sea level rise and adverse weather events
causing flooding are significant risks for Dunedin, and of particular concern
is the South Dunedin area.
14 The
Financial Strategy also discusses the zero carbon work programme, that has two
targets as follows:
· Net
zero emissions of all greenhouse gases other than biogenic methane by 2030, and
· 24%
to 47% reduction below 2017 biogenic methane emissions by 2050, including 10%
reduction below 2017 biogenic methane emissions by 2030.
15 While
the target is for the city as a whole, it also includes reducing emissions from
Council’s own activities, and transport and waste have been identified in
the 10 year plan as priority areas for investment to reduce emissions.
16 The
10 year plan includes budget for additional staff to progress the zero carbon
and South Dunedin Future projects and further budget for the “South
Dunedin Future” programme that is being developed with the Otago Regional
Council.
17 In
2020, a “rapid review” was undertaken to look at planned work
programmes alongside the DCC’s emissions reduction ambitions and Zero
Carbon 2030 target, and to identify initiatives to reduce and/or offset
Dunedin’s greenhouse gas emissions. Key findings were presented to
Council at the 27 January 2021 Council meeting, to consider draft 10 Year Plan
budgets with identified emissions reduction opportunities.
18 The
Infrastructure Strategy, provided at Attachment C, identifies climate change
and zero carbon 2030 as significant issues for Dunedin. Increased demand
on both the transport network and the 3 waters network are recognised in terms
of the effects of flooding, drought, catchment fire, and rising
groundwater. The strategy also considers other natural hazards in
addition to climate change.
19 New
levels of service are being proposed for the draft 10 year plan that will
assist monitoring progress towards achieving Council’s zero carbon 2030
target. These are marked with a green leaf symbol - 
. Examples
include targets to reduce the amount of energy used by DCC properties,
increasing the amount of diversion of recyclable or reusable materials, and
reducing the amount of solid waste.
20 The
Consultation Document will include commentary on climate change, the zero
carbon 2030 target and reducing waste initiatives.
Condition and performance of
critical assets
21 The
Infrastructure Strategy provides information about the current condition of
Dunedin’s network infrastructure for 3 waters and transport assets.
It discusses how asset condition is assessed, and the need to increase the
level of renewals to improve resilience.
22 The
capital budget proposes that $1.5 billion be spent over the 10 year period
compared to
$878 million in the current 10 year plan 2018-28. Of this $950 million
(including inflation) is proposed to be spent on renewals compared to $520
million in the current plan. This budget recognises that renewals are a
priority for Council, with budgets based on the latest asset management plans
that focus on asset condition and risk. A copy of the Capital Expenditure
Report 2021-31 presented to the 27 January 2021 Council meeting is provided at
Attachment D.
23 The
Financial Strategy discusses the need to prioritise funding maintenance and
renewals, with decisions based on asset management plans, asset condition and
risks.
24 The
Consultation Document will include commentary on looking after our assets, and
that replacing aging assets is a major priority for Council. It will acknowledge
the recent water contamination issue of intermittent peaks of lead in found the
water supply at Waikouaiti, Karitane and Hawksbury Village. Ongoing
investigations may result in a reprioritisation of the timing of planned
capital works, to place higher priority on pipe replacement works.
Ability to deliver
25 The
budget overview report to the 27 January 2021 Council meeting, provided at
Attachment E, recognised the challenge of delivering on the proposed level of
capital spend.
26 The
Financial Strategy also discusses our ability to deliver on the planned capital
programme, acknowledging that the annual targets are higher than previous
achievements, and the lead time for delivery is always longer than
anticipated. The Financial Strategy notes that these risks will be
managed through improved forward planning, early contractor engagement,
innovative procurement strategies, and strong disciplines around project
management and monitoring.
Consultation Document
27 A
draft consultation document is currently being reviewed. It will be
presented to the 23 February Council meeting, in non-public, for Councillor
input. To ensure the Audit and Risk Subcommittee receive a most up to
date draft, a copy of the 23 February Council report and draft consultation
document will be circulated to the Audit and Risk Subcommittee as a non-public
supplementary agenda item by Wednesday 17 February 2021.
28 The
audited consultation document will be presented to Council on 9 March for
adoption.
29 A
list of the proposed content of the consultation document has been provided to
our auditors.
30 Consultation
questions have arisen from decisions made at the December 2020 and January 2021
Council meetings.
Compliance
31 Taituarā,
previously called SOLGM, has not provided a legal checklist for this 10 year
plan, as it has done in the past. Staff have prepared a checklist based
on the requirements in the Local Government Act, and this is being used to
ensure the content of the consultation document and the final 10 year plan will
meet all Local Government Act requirements.
32 A
copy of the most recent SOLGM health checklist is provided at Attachment F.
Timetable
33 A
timetable for the remainder of the process through to adoption of the final 10
year plan is provide at Attachment G.
OPTIONS
34 As
this is an update report, there are no options.
NEXT STEPS
35 An
update report will be provided to the Audit and Risk Subcommittee at its next
meeting on
7 April 2021.
Signatories
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Author:
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Sharon Bodeker - Corporate Planner
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Authoriser:
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Gavin Logie - Acting General Manager Finance
Sandy Graham - Chief Executive Officer
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Attachments
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Title
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Page
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⇩a
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Significant Forecasting
Assumptions
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50
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⇩b
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Financial Strategy
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63
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⇩c
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Infrastructure Strategy
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75
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⇩d
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Capital Expenditure
Report
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148
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⇩e
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10 Year Plan Overview
Report
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181
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⇩f
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SOLGM Health Checklist
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191
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⇩g
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Timetable
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197
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