Agenda of Risk and Assurance Committee

Notice is hereby given that an ordinary meeting of the Horowhenua District Risk and Assurance Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Wednesday 15 May 2024

10:00 am

Council Chambers
126-148 Oxford St
Levin

Risk and Assurance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Cr Sam Jennings
Deputy Chairperson	Cr Paul Olsen
Members	Cr Alan Young
	Cr Clint Grimstone
	Cr Jonathan Procter
	Mayor Bernie Wanden
	Jenny Livschitz	Independent Member
	Sarah Everton	Independent Member

Contact Telephone: 06 366 0999

Postal Address: Private Bag 4002, Levin 5540

Email: enquiries@horowhenua.govt.nz

Website: www.horowhenua.govt.nz

Full Agendas are available on Council’s website

www.horowhenua.govt.nz

Full Agendas are also available to be collected from:

Horowhenua District Council Service Centre, 126 Oxford Street, Levin

Te Awahou Nieuwe Stroom, Foxton,

Shannon Service Centre/Library, Plimmer Terrace, Shannon

and Te Takeretanga o Kura-hau-pō, Bath Street, Levin

Risk and Assurance Committee

15 May 2024

Karakia

Whakataka te hau ki te uru

Whakataka te hau ki te tonga

Kia mākinakina ki uta

Kia mātaratara ki tai

E hī ake ana te atakura

He tio, he huka, he hau hū

Tīhei mauri ora!

Cease the winds from the west

Cease the winds from the south

Let the breeze blow over the land

Let the breeze blow over the ocean

Let the red-tipped dawn come with a sharpened air.

A touch of frost, a promise of a glorious day.

1 Apologies

2 Public Participation

Notification of a request to speak is required by 12 noon on the day before the meeting by phoning 06 366 0999 or emailing public.participation@horowhenua.govt.nz.

3 Late Items

To consider, and if thought fit, to pass a resolution to permit the Council to consider any further items which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded.

Such resolution is required to be made pursuant to Section 46A(7) of the Local Government Official Information and Meetings Act 1987, and the Chairperson must advise:

(i) The reason why the item was not on the Agenda, and

(ii) The reason why the discussion of this item cannot be delayed until a subsequent meeting.

4 Declarations of Interest

Members are reminded of their obligation to declare any conflicts of interest they might have in respect of the items on this Agenda.

5 Confirmation of Minutes

5.1 Meeting minutes Risk and Assurance Committee, 21 February 2024

5.2 Meeting minutes In Committee Meeting of Risk and Assurance Committee, 21 February 2024

Recommendations

That the meeting minutes Risk and Assurance Committee, 21 February 2024 be accepted as a true and correct record.

That the In Committee meeting minutes Risk and Assurance Committee, 21 February 2024 be accepted as a true and correct record.

File No.: 24/247

6.1 Treasury Update - March 2024

1. Purpose

1.1 To update the committee on the Bancorp Treasury Reporting Dashboard for the March 2024 quarter.

2. Recommendation

2.1 That Report 24/247 Treasury Update - March 2024 be received.

2.2 That this matter or decision is recognised as not significant in terms of S76 of the Local Government Act.

2.3 That the Committee notes the Bancorp Treasury Reporting Dashboard for the March 2024 quarter.

3. Background and issues for Consideration

3.1 This quarterly Treasury Reporting Dashboard is produced by Council’s treasury advisors, Bancorp Treasury Services Limited.

3.2 Council had $185m of current external debt as at 31 March 2024, all sourced from the Local Government Funding Agency (LGFA). Currently fixed term debt is 51.4% of our total ($95m) and floating debt is 48.6% ($90m).

3.3 Council is in compliance with it’s the debt profile targets set in its Treasury management policy:

Years	Minimum Fixed Rate Amount	Maximum Fixed Rate Amount	Amount	Compliant
0 - 2 years	40%	100%	51%
2 - 4 years	25%	80%	45%
5 -8 years	0%	60%	26%

3.4 Cost of funds as at 31 March 2024 was 4.71%, up from 4.49% in June 2023. This is expected to increase further in the near term as our March – May 2024 debt maturity yield rates are low in comparison to the wider borrowings portfolio.

3.5 There is still significant risk of increasing interest rates, however Bancorp notes the market currently projects the first OCR cut to occur in August this year, the RBNZ however don’t project rate cuts until Q1 2025. Officers continue to consult with Bancorp for all borrowing transactions to ensure we have their latest advice before proceeding.

3.6 Council’s net debt to total operating revenue as at 31 March 2024 is 209%.

3.7 Officers are closely monitoring the net debt to operating income ratio, which is now forecast to be higher than the budgeted 196% due to the timing of significant capital grants and lower than budgeted asset sales. As part of setting the draft LTP a revised forecast of 213% for 2023/24 was agreed. It remains below the 250% limit.

3.8 The table below demonstrates the differences between the LTPA 2023/25 and the current borrowings forecast:

Category	Long term Plan Amendment 2023/24 ($000)	Forecast 2023/24 ($000)	Movement ($000)	Comment
Opening Balance 23/24	137,840	168,000	30,160	Lower asset sales and capital grants
Total Capital Expenditure	35,000	39,043	4,043
Rates funded depreciation	(17,879)	(19,105)	1,226
Unfunded depreciation	7,103	7,113	10
Capital Grants	(9,033)	(9,915)	(882)	Additional grants
Development Contributions	(1,461)	(1,561)	(100)
Asset sales	(9,531)	0	9,531	Reduced to zero
Dept funded operating costs	7,926	7,778	(148)
Prefunding 2025	-	22,000	22,000
2024 Borrowings maturities	-	(15,000)	(15,000)	Prefunded
Gross Borrowings	149,965	198,353	50,840
Less
Cash on hand at YE	(6,621)	(5,000)	1,621
Borrower notes	(3,749)	(6,684)	(2,935)
Term Deposits	0	(22,000)	(22,000)	2025 Prefunding
Net Borrowings	139,595	164,669	27,526
Borrowings movement 23/24	12,125	30,353	18,483
Net Debt %	196%	213%

3.9 A total of $11m of debt matured in March/April 2024 which was repaid using our prefunding that was held on Term Deposit. The remaining $4m matures in May, and this was also prefunded and so the funds are currently on term deposit.

3.10 Prefunding for our 2025 debt maturities was completed on the 15^th of April 2024. A total of $22m was borrowed from the LGFA and placed on Term Deposit to match our 2025 maturities – 15m in April and 7m in May 2025.

4. Attachments

No.	Title	Page
a ⇩	Horowhenua Treasury Report at 31 March 24	10

Author(s)

Daniel Minty

Financial Services Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

15 May 2024

File No.: 24/239

7.1 Local Government Funding Authority Reporting

1. Purpose

1.1 To update elected members on the following Local Government Funding Agency (LGFA) reporting:

1. LGFA 2023-24 Half Year Report to 31 December 2023

2. LGFA Draft 2024-27 Statement of Intent

2. Recommendation

2.1 That Report 24/239 Local Government Funding Authority Reporting be received.

2.2 That this matter or decision is recognised as not significant in terms of S76 of the Local Government Act.

2.3 That the committee notes the LGFA 2023-24 Half Year Report to 31 December 2023

2.4 That the committee notes the LGFA Draft 2024-27 Statement of Intent

3. Background / Previous Council Decisions

3.1 LGFA is enabled under the Local Government Borrowing Act 2011 and is a council-controlled organisation (CCO) for the purposes of the Local Government Act 2002. It is owned by the Government (20%) and 30 Local Authorities (80%). All of Horowhenua District Council’s debt is held with the LGFA.

3.2 LGFA 2023-24 Half Year Report to 31 December 2023 sets out the LGFA’s performance for the first six months of the year.

3.3 This Statement of Intent (SOI) sets out the nature and scope of the activities, objectives and performance targets for the New Zealand Local Government Funding Agency Limited (LGFA) for the three-year period 1 July 2024 to 30 June 2027. The SOI is prepared in accordance with section 64(1) of the Local Government Act 2002.

4. Discussion

LGFA 2023-24 Half Year Report to 31 December 2023

The LGFA 2023-24 Half Year Report and cover Letter are attached (A & B)

LGFA reports positive results for the six months to 31 December 2023 including;

§ record lending of $2.63 billion over the six-month period

§ two new CCOs were added as members bringing total members to 77

§ further progress on sustainability via Climate Action and Green, Social and Sustainable Loans

§ full year forecast in line with expectations;

LGFA Draft Statement of Intent 2024-2027

The LGFA Draft Statement of Intent 2024-2027 and cover letter are attached (C & D).

Officers note the following points regarding the draft SOI 2024-27:

§ Updated assumptions following the repeal of 3 Waters and the new Local Waters Done Well Programme. A business-as-usual approach to council and CCO borrowing is now assumed where there was uncertainty under 3 Waters.

§ Profitability is forecast to remain strong with projections for Net Operating Gain of $15.1 million, $13.1 million, and $10.1 million for the next three years. Financial forecasts are as follows:

§ Borrowing forecasts to Councils have increased to $22.08 billion in 2025 and to $24.45 billion in 2026 (from $20.03 billion and $21.50 billion in the previous SOI). This is a reflection on the increased capital spending Council’s are undertaking across the country.

§ Performance targets remain similar to previous SOI’s, focusing on sustainability and greenhouse gas (GHG) emission reporting, monitoring the credit quality of the sector, and assisting with the implementation of Local Water Done Well Programme.

5. Attachments

No.	Title	Page
a ⇩	Cover Letter - LGFA Half Year Report to December 2023	22
b ⇩	LGFA Half Year Report to December 2023	25
c ⇩	Cover Letter Draft SOI 2024-27	43
d ⇩	LGFA Draft Statement of Intent - 2024-2027	45

Author(s)

Daniel Minty

Financial Services Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

15 May 2024

7.2 Continuous Improvement and Audit Actions Monitoring Report

File No.: 24/234

1. Purpose

1.1 To report to the Risk and Assurance Committee on progress of the action items from previous resolutions.

2. Recommendation

2.1 That Report 24/234 Continuous Improvement and Audit Actions Monitoring Report be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

2.3 That the Risk & Assurance Committee notes the Risk & Assurance Committee resolution and actions monitoring report in Attachment A.

3. Background/Previous Council Decisions

3.1 This paper reports on actions generated from Committee resolutions, and any requests noted through the minutes, or requested through external and internal audit work and for actions accepted by the Chair.

3.2 Much like the Committee Work Programme, the Resolution Monitoring Report is a standing item, and reported through at each committee meeting.

3.3 The monitoring report includes actions that have been carried over from the Finance, Audit and Risk Committee from the previous Triennium.

4. Issues for Consideration

4.1 Below is a summary of the status of recommendations:

4.2 So far, 10 out of 19 of the recommendations from the Audit Management letter for the year ended 30 June 2023 have been implemented and completed. These will be assessed and tested by Audit NZ when they are on site for the 2023/24 Annual Report audit. All recommendations marked as urgent have been completed and awaiting review by Audit NZ.

4.3 The following items were archived from the monitoring report since the last meeting due to them being completed:

4.4 Seven outstanding recommendations resulting from the GST Compliance evaluation by PwC are in progress. These are detailed in Attachment B.

4.5 17 out of 18 of the recommendations resulting from the PAYE Compliance evaluation by PwC have been implemented and completed. The one outstanding item relates to the review of policy regarding clothing/uniform which is underway and expected to be completed by December 2024. Clarification around PAYE treatment for clothing will be captured as part of the policy review. This is detailed in Attachment A.

4.6 PwC performed evaluation on Council’s compliance with Fringe Benefit Tax (FBT) during February 2024. We expect to receive the draft report from PwC in May. Any recommendations from this will be added to the monitoring report for the next meeting.

4.7 Completed recommendations are archived and shown towards the end of the monitoring report in Attachment A.

Attachments

No.	Title	Page
a ⇩	Risk & Assurance Committee monitoring report	60

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Pei Shan Gan

Financial Controller

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

15 May 2024

7.3 Health, Safety and Wellbeing Quarterly Report - May 2024

File No.: 24/273

1. Purpose

1.1 To provide the Committee with health, safety and wellbeing information and insights from the quarter from January – 31 March 2024, along with an update on the SafePlus Onsite Assessment conducted in November 2023.

2. Recommendation

2.1 That Report 24/273 Health, Safety and Wellbeing Quarterly Report - May 2024 be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

3. Discussion

Health, Safety and Wellbeing Dashboard

3.1 The Health, Safety and Wellbeing (HSW) Dashboard report gives a broad overview of lead and lag reporting across all of Council. It is designed to give Elected Members assurance that HSW is being managed for all staff through worker engagement, risk management and leadership. The variety of reporting captures multiple aspects of data available to Council and allows the story of HSW across the three month reporting period to be told. Any issues highlighted in the dashboard will be discussed as part of the presentation of the report.

SafePlus Assessment

3.2 Horowhenua District Council (HDC) took part in a SafePlus Onsite Assessment in November 2023, receiving the report end of February 2024. The full report is attached to this cover information. The assessment aims to improve health, safety and wellbeing and help make sure that everyone gets home healthy and safe. It checks how well HDC has performed against the ten requirements, across three key elements: Leadership, Worker Engagement and Risk Management.

3.3 The result of the assessment confirmed the positive movement of all ten requirements, with seven of the ten moving from the Performing category to the Leading category. However, as three requirements are still in the Performing category, the HDC overall achievement continues to be in the Performing category.

3.4 The below graphs show the improvements from 2018 and 2021 to our latest assessment in November 2023.

3.5 The November 2023 SafePlus Assessment Report includes a number of key recommendations and actions (found on pages 9-10) for officers to review and put into practice. Given our recent adoption of an internal Health, Safety, and Wellbeing Action Plan (HSW), we have aligned and mapped these key recommendations with the actions specified in the plan to be delivered over the next 3 years.

3.6 The SafePlus report from 2021 also presented several recommendations. Below is an update on the progress made regarding those recommendations. As you will observe, the primary area needing more attention lies within the realm of HSW Risk Management. This is an area where heightened focus is warranted going forward.

2021 Recommendation	Evidence	Status
Develop a set of measures for the Senior Management Team (SMT) and the Finance Audit and Risk (FAR) to monitor and verify the effectiveness of risk controls. This will also assist Elected Council members and the CE meet some due diligence requirements.	The creation of the Dashboard Report presented to Risk and Assurance Committee.	Completed
Ensure any online tools related to health and safety have input from the HSA (HSL) so data can be captured in relation to the frequency of contractor’s exposure to critical risks.	Enhanced relationships involve participation in contractors Health and Safety Committee Meetings, contractor meetings, including reporting in the Dashboard which encompasses Contractors data.	Completed
Explore ways to involve more staff in critical risk management. Two examples could be running staff focus groups when developing critical risk profiles and mitigations, and upskilling HSRs in risk management	During the critical risk review process, staff engage in sessions aimed at enhancing awareness. The review history indicates a rise in staff participation in risk reviews. Health and Safety Representatives (HSRs) attend these sessions and occasionally, when appropriate, facilitate them.	Completed
Consider reviewing the top critical risks documented in the FAR report. The risks do not seem to align with the business risks. Information on the risks should also cover how the controls are verified	More effort is required in this area, however we continue to collaborate with the Risk Function to align Health and Safety critical risks with business risks wherever feasible.	Ongoing
The risk register requires: · an additional column to detail how controls will be verified for effectiveness · each control to be assessed using the hierarchy of controls outlined in the HSWA · the correct HDC and external guidance is referred to in relation to specific risks	The HSW critical risk page now incorporates a Verification column. Each page of the HSW risk register now features a Hierarchy of Controls, delineated in distinct columns. Guidance on the HSW risk register has been revised and updated.	Completed
Work with the business units to identify which staff work alone, and in what circumstances, then develop their specific procedures based on the policy and best practice controls covered off by the Working Alone Policy. The plans would need to be developed in conjunction with staff and the relevant staff be trained on how to implement the plans	The development of the People Safety Monitoring Policy is currently underway, with the inclusion of supporting procedures.	Ongoing
Consider creating some measures for the SMT and FAR report around how many business units have staff who work alone, how many business units have procedures in place, and what training has taken place	Included in proposed changes to HSW Dashboard report following the completion of the People Safety Monitoring Policy.	Ongoing
Consider how HDC can embed a sustainable process to review health and safety on site practices of contractors	The Contractor Health and Safety Management Policy has been revised, along with staff training. Assistance is available to staff on the internal HSW portal.	Completed
Ensure there is consistency in health and safety processes across all contractual arrangements	Improvements have been implemented in the financial and procurement areas, including updated templates with consistent Health and Safety language and application across contracts.	Completed
Develop an overarching workplace mental health and wellbeing framework to dovetail into the soon to be developed wellbeing strategy.	An update to and creation of Workplace Wellbeing document, HSW Policy and HSW Internal Portal.	Completed

4. Next Steps

4.1 The recommendations identified in the SafePlus 2023 will be incorporated into the Risk and Assurance Actions Monitoring Report for ongoing tracking over the next 3 years.

Attachments

No.	Title	Page
a ⇩	HDC RAC - Health Safety and Wellbeing Dashboard January - March 2024 - FINAL	101
b ⇩	Final Horowhenua SafePlus Assessment Report 28 and 29 November 2023 - RAC May 2024	111

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Tanya Glavas

Health & Safety Lead

Ashley Huria

Business Performance Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

15 May 2024

7.4 Risk and Assurance Committee Work Programme

File No.: 24/288

1. Purpose

1.1 The purpose of this report is to provide the Risk and Assurance Committee with an outline of a Draft Work Programme for 2024/25.

2. Recommendation

2.1 That Report 24/288 Risk and Assurance Committee Work Programme be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

2.3 That the Risk and Assurance Committee supports the proposed Finance, Audit and Risk Committee Work Programme for 2024/25.

Issues for Consideration

2.4 The Risk and Assurance Committee work programme is attached for consideration.

Attachments

No.	Title	Page
a ⇩	Risk & Assurance Committee work Programme for 2024/25	159

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Ashley Huria

Business Performance Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer